On the Beach Group plc
Annual Report
& Accounts
For the year ended 30 September 2022
TOTAL FINANCIAL
P R O T E C T I O N
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
Contents
Our history timeline
Report from the Chairman
Strategic Report
Chief Executive’s Review
Core business model and Growth
Strategy
Key performance indicators
Financial review
Risk management
Viability statement
Section 172 and stakeholder
engagement
Responsibility and sustainability
Non-financial information
statement
02
05
11
18
21
29
36
50
53
61
83
Governance
Chairman’s introduction
Directors’ biographies
Corporate Governance statement
Report of the Nomination
Committee
Report of the Audit Committee
Remuneration report
Remuneration at a glance
Remuneration policy
87
88
92
103
107
115
118
120
Annual report on remuneration 133
Other statutory and regulatory
disclosures
Independent auditor’s report to
the members of On The Beach
Group plc
Statement of Directors’
responsibilities
146
152
160
Financial Statements
Consolidated Income
Statement and Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement
of Cash Flows
Consolidated Statement of
Changes in Equity
Notes to the Consolidated
Financial Statements
Company Balance Sheet
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
Glossary of Alternative
Performance Measures (‘APMs’)
Shareholder information
164
165
166
167
168
206
207
208
210
217
Financial Highlights
GROUP REVENUE
GROUP TTV1
£144.1m £856.1m
FY21: £21.2m | FY20: £33.7m
FY21: £238.3m | FY20: £500.5m
REVENUE AS AGENT
GROUP BOOKINGS2
TRUST ACCOUNT
£93.6m
FY21: £14.7m | FY20: £16.8m
478.6k
FY21: 137.7k | FY20: 333.4k
£69.4m
FY21: £39.0m | FY20: £25.8m
REVENUE AS PRINCIPAL
CASH
£50.5m
FY21: £6.5m | FY20: £16.9m
PROFIT/(LOSS) BEFORE TAX
£2.1m
£64.5m
FY21: £56.0m | FY20: £36.5m
ADJUSTED PROFIT/(LOSS)
BEFORE TAX3
£14.1m
FY21: (£36.7m) | FY20: (£46.3m)
FY21: (£18.4m) | FY20: £0.6m
1 Group Total Transaction Value (“TTV”) is a non-
GAAP measure representing the cumulative
total transaction value of sales booked each
month before cancellations and adjustments.
2 Group bookings is a non-GAAP measure
representing the total number of bookings
made in the year.
3 A full reconciliation of all non-GAAP measures
to the closest equivalent GAAP measure is
included in the glossary.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
01
Our history timeline
From humble beginnings in 2004 as a start-up business, to our 2015 listing on
the London Stock Exchange; we have come a long way. We make it easy for
people to find, book and enjoy their perfect beach holiday and with significant
opportunities for growth, we’re on a long-term mission to become Europe’s
leading beach holiday retailer via a single platform, multi-brand strategy.
2004
2007
Livingbridge
acquired
a majority stake
2007
2013
Inflexion acquired
a majority stake
2011
2013
2004
Established by
Simon Cooper
2011
79% of the Group’s
bookings were
made online
2015
Launched its first
international platform in
Sweden. Listed on the
London stock exchange
2016
2015
2014
2016
Achieves outstanding profit
growth against a challenging
market backdrop
2014
On the Beach grew its direct
contracting and invested in
TV advertising
02
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
2017
Acquired Sunshine.co.uk
Limited. Launched in Norway
2019
Launched Classic Package
Holidays. Opened a new
Digital HQ in Manchester.
Launched long haul
2017
2018
2021
Raised £24.9m as a result
of a share placing. Offered
free Covid-19 tests in an
industry first
2022
2019
2020
2021
2018
Acquired Classic
Collection. Soft launch
in Denmark
2020
Raised £67m as a result of
a share placing. Redesigned
customer booking path
2022
First mainstream holiday
company to offer free lounge
and fast track on bookings.
Delivered good sales growth
despite another challenging
year for the travel sector
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
03
INTRODUCTION After
two and
half years
of disruption
to trading and
operations, our
FY22 results
demonstrate the
strength and
resilience of the
business model.
Richard Pennycook
Non-Executive Chairman
04
04
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Report from the Chairman
I am pleased to present our Annual Report and Accounts for
the financial year ending 30 September 2022 (‘FY22’).
Financial and strategic progress
The Covid-19 pandemic and its aftermath continued to
cause disruption and challenges to the travel industry
throughout the financial year, with the emergence of the
Omicron variant dampening consumer confidence during the
first half of the year, and with widespread cancellations and
changes to flight programmes in the second half of the year
causing severe operational pressure and impacting financial
performance.
Despite the challenges, the Group finished the year with
strong top line growth, delivered profit in line with market
expectations and continued to make strategic investments
in technology, people, brand and consumer proposition. In
particular, the launch in December 21 of the free lounge
and fast track offer differentiated On the Beach’s consumer
proposition and enabled the business to take a greater share
of the ‘premium’ end of the market (which is more lucrative
and less exposed to the impacts of inflation and the cost of
living crisis).
After two and a half years of severe disruption to trading
and operations, this is demonstrative of the strength and
resilience of the business model and to the talented people
and leadership within the Group. The reports of the CEO
and CFO provide further detail on strategic progress and
financial results, on pages 11-18 and 29-35 respectively.
Cash and liquidity
As at 30 September 2022, the Group had a combined cash
balance of £134m, being £64.5m in Group cash and £69m
of customer prepayments held in a ringfenced trust account.
As outlined in the CFO’s report on page 30, the Group also
has access to a £60m revolving credit facility.
This strong financial position puts the Group in a strong
position to be able to invest for growth. Given this focus, the
Board has not recommended a final dividend for FY22.
Governance
The Group is committed to the highest standards of
corporate governance and we are fully compliant with the
UK Corporate Governance Code (the ‘Code’). The Corporate
Governance Report on page 87 sets out in more detail how
we have complied with the Code during the year.
Board composition, succession planning
and Board diversity
During the year, the Nomination Committee conducted
a thorough review of succession planning, considering
succession on the Board itself (both Executive and
non-Executive) and also the talent pipeline from senior
management to Executive Committee to Board. The
Committee also reviewed the balance of skills and
experience on the Board and approved a new Board
diversity policy, more details of which are contained in the
Nomination Committee Report on page 103.
On 7 December 2022, Simon Cooper notified the Board
of his intention to step down as CEO of the business in
the next twelve months, and the Board has chosen Shaun
Morton, currently the Group’s Chief Financial Officer,
to replace Simon as Group CEO. The timing of Shaun’s
appointment as CEO is dependent on the recruitment of
an experienced CFO to work alongside Shaun to deliver
the Group’s growth strategy. Upon stepping down as CEO,
Simon will remain on the Board as a non-executive Founder
Director. Further details on the succession planning process
will be included in next year’s Annual Report.
As a customer-centric business, it is essential that the
‘customer voice’ is represented on the Board. The Committee
identified this as an opportunity to enrich the balance of
skills and experience on the Board and recommended the
appointment of Zoe Harris, Chief Marketing Officer. We were
delighted to welcome Zoe to the Board on 14 October 2022
and look forward to her valuable contribution.
David Kelly is the longest-serving Non-Executive Director
on the Board, having served nine years by September
2024 and as such, the Committee has been considering
succession arrangements for David’s roles on the Board.
In order to facilitate a smooth handover of responsibilities,
I am pleased to report that, with effect from 27 January
2023, Elaine O’Donnell will become the Senior Independent
Director and Justine Greening will become the Chair of the
Remuneration Committee. David will continue his role as
a Non-Executive Director as well as supporting Elaine and
Justine in their new roles.
The Nomination Committee has commenced a search for a
new independent Non-Executive Director and updates will
be provided in due course.
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05
05
INTRODUCTION Report from the Chairman continued
Looking ahead
While FY22 has been a challenging year,
and we expect FY23 to present its own
challenges with inflation and the cost-of-living
crisis, the business has put in place all the right
building blocks to ensure we are ready to thrive
and take market share.
Richard Pennycook
Non-Executive Chairman
7 December 2022
New Directors’ Remuneration Policy
The current Directors’ Remuneration Policy was approved
by shareholders at the 2022 AGM, receiving support of
just over 97% and would ordinarily apply for a further two
years. However, as highlighted in last year’s Directors’
Remuneration Report, the Remuneration Committee
recognised that the travel sector was still in a state
of transition at that time and that a further review of
remuneration arrangements across the whole Company
would need to be carried out to ensure these are fit for
purpose in the post-Covid-19 environment. Therefore,
following a comprehensive review, we are seeking
shareholder approval for a new long-term incentive plan
for the Executive Directors and members of the senior
management team at the 2023 AGM, as well as a new
Directors’ Remuneration Policy to incorporate this.
David Kelly, as Chair of the Remuneration Committee, has
engaged with over 65% of the shareholder base as well as
with shareholder proxy advisory bodies and the proposed
policy takes into account the feedback received as part of
that process.
Sustainability and ESG
We have a responsibility to conduct our business in a way
that most benefits our customers, our employees and the
planet at large. We do not underestimate the extent of
the task in hand, and importance of our business’ role in
building a better society and contributing more positively
to the planet.
We are committed to conducting our business the right
way and we want to drive meaningful change across the
industry. To that extent, we have completed a materiality
assessment and developed an ESG strategy aligned to our
purpose, values and strategy that will help build resilience in
the business, improve behaviours in our supply chain, create
long-term value and ultimately drive positive change. We are
in the early stages of our ESG journey and there is further
work to be done but this is a strong foundation on which
to build.
Our responsibility and sustainability report can be found at
page 61, which includes our TCFD disclosures at page 74.
06
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
INTRODUCTION
INTRODUCTION
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07
Strategic
Report
Chief Executive’s Review
Core business model and Growth
Strategy
Key performance indicators
Financial review
Risk management
Viability statement
Section 172 and stakeholder
engagement
Responsibility and sustainability
Non-Financial information
statement
11
18
21
29
36
50
53
61
83
08
08
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09
09
We
are now
reaping
the rewards
and gaining
market share
as demand for
beach holidays
recovers thanks
to investments
and the team’s
strategic focus
and hard work.
Simon Cooper
Chief Executive Officer
10
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Chief Executive’s review
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 challenging 12 months for the travel
industry, disrupted in the first half of the year by the Omicron
variant, and in the second half by staff shortages across the
supply chain. Despite these exceptional circumstances, FY22
Group TTV* was 15% ahead of FY19.
Since the onset of Covid-19, the Group has consistently
outlined its strategic intention to capture market share as
trading normalises and demand for beach holidays recovers.
I am confident that the activities we have undertaken over
the last 12 months have laid strong foundations for the
Group for the year ahead and 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 financial year has presented. All staff
across all business departments have continued to work
productively from the office or remotely.
This year we have set out a hybrid working framework. Key
objectives include supporting our colleagues by promoting a
healthy work life balance, enabling flexible working, staying
connected both within teams and cross department, and
ultimately to create an appealing environment where our
staff can deliver to the best of their abilities. Hybrid working
is enabling us to recruit from a wider talent pool and is an
important tool to attract and retain talent in a tight labour
market where colleagues are seeking a greater degree of
flexibility.
We have added further strength to our senior management
team in FY22, with the appointment of a Director of
People in June 2022 who is helping drive and deliver these
objectives.
* Total transaction value of holidays booked in the year before cancellations
and amendments.
We have continued to support colleagues with a diverse
range of initiatives to promote mental health and wellbeing,
helping to retain a connection to our people across
departments and the Company as a whole.
Our staff continue to respond with speed, professionalism
and resilience to the challenges faced by the sector. We
raised the entry salary across the business to £20,000 p.a.
with effect 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. This also ensured that
our lowest paid staff are paid in excess of the Real Living
Wage, and will help to narrow our gender pay gap.
In October 22, against a backdrop of an escalating cost
of living crisis, we awarded a pay rise of £1,500 to all
colleagues with annual salaries at or below £30,000 p.a.,
three months earlier than our usual pay review. This is to
support our staff through difficult winter months with higher
energy and living costs. It also aligns with the suggested
voluntary increase by the Living Wage Foundation of the
Real Living Wage, which rose by 10% in September 2022
(also earlier than scheduled). The Group is proud that it
continues to voluntarily pay its lowest-paid colleagues a
salary in excess of the Real Living Wage, despite another
challenging year of disrupted trading.
Market conditions
Whilst FY21 was a particularly difficult year for travel, the
industry and the UK population did not foresee the level
of disruption experienced throughout FY22. Three months
of H1FY22 were severely affected by Covid-19 and the
summer season in H2FY22 was beset by acute staff
shortages across the sector.
The Omicron variant heavily impacted Group trading in
November and December 2021, and into the key booking
period of early January 2022. Consumer demand remained
materially below H1FY19 levels until restrictions were eased
in mid-January.
In H2FY22, Group TTV was 25% ahead of H2FY19,
despite the indirect consequences of the war in Ukraine and
ongoing disruption across the travel supply chain as the
sector continued to recover from the pandemic. Over the full
year, FY22 Group TTV was 15% ahead of FY19 and Group
revenue was 3% ahead of FY19.
Group TTV relates to new bookings. The sales of many
other operators over the same period will be flattered by
a proportion of their bookings rolled over from previous
periods or booked using vouchers or refund credit notes
(‘RCNs’).
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11
STRATEGIC REPORT Chief Executive’s review continued
The Group has never issued vouchers or RCNs in lieu of
refunds. Where customers have been refunded using
vouchers or RCNs from other operators, they are then
captive to that operator, narrowing our addressable
audience this year. The Group believes that our enhanced
proposition and reputation will allow us to target these
customers in FY23 when the playing field is levelled.
The Group has materially invested in its brand, technology,
and customer proposition throughout the year. This includes
offering a differentiated customer experience with premium
lounges and fast track security, increasing headcount in
technology and customer service areas, and investing in
offline marketing to drive awareness of the brand. These
investments, combined with improved access to a broader
hotel portfolio have resulted in FY22 growth in 5* holiday
sales of 82% vs FY19, and contributing to total FY22
Average Booking Value (‘ABV’) growth of 31% vs FY19.
On the Beach also continues to make good progress in B2B
and long haul. B2B TTV1 was 45% ahead of FY19. Long-
haul TTV2 was 255% up vs FY19.
Partly due to continued rising costs of living, the lates market
for value holidays has remained subdued in H2FY22 and as
a result, sales of 3* holidays for FY22 was 18% below FY19.
The Group is committed to maintaining its focus on this
important segment and growing its share of value holidays.
Strategy
As I set out in more detail below, throughout the year, we
have continued to focus on 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 premium, B2B and long haul.
Investment in our brand
Throughout the pandemic, we have continued to pursue our
strategy of materially investing in both customer proposition
and brand. By investing strategically in both areas, the
Group aims to continue to capture share in its core value
segment and increase penetration of the premium, long-
haul, and B2B segments.
We invested circa £5m in FY22 across a range of
promotions designed to evolve the customer offer from
seamless booking service to differentiated holiday
experience. By differentiating our holidays and offering a
more memorable experience from the point of booking to
arriving home from travel, we expect to increase loyalty,
repeat rates and customer lifetime value. The promotions
have contributed to the success we have had this year
in growing Group sales relative to FY19. We expect the
investment to also payback in FY23 and future periods in
terms of continued growth in market share.
During the beginning of FY22, as we looked to restore
consumer confidence and help get people back on holiday
again, we ran our free Covid-19 test offer which meant we
could reduce the holiday hassle administration as well as
saving our customers money.
The Group subsequently took the early decision in FY22
to invest in airport fast track for all customers. This has
provided a key point of differentiation relative to peers and
airlines, particularly across a summer where airports have
been severely disrupted by staff shortages and typical
queue times have been significantly longer than normal.
1 B2B TTV is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before cancellations and adjustments for the
CCH and CPH segments.
2 Long haul TTV is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before cancellations and adjustments
for long haul holidays across the Group.
In conjunction with the fast track offer, we significantly
invested in free lounge access for customers booking
premium holidays in summer 2022. This is a promotion that,
despite the operational complexity, we were uniquely placed
to offer given our scale, depth and breadth of the Group’s
offering across UK departure airports.
By positioning the brand to appeal to customers seeking
these perks with their holiday, together with improved
access to a broader hotel portfolio, the Group has achieved
significant growth in premium 5* bookings.
The success of the free Covid-19 tests, fast track and
lounge promotions in differentiating the proposition and
capturing share of the premium segment, is testament to
the efforts of many of our colleagues across the business,
particularly in marketing, technology and supply, but also
in our support and back-office functions. In an era of hybrid
working, successfully rolling out these promotions at pace,
demonstrates the strength of cross departmental team
collaboration across the Group.
Alongside enhancements to the proposition, the Group
doubled investment in FY22 offline media spend (vs FY19).
Branded traffic has much higher conversion than traffic from
paid search and other channels.
We aim to continue to pursue our strategy of differentiating
the customer experience and building the brand in future
periods. Our recent progress on both fronts also provides
a strong platform to capture share growth as the value
segment recovers.
In early FY22 we took decisive action to increase headcount
across our customer service teams, to protect the Group
from an increase in volume of enquiries as international
travel restrictions were eased.
However, like all operators across the sector, we were
subject to an exceptionally high level of disruption in the
second half of the year. Certain airlines and airports fared
better than others in anticipating the release of pent-up
demand, however many have been caught out, either by not
staffing up sufficiently or indirectly as the entire supply chain
has been impacted.
This has led to operational challenges for the industry and,
we believe, has contributed to a softening of demand in the
lates market.
I would like to take this opportunity to thank colleagues
in customer service and across the business for working
tirelessly in seeking to address backlogs and serving
customers in these exceptional circumstances.
The supply imbalance is easing once again as volumes
travelling decrease in the autumn and winter months. We
believe that the improvements made to our processes and
the enhancements in our overall package to attract and
retain customer service staff, will enable us to continue to
put our customers at the heart of everything we do and lay
the optimal foundations to cope if any such issues recur in
summer FY23.
Investment in technology
We have continued to add to our technology talent,
in particular to software engineering, design, product,
infrastructure and security.
Across the year, the team have facilitated the successful
roll out of enhancements to the proposition, including free
lounge and fast track, as well as evolving our platform which
will allow us to take advantage of opportunities both in our
core market and identified expansion areas.
We have continued to invest in hybrid 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 continued to focus on enhancing
the core capabilities of our platform (flights, beds, packaging,
front end, payments and back-office).
We have re-developed the front end of the site to enhance
conversion and 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 low-cost carriers,
long haul and scheduled airlines, allowing new suppliers to
be added to serve existing and new destinations.
As part of our overall strategy, there remains 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 by having our own relationships
with our hotel partners, we can guarantee our customers
both a good hotel experience and the best prices. Covid-19
presented the opportunity to secure direct relationships with
quality inventory in key destinations that were previously on
exclusive contracts with competitors.
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13
STRATEGIC REPORT Chief Executive’s review continued
Throughout the financial year, we have been leveraging our
existing capabilities to further optimise our hotel supply.
Direct bookings with hotel partners now represent over
89% of all volumes. By disintermediating bedbanks and
increasing our share of direct contracting, we can drive lower
prices for our customers and higher margins for the Group,
relative to peers more reliant on third-party product.
In addition to the economic benefits, direct
contracting enables the Group to build
and develop closer relationships with hotel
and customers. This is critical in periods of
disruption, where our customers want us to
solve their problems quickly. It has been clear
without direct contracting capability, we could
not possibly have delivered the same level
of service.
The Group has been one of the few operators in the market
with a prompt payment model. Certain other operators
across the sector have been stretched by unprecedented
liquidity challenges over the last two plus years, which
means in many cases they were not able to pay in
accordance with their own payment terms.
Our operating model and reputation in the market has
allowed us to strengthen existing hotel relationships as well
as developing new ones, which has significantly contributed
to further growth in premium, long haul and B2B markets.
The Group maintains access to a diversified group of
low-cost carriers that fly to short haul East and West
Mediterranean locations and has taken the opportunity to
develop relationships with destination specific carriers that
serve Turkey, which itself has experienced a significant uplift
in traffic this year.
The Group has made strong progress over the last two
years in developing its scheduled flight supply with airlines
that serve a core group of east and west bound long-haul
destinations.
There is significant runway for growth and margin
enhancement in many of these long-haul destinations we
now offer by replicating our success in core short-haul
markets and building out our portfolio of directly contracted
product.
We continue to believe that our ability to pay promptly,
distribute opaquely and access B2C and B2B channels
are fundamental to growing levels of direct and
differentiated supply.
Expansion areas
Premium
In FY21 and FY22, alongside successful efforts to access
previously exclusive hotel product, the Group took strategic
actions to enhance its proposition, both of which have
enabled us to penetrate the premium segment of the market.
The Group’s core addressable market is short-haul value
holidays sold online. In the value segment of the market,
which is typically 1–4* holidays sold for less than £700pp,
the Group competes against other online travel agents and
to some extent, tour operators. The tour operator product,
however, is more skewed towards higher price point 4 and
5* holidays with higher average booking values than the
Group’s.
If the market is split into ‘value’ short-haul beach holidays
less than £700 per person and ‘premium’ holidays greater
than £700 per person, we estimate the latter segment is a
similar size in terms of passengers, but approximately two
and a half times larger in terms of absolute value. Capturing
1% of the premium market will therefore contribute two and
a half times as an incremental 1% share of the value market.
Given the higher average booking value of premium, the
revenue margin opportunity on each individual booking
is also greater. The Group now has access to a large
addressable segment of the market which was previously
unavailable, and each incremental booking has a higher
revenue per booking opportunity than the value segment.
Revenue per booking is higher in the premium segment
even after being offset by investment into perks, which will
continue to payback as the Group’s sales mix shifts to more
premium product.
For these reasons, there remains a huge opportunity to
continue to penetrate the premium market as demonstrated
by the recent progress this financial year.
B2B overview
In 2018, we expanded into a new B2B channel via the
acquisition of Classic Collection. This increased the size
of the Group’s addressable market by a further circa eight
million 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
Classic Collection Holidays (CCH) brand and our new Classic
Package Holidays (CPH) brand. CCH sells luxury and tailor-
made premium product primarily to travel agents and has a
small proportion of direct sales to consumer. CPH provides
an online B2B platform that enables high street travel agents
to sell dynamically packaged holidays to their customers.
14
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
2022 was a record year for the Classic businesses. As
travel re-emerged from almost two years of restrictions
in February, Classic Collection and Classic Package were
both well-positioned to deliver growth. Despite the slow
restart post Omicron and the number of captive customers
of competitors who had rolled cancelled holidays from
Covid-19 disrupted periods, the combined Classic
businesses delivered 45% growth in TTV vs 2019.
In October 2022, Andy Freeth was appointed as the new
CEO of Classic Collection Holidays and Classic Package
Holidays. Andy has a huge amount experience in tour
operating and leading B2B businesses through fast paced
growth. Andy is an experienced CEO who is excited to
be coming on board and is keen to support Classic’s
ambitious future growth plans. I would like to also take this
opportunity to thank Oliver Garner, Classic’s previous CEO
for his contribution to the Group. Oliver has been a fantastic
member of the leadership team at OTB for eight years and an
inspirational leader of Classic since its acquisition in 2018.
Classic Package Holidays (CPH)
Partly as a result of the pandemic, a number of barriers
exist for new entrants and smaller independent operators
looking to dynamically package holidays for their customers,
including increased regulation, liability insurance and
technological complexity.
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.
Whilst the year was heavily disrupted, the Group has
continued to make progress in developing the offering
and growing sales after its initial launch in 2019/20 was
hampered by Covid-19. The business was able to carry
more than 40,000 passengers in the year and is well set to
increase this in 2023.
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.
The Classic brands have now launched a long-haul offering
and have a dedicated Group long-haul function.
Most recently, the leadership team at Classic have
undertaken an extensive rebranding exercise launching a
new look and feel for both CCH and CPH.
Long haul
There are four million holidaymakers in the UK who
book long-haul packages each year. Pre-pandemic, the
OTB site handled millions of searches per annum for
long-haul destinations.
Historically, Group long-haul sales were dominated by
tour operator capacity. However, the long-haul market
has always been dominated by scheduled airlines, which
we had no or very limited access to. During the pandemic,
we focused on developing our flight connectivity with
British Airways and Virgin Atlantic westbound, and
Emirates eastbound.
We have sought to combine access to relevant airfares with
new expertise to contract hotels directly, and then use our
brand and buying power to break into the market.
Our long-haul offering has benefitted from the
improvements we have made to the customer proposition
this financial year, with the introduction of free lounge
for premium bookings and fast track for all bookings. Our
growing B2B distribution also supports further growth in
long-haul share. Certain long-haul hotels are now in the
Group’s top sellers list.
There is a significant opportunity post pandemic to drive a
growing share of bookings to longer-haul destinations in
Classic and the core OTB brand. Alongside developing our
hotel contracting in our other key destinations, we continue
to optimise our flight sourcing, which will help us break
into new destinations. We are also enhancing the website
and specialist expertise in the team, to increase conversion,
margin and grow our overall long-haul proposition.
International
The Board has and will continue to evaluate UK and
international opportunities that both increase the Group’s
scale and deliver further value for shareholders.
Regulatory landscape
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 and creates a level playing field for those
operating within it and which reduces or eliminates exposure
for taxpayers against the risk of business failure.
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 whilst 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
15
STRATEGIC REPORT Chief Executive’s review continued
Current trading and outlook
The first quarter of our financial year (calendar
Q4) has historically been the quietest trading
period for the Group.
Over the last 6 weeks, there has been a continuation
of key trends, including growth across premium,
long-haul and B2B expansion areas, set against more
subdued trading in sales of 3* holidays for FY23.
Notwithstanding the widely reported macroeconomic
headwinds, the Group has begun FY23 with a healthier
overall forward order book than the equivalent period in
FY20 (before the onset of the Covid-19 pandemic).
Whilst it is unclear how the cost of living crisis will impact
consumer behaviour in 2023, the Board is confident that
the foundations laid over the past 12 months, including
investment in brand, technology and customer proposition,
position the Group favourably for another year of growth
in FY23.
Simon Cooper
Chief Executive Officer
7 December 2022
During the pandemic, as travel operators scrambled to
preserve cash, consumer laws were broken and 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, creating customer 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. The recovery of the
travel sector is dependent on the industry regaining the trust
of customers that they will be treated fairly.
For most customers in the UK who are booking their
annual beach package holiday, this will likely be the biggest
investment they will make that 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 for consumers.
ATOL reform
The CAA is consulting on reform of the ATOL scheme
including the assessment of funding arrangements and the
protection of customer money. The consultation process
is still ongoing and we expect to hear further feedback
from the CAA in December 2022 or early 2023. Proposals
include mandatory ring-fencing of customer 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’s 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 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 in the market,
On the Beach will be championing the need for this to be
reviewed and addressed.
16
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
STRATEGIC REPORT
Core business model
core addressable market
Structural
market growth
& market
share growth
Short-haul
beach holidays
dynamically
packaged
x
Online
penetration
x
OTB share of
market traffic
=
£ Revenue
per booking
x
Conversion
=
Unique
visitors
x
Revenue
per unique
visitor
=
revenue
-
Unique
visitors
x
Marketing spend
per unique visitor
=
Marketing
investment
-
fixed and
variable costs
↓
=
PBT
• OTB’s business model is centred on driving efficient growth in
market share while maintaining and improving both conversion
and £ revenue per booking
• We 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
Group profit growth is enhanced by penetrating a broader
addressable market of beach holidaymakers - see Strategy section
Personalise
customer
proposition
& leverage £
revenue
Drive efficient
share growth
& strengthen
brand
Scale drives
operational
leverage
18
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Growth Strategy
Core: Grow share of UK value
Expansion: Attract the widest possible audience of UK beach holidaymakers
Vision: Build Europe’s leading beach holiday retailer
Invest in Talent
ONLINE / B2C
OFFLINE / B2B
Drive
Brand
Optimise
Supply
Champion
Change
+ Technology
l
u
a
H
g
n
o
L
l
u
a
H
t
r
o
h
S
Expansion
+4m pax
(Online + Offline)
Expansion: Premium
+4.5m pax
(2.5 x £ of Core)
Core: Value
4.5m pax
19m pax
Total UK market
19m pax*
9m pax
M
nificant growth in TA
Sig
Expansion
+8m pax
(Short Haul +
Long Haul)
=
Expansion
14.5m pax
+
Core
4.5m pax
+ Selectively review growth opportunities
in European source markets
* Total UK market represents Short Haul Beach Online of 9m, Long Haul Beach of 4m (c.2m Online and c.2m Offline),
and Short Haul Beach Offline of c.6m
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
19
STRATEGIC REPORT
Strategy continued
Strategy continued
Strategy for growth
Strategy for growth
On the Beach continues to target significant medium and
On the Beach continues to target significant medium and
long-term growth in its core and adjacent markets by
long-term growth in its core and adjacent markets by
evolving a strategy based on the following strategic pillars:
evolving a strategy based on the following strategic pillars:
1. Invest in talent and technology
• 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
2. Become a brilliant digital brand
• Develop a truly differentiated customer
proposition, to capture share in the core value
segment and increase penetration of the
premium segment
• Deliver a superior customer experience from
the moment of booking to post holiday, to
increase repeat purchase and brand advocacy
3. 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
• Enhance access to 4* and 5* product to support
expansion into new addressable markets
4. Grow our share of B2B beach
• Drive mainstream growth through Classic
Package Holidays
• Evolve Classic Collection to include long haul,
itineraries and boutique hotels
5. Diversify into adjacent beach
holiday markets
Increase penetration of the premium market
•
• Grow share of long haul
• Seek value enhancing opportunities in new and
existing international markets
6. 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
20
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Key performance indicators
Financial KPIs
OTB adjusted revenue1
OTB adjusted revenue after online
marketing costs1
£100
m
£
£80
£60
£40
£20
£0
£89.3
£90.3
£86.9
£50.4
£22.1
m
£
£80
£70
£60
£50
£40
£30
£20
£10
£0
£56.2
£60.5
£59.9
£36.2
£16.6
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
OTB Online marketing
spend % adjusted revenue1
OTB adjusted EBITDA % adjusted
Revenue1
40%
30%
20%
10%
0%
37%
33%
28%
25%
31%
2018
2019
2020
2021
2022
Online marketing spend (£m)
Online spend as % of adjusted revenue
£35
£30
£25
£20
£15
£10
£5
£0
£
m
m
£
£45
£40
£35
£30
£25
£20
£15
£10
£5
£0
-£5
-£10
42%
43%
21%
25%
(28%)
2018
2019
OTB EBITDA
2020
2021
2022
EBITDA % Revenue
50%
40%
30%
20%
10%
0%
-10%
-20%
-30%
-40%
OTB adjusted EBITDA
Group TTV2
m
£
£45
£40
£35
£30
£25
£20
£15
£10
£5
£0
-£5
-£10
£37.9
£38.9
£22.1
£10.6
2018
2019
2020
(£6.1)
2021
2022
£1000
m
£
£800
£600
£400
£200
£0
£741.4
£639.5
£856.1
£500.5
£238.3
2018
2019
2020
2021
2022
1 Long haul sales is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before
cancellations and adjustments for long haul holidays across the Group.
2 B2B sales is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before cancellations
and adjustments for the CCH and CPH segments.
3 Group passenger numbers is a non-GAAP measure defined as the number of passengers booked in the year.
4 A full explanation of all adjusted performance measures is included in the glossary.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
21
STRATEGIC REPORT Key performance indicators continued
Financial KPIs
Long-haul TTV1
B2B TTV2
£60
£50
£40
m
£
£30
£20
£10
£0
£7.1
2018
£53.5
£15.1
£20.3
£18.2
£100
m
£
£80
£60
£40
£20
£0
£86.7
£59.8
£49.3
£33.4
£6.0
2019
2020
2021
2022
2018
2019
2020
2021
2022
Group passenger numbers (booked)3
Group adjusted profit before tax4
2,000,000
1,500,000
1,000,000
500,000
0
1.5
1.6
1.4
1.0
0.4
£33.6
£34.5
£40
£30
£20
m
£
£10
£0
-£10
-£20
£0.6
£14.1
(£18.4)
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Group adjusted revenue4
Group profit before tax
£150
£120
m
£
£90
£60
£30
£0
£147.5
£144.3
£104.3
£71.2
£30.5
£30
£20
£10
£0
m
£
-£10
-£20
-£30
-£40
-£50
£26.1
£19.3
£2.1
(£36.7)
(£46.3)
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
1 Long haul sales is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before
cancellations and adjustments for long haul holidays across the Group.
2 B2B sales is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before cancellations
and adjustments for the CCH and CPH segments.
3 Group passenger numbers is a non-GAAP measure defined as the number of passengers booked in the year.
4 A full explanation of all adjusted performance measures is included in the glossary.
22
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Group Revenue
Group Revenue as an Agent
£150
£120
m
£
£90
£60
£30
£0
£140.4
£144.1
£104.3
£33.7
£21.2
£100
m
£
£80
£60
£40
£20
£0
£90.9
£85.4
£93.6
£16.8
£14.7
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Group Revenue as a Principal
£60
£50
£40
m
£
£30
£20
£10
£0
£55.0
£50.5
£13.4
£16.9
2018
2019
2020
£6.5
2021
2022
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
23
STRATEGIC REPORT Key performance indicators continued
Non-financial KPIs
For link to strategy key, see Strategy for growth on page 20.
Directly contracted hotel supply
Voluntary employee turnover
85%
90%
89%
68%
70%
100%
80%
60%
40%
20%
0%
30%
21%
19%
20%
25%
30%
25%
20%
15%
10%
5%
0%
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Description
Description
Tracking % of total hotel buying via direct contracting
(as opposed to through third-party sourced product).
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
Performance
Our proportion of directly contracted product has
stayed around the same level at 89% (FY21: 90%).
Benefits of direct contracting include increased access
to exclusive rates, ring-fenced capacity and online
travel agent (‘OTA’) exclusivity. Direct contracting
enables the Group to build and develop closer
relationships with hotel and customer, supporting
improved customer satisfaction scores. This is critical in
periods of disruption where our customers want us to
solve their problems quickly. Without direct contracting
capability, we could not have delivered the same level
of service as we did during FY22 when we saw high
levels of disruption throughout the supply chain.
Voluntary turnover increased this year to 25%
(FY21: 20%). 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. There is also real competition for
tech talent which is another area of the business where
we have seen a higher level of voluntary turnover. We
work hard to foster an inclusive and open culture and
our Glassdoor rating based on anonymous reviews
is 4.5 out of 5. There is much we are doing to help
prevent overall employee turnover, including focusing
on improving engagement with employees, investing in
employee development and diversity and inclusion, and
providing market competitive wages and benefits.
For more information, read Responsibility and
sustainability on page 62.
Link to strategy
Link to strategy
1
2
3
4
5
1
24
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Employee engagement
Brand traffic share %
10
)
0
1
f
o
t
u
o
(
e
r
o
c
S
8
6
4
2
0
7.1
7.2
7.2
8.1
8.1
2018
2019
2020
2021
2022
)
s
n
o
i
l
l
i
m
(
i
s
n
o
s
s
e
S
90
80
70
60
50
40
30
20
10
0
48.4
61%
31.2
+10%
56.0
+3%
67%
28.1
72%
40.5
15.8
+7%
-8%
77%
17.8
5.3
71%
51.0
21.2
2018
2019
Non-Brand Sessions
2020
Brand Sessions
2021
2022
Brand Share
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
b
r
a
n
d
s
h
a
r
e
Description
Description
Overall employee engagement score from the
employee engagement survey (administered by
a third party).
Data shows the percentage share of sessions that have
come from brand and non-brand channels.
Performance
Performance
FY22 was the first year where the volume of sessions
returned to something close to pre-pandemic levels.
While brand traffic as a percentage of total has
dropped year-on-year, long-term investment in brand
building is paying off, with a 4 percentage points
increase in share of brand sessions vs pre-pandemic
2019. Indeed, at 71%, 2022 returned the largest
percentage brand traffic (excluding pandemic years),
despite the market heavily investing into non-brand as
the travel industry recovered.
Last year we took the decision to defer the annual
employee survey to December 2021, meaning we were
not able to report on FY21’s engagement score in last
year’s report. The reason for the deferral was because
we had recently closed our Park Square office, so many
employees were getting used to working in a new
office for the first time and at the time of writing the
report, we were also trialling new ways of working. We
therefore felt that carrying out the survey a little later
in the year would give a more realistic and meaningful
insight into how employees felt the hybrid working
arrangements were working. In that December 2021
survey, we saw our engagement score increase to 8.1
out of 10 (FY20: 7.2 out of 10). We were delighted
with the increase, particularly during a challenging year
where Covid-19 continued to cause much disruption.
For FY22, we maintained that score of 8.1. Whilst we
always strive to improve our position, we feel this is a
very positive outcome given the continued challenges
we have seen in the sector and is testament to our
continued investment in our culture and people.
For more information, read Responsibility and
sustainability on page 62.
Link to strategy
Link to strategy
1
2
3
4
5
6
1
2
4
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
25
STRATEGIC REPORT
Key performance indicators continued
Non-financial KPIs
For link to strategy key, see Strategy for growth on page 20.
Prompted brand awareness
Prompted brand consideration
39.8
41.8
46.0
31.9
27.6
50
40
30
20
10
0
10
8
6
4
2
0
6.1
6.8
8.1
7.5
8.3
2018
2019
2020
2021
2022
2018
2019
2020
2021
2022
Description
Description
Data based on a survey that asks participants to select
all travel brands they have heard of from a list.
Data based on a survey that asks participants to select
all travel brands they would consider for their next
holiday from a list.
Performance
Performance
This year we saw a 10% increase against FY21.
The increase is a testament to the investment we
have made in above line media to drive awareness
of our brand.
This year saw our highest score of brand consideration
to date, with a 11% increase compared to FY21. This
is based on the average prompted brand consideration
score for the year. Our peak consideration score for
the year, based on a rolling 4 week average, was 9.9.
These scores are reflective of the material investment
we have made in our brand and customer proposition.
Link to strategy
Link to strategy
1
2
3
4
5
6
1
2
3
4
5
6
STRATEGIC REPORT
Net promoter score
54
55
59
47
60
50
40
30
20
10
0
2017
2018
2019
2022
Description
Index that measures willingness of customers to recommend the 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. Accordingly, we do not have an accurate NPS for FY20 and FY21.
During FY22, we recommenced sending out the questionnaires and during the year, we saw a 20% decrease in
NPS compared to FY19. Several factors contributed to this, including:
•
Last minute flight cancellations by airlines created unexpectedly high volumes of urgent customer contacts.
• Significant increases in the number of customers with complex amend requests such as changing the date
of their holiday.
•
Ongoing Covid related disruptions in resorts (testing, local restrictions, recruitment challenges) impacting the
holiday experience.
We have delivered several customer focused initiatives during the year, including the introduction of perks such as free
airport lounge access and free fast track security for summer bookings which delivered 20% higher NPS scores. We
also created a programme to give our customers more moments of anticipation post booking and pre-holiday, including
testing a white labelled app for our Tenerife customers which increased our NPS score by over 25%. We look forward to
building on these customer centric experiences in the year ahead.
Link to strategy
1
2
3
4
5
6
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
27
STRATEGIC REPORT Whilst
FY22 has
remained
challenging
and disruptive,
we have
finished the
year in a very
strong financial
position with
topline growth
and a return to
profitability.
Shaun Morton
Chief Financial Officer
28
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Financial review
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).
Group overview
Group TTV2
Group revenue
Revenue as Agent3
Revenue as Principal4
Group gross profit
2022
2021
2019
Adjusted¹
GAAP
Adjusted ¹
GAAP
Adjusted ¹
GAAP
£856.1m
–
£238.3m
–
£741.4m
–
£144.3m
£144.1m
£30.5m
£21.2m
£147.5m
£140.4m
£93.8m
£93.6m
£24.0m
£14.7m
£92.5m
£85.4m
£50.5m
£50.5m
£6.5m
£6.5m
£55.0m
£55.0m
£96.1m
£95.6m
£23.3m
£14.4m
£99.1m
£92.0m
Gross profit as Agent
£90.0m
£89.8m
£22.7m
£13.8m
£92.0m
£84.9m
Gross profit as Principal
£6.1m
£5.8m
£0.6m
£0.6m
£7.1m
£7.1m
Group profit/(loss) before tax5
£14.1m
£2.1m
(£18.4m)
(£36.7m)
£34.5m
£19.3m
Basic earnings/(loss) per share6
6.3p
0.9p
(9.7p)
(19.0p)
21.3p
11.9p
1 Adjusted measures are non-GAAP measures, a full explanation of the adjustments is included in the glossary.
2 Group Total Transaction Value (‘TTV’) is a non-GAAP measure representing the cumulative total transaction value of sales booked each month before
cancellations and amendments.
3 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 2021 and 30 September 2022. Adjusted revenue is revenue before exceptional items of £1.0m and fair value gains on forward currency
contracts of £0.8m (2021: £9.3m, 2019: £7.1m).
4 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 2021 and 30 September 2022.
5 Group adjusted profit / loss before tax is profit / loss before tax, amortisation of acquired intangibles of £5.5m (2021: £5.5m, 2019: £5.5m), share-based
payments cost of £4.7m (2021: £2.7m, 2019: £0.7m) fair value gains on forward currency contracts of £0.8m and exceptional items of £2.6m (2021: £10.0m,
2019: £9.0m). A full explanation of the adjustments is included in the glossary.
6 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.
Impact of the pandemic and associated disruption
Certain costs 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.
The Board believes that adjusting for these items provide a clearer reflection of the Group’s performance in the current and
prior periods. The Group has organised package holidays for customers which were cancelled either as a direct result of the
pandemic and more recently due to capacity constraints and operational challenges with airlines and at airports.
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 or resulting disruption.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
29
STRATEGIC REPORT
Financial review continued
Overview of the year
• Revenue of £144.1m was £122.9m higher than FY21:
− Demand for booking holidays in FY21 was severely
impacted by a series of lockdowns and complex rules
and requirements for travel.
− Whilst the first four months of FY22 were similarly
disrupted by the outbreak of the Omicron variant of
Covid-19, travel restrictions were removed and travel
was simplified for most of the year.
• Notwithstanding the emergence of Omicron and the
disrupted airline schedules this summer, revenue was up
3% vs FY19:
− Average booking values were 31% higher than FY19
supported by a greater mix of long haul, B2B and
more premium beach holidays.
− As a result, the TTV of holidays booked in the year
increased by 15% vs FY19.
− As well as adding more quality hotel product, during
the year, the Group invested £4.8m in holiday perks
including airport lounge access, security fast track
and free Covid-19 tests. Revenue is presented net of
these investments.
− The TTV of holidays that departed in summer 2022
was 19% ahead of FY19.
• The Group has made adjustments for exceptional
cancellations, both directly and indirectly related to the
pandemic. After making an adjustment to add back the
impact of cancellations of £1.0m (2021: £9.3m) and
deduct fair value FX gains of £0.8m, adjusted revenue
was £144.3m (FY21: £30.5m).
Cash and liquidity
• Thanks to significant shareholder support, the flexible
business model and the disciplined way in which
customer money is handled, the Group has continued
to invest in the brand and technology throughout the
pandemic and ahead of a full recovery of the travel
industry.
• The Group is in a very strong financial position with
combined cash balances of £133.9m:
− Group cash, excluding amounts held in trust, of
£64.5m (30 September 2021: £56m).
− Customer prepayments held in a ring-fenced trust
account of £69.4m (30 September 2021: £39m).
•
In December 2022, the Group refinanced its credit
facilities with Lloyds Bank and NatWest. This included
cancelling all current facilities and entering into a new
facility for £60m expiring in December 2025.
• Unlike many other businesses in the sector, due to
the disciplined way in which cash is managed, recent
increases in interest rates will not materially increase the
cost of financing the Group’s activities.
• Through the disrupted summer of flight cancellations,
OTB has continued to provide prompt cash refunds for
cancelled holidays. Certain airlines continue to frustrate
the refund process and owe the Group a significant
amount of money for cancelled flights. Legal proceedings
to recover these sums are ongoing.
30
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
OTB performance
TTV
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
2022
Adjusted
£m
762.7
86.9
(27.0)
(11.9)
48.0
(25.9)
(6.7)
–
–
–
15.4
22.1
2022
GAAP
£m
–
87.1
(27.0)
(11.9)
48.2
(25.9)
(6.7)
(1.3)
(4.7)
(4.4)
5.2
16.3
2021
Adjusted
£m
2021
GAAP
£m
204.2
22.1
(5.5)
(6.1)
10.5
(16.6)
(5.9)
–
–
–
(12.0)
(6.1)
–
13.0
(5.5)
(6.1)
1.4
(16.6)
(5.9)
(0.7)
(2.8)
(4.4)
(29.0)
(18.7)
2019
Adjusted
£m
671.5
90.3
(29.8)
(5.4)
55.1
(16.2)
(4.6)
–
–
–
34.3
38.9
2019
GAAP
£m
–
83.3
(29.8)
(5.4)
48.1
(16.2)
(4.6)
(1.2)
(0.7)
(4.4)
21.0
30.0
Adjusted measures are non-GAAP measures, a full explanation of the adjustments is included in the glossary.
Following the success of free Covid tests in September
2021, a new brand campaign was launched to support the
introduction of our holiday perks. This campaign, combined
with sponsorship of Magic Breakfast with Ronan and Harriet,
are the main components of the £11.9m investment in offline
marketing during the year.
Online marketing spend represented 31% of adjusted
revenue compared to 33% in FY19. It is our expectation
that as we continue to invest in the brand, online marketing
costs will become more efficient as more traffic is attracted
through brand and direct channels, reducing reliance on non-
brand PPC.
Revenue has increased to £87.1m (FY21: £13.0m,
FY19: £83.3m). This is significantly ahead of FY21 and 5%
higher than FY19. This performance is despite the early
part of the financial year, which includes the traditional peak
booking month of January, being impacted by the emergence
of the Omicron variant of Covid-19. In addition, there has
been a significant reduction in the addressable market due
to vouchers issued or alternative arrangements made for
cancelled holidays. Also note that, unlike tour operators, all
revenue recognised represents new bookings made during
the financial year and paid for in cash rather than vouchers.
Average booking values have increased by 31% vs FY19
due to an increase in the mix of bookings where customers
are spending more than £700pp on their holidays. This
includes an increase in bookings into more premium
product in both short and long-haul destinations. This has
resulted in an increase in TTV to £762.7m (FY21: £204.2m,
FY19: £671.5m).
Revenue of £87.1m is stated net of a £4.8m investment in
‘holiday perks’ for customers travelling with On the Beach.
This included providing free Covid-19 tests, access to
premium airport lounges and airport security fast track. These
perks, many of which are a first for the industry, enhance
customer experience and enable the business to clearly
communicate value and differentiation through brand media
channels.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
31
STRATEGIC REPORT
Financial review continued
Overheads as % of revenue
2022
Adjusted
2022
GAAP
2021
Adjusted
2021
GAAP
2019
Adjusted
Overheads % TTV
Overheads % revenue
3.4%
30%
–
30%
8.1%
75%
–
127%
2.4%
18%
2019
GAAP
–
19%
Adjusted measures are non-GAAP measures, a full explanation of the adjustments is included in the glossary.
Overheads as a % of revenue have reduced to 30% (FY21: 75%, FY19: 18%). This increase compared to FY19 is due to a
reduction in margins and an increase in fixed costs.
The reduction in margin is due to investments made in the proposition. This includes investments in price to ensure we remain
competitive and investments in the proposition such as premium airport lounge access.
Fixed costs have increased due to ongoing investments in people and technology as well as continued regulatory cost
pressures such as insurance.
Adjusted EBITDA has increased to £22.1m (FY21: loss £6.1m).
Classic Collection Holidays segment performance
TTV (booked)
Revenue (travelled)
Gross profit
Gross profit after marketing costs
Overheads
Depreciation and amortisation
Amortisation of acquired intangibles
Exceptional operating costs
Operating profit/(loss)
EBITDA
2022
Adjusted
£m
2022
GAAP
£m
2021
Adjusted
£m
2021
GAAP
£m
2019
Adjusted
£m
55.6
50.5
6.1
5.1
(5.2)
(0.3)
–
–
(0.4)
(0.1)
–
50.5
5.8
4.8
(5.2)
(0.3)
(1.1)
–
(1.8)
(0.4)
23.2
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)
55.0
55.0
7.2
6.3
(4.1)
(0.2)
–
–
2.0
2.2
2019
GAAP
£m
–
55.0
7.2
6.3
(4.1)
(0.2)
(1.1)
0.7
0.2
1.5
Adjusted measures are non-GAAP measures, a full explanation of the adjustments is included in the glossary.
As a principal (rather than an agent) Classic accounts for revenue on a ‘travelled’ basis and reports revenue on a gross basis.
Both TTV and Revenue increased significantly this year as there was greater opportunity for people to travel.
Revenue increased to £50.5m (FY21: £6.5m, FY19: £55.0m) and operating losses reduced to £1.8m (FY21: loss (£4.8m),
FY19: profit £0.2m).
Bookings from high street travel agents have recovered more slowly than online, due to a gradual return to normal high street
footfall and staff shortages in higher touch retail stores. Despite these headwinds, Sales on a booked, rather than travelled
basis, were £55.6m which is ahead of pre-pandemic levels. Revenue, reported in the period customers travel, recovered to
£50.5m which was significantly ahead of FY21 and only 8% behind FY19.
Particularly encouraging was the performance of the new long haul proposition launched during the pandemic. Long
haul product represented 23% of total sales in the year and expect this to be a high growth area for the business in
FY23. Due to increased revenue, adjusted EBITDA losses reduced to £0.1m compared to £3.1m in FY21.
32
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Classic Package Holidays segment performance
TTV
Revenue
Cost of sales
Gross profit
Gross profit after marketing costs
Overheads
Depreciation and amortisation
Operating (loss)
EBITDA
2022
Adjusted
£m
2022
GAAP
£m
31.1
6.2
(3.8)
2.4
1.4
(1.5)
(0.2)
(0.3)
(0.1)
–
5.8
(3.8)
2.0
1.0
(1.5)
(0.2)
(0.7)
(0.5)
2021
Adjusted
£m
10.2
1.8
(1.3)
0.5
0.1
(1.8)
(0.2)
(1.9)
(1.7)
2021
GAAP
£m
2019
Adjusted
£m
2019
GAAP
£m
–
1.7
(0.9)
0.8
0.4
(1.8)
(0.2)
(1.6)
(1.4)
4.8
0.8
–
0.7
(0.5)
(0.5)
0.3
0.1
0.2
–
(1.2)
(1.2)
–
(1.1)
(1.1)
–
(1.2)
(1.2)
Adjusted measures are non-GAAP measures, a full explanation of the adjustments is included in the glossary.
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 £5.8m (FY21: £1.7m), and the operating loss was £0.7m (FY21: (£1.6m)). As with CCH the
CPH trading result has been impacted by the high street recovering more slowly than online. However, there has been some
mitigation to this as the platform is being increasingly used by online agents and home workers.
Marketing costs increased by £0.6m to £1.0m to support the relaunch of the brand and platform as the industry emerges from
two years of disruption. We continue to develop both the platform and the proposition to ensure that we are serving the trade
and holidaymakers with market leading product at competitive prices.
STRATEGIC REPORT
Financial review continued
Financing
During the period, the Group had in place a revolving credit facility of £75m with Lloyds Bank. The drawdown at
30 September 2022 was nil (FY21: nil). On 7 December 2022, the Group refinanced its credit facilities with Lloyds Bank and
NatWest. This included cancelling all current facilities and entering into a new facility for £60m expiring in December 2025.
Details of the current facility limits and maturity dates are as follows:
Cancelled facilities
RCF
CLBILS
£
Issued
Expiry
£50m
Apr 2020
Dec 2023
£25m
May 2020
May 2023
Total cancelled facilities
£75m
New facilities
RCF - Lloyds Bank
RCF - NatWest
Total new facilities
£30m
Dec 2022
Dec 2025
£30m
Dec 2022
Dec 2025
£60m
Drawn
at 30
September
2022
£nil
£nil
£nil
n/a
n/a
Share-based payments
The Group has an LTIP scheme in place which vests
subject to continued employment and performance criteria.
In accordance with IFRS 2, the Group has recognised a non-
cash charge of £4.7m (FY21: £2.8m).
The share-based payment charge represents a non-cash
charge for the expected cost of shares vesting under the
Group’s Long-Term Incentive Plan. On 21 December 2021
the Remuneration Committee approved the introduction of
an underpin/minimum award for the nil cost awards originally
granted 9 July 2019. This removal of a non-market-based
condition has resulted in a charge to the income statement
of £1.9m that reflects the scheme progress to date. These
charges are added back to provide comparability to prior
periods due to fluctuations in the charges.
Taxation
The Group tax charge of £0.5m represents an effective rate
of 25% (FY21: 18%) which is greater than the standard UK
rate of 19% (FY21: 19%).
During the period a corporation tax rebate of £0.5m was
received and no payments on account have been made.
Cash flow
Profit / (loss) before tax
Depreciation and amortisation
Net finance costs / (income)
Share-based payments including tax
Net loss / (gain) on disposal of property, plant and equipment
Movement in working capital
Corporation tax
Cash generated from operating activities
Other cash flows
Capitalised development expenditure
Capitalised intangible assets
Capital expenditure
Net finance (costs) / income
Payment of lease liabilities
Cash flows excl share proceeds and dividends paid
Proceeds from issue of share capital
Total net cash flows
Opening cash balance
Closing cash at bank
Closing trust balance
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 inflows excluding share proceeds and dividends
were £8.5m which is £13.9m higher than last year (outflow
of £5.4m). This is due to increased profitability in the period.
Not included in the Group’s cash position is £69.4m
(FY21: £39m) of customer prepayments held in a trust
account to be released once the customer has travelled.
FY22
£m
2.1
12.8
0.5
4.7
–
1.3
0.5
21.9
(10.6)
(0.5)
(1.3)
(0.3)
(0.7)
8.5
–
8.5
56.0
64.5
69.4
FY21
£m
(36.7)
11.9
0.9
2.8
0.1
18.0
4.2
1.2
(4.6)
–
(0.5)
(0.9)
(0.6)
(5.4)
24.9
19.5
36.5
56.0
39.0
As a result of the share placings in FY20 and FY21, and the
extension of banking facilities to December 2025 the Group
has sufficient cash reserves to continue to invest in the
brand, people and proposition.
Dividend
The Board is not recommending a final dividend in respect
of FY22.
Shaun Morton
Chief Financial Officer
7 December 2022
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
35
STRATEGIC REPORT
Risk management
Risk is an inherent part of our activities and it is imperative
that sound risk management is embraced across the whole
Group. Effective risk management allows us to identify,
monitor and mitigate risks in line with our risk appetite so
that the Group can deliver on its strategic objectives and
ensure long-term sustainable growth.
During the year we worked with a third-party risk specialist
to help us implement an improved risk management
framework which we set out in more detail below. The
new governance and oversight process will provide greater
transparency of performance, actions and decision making
across the business. A key focus in the year ahead will be
training more of our people on our enhanced framework and
systems and embedding them across the organisation. In
this respect, we have recruited a new Internal Control and
Risk Manager who is leading the implementation and sits on
the newly constituted Executive Risk Committee.
Risk management governance structure
Enterprise risk management is a shared responsibility across
the three lines of defence. The governance structure to
report and escalate risk is shown below:
• Audit Committee: Assists the Board in fulfilling their
risk oversight and management duties by providing a
particular focus on escalated risk and the associated
risk management processes. The Audit Committee
keeps under review the adequacy and effectiveness of
the internal financial controls, internal controls, and risk
management system.
• Executive Team: Owners of the risk management
process who are responsible for embedding risk
management throughout our business. Each quarter, the
top risks within each business area from the operational
(departmental) risk registers are considered for
escalation into the principal risk register.
• Executive Risk Committee (‘ERC’): Dedicated to the
oversight and governance of risk. Membership includes
the Internal Control and Risk Manager and various
Executive Team members. The ERC monitors the risk
registers in place and in use across the Group such that
all areas and activities within the Group are covered, as
well as ensuring timely identification and appropriate
escalation of risk. The ERC provides quarterly updates
to the Audit Committee over the effectiveness of risk
management.
Board
Audit Committee
• Risk owners: Are usually Heads of Departments and
↑
↑
Executive
Team
←→
Executive
Risk Committee
↑
↑
↑
Risk owners
(Heads of department)
All staff
↑
↑
• Board: 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, in conjunction with the Executive Team, retains
ultimate responsibility for identifying and managing risk
within the business.
have responsibility for ensuring there is an established
process for the identification, assessment and
management of risks associated within their specific
functions and department.
• All staff: Risk management is an integral component
of the entire Group’s activities; consequently, it requires
input from all personnel. Risk may arise and be identified
from several sources not limited to occurrences,
events, incidents, or potential incidents. It is therefore
the expectation that all channels with a potential for
identifying risk, are considered for potential inclusion into
relevant risk register(s).
Risk appetite
The Group’s risk appetite, set by the Board, sets out how
we balance risk and opportunity in pursuit of our strategic
objectives and establishes clear parameters in which
departments and the Executive Team can work and succeed.
Our risk appetite statements have been developed in relation
to each category of risk and are aligned to our strategic
objectives. The statements are used to guide decision
making as to whether a risk is within risk appetite or not and
is recorded in the principal risk register for each risk.
36
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Risk management methodology
The following risk management process is applied when
identifying risks that could impact the business:
Risk
Identification
↑
↑
Report and
Escalate
↑
Risk
Assessment
↑
Monitor and
Review
Risk
Control
↑
Risk Identification
The process for identifying risks is forward-looking to ensure
emerging risks are identified, considering what could occur
in the next 12–24 months. Risk assessments are conducted
in relation to everyday operational (departmental) activities,
especially when there is a change in working practice or the
environment. These are regularly reviewed for frame, scope,
appropriateness, and completeness.
Risk Assessment
Once the risk has been identified and described, risk
assessment is conducted. This involves assigning each
risk a standard rating which determines what mitigation
actions (if any) need to be considered and implemented.
The risk register is in place to capture risks that impact on
the achievement of the operational plan, business objectives
and key deliverables.
Risk Evaluation and Control
The objective of risk evaluation is to understand the
operating levels of the identified risks. It provides an
opportunity to separate the minor acceptable risks from
the more significant risks or recurring risks. It includes the
comparison from the risk analysis with the established risk
criteria to determine action to mitigate the identified risks.
Once the risk has been identified, assessed, scored,
and rated, the next stage is to decide and document an
appropriate response to the risk. The response describes
how the desired risk score is to be achieved. In general,
there are four potential responses to address a risk once it
has been identified and assessed – commonly known as the
4 Ts: Tolerate, Treat, Transfer or Terminate:
• Tolerate: The risk may be considered tolerable without
the need for further mitigating action. If the decision is to
tolerate the risk; in effect, the risk is deemed acceptable
but monitored closely. Consideration is given to develop
and agree contingency arrangements for managing the
consequences if the risk is realised.
• Treat (mitigate): It permits the Group to continue with
the activity giving rise to the risk while taking mitigating
action to reduce the risk to an acceptable level i.e.,
as low as reasonably practicable. In general, action
plans reduce the risk to the likelihood of occurrence,
incorporate more methods or more sensitive methods
of detection or reduce the consequence / impact where
possible. It is important to ensure that mitigating actions
are proportionate to the identified risk and provide
reasonable assurance that the risk is reduced to an
acceptable level. Action plans are documented on the
risk assessment form, have a nominated owner and
progress monitored by the appropriate risk forum.
• Transfer: Risks may be transferred for example by
conventional insurance or by sub-contracting a third
party to take the risk. This option is particularly suited
to mitigating financial risks or risks to assets.
• Terminate: The only response to some risks is to
terminate the activity giving rise to the risk or by
doing things differently.
Monitor and Review
The final stage in the risk management process is to
monitor and review the risk objectives and their respective
gradings on a basis that is commensurate with ensuring
prompt assessment and reassessment of timescales,
thereby ensuring appropriate visibility, control, and
safe management.
A risk register is a risk management tool that provides a
comprehensive and dynamic understanding of a Group’s
risk profile. Effectively used, a risk register not only drives
risk management but informs decision-making processes.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
37
STRATEGIC REPORT
Risk management continued
Reporting
During the year, we implemented a new ‘real-time’
enterprise risk management system that replaces the
lengthy, complex spreadsheet risk registers that were both
time-consuming and cumbersome for our people. The new
system has set us up well to manage risk, enabling risk
owners to spend time where it really matters: investigating,
managing and reporting on their risks in a co-ordinated way.
The automated reports from this system form the basis of
the ERC’s ongoing discussions and actions on risk.
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.
As part of enhancing our risk management framework,
we reviewed and revised the structure of the principal risk
register. The majority of the risk categories remain the same
but in some cases they have been renamed or consolidated
with other risks.
Emerging risks
Emerging risks and horizon scanning are integrated as part
of our risk management processes. 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. They may develop into
principal risks or may not arise at all. The Executive Risk
Committee and Executive Team are primarily responsible
for identifying and assessing emerging risks. These are then
monitored on an ongoing basis and reviewed alongside
existing risks. For example during the year, climate change
and other ESG issues were considered emerging risks.
We know this is an area of increasing importance for all
stakeholders and has been a real area of focus for us in
FY22. We have developed a new ESG strategy and during
the year, we carried out climate scenario analysis to help
us identify and start quantifying the potential impact of
climate-related risks and opportunities in our business.
The landscape in this area continues to evolve and ESG
issues will continue to be kept under review as part of our
risk management processes.
1. Major airline failure
Link to strategy:
1
3
4
6
Direction of travel: ↓
Risk and impact
Key controls and mitigating factors
• The collapse of a major airline could have a material
adverse effect on the Group’s business in terms of
business disruption, availability of travel products and
customer demand.
• 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.
•
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.
• 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.
Change in the year
Whilst the cost of living crisis may impact some airlines,
particularly given the demographic of low cost carriers, we
do not believe this materially increases the chance of their
failure. Overall, we believe there is a reduced risk of major
airline failure compared to prior years.
Link with strategy
For each risk highlighted, we have specified the strategic pillars (as outlined in the Strategy section of this report on page 20)
that these risks impact.
These are:
1 Invest in talent and technology.
2 Become a brilliant digital brand.
3 Optimise our direct and differentiated supply.
4 Grow our share of B2B beach.
5 Diversify into adjacent beach holiday markets.
6 Champion customer-centric change.
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Risk management continued
2. Flight supply
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• As is the case with all online travel agents, a lack of
• The Group is successfully building relationships with a
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 online travel agents involved
in litigation with Ryanair in connection with Ryanair’s
efforts to prevent OTAs from booking and selling its
flights. The legal process is ongoing but remains at
an early stage. 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.
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.
• Flight supply issues apply to all OTAs and travel agents,
not just On the Beach and we are engaging with the
Government and regulators on the market power of
airlines and the changes we believe that are required to
secure a healthy and competitive market that protects
the interests of consumers.
Change in the year
As detailed in last year’s report, On the Beach has
commenced legal action against Ryanair to prevent it
from, amongst other things, blocking the Group’s bookings
and degrading the experience for its customers. Those
proceedings are ongoing and there are no material updates
to report in respect of those proceedings. Overall there is no
significant change in flight supply risk from last year.
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3. Recoverability of airline refunds
Link to strategy:
1
2
3
6
Direction of travel: ↓
Risk and impact
Key controls and mitigating factors
• 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 not refunding flight
costs for a cancelled flight in a timely manner; or (ii) not
refunding the flight costs at all because the flight still
went ahead (e.g. during a national lockdown).
• 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’). Where a flight is
cancelled, 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.
• We pay airlines on virtual card which means we have
chargeback rights to recover the sums for cancelled
flights 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.
• We are pursuing a legal claim against Ryanair for
refunds due on cancelled flights. We and others in
the industry are engaging with the Government and
regulators about the need to find a solution to the issue
of airline refunds to travel agents for the benefit of
consumers.
Change in the year
We still await refunds in respect of some flights that were
cancelled during the pandemic. In the second half of the
year, we saw ongoing disruption across the travel supply
chain, resulting in a large number of cancelled flights. Whilst
there has been a delay in recovering refunds for some of
those flights, overall, airlines have got quicker at making
refunds and where they do not refund, we have chargeback
rights as detailed above. We therefore see a downward
trajectory for this risk.
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STRATEGIC REPORT
Risk management continued
4. Data and security
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• A major security breach, whether stemming from human
error, deliberate action or a technology failure, could lead
to unauthorised access to or misuse of our technology,
customer data, employee data, commercially sensitive
information and disruption to core business operations,
which could result in significant financial loss, significant
fines and reputational damage.
• Security policies, processes and technology are
baselined against recognised standards such as NIST
800-53 and PCI-DSS.
• A 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 a 24/7 Managed Security Service provided by our
Information Security partner.
•
Investment in cyber security has significantly increased
and we have completed a security transformation
programme with a dedicated Information Security
function in place.
• Cyber Security Governance Committee established with
empowered representation from all departments within
the Group.
• All colleagues are provided with regular security training
as part of an agreed yearly security training schedule.
• Cyber insurance is in place.
Change in the year
The data security risk environment continues to evolve and
we continue to update our mitigating actions as it does.
Overall, risk level remains the same.
5.
Innovation, transformation and scalability
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• The Group operates in a fast-moving marketplace. In
• With the addition of a Director of Product to the
order to meet our strategic objectives, our IT platforms
must be agile and scalable. If we cannot keep up with
growing demand and/or do not innovate or adapt our
technologies or fail to adapt to changing customer
attitudes/needs, then this will impact growth and the
service we can offer to our customers.
• The Group invests in a number of IT systems/
transformational projects as part of its strategy. Failure
to execute transformational projects successfully could
reduce the Group’s operational efficiency, erode the
Group’s market leadership position and have a negative
impact on financial performance.
Executive Team, innovation will be at the forefront
of the Executive Team. It is the responsibility of the
Director of Product to create a high-performing product
organisation that acts as a glue between all teams
and functions – championing customer centricity and
utilising data to drive business outcomes. A strong
understanding of technology and the art of possibility
underpins all of this. The Director of Product’s
overarching objective is to establish the best (web and
mobile) user experience, innovative technology, and
highly competitive product offerings in Europe. In order
to achieve this goal, we will need a strong product team
and we continue to invest heavily in this area.
• The concept of scalability focuses on ensuring that
projects are fit for purpose and meet the goals of end
users. In order to ensure this delivery, the product team
works closely with the business. The cross-functional
and collaborative approach helps identify bumps on
the road to delivery and, if necessary, adjust plans or
rearrange resources proactively.
Change in the year
It is really important that we have the right people in place
to drive innovation and transformation. During the year, we
have continued to see real competition for tech talent and
in this respect, we are constantly looking at how we recruit
and retain talent. Overall, risk level remains the same.
STRATEGIC REPORT
Risk management continued
6. Disruption to operations
Link to strategy:
1
2
3
5
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• The Group faces the risk of disruption to its operations
from a wide range of unpredictable domestic and
international events. These can range from smaller
localised disruptions impacting systems and operations
at office locations, incidents at holiday destinations
or major incidents affecting the whole Group such as
a pandemic or natural disaster, which could impact
our ability to trade and/or manage our business. Such
disruptive events could materialise at any point along
the supply chain and could impact the Group’s finances
and affect business operations and customer demand.
• As a package organiser under the Package Travel
Regulations, we have number of responsibilities
including finding replacements/providing refunds where
flights are cancelled (through airline insolvency or
otherwise) or there is a major change to a customer’s
holiday and providing accommodation where customers
are stranded.
• We have comprehensive business continuity and
disaster recovery plans in place. These plans and the
supporting backup and failover facilities are regularly
reviewed to ensure their continued validity.
•
Insurance policies are also in place to further mitigate
this risk.
• During the year we carried out climate scenario
analysis to help us identify and quantity the impact of
climate-related risks, including physical risks such as
chronic heat, which could potentially cause disruption
to operations. Whilst it is not anticipated that such
risks will have a material impact in the near term, we
are adopting controls to monitor these risks, such as
country-level threat modelling to help identify specific
areas within major holiday destinations that are
particularly exposed to heat.
Change in the year
We saw much travel disruption in the second half of
the year which caused operational challenges. We have
been working on our plans and processes in case similar
disruption arises again. Overall, we feel the pandemic has
increased our resilience in the event of disruptive events
and that the level of risk remains around the same.
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7. People
Link to strategy:
1
2
3
4
5
6
Direction of travel: ↑
Risk and impact
Key controls and mitigating factors
• Our employees are a key asset and it is critical that we
• We provide an excellent working environment for our
are attracting and retaining the right talent. We need an
engaged and motivated workforce, with the right people
in the right places throughout all levels of the business
in order to innovate, share best practice and move
the Group forward. Failure to do so may negatively
impact our ability to deliver on performance targets and
strategic priorities. The North West, where the Group’s
HQ is located, is an area where there is a particularly
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.
employees, and have a very positive, informal and open
culture, which contributes to our ability to recruit and
retain staff. Our Glassdoor rating based on anonymous
reviews is 4.5 out of 5. Our employee engagement score
is 8.1 out of 10.
• We are constantly reviewing our remuneration tools
to recruit and retain employees, including base salary,
bonus and share schemes and enhanced policies.
• We have succession plans in place and invest in
leadership development to ensure we have a strong and
diverse talent pipeline.
Change in the year
There continues to be more job vacancies than pre-pandemic
and the competition for talent continues to be a challenge.
The recent cost of living crisis could expose us to the risk of
heightened costs and we will keep this under review.
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STRATEGIC REPORT
Risk management continued
8. Customer demand
Link to strategy:
1
2
3
4
5
6
Direction of travel: ↑
Risk and impact
Key controls and mitigating factors
• A material deterioration in consumer confidence can
• The Group’s flexible payment arrangements enable
lead to reduced demand for beach holidays, for example
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 and high-profile
corporate failures reduce consumer confidence to make
‘big ticket’ purchases, particularly well in advance.
• 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 wildfires
and extreme heat could impact the desirability of certain
holiday destinations.
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.
As noted in the ‘disruption to operations’ risk above, during
the year we carried out climate scenario analysis to help
us identify and quantity the impact of climate-related
risks. Whilst it is not anticipated that such risks will have a
material impact in the near term, we are adopting controls
to monitor these risks.
Change in the year
Customer demand remained materially low until
travel restrictions started to ease in January 2022.
Notwithstanding the war in Ukraine and level of the travel
disruption in the second half of the year, we did see a return
in consumer demand. Looking to the year ahead, whilst
more normal travel conditions are expected to resume, the
weak pound and the increase in the cost of living could
potentially impact demand.
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9. Brand and consumer proposition
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• The Group is one of the UK’s largest online beach
holiday retailers and relies on the strength of its brand
and reputation to set it apart from competitors and
attract customers to its website and to secure bookings.
• Failure to protect and maintain our reputation and
brand, or events or circumstances which give rise to
adverse publicity, could damage our brand/reputation,
leading to a loss of goodwill and reduced customer
demand to book with the Group, impacting traffic and
revenue, as well as reducing our competitiveness and
market position.
• We invest heavily in our brand, through a broad variety
of online and offline marketing and PR campaigns,
to build brand awareness and consideration. A key
example is the significant investment we made during
the year in our lounge and fast track promotion.
• We have internal and external PR advisers to support
us to manage any PR incidents.
• We monitor satisfaction through NPS scores and
customer feedback and have invested in additional
headcount in this area, including the appointment of a
Head of Customer Success.
• 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.
Change in the year
During the year, we saw ongoing disruption across the
travel supply chain as the sector continued to recover from
the pandemic. We anticipated there would be an increase
in the volume of enquiries once travel restrictions started
to ease and whilst we took decisive action in early FY22 to
increase headcount across our customer service teams to
deal with those enquiries, the disruption did still have an
impact on customer satisfaction. We continue to pursue our
strategy of materially investing in both customer proposition
and brand and overall we feel the level of risk is unchanged.
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STRATEGIC REPORT
Risk management continued
10. Non-compliance with laws and regulations
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• The Group’s business is highly regulated and is subject
to a complex regimes of laws, rules and regulations
concerning travel and aviation, online commerce,
financial services, consumer rights, data protection and
ESG issues. A breach of these laws and regulations
could have serious, financial, operational and
reputational impacts for the Group.
• Unfavourable changes to or interpretation of existing
laws could adversely affect the Group’s business and
financial performance.
• 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.
• Ongoing training is provided to employees (e.g. around
bribery) and we have Group policies and procedures
in place.
• 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.
Change in the year
There is continued regulatory focus on the travel industry
and consumer facing businesses, including the reforms
to consumer protection laws. ESG-related legislation and
reporting requirements have also increased over the past
year. The regulatory landscape will continue to evolve, as
will our mitigating actions, and overall, we consider the level
of risk remains unchanged.
11. Customer health and safety
Link to strategy:
1
2
3
4
5
6
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• Safety of our customers is paramount. A health
and safety incident or security incident could cause
significant injury/loss of life, litigation, reputational
damage, fines/regulatory sanctions and reduction in
future revenues.
• As a package organiser under the Package Travel
and Linked Travel Regulations 2018, 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 suppliers. In the event of a catastrophic
injury/fatality, or multiple injuries, the cost could run into
millions of pounds.
• 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 also 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.
• As part of our commitment to health and safety, we
have invested in headcount in this area, including the
appointment of a Head of Supply Risk Management.
Change in the year
Conditions in the insurance markets continue to be
extremely difficult for the travel sector and we have again
seen an increase in insurance costs. We continually review
and develop our safety management processes and overall
we consider the level of risk remains unchanged.
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12. Financial risk and liquidity
Link to strategy:
1
2
3
4
5
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• The risk that the Group has insufficient liquidity, does
• The Group has access to a £60m revolving credit facility.
not have appropriate access to funds, there are negative
movements in the market, or we cannot meet our
obligations as they fall due.
• Bank covenant tests are regularly monitored.
• The Group took action to improve overall liquidity
including two equity raises, cumulatively raising circa
£90m net of fees.
• Regular budgeting and forecasting ensures working
capital is sufficient for business requirements and rapid
reaction to adverse business performance.
• We prepare rolling three-year strategic plans and cash
flows and a number of different scenarios have been
modelled to ensure we continue to be viable – see
page 50.
Change in the year
FY22 was another difficult year for the travel industry. The
general macro-economic environment remains uncertain
heading into FY23 with high rates of inflation. However,
given the controls and mitigating actions in place, overall
we feel the level of risk remains unchanged.
13. Acquisition risk
Link to strategy:
1
3
4
5
Direction of travel: ←→
Risk and impact
Key controls and mitigating factors
• Failing to achieve our strategic growth target for
• We work with external advisers and use market
acquisitions due to insufficient opportunities being
identified, poor due diligence or poor integration, or
insufficient cash resources for acquisition, resulting in
erosion of shareholder value.
knowledge to find suitable targets.
• Dedicated Corporate Development Director to focus on
exploring and executing acquisition opportunities.
• Carry out robust due diligence to appraise suitability.
• Clear strategy and agile business model that allows
us to take advantage of new growth opportunities as
they arise.
• Regular reporting of the acquisition pipeline to the
Executive Team and the Board.
Change in the year
The pandemic impacted potential acquisition activity but as
the sector begins to normalise, we continue to identify and
assess appropriate targets. Risk level remains unchanged.
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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.
Assessment of prospects
The Board has determined that a period of four years to 30
September 2026 is the most appropriate period to provide
its viability statement. The Group prepares rolling four-
year strategic plans and cash flows, so setting the viability
statement period at four 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 this period 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 18)
and its strategy (as outlined in the Strategy section of the
report) are central to assessing its future prospects. As
such, key factors likely to affect the future development,
performance and position of the Group are:
• Talent and technology: 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;
• Technology: 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 enable us to continue to take share of
market traffic; and
• Differentiated supply: the Group can leverage increased
revenue through direct and differentiated supply.
The Group’s prospects are assessed primarily through its
strategic planning process. The planning process is based on
three limbs which are:
• The preparation of cash flow forecasts to cover the
period for which we are assessing the potential impact
of events on the Group’s viability. The forecasts will
be initially based on previously approved financial
statements and then extrapolated to cover the period we
are reviewing;
• A review of the specific sensitivities on those cash
flow forecasts relevant to the Group, with a view
to highlighting potential areas of stress for the
business; and
• A review designed to estimate the impact of specific
events and/or circumstances which could be reasonably
expected to occur, that have the potential to affect the
viability of the Group.
Once those scenarios have been identified, the Group then
considers the most effective means of mitigating the risks
they pose. This is achieved through reviewing the existing
procedures and controls already in practice that serve as key
mitigations to those risks, and also considering where those
controls and procedures could be revised or improved upon
to better protect the Group as a going concern.
Assessment of viability
The output of the Group’s strategic and financial planning
process reflects the Board’s best estimate of the future
prospects of the business. To make the assessment of
viability, however, additional scenarios have been modelled
over and above those in the ongoing plan, based upon a
number of the Group’s principal risks and uncertainties
which are documented on pages 36-50.
These scenarios were overlaid into the plan to quantify
the potential impact of one or more of these crystallising
over the assessment period. Whilst 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 - 1 major airline 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.
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The Group has reviewed the list of its airline suppliers and
does not consider any major airlines to be notable failure
risks. The Group has modelled the impact of one of its
larger suppliers failing to consider the impact of refunding
customers and reclaiming refunds on the cash balance
in addition to the impact on profitability whilst the Group
finds alternative supply. 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 - 10 non-compliance with laws and regulations
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
four years, as well as the impact in customer confidence
following a breach and is comfortable that such a fine would
not jeopardise the viability of the Group.
• Scenario 3: Severe reduction in consumer demand
caused by macro-economic factors or changing attitudes
to flying due to environmental concerns.
Link to risk – 8 customer demand, 1 major airline
failure, 2 flight supply, 3 recoverability of airline
refunds
There is a risk of a prolonged impact to consumer demand
as a result of the ongoing cost of living crisis in the UK and
weakened pound. This could be caused by a number of
factors including: affordability and changing attitudes to
flying due to environmental concerns. This would inhibit the
Group’s ability to generate revenue and cash in this regard.
There is also a risk that environmental concerns may result
in a reduction in consumer demand due as consumers may
choose to travel less frequently or certain destinations may
become less desirable due to extreme weather events such
as heat waves and resulting wildfires.
The Group has considered the impact to cash and revenues
of operating in an environment where bookings decrease by
10% over the next year followed by a 5% decrease year-on-
year for the following two years. Whilst profitability would
be impacted, the Group would continue to generate both
profits and cash throughout this period.
• Scenario 4: Limitations on innovation, transformation
and scalability
Link to risk – 5 innovation, transformation and scalability
There is a risk that if the Group cannot keep up with growing
demand or doesn’t innovate to adapt to customers, this will
impact the growth of the Group. The Group is continuously
investing in technology along with focusing on recruiting and
retaining talent to drive innovation and transformation.
The Group has considered the impact to cash and revenues
if the Group is unable to cope with peak customer demand
experienced in January resulting in capped bookings in
combination with restricted growth in bookings of 5%
year-on-year. 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
considers 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 December 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 extended £60m Revolving Credit Facility (expiring
December 2025). 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.
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51
STRATEGIC REPORT Viability statement continued
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 2026.
Going concern
The Group covers its daily working capital requirements
by means of cash and Revolving Credit Facility (‘RCF’).
On 7 December 2022, the Group refinanced its credit
facilities with Lloyds Bank and NatWest. This included
cancelling its current facility of £50m and CLBILS facility of
£25m and entering into a new facility for £60m expiring in
December 2025.
As at 30 September 2022 cash (excluding cash held in trust
which is ring-fenced and not factored into the going concern
assessment) was £64.5m (30 September 2021 cash of
£56.0m).
Where holidays are cancelled the Group is committed to
refunding customers in cash rather than vouchers. 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 2022 was £69.4m.
The Directors have assessed a going concern period through
to March 2024 and have modelled a number of scenarios
considering factors such as airline and hotelier resilience,
cost of living, inflation, interest rates and customer behaviour
/ demand. The Group has performed an assessment of the
impact of climate risk, as part of the Director’s assessment
of the Group’s ability to continue as a going concern. 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 have modelled a
reasonably possible downside scenario to sensitise the base
case. In this scenario the Directors have assessed the impact
to cash and revenue in an environment where bookings are
20% lower than historic levels, although profitability would
be affected, the Group would be able to continue operating.
The Directors modelled what they consider to be a remote
downside scenario of no travel or bookings until March
2024. 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 during the going concern review period.
The Directors have considered possible levels of customer
default in light of the cost of living crisis. At the date of
signing default levels remain low. The Directors remain
confident that the business has adequate controls and
processes in place to recover outstanding balances
from customers.
Given the assumptions above, the mitigating actions
available and within the Group’s control, the Directors
remain confident that the Group continue to operate in an
agile way adapting to any continued disruption. Therefore,
it is considered appropriate to continue to adopt the going
concern basis in preparing these financial statements.
Section 172 and stakeholder engagement
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.
For more information, see page 61.
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.
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:
•
•
•
•
•
•
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 page 60. Further details on how the
Directors’ duties are discharged and the oversight of these
duties are included in the Governance section.
STRATEGIC REPORT Section 172 and stakeholder engagement continued
Customers
Why they matter to us
Outcomes / highlights for 2022
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
• Value for money
• 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 (ATOL and ring-fenced trust
account)
• Protection and reassurance of booking a package holiday
• Health and safety on holiday
• Accurate descriptions / delivery of holiday they booked
How we engage
• We 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
•
Interaction via our customer call centres
• As part of developing our ESG strategy we carried out
a materiality assessment which included engaging with
customers for their views via a survey.
• Extending our payments options so that customers can
now have the choice of paying monthly, in instalments
or in one payment.
• We added questions to our NPS survey to better
understand our customer challenges and launched a
dashboard which created a single view of the customer
feedback.
• We relaunched our post-booking communications as a
key part of our Customer CARE strategy and responded
to customer feedback by making improvements to
certain elements of the ‘manage my booking’ space.
How the Board engages and considers the interests of
our stakeholders
• 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 decision to invest in free lounge
and fast track on Summer 22 holidays.
• Zoe Harris, Chief Marketing Officer, joined the Board on
14 October 2022, and will ensure that the ‘customer
voice’ is prominent in Board discussions.
• The Board monitors and reviews developments
concerning changes to our IT platforms which will
allow us to continually improve service delivery to our
customers.
• Executive bonus linked to Net Promoter Score.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Shareholders
Why they matter to 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
• Long-term growth delivered through successful
implementation of strategy
• Operational and financial performance
• Risk management
• Talent and succession planning
• Liquidity and dividend policy
• ESG matters
How we engage
• Roadshows
• Annual Report, websites and statements
• Ongoing dialogue and individual engagement
with shareholders
• AGM
Outcomes / highlights for 2022
• Both the Chairman and the Chair of the Remuneration
Committee had calls/meetings or engaged in
correspondence with shareholders during the course of
the year.
• Consulted with over 65% of our shareholder base in
relation to the new remuneration policy to be put to
shareholders at the 2023 AGM. As a result of that
consultation, changes were made to the proposed
policy.
• Votes from shareholders representing 83% of share
capital at 2022 AGM.
How the Board engages and considers the interests of
our stakeholders
• 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.
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STRATEGIC REPORT Section 172 and stakeholder engagement continued
Our people
Why they matter to 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
• Ways of working and culture
• Diversity and inclusion
• Knowing concerns are being listened to
• Working for a company that gives back
How we engage
•
•
‘Beach Life’ – our weekly Company-wide meeting (held
both virtually and face to face), where colleagues are
able to ask the Executive Team questions, hear key
updates and celebrate each other’s successes.
‘Pier Group’ – forum of colleagues from different
departments and seniority from all around the business
acting as a voice for their teams. The group meets with a
member of the Executive Team every eight weeks.
Outcomes / highlights for FY22
• As well as Pier Group, this year we launched ‘Pier
Group PLUS’ which gives David Kelly, our designated
Non-Executive Director for employee engagement, the
chance to sit with our colleagues and hear their voice
first hand.
•
Introduced new pension provider and salary sacrifice
scheme, removing the upper and lower limits so total
salary was pensionable.
• Successfully rolled out hybrid way of working after
conducting employee pulse survey on ways of working.
• Following feedback, we enhanced our family friendly
policies during the year, e.g. during the year we
introduced fertility treatment leave, foster carers leave,
pregnancy loss leave and we enhanced maternity,
paternity and shared parental leave and pay.
• Employee wellbeing has continued to be a real focus.
− We ran a programme of wellbeing events when the
office reopened in March 2022 aimed at offering
reassurance to colleagues as they transitioned to a new
way of working.
− In response to the cost of living crisis, we communicated
a payrise of £1,500, three months earlier than usual,
to all colleagues with annual salaries at or below £30k
and we shared updates on our Employee Assistance
Programme which offers a range of support services.
− By listening to our people we have been able to make
improvements in areas which have been acknowledged
in our Hive engagement surveys.
• Weekly communication emails to help showcase our
culture and keep colleagues up to date.
How the Board engages and considers the interests of
our stakeholders
• 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.
• 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 Pier Group meetings.
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-making.
• David Kelly is the designated Non-Executive Director
for employee engagement. This facilitates ongoing
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.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Suppliers and partners
Why they matter to us
Outcomes / highlights for FY22
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
• 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
• Through supplier relationship management –
regular review meetings and ongoing feedback
to maintain openness and to improve value from
supplier relationships.
• Through responsible contracting, trust and ethics.
We conduct regular audits (either on-site and / or via
self-assessment) primarily focused on health and safety
and issues such as modern slavery. We also have
policies on Bribery and Corruption.
• Through industry conferences and events.
• Supported suppliers in the post Covid-19 re-opening
phase and we continue to ensure prompt and fair
payment.
• Building relationships with suppliers has meant that we
have delivered circa 89% of total hotel buying through
direct contracting in FY22.
• During the second half of our financial year, we saw
much airline disruption. We managed that process
with hotel and transfer partners, by ensuring regular
communication to minimise the impact of short notice
cancellations on customers and suppliers.
How the Board engages and considers the interests of
our stakeholders
• 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.
• The Chief Supply Officer and Company Secretary
are both members of the Group’s Health and Safety
Committee and they regularly 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.
• 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.
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STRATEGIC REPORT Section 172 and stakeholder engagement continued
Communities and society
Why they matter to us
Outcomes / highlights for 2022
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 business the right way.
What matters to them
• 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
• Creating partnerships with local charities
• Regular dialogue, events and direct engagement
activities
• Community investment and employee nominated
charities
• Development and implementation of our ESG strategy.
This process includes shaping our understanding of, and
priorities for, engagement with our various stakeholders
• Partnered with DigitalHer to inspire and attract more
girls in our community to consider a career in Tech and
Product. We have hosted both virtual sessions and
in-person sessions with girls attending from 3 schools
over 4 sessions.
• We sponsored 14 candidates through our partnership
with Techreturners and hired eight of them as part of
an initiative to integrate a diverse workforce back into
a tech career after career breaks. Over 50% of these
candidates were women.
• On the Beach was a headline sponsor of the
Manchester Tech Festival in November 2022.
How the Board engages and considers the interests of
our stakeholders
• Progressed our new ESG strategy, which sets out
a formal framework for operating as a responsible
business which has Board oversight (see page 61). In
approving that strategy, the Board took into account
stakeholder feedback. In the year ahead, there will be
a focus on embedding the new strategy and setting
more targets so that the Board can monitor and oversee
progress made. Shaun Morton is the Board member
responsible for climate change and ESG.
Government and regulators
Why they matter to us
Outcomes / highlights for 2022
His Majesty’s Government develops policy and makes laws
that impact our business, our industry and our consumers.
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.
• Active direct engagement with DfT and BEIS, with
parliamentary committees (including the Transport,
Business and Public Affairs Committees), with
politicians, and with the key regulators, the CAA and the
CMA, in relation to the need for holistic market reform in
the travel industry for the benefit of consumers and the
market as a whole. In particular, making the case for a
CMA market review.
The Competition and Markets Authority (‘CMA’), through
its consumer protection and competition powers, is a
key regulator for the Group and for the market in which
it operates. We believe there are systemic issues in the
travel market which require the intervention of the CMA via
its market review powers and we have had constructive
engagement with the CMA in relation to this.
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Government and regulators – continued
Why they matter to us – continued
Outcomes / highlights for 2022 – continued
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 and our consumer credit licence, the ICO (Information
Commissioner’s Office) regulates compliance with data
protection laws and the Advertising Standards Authority
and CMA in relation to consumer law and advertising.
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 our customers and
where possible to influence them to make decisions that
would benefit On the Beach’s customers and our other
stakeholders.
What matters to them
• The Government and our regulators expect us to meet
relevant legal requirements and to treat our customers
and employees and other stakeholders in a fair way.
• They value engagement with open dialogue and a
collaborative approach to help them better understand
the dynamics of the industry in which we operate, and
the challenges faced by our business and our consumers.
• They need our input to their consultations in a timely and
constructive manner.
How we engage
• Engagement with Government and regulators is led by
the General Counsel, supported by external advisers.
The CEO, CFO and other relevant Executives also join
key meetings as appropriate.
• We engage directly with the Government in key
departments including the Department for Transport
(DfT) and Department for Business, Energy and
Industrial Strategy (BEIS), and we engage with relevant
parliamentary committees and with politicians on
relevant issues. We engage directly with key regulators
on a proactive basis including the CAA and CMA.
• We also engage with Government and regulators
through the wider travel community at industry meetings
such as the Air Travel Insolvency Protection Advisory
Committee (‘ATIPAC’) and via travel associations.
• Active participation in policy development, including:
− Engagement with DfT and CAA on proposed
reforms to the ATOL regime in relation to the
ring-fencing of customer monies including full
response to consultation and follow up meetings;
− Responding to BEIS consultation on Package Travel
Regulations; and
− Responding to DfT consultation on consumer rights
in aviation;
• Discussions with others in the industry about the
creation of an informal alliance of online travel
businesses to engage positively together with
Government and regulators as an industry group.
Initial meetings have been positive and a subgroup
collaborated to engage with DfT and provide timely
and helpful feedback on the DfT’s Aviation Passenger
Charter, to ensure that the charter contained relevant
information for customers who book through online
travel businesses.
How the Board engages and considers the interests of
our stakeholders
• The Board reviews and approves our engagement
strategy and receives regular updates on progress from
the General Counsel and external advisers. The Board
sees key correspondence between the Group and the
Government and regulators. The Executive Directors join
key meetings as appropriate.
• The regulatory environment and likely areas of policy
development form a key part of strategic planning and
risk management.
•
Justine Greening, having held a number of positions
in the Cabinet, provides the Board with a unique
perspective on the political and regulatory landscape
and how it might develop.
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59
STRATEGIC REPORT Section 172 and stakeholder engagement continued
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.
Launch of ESG strategy
Key stakeholders affected:
s.172 factors
Shareholders, employees, customers, suppliers, communities,
regulators
Long-term impact, employees, customers and suppliers,
community and environment, business conduct
The Board recognised the increasing importance of ESG issues and that the Group needed to implement an ESG strategy
aligned to its purpose, values and strategy which would drive meaningful change, build resilience and create long-term
value. We engaged with a variety of stakeholders, including conducting client and employee surveys and listened to
feedback received from investors. The insights from that engagement helped form our new strategy and has meant we are
focusing our resources on making progress in the areas that our stakeholders have deemed the most important. The Board
considered the stakeholder feedback when approving the new ESG strategy. Whilst further work is required to set clearer
targets against which progress can be measured, the new strategy means sustainability and ESG are firmly on the Board’s
agenda. Further information on our approach to ESG can be found on pages 61-82.
Investment in our strategy
Key stakeholders affected:
s.172 factors
Shareholders, employees, customers, suppliers
Long-term impact, employees, customers and suppliers,
acting fairly between members
The Company is committed to delivering on its strategic objectives and during the year, the Board considered a number of
investments which focused on, inter alia, brand, technology and customer proposition. Decisions included the investment
in fast track for all customers and free lounge access for customers booking premium holidays in summer 2022, investing
in technology talent and investing in above the line media to drive awareness of the brand. Further details on the outcomes
of these decisions can be found in the Chief Executive’s Review. When making these decisions, the Board considered the
strength of the Company’s balance sheet as well as assessing the interests of the Company’s various stakeholders, including
reflecting on customer feedback, needs of employees and shareholders views on capital allocation and determined that the
investments would drive long-term sustainable growth.
Board diversity
Key stakeholders affected:
Shareholders, employees
s.172 factors
Long-term impact, employees, business conduct,
community and environment
We are committed to building a diverse and inclusive culture throughout the Group and it’s important that the Board
both role models and drives this culture of diversity and inclusion. A diverse Board ensures the broadest range of views,
constructive debate and good decision making and benefits the Group’s stakeholders through aligned interests and
better business performance. Board diversity has accordingly been an area of focus and following engagement with the
People team, the Board made the decision to adopt a new Board diversity policy which sets out targets of 40% female
representation at Board level, at least one senior Board position held by a female Director and at least one ethnically diverse
Board member. With our recent appointment of Zoe Harris to the Board in October 2022, we currently meet the first target
and will meet the second target when Elaine O’Donnell is appointed Senior Independent Director on 27 January 2023. The
final target will be a key area of focus for new Board appointments.
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Responsibility and sustainability
We have a responsibility to conduct our business in a way that most benefits our customers, our employees and the planet at
large. We do not underestimate the extent of the task in hand, and importance of our business’ role in building a better society
and contributing more positively to the planet.
Our ESG framework
We are committed to conducting our business the right way and we want to drive meaningful change across the industry. To
that extent, we wanted to develop an ESG strategy aligned to our purpose, values and strategy that will help build resilience
in the business, improve behaviours in our supply chain, create long-term value and ultimately drive positive change.
In order to make sure we were basing our framework on the right issues, during the year we completed our first materiality
assessment to identify those ESG issues that matter most to our stakeholders and where we have the most potential to create
value aligned with our purpose. We undertook a desk-based research exercise to create a long list of ESG issues 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.
This list was then refined and we carried out further engagement, including surveys with customers and employees which
helped ensure diverse insight and perspective. The insights from our investigations led to the development of our three
strategic pillars: Here for People, Here for holidaymakers and Here for the planet:
Beach holidays. Fairly. For everyone. Forever.
Here for people
Here for holidaymakers
Here for the planet
r
a
l
l
i
P
s
a
e
r
a
s
u
c
o
F
s
G
D
S
o
t
s
k
n
L
i
d
a
e
R
e
r
o
m
A diverse, inclusive and inspiring
workplace that attracts talent,
rewards our people and empowers
our people to make a difference
Providing safe and accessible
holidays that empower and
inspire customers to travel more
sustainably
Reducing our environmental
impact and helping to protect our
natural environment
• Happy and healthy workforce:
Supporting employee health
and wellbeing and cultivating an
engaged, skilled and rewarded
workforce.
• Diversity and Inclusion: Creating
an inclusive workplace that
attracts talents from diverse
backgrounds.
• Giving back: Giving back to
communities and empowering
our employees to support causes
they care about.
• Health and Safety – Deliver the
holiday our customers bought,
safely.
• Climate: responding to the
climate crisis and measuring and
reducing our GHG emissions.
• Customer satisfaction – Make
our holidays accessible and
ensure customers have the very
best experience.
• Sustainable travel – Empower
and inspire our customers to
travel more sustainably.
• Operations: reducing the
environmental impact of our
operations and developing an
environmentally-responsible
culture.
• Oceans: Protecting our
beaches and oceans for future
generations.
Page 62
Page 68
Page 71
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61
STRATEGIC REPORT
Responsibility and sustainability continued
Here for people
FY22 highlights
FY23 focus
• Adopted Board diversity policy
• Focus on increasing the % of senior roles occupied
• Successfully adopted hybrid way of working
• Awarded ‘Best Employer’ at the Travolution
Awards 2021
• Enhanced our pension offering and other benefits and
policies
by women
•
Introduce new Applicant Tracking System to anonymise
candidates during recruitment selection process
• Collect data that allows for more accurate reporting
of equality, diversity and inclusion (including social
mobility data)
• Awarded pay rise, three months earlier than usual, of
£1,500 for all colleagues at or below £30,000 p.a. and
under to assist with the cost of living crisis
• Launching Menopause Support Programme
•
Introduce employee volunteering policy
• Maintained employee engagement score of 8.1
• Focus on initiatives to support education in our
out of 10
communities, providing technical and vocational skills
and helping to advance social mobility
Happy and healthy workforce
New ways of working
Whilst it is widely acknowledged that we are now out of
the pandemic, we know that the impact of the last couple of
years on our colleagues is long lasting. We have embraced
a model of hybrid working and are focused on ensuring that,
when we do come together with our colleagues, this time is
meaningful and collaborative; this is something that we will
continue to focus on for some time ahead, to ensure that we
get it right. Our aim is to ensure that everyone in our team
can reach their potential and, together, provide the best level
of service to our customers.
We are now settled into one site in Aeroworks and have
completed a refurbishment of some of the spaces in the
office by installing state of the art equipment, expanding
collaboration/team zones, and creating further spaces for
training activities; this environment fully supports our aim to
achieve meaningful collaboration when we are together in
one location.
To ensure that we really are getting it right with our
approach to hybrid working, we carried out a pulse survey
with our colleagues in June. This was focused on what our
colleagues need to support them in their roles when they are
working remotely.
We created two surveys. One survey to focus on the experience
of our new starters to measure the success of our remote
onboarding process. A separate survey was issued to colleagues
with over six months’ service to gain insight to how they
had adapted to the hybrid way of working; and into confirm
that all colleagues had the tools and support they needed to
perform at their best, regardless of their working location.
78% of colleagues responded. Colleagues told us that they
could collaborate equally well with their team from home as
they could from the office (8.2); that they felt equally well
informed about business initiatives (8.3), they felt supported
by their manager (8.0), their work/home life balance was
healthy (8.0) and most notably that the flexibility to work
from home was now critical to them (9.0).
We were able to respond directly to colleagues that required
further equipment. We issued a new ‘Working from Home
risk assessment’ to gain a deeper insight into any additional
requirements and safeguard our colleagues’ mental and
physical health, and their safety, whilst working remotely.
New colleagues to the business rated their onboarding
experience on average as 8.7; they felt their manager had
clearly explained the expectations of hybrid working (9.4)
and they had a clear understanding of what was expected
of them in their new role (9.1).
Employee wellbeing
Never has such a sharp focus on the wellbeing of our
colleagues been more important, as they continue to
experience significant changes in working practices and to
be required to adapt so quickly. As was the case throughout
the pandemic, wellbeing has been at the core of our People
agenda. We recognise that all aspects of the employment
relationship affect employee wellbeing and therefore
our commitment in this critical area is not restricted to
this section of the report, but the intention is to highlight
some specific activities that we have focused on.
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In October 2021 we introduced Mental Health Ambassadors
and launched our Mental Health Pledge. Our Mental Health
Ambassadors have played a key role in supporting all
aspects of life at On the Beach for our colleagues. We are
planning a range of training through MHFA England which
could include awareness sessions, manager support and
mental health first aid; this training will provide key support
and development for our teams.
We supported the reopening of the offices in March 2022
with a programme of wellbeing events aimed at offering
reassurance to colleagues as they transitioned to a new way
of working. In response to the increases in the cost of living
we wanted to ensure that we supported the colleagues at
On the Beach who would feel the greatest impact. Along
with changes to remuneration, we shared updates on our
Employee Assistance Programme which offers a range of
support services and we also announced that our Simply
Health cashback plan would be available to all colleagues
from day one of employment, as opposed to previously
being available after the probationary period.
Employee engagement
We know that when colleagues are engaged they are
happier, more motivated and invested in helping us achieve
our goals. Pier group relaunched after a break during
Covid-19. This is a forum of colleagues from different
departments and seniority from all around the business,
acting as a voice for their teams. The group meets with a
member of the Executive Team every eight weeks to discuss
a variety of topics and provide feedback. We have also
launched Pier Group PLUS, which gives our designated
Non-Executive Director for employee engagement, David
Kelly, the chance to sit in with our colleagues and hear
their voice first hand (and vice versa), ensuring the views
and concerns of colleagues are represented and taken
into account in the Board decision-making process. It also
provides our colleagues with a unique opportunity to talk
directly to a Non-Executive Director.
Our approach to communication with our employees is
continuously reviewed and adapted as appropriate to ensure
that it remains relevant. A key part of this is our weekly
Beach Life; this is an update to all colleagues across the
business. It is delivered usually by members of the extended
management team and covers a wide range of topics to
keep our teams up to date with anything that impacts them,
including Meet the Team, Strategy updates, key changes
across the business.
We also use a range of online platforms to ensure that our
teams can communicate effectively with each other in our
hybrid model, where they are not always working in the
same location. These tools also provide a central location for
information to support employees in their roles.
We also run an annual engagement survey (Hive) (facilitated
by an independent third party) 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.
Our employee engagement scores this year are consistent
with last year, showing extremely high levels both in
participation and overall engagement. In particular,
employees feel positive about the way we treat each other
and our support of equality, diversity and inclusion; these
have been areas of focus for us in recent months. Our
employees also feel that we set ourselves high standards
for the work that we deliver and have a clear understanding
of what is expected of them; it’s important to us that
everyone has a clear understanding of the role they play
in our overall success.
Whilst our scores across all categories were high, we always
strive for continuous improvement and will therefore be
focused on making further improvements to our overall
employee experience.
How are we responding to the ongoing
war for talent?
A wide range of activity is essential to ensure that we
continue to address the war for talent, enabling us to remain
ahead of the market in terms of our ability to attract and
retain the best talent to drive our continued growth and
development.
Post pandemic, we witnessed a huge increase in customer
demand. We invested in our talent team and adjusted our
recruitment strategy accordingly. During the last financial
year, we saw our permanent headcount within On the Beach
alone increase from 381 to 581. In addition, for the first time
we introduced agency workers to support the customer
facing functions, with many of the agency workers securing
permanent roles.
We have constantly reviewed our proposition, enhancing our
benefits, introducing new benefits, redesigning our careers
site and recruitment materials, developing our onboarding
strategy and building new partnerships, all with the aim of
reflecting our culture and highlighting our commitment to
diversity and inclusion.
We enhanced our family friendly policies so more colleagues
could enjoy their family and career – for example, introduced
fertility treatment leave, foster carers leave, pregnancy loss
leave, and we enhanced maternity, paternity and shared
parental leave and pay.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
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STRATEGIC REPORT Responsibility and sustainability continued
We recognise that the war for talent does not end with
recruitment and have therefore focused heavily on the
onboarding experience of our new joiners. This included the
development of a remote onboarding framework to support
colleagues with their onboarding in a remote / hybrid world.
It contains useful information, tips, and provides a framework
for a new joiner’s first six months at On the Beach, whilst
ensuring consistency and providing guidance for managers.
This also included introducing a buddy scheme to support
new starters as they settle into life at On the Beach.
Our new joiners now receive a welcome bag with branded
merchandise to introduce and embed our brand personality.
Reward and recognition
Reward and recognition is an area that will continually
evolve as we respond to external market changes and
continue to settle into a post pandemic world, which has
caused many people to reassess what really matters to them
when it comes to their employment package, both financial
and non-financial.
In April 2022 we introduced a new pension provider and
salary sacrifice scheme, removing the upper and lower limits
so that total salary became pensionable. This is an important
first step towards our goal.
We also raised our minimum starting salary to £20,000 per
annum (FTE) for all roles effective from 1st October 2021
which was above the Real Living Wage.
Learning and development
During a period when we were focused on supporting the
transition to a new way of working, we didn’t want to lose
sight of the continuous development of our colleagues and
knew we needed to find a suitable platform to achieve
this. We launched Learnerbly in March 2022 following a
successful trial of 100 users. Since launch we have seen
over 600 learning requests, for books or online courses. It’s
a learning solution that is colleague-led and fits with our
flexible/hybrid way of working. We are continuing to find
ways to use this platform to deliver additional training by
curating specific ‘playlists’.
We have continued to run career development workshops
with over 30 colleagues attending and positive feedback
about the impact of these events.
Diversity and 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.
Diversity and inclusion pledge
• 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
Our Diversity and Inclusion Pledge was launched last year.
We are committed to continuous improvement in this area and
have continued to make positive steps forward in all areas of
the business, as has been noted throughout this report.
Our D& I focus throughout this year has been categorised
under 3 key areas:
• Training and raising awareness
We have delivered several training and development
sessions to colleagues across all areas of the business
including Neurodiversity, Racism Grassroots and People
Manager Diversity and Inclusion. These sessions were
attended by over 90% of our People Manager population
and supported some lively debate and key learning activities
for our teams. We launched a Diversity and Inclusion
calendar which celebrated major events throughout the year
including Pride and International Women’s Day.
• Monitoring
We are committed to ensure that the important work that we
are doing in the D&I area is having an impact and therefore,
this year, we have given focus to monitoring. We added an
additional layer to our established employee engagement
tool, Hive, which now measures the responses by
demographics to make sure everyone’s voice was heard and
to not get lost in the majority. The results have been positive
with no significant difference in employee experience.
We also now measure and monitor internal mobility,
promotion, and retention; this enables us to focus our efforts
where they are needed to give all employees across our
business equal access to opportunities.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
•
Inspiring diverse representation
We have partnered with Digital Her in a project to inspire
and attract young women into the Technology profession
and have delivered seven sessions through this year.
These sessions have featured role models from digital
functions to inspire the younger generation to follow
STEM subject routes.
In collaboration with Marketing, we have rebranded our
recruitment material, such as benefit and candidate packs,
to reflect our culture and showcase our commitment to D&I.
We also carried out a recruitment supplier audit and set
the expectation with our recruitment suppliers to provide
balanced shortlists with the express aim of increasing the
female and minority representation in the recruitment of
senior leadership roles. This was achieved in the recent
appointments of the Director of Product, Director of Data
and Director of People.
Our gender diversity
As a result of feedback from our working families network,
we rolled out a new parental policy to provide additional
support to colleagues in this area.
“I’ve been really enjoying the D&I action group
and the actions that come out of this work.
It feels really positive to work for a company
that listens to their employees and puts new
policies in place – the new Family Friendly
policies are fantastic and I’m proud to work
for a company that is making such amazing
changes in this area.”
Feedback from the Hive engagement survey.
Board
6
Executive Committee
33.3%
33.3%
9
66.7%
66.7%
Male
Female
Male
Female
* As Zoe Harris was appointed to the Board on 14 October 2022 (and
therefore after the year under review) we have not included Zoe in these
figures. Following Zoe’s appointment, the Board now comprises 43%
females and 57% males.
Direct reports to the Executive Committee
Group
48.3%
58.9%
29
715
51.7%
41.1%
Male
Female
Male
Female
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
65
STRATEGIC REPORT Responsibility and sustainability continued
Gender pay gap data
Whilst our overall gender pay gap over the last 12 months
has not reduced in comparison to the previous year, we
have invested heavily in all areas of the business to ensure
that we have the foundations in place to gradually decrease
this gap over the coming years. We know that this will not
happen overnight, and our aim is therefore to make gradual
but solid positive improvements.
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.
One of our key areas of focus highlighted in the previous
year was to reduce the gap in our Technology function.
As we have previously stated we are operating in a sector
that has historically attracted a greater proportion of men
than women and we know that we have a key role to play
in supporting more women into this sector. Our gender pay
gap in our technology function has decreased in the last
12 months from 13.7% to 12.4%.
Employment of disabled persons
The Group’s policies and procedures 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 based on 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 their employment there are policies in place to
oversee the continuation of their employment and to arrange
training for these employees.
Giving back
From providing opportunities for young people to supporting
charitable initiatives, making a meaningful contribution to the
communities in which we operate is something which we
are passionate about. Here are just a few of the community
focused activities that we and our colleagues were involved
in this year:
• DigitalHer: As a tech company, we want to play our part
in encouraging more women into technology. This year
we have partnered with DigitalHer to inspire and attract
more girls in our community to consider a career in Tech
and Product. We have hosted both virtual session and
in-person sessions with a total of 87 girls attending over
seven sessions.
• Tech Returners: We partnered with Tech Returners
who run a programme to secure permanent roles for
software engineers that have had a career break and
are struggling to get back into the field. We sponsored
12 candidates through the programme to provide
technical up-skilling, confidence coaching and interview
preparation. We hired eight of those candidates as part
of an initiative to integrate a diverse workforce back into
a tech career after career breaks. 50% of the candidates
were women and all of them were from minority groups.
• Apprenticeships: A part of our diversity of opportunities
and internal mobility work, we ran Technology
apprenticeships that offered colleagues outside of
Technology the opportunity to step into Software
Engineering roles to enable us to nurture talent
from within.
•
In FY23, we will continue to look at initiatives where we
support education in our communities, providing technical
and vocational skills and helping to advance social
mobility.
• Charity: We always try to give back to our local
communities as much as possible and this year has been
no different. As well as teaming up with local charities
such as Smart Works, which helps unemployed women
and empowers them to feel more confident, we also
have a policy in place to support colleague fundraising
initiatives and events, where we match donations raised
by individuals and teams. This year we matched circa
£12,000 in donations. In FY23, we will explore how we
can introduce a more formal programme that will allow
us and our colleagues to give something back through
charitable organisations that matter to us and them,
whether that be through the donation of time, money
and/or skills. Work is already underway in this respect,
including the introduction of an employee volunteering
policy.
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STRATEGIC REPORT Responsibility and sustainability continued
Here for holidaymakers
FY22 highlights
FY23 focus
• Helped customers get more out of their holidays
by offering free lounge and fast track for summer
22 holidays
• Engagement with suppliers to encourage and
incentivise hotels to obtain a sustainability
accreditation
• Maintained Trust Pilot scores above 4 against a
• Scoping of provision of content to increase
backdrop of travel restrictions and increased flight
and airport disruption during the year
customer awareness on how they can make
more sustainable choices
• Added a contractual obligation in our hotel contracts
to work towards obtaining a recognised sustainability
certification
•
Introduce Supplier Code of Conduct
• Enhanced data/metrics on our customers for the
Executive Team and the Board
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 customers, suppliers and employees.
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. The Group’s Health and Safety team, through
processes and procedures, deliver on our committed
safety standards. Risk and safety standards are measured
in a number of ways, including remote evidence-based
verification, review of documentation and certification
and physical audits to ensure compliance. Potential
improvements identified are followed up with our suppliers
to provide continuous support and proactively improve
safety throughout our supply chain. The Health and Safety
Committee are responsible for reviewing and assessing the
risk management processes and continuous monitoring of
standards. The Chief Supply Officer and General Counsel
are members of the Health and Safety Committee, meeting
on a quarterly basis and reporting to the board on health
and safety matters. We also provide helpful content
to our customers via our health and safety hub to help
keep customers safe on their holidays.
We have processes in place in the event of major incidents
like a major airline failure. We are however currently looking
at implementing a formal incident and crisis management
plan to help ensure that in the event of a disaster or crisis
such as a terrorist attack, we are prepared and able to
respond quickly and effectively.
Customer satisfaction
We know that for our customers, their beach holiday is their
favourite week or two of the year – even more so having
missed out for a year or two through Covid-19 disruptions.
With that in mind, we are even more passionate about
delivering an experience that surpasses our customers’
expectations and are proud that in 2022 we developed our
offering to give our customers holidays that started sooner,
and lasted longer.
Our summer perks helped our customers get their holidays
off to a flying start, with free fast track security passes for all,
and free airport lounge access for our 4 and 5 * customers.
We also adopted a new approach to communicating with
our customers between booking and holidaying which gave
holidaymakers more moments of anticipation, with a free
Happy Holiday podcast hosted by Fearne Cotton, the chance
to ‘learn the lingo’ with £50 of free online Spanish lessons,
and brilliant holiday offers from new partnerships with
WHSmith, boohoo and Revolut.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Other initiatives included introducing a new post-book app
(OTB Holiday Planner) which we trialled on customers going
to Tenerife. The app included flight tracking, weather, maps,
points of interest and recommended activities in resort.
Those customers included in the trial showed increased NPS
scores compared to those not in the trial.
During the year, we increased our headcount across all
customer service teams to handle additional demand and
also re-launched our post-booking communications, taking
on customer feedback, for example by making improvements
to elements of the ‘manage my booking’ space on our site.
Accessible holidays
We believe that holidays should be enjoyed by all. There are
a number of things we are doing to make our holidays more
accessible:
• Spreading the cost: We offer low deposits and
instalment payments to allow customers to spread the
cost of their holiday, During the year, we also added
a new payment option of allowing customers to pay
monthly, which gives customers more flexibility to tie in
payments to their pay day and again spread the cost.
• Finding the right holiday: We know that not everybody
looks for the same thing in a holiday and we are always
looking at ways in which we can make it easier for
customers to find the right holiday for them. We mainly
do this via helpful content on our site and blog but we
are also refining the segmentation of hotels to make it
easier for customers to find their perfect holiday.
•
Inclusive design: As everyone will have an accessibility
need at some point, our approach to inclusive design
ensures that our product is accessible and usable by as
many people as possible.
• Our booking path addresses some of the most common
Web Content Accessibility Guideline (‘WCAG’)
failures, such as:
− Using colours that provide a higher contrast to
improve legibility of text and icons.
− Ensuring that touch target areas are an adequate size
– allowing for users on touch-screen devices to tap
links easily, without frustration.
− Ensuring that all form fields have visible labels at all
times, allowing forms to be completed with ease.
• We continue to learn and spread knowledge of
accessibility guidance across departments through our
newly formed network of Inclusivity Champions, allowing
us to improve our product at every customer touch point.
• Special assistance – We want to make sure everyone
can have an enjoyable holiday that suits their needs. We
have an experienced team who can help customers with
any special assistance requests and we ask customers to
let us know of any special assistance requests or needs
at the time of booking so that we can check, whether
possible, whether those needs can be met.
We will continue to innovate to develop products
and processes that make travel easier and more
accessible for everyone.
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69
STRATEGIC REPORT Responsibility and sustainability continued
Sustainable travel
One of the key ways we will help empower and inspire
our customers to travel more sustainably is by showcasing
our partners and suppliers’ sustainability practices so that
customers can make more informed choices. With this in
mind, our longer-term goals are to:
• Set out sustainability information and credentials for
hotels on our website;
• Show customers the carbon impacts of flights and
explore ways in which that impact could potentially be
mitigated or offset;
• Raising customer awareness to highlight the role they
can play in creating positive change.
We acknowledge it will take some time to meet those goals.
A key focus will be to work with our partners and suppliers
to embed sustainability into our supply chain. During the
year, we added a sustainability clause in our contracts
with accommodation suppliers requiring hoteliers to work
towards obtaining a credible sustainability certification
recognised by the Global Sustainable Tourism Council.
We are also in the process of updating the questionnaire
that all hotels are mandated to complete to include
more sustainability questions so we can get a better
understanding of the hotel’s sustainability practices and
we will roll that out in FY23. In the year ahead, we will also
be looking at introducing a Supplier Code of Conduct to
ensure that our suppliers, like us, are operating ethically
and sustainably and complying with applicable laws.
As well as providing more information on the sustainability
credentials of our partners and suppliers, it’s also important
for us to raise customer awareness about sustainability
issues and we continue to look at ways in which we can
increase that awareness, including by providing meaningful
and helpful content to our customers via our site and
communications as to what practically they can do to make a
difference.
Here for the planet
FY22 highlights
FY23 focus
• Baseline carbon footprint determined, including
Scope 3.
• 40% reduction this year in total SECR emissions
(comprising Scope 1 and Scope 2 emissions and
limited Scope 3 emissions)
•
Implementation of TCFD recommendations
• 0% of waste from our head office sent to landfill
Climate
Amidst an array of sustainability challenges facing global
businesses in the 21st century, climate change is arguably
one of the most critical and time pressured of all. A key area
of our ESG strategy is to look at how we can reduce our
own greenhouse gas emissions and build our resilience to
climate change. During the year, we worked with a third-
party expert to calculate our Scope 3 emissions for the
first time. Whilst we have not yet formalised any targets in
respect of carbon emissions, now that we have established
our baseline Scope 3 emissions and have a clearer
understanding of our full carbon footprint, we are working
with the third party to help us explore science-based targets
and suitable KPIs in terms of preparing our pathway to net
zero. As part of building our resilience to climate change, we
carried our climate scenario analysis during the year to help
us better understand our exposure to climate-related risks
and in turn explore what we can do to mitigate those risks
For more information, see page 72-80
• Continue working with an external adviser on our
decarbonisation strategy to set a target for our
Scope 1 and 2 emissions
• Preparing our pathway to net zero
The travel industry invariably contributes to carbon
emissions. In FY21 use of sold products (namely customer
flights, hotels, transfers and car hire) accounted for circa
84% of all our all emissions. The whole travel industry
needs to work together to make meaningful change but we
are committed to working with our partners to encourage
the adoption of sustainable practices. Please see page 70
for more information on how we are working with some of
our partners in this respect. This also ties in with our Here
for Holidaymakers pillar in terms of how can we support
our customers to reduce their own carbon footprint and
empower them to make more sustainable choices.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
71
STRATEGIC REPORT Responsibility and sustainability continued
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 2022.
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 and business travel in Company-owned
vehicles and grey fleet. The table below details the regulated SECR energy and GHG emission sources from the current and
previous reporting periods.
Table 1 – SECR emissions profile by source
Energy (kWh)
Emissions (tCO2e)
Scope 1
Scope 1
Scope 1
Scope 2
Scope 3
Emission intensity ratio
Natural gas
Company vehicles
Electricity
Business travel
Total energy
Natural gas
Refrigerant gases
Company vehicles
Electricity
Grey fleet
FY22
FY21 % change
191,776
748,663
-74.4%
1,438
22,384
-93.6%
690,102
894,325
-22.8%
95,912
34,591
177.3%
979,229
1,699,963
-42.4%
35.1
137.1
-74.4%
–
0.4
3.6
5.2
-100.0%
-92.3%
146.5
189.9
-22.9%
23.6
8.5
177.6%
Total SECR emissions
205.6
344.3
-40.3%
Relative emissions, (tCO2e / £m Group revenue before exceptional cancellations
Relative emissions (tCO2e / employee numbers)
1.42
0.40
11.29
-87.4%
0.70
-42.9%
It should be noted that there has been a significant reduction in emissions associated with gas consumption in this reporting
period primarily due to the ending of the tenancy at the Park Square which accounted for almost three quarters of gas
consumption during the last period. There has also been an issue with the gas metering at Aeroworks, which has resulted
in no consumption being recorded since May 2022. In this case, consumption has been estimated using the relationship
between invoiced gas consumption and heating degree days as it is known that gas was being used onsite.
The reduction in electricity emissions associated with consumption in comparison to last year’s reporting period is also due to
the ending of the tenancy at the Park Square site with the reduction in Company vehicles, emissions as a result of a decrease
of use of Company cars for On the Beach. The increase in grey fleet emissions is accounted for by a three-fold increase in
colleagues’ business travel at Classic Collection Holidays for this period, namely due to the lifting of Covid-19 restrictions
during the period allowing greater business travel.
Energy efficiency and further action
For more information, please refer to page 80.
Methodology
Electricity and natural gas disclosures have been calculated using metered kWh consumption taken from supplier fiscal
invoices where available. Where consumption for the gas at Aeroworks was not available, this was modelled from the
relationship between invoiced data and heating degree days.
Transport disclosures from Company-owned vehicles and personal cars used for business purposes have been calculated
using a combination of business mileage expense claim records. Mileages have been converted into equivalent energy and
GHG emissions using emissions factors published by BEIS in 2021. 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.
Scope 3 emissions
During the year, we worked with a third-party expert to calculate our Scope 3 emissions for the first time based on FY21
data. Our GHG inventory shows that the majority of our emissions are Scope 3 emissions from the impact of our operations,
both upstream and downstream, in the value chain. The majority of these emissions resulted from use of sold products, which
are the emissions resulting from customer flights and hotels stays sold via On the Beach. While Scope 3 emissions dominate
the 2021 inventory, the majority of these emissions were calculated using the screening methodology and financial data. In
the year ahead we will consider refining the data for certain emissions to better quantify such emissions. Now that we have
established our baseline Scope 3 emissions, we will continue working with a third-party expert to help us develop strategies
and policies to reduce our emissions and set appropriate targets.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
73
STRATEGIC REPORT Responsibility and sustainability continued
Task Force on Climate-Related Financial Disclosures (TCFD)
The Board recognises the importance of understanding and managing the impact of potential climate-related risks and
opportunities on the Group’s business and strategy. During the year, we completed a gap analysis to understand what we
needed to do to meet the TCFD obligations and conducted a series of climate screening workshops with senior management
and other key stakeholders from across the business. With support of a third-party expert, we have carried out climate
scenario analysis to help us identify and quantify the potential impact of climate change risks and opportunities in our
business and as discussed above, for the first time, we have taken steps to quantify our Scope 3 emissions.
The following disclosures are consistent with the Task Force on Climate-related Financial Disclosures (‘TCFD’)
recommendations. They summarise our approach and progress under each of the four pillars of the TCFD – governance,
strategy, risk management, and metrics and targets. We have considered our ‘comply or explain’ obligations under the UK
Financial Conduct Authority Listing Rules and we are fully compliant with 8 of the 11 recommendations. There are three
recommendations (two of which fall within metrics and targets) where we are partially compliant:
• Strategy (financial planning): Whilst conducting our climate-related risk assessment and climate scenario analysis has
provided a firm foundation on which to build our climate change strategy, further work is required to quantify and fully
disclose the impacts of climate-related risks and opportunities in the context of financial planning.
• Metrics and targets: We report annually on our greenhouse gas emissions and carbon intensity ratios and these will be
key metrics, however we are still exploring what other metrics and targets we can set to manage climate-related risks
and opportunities. We are currently working with a third-party expert in this respect and will provide an update in next
year’s report.
We recognise the TCFD framework is still new and whilst we have made significant progress this year, we acknowledge there
is still progress to be made and as such we will seek to refine the quality of our reporting as our approach develops.
Governance
Describe the
Board’s oversight
of climate-
related risks and
opportunities
Describe
management’s
role in assessing
and managing
climate-related
risks and
opportunities
The Board has overall responsibility for the Group’s preparedness for adapting to climate change and
both the Board and Audit Committee maintain oversight of climate-related risks and opportunities.
To ensure the Board can provide appropriate challenge from an informed point of view, they received
a TCFD-focused training session from an external adviser during FY22. As part of implementing
our new risk management framework, we have set up processes to ensure both the Board and
Audit Committee will receive periodic updates on climate-related risks and opportunities, mitigation
methods and progress (namely via reporting and verbal updates) and will oversee the setting of key
targets and progress against those targets.
Shaun Morton is the Board member with overall responsibility for climate change and ESG. As well
as sitting on the Board, attending Audit Committee meetings and being a member of the Executive
Team, Shaun chairs the Executive Risk Committee (‘ERC’) which is a newly constituted committee
dedicated to the oversight and governance of risks, including climate-related risks. The ERC reports in
to both the Audit Committee and the Executive Team and the ERC will provide updates to the Audit
Committee on a quarterly basis with regards to the effectiveness of risk management processes.
The ERC has oversight of the material climate-related risks, as well as an overview of the level and
effectiveness of key controls in place to manage the risks.
The Executive Team is responsible for the operational delivery of sustainability strategy. During
the year we carried out climate risk workshops which educated management on the requirements
of TCFD and the landscape of climate-related risks and opportunities, this in turn has helped the
Executives start embedding climate-related risks and opportunities and other sustainability factors
into their decision making.
The ESG Steering Group is primarily responsible for facilitating the delivery of ESG initiatives across
the Group and members include a number of the Executive Team to ensure a top-down approach
to sustainability. During the year, the ESG Steering Group reported to the Executive Team on a more
informal basis but we will formalise this reporting process as we continue to embed ESG into our
business and strategy.
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On the Beach’s climate-related governance structure
Board
The Board has overall responsibility for our strategic direction,
overseeing strategic implementation (including sustainability,
strategy and delivery) and for setting our risk appetite and
monitoring the application of our risk framework.
↑
↑
Executive Team
Audit Committee
The Executive Team is responsible for operational
delivery of our sustainability strategy, including
day-to-day management of operations and responsibility
for monitoring detailed performance of all related
aspects of our business. Ensures sustainability risks
and opportunities are included in decision making.
The Audit Committee monitors and reviews the effectiveness
of climate-related risk management systems and relevant
internal controls, as well as approving reporting statements,
such as TCFD disclosures, on those internal controls and
climate-related risk management.
↑
↑
↑
Executive Risk Committee
The Executive Risk Committee (“ERC“) is dedicated to the
oversight and governance of risk. It oversees the identification
and management of climate-related risks and opportunities
and reviews risk management activities.
ESG Steering Group
The ESG Steering Group is responsible for driving the
implementation of our overall ESG strategy and facilitating
the delivery of ESG initiatives across the business.
Strategy
Describe the
climate-related
risks and
opportunities the
organisation has
faced over the
short, medium
and long term
In the table on page 77, we explain the key climate-related risks that could have a significant effect
on our operations, strategy and financial planning if they are not managed appropriately. Risks have
been considered across the short term (1-5 years), medium (5-10 years) and long-term (10+ years).
We considered a number of factors to select actionable time frames, including our usual business
planning timescales and the time periods over which both transitional and physical risks are likely to
manifest to a material level.
At this stage, we have not identified any material climate-related opportunities, however we believe
that these will emerge as we develop actions to mitigate climate-related risks. For example we have
a more agile business model than a number of our competitors which means that we may be able
to pivot more quickly than other businesses in the event risks materialise (particularly physical risks),
which in turn has the potential to increase revenues and our market share. We will also explore in
more detail about how customer demand for more sustainable / low carbon holidays could potentially
be maximised. We continue to keep climate-related opportunities under review.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
75
STRATEGIC REPORT Responsibility and sustainability continued
Strategy – continued
Describe the
impact of
climate-related
risks and
opportunities on
the organisation’s
businesses,
strategy, and
financial planning
Describe the
resilience of the
organisation’s
strategy,
taking into
consideration
different climate-
related scenarios,
including a 2°C or
lower scenario
Conducting our climate-related risk assessment and climate scenario analysis has provided a firm
foundation on which to build our climate change strategy. In the table on page 77 we primarily focus on
the qualitative impact of climate-related risks on our business. Whilst some limited quantitative impacts
have been given, we expect to evolve our assessment over time and intend to provide further detail
in future reports, including more detail around the interdependencies of our climate-related risks and
opportunities and their ability to create value over time.
During the year, we commissioned an external agency to undertake climate scenario analysis to help us
identify and quantify the potential impact of climate change risks and opportunities in our business, and
to help us understand the resilience of our business under a range of different climate outcomes. The
following three scenarios, based on the Network for Greening the Financial System (NGFS) framework,
were used. These scenarios were selected as they aligned with current best practice on TCFD disclosure
and offered differing narratives on how the transition to a zero carbon economy would play out:
•
•
‘Net Zero 2050’ is an ambitious scenario that limits global warming to 1.5 °C through stringent
climate policies and innovation, reaching net zero CO₂ emissions around 2050. Net CO₂ emissions
reach zero around 2050, giving at least a 50 % chance of limiting global warming to below 1.5 °C by
the end of the century, with no or low overshoot (< 0.1 °C) of 1.5 °C in earlier years. Physical risks are
relatively low, but transition risks are high.
‘Divergent Net Zero’ reaches net zero by 2050, but with higher costs due to divergent policies
introduced across sectors and a quicker phase out of fossil fuels. This scenario differentiates itself
from the Net Zero 2050 by assuming that climate policies are more stringent in the transportation
and buildings sectors. This mimics a situation where the failure to coordinate policy stringency across
sectors results in a high burden on consumers, while decarbonisation of energy supply and industry
is less stringent. Emissions are in line with a climate goal giving at least a 50 % chance of limiting
global warming to 1.5 °C by the end of the century, with no or low overshoot (<0.1 °C) of 1.5 °C in
earlier years. This leads to considerably higher transition risks than Net Zero 2050.
•
‘Current Policies’ assumes that only currently implemented policies are preserved, leading to high
physical risks. This represents a business-as-usual scenario with minimal meaningful action taken
on reducing emissions. Emissions grow until 2080 leading to about 3 °C of warming and severe
physical risks.
The focus of the scenario analysis was on the next 30 years, to 2050. This aligns with the Government’s
regulatory aspirations for net zero by 2050.
The output of the climate scenario analysis has informed our understanding of how climate-related
risks (both physical and transitional) could impact our business. Our risk exposure very much varies
depending on which scenario is explored. Broadly, our exposure to physical risk is greater within the
current policies scenario, whilst the business’ exposure to transition risk is much greater under the net
zero scenarios. Carbon pricing, regardless of the mechanism through which it is levied, would appear to
be the most financially impactful at this stage, especially in net zero scenarios, but physical climate risks,
which are difficult to quantify could potentially have a significant impact too.
The scenario analysis has allowed us to be more targeted in understanding the current resilience we
have against climate-related risks and focus on developing the right further mitigation strategies for
the Group. We have controls in place for each material climate-related risk, for example in relation to
carbon pricing, we are monitoring action taken to reduce emissions, which will reduce our exposure to
this risk. In relation to physical risks, various mitigating activities are in place, such as heat risk modelling
and gauging consumer perception of excessive heat. Where physicals risks, or the perception of them,
impacts e.g. consumer demand, then we believe our agile business model makes us more resilient and
allows us to pivot more quickly than other businesses.
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Risk
Carbon
pricing
Consumer
sentiment
Talent
retention
Extreme heat
(acute impact)
Extreme
heat (chronic
impact)
Category
Transition
Transition
Transition
Physical
Physical
Description
Carbon taxation
may be directed
either at the
Group’s direct
operations,
or in the form
of increased
taxation across
the aviation
sector. This could
increase our
cost base.
Change in
consumer
sentiment may
impact demand
if aviation is seen
as a ‘problem’
sector. This
could impact
the Group’s
addressable
market and
revenues.
Changing
perception
of current/
prospective
employees
towards
businesses with
exposure to
carbon intensive
industries
may create
retention or
attraction risks.
Prolonged periods
of extreme heat
may change the
relative desirability
of certain locations
and may cause a
decrease in demand
if ‘staycations’
become more
popular
Disruption
from wildfires
close to either
major transport
hubs or holiday
destinations
could cause
potential revenue
loss. Wildfires
may change the
relative desirability
of certain
destinations
which potentially
could impact
revenues.
Time horizon
Medium – long
Medium – long
Medium – long
Long
Long
Financial
implications
High
Medium – high
Low
Medium – high
Medium – high
Likelihood
High
Medium
Low
Medium
Medium
Methodology
A range of
potential
costs were
modelled based
on assumed
emissions
growth and
projected carbon
price within the
scenarios.1
Difficult to
currently quantify
as a broad range
of outcomes are
possible based
on technological
innovation and
public opinion on
air travel.
Cost based
on assumed
attrition rate
increases due
to broader
sustainability
concerns relative
to baseline.
Difficult to
quantify – broad
range of outcomes
based on impact
of physical risk
and customers’
willingness to
accept these.
Difficult to quantify
– broad range of
outcomes based
on localised
temperature rises
and customers’
willingness to
accept these.
1 Carbon prices were derived from an average of the outputs of GCAM5.3, MESSAGEix-GLOBIOM 1.1 and REMIND-MAgPIE 2.1-4.2 models for the
European Economic Area (or similar), sourced from the NGFS Scenario Explorer.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
77
STRATEGIC REPORT
Responsibility and sustainability continued
Risk management
Describe the
organisation’s processes
for identifying
and assessing
climate-related risks.
Describe the
organisation’s
processes for managing
climate-related risks.
Describe how processes
for identifying,
assessing and managing
climate-related risks
are integrated into the
organisation’s overall
risk management.
Climate-related risks will be managed using the same risk management approach as other
risks within our risk management system (please see page 36 for information on our risk
management system).
Climate change is discussed and considered during the principal risk assessment process and,
after consideration, we have determined that climate change is not currently a principal risk to
the business as we do not currently expect climate change to fundamentally alter the demand
for our holidays or our ability to provide them. This will be kept under review as part of our
risk management processes and climate change and sustainability has been identified as an
emerging risk.
In terms of identifying risks, our priority climate-related risks were identified through a series
of workshops with key stakeholders to understand the operational implications of each
climate-related risk. The initial longlist of risks was then condensed into five initial priority risks,
the materiality of which was assessed by considering the impact and likelihood of each risk.
The risk materiality assessment will be updated each year to ensure that we are considering
the rapidly changing context in which the business operates, as well as availability of
additional data that may support more sophisticated modelling of identified risks.
We will also scan the environment for new and relevant climate change publications and data,
industry active and TCFD guidance on potential risks and opportunities.
We have created a climate-related risk register which has been added to our risk management
system. Each material climate-related risk has been assigned an owner and controls and
mitigation actions have been identified for each risk. The risk owner is responsible for
managing the relevant risks and during the year, we began implementing our new ‘real-time’
enterprise risk management system that will make it easier for risk owners to manage
and report on risks. The automated reports from this system will give the Executive Risk
Committee an overview of the level and effectiveness of key controls in place to manage
climate-related risks.
Metrics and targets
Disclose the metrics used
by the organisation to
assess climate-related
risks and opportunities in
line with its strategy and
risk management process.
Disclose Scope 1, Scope
2, and, if appropriate,
Scope 3 greenhouse gas
(GHG) emissions, and
the related risks.
Describe the targets used
by the organisation to
manage climate-related
risks and opportunities
and performance
against targets.
We report annually on our greenhouse gas emissions and carbon intensity ratios and
these will be key metrics. We are however still exploring what other metrics we can use to
meaningfully assess and track progress of climate-related risks and opportunities in line with
our strategy and we will provide an update in next year’s report in this respect.
The Group reports on its Scope 1 and 2 emissions and, for the first time this year, we have
conducted an initial assessment of our Scope 3 emissions. Please refer to page 72 for more
details on our GHG emissions.
The main risk surrounding our operational emissions is potential exposure to carbon pricing.
A carbon tax imposed on our direct operations is unlikely to have a material impact on the
business under all scenarios. However, a carbon tax applied to our full Scope 1–3 emissions is
likely to have a substantive impact. We have initial controls and mitigations in place to manage
/ mitigate this risk but these will be enhanced and kept under review as we address our
business resilience to climate change.
We are taking action to reduce our Scope 1 and 2 emissions (see page 80) but have not as
yet set a formal target in relation to emissions. Similar to metrics, we are still exploring what
targets should be set to manage climate-related risks and opportunities and we will provide
an update in next year’s report.
STRATEGIC REPORT Responsibility and sustainability continued
Operations
We recognise the importance of good environmental
practices. As an internet-based business based in two
UK office locations, our direct environmental footprint is
relatively small. We are however committed to reducing our
environmental impact and our contribution to climate change
through continuous improvement procedures.
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
FY22, 56% of all waste was recycled (FY21: 73%) and the
remaining 44% was diverted (FY21: 27%) meaning none
of our waste was sent to landfill. Diverted waste is namely
compostable waste such as food and coffee beans. The
volume of waste collected this year increased by 43% due to
colleagues returning to the office and hence why the amount
of compostable waste is higher. We are putting various
initiatives in place, for example in our onsite coffee shop,
we have switched from recyclable coffee cups and lids to
compostable items. We are considering introducing a loyalty
card to incentivise employees to bring in their own mug and
reduce the number of compostable cups and lids that we
use. In FY23 we will continue to look at how we can reduce
the amount of waste generated and again look to hitting our
target of 0% of waste sent to landfill.
Energy efficiency. During FY22 there was a continued
focus on conserving energy and other natural resources
and improving the efficacy of those resources and we
have implemented several initiatives this year to reduce
our carbon footprint. These included installing LED lighting
and time control functions in our underground car park and
ensuring that all heating systems are switched off over
the weekend, with the temperature set at 21 °C. 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.
We are considering several other initiatives for future years,
including looking into renewable energy electricity suppliers
and are currently sourcing quotes. We are also in discussion
with our landlord over the installation of wind turbines or
solar panels, however, there are concerns over issues that
may arise by fitting them retrospectively.
Therefore, as an alternative and due to Aeroworks
having a large number of windows, we have investigated
potentially replacing the internal single glazing with solar
controlled glass.
Reducing business travel. Last year, we made the decision
to close our Park Square office and bring all North West
employees under one roof at the Group’s headquarters
which has in turn reduced our energy consumption. Through
adopting a hybrid way of working, we have reduced energy
consumption (compared to pre-pandemic levels). We also
use teleconference technologies to host online meetings
more and as a result, staff travel and consequent travel
related emissions have reduced.
Environmentally-responsible culture. We want to foster an
environmentally-responsible culture through awareness and
by encouraging employee-led environmental actions and
initiatives. As an initial step, during the year we have rolled
out environmental awareness training for all employees.
We have also located several ‘Save our planet’ posters
in all meeting rooms reminding colleagues to turn off air
conditioning systems when they are leaving the rooms.
We will continue to build on this awareness strategy and will
offer more opportunities for our employees to get involved.
As well as organising a beach clean in FY23 (see page 81),
we will explore how we can further encourage employee
participation so that they can feel part of a community that’s
having a positive impact on the environmental as well as
helping the Group reduce its environmental impact.
Fruitful office. We have partnered with Fruitful Office
who provide fresh fruit to our office every week for our
colleagues. For every basket of fresh fruit, Fruitful Office
plant one tree to combat deforestation and offset carbon
emissions. During FY22, 139 trees were planted due to
this partnership.
Oceans
We love beaches and send millions of customers to them
every year. Whilst the beach and ocean are often key parts
of our customers’ holiday, those oceans are also our planet’s
life support system. They generate most of the oxygen
we breathe and they are home to important species and
ecosystems that we rely on for food, livelihoods, climate
regulation and more. However our oceans are in trouble
and it is currently estimated that up to 12 million metric
tons of plastic—everything from plastic bottles and bags
to microbeads—end up in the oceans each year. We want
to make sure we do our bit to help protect and restore our
oceans for future generations.
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We safeguard our employees through a framework of
policies and statements including anti-slavery, equality
and diversity and data protection policies.
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. During FY23, we will
be looking at introducing a Supplier Code of Conduct to
ensure suppliers are complying with applicable laws and
are committed to operating ethically and sustainably.
Data security and privacy
As an online retailer serving millions of customers, protecting
their data and ensuring safe online shopping is critical. 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 General Data Protection
Regulation.
Whistleblowing
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
concern on an entirely confidential basis. The Audit
Committee receives regular reports on the use of the
service and concerns raised.
This is a new focus area for us and we are still exploring
what action we can take and what targets and metrics
we can use to measure progress. In our employee survey
about ESG matters, this was an area that our employees
felt strongly about and we will be organising a beach clean
during FY23 for our colleagues to get involved. We will
continue to engage with and encourage our partners to
adopt sustainable business practices, including in relation
to the reduction of single use plastic. Please see page 72
for more information in this respect.
We look forward to providing an update on this focus area
in next year’s report.
Governance
We are committed to doing business the right way and
our ESG pillars are underpinned by robust governance
and effective policies. Further details of our governance
framework can be read on page 80.
Anti-Corruption and bribery
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.
Human rights and modern slavery
We are committed to supporting human rights through
our compliance with national laws and through our internal
policies which adhere to internationally recognised human
rights principles.
We have 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. We maintain an Anti-
Slavery and Human Trafficking policy and in accordance
with the Modern Slavery Act , the Group has a modern
slavery statement which can be found on our website
www.onthebeachgroupplc.com/responsibility.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
81
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
Environmental
matters
Policies and standards
Where to read more in this report
to understand the impact on the
business, and the outcome of
applying our policies
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 and Sustainability
Report, on page 61, which also contains the statutory carbon emission and energy data on
page 72.
Employees
• Equality and diversity policy
• Responsibility and Sustainability, page 61
• Board diversity policy
• Whistleblowing policy
• HR policies including adoption leave,
parental leave, flexible working
• Health and safety policy
• Staff handbook
• Stakeholder engagement and s.172
statement, page 53
• Principal risks and uncertainties,
page 38-49
• Gender pay gap report
www.onthebeachgroupplc.com/responsibility
Social matters
• Health and safety policy
• Responsibility and Sustainability, page 61
• Staff handbook
• Stakeholder engagement and s.172
statement, page 53
Human rights
• Modern slavery statement
• Responsibility and Sustainability, page 61
• Anti-slavery and human trafficking policy
• Data retention and destruction policy
• Data handling and data quality policy
• Employee data privacy policy
• Anti-bribery and anti-corruption policy
• Responsibility and Sustainability, page 61
• Whistleblowing policy
• Audit Committee Report, page 107
• Staff handbook
• Business model, page 18
• Non-financial key performance indicators,
pages 24-27
• Principal risks and uncertainties,
pages 38-49
Anti-corruption and
anti-bribery
Business model
Non-financial KPIs
Description of
principal risks
Certain Group policies are not published externally.
The Company’s strategic report, set out on pages 5-82, was approved by the Board on 7 December 2022 and signed on its behalf by:
Simon Cooper
Chief Executive Officer
7 December 2022
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STRATEGIC REPORT
Governance
Chairman’s introduction
Directors’ biographies
Corporate Governance statement
Report of the Nomination
Committee
Report of the Audit Committee
Remuneration report
Remuneration at a glance
Remuneration policy
87
88
92
102
106
114
118
120
Annual report on remuneration 133
Other statutory and regulatory
disclosures
Independent auditor's report to
the members of On The Beach
Group plc
Statement of Directors’
responsibilities
146
152
160
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ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
85
Our
governance
arrangements
provide a strong
foundation from
which the Group
can continue to
deliver sustainable
growth for the
benefit of all our
stakeholders.
Richard Pennycook
Chairman of the Board
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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 to ensure 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
considers that the Company has complied with the Code.
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 pages 100-101.
Stakeholders
FY22 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 53 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.
ESG
ESG considerations continue to be an increasingly important
area of focus for many of our stakeholders and during the
year, the Board approved the Group's new ESG strategy that
we hope will bring about meaningful change and create a
stronger and more sustainable business. As we continue to
further embed this strategy in the year ahead, the Board will
have direct oversight of all ESG matters (including climate).
You can read more about our ESG journey on page 61.
Risk
During the year, we developed and introduced a new risk
management system that will enhance the Group's existing
assurance process and gives us additional confidence to
tackle risks and uncertainties that may arise as we execute
our strategic objectives and deliver on our ambition.
Conclusion
I believe that the Board remains effective and continues
to work very well. Whilst it has been another difficult year
for the travel sector, the decisive action that we have taken
means we are well placed to capitalise on opportunities as
travel conditions continue to normalise.
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.
Richard Pennycook
Chairman of the Board
On the Beach Group plc
7 December 2022
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
87
GOVERNANCE Directors’ biographies
Richard Pennycook, CBE
Chairman of the Board
Simon Cooper
Chief Executive Officer
Appointed to Board: 1 April 2019
Appointed to Board: 17 August 2015
Independent: Yes
Independent: No
Listed Company Appointments: Howden Joinery Group plc
(Non-Executive Chairman)*
Listed Company Appointments: None
Committee Memberships: Disclosure (Chair)
Experience and contribution: Simon Cooper is the founder
and Chief Executive Officer of On the Beach. Simon began
his career in the travel industry whilst attending university,
when he founded ski holiday company ‘On the Piste’ in
1996, which went on to be purchased by Thomson (now
TUI) in 2008.
Simon has extensive travel experience, with over 20 years
in the industry, and as the founder of On the Beach he has
a detailed understanding of the business and all operations.
He led the Company through both its IPO process in 2015
and the acquisitions of Sunshine.co.uk and Classic Collection
Holidays. As a seasoned entrepreneur 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.
Committee Memberships: Nomination (Chair),
Remuneration and Disclosure
Experience and contribution: Richard Pennycook joined
On the Beach as Chairman of the Board and of the
Nomination Committee on 1 April 2019. Richard brings
extensive experience in both private and public retail
and consumer businesses, including fast-growing online
businesses.
Until recently, Richard was 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 stepped down from the board on 17 September
2022 at the end of his term. 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.
* Richard Pennycook stood down as a director of Howden Joinery Group plc
on 17 September 2022.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Shaun Morton
Chief Financial Officer
David Kelly
Senior Independent Director
Appointed to Board: 17 July 2020
Appointed to Board: 28 August 2015
Independent: No
Independent: Yes
Listed Company Appointments: None
Committee Memberships: Disclosure
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. More recently, Shaun has been
working closely with Simon on strategic initiatives of the
business such as growing market share in the premium, long
haul and B2B segments. 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.
Listed Company Appointments: Gym Group plc
(Non-Executive Director) and Reach plc (Chair of the
Remuneration Committee)*
Committee Memberships: Remuneration (Chair), Audit
and Nomination,
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, as well as our designated
Non-Executive Director for employee engagement.
* David Kelly will step down as a director of Reach plc on 31
December 2022.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
89
GOVERNANCE Directors’ biographies continued
Elaine O’Donnell
Independent Non-Executive Director
The Rt. Hon Justine Greening
Independent Non-Executive Director
Appointed to Board: 3 July 2018
Appointed to Board: 4 March 2021
Independent: Yes
Independent: Yes
Listed Company Appointments: Games Workshop Group
plc (Non-Executive Chair)*, SThree plc (Chair of the Audit
and Risk Committee) and Gym Group plc (Chair of the
Audit Committee)
Committee Memberships: Audit (Chair), Nomination and
Remuneration
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, and worked with a diverse range
of businesses.
* Elaine O'Donnell will step down as a director of Games Workshop Group
plc on 31 December 2022
Listed Company Appointments: None
Committee Memberships: Audit, Nomination and
Remuneration
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.
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Zoe Harris
Chief Marketing Officer
Appointed to Board: 14 October 2022
Independent: No
Listed Company Appointments: None
Committee Memberships: None
Experience and contribution: Zoe joined On the Beach
as Chief Marketing Officer in January 2021 and has been
instrumental in developing both the Group's marketing
strategy and customer experience. Zoe led on key initiatives
including the provision of free PCR Covid-19 tests for
customers when travel restrictions and entry requirements
required them; and the introduction of perks for customers
to help holidays start sooner, including free fast-track airport
security for all and free airport lounge access for 4* and 5*
customers in the summer.
Zoe joined On the Beach from GoCo Group, where she
had been since 2018, initially holding the role of CMO for
GoCompare and then CEO for Look After My Bills (a GoCo
company). She joined GoCo from Reach PLC (formerly
Trinity Mirror) where she was group marketing director for
nearly six years, working across both the Nationals and
Regionals to refresh brand propositions and transform
marketing activity to better resonate with consumers across
both print and digital platforms. Prior to this, she held roles
at the advertising agency WCRS (Engine), Channel 5, MTV
and NBC.
Board composition
17%
6*
50%
33%
Chairman
Executive directors
Non-executive directors
* As Zoe Harris was appointed as a director on 14 October 22
(and, therefore, after the year under review), we have not included
Zoe in these figures. Following Zoe's appointment, the Board now
comprises 43% executive directors, 43% non-executive directors,
with the chairman making up the final 14%.
18
Simon
Cooper
7
David
Kelly
4
Elaine
O’Donnell
3
Richard
Pennycook
2
Shaun
Morton
1
Justine
Greening
Tenure in years
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
91
GOVERNANCE Corporate Governance statement
Compliance with the UK Corporate Governance Code
The principles set out in the 2018 UK Corporate Governance Code (the '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 publicly available on the website of the Financial Reporting Council ('FRC'), www.frc.org.uk.
During FY22, we believe we have complied with all provisions of the Code.
Code Section
Contents
Board Leadership and Purpose
• Board of Directors
• Governance structure
• Board leadership and purpose
• Designated Non-Executive Director for employee
engagement
Division of Responsibilities
• Board and Committee meetings
• Governance structure
• Division of responsibilities
• Board composition
• Appointments to the Board
Composition, Succession
and Evaluation
• Composition, succession and evaluation
• Nomination Committee report
Audit, Risk and Internal Control
• Audit Committee report
Remuneration
• Remuneration at a glance
• Annual statement of the Chair of the
Remuneration Committee
• Remuneration Policy
• Annual Report on Remuneration
Pages
88-99
93-100
99-105
106-113
114-144
GOVERNANCE
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 Company
through setting a clear purpose and strategy, which creates long-term 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 business, strategy and development. The
Board is also responsible for ensuring the maintenance of a sound system of internal control
and risk management (including financial, operational and compliance controls and for
reviewing the overall effectiveness of systems in place) and for the approval of any changes
to the capital, corporate and/or management structure of the Group. The Board has reserved
certain specific matters to itself for decision. The full schedule of matters reserved to the
Board is available in the Corporate Governance section of the Company’s website.
Audit Committee
Chaired by Elaine O’Donnell
Remuneration Committee
Chaired by David Kelly
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 106-113.
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
114-144.
Nomination Committee
Chaired by Richard Pennycook
Reviews structure, size and
composition of the Board
and makes appropriate
recommendations to the Board.
The Nomination Committee
Report can be read on pages
102-105.
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
the 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.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
93
Corporate Governance statement continued
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 FY22
Details of the main areas of focus for the Board and its Committees during the year are summarised below:
Topic
Key activity
Strategic matters
• 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 undertake a Group re-organisation to simplify the Group’s structure
• Approved the Group's ESG strategy
• Considering and approving the Company’s response to the pandemic across all areas of
the business
Business performance
• 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
Risk management and
internal controls
• Approved enhanced risk management framework
• Reviewed principal risks and uncertainties and emerging risks
• 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
Governance and legal
People, culture and
Board effectiveness
• 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
• Received regular updates from the Group’s Diversity and Inclusion Steering Group
• 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
• Approved Board diversity policy
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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 93 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 94.
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 page 18. 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:
• Reports from and discussions with the Executive
Team and other members of senior management on
issues affecting the business and industry trends
and developments.
• Engagement with key stakeholders – see pages 53-60.
• 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 36-49.
•
In assessing the Group’s prospects and viability for the
purposes of the viability statement (see pages 50-52),
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 deliver. 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.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
95
GOVERNANCE Corporate Governance statement continued
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:
• Hive surveys – Reviewing the feedback from Hive
employee surveys, which capture feedback on a range of
topics, as well as gauging overall engagement levels.
• Compliance – The Group has robust policies in place in
relation to areas such an 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 106-113,
and an independent whistleblowing process monitored
by the Board as described on page 113.
• 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 that support the health and wellbeing of our
employees, develop talent and promote diversity. See
page 62-67 for more details.
• Risk – The Board also assesses management’s attitude
to risk. This is predominantly done through direct
engagement with management at Board meetings.
See also page 101 in relation to progress made against
the conclusions of the FY21 Board evaluation for further
information of how the Board monitors culture.
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
concern 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 ‘Here for our people’ section
on pages 62-97.
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 53-60 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. The 'Here for our people' section on pages
62-67 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:
Shareholder consultation – During the year, we consulted
with over 65% of our shareholder base in relation to our
revised Remuneration policy and took on their guidance and
feedback – see page 115.
Investor meetings and presentations – The Company
has rolled out an investor relations programme enabling
dialogue and meetings between the Executive Directors and
institutional investors, fund managers and analysts. At these
meetings, a wide range of relevant issues including strategy,
performance, management and governance are discussed
within the constraints of information that has already been
made public.
Annual General Meeting ('AGM') – The AGM provides
stakeholders an opportunity to hear from the Board and
raise any questions they may have.
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).
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.
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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
The Board held 11 scheduled meetings during the year, at
which it considered all matters of a routine and strategic
nature, structured through clear agenda setting, written
reports and presentations from both internal members of
staff as well as external advisers and consultants. The table
below shows meeting attendance for scheduled meetings
during the year. There were a further number of ad hoc
Board calls during the year, in addition to the scheduled
meetings.
Director
Scheduled Board
meetings
Audit
Committee
Remuneration
Committee
Nomination
Committee
Richard Pennycook
11/11
Simon Cooper
Shaun Morton
David Kelly
10/11
11/11
11/11
Elaine O’Donnell
11/11
Justine Greening
11/11
Information and support
–
–
–
3/3
3/3
3/3
7/7
–
–
7/7
7/7
6/7
3/3
–
–
3/3
3/3
3/3
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.
GOVERNANCE
Corporate Governance statement continued
Division of responsibilities
Clear division of roles and responsibilities
Chief Financial Officer
Shaun Morton, as CFO, is responsible for:
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
Richard Pennycook, as Chairman is responsible for:
• The leadership and effectiveness of the Board and
setting its agenda and ensuring sufficient time is
available for discussion of agenda items, in particular
strategic issues;
• Ensuring that all Directors receive accurate, timely and
clear information on financial, business and corporate
matters to make sound Board decisions;
• 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:
• 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
• Facilitating the effective contribution of Non-Executive
necessary; and
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.
Chief Executive Officer
Simon Cooper, as CEO, is responsible for managing
the business and driving it forward, including the
responsibility for:
• The operations of the Group;
• Developing Group objectives and strategy, having
regard to the Group’s responsibilities to its shareholders,
customers, employees and other stakeholders;
• Following presentation to, and approval by, the Board, for
the successful implementation and achievement of those
strategies and objectives;
• Ensuring that the Group’s businesses are managed in
line with strategy and approved business plans, and
comply with applicable legislation and Group policy;
• Ensuring effective communication with shareholders; and
• Setting Group human resource policies, including
management development and succession planning for
the senior management team.
• 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 that 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.
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Designated Non-Executive Director for Employee
Engagement
David Kelly, as the designated Non-Executive Director
('NED') is expected to:
• 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;
• 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:
• Quarterly review of colleague engagement survey with
People function to:
• discuss key areas of concern;
•
•
identify actions and areas of focus; and
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 that 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 88-90. None of the Directors hold directorships in
FTSE 100 companies.
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 102-105
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
page 103.
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 seven
members: the Non-Executive Chairman, three Executive
Directors and three independent Non-Executive Directors.
Details of the skills and expertise of each member of the
Board is set out in the profiles on pages 88-91.
The Board reviews the independence of its Non-Executive
Directors as part of the annual Board and Director evaluation
process. The Nominations 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
99
GOVERNANCE Corporate Governance statement continued
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. During the year, an
internal evaluation was accordingly carried out to review the
composition, experience and skills to ensure that the Board
and its Committees continue to work effectively and that the
Directors are demonstrating a commitment to their roles.
As part of the 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 Nomination Committee 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.
Progress against the conclusions of the FY21 Board/
Committee evaluation, together with actions from the FY22
Board/Committee evaluation are set out overleaf.
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 demonstrate
commitment to the role.
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 Zoe Harris as a Director, please see the
report of the Nomination Committee on pages 102-105.
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.
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Actions from FY21 Board evaluation
Area of focus
Progress
Stakeholders
The Board has kept up to date with stakeholder views. The chair of the Remuneration Committee
engaged with major shareholders ahead of changes to the Remuneration Policy. The appointment
of Zoe Harris to the Board has brought 'customer voice' to the forefront of the Board. The Board
will continue to look at how greater insight can be provided for less prominent stakeholders and
consider a more structured approach for feeding back stakeholder concerns to the Board.
Culture
One of the outcomes from the FY21 evaluation was to explore ways in which the Board’s
monitoring of corporate culture could be enhanced. This has been considered and during the year,
the Board monitored culture in a number of ways:
• Review: in materials reviewed by the Board (e.g. how we treat our customers, colleagues,
shareholders, suppliers and other stakeholders). The Board seeks to understand the
experience that all stakeholders have with us as a Group.
• Engage: the Board is challenging and inquisitive. It meets regularly both face-to-face and
via videoconferencing. It takes time in formal Board meetings, as well as outside formal
Board meetings to get to know the business.
• Surveys/data: On an annual basis, the Board reviews the output of surveys to monitor
culture and to verify observations and conclusions from the review of materials and
engagement with stakeholders.
Risk management
This has been a real area of focus for the Board and Audit Committee during the year and
the Group has worked with a third-party risk specialist to help it implement an improved risk
management framework, which will provide greater transparency of performance, actions
and decision making across the business. An Internal Control and Risk Manager has also been
appointed to help embed the new framework across the Group.
Strategy
Action has been taken to improve the balance of operational and strategic items considered by
the Board. Strategic presentations have been planned ahead and scheduled at appropriate times
to enhance the Board's forward-looking focus.
Actions from FY22 Board evaluation
Area of focus
Actions
Succession planning
Succession planning has been a focus during the year. The evaluation highlighted the importance
of maintaining those active discussions around succession planning to ensure there is a sufficient
and diverse pipeline of talent available to execute the Company's current and future strategy.
Board composition
Although the Board has made further progress this year in relation to diversity, particularly in
relation to gender diversity and the adoption of a Board diversity policy, the Board recognised
there was still work to be done to improve the Board’s diversity more generally.
Risk management
Significant progress was made during FY22 in terms of enhancing the Group's risk management
and internal controls processes. It was acknowledged however that it would take time to fully
embed the new processes and that this was an area that would be kept under review.
GOVERNANCE The
Nomination
Committee
continues
to work hard
to ensure we
have the best
structure, size
and composition
of the Board.
Richard Pennycook
Chairman, Nomination Committee
102
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Report of the Nomination Committee
I am pleased to introduce the report of the Nomination
Committee for the year ended 30 September 2022.
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 three 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
Elaine O’Donnell
Independent
July 2018
Justine Greening
Independent
March 2021
3/3
3/3
3/3
3/3
The Committee’s composition meets the requirements of the Code.
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:
• The independence of Non-Executive Directors, considering the judgement, thinking and constructive challenge that they
demonstrate in the Board;
• 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; and
• The effectiveness review of the Board, its principal Committees, the Chairman and individual Directors.
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. Richard Pennycook was initially
appointed as a Director in April 2019 for a period of three years. After careful consideration, the Board agreed during the
calendar year (following the Committee’s recommendation) to re-appoint Richard 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 88-91.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
103
GOVERNANCE Report of the Nomination Committee continued
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 and that there is a
sufficient and diverse pipeline of talent available to execute
the Company’s current and future strategy. As well as the
appointment of Zoe Harris to the Board (covered in further
detail below), the Committee was also delighted to approve
the promotion of Kasia Michaelska, Director of Product, to
the Executive Team.
Succession Planning for David Kelly's roles
David Kelly is the longest serving Non-Executive Director on
the Board and he will have served nine years by September
2024, when his third term ends. David brings so much to
the Board and fulfills many different roles on the Board,
formally and informally, so the Committee wanted to start
considering succession arrangements for David’s roles on
the Board as early as possible.
The Committee considered David’s roles as Senior
Independent Director ('SID') and Chair of the Remuneration
Committee, reviewed the requirements of those roles and
the internal talent already available on the Board, and
identified that there were natural and suitable successors
for those roles.
Elaine O’Donnell was identified as the natural successor for
the SID role. Elaine has served on the Board since 2018, is a
chartered accountant and Chair of the Audit Committee and
has experience as a Chair of a listed business, so was well
suited to the role of SID, which requires the SID to operate
as a sounding board for the Chairman of the Board.
Justine Greening was identified as the natural successor
for the Chair of Remuneration Committee role. Justine
joined the Board in March 2021 and has served on the
Remuneration Committee throughout that period, working
closely with David through the remuneration policy review
process. Justine shares David’s passion for people, and
her experience in her previous business and political roles,
as well as her work on levelling up places her as the ideal
candidate to take over this responsibility from David.
I am pleased to say that Elaine and Justine have graciously
accepted to take on these additional roles, and in order
to facilitate a smooth handover of responsibilities,
both appointments will take effect from 27 January 2023.
David will continue in his role as a Non-Executive Director
as well as supporting Elaine and Justine in their new roles.
David will also continue to be the Designated NED for
employee engagement, but the Committee will consider
succession for that role during the course of FY23.
Appointment of Zoe Harris as a Director
The Nomination Committee regularly reviews the balance
of skills and expertise of the Board. As a customer-centric
business, it is essential that the Board is well-informed on
customer issues and that the 'customer voice' is represented
on the Board. Having identified this as an opportunity
to enrich the composition of the Board, the Committee
recommended the appointment of Zoe Harris, Chief
Marketing Officer. We were delighted to welcome Zoe to the
Board on 14 October 2022 and look forward to her valuable
contribution on the Board. Zoe's appointment is subject to
approval by shareholders at the forthcoming AGM. You can
read more about Zoe's experience and skills on page 91.
Search for New Independent Non-Executive Director
Zoe Harris’ appointment to the Board means that, excluding
myself as Non-Executive Chairman, there are three Executive
Directors and three independent Non-Executive Directors,
which is compliant with the UK Corporate Governance Code.
In view of the increased number of Executive Directors, and
looking ahead to David stepping off the Board at the end of
his term, the Committee has started the search for a new
independent Non-Executive Director to complement the
existing balance of skills and experience on the Board.
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.
To support its commitment to diversity, during the year, the
Committee approved a new Board Diversity policy, which
set out the following objectives (aligned with the FCA’s
new Listing Rule). We have disclosed below our progress
towards these objectives.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
GOVERNANCE
Objective
Objective
met
Comment
40% female
representation at
Board level
Yes
Not
currently,
but will
be by 27
January
2023
At least one
of the senior
Board positions
(Chair, CEO,
CFO, or Senior
Independent
Director) being
held by a female
director
No
At least one
member of the
Board shall be
from a non-white
ethnic minority
background
With Zoe Harris'
appointment,
we now have
43% female
representation on the
Board, and this will
be an area we will
continue to monitor
with future Board
changes.
Elaine O'Donnell will
become SID on 27
January 2023
This will be a key
area of focus for new
Board 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 on page 65.
CEO succession plan
During the year, the Committee reviewed the succession
plan in place for the CEO role. In December 2022 (after the
year end) the Committee recommended to the Board the
appointment of Shaun Morton as the successor of Simon
Cooper as CEO. Further details on this and the search for a
CFO, will be covered in next year’s Nomination Committee
report.
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 100.
Richard Pennycook
Chair, Nomination Committee
GOVERNANCE
The
Audit
Committee
Report
provides
shareholders
with an insight
into how topics
were considered
during the
year and how
we discharge
responsibilities.
Elaine O’Donnell
Chair of the Audit Committee
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Report of the Audit Committee
I am pleased to present the Audit Committee report for the
year ended 30 September 2022. 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.
Committee Governance
Responsibilities
Ultimately, the Committee ensures that shareholder
interests are protected and the Company’s long-term
strategy is supported.
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
The main roles and responsibilities 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
External audit
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.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
107
GOVERNANCE Report of the Audit Committee continued
Committee composition
The Committee currently comprises three independent Directors. 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 89-90. 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 the sector in which the
Group operates.
Committee meetings
The Committee met three times during the year and member attendance is shown below.
Member
Status
Appointment date
Attendance
Elaine O’Donnell (Chair)
Independent
July 2018
David Kelly
Independent
August 2015
Justine Greening
Independent
March 2021
3/3
3/3
3/3
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.
Key activities of the Committee during the year
• Reviewed and supported the implementation of the new risk management framework;
• As part of reviewing the effectiveness of the Group’s internal controls processes, the Committee approved the
appointment of an external third party to conduct an independent review of the effectiveness of key financial controls;
• Considered the response to the FRC following enquiries on the FY21 Annual Report;
• Focused on financial reporting to ensure the annual report and accounts is fair, balanced and understandable;
• Reviewed the Group’s going concern and viability statements;
• Reviewed management’s approach to key judgmental areas of reporting and the related comments of the external auditor;
• Reviewed results statements and financial results presentations;
• Evaluated the reporting requirements of the new TCFD framework and agreed the scope and review of the new reporting
for climate-based financial disclosures;
• Received updates on the Group’s security and data protection processes; and
• Assessed the effectiveness of the external audit process and the Committee's effectiveness.
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How the Committee discharged its responsibilities in FY22
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 and subsequent disruption
The recognition of costs and provisions relating to
disruption caused by the emergence of Omicron in
the first half of the year as well as the cost associated
with widespread cancellations and changes to flight
programmes in the second half of the year 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.
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 future cancellations is
also recorded.
The estimated loss of margin on bookings that depart
in future financial periods is subjective and involves
judgement.
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 market conditions which include continued supply
issues and the cost of living.
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.
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.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
109
GOVERNANCE Report of the Audit Committee continued
Description of focus area
Audit Committee action
Recoverability of trade receivables
The recoverability of customer monies in light of the cost of
living crisis and increasing interest rates.
The Audit Committee has considered management’s
judgments and the appropriateness of the provision and
considers management’s approach to be reasonable.
Task Force on Climate-Related Disclosures ('TCFD')
The Group is required to include TCFD reporting in its
annual reporting for the first time this year.
Group simplification
The Group has undertaken a Group restructuring exercise
resulting in the liquidation of certain subsidiaries and the
hive-up of Sunshine.co.uk Limited’s business and assets to
On the Beach Limited.
Engagement with regulators
The Audit Committee approved the appointment of an
external adviser to assist the Group in its preparedness for
the TCFD framework. The Audit Committee has assessed
the appropriateness and completeness of the Group’s
disclosures against the TCFD recommendations and is
satisfied with the Group’s disclosures.
The Audit Committee has reviewed management’s
accounting of the transactions undertaken in relation to
the simplification and considers the financial disclosures in
respect of the transactions to be appropriate.
In last year’s Annual Report and Accounts, it was reported that “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.”. This was an unintentional misstatement and we would like to issue a correction to confirm that
the CRR team did not make any assessment as to the quality of the Company’s disclosures in its FY20 Annual Report and
Accounts, nor did it issue any rating. Instead, during FY21, the FRC’s Audit Quality Review ('AQR') team conducted a review
of the audit of the 2020 Annual Report and Accounts with the related findings being concluded as not being significant by
the Audit Committee.
In April 2022, the Group received a letter from the Financial Reporting Council ('FRC') as part of its regular review and
assessment of the quality of corporate reporting in the UK. The letter included a request for further information on the Group’s
Annual Report and Accounts for the year ended 30 September 20211. Following completion of the correspondence with the
FRC, the Directors have concluded that the deferred tax asset of £3.6m reported in the balance sheet as at 30 September
2021 should have been presented as a non-current asset in line with the requirements of IAS 1.56, rather than as a current
asset. Therefore, the comparatives for the balance sheet as at 30 September 2021 have been restated to correct the error
identified. As a result, total current assets reduced by £3.6m to £190.7m and total non-current assets increased by £3.6m
to £86.0m.
1 Scope and limitations of the FRC review: The review conducted by the FRC was performed solely on the Group’s published 2021 Annual Report and Accounts
and does not provide any assurance that the Annual Report and Accounts are correct in all material respects The FRC’s review did not benefit from detailed
knowledge of the Company’s business or an understanding of the underlying transactions entered into. The FRC accepts no liability for reliance on their review
by the Company or any third party.
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Fair, balanced and understandable
• Delivery and execution of the agreed external audit
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.
process for FY22;
• 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;
• The quality of EY’s explanation of and response to
In arriving at its assessment, the Committee has:
significant risks identified;
• 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; and
• Considered the external auditor's review of the
Annual Report.
The Directors’ statement on a fair, balanced and
understandable Annual Report and Accounts is set out on
page 160 of this Report.
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 four-year assessment period. This was supported by
a very thorough paper from the CFO. The Group’s viability
statement is on pages 50-52.
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
2022 year-end process. The Committee took a number of
factors into account when considering the effectiveness of
the external audit including:
• The quality of the audit planning covering the approach,
scope and levels of fees for the audit;
• The competence with which EY handled and
communicated the key accounting and audit judgements;
• The communication and engagement between
management, EY and the Committee; and
• The steps taken by EY to ensure their objectivity
and independence.
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 FY22 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:
• Assurances provided by EY on the safeguards in place to
maintain independence;
• Oversight of the non-audit services policy and
fees paid); and
• Oversight of policy on employing former auditors.
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,
whilst ensuring at the same time that the auditor maintains
the same degree of objectivity and independence.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
111
GOVERNANCE Report of the Audit Committee continued
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 £377k). 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 £68k representing 18% of
the total audit fee (2021: £68,000, representing 20.8% 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 FY23. 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:
• The business model under which the Company currently
operates in the context of its activities and in particular the
management model that 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,
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.
• Reports from the external auditors regarding internal
control and risk management, supplemented by
extended assurance reviews by external consultants.
This year, we engaged third-party consultants to
undertake a complete review of our overall risk
management procedures and the effectiveness of key
financial controls. The review of the effectiveness of our
key financial controls highlighted no critical findings. The
non-critical findings have been addressed in our FY23
internal control review plan.
• The appointment of the new Risk and Internal Control
Manager, who is responsible for, inter alia, enhancing
internal controls across the business, coordinating the
risk assessment process, implementing and overseeing
actions plans to mitigate risks and address findings from
audits, evaluations and internal testing.
Having undertaken the review, and considering 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.
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
112
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
those risks is provided on pages 39-49. During the year,
the Audit Committee has overseen the development and
implementation of a new risk management framework
(see page 36-38 ), which will enhance the Group’s current
approach to enterprise risk. As part of our new framework,
we have set-up an Executive Risk Committee and recruited
a dedicated Risk and Internal Control manager. A key focus
for them will be enhancing and further embedding our Risk
Management Framework during FY23.
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:
• Risks are highlighted at various levels in particular
at emerging, strategic and department level and are
captured in the new digitised real-time 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 and control system provides real-time
reporting and focuses on highly ranked risks and the
corresponding controls that mitigate the likelihood of
the risk occurring. The risks and the performance of the
controls are reviewed by the Executive Risk Committee
on a quarterly basis and are approved by the Board
annually.
• 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
• 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.
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’s 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. No significant
control failings or weaknesses were identified during the
period under review.
We will continue to develop our programme of assurance
around our risk management and internal controls processes
in the year ahead. This will largely be facilitated internally,
with third party expertise or independence when required.
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
capital and operational expenditure.
7 December 2022
• Embedded policies and procedures to ensure the
integrity and accuracy of accounting records and to
safeguard the Group’s assets.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
113
GOVERNANCE The Group
has adapted
to challenges
following
macroeconomic
events but we
have continued
to support our
workforce across
the business.
David Kelly
Chair of the Remuneration Committee
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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 2022.
This report includes both our proposed Directors’
Remuneration Policy (‘Policy’) (which will be submitted for
shareholder approval at the 2023 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.
Performance and reward for FY22
FY22 has been another challenging year, with the effects
of the Covid-19 pandemic still felt by the travel industry, as
well as disruption caused by war in Ukraine and the ongoing
cost of living crisis in the UK. Performance has been heavily
impacted by the economic and political climate. The Group
has continued to adapt to the challenges presented by these
macroeconomic events and we have been able to support
our workforce and maintain remuneration arrangements
broadly unchanged across the business.
The FY22 annual bonus for the Executive Directors was
based on both financial and non-financial targets aligned
with the Company's strategy. 50% of the bonus was
based on profit before tax targets, with the remaining
50% weighted equally across the following metrics: net
promoter score; employee engagement; prompted brand
consideration; and passenger number growth. As a result of
performance against those targets, 79.7% of the bonus will
be paid and in accordance with the Policy, 50% of the bonus
award will be deferred into shares for a period of two years.
No discretion was exercised to adjust the outcomes.
The LTIP award granted to Simon Cooper in FY20 was
based on two performance metrics: EPS (70% weighting)
and absolute shareholder return (TSR) (30% weighting).
Neither the EPS nor TSR targets were met and accordingly
Simon’s award has lapsed in full. No discretion was
exercised to adjust the outcomes.
Prior to his appointment as CFO, a number of awards were
made to Shaun during his tenure as Director of Finance, that
operated as restricted share awards with no performance
criteria. The final of these legacy awards vested in
September 2022.
Remuneration policy review
Our current Policy was approved by shareholders at the
2022 AGM, receiving support of just over 97% and would
ordinarily apply for a further two years. However, as
highlighted in last year’s Directors’ Remuneration report,
the Committee recognised that the travel sector was
still in a state of transition at that time and that a further
review of remuneration arrangements across the whole
Company would need to be carried out to ensure these are
fit for purpose in the post-Covid environment. Therefore,
following a comprehensive review, the Committee is
seeking shareholder approval for a new long-term incentive
plan for the Executive Directors and members of the
senior management team (the '2023 LTIP') at the 2023
AGM, as well as a new Directors’ Remuneration Policy to
incorporate this.
The 2023 LTIP has been designed to balance:
• The need for a meaningful incentive and retention tool in
a very challenging market;
• The need to improve line of sight for management over
remuneration outcomes in the context of the UK travel
sector, which is continuing its recovery from significant
disruption since the onset of the Covid-19 pandemic;
• The difficulty faced in setting long-term performance
targets in such a volatile sector that continues to
endure numerous macroeconomic shocks, including but
not limited to the Covid-19 pandemic and the war in
Ukraine; and
• The desire to continue to align remuneration with the
Company’s growth ambitions and strategy to capture
market share over the long term.
We consulted with over 65% of our shareholder base on our
proposed Policy and the 2023 LTIP and I would like to thank
those shareholders who have participated in this process
for their feedback and guidance, which we have taken on
board. In particular, while the initial proposal was for the
2023 LTIP to incorporate both performance and time-based
elements, this has been simplified based on feedback from
shareholders to focus solely on time-based awards, with an
associated reduction in quantum. We have also taken on
board feedback from shareholders in setting the maximum
long-term incentive opportunity level under the proposed
new Policy.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
115
GOVERNANCE Remuneration report continued
Full details of the proposed Policy are set out on pages
119-132 but the only proposed change to the current Policy
is the replacement of the existing long-term incentive plan
with the new 2023 LTIP, which for Executive Directors will
operate as follows:
• Annual grant of nil cost options, with an overall
reduction in quantum from 200% of base salary to
100% of base salary from 2023.
• Awards will vest after three years, with a further
two-year holding period.
• Vesting will be subject to continued employment and
the satisfaction of an underpin determined by the
Remuneration Committee.
The Committee believes that the 2023 LTIP will enable the
Company to retain key talent by providing management with
greater visibility over long-term remuneration outcomes in
a very challenging market. While the Committee maintains
that a combined performance and time-based approach
would have provided a stronger alignment with the
Company’s strategy to capture market share as we emerge
from the pandemic, we accept shareholders’ views that a
simpler structure is preferred at this time. The Committee
may consider re-introducing a performance element to the
LTIP in future policy cycles as the travel sector stabilises and
will continue to engage with shareholders on this over time.
The Committee is confident that all other elements of
the current Policy remain fit for purpose and in line with
corporate governance best practice, and so no other material
changes are proposed.
FY23 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 FY23 include:
Base salary: Simon Cooper and Shaun Morton will
each receive a salary increase of 4% with effect from
1 January 2023. These increases align with the expected
average increase that will be made to our general workforce.
Zoe Harris will be awarded a 9% pay rise, effective
1 January 2023, to reflect her strong performance and
development in role - see page 142 for more information on
Zoe's pay rise.
Pension: No change. Both the Executive Directors' pension
contributions are already aligned with the wider workforce
(currently 3% of eligible earnings), and will continue to
be aligned should there be any changes to the wider
workforces' pension contributions during FY23.
Annual bonus: The maximum bonus opportunity remains
unchanged at 100% of salary. The bonus will be based on
financial and non-financial metrics. 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.
LTIP: It is intended that LTIP awards will be granted during
FY23 of 50% of salary for Simon Cooper and 100% of salary
for Shaun Morton and Zoe Harris. Each award vests after
three years with a further two-year holding period, subject
to continued employment over the vesting period.
Key activities of the Remuneration Committee
Remuneration report
Key activities of the Remuneration Committee during the
year included:
• Agreeing the performance against the targets and
vesting of the 2019 LTIP awards.
• Setting the performance targets for the Executive
Directors FY22 annual bonus.
• Agreeing the population, award levels and performance
targets for the FY22 LTIP awards and restricted
share awards.
• Approving the Directors’ Remuneration report for the
FY21 Annual Report.
• Planning for Directors’ Remuneration report for the
FY22 Annual Report.
• 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 2022 AGM.
• Reviewing the existing Policy and developing new
Policy, including the design of the new LTIP.
• Planning shareholder engagement exercise in relation
to new Policy.
• Monitoring the developments in the corporate
governance environment and investor expectations.
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:
• This Annual Statement.
• Remuneration at a glance.
• The Directors’ Remuneration Policy, which sets out the
Company’s proposed Policy for Executive Directors, the
key factors that 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 2023 AGM and will apply for
three years from the date of approval.
• The Annual Report on Remuneration, which sets out
payments made to the Directors and details the link
between Company performance and remuneration
for the 2022 financial year. The Annual Report on
Remuneration, together with this statement, is subject to
an advisory shareholder vote at the 2023 AGM.
In summary, the Committee is committed to ensuring that
we are responsive to developments in best practice, as
well as a transparent approach in respect of executive pay.
Should you have any queries or comments on this report,
or more generally in relation to the Company’s remuneration,
then please do not hesitate to contact me via the Company
Secretary.
I hope that you find the information in this report helpful and
informative, and I look forward to your continued support at
the Company’s Annual General Meeting.
David Kelly
Chair of the Remuneration Committee
GOVERNANCE
Remuneration at a glance
FY22 implementation of Policy
FY23 implementation of Policy
Salary
Salary increase of 4.2% (in line with average
increase across the wider workforce) for Simon
Cooper, resulting in a salary from 1 January 2022
of £215,757.
Salary increase of 10.0% for Shaun Morton
to reflect his development in role and strong
performance since his appointment to the Board,
resulting in a salary from 1 January 2022 of
£275,000.
Pension
Simon Cooper and Shaun Morton each received a
pension contribution of 3% of eligible earnings (in
line with the wider workforce).
Bonus
Max opportunity: 100% of salary
Performance targets:
• PBT – 50% weighting
• Net Promoter Score – 12.5% weighting
• Employee engagement – 12.5% weighting
• Promoted brand consideration – 12.5%
weighting
• PAX growth – 12.5% weighting
Salary increases of 4% will be awarded to Simon
Cooper and Shaun Morton from 1 January 2023
(in line with expected average increase across the
wider workforce). Zoe Harris will be awarded a 9%
pay rise, effective 1 January 2023, to reflect her
strong performance and development in role - see
page 142 for more information on Zoe's pay rise.
• Simon Cooper: £224,300
• Shaun Morton: £286,000
• Zoe Harris: £330,000
No changes. If there are any changes to the
wider workforces' pension contributions during
FY23, then the Executive Directors' pensions
contributions will be aligned accordingly.
Max opportunity: 100% of salary
Performance targets will be based on financial and
non-financial metrics which will be disclosed on a
retrospective basis in next year’s Annual Report
and Accounts.
LTIP
• Simon Cooper: 100% of salary1
• Shaun Morton: 200% of salary
• Performance conditions:
• Simon Cooper: 50% of salary1
• Shaun Morton: 100% of salary
• Zoe Harris: 100% of salary
Shareholding
requirement
• Absolute TSR – 25% weighting
• Relative TSR – 25% weighting
• Group Total Transaction Value ('TTV') –
25% weighting
• TTV in specific expansion areas (long haul
and Classic) -25% weighting
Executive Directors must establish a shareholding
of 200% of base salary over a five-year period.
At the year-end, Simon Cooper met this
requirement. Shaun Morton will build a holding
to the required levels.
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.
No performance conditions – awards vest subject
to continued employment only.
No changes.
1 The maximum LTIP opportunity for Simon Cooper is lower to reflect Simon's material shareholding. The maximum LTIP opportunity for the other Executive
Directors is higher to support them in building their shareholding and aligning interests with shareholders.
118
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
FY22 Annual bonus performance
The table below sets out the performance targets, and actual performance against these, for the FY22 Annual Bonus scheme.
Weighting
Threshold
Maximum
Actual
Outcome
Group adjusted PBT
50%
£11.9m
£14.5m
14.1m
Employee engagement
12.5%
Net promoter score
12.5%
Prompted brand
consideration
12.5%
6.5
49
8.8
7.9
67
10.2
8.1
47
9.9
Group PAX number
12.5%
1.10m
1.40m
1.42m
TOTAL
44.2%
12.5%
0%
10.5%
12.5%
79.7%
FY20 LTIP performance
The table below sets out the performance targets, and actual performance against these, for Simon Cooper’s FY20 LTIP
award, which was due to vest during the year:
Weighting
Threshold
(25% vests)
Maximum
(100% vests)
70%
30%
77.7p
8%
94.9p
15%
Actual
(3.9p)
(36.5%)
Outcome
0%
0%
0%
EPS1
TSR2
TOTAL
1 Cumulative Adjusted EPS for financial years FY20, FY21 and FY22.
2 Annualised TSR of the Company over the three-year period to 3 December 2022.
GOVERNANCE
Changes to the Remuneration Policy that was
approved by shareholders at the AGM in 2022
The current Directors’ Remuneration Policy was approved by
shareholders at the 2022 AGM and would ordinarily apply
for a further two years. However, as highlighted in last year's
Directors’ Remuneration report, the Committee recognised
that the travel sector was still in a state of transition at that
time and that a further review of remuneration arrangements
across the whole company would need to be carried out to
ensure these are fit for purpose in a post-Covid environment.
Therefore, following a comprehensive review, we will be
seeking shareholder approval for a new long-term incentive
for the Executive Directors and members of the senior
management team at the 2023 AGM, as well as a new
Policy to incorporate this. The Committee is confident that
all other elements of the current Policy remain fit for purpose
and in line with corporate governance best practice, and so
no other material changes are proposed.
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 27 January 2023.
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:
1. 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;
2. 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;
3. 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;
4. Performance-focused compensation – Encourage and
support a high performance culture; and
5. Setting appropriate performance conditions – In line
with the agreed risk profile of the business.
The proposed changes to the policy are set out in the table below:
Element of
remuneration
Base salary and benefits
Pension
Annual bonus
Current policy
Amendment to policy
Reason for change
No change
N/A
No change
N/A
No change
N/A
Salaries are reviewed
annually and any changes
are normally effective
from 1 January in the
financial year.
A competitive level of
benefits is provided.
Pension provision for all
Executive Directors is
aligned with the wider
workforce (currently 3% of
salary).
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
121
GOVERNANCE
Remuneration policy continued
Element of
remuneration
Long-term incentive plan
Current policy
Amendment to policy
Reason for change
Maximum opportunity of
100% of base salary.
Three-year vesting
period, plus a two-year
post-vesting holding period.
Awards will not be
subject to any formulaic
performance conditions.
Maximum opportunity of
200% of base salary.
Three-year performance
period plus a two-year
post-vesting holding period.
The majority of the awards
will be based on financial
metrics, with the balance
based on strategic metrics.
Exceptional maximum
opportunity of 300% of
base salary.
Introduction of the time-
based element provides a
stronger retention tool by
providing management
with greater visibility over
long-term remuneration
outcomes in a very
challenging market and the
volatile UK travel industry.
Reduction in overall
opportunity in line with
shareholder expectations
when performance
conditions are removed.
Facilitates much greater
alignment between the
Executive Directors and
wider senior management
team by enabling all
individuals to participate in
one single incentive plan.
No change
N/A
Shareholding requirement
200% of base salary
to be built up over a
five-year period and then
subsequently held.
Executive Directors are
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).
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
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.
Operation
Opportunity
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:
•
•
•
•
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.
•
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
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
regard was given to his
considerable shareholding in
the Company, and the desire
to focus the remuneration
structure on a long-term
strategy.
GOVERNANCE
Remuneration policy continued
Element of
remuneration
Benefits
Provides a competitive level
of benefits.
Pension
Provides market competitive
retirement benefits.
Operation
Opportunity
Performance metrics
used, weighting and
time period applicable
The maximum will be set
at the cost of providing the
benefits described.
None
Pension provision for all
Executive Directors is
aligned with the wider
workforce (currently 3% of
salary).
None
The Executive Directors
receive benefits, which
include family private health
cover.
The Remuneration
Committee recognises
the need to maintain
suitable flexibility in the
determination of benefits
that ensure it is able to
support the objective of
attracting and retaining
talent. 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.
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.
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Element of
remuneration
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.
Operation
Opportunity
The maximum bonus
opportunity is 100% of base
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.
Malus will apply up to
the date of the bonus
determination and clawback
will apply for three years
from the date of bonus
determination.
Performance metrics
used, weighting and
time period applicable
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 that 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 believes that the
bonus outcome is not a fair
and accurate reflection of
business performance.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
125
GOVERNANCE
Operation
Opportunity
Maximum annual award of
up to 100% of base salary.
Performance metrics
used, weighting and
time period applicable
Awards will not be
subject to any formulaic
performance conditions.
Discretion may be exercised
in cases where the
Remuneration Committee
believes that the vesting
outcome is not a fair and
accurate reflection of
business performance. This
discretion may be used to
either increase or reduce the
formulaic vesting outcome.
UK scheme in line with
HMRC limits as amended
from time to time.
None
N/A
None
Remuneration policy continued
Element of
remuneration
Long-Term
Incentive Plan ('LTIP')
Awards are designed to
incentivise the Executive
Directors to maximise total
shareholder returns.
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.
Awards are granted
annually to Executive
Directors in the form of nil
cost options.
These will vest at the end of
a three-year period subject
to the Executive Director’s
continued employment at
the date of vesting.
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
three-year period from grant
to vesting with clawback
applying for the two-year
period post vesting.
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).
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 into force are
not subject to this holding
requirement.
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Performance metrics
used, weighting and
time period applicable
None
Element of
remuneration
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.
Operation
Opportunity
The base fees for
Non-Executive Directors
are set at a market rate.
In general, the level
of fee increase for the
Non-Executive Directors
will be set taking account of
any change in responsibility
and will take into account
the general rise in salaries
across the UK workforce.
The Company will pay
reasonable expenses
incurred by the Chairman
and Non-Executive
Directors.
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
may be paid 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 years based
on equivalent roles in an
appropriate comparator
group used to review
salaries paid to the
Executive Directors. Fees
may be reviewed more
regularly than this in
exceptional circumstances,
such as a significant
increase in the size or
complexity of the business.
Non-Executive Directors
do not participate in any
variable remuneration or
benefits arrangements.
GOVERNANCE
Remuneration policy continued
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 Policy table. 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 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 200% of salary (other than in exceptional
circumstances where up to 300% 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.
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:
•
•
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.
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Where an existing employee is promoted to the Board, the policy 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 six months’ notice. The Remuneration Committee’s policy for setting notice periods is that a six-
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 six months following the first year
of employment.
The Non-Executive Directors of the Company (including the Chairman) do not have service agreements.
The Non-Executive Directors are appointed by letters of appointment, which set out the terms and conditions
of their appointment.
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
Elaine O’Donnell
3 July 2018
Richard Pennycook
1 April 2019
Justine Greening
4 March 2021
3 months
3 months
3 months
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 27 January 2023 and to re-election at any subsequent AGM at which the Non-Executive
Directors stand for re-election.
GOVERNANCE Remuneration policy continued
Payment for loss of office
The Remuneration Committee will honour Executive Directors’ contractual entitlements. Service agreements 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.
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
Salary, benefits and
pension
Treatment on exit
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 Director 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 Director 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.
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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
Annual bonus plan
LTIP
Change of control
Discretion
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.
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 that has provided a
material enhanced value to shareholders,
which will be fully explained to shareholders.
In all cases any applicable performance
conditions must be satisfied.
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 2023 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
131
GOVERNANCE
Remuneration policy continued
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. The 2023 LTIP will enable greater alignment
between the incentives operated for our Executive Directors
and the senior management team.
Illustrations of application of the Policy
The following charts 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:
• The base salary levels are those in effect as at the date of
the 2023 AGM.
• Fixed elements comprise base salary, pension and
other benefits.
• Benefits levels are assumed to be the same as in the 2022
financial year for each Executive Director.
• Bonus opportunity and LTIP award levels are the
maximum levels set out in the Policy table.
• The LTIP vesting is assumed to be 100% of the maximum
under each performance scenario.
• 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.
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,
Pier Group sessions and regular appraisals.
We also run Pier Group PLUS sessions, which gives David
Kelly, our designated Non-Executive Director for employee
engagement, a chance to sit in with our colleagues and
hear their voice first hand. You can read more about how
we engage with our workforce on page 63.
CEO
Maximum with 50%
SP appreciation
Maximum
On-target
29%
34%
28%
28%
14%
£794,086.11
33%
33%
£681,892.61
41%
20%
39%
£569,699.11
Minimum
100%
£233,118.61
0
250,000
500,000
750,000
1,000,000
Fixed pay (salary, benefits and pension)
Bonus
LTIP
Potential outcome of a 50% share price increase
CFO
Maximum with 50%
SP appreciation
Maximum
29%
34%
28%
33%
28%
14%
£1,011,580.00
33%
£868,580.00
On-target
41%
20%
39%
£725,580.00
Minimum
100%
£296,580.00
0
250,000
500,000
750,000
1,000,000
1,250,000
Fixed pay (salary, benefits and pension)
Bonus
LTIP
Potential outcome of a 50% share price increase
CMO
Maximum with 50%
SP appreciation
Maximum
On-target
Minimum
29%
34%
28%
33%
28%
14%
£1,166,900.00
33%
£1,001,900.00
41%
20%
39%
£836,900.00
100%
£341,900.00
0
250,000
500,000
750,000
1,000,000
1,250,000
Fixed pay (salary, benefits and pension)
Bonus
LTIP
Potential outcome of a 50% share price increase
132
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Annual report on remuneration
The Remuneration Committee’s Annual Report on
remuneration for the year ended 30 September 2022 is set
out below. The statutory auditor is required to report on the
following information up to and including the Statement of
Directors Shareholdings requirement and Share Interests.
Strategic priority
1 Investing in talent and technology.
2 Become a brilliant digital brand.
How remuneration links with strategy
It is essential that a fair, competitive and attractive 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 pages 19-20. In the table
below, we summarise how the Company’s strategic priorities
are aligned with the Remuneration Policy.
3 Optimise our direct and differentiated supply.
4 Grow our share of B2B beach.
5 Diversify into adjacent beach holiday markets.
6 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
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
Employee
Engagement
Score
Annual bonus
1 year
Employee satisfaction is impacted by the following strategic
priorities:
1
2
Prompted brand
consideration
Annual bonus
1 year
Progress towards the following strategic priorities drive our
brand consideration:
1
2
3
4
5
6
Passenger
growth
Annual bonus
1 year
Passenger numbers growth will be driven by the following
strategic priorities:
1
2
3
4
5
6
Absolute and
Relative Total
Shareholder
Return ('TSR')
LTIP scheme
3 years
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
Group, long haul
and Classic TTV
LTIP scheme
3 years
Progress towards the following strategic priorities drive an
increase in the total transaction value for bookings made by the
Group, Classic and long-haul:
1
2
3
4
5
6
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
133
GOVERNANCE
Annual report on remuneration continued
Single total figure of remuneration
Executive and Non-Executive Directors (Audited)
The tables below set out the single total figure of remuneration and breakdown for each Executive and Non-Executive
Director in respect of the 2022 financial year. Comparative figures for the 2021 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
Fixed Pay
Variable Pay
Base Salary
Benefits1
Pension2
Total Fixed Pay
Bonus3
LTIP4,5,6
Total Variable Pay
Total Single Figure of Remuneration
1 Taxable benefits received were family medical insurance.
2022
(£’000)
214
2
4
220
172
–
172
392
2021
(£’000)
207
2
1
210
–
–
–
210
2022
(£’000)
269
2021
(£’000)
250
2
5
276
219
64
283
559
1
1
252
–
224
224
476
2 Pension benefits are employer contributions to the Group workplace pension scheme (3% of eligible earnings) in line with the rest of the workforce.
3 Annual bonus payments for performance in the relevant financial year.
4 The value of the LTIP for 2021 for Simon Cooper related to the 2019 award and the value of his LTIP for 2022 related to the 2020 award. Each award had a
three-year performance period, ending 12 February 2022 and 3 December 2022 respectively. Based on performance during those periods, the Remuneration
Committee determined that none of the awards would vest, meaning both awards lapsed in full.
5 The value of Shaun Morton's LTIP for 2022 relates to two awards that were granted prior to his appointment to the Board. His FY20 LTIP award had a three-
year vesting period ending 30 September 2022 and his FY19 RSA had a three-year vesting period ending on 15 October 2021. Both awards were subject to
continued employment (no performance conditions). In respect of the vesting of these awards, there is no value attributable to share price appreciation.
6 The value of Shaun Morton's LTIP for 2021 relates to two awards that were granted prior to his appointment to the Board. His 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. To the extent that these awards have vested, there is no
value attributable to share price appreciation.
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Single total figure of remuneration for Non-Executive Directors (audited)
Richard Pennycook David Kelly
Elaine O’Donnell
Justine Greening1
2022
(£’000)
2021
(£’000)
2022
(£’000)
2021
(£’000)
2022
(£’000)
2021
(£’000)
2022
(£’000)
2021
(£’000)
Fixed Pay
Fees
161
161
Benefits
Pension
–
–
–
–
Total Fixed Pay
161
161
Variable Pay
Bonus
LTIP
Total Variable Pay
–
–
–
–
–
–
63
–
–
63
–
–
–
63
–
–
63
–
–
–
57
–
–
57
–
–
–
57
–
–
57
–
–
–
48
–
–
48
–
–
–
28
–
–
28
–
–
–
Total Single Figure of Remuneration
161
161
63
63
57
57
48
28
1 The 2021 remuneration data reflects that Justine Greening was appointed Non-Executive Director from 4 March 2021.
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)
2022 annual bonus awards and performance targets
For the year ended 30 September 2022, the maximum bonus opportunity for Simon Cooper and Shaun Morton was equal to
100% of salary.
Performance
metric
Group Adjusted
Profit Before Tax
Performance level
Actual bonus paid
Weighting
Threshold
Target Maximum Actual
% of
maximum
% of
salary
50%
£11.9m
£13.2m
£14.5m
£14.1m
88%
44.2%
Employee
Engagement Score
12.5%
Net Promoter Score
12.5%
Prompted brand
consideration
12.5%
6.5
49
8.8
7.2
58
9.5
7.9
67
10.2
8.1
47
9.9
100%
12.5%
0%
0%
84%
10.5%
Group PAX number
12.5%
1.10m
1.25m
1.40m
1.42m
100%
12.5%
Total
100%
79.7%
No discretion was applied in determining the annual bonus outcome.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
135
GOVERNANCE
Annual report on remuneration continued
Long-term incentives awarded in FY20 with performance period ending in FY22
Simon Cooper was granted an LTIP award on 3 December 2019 that vested in December 2022. Performance under
the award was 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 2022 and the three-year performance period in
relation to the TSR element ended on 3 December 2022.
The EPS condition applying to 70% of the awards is provided in the table below:
Performance tier
Cumulative EPS over the three financial years
FY20, FY21 and FY22
Vesting
Below threshold
Less than 77.7p
Threshold
Maximum
77.7p
94.9p
0%
25%
100%
Between threshold
and maximum
Between 77.7p and 94.9p
Pro rata between 25% and
100%
Actual EPS:
(3.9p)
0%
The Absolute TSR condition applying to 30% of the award is provided in the table below:
Performance tier
Annualised TSR over the three year period to
3 December 2022
Vesting
Below threshold
Less than 8%
Threshold
Maximum
8%
15% or above
0%
25%
100%
Between threshold
and maximum
Between 8% and 15%
Pro rata between 25% and
100%
Actual TSR
(36.5%)
0%
Based on the above performance outcome, none of the award vested. No discretion was applied to the final vesting outcome
shown above.
Long-term incentives awarded in 2022 (audited)
The table below sets out the details of the Long-Term Incentive Plan awards granted in the 2022 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
Number
of shares
awarded
Exercise
Price (£)
Percentage of
award vesting
at threshold
performance
Performance
period end
date
Performance
conditions
Simon
Cooper
LTIP –
nil cost
option
100% of
salary
£215,757 84,343
Nil
25%
Shaun
Morton
LTIP –
nil cost
option
200% of
salary
£550,000 214,961
Nil
25%
25 February
2025
Absolute TSR
(25%)
25 February
2025
Relative TSR
(25%)
30 September
2024
Group TTV
(25%)
30 September
2024
Classic TTV
(12.5%)
30 September
2024
Long Haul TTV
(12.5%
25 February
2025
Absolute TSR
(25%)
25 February
2025
Relative
TSR (25%)
30 September
2024
Group TTV
(25%)
30 September
2024
Classic TTV
(12.5%)
30 September
2024
Long Haul TTV
(12.5%)
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
137
GOVERNANCE
Annual report on remuneration continued
The awards were granted on 25 February 2022. The number of shares awarded is calculated using the closing share price on
24 February 2022, which was £2.56.
The awards are subject to the following performance criteria:
Measure
Description
Weighting Threshold Target
Maximum
Absolute TSR
Annualised absolute TSR
Relative TSR
Ranking the company’s TSR relative to
the constituents of the FTSE All Share
Travel & Leisure Index
25%
25%
5%
Median
N/A
N/A
15%
Upper
quartile
Group TTV
Total transaction value of confirmed
orders across all brands in the Group
25%
£798.9m
£876.8m
£958.3m
Classic TTV
Total transaction value of confirmed orders
made via Classic Collection Holidays and
Classic Package Holidays businesses
Long Haul
TTV
Total transaction value of confirmed
orders for long haul bookings across all
brands in the Group
12.5%
£101.4m
£117.0m
£133.7m
12.5%
£48.5m
£59.9m
£72.5m
25% of the Awards will vest for threshold performance, increasing on a straight line basis to 62.5% for target performance
(where applicable) and to 100% for maximum performance.
Payments to past directors
There were no payments made to past directors during FY22.
Statement of directors’ shareholdings and share interests (audited)
Share plan
awards subject
to performance
conditions
Share plan
awards subject
to continued
employment
Director
Simon Cooper
222,6912
Shaun Morton
419,879
–
–
Share plan
interests vested
but unexercised
Shares held
outright1
50,2983
9,379,744
104,6444
3,030
Between 30 September and the date of this report (7 December 2022), Simon Cooper and Shaun Morton’s shareholdings
and share interests remained unchanged.
1 This information includes holdings of any connected persons.
2 This figure includes the 2020 LTIP award for which the performance period ended 30 September 2022. Although the performance period outcome was nil, the
award did not formally lapse until after the period under review.
3 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 and 2019 LTIP awards lapsed in full as the performance outcomes were nil.
4 Prior to his appointment to the Board, Shaun was granted awards over a total of 104,644 shares during his tenure as Director of Finance, which have vested
between September 2020 and September 2022 and have not yet been exercised.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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 2022
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:
Shares held for purpose of shareholding requirement1
Director
Shareholding
requirement
Number of shares
% of salary2
Shareholding
requirement met?
Simon Cooper
200% of salary
9,406,401
4,395%
Shaun Morton3
200% of salary
55,461
20%
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 100.80 pence as at 30 September 2022 (the last business day of the financial year ending 30 September 2022) 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 2022
Richard Pennycook
48,267
David Kelly
10,258
Elaine O’Donnell
11,447
Justine Greening
3,636
Between 30 September and 7 December 2022, the Non-Executive Director’s interest in shares remained unchanged.
Comparison of overall performance and pay (TSR graph)
The graph right 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 2022.
350
300
250
200
150
100
50
0
n
r
u
t
e
r
l
r
e
d
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h
e
r
a
h
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t
a
t
n
e
m
t
s
e
v
n
i
0
0
1
£
g
n
m
u
s
s
a
(
i
IP O
Septe m ber
2 0 1 5
Septe m ber
2 0 1 6
Septe m ber
2 0 1 7
Septe m ber
2 0 1 8
Septe m ber
2 0 1 9
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2 0 2 0
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2 0 2 1
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2 0 2 2
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FTSE 250
FTSE Small Cap
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
139
GOVERNANCE
Annual report on remuneration continued
Chief Executive Officer historical remuneration
The table below sets out the total remuneration delivered to the Chief Executive Officer since the IPO in 2015:
Chief Executive Officer
2022
2021
2020
2019
2018
2017
2016
2015
Total Single Figure (£000s)
392
210
89
305
316
201
239
131
Annual bonus payment level
achieved (% of maximum
opportunity)
79.7% –
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 62-67.
Relative importance of the spend on pay
The table below sets out the relative importance of spend on pay in the 2021 and 2022 financial years compared with other
disbursements. All figures provided are taken from the relevant Company Accounts.
Disbursements from profit
in 2022 financial year
Disbursements from profit
in 2021 financial year
Director
Profit distributed by way of
dividend
Overall spend on pay including
Executive Directors
(£'m)
–
34.5
(£'m)
% change
–
23.1
N/A
49.3%
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 2022. The calculation has been performed in line
with ‘Option A’ and is based on the total single figure of remuneration methodology.
Year
2021/22
Methodology
25th percentile
pay ratio
Median pay ratio
75th percentile
pay ratio
Option A
18:1
10:1
7:1
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 2022
for individuals employed as at the financial year-end. The pay ratio has been calculated using the actual pay and benefits
received in FY22. 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.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
The table below sets out the salary, and total pay and benefits, for each of the three quartile employees (P25, P50 and P75).
25th percentile (P25) Median (P50)
75th percentile (P75)
Salary
£21,630
Total pay and benefits
£22,300
£38,000
£39,200
£57,750
£59,000
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.
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 2021 to
2022 compared with the average percentage change for employees.
Salary/fees
Benefits
Bonus
Executive Directors
Simon Cooper
Shaun Morton
Non-Executive Directors
Richard Pennycook
David Kelly
Elaine O’Donnell
Justine Greening1
Wider workforce
Average employee of the Company
4%
10%
–
–
–
–
–
Average employee – Group wide1
6%2
–
–
–
–
–
–
–
100%
100%
–
–
–
–
100%
1
Justine Greening was appointed to the Board on 4 March 2021, therefore, there is no FY21 comparison.
2 Average employee percentage change is based on earnings of full time employees that were employed throughout the current and comparison period.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
141
GOVERNANCE
Annual report on remuneration continued
Shareholder voting at annual general meeting
The Committee is committed to shareholder dialogue and seeks to ensure optimal alignment for all stakeholders and that
shareholders’ views are taken into account in shaping remuneration policy and practice. The Directors’ Remuneration Policy
and the Directors’ Annual Report on Remuneration were each subject to a shareholder vote at the AGM on 25 February 2022,
the results of which were as follows:
Resolution
Ordinary resolution to approve the
Directors’ Remuneration Policy
Ordinary resolution to approve the
Directors’ Remuneration Report
For
134,600,923
(97.97%)
136,851,675
(99.61%)
Against
2,787,219
(2.03%)
532,471
(0.39%)
Withheld
18,810
22,806
Implementation of remuneration policy in financial year 2023
The Remuneration Committee proposes to implement the Policy for 2023 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.
Salary
For this year, the Remuneration Committee has determined that a salary increase of 4% will be applied for Simon Cooper
and Shaun Morton, effective 1 January 2023. This is in line with the average increase awarded to the general workforce.
Zoe Harris will receive a pay rise of 9%, effective 1 January 2023, to reflect her strong performance and development in
role (including taking on operational responsibility in the contact centre and expanding into a 'Chief Customer Officer role'
alongside her Chief Marketing Officer role.
Name
Simon Cooper
Shaun Morton
Zoe Harris
NED fees
Salary (£)
2023
2022
Percentage Change
£224,300
£215,757
£286,000
£275,000
£330,000
£302,200
5%
5%
9%
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
economic environment and uncertainty in the sector, the decision was made to defer the review for a further year. The Board
consulted with PwC to understand market benchmarks and considered what general pay increases had been made to the
wider workforce in the period (being 1.5% in January 2020, 1% in January 2021, 4.2% in January 2022 and 4% to apply from
January 2023 (11% in aggregate)). The Board decided to increase the Chairman fee and Base NED fees in line with increases
made to the wider workforce, with effect from 1 January 2023. There is no change to the fees for Senior Independent Director,
Chair of Audit Committee or Chair of Remuneration Committee
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Position
Chairman Fee
Base Fee
Fee
New Fee (from 1 January 2023)
£161,000
£178,800
£48,000
£53,300
Additional fees are paid for:
Senior Independent Director
Chair of Audit Committee
£6,000
£9,000
Chair of Remuneration Committee
£9,000
£6,000
£9,000
£9,000
No additional fee is paid to the Chairman as the Chair of the Nomination Committee.
Benefits and pension
LTIP award
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 and the bonus will continue to
be based on both financial and non-financial metrics.
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.
It is intended that, subject to shareholder approval of the
proposed Policy and 2023 LTIP at the 2023 AGM, a grant
under the LTIP will be made during FY23, with award levels
of 50% of salary for Simon Cooper and 100% of salary for
Shaun Morton and Zoe Harris. In line with the proposed
Policy, each award will vest after three years with a further
two-year holding period, subject to continued employment
over the vesting period.
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.
GOVERNANCE
Annual report on remuneration continued
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 seven times during FY22 and
member attendance is set out below:
David Kelly (Chair)
Elaine O’Donnell
Richard Pennycook
Justine Greening
Member from
August 2015
July 2018
April 2019
March 2021
Meetings attended
7/7
7/7
7/7
6/7
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 the 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 £83,500 for their advice during the year to 30 September 2022.
On behalf of the board
David Kelly
Chair of the Remuneration Committee
7 December 2022
144
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
GOVERNANCE
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:
Section of report
Page reference
Employee engagement
(page 63)
Employment of disabled
persons
(page 67)
Future developments of
the business
(page 11-20)
Stakeholder engagement
and s.172 statement
(pages 53-60)
Viability statement
(page 50-52)
Directors’ interests
(page 88-91, 97,
138-139)
Directors Responsibilities
Statement
(page 160)
Greenhouse gas
emissions
(page 72)
Risk management
Strategic report (page
36-49) and note 22 to
the consolidated financial
statements
Human rights and anti-
bribery and corruption
(page 81)
Diversity
(page 66-65, 104-105)
Non-financial key
performance indicators
(page 24-27)
Directors’ report
All sections under the heading “Governance” on page 84
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 2022.
Strategic report
All sections under the heading “Strategic Report” on
page 8 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 39-49.
Management report
This Directors’ report (pages 84-160) together with the
Strategic report (pages 8-82) form the Management report
for the purposes of DTR 4.1.8R.
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 92. 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 81-91. Biographical details of all
the directors serving at the date of this annual report are
shown on pages 81-91. 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, 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 themselves
for re-appointment by the shareholders.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
All Directors will retire and stand for re-election at the
2023 AGM.
Amendment of Articles of Association
The Company’s Articles of Association ('Articles') 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.
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 2022 comprised 166,258,172 ordinary shares
of £0.01 each. Further information regarding the Company’s
issued share capital can be found on page 196 of the
financial statements. Details of the movements in issued
share capital during the year are provided in note 20 to the
Group’s financial statements contained on page 196. All the
information detailed in note 20 on page 196 forms part of
this Directors’ report and is incorporated into it by reference.
At the Annual General Meeting of the Company held on 25
February 2022 the Directors were granted authority from
shareholders to allot shares in the capital of the Company
up to a maximum nominal amount of £1,105,258.38
(110,525,838 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
2023 AGM.
Authority to purchase own shares
The Company was authorised by shareholders at the last
AGM to purchase, in the market, up to 16,578,876 shares
(equivalent to 10% of the Company’s ordinary share capital
as at 4 January 2022). No shares were bought back under
this authority for the year ended 30 September 2022. This
authority will expire at the conclusion of the 2023 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. 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 that carry
special rights with regard to control of the Company. There
are no shares relating to an employee share scheme that
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 them, unless all amounts
presently payable by them 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.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
147
GOVERNANCE Other statutory and regulatory disclosures continued
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
sometimes accompanied by a CSOP market value option
for tax efficiency purposes. Shareholder approval will be
sought at the 2023 AGM for the establishment of a new
LTIP which will be time-based awards only. If approved,
nil cost share options will be granted to Executive
Directors and senior management. For more information
on the new LTIP see page 115 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 114-144.
Annual General Meeting
The Annual General Meeting for 2023 will be held at 11 am
on 27 January 2023 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
(www.onthebeachgroupplc.com/investor-centre/rns).
The following figures 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 has 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
9,379,774 shares (5.64% of the issued share capital).
Number of
shares
Nature of holding as
per disclosure
Date of Notification
Name of Shareholder
BlackRock Inc
BlackRock Inc
FMR LLC
9,030,811
8,642,209
8,775,768
Mawer Investment Management Ltd
19,275,349
Mawer Investment Management Ltd
17,947,882
BlackRock Inc
BlackRock Inc
BlackRock Inc
BlackRock Inc
9,552,300
9,545,494
9,975,916
9,379,048
Mawer Investment Management Ltd
16,460,473
BlackRock Inc
BlackRock Inc
BlackRock Inc
Baillie Gifford & Co
BlackRock Inc
BlackRock Inc
BlackRock Inc
BlackRock Inc
FMR LLC
BlackRock Inc
BlackRock Inc
BlackRock Inc
Liontrust Investment Partners LLP
Hawksford Trustees Jersey Limited (as
trustees of the SC 2014 Settlement)
BlackRock Inc
BlackRock Inc
BlackRock Inc
BlackRock Inc
9,383,826
9,383,238
9,688,043
8,122,227
9,093,635
9,145,571
9,079,303
9,159,766
12,410,930
9,282,712
9,280,806
9,319,039
9,763,527
7,315,140
8,897,678
8,898,106
8,922,976
8,918,430
Mawer Investment Management Ltd
8,259,902
BlackRock Inc
Baillie Gifford & Co
BlackRock Inc
BlackRock Inc
BlackRock Inc
BlackRock Inc
8,909,602
8,965,816
8,910,805
8,878,005
8,880,243
Below 5%
5.44%
5.21%
5.29%
11.62%
10.82%
5.75%
5.74%
6.01%
5.65%
9.92%
5.65%
5.65%
5.83%
4.9%
5.47%
5.5%
5.47%
5.52%
7.47%
5.58%
5.57%
5.59%
5.87%
4.4%
5.34%
5.34%
5.36%
5.36%
4.97%
5.35%
5.39%
5.35%
5.33%
5.33%
Below 5%
9 December 2021
12 January 2022
13 January 2022
10 February 2022
25 February 2022
28 February 2022
3 March 2022
8 March 2022
8 March 2022
9 March 2022
15 March 2022
16 March 2022
21 March 2022
30 March 2022
17 May 2022
19 May 2022
20 May 2022
23 May 2022
31 May 2022
20 June 2022
24 June 2022
6 July 2022
15 August 2022
23 August 2022
3 October 2022
4 October 2022
25 October 2022
2 November 2022
2 November 2022
7 November 2022
9 November 2022
9 November 2022
21 November 2022
22 November 2022
1 December 2022
Between 30 September 2022 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.
GOVERNANCE
Other statutory and regulatory disclosures continued
Transactions with related parties
There were no related party transactions during the year.
See note 25 to the consolidated financial statements.
Events post year-end
On 7 December 2022, the Group refinanced its credit
facilities with Lloyds and NatWest. This included cancelling
its current facilities and entering into a new facility for £60m
expiring in December 2025.
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 196-202 in note 22
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.
Results and dividends
The Group’s and Company’s audited financial statements for
the year are set out on pages 162-216.
Whilst the Group operates a highly cash generative business
model, a majority of profits are reinvested in the business to
support further growth.
No interim dividend was declared during FY22. Given the
Group's focus on investing for growth, the Board is not
recommending a final dividend in respect of FY22.
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
(4)
page 137
Save as set out above, there is no other information to
disclose in relation to the provisions of Listing Rule 9.8.4R.
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 to the AGM.
Disclosure of information to the auditor
Each of the Directors has confirmed that:
i. so far as the Director is aware, there is no relevant
audit information of which the Company’s auditors are
unaware; and
ii.
the Director has taken all the steps that they ought to
have taken as a Director to make themselves 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 7 December 2022.
Approved by the Board and signed on its behalf:
K Vickerstaff
Company secretary
7 December 2022
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
GOVERNANCE
GOVERNANCE Independent 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 2022 and of
the group’s profit for the year then ended;
•
•
the group financial statements have been properly prepared in accordance with UK adopted international accounting
standards;
the parent company financial statements have been properly prepared in accordance with United Kingdom Generally
Accepted Accounting Practice; and
•
the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
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 2022 which comprise:
Group
Parent company
Consolidated Income Statement and Statement
of Comprehensive Income for the year then ended
Balance sheet as at 30 September 2022
Consolidated Balance Sheet as at 30 September 2022
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 25 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 UK adopted international accounting standards. 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 “Reduced Disclosure Framework” (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 believe that the audit evidence we have obtained is sufficient and appropriate to provide
a basis for our opinion
Independence
We are independent of the group and parent 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.
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.
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Conclusions relating to going concern
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 Group’s ability to continue as a going concern. 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. supplier 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
2024. Our challenge was particularly focused around the consideration of current macro-economic factors including the
rising cost of living, increased interest rates 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.
• 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, downside scenario and a
reverse stress test scenario, where zero revenue is modelled. On 7 December 2022 the Group entered into a new revolving
credit facility of £60 million expiring in December 2025.
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 for a period to March 2024.
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
• We performed an audit of the complete financial information of nine components.
• The components where we performed full audit procedures accounted for 100% of profit before
tax adjusted for the impact of exceptional items, 100% of Revenue and 100% of Total assets.
Key audit matters
• Revenue recognition – risk of management override through journals made to revenue outside of
the standard booking process.
• Accounting for exceptional items in relation to legacy Covid-19 balances and Covid-19 related
cancellations in year.
Materiality
• Overall Group materiality of £969,000 which represents 1% of gross margin adjusted for gross
margin adjusted for exceptional items.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
153
GOVERNANCE Independent auditor's report to the members
of On The Beach Group plc continued
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 nine reporting components of the Group, all are within the
UK and represent the principal business units within the Group.
Of the nine components selected, we performed an audit of the complete financial information of all nine components
(“full scope components”) which were selected based on their size or risk characteristics.
The reporting components where we performed audit procedures accounted for 100% (2021: 100%) of the Group’s
profit before tax adjusted for the impact of exceptional items, 100% (2021: 100%) of the Group’s Revenue and 100%
(2021: 100%) of the Group’s Total assets.
All audit work performed for the purposes of the audit was undertaken by the Group audit team.
Climate change
There has been increasing interest from stakeholders as to how climate change will impact On the Beach Group plc.
The Group has determined that the most significant future impacts from climate change on its operations will be in the
form of physical risks in respect of extreme heat and transition risks in respect of carbon pricing, consumer sentiment and
talent retention. These are explained on pages 74 to 82 in the required Task Force for Climate related Financial Disclosures
and on pages 39 to 49 in the principal risks and uncertainties, which form part of the “Other information,” rather than the
audited financial statements. Our procedures on these disclosures therefore consisted solely of considering whether they are
materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear
to be materially misstated.
Our audit effort in considering climate change was focused on evaluating management’s assessment of the impact of
climate risk, physical and transition, and ensuring that the effects of material climate risks disclosed on pages 74 have been
appropriately reflected in the carrying value of goodwill. We also challenged the Directors’ considerations of climate change in
their assessment of going concern and viability and associated disclosures.
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.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Key observations
communicated to the Audit
Committee
Our 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.
Risk
Revenue recognition (£144.1m value
of risk, PY comparative £21.2m)
Refer to the Audit Committee Report
(page 106); Accounting policies (page
168); and Note 4 of the Consolidated
Financial Statements (page 169)
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.
Our response to the risk
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 net revenue recorded with
booking volumes, and monthly gross
revenue and net revenue 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 procedures
which covered 100% of revenue.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
155
GOVERNANCE
Independent auditor's report to the members
of On The Beach Group plc continued
Key observations
communicated to the Audit
Committee
Based on our procedures performed
we are satisfied that the judgements
applied by management in relation
to the legacy Covid-19 balances are
appropriate.
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
Accounting for exceptional items in
relation to legacy Covid-19 balances
and Covid-19 related cancellations
in year
Refer to the Audit Committee Report
(page 106); Accounting policies (page
168); and Note 6 of the Consolidated
Financial Statements (page 181)
The Group continues to hold legacy
balances as well as record and disclose
exceptional cancellations in the year
ended 30 September 2022 which
have arisen as a result of the Covid-19
pandemic. We consider that there is
a risk in relation to the presentation
and disclosure of exceptional items
including the criteria applied by
management in identifying items that
are deemed to be exceptional and the
judgement (if relevant) in relation to
any re-assessment/release of legacy
Covid-19 balances currently held.
These include the airline receivable
and associated provision, and the
other legacy Covid-19 provisions.
Our response to the risk
We have performed the following
procedures:
Assessed the design and
implementation of the key controls
over the appropriateness of the
exceptional items.
Cancellations recorded in year
Critically challenged management’s
criteria to identify and disclose
cancellations as exceptional or
underlying.
Independently reperformed
management’s calculation of the
cancellations processed in the year
using a data analytics approach to
vouch that those bookings classified
are exceptional in accordance with
managements policy.
Accounting for legacy Covid-19
balances
Challenged management’s rationale
in relation to any changes proposed
in respect of the legacy balances
which included an assessment of
the appropriateness of any reversal
of provisions previously held and the
corresponding classification of those
changes within the Income Statement.
Presentation and disclosure
Challenged management’s rationale
for alternative performance measures,
their role in reporting a fair, balanced
and understandable assessment of
performance and whether appropriate
reconciliations to GAAP measures are
provided.
Critically challenged the
appropriateness of the presentation
of exceptional items in the financial
statements including Income
Statement, notes to the accounts and
alternative performance measures
used in the front end in the context of
the FRC guidance in this area.
We performed full scope procedures
which covered 100% of exceptional
items.
In the prior year, our auditor’s report included a key audit matter in relation to assessment of the carrying value of goodwill,
intangible, tangible and company investments. In the current year, this is no longer a key audit matter on the basis that the
level of uncertainty associated with the Covid-19 pandemic has reduced in the year following the easing of travel restrictions.
156
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Other information
The other information comprises the information included in
the annual report set out on pages 1 to 162, 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 this gives rise
to 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
the strategic report and the directors’ report have
been prepared in accordance with applicable legal
requirements.
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
We determined materiality for the Group to be £961,000
(2021: £807,000), which is 1% of gross margin adjusted
for exceptional items. In 2021, we set materiality at 5%
of Normalised profit before tax adjusted for the impact of
exceptional items. . The increase in the Group’s trading
activity during 2022 caused us to consider alternative
measures on which to base materiality for 2022. We
considered the focus of stakeholders and users of the
financial statements and subsequently determined
that gross margin adjusted for exceptional items is an
appropriate measure for materiality given the nature of
the Group’s activities and an increase in trading activity in
the year.
We determined materiality for the Parent Company to be
£961,000 (2021: £807,000), which is 2% (2021: 2%) of
Equity, 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%
(2021: 75%) of our planning materiality, namely £721,000
(2021: £605,000).
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
£48,000 (2021: £40,000), 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
157
GOVERNANCE Independent auditor's report to the members
of On The Beach Group plc continued
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.
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
Corporate Governance Statement
We have reviewed 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 by the
Listing Rules.
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 52;
• 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 52;
• Director’s statement on whether it has a reasonable
expectation that the group will be able to continue in
operation and meets its liabilities set out on page 52;
• Directors’ statement on fair, balanced and
understandable set out on page 160;
• Board’s confirmation that it has carried out a robust
assessment of the emerging and principal risks set out
on page 38;
• The section of the annual report that describes the
review of effectiveness of risk management and internal
control systems set out on page 94; and;
• The section describing the work of the audit committee
set out on page 107.
Responsibilities of directors
As explained more fully in the directors’ responsibilities
statement set out on page 160, 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.
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.
158
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
However, the primary responsibility for the prevention
and detection of fraud rests with both those charged with
governance of the company and management.
• 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 (UK adopted international accounting
standards, 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.
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
• 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 4 years,
covering the years ending 30 September 2019 to 30
September 2022.
• The audit opinion is consistent with the additional report
• We understood how On the Beach Group plc is
to the audit committee.
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
7 December 2022
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.
We also involved internal specialists as appropriate in
our procedures. 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
159
GOVERNANCE Statement of Director’s 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 financial
statements in accordance with UK-adopted 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:
• 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;
• Make judgements and accounting estimates that are
reasonable and prudent;
• 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 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:
• 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.
Shaun Morton
Chief Financial Officer
7 December 2022
160
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
GOVERNANCE
GOVERNANCE Financial
Statements
Consolidated Income
Statement and Statement of
Comprehensive Income
Consolidated Balance Sheet
Consolidated Statement
of Cash Flows
Consolidated Statement of
Changes in Equity
Notes to the Consolidated
Financial Statements
Company Balance Sheet
Company Statement of
Changes in Equity
Notes to the Company
Financial Statements
164
165
166
167
168
206
207
208
Glossary of Alternative
Performance Measures (‘APMs’) 210
Shareholder information
217
162
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
163
Consolidated Income Statement and
Statement of Comprehensive Income
Year ended 30 September 2022
Revenue
Cost of sales
Gross profit
Administrative expenses
Group operating profit/(loss)
Finance costs
Finance income
Net finance costs
Profit/(loss) before taxation
Taxation (charge)/credit
Profit/(loss) for the year
Other comprehensive income/(loss):
Net gain/(loss) on cash flow hedges
Total comprehensive income/(loss) for the year
Attributable to:
Equity holders of the parent
Basic and diluted earnings/(loss) per share attributable to the equity
Shareholders of the Company:
Basic earnings/(loss) per share
Diluted earnings/(loss) per share
Adjusted earnings/(loss) per share*
Adjusted profit measure*
Adjusted PBT/(LBT) (before amortisation of acquired intangibles, exceptional
items and share-based payments)*
Note
4,5
6
8
8
9
10
10
10
6
2022
£’m
144.1
(48.5)
95.6
(93.0)
2.6
(0.8)
0.3
(0.5)
2.1
(0.5)
2021
£’m
21.2
(6.8)
14.4
(50.2)
(35.8)
(1.0)
0.1
(0.9)
(36.7)
6.5
1.6
(30.2)
0.6
2.2
(0.1)
(30.3)
2.2
(30.3)
0.9p
0.9p
6.3p
(19.0p)
(19.0p)
(9.7p)
14.1
(18.4)
* This is a non-GAAP measure, refer to notes listed above. The adjusted earnings/(loss) per share presented is both basic and diluted.
The notes on pages 168 to 205 form part of the financial statements.
164
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Consolidated Balance Sheet
At 30 September 2022
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Deferred tax
Other assets
Total non-current assets
Current assets
Trade and other receivables
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
Trade and other payables
Total non-current liabilities
Current liabilities
Corporation tax payable
Trade and other payables
Provisions
Derivative financial instruments
Total current liabilities
Total liabilities
Total equity and liabilities
Note
11
12
19
14
14
22
15
20
21
21
21
21
16
16
16
22
Restated
note 2(d)
2021
£’m
74.1
8.3
3.6
–
86.0
94.9
–
0.8
39.0
56.0
190.7
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
126.8
276.7
2022
£’m
74.3
9.1
3.4
0.6
87.4
122.4
3.2
–
69.4
64.5
259.5
346.9
1.7
89.6
194.5
0.5
(129.5)
156.8
3.0
3.0
0.2
186.6
0.3
–
187.1
190.1
346.9
The financial statements from pages 164 to 205 were approved by the Board of Directors and authorised for issue.
Shaun Morton
Chief Financial Officer
7 December 2022
On the Beach Group plc. Reg no 09736592
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
165
FINANCIAL STATEMENTS
Consolidated Statement of Cash Flows
Year ended 30 September 2022
Profit/(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:
(Increase)/decrease in trade and other receivables
Increase in trade and other payables
(Increase) in trust account
Cash flows from operating activities
Cash used in operating activities
Tax received
Net cash inflow/(outflow) from operating activities
Cash flows from investing activities
Purchase of property, plant and equipment
Purchase of intangible assets
Development expenditure
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
Interest paid on borrowings
Interest paid on lease liabilities
Payment of lease liabilities
Net cash (outflow)/inflow from financing activities
Net increase 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
The notes on pages 168 to 205 form part of the financial statements.
166
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Note
6
6
8
8
23
12
12
14
16
12
11
11
8
8
8
17
2022
£’m
2.1
2.0
10.8
0.8
(0.3)
4.7
–
–
2021
£’m
(36.7)
1.8
10.1
1.0
(0.1)
2.8
(0.1)
0.2
20.1
(21.0)
(29.6)
61.3
(30.4)
1.3
21.4
0.5
21.9
(1.3)
(0.5)
(10.6)
0.3
(12.1)
–
–
(0.6)
–
(0.7)
(1.3)
8.5
56.0
64.5
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
Consolidated Statement of Changes in Equity
Year ended 30 September 2022
Share
capital
£’m
Share
premium
£’m
Merger
reserve
£’m
Capital
contribution
reserve
£’m
Retained
earnings
£’m
64.8
(129.5)
0.5
215.0
Balance at 30 September 2020
Share-based charge including tax
Shares issued during the year
Costs related to shares issued
Total comprehensive loss for the year
1.6
–
0.1
–
–
–
25.9
(1.1)
–
–
–
–
–
–
–
–
–
Balance at 30 September 2021
1.7
89.6
(129.5)
0.5
Share-based charge including tax
Total comprehensive income for the
year
–
–
–
–
–
–
–
–
Balance at 30 September 2022
1.7
89.6
(129.5)
0.5
194.5
The notes on pages 168 to 205 form part of these financial statements.
2.9
–
–
(30.3)
187.6
4.7
2.2
Total
£’m
152.4
2.9
26.0
(1.1)
(30.3)
149.9
4.7
2.2
156.8
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
167
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements
Year ended 30 September 2022
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 217.
2. Accounting Policies
a) Basis of Preparation
The consolidated financial statements presented in this
document have been prepared in accordance with UK
adopted International Accounting Standards in conformity
with the requirements of the Companies Act 2006.
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 Revolving Credit Facility (‘RCF’).
On 7 December 2022, the Group refinanced its credit
facilities with Lloyds and NatWest Banks. This included
cancelling its current facility of £50m and CLBILS facility of
£25m and entering into a new facility of £60m expiring in
December 2025.
As at 30 September 2022 cash (excluding cash held in trust
which is ring-fenced and not factored into the going concern
assessment) was £64.5m (30 September 2021 cash of
£56.0m).
Where holidays are cancelled the Group is committed to
refunding customers in cash rather than vouchers. 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 2022 was £69.4m.
The Directors have assessed a going concern period through
to March 2024 and have modelled a number of scenarios
considering factors such as airline and hotelier resilience,
cost of living, inflation, interest rates and customer behaviour
/ demand. The Group has performed an assessment of the
impact of climate risk, as part of the Director’s assessment
of the Group’s ability to continue as a going concern. 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 have modelled a
reasonably possible downside scenario to sensitise the base
case. In this scenario the Directors have assessed the impact
to cash and revenue in an environment where bookings are
20% lower than historic levels, although profitability would
be affected, the Group would be able to continue operating.
The Directors modelled what they consider to be a remote
downside scenario of no travel or bookings until March
2024. 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 during the going concern review period.
The Directors have considered possible levels of customer
default in light of the cost of living crisis. At the date of
signing default levels remain low. The Directors remain
confident that the business has adequate controls and
processes in place to recover outstanding balances from
customers.
Given the assumptions above, the mitigating actions
available and within the Group’s control, the Directors remain
confident that the Group continue to operate in an agile
way adapting to any continued travel disruption. 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
2021; the following amended standards have been
implemented; however, they have not had a significant
impact on the Group’s consolidated financial statements:
Interest Rate Benchmark Reform - Phase 2: Amendments
to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
The amendments provide temporary reliefs which address
the financial reporting effects when an interbank offered
rate (IBOR) is replaced with an alternative nearly risk-
free rate (RFR). These amendments had no impact on the
consolidated financial statements of the Group.
168
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Covid-19 Related Rent Concessions beyond 30 June 2021:
Amends to IFRS 16
On 28 May 2020, the IASB issued Covid-19-Related
Rent Concessions - amendment to IFRS 16 Leases.
The amendments provide relief to lessees from applying
IFRS 16 guidance on lease modification accounting for rent
concessions arising as a direct consequence of the Covid-19
pandemic. As a practical expedient, a lessee may elect not to
assess whether a Covid-19 related rent concession from a
lessor is a lease modification. The amendment was intended
to apply until 30 June 2021, but as the impact of Covid-19
continued, the IASB extended the period of application to
30 June 2022. The Group has not received Covid-19 related
rent concessions during the period of application.
Standards issued but not yet effective
Certain new financial reporting standards, amendments
and interpretations have been published that are not
mandatory for the 30 September 2022 reporting period
and have not been early adopted by the Group. The Group
is currently assessing the impact of the following standards,
amendments and interpretations:
• Reference to the Conceptual Framework – Amendments
to IFRS 3
• Property, Plant and Equipment: Proceeds before
Intended Use – Amendments to IAS 16
current asset. Therefore, the comparatives for the balance
sheet as at 30 September 2021 have been restated to
correct the error identified. As a result, total current assets
reduced by £3.6m to £190.7m and total non-current assets
increased by £3.6m to £86.0m. There was no impact on net
assets, earnings or cash flows.
e) 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. 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.
ii. 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.
• Onerous Contracts – Costs of Fulfilling a Contract –
Amendments to IAS 37
f) Goodwill
•
IFRS 9 Financial Instruments – Fees in the ’10 per cent’
test for derecognition of financial liabilities
d) Reclassification of deferred tax assets
In April 2022, the Group received a letter from the Financial
Reporting Council ('FRC') as part of its regular review and
assessment of the quality of corporate reporting in the UK.
The letter included a request for further information on the
Group’s Annual Report and Accounts for the year ended
30 September 2021. The review conducted by the FRC
was performed solely on the Group’s published Annual
Report and Accounts and does not provide any assurance
that the Annual Report and Accounts are correct in all
material respects. The review did not benefit from a detailed
knowledge of the business or an understanding of the
underlying transactions entered into. FRC letters are written
on the basis that the FRC accepts no liability for reliance on
them by the Company or any third party.
Following completion of the correspondence with the FRC,
the Directors have concluded that the deferred tax asset of
£3.6m reported in the balance sheet as at 30 September
2021 should have been presented as a non-current asset
in line with the requirements of IAS 1.56, rather than as a
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
169
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
g) 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.
h) 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.
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. Due to the restrictions on
accessing the funds in the trust account, customer monies
held in the trust account are presented separately to cash
at bank. Cash flows in respect of the trust account are
presented as operating cash flows on the basis that they
are linked to the Group’s revenue-producing activities as an
online travel agent.
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.
i. Financial assets
Trade and other payables
Financial assets are classified, at initial recognition, and
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 90 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.
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
Trade and other payables 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 22 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.
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.
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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 part of
the Group’s net revenue. 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 part of the
Group’s net revenue.
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.
i) 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.
‘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)
j) 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 customer 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 the OTB and
International segments are presented on an agent basis, and
therefore are stated net. Revenue earned from sales through
CPH are stated net, with the commission payable to agents
recognised in cost of sales.
iii. ‘CCH’ - activity via the Tour Operator, Classic Collection
As principal:
Holidays Limited and subsidiaries
iv. ‘CPH’ - activity via the Classic Package Holidays online
business to business portal
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
171
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
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.
Revenue earned from sales through the CCH are presented
on an principal basis, and therefore are stated gross.
k) Override income
The Group has agreements with suppliers which give rise
to rebate income. This income relates to segments where
revenue is accounted for on an agent basis, therefore 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.
l) 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.
m) 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 acquiree; 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.
n) 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.
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o) Intangible assets
i. Research and development
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.
ii. Software licenses and domain names
Acquired intangible assets are capitalised at the cost
necessary to bring the asset to its working condition. The
Group have applied the guidance published by the IFRS
Interpretations Committee (IFRIC) in respect of Cloud-
computing arrangements. The guidance requires that cloud
computing arrangements are reviewed to determine if they
are within the scope of IAS 38 Intangible Assets, IFRS 16
Leases, or a service contract. This is to determine if the
Group has control of the software intangible asset. Control
is assumed if the Group has the right to take possession of
the software and run it on its own or a third party’s computer
infrastructure or if the Group has exclusive rights to use the
software whereby the supplier cannot make the software
available to other customers.
Costs for software licenses and domain names are carried at
cost less accumulated amortisation and are amortised over
their useful lives at the point in which they come into use.
iii. 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.
iv. 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
v. 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.
p) 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
173
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
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.
q) 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
IT equipment
10 years
3-5 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.
i. 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.
r) Employee benefits
i. 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.
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ii. Share-based payment transactions
s) Financing income and expenses
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).
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 23.
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).
Financing expenses comprises interest payable 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 and dividend income.
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.
t) 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.
u) 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.
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175
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
v) Share capital
aa) Non statutory measures
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.
w) 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.
x) 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.
y) 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.
z) 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.
The Group recognises a refund liability (presented as a
cancellation provision) for the commission that is considered
to represent variable consideration (see note 2j).
One of the Groups KPIs 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 to them,
merit separate presentation to allow shareholders a better
understanding of the financial performance in the period.
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.
i. 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.
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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.
ii. 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 accordance with IFRS 15, revenue for the OTB,
International and CPH segments is recognised 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 is recognised 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
2022, the proportion of development costs that have been
capitalised is higher than the years ending 30 September
2020 and 2021 as the development team are focusing on
key developments rather than operational tasks to respond
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 of future taxable profits, together with
future tax planning strategies. Using approved budgets
and forecasts covering a four-year period, management
concluded that there would be sufficient level of future
taxable profits to support the deferred tax asset of £8.2m
(2021: £9.5m) recognised (note 19).
Whilst the forecasts include inherent estimation uncertainty,
the Group determined that there would be sufficient taxable
income generated to realise the benefit of the deferred
tax assets and no reasonably possible change to key
assumptions would result in a material reduction in forecast
headroom of tax profits.
The key management judgement required was determining
the expected timing of recovery to profit and therefore the
period over which the deferred tax asset would be realised.
In determining the timing of recovery, all available evidence
was considered, including approved budgets, forecasts
and analysis of historical operating results. These forecasts
are consistent with those prepared and used internally for
business planning and impairment purposes. The Group
performed sensitivity analyses on these forecasts that were
consistent with those detailed for impairment testing in
note 19.
The Group has £0.2m of tax losses carried forward from
subsidiaries that have a history of losses, these losses may
not be used to offset taxable income elsewhere in the Group.
On this basis, the Group has determined that it cannot
recognise deferred tax assets on these tax losses carried
forward.
Critical accounting estimates
Covid-19 and supplier disruption
Covid-19 has continued to impact the current financial
year, with the outbreak of the Omicron variant of
Covid-19 causing disruption between October 2021
and January 2022. Following the removal of travel
restrictions in February 2022, travel was further affected by
the disrupted airline schedules. The recognition of costs and
provisions relating to the travel disruption has been an area
of significant estimation. These adjustments relate primarily
to lost revenue resulting from the cancellation of bookings
in the financial year. The estimation includes the loss of
revenues caused by the cancellation and refund of bookings,
offset by the extent to which related holiday costs can be
recovered.
For the year ending 30 September 2021, the Group
recognised a cancellation provision to estimate the extent
to which forward bookings would be cancelled in FY22.
During the current year this provision has been utilised and
any unused amounts reversed, see note 16 for details. The
Group has not included a provision for forward bookings
affected by Covid-19 as at 30 September 2022.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
177
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
i. Recoverability of airline debtor
In relation to flights cancelled during the financial year, the Group has considered the impact of the pandemic and supplier
disruption on the recoverability of amounts paid to airlines in lieu of flights which have been cancelled which as at 30
September 2022 is a receivable balance of £2.8m - see note 14.
The Group has a legal right to a refund; the airline has an obligation to refund in the event that the flight is cancelled.
Where an airline is not forthcoming with a refund owed the Group exercises its chargeback rights are as governed by the
card scheme rules. Alternatively, the Group may take legal action to recover the sums owed (e.g. under the right of redress
provided by Regulation 29 of the Package Travel and Linked Travel Arrangements Regulations 2018, or via an unjust
enrichment claim). The Group has a right to make a chargeback when:
− the merchant (airline) was unable or unwilling to provide the purchased services; or
− 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.
If the Group were to increase its provision by 5 percentage points (‘ppts’), this would have resulted in a decrease of £0.2m in
the receivable balance of £2.8m.
ii.
Impact of Covid-19 and supplier disruption
The estimation required for determining the impact of Covid-19 and supplier disruption includes calculating the loss of
revenues caused by the cancellation and refund of bookings, offset by extent to which related holiday costs can be recovered.
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
Impact
of travel
disruption
£’m
(1.0)
–
(0.3)
(1.3)
(2.6)
The total exceptional items in the year ended 30 September 2022 of £2.6m represents the £4.7m cost of Covid-19 and
supplier disruption to trading in the period which has been offset by the release of £4.6m of provisions from the previous year,
and legal and professional fees of £2.5m incurred in the year.
178
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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.
For the year ended 30 September 2022
Revenue before exceptional items
Sales as agent
Sales as principal
Total revenue before exceptional items
Exceptional cancellations*
Fair value FX gains
Total revenue
For the year ended 30 September 2021
Revenue before exceptional cancellations
Sales as agent
Sales as principal
Total Revenue before exceptional cancellations
Exceptional cancellations*
Total revenue
OTB
£’m
86.9
–
86.9
(0.6)
0.8
87.1
OTB
£’m
22.1
–
22.1
(9.1)
13.0
Int'l
£’m
0.7
–
0.7
–
–
CCH
£’m
–
50.5
50.5
–
–
0.7
50.5
CPH
£’m
6.2
–
6.2
(0.4)
–
5.8
Int'l
£’m
0.1
–
0.1
(0.1)
–
CCH
£’m
CPH
£’m
–
6.5
6.5
–
6.5
1.8
–
1.8
(0.1)
1.7
Total
£’m
93.8
50.5
144.3
(1.0)
0.8
144.1
Total
£’m
24.0
6.5
30.5
(9.3)
21.2
* Exceptional cancellations in the year ended 30 September 2022 relates to the impact of Covid-19 in the year and travel disruption arising following the removal
of travel restrictions. Exceptional cancellations in the year ended 30 September 2021 relate to the impact of Covid-19 (see note 3).
Details of receivables arising from contracts with customers are set out in note 14.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
179
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
5. Segmental report
As explained in note 2i, 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.
Income
Revenue before exceptional
cancellations
Exceptional cancellations*
Fair value FX gains
Total Revenue
Adjusted EBITDA
Share-based charge
Exceptional items
Fair value FX gains
EBITDA
Depreciation and amortisation
Group operating profit/(loss)
Finance costs
Finance income
Profit/(loss) before taxation
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
OTB
£’m
Int'l
£’m
2022
CCH
£’m
CPH
£’m
Total
£’m
OTB
£’m
Int'l
£’m
2021
CCH
£’m
CPH
£’m
Total
£’m
86.9
0.7
50.5
6.2 144.3
(0.6)
0.8
–
–
–
–
(0.4)
(1.0)
–
0.8
87.1
0.7
50.5
5.8 144.1
22.1
(4.7)
(1.9)
0.8
16.3
(11.1)
5.2
–
–
–
–
–
(0.1)
(0.1) 21.9
–
–
(0.3)
(0.4)
–
–
(4.7)
(2.6)
0.8
(0.4)
(0.5)
15.4
(0.1)
(0.1)
(1.4)
(1.8)
(0.2)
(12.8)
(0.7)
2.6
22.1
(9.1)
–
13.0
(6.1)
(2.8)
(9.8)
–
0.1
(0.1)
–
–
6.5
1.8
30.5
–
–
(0.1)
(9.3)
–
–
6.5
1.7
21.2
(0.2)
(3.1)
(1.7)
(11.1)
–
–
–
(2.8)
(0.1)
(0.4)
0.3
(10.0)
–
–
–
–
(18.7)
(10.3)
(29.0)
(0.3)
(0.1)
(0.4)
(3.5)
(1.3)
(4.8)
(1.4)
(23.9)
(0.2)
(11.9)
(1.6)
(35.8)
(0.8)
0.3
2.1
(1.0)
0.1
(36.7)
31.6
27.4
6.3
–
–
–
4.6
6.6
2.8
4.0
0.1
–
40.2
34.1
9.1
31.6
26.0
5.8
–
0.1
–
4.6
7.7
2.5
4.0
0.1
–
40.2
33.9
8.3
* Exceptional cancellations in the year ended 30 September 2022 relate to the impact of Covid-19 and supplier disruption. Exceptional cancellations for 30
September 2021 relate to the impact of Covid-19.
180
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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
Professional services
Other
Administrative expenses before exceptional items & amortisation of intangible assets
Exceptional items
Amortisation of intangible assets
Exceptional items and amortisation of intangible assets
Administrative expenses
b) Exceptional items
2022
£’m
38.7
2.0
28.0
4.5
0.7
3.2
1.6
0.9
1.3
80.9
1.3
10.8
12.1
93.0
2021
£’m
10.9
1.8
18.5
2.5
0.8
0.5
1.6
0.7
1.8
39.0
11.1
10.1
11.2
50.2
2022
2021
Impact
of travel
disruption
£’m
Fair value
FX gains
£’m
Adjusted
£’m
GAAP
£’m
Adjusted
£’m
Impact of
Covid-19
£’m
GAAP
£’m
Group revenue
Revenue as Agent
Revenue as Principal
93.8
50.5
(1.0)
–
Group cost of sales
(48.2)
(0.3)
Group overheads
Administrative expenses
Net finance costs
Group profit/(loss) before tax
(91.7)
(0.5)
3.9
(1.3)
–
(2.6)
0.8
–
–
–
–
0.8
93.6
50.5
(48.5)
(93.0)
(0.5)
2.1
24.0
6.5
–
(7.2)
–
–
(49.1)
(0.9)
(26.7)
(9.3)
–
–
14.7
6.5
–
0.4
(6.8)
–
–
–
–
(1.1)
(50.2)
–
(0.9)
(10.0)
(36.7)
The total exceptional items in the year ended 30 September 2022 of £1.8m includes £2.6m due to the impact of travel
disruption offset by £0.8m of fair value FX gains. The impact of travel disruption represents £4.7m cost of Covid-19 and
supplier disruption to trading in the period which has been offset by the release of £4.6m of provisions from the previous year,
and legal and professional fees of £2.5m incurred in the year.
The 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
181
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
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 associates in respect of:
– Audit of financial statements of subsidiaries pursuant to legislation
– Review of interim financial statements
– Other assurance services
2022
£’m
0.1
0.3
–
–
0.4
2021
£’m
0.1
0.3
–
–
0.4
d) Adjusted profit/(loss) before tax
Management measures the overall performance of the Group by reference to adjusted profit/(loss) before tax, a non-GAAP
measure as it gives a meaningful year-on-year comparison of the Group’s performance:
Profit/(loss) before taxation
Exceptional items (note 4b)
Amortisation of acquired intangibles*
Share-based payments charge**
Adjusted profit/(loss) before tax
2022
£’m
2.1
1.8
5.5
4.7
2021
£’m
(36.7)
10.0
5.5
2.8
14.1
(18.4)
* These charges relate to amortisation of brand, website technology and customer relationships recognised on the acquisition of subsidiaries and are added back
as they are inherently linked to historical acquisitions of businesses.
** The share-based payment charge represents the expected cost of shares vesting under the Group’s Long Term Incentive Plan. The share-based payment
charge has increased to £4.7m (2021: £2.8m) as a result of a significant increase in the number of awards in the year and the change in the expectations for
non-market based performance conditions. In addition, on 21 December 2021 the remuneration committee approved the introduction of an underpin/minimum
award for the nil cost awards originally granted 9 July 2019. This removal of a non-market based condition has resulted in a catch-up charge to the income
statement of £1.9m (2021: £2.0m) that reflects the scheme progress to date. These charges are added back to provide comparability to prior periods due to
fluctuations in the charges.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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 charge
2022
£’m
27.2
0.7
2.9
4.7
35.5
2021
£’m
18.0
0.4
1.9
2.8
23.1
Staff costs above include £7.5m (2021: £4.6m) employee costs capitalised as part of software development. During the year
£nil was claimed in relation to the Coronavirus Job Retention Scheme (2021: £0.2m).
Share-based payments includes a catch-up charge of £1.9m (2021: £2.0m) following the Remuneration Committee
approving the introduction of an underpin/minimum award on 21 December 2021 for the nil cost awards originally granted
9 July 2019. This removal of a non-market based condition has resulted in the catch-up charge to the income statement that
reflects the scheme progress to date.
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
Directors’ emoluments
Remuneration was paid by On the Beach Limited, a subsidiary company of the Group.
2022
No.
463
4
134
22
623
2022
£’m
1.0
–
0.8
1.8
2021
No.
365
6
115
8
494
2021
£’m
0.5
–
0.1
0.6
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
183
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
The remuneration of the highest paid Director was as follows:
Aggregate emoluments
Share-based payment charges
d) Key management compensation
Key management comprised the eight 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
Key management compensation
e) Retirement benefits
2022
£’m
0.6
0.8
1.4
2022
£’m
5.1
–
3.4
8.5
2021
£’m
0.3
0.1
0.4
2021
£’m
1.7
–
2.1
3.8
Included in pension contributions payable by the Group of £0.7m (2021: £0.4m) is £10,700 (2021: £1,300) of contributions
that the Group made to a personal pension scheme in relation to one member of the Executive Team.
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
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
2022
£’m
0.6
0.2
0.8
2022
£’m
0.3
0.3
2021
£’m
0.9
0.1
1.0
2021
£’m
0.1
0.1
9. Taxation
Current tax on profit/(loss) for the year
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 charge/(credit)
2022
£’m
0.4
0.4
0.3
(0.2)
0.1
0.5
2021
£’m
(0.4)
(0.4)
(6.1)
–
(6.1)
(6.5)
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/(loss) on ordinary activities before tax
2022
£’m
2.1
2021
£’m
(36.7)
Profit/(loss) on ordinary activities multiplied by the statutory rate of corporation tax in the UK of
19% (2021: 19%)
0.4
(7.0)
Effects of:
Impact of difference in current and deferred tax rates
Adjustments in respect of prior years
Expenses not deductible
Total taxation charge/(credit)
(0.5)
(0.2)
0.8
0.2
–
0.3
0.5
(6.5)
The effective rate tax rate for the period is 25% (2021: 18%). 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
2022 have been calculated based on these rates.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
185
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
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 basic earnings per share figures are calculated by dividing adjusted earnings after tax for the year by the weighted
average number of shares. Adjusted diluted earnings per share figures are calculated by dividing adjusted earnings after tax
for the year by the weighted average number of shares plus the weighted average number of Ordinary Shares that would be
issued on the conversion of all dilutive potential ordinary shares into Ordinary Shares.
Year ended 30 September 2022
Basic EPS
Diluted EPS
Adjusted basic EPS
Adjusted diluted EPS
Year ended 30 September 2021
Basic EPS
Diluted EPS*
Adjusted EPS*
Basic weighted
average number
of Ordinary
Shares
(m)
Total
earnings
£’m
Pence per
share
165.9
166.7
165.9
166.7
1.6
1.6
10.5
10.5
1.0p
1.0p
6.3p
6.3p
Basic weighted
average number
of Ordinary
Shares
(m)
Total
earnings
£’m
Pence per
share
159.3
159.3
159.3
(30.2)
(30.2)
(15.4)
(19.0p)
(19.0p)
(9.7p)
*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/(loss) after tax is calculated using the tax rate of 25% on the basis that this is the Group’s effective tax rate:
Profit/(loss) for the year after taxation
Adjustments (net of tax at 25%)
Exceptional items (note 4b)
Amortisation of acquired intangibles
Share-based payment charges*
Adjusted earnings/(loss) after tax
* The share-based payment charges are in relation to options which are not yet exercisable.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
2022
£’m
1.6
1.3
4.1
3.5
2021
£’m
(30.2)
8.1
4.5
2.2
10.5
(15.4)
11.
Intangible assets
Brand
£’m
Goodwill
£’m
Website &
development
Costs
£’m
Website
technology
£’m
Customer
relationships
£’m
Agent
relationships
£’m
35.9
–
35.9
–
35.9
15.1
2.4
17.5
2.4
19.9
16.0
18.4
40.2
–
40.2
–
40.2
–
–
–
–
–
40.2
40.2
15.6
4.6
20.2
11.0
31.2
8.7
4.6
13.3
5.3
18.6
12.6
6.9
22.8
–
22.8
–
22.8
16.0
2.4
18.4
2.4
20.8
2.0
4.4
2.1
–
2.1
–
2.1
0.9
0.4
1.3
0.4
1.7
0.4
0.7
4.4
–
4.4
–
4.4
0.7
0.3
1.0
0.3
1.3
3.1
3.5
Total
£’m
121.0
4.6
125.6
11.0
136.6
41.4
10.1
51.5
10.8
62.3
74.3
74.1
Cost
At 1 October 2020
Additions
At 30 September 2021
Additions
At 30 September 2022
Accumulated
amortisation
At 1 October 2020
Charge for the year
At 30 September 2021
Charge for the year
At 30 September 2022
Net book amount
At 30 September 2022
At 30 September 2021
Brand
The brand intangibles assets consist of three brands which were separately identified as intangibles on the acquisition of the
respective businesses. The carrying amount of the brand intangible assets:
Brand
On the Beach
Sunshine.co.uk
Classic Collection
Remaining
amortisation
period
4 years
5 years
6 years
Acquisition
On the Beach Travel Limited
Sunshine.co.uk Limited
Classic Collection Limited
At 30
September
2022
£’m
At 30
September
2021
£’m
12.1
0.7
3.2
16.0
14.1
0.8
3.5
18.4
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
187
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
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
At 30
September
2022
£’m
At 30
September
2021
£’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 CGUs 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. The Group has not recognised
an impairment to the goodwill for the year ending
30 September 2022 (2021: £nil).
‘OTB’ CGU
The Group performed its annual impairment test as at
30 September 2022 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 four-year period. The forecasts are
then extrapolated in perpetuity based on an estimated
growth rate of 2 per cent (2021: 2 per cent), 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
13.5 per cent (2021: 11 per cent).
‘Sunshine’ CGU
The Group performed its annual impairment test as at
30 September 2022 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 four-year period. The forecasts are
then extrapolated in perpetuity based on an estimated
growth rate of 2 per cent (2021: 2 per cent), 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
13.5 per cent (2021: 11 per cent)
‘CCH’ CGU
The Group performed its annual impairment test as at
30 September 2022 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 four-year period. The forecasts are
then extrapolated in perpetuity based on an estimated
growth rate of 2 per cent (2021: 2 per cent). 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
13.5 per cent (2021: 11 per cent).
‘CPH’ CGU
The Group performed its annual impairment test as at
30 September 2022 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 four-year period. The forecasts are
then extrapolated in perpetuity based on an estimated
growth rate of 2 per cent (2021: 2 per cent). This is deemed
appropriate based on the Directors’ best estimate of the
future prospects of the business. Management estimates
188
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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
13.5 per cent (2021: 11 per cent).
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.
Key assumptions used in value-in-use
calculations and sensitivity to changes in
assumptions
The main assumptions on which the forecast cash flows
used for the CGUs were based include:
• Consumer demand - management considered
historic performance both pre-pandemic (year ending
30 September 2019) and during the pandemic (years
ending 30 September 2020 and 2021) as well as the
size of the market, current market share, competitive
pressure, consumer confidence and appetite under the
cost of living crisis. The Directors have used their past
experience of the business and its industry, together
with their expectations of the market.
•
Impact of new marketing and planned improvements on
booking conversion - whilst the spend on incentives and
improvements is within the Group’s control, the impact
on increasing bookings requires assessment of consumer
demand and competitive pressures using industry and
market knowledge.
The calculation of value in use for all CGUs is most sensitive
to the following assumptions:
• Revenue: the level of sales is based on expected
customer demand, average booking values and
booking conversion; however, a material deterioration
in consumer demand can lead to reduced demand for
holidays as well as disruption to its operations from
unpredictable domestic and international events which
can significantly impact the level of sales. A decrease in
bookings of 20% for each CGU would not result in an
impairment.
• Discount rates: Discount rates represent the current
market assessment of the risks specific to each CGU,
taking into consideration the time value of money and
individual risks of the underlying assets that have
not been incorporated in the cash flow estimates.
The discount rate calculation is based on the specific
circumstances of the Group and its operating segments
and is derived from its weighted average cost of capital
('WACC'). A rise in the discount rate to 14% for all CGUs
would not result in an impairment.
• Growth rates used to extrapolate cash flows beyond
the forecast period: the Group operates in a fast-moving
marketplace so management recognises that the speed
of technological change and the possibility of new
entrants can have a significant impact on growth rate
assumptions. A reduction in long-term growth rates by
10ppts for each CGU would not result in an impairment.
Sensitivity analysis has been completed in isolation and in
combination. Management considers that no reasonably
possible changes in assumptions would reduce a CGU’s
headroom to nil.
Impact of cost of living crisis
The Group does not consider that any CGU has been
automatically impaired as a result of the rising cost of living.
All CGUs remain viable trading long-term assets which the
Group expects to continue to generate positive cashflows.
Inherent in the impairment test and sensitivity analysis
is the impact of customer demand being affected by the
rising costs of living. 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 should a change be required.
Website and development costs
The Group capitalises development projects where they
satisfy the requirements for capitalisation in accordance
with 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
and the purchase of domain names. The amortisation period
for website and development costs is three years straight line.
Domain names are amortised over ten 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 2022 this was
£1.3m (2021: £1.4m).
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
189
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
12. Tangible assets
Cost
At 1 October 2020
Additions
Transfer from investment property
Disposals
At 1 October 2021
Additions
Disposals
At 30 September 2022
Accumulated amortisation
At 1 October 2020
Charge for the year
Disposals
At 1 October 2021
Charge for the year
Disposals
At 30 September 2022
Net book amount
At 30 September 2022
At 30 September 2021
Freehold
property
£’m
Right-of-
use asset
(note 17)
£’m
Fixtures,
fittings and
equipment
£’m
1.7
–
0.6
–
2.3
–
–
2.3
–
0.1
–
0.1
0.1
–
0.2
2.1
2.2
5.3
–
–
(1.7)
3.6
1.5
–
5.1
1.6
0.5
(1.0)
1.1
0.6
–
1.7
3.4
2.5
7.1
0.5
–
(0.5)
7.1
1.3
(1.0)
7.4
2.6
1.2
(0.3)
3.5
1.3
(1.0)
3.8
3.6
3.6
Total
£’m
14.1
0.5
0.6
(2.2)
13.0
2.8
(1.0)
14.8
4.2
1.8
(1.3)
4.7
2.0
(1.0)
5.7
9.1
8.3
The depreciation expense of £2.0m for the year ended 30 September 2022 and the depreciation expense of £1.8m for the
year ended 30 September 2021 have been recognised within administrative expenses.
190
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Investments
13.
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
Classic Collection Holiday, Travel &
Leisure 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
Dormant
Saxon House Properties Limited
Property Management
Classic Package Holidays Limited
Travel agent
Proportion of ordinary shares
held by the Group
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
* During the year, the Group has undertaken a project to simplify the group structure, on 30 September 2022 On the Beach Topco Limited and On the Beach
Bidco were placed into Members Voluntary Liquidation. The Group chose to simply the group structure to reduce duplication of processes, reduce complexity of
the structure without affecting the control of the Group’s assets and reduce additional costs associated with the subsidiaries.
There are no restrictions on the Company’s ability to access or use the assets and settle the liabilities of the Company’s subsidiaries.
14. Trade and other receivables
Amounts falling due within one year:
Trade receivables – net
Other receivables and prepayments
Total trade and other receivables
2022
£’m
100.8
21.6
122.4
2021
£’m
79.5
15.4
94.9
For the year ended 30 September 2022 , other receivables includes £2.8m 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, £3.9m of rebates due from suppliers and £2.2m receivable in relation to value added tax. The expected credit
losses in respect to these balances is not material.
Prepayments greater than one year are £0.6m (2021: Nil).
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.
15. 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
191
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
16. Trade, other payables and provisions
Non-current
Lease liabilities (note 17)
Current
Trade payables
Accruals and other payables
Lease liabilities (note 17)
Provision
Total trade, other payables and provisions
2022
£’m
2021
£’m
3.0
2.5
158.3
27.4
0.9
0.3
189.9
104.3
14.8
0.4
4.6
126.6
Trade payables includes £0.4m (2021: £0.9m) 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.
Accruals and other payables includes £14.9m (2021: £14.2m) for products or services received but not yet invoiced at the
year-end date.
At 1 October 2021
Arising during the year
Utilised
Unused amounts reversed
Unwinding of discount and changes in the discount rate
At 30 September 2022
Current
Non-current
Covid-19
Covid-19
cancellations
£’m
Other
Covid-19
related
provisions
£’m
Cancellations
£’m
4.1
–
(2.0)
(2.1)
–
–
–
–
0.5
–
(0.1)
(0.4)
–
–
–
–
–
0.3
–
–
–
0.3
0.3
–
Total
£’m
4.6
0.3
(2.1)
(2.5)
–
0.3
0.3
–
The Covid-19 cancellations and other Covid-19 related provisions have been utilised against the costs associated with
Covid-19 and supplier disruption in the year.
Cancellations
A provision has been recognised in respect of expected future cancellations for supplier and customer cancellations on the
forward order book for future departures. The Group expect this provision to be utilised over the next year. The provision
is based on historical trends and best estimate of future expectation, there is inherent uncertainty in terms of the level and
timing of future cancellations which will depend on various factors including potential further supplier disruption.
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
17. Leases
The Group as a lessee
For the year ending 30 September 2022, the Group entered into leases for IT equipment, the lease terms for IT equipment are
between three and five years. The Group has a lease for its head office which has a term of ten years. 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.
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).
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
2022
£’m
0.6
0.2
–
0.8
2021
£’m
0.5
0.1
(0.1)
0.5
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
Additions
Accretion of interest
Payments
Reassessment of lease term
As at 30 September
Current (note 16)
Non-current (note 16)
2022
£’m
2021
£’m
2.9
1.5
0.2
(0.7)
–
3.9
0.9
3.0
4.2
–
0.1
(0.6)
(0.8)
2.9
0.4
2.5
The Group had total cash outflows for leases of £0.7m in 2022 (£0.6m in 2021). The above table satisfies the requirements of
IAS 7.44A to present a net debt reconciliation.
18. 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.
During the year the Group had a total facility of £75m comprising two elements, as follows:
− Core facility of £50m expiring December 2023; and
− CLBILS facility of £25m expiring May 2023.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
193
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
The interest rate payable on the core facility is equal to SONIA plus a margin. The margin contained within the facility is
dependent on net leverage ratio and the rate per annum ranges from 2.00% to 4.25% for the facility or any unpaid sum. The
interest rate payable on the CLBILS facility is equal to the Bank of England base rate plus a margin. The margin contained
within the facility is 2.30% per annum for the facility or any unpaid sum.
The facility included the following covenants:
i.
that the ratio of adjusted EBITDA to net finance charges in respect of any relevant period shall not be less than 5:1;
ii.
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:
i. LTM minimum EBITDA: December 21 £20.4m loss; March 22 £1.2m loss
ii. 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
2022, the liabilities for these other credit uses was £7.4m, leaving £68m 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 2022 was £nil and there has been nothing drawn down post balance
sheet date.
On 7 December 2022, the Group refinanced its credit facilities with Lloyds and NatWest. This included cancelling its current
facilities and entering into a new facility for £60m expiring in December 2025.
The interest rate payable is equal to SONIA plus a margin. The margin contained within the facility is dependent on net
leverage ratio and the rate per annum ranges from 2.00% to 2.75% for the facility or any unpaid sum.
The terms of the new facility include the following covenants:
i.
the ratio of adjusted EBITDA to net finance charges in respect of any relevant period shall not be less than 5:1; and
ii.
the ratio of total net debt to adjusted EBITDA shall not exceed 2.5:1.
19. Deferred tax
2022
Assets
Liabilities
Total
2021
Assets
Liabilities
Total
Intangible
assets
£’m
Property,
plant and
equipment
£’m
Share-based
payments
£’m
Losses and
unused tax
relief
£’m
Tax assets/
(liabilities)
£’m
–
(5.2)
(5.2)
–
(6.3)
(6.3)
–
(0.3)
(0.3)
–
(0.3)
(0.3)
0.7
–
0.7
0.7
–
0.7
8.2
–
8.2
9.5
–
9.5
8.9
(5.5)
3.4
10.2
(6.6)
3.6
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Intangible
assets
£’m
Property,
plant and
equipment
£’m
Share-based
payments
£’m
Losses and
unused tax
relief
£’m
30 September 2020
Accelerated depreciation for tax purposes
Losses available for offsetting against future
income
Share-based payments recognised in income
Share-based payments recognised in equity
30 September 2021
Losses utilised against taxable income
Accelerated depreciation for tax purposes
Share-based payments recognised in income
Share-based payments recognised in equity
(6.2)
(0.1)
–
–
–
(6.3)
–
1.1
–
–
(0.1)
(0.2)
–
–
–
(0.3)
–
–
–
–
30 September 2022
(5.2)
(0.3)
0.2
–
–
0.4
0.1
0.7
–
–
0.1
(0.1)
0.7
3.5
–
6.0
–
–
9.5
(1.3)
–
–
–
8.2
Total
£’m
(2.6)
(0.3)
6.0
0.4
0.1
3.6
(1.3)
1.1
0.1
(0.1)
3.4
The deferred tax asset includes an amount of £8.2m (2021: £9.5m) which relates to carried forward tax losses. Deferred tax
assets are recognised for tax losses carried forward only to the extent that realisation of the related tax benefit is probable.
Deferred tax assets are reviewed at each reporting date to assess the probability that sufficient taxable profit will be available
to allow all or part of deferred tax asset to be utilised. The Group determined that there would be sufficient taxable income
generated to realise the benefit of the deferred tax assets, and no reasonably possible change to key assumptions would
result in a material reduction in forecast headroom of tax profits (see note 3 for details).
In determining the recognition of deferred tax assets arising from the carry forward of unused tax losses, the Group
considered the following:
The Group considered the location of the taxable entities, the loss-making companies are all located in the United Kingdom,
for a full list of subsidiaries see note 13.
The Group has considered the approved budgeted information covering a four-year period that is consistent with the
forecasts used for the Group’s review of impairment, going concern and viability assessments. For details of the assumptions
used and sensitivity analysis performed for the forecasts, see note 11. Whilst the forecasts include inherent estimation
uncertainty, the Group determined that there would be sufficient taxable income generated to realise the benefit of the
deferred tax assets and no reasonably possible change to key assumptions would result in a material reduction in forecast
headroom of tax profits. On this basis the Group concluded that there is not a significant risk of a material adjustment to the
carrying amount of the deferred tax asset.
Based on the budgeted information, the Group made a significant judgement on the timing of utilising the unused tax losses,
as detailed in note 3. The Group determined that the unused tax losses will be utilised across the years ending 30 September
2023 and 2024. There is no expiry in respect of the deferred tax assets.
The Group has £0.2m that are available indefinitely for offsetting against future taxable profits of the companies in which
the losses arose. Deferred tax assets have not been recognised in respect of these losses as they may not be used to offset
taxable profits elsewhere in the Group, they have arisen in subsidiaries that have been loss-making for some time, and there
are no other tax planning opportunities or other evidence of recoverability in the near future.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
195
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
20. Share capital
Allotted, called up and fully paid
166,258,172 ordinary shares @ £0.01 each (2021: 165,399,366 @ £0.01 each)
2022
£’m
1.7
2021
£’m
1.7
The Group issued 858,806 ordinary shares 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.
21. 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.
22. 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
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 14)
Total financial assets
Financial liabilities
Derivatives designated as hedging instruments
Forward exchange contracts
Financial liabilities at amortised cost
Trade and other payables (note 16)
Provisions
Total financial liabilities
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
FV Level
2022
£’m
2021
£’m
2
3.2
–
69.4
64.5
116.9
254.0
39.0
56.0
89.5
184.5
2
–
(0.3)
(189.6)
(122.0)
(0.3)
(4.6)
(189.9)
(126.9)
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
(2021: nil). On 7 December 2022, the Group refinanced its credit facilities with Lloyds and NatWest Banks. This included
cancelling its current facilities and entering into a new facility for £60m expiring in December 2025. For details of the revolving
credit facility, see note 18. The following table provides the fair values of the Group’s financial assets and liabilities:
Forward exchange contracts
FV Level
2
2022
£’m
3.2
2021
£’m
(0.3)
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.
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 2022
As at 30 September 2021
Level 1
£’m
Level 2
£’m
Level 3
£’m
–
–
3.2
(0.3)
–
–
The forward contracts have been fair valued at 30 September 2022 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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
197
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
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 SONIA.
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.
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
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2022
€’m
12.0
(137.0)
3.0
129.5
7.5
2022
$‘m
4.0
(8.1)
0.3
12.7
8.9
2022
Kr ‘m
25.0
1.5
–
26.5
2021
€’m
33.2
(87.2)
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
Norwegian krone
Cash
Trade payables
Forward exchange contracts
Balance sheet exposure
Danish krone
Cash
Trade receivables
Balance sheet exposure
Moroccan dirham
Cash
Forward exchange contracts
Balance sheet exposure
Foreign currency sensitivity
2022
Kr ‘m
2.4
–
–
2.4
2022
Kr ‘m
0.1
–
0.1
2021
Kr ‘m
0.7
(0.1)
–
0.6
2021
Kr ‘m
0.1
–
0.1
2022
MAD ‘m
2021
MAD ‘m
0.2
(0.9)
(0.7)
0.6
(0.5)
0.1
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%
2022
£’m
2021
£’m
(1.7)
1.7
(0.2)
0.2
0.2
(0.2)
(0.5)
0.5
–
–
0.1
(0.2)
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
199
FINANCIAL STATEMENTS
Notes to the Consolidated
Financial Statements continued
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
12+ months
Total
USD
30 September
Less than 3 months
3 to 6 months
6 to 12 months
Total
MAD
30 September
Less than 3 months
Total
Foreign
currency
€’m
2022
Notional
value
£’m
Carrying
amount
£’m
Foreign
currency
€’m
2021
Notional
value
£’m
Carrying
amount
£’m
56.2
11.6
53.1
2.3
48.1
10.0
46.3
2.1
123.2
106.5
1.3
0.3
1.2
–
2.8
8.6
3.9
49.4
–
61.9
7.6
3.4
42.6
–
53.6
(0.1)
(0.1)
(0.1)
–
(0.3)
Foreign
currency
$‘m
2022
Notional
value
£’m
Carrying
amount
£’m
Foreign
currency
$‘m
2021
Notional
value
£’m
Carrying
amount
£’m
3.9
1.8
1.8
7.5
3.1
1.5
1.6
6.2
0.4
0.1
–
0.5
1.8
2.3
1.5
5.6
1.3
1.7
1.1
4.1
–
–
–
–
Foreign
currency
MAD ‘m
2022
Notional
value
£’m
Carrying
amount
£’m
Foreign
currency
MAD ‘m
2021
Notional
value
£’m
Carrying
amount
£’m
0.2
0.2
–
–
–
–
–
–
–
–
–
–
200
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
The impact of the hedging instruments on the statement of financial position is as follows:
As at 30 September 2022
Foreign exchange forward contracts
As at 30 September 2021
Foreign exchange forward contracts
Credit risk
Notional
amount
£’m
Carrying
amount
£’m
Line in the
statement of
financial position
Change in
fair value
£’m
112.6
Derivative financial
instruments
3.2
1.3
57.7
(0.3)
Derivative financial
instruments
(0.2)
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. Customer credit risk is managed by the Group’s business units which each have policies,
procedures and controls relating to customer credit risk management. Outstanding trade receivables balances are regularly
reviewed to monitor any changes in credit risk with concentrations of credit risk considered to be limited given that the
Group’s customer base is large and unrelated.
Trade receivables and other receivables
The ageing of trade receivables (net) at the balance sheet date was:
As at 30 September 2022
As at 30 September 2021
The ageing of other receivables (net) at the balance sheet date was:
As at 30 September 2022
As at 30 September 2021
Not past
due
£’m
Past due
0-30 days
£’m
Past due
>30 days
£’m
100.1
79.4
0.7
0.1
–
0.3
Not past
due
£’m
Past due
0-180 days
£’m
Past due
>180 days
£’m
16.1
6.9
–
–
–
3.2
Total
£’m
100.8
79.8
Total
£’m
16.1
10.1
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 rising cost of living and inflation rates. Other
receivables includes a receivable in respect of amounts due from airlines as a result of exceptional cancellations, a provision of
£4.4m has been recognised for airline receivables past due greater than 180 days. The Group has recognised a net receivable
for the expected recoverable amount in note 14.
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.
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
201
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. It is Group policy to
maintain a balance of funds, borrowing, committed bank loans and other facilities sufficient to meet anticipated short-term
and long-term financial requirements. In applying the policy the Group continuously monitors forecast and actual cash flows
against the maturity profiles of financial assets and liabilities. It is Group policy to ensure that a specific level of committed
facilities is always available based on forecast working capital requirements. Cash forecasts identifying the Group’s liquidity
requirements are produced and are sensitised for different scenarios including, but not limited to, decreases in profit margins
and weakening of sterling against other functional currencies.
The following are the contractual maturities of financial liabilities:
Financial liabilities at amortised cost
30 September 2022
Carrying
amount
£’m
Contractual
cash flows
£’m
Within 1
year
£’m
1 to 5 years
£’m
> 5 years
£’m
Trade payables
Lease liabilities
Other payables
30 September 2021
Trade payables
Lease liabilities
Other payables
Capital management
158.3
3.9
27.4
189.6
104.3
2.9
14.8
122.0
158.3
4.2
27.4
189.9
104.3
3.4
14.8
122.5
158.3
1.1
27.4
186.8
104.3
0.5
14.8
119.6
–
2.9
–
2.9
–
2.1
–
2.1
–
0.2
–
0.2
–
0.8
–
0.8
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 18) and equity of the Group as
disclosed in note 20.
The Group is not subject to any externally imposed capital requirements.
23. Share-based payments
The following table illustrates the number of, and movements in, share options granted by the Group.
LTIP
No. of share
options
(thousands)
CSOP &
RSA
No. of share
options
(thousands)
Total
No. of share
options
(thousands)
2,922
1,188
–
(791)
(355)
2,964
653
664
1,205
–
(69)
(183)
1,617
112
3,586
2,393
–
(860)
(538)
4,581
765
Outstanding at the beginning of the year
Granted during the year
Lapsed during the year
Exercised during the year
Forfeited during the year
Outstanding at the year end
Exercisable
202
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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 2017-2019 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. For the 2020 schemes, 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.
During the prior year, 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-market based condition resulted in a
catch-up charge to the income statement of £2.0m that reflects the scheme progress to date. The performance conditions for
the shares to vest was achieved on 30 September 2020, all of the shares vested in FY21. The Group also awarded nil-cost
options to certain key employees within the business. The vesting of these awards will be dependent on set departmental
targets.
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 absolute TSR, relative TSR and Total Transaction Value (‘TTV’) targets at the end of a
three-year period. On 21 December 2021, the Remuneration Committee approved the introduction of an underpin/minimum
award for the nil cost awards originally granted 9 July 2019. This removal of a non-market based condition has resulted in
a catch-up charge to the income statement of £1.9m that reflects the scheme progress to date, all of these shares vested
in FY22.
The fair value of equity-settled share-based payments has been estimated as at date of grant using the Black–Scholes model.
No. of
options
awarded
Share
price at
grant date
(£)
Exercise
price
(%)
Expected
volatility
(£)
Option
Life
(years)
Risk
free
rate
(%)
Dividend
yield
(%)
Non-vesting
conditions
(%)
Fair value at
grant date
(£)
300,401
3.550
700,935
3.550
435,500
4.630
44,000
2.450
22,000
2.450
Nil
Nil
Nil
Nil
Nil
59%
3.0 0.03%
0.00%
0%
3.0 0.03%
0.00%
0%
3.0 0.73%
0.74%
0%
0.0 0.73%
0.74%
43%
0.0 0.73%
0.74%
0.0
0.0
0.0
0.0
0.0
2.050
3.540
4.520
2.395
2.395
275,591
2.750
Nil
46%
3.0 1.20%
0.00%
0.0
1.710
275,591
2.750
Nil
46%
3.0 1.20%
0.00%
0.0
1.470
551,183
2.750
Nil
0%
3.0 1.20%
0.00%
0.0
2.749
Award date
5 February 2021
(TSR dependent)
5 February 2021
(EPS dependent)
22 December 2021
(no conditions)
22 December 2021
(no conditions)
22 December 2021
(EBITDA dependent)
25 February 2022
(Relative TSR
dependent)
25 February 2022
(Absolute TSR
dependent)
25 February 2022
(TTV condition
dependent)
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
203
FINANCIAL STATEMENTS Notes to the Consolidated
Financial Statements continued
No. of
options
awarded
Share
price at
grant date
(£)
Exercise
price
(%)
Expected
volatility
(£)
Option
Life
(years)
Risk
free
rate
(%)
Dividend
yield
(%)
Non-vesting
conditions
(%)
Fair value at
grant date
(£)
4,883
2.750
Nil
46%
3.0 1.20%
0.00%
0.0
0.717
Award date
27 July 2022
(Relative TSR
dependent)
27 July 2022
(Absolute TSR
dependent)
4,883
2.750
27 July 2022 (TTV
condition dependent)
9,766
2.750
Nil
Nil
46%
3.0 1.20%
0.00%
0%
3.0 1.20%
0.00%
0.0
0.0
0.613
1.156
Expected volatility is estimated by considering historic average share price volatility at the grant date.
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 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
(£)
Exercise
price
(%)
Expected
volatility
(£)
Option
Life
(years)
Risk
free
rate
(%)
Dividend
yield
(%)
Non-vesting
conditions
(%)
Fair value at
grant date
(£)
Type
2021 RSA
2021 RSA
2022 RSA
2022 RSA
2022 RSA
2022 RSA
No. of
shares
20,000
314,695
793,135
290,398
33,164
87,887
3.680
3.680
2.450
2.450
2.750
1.156
Nil
Nil
Nil
Nil
Nil
Nil
N/A
N/A
N/A
N/A
N/A
N/A
1.0 0.03%
3.0 0.03%
2.0 1.20%
1.0 1.20%
2.0 1.20%
1.5 1.20%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Nil
Nil
Nil
Nil
Nil
Nil
2022
£’m
3.2
1.5
4.7
3.680
3.680
2.450
2.450
2.750
1.156
2021
£’m
2.1
0.7
2.8
The following has been recognised in the income statement during the year:
LTIP
RSA
Total share scheme charge
204
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
24. Commitments and contingencies
a) Capital commitments
No new capital commitments.
b) Contingencies
In September 2010, proceedings were initiated against On the Beach Limited by Ryanair alleging infringement of, inter alia,
its intellectual property rights. The case lay dormant for over three years with no material developments in that period, and
as such the Group sought to strike out the claim on the basis of inordinate and inexcusable delay. Therefore, whilst the legal
process is ongoing, 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.
25 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).
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
205
FINANCIAL STATEMENTS Company Balance Sheet
Year ended 30 September 2022
Fixed assets
Investments
Deferred tax
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
4
5
6
7
8
8
2022
£’m
163.4
1.0
122.6
0.1
122.7
(1.0)
–
(1.0)
2021
£’m
132.6
–
169.9
0.4
170.3
(17.5)
(0.2)
(17.7)
286.1
285.3
1.7
89.6
2.6
0.5
191.7
286.1
1.7
89.6
2.6
0.5
190.9
285.3
The loss for the year ended 30 September 2022 dealt with in the financial statements of the parent company is £3.9m
(2021: loss £3.1m)
The financial statements were approved by the Board of Directors and authorised for issue.
Shaun Morton
Chief Financial Officer
7 December 2022
On the Beach Group plc. Reg no 09736592
206
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Company Statement of Changes in Equity
Year ended 30 September 2022
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
Share
capital
£’m
Share
premium
£’m
Merger
reserve
£’m
Capital
contribution
£’m
Retained
earnings
£’m
1.6
0.1
–
–
–
64.8
25.9
(1.1)
–
–
2.6
0.5
191.1
–
–
–
–
–
–
–
–
–
–
2.9
(3.1)
Total
£’m
260.6
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
Shares issued during the year
Share-based payment charges
including tax
Dividends paid during the year
Total comprehensive loss for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4.7
–
(3.9)
–
4.7
–
(3.9)
Balance at 30 September 2022
1.7
89.6
2.6
0.5
191.7
286.1
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
207
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 2022 and 30 September 2021.
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 2022
dealt with in the financial statements of the parent company
is £3.9m (2021: loss £3.1m).
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 13 to the
consolidated financial statements.
2. Director’s 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 114
to 144.
3. Shared-based payments
The Company recognised a total charge of £4.7m
(2021: £2.8m) in the year in relation to the Long Term
Incentive Plan. Details of this scheme is described in note 23
to the consolidated financial statements.
Investments
4.
The £132,613,000 investment in subsidiary undertakings
made in 2015 relates to the capital reorganisation of the
Group in 2015. During the year, the Group has undertaken
a project to simplify the group structure. On the Beach
Group plc acquired On the Beach Travel Limited from its
subsidiary On the Beach Bidco Limited for £30,749,667.
On 30 September 2022, On the Beach Bidco Limited and
On the Beach Topco Limited were placed into Members
Voluntary Liquidation following the distribution of assets to
On the Beach Group plc.
208
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
5. Debtors
Amounts falling due within one year:
Amounts owed by Group undertakings
Prepayments
Total debtors
2022
£’m
121.7
0.9
122.6
2021
£’m
169.9
–
169.9
Amounts owed by Group undertakings are presented as a current asset as the balances are repayable on demand
6. Creditors due within one year
Current
Amounts owed to Group undertakings
Accruals
Total creditors due within one year
7. Called-up share capital
Allotted, called up and fully paid
166,258,172 ordinary shares @ £0.01 each (2021: 165,399,366 @ £0.01 each)
2022
£’m
–
1.0
1.0
2022
£’m
1.7
1.7
2021
£’m
16.1
1.4
17.5
2021
£’m
1.7
1.7
The Group issued 858,806 ordinary shares 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. 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. The capital
redemption reserve arose as a result of the redemption of preference shares in the year ended 30 September 2015.
9. 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 2022 was £nil (2021: £nil).
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
209
FINANCIAL STATEMENTS
Glossary of Alternative Performance Measures
APM
Definition
Reconciliation to closest GAAP measure
Adjusted EPS
2022
Profit/(loss) for the year
Share-based payments
(net of tax)
Impact of exceptional
items (net of tax)
Amortisation of acquired
intangibles (net of tax)
Adjusted profit/(loss)
after tax (£’m)
Basic weighted average
number of Ordinary
Shares (m)
Adjusted basic EPS (p)
1.6
3.5
1.3
4.1
2021
(30.2)
2.2
8.1
4.5
10.5
(15.4)
165.9
6.3
159.3
(9.7)
Adjusted profit/(loss)
before tax (£’m)
Profit/(loss) before tax
Amortisation of acquired
intangibles
Share-based payments
Exceptional items
Adjusted profit/(loss)
before tax
2022
2.1
5.5
4.7
1.8
2021
(36.7)
5.5
2.8
10.0
14.1
(18.5)
Adjusted basic earnings/
(loss) per share (‘EPS’)
Adjusted profit/(loss)
before tax
Adjusted basic EPS is calculated on
the weighted average number of
ordinary shares in issue, using the
adjusted profit after tax.
Adjusted earnings after tax is based
on profit/(loss) after tax adjusted for
amortisation of acquired intangibles,
share-based payments and
exceptional items.
Amortisation of acquired intangibles
are linked to the historical acquisitions
of businesses.
Share-based payments represents
the non-cash costs which fluctuates
year on year.
Exceptional items consists of
exceptional cancellations as a result
of Covid-19 and supplier disruption in
2022 offset by fair value gains from
FX forward contracts. Exceptional
items for 2021 consists of exceptional
cancellations as a result of Covid-19.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Group and allow
comparability to prior years.
Adjusted profit/(loss) before tax is
based on profit/(loss) before tax
adjusted for amortisation of acquired
intangibles, share-based payments
and exceptional items.
Amortisation of acquired intangibles
are linked to the historical acquisitions
of businesses.
Share-based payments represents
the non-cash costs which fluctuates
year on year.
Exceptional items consists of
exceptional cancellations as a result
of Covid-19 and supplier disruption in
2022 offset by fair value gains from
FX forward contracts. Exceptional
items for 2021 consists of exceptional
cancellations as a result of Covid-19.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Group and allow
comparability to prior years.
210
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
Definition
Reconciliation to closest GAAP measure
APM
B2B TTV
CCH adjusted EBITDA
CCH adjusted
gross profit
B2B Total Transaction Value (‘TTV’)
is a non-GAAP measure representing
the cumulative total transaction value
of sales booked each month before
cancellations and adjustments.
* Bookings where revenue has been recognised
on a travelled basis as a principal.
** Costs relate to the gross costs for bookings
made on an agent basis.
CCH Adjusted EBITDA is based on
CCH operating profit/(loss) before
depreciation, amortisation and the
impact of exceptional items.
Amortisation of acquired intangibles
are linked to the historical acquisitions
of businesses.
Exceptional items consists of
exceptional cancellations as a result
of Covid-19 and supplier disruption
in 2022 and exceptional cancellations
as a result of Covid-19 in 2021.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment and
allow comparability to prior years.
CCH Adjusted gross profit is based
on CCH gross profit before the impact
of exceptional items. Exceptional
items consists of exceptional
cancellations as a result of Covid-19
and supplier disruption in 2022.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment and
allow comparability to prior years.
CCH EBITDA
CCH EBITDA is based on CCH
operating profit before depreciation
and amortisation.
B2B TTV (£’m)
CCH revenue
CPH revenue
B2B revenue
Costs** and amendments
Booked in previous year
and travelled in year*
Booked but not yet
travelled*
B2B TTV
CCH Adjusted EBITDA
(£’m)
CCH operating loss
Exceptional items
Depreciation and
amortisation
Amortisation of acquired
intangibles
CCH Adjusted EBITDA
CCH adjusted gross
profit (£’m)
CCH gross profit
Exceptional items
CCH adjusted gross
profit
Marketing costs
CCH adjusted gross
profit after marketing
costs
CCH EBITDA (£’m)
CCH operating loss
Depreciation and
amortisation
CCH EBITDA
2022
50.5
5.8
56.3
35.5
2021
6.5
1.7
8.2
21.5
(13.7)
(5.4)
8.6
86.7
9.1
33.4
2022
(1.8)
0.3
0.3
1.1
(0.1)
2021
(4.8)
0.4
0.2
1.1
(3.1)
2022
2021
5.8
0.3
6.1
(1.0)
0.6
–
0.6
(0.4)
5.1
0.2
2022
(1.8)
1.4
(0.4)
2021
(4.8)
1.3
(3.5)
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
211
FINANCIAL STATEMENTS
Glossary of Alternative Performance Measures continued
APM
CCH TTV
Definition
Reconciliation to closest GAAP measure
CCH TTV is a non-GAAP measure
representing the cumulative total
transaction value of sales booked
each month before cancellations and
adjustments.
* As a principal revenue is recognised on a
travelled basis.
CCH TTV (£’m)
CCH revenue
Amendments
Booked in previous year
and travelled in year*
Bookings made but not
yet travelled*
CCH TTV
2022
50.5
10.2
2021
6.5
13.0
(13.7)
(5.4)
8.6
55.6
9.1
23.2
CPH adjusted EBITDA
CPH EBITDA
CPH adjusted
gross profit
CPH Adjusted EBITDA is based
on CPH operating loss before
depreciation, amortisation and
the impact of exceptional items.
Exceptional items consists of
exceptional cancellations as result of
Covid-19 and supplier disruption in
2022 and exceptional cancellations
as a result of Covid-19 in 2021.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment and
allow comparability to prior years.
CPH EBITDA is based on CPH
operating profit before depreciation
and amortisation.
CPH Adjusted gross profit is based
on CPH gross profit before the impact
of exceptional items. Exceptional
items consists of exceptional
cancellations as result of Covid-19
and supplier disruption in 2022.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment and
allow comparability to prior years
CPH adjusted EBITDA
(£’m)
CPH operating loss
Depreciation and
amortisation
Exceptional items
CPH adjusted EBITDA
CPH EBITDA (£’m)
CPH operating loss
Depreciation and
amortisation
CPH EBITDA
CPH adjusted gross
profit (£’m)
CPH gross profit
Exceptional items
CPH adjusted gross
profit
Marketing costs
CPH adjusted gross
profit after marketing
costs
2022
(0.7)
0.2
0.4
(0.1)
2022
(0.7)
0.2
(0.5)
2021
(1.6)
0.2
(0.3)
(1.7)
2021
(1.6)
0.2
(1.4)
2022
2021
2.0
0.4
2.4
(1.0)
0.8
(0.3)
0.5
(0.4)
1.4
0.1
CPH TTV
CPH TTV is a non-GAAP measure
representing the cumulative total
transaction value of sales booked
each month before cancellations and
adjustments.
* Costs relate to the gross costs for bookings
made on an agent basis.
CPH TTV (£’m)
CPH revenue
Costs* and amendments
CPH TTV
2022
5.8
25.3
31.1
2021
1.7
8.5
10.2
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ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
APM
Definition
Reconciliation to closest GAAP measure
Exceptional items
Group TTV
Exceptional items are certain costs
/ income that derive from events or
transactions that fall outside of the
normal activities of the Group. For
2022 this consists of exceptional
cancellations as a result of Covid-19
and supplier disruption in 2022 offset
by fair value gains from FX forward
contracts. For 2021, this consists of
exceptional cancellations as a result
of Covid-19. These costs / income are
excluded by virtue of their size and in
order to reflect management’s view
of the performance of the Group and
allow comparability to prior years.
Group TTV is a non-GAAP measure
representing the cumulative total
transaction value of sales booked
each month before cancellations and
adjustments.
* Bookings where revenue has been recognised
on a travelled basis as a principal.
** Costs relate to the gross costs for bookings
made on an agent basis.
Group adjusted revenue Group adjusted revenue is revenue
Group adjusted revenue
as an agent
adjusted for the impact of lost
revenue as a result of Covid-19 and
supplier disruption in 2022 offset
by fair value FX gains. For 2021
revenue is adjusted for the impact of
lost revenue as a result of Covid-19.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Group and allow
comparability to prior years.
Group adjusted revenue as an agent
is revenue adjusted for the impact of
lost revenue as a result of Covid-19
and supplier disruption in 2022 offset
by fair value FX gains. For 2021
revenue is adjusted for the impact of
lost revenue as a result of Covid-19.
For 2019 revenue is adjusted for
the impact of the failure of Thomas
Cook Group. These costs / income are
excluded by virtue of their size and in
order to reflect management’s view
of the performance of the Group and
allow comparability to prior years.
Exceptional items (£’m)
2022
2021
Impact of Covid-19 and
supplier disruption
Fair value FX gains
Exceptional items
2.6
(0.8)
1.8
10.0
–
10.0
Group TTV (£’m)
Group revenue
2022
144.1
2021 2019
21.2 140.3
Costs** and amendments
717.1
208.4 592.3
Booked in previous year
and travelled in year*
Bookings made but not
yet travelled*
(13.7)
(5.4)
(5.2)
8.6
14.1
14.0
Group TTV
856.1
238.3 741.4
Group adjusted revenue
(£’m)
Group revenue
Exceptional items
2022
2021
2019
144.1
21.2
140.4
0.2
9.3
7.1
Group adjusted revenue
144.3
30.5
147.5
Group adjusted revenue
as an agent (£’m)
Group revenue
2022
144.1
2021
2019
21.2
140.4
Revenue as a principal
(50.5)
(6.5)
(55.0)
Revenue as an agent
Exceptional items
93.6
0.2
14.7
9.3
85.4
7.1
Group adjusted revenue
as an agent
93.8
24.0
92.5
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
213
FINANCIAL STATEMENTS
Glossary of Alternative Performance Measures continued
APM
Definition
Reconciliation to closest GAAP measure
Group adjusted
gross profit
Long haul TTV
OTB adjusted EBITDA
Group adjusted gross profit is gross
profit adjusted for the impact of
Covid-19 and supplier disruption in
2022 offset by fair value FX gains.
For 2021 gross profit is adjusted for
the impact of Covid-19. For 2019
gross profit is adjusted for the impact
of the failure of Thomas Cook Group.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Group and allow
comparability to prior years.
Long haul TTV is a non-GAAP
measure representing the cumulative
total transaction value of sales booked
each month before cancellations and
adjustments.
* Bookings where revenue has been recognised
on a travelled basis as a principal.
** Costs relate to the gross costs for bookings
made on an agent basis.
OTB Adjusted 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 a result
of Covid-19 and supplier disruption
in 2022 offset by fair value FX gains.
For 2021, exceptional cancellations
as a result of Covid-19. These
costs / income are excluded by
virtue of their size and in order to
reflect management’s view of the
performance of the Segment and
allow comparability to prior years
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment.
Group adjusted gross
profit (£’m)
Gross profit as an agent
Gross profit as a principal
Group gross profit
Exceptional items
Group adjusted gross
profit
2022
2021
2019
89.8
5.8
95.6
0.5
13.8
0.6
14.4
8.8
84.9
7.1
92.0
7.1
96.1
23.2
99.1
Long haul TTV (£’m)
Group revenue
Costs** and amendments
Booked in previous year
and travelled in year*
Bookings made but not
yet travelled*
Short haul TTV
Long haul TTV
2022
144.1
717.1
(13.7)
8.6
2021
21.2
213.3
(5.4)
9.1
(802.6)
(220.1)
53.5
18.2
OTB adjusted operating
profit (£’m)
OTB operating profit/
(loss)
Exceptional items
Share-based payments
Depreciation and
amortisation
Amortisation of acquired
intangibles
OTB adjusted EBITDA
2022
2021
5.2
1.1
4.7
6.7
4.4
22.1
(29.0)
9.8
2.8
5.9
4.4
(6.1)
214
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
APM
Definition
Reconciliation to closest GAAP measure
OTB adjusted revenue
(£’m)
OTB revenue
Exceptional cancellations
Fair value FX gains
OTB adjusted revenue
2022
87.1
0.6
(0.8)
86.9
2021
13.0
9.1
–
22.1
OTB adjusted operating
profit (£’m)
OTB operating profit/
(loss)
Exceptional items
Share-based payments
Amortisation of acquired
intangibles
OTB adjusted operating
profit/(loss)
2022
2021
4.9
1.1
4.7
4.4
(29.0)
9.8
2.8
4.4
15.1
(12.0)
OTB adjusted revenue
OTB adjusted
operating profit
OTB adjusted revenue is revenue
adjusted for the impact of lost
revenue as a result of Covid-19 and
supplier disruption in 2022 offset
by fair value FX gains. For 2021
revenue is adjusted for the impact of
lost revenue as a result of Covid-19.
These costs / income are excluded
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment and
allow comparability to prior years
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment.
OTB adjusted operating profit is
based on OTB operating profit/(loss)
before the impact of exceptional
items, amortisation of acquired
intangibles and the non-cash cost of
the share-based payment schemes.
Amortisation of acquired intangibles
are linked to the historical acquisitions
of businesses.
Share-based payments represents
the non-cash costs which fluctuates
year on year.
Exceptional items consists of
exceptional cancellations as a result
of Covid-19 and supplier disruption
offset by fair value FX gains in 2022
and exceptional cancellations as a
result of Covid-19 in 2021. These
costs / income are excluded by
virtue of their size and in order to
reflect management’s view of the
performance of the Segment and
allow comparability to prior years
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment.
OTB online marketing as
% revenue
OTB adjusted revenue after marketing
cost is revenue after ‘OTB’ online and
offline marketing costs.
OTB revenue after
marketing cost (£’m)
OTB adjusted revenue
OTB online marketing
costs
OTB adjusted revenue
after online marketing
OTB online marketing as
% revenue
2022
87.1
2021
22.1
(27.0)
(5.5)
60.1
31%
16.6
25%
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
215
FINANCIAL STATEMENTS
Glossary of Alternative Performance Measures continued
APM
OTB EBITDA
OTB EBITDA as
a percentage of
adjusted revenue
OTB TTV
Overheads % revenue
Overheads % TTV
Definition
Reconciliation to closest GAAP measure
OTB EBITDA is based on OTB
operating profit before depreciation
and amortisation.
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
items consists of exceptional
cancellations as result of Covid-19
and supplier disruption offset by
fair value FX gains in 2022 and
exceptional cancellations as a
result of Covid-19 in 2021. These
costs / income are excluded by
virtue of their size and in order to
reflect management’s view of the
performance of the Segment and
allow comparability to prior years
by virtue of their size and in order
to reflect management’s view of the
performance of the Segment.
OTB TTV is a non-GAAP measure
representing the cumulative total
transaction value of sales booked
each month before cancellations and
adjustments
* Costs relate to the gross costs for bookings
made on an agent basis
Overheads as a percentage of
revenue is based on the OTB adjusted
revenue divided by the overheads
for OTB. OTB overheads is the
administrative expenses excluding
the depreciation and amortisation.
Overheads as a percentage of TTV is
based on the OTB TTV divided by the
overheads for OTB. OTB overheads is
the administrative expenses excluding
marketing costs, depreciation and
amortisation.
OTB EBITDA (£’m)
2022
2021
OTB operating profit/
(loss)
Depreciation and
amortisation
OTB EBITDA
5.2
(29.0)
11.1
16.3
10.3
(18.7)
OTB EBITDA as a
percentage of adjusted
revenue
Revenue
Exceptional cancellations
Exceptional FX gains
Adjusted revenue
Adjusted OTB EBITDA
OTB EBITDA as a
percentage of adjusted
revenue
2022
87.1
0.6
(0.8)
86.9
22.1
2021
13.0
9.1
–
22.1
(6.1)
25%
(28%)
OTB TTV (£’m)
OTB revenue
Costs* and amendments
OTB TTV
Overheads % revenue
(£’m)
OTB adjusted revenue
Overheads
Overheads % revenue
Overheads % revenue
(£’m)
OTB TTV
Overheads
Overheads % TTV
2022
87.1
675.6
762.7
2022
86.9
(25.9)
30%
2022
762.7
(25.9)
3.4%
2021
13.0
191.1
204.2
2021
22.1
(16.5)
75%
2021
204.2
(16.5)
8.1%
216
ON THE BEACH GROUP PLC | ANNUAL REPORT & ACCOUNTS 2022
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
ANNUAL REPORT & ACCOUNTS 2022 | ON THE BEACH GROUP PLC
217
FINANCIAL STATEMENTS On the Beach Group
plc is a fast-growing,
leading online retailer
of beach holidays
On the Beach Group plc
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)