Preliminary Results
Holidaybreak PLC
29 November 2007
29 November 2007: For immediate release
HOLIDAYBREAK
Results for the year ended 30 September 2007
Year of transformation with creation of Education Division
Well positioned for the future
Holidaybreak, the European specialist holiday group, today announces preliminary
results for the year ended 30 September 2007.
Financial highlights
2007 2006
£m £m
Group revenue 357.9 304.5
Operating margins* 12.2% 11.6%
Headline profit before tax* 40.0 33.1
Statutory profit before tax 37.5 32.1
Headline basic EPS* 59.4 pence 49.0 pence
Statutory basic EPS 54.5 pence 46.8 pence
Net debt 146.5 3.1
Dividend per share 32.1 pence 29.2 pence
* Headline profits, operating margin, earnings per share, interest cover and
dividend cover are stated before amortisation of acquired intangible assets of
£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil).
Summary
* Holidaybreak continues to stand out amongst its peers in terms of
generating margins and operating cash flows. We are market leaders in our
specialist sectors. At the same time, the greater diversity of
Holidaybreak's businesses gives the Group additional resilience.
* Sales for Hotel Breaks Division were 13% above last year. The recovery in
market conditions experienced in the second half of last financial year
has continued. 'Packaged product' sales into London, with strong theatre
offerings such as Joseph, Dirty Dancing and The Sound of Music, have been
particularly buoyant. London theatre ticket agent West End Theatre
Bookings, acquired in January, is performing well and in line with
expectations.
* Adventure Travel Division continues to perform satisfactorily. Adventure
sales were 18% up. We are beginning to see a recovery in trading for
holidays to the Middle East.
* Camping Division generated cash and strong margins in the full year.
Camping sales were down 3% compared with last year in the context of a 4%
reduction in capacity.
* Holidaybreak made two acquisitions in the education sector, PGL and NST,
which have been formed into a new Education Division for the Group. The
division is performing well, in line with expectations at the time of the
acquisitions, and has considerable potential to deliver long-term value.
Forward bookings in this division are made unusually far ahead of
departure and provide the division with good visibility on future
performance.
* Organic growth initiatives included the extension of product ranges in the
Adventure Travel Division, setting up a holiday home ownership business in
the Camping Division and investing in the online capability of all our
businesses.
* The Board continues to believe that the Group is well positioned to
exploit further market opportunities and continues to seek acquisition
opportunities.
* Current trading is in line with our expectations. Group sales intake to
date is +6% (Hotel Breaks: +12%; Adventure Travel +5%; Camping -1% and
Education +9%).
Carl Michel, Group Chief Executive, said: "Holidaybreak's results for 2007 only
tell part of the story. The Group has been expanded while retaining its
specialist focus. Our new brands, PGL and NST, like those they have joined in
the Group, add value for their customers and are market leaders, clearly
differentiated from their competitors. Meanwhile, Group trading has been robust
and margins continue to outstrip others in the industry."
"Trading and financial prospects for the current financial year are in line with
our expectations. We will continue to invest in our businesses in 2008 and
review possible acquisitions which meet our stringent financial criteria and
will fit within our existing portfolio."
Enquiries:
Carl Michel / Bob Baddeley Holidaybreak +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. Holidaybreak has
four operating divisions: Hotel Breaks, Adventure Travel, Camping and Education.
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
Introduction
In the year to 30 September 2007, Holidaybreak again performed well and headline
profit before tax* increased to £40.0m.
Holidaybreak continues to stand out amongst its peers in terms of generating
margins and operating cash flows. We are market leaders in our specialist
sectors. At the same time, the greater diversity of Holidaybreak's businesses
gives the Group additional robustness.
We made two acquisitions in the education sector, PGL and NST. This newly
created Education Division is performing well and we are excited about its
potential to deliver long-term value. Forward bookings in this division are
unusually far ahead of departure and provide the division with good visibility
on future performance.
Following the PGL and NST acquisitions, the pro-forma composition of the Group
is now:
* Hotel Breaks (34% of sales);
* Adventure Travel (21%);
* Camping (24%); and
* Education (21%).
For comparison purposes, sales for NST and PGL included above are taken from the
last audited accounts, being the year ended 31 December 2006 and the 52 week
period ended 22 February 2007 respectively.
This mix will continue to evolve as we focus on delivering long-term,
sustainable value to shareholders.
Our strength lies in our employees and their ability to adapt to changes in the
Group as it continues to respond to evolving consumer tastes, school
requirements, distribution methods and search technologies. I would particularly
like to welcome the new staff from West End Theatre Bookings, PGL and NST. I
thank all our staff for their hard work, enthusiasm and dedication to great
customer service.
Group results
For the year ended 30 September 2007, headline profit before tax* was £40.0m
(2006: £33.1m) on revenue of £357.9m (2006: £304.5m). Headline earnings per
share* were 59.4p (2006: 49.0p). Statutory basic earnings per share were 54.5p
(2006: 46.8p).
Net debt at 30 September 2007 was £146.5m (2006: £3.1m), after spending £12.9m
on capital expenditure net of disposal proceeds (2006: £4.6m) and £3.5m (2006:
£0.3m) on intangible assets. Net cash consideration on the acquisition of
subsidiaries was £39.7m (2006: £4.0m). In addition, the Group issued £48.5m
worth of loan notes, as consideration, redeemable in December 2007 and assumed
£50.4m of bank loans.
Dividend
Given the financial strength of Holidaybreak and confidence in its future
prospects, the Board is recommending an increase in the annual dividend of 10%
for 2007.
The Board is thus recommending a final dividend of 23.3p (2006: 21.2p), payable
on 22 April 2008, to shareholders on the register on 28 March 2008, making a
total of 32.1p (2006: 29.2p) for the year.
Going forward, it intends to pay dividends that are appropriate in light of the
growth prospects and the underlying performance of the Group.
Acquisitions and investment
In January, Holidaybreak acquired the London theatre ticket agent West End
Theatre Bookings Limited. Its websites include: www.uktickets.co.uk, www.
westendtheatrebreaks.com and www.westendtheatrebookings.com. It also sells via
its call centre in Guildford and has outlets in the West End.
On 11 June, Holidaybreak announced the successful completion of the acquisition
of UK schools trips organiser PGL, based in Ross-on-Wye. PGL is the market
leader in the residential, outdoor education and adventure sector for UK
schools, organising trips for over 250,000 children each year.
This was followed on 30 September by the acquisition of UK educational tour
organiser NST. NST, based in Blackpool, is the UK's leading provider of group
travel to schools and colleges throughout the UK. Last year it carried 172,000
students and education staff on over 4,000 trips for groups from the UK and
Ireland to destinations in the UK, Europe and Worldwide.
Together, PGL and NST form the Group's new Education Division. We are already
seeing benefits from bringing the two companies together under the Holidaybreak
umbrella, and we are uniquely placed to capitalise on the exciting developments
within this marketplace.
These acquisitions have increased the Group's borrowings. We continue to examine
opportunities to make sensible acquisitions which 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.
Management and Board changes
Following completion of the acquisition of PGL on 11 June 2007, Martin Davies,
Chief Executive of PGL, became the Managing Director of Holidaybreak's new
Education Division and joined the Board of the Company.
Nick Cust, Joint Managing Director of the Hotel Breaks Division, became the
Interim Managing Director of NST, following its acquisition on 30 September
2007, to oversee the integration into the Education Division and the wider
Group. Nick continues to represent the Hotel Breaks Division on the Holidaybreak
plc Board and retains certain key Hotel Breaks responsibilities.
James Greenbury has agreed to extend his term of appointment as a non-executive
director by a further three years from 1 January 2008. This appointment is
subject to the Company's right to terminate the appointment early on giving 12
months notice
Board structure
In the circular to shareholders relating to the acquisition of PGL, the Board
announced that it would be considering the appropriate future composition of the
Board. Following that announcement, views of certain shareholders and
shareholder organisations were sought and the Chairman then conducted one-to-one
meetings with each Director. Subsequently, the full Board discussed the
composition and concluded that, having regard to the Combined Code, the
structure of the Board should progressively change so that there would be a
balance in numbers between Executive Directors and Non-executive Directors
(excluding the Chairman) and that accordingly it was not the Board's intention
to appoint a replacement Executive Director (other than in relation to a change
of Group Chief Executive or Group Finance Director), should a vacancy occur,
until that balance had been achieved.
Outlook
The Board continues to believe that the Group is well positioned to exploit
further market opportunities. Management continues to review all opportunities
to deliver industry leading margins.
Trading and financial prospects for the current financial year are in line with
our expectations. We will continue to invest in our businesses in 2008 and
review possible acquisitions which meet our stringent financial criteria and
will fit with our existing portfolio of businesses.
Robert Ayling
Chairman
* Headline profits, operating margin, earnings per share, interest cover and
dividend cover are stated before amortisation of acquired intangible assets of
£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil).
BUSINESS AND FINANCIAL REVIEW
Introduction
Holidaybreak's results for 2007 only tell part of the story. The Group has been
expanded while retaining its specialist focus. Our new brands, like those they
have joined in the Group, add value for their customers and are market leaders,
clearly differentiated from their competitors. Meanwhile, Group trading has been
robust and margins continue to outstrip others in the industry.
Group strategy
This year has been one of transformation for the Group. We have made two
sizeable acquisitions and created a fourth operating division. A key criterion
for us was that any specialist holiday business we bought fitted with our
strategy of it being the market leader in its sector. Market leadership provides
the most certain means to achieve superior margins - by better buying, greater
brand recognition and superior sales strength. In the newly formed Education
Division we have created a powerful force by bringing together the UK's leading
businesses in both residential centres and school tours. The combination gives
us a range of products to sell for all school age groups, leveraging the
undoubted reputations and well-established customer loyalty of both PGL and NST.
A year ago we made reference to balance sheet efficiency and the need to have
flexibility to exploit opportunities as they arose. The Group now has a more
efficient capital structure. We have always stressed the value of flexibility
and being 'asset right'. We continue to avoid ownership of assets such as
hotels, which are not necessary for our business to prosper. However our
educational adventure centres are a key strategic asset with no sensible
alternative supply. We therefore have freeholds or long-leases on these
properties.
Measurable progress has been made on each of the four strategic themes
identified last year:
* Build on core competences: leverage synergies - we have used our strength
in London hotel bookings to increase significantly sales of other 'packaged
products', such as theatre and rail. Customer lists have been shared across
divisions.
* Develop a multi-path approach - we have made two major acquisitions but
also encouraged organic activities ranging from IT / web investments to
setting up an own-your-own holiday home business.
* Pursue sustainable faster growth - carpe diem and TravelWorks (part of the
Adventure Travel Division) and PGL have demonstrated double-digit revenue
growth with strong margins relative to industry norms. We are also excited
by the potential at NST in conjunction with PGL.
* Diversify sales mix - the Education Division will, on a budget pro-forma
basis for 2008, be larger than either Camping or Adventure Travel in terms
of revenues. The Group is now more balanced and is less attuned to
discretionary consumer travel expenditure.
A number of new initiatives, linked to the above themes, are planned for the
coming year.
We continue to work on increasing the differentiation in each of our businesses
from competitors - this enhances their trading resilience and reduces
competitive threats. We will continue to develop our online capabilities,
enhance customer loyalty programmes and add to our product range and depth to
ensure our margins remain industry-leading. Our acquisitions this year have also
added to the strength in depth of our management and we are already seeing some
of the benefits of this.
All of our businesses are well positioned in their respective marketplaces. For
each business we have opportunities to grow, with the main focus for the Group
to exploit more synergies and continue the process of rounding out our
educational product portfolio. There remains a healthy pipeline of acquisition
opportunities, both in the UK and Europe, which we believe can help us deliver
good returns to our shareholders.
Current trading
Group sales intake to date is currently up 6%.
Hotel Breaks Division's sales intake (incorporating Bookit's intake based on
total transaction value) across the division is approximately 12% up on the
comparable period for 2006/07.
Overall, 2008 sales intake for the Adventure Travel Division is currently 5%
higher than in 2007 as we begin to see a recovery in trading for holidays in the
Middle East.
The Camping Division's capacity will be marginally adjusted (-5%) for the 2008
season to reflect more modest shifts in demand. Our plan is to hold back more
capacity for sale into the spring; we are currently approximately -1% below last
year's sales intake (based on bookings received to date).
The Education Division is performing well with revenue 9% up on the comparable
period for 2006/07. Divisional management is now looking at driving through the
synergies available from PGL and NST. The division is performing well and has
considerable potential to deliver long-term value.
Group results
In the year to 30 September 2007 Holidaybreak plc increased headline profit
before tax* by 20.8% to £40.0m principally due to purchasing PGL, NST and West
End Theatre Bookings. Net debt increased by £143.4m to £146.5m. We are targeting
another year of good operating cash flow performance in 2008 but we expect to
spend c.£19m on capital investment.
Divisional performance, operating profit and margins
Group revenue in 2007 was up 17.5% on 2006 at £357.9m (2006: £304.5m). Operating
profit* was 24.1% higher than 2006 at £43.8m (2006: £35.3m). Operating margin*
improved to 12.2% (2006: 11.6%).
Hotel Breaks
2007 2006
Divisional revenue £139.0m £122.7m
Divisional operating profit* £17.0m £16.9m
Operating margin* 12.2% 13.8%
This remains the largest division in the Group, selling 2.5m holidays in 2007.
Hotel Breaks' operating margin* declined to 12.2% from 13.8% in 2006 as we
invested in hotel contracting for the overseas business and IT and internet
developments. The business enjoys low operational gearing. Room allocations are
not committed, allowing a high degree of flexibility in costs.
The recovery in market conditions experienced in the second half of last year
continued. 'Packaged product' sales into London, with strong theatre offerings
such as Joseph, Dirty Dancing and The Sound of Music, have been particularly
buoyant. London theatre ticket agent West End Theatre Bookings, acquired in
January, is performing in line with expectations.
Adventure Travel
2007 2006
Divisional revenue £90.0m £76.3m
Divisional operating profit* £6.6m £5.9m
Operating margin* 7.3% 7.7%
The division sold 76,000 holidays in 2007 and has once again delivered growth in
profits* and revenue. Adventure Travel's operating margin* reduced slightly from
7.7% to 7.3%. Margin was adversely affected by movements in exchange rates and
the timing of recognition of marketing expenditure; underlying margins were
stable. The business model remains flexible with very low levels of fixed costs.
The German businesses, carpe diem and TravelWorks, acquired in September 2006,
have been successfully integrated into the division and are performing ahead of
expectations.
Camping
2007 2006
Divisional revenue £102.8m £105.5m
Divisional operating profit* £11.7m £12.5m
Operating margin* 11.4% 11.8%
Camping generated cash and strong margins in the full year. Revenue was down 3%
compared with last year in the context of a 4% reduction in capacity. Camping
benefited from improved occupancy but incurred £0.3m of non-recurring
reorganisation costs. Hence the division achieved an operating margin* of 11.4%
(2006: 11.8%). A total of 516,000 holidays were sold.
The late UK booking market was particularly successful, thanks in part to bad
summer weather in the UK, but also due to successfully holding back some high
season capacity.
Education
2007
Divisional revenue £26.1m
Divisional operating profit* £8.5m
Operating margin* 32.6%
The acquisition of PGL was completed on 11 June 2007. In the period
post-acquisition, this business generated revenue of £26.1m and, due to the
normal seasonality of the business, contributed £8.5m of operating profit*. The
acquisition of NST was completed on the final day of the financial year. It
therefore did not contribute to the trading results of the Group for the year
ended 30 September 2007. PGL's operating margin*, enhanced in the period post
acquisition, reflects the seasonality of the business. The enlarged division
expects to achieve operating margins over a full year's trading similar to
Camping.
Since the acquisition of PGL, the division has organised educational trips for
over 125,000 children.
Interest
Finance costs (net of investment income) increased from £2.2m in 2006 to £3.8m,
principally due to the costs of the additional debt raised to purchase PGL.
Interest cover* reduced from 16.0 times in 2006 to 11.5 times in 2007. Net
interest was 9.7 times covered by operating cash flow, a level we regard as
prudent.
Taxation
The tax charge, including full provision for deferred tax, was £11.3m and the
tax rate of 30% was the same as 2006. The underlying rate going forward is
expected to reduce as UK corporate tax rates fall to 28%.
Earnings per share and dividends
Headline basic earnings per share* were 59.4p (2006: 49.0p) an increase of
21.2%. Statutory basic earnings per share were 54.5p (2006: 46.8p).
The Board is recommending a final dividend of 23.3p per ordinary share
representing an increase of 10% over 2006. This gives a total dividend for the
year of 32.1p per ordinary share (2006: 29.2p). This is covered 1.9 times by
headline basic earnings per share* (2006: 1.7 times).
Balance sheet
Net assets of the Group increased to £73.7m (2006: £59.1m). Net debt gearing**
at 30 September 2007 was 199% compared to 5.2% at the previous year end.
Intangible assets acquired via acquisitions during the year were £23.9m (2006:
£2.1m) and the annual amortisation charge will be c.£3.0m. Deferred tax arising
through the purchase of intangible assets and non qualifying business properties
via acquisitions was £31.6m. Goodwill arising via acquisitions was £74.2m.
Cash flow and bank facilities
The Group's net borrowings at 30 September 2007 were £146.5m, compared to £3.1m
in 2006. Cash flow from our operating activities was £36.8m, another strong
performance. Net cash consideration on the acquisition of subsidiaries was
£39.7m (2006: £4.0m). In addition, the Group issued £48.5m worth of loan notes,
as consideration, redeemable in December 2007 and assumed £50.4m of bank loans.
To finance the acquisition of PGL in June 2007, we arranged a new committed bank
facility of £115m. This facility was for a term of eighteen months. Total
available bank facilities (£255m as at 30 September 2007) 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 the Group's
borrowing facilities was £51.9m at the end of April 2007 when borrowings and
facility utilisation are historically at their maximum. Following the
acquisition of NST on 30 September 2007, headroom under these facilities was
£48.2m. 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.
Capital expenditure
Capital expenditure (net of receipts from disposals) in the year to 30 September
2007 was £12.9m (2006: £4.6m).The purchase of mobile-homes (£10.9m) accounted
for the majority of the total expenditure. Sales of mobile-homes generated
£3.1m. Accommodation capacity will again be reduced by a further 5% in 2007/8.
We expect Group net capital expenditure in 2008 to be approximately £19m.
Disposal proceeds in respect of mobile-homes sold at the end of their useful
life achieved net book value. We now have over £100m of freehold and
long-leasehold properties on the balance sheet. The majority of these are
activity centres operated by the Education Division. Annual maintenance capital
expenditure is likely to be c.£3m. On 28 November, we sold the freehold office
premises occupied by NST to one of its former owners for its net book value of
£3.25m. At the same time we entered into a 15 year leasehold arrangement at an
annual rental of £245,000.
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.
2007 2006
£m £m
Forward foreign currency contracts 30.4 29.1
----------------------------------- -------- --------
Changes in the fair value of non-hedging currency derivatives amounting to £0.5m
have been charged to income in the year.
At the balance sheet date £46.6m (2006 £45.5m) of foreign currency denominated
debt was designated as a hedging instrument for the purpose of hedging the
translation of its investment in foreign operations.
Interest rate derivatives
The Group uses interest rate collars to manage its exposure to interest rate
movements on its bank borrowings. At 30 September 2007, the Group held the
following interest rate collars:
Initial Cap rate Floor Start date End date Rate compared
amount rate to
€50.0m 4.5% 3.0% 15 January 15 January 2010 3 month EURIBOR
2007
£22.4m* 5.5% 4.4% 28 February 28 February 3 month LIBOR
2006 2009
£40.4m 6.5% 5.3% 31 December 30 September 3 month LIBOR
2007 2012
* acquired as part of the acquisition of PGL Holdings Limited
These amounts are based upon market values of equivalent instruments at the
balance sheet date. None of the interest rate collars are designated and
effective as cash flow hedges. Changes in the fair value of non-hedging interest
rate collars amounting to £0.7m (2006: £nil) have been charged to the income
statement in the year.
Changes in accounting policies
During the year ended 30 September 2007, there were no changes in accounting
policies.
Summary
We believe that Holidaybreak is well placed to prosper. The addition of a new
division provides a powerful new impetus to growth and allowed us to assume a
strong position in a market, which we intend to develop still further. Education
also sets us apart from our peers in diversifying the Group away from
discretionary consumer travel expenditure.
Our market-leading specialist businesses have demonstrated their resilience in a
changing marketplace. We continue to look at achieving superior returns on
capital by an emphasis on great customer service and unique products.
We have the financial and human resources to consider a range of opportunities
to grow, both organically and by acquisition. Our priority for 2007/08 is to
continue delivering against our four strategic themes.
Carl Michel Bob Baddeley
Group Chief Executive Group Finance Director
* Headline profits, operating margin, earnings per share, interest cover and
dividend cover are stated before amortisation of acquired intangible assets of
£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil).
** Net debt gearing is net debt expressed as a percentage of year end net assets
Consolidated income statement
Year ended 30 september 2007
Note 2007 2006
£m £m
Group revenue - continuing operations 1 357.9 304.5
Net operating costs (316.6) (270.2)
--------------------- -------- -------- --------
Net operating costs before amortisation of other
intangible assets acquired via business 1 (314.1) (269.2)
combinations
Amortisation of other intangible assets acquired
via business combinations (2.5) (1.0)
-------- -------- --------
Operating profit 41.3 34.3
Investment income 1.6 1.4
Finance costs (5.4) (3.6)
-------- -------- --------
Profit before tax 37.5 32.1
Tax (11.3) (9.7)
-------- -------- --------
Profit for the year 26.2 22.4
--------------------- -------- -------- --------
Attributable to:
Equity holders of the parent 26.2 22.4
--------------------- -------- -------- --------
Earnings per share
Basic 3 54.5p 46.8p
Diluted 3 54.1p 46.6p
Headline earnings per share
Basic 3 59.4p 49.0p*
Diluted 3 59.0p 48.8p*
* The Directors changed the definition of headline earnings per share in the
year ended 30 September 2007 (see note 3). The 2006 headline earnings per share
figures have, therefore, been restated.
Consolidated statement of recognised income and expense
Year ended 30 september 2007
2007 2006
£m £m
Exchange differences on translation of foreign operations 0.6 -
Actuarial gains on defined benefit pension schemes 0.1 -
-------------------------------- -------- --------
Net income recognised directly in equity 0.7 -
-------------------------------- -------- --------
Profit for the year 26.2 22.4
-------------------------------- -------- --------
Total recognised income and expense for the year 26.9 22.4
-------------------------------- -------- --------
Attributable to:
Equity holders of the parent 26.9 22.4
-------------------------------- -------- --------
Consolidated balance sheet
30 September 2007
Restated*
Note 2007 2006
£m £m
Non-current assets
Goodwill 138.4 62.8
Other intangible assets 34.3 10.2
Property, plant and equipment 168.6 53.4
Defined benefit pension asset 0.4 -
----------------------- ------ -------- --------
341.7 126.4
Current assets
Inventories 4.1 0.6
Trade and other receivables 33.5 20.7
Cash and cash equivalents 4 59.7 54.4
----------------------- ------ -------- --------
97.3 75.7
Non current assets classified as held for sale 1.8 2.4
----------------------- ------ -------- --------
Total assets 440.8 204.5
----------------------- ------ -------- --------
Current liabilities
Trade and other payables (116.1) (77.4)
Current tax liabilities (7.8) (4.8)
Obligations under finance leases 4 (5.7) (5.0)
Interest bearing loans and borrowings 4 (189.7) (45.9)
----------------------- ------ -------- --------
(319.3) (133.1)
----------------------- ------ -------- --------
Net current liabilities (220.0) (57.4)
----------------------- ------ -------- --------
Non-current liabilities
Deferred tax liabilities (37.0) (5.7)
Obligations under finance leases 4 (10.8) (6.6)
----------------------- ------ -------- --------
(47.8) (12.3)
----------------------- ------ -------- --------
Total liabilities (367.1) (145.4)
----------------------- ------ -------- --------
----------------------- ------ -------- --------
Net assets 73.7 59.1
----------------------- ------ -------- --------
Equity
Share capital 2.4 2.4
Share premium account 38.9 37.9
Own shares (2.6) (3.2)
Other reserves 1.3 0.7
Retained earnings 33.7 21.3
----------------------- ------ -------- --------
Total equity 73.7 59.1
----------------------- ------ -------- --------
* During the current year ended 30 September 2007, the Group completed its
initial accounting in respect of the acquisition of carpe diem Sprachreisen GmbH
and TravelWorks GmbH. This resulted in a reduction in the fair value of
intangible assets of £1.3m at the date of acquisition (29 September 2006), with
a corresponding increase in goodwill.
The 2006 comparative information has been restated to reflect this adjustment.
This restatement has no impact on reported profits, equity or cash flow in the
year ended 30 September 2006.
Consolidated cash flow statement
Year ended 30 September 2007
Note 2007 2006
£m £m
--------------------------- -------- -------- --------
Reconciliation of operating profit to cash generated from operating activities
Cashflow from operating activities
Operating profit 41.3 34.3
Adjustments for:
Amortisation of other intangible assets 3.3 1.7
Depreciation of property, plant and equipment 11.1 10.9
Share based payment charge 0.6 0.2
(Increase) in inventories (2.1) -
(Increase) in receivables (5.9) (0.4)
(Decrease) Increase in payables (11.5) 2.1
--------------------------- -------- -------- --------
Cash inflow from operating activities 36.8 48.8
Tax paid (9.0) (7.6)
--------------------------- -------- -------- --------
Net cash from operating activities 27.8 41.2
--------------------------- -------- -------- --------
Investing activities
Acquisitions of subsidiaries net of cash acquired (39.7) (4.0)
Purchase of intangible assets (3.5) (0.3)
Purchases of property, plant and equipment (16.8) (10.2)
Proceeds on disposal of property, plant and 3.9 5.6
equipment -------- -------- --------
---------------------------
Net cash used in investing activities (56.1) (8.9)
--------------------------- -------- -------- --------
Financing activities
Finance costs paid (4.3) (2.9)
Interest received 2.1 1.4
Proceeds on issue of new ordinary shares 1.0 1.0
Proceeds on exercise of share options 0.6 0.7
New bank loans raised 44.0 -
New finance leases 10.3 -
Repayment of borrowings - (6.3)
Payments under finance leases (5.4) (5.9)
Dividends paid (14.5) (13.1)
--------------------------- -------- -------- --------
Net cash from financing activities 33.8 (25.1)
--------------------------- -------- -------- --------
--------------------------- -------- -------- --------
Net increase in cash and cash equivalents 5.5 7.2
--------------------------- -------- -------- --------
Cash and cash equivalents at beginning of period 53.3 46.1
--------------------------- -------- -------- --------
Cash and cash equivalents at end of year 4 58.8 53.3
--------------------------- -------- -------- --------
1. Business and geographical segments
For management purposes, the group is currently organised into four operating
divisions - Hotel breaks, Adventure Travel Camping and Education. These
divisions are the basis on which the group reports its primary segment
information.
Segment information about these businesses is presented below.
Hotel breaks Adventure Camping Education Consolidated
Travel
2007 2007 2007 2007 2007
2007 £m £m £m £m £m
Revenue
Total revenue 139.0 90.0 102.8 26.1 357.9
------------ -------- -------- -------- -------- --------
Result 17.0 6.6 11.7 8.5 43.8
Amortisation
of other
intangible
assets
acquired via
business
combinations (1.1) (0.6) - (0.8) (2.5)
------------ -------- -------- -------- -------- ---------
Operating
profit 15.9 6.0 11.7 7.7 41.3
------------ -------- -------- -------- -------- ---------
Investment
income 1.6
Finance costs (5.4)
---------
Profit before
tax 37.5
Tax (11.3)
------------ -------- -------- -------- -------- ---------
Profit after tax 26.2
------------ -------- -------- -------- -------- ---------
Hotel breaks Adventure Camping Education Consolidated
Travel
2006 2006 2006 2006 2006
2006 £m £m £m £m £m
Revenue
Total revenue 122.7 76.3 105.5 - 304.5
------------ -------- -------- -------- -------- --------
Result 16.9 5.9 12.5 - 35.3
Amortisation
of other
intangible
assets
acquired via
business
combinations (0.7) (0.3) - - (1.0)
------------ -------- -------- -------- -------- ---------
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
------------ -------- -------- -------- -------- ---------
1. Business and geographical segments (continued)
The following table provides an analysis of the Group's revenue by geographical
origin:
Sales revenue
2007 2006
£m £m
United Kingdom 260.1 222.2
Ireland 7.6 6.3
Netherlands and Belgium 61.0 58.2
Germany, Switzerland and Austria 23.1 11.8
Other 6.1 6.0
------------------------- -------- --------
357.9 304.5
------------------------- -------- --------
2. Dividends
2007 2005
£m £m
Amounts recognised as distributions to equity holders in the
period:
Final dividend for the year ended 30 September 2006 of 21.2p 10.2 9.2
(2005: 19.35p) per share.
Interim dividend for the year ended 30 September 2007 of
8.8p (2006: 8.0p) per share. 4.3 3.9
--------------------------------- -------- --------
14.5 13.1
--------------------------------- -------- --------
Proposed final dividend for the year ended 30 September 2007
of 23.3p (2006: 21.2p) per share. 11.2 10.2
--------------------------------- -------- --------
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 22 April 2008 to those shareholders
on the register on 28 March 2008.
3. Earnings per share
The calculation of the basic and diluted earnings per share is based on the
following data:
Earnings 2007 2006
£m £m
Earnings for the purposes of basic and diluted
earnings per share being net profit attributable to
equity holders of the parent 26.2 22.4
--------------------------------- -------- --------
Number Number
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share 48,198,488 47,769,249
Effect of dilutive potential ordinary shares:
Share options 347,615 208,490
--------------------------------- -------- --------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share 48,546,103 47,977,739
--------------------------------- -------- --------
Pence Pence
Earnings per share
Basic 54.5 46.8
Diluted 54.1 46.6
Headline Earnings 2007 2006
£m £m
Net profit attributable to equity holders of the parent 26.2 22.4
--------------------------------- -------- --------
Add back:
Amortisation of other intangible assets acquired via 2.5 1.0
business combinations
Tax effect of the above (0.1) -
--------------------------------- -------- --------
Headline earnings 28.6 23.4
--------------------------------- -------- --------
Pence Pence
Headline earnings per share
Basic 59.4 46.8
Diluted 59.0 46.6
The Directors changed the definition of headline earnings per share in year
ended 30 September 2007 due to the increasing importance on the Group's
performance of amortisation of acquired intangibles.
In 2006, headline earnings were defined as net profit attributable to equity
holders of the parent, after adding back amounts charged to the income statement
in respect of impairment of goodwill and the tax effect thereof. There was no
impairment of goodwill in 2006 (2005: £9.3m).
In 2007, headline earnings are defined as net profit attributable to equity
holders of the parent, after adding back amounts charged to the income statement
in respect of impairment of goodwill and amortisation of other intangible assets
acquired via business combinations, and the combined tax effect thereof.
The Directors consider that the new headline earnings per share provides a
better understanding of the Group's earnings.
4. Analysis of cash and cash equivalents and reconciliation to net
debt
1 October 2006 Cash flow Foreign Non cash 30 September
exchange movements 2007
Group £m £m £m £m £m
------------------ ------- ------ ------- -------- ---------
Cash at bank
and in hand 54.4 5.3 - - 59.7
Overdrafts (1.1) 0.2 - - (0.9)
------------------ ------- ------ ------- -------- ---------
Cash and cash
equivalents 53.3 5.5 - - 58.8
Debt due
within one
year (44.8) (44.0) (1.1) (98.9) (188.8)
Finance leases
less than one
year (5.0) 3.3 - (4.0) (5.7)
Finance leases
more than one
year (6.6) (8.2) - 4.0 (10.8)
------------------ ------- ------ ------- -------- ---------
(3.1) (43.4) (1.1) (98.9) (146.5)
------------------ ------- ------ ------- -------- ---------
Non cash movements on debt due within one year are bank loans of £50.4m and loan
notes issued of £48.5m in respect of the acquisition of PGL.
5. Acquisition of subsidiaries
The Group has made three acquisitions in the year, which are disclosed
separately below.
The net assets and results of the acquired businesses are included in the
consolidated accounts of the Group from the date of acquisition. All
acquisitions have been accounted for using the purchase method of accounting.
West End Theatre Bookings Limited
On 29 January 2007, the Group acquired 100% of the issued share capital of West
End Theatre Bookings Limited (WETB) for cash consideration of £2.7m. WETB's
principal activity is the selling of theatre tickets.
Book value Provisional Provisional
fair value fair value
adjustments
£m £m £m
-------------------------- -------- --------- --------
Net assets acquired
Property, plant and equipment 0.1 - 0.1
Other intangible assets - 0.2 0.2
Inventories 0.6 - 0.6
Trade and other receivables 0.1 - 0.1
Cash and cash equivalents 0.7 - 0.7
Trade and other payables (1.1) - (1.1)
-------------------------- -------- --------- --------
0.4 0.2 0.6
-------------------------- -------- ---------
Goodwill 2.8
--------
Total consideration 3.4
--------
Satisfied by:
Cash consideration 2.7
Deferred consideration 0.6
--------
3.3
Directly attributable costs 0.1
--------
3.4
--------
Net cash outflow arising on acquisition
Cash consideration and directly
attributable costs (2.8)
Cash and cash equivalents acquired 0.7
--------
(2.1)
--------
WETB contributed £7.6m revenue and £0.2m to the Group's profit before tax
between the date of acquisition and the balance sheet date.
5. Acquisition of subsidiaries (continued)
PGL Holdings Limited
On 11 June 2007, the Group acquired 100% of the issued share capital of PGL
Holdings Limited (PGL) for total consideration of £50.7m. PGL is the parent
company of a group of companies involved in the provision of educational and
adventure trips for UK schools.
Book Provisional Provisional
value fair value fair value
adjustments
£m £m £m
-------------------------- -------- --------- ---- --------
Net assets acquired
Property, plant and equipment 78.1 20.3 (a) 98.4
Other intangible assets (8.3) 21.7 (b) 13.4
Defined benefit pension asset 0.2 - 0.2
Inventories 0.8 - 0.8
Trade and other receivables 2.1 - 2.1
Cash and cash equivalents 7.4 - 7.4
Trade and other payables (32.9) - (32.9)
Bank loans (50.4) - (50.4)
Current tax assets 0.1 - 0.1
Deferred tax assets
(liabilities) 0.2 (25.1) (c) (24.9)
-------------------------- -------- --------- ---- --------
(2.7) 16.9 14.2
Goodwill 40.4
--------
Total consideration 54.6
--------
Satisfied by:
Cash consideration 2.2
Loan notes 48.5
--------
Total consideration 50.7
Directly attributable costs 3.9
--------
54.6
--------
Net cash inflow (outflow) arising on
acquisition
Cash consideration and
directly attributable costs (6.1)
Cash and cash equivalents
acquired 7.4
--------
1.3
--------
Provisional fair value adjustments:
(a) increase in the value of properties;
(b) valuation of identifiable acquired intangible assets in accordance with IFRS
3 'Business Combinations'; and
(c) reassessment of deferred tax including deferred tax on provisional fair
value adjustments.
PGL contributed £26.1m revenue and £6.9m to the Group's profit before tax
between the date of acquisition and the balance sheet date.
5. Acquisition of subsidiaries (continued)
NST Holdings Limited
On 30 September 2007, the Group acquired 100% of the issued share capital of NST
Holdings Limited (NST) for cash consideration of £47.2m. NST is the parent
company of a group of companies involved in the provision of group travel to
schools and colleges throughout the UK.
Book Provisional fair value Provisional
value adjustments
fair value
£m £m £m
----------------------- -------- --------- ---- --------
Net assets acquired
Property, plant and
equipment 12.3 2.3 (a) 14.6
Other intangible
assets 0.1 10.2 (b) 10.3
Trade and other
receivables 4.7 - 4.7
Cash and cash
equivalents 8.3 - 8.3
Trade and
other payables (14.1) - (14.1)
Current tax assets
(liabilities) 0.3 (0.5) (c) (0.2)
Deferred tax assets
(liabilities) 0.2 (6.9) (d) (6.7)
----------------------- -------- --------- ---- --------
11.8 5.1 16.9
----------------------- -------- ---------
Goodwill 31.0
--------
Total
consideration 47.9
--------
Satisfied by:
Cash consideration 47.2
Directly attributable
costs accrued 0.7
--------
47.9
--------
Net cash outflow arising on
acquisition
Cash consideration (47.2)
Cash and cash
equivalents acquired 8.3
--------
(38.9)
--------
Provisional fair value adjustments:
(a) increase in the value of French properties;
(b) valuation of identifiable acquired intangible assets in accordance with IFRS
3 'Business Combinations';
(c) reassessment of current corporation tax; and
(d) reassessment of deferred tax including deferred tax on provisional fair
value adjustments.
No profit has been recognised in the income statement for year ended 30
September 2007 in respect of the acquisition of NST.
5. Acquisition of subsidiaries (continued)
The fair values currently established for all three of the above acquisitions
are considered to be provisional by the Directors as they are finalising their
determination. Fair values will be reviewed based upon additional information up
to one year from the date of acquisition.
In year ended 30 September 2007, WETB generated revenues of £11.4m and profit
after tax of £0.2m.
In the period ended 22 February 2007, PGL generated revenues of £51.3m and
profit after tax of £3.1m. In year ended 31 December 2006, NST generated
revenues of £39.8m and profit after tax of £0.8m. It has been impracticable to
obtain the results of PGL and NST for year ended 30 September 2007.
6. Non-statutory accounts
The financial information set out above was approved by the Directors on 29
November 2007. It does not constitute the Company's statutory accounts for the
years ended 30 September 2007 or 2006, but is derived from these accounts.
Statutory accounts for 2006 have been delivered to the Registrar of Companies
and those for 2007 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 full financial statements that comply with
IFRS in January 2008.
This information is provided by RNS
The company news service from the London Stock Exchange
Friday, 10th January 2025
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