Final Results
Holidaybreak PLC
30 November 2006
30 November 2006: For immediate release
HOLIDAYBREAK PLC
Results for the year ended 30 September 2006
Good results, in line with Board expectations
2007 a year of investment
Holidaybreak, the European specialist holiday group, today announces preliminary
results for the year ended 30 September 2006.
Financial highlights
2006 2005
£m £m
Group turnover 304.5 303.0
Operating margins* 11.3% 11.1%
Headline profit before tax* 32.1 29.9
Statutory profit before tax 32.1 20.6
Headline EPS* 46.8 pence 44.2 pence
Free cash flow** 35.1 38.1
Net debt 3.1 22.9
Dividend per share 29.2 pence 26.6 pence
* Before goodwill impairment in 2006 of £nil (2005: £9.3m).
** Free cash flow is operating cash flow (£48.8m (2005: £52.0m)) after capital
expenditure (£10.2m (2005: £8.6m)) net of disposals (£5.6m (2005: £6.2m)) and
after interest and tax payments (£9.1m (2005: £11.4m)).
Summary
• Solid performance in line with Board's expectations. Holidaybreak's
businesses sold 3.1m holidays (2005: 3.0m) in the year. They are market leaders
and enjoy industry-leading margins.
• The diversity of Holidaybreak's businesses and their flexible cost
structures helped deliver an excellent performance overall. There was no
material impact on Group financial performance by the war in Lebanon or other
events, such as the World Cup.
• 2006 sales up 0.5% at £304.5m (Hotel Breaks: -3%; Adventure Travel: +22%;
Camping: -7%). With the relative changes in revenue there is now a better
balance between the divisions.
• European operations further enhanced by the acquisition of German specialist
tour operators, carpe diem Sprachreisen GmbH and TravelWorks GmbH, in September.
This is in line with our established strategy of investing in European
specialist holiday companies.
• The Camping Division has delivered cash and good margins. Capacity will be
reduced again in 2007, this time by around 3%.
• 2007 will be a year of investment in our existing businesses. Organic growth
initiatives include the extension of product ranges in the Adventure Travel
Division and investing in the online capability of all our businesses. The
Camping Division will also be investing £9.5m (net of disposal proceeds) to
replace older mobile-homes.
• Current trading is in line with our expectations. Group sales intake to date
+6% (Hotel Breaks currently +8%; Adventure Travel + 5%; Camping -6%). The Group
remains confident of achieving another satisfactory performance.
Carl Michel, Group Chief Executive, said: "These results represent another
robust performance in what has been yet another eventful year in our markets.
We are market leaders with industry-leading margins and continue to search out
acquisitions that meet our criteria and will add to the Group."
"I remain extremely pleased with the resilience of the Group and am confident
that Holidaybreak, with its diversity of quality businesses, will continue to
prosper. Current trading is in line with our expectations and the Group is
confident of achieving another satisfactory performance."
Enquiries:
Carl Michel / Bob Baddeley Holidaybreak
30 November +44 (0) 20 7404 5959
Thereafter +44 (0) 1606 787100
James Hogan / Craig Breheny / Ash Spiegelberg Brunswick
+44 (0) 20 7404 5959
Note to Editors
Holidaybreak (HBR.L) is listed on the London Stock Exchange. The European
specialist holiday group sold 3.1m holidays in the year ended 30 September 2006
(2005: 3.0m). Holidaybreak has three operating divisions: Hotel Breaks,
Adventure Travel and Camping. Each is a market leader in its respective
specialist sector of the European holiday industry, has multi-channel
distribution and is recognised for providing high standards of product and
service quality. For more information, please go to www.holidaybreak.co.uk.
Chairman's Statement
Holidaybreak continues to stand out amongst UK tour operators in terms of
generating margins and cash flows. In the year to 30 September 2006, headline
profit before tax* increased to £32.1m and the business generated £35.1m of free
cash flow**. We also made two acquisitions in Germany.
Holidaybreak has demonstrated resilience to external shocks, with modest growth
in revenues and headline profit before tax*, notwithstanding the uncertainty
created by terrorist activity including the London bombings. Margins remain
industry leading with excellent free cash flow generation.
Holidaybreak's results reflect our core approach of putting customers (whether
consumers, travel agents or partners) at the heart of what we do. Consumer
loyalty is a key measure for all of our businesses and we will continue to
strive to increase repeat business. This is a very tangible measure of success
in an environment where traditional loyalties are reducing.
The Board is determined to ensure that Holidaybreak's pedigree, as a manager of
well-run specialist holiday businesses that are leaders in their respective
market sectors, is maintained and enhanced.
We continue to examine opportunities to make sensible acquisitions that we
believe will serve our shareholders in terms of growing the business, achieving
a good return on investment and generating cash. We are also allocating capital
for organic development opportunities within our existing businesses, where
appropriate. Finally, we shall also consider the potential of more substantial
specialist tour operating opportunities, which might constitute a viable 'fourth
division'.
Our strength lies with our employees and their ability to adapt to changes in
consumer tastes, distribution technologies and marketing mix. I would like to
thank them for their enthusiasm and hard work during the year.
Group results
For the year ended 30 September 2006, pre-tax profits* were £32.1m (2005:
£29.9m) on revenue of £304.5m (2005: £303.0m). Headline earnings per share* were
46.8p (2005: 44.2p).
All Holidaybreak's operations generated substantial cash. Operating cash inflow
was £48.8m (2005: £52.0m). Net debt at 30 September 2006 was £3.1m (2005:
£22.9m). Capital expenditure, net of disposals, was £4.6m (2005: £2.4m).
Dividend
In view of the financial strength of Holidaybreak and confidence in its future
prospects, the Board is recommending an increase in the annual dividend of 10%
in 2006. The Board intends to continue to pay ordinary dividends that are
appropriate in light of the growth prospects and the underlying performance of
the Group.
The Board is thus recommending a final dividend of 21.2p (2005: 19.35p), payable
on 24 April 2007, to shareholders on the register on 30 March 2007, making a
total of 29.2p (2005: 26.6p) for the year.
Acquisitions
In September 2006, Holidaybreak completed two acquisitions in Germany. carpe
diem Sprachreisen GmbH is a leading player in the language travel sector and
TravelWorks GmbH specialises in longer work assignments overseas, such as
gap-years. The combined initial consideration for the two acquisitions was €10m
(£6.8m) with an additional payment of up to €2m (£1.3m) subject to trading in
the 12 months following acquisition. The impact of these acquisitions is
expected to be marginally earnings enhancing (pre-amortisation of acquired
intangible assets)*** in 2007. The experienced management team will remain with
the businesses.
Discussions on the potential sale of camping
In June 2006, the Board ended discussions regarding the possible sale of the
Camping Division. The proposed indicative offers fell short of the Board's
valuation of the business. The Board believes that keeping the Camping Division
within the Group will deliver greater value to shareholders.
Management and board changes
Steve Whitfield joined the Holidaybreak plc Board on 12 July 2006. He was
appointed Managing Director of the Camping Division in March 2006. Steve, 48,
has been with the business since 1984 in a variety of roles and his depth of
knowledge will be instrumental in taking the division forward. He took over from
Matthew Cheetham who resigned from his position as divisional Managing Director
and left the Holidaybreak plc Board on 10 March 2006.
Outlook
Current trading is in line with our expectations and the Board believes that the
trading and financial prospects of the Group are satisfactory. The Group's
balance sheet strength will fund significant investment in its existing
businesses in 2007. In addition, management continues to review a range of
possible acquisitions, of different sizes, which meet its stringent financial
criteria and will add to the existing portfolio of businesses.
At the same time, the Board remains focused on the efficiency of the Group's
balance sheet. If no material acquisition is made, and assuming current
conditions continue, the Board retains the option of considering a return of
value to shareholders in due course.
* Before goodwill impairment in 2006 of £nil (2005: £9.3m)
** Free cash flow is operating cash flow (£48.8m (2005: £52.0m)) after capital
expenditure (£10.2m (2005: £8.6m)) net of disposals (£5.6m (2005: £6.2m)) and
after interest and tax payments (£9.1m (2005: £11.4m)).
*** This statement should not be taken to mean that the earnings per share of
Holidaybreak plc will necessarily match or exceed the historic reported earnings
per share of Holidaybreak plc and no forecast is intended or implied.
Bob Ayling
Chairman
Chief Executive's Business Review
Holidaybreak's results for 2006 reflect our work to date in putting the customer
at the heart of development efforts, especially in the online environment. All
of our brands are focused on adding value for the customer and differentiation
from competitors. Group trading has been resilient in the face of a number of
one-off factors. Margins continue to be industry leading - thanks in no small
part to the strength and depth of management across all parts of the business.
Group structure
Holidaybreak plc has three separate operating divisions: Hotel Breaks
(representing 40% of Group revenue in 2006), Adventure Travel (25%) and Camping
(35%).
Strategy
A component of our strategy is to grow through acquisition. We continue to
investigate opportunities that leverage the strengths of our businesses and
build on our core competencies by extending market and product reach. We would
also consider more sizeable transactions of specialist holiday businesses - as a
potential 'fourth operating division' - if they meet our strict financial
criteria. A key requirement for any business is that it is already - or has the
clear potential to become - a leader in its market segment. Our strong margins
relative to industry norms reflect this focus in all our existing businesses,
with Explore, Superbreak, Bookit, Djoser, Eurocamp and Keycamp all enjoying
market leadership.
There are a number of attractive acquisition opportunities - mostly but not
exclusively in the wider European market - which can provide us with new
platforms for growth. Examples of this are the two recent acquisitions in
Germany which have increased our European presence. Management continues to
review a range of possible acquisitions, of different sizes, which meet its
stringent financial criteria and will add to the existing portfolio of
businesses.
The Group's balance sheet strength will fund significant investment in its
existing businesses in 2007. All of the divisions are pursuing organic growth
initiatives which are detailed below. I believe we are well placed to capitalise
on opportunities and continue to deliver good returns to our shareholders.
Financial performance and current trading
For the Group overall, revenue per customer increased from £103 in 2005 to £108
in 2006. Customer retention is a key focus for all our divisions. This year
29.6% of direct bookings (excluding bookings from retail travel agents) taken
for the Group as a whole were repeat bookings (2005: 28.7%).
Hotel Breaks
This remains the largest division in the Group, selling 2.5m holidays in 2006
(2005: 2.4m). Divisional operating profit was down 3% at £16.2m (2005: £16.8m)
on revenue also 3% down at £122.7m (2005: £126.7m). Margins were constant at
13.2%. Free cash flow generated was £18.4m (2005: £14.9m). The business
continues to enjoy low operational gearing, for instance room allocations are
not committed, allowing a high degree of flexibility in costs.
The impact of the London bombings in July 2005 and the press coverage thereafter
continued to be felt in the London leisure market until Spring 2006. Growth
restarted around Easter but, in both the UK and the Netherlands, bookings were
further impacted by the competing attractions of the FIFA World Cup in June and
the unusually hot weather in July.
We believe that the year ahead will see a return to growth - sales intake
(incorporating Bookit's intake based on total transaction value) across the
division is approximately 8% up on the comparable period for 2005/06.
Adventure Travel
The division sold 66,400 holidays in 2006 (2005: 60,300) and has once again
delivered strong growth in profits and revenue. Operating profit increased by
47% to £5.6m (2005: £3.8m) with margins up at 7.3% (2005: 6.0%). The business
model remains flexible with very low levels of fixed costs. Revenue was up 22%
at £76.3m (2005: £62.6m) and free cash flow was £3.1m (2005: £12.7m). During the
year Explore moved to new freehold premises at a cost of £2.9m. In 2005 the
division had a one-off benefit from the acquisition of Djoser whereby we had
£5.0m of payments received on account of holidays taken by Djoser customers
after the year end.
Overall, 2007 sales intake for the division is currently 5% higher than in 2006,
but the Middle East as a destination continues to under perform management
expectations.
Camping
A total of 515,000 holidays were sold (2005: 523,000). Operating profit* reduced
3% to £12.5m (2005: £13.1m) on revenue down 7% at £105.5m (2005: £113.7m).
Operating margin* improved to 11.9% (up from 11.4% in 2005). Free cash flow
generation was £22.7m (2005: £22.0m) reflecting reduced capital expenditure in
2006 as we cut capacity. The business was effectively 'right sized' for the
season, with a 16% reduction in capacity. The outcome was a pleasing increase in
camp-site occupancy from 85 to 95 nights.
For the 2007 season, capacity will be marginally adjusted (-3%) to reflect more
modest shifts in demand. Our plan is to hold back more capacity for sale into
the spring. As a result of this expected later sales phasing we are currently
approximately 6% below last year's sales intake (based on bookings received to
date).
Acquisitions
In September 2006, the Adventure Travel Division was augmented by the addition
of two German specialist holiday businesses. carpe diem Sprachreisen provides
English and other language holidays and TravelWorks offers working holidays and
gap-year breaks. Both businesses have experienced a number of years of
double-digit growth and enjoy margins and cash flow generation similar to that
of our Adventure Travel Division.
The businesses are based in Munster in Nordrhein-Westfalen with a small office
in Vienna, Austria. The combined consideration for the two acquisitions was €10m
(£6.8m) with an additional payment of up to €2m (£1.3m) subject to trading in
the 12 months following acquisition. The acquisitions are expected to be
marginally earnings enhancing (pre-amortisation of acquired intangible assets)**
for Holidaybreak in the financial year ended 30 September 2007. The experienced
management team will remain with the businesses.
In the course of this year, the Board was approached by several interested
parties regarding the potential sale of the Camping Division. The Board first
ascertained whether other parties were also interested and then considered
whether any of the expressions of interest would achieve a valuation
commensurate with the likely future cash flows of the division if retained. As
this was not the case, the Board suspended discussions, as it did not see any
outcome forthcoming that was likely to be in the best interests of shareholders.
The Board looked hard at the value the Camping business brings but believes that
retaining the business within the Group will deliver greater value to
shareholders.
Business development
The Hotel Breaks Division comprises Superbreak based in the UK and Bookit in the
Netherlands which provide primarily domestic short-break holidays to their
respective markets. In the UK, Superbreak has continued to focus efforts on
'packaged breaks' (including some successful new rail and newspaper
relationships) to further differentiate it from other leisure break providers.
Superbreak's Theatre Breaks programme led the division's recovery in the London
leisure hotel market, offering breaks around new theatre shows, such as
Spamalot, The Sound of Music and Wicked. While we recognise the value in
rebalancing our revenue mix to be less reliant on London, by growing our
European offering, we are also widely recognised by the travel trade and
consumers alike as experts in London and in marketing its attractions.
Superbreak will therefore continue to look for further opportunities in this
area.
This year Superbreak introduced a loyalty scheme for frequent bookers and
recently invited regular users to decide on which version of the new main
landing page they preferred for Superbreak.com.
In the Netherlands, Bookit has successfully grown its Hotelletje.nl brand,
launched in late 2005, to include over 400 smaller independent guesthouses
located in the Benelux countries. The brand now accounts for approximately 5% of
Bookit turnover. Having exclusively contracted properties is important in
attracting and retaining loyal customers. Weekendjeweg.nl and Nachtjeweg.nl
remain the core brands, offering leisure consumers a great range of hotels for
weekend or single night stays. The Dutch are avid holiday home users and
Bookit's site Bungalows.nl remains pre-eminent.
A new website, Citytripper.nl, has recently been launched allowing Bookit to
sell a global range of hotels to its million plus customer base.
The Adventure Travel Division's principal businesses, Explore, based in the UK,
and Djoser, based in the Netherlands, are market leaders in specialist small
group exploratory trips in their respective markets. RegalDive, also based in
the UK, is one of the leading UK diving operators. Explore and Djoser's
specialist programmes have performed strongly, most notably the Family
Adventures offering. New tours and destinations have been added to all
programmes. Djoser has capitalised on Explore's specialist product-led strategy
by launching, in early 2006, their own walking and trekking programme, 'Djoser
Wandel', based on Explore's version. Both the Explore and Djoser brands will
continue to benefit from each other by new product development, enlarged
overseas purchasing power and joint marketing initiatives. RegalDive continues
to develop away from the Red Sea and sales to other worldwide destinations, for
instance Oman, the Maldives and Indonesia, accounted for 34% of total revenue.
The Camping Division's principal activity is the sale of holidays into our own
pre-sited accommodation through the Eurocamp and Keycamp brands. Customers,
predominantly families with school-age children, come from the UK, Ireland, the
Netherlands, Germany and five other European countries.
The division has been successful in selling the more price-sensitive low-season
holidays where the key customer groups are either couples or pre-school
families.
We continue to see considerable scope to broaden the appeal of camping. One such
initiative has resulted in adding video clips to our websites to enable
potential customers to get an up-to-date impression of camping and allow
existing ones to view footage of accommodation and activities on camp-sites.
The division has continued to source new destinations that are accessible using
low-cost carriers and is introducing new sites for the first time in Portugal,
Southern Spain and Slovenia for the 2007 season. Following a successful trial in
2006, the division will be expanding the number of chalets on offer next season.
Investment
As previously announced, we have increased spend on organic growth initiatives.
For instance, the Adventure Travel Division is achieving organic growth by the
extension of existing specialist product ranges and by the introduction of new
ones, designed to satisfy the specific niche demands of customers. This year we
introduced Explore Private Groups, which is aimed at parties requiring a
dedicated itinerary and tour leader.
We continue to invest more in the online capability of all our businesses. We
recognise the value in a broad multi-channel distribution approach but it is
vital that our offering on the web is compelling if consumers wish to access us
in this way. The Hotel Breaks Division is therefore investing, as previously
announced, up to £2m per annum on improving web content and design and expects
to see the return from this investment come through in the following years.
Furthermore, Explore, part of the Adventure Travel Division, is currently
re-developing its website to improve customer retention rates. This year 68.0%
(2005: 64.3%) of total Group bookings taken from consumers (excluding bookings
taken from retail travel agents) were made online.
The hotel contracting team has been expanded to broaden significantly the range
of Superbreak's European hotels on offer and the results of this should become
noticeable in 2007.
The Camping Division is to invest £9.5m (net of disposal proceeds) in the
current year to replace older mobile-homes with more contemporary models
(compared to £3.6m last year). We are also improving accommodation with the
addition of wooden decking and air conditioning to some units.
Principal risks facing the Group's businesses
Our priority will always be the safety of our customers, staff and suppliers.
Holidaybreak has been successful at managing the risks associated with running
very diverse holiday businesses.
Geopolitical events
Our businesses, particularly within the Adventure Travel Division, are exposed
to geopolitical events. In addition, climatic events, such as hurricanes and
earthquakes require us to rearrange itinerary timings and/or routings. This year
the division faced the threat of avian flu, bombings in the Sinai and most
notably, the war in Lebanon which had a depressing but not material effect in
the financial year. The Middle East accounts for approximately 16% of the
Adventure Travel Division's turnover. By continuing to expand the number of
destinations to which it offers tours (currently 131 countries worldwide) the
division seeks to mitigate the geopolitical risks. For example, Explore and
Djoser were able to grow despite the Middle East downturn and experienced strong
performances particularly in Africa and Asia.
The financial performance of the Hotel Breaks Division was affected by the July
2005 bombings in London, and growth only returned to its London market in Spring
2006. As mentioned earlier, the division is expanding its European and overseas
range of hotels.
Exposure to the economy
The majority of the Group's customers are based in the UK and as a result our
revenues are linked to the strength of the UK economy. Further European
acquisitions will reduce this dependence but will in turn expose the Group to
the fortunes of other European economies. The Dutch market currently represents
about 24% of the Group's total transaction values.
Ability to grow business
Our ability to grow the business is partially dependent on our capability to
successfully complete value enhancing acquisitions. The process of integrating
acquired businesses may involve unforeseen difficulties and may require a
disproportionate amount of time and attention of management and our financial
and other resources. We use both in-house expertise and professional advisers
when undertaking such acquisitions.
Recruitment and retention of talent
As a service-led group, our people, including call centre and administration
staff, tour leaders and couriers, are our most important assets. A core aspect
of our competitiveness is the ability to attract, retain and motivate these key
employees and management personnel, and if we lose or fail to attract these key
employees we may be put at a competitive risk. We believe our training
programmes and incentive arrangements provide the necessary tools to attract and
retain key staff. We encourage our staff to save for their future through
pension schemes set up by Group companies and currently 43.3% (2005: 42.7%) of
permanent staff are members of the schemes. An indication of the high levels of
motivation in our call centre staff are evident in the number of calls answered
within 20 seconds (55%) and the low level of unanswered calls (5%). No
comparative figures are available for 2005 but we hope to have comparative
figures for future reports. Absenteeism amongst Group permanent staff is below
UK national averages for call centre based businesses of 4.1% (source: CIPD
annual absence management survey report 2006) at 2.4% (2005: 2.6%).
Interest rate and foreign exchange risk
The Group is exposed to interest rate and foreign exchange risk. Details of how
the Group manages these risks are set out in the Finance Director's Review.
Summary
I believe Holidaybreak is well placed to prosper. It has demonstrated its
resilience and also embarked on a number of initiatives to seek to accelerate
medium-term growth while remaining focused on the specialist travel sector.
Given the strength of its balance sheet, Holidaybreak remains well positioned to
grow, both organically and by acquisition. Management continues to pursue
several European acquisition opportunities in the specialist tour operating
sector, with good margin and cash generation characteristics.
Carl Michel
CEO
* Before goodwill impairment in 2006 of £nil (2005: £9.3m)
** This statement should not be taken to mean that the earnings per share of
Holidaybreak plc will necessarily match or exceed the historic reported earnings
per share of Holidaybreak plc and no forecast is intended or implied.
Finance Director's Review
In the year to 30 September 2006 Holidaybreak plc increased headline profits
before tax* to £32.1m and invested £4.0m (net of cash acquired) in purchasing
carpe diem and Travelworks. Despite this expenditure, net debt reduced by £19.8m
to £3.1m as we continued to benefit from substantial cash generation in all
businesses. We are targeting another year of good operating cash flow
performance in 2007 but we expect to spend c. £16m on capital investment.
Operating Profit And Profit Before Tax
Group revenue in 2006 was up 0.5% on 2005 at £304.5m (2005: £303.0m). Operating
profit* was 1.8% higher than 2005 at £34.3m (2005: £33.7m). Operating margin*
was improved to 11.3% (2005: 11.1%).
Hotel Breaks' margin was the same as 2005 at 13.2% and Camping, benefiting from
improved occupancy, achieved a margin of 11.9% (2005: 11.4%). Adventure Travel's
margin improved from 6.0% to 7.3%. 2005 margin was adversely affected by the IAS
38 treatment of advertising and promotional activities whereby, in the nine
months following the acquisition of Djoser, the company bore a full annual
marketing charge.
The Group incurred costs of £0.3m in relation to the curtailed sale of the
Camping Division and two substantial potential acquisitions.
Finance costs (net of investment income) reduced from £4.4m in 2005 to £2.2m.
Interest cover* improved from 7.7 times in 2005 to 15.7 times in 2006. Interest
was 23.8 times covered by operating cash flow, a level we regard as prudent.
Cash Flow And Bank Facilities
The Group's net borrowings at 30 September 2006 were £3.1m, compared to £22.9m
in 2005. Cash flow from our operating activities was £48.8m, another strong
performance. This position reflected the acquisitions of carpe diem and
TravelWorks for an initial purchase consideration (net of cash acquired) of
£4.0m.
Available bank facilities (£140m as at 30 September 2006) are sufficient to meet
the working capital, investment and bonding requirements of the Group. Due to
the highly seasonal nature of Camping's cash flow, headroom under these
facilities was £56.0m at the end of April 2006 when borrowings were at their
maximum. In addition to these facilities we have hire purchase agreements with
various UK financial institutions to finance the purchase of mobile-homes. Just
over half of annual expenditure on mobile-homes is financed from this source.
Taxation
The tax charge, including full provision for deferred tax, was £9.7m and the tax
rate of 30.2% was lower than 2005 (36.9%) when goodwill impairment of £9.3m was
substantially non-deductible. The underlying rate going forward is expected be
in the region of 30%.
Earnings Per Share And Dividends
Headline basic earnings per share* was 46.8p (2005: 44.2p) an increase of 5.9%.
The Board is recommending a final dividend of 21.2p per ordinary share
representing an increase of 10% over 2005. This gives a total dividend for the
year of 29.2p per ordinary share (2005: 26.6p). This is covered 1.6 times by
post tax earnings.
Balance Sheet
Net assets of the Group increased to £59.1m (2005: £48.0m). Net debt gearing**
at 30 September 2006 was 5.2% compared to 47.7% at the previous year end.
Intangible assets acquired on acquisitions during the year were £2.1m (2005:
£9.7m) and the annual amortisation charge will be c. £1.0m.
Capital Expenditure
Capital expenditure (net of receipts from disposals) in the year to 30 September
2006 was £4.6m (2005: £2.4m). The majority of this, £2.9m, was again accounted
for by Camping. Mobile-homes (£4.3m before disposals) accounted for the bulk of
this expenditure. Sales of mobile-homes generated £4.2m. Accommodation capacity
will again be reduced by a further 3% in 2006/7. The Group's depreciation policy
is to write down the cost of mobile-homes to an estimated residual value over
their projected economic life. Disposal proceeds in respect of mobile-homes sold
at the end of their useful life achieved net book value.
Foreign Currency And Interest Rate Risk Management
The Group utilises currency derivatives to hedge significant future transactions
and cash flows. The Group is a party to a variety of foreign currency forward
contracts in the management of its exchange rate exposures. The instruments
purchased are primarily denominated in the currencies of the Group's principal
markets.
At the balance sheet date, the total notional amount of outstanding forward
foreign exchange contracts that the Group has committed are as below.
2006 2005
£m £m
Forward foreign currency contracts 29.1 21.6
----------------------------------- -------- --------
Changes in the fair value of non-hedging currency derivatives amounting to £0.2m
have been charged to income in the year.
At the balance sheet date £45.5m (2005 £22.8m) of foreign currency denominated
debt was designated as a hedging instrument for the purpose of hedging the
translation of its investment in foreign operations.
At the balance sheet date the Group had no interest rate derivative contracts.
CHANGES IN ACCOUNTING POLICIES AND THE ADOPTION OF INTERNATIONAL FINANCIAL
REPORTING STANDARDS
During the year the Group adopted International Financial Reporting Standards
("IFRS") for the first time. The main changes affecting the Group's reporting
are that:
purchased goodwill is no longer amortised but is subject to an annual impairment
review. Purchased intangible assets are subject to an annual amortisation
charge;
the income statement includes an annual charge based on the fair value of
equity-based awards made to employees;
open forward foreign exchange contracts and interest rate swaps are valued at
year end market rates, with any gains or losses charged to the income statement.
Expenditure on advertising and promotional activities is expensed as incurred.
The impact of the adoption of IFRS on prior year reporting has been to increase
the reported profit before tax for the year ended 30 September 2005 from £19.4m
under UK GAAP to £20.6m primarily due to the amortisation of intangible assets
through the acquisitions of Bookit BV and Djoser BV in December 2004 and January
2005 respectively (£1.4m), the add-back of amortisation of goodwill (£3.4m), a
charge in respect of prepaid advertising and brochure distribution costs
(£0.6m), and a charge of £0.3m in respect of the fair value of equity based
payments to employees. In addition, reported net assets at 1 October 2004 (the
date of transition) were increased from £36.5m under UK GAAP to £43.7m, and from
£38.4m to £48.0m at 30 September 2005.
Robert Baddeley
Finance Director
* Headline profits, operating margin EPS and interest cover are stated before
goodwill impairment in 2006 of £nil (2005: £9.3m)
** Net debt gearing is net debt expressed as a percentage of year end net assets
Consolidated income statement
Year Ended 30 September 2006
Note 2006 2005
£m £m
Group revenue - continuing operations 1 304.5 303.0
Net operating costs (270.2) (278.6)
--------------------- -------- -------- --------
Operating profit 1 34.3 24.4
Profit on disposal of property - 0.6
Investment income 1.4 1.2
Finance costs (3.6) (5.6)
--------------------- -------- -------- --------
Profit before tax 1 32.1 20.6
Tax (9.7) (7.6)
--------------------- -------- -------- --------
Profit for the year 1 22.4 13.0
--------------------- -------- -------- --------
Attributable to:
Equity holders of the parent 22.4 13.0
--------------------- -------- -------- --------
Earnings per share
Basic 3 46.8p 27.6p
Diluted 3 46.6p 27.4p
Headline earnings per share
Basic 3 46.8p 44.2p
Diluted 3 46.6p 43.9p
Consolidated statement of recognised income and expense
Year ended 30 September 2006
2006 2005
£m £m
Exchange differences on translation of foreign operations - 0.3
-------------------------------- -------- --------
Net income recognised directly in equity - 0.3
-------------------------------- -------- --------
Profit for the year 22.4 13.0
-------------------------------- -------- --------
Total recognised income and expense for the year 22.4 13.3
-------------------------------- -------- --------
Attributable to:
Equity holders of the parent 22.4 13.3
-------------------------------- -------- --------
Consolidated balance sheet
30 September 2006
Note 2006 2005
£m £m
Non-current assets
Goodwill 61.5 56.0
Other intangible assets 11.5 9.5
Property, plant and equipment 53.4 61.7
--------------------- -------- -------- --------
126.4 127.2
Current assets
Inventories 0.6 0.5
Trade and other receivables 20.7 21.4
Cash and cash equivalents 4 54.4 50.4
--------------------- -------- -------- --------
75.7 72.3
Assets held for sale 2.4 3.3
--------------------- -------- -------- --------
Total assets 204.5 202.8
--------------------- -------- -------- --------
Current liabilities
Trade and other payables (77.4) (73.3)
Current tax liabilities (4.8) (2.7)
Obligations under finance leases 4 (5.0) (5.9)
Bank overdrafts and loans 4 (45.9) (55.8)
--------------------- -------- -------- --------
(133.1) (137.7)
--------------------- -------- -------- --------
Net current liabilities (57.4) (65.4)
--------------------- -------- -------- --------
Non-current liabilities
Deferred tax liabilities (5.7) (5.5)
Obligations under finance leases 4 (6.6) (11.6)
--------------------- -------- -------- --------
(12.3) (17.1)
--------------------- -------- -------- --------
Total liabilities (145.4) (154.8)
--------------------- -------- -------- --------
--------------------- -------- -------- --------
Net assets 59.1 48.0
--------------------- -------- -------- --------
Equity
Share capital 2.4 2.4
Share premium account 37.9 36.9
Own shares (3.2) (3.9)
Other reserves 0.7 0.6
Retained earnings 21.3 12.0
--------------------- -------- -------- --------
Total equity 59.1 48.0
--------------------- -------- -------- --------
Consolidated cash flow statement
Year Ended 30 September 2006
Note 2006 2005
£m £m
--------------------------- -------- -------- --------
Reconciliation of operating profit to cash generated from operating activities
Cashflow from operating activities
Operating profit 34.3 24.4
Adjustments for:
Amortisation of other intangible assets 1.7 2.2
Depreciation of property, plant and equipment 10.9 12.9
Impairment of goodwill - 9.3
Share based payment charge 0.2 0.3
Increase in receivables (0.4) (2.4)
Increase in payables 2.1 5.3
--------------------------- -------- -------- --------
Cash inflow from operating activities 48.8 52.0
Tax paid (7.6) (7.0)
--------------------------- -------- -------- --------
Net cash from operating activities 41.2 45.0
--------------------------- -------- -------- --------
Investing activities
Acquisitions of subsidiaries net of cash acquired (4.0) (39.0)
Purchase of intangible assets (0.3) -
Purchases of property, plant and equipment (10.2) (8.6)
Proceeds on disposal of property, plant and
equipment 5.6 6.2
--------------------------- -------- -------- --------
Net cash used in investing activities (8.9) (41.4)
--------------------------- -------- -------- --------
Financing activities
Finance costs paid (2.9) (5.8)
Interest received 1.4 1.4
Proceeds on issue of new ordinary shares 1.0 2.4
Proceeds on exercise of share options 0.7 0.6
Purchase of own shares to be held in trust - (0.7)
New bank loans raised - 44.8
Repayment of borrowings 4 (6.3) (12.5)
Payments under finance leases 4 (5.9) (7.2)
Dividends paid (13.1) (11.8)
--------------------------- -------- -------- --------
Net cash from financing activities (25.1) 11.2
--------------------------- -------- -------- --------
--------------------------- -------- -------- --------
Net increase in cash and cash equivalents 4 7.2 14.8
--------------------------- -------- -------- --------
Cash and cash equivalents at beginning of year 4 46.1 31.3
--------------------------- -------- -------- --------
Cash and cash equivalents at end of year 4 53.3 46.1
--------------------------- -------- -------- --------
1. Business and geographical segments
For management purposes, the group is currently organised into three operating
divisions - Hotel breaks, Adventure Travel and Camping. These divisions are the
basis on which the group reports its primary segment information.
Segment information about these businesses is presented below.
Adventure
Hotel Breaks Travel Camping Consolidated
2006 2006 2006 2006
2006 £m £m £m £m
Revenue
------------ -------- -------- -------- ---------
Total revenue 122.7 76.3 105.5 304.5
------------ -------- -------- -------- ---------
Result
Operating profit 16.2 5.6 12.5 34.3
------------ -------- -------- -------- ---------
Investment income 1.4
Finance costs (3.6)
---------
Profit before tax 32.1
Tax (9.7)
------------ -------- -------- -------- ---------
Profit after tax 22.4
------------ -------- -------- -------- ---------
Adventure
Hotel breaks Travel Camping Consolidated
2005 2005 2005 2005
2005 £m £m £m £m
Revenue
------------ -------- -------- -------- ---------
Total revenue 126.7 62.6 113.7 303.0
------------ -------- -------- -------- ---------
Result
Segment result
prior to impairment
of goodwill 16.8 3.8 13.1 33.7
Impairment losses
recognised in
income. - - (9.3) (9.3)
------------ -------- -------- -------- ---------
Operating profit 16.8 3.8 3.8 24.4
Profit on disposal
of property 0.6
Investment income 1.2
Finance costs (5.6)
---------
Profit before tax 20.6
Tax (7.6)
------------ -------- -------- -------- ---------
Profit after tax 13.0
------------ -------- -------- -------- ---------
Consolidated cash flow statement
Year ended 30 September 2006
1. Business and geographical segments (continued)
The following table provides an analysis of the Group's revenue by geographical
origin:
Sales revenue
2006 2005
£m £m
United Kingdom 222.2 231.0
Ireland 6.3 7.4
Netherlands and Belgium 58.2 46.2
Germany, Switzerland and Austria 11.8 12.5
Other 6.0 5.9
------------------------- -------- --------
304.5 303.0
------------------------- -------- --------
2. Dividends
2006 2005
£m £m
Amounts recognised as distributions to equity holders in the
period:
Final dividend for the year ended 30 September 2005 of 19.35p
(2004: 17.6p) per share. 9.2 8.4
Interim dividend for the year ended 30 September 2006 of 8.0p
(2005: 7.25p) per share. 3.9 3.4
--------------------------------- -------- --------
13.1 11.8
--------------------------------- -------- --------
Proposed final dividend for the year ended 30 September 2006
of 21.2p (2005: 19.35p) per share. 10.2 9.2
--------------------------------- -------- --------
The proposed final dividend is subject to approval by shareholders at the Annual
General Meeting and has not been included as a liability in these financial
statements. The dividend will be payable on 24 April 2007 to those shareholders
on the register on 30 March 2007.
3. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings 2006 2005
£m £m
Earnings for the purposes of basic and diluted
earnings per share being net profit attributable to
equity holders of the parent 22.4 13.0
--------------------------------- -------- -------
Number Number
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 47,769,249 47,186,130
Effect of dilutive potential ordinary shares:
Share options 208,490 301,197
--------------------------------- -------- --------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 47,977,739 47,487,327
--------------------------------- -------- --------
Pence Pence
Earnings per share
Basic 46.8 27.6
Diluted 46.6 27.4
Headline Earnings 2006 2005
£m £m
Net profit attributable to equity holders of the parent 22.4 13.0
Add back:
Impairment of goodwill - 9.3
Tax effect of the above - (1.5)
--------------------------------- -------- --------
Headline earnings 22.4 20.8
--------------------------------- -------- --------
Pence Pence
Headline earnings per share
Basic 46.8 44.2
Diluted 46.6 43.9
The directors consider that headline earnings per share provides a better
understanding of the Group's earnings following the impairment of goodwill in
2005.
4. Analysis of cash and cash equivalents and reconciliation to net debt
1 October Cash flow Foreign Non cash 30 September
2005 exchange movements 2006
£m £m £m £m £m
Cash at bank and in hand
and in hand 50.4 4.0 - - 54.4
Overdrafts (4.3) 3.2 - - (1.1)
-------------- ------- -------- -------- --------- --------
46.1 7.2 - - 53.3
Debt due within one
year (51.5) 6.3 0.5 - (44.8)
Finance leases:
less than one year (5.9) 5.9 - (5.0) (5.0)
more than one year (11.6) - - 5.0 (6.6)
-------------- ------- -------- -------- --------- --------
(22.9) 19.4 0.5 - (3.1)
-------------- ------- -------- -------- --------- --------
5. Non-statutory accounts
The financial information set out above does not constitute the Company's
statutory accounts for the years ended 30 September 2006 or 2005, but is derived
from these accounts. Statutory accounts for 2005 have been delivered to the
Registrar of Companies and those for 2006 will be delivered following the
Company's Annual General Meeting. The auditors have reported on those accounts;
their reports were unqualified and did not contain a statement under section 237
(2) or (3) of the Companies Act 1985.
Whilst the financial information included in this preliminary announcement has
been computed in accordance with International Financial Reporting Standards
(IFRS), this announcement in itself does not contain sufficient information to
comply with IFRS.
The Company expects to publish its first full financial statements that comply
with IFRS in January 2007.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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