Interim Results

Holidaybreak PLC 23 May 2000 2000 INTERIM RESULTS Highlights - As normal recorded a seasonal loss before tax of £7.9m (1999: loss before tax £8.3m) - £29 million acquisition in February of the leading adventure holiday operator Explore Worldwide - Excellent overall performance from Hotel Breaks - Developing a comprehensive Internet service for all parts of the Group - Bookings for the camping division below the previous year but higher margins will ensure satisfactory profit progress - Half-year dividend increased by 9% to 4.8p - Continued search for the right acquisition opportunities Commenting on the results Angus Crichton-Miller, Chairman, said: 'We are now the UK's leading specialist holiday operator with five market leading brands in three specialist areas. We are confident that our recent acquisition Explore Worldwide will benefit from being a part of a larger Group and we are continuing to seek out other similar opportunities. Current trading is positive and we are well positioned to record solid progress for the year.' Enquiries: Richard Atkinson, Chief Executive Bob Baddeley, Finance Director Holidaybreak plc Telephone: 0207 796 4133 on Tuesday 23rd May 2000 only Thereafter 01606 787 100 Michael Sandler Tim Robertson Hudson Sandler Limited Telephone: 0207 796 4133 INTERIM ANNOUNCEMENT In the six month period to 31 March 2000, Holidaybreak plc recorded a pre-tax loss of £7.9m. This compares with a loss of £8.3m for the equivalent period in 1999. First half losses of this magnitude are entirely normal due to the seasonal nature of our business. The current year figure includes a profit of £0.3m attributable to our most recent acquisition, Explore Worldwide, for the period from 22 February 2000. Hotel Breaks, which achieved an operating profit of £1.6m (1999: £1.4m) on the back of strong revenue growth, is also profitable in the first half. Camping, the largest business in the Group is highly seasonal with all sales falling into the second half. Significant first half losses are an annual feature and these amounted to £8.1m, compared to the 1999 equivalent of £7.9m. The interest charge is slightly lower year on year at £1.5m (1999: £1.7m). Interest on the Explore acquisition debt will have no material impact until the second half. DIVIDEND The Board has declared a half-year dividend of 4.8p per share, an increase of 9% on the 1999 figure. This will be payable on 21 August 2000 to shareholders on the register on 14 July 2000. ACQUISITION OF EXPLORE WORLDWIDE We made a significant step forward in developing Holidaybreak into a broadly based group of specialist holiday businesses with the acquisition, on 22 February 2000, of the market leading adventure holidays operator Explore Worldwide. The consideration of £29m plus deferred consideration of £1m, linked to Explore's profit performance in the year to 30 September 2000, was partially offset by the £6m net cash balances which we inherited. Travers Cox, managing director and former majority shareholder of Explore, joined the Holidaybreak Board on that date. The early stages of integrating Explore into the Holidaybreak Group have gone well and the strong trading pattern apparent at the time of the acquisition has continued. Worldwide adventure holidays are a rapidly expanding sector in both the UK and overseas markets. Explore Worldwide is the largest European operator of these holidays with a comprehensive and exciting range of 200 winter and summer tours to 100 countries on six continents. Holidaybreak's experience of direct and internet marketing and our established sales and marketing operations in Holland, Germany, Switzerland and Ireland are likely to be beneficial in increasing future sales. CURRENT TRADING AND PROSPECTS We expect to achieve a satisfactory increase in profits in 2000. As previously mentioned, our new acquisition Explore Worldwide is trading as we had anticipated and should achieve profits in line with our expectations at the time of acquisition, which would represent a good improvement on their 1999 performance. Hotel Breaks also continue to perform extremely strongly, although the benefit of a 21% increase in sales revenues has been slightly diluted by higher than anticipated commissionable sales through retail agents. A highlight has been the number of weekend packages which we have sold, in conjunction with visits to the Millennium Dome (over 7,000 to date) or with tickets for popular London shows such as the Lion King, Mamma Mia and, most recently, The King and I. Camping, which is the largest profit earner in the Group, has faced some difficulties but there have been positive features in our performance to offset the negatives. Booking volumes for the two main brands, Eurocamp and Keycamp, remain below equivalent 1999 levels at minus 7% although the gap is narrowing and more profitable mobile-home bookings are level year on year. As we had anticipated, demand for August has continued to come in steadily. However, low value May and June bookings for tents have fallen back in recent weeks after a promising start and we have also been affected by the extent of media coverage of the oil spill off the coast of Western France. In fact, customers can book their holidays with the confidence that the beaches will be clear before the summer season commences. One of the great strengths of Camping's performance has been the very strong invoice values which have exceeded expectations. This, together with strong growth in Germany, various cost efficiencies and further benefits derived from the Keycamp acquisition means that, despite lower booking volumes, Camping will still make satisfactory profit progress. With the acquisition of Explore the Holidaybreak Group has evolved further away from over-reliance on a single business. We are continuing to seek out opportunities within the holiday sector, to further that process. With regard to our current businesses, whilst the second half of our year has only just started and the main summer season lies ahead, planning for 2001 is already well advanced. All enjoy excellent prospects and we anticipate continuing growth in profits, earnings and dividends. Consolidated profit and loss account For the six months ended 31 March 2000 Unaudited Unaudited Audited 6 months 6 months Year to to ended 31 March 31 March 30 September 2000 1999 1999 Continuing Operations Acquisitions Total £'000 £'000 £'000 £'000 £'000 Turnover 18,571 2,150 20,721 15,614 142,436 ====== ====== ====== ===== ===== Operating (loss) (6,551) 269 (6,282) (6,552) 20,050 profit before goodwill amortisation Goodwill amortisation (120) - - ------- ------- --------- Operating (loss) (6,402) (6,552) 20,050 after goodwill amortisation Net interest payable (1,516) (1,728) (2,779) ------- ------- --------- (Loss) profit on (7,918) (8,280) 17,271 ordinary activities before tax Taxation 2,375 2,500 (5,165) ------- ------- --------- (Loss) profit on (5,543) (5,780) 12,106 ordinary activities after taxation Ordinary dividend (2,190) (1,819) (5,800) ------- ------- --------- Retained (loss) (7,733) (7,599) 6,306 profit for the period ======= ====== ========= (Loss) earnings per (13.1p) (14.0p) 29.3p ordinary share ======= ====== ========= The Group has no recognised gains or losses other than the (loss) profit for the financial period. Notes: 1. Segment information. Group turnover by geographic region was as follows Unaudited Unaudited Audited 6 months to 6 months to Year ended 31 March 31 March 30 September 2000 1999 1999 £'000 £'000 £'000 United Kingdom and Ireland 20,721 15,614 109,518 Netherlands and Belgium - - 16,527 Germany, Switzerland and - - 13,168 Austria Others - - 3,223 ------- ------- --------- 20,721 15,614 142,436 ======= ======= ========= Group turnover and profit before tax and interest by class of business was as follows: Turnover PBIT Unaudited Unaudited Audited Unaudited Unaudited Audited 6 months 6 months Year 6 months 6 months Year to to ended to to ended 31 March 31 March 30 31 March 31 March 30 September September 2000 1999 1999 2000 1999 1999 £'000 £'000 £'000 £'000 £'000 £'000 Camping - - 103,739 (8,137) (7,942) 16,231 holidays Hotel short- 18,571 15,614 38,697 1,586 1,390 3,819 breaks Adventure 2,150 - - 269 - - holidays Goodwill - - - (120) - - amortisation ------- ------- -------- ------- ------- -------- 20,721 15,614 142,436 (6,402) (6,552) 20,050 ======= ======= ======== ======= ======= ======== Consolidated balance sheet As at 31 March 2000 Unaudited Unaudited Audited 6 months 6 months Year ended to to 31 March 31 March 30 September 2000 1999 1999 £'000 £'000 £'000 Tangible fixed assets 55,262 54,594 48,666 ====== ====== ====== Intangible assets 28,856 - - ====== ====== ====== Current assets Investments held for disposal 1,016 1,452 5,019 Debtors 29,610 19,922 11,905 Cash at bank and in hand 6,843 1,586 26,194 ------- ------- --------- 37,469 22,960 43,118 Creditors: Amounts falling due within one (60,106) (37,736) (39,438) year ------- ------- --------- Net current liabilities (22,637) (14,776) 3,680 -------- ------- --------- Total assets less current 61,481 39,818 52,346 liabilities Creditors: Amounts falling due after more (50,470) (46,793) (45,591) than one year Provision for liabilities and (74) (256) (74) charges ------- ------- --------- Net assets / (liabilities) 10,937 (7,231) 6,681 ======= ======= ========= Capital and reserves Called up share capital 2,281 2,067 2,069 Retained reserves 8,656 (9,298) 4,612 ------- ------- --------- Equity shareholders' funds 10,937 (7,231) 6,681 ======== ======= ========= Consolidated cashflow statement For the six months ended 31 March 2000 Unaudited Unaudited Audited 6 months 6 months Year to to ended 31 March 31 March 30 September 2000 1999 1999 £'000 £'000 £'000 Net cash (outflow) inflow from (10,713) (13,398) 28,562 operating activities Returns on investments and (1,516) (1,728) (2,779) servicing of finance Taxation (1,278) - (3,532) Capital expenditure and (6,388) (6,655) (6,513) financial investment Acquisitions and disposals (24,205) 6,704 6,700 Equity dividends paid - - (5,330) -------- -------- --------- Cash (outflow) inflow before management of liquid resources (44,100) (15,077) 17,108 and financing Financing 24,763 (2,659) (7,665) -------- -------- --------- (Decrease) increase in cash in (19,337) (17,736) 9,443 the period ======== ======== ========= Notes: 1. The principal Group accounting policies have been applied consistently throughout the current and the preceding half year and are consistent with those set out in the Annual Report and Accounts 1999 with the exception that, following the adoption of FRS 10 'Goodwill and Intangible Assets', goodwill arising on acquisitions is capitalised and amortised over its estimated useful economic life. Goodwill arising on the acquisition of Explore Worldwide Limited has been estimated and amounts to £28,976,000 and the amortisation charged to the profit & loss account in the period was £120,000. 2. Earnings per ordinary share are based on the weighted average number of ordinary shares in issue of 42,305,405 (six months to 31 March 1999 - 41,279,164, year ended 30 September 1999 - 41,315,783). 3. An interim dividend of 4.8p per ordinary share will be paid on 21 August 2000 to shareholders on the Register on 14 July 2000. 4. The profit and loss account, balance sheet and cashflow statement in this interim report do not amount to statutory accounts within the meaning of section 240 of the Companies Act 1985. Statutory accounts for the year ended 30 September 1999 incorporating an unqualified audit report have been filed with the Registrar of Companies. 5. The Board have noted the publication of the Turnbull Report on internal control and are taking appropriate action to ensure compliance. 6. Reconciliation of operating profit to net cash (outflow) inflow from operating activities: Unaudited Unaudited Audited 6 months 6 months Year ended to to 30 31 March 31 March September 2000 1999 1999 £'000 £'000 £'000 Operating (loss) profit (6,402) (6,552) 20,050 Depreciation charges 204 250 10,649 Goodwill amortisation 120 - - Profit on sale of tangible - - 74 fixed assets (Increase) in debtors (11,184) (6,239) (540) Increase (decrease) in 6,549 (857) (1,671) creditors -------- ------- --------- Net cash (outflow) inflow from operating activities (10,713) (13,398) 28,562 ======== ======= ======== 7. Reconciliation of net debt Unaudited Unaudit Audited 6 months 6 months Year ended to to 31 March 31 March 30 September 2000 1999 1999 £'000 £'000 £'000 (Decrease) increase in (19,337) (17,736) 9,443 cash in the period Cash (inflow) outflow from (12,774) 2,871 7,989 (increase) decrease in debt and lease financing --------- --------- --------- Movement in net debt in (32,111) (14,865) 17,432 the period New HP contracts (4,425) (3,822) (7,062) Net debt at beginning of (24,896) (35,266) (35,266) period --------- --------- --------- Net debt at end of period (61,432) (53,953) (24,896) ========= ========= ========= 8. Copies of this Interim Report are available from the registered office of Holidaybreak plc, Hartford Manor, Greenbank Lane, Northwich, Cheshire CW8 1HW.

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