Results for the six months ended 31 March 2011 (1362H)

TIDMHBR

RNS Number : 1362H

Holidaybreak PLC

24 May 2011

Tuesday 24 May 2011: For immediate release

HOLIDAYBREAK PLC

Results for the six months ended 31 March 2011

Holidaybreak, the education and activity travel group, announces its interim results for the six months ended 31 March 2011.

The Group traditionally reports an operating loss in the first half due to the seasonal nature of the Education and Camping businesses.

Key financials

 
                     Headline results*     Statutory results 
                     H1 2011    H1 2010    H1 2011    H1 2010 
                        GBPm       GBPm       GBPm       GBPm 
 Group revenue         139.6      150.2      139.6      150.2 
 Operating loss        -12.4      -11.0      -14.2      -11.9 
 Loss before tax       -19.2      -17.7      -16.8      -20.0 
-----------------  ---------  ---------  ---------  --------- 
 

Highlights

-- Resilient performance in tough operating conditions.

-- Strong performance from Education with 96% of 2011 revenue booked with sales intake to date 1% below last year.

- PGL UK centres are currently 99% booked for 2011

- Strong start to 2012 with Education 39% of 2012 revenue booked, including 63% at PGL UK centres

-- Excellent trading performance from Meininger since acquisition with sales intake 16% ahead of last year. Expansion continues with 2 new sites opening this year and a further 6 sites in 2012 and 2013, including Amsterdam and Brussels.

-- Net debt increased by GBP19.6m year on year reflecting the acquisition of the Group's 50% stake in Meininger for GBP30.8m.

-- The Board has declared a half year dividend of 3.35p per share, up 5% on last year reflecting its confidence in the outlook for the full year.

-- Sales intake for the year to date is 4% below last year reflecting a later booking trend at Camping; the Group remains on track to meet management expectations for the Group for the full year.

Martin Davies, Holidaybreak Chief Executive, said:

"We have delivered a resilient performance in the first half despite the difficult trading environment. Our Education businesses continue to perform well, evidencing the strong social, political and demographic drivers for growth, and I am particularly excited about the growth prospects for Meininger and the potential to extend our offering to the large German education market."

"We continue to review the overall Group portfolio as we look to strengthen the Education share of the Group. In the meantime, all of our businesses are being managed tightly, with a focus on cash generation, margin and cost control and we expect to perform in line with our expectations for the year ending 30 September 2011."

* Headline loss before tax is stated before amortisation of other intangible assets acquired via business combinations of GBP0.7m (H1 2010: GBP0.9m), separately disclosed items of GBP1.1m (H1 2010: GBPnil) and other gains and losses, being IAS 39 mark-to-market revaluations of financial derivatives of GBP4.2m credit (H1 2010: GBP1.4m charge).

For further information, please contact:

Holidaybreak [phone]

Martin Davies / Neil Bright

Brunswick [phone]

Catherine Hicks / Craig Breheny / Oliver Hughes

Note to Editors

Holidaybreak (HBR.L) is an education and activity travel group listed on the London Stock Exchange. The Group's businesses have market leading positions in the UK and other major European markets, organising educational and activity trips, worldwide exploratory trips, outdoor family holidays and short breaks.

For more information, please go to www.holidaybreak.co.uk.

CHAIRMAN'S STATEMENT

Introduction

These results and current trading are in line with our expectations.

Trading across the Group has remained challenging given the difficult economic environment and the impact of geopolitical events. However, our businesses have remained focused on improving the quality of products offered whilst maintaining strong margin performance and improving cash generation. All of our businesses are well placed to prosper when the economy recovers.

We continue to review the overall Group portfolio as we look to strengthen the Education share of the Group. I am particularly pleased to report that Meininger, the German school accommodation business in which we acquired a 50% stake in December 2010, continues to grow rapidly with two further new sites opening this financial year. We are excited about the opportunities to grow this business outside of Germany and the potential to extend our leading brands to the large German education market.

The Board thanks management and staff throughout the Group for their continued hard work and commitment during this period.

Financial Review

The Group has traditionally reported an operating loss in the first half due to the seasonal nature of the Education and Camping businesses. In the six month period to 31 March 2011, Holidaybreak recorded a pre-tax loss on ordinary activities of GBP16.8m (2010: GBP20.0m).

The headline loss before tax(1) was GBP19.2m (2010: GBP17.7m). The increased loss includes the GBP1m impact of geopolitical events in the Middle East, North Africa and Asia on Adventure's results and reflects the difficult trading conditions in Hotel Breaks. Seasonal headline losses in Education and Camping were below the prior year.

The seasonal loss also includes the Group's share of post tax profits of Meininger of GBP0.3m (2010: GBPnil) from the date of acquisition to 31 March 2011. This period represents the least important trading period for Meininger due to seasonality and the timing of new site openings, with two new sites opening in the second half of the financial year.

Separately disclosed costs of GBP1.1m (2010: GBPnil) were incurred in the period primarily relating to legal and professional fees associated with the acquisition of Meininger.

Net finance costs and other gains and losses were GBP2.6m (2010: GBP8.1m), including a non-cash credit of GBP4.2m (2010: GBP1.4m charge) in respect of the mark-to-market revaluations of the Group's interest rate derivatives and forward foreign currency exchange contracts.

The tax credit is based on the estimated effective tax rate for the full year of 25% (2010: 25%). The headline tax rate(2) for the full year is expected to be approximately 22.5% (2010: 22.4%).

Capital expenditure for the half year, net of disposals, was GBP7.4m (2010: GBP4.8m) with the increase year on year reflecting the timing of expenditure and disposals in Camping. Net capital expenditure for the financial year is expected to be below previous guidance at approximately GBP17.1m (2010: GBP16.8m).

Net debt at the half year was GBP148.8m (2010: GBP129.2m). The increase on the prior year net debt reflects the cash outflow of GBP30.8m (including GBP0.2m fees) for the acquisition of the Group's 50% stake in Meininger in December 2010. The half year is typically the low point in our cash flow cycle and the minimum headroom during the first half was approximately GBP40m. Net debt levels then reduce during May and June as final summer holiday balances are paid. The average net debt, based on month end balances, for the last financial year was approximately GBP127.9m (2009: GBP163.2m). On an annualised basis, all of Holidaybreak's operations generate a good level of cash.

Divisional review

Education & Adventure

The seasonal nature of the Education businesses means that it generates an operating loss in the first half of the financial year. First half statutory operating loss for the Education & Adventure Division was GBP5.8m (2010: GBP3.7m) on revenues of GBP79.8m (2010: GBP84.9m). Headline operating loss(3) was GBP4.3m (2010: GBP3.1m).

Education

First half statutory operating loss for the Education businesses was, as expected, GBP3.7m (2010: GBP3.0m) on revenues of GBP41.0m (2010: GBP44.0m). Headline operating loss(3) was GBP2.3m (2010: GBP2.5m). The reduction in revenue primarily reflects the timing of Easter compared to last year.

Sales intake for the division is currently 1% below last year. The division is 96% booked for 2011 including PGL's UK outdoor education centres which are 99% booked. Overall, PGL UK centres will be providing over 710,000 bed nights to approximately 6,000 schools in 2011. Total PGL UK capacity now stands at 7,400 beds with 200 beds added at Liddington and marginal capacity reductions at smaller rented sites as part of the ongoing strategy of improving customer service and maximising margin across our portfolio of owned centres. Capital expenditure for 2011 is anticipated to be GBP5.9m (2010: GBP8.0m).

For the 2012 season, the division is currently 39% booked, including PGL UK centres with 63% of revenue booked. PGL remains focused on expanding its offering and is well placed to benefit from any consolidation of centres run by local education authorities.

Meininger is 16% ahead of last year reflecting strong like-for-like trading and successful site openings. The strategic roll out programme has continued with a new site in Salzburg opened earlier this month and another site in Berlin opening later this financial year. These sites will increase bed capacity to approximately 4,550 beds (+23%). A further six sites have been secured with four opening in 2012 and two, in Brussels and Amsterdam, opening in 2013.

Adventure

The first half statutory operating loss for the Adventure businesses was GBP2.1m (2010: GBP0.7m) on revenues of GBP38.8m (2010: GBP40.9m). Headline operating loss(3) was GBP2.0m (2010: GBP0.6m). The increase in the loss primarily reflects the GBP1m impact of geopolitical events.