ebookers.com has released results for the third quarter ending 30th September 2001, with the welcome news that the company has entered profitability, albeit with a qualification.

The company reported a profit of GBP 0.2m for Q3 2001, although that figure is adjusted and defined as: Earnings after net interest, before tax, depreciation, amortisation and stock compensation expense. This compares to a second quarter loss of GBP 5.9m.

Other highlights from the third quarter include:

—Gross profit increases to GBP 6.4m, an increase of 146% compared to Q3 last year and 37% sequentially.

—Pre-tax loss falls by GBP 6m in just one quarter to GBP 2.6m (Q2 2001 loss GBP 8.6m).

—Profit* per ordinary share of 0.5 pence in Q3 2001 compared to a loss of 13 pence in Q2 2001 and 15 pence in Q3 2000.

—Cash at 30 September: GBP 22.9m.

—Gross margins based on gross sales improve sequentially from 9.5% to 12.9%.

—Gross sales net of cancellations rose by 80% year on year, and 1.4% sequentially to GBP 49.4m for the September quarter.

—78% of gross sales are merchant fares.

—ebookers has implemented strong efficiency measures, including staff reductions and moving back office functions to India. Impact of these is expected to come through in 2002.

—All figures as per estimates given in announcement of 24 October and are unaudited and in UK GAAP.

The first 10 days of September were the strongest online in ebookers` trading history. For the 3 weeks after the September 11 total average daily sales were approximately 75% of those of September 1-10.
In the first week of October sales returned strongly to 89% of the September 1-10 period. There was a decline with the outbreak of conflict on October 7, but by the week October 15-21 sales were running at 85% of September 1-10 levels. These figures are particularly encouraging.

The last quarter of the year is traditionally ebookers` weakest due to seasonality. Also, during the fourth quarter ebookers is establishing IT and back office operations in India which are expected to be fully functional in Q1 2002 and should subsequently deliver substantial cost savings. This means that ebookers will be incurring additional expenditure in training and operating expenses during the present quarter.

Navneet Bali CFO commented: “Though demand has shown a positive and encouraging trend in recent weeks, due to current uncertainty it would be difficult to give accurate forecasts. Given this volatility, the additional expenditure we are incurring, and the seasonality in our business, we expect to make a modest negative EBITDA and pre tax loss in the fourth quarter. Cost savings from our efficiency-related investments are expected to make their real impact in 2002.”

The achievement of these goals could be affected by factors outside ebookers control such as military conflict or further terrorist activity.

Sanjiv Talwar, Managing Director commented: “Having achieved profitability two quarters in advance of our commitment, ebookers is investing in its infrastructure to give it the cost base for high future profits. All company activities are geared towards this aim. Our focus and efforts have now moved on towards delivering both growth and a positive EBITDA of over 3% of sales within the period Q4 2002 -Q1 2003, and of 5% within Q4 2003-Q1 2004.”

Dinesh Dhamija, CEO ebookers stated: “We are very happy to have achieved profitability despite the events of September 11. We believe the results reflect the extensive travel experience of the management team. We have been through and prospered in uncertain times before such as the Gulf War. We know how to manage costs and are prepared to take strong measures to do so. Another factor is our merchant fares which are the best online in Europe. We set our margins on them, so they are not subject to commission pressure. For instance, recent withdrawal of commission by Continental to internet travel agents does not affect ebookers—quite apart from the fact that it only applies to US agents and not those in Europe.” Ebookers will hold a Webcast today, 29th October, at 16:00GMT, 17:00CET, 11:00EST.
www.ebookers.com

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