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Goodwill and other intangible assets 8 253.5 258.0
Property, plant and equipment 9 14.8 15.1
Investments accounted for using the equity method 2.7 2.8
Trade and other receivables 0.1 0.2
Deferred tax assets 48.8 33.8
319.9 309.9
Current assets
Trade and other receivables 115.4 102.6
Financial assets - derivative financial instruments 0.2 -
Current tax assets 1.0 1.5
Cash and cash equivalent assets 58.8 68.5
175.4 172.6
Total assets 1 495.3 482.5
Non current liabilities
Financial liabilities - borrowings (135.1) (144.4)
Deferred tax liabilities (1.6) (1.6)
Retirement benefit obligations 11 (126.4) (65.3)
Provisions (3.5) (3.4)
(266.6) (214.7)
Current liabilities
Financial liabilities - borrowings (0.4) (8.0)
Financial liabilities - derivative financial instruments - (0.6)
Current tax liabilities (9.4) (9.3)
Trade and other payables (216.7) (196.5)
Provisions (1.5) (5.7)
(228.0) (220.1)
Total liabilities (494.6) (434.8)
Net assets 0.7 47.7
Capital and reserves attributable to Equity Shareholders
Share capital 3.1 3.1
Share premium 172.2 172.2
Other reserves 12 13.4 24.1
Retained earnings 12 (191.4) (155.2)
(2.7) 44.2
Minority interests 13 3.4 3.5
Total equity 0.7 47.7
Hogg Robinson Group plc
Consolidated Statement of Changes in Equity
As at 31 March 2010
Attributable to equity holders of the Company
Share Share Other Retained Minority Total
capital Premium reserves earnings Total Interest Equity
£m £m £m £m £m £m £m
Balance at 1 April 2008 3.1 171.9 5.3 (132.8) 47.5 2.5 50.0
Retained profit for the financial year - - - 7.4 7.4 1.7 9.1
Other comprehensive income:
Actuarial loss on pension schemes - - - (23.4) (23.4) - (23.4)
Deferred tax movement on pension liability - - - 5.9 5.9 - 5.9
Currency translation differences - - 17.6 - 17.6 0.1 17.7
Total comprehensive income - - 17.6 (10.1) 7.5 1.8 9.3
Transactions with owners:
Dividends - - - (12.3) (12.3) (0.8) (13.1)
Scrip dividend issued in lieu of cash dividend - 0.3 - - 0.3 - 0.3
Share-based incentives - - 1.2 - 1.2 - 1.2
Total transactions with owners - 0.3 1.2 (12.3) (10.8) (0.8) (11.6)
Balance at 1 April 2009 3.1 172.2 24.1 (155.2) 44.2 3.5 47.7
Retained profit for the financial year - - - 13.4 13.4 0.9 14.3
Other comprehensive income:
Actuarial loss on pension schemes - - - (66.0) (66.0) - (66.0)
Deferred tax movement on pension liability - - - 18.7 18.7 - 18.7
Currency translation differences - - (11.8) - (11.8) - (11.8)
Total comprehensive income - - (11.8) (33.9) (45.7) 0.9 (44.8)
Transactions with owners:
Dividends - - - (1.2) (1.2) (1.0) (2.2)
Shares purchased by Employee Benefits Trust - - - (1.1) (1.1) - (1.1)
Share-based incentives - - 1.1 - 1.1 - 1.1
Total transactions with owners - - 1.1 (2.3) (1.2) (1.0) (2.2)
Balance at 31 March 2010 3.1 172.2 13.4 (191.4) (2.7) 3.4 0.7
Hogg Robinson Group plc
Consolidated Cash Flow Statement
For the year ended 31 March 2010 Years ended 31 March
Notes 2010 2009
£m £m
Cash flows from operating activities
Cash generated from operations 14 36.2 65.2
Interest paid (3.6) (8.6)
Tax paid (5.1) (3.8)
Cash flows from operating activities - net 27.5 52.8
Cash flows from investing activities
Acquisition of subsidiaries, net of cash acquired - (0.3)
Acquisition of associates, joint ventures and other investments (0.3) -
Disposals of associates, joint ventures and other investments - 0.4
Purchase of property, plant and equipment (4.5) (5.4)
Purchase and internal development of intangible assets 8 (6.7) (4.1)
Proceeds from sale of property, plant and equipment 0.1 0.1
Interest received 0.3 1.4
Dividends received from associates and joint ventures 0.5 0.3
Cash flows from investing activities - net (10.6) (7.6)
Cash flows from financing activities
Repayment of borrowings (40.3) (34.0)
New borrowings 21.1 15.0
Cash effect of currency swaps (1.2) (3.9)
Employee Benefits Trust (1.1) -
Dividends paid to external shareholders (1.2) (12.0)
Dividends paid to minority interests (1.0) (0.8)
Cash flows from financing activities - net (23.7) (35.7)
Net (decrease) / increase in cash and cash equivalents (6.8) 9.5
Cash and cash equivalents at beginning of the year 63.3 48.5
Exchange rate effects 1.7 5.3
Cash and cash equivalents at end of the year 58.2 63.3
Cash and cash equivalent assets 58.8 68.5
Overdrafts (0.6) (5.2)
58.2 63.3
Additional Financial Information
General information and basis of preparation
The financial information which comprises the Consolidated Income Statement,
the Consolidated Statement of Comprehensive Income, the Consolidated Balance
Sheet, the Consolidated Statement of Changes in Equity and the Consolidated
Cash Flow Statement and related notes do not constitute the Company's statutory
accounts for the years ended 31 March 2010 and 2009, but is derived from those
accounts. The auditors have reported on the Group's statutory accounts for
each of the years ended 31 March 2009 and 31 March 2010. Their reports were
unqualified, did not draw attention to any matters by way of emphasis and did
not contain statements under s498(2) or (3) of Companies Act 2006 or equivalent
preceding legislation. The statutory accounts for the year ended 31 March 2009
have been delivered to the Registrar of Companies and the statutory accounts
for the year ended 31 March 2010 will be filed with the registrar in due
course.
The Consolidated Financial Statements have been prepared in compliance with
International Financial Reporting Standards (IFRS) as adopted by the European
Union, International Financial Reporting Interpretations Committee (IFRIC)
interpretations and with those parts of the Companies Act 2006 applicable to
companies reporting under IFRS. The Consolidated Financial Statements have
been prepared under the historical cost convention, as modified by the use of
valuations for certain financial instruments, share-based payment incentives
and retirement benefits.
Critical accounting policies and forward-looking statements
The preparation of the IFRS financial statements requires the use of estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the Consolidated Financial Statements and the reported amounts of
revenues and expenses during the year.
This Operational Review should be read in conjunction with the audited
Consolidated Financial Statements. The discussions contain forward-looking
statements that appear in a number of places and include statements regarding
HRG's intentions, beliefs or current expectations concerning, among other
things, results of operations, revenue, financial condition, liquidity, growth,
strategies, new products and the markets in which HRG operates. Readers are
cautioned that any such forward-looking statements are not guarantees of future
performance and involve risks and uncertainties.
Non-GAAP measures
Underlying operating profit is calculated as operating profit before
amortisation of acquired intangibles and exceptional items
Earnings Before Interest, Taxation, Depreciation and Amortisation (EBITDA) is
calculated as operating profit before exceptional items before net finance
costs, income taxes, depreciation, amortisation and impairment.
The Directors believe that the presentation of underlying operating profit and
EBITDA enhances an investor's understanding of HRG's financial performance.
However, underlying operating profit and EBITDA should not be considered in
isolation or viewed as substitutes for retained profit, cash flow from
operations or other measures of performance as defined by IFRS. Underlying
operating profit and EBITDA as used in this announcement is not necessarily
comparable to other similarly titled captions of other companies due to
potential inconsistencies in the method of calculation and are unaudited line
items but are derived from audited financial information. The Directors use
underlying operating profit and EBITDA to assess HRG's operating performance
and to make decisions about allocating resources among various reporting
segments.
1 Segment information
The chief operating decision maker has been identified as the Executive
Management Team, which reviews the Group's internal reporting in order to
assess performance and allocate resources. The Executive Management Team has
determined the operating segments based on these reports.
The Executive Management Team considers the business from the perspective of
two core activities, Corporate Travel Management, which is analysed into three
distinct geographic segments, and Spendvision. The Group's internal reporting
processes do not distinguish between the numerous sources of income that
comprise revenue for Corporate Travel Management. The performance of the
operating segments is assessed based on a measure of operating profit excluding
items of an exceptional nature. Interest income and expenditure and income tax
expense are not included in the result for each operating segment that is
reviewed by the Executive Management Team. Other information provided, except
as noted below, to the Executive Management Team is measured in a manner
consistent with that in the financial statements.
Total segment assets exclude cash and cash equivalent assets, current tax
assets and deferred tax assets which are managed on a central basis. These are
included as part of the reconciliation to total Consolidated Balance Sheet
assets.
Corporate Travel Management Spendvision Total
North Asia
Europe America Pacific Total
£m £m £m £m £m £m
Year ended 31 March 2010
Revenue from external customers 229.6 69.3 16.7 315.6 11.2 326.8
Underlying operating profit 28.1 6.8 (1.1) 33.8 1.4 35.2
Amortisation of acquired intangibles (2.9) (0.7) - (3.6) (0.3) (3.9)
Operating profit before exceptional items 25.2 6.1 (1.1) 30.2 1.1 31.3
Exceptional items (3.3) - - (3.3) - (3.3)
Operating profit 21.9 6.1 (1.1) 26.9 1.1 28.0
Underlying margin 12.2% 9.8% -6.6% 10.7% 12.5% 10.8%
Year ended 31 March 2009 (restated)
Revenue from external customers 257.9 67.6 16.0 341.5 9.8 351.3
Underlying operating profit 32.0 0.7 (1.0) 31.7 2.9 34.6
Amortisation of acquired intangibles (2.7) (0.7) - (3.4) (0.3) (3.7)
Operating profit before exceptional items 29.3 - (1.0) 28.3 2.6 30.9
Exceptional items (4.3) (1.3) - (5.6) - (5.6)
Operating profit 25.0 (1.3) (1.0) 22.7 2.6 25.3
Underlying margin 12.4% 1.0% -6.3% 9.3% 29.6% 9.8%
The results for the year ended 31 March 2009 have been restated to reflect
Spendvision as a separate operating segment.
External revenue from clients by geographical area (where the client is
located) is not materially different from external revenue from clients by
origin (where the Group's operations are located) disclosed above.
There is no material inter-segment revenue.
A reconciliation of operating profit to total profit before income tax expense
is provided in the Consolidated Income Statement.
Corporate Travel Management Spendvision Total
North Asia
Europe America Pacific Total
£m £m £m £m £m £m
Total segment assets
31 March 2010 272.0 95.7 12.1 379.8 6.9 386.7
31 March 2009 (restated) 275.1 87.6 11.5 374.2 4.5 378.7
The segment assets at 31 March 2009 have been restated to reflect Spendvision
as a separate operating segment.
Reportable segments' assets are reconciled to total assets as follows:
31 March 31 March
2010 2009
£m £m
Total segment assets 386.7 378.7
Cash and cash equivalent assets 58.8 68.5
Current tax assets 1.0 1.5
Deferred tax assets 48.8 33.8
495.3 482.5
Capital expenditure by geographical location:
Corporate Travel Management Spendvision Total
North Asia
Europe America Pacific Total
£m £m £m £m £m £m
Capital expenditure
31 March 2010 4.6 4.5 0.1 9.2 2.0 11.2
31 March 2009 (restated) 5.6 2.9 0.4 8.9 0.9 9.8
Capital expenditure by operating segment for the year ended 31 March 2009 has
been restated to reflect Spendvision as a separate operating segment.
2 Operating expenses
Year ended 31 March
2010 2009
£m £m
Underlying operating expenses
Staff costs (note 3) 193.6 208.6
Amortisation of other intangible assets 4.2 3.1
Depreciation of property, plant and equipment 5.1 4.6
Auditors' remuneration for audit services 1.7 1.7
Operating lease rentals - buildings 14.7 14.6
Operating lease rentals - other assets 1.8 1.9
Loss on disposal of property, plant and equipment 0.1 0.1
Currency translation differences 0.2 (0.2)
Other expenses 70.2 82.3
291.6 316.7
Amortisation of acquired intangibles:
Amortisation of client relationships 3.6 3.4
Amortisation of other acquired intangible assets 0.3 0.3
3.9 3.7
Exceptional items:
Restructuring costs:
- Staff costs (note 3) 2.6 6.6
- Other expenses 0.7 0.3
Release of unutilised accruals relating to acquisitions in prior years - (1.6)
Adjustments to goodwill on recognition of deferred tax assets - 0.3
3.3 5.6
Total operating expenses 298.8 326.0
Restructuring costs of £3.3m were incurred during the year (2009: £6.9m) and
relate to planned cost reduction programmes in Europe (2009: Europe and North
America). They are in respect of redundancy costs and onerous lease
provisions.
Certain unutilised accruals relating to acquisitions in prior years were
released in the year ended 31 March 2009.
3 Staff costs
Years ended 31 March
2010 2010 2010 2009 2009 2009
Before Before
exceptional Exceptional exceptional Exceptional
items items Total items items Total
£m £m £m £m £m £m
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