Preliminary Results
28 February 2004 - 3:13AM
UK Regulatory
RNS Number:9334V
2 Travel Group PLC
27 February 2004
2 Travel Group Plc
Preliminary statement of results for the year ended
31 August 2003.
Chairman's statement
Overview
The Company floated on the Alternative Investment Market ("Aim") in January
2003. Depressed financial markets slowed the flotation process until well into
our financial year 2002/3, and this unfortunately pushed back many of the
initiatives we had budgeted for earlier in the year. This has had a detrimental
impact on the year's results.
As outlined in our Prospectus, the Board has concentrated its efforts on moving
the coach business away from tour work to more predictable domestic business. We
have frozen the expansion of the coach fleet, and developed and expanded the
business towards a mid level regional bus operator. Given the volatility of
coach operations in the year, due to internationalevents such as SARS and the
Iraq war, this position has been vindicated.
At the start of the financial year, the Company had its two depots at Swansea
and Cwmbran. By August 2003, facilities and infrastructure had been established
at both Cardiff and Llanelli. This significantly expanded the potential range
and size of our bus services and facilitated closer links with a number of Local
Authorities to whom we could tender for bus services. These depots are now fully
operational and have been inspected and approved by the Vehicle Inspectorate.
Since flotation, the Company has applied for, and was successful in its
application to increase the number of vehicle operating discs it holds by 30 to
a total of 110. The Company can now grow its activities by 37% .
Other achievements included the purchase of CTC in April 2003. CTC is a
clearing house for coach tour operators and gives 2 Travel's coach unit first
choice of available domestic work improving the general utilisation of the
internal coach fleet. Additionally, in June 2003 the Company acquired the
freehold on its Head Office site in Swansea. As described in more detail below,
the site is adjacent to a major retail development scheme which is currently
well underway.The Board is examining how to capitalise on the site for the
benefit of shareholders.
Results
Turnover (including a contribution of #506,626 from acquisitions) increased to
#4.2m (2002: #3.7m), operating loss was (#686,654) (2002: profit #375,763) and
the loss before taxation was (#996,663) (2002: profit #212,135). In view of the
losses, no dividend will be paid for 2003. The main reason for the fall in
profits were:
* Exceptional costs arising from the Company's flotation, totalling
approximately #250,000.
* Depot development costs totalling approximately #50,000.
* Route development costs totalling approximately #40,000.
* Increased insurance premiums.
* Increased staff costs, up by 12% on the previous years in preparation for
the bus expansion programme. This was also partly attributable to the
higher national insurance rates.
* Substantial additional operating costs were incurred to support the build
up of business at the two new depots in Llanelli and Cardiff. The benefits
from this did not materialise until the two new depots were fully
operational and the additional licences were obtained. This did not occur
until the end of the financial year.
* General overhead costs increased by approximately #400,000. This included
Directors remuneration increases of #144,000, administration wage increases
of #114,000, legal and professional fee increases of #47,000 and bad debts
of #10,000.
Funds received from the flotation before expenses amounted to #1.6m. In addition
after flotation a further #550,000 was raised before costs.
Net debt as at 31 August 2003 was #3.6m (2002:#3.2m).Debt, increased during the
year, helping to fund fixed asset additions of #1.7m (2002:#1.5m).Total
repayments on finance agreements, including interest were #1.1m (2002:#0.8m),
with new finance agreements of #0.7m (2002: #1.4m).
Operating cash flow during the year was an outflow of #47,157 (2002:#477,065
inflow). The main contributory factor was a operating loss of #686,654 (2002:
#375,763 operating profit). Depreciation charges rose to #266,591 (2002:
#213,707), whilst stocks and debtor balances fell by #139,892 (2002:#117,450
increase), and creditor balances grew by #233,014 (2002:#5,045 increase).
Coach operations
The UK coach industry experienced lower activity as a result of reduced inbound
tourism due to the Iraqi war, perceived terrorist threats generally and SARS.
Incoming tourist work, which had formed a significant part of the previous years
trading, virtually disappeared and there was a general downturn in outward
European tours. Despite this, the Company maintained turnover by establishing
new customers within the UK tour market.
The addition of CTC provided some improved utilisation of the coach fleet,
although CTC itself suffered from reduced volumes experienced throughout the
industry.
Bus operations
In line with the Company's intention to become a mid level localbus service
provider, bus operations benefited from the new commercial and local authority
tendered routes gained towards the end of the year.
Development costs have been incurred to enable further expansion through to
2005. With the new depots at Llanelli and Cardiff the Company has facilities in
place to operate up to 200 vehicles. Between April and August 2003, 10 bus
services were registered to operate in Neath, Swansea and Cwmbran. By April 2004
over 60 bus workings will be in operation. The start up costs included in the
2003 figures have enabled this significant development to take place, however
the full effect of the move to bus workings will not be felt until 2004/2005.
Experience with existing routes, confirm that after an establishment period, of
approximately 6 months more predictable income streams and improved cash flows
are achieved. It is the intention to consolidate the development of the bus
operations during 2003/2004. Whilst some benefits are expected to flowin the
current year the full benefits will be achieved in the following financial year.
Premises
The significant Retail and Leisure development on local authority land adjacent
to the Company's 5 acre premises at Swansea which is due to complete later this
year will result in a marked increase in the value of the Company's premises.
During the year the local authority officially recognised the existing use of
the site, which is an important step towards enhancing the planning status of
the premises.
The premises have already attracted attention from national companies looking
for a base in Swansea. This has prompted the Board to investigate the
possibility of relocating its operations in the Swansea area.
Whilst it is not expected that a significant cash return will be generated from
the premises in the next financial year there clearly exists a potential
opportunity for the Company to relocate and build a purpose- built depot and
generate additional profit from a redevelopment of the site.
Any significant progress in this regard will be announced.
Current trading
Although the year has started slower than expected, the development of new bus
routes, and continued support to existing routes until they fully mature, should
have a positive impact during the current year. Now that the Company's overhead
base is relatively fixed the Board believe that the contribution from the
expanding bus operations will increase.
Therefore to implement the final part ofthis first phase of the company's
expansion programme a secured facility has been negotiated of #675,000 to meet
the Company's short to medium term working capital requirements. The facility
has been guaranteed by Nigel Short and Huw Francis, on commercial terms secured
by a second charge on the Company's freehold property in Swansea.
To further assist cash flow a refinancing and rescheduling of some finance
agreements has been undertaken post year end with the aim of reducing monthly
repayments and to take advantage of the lower interest rates then available in
the market.
It is hoped that debt levels should begin to fall at the end of the year and
this will continue in the following financial year.
Summary
This has been a period of transition for the Company; a significant amount of
work has been completed in developing this bus network and the Board remains
optimistic for the future.
The year has seen significant costs being incurred to grow and support the
infrastructure of the business whilst the bus services are further developed.
It is expected that further development will continue through the first half of
the next financial year when the remaining 40 bus workings will come on stream.
The full effect ofthe first phase of the Company's development plan will not be
felt until the next financial year when it is expected that significant
improvements in the financial results will be achieved.
On behalf of the Board, I would like to thank all of our staff for their
contribution and effort during 2003. I look forward to their continued support
as the Company meets the challenges of 2004.
Sir Richard Needham
Chairman
Consolidated profit and loss account
For the year ended 31 August2003
2003 2002
#'000 #'000
Turnover (incl. acquisition effect of #507k) 4,245 3,679
Other Operating Income 2 10
------- -------
4,247 3,689
Operating Costs (4,685) (3,313)
Exceptional Costs associated with flotation (249) -
-------- ---------
Gross Operating (loss)/profit (687) 376
Profit on disposal of fixed assets 72 106
Net interest payable (382) (270)
------- -------
(Loss)/profit on ordinary activities before taxation (997) 212
Tax on (loss)/profit on ordinary activities 47 (41)
------- -------
(Loss)/profit for the financial year (950) 171
Dividends - (81)
------- -------
Retained(loss)/profit for the financial year (950) 90
======= =======
Surplus on property revaluation 167 -
Total recognised (losses)/gains for the year (783) 90
===== =====
The results for the current and prior years all relate to continuing operations.
Consolidated Balance Sheet
At 31 August 2003
31.8.03 31.8.02
#'000 #'000 #'000 #'000
Fixed assets
Tangible assets 4,959 3,478
Intangible assets 180 1
------- --------
5,139 3,479
Current assets
Stocks 171 215
Debtors 692 624
Cash at bank and in hand 154 -
----- -----
1,017 839
Creditors: amounts falling due within (2,350) (1,768)
one year
--------- ---------
Net current liabilities (1,333) (929)
Total assets less current liabilities 3,806 2,550
Creditors: amounts falling due after (2,737) (2,085)
more than one year
Provisions for liabilities and charges - (42)
--------- --------
Net assets 1,069 423
===== =====
Capital and reserves
Called up share capital 98 25
Share premium 1,692 337
Revaluation reserve 167 -
Profit and loss account (888) 61
------ -----
Shareholders funds 1,069 423
====== =====
Consolidated cash flow statement
For the year ended 31 August 2003
2003 2002
#'000 #'000
Cash (outflow)/inflow from operating (47) 477
activities
Returns on investments and servicing of (376) (270)
financing
Capital expenditure (691) 198
Acquisitions and disposals (27) -
Equity dividends paid - (81)
----- -----
Cash (outflow)/inflow before financing (1,141) 324
Financing 1,256 (334)
------- -------
Increase/(decrease) in cash in the period 115 (10)
======= =======
Notes
1. Basis of accounting.
The financial statements have been prepared under the historical cost convention
as modified by the revaluation of certain assets.
2. Profit on ordinary activities before taxation
Profit on ordinary activities before taxation is stated after charging/
(crediting):
2003 2002
#'000 #'000
Depreciation
Owned assets 5312
Leased assets 206 201
Auditors remuneration - audit 16 4
Auditors remuneration - non audit 23 -
3. Loss per ordinary share
The basic earnings per ordinary share is calculated by reference to the loss of
#949,636 attributable to ordinary shareholders. This calculation was based on
the loss for the period of #949,636 and on a weighted average number of ordinary
shares in issue in the financial period of 37,034,432.
The basic earnings per ordinary share before flotation costs is calculated by
reference to the loss of #949,636 attributable to ordinary shareholders less
flotation costs of #248,645. This calculation was based on the loss before
flotation costs for the period of #700,991 and on a weighted average number of
ordinary shares in issue in the financial period of 37,034,432.
The share option and the convertible loan stock are at present non dilutive.
4. Reconciliation of net cash flow to movement in net debt
2003 2002
#'000 #'000
Increase/(decrease) in cash in the period 115 (10)
Cash(inflow)/outflow from (increase) / decrease in (103) 553
debt lease finance
Cash(outflow)/inflow from (decrease) in factoring 245 (219)
account
----- ------
Change innet debt resulting from cash flows 257 324
New finance leases (723) (1,443)
------ --------
Movement in net debt in the year (466) (1,119)
Net debt at beginning of year (3,182) (2,063)
-------- ---------
Net debt at end of year (3,648) (3,182)
===== =====
5. Analysis of net debt
At 1.9.02 Cashflow Other non cash At 31.8.03
flows
#'000 #'000 #'000 #'000
Cash at bank and in hand 154 154
Bank overdrafts (48) (40) (88)
----- ----- ------ -----
(48) 114 - 66
Hire Purchase (2,671) 801 (723) (2,593)
Factoring Account (463) 245 (218)
Debts falling due within one (25) (25)
year
Debts falling due after more (878) (878)
than one year
-------- ------ -------- --------
Total (3,182) 257 (723) (3,648)
===== === ===== =====
6. Financial Information
The financial information set out above does not constitute statutory accounts
within the meaning of Section 154 of the Companies Act 1985 forthe years ended
31 August 2003 and 2002 but it is derived from the Groups audited accounts which
have been approved and signed by the directors. Statutory accounts for 2002 have
been delivered to the Registrar of Companies, and those for 2003 will be
delivered following the Group's Annual General Meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under either Section 237(2) or 237(3) of the Companies Act 1985.
7. Report and Accounts
Copies of the Report and Accounts will be sent to shareholders. Copies will be
available from the Group's Registered Office at Upper Bank, Pentrechwyth ,
Swansea, SA1 7DB.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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