Final Results

RNS Number : 0123X

Holidaybreak PLC

30 November 2010

 



Tuesday 30 November 2010: For immediate release

HOLIDAYBREAK

Final Results for the year ended 30 September 2010

Acquisition of a 50% stake in student and school tour accommodation group Meininger

Holidaybreak, the education and activity travel group, today announces its final full year results for the year ended 30 September 2010.

In a separate announcement today, the Group has said that its Education Division has reached agreement to acquire a 50% stake in the German-based student and school tour accommodation group Meininger for approximately €36.5m (£30.9m), with the option to acquire the remaining shares in Meininger over the next two to three years.

Financial Summary

§ Solid profit growth, improved cash management, stringent cost control and strong operating margin performance.

§ Group revenue down 2.5% at £461.7m (2009: £473.4m).

§ Headline profit before tax¹ up 8.9% at £30.7m (2009³: £28.2m). Statutory profit before tax at £26.0m (2009³: £5.2m). Growth in profitability reflects continued shift towards our education businesses which are less exposed to discretionary spending.

§ Headline basic EPS¹ of 34.0p (2009³: 36.8p). Statutory basic EPS of 28.7p (2009³: 4.4p).

§ Net debt reduced by £38.4m to £99.7m (2009: £138.1m) following a strong focus on cash management.

§ Final dividend of 7.9p making a total dividend per share² of 11.1p (2009: 11.1p).

 

Operational Summary

§ Our newest PGL centres, Windmill Hill and Liddington, are both performing ahead of expectations. Both centres have achieved a 100% re-booking rate from schools who visited in 2010.

§ PGL will increase bed stock at Liddington to satisfy known demand. Bed capacity will be increased to 600 this year with a potential to add significantly more beds in the future. We continue to review opportunities for new PGL centres.

§ The acquisition of a stake in Meininger will increase non-leisure revenues and demonstrates our ability to lead the education market. The education share of the Group is expected to grow strongly in the coming years.

§ Our goal is to become the leading brand in the European school trip market, covering all the major destinations such as Paris, London, Berlin, Amsterdam and Milan. Taking a stake in Meininger takes us a step closer to that goal.

§ The Adventure Travel Division continues its recovery, performing strongly in a challenging economic environment.

§ Hotel Breaks Division remains exposed to short-term demand fluctuations as disposable incomes are impacted during a recession.  However, it continues to benefit from popular theatre shows such as Lion King, Wicked and We Will Rock You, plus the upcoming production of the Wizard of Oz is expected to drive demand.

§ Camping has undertaken an initial review of the life expectancy of its mobile-home fleet. This indicates that its average lifespan could be extended by approximately two years, having a material positive impact on the Group's cash flow in the medium term.

§ Current trading is in line with management expectations. Group sales intake for 2010/11 to date is currently 1% down on last year.

Martin Davies, Chief Executive, said:

 "I am pleased with these results which demonstrate solid profit growth, improved cash management, stringent cost control and a strong operating margin performance. The growth in profitability is evidence of our strategic focus on our education businesses which are much less exposed to discretionary spending and where we can create unique, bespoke products and services for our customers.

I am also delighted that we have agreed to acquire a stake in Meininger which was announced today. Our goal is to become the leading brand in the European school trip market, covering all the major destinations such as Paris, London, Berlin, Amsterdam and Milan. This transaction takes us a step closer to that goal.

Education has been core to our business for some time and remains central to the Group's plans for profitable growth. Meininger fits with our core competencies in property, hospitality and safety management for children and school groups. It also secures a growing earnings stream with major potential for further growth outside of Germany and gives Holidaybreak the potential for further development in school tours and activities in various European markets.

The Group as a whole has performed well despite the difficult economic environment. Although the outlook for 2011 remains challenging, visibility remains very high for our education businesses. Current trading is in line with management expectations. Group sales intake for 2010/11 to date is currently 1% down on last year. The acquisition of Meininger will increase our proportion of non-leisure revenues and we will continue to invest in our education businesses which have defendable, leadership positions in attractive sectors with strong market drivers for growth. However, we will continue to manage the entire business tightly, with a focus on cash generation and cost control."

¹ Headline profit before tax and headline basic earnings per share are stated before amortisation of other intangible assets acquired via business combinations of £1.8m (2009: £3.5m), impairment of goodwill of £nil (2009: £9.6m), separately disclosed items of £1.2m (2009: £1.6m), IAS 39 mark-to-market revaluations of financial derivatives of £1.7m (2009: £8.3m) and, for headline basic earnings per share, the tax effect thereof of £1.0m (2009: £3.6m).

² 2009 interim dividend restated for the Rights Issue.

³ Restated following adoption of amendments to IAS 38 'Intangible assets' and IFRS 2 'Share-based payments'.

Enquiries:

Holidaybreak                                                                                            [phone]

Martin Davies                                                 

Brunswick                                                                                                 [phone]

[e-mail]

Catherine Hicks / Craig Breheny / Oliver Hughes

Notes to Editors

1. 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.

2. Reconciliation of headline to statutory operating profit

2010	Education £m	Adventure Travel £m	Hotel Breaks £m	Camping £m	Group £m
Headline operating profit	15.8	4.7	11.5	11.7	43.7
Amortisation of other intangible assets acquired via business combinations	(0.9)	(0.3)	(0.6)	-	(1.8)
Separately disclosed items	(0.2)	(0.1)	-	(0.9)	(1.2)
Operating profit	14.7	4.3	10.9	10.8	40.7

2009 restated*	Education £m	Adventure Travel £m	Hotel Breaks £m	Camping £m	Group £m
Headline operating profit	13.6	4.2	12.5	12.8	43.1
Amortisation of other intangible assets acquired via business combinations	(2.4)	(0.4)	(0.7)	-	(3.5)
Impairment of goodwill	-	(9.6)	-	-	(9.6)
Separately disclosed items	(0.7)	(0.9)	-	-	(1.6)
Operating profit	10.5	(6.7)	11.8	12.8	28.4

* Restated following adoption of amendments to IAS 38 'Intangible assets' and IFRS 2 'Share-based payments'.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

Chairman's Statement

Introduction

Since the appointment of Martin Davies as Group Chief Executive in April, I have reverted to the role of non-executive Chairman. Given his work in the Education Division and on the Board, Martin knows all of the Holidaybreak businesses extremely well. He has certainly hit the ground running and his ideas and enthusiasm, together with the support of his management team, give me great confidence for the future.

Education is central to the Group's plans for profitable growth and the acquisition of a stake in Meininger, announced separately today, extends our market-leading position in educational travel to the German market.

All our businesses remain focused on delivering value for the consumer by offering quality products with great customer service at attractive prices, whilst improving cash generation and keeping costs under control.

On behalf of the Board, I would like to thank management and staff throughout the Group for their continued hard work and commitment and for their expertise and dedication to serving our customers.

Group results

For the year ended 30 September 2010, headline profit before tax¹ was £30.7m (2009 restated²: £28.2m) on revenue of £461.7m (2009: £473.4m). Statutory profit before tax was £26.0m (2009 restated²: £5.2m). Headline earnings per share¹ were 34.0p (2009 restated²: 36.8p). Statutory basic earnings per share were 28.7p (2009 restated²: 4.4p).

Net debt at 30 September 2010 was £99.7m (2009: £138.1m), after spending £16.8m on capital expenditure and intangible assets net of disposal proceeds (2009: £30.5m).  

Dividend

The Board is recommending a final dividend of 7.9p (2009: 7.9p), payable on 6 May 2011, to shareholders on the register on 8 April 2011, making a total of 11.1p (2009: 11.1p, the interim dividend being restated for the Rights Issue) for the year. The cash cost of the full year dividend is £7.8m (2009: £7.8m).

Acquisition

Today we announced that the Education Division has reached agreement to acquire a 50% stake in the German-based student and school tour accommodation group Meininger from the executive directors who own the company: Nizar Rokbani, Oskar Kan and Sascha Gechter. These directors will continue to run the company, supported by the Education & Adventure Division.

The initial consideration is approximately €36.5m (£30.9m) which is subject to adjustment following finalisation of the audited accounts of Meininger Holding GmbH for the year ended 30 September 2010. We have the option to acquire the remaining shares in Meininger over the next two to three years.

Meininger provides bespoke accommodation tailored specifically for school tours and youth groups with properties located close to the key city centre cultural locations in Germany, the UK and Austria. Headquartered in Berlin, it currently employs over 250 staff and operates a total of ten properties in Berlin, London, Vienna, Munich, Frankfurt, Cologne and Hamburg. Meininger will look to expand its offering to other key European school trip destinations as part of Holidaybreak's Education & Adventure Division.

Management and Board changes

Martin Davies was appointed Group Chief Executive on 19 April 2010. Martin joined PGL, the market leader in the residential, outdoor education and adventure sector for UK primary schools, as Chief Executive in 2004 and went on to lead the MBO in 2005. He subsequently led the sale of PGL to Holidaybreak in June 2007, following which he was appointed Managing Director of the Education Division and became a member of the plc Board.

Martin remains Managing Director of the Education Division which is at the heart of our growth plans for the Group.

On 9 September 2010, we announced the appointment of Neil Bright as Group Finance Director, with effect from 1 January 2011. Neil succeeds Bob Baddeley, who will retire on 31 December 2010 after more than 15 years with the Company. I would like to thank Bob for his invaluable contributions during his time on the Board and for his service to the Company.

Neil, 47, is currently group finance director at HMV Group plc. He joined HMV in August 1996 as group finance director from its parent company, Thorn EMI plc, and was appointed to the HMV board as finance director in March 1998. He is a chartered accountant, having qualified with Coopers & Lybrand in London. Neil was appointed as a Non-executive Director of Holidaybreak plc on 27 November 2008 and became Chairman of the Audit Committee on 1 January 2009.

In September, the Company commenced an external search for a new Non-executive Director who can take up the position of Chairman of the Audit Committee. The search is ongoing.

The Joint Managing Directors of the Hotel Breaks Division, Nick Cust OBE and Mark Wray, retired on 31 December 2009. Nick also stood down from the Board at that time. Eamonn Ferrin, previously chief executive of Allbury Travel Group Limited, joined the division on 2 November 2009 and became Managing Director of the Hotel Breaks Division on 1 January 2010.

Annual General Meeting

The Annual General Meeting will be held on Wednesday 2 March 2011 at 11:30am at the Lowry, Pier 8, Salford Quays, Manchester M50 3AZ.

Outlook and current trading

The Group has performed well despite the difficult economic environment. Although the outlook for 2011 remains challenging, visibility remains very high for our education businesses.  The acquisition of Meininger will increase our proportion of non-leisure, education revenues and we will continue to invest in our education businesses which have defendable, leadership positions in attractive sectors with strong market drivers for growth. However, we will continue to manage the entire business tightly, with a focus on cash generation and cost control.

Current trading is in line with management expectations. Group sales intake for 2010/11 to date is currently 1% down on last year.

Sales intake for the Education and Adventure Division is 2% higher than last year. PGL outdoor education centres are 88% booked for 2010/11. 

The Hotel Breaks Division's sales intake is approximately 8% below on the comparable period for 2009/10.

Sales intake for the Camping Division is currently approximately 6% below last year's level on 4% lower capacity for the 2011 season.

John Coleman

Chairman

¹ Headline profit before tax and headline basic earnings per share are stated before amortisation of other intangible assets acquired via business combinations of £1.8m (2009: £3.5m), impairment of goodwill of £nil (2009: £9.6m), separately disclosed items of £1.2m (2009: £1.6m) as set out in note 4 of the attached financial information, IAS 39 mark-to-market revaluations of financial derivatives of £1.7m (2009: £8.3m) and, for headline basic earnings per share, the tax effect thereof of £1.0m (2009: £3.6m).

² Restated following adoption of amendments to IAS 38 'Intangible assets' and IFRS 2 'Share-based payments'.

Business and Financial Review

Group strategy

Core skills in the Group

Our strategy of building on our strengths will enable the business to continue sustainable, long term growth. We are proud of our first hand delivery of unique and valued services, which has led to consistently high levels of customer loyalty (approximately 70% for PGL school groups).  We have a base of core capabilities in school and adult groups, families, health and safety management and yield and asset management, together with expertise in delivering lifelong learning, exploratory and active travel experiences. Our businesses share a common ethos: a belief and pride in an authentic product and emotional attachment to the customer experience. We believe that this common sense of purpose is core to our development as we look to take our core skills to new markets and products.

Strong business models and brands in niche positions

Our businesses operate in a number of travel sectors, ranging from what we would characterise as commodity leisure, through value-added leisure, to lifelong education and personal development and out-of-classroom education.  We believe that the sector position becomes more attractive when products have value-added elements that are difficult for customers to package themselves and when customers' buying habits are less leisure motivated.  Our hotel breaks businesses are potentially the most exposed to any downturn in consumer confidence by operating mainly in the highly competitive leisure travel space. Our camping and adventure businesses add value through richer travel experiences, for example by first hand delivery through tour leaders (Explore) or couriers (Camping). Djoser, Explore and Travelplus are also driven in part by our customers' aspirations towards personal development. Our education businesses operate in segments that are much less exposed to discretionary spending and have strong social and political drivers for growth, for example the UK government actively promotes the benefits of outdoor learning.

We focus on complex niche sectors where we have defendable, leadership positions with control of strategic product or elements of exclusivity. For example, our camping businesses enjoy market leading positions in the European camping market with strong brand strength across a number of sales markets, a high degree of product control through ownership of mobile-homes and a value-added service proposition. PGL has a market leading and highly defendable position in the UK. Its leadership position is founded on its strong safety management, customer service and ownership of large outdoor education centres.

Building shareholder value

The Group exhibits strong cash flows, strong profit margins and a proven resilience to the recession. We will build on this foundation by growing and increasing the quality of our earnings whilst maintaining an appropriate capital structure. To do this, we will:

·   Invest in our high growth PGL business. PGL will increase bed stock at Liddington to satisfy known demand. Bed capacity will be increased by 200 to 600 this year with a potential to add significantly more beds in the future. We continue to review opportunities for new PGL centres in the short to medium term.

·   Grow our education mix through acquisition. We will seek to make acquisitions which leverage our core competencies, have attractive sector positions and strong business models. The acquisition of Meininger fits with our core competencies in property, hospitality and safety management for children and school groups.

Meininger has a market leading and defendable position with strategic control through the operation of ten properties in city centre cultural locations in Germany, the UK and Austria.

Meininger's business model is uniquely optimised to satisfy school groups. Suitable accommodation for this market is limited in supply; Meininger fills the gap, offering flexible bed and room structures ideal for groups. The business has grown rapidly with four sites opening in the last three years increasing bed capacity by 60% to a total of 3,800 beds.  A further five sites are expected to open in 2011 and Meininger will look to expand its offering to other key European school trip destinations.

The acquisition secures a growing earnings stream with major potential for further growth outside of Germany and gives us the potential for further development in school tours and activities in various European markets. The combination of sector positioning and business model strength place Meininger close to our strategic ambition, with similar characteristics to PGL, the strategic core of the Group.

·   Strengthen our businesses and grow from the core. All of our businesses will focus on organic growth strategies. For example, Superbreak will increase its packaged product mix by sourcing new, attractive add-ons to improve average spend, and the Camping Division continues to improve its European customer segmentation to strengthen low season sales. The acquisition of Meininger allows us to add to the products we currently offer through NST, PGL, European Study Tours and Travelplus.

Market overview

Whilst the economic environment has been challenging this year as consumers' disposable incomes were tightened, our education businesses are much less exposed to discretionary spending with parents prioritising expenditure on their child's school trip. Also, the spread of our businesses across various European markets provides us with additional resilience.  

PGL is the market leader in the residential, outdoor education market.  Competition comes from smaller commercial operators and considerably smaller local education authority centres. Market drivers are also strong:

§ In recent years, the UK government has actively promoted the benefits of outdoor learning through the 'Learning Outside the Classroom' manifesto.

§ The increasing complexity of organising the trips, including the various health and safety aspects, is driving schools to outsource outdoor learning programmes to commercial providers like PGL.

§ The ongoing reduction in funding of local education authority centres. Additional funding cuts look likely which may lead to closure of these type of centres.

Demand for PGL's product remains strong with a very early booking profile and customer retention is extremely high.

The Camping Division's market leading and trustworthy brands, Eurocamp and Keycamp, offer outdoor family holidays in mobile-homes and tents pre-sited on high quality European camp-sites. The value for money offering that can be tailored to suit customers' budgets with flexible durations has meant that our camping holidays have proven resilient during the economic downturn. Further, our pan-European distribution model gives trading resilience and provides key competitive advantages, allowing us to allocate capacity to the highest yielding sales markets. We believe that the Camping Division is well placed to grow when the economy improves with customers seeking high quality, family holidays in a safe, outdoor holiday environment.

Demand for our hotel breaks businesses has been affected by the economic environment in the UK and the Netherlands as disposable incomes are squeezed. Also, the absence of any major exhibitions in London has impacted demand to this key destination. In the short to medium term, we expect trading conditions for domestic short breaks to remain difficult but there are a number of attractive theatre shows, such as Wizard of Oz and Shrek, scheduled to open in 2011 that we expect to drive demand.

The relatively high cost and aspirational nature of our adventure travel tours means that they are more likely to be deferred in difficult times. However, demand for our adventure travel businesses increased in the second half of 2010 as consumer confidence improved. We expect trading to be challenging in the medium term but growth is returning, highlighting that there is still a trend towards people seeking personal development experiences, helped by an ageing demographic.

Group results

In the year to 30 September 2010 headline profit before tax¹ increased by 8.9% to £30.7m. Statutory profit before tax was £26.0m (2009 restated³: £5.2m). The increase in statutory profit before tax is predominantly due to the reduction in the losses on IAS 39 mark-to-market revaluations of financial derivatives of £1.7m (2009: £8.3m) and no requirement for goodwill impairment in the year (2009: £9.6m).

Following a strong focus on cash management, net debt reduced by £38.4m to £99.7m after expenditure on fixed and intangible assets net of disposal proceeds of £16.8m. The Group retains a comfortable level of headroom on its committed credit and bonding facilities and the covenants within those facilities.

Divisional performance, operating profit & margins

Group revenue in 2010 was down 2.5% on 2009 at £461.7m (2009: £473.4m). Headline operating profit² was marginally up on 2009 at £43.7m (2009 restated³: £43.1m). Headline operating margin² increased to 9.5% (2009: 9.1%). 

We have separately disclosed costs of £1.2m. The main element was a loss of £0.6m in respect of mobile homes written-off following floods in Cote d'Azur in June. We also incurred exceptional restructuring costs of £0.6m in aggregate in the Education, Adventure Travel and Camping Divisions relating to redundancy and re-organisational costs.

Education

	2010	2009
Revenue	£121.1m	£122.3m
Headline operating profit²	£15.8m	£13.6m
Operating profit	£14.7m	£10.5m

The Education Division has performed well and was not materially affected by the economic environment. Revenue declined slightly due to a combination of NST's removal of less profitable tours from its programme, a reduction in demand for ski products and a challenging Irish market, although PGL centres were 8% ahead of the previous year. Headline operating profit² increased by 16.2% as improvements were made in gross margin. Headline operating margin² improved to 13.0% (2009: 11.1%). The division benefited from the first full operating season of the Windmill Hill education centre which performed ahead of expectations. The Liddington education centre, acquired in September 2009, opened on 1 April 2010.  Both centres have achieved a 100% re-booking rate from schools who visited in 2010.

We invested £5.8m in our education centres, including £2.1m on developing the Liddington education centre. In 2011, we expect to spend £1.2m on Liddington by adding 200 beds and investing in market leading facilities.

Adventure Travel

	2010	2009
Revenue	£97.4m	£97.9m
Headline operating profit²	£4.7m	£4.2m
Operating profit (loss)	£4.3m	£(6.7m)

The Adventure Travel Division continued its recovery from the recession, performing strongly in a challenging economic environment. Headline operating profit² increased by 11.9% and headline operating margin² improved to 4.8% (2009: 4.3%). The division benefited from Explore's cost reduction programme undertaken in 2009. Overheads were reduced by approximately £1m. In addition, in 2009 there was an impairment charge of £9.6m. Going forward, we expect the trading environment to remain challenging but anticipate that sustained growth will return when consumer confidence improves further in the UK and the Netherlands. The division will continue to focus its product development on lifelong learning experiences where there are strong drivers for growth.

Hotel Breaks

	2010	2009 restated3
Revenue	£135.8m	£141.3m
Headline operating profit²	£11.5m	£12.5m
Operating profit	£10.9m	£11.8m

The performance of the Hotel Breaks Division reflects a difficult trading environment in the UK and the Netherlands and the impact of the extreme winter weather in January 2010. Headline operating profit² was down 8.0% as margin was adversely affected by the sales mix with an increased proportion of sales through UK retail travel agents. To mitigate the reduced margins, the Hotel Breaks Division focused on tight control of costs and cash management. Going forward, we will continue to invest in the division with particular focus on growing Superbreak's direct to consumer business.

Camping

	2010	2009 restated3
Revenue	£107.4m	£111.9m
Headline operating profit²	£11.7m	£12.8m
Operating profit	£10.8m	£12.8m

The Camping Division performed well as customers sought affordable outdoor family holidays. Revenue was down 4.0% compared with last year in the context of an 8% reduction in pre-sited capacity. Headline operating profit² was down 8.6%. The division was affected by flooding in the Cote d'Azur in June with the loss of 74 mobile-homes and 22 tents. This incident impacted the division's profits by approximately £1.2m, due to a write-off of assets of £0.6m and lost revenue in the period following the flooding. For the 2011 season, capacity will be reduced by approximately 4% as we expect trading across Europe to remain challenging. We expect to spend £8.2m net of disposals on replacement mobile-homes and other camping equipment. We will continue to monitor and rebalance the geographical mix of capacity and sales accordingly in order to maximise profitability.

Finance costs

Finance costs (net of investment income) reduced from £23.2m in 2009 to £14.7m. We have incurred a non-cash charge of £1.7m in respect of the revaluations of the Group's interest rate derivatives and forward foreign currency exchange contracts (2009: £8.3m). Interest payable was £13.4m (2009: £16.0m) reflecting the lower levels of net debt and the reduction in margin payable under the Group's five year committed credit facilities. Net interest cover⁴ increased from 2.9 times in 2009 to 3.4 times in 2010. Net interest was 5.9 times covered by cash inflow from operating activities (2009: 3.5 times).

Taxation

The tax charge, including full provision for deferred tax, was £5.8m and the effective tax rate of 22.5% (2009: 49.1%) was substantially lower than last year reflecting the non-deductibility of the impairment of goodwill in 2009. The headline rate of corporate tax was 22.4% (2009: 22.0%) as corporate tax rates in the UK and the European markets in which we operate declined. The underlying rate going forward is expected to remain at this level for the foreseeable future.

Earnings and dividends

Headline basic earnings per share¹ were down 7.6% at 34.0p (2009 restated³: 36.8p), reflecting the increased number of ordinary shares in issue following the Rights Issue in 2009. Statutory basic earnings per share were 28.7p (2009 restated³: 4.4p).

The Board is recommending a final dividend of 7.9p per ordinary share (2009: 7.9p). This gives a total dividend for the year of 11.1p per ordinary share (2009: 11.1p, the interim dividend being restated for the Rights Issue). This is covered 3.1 times by headline basic earnings per share¹ (2009 restated³: 3.3 times).

Balance sheet

Net assets of the Group increased to £112.3m (2009 restated³: £101.0m).  Net debt gearing⁵ at 30 September 2010 was 88.8% compared to 136.6% at the previous year end.

Cash flow and bank facilities

The Group's net borrowings at 30 September 2010 were £99.7m, compared to £138.1m at the previous year end. Cash flow from our operating activities was £76.4m (2009: £52.4m).

The Group has a five year committed credit facility which expires in May 2013. Under this facility the Group retains a comfortable level of headroom on both the banking facility and the covenants. The Group's cost of borrowing will be lower from November 2010 as the margin payable under the facility reduces from LIBOR plus 3.0% to LIBOR plus 2.5%, reflecting the reduction in net debt / EBITDA gearing level for the year ended 30 September 2010.

Due to the highly seasonal nature of the Group's cash flow, headroom under the Group's credit facilities was £41.1m at the end of January 2010 when borrowings and facility utilisation were at their maximum. In addition to these facilities, the Group has hire purchase agreements with various UK financial institutions to finance the purchase of mobile-homes. Just over half of annual expenditure on mobile-homes is financed from this source.

Capital expenditure

Capital expenditure on fixed and intangible assets (net of proceeds from disposals) in the year to 30 September 2010 was £16.8m (2009: £30.5m). We spent £5.8m on developing outdoor education centres at the Education Division, including £2.1m on developing Liddington, acquired in September 2009, as well as adding capacity at several other UK sites.

The purchase of mobile-homes accounted for £6.2m (2009: £7.0m). Sales of mobile-homes generated £3.0m (2009: £1.6m). Camping has undertaken an initial review of the life expectancy of its mobile-home fleet. This indicates that its average lifespan could be extended by approximately two years, having a material positive impact on the Group's cash flow in the medium term. A change in depreciation policy is expected to be implemented in the 2011 financial statements.

We anticipate Group net capital expenditure of approximately £18.3m in 2010/11, including a further £1.2m in respect of developing capacity at Liddington and £7.7m to be spent on replacement mobile-homes in the Camping Division. Accommodation capacity in the Camping Division will be reduced by approximately 4% in 2010/11. .Disposal proceeds for the sale of mobile-homes are likely to be approximately £1.7m.

Financial risk management policies

The Group considers itself to be exposed to risks on financial instruments, including market risk (including currency risk), credit risk, liquidity risk and cash flow interest rate risk.

The Group uses derivative financial instruments to hedge these risk exposures and therefore reduce the exposure of the Group. The use of financial derivatives is governed by the Group's policies approved by the Board of Directors, which provide written principles on foreign exchange risk, interest rate risk, credit risk, the use of financial derivatives and non-derivative financial instruments and the investment of excess liquidity. Compliance with policies and exposure limits is reviewed by the Board of Directors continuously by way of a formal report to each monthly Board meeting. The Group does not enter into or trade financial instruments, including derivative financial instruments, for speculative purposes.

Market risks

The Group's activities expose it primarily to the financial risks of changes in foreign currency exchange rates and interest rates. The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including:

·   Forward foreign exchange contracts to reduce the exposure to, principally, Euros and US Dollars but also to Australian Dollars, New Zealand Dollars, Danish Krone and Swiss Francs.

·   Interest rate swaps and collars to mitigate the risk of movements in interest rates.

Foreign currency risk management

The Group is exposed to foreign currency risks via its transactions denominated in foreign currencies. Exchange rate exposures are managed within approved policies set out by the Board of Directors.

In addition to the economic hedging obtained by the Group, which is managed by the preparation of local currency cash flow forecasts, the Group purchases currency derivatives to hedge significant future transactions and cash flows.  The contracts are denominated in foreign currencies noted above.

At the balance sheet date, the total notional amount of outstanding forward foreign exchange contracts that the Group has committed to is as below:

	2010	2009
Forward foreign exchange contracts	£15.0m	£44.6m

These arrangements are designed to address significant exchange exposures until September 2011 and are renewed on a revolving basis as required.

Interest rate risk management

The Group is exposed to interest rate risk as entities in the Group borrow funds at floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, by the use of interest rate swap and interest rate collar contracts. 

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The carrying amount of financial assets recorded in the financial statements, which is net of impairment losses, represents the Group's maximum exposure to credit risk.

The Directors have considered the counterparty risk associated with the cash and derivative balances and do not consider there to be a material risk. The Group manages the credit risk associated with its bank and cash balances by ensuring that an appropriate spread of financial institutions are used in which to place these assets. The concentration of credit risk from trade receivables is limited due to the customer base being large and unrelated.

Liquidity risk management

The Group manages liquidity risk by maintaining adequate liquid funds and banking facilities. We have a £255m committed five year credit facility with a syndicate of six banks which expires in May 2013. This facility is sufficient to meet the working capital and bonding requirements of the Group. At 30 September 2010 we had headroom under this facility of £84.7m. We continuously monitor actual and forecast cash flows and actual and forecast compliance with covenants within the facility.

Changes in accounting policies

During the year ended 30 September 2010, there were no changes in accounting policies.

Principal risks and uncertainties facing the Group

The Board regularly reviews the risks faced by the Group, including the social, environmental and ethical risks. The Directors consider the major risks to delivering the Group's strategy are those set out below. The Board recognises that the profile of risks changes constantly and additional risks not presently known, or that are deemed immaterial, may also impact on delivery of the Group's strategy.

Key risk	Impact	Mitigation strategy
EXTERNAL
Economic and financial conditions across markets	A prolonged economic downturn 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.	·   We actively seek to redirect business to sectors that are less affected by the recession. Our strategic focus is on our education businesses which we believe to be less exposed to discretionary consumer spending and enjoy strong forward booking visibility. ·   Our mix of businesses across different travel segments in various European markets provides us with some trading resilience.
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.	·   We have a partial natural currency hedge arising from cash flows between the various markets and destinations in which we operate. ·   The Group enters into a variety of derivative financial instruments to manage its exposure to interest rate and foreign currency risk, including: -       forward foreign currency exchange contracts to hedge significant future transactions and cash flows; -       interest rate derivatives to mitigate the risk of fluctuating interest rates over the medium to long term.
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, West End Theatre Bookings 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 may require the Adventure Travel Division to rearrange itinerary timings and/or routings.	·   Whilst all of our businesses have crisis management procedures in place to handle any external incidents to ensure any disruption is kept to a minimum, such events could impact trading or the ability to deliver our products. Our businesses offer a range of products across different destinations to reduce the reliance on a particular market. ·   The impact on the Camping Division of any storm damage on camp-sites is managed through the wide geographical spread of Camping's revenue generating assets.
Consumer demand	A change in consumer tastes could impact demand levels	·   We carefully track any changes to consumer tastes through customer insight teams/focus groups and adapt our product offering as necessary.
INTERNAL
Liquidity risk	The risk that trading underperformance, increased cost of debt and inefficient treasury management could lead to breaches in covenants and bonding arrangements.	·   The Group manages liquidity risk by maintaining adequate liquid funds and banking facilities. Our five year credit facility, which expires in May 2013, is sufficient to meet the forecast working capital and bonding requirements of the Group. We continuously monitor actual and forecast cash flows and actual and forecast compliance with covenants within the facility and should a risk of trading underperformance occur, the Board has considered mitigation strategies that could be put in place, for example working capital management, capital expenditure reduction and stringent cost control.
Health,  safety & security	The risk that the company fails to manage health, safety and security issues leading to significant financial and operational costs.	·   Our businesses are committed to ensuring the highest standards of health, safety and security in their operations and monitor and conduct regular audits when appropriate. All divisions produce monthly health & safety reports. Issues noted as significant are considered by the Board.
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.	·   We believe our training programmes and incentive arrangements provide the necessary tools to retain and motivate key staff. A senior executive development programme is in place to enhance the calibre of senior management.

Responsibility statement

We confirm to the best of our knowledge:

·   the financial statements, prepared in accordance with International Reporting Standards as adopted by the EU, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company  and the undertakings included in the consolidation taken as a whole; and

·   the Business and Financial Review includes a fair review of the development and performance of the business and position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties that they face.

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 as set out above, 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 successfully despite the current 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 £255m of committed bank facilities through to May 2013.

After making enquiries, the Directors have formed a judgement, at the time of approving the financial statements, that there is a reasonable expectation that the Company and the Group 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.

Summary

The Group is well-positioned for growth. Strategically, we will continue to grow our education businesses and strengthen our positions in the UK and Europe. All of our businesses will continue to develop organic initiatives whilst improving cash generation and keeping costs under control.

Martin Davies                                                            Bob Baddeley

Group Chief Executive                                                Group Finance Director

¹ Headline profit before tax, headline basic earnings per share and interest cover are stated before amortisation of other intangible assets acquired via business combinations of £1.8m (2009: £3.5m), impairment of goodwill of £nil (2009: £9.6m), separately disclosed items of £1.2m (2009: £1.6m) as set out in note 4 of the attached financial information, IAS 39 mark-to-market revaluations of financial derivatives of £1.7m (2009: £8.3m) and for headline basic earnings per share the tax effect thereof of £1.0m (2009: £3.6m).

² Headline operating profit and margin are stated before amortisation of other intangible assets acquired via business combinations, exceptional restructuring costs and impairment of goodwill as set out in note 2 of the attached financial information.

³ Restated following adoption of amendments to IAS 38 'Intangible assets' and IFRS 2 'Share-based payments'.

⁴ Net interest cover is expressed as the number of times net interest, excluding IAS 39 mark-to-market revaluations, is covered by headline operating profit.

⁵ Net debt gearing is net debt expressed as a percentage of year end net assets.

Cautionary statement

The full year results announcement has been prepared solely to provide additional information to shareholders to assess the Company's strategies and the potential for those strategies to succeed. The full year results announcement should not be relied on by any other party or for any other purpose. The full year results announcement contains certain forward-looking statements. These statements are made by the Directors in good faith based upon the information available to them up to the time of their approval of this announcement and such statements should be treated with caution due to the inherent uncertainties underlying such forward-looking information.

Holidaybreak plc

Consolidated income statement

Year ended 30 September 2010

	Note	2010 £m	Restated* 2009 £m
Group revenue	1,2	461.7	473.4
Net operating costs		(421.0)	(445.0)
Net operating costs before amortisation of other intangible assets acquired via business combinations, impairment of goodwill and separately disclosed items		(418.0)	(430.3)
Amortisation of other intangible assets acquired via business combinations		(1.8)	(3.5)
Impairment of goodwill		-	(9.6)
Separately disclosed items	4	(1.2)	(1.6)
Operating profit	2	40.7	28.4
Investment income	1	0.4	1.1
Other gains and losses	3	(1.7)	(8.3)
Finance costs		(13.4)	(16.0)
Profit before tax	2	26.0	5.2
Tax	5	(5.8)	(2.6)
Profit for the year	2	20.2	2.6
Attributable to:
Equity holders of the parent		20.2	2.6
Earnings per share		Pence	Restated* Pence
Basic	7	28.7	4.4
Diluted	7	28.7	4.4
Headline earnings per share
Basic	7	34.0	36.8
Diluted	7	34.0	36.8

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

Holidaybreak plc

Consolidated statement of comprehensive income

Year ended 30 September 2010

	2010 £m	Restated* 2009 £m
Profit for the year	20.2	2.6
Exchange losses on translation of foreign operations	(1.2)	(2.1)
Actuarial losses on defined benefit pension schemes	(0.5)	(0.3)
Tax relating to components of other comprehensive income	(0.1)	1.7
Other comprehensive expense for the period	(1.8)	(0.7)
Total comprehensive income for the period	18.4	1.9
Attributable to:
Equity holders of the parent	18.4	1.9

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

Holidaybreak plc

Consolidated balance sheet

At 30 September 2010

	Note	2010 £m	Restated* 2009 £m	Restated* 2008 £m
Non-current assets
Goodwill		138.5	140.1	145.5
Other intangible assets		27.1	28.4	30.8
Property, plant and equipment		191.1	190.5	175.0
Investments		-	-	-
		356.7	359.0	351.3
Current assets
Inventories		2.1	2.4	2.3
Trade and other receivables		32.0	33.6	36.1
Current tax assets		0.8	2.8	-
Cash and cash equivalents		56.4	51.9	44.7
Derivative financial instruments		0.1	0.7	0.5
		91.4	91.4	83.6
Non-current assets classified as held for sale		0.5	1.1	1.1
Total assets		448.6	451.5	436.0
Current liabilities
Trade and other payables		(133.0)	(117.8)	(120.9)
Provisions for restructuring costs		-	-	(1.3)
Current tax liabilities		(5.3)	(1.1)	-
Obligations under finance leases		(5.1)	(4.6)	(6.0)
Interest bearing loans and borrowings		(10.0)	(10.1)	(13.0)
Derivative financial instruments		(10.7)	(9.7)	(1.2)
		(164.1)	(143.3)	(142.4)
Net current liabilities		(72.7)	(51.9)	(58.8)
Non-current liabilities
Deferred tax liabilities		(30.0)	(31.4)	(33.2)
Obligations under finance leases		(12.5)	(13.9)	(15.2)
Defined benefit pension liability		(1.2)	(0.5)	(0.4)
Interest bearing loans and borrowings		(128.5)	(161.4)	(171.8)
		(172.2)	(207.2)	(220.6)
Total liabilities		(336.3)	(350.5)	(363.0)
Net assets		112.3	101.0	73.0
Equity
Share capital	9	3.5	3.5	2.4
Share premium account		69.0	69.0	38.9
Own shares		(2.4)	(2.6)	(2.6)
Other reserves		2.4	1.9	1.5
Retained earnings		39.8	29.2	32.8
Total equity		112.3	101.0	73.0

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

Holidaybreak plc

Group statement of changes in equity

At 30 September 2010

	Share capital	Share premium account	Own shares	Other reserves	Retained earnings	Total
Group	£m	£m	£m	£m	£m	£m
At 1 October 2008	2.4	38.9	(2.6)	1.1	33.4	73.2
Effect of change in accounting policy for IAS 38	-	-	-	-	(0.2)	(0.2)
Effect of change in accounting policy for IFRS 2	-	-	-	0.4	(0.4)	-
As restated*	2.4	38.9	(2.6)	1.5	32.8	73.0
Profit for the year as restated	-	-	-	-	2.6	2.6
Other comprehensive income for the year	-	-	-	-	(0.7)	(0.7)
Total comprehensive income for the year	-	-	-	-	1.9	1.9
Rights Issue	1.1	30.1	-	-	-	31.2
Dividends paid	-	-	-	-	(5.5)	(5.5)
Restated credit to equity for share-based payments	-	-	-	0.5	-	0.5
Tax effect of items recognised direct in equity	-	-	-	(0.1)	-	(0.1)
At 1 October 2009	3.5	69.0	(2.6)	1.9	29.2	101.0
Profit for the year	-	-	-	-	20.2	20.2
Other comprehensive income for the year	-	-	-	-	(1.8)	(1.8)
Total comprehensive income for the year	-	-	-	-	18.4	18.4
Dividends paid	-	-	-	-	(7.8)	(7.8)
Credit to equity for share-based payments	-	-	-	0.7	-	0.7
Disposed of on award of LTIP options	-	-	0.2	(0.2)	-	-
At 30 September 2010	3.5	69.0	(2.4)	2.4	39.8	112.3

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

Holidaybreak plc

Consolidated cash flow statement

Year ended 30 September 2010

	Note	2010 £m	Restated* 2009 £m
Reconciliation of operating profit to cash generated from operating activities
Cash flow from operating activities
Operating profit		40.7	28.4
Adjustments for:
Amortisation of other intangible assets		4.4	5.5
Depreciation of property, plant and equipment		13.8	14.1
Impairment of goodwill		-	9.6
Share-based payment charge		0.7	0.5
Decrease in inventories		0.3	-
Decrease in receivables		1.3	0.9
Increase (decrease) in payables		15.2	(6.6)
Cash inflow from operating activities		76.4	52.4
Tax paid		(1.0)	(4.5)
Net cash from operating activities		75.4	47.9
Investing activities
Acquisitions of subsidiaries net of cash acquired		-	(0.8)
Dividends received from subsidiaries		-	-
Purchase of intangible assets		(3.3)	(3.1)
Purchases of property, plant and equipment		(16.5)	(29.0)
Proceeds on disposal of property, plant and equipment		3.0	1.6
Net cash used in investing activities		(16.8)	(31.3)
Financing activities
Finance costs paid		(11.8)	(14.5)
Interest received		0.4	1.1
Proceeds on issue of ordinary shares		-	31.2
New finance leases		3.8	3.3
Repayment of borrowings		(32.5)	(19.2)
Payments under finance leases		(4.7)	(6.0)
Dividends paid		(7.8)	(5.5)
Net cash used in financing activities		(52.6)	(9.6)
Net increase in cash and cash equivalents		6.0	7.0
Cash and cash equivalents at beginning of year		51.8	41.7
Effect of foreign exchange rate changes		(1.4)	3.1
Cash and cash equivalents at end of year	8	56.4	51.8

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

Holidaybreak plc

Notes to the financial statements

 

1.       Revenue

	2010	2009
	£m	£m
Revenue - continuing operations	461.7	473.4
Investment income	0.4	1.1
	462.1	474.5

Revenue from continuing operations is generated by the provision of services.  Investment income arises from bank interest and net income from the defined benefit pension scheme.

2.       Business and geographical segments

Business segments

For management purposes, the Group is currently organised into four operating 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 businesses is presented below.

2010	Education £m	Adventure Travel £m	Hotel Breaks £m	Camping £m	Consolidated £m
Revenue
Total revenue	121.1	97.4	135.8	107.4	461.7
Result
Operating profit before amortisation of other intangible assets acquired via business combinations, impairment of goodwill and separately disclosed items	15.8	4.7	11.5	11.7*	43.7
Amortisation of other intangible assets acquired via business combinations	(0.9)	(0.3)	(0.6)	-	(1.8)
Separately disclosed items (note 4)	(0.2)	(0.1)	-	(0.9)	(1.2)
Segment result	14.7	4.3	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 year					20.2

* Includes £1.8m profit on sale of mobile-homes.

2.       Business and geographical segments (continued)

Business segments (continued)

2010	Education £m	Adventure Travel £m	Hotel Breaks £m		Camping £m		Consolidated £m
Other information
Capital additions1	8.0	0.4	1.9	9.5		19.8
Depreciation and amortisation	4.6	1.2	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	48.1	55.8		390.9
Unallocated corporate assets						57.7
Consolidated total assets						448.6
Liabilities
Segment liabilities	(65.0)	(27.9)	(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 acquisitions of subsidiary intangible assets and property, plant and equipment.

² Non-current assets held for sale are mobile-homes held within the Camping segment and are expected to be sold within twelve months of the year end.

2009 restated*	Education £m	Adventure Travel £m	Hotel Breaks £m	Camping £m	Consolidated £m
Revenue
Total revenue	122.3	97.9	141.3	111.9	473.4
Result
Operating profit before amortisation of other intangible assets acquired via business combinations, impairment of goodwill and separately disclosed items	13.6	4.2	12.5	12.8**	43.1
Amortisation of other intangible assets acquired via business combinations	(2.4)	(0.4)	(0.7)	-	(3.5)
Impairment of goodwill	-	(9.6)	-	-	(9.6)
Separately disclosed items (note 4)	(0.7)	(0.9)	-	-	(1.6)
Segment result	10.5	(6.7)	11.8	12.8	28.4
Investment income					1.1
Other gains and losses					(8.3)
Finance costs					(16.0)
Profit before tax					5.2
Tax					(2.6)
Profit for the year					2.6

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

             ** Includes £0.5m profit on sale of mobile-homes.

The Adventure Travel segment includes £9.6m in respect of an impairment charge in relation to goodwill recognised on the acquisition of Explore Worldwide Limited.

2.       Business and geographical segments (continued)

Business segments (continued)

2009	Education £m	Adventure Travel £m	Hotel Breaks £m		Camping £m		Consolidated £m
Other information
Capital additions1	20.3	0.6	1.4	9.9		32.2
Depreciation and amortisation	6.2	1.1	1.9	10.4		19.6
Non-current assets held for sale2	-	-	-	1.1		1.1
Balance sheet (restated*)
Assets
Segment assets	237.2	45.7	53.2	60.6		396.7
Unallocated corporate assets						54.8
Consolidated total assets						451.5
Liabilities
Segment liabilities	(60.2)	(22.9)	(46.2)	(18.8)		(148.1)
Unallocated corporate liabilities						(202.4)
Consolidated total liabilities						(350.5)

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

¹ Includes additions of other intangible assets and property, plant and equipment in addition to acquisitions of subsidiary intangible assets and property, plant and equipment.

² Non-current assets held for sale are mobile-homes held within the Camping Segment and are expected to be sold within twelve months of the year end.

Geographical segments

The following table provides an analysis of the Group's revenue by geographical market:

		2010 £m	2009 £m
United Kingdom		340.6	345.7
Ireland		10.4	12.1
Netherlands and Belgium		71.2	77.2
Germany, Switzerland and Austria		31.0	30.2
Other		8.5	8.2
		461.7	473.4

The following is an analysis of the carrying amount of segment assets, and additions to property, plant and equipment and intangible assets, analysed by the geographical area in which the assets are located:

				Carrying amount of segment assets
				2010 £m	Restated* 2009 £m
United Kingdom				346.1	357.4
Ireland				1.5	1.2
Netherlands and Belgium				26.7	24.9
Germany, Switzerland and Austria				6.0	5.8
France				51.0	45.7
Italy				11.1	10.6
Spain				5.2	5.0
Other				1.0	0.9
				448.6	451.5

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

3.       Other gains and losses

		2010 £m	2009 £m
Fair value losses on interest rate derivatives		(1.1)	(8.5)
Fair value (losses) gains on forward currency exchange derivatives		(0.6)	0.2
		(1.7)	(8.3)

4.         Separately disclosed items

		2010 m	2009 £m
Exceptional restructuring costs		(0.6)	(1.6)
Mobile-home assets written off as a result of flood damage		(0.6)	-
		(1.2)	(1.6)

Exceptional restructuring costs

These relate to costs of £0.2m incurred in Education, £0.1m in Adventure and £0.3m in Camping, relating to redundancy and reorganisation costs incurred by the respective segment.

In 2009, the exceptional restructuring costs in the Education and Adventure segments of £0.7m and £0.9m respectively related to redundancy and reorganisation costs incurred principally in NST and Explore Worldwide.

Mobile-home assets written off as a result of flood damage

In June 2010, severe weather in southern France resulted in the flooding of two sites occupied by the Camping Division.  The extent of the flooding resulted in the loss of 74 mobile homes and 22 tents.

5.       Tax

 

	2010 £m	2009 £m
UK corporation tax
- charge for the year	3.8	1.6
- adjustment in respect of prior years	(0.2)	(0.9)
Foreign taxation
- charge for the year	3.2	3.7
- adjustment in respect of prior years	0.2	(0.1)
Deferred tax
- charge (credit) for the year	0.2	(1.8)
- effect of reduction in UK corporation tax rate	(1.1)	-
- adjustment in respect of prior years	(0.3)	0.1
Tax expense for the year	5.8	2.6

UK corporation tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the respective jurisdictions.

The adjustment in respect of prior years includes £nil (2009: £0.4m) in respect of the release of amounts provided on overseas earnings.

The charge for the year can be reconciled to the profit per the income statement as follows:

	2010 £m	Restated* 2009 £m
Profit before tax	26.0	5.2
Tax at the UK corporation tax rate of 28% (2009: 28%)	7.3	1.5
Tax effect of expenses not deductible in determining taxable profit	0.2	0.2
Effect of goodwill impairment	-	2.7
Effect of reduction in UK corporation tax rate	(1.1)	-
Effect of different tax rates of subsidiaries operating in other jurisdictions	(0.3)	(0.5)
Adjustments in respect of prior years	(0.3)	(0.9)
Release of amounts provided on overseas earnings	-	(0.4)
Tax expense for the year	5.8	2.6

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

 

 

6.       Dividends

	Restated* pence per share	Actual pence per share	2010 £m	2009 £m
Ordinary dividends paid
For the year ended 30 September 2008
Final dividend	5.73	6.80	-	3.3
For the year ended 30 September 2009
Interim dividend	3.20	4.625	-	2.2
Final dividend	-	7.90	5.6	-
For the year ended 30 September 2010
Interim dividend	-	3.20	2.2	-
			7.8	5.5

		Dividend pence per share	2010 £m	2009 £m
Ordinary dividends proposed
For the year ended 30 September 2010
Final dividend		7.90	5.6	-
For the year ended 30 September 2009
Final dividend		7.90	-	5.6

* The restated dividend per share represents the theoretical dividend per share that would have been paid had the bonus shares inherent in the Rights Issue been in existence at the relevant dividend dates.

The proposed final dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements.

7.       Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

Earnings	2010 £m	Restated* 2009 £m
Earnings for the purposes of basic and diluted earnings per share being net profit attributable to equity holders of the parent	20.2	2.6
	2010	2009
	Number	Number
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share	70,045,069	59,797,571
Effect of dilutive potential ordinary shares:
Share options and awards	28,355	6,652
Weighted average number of ordinary shares for the purposes of diluted earnings per share	70,073,424	59,804,223
	2010	Restated* 2009
	Pence	Pence
Earnings per share
Basic	28.7	4.4
Diluted	28.7	4.4
Headline earnings	2010 £m	Restated* 2009 £m
Net profit attributable to equity holders of the parent	20.2	2.6
Add back:
Amortisation of other intangible assets acquired via business   combinations	1.8	3.5
Impairment of goodwill	-	9.6
Separately disclosed items	1.2	1.6
IAS 39 mark-to-market adjustment on financial derivatives	1.7	8.3
Tax effect of the above	(1.0)	(3.6)
Headline earnings	23.9	22.0
	2010	Restated* 2009
	Pence	Pence
Headline earnings per share
Basic	34.0	36.8
Diluted	34.0	36.8

* Restated for amendment to IAS 38 'Intangible Assets' and IFRS 2 'Share-based payment' - see note 11.

8.       Analysis of cash and cash equivalents and reconciliation to net debt

	1 October 2009	Cash flow	Foreign exchange	Non-cash movements	30 September 2010
Group	£m	£m	£m	£m	£m
Cash at bank and in hand	51.9	5.9	(1.4)	-	56.4
Overdrafts	(0.1)	0.1	-	-	-
Cash and cash equivalents	51.8	6.0	(1.4)	-	56.4
Debt due within one year	(10.0)	10.0	-	(10.0)	(10.0)
Debt due after one year	(161.4)	22.5	1.6	8.8	(128.5)
Finance leases less than one year	(4.6)	3.9	-	(4.4)	(5.1)
Finance leases more than one year	(13.9)	(3.0)	-	4.4	(12.5)
Net debt	(138.1)	39.4	0.2	(1.2)	(99.7)

The non-cash movement in debt due after one year of £1.2m is the amortisation of facility fees relating to the Group's lending facility, which has been charged to finance costs in the year.

9.       Share capital

	Ordinary shares of 5p each
Group and Company	Number	Nominal value £m
Authorised:
At 1 October 2008	90,000,000	4.5
Increase in authorised new shares	10,000,000	0.5
At 1 October 2009 and 30 September 2010	100,000,000	5.0
Allotted, called up and fully paid:
At 1 October 2008	48,857,266	2.4
Rights Issue	21,714,340	1.1
At 1 October 2009	70,571,606	3.5
Allotments in the year	3,126	-
At 30 September 2010	70,574,732	3.5

On 3 July 2009 an ordinary resolution was passed at a general meeting of the Company that approved the increase in the authorised ordinary shares of 5p each from 90.0 million to 100.0 million.

On 3 July 2009 a special resolution was passed that allowed the Company to proceed with a Rights Issue which provided shareholders with the right to acquire four additional shares at an issue price of 153p for every nine shares held.  The Rights Issue resulted in the issue of an additional 21,714,340 ordinary shares on 21 July 2009.

During the year 3,126 (2009: nil) ordinary 5p shares were issued, with a nominal value of £156 (2009: £nil) in respect of options exercised under the Company's share option schemes.

The Company has one class of ordinary shares, which carry no right to fixed income.

Shareholders' authority for the purchase of up to 7,057,100 of the Company's ordinary shares of 5p each was still valid at the end of the year.

10.     Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note.

There has been no change to the nature of related party transactions in the financial year that has materially affected the financial position or performance of the Group.

11.     Restatement

Adoption of new and revised International Financial Reporting Standards

In the current year the group adopted the following amendments to IFRS which have had an impact on the financial performance of the group:

IAS 38 Intangible Assets               Following the amendment to IAS 38 all expenditure relating to the production of travel brochures is now charged to the income statement as incurred, rather then recognised as an inventory asset until the date of despatch.

IFRS 2 Share-based payment        Following the amendment options granted under SAYE schemes are now treated as cancelled once employees leave the scheme, thus accelerating the remaining charge.

 As a result of adopting the above standards and interpretations the following restatements have been made:

	Group
	Year ended 30 September 2009 £m	Year ended 30 September 2008 £m
Net assets as previously reported	101.1	73.2
Reduction in inventories	(0.2)	(0.3)
Reduction in deferred tax liability	0.1	0.1
Net assets as restated	101.0	73.0
Total equity as previously reported	101.1	73.2
Increase in other reserves brought forward	0.4	-
Increase in other reserves during the year	0.2	0.4
Total increase in other reserves	0.6	0.4
Reduction in retained earnings brought forward	(0.6)	-
Reduction in retained earnings during the year	(0.1)	(0.6)
Total reduction in retained earnings	(0.7)	(0.6)
Total equity as restated	101.0	73.0
Profit for the period as previously reported	2.8	18.0
Increase in net operating costs	(0.2)	(0.6)
Profit for the period as restated	2.6	17.4

12.     Non-statutory accounts

The financial information set out above was approved by the Directors on 30 November 2010.  It does not constitute the Company's statutory accounts for the years ended 30 September 2010 or 2009, but is derived from these accounts. Statutory accounts for 2009 have been delivered to the Registrar of Companies and those for 2010 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not draw attention to any matters by way of emphasis without qualifying their report and did not contain statements under section 498(2) or (3) of the Companies Act 2006.

Whilst the financial information included in this full year results announcement has been computed in accordance with the recognition and measurement criteria of International Financial Reporting Standards (IFRS), this announcement in itself does not contain sufficient information to comply with IFRS.

This financial information does not represent the Company's dissemination announcement. The Company expects to publish its full financial statements that comply with IFRS in January 2011.

 

END

 

 

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