Interim Results
Holidaybreak PLC
19 May 2004
For Immediate Release 19 May 2004
HOLIDAYBREAK PLC
ANNOUNCES INTERIM RESULTS FOR THE SIX MONTHS
ENDED 31 MARCH 2004
Holidaybreak plc ("HBR"), the provider of specialist holidays, today announces
its interim results for the six months ended 31 March 2004.
HIGHLIGHTS
• Strong trading performances from Hotel Breaks and Adventure
• Camping bookings in line with revised expectations
Financial:
• Turnover £71.5m - up 37.5%
• Loss before tax* £4.6m - decreased by 36%
• Net debt reduced to £60.9m (2003 : £75.4m)
• Interim dividend of 6.6p per share - up 10%
Hotel Breaks:
• Sales increased 35% on like for like basis
• Operating profit* up 50% on like for like basis
• Margins improved
• Cumulative sales intake up 33%
• Significant part of Holidaybreak portfolio
Adventure Holidays:
• Sales increased by 5.5% in H1
• Operating profit* up 25% in H1
• Margins improved
• More favourable trading environment
• Current sales up 17% year on year
Camping Division:
• Operating loss* £10m - in line with loss* for H1 2003
• Sales broadly in line with revised expectations - cumulatively 7%
below 2003
• Re-orientation of campsite programme and reduced capital expenditure
in 2005
Commenting on the results, Bob Ayling, Chairman of Holidaybreak, said:
"The Hotel Breaks and Adventure divisions have had an excellent first half of
the year. The robust portfolio nature of our business, combined with its strong
level of cash generation underpin the Board's confidence in the prospects of the
Group and enable us to continue to pay a healthy dividend to our shareholders."
*Operating profit/loss before goodwill amortisation and impairment as detailed
in Note 5 to the interim financial statements
For further information, please contact:
Richard Atkinson, CEO On 19.05.04: 020 7466 5000
Holidaybreak 01606 787100
Tim Anderson / Isabel Podda
Buchanan Communications 020 7466 5000
HOLIDAYBREAK PLC
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004
CHAIRMAN'S STATEMENT
In the six month period to 31 March 2004 Holidaybreak recorded a reduced pre-tax
loss on ordinary activities of £4.6m, before goodwill amortisation and tax (2003
loss: £7.2m). This improved half-year result is due to strong trading
performances from the Hotel Breaks and Adventure divisions. The size of the
Camping business and the very seasonal nature of its trading means that, as in
previous years, an overall first half loss for the Group is incurred.
Net debt at the half year was £60.9m which is £14.5m lower than the 2003 figure
of £75.4m, demonstrating once again the strong cash generative qualities of the
Holidaybreak Group. Capital expenditure for the half-year was £10.9m and net
capital expenditure for 2004 is expected to be c.£15m (2003: £17.1m). The
interest charge was £2.1m (2003: £2.1m). We are close to the low 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 6.6p per share (2003: 6.0p),
representing an increase of 10% on last year. This will be payable on 16 August
2004 to shareholders on the register on 9 July 2004. The Board remains committed
to a progressive dividend policy.
DIVISIONAL REVIEW
Hotel Breaks
First-half sales for our Hotel Breaks division rose by 50% to £54.8m (2003:
£36.6m) whilst operating profit* increased by 64% to £6.0m (2003: £3.6m). These
results include six full calendar months whereas the prior year figures were
based on six four weekly accounting periods. A like for like comparison would
reduce the turnover increase by approximately £4.8m to 35% and operating profit*
by £0.6m to 50%. Margins are improved due to economies of scale and a more
favourable distribution mix.
We have experienced very strong demand levels throughout the period, continuing
into the second half, with London breaks particularly popular. We continue to
be able to source the room capacity we require for all major destinations at
prices which are attractive to our leisure break customers. All three main
channels of distribution (high street agents, direct and internet) have
continued to provide growth. We anticipate some slowdown in year on year growth
during the remainder of the campaign. Trading for the equivalent period in 2003
was very strong and we were also benefiting from the acquisition of the London
Travel Service and Bridge Britain and Ireland business. Sales intake for the
year now stands at 33% above the comparable 2003 figure.
Adventure Holidays
Our Adventure businesses, Explore Worldwide and RegalDive, are experiencing much
improved fortunes in 2004 compared to the two previous years when, for reasons
that have been well documented, trading conditions were exceptionally difficult.
The six month sales figure has risen by 5.5% to £16.7m (2003: £15.8m).
Operating profit* for the first half was up 25% to £1.5m (2003: £1.2m).
Efficient load factor management has enabled us to improve margins and we expect
to see a continuation of this trend in the second half.
A comparison of year on year sales now shows the Adventure division 17% up on
the equivalent figure for 2003. Whilst geopolitical uncertainty has continued
to subdue demand for some destinations, in general we are trading in a more
favourable environment. The growing appetite of customers for this type of
holiday has once again been demonstrated and we expect a much improved result in
2004.
Camping Division
With all sales falling into the second half, the interim operating loss* for
Camping was £10.0m which is in line with the 2003 figure of £9.9m. This
reflects normal marketing and overhead costs in the October to March period.
The 2004 loss has been adversely affected by the strengthening of the Euro which
has increased overseas office costs in sterling terms. However, we should see a
balancing benefit in the sterling value of Euro sales in the second half.
On 19 April 2004 Holidaybreak plc issued a trading update announcement. This
reported that, despite a recovery from the weak sales figures for Camping during
the pre-Christmas period, we did not expect that the rate of increase during the
remainder of the campaign would be sufficient to achieve the profit levels that
had been previously anticipated for this division. Sales since that date have
come in broadly in line with our expectations at the time when the announcement
was made. The cumulative position is now 7% below the equivalent figure in 2003.
Consumers continue to make later and later decisions regarding their holiday
bookings and all potential sales are being vigorously pursued.
As reported in the announcement, the Board had already recognised the need for a
thorough review of the Camping division business. This is being led by the new
divisional managing director, Matthew Cheetham, who was appointed on 26 January
2004. Capacity levels have proved too high this year, exacerbated by regional
imbalances, and this is being addressed for 2005. As a consequence, we
anticipate a reorientation of our camp-site programme and a reduced capital
expenditure requirement in 2005.
Prospects
The Hotel Breaks and Adventure divisions have performed strongly and are
expected to achieve significant profit increases. However, the overall outcome
for the year does remain sensitive to the operational gearing within Camping and
our success in achieving late booking sales.
Both the Hotel Breaks and Adventure divisions are well placed to profit from the
rapidly changing holiday market environment and all our businesses enjoy net
margins which are higher than the travel sector norm. Returns on capital
investment are attractive and the Group is highly cash generative, enabling us
to continue paying a healthy dividend to our shareholders. The fundamental
strengths of each of our three businesses underpin the Board's confidence in the
prospects for the Holidaybreak Group.
Robert Ayling
Chairman
*Operating profit/loss before goodwill amortisation and impairment
Consolidated profit and loss account
For the six months ended 31 March 2004
Unaudited Unaudited Audited
6 months to 6 months to 12 months to
31 March 31 March 30 September
2004 2003 2003
£'000 £'000 £'000
Turnover 71,524 52,408 259,514
Operating (loss) profit before goodwill amortisation,
impairment and exceptional costs (2,516) (5,060) 31,780
Goodwill amortisation (1,367) (1,277) (2,615)
Goodwill impairment - - (827)
Exceptional operating costs - (1,271) (3,129)
Operating (loss) profit (3,883) (7,608) 25,209
Amounts written off fixed asset investments - - (600)
Net interest payable (2,071) (2,149) (3,888)
(Loss) profit on ordinary activities before goodwill
amortisation, impairment, exceptional costs and tax (4,587) (7,209) 27,892
(Loss) profit on ordinary activities before tax (5,954) (9,757) 20,721
Taxation 1,786 2,927 (6,112)
(Loss) profit on ordinary activities after taxation (4,168) (6,830) 14,609
Ordinary dividend (3,244) (2,823) (10,325)
Retained (loss) profit for the period (7,412) (9,653) 4,284
(Loss) earnings per ordinary share
Headline (loss) earnings per ordinary share (7.1p) (11.1p) 44.4p
Basic (loss) earnings per ordinary share (8.9p) (14.7p) 31.5p
The Group has no recognised gains or losses other than the (loss) profit for the
financial period.
Consolidated balance sheet
As at 31 March 2004
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2004 2003 2003
Restated Restated
(see note 8) (see note 8)
£'000 £'000 £'000
Fixed assets:
Intangible assets - goodwill 42,871 46,249 44,238
Tangible assets 88,215 89,044 71,994
Investments 15 615 15
131,101 135,908 116,247
Current assets:
Assets held for disposal 780 - 3,750
Debtors 67,481 36,035 21,977
Cash at bank and in hand 26,284 20,163 33,791
94,545 56,198 59,518
Creditors:
Amounts falling due within one year (120,488) (79,111) (95,479)
Net current liabilities (25,943) (22,913) (35,961)
Total assets less current liabilities 105,158 112,995 80,286
Creditors:
Amounts falling due after more than one year (71,835) (82,317) (40,443)
Provision for liabilities and charges (4,621) (5,962) (4,621)
Net assets 28,702 24,716 35,222
Capital and reserves
Called up share capital 2,376 2,352 2,368
Share premium account 34,162 32,122 33,435
Other reserves (2,971) (2,730) (2,971)
Profit and loss account (4,865) (7,028) 2,390
Equity shareholders' funds 28,702 24,716 35,222
Consolidated cashflow statement
For the six months ended 31 March 2004
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2004 2003 2003
Restated
(see note 9)
£'000 £'000 £'000
Net cash (outflow) inflow from operating activities (20,697) (19,654) 47,373
Returns on investments and servicing of finance (2,071) (2,149) (3,727)
Taxation (4,552) (3,172) (6,028)
Capital expenditure and financial investment (10,922) (10,457) (5,299)
Acquisitions - (2,130) (2,284)
Equity dividends paid - - (9,374)
Cash (outflow) inflow before management of liquid resources
and financing (38,242) (37,562) 20,661
Financing 31,167 21,332 (21,146)
(Decrease) in cash in the period (7,075) (16,230) (485)
Notes:
1. The principal Group accounting policies have been applied consistently
throughout the current half year and are consistent with those set out
in the 2003 Annual Report and Financial Statements apart from the adoption
of the requirements of UITF 38 "Accounting for ESOP Trusts", which is
detailed in Note 8.
2. The loss per ordinary share is based on the weighted average number of
ordinary shares in issue of 46,696,436 (six months to 31 March 2003 -
46,559,828; year ended 30 September 2003 - 46,349,608). The headline loss
per ordinary share is based on Group profit on ordinary activities, after
taxation, but before goodwill amortisation and exceptional operating costs.
3. An interim dividend of 6.6p per ordinary share will be paid on 16 August
2004 to shareholders on the Register on 9 July 2004.
4. The profit and loss account, balance sheet and cashflow statement in this
interim report, which was approved by the Board of Directors on 18 May
2004, do not amount to statutory accounts within the meaning of section
240 of the Companies Act 1985. The interim financial statements have
neither been reviewed nor audited. Statutory accounts for the year ended
30 September 2003 incorporating an unqualified audit report have been filed
with the Registrar of Companies.
5. 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
2004 2003 2003
£'000 £'000 £'000
United Kingdom and Ireland 70,240 51,366 216,709
Netherlands and Belgium - - 21,722
Germany, Switzerland and Austria - - 17,108
Others 1,284 1,042 3,975
71,524 52,408 259,514
Group turnover and (loss) profit before goodwill amortisation, impairment,
exceptional costs, interest and 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
2004 2003 2003
£'000 £'000 £'000
Camping - - 128,428
Hotel Breaks 54,845 36,595 97,776
Adventure holidays 16,679 15,813 33,310
71,524 52,408 259,514
Operating (loss) profit before goodwill (Loss) profit before tax
amortisation, impairment and exceptional
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 September 31 March 31 March September
2004 2003 2003 2004 2003 2003
£'000 £'000 £'000 £'000 £'000 £'000
Camping (9,972) (9,864) 18,858 (10,374) (11,532) 15,323
Hotel Breaks 5,960 3,634 11,011 5,780 3,537 9,946
Adventure holidays 1,496 1,170 1,911 711 387 341
(2,516) (5,060) 31,780 (3,883) (7,608) 25,610
Unallocated parent costs - - (401)
Investment income 203 283 744
Amounts written off fixed asset investments - - (600)
Interest payable (2,274) (2,432) (4,632)
(Loss) profit before tax (5,954) (9,757) 20,721
6. 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
2004 2003 2003
£'000 £'000 £'000
Operating (loss) profit (3,883) (7,608) 25,209
Depreciation and amortisation and impairment of 2,036 1,873 19,034
goodwill
Increase in debtors (42,534) (19,627) (6,515)
Increase in creditors 23,684 5,708 9,645
Net cash (outflow) inflow from operating (20,697) (19,654) 47,373
activities
7. Reconciliation of net debt
Unaudited Unaudited Audited
6 months to 6 months to Year ended
31 March 31 March 30 September
2004 2003 2003
Restated
(see note 9)
£'000 £'000 £'000
(Decrease) in cash in the period (7,075) (16,230) (485)
Cash (inflow) outflow from (increase) decrease in
debt and lease financing (30,432) (21,185) 21,847
Movement in net debt in the period (37,507) (37,415) 21,362
New hire purchase contracts - (5,569) (12,320)
Net debt at beginning of period (23,353) (32,395) (32,395)
Net debt at end of period (60,860) (75,379) (23,353)
8. During the year, the Group has adopted the requirements of UITF 38
"Accounting for ESOP Trusts", as a result of which the policy for
accounting for the Group's employee benefit trust was changed. The
comparative figures have been restated to reflect the new policy. There is
no impact on the results for the year ended 30 September 2003 or the six
months ended 31 March 2003. The effects of the change in policy are
summarised below:
Balance Sheet
Unaudited Audited
6 months to Year ended
31 March 30 September
2003 2003
£'000 £'000
Investments (2,817) (3,058)
Other reserves 2,817 3,058
9. As disclosed in the Annual Report & Financial Statements for the year ended
30 September 2003, the balance sheet at 30 September 2002 was adjusted in
respect of loans amounting to £27.5 million, which had been repaid close to
the year end which were incorrectly included in long term loans and cash in
hand in the Group balance sheet at 30 September 2002. This has impacted
the cashflow statement and the reconciliation of net debt for the six
months ended 31 March 2003.
10. 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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