Last checked at 18 Feb 2009 07:00
18 February 2009: For immediate release
HOLIDAYBREAK PLC
Interim Management Statement
Holidaybreak, the education, leisure and activity travel group, today releases its interim management statement for the period 1 October 2008 to 17 February 2009.
Carl Michel, Group Chief Executive, said:
"The Group's current trading performance is creditable given an unsettled and unpredictable consumer environment.
More than ever this year will be about providing unique products, value for money and exceptional service to our customers. We will benefit from the strength of our well-known and respected brands. Overall trading is broadly flat for the year to date while the market is booking later than usual. Nonetheless we are seeing benefits from our sales to Eurozone-based customers, from our prudent expansion of our Education Division, and from overhead savings already implemented. We anticipate performing in line with management expectations for the year ending 30 September 2009."
Summary
Trading in the current financial year to date is broadly flat reflecting a later booking market, with overall Group sales intake up 0.5% at current exchange rates (and down 2% at constant exchange rates) compared with last year. We will benefit from our sales to Eurozone-based customers who currently account for approximately 28% of Group revenues and overhead savings already implemented. At this stage, with still 41% of target Group revenue to be booked, we anticipate performing in line with management expectations for the year ending 30 September 2009.
Divisional performance
Education
The Education Division accounted for approximately 24% of 2008 Group revenues. It is currently 85% booked for 2009 and 14% for 2010, in line with previous years. Sales for the division are currently 13% above last year including a contribution from EST (acquired in June 2008); on a like-for-like basis divisional sales are up 7% over last year. We have not detected any material signs that the division is being affected by the recession.
We acquired the Windmill Hill activity centre in Sussex last year. Following a £4.5 million refurbishment programme, it is expected to open on schedule in May 2009 and offer purpose-built accommodation and high quality on-site adventure activities. Adding 5% (400 beds) to the capacity of PGL, Windmill Hill is already 89% booked for 2009 and 40% for 2010.
Hotel Breaks
Hotel Breaks accounted for approximately 33% of Group revenues. Sales intake for Hotel Breaks is currently 10% below last year. We have taken out about £1m of costs in the current year at Superbreak, primarily through headcount reduction.
Packaged business into London is an important market segment for this division. Declining hotel leisure rates and attractive rail fares have, since about early December, allowed us to offer customers better value short-break packages. Trading in recent weeks is about 6-8% below last year's value as we begin to see the benefit from an improved show line-up compared to 2008. Oliver! (which opened on 14 January 2009) has sold well and has also led to increased demand for other established shows such as The Lion King and Billy Elliott. Shows opening later in the year include Sister Act, Calendar Girls and Priscilla Queen of the Desert.
For the summer we are seeing some growth in UK short breaks and a decline in demand for European destinations, reflecting the weakness of Sterling. The net effect is modestly positive, despite lower average booking values.
Our Dutch hotels business Bookit is seeing higher volumes but lower hotel rates and the business is thus level (in Euro terms). Again there are signs that Dutch consumers are taking short breaks closer to home.
In neither the UK nor the Netherlands do we have commitments to accommodation or transportation.
Adventure Travel
Adventure Travel accounted for approximately 21% of Group revenues and is the smallest division. For 2008/09 the division is 61% (2008: 72%) booked and showing sales up 1% on lower volumes. Demand for adventure trips has been adversely affected by higher prices due to the strength of both the Euro and US$, although certain non-Euro destinations, such as Turkey, are performing well. We are expecting a later booking profile as customers defer big-ticket expenditure. To mitigate for the weaker demand and reduced margins due to adverse currency movements and inclusion of ad-hoc local payments, we have taken out about £1m of costs in the division, mostly at Explore.
We have not, to date, suffered from the geopolitical issues which impacted last year's trading. Tailormade Explore, launched last summer and catering for individual adventure travellers, is proving popular. Explore has recently launched a new Back to Basics economy trip range, which use public transport and simple guesthouses to help travellers get off the beaten tourist track under the guidance of an expert tour leader. Lastly, we have recently relaunched the Explore website with the aim of increasing online sales.
Our Dutch business Djoser is expected to follow a similar later booking pattern to the UK, while Travelplus (our German language-trip and gap-year specialist) is trading well and up overall in volume terms.
Camping
Camping accounted for approximately 22% of Group revenues. For the 2009 season, capacity has been reduced by 4%. Sales are currently 5% down compared with the corresponding period last year, with approximately 62% of sales booked (compared to 67% last year). Our research suggests that a high proportion of last year's UK customers are planning to book later in 2009 than they did in 2008. We continue to focus on improving occupancy and yields remain strong and in line with target. We are experiencing weakness in trading in Ireland (historically about 7% of the business) as a result of the very difficult economic environment. However, the strength of the Euro will increase the Sterling equivalent yields from Dutch and German bookings, thereby underlining the trading resilience of this division. Overall, we remain confident on our high season sales but there is some uncertainty about low season given the later booking trends. We continue to broaden the range of our Camping offer, introducing new destinations in the United States, and have, for this summer, a number of safari tents on test.
Financial position
Other than in relation to IAS 39, as detailed below, there has been no significant change in the Group's financial position since the full year results statement in November 2008. The normal working capital cycle of the Group's businesses is unchanged. We have taken a number of steps to prepare the business for a challenging year including strict management of cash and reduction in both costs and discretionary expenditure.
As reported in the annual report and financial statements for the year ended 30 September 2008, the Group has a number of currency derivatives and interest rate collar arrangements, to help manage the Group's exchange rate exposures and to cap the potential interest rates payable on Group borrowings; all of these arrangements are expected to be held to maturity. These are accounted for through the income statement on a fair value basis under IAS39. This resulted in a net charge to 2007/08 finance costs of £0.2 million. Currently, given recent weeks' changes in prevailing rates, the Board estimate a current year IAS 39 charge to finance costs of approximately £9 million, although the exact adjustment depends on prevailing rates at the end of the current financial year. This adjustment would be excluded from Headline EPS, is a non-cash item, has no impact on the Group's finance facilities or covenant calculations and will unwind over time to zero.
Financial calendar
Holidaybreak's Annual General Meeting will be held at 2:30pm on Tuesday 24 February 2009 at The Lowry Centre in Manchester.
The Company expects to announce its Interim Results for the six months ending 31 March 2009 on 18 May 2009.
Broker
We have appointed KBC Peel Hunt as corporate broker and financial adviser to Holidaybreak with effect from the AGM.
Board and Management
Simon Tobin, Managing Director of the Adventure Travel Division, will be stepping down from the Plc Board and from his divisional duties at the end of February 2009. He has been a Board member since January 2001. Going forward, the role will not be replaced. Carl Michel, Group Chief Executive, will chair the Adventure Travel Division and the managing directors of its individual businesses will report directly to him. The Board would like to thank Simon for his contribution to the Group over the years and to wish him well for the future.
As announced in November 2008, Bob Ayling's second three-year term as Chairman comes to an end in June 2009 when he will retire from the Board. The Nomination Committee is progressing with its search for his successor. A further announcement will be made when appropriate.
Enquiries:
Carl Michel / Bob Baddeley Holidaybreak +44 (0) 1606 787100
Catherine Hicks / Craig Breheny / Oliver Hughes Brunswick +44 (0)20 7404 5959
Note to Editors
Holidaybreak (HBR.L) is an education, leisure and activity travel group listed on the London Stock Exchange. The Group's four operating divisions have market leading positions in the UK and other major European markets, organising educational and activity trips for UK school children, short breaks in the UK and Europe, worldwide adventure holidays and mobile-home and camping holidays on sites throughout Europe. For more information, please go to www.holidaybreak.co.uk.
This information in this release is based on management information.
Certain statements in this announcement are forward-looking statements. Such statements are based on current expectations and by their nature are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. These forward-looking statements are made only as at the date of this announcement. Except as required by law, Holidaybreak plc has no responsibility or obligation to update publicly or revise any of the forward-looking statements contained herein.