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INTERIM RESULTS 2002

MAY 2002. INTERIM RESULTS 2002. 9 May 2002. Holiday break plc INTERIM RESULTS 2002. Results Overview Financial Review Current Trading and Prospects Future Strategy. Interim Announcement 2002 HALF-YEAR RESULTS. £5.9m loss is entirely normal (2001 : £6.7m)

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INTERIM RESULTS 2002

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  1. MAY 2002 INTERIM RESULTS2002 9 May 2002

  2. Holidaybreak plcINTERIM RESULTS 2002 • Results Overview • Financial Review • Current Trading and Prospects • Future Strategy

  3. Interim Announcement 2002HALF-YEAR RESULTS • £5.9m loss is entirely normal (2001 : £6.7m) • Hotel breaks - substantial growth at the top line - margin improvement • Adventure - pleasing sales performance following post September 11th disruption - reduced margins due to load factor pressures • Camping - similar loss to 2001 • Interest charge down • Substantial net debt reduction

  4. Interim Announcement 2002CURRENT TRADING AND PROSPECTS • Camping outperforming mainstream AIT operators - 6% better than 2001 • Hotel Breaks sales growth continuing strongly- 30% ahead of 2001 • Adventure will achieve a creditable result in a difficult year - 2% up on 2001 • Overall prospects for the year are good - further earnings and dividend growth anticipated

  5. Interims 2002PROFIT AND LOSS ACCOUNT (six months to 31 March 2002) All stated before goodwill amortisation

  6. Interims 2002PROFIT AND LOSS ACCOUNT- DIVISIONAL ANALYSIS (six months to 31 March 2002) All stated before goodwill amortisation

  7. Interims 2002BALANCE SHEET

  8. Interims 2002CASH FLOW (six months to 31 March 2002)

  9. Interims 2002CAMPING - HALF-YEAR RESULTS • Seasonal nature of business means a loss in the first half is inevitable • All sales taken in the second period -over 80% of forward bookings for the summer season received by 31st March • Costs are for overheads and marketing

  10. Interims 2002CAMPING - CURRENT TRADING AND PROSPECTS • Like for like sales 6% up on 2001 with over 85% of estimated final total received • UK, the largest and most profitable market, 8% up • Resilient performance fromHolland • German bookings down,partly due to marketweakness but also schoolholiday patterns whichchange annually

  11. Interims 2002CAMPING - CURRENT TRADING AND PROSPECTS • Low season has held up well • Confident that late Augustcapacity will fill in a stronglate bookings market • Small margin improvementanticipated

  12. Interims 2002CAMPING - STRATEGY • Ongoing evolution from tent to mobile-home accommodation in all markets will continue to support profits and margin growth • Product development - Fun Station, low season products, fly/drive • Dual brand strategy to continue with Eurocamp brand positioned to appeal to the mainstream self-catering customer whilst Keycamp maintains current positioning • Camp-site owned capacity an increasing feature but no significant inroads into UK market

  13. Interims 2002HOTEL BREAKS - HALF-YEAR RESULTS • First half sales increase of 25% • Effect of lower London hotel prices on average invoice values counterbalanced by increased rail inclusive sales and reduced numbers of low value airport hotel bookings • Margin improvements due to effective cost controls, scale economies and improved mix -ie.direct sales and internet • Successful launch of European hotels programme - second edition brochure just released • Valuable contribution to group cash flows -benefits of negative working capital

  14. Interims 2002HOTEL BREAKS - CURRENT TRADING AND PROSPECTS • Strong trading pattern continuing- currently domestic break sales at plus 30% on 2001 • European break sales increasing aslate spring/early summer bookingscontinue • London hotel market (over 35%of sales) still relatively soft andso providing plentiful capacityand attractive rates • But all regions showing healthygrowth

  15. Interims 2002HOTEL BREAKS - CURRENT TRADING AND PROSPECTS • All distribution channels growing but directs and internet (in particular) growing faster than high street retail • Economies of scale and reduced share of high street agency sales will result in better year end margin • Acquisition of Crystal Britain, the UK hotel breaks division of Thomson (now TUI) will increase share and distribution in UK travel agencies and provide direct marketing opportunities

  16. Interims 2002HOTEL BREAKS - STRATEGY • Continue to support core high street agency distribution channel whilst growing internet and directs share of overall sales • Active development of new product extensions (events, theatre packages etc) and distribution partnerships - rail companies, internet portals hotel chains, tourist authorities, affinity groups etc • Second year European programme will double original hotel numbers to 750 and extend destination range from 30 to 55-60 • Build on current inbound sales • Appropriate bolt-on acquisitions

  17. Interims 2002ADVENTURE - HALF-YEAR RESULTS • Explore’s pre-Christmas sales held up reasonably well due to strong pre-September 11th start to the campaign - post September 11th new booking activity was sparse and cancellations heavy • Load factors hit by customer cancellations, tour transfers and airline schedule changes • Second quarter sales figures benefited from earlier Easter • Regal achieved excellent load factor returns albeit at lower values and margins • First half result somewhat better than we anticipated at time of 2001 results announcement

  18. Interims 2002ADVENTURE - CURRENT TRADING AND PROSPECTS • Current total 2002 sales 2% up on 2001 equivalents. Weekly trends up year on year • Explore’s third quarter year on year comparisons affected by earlier Easter and weakness in lower margin overseas agent bookings (USA, Canada, Australia etc) which tend to concentrate into early summer period • Fourth quarter is stronger and both periods will benefit from greater than normal late booking activity which is characterising the current campaign and the market in general

  19. Interims 2002ADVENTURE - CURRENT TRADING AND PROSPECTS • Reduced charter capacity will limit potential upside for Regal but overall performance will exceed post September 11th expectations • Full year divisional profits will be lower than last year’s figure but we anticipate a creditableresult in a very difficult year

  20. Interims 2002ADVENTURE - STRATEGY • Concentrate on growing existing profitable tours • More short tours and European capacity • Separate “Walking and Trekking” product • Product extensions - specialist tours, family adventures, tailor made • Improve internal systems and processes to achieve processing efficiencies and support development plans • Reduce Regal’s dependence on Red Sea charters through schedule carrier based offers to other destinations • Fragmented sector offers acquisition possibilities

  21. UK Holiday Sector2001/2 TRADING • Volume sales for both winter and summer 2002 down on 2001 by c.10% - particular weakness in family holidays • Summer 2002 has been strengthening but May/June remains a problem • Capacity cuts on air charters appear to be holding • Many independent operators having an excellent year • Low cost airline traffic and tailor-made holidays growing rapidly • Late bookings strong - not just price driven

  22. UK Holiday SectorINDUSTRY DEVELOPMENTS • Four major players in UK:Thomson (TUI/Preussag), My Travel (Airtours), Thomas Cook (C&N) and First Choice - 70% share of inclusive holidays sold and own 45% of high street agents • Vertical integration exposed by recent industry trends but further consolidation likely

  23. UK Holiday SectorINDUSTRY DEVELOPMENTS • Many specialist operators and independent agents continue to thrive • Low cost airlines (Easyjet, Ryanair, Go etc) have challenged existing industry model and changed consumer behaviour • Distribution channels fragmenting - internet, teletext, TV channels, Off the page

  24. UK Holiday SectorCONSUMER TRENDS • Consumers - more knowledgeable, more demanding, less brand loyal • Independent and tailor made holidays increasingly favoured • Increase in multiple holiday taking and short breaks (domestic and overseas) • ‘Grey’ market increasing in importance • Other growth areas are long-haul and activity/ special interest • Late booking trends partly driven by bargain hunting and partly by lifestyle changes and more frequent travel

  25. (Short breaks = 1-3 nights) Source: Mintel (2002) UK Holiday SectorGROWTH IN OVERSEAS HOLIDAYS, 1991-2001 UK HOLIDAY MARKET

  26. (Short breaks = 1-3 nights) Source: Mintel (2002) UK Holiday SectorGROWTH IN DOMESTIC HOLIDAYS, 1991-2001 UK HOLIDAY MARKET

  27. Holidaybreak plcGROUP POSITIONING AND STRATEGY • Quality market leading businesses in sectors with good growth potential • Avoid volatile, low margin, short-haul package holiday market • Organic growth combined with ‘bolt-on’ acquisitions to existing divisions and acquisition of travel businesses in new sectors • Characteristics of Group businesses provide an excellent platform for growth and acquisition template

  28. Holidaybreak plcCOMMON CHARACTERISTICS • Market Leading businesses - Eurocamp, Keycamp, Superbreak, Explore Worldwide and Regal • Growth opportunities - in all divisions • Healthy margins - much higher than sector norm • Low fixed cost commitments - flexible business models • Strongly cash generative - especially Hotel Breaks and Adventure

  29. Adventure Hotel Breaks Camping Holidaybreak plcDIVISIONAL STRUCTURE AND BRANDS

  30. Interims 2002OVERVIEW AND SUMMARY • Half year results show impressive performance by Hotel Breaks and reduced net debt • Further profits and dividend growth in 2002 • Camping and Hotel Breaks positioned for further growth in 2003 whilst Adventure should recover lost ground • Holidaybreak well placed to benefit from current holiday sector trends - very strong cash generation a key characteristic of the business • We view the future with confidence

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