Results for the six months ended 31 March 2011
Tuesday 24 May 2011: For immediate release
HOLIDAYBREAK PLC
Results for the six months ended 31 March 2011
Holidaybreak, the education and activity travel group, announces its interim results for the six months ended 31 March 2011.
The Group traditionally reports an operating loss in the first half due to the seasonal nature of the Education and Camping businesses.
Key financials
|
|
Headline results* |
Statutory results |
|||
|
|
H1 2011 £m |
H1 2010 £m |
|
H1 2011 £m |
H1 2010 £m |
|
Group revenue |
139.6 |
150.2 |
|
139.6 |
150.2 |
|
Operating loss |
-12.4 |
-11.0 |
|
-14.2 |
-11.9 |
|
Loss before tax |
-19.2 |
-17.7 |
|
-16.8 |
-20.0 |
Highlights
§ Resilient performance in tough operating conditions.
§ Strong performance from Education with 96% of 2011 revenue booked with sales intake to date 1% below last year.
- PGL UK centres are currently 99% booked for 2011
- Strong start to 2012 with Education 39% of 2012 revenue booked, including 63% at PGL UK centres
§ Excellent trading performance from Meininger since acquisition with sales intake 16% ahead of last year. Expansion continues with 2 new sites opening this year and a further 6 sites in 2012 and 2013, including Amsterdam and Brussels.
§ Net debt increased by £19.6m year on year reflecting the acquisition of the Group's 50% stake in Meininger for £30.8m.
§ The Board has declared a half year dividend of 3.35p per share, up 5% on last year reflecting its confidence in the outlook for the full year.
§ Sales intake for the year to date is 4% below last year reflecting a later booking trend at Camping; the Group remains on track to meet management expectations for the Group for the full year.
Martin Davies, Holidaybreak Chief Executive, said:
"We have delivered a resilient performance in the first half despite the difficult trading environment. Our Education businesses continue to perform well, evidencing the strong social, political and demographic drivers for growth, and I am particularly excited about the growth prospects for Meininger and the potential to extend our offering to the large German education market."
"We continue to review the overall Group portfolio as we look to strengthen the Education share of the Group. In the meantime, all of our businesses are being managed tightly, with a focus on cash generation, margin and cost control and we expect to perform in line with our expectations for the year ending 30 September 2011."
* Headline loss before tax is stated before amortisation of other intangible assets acquired via business combinations of £0.7m (H1 2010: £0.9m), separately disclosed items of £1.1m (H1 2010: £nil) and other gains and losses, being IAS 39 mark-to-market revaluations of financial derivatives of £4.2m credit (H1 2010: £1.4m charge).
For further information, please contact:
Holidaybreak +44 (0) 1606 787100
Martin Davies / Neil Bright
Brunswick +44 (0)20 7404 5959
Catherine Hicks / Craig Breheny / Oliver Hughes
Note to Editors
Holidaybreak (HBR.L) is an education and activity travel group listed on the London Stock Exchange. The Group's businesses have market leading positions in the UK and other major European markets, organising educational and activity trips, worldwide exploratory trips, outdoor family holidays and short breaks.
For more information, please go to www.holidaybreak.co.uk.
CHAIRMAN'S STATEMENT
Introduction
These results and current trading are in line with our expectations.
Trading across the Group has remained challenging given the difficult economic environment and the impact of geopolitical events. However, our businesses have remained focused on improving the quality of products offered whilst maintaining strong margin performance and improving cash generation. All of our businesses are well placed to prosper when the economy recovers.
We continue to review the overall Group portfolio as we look to strengthen the Education share of the Group. I am particularly pleased to report that Meininger, the German school accommodation business in which we acquired a 50% stake in December 2010, continues to grow rapidly with two further new sites opening this financial year. We are excited about the opportunities to grow this business outside of Germany and the potential to extend our leading brands to the large German education market.
The Board thanks management and staff throughout the Group for their continued hard work and commitment during this period.
Financial Review
The Group has traditionally reported an operating loss in the first half due to the seasonal nature of the Education and Camping businesses. In the six month period to 31 March 2011, Holidaybreak recorded a pre-tax loss on ordinary activities of £16.8m (2010: £20.0m).
The headline loss before tax1 was £19.2m (2010: £17.7m). The increased loss includes the £1m impact of geopolitical events in the Middle East, North Africa and Asia on Adventure's results and reflects the difficult trading conditions in Hotel Breaks. Seasonal headline losses in Education and Camping were below the prior year.
The seasonal loss also includes the Group's share of post tax profits of Meininger of £0.3m (2010: £nil) from the date of acquisition to 31 March 2011. This period represents the least important trading period for Meininger due to seasonality and the timing of new site openings, with two new sites opening in the second half of the financial year.
Separately disclosed costs of £1.1m (2010: £nil) were incurred in the period primarily relating to legal and professional fees associated with the acquisition of Meininger.
Net finance costs and other gains and losses were £2.6m (2010: £8.1m), including a non-cash credit of £4.2m (2010: £1.4m charge) in respect of the mark-to-market revaluations of the Group's interest rate derivatives and forward foreign currency exchange contracts.
The tax credit is based on the estimated effective tax rate for the full year of 25% (2010: 25%). The headline tax rate2 for the full year is expected to be approximately 22.5% (2010: 22.4%).
Capital expenditure for the half year, net of disposals, was £7.4m (2010: £4.8m) with the increase year on year reflecting the timing of expenditure and disposals in Camping. Net capital expenditure for the financial year is expected to be below previous guidance at approximately £17.1m (2010: £16.8m).
Net debt at the half year was £148.8m (2010: £129.2m). The increase on the prior year net debt reflects the cash outflow of £30.8m (including £0.2m fees) for the acquisition of the Group's 50% stake in Meininger in December 2010. The half year is typically the low point in our cash flow cycle and the minimum headroom during the first half was approximately £40m. Net debt levels then reduce during May and June as final summer holiday balances are paid. The average net debt, based on month end balances, for the last financial year was approximately £127.9m (2009: £163.2m). On an annualised basis, all of Holidaybreak's operations generate a good level of cash.
Divisional review
Education & Adventure
The seasonal nature of the Education businesses means that it generates an operating loss in the first half of the financial year. First half statutory operating loss for the Education & Adventure Division was £5.8m (2010: £3.7m) on revenues of £79.8m (2010: £84.9m). Headline operating loss3 was £4.3m (2010: £3.1m).
Education
First half statutory operating loss for the Education businesses was, as expected, £3.7m (2010: £3.0m) on revenues of £41.0m (2010: £44.0m). Headline operating loss3 was £2.3m (2010: £2.5m). The reduction in revenue primarily reflects the timing of Easter compared to last year.
Sales intake for the division is currently 1% below last year. The division is 96% booked for 2011 including PGL's UK outdoor education centres which are 99% booked. Overall, PGL UK centres will be providing over 710,000 bed nights to approximately 6,000 schools in 2011. Total PGL UK capacity now stands at 7,400 beds with 200 beds added at Liddington and marginal capacity reductions at smaller rented sites as part of the ongoing strategy of improving customer service and maximising margin across our portfolio of owned centres. Capital expenditure for 2011 is anticipated to be £5.9m (2010: £8.0m).
For the 2012 season, the division is currently 39% booked, including PGL UK centres with 63% of revenue booked. PGL remains focused on expanding its offering and is well placed to benefit from any consolidation of centres run by local education authorities.
Meininger is 16% ahead of last year reflecting strong like-for-like trading and successful site openings. The strategic roll out programme has continued with a new site in Salzburg opened earlier this month and another site in Berlin opening later this financial year. These sites will increase bed capacity to approximately 4,550 beds (+23%). A further six sites have been secured with four opening in 2012 and two, in Brussels and Amsterdam, opening in 2013.
Adventure
The first half statutory operating loss for the Adventure businesses was £2.1m (2010: £0.7m) on revenues of £38.8m (2010: £40.9m). Headline operating loss3 was £2.0m (2010: £0.6m). The increase in the loss primarily reflects the £1m impact of geopolitical events.
Prior to these events, the businesses had experienced very strong trading in Q1, despite the disruption caused by the UK and Dutch airport closures due to snow in December. The unprecedented series of global events led to high levels of cancellations, lower levels of forward bookings, reduced load factors and costs attributed to dealing with the disruption. These events are estimated to have cost the division approximately £1m in lost profit in the first half of the financial year and a further £0.5m in the second half. In light of the disruption, the businesses have refined their product offering to focus on the most profitable tours and to maximise load factors.
Sales intake for the Adventure businesses is currently 3% below last year as the geopolitical instability in the Middle East, North Africa and Asia have negatively impacted performance.
Hotel Breaks
The Hotel Breaks Division's first half statutory operating profit was £3.9m (2010: £4.2m) with revenue of £59.7m (2010: £65.1m). Headline operating profit3 was £4.2m (2010: £4.5m).
The bad weather in December 2010 and the difficult consumer environment in the UK and the Netherlands impacted performance. Despite the revenue decline, Superbreak's gross margin was up 70 bps and costs were tightly managed and reduced by 18% to maintain profit. The revenue decline in Bookit, partially offset by improved profit at West End Theatre Bookings, resulted in a reduction in divisional profit of £0.3m.
Sales intake for Hotel Breaks is currently 9% below last year. Trading continues to be difficult with sales through UK retail travel agents and Bookit lower than last year. Superbreak's sales have also been affected by the loss of UK airport hotel contracts with large retail travel agents, although this was a low margin product. Excluding these contracts, the underlying trend shows sales intake currently at 6% below last year.
We continue to manage the business tightly with a focus on reducing costs and growing the higher margin direct to consumer sales channel, whilst at the same time positioning the business to ensure it is well placed to benefit when the trading environment improves.
Camping
Since the vast majority of the Camping Division's revenues occur in the second half of the financial year, the division always reports an interim operating loss. In 2011, this was £12.3m (2010: £12.4m). The division is again expected to deliver strong cash flow and good margins in the full year.
Sales intake for the Camping Division is 5% below last year in the context of a 3% reduction in capacity. The trend towards later bookings continues with the division currently 82% booked compared with 86% last year. Trading conditions in the UK and Dutch markets have been difficult, whilst Germany has been performing well. The division continues to focus on maximising occupancy and yields across its sales markets.
Capital expenditure (net of disposal proceeds) for 2011 in the Camping Division is expected to be £8.7m (2010: £6.5m), including £7.3m on 565 replacement mobile-homes (2010: £6.2m on 450 replacement mobile-homes). The division has confirmed that the mobile-home life extension programme has been adopted with capital expenditure savings expected over the medium term.
Board Changes
Neil Bright was appointed Group Finance Director with effect from 1 January 2011. Neil succeeded Bob Baddeley, who retired on 31 December 2010 after more than 15 years with the Company.
Ludger Heuberg was appointed a Non-executive Director and Chairman of the Audit Committee on 18 April 2011. Ludger is currently Group Chief Financial Officer of H.C. Starck Group and is also a Member of the Advisory Board of Commerzbank A.G. Previously he spent six years with Thomas Cook Group including, from June 2007 to June 2008, as Group Chief Financial Officer of Thomas Cook Group plc. He also held the position of Chief Financial Officer and HR Director on the management board of Thomas Cook AG from 2004 to 2010.
Dividend
The Board has declared a half year dividend of 3.35p per share (2010: 3.20p) reflecting its confidence in the outlook for the full year. This will be payable on 10 August 2011 to shareholders on the register on 15 July 2011. The ex-dividend date will be 13 July 2011.
The Board will continue to keep the Company's dividend policy under review, taking into account both trading and outlook.
Outlook
Sales intake for the year to date is 4% below last year reflecting a difficult trading and operating environment for our traditional travel businesses and a later booking trend at Camping.
Our largest division, Education, which operates in segments that are much less exposed to discretionary spending and have strong social, political and demographic drivers for growth, continues to perform well and has strong visibility in the current financial year with 96% of revenue booked and 39% of 2012 target revenue already secured.
We continue to manage all of our businesses tightly with a focus on cash generation, margin and cost control and we expect to perform in line with our expectations for the year ending 30 September 2011.
John Coleman
Chairman
24 May 2011
1 Headline loss before tax is stated before amortisation of other intangible assets acquired via business combinations of £0.7m (2010: £0.9m), separately disclosed items of £1.1m (2010: £nil) and other gains and losses, being IAS 39 mark-to-market revaluations of financial derivatives of £4.2m credit (2010: £1.4m charge).
2 Headline tax rate is stated before amortisation of other intangible assets acquired via business combinations, separately disclosed items and other gains and losses, being IAS 39 mark-to-market revaluations of financial derivatives.
3 Headline operating (loss) profit is stated before amortisation of other intangible assets acquired via business combinations and separately disclosed items as set out in note 4 of the attached financial information.
INDEPENDENT REVIEW REPORT TO HOLIDAYBREAK PLC
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2011 which comprises the condensed consolidated income statement, the condensed consolidated statement of comprehensive income, the condensed consolidated balance sheet, the condensed consolidated statement of changes in equity, the condensed consolidated cash flow statement and related notes 1 to 12. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the Company those matters we are required to state to them in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusions we have formed.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
INDEPENDENT REVIEW REPORT TO HOLIDAYBREAK PLC (continued)
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 March 2011 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
Manchester, United Kingdom
24 May 2011
Condensed consolidated income statement |
|
|
||
For the six months ended 31 March 2011 |
|
|
||
|
|
|
|
|
|
|
|
|
Unaudited |
Audited |
|
|
|
|
Six months ended |
Year ended |
|
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
note |
£m |
£m |
£m |
|
|
|
|
|
|
|
Group revenue |
4 |
139.6 |
150.2 |
461.7 |
|
Net operating costs |
|
(154.1) |
(162.1) |
(421.0) |
|
Share of results of associates |
|
0.3 |
- |
- |
|
Operating (loss) profit |
4 |
(14.2) |
(11.9) |
40.7 |
|
|
|
|
|
|
|
Investment income |
|
0.1 |
0.2 |
0.4 |
|
Other gains and losses |
|
4.2 |
(1.4) |
(1.7) |
|
Finance costs |
|
(6.9) |
(6.9) |
(13.4) |
|
(Loss) profit before tax |
|
(16.8) |
(20.0) |
26.0 |
|
|
|
|
|
|
|
Analysed as: |
|
|
|
|
|
Headline operating (loss) profit |
4 |
(12.4) |
(11.0) |
43.7 |
|
Net interest |
|
(6.8) |
(6.7) |
(13.0) |
|
Headline (loss) profit before tax |
|
(19.2) |
(17.7) |
30.7 |
|
Amortisation of other intangible assets acquired via business combinations |
|
(0.7) |
(0.9) |
(1.8) |
|
Separately disclosed items |
4 |
(1.1) |
- |
(1.2) |
|
Other gains and losses |
|
4.2 |
(1.4) |
(1.7) |
|
(Loss) profit before tax |
|
(16.8) |
(20.0) |
26.0 |
|
|
|
|
|
|
|
Headline tax |
|
5.2 |
4.3 |
(6.8) |
|
Tax effect of headline-adjusting items |
|
(0.9) |
0.7 |
1.0 |
|
Tax |
5 |
4.3 |
5.0 |
(5.8) |
|
|
|
|
|
|
|
(Loss) profit for the period |
|
(12.5) |
(15.0) |
20.2 |
|
Attributable to: |
|
|
|
|
|
Equity holders of the parent |
|
(12.5) |
(15.0) |
20.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
Audited |
|
|
|
|
Six months ended |
Year ended |
|
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
|
Pence |
Pence |
Pence |
|
|
|
|
|
|
Basic (loss) earnings per share |
6 |
(17.9) |
(21.5) |
28.7 |
Diluted (loss) earnings per share |
6 |
(17.9) |
(21.5) |
28.7 |
|
|
|
|
|
|
Headline basic (loss) earnings per share |
6 |
(20.0) |
(19.1) |
34.0 |
Headline diluted (loss) earnings per share |
6 |
(20.0) |
(19.1) |
34.0 |
|
|
|
|
|
|
All activities are continuing.
Condensed consolidated statement of comprehensive incomeFor the six months ended 31 March 2011 |
|||
|
|
|
|
|
|
|
Unaudited |
Audited |
|
|
|
Six months ended |
Year ended |
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
(Loss) profit for the period |
(12.5) |
(15.0) |
20.2 |
|
|
|
|
|
|
Exchange differences on translation of foreign operations |
(0.3) |
(0.8) |
(1.2) |
|
Actuarial gains (losses) on defined benefit pension schemes |
0.1 |
- |
(0.5) |
|
Tax relating to components of other comprehensive income |
- |
- |
(0.1) |
Other comprehensive expense for the period |
(0.2) |
(0.8) |
(1.8) |
|
|
|
|
|
Total comprehensive (expense) income for the period |
(12.7) |
(15.8) |
18.4 |
|
Attributable to: |
|
|
|
|
Equity holders of the parent |
(12.7) |
(15.8) |
18.4 |
|
|
|
|
|
Condensed consolidated balance sheet |
|
||
31 March 2011 |
|
|
|
|
|
Unaudited |
Unaudited |
Audited |
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
£m |
£m |
£m |
Non-current assets |
|
|
|
|
Goodwill |
139.1 |
139.2 |
138.5 |
|
Other intangible assets |
25.9 |
27.5 |
27.1 |
|
Property, plant and equipment |
202.6 |
200.3 |
191.1 |
|
Interests in associates |
31.5 |
- |
- |
|
|
399.1 |
367.0 |
356.7 |
|
|
|
|
|
|
Current assets |
|
|
|
|
Inventories |
2.5 |
2.8 |
2.1 |
|
Trade and other receivables |
43.7 |
56.0 |
32.0 |
|
Current tax assets |
4.6 |
5.5 |
0.8 |
|
Cash and cash equivalents |
51.1 |
51.2 |
56.4 |
|
Derivative financial instruments |
0.6 |
0.4 |
0.1 |
|
|
102.5 |
115.9 |
91.4 |
|
|
|
|
|
|
Non-current assets classified as held for sale |
0.2 |
0.4 |
0.5 |
|
|
|
|
|
|
Total assets |
501.8 |
483.3 |
448.6 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Trade and other payables |
(169.4) |
(180.3) |
(133.0) |
|
Current tax liabilities |
- |
- |
(5.3) |
|
Obligations under finance leases |
(5.3) |
(4.6) |
(5.1) |
|
Interest bearing loans and borrowings |
(10.0) |
(0.1) |
(10.0) |
|
Derivative financial instruments |
(7.0) |
(10.7) |
(10.7) |
|
|
(191.7) |
(195.7) |
(164.1) |
|
|
|
|
|
|
Net current liabilities |
(89.2) |
(79.8) |
(72.7) |
|
|
|
|
|
|
Non-current liabilities |
|
|
|
|
Deferred tax liabilities |
(30.0) |
(31.4) |
(30.0) |
|
Obligations under finance leases |
(11.5) |
(12.1) |
(12.5) |
|
Defined benefit pension liability |
(1.2) |
(0.5) |
(1.2) |
|
Interest bearing loans and borrowings |
(173.1) |
(163.6) |
(128.5) |
|
|
(215.8) |
(207.6) |
(172.2) |
|
|
|
|
|
|
Total liabilities |
(407.5) |
(403.3) |
(336.3) |
|
|
|
|
|
|
Net assets |
94.3 |
80.0 |
112.3 |
|
|
|
|
|
Equity |
|
|
|
|
Share capital |
3.5 |
3.5 |
3.5 |
|
Share premium account |
69.0 |
69.0 |
69.0 |
|
Own shares |
(2.4) |
(2.6) |
(2.4) |
|
Other reserves |
2.6 |
2.2 |
2.4 |
|
Retained earnings |
21.6 |
7.9 |
39.8 |
|
Total equity |
94.3 |
80.0 |
112.3 |
Condensed consolidated statements of changes in equity |
||||||
31 March 2011 |
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
Share capital |
Share premium |
Own shares |
Other reserves |
Retained earnings |
Total attributable to equity holders of the parent |
|
|
£m |
£m |
£m |
£m |
£m |
£m |
|
|
|
|
|
|
|
|
|
Changes in equity for the six months ended 31 March 2011 - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 October 2010 |
3.5 |
69.0 |
(2.4) |
2.4 |
39.8 |
112.3 |
|
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
(12.5) |
(12.5) |
|
Exchange differences on translation of foreign operations |
- |
- |
- |
- |
(0.3) |
(0.3) |
|
Actuarial gains on defined benefit pension schemes |
- |
- |
- |
- |
0.1 |
0.1 |
|
Total comprehensive expense for the period |
- |
- |
- |
- |
(12.7) |
(12.7) |
|
|
|
|
|
|
|
|
|
Dividends (note 7) |
- |
- |
- |
- |
(5.5) |
(5.5) |
|
Credit to equity for share-based payments |
- |
- |
- |
0.2 |
- |
0.2 |
|
At 31 March 2011 |
3.5 |
69.0 |
(2.4) |
2.6 |
21.6 |
94.3 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in equity for the six months ended 31 March 2010 - unaudited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 October 2009 |
3.5 |
69.0 |
(2.6) |
1.9 |
29.2 |
101.0 |
|
|
|
|
|
|
|
|
|
Loss for the period |
- |
- |
- |
- |
(15.0) |
(15.0) |
|
Exchange differences on translation of foreign operations |
- |
- |
- |
- |
(0.8) |
(0.8) |
|
Total comprehensive expense for the period |
- |
- |
- |
- |
(15.8) |
(15.8) |
|
|
|
|
|
|
|
|
|
Dividends (note 7) |
- |
- |
- |
- |
(5.5) |
(5.5) |
|
Credit to equity for share-based payments |
- |
- |
- |
0.3 |
- |
0.3 |
|
At 31 March 2010 |
3.5 |
69.0 |
(2.6) |
2.2 |
7.9 |
80.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Changes in equity for the year ended 30 September 2010 - audited |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At 1 October 2009 |
3.5 |
69.0 |
(2.6) |
1.9 |
29.2 |
101.0 |
|
|
|
|
|
|
|
|
|
Profit for the year |
- |
- |
- |
- |
20.2 |
20.2 |
|
Exchange differences on translation of foreign operations |
- |
- |
- |
- |
(1.2) |
(1.2) |
|
Actuarial losses on defined benefit pension schemes |
- |
- |
- |
- |
(0.5) |
(0.5) |
|
Tax relating to components of other comprehensive income |
- |
- |
- |
- |
(0.1) |
(0.1) |
|
Total comprehensive income for the period |
- |
- |
- |
- |
18.4 |
18.4 |
|
|
|
|
|
|
|
|
|
Dividends (note 7) |
- |
- |
- |
- |
(7.8) |
(7.8) |
|
Credit to equity for share-based payments |
- |
- |
- |
0.7 |
- |
0.7 |
|
Disposed of on vesting of LTIP awards |
- |
- |
0.2 |
(0.2) |
- |
- |
|
At 30 September 2010 |
3.5 |
69.0 |
(2.4) |
2.4 |
39.8 |
112.3 |
Condensed consolidated cash flow statement |
|
||
For the six months ended 31 March 2011 |
|
||
|
|
|
|
|
|
|
Unaudited |
Audited |
|
|
|
Six months ended |
Year ended |
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
£m |
£m |
£m |
|
|
|
|
|
|
Operating (loss) profit |
(14.2) |
(11.9) |
40.7 |
|
Adjustments for: |
|
|
|
Share of results of associates |
(0.3) |
- |
- |
Amortisation of intangible assets |
2.1 |
2.3 |
4.4 |
Depreciation of property, plant and equipment |
2.1 |
2.0 |
13.8 |
Share-based payment charge |
0.2 |
0.3 |
0.7 |
|
(Increase) decrease in inventories |
(0.4) |
(0.4) |
0.3 |
|
(Increase) decrease in receivables |
(11.7) |
(22.4) |
1.3 |
|
Increase in payables |
24.0 |
46.1 |
15.2 |
Cash inflow from operating activities |
1.8 |
16.0 |
76.4 |
|
|
|
|
|
|
Tax (paid) refunded |
(4.8) |
0.5 |
(1.0) |
Net cash (used in) from operating activities |
(3.0) |
16.5 |
75.4 |
|
|
|
|
|
Investing activities |
|
|
|
|
Acquisition of associates |
(30.8) |
- |
- |
|
Purchases of intangible assets |
(1.0) |
(1.5) |
(3.3) |
|
Purchases of property, plant and equipment |
(7.8) |
(5.4) |
(16.5) |
|
Proceeds on disposal of property, plant and equipment |
1.4 |
2.1 |
3.0 |
Net cash used in investment activities |
(38.2) |
(4.8) |
(16.8) |
|
|
|
|
|
Financing activities |
|
|
|
|
Finance costs paid |
(6.6) |
(5.3) |
(11.8) |
|
Interest received |
0.1 |
0.2 |
0.4 |
|
New bank loans raised |
43.5 |
3.0 |
- |
|
Repayment of borrowings |
- |
(10.0) |
(32.5) |
|
New finance leases |
1.1 |
- |
3.8 |
|
Payments under finance leases |
(1.9) |
(1.8) |
(4.7) |
|
Dividends paid |
- |
- |
(7.8) |
|
Net cash from (used in) financing activities |
36.2 |
(13.9) |
(52.6) |
|
|
|
|
|
Net (decrease) increase in cash and cash equivalents |
(5.0) |
(2.2) |
6.0 |
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
56.4 |
51.8 |
51.8 |
|
Effect of foreign exchange rate changes |
(0.3) |
1.5 |
(1.4) |
|
Cash and cash equivalents at end of period |
51.1 |
51.1 |
56.4 |
|
|
|
|
|
Notes to the condensed interim financial statements
1. General information
The financial information for the year ended 30 September 2010 contained within this condensed set of half-yearly financial statements does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified, did not draw attention to any matters by way of emphasis and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.
The Group's condensed set of half-yearly financial statements was approved by the Board of Directors on 24 May 2011. This announcement is being sent to shareholders and copies of this report and the last Annual Report are available at the Company's registered office at Hartford Manor, Greenbank Lane, Northwich, Cheshire, CW8 1HW and can each be downloaded or viewed from the Group's website at www.holidaybreak.co.uk. Copies of this report have also been submitted to the National Storage Mechanism and will shortly be available at www.hemscott.com/nsm.do.
2. Basis of preparation
The condensed set of financial statements for the six months ended 31 March 2011 has been prepared in accordance with IAS 34 'Interim Financial Reporting'. The annual financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the European Union. These condensed half-yearly financial statements have been prepared using accounting policies consistent with International Financial Reporting Standards as adopted by the European Union, and in accordance with those policies disclosed within the Annual Report for the year ended 30 September 2010, which was filed with the Registrar of Companies on 7 March 2011.
3. Going Concern
The Directors, in their consideration of going concern, have reviewed the Group's future cash flow forecasts and revenue projections, which are based on market data and past experience. The Group is subject to a number of significant risks and uncertainties which are set out in note 10, which could affect the Group's ability to meet these forecasts and hence its ability to meet its banking covenants. The Directors believe that the Group is adequately placed to manage its business risks despite the ongoing uncertain consumer economic outlook and challenging macro economic conditions.
Management is currently of the opinion that the Group's forecasts and projections, after subjecting them to reasonable robust sensitivities, show that the Group should be able to operate within its current facilities and comply with its banking covenants. The Group has a robust policy towards liquidity and cash flow management and it is financed principally through £250m of bank facilities committed through to May 2013.
After making enquiries, the Directors have formed a judgment, at the time of approving the half-yearly financial statements, that there is a reasonable expectation that the Group and therefore the Company have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
4. Business segments
For management purposes, the Group is currently organised into the following divisions: Education & Adventure Travel, Hotel Breaks and Camping. These divisions are the basis on which the Group reports its primary segment information.
Segment information about these divisions is presented below:
|
6 months ended 31 March 2011 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|
|
Revenue |
|
|
|
|
|
|
|
|
Total revenue |
41.0 |
38.8 |
79.8 |
59.7 |
0.1 |
139.6 |
|
|
|
|
|
|
|
|
|
|
|
Result |
|
|
|
|
|
|
|
|
Headline operating (loss) profit |
(2.3) |
(2.0) |
(4.3) |
4.2 |
(12.3) |
(12.4) |
|
|
|
|
|
|
|
|
|
|
|
Amortisation of other intangible assets acquired via business combinations |
(0.3) |
(0.1) |
(0.4) |
(0.3) |
- |
(0.7) |
|
|
Separately disclosed items* |
(1.1) |
- |
(1.1) |
- |
- |
(1.1) |
|
|
|
|
|
|
|
|
|
|
|
Segment result |
(3.7) |
(2.1) |
(5.8) |
3.9 |
(12.3) |
(14.2) |
|
|
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
0.1 |
|
|
Other gains and losses |
|
|
|
|
|
4.2 |
|
|
Finance costs |
|
|
|
|
|
(6.9) |
|
|
Loss before tax |
|
|
|
|
|
(16.8) |
|
|
Tax |
|
|
|
|
|
4.3 |
|
|
Loss for the period |
|
|
|
|
|
(12.5) |
|
|
* Separately disclosed items comprises £0.9m of acquisition costs and £0.2m of exceptional restructuring costs. |
|
||||||
|
6 months ended 31 March 2011 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|||
|
Other information |
|
|
|
|
|
|
|||
|
Capital additions1 |
4.1 |
0.3 |
4.4 |
0.4 |
9.8 |
14.6 |
|||
|
Depreciation and amortisation |
2.2 |
0.4 |
2.6 |
1.1 |
0.5 |
4.2 |
|||
|
Non-current assets held for sale2 |
- |
- |
- |
- |
0.2 |
0.2 |
|||
|
|
|
|
|
|
|
|
|||
|
Balance sheet |
|
|
|
|
|
|
|||
|
Assets |
|
|
|
|
|
|
|||
|
Segment assets |
271.8 |
45.1 |
316.9 |
49.0 |
79.5 |
445.4 |
|||
|
Unallocated corporate assets |
|
|
|
|
|
56.4 |
|||
|
Consolidated total assets |
|
|
|
|
|
501.8 |
|||
|
|
|
|
|
|
|
|
|||
|
Liabilities |
|
|
|
|
|
|
|||
|
Segment liabilities |
(77.8) |
(24.1) |
(101.9) |
(44.1) |
(46.6) |
(192.6) |
|||
|
Unallocated corporate liabilities |
|
|
|
|
|
(214.9) |
|||
|
Consolidated total liabilities |
|
|
|
|
|
(407.5) |
|||
|
|
|
|
|
|
|
||||
|
1 Includes additions of other intangible assets and property, plant and equipment in addition to acquisition of subsidiary intangible assets and property, plant and equipment. |
|
||||||||
|
2 Non-current assets held for sale are mobile-homes held within the Camping Division. |
|
||||||||
4. Business segments (continued)
|
6 months ended 31 March 2010 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|
Revenue |
|
|
|
|
|
|
|
Total revenue |
44.0 |
40.9 |
84.9 |
65.1 |
0.2 |
150.2 |
|
|
|
|
|
|
|
|
|
Result |
|
|
|
|
|
|
|
Headline operating (loss) profit |
(2.5) |
(0.6) |
(3.1) |
4.5 |
(12.4) |
(11.0) |
|
|
|
|
|
|
|
|
|
Amortisation of other intangible assets acquired via business combinations |
(0.5) |
(0.1) |
(0.6) |
(0.3) |
- |
(0.9) |
|
|
|
|
|
|
|
|
|
Segment result |
(3.0) |
(0.7) |
(3.7) |
4.2 |
(12.4) |
(11.9) |
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
0.2 |
|
Other gains and losses |
|
|
|
|
|
(1.4) |
|
Finance costs |
|
|
|
|
|
(6.9) |
|
Loss before tax |
|
|
|
|
|
(20.0) |
|
Tax |
|
|
|
|
|
5.0 |
|
Loss for the period |
|
|
|
|
|
(15.0) |
|
6 months ended 31 March 2010 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|||
|
Other information |
|
|
|
|
|
|
|||
|
Capital additions1 |
4.4 |
0.2 |
4.6 |
0.7 |
8.5 |
13.8 |
|||
|
Depreciation and amortisation |
2.2 |
0.5 |
2.7 |
0.9 |
0.7 |
4.3 |
|||
|
Non-current assets held for sale2 |
- |
- |
- |
- |
0.4 |
0.4 |
|||
|
|
|
|
|
|
|
|
|||
|
Balance sheet |
|
|
|
|
|
|
|||
|
Assets |
|
|
|
|
|
|
|||
|
Segment assets |
234.8 |
44.4 |
279.2 |
65.8 |
81.1 |
426.1 |
|||
|
Unallocated corporate assets |
|
|
|
|
|
57.2 |
|||
|
Consolidated total assets |
|
|
|
|
|
483.3 |
|||
|
|
|
|
|
|
|
|
|||
|
Liabilities |
|
|
|
|
|
|
|||
|
Segment liabilities |
(74.3) |
(24.4) |
(98.7) |
(59.2) |
(46.4) |
(204.3) |
|||
|
Unallocated corporate liabilities |
|
|
|
|
|
(199.0) |
|||
|
Consolidated total liabilities |
|
|
|
|
|
(403.3) |
|||
|
|
|
|
|
|
|
||||
|
1 Includes additions of other intangible assets and property, plant and equipment in addition to acquisition of subsidiary intangible assets and property, plant and equipment. |
|
||||||||
|
2 Non-current assets held for sale are mobile-homes held within the Camping Division. |
|
||||||||
4. Business segments (continued)
|
Year ended 30 September 2010 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|
Revenue |
|
|
|
|
|
|
|
Total revenue |
121.1 |
97.4 |
218.5 |
135.8 |
107.4 |
461.7 |
|
|
|
|
|
|
|
|
|
Result |
|
|
|
|
|
|
|
Headline operating profit |
15.8 |
4.7 |
20.5 |
11.5 |
11.7** |
43.7 |
|
|
|
|
|
|
|
|
|
Amortisation of other intangible assets acquired via business combinations |
(0.9) |
(0.3) |
(1.2) |
(0.6) |
- |
(1.8) |
|
Separately disclosed items* |
(0.2) |
(0.1) |
(0.3) |
- |
(0.9) |
(1.2) |
|
|
|
|
|
|
|
|
|
Segment result |
14.7 |
4.3 |
19.0 |
10.9 |
10.8 |
40.7 |
|
|
|
|
|
|
|
|
|
Investment income |
|
|
|
|
|
0.4 |
|
Other gains and losses |
|
|
|
|
|
(1.7) |
|
Finance costs |
|
|
|
|
|
(13.4) |
|
Profit before tax |
|
|
|
|
|
26.0 |
|
Tax |
|
|
|
|
|
(5.8) |
|
Profit for the period |
|
|
|
|
|
20.2 |
* Separately disclosed items comprises £0.6m of exceptional restructuring costs and £0.6m in relation to mobile-homes written off as a result of flood damage.
** Includes £1.8m profit on sale of mobile-homes.
|
Year ended 30 September 2010 |
Education £m |
Adventure £m |
Education & Adventure £m |
Hotel Breaks £m |
Camping £m |
Consolidated £m |
|||
|
Other information |
|
|
|
|
|
|
|||
|
Capital additions1 |
8.0 |
0.4 |
8.4 |
1.9 |
9.5 |
19.8 |
|||
|
Depreciation and amortisation |
4.6 |
1.2 |
5.8 |
2.1 |
10.3 |
18.2 |
|||
|
Non-current assets held for sale2 |
- |
- |
- |
- |
0.5 |
0.5 |
|||
|
|
|
|
|
|
|
|
|||
|
Balance sheet |
|
|
|
|
|
|
|||
|
Assets |
|
|
|
|
|
|
|||
|
Segment assets |
241.1 |
45.9 |
287.0 |
48.1 |
55.8 |
390.9 |
|||
|
Unallocated corporate assets |
|
|
|
|
|
57.7 |
|||
|
Consolidated total assets |
|
|
|
|
|
448.6 |
|||
|
|
|
|
|
|
|
|
|||
|
Liabilities |
|
|
|
|
|
|
|||
|
Segment liabilities |
(65.0) |
(27.9) |
(92.9) |
(47.9) |
(20.9) |
(161.7) |
|||
|
Unallocated corporate liabilities |
|
|
|
|
|
(174.6) |
|||
|
Consolidated total liabilities |
|
|
|
|
|
(336.3) |
|||
|
|
|
|
|
|
|
||||
|
1 Includes additions of other intangible assets and property, plant and equipment in addition to acquisition of subsidiary intangible assets and property, plant and equipment. |
|
||||||||
|
2 Non-current assets held for sale are mobile-homes held within the Camping Division. |
|
||||||||
5. Taxation
The taxation credit (charge) is based on the estimated effective tax rate for the full year of 25.0 per cent (31 March 2010: 25.0 per cent, 30 September 2010: 22.5 per cent).
6. (Loss) earnings per share
The calculation of the basic and diluted (loss) earnings per share is based on the following data:
|
|
Six months ended |
Year ended |
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
£m |
£m |
£m |
(Loss) earnings |
|
|
|
|
(Loss) earnings for the purposes of basic and diluted (loss) earnings per share being net (loss) profit attributable to equity holders of the parent |
(12.5) |
(15.0) |
20.2 |
|
|
|
|
|
|
|
Number |
Number |
Number |
Number of shares |
M |
M |
M |
|
Weighted average number of ordinary shares for the purposes of basic (loss) earnings per share |
70.1 |
70.1 |
70.1 |
Effect of dilutive potential ordinary shares: |
|
|
|
Share options and awards |
- |
- |
- |
Weighted average number of ordinary shares for the purposes of diluted (loss) earnings per share |
70.1 |
70.1 |
70.1 |
|
|
|
|
|
|
|
Pence |
Pence |
Pence |
|
|
|
|
|
Basic (loss) earnings per share |
(17.9) |
(21.5) |
28.7 |
Diluted (loss) earnings per share |
(17.9) |
(21.5) |
28.7 |
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
|
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
|
£m |
£m |
£m |
|
(Loss) earnings |
|
|
|
|
Net (loss) profit attributable to equity holders of the parent |
(12.5) |
(15.0) |
20.2 |
|
Add back: |
|
|
|
|
Amortisation of other intangible assets acquired via business combinations |
0.7 |
0.9 |
1.8 |
|
Separately disclosed items |
1.1 |
- |
1.2 |
|
IAS 39 mark-to-market revaluations of financial derivatives |
(4.2) |
1.4 |
1.7 |
|
Tax effect of the above |
0.9 |
(0.7) |
(1.0) |
|
(Loss) earnings for the purposes of headline basic (loss) earnings per share |
(14.0) |
(13.4) |
23.9 |
|
|
|
|
|
|
|
|
|
Pence |
Pence |
Pence |
|
|
|
|
|
|
|
Headline basic (loss) earnings per share |
(20.0) |
(19.1) |
34.0 |
|
Headline diluted (loss) earnings per share |
(20.0) |
(19.1) |
34.0 |
|
|
|
|
|
|
|
7. Dividends
|
|
|
Six months ended |
Year ended |
|
|
|
Dividend pence per share |
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
|
£m |
£m |
£m |
Ordinary dividends paid |
|
|
|
|
For the year ended 30 September 2009 |
|
|
|
|
Final dividend |
7.90 |
- |
5.6 |
5.6 |
|
|
|
|
|
|
For the year ended 30 September 2010 |
|
|
|
|
Interim dividend |
3.20 |
- |
- |
2.2 |
Final dividend |
7.90 |
5.6 |
- |
- |
|
|
|
5.6 |
5.6 |
7.8 |
|
|
|
Six months ended |
Year ended |
|
|
|
Dividend pence per share |
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
|
£m |
£m |
£m |
Ordinary dividends proposed |
|
|
|
|
For the year ended 30 September 2011 |
|
|
|
|
Interim dividend |
3.35 |
2.3 |
- |
- |
|
|
|
|
|
|
For the year ended 30 September 2010 |
|
|
|
|
Interim dividend |
3.20 |
- |
2.2 |
- |
Final dividend |
7.90 |
- |
- |
5.6 |
|
|
|
2.3 |
2.2 |
5.6 |
Under arrangements dated 30 March 2009 and 3 April 2009, Holidaybreak Trustee Limited (as trustee of the Holidaybreak plc Employee Share Trust) and Halifax EES Trustees International Limited (as trustee of the Holidaybreak plc Employee Benefit Trust) respectively (together 'the Trustees') have agreed to waive all dividends due to them (except for 0.001 pence per share and 0.0001 pence per share respectively) from that point onwards.
As at 31 March 2011, 31 March 2010 and 30 September 2010 the Trustees held 481,822 shares, representing 0.68% of the called up share capital of the Company.
Accordingly, the dividend of £5.5m recognised in the period, as shown in the condensed consolidated statement of changes in equity, excludes those dividends waived as detailed above.
The proposed interim dividend was approved by the Board on 24 May 2011 and has not been included as a liability as at 31 March 2011. The proposed dividend will be payable on 10 August 2011 to shareholders on the register at close of business on 15 July 2011.
8. Acquisition of associate
On 16 December 2010 the Group acquired 50% of the issued share capital of Meininger Holding GmbH, a German-based provider of student and school tour accommodation, for a total consideration of €37.1m (£31.1m). This includes €0.6m (£0.5m) of deferred consideration in relation to the achievement of targets which have subsequently been satisfied. The Group has the option to acquire the remaining 50% stake over the next 2-3 years, price dependent on the performance of the business. The transactions have been accounted for by the equity method of accounting.
|
|
Book value |
Provisional fair value adjustments |
Provisional fair value |
|
|
£m |
£m |
£m |
|
|
|
|
|
Share of net assets acquired |
|
|
|
|
Property, plant and equipment |
0.6 |
- |
0.6 |
|
Inventories |
0.1 |
- |
0.1 |
|
Trade and other receivables |
1.2 |
- |
1.2 |
|
Cash and cash equivalents |
2.6 |
(1.0) |
1.6 |
|
Trade and other payables |
(2.3) |
- |
(2.3) |
|
Current tax liabilities |
(0.8) |
- |
(0.8) |
|
Bank loans |
(0.1) |
- |
(0.1) |
|
|
1.3 |
(1.0) |
0.3 |
|
Goodwill |
|
|
30.8 |
|
|
|
|
|
|
Total consideration |
|
|
31.1 |
|
|
|
|
|
|
Satisfied by: |
|
|
|
|
Cash consideration |
|
|
30.6 |
|
Deferred consideration |
|
|
0.5 |
|
|
|
|
31.1 |
|
Net cash outflow arising on acquisition |
|
|
|
|
Cash consideration |
|
|
(30.6) |
|
Directly attributable costs |
|
|
(0.2) |
|
|
|
|
(30.8) |
|
|
|
|
|
The fair value adjustment of £1.0m relates to ring-fenced cash payable to the previous shareholders under the terms of the sale and purchase agreement.
The interest in Meininger Holding GmbH is reconciled as follows:
|
|
|
|
Six months ended 31 March 2011 |
|
|
|
|
£m |
|
|
|
|
|
|
Share of net assets acquired |
|
|
0.3 |
|
Share of results for the period |
|
|
0.3 |
|
Goodwill |
|
|
30.8 |
|
|
|
|
31.4 |
|
|
|
|
|
9. Analysis of cash and cash equivalents and reconciliation to net debt
|
|
31 March 2011 |
31 March 2010 |
30 September 2010 |
|
|
£m |
£m |
£m |
|
|
|
|
|
Cash |
51.1 |
51.2 |
56.4 |
|
Bank overdrafts |
- |
(0.1) |
- |
Cash and cash equivalents |
51.1 |
51.1 |
56.4 |
|
Debt due within one year |
(10.0) |
- |
(10.0) |
|
Debt due after one year |
(173.1) |
(163.6) |
(128.5) |
|
Finance leases less than one year |
(5.3) |
(4.6) |
(5.1) |
|
Finance leases more than one year |
(11.5) |
(12.1) |
(12.5) |
|
Net debt at the end of the period |
(148.8) |
(129.2) |
(99.7) |
|
|
|
|
|
10. Risks and uncertainties
There are a number of potential risks and uncertainties that could have a material impact on the Group's performance over the remaining six months of the financial year and beyond. These include, but are not limited to, the following:
· Economic conditions across markets:
Adverse economic conditions in one or more countries significant to our businesses may lead to a reduction in levels of demand for our products and thereby impact the Group's earnings and financial position;
· Foreign exchange and interest rates:
Fluctuating exchange rates will have financial implications for the Group (both transaction and translation) and could affect the selling price of holidays and therefore impact the consumer demand for some of our products and services. Adverse movements in interest rates will have a negative impact on the Group's borrowing costs and may affect consumer demand for our products and services;
· Major external events:
Most of our businesses are exposed to external events. For example, an outbreak of a contagious disease or a fire is likely to have a significant impact on the ability of any affected centre(s) within the Education Division to continue in operation. A major terrorist (or similar) incident in London could have a significant impact on Superbreak and NST. The Camping Division is exposed to the possibility of severe weather rendering accommodation unusable. Camping's overseas revenue generating assets are not insured against business interruption or loss or damage arising from storms or floods as such insurance is not available at commercially sensible rates. A major incident overseas, such as political unrest, may require the Adventure businesses to cancel tours or rearrange itinerary timings and/or routings;
· Consumer tastes:
Failure to anticipate and respond to changes in consumer tastes or market trends may lead to a reduction in levels of demand;
· Liquidity risk:
The risk that trading underperformance, increased cost of debt and inefficient treasury management could lead to breaches in covenants and bonding arrangements;
10. Risks and uncertainties (continued)
· Health, safety and security:
The Group is committed to ensuring the highest standards of health, safety and security in its operations. However, there are material risks of accidents or other incidents and litigation, compensation and reputational damage arising from such accidents which would adversely affect the business of the Group; and
· Failure to attract, retain and motivate key employees:
Our ability to provide high-quality products and services on a timely basis depends to a significant extent on having an adequate number of qualified employees. Accordingly, the Group's ability to increase its productivity and profitability and support its growth strategies may be limited by its ability to employ, train, motivate and retain skilled personnel, which in turn may be hindered by restructurings and cost saving initiatives.
The Board routinely monitors all these risks and uncertainties and appropriate actions are taken at Board or divisional level to mitigate these risks. The Board conducts an annual self-assessment process designed to review the effectiveness of all internal controls and risk management processes at both divisional and Group level. This process highlights the key risks to the business and what action should reasonably and cost effectively be taken to manage them.
11. Contingent liabilities and contractual commitments
Under the terms of guarantees given to the Civil Aviation Authority, Association of British Travel Agents and other relevant authorities by the Company in respect of certain subsidiaries, in the event of default, the Company could be held liable to the extent of the subsidiaries' net trading liabilities at the time of default. At 31 March 2011 the Group had total bonds and guarantees of £38.9m (31 March 2010: £41.9m, 30 September 2010: £39.9m).
During the period the Group entered into contracts with camp-site owners to lease mobile-home and tent pitches. Contracts entered into as at 31 March 2011 totalled £23.2m (31 March 2010: £22.3m, 30 September 2010: £10.3m)
12. Related parties
Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.
A subsidiary of the Group's associate company, Meininger Holding GmbH, has entered into a lease agreement under commercial terms on a hostel from the owners of the remaining 50% stake. The lease is due to commence in June 2011.
During the period NST purchased accommodation from Meininger at arm's length for a total of £0.2m.
There has been no change to the nature of related party transactions in the first six months of the financial year that has materially affected the financial position or performance of the Group.
Responsibility Statement
We confirm that to the best of our knowledge:
· the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting';
· the interim management report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and
· the interim management report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).
By the order of the Board,
Martin Davies
Group Chief Executive
24 May 2011
Cautionary Statement
This interim management report ('the Report') has been prepared solely to provide additional information to shareholders to assess the Group's strategies and the potential for those strategies to succeed. The interim management report should not be relied on by any other party or for any other purpose.
Statements in this Report reflect the knowledge and information available at the time of its preparation. Certain statements included or incorporated by reference within this Report may constitute 'forward looking statements' in respect of the Group's operations, performance, prospects and/or financial condition. By their nature, forward looking statements involve a number of risks, uncertainties and assumptions and actual results or events may differ materially from those expressed or implied by those statements. Accordingly, no assurance can be given that any particular expectation will be met and reliance should not be placed on any forward looking statement. Additionally, forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. No responsibility or obligation is accepted to update or revise any forward looking statement resulting from new information, future events or otherwise. Nothing in this Report should be construed as a profit forecast.
This Report does not constitute or form part of any offer or invitation to sell, or any solicitation of any offer to purchase shares in the Company, nor shall it, nor any part of it, or the fact of its distribution form the basis of, or be relied on in connection with, any contract or commitment or investment decisions relating thereto, nor does it constitute a recommendation regarding the shares of the Company. Past performance cannot be relied upon as a guide to future performance. Liability arising from anything within this Report shall be governed by English Law. Nothing in this Report shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.
This information is provided by RNS
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