AB Novaturas interim report for the six months of 2018
2018 first-half highlights:
- Novaturas’s turnover in the first half of 2018 was EUR 80.2 mln, or 43% more than in the same period of 2017.
- Gross profit amounted to EUR 14.1 mln and was 36% higher than in the same period of 2017.
- Operating expenses amounted to EUR 8.4 mln, or 35% more than in the same period of 2017. Excluding the impact of commissions and one-time expenses, operating costs increased by 15% from the same period a year earlier.
- EBITDA amounted to EUR 5.9 mln and was 36% larger than in the same period of 2017.
- The effective tax rate in the first half of 2018 was 18.7%, compared to 9% in the same period of 2017. The main reason was dividends the Estonian subsidiary paid to the parent company which resulted in a tax payment of roughly EUR 600,000 in Estonia.
- Novaturas had a net profit of EUR 4.4 mln, which is 24% more than in the same period of 2017.
- In the first half of 2018, the Company served 134,463 clients, 42% more than in the same period of 2017.
2018 second-quarter highlights:
- Novaturas’s turnover in the second quarter of the year was EUR 54.4 mln, or 40% more than in the same period of 2017.
- Gross profit amounted to EUR 9.3 mln and was 23% higher than in the same period of 2017.
- Operating expenses totaled EUR 4.8 mln, 30% more than in the same period of 2017. Excluding the impact of commissions and one-time expenses, operating costs increased by 11% from the same period a year earlier.
- EBITDA amounted to EUR 4.6 mln and was 15% larger than in the same period of 2017.
- The effective tax rate in the period was 20.5%, compared to 7.4% in the same period of 2017. The main reason was dividends the Estonian subsidiary paid to the parent company, which resulted in a tax payment of roughly EUR 600,000 in Estonia.
- Novaturas had a net profit of EUR 3.5 mln, which is 2% more than in the same period of 2017.
- In the second quarter of 2018, the Company served 96,825 clients, 39% more than in the same period of 2017.
Both the half- year and second- quarter results surpassed thelat year same period results for the same periods last year.
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. For each season we introduce new destinations on the market or reintroduce some old ones. For the summer of 2018 we added Tunisia, and for the upcoming winter season we have added Jordan and Cuba. 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 34% in the first half of the year. Other destinations also grew during the reporting period.
The number of clients served grew in all source markets where Novaturas operates. The strongest growth was recorded in the Belarussian market, where the number of clients rose 86%. We do not fly from Belarus but rather sell our Lithuanian products through Belarusian agencies. The Lithuanian source market grew 43% while the Latvian market grew by 43% and the Estonian market was up 38% compared to last year.
Passenger growth was strongest for flight package tours, at 49%, with a growth rate of 26% for other products. 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. Sightseeing tours by plane grew by 5%. We are currently offering this type of product mainly in the Lithuanian market.
Travel agencies’ share in our sales increased by 1.3 percentage points to 72.1%. Instead of our own retail share (decreased by 2 percentage points to 11.8%), we have mainly focused on growing web sales. Web sales’ share rose by 0.6 percentage points in the first half of the year to 14.5% and GDS sales increased by 0.1 percentage points to 1.6%. Just as planned, in in June we introduced a new version of the Company’s webpage in all thee countries where we operate. The responsive design of the webpage is much better suited to mobile devices, which are being used more and more not only to search for information but also to make purchases on the internet.
We kept our operating expenses under control during the first half of the year. They grew at a much slower pace than sales growth, increasing the efficiency of the Company. Direct marketing expenditures were 0.8% of sales, similar to last year’s level. Salaries and related items increased by 12% over the same period last year. Excluding the impact of commissions and one-off spending, operating expenses increased by 15% compared with the first half of last year. One-time expenses, incurred mainly in the IPO, amounted to EUR 391,000. Including one-time costs, operating costs less commissions paid rose by 27%. Total costs, including commissions, grew by 35%. Commission expenses remained stable at 5.2% of sales.
Profit tax expenses include EUR 600,000 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 first year we paid a dividend, the tax rate was 20%.
Other current financial assets mainly consist of restricted cash (EUR 4.6 mln), which is used to issue guarantees covering prepayments received from customers as required by the law in each country of operations. The remaining amount of other financial assets is the market value of open hedge contracts. The cash level was lower mainly because restricted cash was reported under a different line.
Company by 30 June 2018 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.