CNG reports loss of €7.3m in first six months

The cost of giving free shares to its backers contributed to a $9 million (€7.3 million) loss at online hotel booker CNG Travel Group during the first six months of the year.

The first set of interim results released by the company since it floated on London's Alternative Investment Market (AIM) last May show that operating losses rose by more than 60 per cent to $3 million, compared with $1.8 million during the same period in 2003.

However, it took a $5.8 million hit for interest and other charges during the period, compared with just $1.5 million in 2003.

This brought its loss before tax for the first six months to $8.8 million, a 120 per cent increase on last year's pre-tax deficit of $2.7 million.

Finance director Mr Ronnie Culliton said last night that the bulk of the $5.8 million was attributable to other charges.

These stemmed from the fact that the company had to account for shares given to "supporters and investors" in return for underwriting loans and aiding the company in raising finance.

"They would have been shares given for a non-cash consideration," Mr Culliton said. He explained that accounting regulations required the company to account for these shares in the first half of the year and stressed that it was a once-off non-cash charge.

He said that it would be included in CNG's full-year accounts.

The figure also includes a $38,176 provision for interest.

Mr Culliton said that, as the company's borrowings were low, the overall full-year charge would not increase significantly.

The Menolly Group, controlled by Mr Séamus Ross and parent of building company Menolly Homes, holds 29.9 per cent of CNG.

It is understood that the group received some of the free shares in return for underwriting loans.

Mr Séamus Ross junior is a director of CNG.

The company's accounts also show that operating expenses had increased by 400 per cent year on year in the six months to the end of June to $8.2 million from $2.2 million.

The increase was partly due to the $4.6 million operating expenses incurred by its US acquisition, Tzell, during the first half. It bought Tzell late in 2003.

CNG's first basic loss per share recorded as a public company was 64 cent.

Shareholders' funds stood at $35.5 million at the end of the period, compared with a deficit of $10.4 million in 2003, as it had changed from a private to a public company in the meantime.

Commenting on the results, CNG chief executive Mr Finbarr Power said yesterday that the company was exactly where management expected it to be at the half-year stage.

He said that CNG was on target to be profitable at the end of this year.

The company's shares on London's AIM rose by 0.25p yesterday to close at 86.5p.