Interim Results Statement

Date: 4 July 2012

On behalf of: Travelzest plc ("Travelzest, the "Company" or the "Group")

Embargoed until: 0700 hrs

Travelzest plc

Interim results for the six months to 30 April 2012

Travelzest plc, the group specialising in a broad range of travel products and niche travel programmes to consumers in Canada and the United Kingdom, is pleased to announce its unaudited interim results for the six months ended 30 April 2012.

Financial highlights

1 Underlying operating profit excludes separately disclosed items and amortisation of intangible assets

Operational highlights

§ Canadian businesses continued an upward trend with revenue increasing 1.8% to £15.0 million (2011: £14.8 million).

§ Sale of J.M.B. Travel, Travelzest Holidays and Fair's Fare plus closure of Tapestry Collections

§ Significant reduction in operating costs achieved

§ New Canadian focused strategy implemented

§ Continued investment in itravel2000 online activities

§ Increased online presence for Cruise Professionals plus widening of product offering

§ Formal Sale Process continues. The field has been narrowed to a small number of preferred parties. Due diligence under-way with those parties.

Commenting on the results, Nigel Jenkins, Non-Executive Chairman and Jonathan Carroll, Group Chief Executive Officer said:

"The Group's Canadian operations continue to perform well and our efforts to reduce and control costs over the long term have enabled us to significantly increase our profitability. We will continue to drive the Canadian operations and will build on the strong platform we have created which we believe will benefit the wider Group. We would like to thank the team for all of their hard work in the period."

Enquiries:

Notes to Editors:

Travelzest plc (LSE:TVZ.L) is a dynamic travel group, with a collection of online travel retailers and specialized merchant operators. Included in the Travelzest family are VFB Holidays, itravel2000, The Cruise Professionals, Captivating Cuba, Best of Morocco, holiday.co.uk and flight.co.uk. Travelzest is traded on London's AIM Exchange under the symbol TVZ.

Chairman's and Chief Executive Officer's Statement

Overview

Travelzest continues to perform well in Canada and the actions taken to lower operating costs and reduce the Group's presence in the UK have improved profitability despite declining revenues.

We have now substantially reduced the Group's UK activities with the sale of J.M.B. Travel, Travelzest Holidays and Fair's Fare and the closure of Tapestry Collections. As a result of these actions, the Group now has a lower risk profile.

itravel2000 continues to invest in its online activities as this is an area where the Board sees the potential for rapid growth. The Cruise Professionals has revamped its online presence and increased the range and type of luxury holidays it offers to its discerning clients.

Results

Group transaction value for the six months to 30 April 2012 increased by 5% to £147.5 million (2011: £140.7 million) but revenue has decreased by 5% to £18.8 million (2011: £19.8 million). The decline in revenue has occurred because of lower UK Merchant revenue. Gross profit remained stable at £13.3 million (2011: £13.4 million) with gross profit margins on total transactions value falling to 9.0% from 9.5% primarily due to margin pressure in Agency Operations. Underlying operating profit increased 31% to £4.3 million from £3.1 million primarily due to lower exceptional charges, improved Merchant Operation profitability partially offset by higher marketing spending in Agency Operations.

Canadian businesses continued an upward trend with revenue increasing 1.8% to £15.0 million (2011: £14.8 million).

Agency Operations revenue (the sale of third party's holidays) remained flat at £15.9 million (2011: £15.8 million). This is largely represented by Canadian operations.

UK operations revenue for the same period declined 26.7% to £3.7 million (2011: £5.1 million). Merchant Operations (the sale of the Group's own holidays, which largely relates to the UK businesses) decreased 28% to £2.9 million (2011: £4.0 million).

The Group has incurred exceptional charges totalling £0.4 million (2011: £1.4 million). The majority of these non-recurring charges relate to employee severance and legal charges, as well as costs in respect of IFRS 2.

Cash flow from operations decreased in the period by £0.4 million to £0.5 million (2011: £0.9 million). This was primarily due to increased interest payments and higher Canadian tax payments partially offset by the improved underlying profit of the Group lower trading in the UK operations and improved cash management. Cash and cash equivalents increased 7.5% to £3.7 million (2011: £3.4 million). The overall Group's net debt position increased by £3.0 million to £12.0 million (2011: £9.0 million) due to higher interest, finance charges, tax payments and trade creditor payments partially offset by improved underlying profit.

Trading

Winter 2011/12

This past winter, which was unseasonably warm, combined with lower consumer confidence has slowed the growth of the Canadian outbound travel market. Demand was stimulated at the end of H1 with price reductions. The UK market for travel during the winter was weak reflecting the current economic situation. The overall departures for the season were up marginally by 1%. Our Canadian operations experienced a modest 1% increase in departures, and our UK operations were down 13%. The UK group is not focused on a winter programme so this has had minimal effect on the overall departures.

Autumn 2012

Advanced bookings for the group at 27 June 2012 have increased over the same period from the prior year by 2.6%. The Canadian market continues to improve with advanced autumn bookings up by approximately 10%. Our small UK operations are finding market conditions challenging with our advanced bookings down 42% reflecting weak demand and the sale/closure of certain UK businesses.

Update on Formal Sale Process

The Independent Directors have been encouraged by the interest received to date. The Company and its advisers have narrowed the field to a small number of preferred parties, which includes the executive management team, and negotiations with these parties continue. The interest received to date is subject to further due diligence and the Company will make further announcements as required

Separately disclosed items

The Group has incurred various non-recurring severance and legal charges primarily related to the Canadian operations partially offset by the reversal of IFRS expense for a departed senior executive.

Separately disclosed items decreased by 74% to £0.4 million (2011: £1.4 million). The Group will incur additional restructuring charges during the current financial year due to the sale process as well as IFRS 2 charges.

Debt facility

The Group's current facilities expire in June 2013. If a sale of the Group has not been completed prior to autumn of 2012 the Group anticipates beginning discussions about new banking arrangements in the autumn of 2012.

Outlook

The Group's Canadian operations, in particular itravel2000, have performed well in the first half of the financial year. These operations continue to excel but face pressure on margins due to price competition. We remain confident about the prospects for the Canadian operations and believe that is where we are going to drive future growth. With this in mind, we will continue to develop the brands we have in Canada and focus on continuing to improve the Group's profitability.

Nigel Jenkins Jonathan Carroll

Non-Executive Chairman Group Chief Executive Officer

Condensed consolidated income statement

* See note 8

Condensed consolidated statement of comprehensive income

Condensed consolidated balance sheet

*See note 8

Condensed consolidated cash flow statement

*See note 8

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 2012 and 30 April 2011 are unaudited and do not constitute the statutory financial statements for the period. The figures and financial information for the year ended 31 October 2011 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 interim consolidated 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 2011 Financial Statements except as modified by the amendment of the standards set out below.

In adopting the going concern basis for preparing this condensed interim financial information, the Directors have considered the business activities as well as Travelzest plc's principal risks and uncertainties.

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 financial information.

2 Segment reporting

The executive management considers the business from an operating division perspective. For management purposes, the Group is currently organised into two operating divisions: merchant operations and agency operations. Within these divisions, businesses are classified by geographical location.

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

Segment reporting (continued)

Business segments

*See note 8

** Included within central costs is £3,000 of depreciation £1,000 of amortisation and £2,000 of gains on disposal of intangible assets (2011: £4,000, £4,000 and £4,000 respectively).

Segment reporting (continued)

Group wide disclosures

The UK is the Company's country of domicile. Revenues from external sources are split geographically as follows:

3 Operating profit / (loss)

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

Operating profit / (loss) (continued)

4 Income tax expense

The income tax expense of £901,000 relates primarily to overseas taxation of £834,000 (2011: £935,000), 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.

Earnings / (loss) per share (continued)

The Group made a profit during the period, the impact of potential shares is dilutive and therefore the dilutive profit per share is calculated using the weighted average of fully diluted shares. The basic earnings per share is at 0.68p, while the fully diluted earnings per share is 0.59p (2011: basic loss per share 0.36p and fully diluted loss per share 0.36p).

6 Notes to the condensed cash flow statement

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 Re-presentation of the 30 April 2011 consolidated income statement, consolidated balance sheet and consolidated cash flow statement

The 30 April 2011 income statement has been re-presented to reclassify £207,000 costs in respect of salary and benefits from separately disclosed items to administrative expenses.

The 30 April 2011 balance sheet has been re-presented to disclose restricted cash of £844,000 separately from cash and cash equivalents.

Re-presentation of the 30 April 2011 consolidated income statement, consolidated balance sheet and consolidated cash flow statement (continued)

The 30 April 2011 balance sheet has been re-presented to reclassify £1,503,000 of trade and other payables from short to long term.

The 30 April 2011 consolidated cash flow statement has been re-presented to reclassify interest paid of £677,000 from a financing activity to an operating activity.

The 30 April 2011 consolidated cash flow statement has been re-presented to reclassify movement in restricted cash of £844,000 from net movement in cash and cash equivalents to a financing activity.

9 Post balance sheet events

On 31 May 2012 the Company completed the sale of the assets of Fair's Fare Limited to a third party.

There have been no other significant post balance sheet events since 30 April 2012.