Corporate News – TOMORROW FOCUS AG boosts revenue in third quarter despite competitive market environment

TOMORROW FOCUS AG slightly boosted its revenue growth rate in the third quarter of 2015 in the face of strong competition. Consolidated revenue for the first nine months of the current year rose to EUR 83.5 million from EUR 80.2 million in the same period of 2014, a rise of 4.1 percent. At EUR 28.8 million, third-quarter 2015 revenue was up 5.5 percent on the total of EUR 27.3 million recorded for the same period in 2014. By contrast, growth in the second quarter of 2015 was just 1 percent.

Based on the company’s own estimates, the package holiday sector in the German-speaking area (Austria, Germany and Switzerland) generated moderate revenue growth in the first nine months of 2015 as a whole but fell back slightly in the third quarter of the year. In the same region, the travel market has been dominated throughout the year to date by tough marketing competition among the leading travel portal operators. One of the consequences of this was a sharp rise in prices for Google’s auction-based AdWords service. In the third quarter of 2015, HolidayCheck responded to this trend by significantly reducing the amount it spends on AdWords and introducing a voucher system for package holiday bookings that is designed to attract new customers and retain existing customers. According to the company’s own estimates, in the third quarter of the year HolidayCheck managed to boost its share of the package holiday market by a substantial margin at the expense of its competitors.

Overall, HolidayCheck AG increased its revenue for the first nine months of 2015 by around 7 percent and in the third quarter of the year by around 8 percent.

Based on our own assessment, revenue over the first nine months of 2015 in the Benelux package holiday sector was on a par with the previous year. In this environment and during a phase of strategic transformation, revenue for this period was down by one percentage point at WebAssets B.V., which operates the Zoover travel and MeteoVista/WeerOnline weather portals. Although third-quarter revenue remained slightly down year on year, revenue in September was well up on the same month in 2014.

Overall, Travel segment revenue for the first nine months of the year rose by 4.2 percent from EUR 80.0 million in 2014 to EUR 83.3 million in the current financial year.

At EUR 28.7 million, segment revenue in the third quarter of 2015 was up 5.5 percent year on year (third quarter of 2014: EUR 27.2 million).

The earnings figures for the first nine months of 2015 include a number of exceptional items. The main details are outlined below.

The appreciation of the Swiss franc against the euro had a substantial impact on the Group’s key earnings figures for the nine-month period under review and reduced total consolidated earnings by EUR 2.5 million (including EUR 0.8 million attributable to the third quarter of 2015).

To facilitate comparison with the previous year, the earnings figures shown below have been adjusted to exclude the following items:

Overall, additions to liabilities from share-based payment transactions (LTIP) reduced total consolidated earnings for the first nine months of 2015 by a further EUR 0.4 million, although this was partly offset by income of EUR 0.6 million in the third quarter. Group restructuring costs for the first nine months of 2015 came to EUR 2.0 million (of which EUR 0.9 million in the third quarter). Finally, nine-month earnings were reduced by pension provisions of EUR 0.5 million (first nine months of 2014: EUR 0.2 million).

Group operating earnings before interest, taxes, depreciation and amortisation (Group operating EBITDA) from continuing operations in the first nine months of 2015 stood at EUR 7.2 million, down 54.7 percent on the previous year’s nine-month total of EUR 15.9 million.

At EUR 3.1 million, Group operating EBITDA from continuing operations in the third quarter of 2015 was 49.8 percent lower compared with EUR 6.2 million in the same quarter of 2014.

Group operating earnings before interest and taxes (Group EBIT) from continuing operations stood at EUR 2.5 million in the first nine months of 2015, down 78.6 percent compared with EUR 11.5 million in the same period of the previous year.

Group operating EBIT from continuing operations in the third quarter of the current year was down 65.4 percent from EUR 4.7 million in 2014 to EUR 1.6 million.

Group operating earnings before taxes (Group EBT) from continuing operations stood at EUR 1.3 million in the first nine months of 2015, down 83.8 percent compared with EUR 8.3 million in the same period of 2014.

Group operating EBT from continuing operations in the third quarter of 2015 was minus EUR 1.2 million (third quarter 2014: EUR 3.9 million).

Group earnings after taxes from continuing operations ended the first nine months of 2015 at minus EUR 2.8 million compared with EUR 7.0 million in the same period of 2014.

Group earnings after taxes from continuing operations in the third quarter declined from EUR 3.3 million in 2014 to EUR 0.2 million in the current financial year.

Group earnings after taxes from discontinued operations for the first nine months of 2015 stood at EUR 18.2 million (first nine months 2014: minus EUR 13.6 million). With regard to the current period under review, this total contains consolidated earnings after taxes from the Group’s discontinued Publishing segment (EUR 20.6 million) and from its discontinued Subscription segment (minus EUR 2.4 million). Turning to the first three quarters of 2014, the above total of minus EUR 13.6 million contains consolidated earnings after taxes from the Group’s various discontinued operations: Publishing (minus EUR 1.9 million), French travel market (minus EUR 11.6 million), B2B (EUR 0.6 million) and Subscription (minus EUR 0.8 million).

Group earnings after taxes from discontinued operations in the third quarter of 2015 stood at EUR 0.9 million (third quarter 2014: minus EUR 9.2 million). This figure contains consolidated earnings after taxes from the Group’s discontinued Subscription segment (EUR 1.1 million). In the third quarter of 2014, the above total of minus EUR 9.2 million contains consolidated earnings after taxes from the Group’s various discontinued operations: Publishing (minus EUR 0.3 million), French travel market (minus EUR 9.2 million), B2B (EUR 0.4 million) and Subscription (EUR 0.0 million).

Group earnings after taxes for the first nine months of 2015 stood at EUR 15.4 million (first nine months 2014: minus EUR 6.6 million).

Group earnings after taxes for the third quarter of 2015 were EUR 1.1 million (third quarter 2014: minus EUR 5.9 million).

Consolidated earnings per share for all the Group’s operations stood at EUR 0.26 for the first nine months of 2015 compared with minus EUR 0.11 in the same period of 2014.

Consolidated earnings per share for all the Group’s operations in the third quarter of 2015 were EUR 0.02 (third quarter 2014: minus EUR 0.10).

As at 30 September 2015, the equity ratio stood at 62.8 percent compared with 53.7 percent as at 31 December 2014.

With regard to the Group’s continuing operations in the current financial year as a whole, TOMORROW FOCUS AG aims to generate percentage revenue growth in the mid to high single digits compared with total consolidated revenue for 2014 of EUR 100.1 million. Its objective for Group operating EBITDA is to at least reach the break-even point.

The Group’s strategic focus in the fourth quarter of 2015 and the financial year 2016 will be on measures to achieve sustainably higher rates of growth in customer numbers and revenue for our travel operations in the German-speaking area (Austria, Germany and Switzerland) and the Benelux region. To this end, over the next 15 months, TOMORROW FOCUS AG plans to invest more heavily in a range of product marketing measures designed to attract new customers and retain existing customers.

About TOMORROW FOCUS AG

TOMORROW FOCUS AG (ISIN DE005495329) is based in Munich, Germany, and is one of the country’s leading digital travel companies. With a total workforce of around 400, the TOMORROW FOCUS Group comprises HOLIDAYCHECK AG, which operates hotel review and travel booking portals by the same name; the car rental portal MIETWAGENCHECK; and WEBASSETS B.V., which operates the ZOOVER hotel review portals and the METEOVISTA/WEERONLINE weather portals.