30th Nov 2006 07:00
Holidaybreak PLC30 November 2006 30 November 2006: For immediate release HOLIDAYBREAK PLC Results for the year ended 30 September 2006 Good results, in line with Board expectations 2007 a year of investment Holidaybreak, the European specialist holiday group, today announces preliminaryresults for the year ended 30 September 2006. Financial highlights 2006 2005 £m £mGroup turnover 304.5 303.0Operating margins* 11.3% 11.1%Headline profit before tax* 32.1 29.9Statutory profit before tax 32.1 20.6Headline EPS* 46.8 pence 44.2 penceFree cash flow** 35.1 38.1Net debt 3.1 22.9Dividend per share 29.2 pence 26.6 pence * Before goodwill impairment in 2006 of £nil (2005: £9.3m). ** Free cash flow is operating cash flow (£48.8m (2005: £52.0m)) after capitalexpenditure (£10.2m (2005: £8.6m)) net of disposals (£5.6m (2005: £6.2m)) andafter interest and tax payments (£9.1m (2005: £11.4m)). Summary • Solid performance in line with Board's expectations. Holidaybreak's businesses sold 3.1m holidays (2005: 3.0m) in the year. They are market leaders and enjoy industry-leading 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. • 2006 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 anotherrobust performance in what has been yet another eventful year in our markets.We are market leaders with industry-leading margins and continue to search outacquisitions that meet our criteria and will add to the Group." "I remain extremely pleased with the resilience of the Group and am confidentthat Holidaybreak, with its diversity of quality businesses, will continue toprosper. Current trading is in line with our expectations and the Group isconfident of achieving another satisfactory performance." Enquiries: Carl Michel / Bob Baddeley Holidaybreak 30 November +44 (0) 20 7404 5959Thereafter +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 Europeanspecialist holiday group sold 3.1m holidays in the year ended 30 September 2006(2005: 3.0m). Holidaybreak has three operating divisions: Hotel Breaks,Adventure Travel and Camping. Each is a market leader in its respectivespecialist sector of the European holiday industry, has multi-channeldistribution and is recognised for providing high standards of product andservice quality. For more information, please go to www.holidaybreak.co.uk. Chairman's Statement Holidaybreak continues to stand out amongst UK tour operators in terms ofgenerating margins and cash flows. In the year to 30 September 2006, headlineprofit before tax* increased to £32.1m and the business generated £35.1m of freecash flow**. We also made two acquisitions in Germany. Holidaybreak has demonstrated resilience to external shocks, with modest growthin revenues and headline profit before tax*, notwithstanding the uncertaintycreated by terrorist activity including the London bombings. Margins remainindustry leading with excellent free cash flow generation. Holidaybreak's results reflect our core approach of putting customers (whetherconsumers, travel agents or partners) at the heart of what we do. Consumerloyalty is a key measure for all of our businesses and we will continue tostrive to increase repeat business. This is a very tangible measure of successin an environment where traditional loyalties are reducing. The Board is determined to ensure that Holidaybreak's pedigree, as a manager ofwell-run specialist holiday businesses that are leaders in their respectivemarket sectors, is maintained and enhanced. We continue to examine opportunities to make sensible acquisitions that webelieve will serve our shareholders in terms of growing the business, achievinga good return on investment and generating cash. We are also allocating capitalfor organic development opportunities within our existing businesses, whereappropriate. Finally, we shall also consider the potential of more substantialspecialist tour operating opportunities, which might constitute a viable 'fourthdivision'. Our strength lies with our employees and their ability to adapt to changes inconsumer tastes, distribution technologies and marketing mix. I would like tothank them for their enthusiasm and hard work during the year. Group results For the year ended 30 September 2006, pre-tax profits* were £32.1m (2005:£29.9m) on revenue of £304.5m (2005: £303.0m). Headline earnings per share* were46.8p (2005: 44.2p). All Holidaybreak's operations generated substantial cash. Operating cash inflowwas £48.8m (2005: £52.0m). Net debt at 30 September 2006 was £3.1m (2005:£22.9m). Capital expenditure, net of disposals, was £4.6m (2005: £2.4m). Dividend In view of the financial strength of Holidaybreak and confidence in its futureprospects, the Board is recommending an increase in the annual dividend of 10%in 2006. The Board intends to continue to pay ordinary dividends that areappropriate in light of the growth prospects and the underlying performance ofthe Group. The Board is thus recommending a final dividend of 21.2p (2005: 19.35p), payableon 24 April 2007, to shareholders on the register on 30 March 2007, making atotal of 29.2p (2005: 26.6p) for the year. Acquisitions In September 2006, Holidaybreak completed two acquisitions in Germany. carpediem Sprachreisen GmbH is a leading player in the language travel sector andTravelWorks GmbH specialises in longer work assignments overseas, such asgap-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 inthe 12 months following acquisition. The impact of these acquisitions isexpected to be marginally earnings enhancing (pre-amortisation of acquiredintangible assets)*** in 2007. The experienced management team will remain withthe businesses. Discussions on the potential sale of camping In June 2006, the Board ended discussions regarding the possible sale of theCamping Division. The proposed indicative offers fell short of the Board'svaluation of the business. The Board believes that keeping the Camping Divisionwithin the Group will deliver greater value to shareholders. Management and board changes Steve Whitfield joined the Holidaybreak plc Board on 12 July 2006. He wasappointed Managing Director of the Camping Division in March 2006. Steve, 48,has been with the business since 1984 in a variety of roles and his depth ofknowledge will be instrumental in taking the division forward. He took over fromMatthew Cheetham who resigned from his position as divisional Managing Directorand left the Holidaybreak plc Board on 10 March 2006. Outlook Current trading is in line with our expectations and the Board believes that thetrading and financial prospects of the Group are satisfactory. The Group'sbalance sheet strength will fund significant investment in its existingbusinesses in 2007. In addition, management continues to review a range ofpossible acquisitions, of different sizes, which meet its stringent financialcriteria and will add to the existing portfolio of businesses. At the same time, the Board remains focused on the efficiency of the Group'sbalance sheet. If no material acquisition is made, and assuming currentconditions continue, the Board retains the option of considering a return ofvalue to shareholders in due course. * Before goodwill impairment in 2006 of £nil (2005: £9.3m) ** Free cash flow is operating cash flow (£48.8m (2005: £52.0m)) after capitalexpenditure (£10.2m (2005: £8.6m)) net of disposals (£5.6m (2005: £6.2m)) andafter interest and tax payments (£9.1m (2005: £11.4m)). *** This statement should not be taken to mean that the earnings per share ofHolidaybreak plc will necessarily match or exceed the historic reported earningsper share of Holidaybreak plc and no forecast is intended or implied. Bob AylingChairman Chief Executive's Business Review Holidaybreak's results for 2006 reflect our work to date in putting the customerat the heart of development efforts, especially in the online environment. Allof our brands are focused on adding value for the customer and differentiationfrom competitors. Group trading has been resilient in the face of a number ofone-off factors. Margins continue to be industry leading - thanks in no smallpart 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 2006), Adventure Travel (25%) and Camping(35%). Strategy A component of our strategy is to grow through acquisition. We continue toinvestigate opportunities that leverage the strengths of our businesses andbuild on our core competencies by extending market and product reach. We wouldalso consider more sizeable transactions of specialist holiday businesses - as apotential 'fourth operating division' - if they meet our strict financialcriteria. A key requirement for any business is that it is already - or has theclear potential to become - a leader in its market segment. Our strong marginsrelative to industry norms reflect this focus in all our existing businesses,with Explore, Superbreak, Bookit, Djoser, Eurocamp and Keycamp all enjoyingmarket leadership. There are a number of attractive acquisition opportunities - mostly but notexclusively in the wider European market - which can provide us with newplatforms for growth. Examples of this are the two recent acquisitions inGermany which have increased our European presence. Management continues toreview a range of possible acquisitions, of different sizes, which meet itsstringent financial criteria and will add to the existing portfolio ofbusinesses. The Group's balance sheet strength will fund significant investment in itsexisting businesses in 2007. All of the divisions are pursuing organic growthinitiatives which are detailed below. I believe we are well placed to capitaliseon 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 2005 to £108in 2006. Customer retention is a key focus for all our divisions. This year29.6% of direct bookings (excluding bookings from retail travel agents) takenfor the Group as a whole were repeat bookings (2005: 28.7%). Hotel Breaks This remains the largest division in the Group, selling 2.5m holidays in 2006(2005: 2.4m). Divisional operating profit was down 3% at £16.2m (2005: £16.8m)on revenue also 3% down at £122.7m (2005: £126.7m). Margins were constant at13.2%. Free cash flow generated was £18.4m (2005: £14.9m). The businesscontinues to enjoy low operational gearing, for instance room allocations arenot committed, allowing a high degree of flexibility in costs. The impact of the London bombings in July 2005 and the press coverage thereaftercontinued to be felt in the London leisure market until Spring 2006. Growthrestarted around Easter but, in both the UK and the Netherlands, bookings werefurther impacted by the competing attractions of the FIFA World Cup in June andthe 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 thedivision is approximately 8% up on the comparable period for 2005/06. Adventure Travel The division sold 66,400 holidays in 2006 (2005: 60,300) and has once againdelivered strong growth in profits and revenue. Operating profit increased by47% to £5.6m (2005: £3.8m) with margins up at 7.3% (2005: 6.0%). The businessmodel remains flexible with very low levels of fixed costs. Revenue was up 22%at £76.3m (2005: £62.6m) and free cash flow was £3.1m (2005: £12.7m). During theyear Explore moved to new freehold premises at a cost of £2.9m. In 2005 thedivision 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 customersafter the year end. Overall, 2007 sales intake for the division is currently 5% higher than in 2006,but the Middle East as a destination continues to under perform managementexpectations. Camping A total of 515,000 holidays were sold (2005: 523,000). Operating profit* reduced3% to £12.5m (2005: £13.1m) on revenue down 7% at £105.5m (2005: £113.7m).Operating margin* improved to 11.9% (up from 11.4% in 2005). Free cash flowgeneration was £22.7m (2005: £22.0m) reflecting reduced capital expenditure in2006 as we cut capacity. The business was effectively 'right sized' for theseason, with a 16% reduction in capacity. The outcome was a pleasing increase incamp-site occupancy from 85 to 95 nights. For the 2007 season, capacity will be marginally adjusted (-3%) to reflect moremodest shifts in demand. Our plan is to hold back more capacity for sale intothe spring. As a result of this expected later sales phasing we are currentlyapproximately 6% below last year's sales intake (based on bookings received todate). Acquisitions In September 2006, the Adventure Travel Division was augmented by the additionof two German specialist holiday businesses. carpe diem Sprachreisen providesEnglish and other language holidays and TravelWorks offers working holidays andgap-year breaks. Both businesses have experienced a number of years ofdouble-digit growth and enjoy margins and cash flow generation similar to thatof our Adventure Travel Division. The businesses are based in Munster in Nordrhein-Westfalen with a small officein 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 inthe 12 months following acquisition. The acquisitions are expected to bemarginally earnings enhancing (pre-amortisation of acquired intangible assets)**for Holidaybreak in the financial year ended 30 September 2007. The experiencedmanagement team will remain with the businesses. In the course of this year, the Board was approached by several interestedparties regarding the potential sale of the Camping Division. The Board firstascertained whether other parties were also interested and then consideredwhether any of the expressions of interest would achieve a valuationcommensurate with the likely future cash flows of the division if retained. Asthis was not the case, the Board suspended discussions, as it did not see anyoutcome 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 thatretaining the business within the Group will deliver greater value toshareholders. Business development The Hotel Breaks Division comprises Superbreak based in the UK and Bookit in theNetherlands which provide primarily domestic short-break holidays to theirrespective markets. In the UK, Superbreak has continued to focus efforts on'packaged breaks' (including some successful new rail and newspaperrelationships) to further differentiate it from other leisure break providers.Superbreak's Theatre Breaks programme led the division's recovery in the Londonleisure hotel market, offering breaks around new theatre shows, such asSpamalot, The Sound of Music and Wicked. While we recognise the value inrebalancing our revenue mix to be less reliant on London, by growing ourEuropean offering, we are also widely recognised by the travel trade andconsumers alike as experts in London and in marketing its attractions.Superbreak will therefore continue to look for further opportunities in thisarea. This year Superbreak introduced a loyalty scheme for frequent bookers andrecently invited regular users to decide on which version of the new mainlanding page they preferred for Superbreak.com. In the Netherlands, Bookit has successfully grown its Hotelletje.nl brand,launched in late 2005, to include over 400 smaller independent guesthouseslocated in the Benelux countries. The brand now accounts for approximately 5% ofBookit turnover. Having exclusively contracted properties is important inattracting and retaining loyal customers. Weekendjeweg.nl and Nachtjeweg.nlremain the core brands, offering leisure consumers a great range of hotels forweekend or single night stays. The Dutch are avid holiday home users andBookit's site Bungalows.nl remains pre-eminent. A new website, Citytripper.nl, has recently been launched allowing Bookit tosell 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 smallgroup exploratory trips in their respective markets. RegalDive, also based inthe UK, is one of the leading UK diving operators. Explore and Djoser'sspecialist programmes have performed strongly, most notably the FamilyAdventures offering. New tours and destinations have been added to allprogrammes. Djoser has capitalised on Explore's specialist product-led strategyby launching, in early 2006, their own walking and trekking programme, 'DjoserWandel', based on Explore's version. Both the Explore and Djoser brands willcontinue to benefit from each other by new product development, enlargedoverseas purchasing power and joint marketing initiatives. RegalDive continuesto develop away from the Red Sea and sales to other worldwide destinations, forinstance Oman, the Maldives and Indonesia, accounted for 34% of total revenue. The Camping Division's principal activity is the sale of holidays into our ownpre-sited accommodation through the Eurocamp and Keycamp brands. Customers,predominantly families with school-age children, come from the UK, Ireland, theNetherlands, Germany and five other European countries. The division has been successful in selling the more price-sensitive low-seasonholidays where the key customer groups are either couples or pre-schoolfamilies. We continue to see considerable scope to broaden the appeal of camping. One suchinitiative has resulted in adding video clips to our websites to enablepotential customers to get an up-to-date impression of camping and allowexisting ones to view footage of accommodation and activities on camp-sites. The division has continued to source new destinations that are accessible usinglow-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 in2006, 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 theextension of existing specialist product ranges and by the introduction of newones, designed to satisfy the specific niche demands of customers. This year weintroduced Explore Private Groups, which is aimed at parties requiring adedicated itinerary and tour leader. We continue to invest more in the online capability of all our businesses. Werecognise the value in a broad multi-channel distribution approach but it isvital that our offering on the web is compelling if consumers wish to access usin this way. The Hotel Breaks Division is therefore investing, as previouslyannounced, up to £2m per annum on improving web content and design and expectsto see the return from this investment come through in the following years.Furthermore, Explore, part of the Adventure Travel Division, is currentlyre-developing its website to improve customer retention rates. This year 68.0%(2005: 64.3%) of total Group bookings taken from consumers (excluding bookingstaken from retail travel agents) were made online. The hotel contracting team has been expanded to broaden significantly the rangeof Superbreak's European hotels on offer and the results of this should becomenoticeable in 2007. The Camping Division is to invest £9.5m (net of disposal proceeds) in thecurrent year to replace older mobile-homes with more contemporary models(compared to £3.6m last year). We are also improving accommodation with theaddition 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 runningvery diverse holiday businesses. Geopolitical events Our businesses, particularly within the Adventure Travel Division, are exposedto geopolitical events. In addition, climatic events, such as hurricanes andearthquakes require us to rearrange itinerary timings and/or routings. This yearthe division faced the threat of avian flu, bombings in the Sinai and mostnotably, the war in Lebanon which had a depressing but not material effect inthe financial year. The Middle East accounts for approximately 16% of theAdventure Travel Division's turnover. By continuing to expand the number ofdestinations to which it offers tours (currently 131 countries worldwide) thedivision seeks to mitigate the geopolitical risks. For example, Explore andDjoser were able to grow despite the Middle East downturn and experienced strongperformances particularly in Africa and Asia. The financial performance of the Hotel Breaks Division was affected by the July2005 bombings in London, and growth only returned to its London market in Spring2006. As mentioned earlier, the division is expanding its European and overseasrange of hotels. Exposure to the economy The majority of the Group's customers are based in the UK and as a result ourrevenues are linked to the strength of the UK economy. Further Europeanacquisitions will reduce this dependence but will in turn expose the Group tothe fortunes of other European economies. The Dutch market currently representsabout 24% of the Group's total transaction values. Ability to grow business Our ability to grow the business is partially dependent on our capability tosuccessfully complete value enhancing acquisitions. The process of integratingacquired businesses may involve unforeseen difficulties and may require adisproportionate amount of time and attention of management and our financialand other resources. We use both in-house expertise and professional adviserswhen undertaking such acquisitions. Recruitment and retention of talent As a service-led group, our people, including call centre and administrationstaff, tour leaders and couriers, are our most important assets. A core aspectof our competitiveness is the ability to attract, retain and motivate these keyemployees and management personnel, and if we lose or fail to attract these keyemployees we may be put at a competitive risk. We believe our trainingprogrammes and incentive arrangements provide the necessary tools to attract andretain key staff. We encourage our staff to save for their future throughpension schemes set up by Group companies and currently 43.3% (2005: 42.7%) ofpermanent staff are members of the schemes. An indication of the high levels ofmotivation in our call centre staff are evident in the number of calls answeredwithin 20 seconds (55%) and the low level of unanswered calls (5%). Nocomparative figures are available for 2005 but we hope to have comparativefigures for future reports. Absenteeism amongst Group permanent staff is belowUK national averages for call centre based businesses of 4.1% (source: CIPDannual absence management survey report 2006) at 2.4% (2005: 2.6%). Interest rate and foreign exchange risk The Group is exposed to interest rate and foreign exchange risk. Details of howthe 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 itsresilience and also embarked on a number of initiatives to seek to acceleratemedium-term growth while remaining focused on the specialist travel sector. Given the strength of its balance sheet, Holidaybreak remains well positioned togrow, both organically and by acquisition. Management continues to pursueseveral European acquisition opportunities in the specialist tour operatingsector, with good margin and cash generation characteristics. Carl MichelCEO * Before goodwill impairment in 2006 of £nil (2005: £9.3m) ** This statement should not be taken to mean that the earnings per share ofHolidaybreak plc will necessarily match or exceed the historic reported earningsper share of Holidaybreak plc and no forecast is intended or implied. Finance Director's Review In the year to 30 September 2006 Holidaybreak plc increased headline profitsbefore tax* to £32.1m and invested £4.0m (net of cash acquired) in purchasingcarpe diem and Travelworks. Despite this expenditure, net debt reduced by £19.8mto £3.1m as we continued to benefit from substantial cash generation in allbusinesses. We are targeting another year of good operating cash flowperformance in 2007 but we expect to spend c. £16m on capital investment. Operating Profit And Profit Before Tax Group revenue in 2006 was up 0.5% on 2005 at £304.5m (2005: £303.0m). Operatingprofit* was 1.8% higher than 2005 at £34.3m (2005: £33.7m). Operating margin*was improved to 11.3% (2005: 11.1%). Hotel Breaks' margin was the same as 2005 at 13.2% and Camping, benefiting fromimproved occupancy, achieved a margin of 11.9% (2005: 11.4%). Adventure Travel'smargin improved from 6.0% to 7.3%. 2005 margin was adversely affected by the IAS38 treatment of advertising and promotional activities whereby, in the ninemonths following the acquisition of Djoser, the company bore a full annualmarketing charge. The Group incurred costs of £0.3m in relation to the curtailed sale of theCamping Division and two substantial potential acquisitions. Finance costs (net of investment income) reduced from £4.4m in 2005 to £2.2m.Interest cover* improved from 7.7 times in 2005 to 15.7 times in 2006. Interestwas 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 2006 were £3.1m, compared to £22.9min 2005. Cash flow from our operating activities was £48.8m, another strongperformance. This position reflected the acquisitions of carpe diem andTravelWorks for an initial purchase consideration (net of cash acquired) of£4.0m. Available bank facilities (£140m as at 30 September 2006) are sufficient to meetthe working capital, investment and bonding requirements of the Group. Due tothe highly seasonal nature of Camping's cash flow, headroom under thesefacilities was £56.0m at the end of April 2006 when borrowings were at theirmaximum. In addition to these facilities we have hire purchase agreements withvarious UK financial institutions to finance the purchase of mobile-homes. Justover 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 taxrate of 30.2% was lower than 2005 (36.9%) when goodwill impairment of £9.3m wassubstantially non-deductible. The underlying rate going forward is expected bein the region of 30%. Earnings Per Share And Dividends Headline basic earnings per share* was 46.8p (2005: 44.2p) an increase of 5.9%. The Board is recommending a final dividend of 21.2p per ordinary sharerepresenting an increase of 10% over 2005. This gives a total dividend for theyear of 29.2p per ordinary share (2005: 26.6p). This is covered 1.6 times bypost tax earnings. Balance Sheet Net assets of the Group increased to £59.1m (2005: £48.0m). Net debt gearing**at 30 September 2006 was 5.2% compared to 47.7% at the previous year end.Intangible assets acquired on acquisitions during the year were £2.1m (2005:£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 September2006 was £4.6m (2005: £2.4m). The majority of this, £2.9m, was again accountedfor by Camping. Mobile-homes (£4.3m before disposals) accounted for the bulk ofthis expenditure. Sales of mobile-homes generated £4.2m. Accommodation capacitywill again be reduced by a further 3% in 2006/7. The Group's depreciation policyis to write down the cost of mobile-homes to an estimated residual value overtheir projected economic life. Disposal proceeds in respect of mobile-homes soldat 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 transactionsand cash flows. The Group is a party to a variety of foreign currency forwardcontracts in the management of its exchange rate exposures. The instrumentspurchased are primarily denominated in the currencies of the Group's principalmarkets. At the balance sheet date, the total notional amount of outstanding forwardforeign exchange contracts that the Group has committed are as below. 2006 2005 £m £m Forward foreign currency contracts 29.1 21.6----------------------------------- -------- -------- Changes in the fair value of non-hedging currency derivatives amounting to £0.2mhave been charged to income in the year. At the balance sheet date £45.5m (2005 £22.8m) of foreign currency denominateddebt was designated as a hedging instrument for the purpose of hedging thetranslation 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 FINANCIALREPORTING STANDARDS During the year the Group adopted International Financial Reporting Standards("IFRS") for the first time. The main changes affecting the Group's reportingare that:purchased goodwill is no longer amortised but is subject to an annual impairmentreview. Purchased intangible assets are subject to an annual amortisationcharge;the income statement includes an annual charge based on the fair value ofequity-based awards made to employees;open forward foreign exchange contracts and interest rate swaps are valued atyear 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 increasethe reported profit before tax for the year ended 30 September 2005 from £19.4munder UK GAAP to £20.6m primarily due to the amortisation of intangible assetsthrough the acquisitions of Bookit BV and Djoser BV in December 2004 and January2005 respectively (£1.4m), the add-back of amortisation of goodwill (£3.4m), acharge in respect of prepaid advertising and brochure distribution costs(£0.6m), and a charge of £0.3m in respect of the fair value of equity basedpayments to employees. In addition, reported net assets at 1 October 2004 (thedate of transition) were increased from £36.5m under UK GAAP to £43.7m, and from£38.4m to £48.0m at 30 September 2005. Robert BaddeleyFinance Director * Headline profits, operating margin EPS and interest cover are stated beforegoodwill impairment in 2006 of £nil (2005: £9.3m) ** Net debt gearing is net debt expressed as a percentage of year end net assets Consolidated income statementYear Ended 30 September 2006 Note 2006 2005 £m £m Group revenue - continuing operations 1 304.5 303.0Net operating costs (270.2) (278.6)--------------------- -------- -------- --------Operating profit 1 34.3 24.4 Profit on disposal of property - 0.6Investment income 1.4 1.2Finance 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 27.6pDiluted 3 46.6p 27.4p Headline earnings per shareBasic 3 46.8p 44.2pDiluted 3 46.6p 43.9p Consolidated statement of recognised income and expenseYear ended 30 September 2006 2006 2005 £m £m 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-------------------------------- -------- -------- Consolidated balance sheet30 September 2006 Note 2006 2005 £m £mNon-current assetsGoodwill 61.5 56.0Other intangible assets 11.5 9.5Property, plant and equipment 53.4 61.7--------------------- -------- -------- -------- 126.4 127.2 Current assetsInventories 0.6 0.5Trade and other receivables 20.7 21.4Cash 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 liabilitiesTrade 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 liabilitiesDeferred 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--------------------- -------- -------- -------- EquityShare capital 2.4 2.4Share premium account 37.9 36.9Own shares (3.2) (3.9)Other reserves 0.7 0.6Retained earnings 21.3 12.0--------------------- -------- -------- --------Total equity 59.1 48.0--------------------- -------- -------- -------- Consolidated cash flow statementYear Ended 30 September 2006 Note 2006 2005 £m £m --------------------------- -------- -------- --------Reconciliation of operating profit to cash generated from operating activities Cashflow from operating activitiesOperating profit 34.3 24.4Adjustments for:Amortisation of other intangible assets 1.7 2.2Depreciation of property, plant and equipment 10.9 12.9Impairment of goodwill - 9.3Share based payment charge 0.2 0.3Increase 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 activitiesAcquisitions 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 activitiesFinance costs paid (2.9) (5.8)Interest received 1.4 1.4Proceeds on issue of new ordinary shares 1.0 2.4Proceeds on exercise of share options 0.7 0.6Purchase of own shares to be held in trust - (0.7)New bank loans raised - 44.8Repayment 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--------------------------- -------- -------- -------- 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. Adventure Hotel Breaks Travel Camping Consolidated 2006 2006 2006 20062006 £m £m £m £mRevenue ------------ -------- -------- -------- ---------Total revenue 122.7 76.3 105.5 304.5------------ -------- -------- -------- --------- Result Operating profit 16.2 5.6 12.5 34.3------------ -------- -------- -------- --------- Investment income 1.4Finance costs (3.6) ---------Profit before tax 32.1Tax (9.7)------------ -------- -------- -------- ---------Profit after tax 22.4------------ -------- -------- -------- --------- Adventure Hotel breaks Travel Camping Consolidated 2005 2005 2005 20052005 £m £m £m £mRevenue ------------ -------- -------- -------- ---------Total revenue 126.7 62.6 113.7 303.0------------ -------- -------- -------- --------- ResultSegment resultprior to impairmentof goodwill 16.8 3.8 13.1 33.7Impairment lossesrecognised inincome. - - (9.3) (9.3)------------ -------- -------- -------- ---------Operating profit 16.8 3.8 3.8 24.4 Profit on disposalof property 0.6Investment income 1.2Finance costs (5.6) ---------Profit before tax 20.6Tax (7.6)------------ -------- -------- -------- ---------Profit after tax 13.0------------ -------- -------- -------- --------- Consolidated cash flow statementYear ended 30 September 2006 1. Business and geographical segments (continued) The following table provides an analysis of the Group's revenue by geographical origin: Sales revenue 2006 2005 £m £m 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 2006 2005 £m £mAmounts recognised as distributions to equity holders in theperiod:Final dividend for the year ended 30 September 2005 of 19.35p(2004: 17.6p) per share. 9.2 8.4Interim dividend for the year ended 30 September 2006 of 8.0p (2005: 7.25p) per share. 3.9 3.4 --------------------------------- -------- -------- 13.1 11.8--------------------------------- -------- -------- Proposed final dividend for the year ended 30 September 2006of 21.2p (2005: 19.35p) per share. 10.2 9.2 --------------------------------- -------- -------- The proposed final dividend is subject to approval by shareholders at the AnnualGeneral Meeting and has not been included as a liability in these financialstatements. The dividend will be payable on 24 April 2007 to those shareholderson the register on 30 March 2007. 3. Earnings per share The calculation of the basic and diluted earnings per share is based on the following data: Earnings 2006 2005 £m £m 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 2006 2005 £m £m 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 betterunderstanding of the Group's earnings following the impairment of goodwill in2005. 4. Analysis of cash and cash equivalents and reconciliation to net debt 1 October Cash flow Foreign Non cash 30 September 2005 exchange movements 2006 £m £m £m £m £m Cash at bank and in handand in hand 50.4 4.0 - - 54.4Overdrafts (4.3) 3.2 - - (1.1)-------------- ------- -------- -------- --------- -------- 46.1 7.2 - - 53.3Debt due within oneyear (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 2006 or 2005, but is derived from these accounts. Statutory accounts for 2005 have been delivered to the Registrar of Companies and those for 2006 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. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harbour Energy