1st Oct 2007 07:01
Holidaybreak PLC01 October 2007 1 October 2007: FOR IMMEDIATE RELEASE Not for release, distribution or publication, in whole or in part, in or into the United States, Canada, Australia or Japan HOLIDAYBREAK £47.2m acquisition of NST to grow Group's Education Division Holidaybreak, the European specialist holiday and activity group, todayannounces the acquisition of UK and Ireland educational tour organiser NSTHoldings Limited for a total cash consideration of £47.2 million. NST will beintegrated into the Group's Education Division, created earlier in the year withthe acquisition of PGL. Summary: * NST is the UK's leading provider of group travel to schools and colleges throughout the UK. It has a strong brand name and reputation within the sector, enjoys long-term relationships with schools and achieves high levels of customer retention. * Established in 1967, it provides a full range of tours for schools and colleges all over the world. In 2006, 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. * Under the slogan 'Bringing the Curriculum to Life', NST organises trips for schools and colleges to the UK and destinations around the world, including India and China. Its specialist trips range from Media Studies tours to Los Angeles to Literature Visits to WW1 Battlefields. * NST owns Le Chateau d'Ebblinghem, a 19th century French country house 8km east of St. Omer in Flanders, which is used as hotel accommodation. It also operates activity centres in Lancashire and the Ardeche (part of the Rhone-Alpes in the administrative division of Languedoc). * NST will form part of the Group's Education Division. PGL, the Group's existing education business, is already the market leader in the residential, outdoor education and adventure sector for UK schools, which organises trips for over 250,000 children each year. * The Group's expanded Education Division has the opportunity for further growth given the active promotion of the benefits of non-classroom learning by the UK government and the ongoing trend of schools to outsource outdoor learning programmes to commercial providers. * The acquisition is expected to be earnings enhancing for Holidaybreak (before any non-recurring costs and amortisation of acquired intangible assets) for the year ended 30 September 2008, the first year of ownership (see note 2 of Notes to editors, below). Carl Michel, Holidaybreak CEO, said:"This is another excellent acquisition for Holidaybreak and I am pleased towelcome NST into our Group. This acquisition allows us to grow our EducationDivision. NST's market leading position, cash flow and margins, are consistentwith the Group's strategy. We expect to realise significant benefits from thecombination, and we are uniquely placed to capitalise on the excitingdevelopments within this marketplace. Going forward, we will continue to lookfor suitable acquisitions and have the capacity to consummate further deals." Martin Davies, Managing Director of Holidaybreak's Education Division, said:"The acquisition of NST means we can expand our offer to schools. It bringsbrand leadership in the school tours market to complement PGL's marketleadership in the active learning sector. Within its first four months, ourEducation Division has consolidated a strong, market leading position in thehighly attractive educational travel market." David Craven, Chief Executive of NST, said:"I am delighted we have this opportunity to join the Education Division of theHolidaybreak Group. This is an exciting deal for NST, its staff and the schoolsand students it serves. Together, we can build on our market leadership in theseexciting growth markets." This summary should be read in conjunction with the background information tothe transaction, which is included below. Holidaybreak will be hosting a conference call for analysts at 8.30 a.m. todayon +44 (0) 1452 541 076. EnquiriesHolidaybreak: +44 (0)1606 787100Carl Michel / Bob Baddeley Brunswick +44 (0) 20 7404 5959James Hogan / Craig Breheny / Ash Spiegelberg / Oliver Hughes Background information to the transaction NSTNST is the UK's leading provider of group travel to schools and collegesthroughout the UK. It has a strong brand name and reputation within the sector,enjoys long-term relationships with schools and achieves high levels of customerretention. Established in 1967, NST provides and operates educational travel tours toschools and colleges in the UK and Ireland. Tours are offered on asubject-specific basis to complement learning activities, and developed in linewith existing curriculum needs. Products and brochures are uniquely aligned withteachers' own priorities. Tours are offered worldwide, but principally in the UK and Western Europe. Underthe slogan 'Bringing the Curriculum to Life', NST organises trips in the UK anddestinations around the world, including India and China. Its specialist tripsrange from Media Studies tours to Los Angeles to Literature Visits to WW1Battlefields. In 2006, it carried 172,000 students and education staff on over 4,000 trips todestinations in the UK, Europe and Worldwide. NST owns Le Chateau d'Ebblinghem,a 19th century French country house 8km east of St. Omer in Flanders, which isused as hotel accommodation. It also operates activity centres in Lancashire andthe Ardeche (part of the Rhone-Alpes in the administrative division of Languedoc).These properties have been valued at approximately £10 million. The acquisition of NST will allow the Group to expand its offer to schools,colleges, teaching staff and students. It makes Holidaybreak's EducationDivision the clear market leader in residential, out-of-classroom educationaltours and activities. The Education Division possesses industry-leading safety management, productrange and product quality standards, to provide a one-stop shop for schoolsacross the product and age range. NST is particularly strong in the secondaryand higher education stages, whereas PGL leads at the primary school stage. PGLexpects to be able to add considerable value to NST's activity centres.Particular benefits are also expected to accrue from a coordinated approach tomarketing and distribution. Principal terms of the acquisitionThe Group's subsidiary, Holidays Limited, has acquired the entire issued sharecapital and loan stock of NST, for £27.8 million and £19.4 million respectively,from the current owners comprising David and John Craven (sons of NST'sfounder), other family members, family trusts and management. The acquisition agreement contains warranties customary in a transaction of thisnature and size. The total consideration was paid in cash on completion. It isexpected that £3.25 million of cash will be released through a subsequent saleand leaseback of NST's Blackpool head office, at a yield of 7.5%. Expected financial effectsThe acquisition is expected to be earnings enhancing for Holidaybreak (beforeany non-recurring costs and amortisation of acquired intangible assets) for theyear ended 30 September 2008, the first year of ownership (see note 2 of notesto editors, below). The return on invested capital is expected to exceed Holidaybreak's weightedaverage cost of capital during the year ended 30 September 2009 (see note 2 ofnotes to editors, below). Following the acquisition of NST, the Directors believe Holidaybreak's financialposition remains robust. Other informationFor the year ended 31 December 2006, NST's aggregated revenues were £45.7million and its aggregated profit before taxation was £1.0 million, aftercharging approximately £0.95 million of certain non-recurring items. Aggregated gross assets at 31 December 2006 were £28.5 million. NST invested significantly in its products, staffing and infrastructure during2006 including a move to a new head office. Average cash within NST for the twelve months prior to acquisition wasapproximately £9 million and is expected to be at the same level at completion. NST will form part of the Group's Education Division, under the leadership ofManaging Director Martin Davies. Nick Cust, Joint Managing Director of theGroup's Hotel Break's Division, will oversee the integration of NST into theEducation Division and the wider Group. NST's chief executive David Craven will,over time, reduce his level of operational involvement in the business. Companysecretary John Craven will leave NST after a transitional period. The remainderof NST's senior management team will remain with the Group following theacquisition and appropriate incentivisation will be put in place in due course. Notes to Editors 1. Holidaybreak (HBR.L) is listed on the London Stock Exchange. The European specialist holiday and activity group sold 3.1m holidays in the year ended 30 September 2006 (2005: 3.0m). 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. 2. No statement in this announcement is intended to constitute a profit forecast for the financial year ending 30 September 2007 or for any other period. In addition, no statement in this announcement should be interpreted to mean that earnings per share (before any non-recurring costs and amortisation of acquired intangible assets) will necessarily be greater than those for the relevant preceding period. 3. Certain statements in this announcement are forward looking statements. Such statements are based on current expectations and by their nature are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. The information does not assume any responsibility or obligation to update publicly or revise any of the forward-looking statements contained herein. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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