17th May 2006 07:00
Holidaybreak PLC17 May 2006 17 May 2006: For immediate release HOLIDAYBREAK PLC Results for the six months ended 31 March 2006 Holidaybreak, the European operator of specialist holiday businesses, announcesinterim results for the six months ended 31 March 2006. For the first time, these results are stated in accordance with InternationalFinancial Reporting Standards ("IFRS"). The comparative figures for last yearhave been restated on a consistent basis. Six months Six months Year to to 31.3.06 to 31.3.05 30.9.05 £m £m £mRevenue 88.7 85.3 303.0Operating (loss) /profit (5.8) (6.5) 24.9(Loss) /profit beforetax (6.3) (8.6) 21.1Statutory EPS (pps) (9.6p) (13.0p) 28.6pHeadline* EPS(pps) (9.6p) (13.0p) 45.9pDividend per share (pps) 8.0p 7.25p 26.6pNet debt 36.2 65.1 22.9 * Before goodwill impairment in the year to 30 September 2005 only of £9.3m Summary • Results in line with management expectations. The Group has traditionallyreported an operating loss in the first half due to the seasonal nature of itsCamping business. • 545,000 holidays provided in the first half (H1 2005: 484,000). • All Holidaybreak's operations continue to generate substantial cash. Net debt at the half year was £36.2m, £28.9m lower than the 2005 figure of £65.1m. Operating cash inflow** for the 12 months to 31 March 2006 was £54.3m (2005: £59.0m). • Interim dividend up 10.3%. • Hotel Breaks and Adventure Travel divisions now account for approximately 70% of the Group's sales (based upon total transaction values) on an annualised basis. • Camping is expected to deliver cash and good margins in the full year. The Board announced on 20 March 2006 it had received several expressions of interest from parties seeking to acquire the Camping division. The process of evaluating these is continuing. As previously stated, any possible transaction will be considered on the basis of the value created for shareholders and the Board stresses that there is no certainty that any transaction will occur. • The strength of its balance sheet and its cash generation capabilities means the Group is well positioned to grow by acquisition and it continues to consider a number of potential transactions. Carl Michel, Chief Executive, said: "Management remains focused on raisingyields, achieving high customer satisfaction and generating cash. The HotelBreaks division is delivering to expectations in a difficult market place. TheAdventure Travel business continues to perform strongly and Camping continues togenerate cash and good margins. Holidaybreak's presence in European marketscontinues to grow. Current trading in all our divisions is in line withexpectations and management expects to achieve a satisfactory trading outcomefor the full year." ** Cash generation before capital expenditure, acquisitions, interest, dividends and tax Enquiries: Carl Michel / Robert Baddeley Holidaybreaktoday +44 (0) 20 7404 5959 / Thereafter +44 (0) 1606 787100 James Hogan / Craig Breheny / Lucie Anne Brailsford Brunswick+44 (0) 20 7404 5959 Note to Editors Holidaybreak (HBR.L) is listed on the London Stock Exchange. The Europeanspecialist holiday group sold 3m holidays in the year ended 30 September 2005(2004: 2.3m). Holidaybreak has three operating divisions: Hotel Breaks,Adventure Travel and Camping. Each is a market leader in its respectivespecialist sector of the European holiday industry, has multi-channeldistribution and is recognised for providing high standards of product andservice quality. CHAIRMAN'S STATEMENT Introduction Holidaybreak is a leading European specialist holiday group with significantoperations in the United Kingdom and the Netherlands. The Group provided 545,000holidays in the six months ended 31 March 2006 (2005: 484,000). Holidaybreak's performance is increasingly driven by its Hotel Breaks andAdventure Travel divisions which now account for approximately 70% of Groupsales (total transaction values) on an annualised basis and this share isexpected to increase as a result of organic growth and acquisition activity.Camping remains a profitable business and management actions to ensure capacityis aligned with demand are showing positive results. The Board thanks management and staff throughout the Group for their continuedhard work and commitment during the period. Financial results The Group has traditionally reported an operating loss in the first half due tothe seasonal nature of its Camping business, but the trend is towards aprofitable first half as the business becomes less reliant on Camping. In thesix-month period to 31 March 2006, Holidaybreak recorded a pre-tax loss onordinary activities of £6.3m, (2005: loss of £8.6m), whilst the interimoperating loss was £5.8m (2005: loss of £6.5m). All Holidaybreak's operations generate substantial cash. Net debt at the halfyear was £36.2m, which is £28.9m lower than the 2005 figure of £65.1m. Operatingcash inflow** for the 12 months to 31 March 2006 was £54.3m. Capital expenditurefor the half-year, net of disposals, was £4.9m (2005: £3.3m) and net capitalexpenditure in the financial year is expected to be approximately £4.1m (2004:£5.0m). The half year-end typically represents close to a low point in our cashflow cycle. Net debt levels reduce rapidly during May and June as final summerholiday balances are paid. Dividend The Board has declared a half-year dividend of 8.0p per share (2005: 7.25p),representing an increase of 10.3% on 2005. This will be payable on 15 August2006 to shareholders on the register on 21 July 2006. The Board intends tocontinue its policy of paying ordinary dividends that are appropriate to theprospects and the underlying performance of the Group. Divisional review Hotel Breaks Hotel Breaks' first-half operating profit was £6.5m (2005: £7.3m) with revenuesdown 8% at £55.2m (2005: £59.9m). As anticipated, Hotel Breaks' overall sales intake for 2006 has now improved tobe only 3% lower than 2005 reflecting late Easter and a continuing recovery intrips to London. Theatre packages remain very popular, boosted by shows such asBilly Elliot, Lion King and Mamma Mia. Here, as elsewhere, our ability to sourcetickets and rooms at attractive prices is a core skill. Another populardestination is Stratford-upon-Avon, where The Royal Shakespeare Company launcheda major season of plays. Our Dutch business, Bookit, acquired in December 2004,continues to grow. There has been an encouraging take-up among consumers on thehotelletje.nl site which features smaller independent hotel properties in theBenelux. Sales prospects remain satisfactory but will look favourable after 7 July whenthe comparatives from last year start to fall away, especially in London. Adventure Travel First-half operating profit for the Adventure Travel division attained £0.8m(2005: £0.6m) with revenues up 35% to £33.5m (2005: £24.8m). Geopolitical events in the period had no material impact on performance as thebreadth of our product offering allows customers many alternative tours. Explorehave successfully launched a new 'Beyond' brochure, covering more exoticdestinations. During the period a number of special interest tours were run,most notably to cover the total solar eclipse in Libya at the end of March. Thefamilies' brochures in both markets continue to outperform management's initialexpectations. RegalDive has reacted to events in Sinai and has successfully sought todiversify its activities away from the Red Sea. Its worldwide programme nowaccounts for about 40% (2005: 20%) of revenue. Margins have declined slightly, as a result of fuel price surcharges and thefaster growth in Djoser, our lower margin Dutch business acquired in December2004. Sales prospects for the remainder of 2006 are healthy with summer revenues up12%. Camping With all revenues falling in the second half of the financial year, the interimoperating loss for Camping was £13.1m, (2005: £14.3m). Last year, the first halfincluded Easter period sales of £0.6m. The half-year results reflect the normallevel of marketing and overhead costs, which under IFRS are now expensed in theperiod in which they are incurred. Camping sales for 2006 are cumulatively 7% lower than the 2005 equivalent.Capacity has been reduced by 16% overall with the number of mobile homes down13% and tents down 23%. In this reduction we have been able to take account ofshifts in demand patterns - away from Northern France and towards theMediterranean, driven by low cost flying. In certain areas - Catalonia, Croatia,Sardinia - we have added to capacity. The main overseas operational costs, depreciation and campsite fees, are nowfixed and the eventual outturn for the division remains sensitive to revenueintake over the remainder of the season. The impact of the summer's soccer WorldCup has so far been benign; we have been successful in encouraging earlybookings from Germany in June. Camping trading is in line with our expectationsto deliver cash and good margins in the full year. The Board announced on 20 March 2006 that it had received several expressions ofinterest to acquire the Group's Camping division. The process of evaluatingthese is continuing. As previously stated, any possible transaction will beconsidered on the basis of the value created for shareholders and the Boardstresses that it is satisfied with the performance of the camping division andthat there is no certainty that any transaction will occur. On-going strategy The Group's management team have performed a thorough review of the Group'sstrategy and have determined that it should comprise the following: • Build on core competences - ideally to leverage some cost and revenue synergies• Develop a multi-path approach to avoid being 'boxed in'• Clear theme of sustainable faster growth and securing strong market positions in higher margin businesses• Look to increase overseas business mix We continue to explore the development of all our businesses and retain theflexibility to exploit opportunities as they arise. We also look to achieveabove average margins and a superior return on capital employed. Outlook Management remains focused on maximising yields and generating cash. The HotelBreaks division is delivering to expectations in a difficult marketplace. TheAdventure business continues to perform strongly and Camping is meeting itsplans and continues to generate cash and good margins. Holidaybreak's presencein European markets continues to grow. The Board has been very pleased with theperformance of the Dutch acquisitions. The strength of its balance sheet and its cash generation capabilities means theGroup is well positioned to grow by acquisition and it continues to consider anumber of potential transactions. The Group's current trading is in line with expectations and we expect toachieve a satisfactory trading outcome for the full year. Robert AylingChairman Group income statementFor the six months ended 31 March 2006 Six months ended Year ended 31 March 31 March 30 September 2005 2006 2005 note £m £m £m Revenue 3 88.7 85.3 303.0Net operating costs (94.5) (91.8) (278.1)---------------------- ----- -------- -------- ---------Operating (loss) profit 3 (5.8) (6.5) 24.9 Profit on disposal of property - - 0.6Investment income 0.8 0.4 1.2Finance costs (1.3) (2.5) (5.6)---------------------- ----- -------- -------- ---------(Loss) profit before tax (6.3) (8.6) 21.1---------------------- ----- -------- -------- --------- Tax 1.8 2.4 (7.6)---------------------- ----- -------- -------- ---------(Loss) profit for the period (4.5) (6.2) 13.5---------------------- ----- -------- -------- ---------Attributable to;Equity holders of the parent (4.5) (6.2) 13.5---------------------- ----- -------- -------- --------- Earnings per share (in pence)Basic 4 (9.6p) (13.0p) 28.6p Group statement of recognised income and expenseFor the six months ended 31 March 2006 Six months ended Year ended 31 March 31 March 30 September 2005 2006 2005 £m £m £m Exchange differences on translationof foreign operations - (0.2) 0.3------------------------ -------- -------- ---------Net (expense) income recogniseddirectly in equity - (0.2) 0.3 (Loss) profit for the period fromcontinuing operations (4.5) (6.2) 13.5------------------------ -------- -------- ---------Total recognised income and expensefor the period (4.5) (6.4) 13.8------------------------ -------- -------- --------- Attributable to;Equity holders of the parent (4.5) (6.4) 13.8------------------------ -------- -------- --------- Movement in shareholders equityFor the six months ended 31 March 2006 Six months ended Year ended 31 March 31 March 30 September 2006 2005 2005 note £m £m £m Equity at the beginning of theperiod 48.5 43.7 43.7 (Loss) profit for the period (4.5) (6.2) 13.5---------------------- ----- -------- -------- ---------Total recognised income and expense (4.5) (6.2) 13.5 Recognised directly in equity Dividends 5 (9.2) (8.4) (11.8)IFRS 2 share option charge 0.2 0.1 0.3New share capital subscribed 0.5 1.7 2.5Movement in owned shares 0.4 - -Exchange differences - (0.2) 0.3---------------------- ----- -------- -------- ---------Net change recognised directly inequity (8.1) (6.8) (8.7)---------------------- ----- -------- -------- --------- Total movements (12.6) (12.7) 4.8 ---------------------- ----- -------- -------- --------- Equity at end of the period 35.9 30.7 48.5---------------------- ----- -------- -------- --------- Group balance sheet31 March 2006 31 March 31 March 30 September 2006 2005 2005 £m £m £mNon-current assetsGoodwill 56.2 65.3 56.0Other intangible assets 7.8 9.1 8.3Property, plant and equipment 67.0 77.5 62.9---------------------- -------- -------- --------- 131.0 151.9 127.2 Current assetsInventories 0.7 0.3 0.5Trade and other receivables 41.6 55.1 21.9Cash and cash equivalents 43.9 41.9 50.4---------------------- -------- -------- --------- 86.2 97.3 72.8 Assets held for sale 1.3 1.1 3.3 ---------------------- -------- -------- ---------Total assets 218.5 250.3 203.3---------------------- -------- -------- --------- Current liabilitiesTrade and other payables (97.4) (108.7) (73.3)Tax liabilities (0.8) - (2.7)Obligations under finance leases (4.8) (6.1) (5.9)Bank overdrafts and loans (65.7) (74.2) (55.8)---------------------- -------- -------- --------- (168.7) (189.0) (137.7)---------------------- -------- -------- ---------Net current liabilities (82.5) (91.7) (64.9)---------------------- -------- -------- --------- Non-current liabilitiesDeferred tax liabilities (4.3) (4.0) (5.5)Obligations under finance leases (9.6) (14.8) (11.6)Bank loans - (11.8) ----------------------- -------- -------- --------- (13.9) (30.6) (17.1) ---------------------- -------- -------- ---------Total liabilities (182.6) (219.6) (154.8)---------------------- -------- -------- ------------------------------- -------- -------- ---------Net assets 35.9 30.7 48.5====================== ======== ======== ========= Equity Share capital 2.4 2.4 2.4Share premium account 37.4 36.1 36.9Other reserves (3.3) (3.8) (3.8)Share option reserve 0.8 0.3 0.5Retained earnings (1.4) (4.3) 12.5---------------------- -------- -------- ---------Total equity 35.9 30.7 48.5====================== ======== ======== ========= Group cash flow statementFor the six months ended 31 March 2006 Six months ended Year ended 31 March 31 March 30 September 2006 2005 2005 £m £m £m----------------------------- ------- ------- --------- Operating (loss) profit (5.8) (6.5) 24.9Adjustments for:Depreciation, amortisation andimpairment of goodwill 1.4 1.4 24.0 IFRS 2 share option charge 0.2 0.1 0.3 Increase in receivables (19.8) (32.3) (2.9)Increase in payables 18.4 29.4 5.7----------------------------- ------- ------- --------- Cash (outflow) inflow from operatingactivities (5.6) (7.9) 52.0 Tax paid (2.8) (2.0) (7.0)----------------------------- ------- ------- ---------Net cash from operating activities (8.4) (9.9) 45.0----------------------------- ------- ------- --------- Investing activities Acquisitions of subsidiaries net ofcash acquired - (39.0) (39.0)Purchase of property, plant andequipment (7.3) (5.0) (8.6)Proceeds on disposal of property,plant and equipment 2.4 1.7 6.2----------------------------- ------- ------- ---------Net cash used in investmentactivities (4.9) (42.3) (41.4)----------------------------- ------- ------- --------- Financing activities Finance costs paid (1.2) (2.4) (5.8)Interest received 0.8 0.3 1.4Proceeds on issue of ordinary shares 0.5 1.7 2.2New bank loans raised 13.6 65.0 44.8Repayment of borrowings - - (12.5)Payments under finance leases (3.1) (3.7) (7.2)Dividends paid - - (11.7)----------------------------- ------- ------- ---------Net cash from financing activities 10.6 60.9 11.2----------------------------- ------- ------- -------------------------------------- ------- ------- --------- Net (decrease) increase in cash andcash equivalents (2.7) 8.7 14.8----------------------------- ------- ------- --------- Cash and cash equivalents atbeginning of period 46.1 31.3 31.3----------------------------- ------- ------- ---------Cash and cash equivalents at end ofperiod 43.4 40.0 46.1----------------------------- ------- ------- --------- Analysis of net borrowings & reconciliation of net cash flow to movement in net borrowings 31 March 31 March 30 September 2006 2005 2005 £m £m £mCash 43.9 41.9 50.4 Bank overdrafts (0.5) (1.9) (4.3)--------------------------- -------- -------- ---------Cash and cash equivalents 43.4 40.0 46.1 Borrowings due within one year (70.0) (78.5) (57.4)Borrowings due after one year (9.6) (26.6) (11.6)--------------------------- -------- -------- ---------Net borrowings at the end of theperiod (36.2) (65.1) (22.9)--------------------------- -------- -------- --------- Six months ended Year ended 31 March 31 March 30 September 2006 2005 2005 £m £m £mReconciliation of net cash flow to movement in net borrowings(Decrease) increase in cash and cashequivalents (2.7) 8.7 14.8Cash inflow from movement in netborrowings (10.6) (61.3) (25.2)--------------------------- -------- -------- ---------Cash inflow from increase in netborrowings (13.3) (52.6) (10.4) Net borrowings at the beginning ofthe period (22.9) (12.5) (12.5)--------------------------- -------- -------- --------- Net borrowings at the end of theperiod (36.2) (65.1) (22.9)--------------------------- -------- -------- --------- Notes to the interim statement 1. General information The interim statement for the six months ended 31 March 2006 does not constitutestatutory accounts for the purposes of Section 240 of the Companies Act 1985 andhas not been audited. No statutory accounts for the period have been deliveredto the Registrar of Companies. The financial information in respect of the year ended 30 September 2005 hasbeen produced using extracts from the statutory accounts prepared under UK GAAPfor this period and amended by adjustments arising from the implementation ofInternational Financial Reporting Standards (IFRS). The statutory accounts forthis period have been filed with the Registrar of Companies. The auditors havereported on those accounts and that report was unqualified and did not contain astatement under section 237(2) or 237(3) of the Companies Act 1985. The financial information presented on pages 1 to 5 has been prepared based onthe adoption of IFRS, including International Accounting Standards (IAS) andinterpretations issued by the International Accounting Standards Board (IASB)and its committees, as interpreted by any regulatory bodies relevant to theGroup. These are subject to ongoing amendment by the IASB and subsequentendorsement by the European Commission and are therefore subject to change. As aresult the accounting policies used to prepare the interim financial report willneed to be updated for any subsequent amendment to IFRS required for first timeadoption, or any new standards that the Group may elect to adopt early. The interim statement was approved by the Board of Directors on 17 May 2006.This announcement is being sent to shareholders and will be made available atthe Company's registered office at Hartford Manor, Greenbank Lane, NorthwichCheshire, CW8 1HW UK. 2. Accounting policies Holidaybreak plc has adopted the accounting policies set out below inpreparation of this interim statement. All of these policies have been appliedconsistently throughout the period. The accounting policies and resultingbalance sheet and income statement are to be regarded as preliminary and will bedetermined with certainty only when the first full IFRS financial statements forthe year ending 30 September 2006 are issued. Basis of preparation The interim statement has been prepared on a basis consistent with the Group'sexpected 2006 IFRS accounting policies for the first time. The interim statement has been prepared on the historical cost basis. First-time adoption of IFRS The Group has adopted IFRS from 1 October 2004 ("the date of transition"). Thisrequires the Group to set out its accounting policies as at 30 September 2006and apply them retrospectively in determining the IFRS opening balance sheet atthe date of transition. In accordance with IFRS 1 ("First-time Adoption of International FinancialReporting Standards") the Group is entitled to a variety of voluntary andmandatory exemptions from full restatement, which have been adopted as follows: i. IFRS 2 "Share Based Payments" IFRS 2 has been applied to all options granted after 7 November 2002 and which have not fully vested as at 1 January 2005. ii. IFRS 3 "Business Combinations" Holidaybreak plc has opted to apply IFRS 3 prospectively from 1 October 2004. Accordingly, acquisitions prior to this date have not been restated for the effects of IFRS 3. In addition, goodwill previously written off to reserves under UK GAAP will be deemed to be zero and therefore will not be used in the calculation of any gain or loss on disposal of the acquired entity. iii. IAS 32 "Financial Instruments: Disclosure and Presentation" and IAS 39 "Financial Instruments: Recognition and Measurement" The Group will not present comparative information that complies with IAS 32 and IAS 39. iv. IAS 16 "Property, Plant & Equipment The Group has taken advantage of the IFRS 1 exemption to elect to measure the value of property, plant and equipment at 1 October 2004, at historic cost. Reconciliations and a description of the effect of transition from UK GAAP toIFRS on the Group's equity and net income are provided in note 7. Other thanpresentational differences, there are no changes in the Group's cash flows. Basis of consolidation The interim statement consolidates the financial information of the Company andits subsidiary undertakings. The financial information of subsidiaries isprepared under consistent accounting policies and for the same reporting periodas the parent company. Subsidiaries are entities over which the Group has control, being the power togovern the financial and operating policies of the acquired entity in order toobtain benefits from its activities. The results of subsidiaries acquired ordisposed of are consolidated for the periods from or to the date on whichcontrol passed. Acquisitions are accounted for under the acquisition method. At the date ofacquisition the fair values of assets, liabilities and contingent liabilitiesare measured. Any excess of the fair value of the cost of acquisition over thefair value of the net assets acquired is recognised as goodwill. Intangible assets - goodwill Goodwill arising on acquisition represents any excess of the fair value of theconsideration given over the fair value of the identifiable assets andliabilities acquired. Goodwill is recognised as an asset and is reviewed forimpairment annually or where there is an indication that its carrying value isnot recoverable. Any impairment is recognised immediately in the Group's incomestatement and is not subsequently reversed. Intangible assets - other Intangible assets other than goodwill are carried on the Group's balance sheetat cost less accumulated amortisation. Amortisation is charged on astraight-line basis over the asset's useful life of between 3 and 20 years. Property, plant and equipment Property, plant and equipment are shown at cost, net of depreciation and anyprovision for impairment. Depreciation is provided using the straight-linemethod at rates calculated to write off the cost, less estimated residual value,of each asset over its expected useful economic life, as follows: Freehold land and buildings 50 yearsShort leasehold improvements Term of leaseCamping equipment 2-5 yearsMobile homes 7-10 yearsOffice equipment and motor vehicles 3-5 years No depreciation on camping equipment and mobile homes is charged in the firsthalf of the financial year, a full year's depreciation being charged in thesecond half of the financial year. Assets held for sale Mobile homes held for sale are stated at the lower of carrying amount and fairvalue less costs to sell. Inventories Inventories are stated at the lower of cost and net realisable value. Revenue recognition and associated costs Revenue represents the aggregated amount of gross revenue receivable, excludingVAT and similar taxes, from the sale of holidays, tours and other travelservices supplied to customers in the ordinary course of business. Revenue andexpenses relating directly to holidays are taken to the income statement onholiday departure. Revenue arising from the sale of insurance policies providedby third parties is taken to the income statement on holiday departure. Taxation The tax expense represents the sum of the corporation tax currently payable andthe deferred tax charge. The corporation tax currently payable is based on taxable profit for the period.Taxable profit differs from profit before tax as reported in the incomestatement as it excludes items of income or expense that are taxable ordeductible in other years, and excludes items that are never taxable ordeductible. Deferred tax is the tax expected to be payable or recoverable on differencesbetween the carrying amount of assets and liabilities in the financialstatements and the corresponding tax bases used in the computation of taxableprofit and is accounted for using the balance sheet liability method. Deferredtax liabilities are generally recognised for all taxable temporary differencesand deferred tax assets are recognised to the extent that it is probable thattaxable will be available against which deductible temporary differences can beutilised. The carrying amount of deferred tax assets is reviewed at each balance sheetdate and reduced to the extent that it is no-longer probable that sufficienttaxable profits will be available to allow all or part of the asset to berecovered. Deferred tax is calculated at the average tax rates that are expected to applyin the periods in which the timing differences are expected to reverse based ontax rates and laws that have been enacted by the balance sheet date. Employee benefits - retirement benefit costs The Group provides pensions to directors and senior employees through definedcontribution pension schemes. The assets of the schemes are held independentlyof the Group by an insurance company. The amount charged to the income statementis the contributions payable in the year. Foreign currency Average exchange rates are used to translate the results of all subsidiariesthat have a functional currency other than Sterling. The balance sheets of suchentities are translated at period end exchange rates. The resulting exchangedifferences are dealt with through a separate component of equity. Transaction in currencies other than the functional currency of an entity, aretranslated at the exchange rate at the date of the transaction. Foreign currencymonetary assets and liabilities held at the period end are translated at periodend exchange rates. The resulting exchange gain or loss is dealt with in theincome statement. Bank borrowings Finance costs of debts are recognised in the income statement over the term ofsuch instruments at a constant rate on the carrying amount. Debt is initiallystated at the amount of the net proceeds after deduction of issue costs. Thecarrying amount is increased by the finance cost in respect of the accountingperiod and reduced by payments made in the period. Hire purchase agreements and leases Leases of property plant and equipment where the Group has substantially all therisks and rewards of ownership are classified as finance leases. Finance leasesare capitalised at the lease's inception at the lower of the fair value of theleased asset and the present value of the minimum lease payments. Each leasepayment is allocated between the liability and the finance charge so as toachieve a constant rate on the finance balance outstanding. The correspondingrental obligations, net of finance charges, are included within other long-termpayables. The interest element of the finance cost is charged to the incomestatement over the lease period so as to produce a constant periodic rate ofinterest on the remaining balance of the liability for each period. Theproperty, plant and equipment acquired under finance leases are depreciated overthe shorter of the asset's useful life and the lease term. Leases where the lessor retains substantially all the risks and rewards ofownership are classified as operating leases. Payments made under operatingleases (net of any incentives received from the lessor) are charged to theincome statement on a straight-line basis over the period of the lease. Derivative financial instruments Derivatives are initially recognised at fair value on the date a derivativecontract is entered into and are subsequently remeasured at their fair value. The Group's derivative instruments do not qualify for hedge accounting. Thesederivatives are classified as at fair value through profit or loss, and anychanges in their fair value are recognised immediately in the income statement. The Group uses a variety of methods to calculate the fair value of financialinstruments at the balance sheet date. The fair value of interest-rate swaps iscalculated as the present value of estimated future cash flows. The fair valueof forward exchange contracts is determined using forward exchange market ratesat the balance sheet date. Share based payments The Group issues share options to certain employees as part of their totalremuneration. The fair values of the share options are calculated at the date ofthe grant, using the Black-Scholes option pricing model. These fair values arecharged to the income statement on a straight-line basis over the expectedvesting period of the options, with a corresponding increase in equity reserves,based on the Group's best estimate of shares that will actually vest. 3. Business segments For management purposes, the Group is currently organised into the followingdivisions: Hotel Breaks, Adventure Travel and Camping. These divisions are thebasis on which the Group reports its primary segment information. Segment information about these divisions is presented below: Revenue Operating (loss) profit 6 months ended Year ended 6 months ended Year ended 31 March 31 March 30 September 31 March 2006 31 March 30 September 2006 2005 2005 2006 2005 2005 £m £m £m £m £m £mContinuing OperationsHotel Breaks 55.2 59.9 126.7 6.5 7.3 16.8AdventureTravel 33.5 24.8 62.6 0.8 0.5 4.3Camping - 0.6 113.7 (13.1) (14.3) 3.8 ------ ------- ----------- ------- ------- --------- 88.7 85.3 303.0 (5.8) (6.5) 24.9 ------ ------- ----------- ------- ------- --------- 4. Earnings per share Basic earnings per share are calculated by dividing the loss attributable to theordinary shareholders of £4.5m (2005 - interim loss of £6.2m, full year profitof £13.5m) by the weighted average number of shares in issue during the periodof 47.6m (2005 - interim 46.9m, full year 47.2m). 5. Dividends Six months ended Year ended 31 March 31 March 30 September 2006 2005 2005 £m £m £m------------------------ -------- -------- ---------Dividends paid per share in theperiod of 19.35p (2005 - first half 17.6p, full year 24.85p) 9.2 8.4 11.8------------------------ -------- -------- --------- The amount of £9.2m is in respect of the final dividend for the year ended 30September 2005; the amount of £8.4m is in respect of the final dividend for theyear ended 30 September 2004; the amount of £11.8m is in respect of the finaldividend for the year ended 30 September 2004 plus the interim dividend for theyear ended 30 September 2005. 6. Events since the balance sheet date The Directors have declared and approved an interim dividend of 8.0p per share(2005 - 7.25p per share) on 17 May 2006. This has not been included as aliability at 31 March 2006. The dividend will be payable on 15 August 2006 toshareholders on the register at close of business on 21 July 2006. 7. Explanation of transition to IFRS The following explains the adjustments arising from the transition to IFRS. Differences between IFRS and UK GAAP. i. IFRS 2 "Share Based Payments" IFRS 2 requires an expense to be recorded in the income statement for all forms of share-based payments. The expense is based on the fair value of the share award at the date the award is made. The expense is recorded over the period for which the employee provides services in respect of the share scheme. The fair value of the options has been calculated using the Black Scholes option-pricing model. This only applies to options awarded after 7 November 2002 that had not vested at 1 January 2005. ii. Goodwill - IFRS 3 "Business Combinations" Under IFRS 3, goodwill is not amortised. Instead it is subject to an annual impairment review. An adjustment has been made to remove the goodwill amortisation charge under UK GAAP. IFRS 3 requires that consideration paid in excess of the value of assets acquired be held in the balance sheet. Whereby under UK GAAP, this balance was all deemed to be goodwill, intangible assets acquired that meet the definition of an intangible asset (i.e. assets that are 'identifiable non-monetary assets without physical substance') must be identified, recognised separately from goodwill and amortised over the period to which benefits from such assets relate. iii. Dividends - IAS 10 "Post Balance Sheet Events " Under IAS 10 the declaration of a dividend is only recognised as a liability at the date it is approved. Additionally dividends no longer appear on the face of the income statement but are instead shown within the Statement of Changes in Shareholder Equity. Accordingly the 2005 proposed dividend under UK GAAP is removed from the 2005 IFRS accounts. iv. IAS 38 "Intangible Assets" Under IAS 38 the policy on intangible assets is to capitalise all such assets where they meet the criteria specified within IAS 38. The standard requires that all expenditure on advertising and promotional activities should be written off as incurred. Under UK GAAP, the Group's policy has been to charge brochure, other marketing costs and other sales related costs to the profit and loss account in the season to which they relate. Reconciliation of profitFor the year ended 30 September 2005 Adjustments UK GAAP IAS 38 IFRS 2 IFRS 3 IFRS £m £m £m £m £m Revenue 303.0 303.0Net operating costs (279.8) (1.4) (0.3) 3.4 (278.1)-------------------- ------- ------- ------- ------ -------Profit from operations 23.2 (1.4) (0.3) 3.4 24.9 Profit on sale of property 0.6 0.6Investment income 1.2 1.2Interest payable and similar charges (5.6) (5.6)-------------------- ------- ------- ------- ------ ------- Profit on ordinary activities beforetax 19.4 (1.4) (0.3) 3.4 21.1-------------------- ------- ------- ------- ------ ------- Tax on profit on ordinary activities (7.6) - 0.1 (0.1) (7.6)-------------------- ------- ------- ------- ------ -------Profit on ordinary activities aftertax 11.8 (1.4) (0.2) 3.3 13.5-------------------- ------- ------- ------- ------ ------- Reconciliation of equity at 30 September 2005 Adjustments UK GAAP IAS 10 IAS 38 IFRS 2 IFRS 3 IFRS £m £m £m £m £m £mNon-current assetsGoodwill 62.3 (9.7) 3.4 56.0Other intangible assets - 8.3 8.3Property, plant andequipment 62.9 62.9------------------- ------- ------ ------ ------ ------ ------ 125.2 - (1.4) - 3.4 127.2------------------- ------- ------ ------ ------ ------ ------ Current assetsInventories - 0.5 0.5Trade and otherreceivables 23.7 (1.8) 21.9Cash and cashequivalents 50.4 50.4------------------- ------- ------ ------ ------ ------ ------ 74.1 - (1.3) - - 72.8------------------- ------- ------ ------ ------ ------ ------ Assets held for sale 3.3 3.3------------------- ------- ------ ------ ------ ------ ------Total assets 202.6 - (2.7) - 3.4 203.3------------------- ------- ------ ------ ------ ------ ------ Current liabilitiesTrade and other payables (82.2) 9.2 (0.4) (73.4)Tax liabilities (2.7) (2.7)Obligations underfinance leases (5.8) (5.8)Bank overdrafts andloans (55.8) (55.8)------------------- ------- ------ ------ ------ ------ ------ (146.5) 9.2 (0.4) - - (137.7)------------------- ------- ------ ------ ------ ------ ------ Net current liabilities (72.4) 9.2 (1.7) - - (64.9)------------------- ------- ------ ------ ------ ------ ------ Non-current liabilitiesDeferred tax liabilities (6.1) 0.5 0.2 (0.1) (5.5)Obligations underfinance leases (11.6) (11.6)------------------- ------- ------ ------ ------ ------ ------ (17.7) - 0.5 0.2 (0.1) (17.1)------------------- ------- ------ ------ ------ ------ ------------------------- ------- ------ ------ ------ ------ ------Total liabilities (164.2) 9.2 0.1 0.2 (0.1) (154.8)------------------- ------- ------ ------ ------ ------ ------------------------- ------- ------ ------ ------ ------ ------Net assets 38.4 9.2 (2.6) 0.2 3.3 48.5------------------- ------- ------ ------ ------ ------ ------ EquityShare capital 2.4 2.4Share premium account 36.9 36.9Other reserves (3.8) (3.8)Share option reserve - 0.5 0.5Retained earnings -brought forward 3.6 (1.2) (0.1) 2.3- current year (0.7) 9.2 (1.4) (0.2) 3.3 10.2------------------- ------- ------ ------ ------ ------ ------Total equity 38.4 9.2 (2.6) 0.2 3.3 48.5------------------- ------- ------ ------ ------ ------ ------ Reconciliation of equity at 1 October 2004(date of transition to IFRS) UK GAAP IAS 10 IAS 38 IFRS 2 IFRS £m £m £m £m £mNon-current assetsGoodwill 36.2 36.2Property, plant and equipment 70.6 70.6------------------- ------- ------ ------ ------ ------ 106.8 - - - 106.8------------------- ------- ------ ------ ------ ------Current assetsInventories - 0.5 0.5Trade and other receivables 20.8 (1.8) 19.0Cash and cash equivalents 31.4 31.4------------------- ------- ------ ------ ------ ------ 52.2 - (1.3) - 50.9------------------- ------- ------ ------ ------ ------ Assets held for sale 3.5 3.5------------------- ------- ------ ------ ------ ------Total assets 162.5 - (1.3) - 161.2------------------- ------- ------ ------ ------ ------ Current liabilitiesTrade and other payables (74.1) 8.4 (0.3) (66.0)Tax liabilities (1.9) (1.9)Obligations under finance leases (7.2) (7.2)Bank overdrafts and loans (7.6) (7.6)------------------- ------- ------ ------ ------ ------ (90.8) 8.4 (0.3) - (82.7)------------------- ------- ------ ------ ------ ------ Net current assets (38.6) 8.4 (1.6) - (31.8)------------------- ------- ------ ------ ------ ------ Non-current liabilitiesBank loans (11.7) (11.7)Deferred tax liabilities (6.1) 0.4 (5.7)Obligations under finance leases (17.4) (17.4)------------------- ------- ------ ------ ------ ------ (35.2) - 0.4 - (34.8)------------------- ------- ------ ------ ------ ------------------------- ------- ------ ------ ------ ------Total liabilities (126.0) 8.4 0.1 - (117.5)------------------- ------- ------ ------ ------ ------------------------- ------- ------ ------ ------ ------Net assets 36.5 8.4 (1.2) - 43.7------------------- ------- ------ ------ ------ ------ EquityShare capital 2.4 2.4Share premium account 34.4 34.4Other reserves (3.7) (3.7)Share option reserve - 0.2 0.2Retained earnings 3.4 8.4 (1.2) (0.2) 10.4------------------- ------- ------ ------ ------ ------Total equity 36.5 8.4 (1.2) - 43.7------------------- ------- ------ ------ ------ ------ This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Harbour Energy