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MakeMyTrip Limited Announces Strong Fiscal 2011 Third Quarter Results

Subject to the terms of the SPA, MakeMyTrip Limited will acquire from the existing shareholders, on the first closing date, an aggregate number of ordinary shares representing approximately 79% of LTT's fully diluted share capital for an initial purchase cash consideration of approximately US$3 million. MakeMyTrip Limited will also invest approximately US$0.75 million in addition, in one or more tranches until June 2012, for the subscription of new equity shares to be issued by LTT. Further, MakeMyTrip Limited will acquire from the existing shareholders, their remaining shares in LTT, in three tranches over a three-year earn-out period ending June 2014. The payment under each such tranche will be made in cash, based on valuations linked to actual profitability of LTT.  Luxury Tours & Travel Pte Limited is a Singapore registered and licensed travel agency, engaged in the business of providing hotel reservations, excursion tours and other related services to inbound and outbound travelers in Singapore and the region. LTT has built strong relationships over the years with a large number of hotels and with vendors for other inbound tourism services in the region, in addition to establishing a loyal base of customers.  Deep Kalra, Chairman and CEO of MakeMyTrip Limited, said "The acquisition is a major strategic move for MMYT, since it broadens our presence in other emerging markets beyond India. South East Asia region is a highly popular destination of choice for Indian travelers and among the biggest and fastest growing markets for our outbound tours and packages business. Through this acquisition, MMYT intends to build a position of strength in the region through strong relationships with local hotels. We also believe a stronger local presence would enable us to deliver greater value and enhanced customer service to our customers."

Fiscal 2011 Third Quarter Financial Results

Revenue. We generated revenue of $35.8 million in the quarter ended December 31, 2010, an increase of 56.7% over revenue of $22.8 million in the quarter ended December 31, 2009.

Air Ticketing. Revenue from our air ticketing business increased by 60.9% to $13.5 million in the quarter ended December 31, 2010 from $8.4 million in the quarter ended December 31, 2009. This was due to increase in gross bookings by 71.4% partially offset by a reduction in net revenue margin from 7.7% in the quarter ended December 31, 2009 to 7.4% in the quarter ended December 31, 2010. Air ticketing net revenue margin in the quarter remained at the same level as in the previous quarter.

Hotels and Packages. Revenue from our hotels and packages business increased by 52.0% to $21.5 million in the quarter ended December 31, 2010 from $14.1 million in the quarter ended December 31, 2009. Our Revenue less service cost (2) increased by 27.9% to $2.95 million in the quarter ended December 31, 2010 from $2.31 million in the quarter ended December 31, 2009. This was due to an increase in gross bookings by 65.5%, partially offset by reduction in net revenue margin from 14.0% in the quarter ended December 31, 2009 to 10.8% in the quarter ended December 31, 2010 as net revenue margins normalized from levels experienced in fiscal 2010 when travel suppliers provided us favorable rates during the slowdown in India's economy. Hotels and packages net revenue margins declined 110 basis points quarter to quarter, reflecting our increased promotion of new holiday packages as we continued to develop new travel destinations.

Other Revenue. Our other revenue increased to $0.8 million in the quarter ended December 31, 2010 from $0.4 million in the quarter ended December 31, 2009, primarily due to increase in sale of rail tickets, bus tickets and travel insurance.

Total Revenue less Service Cost. Our total revenue less service cost increased by 59.2% to $17.3 million in the quarter ended December 31, 2010 from $10.9 million in the quarter ended December 31, 2009 as a result of a 64.5% increase in our air ticketing revenue less service cost, as well as a 27.9% increase in our hotels and packages revenue less service cost.

Personnel Expenses. Personnel expenses increased to $3.9 million in the quarter ended December 31, 2010 from $2.4 million in the quarter ended December 31, 2009, mainly as a result of annual wage increases and increases in average employee headcount year over year in the quarter ended December 31, 2010. This growth reflects an overall increase in business as well as employee share-based compensation costs of $0.14 million in quarter ended December 31, 2010 as against $0.02 million in quarter ended December 31, 2009. Excluding employee share-based compensation costs, Personnel Expenses as a percentage of net revenue improved by 76 basis points year over year and by 337 basis points quarter to quarter to 21.5%.

Other Operating Expenses. Other operating expenses increased by 56.0% to $11.5 million in the quarter ended December 31, 2010 from $7.4 million in the quarter ended December 31, 2009, primarily as a result of an increase in payment gateway charges, advertising and business promotion expenses and outsourcing fees in line with the growth in our business. Other Operating Expenses as a percentage of net revenue improved by 139 basis points year over year and by 143 basis points quarter to quarter to 66.4%.

Results from Operating Activities. As a result of the foregoing factors, our results from operating activities improved to an income of $1.4 million in the quarter ended December 31, 2010 from an income of $0.7 million in the quarter ended December 31, 2009. Excluding the effects of our employee share-based compensation costs for both quarters ended December 31, 2010 and 2009, we would have recorded an operating profit of $1.6 million in the quarter ended December 31, 2010 and $0.7 million in the quarter ended December 31, 2009.

Net Finance Income (Costs). Our finance income increased to $0.2 million in the quarter ended December 31, 2010 from a finance cost of $(0.02) million in the quarter ended December 31, 2009, primarily due to $0.3 million in interest accrued on the liability portion of our preference shares in the quarter ended December 31, 2009.

Profit (Loss) for the period. As a result of the foregoing factors, including the effects of our employee share-based compensation costs, our profit for the quarter ended December 31, 2010 was $1.6 million as compared to a profit of $0.6 million in the quarter ended December 31, 2009. Excluding the effects of employee share-based compensation costs for both fiscal years 2010 and 2009, interest accrued on the liability portion of preference shares and changes in fair market value of embedded derivatives in the preference shares, we would have recorded a net profit of $1.8 million in the quarter ended December 31, 2010 and a net profit of $0.8 million in quarter ended December 31, 2009.

Earnings (loss) per share. Diluted earnings per share were $0.04 for the quarter ended December 31, 2010 as compared to earnings per share of $0.02 in the corresponding quarter in the prior fiscal year. Adjusted for interest accrued on the liability portion of preference shares, employee share-based compensation costs as mentioned in the preceding paragraph, diluted earnings per share were $0.05 in the quarter ended December 31, 2010, compared to $0.02 in the quarter ended December 31, 2009.

Fiscal Year 2011 Outlook

The Company continues to be optimistic with regards to its long term outlook. With the strong travel demands experienced in the third fiscal quarter, MakeMyTrip expects fiscal year 2011's revenue less service cost to be between $59 million and $61 million. 

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