30 November : For immediate release HOLIDAYBREAK PLC Results for the year ended 30 September Good results, in line with Board expectations 2007 a year of investment Holidaybreak, the European specialist holiday group, today announces preliminary results for the year ended 30 September. Financial highlights Group turnover 304.5 303.0 Operating margins* 11.3% 11.1% Headline profit before tax* 32.1 29.9 Statutory profit before tax 32.1 20.6 Headline EPS* 46.8 pence 44.2 pence Free cash flow** 35.1 38.1 Net debt 3.1 22.9 Dividend per share 29.2 pence 26.6 pence * Before goodwill impairment in of nil (: 9.3m). ** Free cash flow is operating cash flow ( 48.8m (: 52.0m)) after capital expenditure ( 10.2m (: 8.6m)) net of disposals ( 5.6m (: 6.2m)) and after interest and tax payments ( 9.1m (: 11.4m)). Summary Solid performance in line with Board s expectations. Holidaybreak s businesses sold 3.1m holidays (: 3.0m) in the year. They are market leaders and enjoy industryleading margins. The diversity of Holidaybreak s businesses and their flexible cost structures helped deliver an excellent performance overall. There was no material impact on Group financial performance by the war in Lebanon or other events, such as the World Cup. 1
sales up 0.5% at 304.5m (Hotel Breaks: -3%; Adventure Travel: +22%; Camping: -7%). With the relative changes in revenue there is now a better balance between the divisions. European operations further enhanced by the acquisition of German specialist tour operators, carpe diem Sprachreisen GmbH and TravelWorks GmbH, in September. This is in line with our established strategy of investing in European specialist holiday companies. The Camping Division has delivered cash and good margins. Capacity will be reduced again in 2007, this time by around 3%. 2007 will be a year of investment in our existing businesses. Organic growth initiatives include the extension of product ranges in the Adventure Travel Division and investing in the online capability of all our businesses. The Camping Division will also be investing 9.5m (net of disposal proceeds) to replace older mobile-homes. Current trading is in line with our expectations. Group sales intake to date +6% (Hotel Breaks currently +8%; Adventure Travel + 5%; Camping -6%). The Group remains confident of achieving another satisfactory performance. Carl Michel, Group Chief Executive, said: These results represent another robust performance in what has been yet another eventful year in our markets. We are market leaders with industry-leading margins and continue to search out acquisitions that meet our criteria and will add to the Group. I remain extremely pleased with the resilience of the Group and am confident that Holidaybreak, with its diversity of quality businesses, will continue to prosper. Current trading is in line with our expectations and the Group is confident of achieving another satisfactory performance. Enquiries: Carl Michel / Bob Baddeley Holidaybreak 30 November +44 (0) 20 7404 5959 Thereafter +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. The European specialist holiday group sold 3.1m holidays in the year ended 30 September (: 3.0m). Holidaybreak has three operating divisions: Hotel Breaks, Adventure Travel and Camping. 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. 2
Chairman s Statement Holidaybreak continues to stand out amongst UK tour operators in terms of generating margins and cash flows. In the year to 30 September, headline profit before tax* increased to 32.1m and the business generated 35.1m of free cash flow**. We also made two acquisitions in Germany. Holidaybreak has demonstrated resilience to external shocks, with modest growth in revenues and headline profit before tax*, notwithstanding the uncertainty created by terrorist activity including the London bombings. Margins remain industry leading with excellent free cash flow generation. Holidaybreak s results reflect our core approach of putting customers (whether consumers, travel agents or partners) at the heart of what we do. Consumer loyalty is a key measure for all of our businesses and we will continue to strive to increase repeat business. This is a very tangible measure of success in an environment where traditional loyalties are reducing. The Board is determined to ensure that Holidaybreak s pedigree, as a manager of well-run specialist holiday businesses that are leaders in their respective market sectors, is maintained and enhanced. We continue to examine opportunities to make sensible acquisitions that 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. Finally, we shall also consider the potential of more substantial specialist tour operating opportunities, which might constitute a viable fourth division. Our strength lies with our employees and their ability to adapt to changes in consumer tastes, distribution technologies and marketing mix. I would like to thank them for their enthusiasm and hard work during the year. Group results For the year ended 30 September, pre-tax profits* were 32.1m (: 29.9m) on revenue of 304.5m (: 303.0m). Headline earnings per share* were 46.8p (: 44.2p). All Holidaybreak s operations generated substantial cash. Operating cash inflow was 48.8m (: 52.0m). Net debt at 30 September was 3.1m (: 22.9m). Capital expenditure, net of disposals, was 4.6m (: 2.4m). Dividend In view of the financial strength of Holidaybreak and confidence in its future prospects, the Board is recommending an increase in the annual dividend of 10% in. The Board intends to continue to pay ordinary dividends that are appropriate in light of the growth prospects and the underlying performance of the Group. The Board is thus recommending a final dividend of 21.2p (: 19.35p), payable on 24 April 2007, to shareholders on the register on 30 March 2007, making a total of 29.2p (: 26.6p) for the year. Acquisitions In September, Holidaybreak completed two acquisitions in Germany. carpe diem Sprachreisen GmbH is a leading player in the language travel sector and TravelWorks 3
GmbH specialises in longer work assignments overseas, such as gap-years. The combined initial consideration for the two acquisitions was 10m ( 6.8m) with an additional payment of up to 2m ( 1.3m) subject to trading in the 12 months following acquisition. The impact of these acquisitions is expected to be marginally earnings enhancing (pre-amortisation of acquired intangible assets)*** in 2007. The experienced management team will remain with the businesses. Discussions on the potential sale of camping In June, the Board ended discussions regarding the possible sale of the Camping Division. The proposed indicative offers fell short of the Board s valuation of the business. The Board believes that keeping the Camping Division within the Group will deliver greater value to shareholders. Management and board changes Steve Whitfield joined the Holidaybreak plc Board on 12 July. He was appointed Managing Director of the Camping Division in March. Steve, 48, has been with the business since 1984 in a variety of roles and his depth of knowledge will be instrumental in taking the division forward. He took over from Matthew Cheetham who resigned from his position as divisional Managing Director and left the Holidaybreak plc Board on 10 March. Outlook Current trading is in line with our expectations and the Board believes that the trading and financial prospects of the Group are satisfactory. The Group s balance sheet strength will fund significant investment in its existing businesses in 2007. In addition, management continues to review a range of possible acquisitions, of different sizes, which meet its stringent financial criteria and will add to the existing portfolio of businesses. At the same time, the Board remains focused on the efficiency of the Group's balance sheet. If no material acquisition is made, and assuming current conditions continue, the Board retains the option of considering a return of value to shareholders in due course. * Before goodwill impairment in of nil (: 9.3m) ** Free cash flow is operating cash flow ( 48.8m (: 52.0m)) after capital expenditure ( 10.2m (: 8.6m)) net of disposals ( 5.6m (: 6.2m)) and after interest and tax payments ( 9.1m (: 11.4m)). *** This statement should not be taken to mean that the earnings per share of Holidaybreak plc will necessarily match or exceed the historic reported earnings per share of Holidaybreak plc and no forecast is intended or implied. Bob Ayling Chairman 4
Chief Executive s Business Review Holidaybreak s results for reflect our work to date in putting the customer at the heart of development efforts, especially in the online environment. All of our brands are focused on adding value for the customer and differentiation from competitors. Group trading has been resilient in the face of a number of one-off factors. Margins continue to be industry leading thanks in no small part to the strength and depth of management across all parts of the business. Group structure Holidaybreak plc has three separate operating divisions: Hotel Breaks (representing 40% of Group revenue in ), Adventure Travel (25%) and Camping (35%). Strategy A component of our strategy is to grow through acquisition. We continue to investigate opportunities that leverage the strengths of our businesses and build on our core competencies by extending market and product reach. We would also consider more sizeable transactions of specialist holiday businesses as a potential fourth operating division if they meet our strict financial criteria. A key requirement for any business is that it is already or has the clear potential to become a leader in its market segment. Our strong margins relative to industry norms reflect this focus in all our existing businesses, with Explore, Superbreak, Bookit, Djoser, Eurocamp and Keycamp all enjoying market leadership. There are a number of attractive acquisition opportunities mostly but not exclusively in the wider European market which can provide us with new platforms for growth. Examples of this are the two recent acquisitions in Germany which have increased our European presence. Management continues to review a range of possible acquisitions, of different sizes, which meet its stringent financial criteria and will add to the existing portfolio of businesses. The Group s balance sheet strength will fund significant investment in its existing businesses in 2007. All of the divisions are pursuing organic growth initiatives which are detailed below. I believe we are well placed to capitalise on opportunities and continue to deliver good returns to our shareholders. Financial performance and current trading For the Group overall, revenue per customer increased from 103 in to 108 in. Customer retention is a key focus for all our divisions. This year 29.6% of direct bookings (excluding bookings from retail travel agents) taken for the Group as a whole were repeat bookings (: 28.7%). Hotel Breaks This remains the largest division in the Group, selling 2.5m holidays in (: 2.4m). Divisional operating profit was down 3% at 16.2m (: 16.8m) on revenue also 3% down at 122.7m (: 126.7m). Margins were constant at 13.2%. Free cash flow generated was 18.4m (: 14.9m). The business continues to enjoy low operational gearing, for instance room allocations are not committed, allowing a high degree of flexibility in costs. 5
The impact of the London bombings in July and the press coverage thereafter continued to be felt in the London leisure market until Spring. Growth restarted around Easter but, in both the UK and the Netherlands, bookings were further impacted by the competing attractions of the FIFA World Cup in June and the unusually hot weather in July. We believe that the year ahead will see a return to growth sales intake (incorporating Bookit s intake based on total transaction value) across the division is approximately 8% up on the comparable period for /06. Adventure Travel The division sold 66,400 holidays in (: 60,300) and has once again delivered strong growth in profits and revenue. Operating profit increased by 47% to 5.6m (: 3.8m) with margins up at 7.3% (: 6.0%). The business model remains flexible with very low levels of fixed costs. Revenue was up 22% at 76.3m (: 62.6m) and free cash flow was 3.1m (: 12.7m). During the year Explore moved to new freehold premises at a cost of 2.9m. In the division had a one-off benefit from the acquisition of Djoser whereby we had 5.0m of payments received on account of holidays taken by Djoser customers after the year end. Overall, 2007 sales intake for the division is currently 5% higher than in, but the Middle East as a destination continues to under perform management expectations. Camping A total of 515,000 holidays were sold (: 523,000). Operating profit* reduced 3% to 12.5m (: 13.1m) on revenue down 7% at 105.5m (: 113.7m). Operating margin* improved to 11.9% (up from 11.4% in ). Free cash flow generation was 22.7m (: 22.0m) reflecting reduced capital expenditure in as we cut capacity. The business was effectively right sized for the season, with a 16% reduction in capacity. The outcome was a pleasing increase in camp-site occupancy from 85 to 95 nights. For the 2007 season, capacity will be marginally adjusted (-3%) to reflect more modest shifts in demand. Our plan is to hold back more capacity for sale into the spring. As a result of this expected later sales phasing we are currently approximately 6% below last year s sales intake (based on bookings received to date). Acquisitions In September, the Adventure Travel Division was augmented by the addition of two German specialist holiday businesses. carpe diem Sprachreisen provides English and other language holidays and TravelWorks offers working holidays and gap-year breaks. Both businesses have experienced a number of years of double-digit growth and enjoy margins and cash flow generation similar to that of our Adventure Travel Division. The businesses are based in Münster in Nordrhein-Westfalen with a small office in Vienna, Austria. The combined consideration for the two acquisitions was 10m ( 6.8m) with an additional payment of up to 2m ( 1.3m) subject to trading in the 12 months following acquisition. The acquisitions are expected to be marginally earnings enhancing (preamortisation of acquired intangible assets)** for Holidaybreak in the financial year ended 30 September 2007. The experienced management team will remain with the businesses. In the course of this year, the Board was approached by several interested parties regarding the potential sale of the Camping Division. The Board first ascertained whether other parties were also interested and then considered whether any of the expressions of interest would achieve a valuation commensurate with the likely future cash flows of the division if retained. As this was not the case, the Board suspended discussions, as it did not see any outcome 6
forthcoming that was likely to be in the best interests of shareholders. The Board looked hard at the value the Camping business brings but believes that retaining the business within the Group will deliver greater value to shareholders. Business development The Hotel Breaks Division comprises Superbreak based in the UK and Bookit in the Netherlands which provide primarily domestic short-break holidays to their respective markets. In the UK, Superbreak has continued to focus efforts on packaged breaks (including some successful new rail and newspaper relationships) to further differentiate it from other leisure break providers. Superbreak s Theatre Breaks programme led the division s recovery in the London leisure hotel market, offering breaks around new theatre shows, such as Spamalot, The Sound of Music and Wicked. While we recognise the value in rebalancing our revenue mix to be less reliant on London, by growing our European offering, we are also widely recognised by the travel trade and consumers alike as experts in London and in marketing its attractions. Superbreak will therefore continue to look for further opportunities in this area. This year Superbreak introduced a loyalty scheme for frequent bookers and recently invited regular users to decide on which version of the new main landing page they preferred for Superbreak.com. In the Netherlands, Bookit has successfully grown its Hotelletje.nl brand, launched in late, to include over 400 smaller independent guesthouses located in the Benelux countries. The brand now accounts for approximately 5% of Bookit turnover. Having exclusively contracted properties is important in attracting and retaining loyal customers. Weekendjeweg.nl and Nachtjeweg.nl remain the core brands, offering leisure consumers a great range of hotels for weekend or single night stays. The Dutch are avid holiday home users and Bookit s site Bungalows.nl remains pre-eminent. A new website, Citytripper.nl, has recently been launched allowing Bookit to sell a global range of hotels to its million plus customer base. The Adventure Travel Division s principal businesses, Explore, based in the UK, and Djoser, based in the Netherlands, are market leaders in specialist small group exploratory trips in their respective markets. RegalDive, also based in the UK, is one of the leading UK diving operators. Explore and Djoser s specialist programmes have performed strongly, most notably the Family Adventures offering. New tours and destinations have been added to all programmes. Djoser has capitalised on Explore s specialist product-led strategy by launching, in early, their own walking and trekking programme, Djoser Wandel, based on Explore s version. Both the Explore and Djoser brands will continue to benefit from each other by new product development, enlarged overseas purchasing power and joint marketing initiatives. RegalDive continues to develop away from the Red Sea and sales to other worldwide destinations, for instance Oman, the Maldives and Indonesia, accounted for 34% of total revenue. The Camping Division s principal activity is the sale of holidays into our own pre-sited accommodation through the Eurocamp and Keycamp brands. Customers, predominantly families with school-age children, come from the UK, Ireland, the Netherlands, Germany and five other European countries. The division has been successful in selling the more price-sensitive low-season holidays where the key customer groups are either couples or pre-school families. 7
We continue to see considerable scope to broaden the appeal of camping. One such initiative has resulted in adding video clips to our websites to enable potential customers to get an up-to-date impression of camping and allow existing ones to view footage of accommodation and activities on camp-sites. The division has continued to source new destinations that are accessible using low-cost carriers and is introducing new sites for the first time in Portugal, Southern Spain and Slovenia for the 2007 season. Following a successful trial in, the division will be expanding the number of chalets on offer next season. Investment As previously announced, we have increased spend on organic growth initiatives. For instance, the Adventure Travel Division is achieving organic growth by the extension of existing specialist product ranges and by the introduction of new ones, designed to satisfy the specific niche demands of customers. This year we introduced Explore Private Groups, which is aimed at parties requiring a dedicated itinerary and tour leader. We continue to invest more in the online capability of all our businesses. We recognise the value in a broad multi-channel distribution approach but it is vital that our offering on the web is compelling if consumers wish to access us in this way. The Hotel Breaks Division is therefore investing, as previously announced, up to 2m per annum on improving web content and design and expects to see the return from this investment come through in the following years. Furthermore, Explore, part of the Adventure Travel Division, is currently redeveloping its website to improve customer retention rates. This year 68.0% (: 64.3%) of total Group bookings taken from consumers (excluding bookings taken from retail travel agents) were made online. The hotel contracting team has been expanded to broaden significantly the range of Superbreak s European hotels on offer and the results of this should become noticeable in 2007. The Camping Division is to invest 9.5m (net of disposal proceeds) in the current year to replace older mobile-homes with more contemporary models (compared to 3.6m last year). We are also improving accommodation with the addition of wooden decking and air conditioning to some units. Principal risks facing the Group s businesses Our priority will always be the safety of our customers, staff and suppliers. Holidaybreak has been successful at managing the risks associated with running very diverse holiday businesses. Geopolitical events Our businesses, particularly within the Adventure Travel Division, are exposed to geopolitical events. In addition, climatic events, such as hurricanes and earthquakes require us to rearrange itinerary timings and/or routings. This year the division faced the threat of avian flu, bombings in the Sinai and most notably, the war in Lebanon which had a depressing but not material effect in the financial year. The Middle East accounts for approximately 16% of the Adventure Travel Division s turnover. By continuing to expand the number of destinations to which it offers tours (currently 131 countries worldwide) the division seeks to mitigate the geopolitical risks. For example, Explore and Djoser were able to grow despite the Middle East downturn and experienced strong performances particularly in Africa and Asia. The financial performance of the Hotel Breaks Division was affected by the July bombings in London, and growth only returned to its London market in Spring. As mentioned earlier, the division is expanding its European and overseas range of hotels. 8
Exposure to the economy The majority of the Group s customers are based in the UK and as a result our revenues are linked to the strength of the UK economy. Further European acquisitions will reduce this dependence but will in turn expose the Group to the fortunes of other European economies. The Dutch market currently represents about 24% of the Group s total transaction values. Ability to grow business Our ability to grow the business is partially dependent on our capability to successfully complete value enhancing acquisitions. The process of integrating acquired businesses may involve unforeseen difficulties and may require a disproportionate amount of time and attention of management and our financial and other resources. We use both in-house expertise and professional advisers when undertaking such acquisitions. Recruitment and retention of talent As a service-led group, our people, including call centre and administration staff, tour leaders and couriers, are our most important assets. A core aspect of our competitiveness is the ability to attract, retain and motivate these key employees and management personnel, and if we lose or fail to attract these key employees we may be put at a competitive risk. We believe our training programmes and incentive arrangements provide the necessary tools to attract and retain key staff. We encourage our staff to save for their future through pension schemes set up by Group companies and currently 43.3% (: 42.7%) of permanent staff are members of the schemes. An indication of the high levels of motivation in our call centre staff are evident in the number of calls answered within 20 seconds (55%) and the low level of unanswered calls (5%). No comparative figures are available for but we hope to have comparative figures for future reports. Absenteeism amongst Group permanent staff is below UK national averages for call centre based businesses of 4.1% (source: CIPD annual absence management survey report ) at 2.4% (: 2.6%). Interest rate and foreign exchange risk The Group is exposed to interest rate and foreign exchange risk. Details of how the Group manages these risks are set out in the Finance Director s Review. Summary I believe Holidaybreak is well placed to prosper. It has demonstrated its resilience and also embarked on a number of initiatives to seek to accelerate medium-term growth while remaining focused on the specialist travel sector. Given the strength of its balance sheet, Holidaybreak remains well positioned to grow, both organically and by acquisition. Management continues to pursue several European acquisition opportunities in the specialist tour operating sector, with good margin and cash generation characteristics. Carl Michel CEO * Before goodwill impairment in of nil (: 9.3m) ** This statement should not be taken to mean that the earnings per share of Holidaybreak plc will necessarily match or exceed the historic reported earnings per share of Holidaybreak plc and no forecast is intended or implied. 9
Finance Director s Review In the year to 30 September Holidaybreak plc increased headline profits before tax* to 32.1m and invested 4.0m (net of cash acquired) in purchasing carpe diem and Travelworks. Despite this expenditure, net debt reduced by 19.8m to 3.1m as we continued to benefit from substantial cash generation in all businesses. We are targeting another year of good operating cash flow performance in 2007 but we expect to spend c. 16m on capital investment. Operating profit and profit before tax Group revenue in was up 0.5% on at 304.5m (: 303.0m). Operating profit* was 1.8% higher than at 34.3m (: 33.7m). Operating margin* was improved to 11.3% (: 11.1%). Hotel Breaks margin was the same as at 13.2% and Camping, benefiting from improved occupancy, achieved a margin of 11.9% (: 11.4%). Adventure Travel s margin improved from 6.0% to 7.3%. margin was adversely affected by the IAS 38 treatment of advertising and promotional activities whereby, in the nine months following the acquisition of Djoser, the company bore a full annual marketing charge. The Group incurred costs of 0.3m in relation to the curtailed sale of the Camping Division and two substantial potential acquisitions. Finance costs (net of investment income) reduced from 4.4m in to 2.2m. Interest cover* improved from 7.7 times in to 15.7 times in. Interest was 23.8 times covered by operating cash flow, a level we regard as prudent. Cash flow and bank facilities The Group s net borrowings at 30 September were 3.1m, compared to 22.9m in. Cash flow from our operating activities was 48.8m, another strong performance. This position reflected the acquisitions of carpe diem and TravelWorks for an initial purchase consideration (net of cash acquired) of 4.0m. Available bank facilities ( 140m as at 30 September ) 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 these facilities was 56.0m at the end of April when borrowings were at their maximum. 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. Taxation The tax charge, including full provision for deferred tax, was 9.7m and the tax rate of 30.2% was lower than (36.9%) when goodwill impairment of 9.3m was substantially nondeductible. The underlying rate going forward is expected be in the region of 30%. Earnings per share and dividends Headline basic earnings per share* was 46.8p (: 44.2p) an increase of 5.9%. The Board is recommending a final dividend of 21.2p per ordinary share representing an increase of 10% over. This gives a total dividend for the year of 29.2p per ordinary share (: 26.6p). This is covered 1.6 times by post tax earnings. Balance sheet Net assets of the Group increased to 59.1m (: 48.0m). Net debt gearing** at 30 September was 5.2% compared to 47.7% at the previous year end. Intangible assets 10
acquired on acquisitions during the year were 2.1m (: 9.7m) and the annual amortisation charge will be c. 1.0m. Capital expenditure Capital expenditure (net of receipts from disposals) in the year to 30 September was 4.6m (: 2.4m). The majority of this, 2.9m, was again accounted for by Camping. Mobile-homes ( 4.3m before disposals) accounted for the bulk of this expenditure. Sales of mobile-homes generated 4.2m. Accommodation capacity will again be reduced by a further 3% in /7. The Group s depreciation policy is to write down the cost of mobile-homes to an estimated residual value over their projected economic life. Disposal proceeds in respect of mobile-homes sold at the end of their useful life achieved net book value. 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. Forward foreign currency contracts 29.1 21.6 Changes in the fair value of non-hedging currency derivatives amounting to 0.2m have been charged to income in the year. At the balance sheet date 45.5m ( 22.8m) of foreign currency denominated debt was designated as a hedging instrument for the purpose of hedging the translation of its investment in foreign operations. At the balance sheet date the Group had no interest rate derivative contracts. CHANGES IN ACCOUNTING POLICIES AND THE ADOPTION OF INTERNATIONAL FINANCIAL REPORTING STANDARDS During the year the Group adopted International Financial Reporting Standards ( IFRS ) for the first time. The main changes affecting the Group s reporting are that: - purchased goodwill is no longer amortised but is subject to an annual impairment review. Purchased intangible assets are subject to an annual amortisation charge; - the income statement includes an annual charge based on the fair value of equitybased awards made to employees; - open forward foreign exchange contracts and interest rate swaps are valued at year end market rates, with any gains or losses charged to the income statement; - expenditure on advertising and promotional activities is expensed as incurred. The impact of the adoption of IFRS on prior year reporting has been to increase the reported profit before tax for the year ended 30 September from 19.4m under UK GAAP to 20.6m primarily due to the amortisation of intangible assets through the acquisitions of Bookit BV and Djoser BV in December 2004 and January respectively ( 1.4m), the add-back of amortisation of goodwill ( 3.4m), a charge in respect of prepaid advertising and 11
brochure distribution costs ( 0.6m), and a charge of 0.3m in respect of the fair value of equity based payments to employees. In addition, reported net assets at 1 October 2004 (the date of transition) were increased from 36.5m under UK GAAP to 43.7m, and from 38.4m to 48.0m at 30 September. Robert Baddeley Finance Director * Headline profits, operating margin EPS and interest cover are stated before goodwill impairment in of nil (: 9.3m) ** Net debt gearing is net debt expressed as a percentage of year end net assets 12
Holidaybreak plc Consolidated income statement Year ended 30 September Note Group revenue - continuing operations 1 304.5 303.0 Net operating costs (270.2) (278.6) Operating profit 1 34.3 24.4 Profit on disposal of property - 0.6 Investment income 1.4 1.2 Finance costs (3.6) (5.6) Profit before tax 1 32.1 20.6 Tax (9.7) (7.6) Profit for the year 1 22.4 13.0 Attributable to: Equity holders of the parent 22.4 13.0 Earnings per share Basic 3 46.8p 27.6p Diluted 3 46.6p 27.4p Headline earnings per share Basic 3 46.8p 44.2p Diluted 3 46.6p 43.9p 13
Holidaybreak plc Consolidated statement of recognised income and expense Year ended 30 September Exchange differences on translation of foreign operations - 0.3 Net income recognised directly in equity - 0.3 Profit for the year 22.4 13.0 Total recognised income and expense for the year 22.4 13.3 Attributable to: Equity holders of the parent 22.4 13.3 14
Holidaybreak plc Consolidated balance sheet 30 September Note Non-current assets Goodwill 61.5 56.0 Other intangible assets 11.5 9.5 Property, plant and equipment 53.4 61.7 126.4 127.2 Current assets Inventories 0.6 0.5 Trade and other receivables 20.7 21.4 Cash and cash equivalents 4 54.4 50.4 75.7 72.3 Assets held for sale 2.4 3.3 Total assets 204.5 202.8 Current liabilities Trade and other payables (77.4) (73.3) Current tax liabilities (4.8) (2.7) Obligations under finance leases 4 (5.0) (5.9) Bank overdrafts and loans 4 (45.9) (55.8) (133.1) (137.7) Net current liabilities (57.4) (65.4) Non-current liabilities Deferred tax liabilities (5.7) (5.5) Obligations under finance leases 4 (6.6) (11.6) (12.3) (17.1) Total liabilities (145.4) (154.8) Net assets 59.1 48.0 Equity Share capital 2.4 2.4 Share premium account 37.9 36.9 Own shares (3.2) (3.9) Other reserves 0.7 0.6 Retained earnings 21.3 12.0 Total equity 59.1 48.0 15
Holidaybreak plc Consolidated cash flow statement Year ended 30 September Note Reconciliation of operating profit to cash generated from operating activities Cashflow from operating activities Operating profit 34.3 24.4 Adjustments for: Amortisation of other intangible assets 1.7 2.2 Depreciation of property, plant and equipment 10.9 12.9 Impairment of goodwill - 9.3 Share based payment charge 0.2 0.3 Increase in receivables (0.4) (2.4) Increase in payables 2.1 5.3 Cash inflow from operating activities 48.8 52.0 Tax paid (7.6) (7.0) Net cash from operating activities 41.2 45.0 Investing activities Acquisitions of subsidiaries net of cash acquired (4.0) (39.0) Purchase of intangible assets (0.3) - Purchases of property, plant and equipment (10.2) (8.6) Proceeds on disposal of property, plant and equipment 5.6 6.2 Net cash used in investing activities (8.9) (41.4) Financing activities Finance costs paid (2.9) (5.8) Interest received 1.4 1.4 Proceeds on issue of new ordinary shares 1.0 2.4 Proceeds on exercise of share options 0.7 0.6 Purchase of own shares to be held in trust - (0.7) New bank loans raised - 44.8 Repayment of borrowings 4 (6.3) (12.5) Payments under finance leases 4 (5.9) (7.2) Dividends paid (13.1) (11.8) Net cash from financing activities (25.1) 11.2 Net increase in cash and cash equivalents 4 7.2 14.8 Cash and cash equivalents at beginning of year 4 46.1 31.3 Cash and cash equivalents at end of year 4 53.3 46.1 16
Holidaybreak plc Consolidated cash flow statement Year ended 30 September 1. Business and geographical segments For management purposes, the group is currently organised into three operating divisions Hotel breaks, Adventure Travel and Camping. These divisions are the basis on which the group reports its primary segment information. Segment information about these businesses is presented below. Revenue Hotel breaks Adventure Travel Camping Consolidated Total revenue 122.7 76.3 105.5 304.5 Result 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 Revenue Hotel breaks Adventure Travel Camping Consolidated Total revenue 126.7 62.6 113.7 303.0 Result Segment result prior to impairment of goodwill 16.8 3.8 13.1 33.7 Impairment losses recognised in income. - - (9.3) (9.3) Operating profit 16.8 3.8 3.8 24.4 Profit on disposal of property 0.6 Investment income 1.2 Finance costs (5.6) Profit before tax 20.6 Tax (7.6) Profit after tax 13.0 17
Holidaybreak plc Consolidated cash flow statement Year ended 30 September 1. Business and geographical segments (continued) The following table provides an analysis of the Group s revenue by geographical origin: Sales revenue United Kingdom 222.2 231.0 Ireland 6.3 7.4 Netherlands and Belgium 58.2 46.2 Germany, Switzerland and Austria 11.8 12.5 Other 6.0 5.9 304.5 303.0 2. Dividends Amounts recognised as distributions to equity holders in the period: Final dividend for the year ended 30 September of 19.35p (2004: 17.6p) per share. 9.2 8.4 Interim dividend for the year ended 30 September of 8.0p (: 7.25p) per share. 3.9 3.4 13.1 11.8 Proposed final dividend for the year ended 30 September of 21.2p (: 19.35p) per share. 10.2 9.2 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 24 April 2007 to those shareholders on the register on 30 March 2007. 18
Holidaybreak plc Consolidated cash flow statement Year ended 30 September 3. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: Earnings Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent 22.4 13.0 Number Number Number of shares Weighted average number of ordinary shares for the purposes of basic earnings per share 47,769,249 47,186,130 Effect of dilutive potential ordinary shares: Share options 208,490 301,197 Weighted average number of ordinary shares for the purposes of diluted earnings per share 47,977,739 47,487,327 Pence Pence Earnings per share Basic 46.8 27.6 Diluted 46.6 27.4 Headline Earnings Net profit attributable to equity holders of the parent 22.4 13.0 Add back: Impairment of goodwill - 9.3 Tax effect of the above - (1.5) Headline earnings 22.4 20.8 Pence Pence Headline earnings per share Basic 46.8 44.2 Diluted 46.6 43.9 The directors consider that headline earnings per share provides a better understanding of the Group s earnings following the impairment of goodwill in. 19
Holidaybreak plc Consolidated cash flow statement Year ended 30 September 4. Analysis of cash and cash equivalents and reconciliation to net debt 1 October Cash flow Foreign exchange Non cash movements 30 September Cash at bank and in hand 50.4 4.0 - - 54.4 Overdrafts (4.3) 3.2 - - (1.1) 46.1 7.2 - - 53.3 Debt due within one year (51.5) 6.3 0.5 - (44.8) Finance leases: less than one year (5.9) 5.9 - (5.0) (5.0) more than one year (11.6) - - 5.0 (6.6) (22.9) 19.4 0.5 - (3.1) 5. Non-statutory accounts The financial information set out above does not constitute the Company s statutory accounts for the years ended 30 September or, but is derived from these accounts. Statutory accounts for have been delivered to the Registrar of Companies and those for 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 first full financial statements that comply with IFRS in January 2007. 20