Holidaybreak Annual Report and Accounts 2002

Holidaybreak has had another excellent year. Profits and turnover have reached record levels, with the increases coming almost entirely from organic growth. Substantial cash has been generated and we have made an important addition to our core Camping business.

In the year to September 30th 2002, profits before goodwill amortisation, impairment and tax rose by 13.7% to £27.1m on turnover of £218.7m, up 13.6%. There were no exceptional items. Headline earnings per share rose 11.6% to 42.5p and the proposed final dividend would result in an overall annual dividend of 20.0p (up 11.1%). Net debt, before the cost of acquiring EuroSites, was reduced by £21.8m.

Our year in Summary

Creditable performance from each of the divisions and an excellent overall result
Increases in profits and turnover almost entirely from organic growth
Shareholder value increased in a year that many holiday businesses struggled
Camping outperformed mass market
Another outstanding year for Hotel Breaks
Resilient performance by Adventure
Acquisition of EuroSites from MyTravel plc

DIVIDEND
The Board is recommending a final dividend of 14.1p, payable on April 21st 2003, to shareholders on the register on March 21st 2003, making a total of 20.0p for the year. Dividend cover will be 2.1 times, in line with our policy of maintaining approximately two times cover.

THE DIVISIONS
Each of our three divisions can look back on 2002 with a good deal of satisfaction. In a difficult year for many overseas holiday companies, Camping outperformed the mass market air package operators with sales up by 5% and margins showing a slight improvement. Hotel Breaks built on an excellent result in 2001 with a 33% revenue uplift and very strong profits growth and, despite a major setback post-September 11th, the Adventure Division increased its revenues and remained profitable. More detail on the performance of each found in the divisional reviews.

ACQUISITION OF EUROSITES
We announced the acquisition of EuroSites, the camping and mobile-home operator, from MyTravel plc on September 30th of this year for a total consideration of £29.9m. Our investment in this resilient and profitable sector of the holiday market, which we know well, is expected to provide attractive returns as well as significant strategic benefits. To date, integration of the two businesses is proceeding according to plan but EuroSites continues to trade as a separate brand.

CURRENT TRADING AND PROSPECTS
With such a strong weighting towards the summer period, it is too early to forecast with confidence the eventual outcome for our various businesses in the current year. Moreover, customers now book their holidays later than ever unless incentivised by unrealistic prices or no deposit deals, strategies which make no sense for the sectors in which we operate. The current experience of our year round businesses, Hotel Breaks and Adventure, is that underlying demand is strong but late in coming through.

At the end of November 2002, summer 2003 sales for the newly enlarged Camping Division were 3% below 2002 equivalents, Hotel Breaks revenues for the year, including forward bookings, were 33% up and Adventure’s revenues were 40% better.

The Camping figure is satisfactory given the market context and, in the case of EuroSites, acquisition linked issues. We anticipate an improvement in performance as full integration of the business takes effect and availability tightens.

Chairman's Statement

page 1 - page 2