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:
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Should you wish to take part in the Conference Call, please dial one of the
following numbers:
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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.
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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