"Novaturas" consolidated interim report for 6 month of 2019
Management report
2019 first-half highlights:
- Novaturas’s turnover in the first half of 2019 was EUR 83.3 mln, or 3.8% more than in the same period of 2018.
- Gross profit amounted to EUR 10.1 mln and was 26% lower than in the same period of 2018.
- Operating expenses amounted to EUR 8.5 mln, or 1% more than in the same period of 2018. Excluding the impact of commissions and one-time expenses, operating costs increased by 3% from the same period a year earlier.
- EBITDA amounted to EUR 1.7 mln and was 71% smaller than in the same period of 2018.
- The actual profit tax rate in the first half of 2019 was 65.8%, compared to 18.7% in the same period of 2018. The main reason was dividends the Estonian subsidiary paid to the parent company which resulted in a tax payment of roughly EUR 544,000 in Estonia.
- Novaturas had a net profit of EUR 0.4 mln, which is 90% less than in the same period of 2018.
- In the first half of 2019, the Company served 137,036 clients, 2% more than in the same period of 2018.
2019 second-quarter highlights:
- Novaturas’s turnover in the second quarter of the year was EUR 54.5 mln, or 0.1% more than in the same period of 2018.
- Gross profit amounted to EUR 6.5 mln and was 30% lower than in the same period of 2018.
- Operating expenses totaled EUR 5 mln, 2% more than in the same period of 2018. Excluding the impact of commissions and one-time expenses, operating costs increased by 4% from the same period a year earlier.
- EBITDA amounted to EUR 1.6 mln and was 64% smaller than in the same period of 2018.
- The actual profit tax rate in the period was 59.4%, compared to 20.5% in the same period of 2018. The main reason was dividends the Estonian subsidiary paid to the parent company, which resulted in a tax payment of roughly EUR 544,000 in Estonia.
- Novaturas had a net profit of EUR 0.6 mln, which is 83% less than in the same period of 2018.
- In the second quarter of 2019, the Company served 95,939 clients, 1% less than in the same period of 2018.
Management Comment:
After too strong growth in capacity for 2018 year we still facing weak demand at current level of market supply. Both second quarter and first half results were significantly weaker compared to year 2018. During the second quarter we had very strong April month results, but May and June results were much weaker than expected. June once again surprised with extremely hot weather.
Our main product remains flight package tours. The most popular destinations remain Turkey and Greece for the summer season and Egypt for the winter season. This year Turkey and Egypt demand increased much faster leading to higher share by these destinations. For each season we introduce new destinations on the market or reintroduce some old ones. For the summer of 2019 we added Albania, and for the upcoming winter season we have added Bali, Mexico and Seychelles. The wide variety of destinations in our portfolio lets us satisfy our clients’ diverse needs. Strong growth in demand for Turkey as a destination increased Turkey’s share in our portfolio to 37% in the first half of the year.
The number of clients served grew by 2% in the first half of the year. The Lithuanian source market decreased 3% while the Latvian market grew by 9% and the Estonian market was up 8% compared to last year. Still Lithuanian market is the biggest with 52% share in total volumes.
The strongest growth was for sightseeing tours - by planes increased by 24% and by coach increased 12%. Sightseeing by plane product growth was achieved by introducing this product also to Latvian and Estonian markets. Passenger growth was 2% for flight package tours, while other products decreased by 5%. The other products passengers bought were mainly flight tickets for charter flights we operate. Our flight tickets are sold through travel agencies and also via the GDS channel, reaching very diverse types of travelers.
Travel agencies’ share in our sales increased by 0.7 percentage points to 72.7%. this remains our most important distribution channel. Our own retail and web sales share slightly decreased for the period.
We kept our operating expenses under control during the first half of the year. Direct marketing expenditures were 0.6% of sales, lower than last years’s 0.8%. Salaries and related items increased by 9% over the same period last year. We have decreased head-count so salary expense increase was led by increased salary level. Excluding the impact of commissions and one-off spending, operating expenses increased by 3% compared with the first half of last year. One-time expenses amounted to EUR 144,000. Including one-time costs, operating costs less commissions paid decreased 3%. Total costs, including commissions, grew by 1%. Commission expenses remained stable at 5.3% of sales.
Profit tax expenses include EUR 544,000 paid in Estonia on dividends paid by the subsidiary there to the parent company. Legislation in Estonia allows companies that regularly pay dividends to their parents to gradually reduce their dividend tax rate from 20% to 14%. As this was the second year, we paid a dividend, the tax rate was already reduced 18%.
Restricted cash is required by banks to issue guarantees covering prepayments received from customers as required by the law in each country of operations.
Other financial assets are the market value of open hedge contracts.
Company by 30 June 2019 had paid back in full the overdraft which it partly used during the first half of the year. Long-term loan amortization is in accord with the agreement and EUR 0.5 mln of loans have already been repaid. The high level of advances received from customers was due to a strong increase in passenger volumes and very good advanced sales at the end of the period.
Finance director,
Tomas Staškūnas
, +370 687 10426
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