Plc (UK) - Trading Update

17th Sep 2002

Prior to entering its close period at the end of September,
has issues a trading update covering the key Quarter

Total Transaction Value (TTV) by departure date will increase to approximately £110.0 million for the Quarter. This compares with TTV of £61.0 million in Quarter 3 2002 and £46.9 million in Quarter 4 2001, demonstrating growth rates of approximately 80 per cent and 135 per cent respectively.
Organic like-for-like growth in the Quarter will amount to at least 55 per cent compared with Quarter 4 2001. Both the UK and France have
performed exceptionally well during this very busy period for the travel sector with organic growth rates of approximately 73 per cent
and 46 per cent respectively compared with the previous year.

The Quarter also benefits from a full quarter effect of the strategic acquisitions of and The Destination Group made in
the UK and from a two-month contribution from in
Europe, principally in France. The growth of TTV in has exceeded our expectations set during the acquisition process.
Percentage gross margins have also improved from Quarter 3 to deliver a return on TTV of approximately 13.5 per cent. This improvement comes from the increased sale of higher margin holidays during the
Quarter and from an increasing contribution from the sale of advertising space and other commercial transactions.

As previously announced, the underlying cash costs for the full year will show a reduction of at least £10.0 million compared with the
previous financial year. Cost reductions continue to be a major focus
within the businesses.

The integration of the principal travel functions of the two UK acquisitions and the travel categories of into a
single travel unit based at the Farringdon offices remains on track and will be completed by 30 September 2002. This process will reduce
the combined UK cost base by approximately £2.0 million during the next financial year.
The integration of the businesses in France, following the acquisition of Travelprice SA, has now started and we remain confident that the process will be completed by 28 February 2003 and will deliver full year savings of at least EUR10.0 million.


Today, we also announce the completion of a contract with 7C (Holdings) Limited to outsource UK data entry and a proportion of post sales customer support. This commercial outsourcing arrangement converts a level of fixed costs into a variable cost. The full year
effect of this contract will be to reduce the UK future cost base by approximately £2.0 million.

We are also pleased to announce that for the first time will deliver profit before tax (excluding goodwill
amortisation and exceptional items) and positive operating cashflow in this key Quarter. The Quarter 4 and preliminary results will be announced on 22 November 2002.

Related stories on ITN:

(28/08/2002) to Acquire

(08/08/2002) Q3 Results Profitable



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