6th Sep 2006 07:00
Holidaybreak PLC06 September 2006 6 September 2006 HOLIDAYBREAK PLC Pre-close trading update Holidaybreak, the European operator of specialist holiday businesses, todayreleases its normal trading update prior to the end of its current financialyear. Summary • After eleven months of the financial year ending 30 September 2006, the Board believes that the financial and trading prospects of the Group remain satisfactory. Holidaybreak expects to again deliver double-digit margins and be strongly cash generative with year-end net debt substantially reduced. • The diversity of Holidaybreak's businesses and their flexible cost structure means that the performance of the Group as a whole continues to be robust. The World Cup, recent terrorist threats in the UK and events in the Middle East and Turkey have not had a material impact on the Group's expected outcome for the current financial year. • Given the strength of its balance sheet and its excellent cash generation, Holidaybreak remains well positioned to grow, both organically and by acquisition. Management continue to pursue several European acquisition opportunities in the specialist tour operating sector, with good margin and cash generation characteristics. Further announcements will be made if and when appropriate. Carl Michel, Chief Executive, said: "With four weeks to the end of our currentfinancial year, Holidaybreak remains on target to deliver another solidperformance. We are market leaders in our specialist sectors and our businessesenjoy industry-leading margins. In what may prove to have been a difficultsummer for the industry as a whole, I have been pleased with the resilience ofthe Group and am confident that Holidaybreak, with its diversity of qualitybusinesses, will continue to prosper." Trading update After eleven months of the financial year ending 30 September 2006, Holidaybreakis again expected to deliver double-digit margins and generate substantiallevels of cash. Whilst the recent terrorist threats in the UK and events in theMiddle East and Turkey have had a limited impact on the Adventure TravelDivision, the effect on the Group results for the current financial year is notexpected to be material. Hotel Breaks Hotel Breaks' overall sales intake for 2006 has continued to recover and iscurrently marginally below 2005 levels. As anticipated, year on year salesgrowth for the UK business improved after 7th July, against a weak comparativeperiod in 2005. We have seen a recovery in trips to London, particularly inTheatre inclusive packages. In addition we have developed our relationships withVirgin Rail and the Associated Newspapers Group, allowing us to grow newchannels and increase the range of packaged product. Our business model, withhotel room allocations taken on an uncommitted basis, retains a high degree offlexibility. In order to maximize the opportunities available to the Division,we intend to increase ongoing spend by £1-2 million and expect to see the returncome through over the following years - one such area is in contracting moreEuropean hotels. Adventure Travel The Adventure Travel Division looks set to report on another good year. Salesare 11% up on 2005 equivalents and momentum has been maintained despite aconstant stream of adverse geopolitical events. Tour load factors have held upbut margins will be slightly lower due to increases in fuel costs in the air andon land. Forward sales at Explore and Djoser for 2007 are currently 7% ahead of prioryear. We are understandably seeing some short term quietening of interest toTurkey and the Middle East and are cautious in our view on likely demand forthese regions, which account for approximately 17% of divisional sales.Nevertheless one of the Division's strengths is the diversity of destinationsand products it can offer. Our diving business Regal continues to develop awayfrom the Red Sea and worldwide sales now account for 40% of its business. Camping The 2006 season is now virtually over. Sales in this Division are 9% down on2006 but, with capacity cut by 16%, occupancy levels have improved by about tendays versus last year, and high season has been filled at good yields. We havebeen very encouraged by the progress made this year. Over the last two years, the cost base and capacity of the Division have beensignificantly reduced. Consequently, capital expenditure requirements have beenlow. Although there are likely to be further small changes in capacity in 2007,management believes Camping is now essentially 'right-sized' for the expectedmarket. Net capital expenditure for Camping in the coming year will bematerially higher than in 2005 and 2006 as older mobile homes are replaced atthe end of their useful lives. However, the Division once again is expected tobe cash generative and deliver good margins in 2007. As announced on 2nd June 2006, the Board ended discussions regarding thepossible sale of the Camping Division, believing that greater value can beachieved for shareholders by keeping Camping within the Group. Outlook The Board believes that the financial and trading prospects of the Group in thecurrent financial year are satisfactory and that the Group is well positioned torespond to changing conditions and to exploit market opportunities. Management continue to pursue several European acquisition opportunities in thespecialist tour operating sector, with good margin and cash generationcharacteristics. Further announcements will be made if and when appropriate. Enquiries: Holidaybreak: +44 (0)1606 787100Carl Michel/Bob Baddeley Brunswick +44 (0) 20 7404 5959James Hogan / Craig Breheny / Ash Spiegelberg Note to Editors 1. Holidaybreak (HBR.L) is listed on the London Stock Exchange. The European specialist holiday group sold 3m holidays in the year ended 30 September 2005 (2004: 2.3m). Holidaybreak has three operating divisions: Hotel Breaks, Adventure Travel and Camping. Each is a market leader in its respective specialist sector of the European holiday industry, has multi-channel distribution and is recognised for providing high standards of product and service quality. For more information, please go to www.holidaybreak.co.uk. 2. The company expects to announce its full year results on Thursday 30th November. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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