Investor Day

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• Investor Day
• Caythorpe Park
• 28th September 2007

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INVESTOR DAY PRESENTATION

• Corporate Overview Carl Michel
• Education (PGL) Martin Davies
• QA
• Hotel Breaks Nick Cust / Mark Wray
• QA
• Adventure Simon Tobin
• QA
• Camping Steve Whitfield
• QA

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• Corporate Overview

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STRATEGIC GOALS

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

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

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

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• Education (PGL)

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OVERVIEW

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

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OUR MARKETS
Outdoor Education and Adventure
Competition
Drivers
Size

• Market historically dominated by LEAs
• Funding pressure and teacher expectations means
  LEA provision is decreasing
• Administration and fear of litigation means
  teachers are less willing to organise
• Experienced commercial providers sought
• Brand recognition and values important
• Demand at peak outstrips supply
• Government support for outdoor learning

• Other operators
• - Acorn
• - Travelclass
• - Kingswood
• - NST
• - Manor Adv.
• The market is also served by 99 LEA centres
• In addition there are a further 50 registered
  centres usually run and managed by the owner

• PGL is the clear market leader in this sector
• PGL operates predominantly at the Key Stage Two
  level for 8 12 year olds
• Estimated market growth of c. 7 over from 2005 -
  2010
• In excess of 800 registered operators in the
  outdoor sector. Over 60 are not for profit
  (i.e. LEAs)

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OUR MARKETS
School Tours
Competition
Drivers
Size

• Risk management and government approval issues
  impacting the outdoor education market also apply
  
• Admin / risk management costs will drive business
  towards the larger, more professional operators
• Brand awareness and trust is key
• Barriers to entry will become even higher
• PGL sees an opportunity to professionalise the
  market, taking share from smaller operators and
  DIY

• Other operators include NST and STS
• Further consolidation would offer larger players
  scale and more comprehensive product ranges

• Market trend of more foreign travel
• Core age range 11 16 years
• Majority of operators in this sector are growing
  at c. 3 per annum
• Static real growth

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OUR MARKETS
Ski
Competition
Drivers
Size

• Due to the declining nature of the market, PGLs
  strategy is to increase market share and build
  margin

• STG
• Ski bound
• 4 other mid size operators
• There are also numerous other smaller players and
  DIY comprising the remainder of market supply

• The market has been in decline since the late
  1980s
• The majority of LEAs do not see the educational
  benefits of such trips, hence the industry is
  focused on school holiday periods
• Opportunity to reposition as an educational
  product

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GROWTH STRATEGY

• Investment in facilities and infrastructure to
  extend market position and potentially improve
  margins

• Increase size of business to match PGL reputation
• Developing second tier management and potentially
  acquire additional expertise
• Understanding opportunities in the marketplace
• Known acquisition targets

• Identify additional sites
• Develop range of services and customer
  relationships

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GROWTH STRATEGY

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

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GROWTH STRATEGY

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

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RATIONALE FOR ACQUISITIONS

• Consolidation
• PGL currently focuses on UK residential centres
  for key stage 2 (8-12)
• Winners will provide out of classroom products
  for wide age range
• PGL Brand
• Opportunity to increase the size of the business
  to match reputation
• Synergies
• Potential benefits in overhead reduction, market
  pricing, market segmentation, gross margin
• People
• Chance to develop second tier management and
  acquire additional expertise
• Strategic Partnerships
• To meet all schools residential out of classroom
  learning needs
• Potential for investment in partnership for long
  term stability
• Broadening of brand proposition
• A significant school tours business will deliver
  a core of 12-18yr olds
• Economic Model
• A significant tours operation will generate cash
  during winter

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SUMMARY

• Profitable and cash generative business
• Established market leader
• Generic brand
• Growth markets
• Superb reputation
• Loyal customer base with significant repeat
  revenues
• Visible income
• Consolidation platform
• Quality asset backing including strong freehold
  property
• Management team with a record of success
• Opportunity to grow

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• QA

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• Hotel Breaks

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OVERVIEW

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

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INTERNATIONAL

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

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GROWTH PROSPECTS

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

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• QA

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• Adventure

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OVERVIEW

• Travel experiences for individuals and groups
• Expanding portfolio
• Value added hard to recreate individually
• Consumers on trend, altruistic, experience
  seeking, middle youth
• Industry structure fragmented, highly
  competitive, high knowledge requirement, high
  margin/costs
• Flexible product dimension open and closed
  groups. small groups, individuals and families
• Business characteristics low fixed costs,
  minimum commitments, constant innovation

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BRANDS AND PRODUCTS

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

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BUSINESS MIX AND MARKET

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

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GROWTH PROSPECTS

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

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• QA

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• Camping

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(No Transcript)
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OVERVIEW

• Eurocamp and Keycamp
• Market leading brands
• Quality product with flexibility and choice
• High satisfaction levels and loyalty
• Strong pan-European sales and marketing
• Large segmented databases
• Disciplined capacity planning and yield
  management
• Eurocamp Independent
• Pitch and ferry reservation service
• Acquisition of Select Sites (Oct 1st)
• Easycamp
• Value based holidays in site owned Mobile Homes
• Low risk model well placed for growth
• Own a Holiday Home
• Sales of Mobile Homes for residential use in
  France
• Leverage customer databases and brand strength

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CHANGING PRODUCT MIX

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

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PROSPECTS

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

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• QA