FIRST CHOICE HOLIDAYS PLC TRADING UPDATE

Transcription

1 FIRST CHOICE HOLIDAYS PLC TRADING UPDATE 26 October 2005 Prior to entering its close period on 1 November 2005 First Choice Holidays PLC announces the following trading update. Our continued strategy of differentiating product, increasing control of distribution and building significant positions in niche specialist markets gives us confidence that we will again deliver double-digit earnings growth for the year ended 31 October 2005, in line with expectations. This will have been achieved through a mix of organic and acquisition growth and also demonstrates the resilience and flexibility of our business model which this year has dealt with significant tragic natural disasters and geopolitical events. Looking forward, this combination of growth and flexibility means that the Group has confidence as we continue to progress towards our 5% operating margin target. Current Trading and Outlook Summer 2005 All of the Group s four Sectors have performed strongly in the year. In the Mainstream Holidays Sector, our strategy of remixing the business away from the commoditised short-haul market, which now represents less than thirty percent of Mainstream Holidays revenues, and continuing to develop differentiated product has proved successful. We have seen strong rates of sale on our long-haul offering (+18%) and exclusive products. Accordingly, we have achieved excellent top line growth of 13% at margins that are better than last year. In the Specialist Holidays Sector another year of strong double-digit top line growth (+13%) has been achieved. Trading across Europe (+14%) and in Canada (+9%) has been particularly pleasing in light of certain of the businesses key destinations being impacted by the Egypt bombings, the Tsunami and hurricanes in the Caribbean. Our Activity Holidays Sector has performed well (+4%) with improved asset utilisation in the Marine business (+5%) and strong organic growth in the Activity Adventure division (+15%). The 2003/04 and current year acquisitions in this division have also made strong contributions. The rapid growth of our Online Destination Services Sector has continued in 2004/05 with online bednights sold increasing by 86%. The Hotelopia business-to-consumer online business has now been trading for just one year and now serves 8 source markets. y-o-y variation % Summer 05 Mainstream Holidays* Short haul +6-2 Medium haul Long haul Total Specialist Holidays Europe North America Total Activity Holidays Marine +5 n/a Adventure +15 n/a Lakes & Mountains -55 n/a Total +4 n/a 1

2 y-o-y variation % Summer 05 Online Destination Services Sales Bednights Online Hotelbeds Bedsonline Hotelopia Total Sales Island Cruises +13 Notes These figures are up to 15 October 2005 * These statistics reflect inclusive tour statistics only Outlook Winter 2005/06 The Group s business philosophy is not to chase volume at unprofitable margins. Instead we align capacity to match profitable demand. We have therefore reduced capacity in our Mainstream Holidays Sector by 6% so far for the Winter season, particularly in the short-haul market and certain medium-haul destinations. As a result of these actions we have less holidays to sell compared to the same point last year. Similar capacity reductions are taking place where appropriate in the other Sectors. In the Mainstream Holidays Sector revenues have grown 6% with average selling prices and margins stronger than the prior year in particular due to the performance of our long-haul programme where revenues are up 39%. Customer volumes are currently 11% down on the previous year. Our Specialist Holidays Sector has also seen a reduction in Winter bookings (down 4%) although holidays sold are at better average selling prices than last year resulting in revenues being up 7%. Our North American businesses are trading particularly well up with volumes up 16% and revenue per passenger ahead of last year. The Activity Holidays Sector is trading strongly for the Winter season with revenues significantly ahead of last year (+91%). The performances of our Ski and Activity Adventure businesses are particularly strong with Activity Adventure trading 12% ahead of last year on a like for like basis (+246% in total). Online Destination Services is seeing strong volumes and prices for the next financial year with all three routes to market trading well. y-o-y variation % Winter 05/06 Mainstream Holidays* Short haul Medium haul Long haul Total Specialist Holidays Europe North America Total

3 y-o-y variation % Winter 05/06 Activity Holidays Marine +2 N/a Adventure** +246 N/a Ski +6 N/a Total +91 N/a Year ending October 2006 Online Destination Services Sales Bednights Online Hotelbeds Bedsonline Hotelopia Total Notes These figures are up to 15 October 2005 * These statistics reflect inclusive tour statistics only ** Like for like growth is + 12% We anticipated that there may be less demand for flight-only and 3* generic winter holidays and have therefore adjusted capacity accordingly. The flexibility we have built into our business model gives us confidence that we are well positioned to deal with the current environment. Summer 2006 In our Mainstream Holidays Sector revenues and margins achieved per customer are up compared to the previous year, which more than offsets the impact of customer bookings which are marginally down. Our long-haul programme and exclusive differentiated properties are performing particularly strongly, continuing on from Summer It is very early in the booking cycle for our other Sectors but where programmes are on sale, volumes are strong and revenues and margins achieved are ahead of last year. Acquisitions As previously stated, our strategy is to grow the specialist businesses and to continue to differentiate the Mainstream business. We believe that this will reduce volatility and will deliver leisure travel experiences that meet our customers needs while providing superior returns to our shareholders. In accordance with this strategy, the Company has accelerated its acquisitions programme, in line with stated expectations, making a number of acquisitions in the year to date with a particular focus on companies that have significant positions in specialist niche markets. In the current financial year, we have made acquisitions to date with a maximum aggregate consideration of 68m of which 57m has been paid. By way of comparison, in the year ended 31 October 2004, we made acquisitions with a maximum aggregate consideration of 45m of which 28m was paid during the financial year. These acquisitions, based on their profitability in the first year of ownership by First Choice, were acquired for an average EBIT multiple of less than 6 times. A full list of the acquisitions made in the current financial year to date is attached as an appendix to this statement. Activity Holidays Sector We have acquired three businesses in the Activity Holidays Sector since our Interim Results Announcement, two of which are in the Activity Adventure Division. Peregrine Adventures Pty Limited ( Peregrine ) was acquired in late July for a cash consideration of 19.5m followed by Imaginative Traveller, for a maximum cash consideration of 6.5m of which 3m is deferred. Peregrine is the market leader in Australia for adventure holidays and the world 3

4 leader in Polar expedition cruises. Imaginative Traveller, is a UK based adventure travel tour operator specialising in land based product. Since our first acquisition, of Exodus in 2002, we have built the Activity Adventure Division into a global business offering customers from a number of different source markets a wide range of adventure products in destinations across the world. We believe that the Activity Adventure division is the largest business of its type in terms of revenue and operating profit. In the specialist Ski Division, we have added to our exclusive hotels by acquiring the exclusive contract on the Hotel Fitzroy in Val Thorens for 1.6m. We now have three exclusive hotels in the prestigious Les Trois Vallées region of France and will be marketing these hotels separately under the Luxury Mountain Hotels banner. Specialist Holidays Sector We have continued with our strategy of building up a significant share of the student travel market in North America, which has resulted in the acquisition of Boss Tours, the parent company of Breakaway Tours and Impact Educational. This business was acquired for a maximum cash consideration of 3.6m. Based in Toronto, it is the largest leisure student travel company in Canada. We have also acquired a specialist web based tour operator selling intercontinental travel packages. Based in Seattle, Europe Express sells direct to the consumer and also provides white label package services to a number of scheduled airlines. The business was acquired for a maximum cash consideration of 13.8m of which 2.9m is deferred. Online Destination Services Sector Finally, we have expanded our Greek business by acquiring the outbound meetings and incentives business of Triaena and Congress Tours SA. Our strategy of building a position in specialist niche areas allows us to identify companies that occupy significant positions in their markets and offer excellent growth prospects. There continues to be a strong pipeline of acquisitions and we firmly believe that the combination of organic and acquisition growth will continue to deliver excellent returns for our shareholders. Commenting Peter Long, Chief Executive said: We are pleased with the way the current summer season has gone across all our businesses. We anticipated that consumer demand for flight-only and generic 3* winter holidays would be weaker and we have adjusted capacity accordingly. Our flexible business model enables us to manage such changes in consumer demand and revenues and margins remain strong. We therefore believe the Group is well placed for the forthcoming year. Enquiries: First Choice Holidays PLC Peter Long, Chief Executive Tel: Paul Bowtell, Group Finance Director Tel: Analysts: Tel: Andy Jones, Director Planning and Financial Control Press: Lesley Allan, Corporate Communications Director Tel: gcg hudson sandler Tel: Michael Sandler Elizabeth Young 4

5 Appendix 1 Acquisitions year to date: Company name Description Max Cons (millions) Activity Sector Paid (millions) Date Magic of the Orient Tailor made soft adventure with focus on south East Asian destinations Mar 05 Groupe Aventuria SAS French based tour operator specialising in tailor made and specialist interest group travels to Canada/USA and Australasia May 05 MyPlanet Holding SAS Denmark based tour operator specialising in tailor made individual and group adventure travel to Australia/New Zealand and USA/Canada Jun 05 Peregrine Adventures Pty Australian based group adventure and Polar expedition travel tour operator Jul 05 Hotel Fitzroy 4 star premium ski hotel in Val Thorens, France Jul 05 The Imaginative Traveller Limited UK based adventure travel tour operator specialising in land based product Sept 05 Specialist Sector Delphin Austrian tour operator with focus on eastern Mediterranean destinations Apr 05 EEFC, Inc StudentCity A US based specialist tour operator selling outbound packages to US customers Jul 05 Spring Break Travel, Inc North Carolina operator of cruise based college spring break packages Feb 05 Boss Tours Ltd Toronto based high school spring break and educational breaks tour operator Aug 05 Online Destination Services Sector Asset acquisition Outbound meetings and incentives business of Triaena Tours and Congress SA Aug 05 5