Interim Results

Travelzest plc

Interim results

Travelzest plc (AIM:TVZ), the online travel group,announces its unaudited interim results for the six months ended 30 April 2013.

Highlights

·; Total transaction value of £130.3 million (2012: £137.3 million)

·; Revenues of £13.2 million (2012: £15.0 million)

·; Operating profit from continuing operations of £0.3 million (2012: £3.1 million)

·; Underlying operating profit1 from continuing operations was £3.3 million (2012: £3.8 million)

·; The gross profit percentage increased to 82.4% (2012: 80.2%)

·; Continued investment in business development and marketing

·; Company continues to trade with the support of its primary lending bank

Commenting on the results, Christopher Howell, Non-Executive Chairman said:

"Our Canadian brands are both robust businesses with strong and loyal customer bases. In the period, marketing investment has been a significant focus and the benefits of this are coming through. Consumer confidence is beginning to stabilise in the travel market, and our brands are well positioned to maximise this opportunity."

- Ends -

Enquiries:

Notes to Editors:

Travelzest plc (LSE:TVZ.L) is a dynamic travel group, with a collection of online travel retailers. Included in the Travelzest agency family are itravel2000 and The Cruise Professionals. Travelzest is traded on London's AIM Exchange under the symbol TVZ.

Chairman's statement

As previously announced, following the expiry of the Group's debt facility on 30 June 2013, the Company continues to operate with the support of its primary lender to 30 August 2013. This is notwithstanding that the Company must continue to comply with its other obligations under the facility arrangements and that the loan is now capable of being demanded by the primary lender at any time. Therefore, as previously stated, the Company remains reliant on the support of its primary lending bank in order to continue to trade.

The Directors are exploring all options to refinance its debt including further investment from alternate sources. On this basis, the Directors have formed the view that the business is a going concern. These financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

Improved pricing, higher advertising revenue and improved volumes from the Cruise Professionals has partially offset H1 trading at itravel2000, which is down versus the prior year as a result of weaker package vacation sales, primarily in the first quarter.

In late 2012, the Group announced its intention to sell or wind down all the remaining UK operations. This was recently completed and as a result, we now present the UK operations as discontinued operations in the Group income statement.

These interim financial statements have been prepared on a going concern basis. The Directors are currently exploring all options including further investment

Financial results

·; Total transaction value declined 5.1% and revenue declined 12.0% to £13.2 million (2012: £15.0 million) as a result of a 12.0% decline in package vacation volumes partially offset by increased package vacation pricing and 2% growth in flight volumes and higher advertising revenues 

·; The gross profit percentage increased to 82.4% (2012: 80.2%) as a result of higher advertising revenues and higher package vacation pricing.

·; Administrative expenses, excluding the impact of a non-cash goodwill impairment charge of £1.7 million, were in line with the prior year.

·; The Company recorded a goodwill impairment charge related to the itravel2000 operations of £1.7 million (2012: nil).

·; Separately disclosed items increased to £0.9 million (2012: £0.3 million) as a result of an increase in provision for an employment related claim together with costs associated with the aborted formal sale process.

·; Underlying operating profit1 from continuing operations declined to £3.3 million (2012: £3.8 million) primarily due to lower package vacation volumes partially offset by higher advertising revenues, improved package vacation pricing and higher flight volumes.

·; Operating profit from continuing operations declined to £0.3 million (2012: £3.8 million) as a result of lower package vacation volumes, higher separately disclosed items and the goodwill impairment charge.

·; The gain from the Group's discontinued operations declined to £0.3 million (2012: £0.4 million) as the Group completed the exit of its UK operations in H1.

1. Underlying operating profit is adjusted for amortisation of intangible assets, goodwill impairment and separately disclosed items

Outlook

The short-term outlook is that consumer confidence will remain relatively stable with purchase intentions expected to grow by 2% in 2013 and 2.3% in 2014 2. The Group's brands are well positioned to maximise this opportunity.

The Group will be expanding its luxury land based product offering to address a growing need in the marketplace. In addition, marketing investment continues to be a significant focus for the Group, with particular regard to the late booking market for itravel2000 and our luxury offering, The Cruise Professionals.

Summary

I would like to thank Nigel Jenkins for his service to the Board as Chairman; I am grateful that Nigel has decided to remain on the Board and continues to provide us with his significant experience. I would also like to thank Mark Molyneux for his years of service as a Director and as past Chairman. I would also like to express both my gratitude and that of the board for Jonathan Carroll's contributions as Chief Executive Officer since 2009. Finally, I would also like to thank the employees for their hard work in providing excellent customer service and continuing to push new initiatives forward to build sustainable growth despite the challenging market and other factors that the business has recently faced.

Christopher Howell

Chairman

31 July 2013

2. Conference Board of Canada : Outbound June 2013

Consolidated income statement

Condensed Consolidated statement of comprehensive income

Condensed Consolidated balance sheet

Condensed Consolidated cash flow statement

* Refer to note 9

Consolidated statement of changes in equity

Notes to the condensed interim financial statements

1 Principal accounting policies

The figures and financial information for the six-month period ended 30 April 2013 and 30 April 2012 are unaudited and do not constitute the statutory financial statements for the period. The figures and financial information for the year ended 31 October 2012 do constitute the statutory financial statements for that year. Those financial statements included the auditors' report which was unqualified and drew attention to an emphasis of matter but did not contain a statement under either section 498(2) or 498(3) of the Companies Act 2006.

These condensed interim financial statements of Travelzest plc have been prepared in accordance with the accounting policies set out below and accounting policies adopted for use in the Travelzest plc 2012 Financial Statements except as modified by the amendment of the standards set out below.

The Company's debt facility expired on 30 June 2013 and continues to operate with the support of its primary lender to 30 August 2013. This is notwithstanding that the Company must continue to comply with its other obligations under the facility arrangements and that the loan is now capable of being demanded by the primary lender at any time. The Directors are exploring all options to refinance its debt including further investment from alternate sources. On this basis, the Directors have formed the view that the business is a going concern. These condensed interim financial statements do not include the adjustments that would result if the Group were unable to continue as a going concern.

A number of amended standards and interpretations are effective for the current financial year, but none of them has had any material impact on the condensed interim financial information.

2 Segment reporting

The executive management considers the business from an operating division perspective. The executive management considers the business segments to be the Groups Canadian and UK operations. In addition, certain central costs are monitored separately. In the previous year the Group considered its segments to be its merchant and agency operations and as such the comparative information in the segmental information below has been re-presented to reflect the new segmentation. The entire UK operations have been classified as discontinued operations in the current year and comparatives restated.

The segment information provided to the executive management is as follows:

Total Transaction value

Segment reporting (continued)

** Included within central costs is £0 of depreciation £0 of amortisation and £1,000 of gains on disposal of intangible assets (2012: £3,000, £1,000 and £2,000 respectively).

3 Operating profit / (loss)

Operating profit / (loss) stated after charging / (crediting):

Continuing operations

4 Income tax expense

The income tax expense of £715,000 relates primarily to overseas taxation of £662,000 (2012: £901,000), this represents the application of the effective tax rate for the full year.

5 Earnings / (loss) per share

The calculations for earnings / (loss) per share, based on the weighted average number of shares, are shown in the table below.

The Group made a loss during the period from continuing operations, the impact of potential ordinary shares is anti-dilutive and therefore the diluted loss per share is the same as the basic loss per share at £1.40 (2012: basic profit per share 0.38p and fully diluted profit per share 0.33p). The basic profit per share from discontinued operations is 0.20p while the fully diluted earnings per share is 0.18p (2012 basic profit per share 0.29p and fully diluted profit per share 0.26p).

6 Notes to the condensed cash flow statement 

*See note 9

7 Derivative financial instruments

Derivative financial instruments, serving primarily to hedge future operative business, are detailed in the accounting policies on financial instruments.

Derivative financial instruments, all with a remaining term of less than year, primarily serve to hedge future operative business. The fair value of the financial derivative assets and liabilities has been determined by relevant active market valuations obtained from the Group bankers. All financial instruments have been designated as hedging instruments in accordance with IAS 39.

8 Goodwill

Annually or more frequently if events or a change in the economic environment indicate a risk of impairment, the Group assesses the recoverable amount of goodwill allocated to the businesses listed below (determined by reference to the value in use of the continuing operations of the related businesses) as required by IAS 36 Impairment of assets. IAS 36 requires that impairment tests be carried at the level where independent cash flows arose at which the Group's management measures returns on operations.

Goodwill is allocated to the following CGUs:

For the half year ended 30 April 2013, management has undertaken a detailed review of the carrying value of the above balances both at a consolidated and company level and have determined that an impairment charge is required for 4358376 Canada Inc. in the amount of £1,710,000 (2012 £nil) while no impairment charge is required for The Cruise Professionals Limited.

In making estimates of future profit and cash flows, the growth rate assumptions that have been applied to each businesses' current year profits are deemed to be appropriate by management.

Growth rate estimates by their nature will include assumptions which have been considered in detail by management and are consistent with those in use in the Travelzest plc 2012 Financial Statements.

9 Re-presentation of the 30 April 2012 consolidated income statement, consolidated balance sheet and consolidated cash flow statement

The entire UK operations have been classified as discontinued operations in the current year and April 30 2012 comparatives re-presented.