HolidayCheck Group AG publishes financial results for the first quarter of 2020

Munich, Germany, 8 May 2020

The global spread of COVID-19 and the associated extensive travel restrictions in many countries, as well as the worldwide travel warning issued by the German Foreign Office, have almost completely wiped out the demand for holiday travel in recent weeks. In addition, numerous trips booked in 2019 and the first quarter of 2020, and planned for this year, have had to be cancelled. This had a significant impact on the revenue and earnings figures of HolidayCheck Group AG in the first quarter 2020. In the supplementary report for the 2019 financial year, HolidayCheck Group AG assumed travel restrictions would continue until mid-July 2020. Although the current travel warning issued by the Federal Foreign Office is only in place until mid-June 2020, the company still expects significantly longer travel restrictions depending on the destination. The lifting of restrictions on, and/or recovery in the demand for, worldwide travel are now only expected to take effect from November 2020.

In addition, the supplementary report for the 2019 financial year clearly indicated that there was a risk of impairment of assets. Unscheduled impairment tests have been carried out in light of the now clear effects of COVID-19, including for the Dutch WebAssets Group. These show that, due to the current travel restrictions, further investments in the restructuring of Zoover, which is part of the WebAssets Group, are no longer economically prudent. The company therefore already announced on Tuesday that the carrying amounts of the assets not yet written off and the goodwill would be written off in full.

Due to the various COVID-19-related unscheduled effects, the company has decided to adjust the financial results to take significant exceptional items into account. In addition to the unscheduled impairment write-offs, an adjustment is also being made for deferred revenues from 2019 and directly related costs for travel planned for 2020 and expected to be cancelled.

Therefore, in summary, below are the key financial figures for the first quarter of 2020:

The company generated revenue of minus EUR 5.1 million in the first quarter of 2020, compared with EUR 42.2 million in the same quarter of the previous year. The revenue figure for the first quarter of 2020 is negative because it includes adjustments due to cancellations of bookings made in the 2019 financial year with a departure date after mid-March 2020.
The adjusted revenue in the first quarter of 2020, taking into account these corrections, amounted to EUR 10.2 million.

The gross margin in the first quarter of 2020 amounted to minus EUR 6.6 million, compared with EUR 42.2 million in the first quarter of 2019.
The adjusted gross margin for the first quarter of 2020 was EUR 8.7 million.
The gross margin is defined as sales revenue less COGS (cost of goods sold - advance purchases of holiday services such as hotel, flight and transfer services by the Group's own tour operator HC Touristik).

The company recorded EBITDA (earnings before interest, taxes, depreciation and amortisation) of minus EUR 29.6 million for the first quarter of 2020 compared with EUR 4.1 million in the same quarter of the previous year.

Adjusted EBITDA in the first quarter of 2020 amounted to minus EUR 19.6 million. The figure excludes subsequent adjustments to the earnings effects originally recognised in 2019.

Operating EBITDA in the first quarter of 2020 stood at minus EUR 29.8 million compared with EUR 4.3 million in the same quarter of the prior year.
Adjusted operating EBITDA (operating earnings before interest, taxes, depreciation and amortisation) for the first quarter of 2020 was minus EUR 19.8 million.

Depreciation and amortisation in the first quarter of 2020 totalled EUR 31.2 million compared with EUR 2.4 million in the same quarter of the previous year.
This includes unscheduled impairment losses of EUR 21.3 million on goodwill allocated to the subsidiary Zoover during first-time consolidation and EUR 7.5 million on the value of the Zoover brand and domain allocated during purchase price allocation.
There is no need for any further impairment. Although no exhaustive impairment tests could be carried out in the short-term due to the extent of the impairment, it can be assumed with sufficient certainty that the other non-current assets reported in the balance sheet are recoverable. In the view of the Management Board, there is therefore currently no further need to write down assets recognised in the Group accounts in connection with the acquisition of HolidayCheck AG and WebAssets B.V.

The company generated EBIT (earnings before interest and taxes) of minus EUR 60.8 million in the first quarter of 2020 compared with EBIT of EUR 1.7 million year on year.
Adjusted EBIT for the first quarter of 2020 was minus EUR 22.0 million.

EBT (earnings before taxes) for the first quarter of 2020 was minus EUR 60.9 million compared with EUR 1.6 million in the same quarter of the previous year.
Adjusted EBT for the first quarter of 2020 totalled minus EUR 22.1 million.

The company generated a consolidated net loss of EUR 58.9 million in the first quarter of 2020, compared with consolidated net profit of EUR 1.0 million in the same quarter of the previous year.
Adjusted consolidated net loss for the first quarter of 2020 amounted to EUR 22.0 million.

Basic and diluted earnings per share in the first quarter of 2020 were minus EUR 1.03 compared with EUR 0.02 in the prior-year period.
Adjusted basic and diluted earnings per share for the first quarter of 2020 were minus EUR 0.37.

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

In order to preserve the company's liquidity, the Management Board introduced extensive cost-cutting measures at an early stage. Marketing expenses were significantly reduced during the first quarter of 2020. As a result, adjusted marketing expenditure decreased noticeably to EUR 12.8 million in the first quarter of 2020. The 2019 first-quarter figure was EUR 21.2 million.

In addition, targeted measures were initiated to significantly reduce personnel costs, which will take effect from the second quarter of 2020. In particular, these include the introduction of short-time working in many parts of the company, a waiver of salary increases and a partial remuneration waiver of the Management Board.

Outlook
As stated above, the Management Board has adopted a cautious approach by basing its assumptions for the 2020 financial year on further travel restrictions clearly extending longer than the current warnings. The Management Board is also actively managing the cost and liquidity situation to ensure that the company is able to meet its financial obligations and continue its business operations despite the current impact of COVID-19.

This will be done in part through reduced working hours 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.

Overall, the Management Board of HolidayCheck Group AG expects a significant year-on-year decline in the gross margin (sales revenue less COGS/advance purchases of holiday services) for the 2020 financial year, adjusted for the acquisition and sale of investments, as well as substantial negative operating EBITDA. A more reliable quantification of the decline is still not possible at present due to the uncertainty with regard to facts and information.

About HolidayCheck Group AG:
HolidayCheck Group AG (ISIN DE005495329), Munich, Germany, is one of Europe's leading digital firms for holidaymakers. With a total workforce of around 490, HolidayCheck Group AG comprises HolidayCheck AG (which operates hotel review and travel booking portals by the same name), HC Touristik GmbH (which operates the tour operator HolidayCheck Reisen), Driveboo AG (which operates the car rental portal MietwagenCheck and Driveboo); and WebAssets B.V. (which operates the Zoover hotel review portals and the MeteoVista/WeerOnline weather portals). HolidayCheck Group's vision is to become the world's most holidaymaker-friendly company in the world.

Media and Investor Relations contact at HolidayCheck Group AG
HolidayCheck Group AG
Armin Blohmann
Neumarkter Strasse 61
81673 München
Germany

phone: +49 (0)89 9250 1256
fax: +49 (0)89 9250 2403
email: [email protected]

www.holidaycheckgroup.com
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