Interim Results
Holidaybreak PLC
18 May 2005
18 May 2005: For immediate release
HOLIDAYBREAK PLC
Results for the six months ended 31 March 2005
Holidaybreak, the UK's leading operator of specialist holiday businesses,
announces interim results for the six months ended 31 March 2005.
Six months to Six months to Year to 30.9.04
31.3.05 31.3.04
£m £m £m
Turnover 85.3 71.5 281.6
Operating
profit /
(loss) 1.4* (2.5)* 31.4#
(Loss) /
Profit before
tax (0.7)* (4.6)* 28.0#
Statutory
(loss) profit
before tax (2.4)* (6.0)* 17.4#
Headline EPS* (1.0p) (7.1p) 44.0p
Dividend per
share 7.25p 6.6p 24.2p
Net debt 65.1 60.9 12.5
* Before goodwill amortisation of £1.7m (2004: £1.4m)
# Before goodwill amortisation of £2.7m, impairment of £5.3m and exceptional
costs of £2.6m
Summary
• For the first time Holidaybreak has reported an interim operating profit*.
This reflects the more balanced composition of the Group.
• 484,000 holidays provided in the first half (H1 2004: 367,000).
• Hotel Breaks and Adventure divisions now account for approximately
two-thirds of the Group's sales (total transaction values) on an
annualised basis.
• Recent acquisitions, BRC (Bookit) and Djoser, increase European
presence. Both are performing well and are ahead of management
expectations.
• Camping is expected to deliver cash and good margins in the full year.
Capacity will be reduced again in 2006.
• Operating cash inflow** for the 12 months to 31 March 2005 was £59.0m
• Net debt at the half year just £4.2m higher than at 31 March 2004, after
investing £39.0m in the acquisitions of Bookit and Djoser.
• Interim dividend up 10%.
• Management continues to focus on maximising yields and optimising
distribution across all divisions, particularly through the internet, which
accounts for over 30% of Group sales and continues to grow.
Richard Atkinson, Chief Executive, said: "These are pleasing results, reflecting
strong performances by both the Hotel Breaks and Adventure divisions which have
been boosted by our recent acquisitions. Approximately two-thirds of the Group's
activities are now in these growth areas. We expect to achieve a satisfactory
trading outcome for the full year, at good margins, and further strong cash
performance."
* Before goodwill amortisation, impairment and exceptional costs
** Cash generation before capital expenditure, acquisitions, interest, dividends
and tax
Enquiries:
Richard Atkinson / Robert Baddeley Holidaybreak
today +44 (0) 20 7404 5959 / Thereafter +44 (0) 1606 787100
James Hogan / Craig Breheny Brunswick
+44 (0) 20 7404 5959
Note to Editors
Holidaybreak (HBR.L) is listed on the London Stock Exchange. The UK's leading
operator of specialist holiday businesses, it sold 2.3m holidays in the 12
business months to 30 September 2004. Holidaybreak has three operating
divisions: Hotel Breaks, Adventure Holidays and Camping. Each is a market leader
in its respective specialist sector of the holiday industry, has multi-channel
distribution and is recognised for providing high standards of product and
service quality. In December 2004, Holidaybreak announced the acquisition of two
market leading Dutch holiday businesses: BRC, the on-line intermediary for
short-stay leisure hotel breaks, and Djoser, the market leading 'soft adventure'
specialist.
For more information, please go to www.holidaybreak.co.uk.
CHAIRMAN'S STATEMENT
Introduction
Holidaybreak is the UK's leading operator of specialist holiday businesses. The
Group provided 484,000 holidays in the six months ended 31 March 2005 (2004:
367,000) and, for the first time, has reported an interim operating profit*.
The Hotel Breaks and Adventure divisions now account for approximately
two-thirds of annualised sales (total transaction values). The acquisitions of
BRC (Bookit) and Djoser, announced in December 2004, accelerated the changing
balance of the Group, increased our presence in European markets and boosted
profits in Hotel Breaks (now the biggest division in the Group) and Adventure.
Both acquisitions are performing well and are ahead of management expectations.
They are expected to be earnings enhancing*** in the current year.
Holidaybreak has traditionally reported an operating loss in the first half as a
result of the seasonal nature of its Camping business. Camping, whilst remaining
both popular and profitable, now represents approximately a third of Group
sales. As Hotel Breaks and Adventure grow, this share is expected to fall
further in the medium term. The changing shape of the Group, together with the
extensive work we have done on Camping, reorganising the division and focusing
on yield management, will continue to be important factors underpinning our
future financial performance.
The Board thanks management and staff throughout the Group for their continued
hard work and commitment during the period.
Financial results
In the six-month period to 31 March 2005, total Group turnover was £85.3m (2004:
£71.5m). Excluding the impact of acquisitions, turnover increased 12% to £79.8m.
The pre-tax loss on ordinary activities was £0.7m, before goodwill amortisation
and tax (2004 loss: £4.6m), whilst the interim operating profit* was £1.4m. On a
like-for-like basis, excluding the impact of acquisitions, existing activities
made an operating profit* of £0.4m (2004 loss: £2.5m). The new acquisitions,
Bookit and Djoser, both announced in December, contributed combined operating
profits* of £0.9m.
The improved half-year figures are the result of continued strong trading
performances from the Hotel Breaks and Adventure divisions. Profits from the
original Hotel Breaks and Adventure operations (excluding Bookit and Djoser)
were broadly offset by normal first half losses in the Camping business, due to
the seasonal nature of its trading. The interest charge was £2.1m (2004: £2.1m).
All Holidaybreak's operations generate substantial cash. Net debt at the half
year was £65.1m which is £4.2m higher than the 2004 figure of £60.9m. The
acquisitions of Bookit and Djoser, for a combined consideration of £39.0m
(€56.3m), were financed entirely from new borrowings. Excluding these new
borrowings, debt reduced by £34.8m compared to 31 March 2004. Operating cash
inflow** for the 12 months to 31 March 2005 was £59.0m, including £9.7m of
overseas VAT recovered in May 2004. Capital expenditure for the half-year, net
of disposals, was £3.3m (2004: £10.9m) and net capital expenditure in the
financial year is expected to be approximately £5.0m (2004: £13.5m). We are
close to the lowest point in our cash flow cycle at the half-year and net debt
levels reduce rapidly during May and June as final summer holiday balances are
paid.
Dividend
The Board has declared a half-year dividend of 7.25p per share (2004: 6.6p),
representing an increase of 10% on 2004. This will be payable on 16 August 2005
to shareholders on the register on 22 July 2005. The Board intends to continue
its policy of paying ordinary dividends that are appropriate to the growth
prospects and the underlying performance of the Group.
Acquisitions
Holidaybreak increased its presence in the growing leisure break and soft
adventure sectors, and also in European travel markets, with the announcement,
in December 2004, of the acquisitions of Bookit, an on-line intermediary for
short-stay holidays in the Netherlands, and Djoser, the leading Dutch adventure
holiday operator. The combined consideration for the two acquisitions was
£39.0m.
Djoser and Bookit enjoy high levels of consumer recognition in the Netherlands
and are market leaders in their sectors. Both companies have experienced and
committed management teams who are staying with their businesses.
Integration of the newly acquired businesses has gone smoothly. They are both
performing well and are ahead of management expectations. Both are expected to
be earnings enhancing*** in the current year.
DIVISIONAL REVIEW
Hotel Breaks
Hotel Breaks is now the largest division in the Group. Including Bookit,
first-half operating profit* rose 28% to £7.6m (2004: £6.0m) with sales up 9% to
£59.9m (2004: £54.8m).
The margin improvement is partly due to improvements in the original business
and partly because Bookit only reports commissions in its accounts, rather than
TTV (total transaction values). Bookit's operating profit* in the first half was
£0.7m on sales of £1.8m. Total transaction values were £9.3m.
Hotel Breaks' overall sales intake for 2005 is currently 6% higher than 2004. On
a like-for-like basis, excluding Bookit, the year on year increase is 3%.
Bookit has continued the very favourable trends seen prior to its acquisition by
Holidaybreak. Bookit's bungalows.nl website, which specialises in self-catering
accommodation on holiday parks, is showing particularly rapid growth.
UK consumer demand for domestic short breaks has been subdued in recent months.
We have still achieved year on year growth although this has been below the
exceptional levels experienced in 2003 and 2004. Overseas breaks to popular city
break destinations, such as Prague, Barcelona and New York, and London theatre
packages, for shows such as The Producers and Mary Poppins, have been areas of
high demand. We continue to be able to source the room capacity we require for
all major destinations at prices that are attractive to our leisure break
customers.
Adventure Holidays
First-half operating profit* for the Adventure division increased by 67% to
£2.5m (2004: £1.5m) with sales up 49% to £24.8m (2004: £16.7m). Excluding
recently acquired Djoser, the year on year increase in sales was 27% whilst
operating profit* rose by 54%.
The margin improvement is primarily due to improved tour load factors and a very
strong first quarter performance. The operating profit* for Djoser for the
period was £0.2m on sales of £3.6m.
Our Explore brand is the UK market leader, offering a broad range of soft
adventure holidays. This will help us to expand Djoser's portfolio of holidays
for the Dutch market.
RegalDive, which contributed 13% (2004:16%) of divisional operating profit* in
the first half, has maintained its solid trading performance.
The Tsunami in December affected only the Adventure Division and this did not
have a material impact on the Group's financial or operational performance. All
customers were safely accounted for. Management teams at Explore, Djoser and
RegalDive reacted rapidly and effectively as events unfolded on Boxing Day,
contacting both our representatives on the ground and, once definitive news was
available, customers' close relatives.
Overall 2005 sales intake for the Adventure Division is currently 77% higher
than 2004. On a like for like basis, excluding Djoser, the year on year increase
is 20%. Sales prospects for the remainder of 2005 are healthy and initial
indications for 2006 are also favourable.
Camping Division
With almost all sales falling in the second half of the financial year, the
interim operating loss* for Camping was £8.7m, an improvement on the 2004 figure
of £10.0m. The first half includes Easter period sales of £0.6m. These were
included in the second half in 2004. The overall result reflects normal
marketing and overhead costs in the October to March period.
Camping sales for 2005 are cumulatively 9% lower than the 2004 equivalent.
Capacity has been reduced with the number of mobile homes on our campsites 11%
lower and 14% fewer tents.
The main overseas operational costs, depreciation and campsite fees, are now
fixed and the eventual outturn for the division is therefore sensitive to
revenue intake over the remainder of the season.
As previously announced, operational and overhead cost reductions in this
division are expected to be at least £3m in the full year. Divisional management
remains focused on yield optimisation and maximising Camping's 2005 financial
result. In 2006, we currently expect Camping capacity to be reduced once again
and costs will be subject to further rigorous review.
Outlook
Management in all parts of the business remains focused on maximising yields and
generating cash. The Hotel Breaks and Adventure businesses continue to perform
strongly and Camping generates cash at good margins. The Bookit and Djoser
acquisitions increase Holidaybreak's presence in European markets and also in
the leisure break and soft adventure sectors. Approximately two-thirds of the
Group's activities are now in these growth areas. We expect to achieve a
satisfactory trading outcome for the full year, at good margins, and further
strong cash performance.
Robert Ayling
Chairman
* Operating profit/loss before goodwill amortisation, impairment and exceptional
costs
** Cash generation before capital expenditure, acquisitions, interest, dividends
and tax
*** This statement should not be taken to mean that the earnings per share of
the Group will necessarily match or exceed the historical reported earnings per
share of the Group and no forecast is intended or implied
Consolidated profit and loss account
For the six months ended 31 March 2005
Unaudited 6 months to Unaudited Audited
31 March 2005 6 months to year ended
31 March 30 September
2004 2004
£'000 £'000 £'000 £'000 £'000
Acquisitions Existing Total
Operations Continuing
Operations
Turnover 5,449 79,821 85,270 71,524 281,557
_________ ________ _________ ________ _________
------------------- --------- -------- -------- -------- ---------
Operating profit
(loss) before
goodwill
amortisation,
impairment and
exceptional
operating
costs 946 442 1,388 (2,516) 31,380
Goodwill
amortisation (483) (1,232) (1,715) (1,367) (2,735)
Goodwill
impairment - - - - (5,276)
Exceptional
operating
costs - - - - (2,645)
------------------- --------- -------- -------- -------- ---------
_________ ________ ________ ________ _________
Operating
profit (loss) 463 (790) (327) (3,883) 20,724
Net interest
payable (2,073) (2,071) (3,333)
------------------- --------- -------- -------- -------- ---------
(Loss) profit
on ordinary
activities
before
goodwill
amortisation,
impairment,
exceptional
operating
costs and tax (685) (4,587) 28,047
------------------- --------- -------- -------- -------- ---------
________ ________ _________
(Loss) profit
on ordinary
activities
before tax (2,400) (5,954) 17,391
Taxation 720 1,786 (5,014)
________ ________ _________
(Loss) profit
on ordinary
activities
after taxation (1,680) (4,168) 12,377
Dividends paid
and proposed (3,488) (3,244) (11,478)
________ ________ _________
Retained
(loss) profit
for the period (5,168) (7,412) 899
________ ________ _________
(Loss) earnings per
ordinary share
Headline
(loss)
earnings per
ordinary share (1.0p) (7.1p) 44.0p
Basic (loss)
earnings per
ordinary share (3.6p) (8.9p) 26.5p
=== === === === ===
The Group has no recognised gains or losses other than the (loss) profit for the
financial period.
Consolidated balance sheet
As at 31 March 2005
Unaudited Unaudited Audited
31 March 31 March 30 September
2005 2004 2004
£'000 £'000 £'000
Fixed assets:
Intangible assets 73,249 42,871 36,227
Tangible assets 78,610 88,215 70,559
Investments 15 15 15
__________ __________ __________
151,874 131,101 106,801
Current assets:
Assets held for disposal 45 780 3,526
Debtors 64,249 67,481 20,833
Cash at bank and in hand 41,873 26,284 31,363
__________ __________ __________
106,167 94,545 55,722
Creditors:
Amounts falling due within one year (192,518) (120,488) (90,769)
__________ __________ __________
Net current liabilities (86,351) (25,943) (35,047)
__________ __________ __________
Total assets less current liabilities 65,523 105,158 71,754
Creditors:
Amounts falling due after more than one
year (26,597) (71,835) (29,136)
Provision for liabilities and charges (6,122) (4,621) (6,122)
__________ __________ __________
Net assets 32,804 28,702 36,496
__________ __________ __________
Capital and reserves
Called up share capital 2,405 2,376 2,381
Share premium account 36,097 34,162 34,427
Other reserves (3,839) (2,971) (3,709)
Profit and loss account (1,859) (4,865) 3,397
__________ __________ __________
Equity shareholders' funds 32,804 28,702 36,496
__________ __________ __________
Consolidated cashflow statement
For the six months ended 31 March 2005
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2005 2004 2004
£'000 £'000 £'000
Net cash (outflow) inflow from
operating activities (7,926) (20,697) 46,274
Returns on investments and servicing
of finance (2,072) (2,071) (4,033)
Taxation (1,957) (4,552) (7,541)
Capital expenditure (net of (3,305) (10,922) (7,478)
disposals)
Acquisitions (38,956) - -
Equity dividends paid - - (10,674)
__________ __________ __________
Cash (outflow) inflow before
management (54,216) (38,242) 16,548
of liquid resources and financing
Financing 62,989 31,167 (18,624)
__________ __________ __________
Increase (decrease) in cash in the
period 8,773 (7,075) (2,076)
__________ __________ __________
Notes:
1. The figures for the year-ended 30 September 2004, which were approved by
the Board of Directors on 2 December 2004, do not constitute the company's
statutory accounts for the period, but have been extracted from the
statutory accounts, which have been filed with the Registrar of Companies.
The auditors have reported on those accounts and that report was
unqualified and did not contain a statement under section 237(2) of the
Companies Act 1985.
The accounts for the six months ended 31 March 2005 have neither been
reviewed nor audited nor have the relevant accounts for the equivalent
period in 2004. They comply with relevant accounting standards and have
been prepared on a consistent basis using accounting policies set out in
the 2004 Annual Report and Financial Statements.
2. The loss per ordinary share is based on the weighted average number of
ordinary shares in issue of 46,994,257 (six months to 31 March 2004 -
46,696,436; year ended 30 September 2004 - 46,743,795). The headline loss
per ordinary share is based on group profit on ordinary activities, after
taxation, but before goodwill amortisation, impairment and exceptional
operating costs.
3. An interim dividend of 7.25p per ordinary share will be paid on 16 August
2005 to shareholders on the Register on 22 July 2005.
4. 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
2005 2004 2004
£'000 £'000 £'000
United Kingdom and Ireland 78,652 70,240 238,618
Netherlands and Belgium 5,449 - 22,245
Germany, Switzerland and Austria - - 15,586
Others 1,169 1,284 5,108
__________ __________ __________
85,270 71,524 281,557
__________ __________ __________
Group turnover and operating profit (loss) before goodwill amortisation,
impairment, exceptional operating costs and (loss) profit before tax by class of
business was as follows:
Turnover
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2005 2004 2004
£'000 £'000 £'000
Hotel Breaks 59,913 54,845 120,895
Adventure holidays 24,789 16,679 37,417
Camping 568 - 123,245
_________ _________ _________
85,270 71,524 281,557
_________ _________ _________
4. Segment information (continued)
Operating profit (loss) before goodwill (Loss) profit before tax
amortisation, impairment and exceptional
operating costs
Unaudited Unaudited Audited Unaudited Unaudited Audited
6 months to 6 months to Year ended 6 months to 6 months to Year ended
31 March 31 March 30 September 31 March 31 March 30 September
2005 2004 2004 2005 2004 2004
£'000 £'000 £'000 £'000 £'000 £'000
Hotel Breaks 7,615 5,960 14,487 7,158 5,780 14,129
Adventure 2,493 1,496 3,160 1,503 711 1,590
holidays
Camping (8,720) (9,972) 13,733 (8,988) (10,374) 5,005
_________ _________ _________ _________ _________ _________
1,388 (2,516) 31,380 (327) (3,883) 20,724
_________ _________ _________
Investment income 339 203 1,097
Interest payable (2,412) (2,274) (4,430)
_________ _________ _________
(Loss) profit before tax (2,400) (5,954) 17,391
_________ _________ _________
5. Reconciliation of operating (loss) profit to net cash (outflow) inflow
from operating activities
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2005 2004 2004
£'000 £'000 £'000
Operating (loss) profit (327) (3,883) 20,724
Depreciation and amortisation and
impairment of goodwill 2,488 2,036 23,144
(Increase) decrease in debtors (39,935) (42,534) 1,144
Increase in creditors 29,848 23,684 1,262
__________ __________ ___________
Net cash (outflow) inflow from
operating activities (7,926) (20,697) 46,274
__________ __________ ___________
6. Reconciliation of net debt
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2005 2004 2004
£'000 £'000 £'000
Increase (decrease) in cash in the
period 8,773 (7,075) (2,076)
Cash (inflow) outflow from (increase)
decrease in debt and lease financing (61,295) (30,432) 19,629
_________ _________ _________
Movement in net debt in the period (52,522) (37,507) 17,553
New hire purchase contracts - - (6,734)
Net debt at beginning of period (12,534) (23,353) (23,353)
_________ _________ _________
Net debt at end of period (65,056) (60,860) (12,534)
_________ _________ _________
7. Acquisition of Subsidiaries
On 21 December 2004, the Group acquired 100% of the issued share capital of BRC
Holland Holding BV for cash consideration of £23.1 million. BRC is the market
leading on-line intermediary for short-stay leisure hotel breaks in the
Netherlands. This transaction has been accounted for by the acquisition method
of accounting.
Book &
Provisional
Fair Value
£'000
Net assets acquired
Tangible fixed assets 967
Trade and other receivables 1,466
Cash and cash equivalents 548
Trade and other payables (1,248)
Tax liabilities (625)
_________
1,108
Goodwill 22,294
_________
Total consideration 23,402
_________
Satisfied by:
Cash 23,059
Costs of acquisition - paid 208
- accrued 135
_________
23,402
_________
Net cash outflow arising on acquisition:
Cash consideration (23,059)
Cash and cash equivalents acquired 548
_________
(22,511)
_________
7. Acquisition of Subsidiaries (continued)
On 19 January 2005, the Group acquired 100% of the issued share capital of
Djoser BV for cash consideration of £16.0 million. Djoser BV is Netherlands'
leading 'soft adventure' holiday operator. This transaction has been accounted
for by the acquisition method of accounting.
Book &
Provisional
Fair Value
£'000
Net assets acquired
Tangible fixed assets 300
Trade and other receivables 4,805
Cash and cash equivalents 8
Trade and other payables (4,938)
Tax liabilities (64)
_________
111
Goodwill 16,322
_________
Total consideration 16,433
_________
Satisfied by:
Cash 15,951
Costs of acquisition - paid 294
- accrued 188
_________
16,433
_________
Net cash outflow arising on acquisition:
Cash consideration (15,951)
Cash and cash equivalents acquired 8
_________
(15,943)
_________
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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