29th Nov 2007 07:01
Holidaybreak PLC29 November 2007 29 November 2007: For immediate release HOLIDAYBREAK Results for the year ended 30 September 2007 Year of transformation with creation of Education Division Well positioned for the future Holidaybreak, the European specialist holiday group, today announces preliminaryresults for the year ended 30 September 2007. Financial highlights 2007 2006 £m £mGroup revenue 357.9 304.5Operating margins* 12.2% 11.6%Headline profit before tax* 40.0 33.1Statutory profit before tax 37.5 32.1Headline basic EPS* 59.4 pence 49.0 penceStatutory basic EPS 54.5 pence 46.8 penceNet debt 146.5 3.1Dividend per share 32.1 pence 29.2 pence * Headline profits, operating margin, earnings per share, interest cover anddividend cover are stated before amortisation of acquired intangible assets of£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil). Summary * Holidaybreak continues to stand out amongst its peers in terms of generating margins and operating cash flows. We are market leaders in our specialist sectors. At the same time, the greater diversity of Holidaybreak's businesses gives the Group additional resilience. * Sales for Hotel Breaks Division were 13% above last year. The recovery in market conditions experienced in the second half of last financial year has continued. 'Packaged product' sales into London, with strong theatre offerings such as Joseph, Dirty Dancing and The Sound of Music, have been particularly buoyant. London theatre ticket agent West End Theatre Bookings, acquired in January, is performing well and in line with expectations. * Adventure Travel Division continues to perform satisfactorily. Adventure sales were 18% up. We are beginning to see a recovery in trading for holidays to the Middle East. * Camping Division generated cash and strong margins in the full year. Camping sales were down 3% compared with last year in the context of a 4% reduction in capacity. * Holidaybreak made two acquisitions in the education sector, PGL and NST, which have been formed into a new Education Division for the Group. The division is performing well, in line with expectations at the time of the acquisitions, and has considerable potential to deliver long-term value. Forward bookings in this division are made unusually far ahead of departure and provide the division with good visibility on future performance. * Organic growth initiatives included the extension of product ranges in the Adventure Travel Division, setting up a holiday home ownership business in the Camping Division and investing in the online capability of all our businesses. * The Board continues to believe that the Group is well positioned to exploit further market opportunities and continues to seek acquisition opportunities. * Current trading is in line with our expectations. Group sales intake to date is +6% (Hotel Breaks: +12%; Adventure Travel +5%; Camping -1% and Education +9%). Carl Michel, Group Chief Executive, said: "Holidaybreak's results for 2007 onlytell part of the story. The Group has been expanded while retaining itsspecialist focus. Our new brands, PGL and NST, like those they have joined inthe Group, add value for their customers and are market leaders, clearlydifferentiated from their competitors. Meanwhile, Group trading has been robustand margins continue to outstrip others in the industry." "Trading and financial prospects for the current financial year are in line withour expectations. We will continue to invest in our businesses in 2008 andreview possible acquisitions which meet our stringent financial criteria andwill fit within our existing portfolio." Enquiries: Carl Michel / Bob Baddeley Holidaybreak +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. Holidaybreak hasfour operating divisions: Hotel Breaks, Adventure Travel, Camping and Education.Each is a market leader in its respective specialist sector of the Europeanholiday industry, has multi-channel distribution and is recognised for providinghigh standards of product and service quality. For more information, please goto www.holidaybreak.co.uk. CHAIRMAN'S STATEMENT Introduction In the year to 30 September 2007, Holidaybreak again performed well and headlineprofit before tax* increased to £40.0m. Holidaybreak continues to stand out amongst its peers in terms of generatingmargins and operating cash flows. We are market leaders in our specialistsectors. At the same time, the greater diversity of Holidaybreak's businessesgives the Group additional robustness. We made two acquisitions in the education sector, PGL and NST. This newlycreated Education Division is performing well and we are excited about itspotential to deliver long-term value. Forward bookings in this division areunusually far ahead of departure and provide the division with good visibilityon future performance. Following the PGL and NST acquisitions, the pro-forma composition of the Groupis now: * Hotel Breaks (34% of sales);* Adventure Travel (21%);* Camping (24%); and* Education (21%). For comparison purposes, sales for NST and PGL included above are taken from thelast audited accounts, being the year ended 31 December 2006 and the 52 weekperiod ended 22 February 2007 respectively. This mix will continue to evolve as we focus on delivering long-term,sustainable value to shareholders. Our strength lies in our employees and their ability to adapt to changes in theGroup as it continues to respond to evolving consumer tastes, schoolrequirements, distribution methods and search technologies. I would particularlylike to welcome the new staff from West End Theatre Bookings, PGL and NST. Ithank all our staff for their hard work, enthusiasm and dedication to greatcustomer service. Group results For the year ended 30 September 2007, headline profit before tax* was £40.0m(2006: £33.1m) on revenue of £357.9m (2006: £304.5m). Headline earnings pershare* were 59.4p (2006: 49.0p). Statutory basic earnings per share were 54.5p(2006: 46.8p). Net debt at 30 September 2007 was £146.5m (2006: £3.1m), after spending £12.9mon capital expenditure net of disposal proceeds (2006: £4.6m) and £3.5m (2006:£0.3m) on intangible assets. Net cash consideration on the acquisition ofsubsidiaries was £39.7m (2006: £4.0m). In addition, the Group issued £48.5mworth of loan notes, as consideration, redeemable in December 2007 and assumed£50.4m of bank loans. Dividend Given the financial strength of Holidaybreak and confidence in its futureprospects, the Board is recommending an increase in the annual dividend of 10%for 2007. The Board is thus recommending a final dividend of 23.3p (2006: 21.2p), payableon 22 April 2008, to shareholders on the register on 28 March 2008, making atotal of 32.1p (2006: 29.2p) for the year. Going forward, it intends to pay dividends that are appropriate in light of thegrowth prospects and the underlying performance of the Group. Acquisitions and investment In January, Holidaybreak acquired the London theatre ticket agent West EndTheatre Bookings Limited. Its websites include: www.uktickets.co.uk, www.westendtheatrebreaks.com and www.westendtheatrebookings.com. It also sells viaits call centre in Guildford and has outlets in the West End. On 11 June, Holidaybreak announced the successful completion of the acquisitionof UK schools trips organiser PGL, based in Ross-on-Wye. PGL is the marketleader in the residential, outdoor education and adventure sector for UKschools, organising trips for over 250,000 children each year. This was followed on 30 September by the acquisition of UK educational tourorganiser NST. NST, based in Blackpool, is the UK's leading provider of grouptravel to schools and colleges throughout the UK. Last year it carried 172,000students and education staff on over 4,000 trips for groups from the UK andIreland to destinations in the UK, Europe and Worldwide. Together, PGL and NST form the Group's new Education Division. We are alreadyseeing benefits from bringing the two companies together under the Holidaybreakumbrella, and we are uniquely placed to capitalise on the exciting developmentswithin this marketplace. These acquisitions have increased the Group's borrowings. We continue to examineopportunities to make sensible acquisitions which we believe will serve ourshareholders in terms of growing the business, achieving a good return oninvestment and generating cash. We are also allocating capital for organicdevelopment opportunities within our existing businesses, where appropriate. Management and Board changes Following completion of the acquisition of PGL on 11 June 2007, Martin Davies,Chief Executive of PGL, became the Managing Director of Holidaybreak's newEducation Division and joined the Board of the Company. Nick Cust, Joint Managing Director of the Hotel Breaks Division, became theInterim Managing Director of NST, following its acquisition on 30 September2007, to oversee the integration into the Education Division and the widerGroup. Nick continues to represent the Hotel Breaks Division on the Holidaybreakplc Board and retains certain key Hotel Breaks responsibilities. James Greenbury has agreed to extend his term of appointment as a non-executivedirector by a further three years from 1 January 2008. This appointment issubject to the Company's right to terminate the appointment early on giving 12months notice Board structure In the circular to shareholders relating to the acquisition of PGL, the Boardannounced that it would be considering the appropriate future composition of theBoard. Following that announcement, views of certain shareholders andshareholder organisations were sought and the Chairman then conducted one-to-onemeetings with each Director. Subsequently, the full Board discussed thecomposition and concluded that, having regard to the Combined Code, thestructure of the Board should progressively change so that there would be abalance in numbers between Executive Directors and Non-executive Directors(excluding the Chairman) and that accordingly it was not the Board's intentionto appoint a replacement Executive Director (other than in relation to a changeof Group Chief Executive or Group Finance Director), should a vacancy occur,until that balance had been achieved. Outlook The Board continues to believe that the Group is well positioned to exploitfurther market opportunities. Management continues to review all opportunitiesto deliver industry leading margins. Trading and financial prospects for the current financial year are in line withour expectations. We will continue to invest in our businesses in 2008 andreview possible acquisitions which meet our stringent financial criteria andwill fit with our existing portfolio of businesses. Robert Ayling Chairman * Headline profits, operating margin, earnings per share, interest cover anddividend cover are stated before amortisation of acquired intangible assets of£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil). BUSINESS AND FINANCIAL REVIEW Introduction Holidaybreak's results for 2007 only tell part of the story. The Group has beenexpanded while retaining its specialist focus. Our new brands, like those theyhave joined in the Group, add value for their customers and are market leaders,clearly differentiated from their competitors. Meanwhile, Group trading has beenrobust and margins continue to outstrip others in the industry. Group strategy This year has been one of transformation for the Group. We have made twosizeable acquisitions and created a fourth operating division. A key criterionfor us was that any specialist holiday business we bought fitted with ourstrategy of it being the market leader in its sector. Market leadership providesthe most certain means to achieve superior margins - by better buying, greaterbrand recognition and superior sales strength. In the newly formed EducationDivision we have created a powerful force by bringing together the UK's leadingbusinesses in both residential centres and school tours. The combination givesus a range of products to sell for all school age groups, leveraging theundoubted reputations and well-established customer loyalty of both PGL and NST. A year ago we made reference to balance sheet efficiency and the need to haveflexibility to exploit opportunities as they arose. The Group now has a moreefficient capital structure. We have always stressed the value of flexibilityand being 'asset right'. We continue to avoid ownership of assets such ashotels, which are not necessary for our business to prosper. However oureducational adventure centres are a key strategic asset with no sensiblealternative supply. We therefore have freeholds or long-leases on theseproperties. Measurable progress has been made on each of the four strategic themesidentified last year: * Build on core competences: leverage synergies - we have used our strength in London hotel bookings to increase significantly sales of other 'packaged products', such as theatre and rail. Customer lists have been shared across divisions. * Develop a multi-path approach - we have made two major acquisitions but also encouraged organic activities ranging from IT / web investments to setting up an own-your-own holiday home business. * Pursue sustainable faster growth - carpe diem and TravelWorks (part of the Adventure Travel Division) and PGL have demonstrated double-digit revenue growth with strong margins relative to industry norms. We are also excited by the potential at NST in conjunction with PGL. * Diversify sales mix - the Education Division will, on a budget pro-forma basis for 2008, be larger than either Camping or Adventure Travel in terms of revenues. The Group is now more balanced and is less attuned to discretionary consumer travel expenditure. A number of new initiatives, linked to the above themes, are planned for thecoming year. We continue to work on increasing the differentiation in each of our businessesfrom competitors - this enhances their trading resilience and reducescompetitive threats. We will continue to develop our online capabilities,enhance customer loyalty programmes and add to our product range and depth toensure our margins remain industry-leading. Our acquisitions this year have alsoadded to the strength in depth of our management and we are already seeing someof the benefits of this. All of our businesses are well positioned in their respective marketplaces. Foreach business we have opportunities to grow, with the main focus for the Groupto exploit more synergies and continue the process of rounding out oureducational product portfolio. There remains a healthy pipeline of acquisitionopportunities, both in the UK and Europe, which we believe can help us delivergood returns to our shareholders. Current trading Group sales intake to date is currently up 6%. Hotel Breaks Division's sales intake (incorporating Bookit's intake based ontotal transaction value) across the division is approximately 12% up on thecomparable period for 2006/07. Overall, 2008 sales intake for the Adventure Travel Division is currently 5%higher than in 2007 as we begin to see a recovery in trading for holidays in theMiddle East. The Camping Division's capacity will be marginally adjusted (-5%) for the 2008season to reflect more modest shifts in demand. Our plan is to hold back morecapacity for sale into the spring; we are currently approximately -1% below lastyear's sales intake (based on bookings received to date). The Education Division is performing well with revenue 9% up on the comparableperiod for 2006/07. Divisional management is now looking at driving through thesynergies available from PGL and NST. The division is performing well and hasconsiderable potential to deliver long-term value. Group results In the year to 30 September 2007 Holidaybreak plc increased headline profitbefore tax* by 20.8% to £40.0m principally due to purchasing PGL, NST and WestEnd Theatre Bookings. Net debt increased by £143.4m to £146.5m. We are targetinganother year of good operating cash flow performance in 2008 but we expect tospend c.£19m on capital investment. Divisional performance, operating profit and marginsGroup revenue in 2007 was up 17.5% on 2006 at £357.9m (2006: £304.5m). Operatingprofit* was 24.1% higher than 2006 at £43.8m (2006: £35.3m). Operating margin*improved to 12.2% (2006: 11.6%). Hotel Breaks 2007 2006Divisional revenue £139.0m £122.7mDivisional operating profit* £17.0m £16.9mOperating margin* 12.2% 13.8% This remains the largest division in the Group, selling 2.5m holidays in 2007. Hotel Breaks' operating margin* declined to 12.2% from 13.8% in 2006 as weinvested in hotel contracting for the overseas business and IT and internetdevelopments. The business enjoys low operational gearing. Room allocations arenot committed, allowing a high degree of flexibility in costs. The recovery in market conditions experienced in the second half of last yearcontinued. 'Packaged product' sales into London, with strong theatre offeringssuch as Joseph, Dirty Dancing and The Sound of Music, have been particularlybuoyant. London theatre ticket agent West End Theatre Bookings, acquired inJanuary, is performing in line with expectations. Adventure Travel 2007 2006Divisional revenue £90.0m £76.3mDivisional operating profit* £6.6m £5.9mOperating margin* 7.3% 7.7% The division sold 76,000 holidays in 2007 and has once again delivered growth inprofits* and revenue. Adventure Travel's operating margin* reduced slightly from7.7% to 7.3%. Margin was adversely affected by movements in exchange rates andthe timing of recognition of marketing expenditure; underlying margins werestable. The business model remains flexible with very low levels of fixed costs. The German businesses, carpe diem and TravelWorks, acquired in September 2006,have been successfully integrated into the division and are performing ahead ofexpectations. Camping 2007 2006Divisional revenue £102.8m £105.5mDivisional operating profit* £11.7m £12.5mOperating margin* 11.4% 11.8% Camping generated cash and strong margins in the full year. Revenue was down 3%compared with last year in the context of a 4% reduction in capacity. Campingbenefited from improved occupancy but incurred £0.3m of non-recurringreorganisation costs. Hence the division achieved an operating margin* of 11.4%(2006: 11.8%). A total of 516,000 holidays were sold. The late UK booking market was particularly successful, thanks in part to badsummer weather in the UK, but also due to successfully holding back some highseason capacity. Education 2007Divisional revenue £26.1mDivisional operating profit* £8.5mOperating margin* 32.6% The acquisition of PGL was completed on 11 June 2007. In the periodpost-acquisition, this business generated revenue of £26.1m and, due to thenormal seasonality of the business, contributed £8.5m of operating profit*. Theacquisition of NST was completed on the final day of the financial year. Ittherefore did not contribute to the trading results of the Group for the yearended 30 September 2007. PGL's operating margin*, enhanced in the period postacquisition, reflects the seasonality of the business. The enlarged divisionexpects to achieve operating margins over a full year's trading similar toCamping. Since the acquisition of PGL, the division has organised educational trips forover 125,000 children. Interest Finance costs (net of investment income) increased from £2.2m in 2006 to £3.8m,principally due to the costs of the additional debt raised to purchase PGL.Interest cover* reduced from 16.0 times in 2006 to 11.5 times in 2007. Netinterest was 9.7 times covered by operating cash flow, a level we regard asprudent. Taxation The tax charge, including full provision for deferred tax, was £11.3m and thetax rate of 30% was the same as 2006. The underlying rate going forward isexpected to reduce as UK corporate tax rates fall to 28%. Earnings per share and dividends Headline basic earnings per share* were 59.4p (2006: 49.0p) an increase of21.2%. Statutory basic earnings per share were 54.5p (2006: 46.8p). The Board is recommending a final dividend of 23.3p per ordinary sharerepresenting an increase of 10% over 2006. This gives a total dividend for theyear of 32.1p per ordinary share (2006: 29.2p). This is covered 1.9 times byheadline basic earnings per share* (2006: 1.7 times). Balance sheet Net assets of the Group increased to £73.7m (2006: £59.1m). Net debt gearing**at 30 September 2007 was 199% compared to 5.2% at the previous year end.Intangible assets acquired via acquisitions during the year were £23.9m (2006:£2.1m) and the annual amortisation charge will be c.£3.0m. Deferred tax arisingthrough the purchase of intangible assets and non qualifying business propertiesvia acquisitions was £31.6m. Goodwill arising via acquisitions was £74.2m. Cash flow and bank facilities The Group's net borrowings at 30 September 2007 were £146.5m, compared to £3.1min 2006. Cash flow from our operating activities was £36.8m, another strongperformance. Net cash consideration on the acquisition of subsidiaries was£39.7m (2006: £4.0m). In addition, the Group issued £48.5m worth of loan notes,as consideration, redeemable in December 2007 and assumed £50.4m of bank loans. To finance the acquisition of PGL in June 2007, we arranged a new committed bankfacility of £115m. This facility was for a term of eighteen months. Totalavailable bank facilities (£255m as at 30 September 2007) 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 the Group'sborrowing facilities was £51.9m at the end of April 2007 when borrowings andfacility utilisation are historically at their maximum. Following theacquisition of NST on 30 September 2007, headroom under these facilities was£48.2m. 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. Capital expenditure Capital expenditure (net of receipts from disposals) in the year to 30 September2007 was £12.9m (2006: £4.6m).The purchase of mobile-homes (£10.9m) accountedfor the majority of the total expenditure. Sales of mobile-homes generated£3.1m. Accommodation capacity will again be reduced by a further 5% in 2007/8.We expect Group net capital expenditure in 2008 to be approximately £19m.Disposal proceeds in respect of mobile-homes sold at the end of their usefullife achieved net book value. We now have over £100m of freehold andlong-leasehold properties on the balance sheet. The majority of these areactivity centres operated by the Education Division. Annual maintenance capitalexpenditure is likely to be c.£3m. On 28 November, we sold the freehold officepremises occupied by NST to one of its former owners for its net book value of£3.25m. At the same time we entered into a 15 year leasehold arrangement at anannual rental of £245,000. 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. 2007 2006 £m £mForward foreign currency contracts 30.4 29.1----------------------------------- -------- -------- Changes in the fair value of non-hedging currency derivatives amounting to £0.5mhave been charged to income in the year. At the balance sheet date £46.6m (2006 £45.5m) of foreign currency denominateddebt was designated as a hedging instrument for the purpose of hedging thetranslation of its investment in foreign operations. Interest rate derivatives The Group uses interest rate collars to manage its exposure to interest ratemovements on its bank borrowings. At 30 September 2007, the Group held thefollowing interest rate collars: Initial Cap rate Floor Start date End date Rate comparedamount rate to€50.0m 4.5% 3.0% 15 January 15 January 2010 3 month EURIBOR 2007£22.4m* 5.5% 4.4% 28 February 28 February 3 month LIBOR 2006 2009£40.4m 6.5% 5.3% 31 December 30 September 3 month LIBOR 2007 2012 * acquired as part of the acquisition of PGL Holdings Limited These amounts are based upon market values of equivalent instruments at thebalance sheet date. None of the interest rate collars are designated andeffective as cash flow hedges. Changes in the fair value of non-hedging interestrate collars amounting to £0.7m (2006: £nil) have been charged to the incomestatement in the year. Changes in accounting policies During the year ended 30 September 2007, there were no changes in accountingpolicies. Summary We believe that Holidaybreak is well placed to prosper. The addition of a newdivision provides a powerful new impetus to growth and allowed us to assume astrong position in a market, which we intend to develop still further. Educationalso sets us apart from our peers in diversifying the Group away fromdiscretionary consumer travel expenditure. Our market-leading specialist businesses have demonstrated their resilience in achanging marketplace. We continue to look at achieving superior returns oncapital by an emphasis on great customer service and unique products. We have the financial and human resources to consider a range of opportunitiesto grow, both organically and by acquisition. Our priority for 2007/08 is tocontinue delivering against our four strategic themes. Carl Michel Bob Baddeley Group Chief Executive Group Finance Director * Headline profits, operating margin, earnings per share, interest cover anddividend cover are stated before amortisation of acquired intangible assets of£2.5m (2006: £1.0m) and the tax effect thereof: £0.1m (2006: £nil). ** Net debt gearing is net debt expressed as a percentage of year end net assets Consolidated income statementYear ended 30 september 2007 Note 2007 2006 £m £m Group revenue - continuing operations 1 357.9 304.5Net operating costs (316.6) (270.2)--------------------- -------- -------- --------Net operating costs before amortisation of otherintangible assets acquired via business 1 (314.1) (269.2)combinations Amortisation of other intangible assets acquiredvia business combinations (2.5) (1.0) -------- -------- -------- Operating profit 41.3 34.3 Investment income 1.6 1.4Finance costs (5.4) (3.6) -------- -------- --------Profit before tax 37.5 32.1 Tax (11.3) (9.7) -------- -------- --------Profit for the year 26.2 22.4--------------------- -------- -------- -------- Attributable to:Equity holders of the parent 26.2 22.4--------------------- -------- -------- -------- Earnings per share Basic 3 54.5p 46.8pDiluted 3 54.1p 46.6p Headline earnings per shareBasic 3 59.4p 49.0p*Diluted 3 59.0p 48.8p* * The Directors changed the definition of headline earnings per share in theyear ended 30 September 2007 (see note 3). The 2006 headline earnings per sharefigures have, therefore, been restated. Consolidated statement of recognised income and expenseYear ended 30 september 2007 2007 2006 £m £m Exchange differences on translation of foreign operations 0.6 -Actuarial gains on defined benefit pension schemes 0.1 --------------------------------- -------- --------Net income recognised directly in equity 0.7 --------------------------------- -------- --------Profit for the year 26.2 22.4-------------------------------- -------- --------Total recognised income and expense for the year 26.9 22.4-------------------------------- -------- --------Attributable to:Equity holders of the parent 26.9 22.4-------------------------------- -------- -------- Consolidated balance sheet30 September 2007 Restated* Note 2007 2006 £m £mNon-current assetsGoodwill 138.4 62.8Other intangible assets 34.3 10.2Property, plant and equipment 168.6 53.4Defined benefit pension asset 0.4 ------------------------ ------ -------- -------- 341.7 126.4 Current assetsInventories 4.1 0.6Trade and other receivables 33.5 20.7Cash and cash equivalents 4 59.7 54.4----------------------- ------ -------- -------- 97.3 75.7 Non current assets classified as held for sale 1.8 2.4----------------------- ------ -------- --------Total assets 440.8 204.5----------------------- ------ -------- -------- Current liabilitiesTrade and other payables (116.1) (77.4)Current tax liabilities (7.8) (4.8)Obligations under finance leases 4 (5.7) (5.0)Interest bearing loans and borrowings 4 (189.7) (45.9)----------------------- ------ -------- -------- (319.3) (133.1)----------------------- ------ -------- --------Net current liabilities (220.0) (57.4)----------------------- ------ -------- -------- Non-current liabilitiesDeferred tax liabilities (37.0) (5.7)Obligations under finance leases 4 (10.8) (6.6)----------------------- ------ -------- -------- (47.8) (12.3)----------------------- ------ -------- --------Total liabilities (367.1) (145.4)----------------------- ------ -------- ------------------------------- ------ -------- --------Net assets 73.7 59.1----------------------- ------ -------- -------- EquityShare capital 2.4 2.4Share premium account 38.9 37.9Own shares (2.6) (3.2)Other reserves 1.3 0.7Retained earnings 33.7 21.3----------------------- ------ -------- --------Total equity 73.7 59.1----------------------- ------ -------- -------- * During the current year ended 30 September 2007, the Group completed itsinitial accounting in respect of the acquisition of carpe diem Sprachreisen GmbHand TravelWorks GmbH. This resulted in a reduction in the fair value ofintangible assets of £1.3m at the date of acquisition (29 September 2006), witha corresponding increase in goodwill. The 2006 comparative information has been restated to reflect this adjustment.This restatement has no impact on reported profits, equity or cash flow in theyear ended 30 September 2006. Consolidated cash flow statementYear ended 30 September 2007 Note 2007 2006 £m £m --------------------------- -------- -------- --------Reconciliation of operating profit to cash generated from operating activities Cashflow from operating activitiesOperating profit 41.3 34.3Adjustments for:Amortisation of other intangible assets 3.3 1.7Depreciation of property, plant and equipment 11.1 10.9Share based payment charge 0.6 0.2(Increase) in inventories (2.1) -(Increase) in receivables (5.9) (0.4)(Decrease) Increase in payables (11.5) 2.1--------------------------- -------- -------- --------Cash inflow from operating activities 36.8 48.8 Tax paid (9.0) (7.6)--------------------------- -------- -------- --------Net cash from operating activities 27.8 41.2--------------------------- -------- -------- -------- Investing activitiesAcquisitions of subsidiaries net of cash acquired (39.7) (4.0)Purchase of intangible assets (3.5) (0.3)Purchases of property, plant and equipment (16.8) (10.2)Proceeds on disposal of property, plant and 3.9 5.6equipment -------- -------- -----------------------------------Net cash used in investing activities (56.1) (8.9)--------------------------- -------- -------- -------- Financing activitiesFinance costs paid (4.3) (2.9)Interest received 2.1 1.4Proceeds on issue of new ordinary shares 1.0 1.0Proceeds on exercise of share options 0.6 0.7New bank loans raised 44.0 -New finance leases 10.3 -Repayment of borrowings - (6.3)Payments under finance leases (5.4) (5.9)Dividends paid (14.5) (13.1)--------------------------- -------- -------- --------Net cash from financing activities 33.8 (25.1)--------------------------- -------- -------- ----------------------------------- -------- -------- --------Net increase in cash and cash equivalents 5.5 7.2--------------------------- -------- -------- -------- Cash and cash equivalents at beginning of period 53.3 46.1--------------------------- -------- -------- --------Cash and cash equivalents at end of year 4 58.8 53.3--------------------------- -------- -------- -------- 1. Business and geographical segments For management purposes, the group is currently organised into four operatingdivisions - Hotel breaks, Adventure Travel Camping and Education. Thesedivisions are the basis on which the group reports its primary segmentinformation. Segment information about these businesses is presented below. Hotel breaks Adventure Camping Education Consolidated Travel 2007 2007 2007 2007 20072007 £m £m £m £m £mRevenueTotal revenue 139.0 90.0 102.8 26.1 357.9------------ -------- -------- -------- -------- -------- Result 17.0 6.6 11.7 8.5 43.8Amortisationof otherintangibleassetsacquired viabusinesscombinations (1.1) (0.6) - (0.8) (2.5) ------------ -------- -------- -------- -------- ---------Operatingprofit 15.9 6.0 11.7 7.7 41.3------------ -------- -------- -------- -------- --------- Investmentincome 1.6Finance costs (5.4) ---------Profit beforetax 37.5Tax (11.3)------------ -------- -------- -------- -------- ---------Profit after tax 26.2 ------------ -------- -------- -------- -------- --------- Hotel breaks Adventure Camping Education Consolidated Travel 2006 2006 2006 2006 20062006 £m £m £m £m £mRevenueTotal revenue 122.7 76.3 105.5 - 304.5------------ -------- -------- -------- -------- -------- Result 16.9 5.9 12.5 - 35.3Amortisationof otherintangibleassetsacquired viabusinesscombinations (0.7) (0.3) - - (1.0)------------ -------- -------- -------- -------- ---------Operatingprofit 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 ------------ -------- -------- -------- -------- --------- 1. Business and geographical segments (continued) The following table provides an analysis of the Group's revenue by geographicalorigin: Sales revenue 2007 2006 £m £m United Kingdom 260.1 222.2Ireland 7.6 6.3Netherlands and Belgium 61.0 58.2Germany, Switzerland and Austria 23.1 11.8Other 6.1 6.0------------------------- -------- -------- 357.9 304.5------------------------- -------- -------- 2. Dividends 2007 2005 £m £mAmounts recognised as distributions to equity holders in theperiod:Final dividend for the year ended 30 September 2006 of 21.2p 10.2 9.2(2005: 19.35p) per share.Interim dividend for the year ended 30 September 2007 of8.8p (2006: 8.0p) per share. 4.3 3.9 --------------------------------- -------- -------- 14.5 13.1--------------------------------- -------- -------- Proposed final dividend for the year ended 30 September 2007of 23.3p (2006: 21.2p) per share. 11.2 10.2 --------------------------------- -------- -------- 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 22 April 2008 to those shareholderson the register on 28 March 2008. 3. Earnings per share The calculation of the basic and diluted earnings per share is based on thefollowing data:Earnings 2007 2006 £m £mEarnings for the purposes of basic and dilutedearnings per share being net profit attributable toequity holders of the parent 26.2 22.4--------------------------------- -------- -------- Number NumberNumber of sharesWeighted average number of ordinary shares for thepurposes of basic earnings per share 48,198,488 47,769,249 Effect of dilutive potential ordinary shares:Share options 347,615 208,490--------------------------------- -------- --------Weighted average number of ordinary shares for thepurposes of diluted earnings per share 48,546,103 47,977,739--------------------------------- -------- -------- Pence PenceEarnings per shareBasic 54.5 46.8Diluted 54.1 46.6 Headline Earnings 2007 2006 £m £m Net profit attributable to equity holders of the parent 26.2 22.4--------------------------------- -------- --------Add back:Amortisation of other intangible assets acquired via 2.5 1.0business combinationsTax effect of the above (0.1) ---------------------------------- -------- --------Headline earnings 28.6 23.4--------------------------------- -------- -------- Pence PenceHeadline earnings per shareBasic 59.4 46.8Diluted 59.0 46.6 The Directors changed the definition of headline earnings per share in yearended 30 September 2007 due to the increasing importance on the Group'sperformance of amortisation of acquired intangibles. In 2006, headline earnings were defined as net profit attributable to equityholders of the parent, after adding back amounts charged to the income statementin respect of impairment of goodwill and the tax effect thereof. There was noimpairment of goodwill in 2006 (2005: £9.3m). In 2007, headline earnings are defined as net profit attributable to equityholders of the parent, after adding back amounts charged to the income statementin respect of impairment of goodwill and amortisation of other intangible assetsacquired via business combinations, and the combined tax effect thereof. The Directors consider that the new headline earnings per share provides abetter understanding of the Group's earnings. 4. Analysis of cash and cash equivalents and reconciliation to netdebt 1 October 2006 Cash flow Foreign Non cash 30 September exchange movements 2007Group £m £m £m £m £m------------------ ------- ------ ------- -------- ---------Cash at bankand in hand 54.4 5.3 - - 59.7Overdrafts (1.1) 0.2 - - (0.9)------------------ ------- ------ ------- -------- ---------Cash and cashequivalents 53.3 5.5 - - 58.8Debt duewithin oneyear (44.8) (44.0) (1.1) (98.9) (188.8)Finance leasesless than oneyear (5.0) 3.3 - (4.0) (5.7)Finance leasesmore than oneyear (6.6) (8.2) - 4.0 (10.8)------------------ ------- ------ ------- -------- --------- (3.1) (43.4) (1.1) (98.9) (146.5)------------------ ------- ------ ------- -------- --------- Non cash movements on debt due within one year are bank loans of £50.4m and loannotes issued of £48.5m in respect of the acquisition of PGL. 5. Acquisition of subsidiaries The Group has made three acquisitions in the year, which are disclosedseparately below. The net assets and results of the acquired businesses are included in theconsolidated accounts of the Group from the date of acquisition. Allacquisitions have been accounted for using the purchase method of accounting. West End Theatre Bookings Limited On 29 January 2007, the Group acquired 100% of the issued share capital of WestEnd Theatre Bookings Limited (WETB) for cash consideration of £2.7m. WETB'sprincipal activity is the selling of theatre tickets. Book value Provisional Provisional fair value fair value adjustments £m £m £m-------------------------- -------- --------- --------Net assets acquiredProperty, plant and equipment 0.1 - 0.1Other intangible assets - 0.2 0.2Inventories 0.6 - 0.6Trade and other receivables 0.1 - 0.1Cash and cash equivalents 0.7 - 0.7Trade and other payables (1.1) - (1.1)-------------------------- -------- --------- -------- 0.4 0.2 0.6-------------------------- -------- --------- Goodwill 2.8 --------Total consideration 3.4 --------Satisfied by:Cash consideration 2.7Deferred consideration 0.6 -------- 3.3Directly attributable costs 0.1 -------- 3.4 --------Net cash outflow arising on acquisitionCash consideration and directlyattributable costs (2.8)Cash and cash equivalents acquired 0.7 -------- (2.1) -------- WETB contributed £7.6m revenue and £0.2m to the Group's profit before taxbetween the date of acquisition and the balance sheet date. 5. Acquisition of subsidiaries (continued) PGL Holdings Limited On 11 June 2007, the Group acquired 100% of the issued share capital of PGLHoldings Limited (PGL) for total consideration of £50.7m. PGL is the parentcompany of a group of companies involved in the provision of educational andadventure trips for UK schools. Book Provisional Provisional value fair value fair value adjustments £m £m £m-------------------------- -------- --------- ---- --------Net assets acquiredProperty, plant and equipment 78.1 20.3 (a) 98.4Other intangible assets (8.3) 21.7 (b) 13.4Defined benefit pension asset 0.2 - 0.2Inventories 0.8 - 0.8Trade and other receivables 2.1 - 2.1Cash and cash equivalents 7.4 - 7.4Trade and other payables (32.9) - (32.9)Bank loans (50.4) - (50.4)Current tax assets 0.1 - 0.1Deferred tax assets(liabilities) 0.2 (25.1) (c) (24.9)-------------------------- -------- --------- ---- -------- (2.7) 16.9 14.2 Goodwill 40.4 --------Total consideration 54.6 -------- Satisfied by:Cash consideration 2.2Loan notes 48.5 --------Total consideration 50.7Directly attributable costs 3.9 -------- 54.6 -------- Net cash inflow (outflow) arising onacquisitionCash consideration anddirectly attributable costs (6.1)Cash and cash equivalentsacquired 7.4 -------- 1.3 -------- Provisional fair value adjustments: (a) increase in the value of properties; (b) valuation of identifiable acquired intangible assets in accordance with IFRS3 'Business Combinations'; and (c) reassessment of deferred tax including deferred tax on provisional fairvalue adjustments. PGL contributed £26.1m revenue and £6.9m to the Group's profit before taxbetween the date of acquisition and the balance sheet date. 5. Acquisition of subsidiaries (continued) NST Holdings Limited On 30 September 2007, the Group acquired 100% of the issued share capital of NSTHoldings Limited (NST) for cash consideration of £47.2m. NST is the parentcompany of a group of companies involved in the provision of group travel toschools and colleges throughout the UK. Book Provisional fair value Provisional value adjustments fair value £m £m £m----------------------- -------- --------- ---- --------Net assets acquiredProperty, plant andequipment 12.3 2.3 (a) 14.6Other intangibleassets 0.1 10.2 (b) 10.3Trade and otherreceivables 4.7 - 4.7Cash and cashequivalents 8.3 - 8.3Trade andother payables (14.1) - (14.1)Current tax assets(liabilities) 0.3 (0.5) (c) (0.2)Deferred tax assets(liabilities) 0.2 (6.9) (d) (6.7)----------------------- -------- --------- ---- -------- 11.8 5.1 16.9----------------------- -------- --------- Goodwill 31.0 --------Totalconsideration 47.9 -------- Satisfied by:Cash consideration 47.2Directly attributablecosts accrued 0.7 -------- 47.9 --------Net cash outflow arising onacquisitionCash consideration (47.2)Cash and cashequivalents acquired 8.3 -------- (38.9) --------Provisional fair value adjustments: (a) increase in the value of French properties; (b) valuation of identifiable acquired intangible assets in accordance with IFRS3 'Business Combinations'; (c) reassessment of current corporation tax; and (d) reassessment of deferred tax including deferred tax on provisional fairvalue adjustments. No profit has been recognised in the income statement for year ended 30September 2007 in respect of the acquisition of NST. 5. Acquisition of subsidiaries (continued) The fair values currently established for all three of the above acquisitionsare considered to be provisional by the Directors as they are finalising theirdetermination. Fair values will be reviewed based upon additional information upto one year from the date of acquisition. In year ended 30 September 2007, WETB generated revenues of £11.4m and profitafter tax of £0.2m. In the period ended 22 February 2007, PGL generated revenues of £51.3m andprofit after tax of £3.1m. In year ended 31 December 2006, NST generatedrevenues of £39.8m and profit after tax of £0.8m. It has been impracticable toobtain the results of PGL and NST for year ended 30 September 2007. 6. Non-statutory accounts The financial information set out above was approved by the Directors on 29November 2007. It does not constitute the Company's statutory accounts for theyears ended 30 September 2007 or 2006, but is derived from these accounts.Statutory accounts for 2006 have been delivered to the Registrar of Companiesand those for 2007 will be delivered following the Company's Annual GeneralMeeting. The auditors have reported on those accounts; their reports wereunqualified and did not contain a statement under section 237(2) or (3) of theCompanies Act 1985. Whilst the financial information included in this preliminary announcement hasbeen computed in accordance with International Financial Reporting Standards(IFRS), this announcement in itself does not contain sufficient information tocomply with IFRS. The Company expects to publish its full financial statements that comply withIFRS in January 2008. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harbour Energy