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Share Name | Share Symbol | Market | Type |
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Eagle Bay Resources Corp | CSE:EBR | CSE | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
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0.00 | 0.00% | 0.31 | 0.31 | 0.40 | 0 | 01:00:00 |
FINANCIAL RESULTS FOR QUARTER 1, ENDED 31 MARCH 2003 - ebookers achieves profitability despite Iraq War(1) - 07 May 2003: - ebookers plc, the pan-European online travel agency (LSE: EBR, Nasdaq: EBKR), today announces financial results for Quarter 1, ended 31 March 2003. Quarter 1 Highlights (UK GAAP)(2) * Results ahead of expectations despite Iraq War. * Adjusted profit before tax(1) of £0.1m, achieved for the first time, compared to £2.2m loss in same quarter last year. * Quarter 1 turnover (gross profit) up 113% to £14.3m, from £6.7m last year. 42% organic (non-acquisition) growth(2). * Quarter 1 gross sales up 79% to £109m, from £61m last year. 29% organic (non-acquisition) growth(2). * Gross profit margin on gross sales increases to 13.1% from 11.1% in Q1 2002. * Travelbag integration making excellent progress. Dinesh Dhamija, CEO ebookers plc, comments: "We are delighted to have achieved this profitability milestone, the first in the pan-European online travel industry to do so. It is testament to our high growth internet model and our low cost Business Process Outsourcing (BPO)centre in India. Going forward we will continue to drive sales growth by taking the Travelbag brands online, and increasing high margin non-air sales, while at the same time reducing costs." Nigel Addison Smith, CFO ebookers plc, comments: "We have achieved this result despite the impact of the Iraq War which we estimate reduced our Q1 profit by £3-4m. This highlights the underlying profit potential within our business." 1. Before amortisation, all stock compensation related costs, and exceptional items. See note 4. Loss before tax: Q1 2003 £4.9m (including £3.8m acquisition costs), Q1 2002 £ 3.5m 2. Results for Q1 2003 are inclusive of the results of Travelbag Holdings Ltd ("Travelbag") for February and March. Continued/ Chairman's Statement Quarter 1 2003 was a difficult trading environment for travel companies specialising in mid and long haul, due to the effect of the Iraq war and latterly the SARS virus. Nonetheless, our focus on cost control, particularly our Indian BPO, meant that although top line growth was inevitably impacted we were still able to deliver our first ever adjusted profit before tax (see note 4). Hitting this target ahead of expectations was particularly notable given the challenging market environment. We believe it is also indicative of the direction of our business as we continue to grow and reap the benefits of added scale. Of particular note for the quarter was the strong organic growth of our Continental European subsidiaries which delivered turnover (gross profit) growth of 70%. Integration of Travelbag A key management focus during the period was the integration of Travelbag Holdings Limited, acquired in February 2003. The integration aims to deliver both cost and revenue synergies as rapidly as possible by growing the internet sales of the Travelbag brands, restructuring the UK organisation, leveraging our enhanced buying power, and transferring functions to our Indian BPO. Also, by maximising product synergies, for example by selling ebookers' European, US and Caribbean product through the Travelbag websites. The integration is making excellent progress and we are on track to deliver annualised cost savings of at least £5m. Phase One of the integration timetable, which includes assessment, preparation and integration "quick wins" will end in June 2003. The key quick wins already achieved include consolidation of media and air product buying and the installation of an ebookers-powered booking engine on the Bridge the World website. The ebookers booking engine is being tested on the Travelbag website. The high margin Travelbag Adventures product is already being sold on the ebookers.co.uk website and is expected to be extended to websites in the other 11 European countries serviced by ebookers. As part of the integration, the cost base structure of the combined UK business is under review and 80 proposed redundancies have been announced within the UK business. An India migration team has been established to work towards the successful migration of some Travelbag functions to our BPO in India. Trading statement Quarter 2 trading was generally impacted up to April 25 by the Iraq War and SARS. Since April 25 we have noticed extremely encouraging trading to many destinations not affected by the virus, though many directly and indirectly affected destinations continue to be impacted. While the situation appears to be improving, currently there is insufficient data to establish a clear trend. Therefore, we will be issuing another trading statement towards the end of May when the trading patterns for the quarter and beyond are clearer. Outlook We remain confident about the long term growth and profitability of the business. We have positioned our business to maximise these in the following ways: Growth There is a huge opportunity for internet growth in the European leisure travel market. This is why ebookers recorded strong growth in Quarter 1 despite the Iraq war, while many bricks and mortar companies have suffered declining sales. According to leading forecasters, only 4% of European travel is currently online, compared to 14% for the United States. Online travel growth rates are far higher in Europe. The population is bigger (approx 380m vs. 280m), and the fact that Europeans take more holidays means that the overall leisure market is also much bigger. We aim to capture as much of this growth as possible by taking the Travelbag brands online, increasing our sale of high margin non-air products, and continuing our strategy of offering multichannel access for internet bookings - and in particular telephone support for internet bookings - with costs kept low through our India BPO. ebookers has always offered this telephone facility and we note that now all other major online travel competitors in Europe have followed our positioning and advertise a phone number as well as an internet address for customers. Balanced destination coverage and product offering As a result of our acquisition strategy and 20-year travel heritage, ebookers has the widest and deepest range of discount merchant travel products online in Europe. Recent events have illustrated how important it is for a travel company not to be too focused on one global region so that customers can switch destination in the event of a trouble spot. At ebookers our destination coverage is balanced across the globe. Currently, North America accounts for 30% of gross sales, Australasia 26%, Europe 15%, Far East and Asia 15%, Africa 8%, and the Caribbean, Middle East and South America the remainder. Our range encompasses all travel products and we are successfully cross selling increasing amounts of high margin non-air inventory. Non-air travel products accounted for 25% of sales in Q1 2002, and by Q1 2003 this had increased to 37%. Mid and long haul (vs short haul) We believe that the long and mid haul market is superior to the short haul and we have positioned ourselves accordingly. We believe that there are three advantages to long and mid haul: (1) The average gross profit on a long and mid haul flight is over twice that an agent can make on a short haul flight, yet the cost of fulfilling that ticket is broadly similar. (2) There is no competition from "no frills" and low price carriers on long and mid haul flights. (3) The long and mid haul market is bigger and is growing faster than the short haul market. The short haul market accounts for 40% of European flights (and much of this is taken by "no frills" and charter airlines), whereas mid and long haul account for 60%. Between 2001 and 2011 the short haul market is forecast to grow by 62% whereas the long and mid haul market is forecast to grow by 72%. (Source Boeing 20-Year Market Growth Projection, Europe) Leisure market ( vs business travel) We have positioned ourselves in the leisure rather than the corporate market because we believe that the corporate market is more susceptible in periods of war, crisis and geopolitical uncertainty. BPO To sell travel online (especially mid and long haul) it is essential to have call centre support. Additionally, many processes in online travel cannot yet be automated (for example only a small percentage of European airlines are yet able to "eticket"). Both call centres and processing functions are costly but unavoidable. Only ebookers has a BPO in India carrying out functions encompassing both customer facing and administrative procedures at a fraction of European costs. We believe that this low cost centre is a major profitability advantage and we are expanding its use with Travelbag and also our European subsidiaries. We are also considering offering its services to third parties. Financial Review Summary Despite the impact of the Iraq War and SARS, we still delivered strong growth to record our first positive adjusted profit before tax of £0.1m (see note 4) in Quarter 1. Acquisition of Travelbag Unless otherwise stated figures for Q1 2003 include the acquisition of Travelbag Holdings Limited "Travelbag" for the period February 1 - March 31, 2003. Gross sales Gross sales increased from £61m in Quarter 1 2002 to £109m in Quarter 1 2003, an increase of 79%. The Q1 2003 figure includes £30.6m of Travelbag gross sales for the two month period. Growth in UK businesses was affected more severely by the Iraq War than our Continental European subsidiaries, which recorded strong growth for the period. Overall, continental European subsidiaries grew gross sales by 58% in Q1 2003 compared to Q1 2002. This was all organic (non-acquisition growth). Among the best performing subsidiaries were Finland which recorded growth of 75%, Ireland with 99% and Norway with 630%. Turnover (gross profit) Turnover (gross profit) reached a record level of £14.3m, up 113% on Q1 2002's figure of £6.7m. The Q1 2003 figure includes £4.8m of Travelbag turnover (gross profit) for the period February and March 2003. Continental European subsidiaries grew turnover (gross profit) by 70% in Q1 2003 compared to Q1 2002, all organic (non-acquisition) growth. The gross profit margin on gross sales increased to 13.1% compared to 11.1% in Q1 2002 due to a higher proportion of higher margin non-air sales including cars and hotels, particularly due to the impact of the higher margin Travelbag non-air product mix. Operating expenses We continue to successfully reduce operating expenses through expanding the use of our Indian BPO. Adjusted operating expenses (see note 4) were £13.9m in Q1 2003 compared to £8.0m in Q1 2002, the increase mainly due to £5.1m of additional operating expenses for Travelbag for the period February and March. Excluding the impact of Travelbag, adjusted operating expenditure increased by only 9% from £8.0m in Q1 2002 to £8.8m in Q1 2003, despite the 42% increase in turnover (gross profit). We aim to reduce Travelbag's contribution to operating expenditure by further integration with our UK operations and transferring functions to our India BPO where appropriate. As a percentage of gross sales adjusted operating expenditure (excluding Travelbag) decreased from 13.2% in Q1 2002 to 11.1% in Q1 2003. This indicates the impact of our low cost India BPO and the automation efficiencies of the Internet model. The percentage for Q1 2003 including Travelbag for February and March was 12.7%, indicating the potential for reducing the Travelbag cost base. Sales and marketing costs Sales and marketing costs were £7.6m in Q1 2003 compared to £3.5m in Q1 2002, the increase mainly due to £3.3m of costs for Travelbag for the period February and March 2003 and increased volumes in business. Excluding the impact of Travelbag, sales and marketing costs increased by 24% from £3.5m in Q1 2002 to £4.3m in Q1 2003 despite the 42% increase in turnover (gross profit). Administrative expenses Technology costs in Q1 2003 were £1.4m compared to £0.7m in Q1 2002, the increase was due in part to £0.3m of costs for Travelbag for the period February and March 2003. Excluding the impact of Travelbag, technology costs increased from £0.7m in Q1 2002 to £1.1m in Q1 2003. This increase reflects greater focus on automation technologies, Management Information Systems and website technology. General administrative expenses increased to £4.9m in Q1 2003 compared to £3.8m in Q1 2002, due to £1.5m of costs for Travelbag for the period February and March 2003. Excluding Travelbag, general administrative expenses decreased from £3.8m in Q1 2002 to £3.4m in Q1 2003 due partly to the cost reduction impact of our India BPO facility. Depreciation costs in Q1 2003 were £0.7m compared to £1.1m in Q1 2002. The decrease was due mainly to fully depreciated assets, despite an increase of £ 0.2m due to depreciation costs for Travelbag for the period February and March 2003. Excluding Travelbag, depreciation costs decreased from £1.1m to £0.5m. Stock compensation cost increased from £0.1m in Q1 2002 compared to £0.2m in Q1 2003 due to additional grants of stock options to employees. Amortisation cost increased by 60% from £1.2m in Q1 2002 to £1.9m in Q1 2003 due to the impact of the Travelbag acquisition in February 2003. Travelbag goodwill is being amortised over twelve years. Operating loss and loss on ordinary activities before taxation As a result of our growth and cost control, despite exceptional costs relating to the acquisition of Travelbag of £3.8m, our operating loss was only £5.1m in Q1 2003 compared to £3.6m in Q1 2002. We also achieved our first adjusted profit before tax (see note 4) of £0.1m in Q1 2003 compared to a loss of £2.2m in Q1 2002. Loss on ordinary activities before taxation was £4.9m in Q1 2003 compared to £ 3.5m in Q1 2002. It is also important to highlight that Q1 2003 included a receipt of £1.1m of previously unrecognised income within Travelbag. This has not been included in Q1 2003 profit/(loss) before tax above but has been included within the acquisition goodwill for Travelbag. Treasury As at 31 March 2003, ebookers had cash (net of overdrafts) of £48.2m compared to £22.5m at 31 March 2002 and £21.3m at 31 December 2002. More detail on this is provided in the cash flow statement on page 9. Loss per share Basic and diluted loss per share increased only from 7p in Q1 2002 to 8p in Q1 2003 despite one off exceptional costs relating to the acquisition of Travelbag of 6.6p per share. --ends-- For further information: ebookers plc Oliver Strong +44 (0) 20 7489 2239 oliver.strong@ebookers.com +44 (0) 7771 934 153 Cubitt Consulting (UK) Peter Ogden +44 (0) 20 7367 5130 peter.ogden@cubitt.com Webcast and conference call When: Wednesday 7 May at 16:00 BST /15:00 GMT / 17:00 CET / 11:00 ET (USA, NYC). Where: For registration of the live event please click on the link below: http://meta.unit.net/ebookers/20030425/index.html Should you wish to take part in the Conference Call, please dial one of the following numbers: UK dial in 0845 245 3471 International dial in +44 (0) 1452 542 300 A replay of the conference will be available for 7 days on the following numbers: UK 0845 245 5205 International +44 (0) 1452 55 00 00 Replay Access Number: 135619# If you are unable to participate during the live audio webcast, the event will be archived on the same URL as listed above for 90 days from the date of the event. (Minimum Requirements to listen to broadcast: The Windows Media Player software, downloadable free from http:// www.microsoft.com/windows/windowsmedia/en/download/default.asp Or Real Player and at least a 28.8Kbps connection to the Internet.) About ebookers plc ebookers is a leading pan-European online travel agency with websites in 12 European countries - UK, France, Ireland, Germany, Austria, Spain, Holland, Switzerland, Sweden, Denmark, Norway, and Finland. It specialises in the mid- and long-haul modular leisure segments of the European travel industry. It also specialises in selling discount merchant fares, which are negotiated directly with leading travel suppliers in order to help them sell their excess capacity without damaging their pricing structure and brands. ebookers has a low-cost BPO facility in New Delhi, India with a staff of over 400, which carries out 13 separate functions from email sales to software development. The Company has a multi brand marketing strategy. Its brands include ebookers.com, Flightbookers, Travelbag, Travelbag Adventures Bridge the World, and MrJet. ebookers plc is listed on the London Stock Exchange and quoted on Nasdaq in the United States of America. Forward Looking Statements Except for the historical information contained herein, the matters discussed in this news release are forward-looking statements that involve risks and uncertainties that could cause actual results to differ materially from those in such forward looking statements. Potential risks and uncertainties include, without limitation, the company's ability to identify, acquire and integrated companies across Europe including Travelbag Holdings, its ability to significantly increase its online revenues and sales volumes, to maintain and develop relationships with travel suppliers and strategic partners and to attract and retain customers, potential adverse changes in its gross mark up or in commission rates, reduce its operating costs through outsourcing certain functions to India, unforeseen events affecting the travel industry, and the company's dependence on its ability to establish its brand. The foregoing list of important factors is not exhaustive. When relying on forward-looking statements, readers should carefully consider the foregoing factors and other uncertainties and events, as well as factors described in documents ebookers plc files from time to time with regulatory authorities in the United Kingdom and the United States, including annual reports on Form 20-F filed with the US Securities and Exchange Commission. Any forward-looking statements speak only as of the date on which they are made and except as required by the rules of the UK Listing Authority, the London Stock Exchange and applicable law, ebookers plc undertakes no obligation to update publicly or revise any forward-looking statements. CONSOLIDATED QUARTERLY PROFIT AND LOSS Quarter Quarter Quarter ACCOUNT ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 [Prepared in accordance with UK £'000 £'000 £'000 GAAP] (unaudited) (unaudited) (unaudited) GROSS SALES 108,662 63,918 60,636 Turnover (gross profit) (including 14,287 8,023 6,713 Acquisition: £4,751,000) Distribution costs: (including Acquisition: £3,313,000) Sales and (7,616) (3,333) (3,462) marketing Administrative expenses: (including Acquisition: £ 1,957,000) Technology costs (1,380) (933) (717) General administrative (4,867) (3,695) (3,840) expenses Depreciation (682) (1,330) (1,057) Amortisation of profit on sale and 75 479 - leaseback transaction National Insurance on 937 (1,135) - stock options Stock (152) (493) (67) compensation cost Amortisation (1,906) (1,185) (1,192) Exceptional items (3,840) - - Total administrative (11,815) (8,292) (6,873) expenses Total operating expenses (19,431) (11,625) (10,335) Operating loss (including Acquisition: £ (5,144) (3,602) (3,622) 519,000) Interest receivable and 449 312 153 similar income Interest payable and (160) (30) (26) similar charges Loss on ordinary activities before (4,855) (3,320) (3,495) taxation Tax charge on loss on ordinary (10) (226) (8) activities Loss on ordinary activities after taxation retained for the financial quarter (4,865) (3,546) (3,503) Weighted average number of shares (in 57,918 49,969 46,833 thousands) Basic and diluted loss per (8.40)p (7.10)p (7.48)p share Adjusted profit/(loss) before tax 0.18p (1.01)p (4.77)p per share* *The adjusted loss per share is after adjusting for non cash and non recurring items. See note 4. CONSOLIDATED BALANCE SHEET As restated 31-Mar-03 31-Dec-02 31-Mar-02 [Prepared in accordance with UK £'000 £'000 £'000 GAAP] (unaudited) (audited) (unaudited) FIXED ASSETS Intangible assets 58,602 10,279 14,428 Tangible assets 11,351 3,816 6,041 69,953 14,095 20,469 CURRENT ASSETS Debtors 15,342 6,107 8,505 Cash at bank and in hand 48,690 21,729 23,007 64,032 27,836 31,512 CREDITORS: amounts falling due within one (63,543) (26,307) (30,044) year NET CURRENT ASSETS 489 1,529 1,468 TOTAL ASSETS LESS CURRENT 70,442 15,624 21,937 LIABILITIES CREDITORS: amounts falling due after more (16,389) - (50) than one year PROVISIONS FOR LIABILITIES AND (856) (1,770) (635) CHARGES NET ASSETS 53,197 13,854 21,252 CAPITAL AND RESERVES Called up share capital 8,876 7,009 6,557 Share premium account 112,933 73,778 68,525 Merger reserve 2,194 2,194 2,194 Shares to be issued 19,635 19,080 23,206 Profit and loss account (90,441) (88,207) (79,230) EQUITY SHAREHOLDERS' FUNDS 53,197 13,854 21,252 * Provision for liabilities and charges have been reclassified from within creditors due within one year CONSOLIDATED CASHFLOW STATEMENT Quarter Quarter Quarter ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 [Prepared in accordance with UK £'000 £'000 £'000 GAAP] (unaudited) (unaudited) (unaudited) Net cash (outflow)/inflow from (10,276) (3,126) 3,419 operating activities Returns on investment and servicing of finance Interest received 449 182 153 Interest paid (160) (11) (26) Net cash flow from returns on investment and servicing of finance 289 171 127 Overseas tax paid (31) (205) - Capital expenditure and financial investment Payments to acquire tangible fixed (784) (1,567) (918) assets Net cash flow from capital expenditure and financial investment (784) (1,567) (918) Acquisitions Payment to acquire subsidiary (Vendor (40,409) - - Placing: £30,500,000) Net cash/(overdraft) acquired with 34,706 - - subsidiary (5,703) - - Net cash (outflow)/inflow before (16,505) (4,727) 2,628 financing Financing Issue of ordinary shares net of 29,005 404 - expenses; (Vendor Placing: £30,500,000) Capital element of finance lease (161) (167) (250) repayments New leases received as part of 123 - - acquisition Loan received net of expenses 14,360 - - Net cash flow from financing 43,327 237 (250) Increase/(decrease) in cash in the 26,822 (4,490) 2,378 quarter NOTES TO THE ACCOUNTS 1. Segmental analysis and trading information Gross Sales Turnover (gross profit) Quarter Quarter Quarter Quarter ended ended ended ended 31-Mar-03 31-Mar-02 31-Mar-03 31-Mar-02 £'000 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) (unaudited) UK 81,292 43,331 11,193 4,897 non UK 27,370 17,305 3,094 1,816 108,662 60,636 14,287 6,713 Loss Before Tax Net assets/(liabilities) Quarter Quarter ended ended As at As at 31-Mar-03 31-Mar-02 31-Mar-03 31-Mar-02 £'000 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) (unaudited) Head Office (5,479) (3,277) 38,509 22,612 UK business 276 144 12,499 (461) UK (5,203) (3,133) 51,008 22,151 non UK 348 (362) 2,189 (899) (4,855) (3,495) 53,197 21,252 (1) Gross sales is a memorandum disclosure and represents the total transaction value of all our services and hence includes the total amount paid by customers for the services provided by the Group, as opposed to the margin earned per the Group's turnover definition. The Group reports total transaction value since the Directors believe that it reflects more accurately the cash flows within the Group. It is also a widely used measure of company size within the travel sector. (2) Turnover (gross profit) in the Group consists largely of the margins on sales of discounted airfares on scheduled flights as well as other travel products and services. The Group recognises revenue at the time the reservation is ticketed as the customer generally does not have the ability to cancel tickets or obtain refunds after ticketing, and all amounts payable have been received. In cases where customers have the ability to cancel and obtain refunds after ticketing, the Group is able to estimate its refund obligations and such obligations are accounted for. Turnover (gross profit) includes other travel product margins from hotel reservations, car rental and travel insurance. Incentive income is also received from the Group's service provider business partners and is recognised as turnover (gross profit) on receipt, unless dependent upon monthly or quarterly targets being achieved, in which case it is recognised as the targets are achieved. In addition, turnover (gross profit) also includes advertising revenue earned during the period. 2. Reconciliation of operating loss to net cash (outflow)/inflow from operating activities Quarter Quarter Quarter ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Operating (5,144) (3,602) (3,622) loss Amortisation of 1,906 1,185 1,192 goodwill Depreciation 682 1,330 1,057 Stock Compensation 152 493 67 charge National insurance relating to (937) 1,135 - stock options Amortisation of profit on sale and leaseback (75) (479) - transaction Issue of shares for non-cash 16 - (2,798) consideration (Increase)/decrease in (3,867) 3,048 7,614 debtors One off trading cash 1,118 - - receipt Decrease in creditors (7,532) (6,065) (91) Exchange losses (120) (171) - Non cash exceptional 3,525 - - items Net cash (outflow)/inflow from operating (10,276) (3,126) 3,419 activities 3. Exceptional items £'000 Travelbag deal related stock compensation 3,608 and retirement costs Travelbag deal related 232 costs 3,840 4. Reconciliation of pro-forma financial measures Quarter Quarter Quarter ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 £'000 £'000 £'000 (unaudited) (unaudited) (unaudited) Loss on ordinary activities (4,855) (3,320) (3,495) before taxation Add back: Amortisation 1,906 1,185 1,192 Stock compensation 152 493 67 charge National Insurance on share (937) 1,135 - options Exceptional items 3,840 - - Adjusted profit/(loss) before tax 106 (507) (2,236) Weighted average number of shares (in 57,918 49,969 46,833 thousands) Adjusted profit/(loss) per share, based on adjusted profit/(loss) before 0.18p (1.01)p (4.77)p tax Operating expenses (19,431) (11,625) (10,335) Add back: Depreciation and 2,588 2,515 2,249 amortisation Stock compensation 152 493 67 charge National Insurance on share (937) 1,135 - options Exceptional items 3,840 - - Amortisation of profit on sale and leaseback (75) (479) - transaction Adjusted operating expenses (13,863) (7,961) (8,019) 5. Other matters This statement has been prepared on the basis of accounting policies as set out in the annual financial statements at 31 December 2002. The Group has adopted FRS 19. However, there has been no impact on prior period results as a result of this. Tax losses have been incurred by the Group, which are available for offset against future taxable profits. The financial information set out above does not constitute the Company or Group's statutory accounts within the meaning of section 240 of the Companies Act 1985 for the year ended 31 December 2002, but is derived from those accounts. Statutory accounts for 2001 have been delivered to the Registrar of Companies and those for 2002 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 statements under S237(2) or (3) Companies Act 1985. The financial information for the three month periods ended 31 December 2002, 31 March 2003 and 31 March 2002 have neither been audited nor reviewed by the Group's auditors. On 7 February 2003, the Company acquired the entire share capital of Travelbag Holdings Ltd for a consideration of £55m. After provisional fair value adjustments of £1.9m, goodwill of £50.2m has been recognised in respect of this acquisition. The fair values of the net assets of Travelbag used in the calculation of the goodwill on acquisition are provisional and may be subject to change in following quarters. CONSOLIDATED STATEMENT OF Quarter Quarter Quarter OPERATIONS ended ended ended $'000 $'000 $'000 [Prepared in accordance with US 31-Mar-03 31-Dec-02 31-Mar-02 GAAP] (unaudited) (unaudited) (unaudited) Revenue 22,620 12,747 9,729 Operating expenses: Marketing and sales 11,995 5,246 4,944 General and administrative 7,003 5,313 5,483 Stock compensation (13,425) 16,513 123 Depreciation and amortisation 1,074 2,093 1,510 Product technology and development 2,173 1,469 1,024 Exceptional items 6,048 - - Total operating expenses 14,868 30,634 13,084 Operating profit/(loss) 7,752 (17,887) (3,355) Other income Interest income 558 320 219 Other 150 116 - 708 436 219 Other expense Interest expense (252) 8 (37) Other - - - (252) 8 (37) Profit/(loss) from continuing operations before income taxes 8,208 (17,443) (3,173) Income tax provision (16) (357) (11) Net profit/(loss) 8,192 (17,800) (3,184) Basic and diluted weighted average number of shares '000 57,918 49,969 46,833 Net profit/(loss) per share - $0.14 $(0.36) $(0.07) basic and diluted Adjusted profit/(loss) per share $0.01 $(0.04) $(0.07) Exchange rates used $ per £* 1.5750 1.5740 1.4280 *For convenience the period end rate has been used for all translations. CONSOLIDATED BALANCE SHEETS 31-Mar-03 31-Dec-02 31-Mar-02 [Prepared in accordance with US $'000 $'000 $'000 GAAP] (unaudited) (audited) (unaudited) ASSETS Current assets: Cash and cash equivalents 76,686 29,366 32,808 Restricted cash - 5,607 - Accounts receivable, net of 4,132 2,136 8,433 allowance for doubtful accounts Prepaid expenses 7,001 3,873 904 Other current assets 13,098 3,890 2,852 Total current assets 100,917 44,872 44,997 Property, plant and equipment, net 17,043 5,630 7,541 Other non-current assets 835 512 1,074 Goodwill, net 99,074 20,400 18,900 TOTAL ASSETS 217,869 71,414 72,512 LIABILITIES AND SHAREHOLDERS EQUITY Current liabilities: Bank overdraft 902 699 757 Accounts payable 75,719 27,630 24,671 Accrued expenses and other current 24,990 16,217 27,023 liabilities Total current liabilities 101,611 44,546 52,451 Long term liabilities 25,813 - - Shareholders' equity: Ordinary shares of £0.14 par value - 13,980 11,281 9,350 issued and outstanding Additional paid-in capital 190,432 144,657 109,753 Accumulated deficit (113,283) (128,536) (99,003) Accumulated other comprehensive loss (684) (534) (39) Total shareholders' equity 90,445 26,868 20,061 TOTAL LIABILITIES AND SHAREHOLDERS 217,869 71,414 72,512 EQUITY Exchange rate for the period end ($ 1.5750 1.6095 1.4260 per £) *For convenience the period end rate has been used for all translations. CONSOLIDATED CASH FLOW STATEMENT Quarter Quarter Quarter [US GAAP Numbers] ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 $'000 $'000's $'000's (unaudited) (unaudited) (unaudited) Cash flows from operating activities: Net income/(loss): 8,192 (17,800) (3,184) Adjustments to reconcile net income/ (loss) to net cash used for operating activities: Depreciation and amortisation 1,074 2,093 1,510 Changes in : Trade working capital (12,999) (4,463) 5,741 One off trading cash receipt 1,761 - - Stock compensation (credit)/expense (13,425) 16,514 123 Net cash provided from operating (15,397) (3,656) 4,190 activities Cash flows from investing activities Capital expenditure and acquisitions (63,644) - - (Vendor Placing: £30,500,000) Decrease/(Increase) in restricted cash 5,487 (1,533) - Other capital expenditure (1,235) (2,452) (1,309) Net cash used in investing activities (59,392) (3,985) (1,309) Cash flows financing activities: Increase/(decrease) in bank loans and 219 (306) 757 overdraft Proceeds from issuance of common stock 45,684 630 - net of expenses (Vendor Placing: £30,500,000) Loan received net of expenses 22,617 - - Capital element of finance lease (253) (2,188) 509 Net cash provided from financing 68,267 (1,864) 1,266 activities Effect of exchange rates on cash (190) (2,016) (569) Net (decrease)/increase in cash receipts (6,712) (11,521) 3,578 Cash at the beginning of the period 28,736 40,887 29,229 Cash at acquisition 54,662 - - Cash at the end of the period 76,686 29,366 32,807 Exchange rate used in calculations $ per 1.5750 1.5740 1.4280 £ *For convenience the period end rate has been used for all translations Reconciliation of pro-forma financial measures Quarter Quarter Quarter ended ended ended 31-Mar-03 31-Dec-02 31-Mar-02 $'000 $'000 $'000 (unaudited) (unaudited) (unaudited) Operating (14,868) (30,634) (13,084) expenses Add backs: Stock (13,425) 16,513 123 Compensation Exceptional items 6,048 - - Amortisation of profit on sale and (79) (513) - leaseback transaction Adjusted operating (22,324) (14,634) (12,961) expenses Operating profit/ 7,752 (17,887) (3,355) (loss) Add back depreciation and amortisation 1,074 2,093 1,510 EBITDA 8,826 (15,794) (1,845) Stock (13,425) 16,513 123 Compensation Exceptional items 6,048 - - Amortisation of profit on sale and (79) (513) - leaseback transaction Adjusted EBITDA 1,370 206 (1,722) Pre tax income/ 8,208 (17,443) (3,173) (loss) Stock (13,425) 16,513 123 Compensation Exceptional items 6,048 - - Amortisation of profit on sale and (79) (513) - leaseback transaction Adjusted pre tax income/ 752 (1,443) (3,050) (loss) Net income/(loss) 8,192 (17,800) (3,184) Stock (13,425) 16,513 123 Compensation Exceptional items 6,048 - - Amortisation of profit on sales and (79) (513) - leaseback transaction Adjusted net income/(loss) 736 (1,800) (3,061) Weighted average number of shares (in 57,918 49,969 46,833 thousands) Adjusted loss per share $0.01 $(0.04) $(0.07) *For convenience the period end rate has been used for all translations We use EBITDA as a measure since we believe it is useful for the investors wishing to compare the Group with other companies that use EBITDA as a way of reporting profit excluding the impact of non-cash items. Adjusted EBITDA excludes non-cash and exceptional operating items and therefore we believe that it is a useful way for investors to compare the Group's underlying EBITDA trend, both with other companies and also with the Group's previous financial results. We also use adjusted operating expenses and adjusted loss before tax in order to facilitate comparisons and trends. Reconciliation between UK and US GAAP For the quarter ended 31 March 2003 £'000's (unaudited) Retained loss for the period 1 January 2003 to 31 (4,865) March 2003 Reported in the consolidated profit and loss account for the period under UK GAAP Amortisation of 1,906 goodwill Deferred revenue 75 Deferral of gain on asset (25) disposal Stock 8,676 compensation cost National (566) Insurance Loss for the period 1 January 2003 to 31 March 2003 5,201 under US GAAP $'000's Loss for the period 1 January 2003 to 31 March 2003 8,192 under US GAAP* *Translated in US$ at exchange rate for the period 1.575 end of $1.575 per £1 £'000's Shareholders' equity as reported in the consolidated balance sheet 53,197 under UK GAAP Goodwill 4,302 Net assets of Carbookers 43 Limited Deferred revenue (500) Deferral of gain on asset (185) disposal National 569 Insurance Shareholders'equity as reported in the consolidated balance sheet 57,426 under US GAAP $'000's Shareholders' equity as reported in the consolidated balance sheet 90,445 under US GAAP Translated in US$ at exchange rate for the period end of $1.575 per £1 END
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