Interim Results
30 Mai 2003 - 9:01AM
UK Regulatory
RNS Number:7177L
2 Travel Group PLC
30 May 2003
30 May 2003
2 Travel Group plc
Interim Statement
Chairman's Statement
Introduction
2 Travel Group plc is a bus and coach operation based in South Wales. The
Company floated on AIM in January 2003. The placing raised circa #2 million
before expenses, through a combination of share capital and loan notes, to
provide working capital and resources to expand the business. The Company is
pleased to present today its first Interim Report.
Results
For the six months to 28 February 2003, turnover stood at #1,951,000 (12 months
31 August 2002: #3,679,000) and operating profit at #80,000 (12 months 31 August
2002: #482,000). Interest and factoring charges during the period amounted to
#179,000 (12 months 31 August 2002: #270,000), whilst non-capital flotation
costs of #212,000 have also been incurred and charged to the profit and loss
account in the six months to 28 February 2003. These costs exceeded those
estimated pre-float and reflect the additional work required through the delay
of going to market.
Significant amounts of management time and effort were expended to ensure the
flotation proceeded. Further costs were incurred as additional management was
recruited to meet the demands of being a publicly quoted plc. Revenue
initiatives were delayed as the necessary resources were not available for most
of the period. It is anticipated that the full benefits from the placing will
be in future periods.
The additional funds raised have improved the Company's working capital position
and enabled vehicles to be acquired and acquisitions to be made as outlined in
the Current Trading section below. Subsequent to the main placing an additional
investment of #400,000 (gross) has been made by Matrix Private Equity.
At the end of the period net debt, which mainly comprised HP debt on our coach
fleet was #2,820,000, (31 August 2002: #3,181,000), which now includes #600,000
of convertible loan stock, taken out at the time of the Company's flotation.
No dividend for the period is proposed.
Bus Division
September 2002 saw the commencement of additional vehicle operations in the
Cardiff area and the opening of a depot on the city outskirts. This decision
reflects the Company's policy of shifting more into contract and local bus
operations. Cardiff being the Welsh capital and seat of the devolved government,
was an obvious target for the Company to become a regional bus operator. The
success of the Cardiff move continues with additional bus operations commencing
in April 2003, and passenger numbers on existing services continuing to grow.
The Company now operates 11 vehicles on a mix of commercial and long term
subsidy basis on all day bus routes, whilst a further 23 vehicles operate
schools only services. Bus and Local Authority contracts currently represent
approximately 50% of overall revenue.
Coaching Division
The Coaching Division continues to provide coaches to a number of organisations
with the Company recently being awarded the contract to carry the Welsh National
Rugby Team. Competition remains high in this market place and rates remain low.
At the end of 2002 a decision was made to reduce the Company's commitment to
the European 2003 Tour season. Although daily revenue is higher profit margins
are considerably lower, as most of the work is very high mileage requiring two
drivers. Additional UK work has been taken on to replace this. The sector,
however, has suffered from the uncertainty in the economy arising out of the
Iraq war.
The Company currently operates a frontline coach fleet of 25 vehicles and it is
not envisaged that this will grow. Emphasis is being placed on increasing
utilization of these high cost assets to improve the return on investment.
Commercial Engineering Division
Our Engineering Division services and maintains both our in-house fleet of
vehicles and third party vehicles, where capacity permits. The growth in the
Company's vehicle fleet has necessitated greater use of the already limited
engineering facilities. As a result resources available for Third Party vehicles
have fallen and so also has turnover in this area. Some success has been
achieved in obtaining new external customers, which now include Tesco's and BFS
Group. This side of the business is expected to gradually become a smaller
percentage of turnover in the Engineering Division.
Management Initiatives
During the period work commenced in introducing new and stronger management
reporting systems, with the aim of establishing the profitability and
utilization of the Company's vehicles. Regular monitoring of current contract
profitability continues. There have also been some successes in recent tender
awards, increasing the number of buses on all day services by 25%. The
development of local bus services is seen as the main future direction for the
Company; to this end, additional services have commenced in Cardiff, Neath and
Newport. These have achieved their passenger number targets. The full benefits
of these extended operations is expected to begin to show through in the second
half of the year and should be significant in 2003/04. We are currently
reviewing all our existing operations to maximize our profitability and cash
flow.
Current Trading and Outlook
Since the half year trading conditions remain highly competitive. The quick
conclusion of the Iraq war has led to an oil price reduction, which has helped,
but uncertainty still flows through the Tour Hire Market.
Major tender programmes are now being issued by several local authorities, which
could provide attractive opportunities for the Company.
The 2 Travel Group brand is now well in established South Wales. Key
achievements since the flotation of the Company on AIM include the following:
* The Company was awarded the prestigious Welsh Rugby Union approved carrier
status.
* Contract signed with Leisuretime Wales to provide the majority of coaches
for their 2003 brochure.
* Vehicle acquisitions for bus services.
* Significant reduction in factoring.
* Acquisition of CTC completed.
* Acquisition of our head office 5.5 acre site in Swansea completed.
The outcome for the financial year will depend on the important summer season.
Assuming this to be reasonable the Board remains confident of achieving a
satisfactory level of performance during the post flotation period.
The Board would like to place on record their thanks to all the company
employees and management for their contributions and efforts during this period.
Without their commitment a difficult task would have been nigh impossible. The
Company is now well placed to face the challenges and opportunities which lie
ahead.
Rt Hon Sir Richard Needham
Chairman 30 May 2003
Consolidated Profit and Loss Account
For the 6 months ended 28 February 2003.
Notes 6 months 12 months
ended ended
28 February 31 August
2003 2002
#'000 #'000
Turnover 1,951 3,679
Operating Profit 80 482
Interest and Finance Charges 183 270
Exceptional Charges 212 -
(Loss)/Profit before tax (315) 212
Taxation 2 30 (41)
(Loss)/Profit after tax (285) 171
Dividends 3 - (81)
Retained (Loss)/Profit for the period (285) 90
Ordinary Shares in issue 4 28,627,799* 25,202**
Basic loss per share: 4
Before Exceptional Costs 0.25p
After Exceptional Costs 0.99p
* Calculated from weighted average number of shares based on date of issue.
** Preflotation shares @ #1 nominal value.
Consolidated Balance Sheet as at 28 February 2003.
Unaudited Audited
28-Feb-03 31-Aug-02
#'000 #'000
Fixed Assets
Intangible assets 1 1
Tangible assets 3,474 3,478
3,475 3,479
Current Assets
Stocks 237 215
Debtors 835 624
Cash 147 -
1,219 839
Creditors: amounts due within one year 1,812 1,768
Net current liabilities (593) (929)
Total assets less current liabilities 2,882 2,550
Creditors amounts due after one year (1,867) (2,085)
Provisions for liabilities and charges (12) (41)
Net Assets 1,003 424
Capital and Reserves
Called up share capital 79 25
Share Premium account 1,147 337
Profit and loss account (223) 62
1,003 424
Consolidated Cash Flow Statement
Unaudited Audited
28-Feb-03 31-Aug-02
#'000 #'000
Cash from operating activities (13) 477
Returns on investments and servicing of finance
Interest paid (4) (2)
Interest element of hire purchase payments (141) (268)
Net outflow from returns on investments and
Servicing of finance (145) (270)
Capital Expenditure (103) 199
Taxation - -
Equity Dividends paid - (81)
Financing
Issue of new ordinary share capital 864 -
Issue of loan stock 577
Factoring account movement (323) 220
Capital element of hire purchase payments (450) (554)
Costs of flotation (212) -
Net cash inflow/(outflow) from financing 456 (334)
Increase/(decrease) in net cash in the period 195 (9)
Notes
1. The interim financial statements were approved by the Board of Directors
on 23 May 2003. The interim statements, which are unaudited but have been
subject to independent review by our auditors, Bevan & Buckland, have
been prepared on the basis of the accounting policies published in the
statutory accounts for the year ended 31 August 2002. A copy of their
Independent Review Report can be found on page 10. The financial
information set out in this interim report does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. The figures
for the year ended 31 August 2002 have been extracted from the statutory
financial statements which have been filed with the Registrar of
Companies.
2. The estimated tax charge is based on a Corporation tax rate of 19%.
3. The Directors do not recommend the payment of an interim dividend.
4. Basic earnings per share, after the write off of flotation costs, have
been calculated on the weighted average number of shares in issue
during the period of 28,627,799, based on the date of issue.
5. Copies of this report are available to shareholders and members of the
public from the Company's registered office: 2 Travel House, Upper Bank,
Bonymaen, Swansea, SA1 7DB.
INDEPENDENT REVIEW REPORT TO 2 TRAVEL GROUP PLC
Introduction
We have been instructed by the company to review the financial information set
out on pages 6 to 8 and we have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' Responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The Listing
Rules of the London Stock Exchange require that the accounting policies and
presentation applied to the interim figures should be consistent with those
applied in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.
Review Work Performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board. A review consists principally of making
enquiries of management and applying analytical procedures to the financial
information and underlying financial data and based thereon, assessing whether
the accounting policies and presentation have been consistently applied unless
otherwise disclosed. A review excludes audit procedures such as tests of
controls and verification of assets, liabilities and transactions. It is
substantially less in scope than an audit performed in accordance with Auditing
Standards and therefore provides a lower level of assurance than an audit.
Accordingly we do not express an audit opinion on the financial information.
Review Conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 28 February 2003.
Bevan & Buckland
Chartered Accountants
Russell House
Russell Street 27 May 2003
Swansea
SA1 4HR
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