TVZ.L Regulatory News (TVZ)

4 Nov 2008 07:00



Date: 4 November 2008

On behalf of: Travelzest plc ('Travelzest' or the 'Group')

Embargoed until: 0700hrs

Travelzest plc

Pre-close trading update

Travelzest plc, the online and specialist travel group, today announces the following update prior to entering a close period in respect of its results for the year ended 31 October 2008.

The Board of Travelzest anticipates that underlying trading for the year will be in line with its expectations. 

Canadian distribution

On 24 July 2008, as part of the Group's interim results for the six months ended 30 April 2008, the Group reported that its largest business, itravel2000, was performing well. The Board remains pleased with the performance of itravel2000 in the second half of the year and believes that this business is well placed going in to the peak winter selling season.

In June 2008, the Group announced the acquisition of The Cruise Professionals Limited, a Canadian luxury cruise retailer. The Board is pleased with the performance of the business which has performed in line with expectation since acquisition.

UK tour operations

The Group's operating model, with low levels of fixed assets and limited commitments for flights and accommodation, provides resilience to changes in consumer demand. Overall we are satisfied with the performance of the UK tour operating businesses in 2008.

UK on-line agency distribution

At the half year, the Group announced the decision to outsource Holiday Express' call centre. This action has been completed successfully. During the second half of the year, the Group took the decision to further reduce operating costs and closed the remaining operations of Holiday Express in October 2008. Whilst ownership of the holiday.co.uk and flight.co.uk websites will remain with the Group, operation of the sites has been passed to a third party. This ensures that the Group does not have exposure to further costs beyond October 2008. Operating losses generated by Holiday Express of approximately £1.2 million, which includes the costs of closing the operations, will be shown as a non-recurring item for the year ended 31 October 2008.

Possible offer

On 15 August 2008, the Group announced that it was in the early stages of discussions over a potential cash offer for the entire issued and to be issued share capital of Travelzest at a price of 115 pence per ordinary share. The potential offeror reserved the right to announce an offer at such lower price, to the extent that it is recommended by the board of Travelzest.

Discussions with the potential offeror continue and the majority of their due diligence has been completed. They confirmed to the Group on 31 October 2008 that their remaining due diligence in relation to the potential offer is underway and that they have not discovered any matter which would lead them to reduce the Offer from 115 pence in cash.  Completion of the due diligence process is anticipated in December 2008. There is no certainty that an offer will be made for the Group. A further announcement will be made when appropriate.

Commenting on the outlook, Chris Mottershead, Travelzest's Chief Executive, said:"I am pleased with the underlying performance of the Group this year. The actions that we have taken in our UK on-line distribution business, Holiday Express, in the last six months have further reduced our fixed cost base whilst maintaining our ability to create first class experiences for our customers.

Whilst there is clearly an uncertain global financial and economic landscape, the Board remains cautiously optimistic for the outlook for the 2009 financial year."

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