HolidayCheck Group AG publishes financial results for the first quarter 2020 - unexpected write-offs on Zoover

Munich, Germany, 5 May 2020 - The worldwide spread of COVID-19 and the associated comprehensive travel restrictions in many countries, as well as the worldwide travel warning issued by the German Foreign Office, have brought the demand for holiday travel almost to a complete standstill in recent weeks. In addition, numerous trips booked in 2019 and the first quarter of 2020 and planned for this year had to be cancelled. This had a significant impact on the topline and earnings figures of HolidayCheck Group AG in the first quarter of 2020. In the supplementary report for the 2019 financial year, HolidayCheck Group AG assumed travel restrictions until mid-July 2020. The company now expects a much slower recovery, with restriction remaining in place longer than previously expected.

In addition, in the supplementary report for the 2019 financial year, the probability of occurrence of the impairment risk of assets was rated as nearly certain. As a result, unexpected simplified impairment tests have now been carried out in light of the effects of COVID-19, including for the Dutch WebAssets Group. This corporation has come to the conclusion that, due to the aforementioned travel restrictions that are still expected to continue, further investments in the restructuring of the business model of Zoover, which is part of the WebAssets Group, are no longer economically prudent. The Executive Board of HolidayCheck Group AG has therefore decided to make a full and unexpected write-off of the proportionate assets allocated to Zoover during the initial consolidation that had not yet been written off, as well as of Goodwill.

Therefore, in summary, the following financials apply for the first quarter of 2020:

Revenues for the first quarter of 2020, including subsequent adjustments due to cancelations of bookings in the 2019 financial year, having a departure date after mid-March 2020, amounted to EUR -5.1 MM, compared with EUR 42.2 MM in the same quarter of the previous year.

The gross margin in the first quarter of 2020 amounted to EUR -6.6 MM, compared to EUR 42.2 MM in the prior-year quarter.

The gross margin is defined as revenues less COGS ('costs of goods sold' - purchase of travel inputs such as hotel, flight and transfer services by the Group's own tour operator HC Touristik).

The EBITDA for the first quarter of 2020 amounted to EUR -29.6 MM compared to EUR 4.1 MM in the same quarter of the previous year.

Operating EBITDA in the first quarter of 2020 was EUR -29.8 MM, compared with EUR 4.3 MM in the same quarter of the previous year.

Depreciation and amortization in the first quarter of 2020 amounted to EUR -31.2 MM, compared with EUR -2.4 MM in the same quarter of the previous year.

This includes impairment losses of EUR -21.3 MM on Goodwill in the subsidiary Zoover during original consolidation and EUR -7.5 MM on the value of the brand and domain "Zoover" allocated during purchase price allocation.

There is no other need for further impairment. Even if no exhaustive impairment tests could be carried out in the short-term due to the recency of the impairment, it can be assumed with sufficient certainty that the other assets reported in the balance sheet are stable. In the view of the Executive Board, there is therefore currently no further need to write down assets recognised in the Group in the connection with the original acquisition of HolidayCheck AG and WebAssets B.V.

The EBIT (earnings before interest and taxes) in the first quarter of 2020 amounted to EUR -60.8 MM compared to EUR 1.7 MM in the same quarter of the previous year.

Cash and cash equivalents increased to EUR 36.4 MM at the end of the first quarter of 2020 compared to EUR 27.5 MM as of 31 December 2019, mainly due to the drawing of existing working capital lines of around EUR 20 MM. We continue to evaluate additional long-term financing options to support business operations.

Outlook
As described above, the Executive Board's assumptions for the 2020 financial year extend beyond the current public statements. The Executive Board expects to continue uninterrupted business operations, in part due to reduced working hours (Kurzarbeit) across the company. The impact of a much longer-lasting crisis than currently assumed can only be estimated to a limited extent and could trigger further liquidity risks.

In total, the Management Board of HolidayCheck Group AG expects a significant year-on-year decline in the gross margin (revenue less COGS/travel expenses) for the 2020 financial year, adjusted for the acquisition and sale of investments, as well as a clearly negative operating EBITDA. A more reliable quantification of the decline is still not possible at present due to the uncertain facts and information situation.

Contact:
HolidayCheck Group AG
Armin Blohmann
Neumarkter Str. 61
81673 München

Tel.: +49 89 357680 901
Fax: +49 89 357680 999

E-Mail: [email protected]