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| Date/Time | Headline | Source |
|---|---|---|
| 09-03-10 | PRN |
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This news article is displayed preformatted as it may contain results tables
JOHN MENZIES PLC PRELIMINARY RESULTS ANNOUNCEMENT FOR THE YEAR ENDED 31
DECEMBER 2009
HIGHLIGHTS
2009 2008
Revenue £1,725.7m £1,667.1m
Underlying profit before taxation (1) £35.2m £30.7m
Profit before tax £22.0m £9.9m
Underlying operating profit by division (2)
Aviation £15.8m £14.1m
Distribution £28.6m £23.9m
Underlying earnings per share (3) 43.8p 31.3p
Basic earnings per share (4) 25.8p (2.0)p
Net Debt £132.3m £182.6m
Free Cashflow £26.9m £(11.1)m
* GROUP
* Underlying profit before taxation up 14.7% to £35.2m
* Net debt reduced by £50.3m to £132.3m
* Strong cash generation produces £26.9m of free cashflow
* MENZIES AVIATION
* Underlying operating profit up 12% to £15.8m
* Rigorous cost base actions deliver significant benefits
* Contract gain momentum within Ground Handling offsets market weakness
* MENZIES DISTRIBUTION
* Underlying operating profit up 19.7% to £28.6m
* Contract gains provide a step change for the business
* Cost and productivity initiatives deliver ahead of expectations
* DIVIDEND
* Dividend recommenced with an interim payment for 2009 of 8p in lieu of a
final dividend (2008 7.56p)
Notes
1 Underlying profit before taxation is defined as profit before taxation,
intangible amortisation and exceptional items.
2 Underlying operating profit includes each division's share of pre-tax
profit from joint ventures and associates, and excludes intangible
amortisation and exceptional items.
3 Underlying earnings per share is profit after taxation and minority
interest, but before intangible amortisation and exceptional items,
divided by the weighted average number of ordinary shares in issue.
4 Basic earnings per share in 2008 includes exceptional costs of £7.3m,
intangible amortisation of £4.3m and a non-recurring (non-cash)
deferred tax charge of £9.3m.
William Thomson, Chairman said:
"2009 has been a year of great contrast but I am delighted that the Group has
come through it in a strong position.
The focus for 2009 was on debt reduction and cost control. I am pleased that
Group net debt has reduced by over £50m, demonstrating both the extremely cash
generative nature of the Group and that management at both divisions rigorously
controlled their cost bases.
Menzies Aviation turned in a resilient performance in the light of significant
market weakness particularly in the cargo handling market and to a lesser
extent in the ground handling market. Management's ability to flex the cost
base, particularly within the larger ground handling business, helped to
mitigate the lost revenue. This combined with new contracts and the
annualisation of contracts won in 2008, allowed the division to return profits
up 12%, which in a distressed marketplace was a very commendable achievement.
Menzies Distribution had a stellar year. Cost initiatives, driven by management
incentive schemes and the full benefit of investment in new technologies,
delivered ahead of expectations. In addition, over £180m of new revenues were
secured following the latest round of publisher negotiations. These contract
gains secure core revenue streams through to 2015 and represent a splendid
achievement.
To reflect the positive progress made during the year and the strong cashflow
performance, the Board has decided to make an interim payment of 8p for the
financial year 2009. The payment will be made on 1 April 2010 to all
shareholders on the register of members as at 19 March 2010. This dividend is
in lieu of a final dividend for 2009.
2010 has started well with both divisions trading ahead of the previous year.
We intend to continue to grow both of our divisions by contract wins and
selective growth opportunities whilst continuing to focus on debt reduction."
For further information:
Paul Dollman, Group Finance Director, John Menzies plc 0131 459 8018
John Geddes, Group Company Secretary, John Menzies plc 0131 459 8180
NOTES TO EDITORS:
1. John Menzies plc is one of Scotland's largest companies. The company has
two operating divisions, Menzies Aviation and Menzies Distribution. Both
divisions operate in distinct business to business sectors where success
depends on providing an efficient, high quality, time-critical service to
their customers and partners.
2. The company was established in 1833 and its head office is in Edinburgh,
Scotland. Today the company is an international business operating in
Europe, North America, India, Australasia and Africa.
3. Menzies Aviation is one of the world's leading independent suppliers of
ground handling services to the aviation market providing ground and cargo
services for many of the world's leading airlines at some of the busiest
international airports. The division employs 15,000 people worldwide
servicing over 500 airline customers at 112 locations in 27 countries, In
2009 the division handled more than 650,000 flight turns, 71 million
passengers and 1.4 million tonnes of cargo.
4. Menzies Distribution is a leading provider of added value distribution and
marketing services to the newspaper and magazine supply chain in the UK.
The division handles around 5.5 million newspapers and 2.2 million
magazines (covering 3,000 magazine titles) each day, with deliveries to
more than 25,000 customers. The division employs 4,000 people at 40 sites
throughout the UK - and is a strongly cash generative business, with around
43% of the newspaper and magazine wholesale distribution market in the UK.
It has a track record of investment in innovation and customer service
delivery.
5. Further information on John Menzies plc can be found at:
www.johnmenziesplc.com, www.menziesdistribution.com and
www.menziesaviation.com.
GROUP PERFORMANCE
Against a backdrop of material reduction in volumes at both divisions the main
focus for the Group in 2009 was cost control and reducing the Group's debt. As
a result, the Group reduced net debt by over £50m in the year and generated an
increase in underlying operating profits of 18.9%.
Menzies Aviation's revenue increased by 1.3% to £507m, with Menzies
Distribution's revenue increasing by 4.5% to £1,219m.
Aviation delivered an underlying operating profit of £15.8m, (£14.1m 2008) up
12% on last year. The results for the year benefited from contract gains, the
annualisation of prior year business development, lower start-up costs, foreign
exchange and continued cost control. This all contributed in mitigating the
impact of volume shortfalls.
Distribution had an excellent year with operating profits of £28.6m, (£23.9m
2008) up 19.7% on last year. Like for like gross profit again fell during the
year particularly, as expected in the magazine categories. This was more than
offset by a very strong performance on costs which net of inflation were
reduced by £5.7m. In addition, new revenue streams, other income and a 53rd
week of trading also helped to increase operating profits.
Corporate costs were reduced by a further £0.5m compared to last year resulting
in an underlying operating profit for the Group of £43.4m, £6.9m of ahead last
year, an increase of 18.9%. The Group underlying profit before tax was £35.2m,
an increase on 2008 of 14.7%.
Cashflow and Investment
Operating cashflow was £57.7m, an increase of £15.2m (c35%) on 2008 reflecting
higher operating profits and a positive working capital movement. The focus on
debt reduction resulted in Capital Expenditure of £15.1m, some £25.3m lower
than the previous year. The reduction in capital expenditure in Aviation along
with excellent working capital control led to Aviation having a higher cash
conversion rate in the year than Distribution. This resulted in a free cash
inflow of £26.9m (or 45p per share) in 2009 compared to a free cash outflow of
£11.1m in 2008. In addition, £16.5m was raised from the sale and refinancing of
assets which, together with a £6.8m translation gain reduced net debt by £50.3m
to £132.3m.
Debt and Interest
Net debt at the year-end was £132.3m which was £50.3m lower than the previous
year-end. The key covenant measure, Net Debt to EBITDA was 2.2 times at the end
of 2009 markedly down from its peak of 3.2 times at the end of last year. The
Group's interest cover increased from 4.9 times in 2008 to 6.7 times in 2009.
External interest costs of £6.4m were £1.3m or 16.9% lower than the previous
year, reflecting lower interest rates and the lower levels of average net debt.
The IAS 19 interest charge of £1.8m is a £4.1m increase on the net credit of £
2.3m in the previous year.
Exceptional Items
Group profit before tax and basic earnings per share were affected by a net
exceptional charge of £6m. The majority of this figure £3.8m related to
redundancy costs in the Netherlands as we downsized our ground handling
operation. A further £1.0m was provided for the disposal of our Joint Venture
investment in Chengdu expected to complete during 2010.
Pensions
The triennial valuation of the Group's defined benefit pension scheme as at 31
March 2009 is currently being finalised. The IAS 19 deficit has increased from
£25.6m in 2008 to £60.8m in 2009 net of deferred tax. The company has reached
agreement with the trustees on the deficit funding which is an additional
payment of £6m per annum (£4.3m net of tax). This will increase annually with
RPI. We are looking at ways of reducing future volatility in the scheme and in
particular, ways to mitigate the future inflation risk.
Dividend
The Board has declared an interim dividend in lieu of a final dividend, of 8p
per share. On the basis of a more normal one thirds, two thirds split this
would represent an annualised dividend of 12p per share. At this level the
annualised dividend would have been covered more than 3.5 times by both
earnings and free cashflow in 2009.
MENZIES AVIATION
2009 2008
Revenue £507.2m £500.9m
Underlying operating profit £15.8m £14.1m
Performance
Menzies Aviation produced a resilient performance with underlying operating
profit up by 12%. This strong set of results was driven by cost control
(including pay freezes and staff reductions), new stations, contract wins and
lower start up costs, but mitigated by the sharp decline in volumes for cargo
handling and cargo forwarding.
The split of revenues continued its shift towards the more profitable and
flexible ground handling business which now represents 59% of divisional
turnover with cargo handling and cargo forwarding representing 26% and 15%
respectively.
The division also contributed to the cash position of the Group with a net cash
inflow of £33.2m. This result was achieved by restricting capital expenditure,
continued improvement in working capital management and moving the ground
handling business to a less cash consumptive operating leasing model.
During the year the division was a net winner of 49 contacts. The net contract
gains will contribute £1.5m on an annualised basis. A high proportion of the
losses were as a result of predatory pricing or route cessation. Just as
important as contract gains are contract renewals and during the year 35% of
EBIT was renewed from key airline contracts that included Alaska Airlines,
Pacific Blue, Thai, Virgin America and Continental.
In April 2010 a franchise agreement held in Peru comes to an end reducing
divisional EBIT by around £1.5m. However, we expect the effect of this will be
offset by the annualised effect of contracts gained during 2009.
Cost Savings
Divisional management reacted quickly to the underlying market conditions and
took rigorous measures to manage the cost base. During the year underlying
headcount was reduced by some 8% as the workforce was flexed to match demand.
Where possible a pay freeze was implemented which helped to restrict labour
costs. Indirect costs were minimised, with back office functions further
centralised into regional shared service centres, which helped produce an
additional benefit of £2m.
Enhanced technology, in particular, a biometric recognition time and attendance
system and a new rostering tool were rolled out across the network during the
year. These tools brought greater standardisation to working practices and
allowed further efficiencies to be driven from the business.
Within ground handling, hours per turn (the key productivity indicator) were
reduced by 5.2% and in cargo handling hours per tonne were held in line with
the previous year despite the volume shortfalls.
Cargo Handling
The cargo handling business experienced a very difficult year. Absolute tonnes
were down 17.8% (lfl 12.4%) as cargo volumes across the world deteriorated.
This market weakness led to over capacity, particularly at the world's major
airports, which encouraged predatory pricing. As a result of this contract
losses, primarily at London Heathrow, also impacted the business. The division
has not participated in predatory pricing as it believes that such actions will
lead to a reduction in value that will not be recovered when the market turns.
Cargo handling at major hub airports is structurally challenged. Within the
portfolio, loss making operations at four major airports have been identified
and are now subject to a fix, close or sell process. Cargo operations at minor
airports, whilst still affected by reduced volumes, were profitable as the
dynamics of these operations differ with little over capacity and reduced
competition.
During the year management reduced the cost base to meet the falling demand,
with five sheds being closed and capacity rationalised where possible. Fourth
quarter 2009 volumes did show signs of recovery, albeit against weak
comparators.
Cargo Forwarding
AMI, the division's freight forwarding business, was impacted by the general
malaise in the cargo market. Bookings were down 11.6% coupled with yield
pressure which saw the margin decline by 0.9% to 2.2%.
Ground Handling
The ground handling business had another good year, with eight new stations
opened during the year. Like for like turns were down 3.5%, but absolute turns
were up 7.6% demonstrating continued contract gain momentum.
During the year the ground handling business model was further developed.
Increasingly the division is utilising a turnkey lease/maintenance solution for
its ground handling equipment requirements. Not only does this reduce cash
consumption, but also leads to a reduction in total cost of ownership through
reduced maintenance costs.
Within the ground handling network the UK business had another strong year,
strengthening its relationship with easyJet through the award of contracts at
Stansted and Bristol. At London Heathrow, operations at Terminal One prospered,
with the award of contracts from Air New Zealand and Swiss. The business now
has a significant presence at Terminal One and will look to expand its customer
base in the adjacent Terminal Three, where it already has Finnair as its launch
customer.
In Continental Europe, operations at Amsterdam were rationalised and a number
of unprofitable airline contracts terminated. As a result some three hundred
employees left the business. Elsewhere management are continuing to synergise
the prior year acquisitions made in Scandinavia, creating a strong platform for
growth. In addition, the regional density created in Spain was expanded with
operations commencing at Barcelona. The division now operates nine stations in
Spain.
The Americas had an excellent year winning new contracts, extending customer
relationships and building a reputation as the quality player in the market.
The contract to handle Alaska Airlines at their Seattle Tacoma hub was renewed,
along with four other stations. In addition, Virgin America at three stations
in the USA and Continental at twenty two stations in Mexico were also renewed.
Operations in South Africa had a successful year with new contracts secured and
the region receiving a number of airline and airport awards for customer
service. In Oceania, the region's largest contract with Pacific Blue to handle
their flights at four airports in New Zealand was renewed and a further six new
contracts were secured in Australia. Operations at Hyderabad and Bangalore, in
India, had a good year and prospects are encouraging.
Strategy
The division has remained true to its strategy and will continue to focus on
working with attractive airlines in attractive markets creating product,
station and regional densities.
The strong growth seen within the ground handling business will continue as the
division pursues a rich pipeline of organic opportunities. This can largely be
achieved by using the new business model which allows the business to grow
without requiring major capital expenditure.
Within cargo handling, the focus will be on addressing the structural issues
that exist at major cargo locations while the cost base is kept as tight as
possible until the market recovers.
MENZIES DISTRIBUTION
2009 2008
Revenue £1,218.5m £1,166.2m
Underlying operating profit £28.6m £23.9m
Performance
2009 was an excellent year for Menzies Distribution. Underlying operating
profits were up 19.7%, largely as a result of excellent cost control, the
delivery of productivity initiatives and the effect of a 53rd week of trading.
In addition, £180m of new revenues were secured in the latest round of
publisher negotiations. The majority of these contracts started, somewhat
earlier than expected, during August following the administration of Dawson
News and the remainder will come on stream during 2010. The 2009 full year
effect of this new business was neutral as the incremental profit was offset by
start up costs.
These contract gains are an excellent achievement and create a step change for
the division and the industry.
Sales
Market conditions during the year remained difficult but sales performed
largely as forecast. Like for like sales of magazines were 5.5% down. Absolute
volumes were up 2.9% reflecting the new contracts which commenced in August.
Newspapers continued their long term trend with like for like sales down 1.6%
with only Saturday sales showing any year on year increase. Absolute volumes
were up 4.1% again reflecting the new contract gains.
Stickers had a good year outperforming expectations following a number of
successful launches. Overall like for like sales were up 3.6% despite having no
major football tournament during the year.
Marketplace and New Business
In August, following the administration of Dawson News, the division at
extremely short notice, took responsibility for a number of contracts that were
to migrate over time from Dawson News. This required operating from five Dawson
News branches for an initial period. Swift action was required to ensure
continuous supply was maintained to all the division's new customers. This was
a major operational challenge but one that was met successfully.
During the year £60m of revenue was gained. This will rise to an annualised
total of £180m when all of the contracts migrate. 34% of the new business will
be serviced from the existing branch network and the remainder of the business
will be serviced by two new hub branches opened in Maidstone and Preston
together with two new newspaper packing spokes. These new branches were
delivered on time and on budget and are producing the high levels of customer
service that is already embedded across the branch network.
As a result of the increased footprint, further rationalisation opportunities
exist and will be pursued during 2010.
The marketplace has now consolidated from three major wholesalers to two. As a
result the division now holds approximately 43% UK market share. In recognition
of this the division launched a service pledge to all our customers. The
division is committed to being the industry leader in terms of the service that
we provide to our publisher and retailer customers. This pledge raises the bar
and the division is committed to delivering its pledge each day.
Cost and Productivity Initiatives
2009 produced another excellent cost and productivity performance with like for
like operating costs reducing by £5.7m. The full benefit of new technologies
helped drive savings together with a Productivity Improvement Plan which
incentivised managers to find efficiencies within their own branches. In
addition, enhanced route planning delivered significant transport benefits.
The implementation of SAP continues. This major project is not without its
challenges but the division remains confident that the project goals will be
met. The financial module is operational and the project is now focussed on
delivering SAP into the branch network during 2010, with full roll out during
2011.
New Revenue Streams
The division continued to develop new businesses. New revenue streams made an
increased contribution to divisional profits, although their growth was
impacted by the challenging marketplace.
D-Cipher, the retail media management business, continued to work with its
existing customers and delivered returns in line with expectations. Accelerated
growth was difficult, largely due to external market conditions and a general
reduction in promotional spend. However, the business model remains fit for
purpose and growth opportunities exist.
The Network, a field marketing business, was hit by the closure of the London
Lite newspaper which it distributed. The distribution contract for the London
Evening Standard was secured but revenues from this new contract do not match
the London Lite loss. This part of its business has been restructured
accordingly and together with its travel and promotional activities will pursue
a number of opportunities during 2010.
Jones Yarrell Leadenhall, the corporate news distribution business, performed
in line with expectations and successfully integrated specialist London
distribution contracts which were secured after Dawson News was placed in
administration.
A new business was launched in conjunction with a German partner, Newslog,
called Menzies Travel Media to service the needs of travellers for printed
media, principally onboard aircraft or within airline lounges. This venture is
still in its infancy but progress so far has been encouraging.
To drive this business segment forward, a subdivision - Menzies Marketing
Services (MMS) - has been created with four businesses now under the MMS banner
and the stewardship of one Managing Director. Each of the businesses has a
niche and it is believed that they can grow market share and develop into
adjacent markets.
Progress continues to be made on gaining more regional press contracts. £8m of
new business was gained in 2010 and there remains a substantial amount of
business to go after.
The joint venture with Eason and Son Ltd in Ireland had a good year.
Operational stability was achieved and Menzies Distribution processes and
standards are now becoming embedded into the culture. A number of new contracts
have been secured and by delivering high levels of customer service it is hoped
that further contracts will be gained.
Office of Fair Trading (OFT)
The OFT announced in September that it was not referring the newspaper and
magazine supply chain to the Competition Commission. The division welcomes this
decision and looks forward to participating in industry groups to help shape
the industry, as all participants look to address the challenges that exist.
Strategy
After a year that has brought a great amount of change the division has clear
objectives. In 2010 the additional new contracts will be integrated into the
business. This enlarged network allows further synergy benefits and these will
be pursued. New ventures will be developed and further efficiencies will be
targeted.
Divisional strategy is set around three pillars:
Pillar 1 - Execute
* fully integrate new business on the back of contract wins
* continue to deliver cost savings and productivity improvements
* develop joint venture in Ireland
Pillar 2 - Redesign
* develop the business to meet the changing business environment
* increase customer focus and continue to improve service
* implement SAP throughout the business, driving further efficiencies
Pillar 3 - Grow & Diversify
* deliver new regional distribution contracts
* expand Marketing Services
* explore acquisition opportunities
OUTLOOK
At Menzies Aviation, the year has started well. Both Cargo and Ground handling
volumes have seen like for like growth in the early weeks of 2010, albeit
against weak comparatives in the previous year.
At Menzies Distribution, sales in the year so far are well up on last year as a
result of the impact of contract gains. Overall trading in the early weeks of
2010 was broadly in line with last year. The focus for the year remains on cost
control, the implementation of the new SAP system and the development of
additional revenue streams.
Overall the Group is planning selectively to grow both divisions using the cash
generated by the businesses whilst continuing to focus on debt reduction and
further improve our financial ratios. We have recommenced dividend payments
which we will look to grow progressively. The Board is looking forward with
confidence and expects the Group to make further progress in 2010.
GROUP INCOME STATEMENT
for the year ended 31 December 2009 (year ended 31 December 2008)
Before
exceptional Exceptional
and other and other 2009
items items Total
Notes £m £m £m
Revenue 2 1,725.7 - 1,725.7
Net operating costs (1,692.1) (9.3) (1,701.4)
Operating profit 33.6 (9.3) 24.3
Share of post-tax results of 9.8 (3.9) 5.9
joint ventures and associates
Operating profit after joint 43.4 (13.2) 30.2
ventures and associates
Analysed as:
Underlying operating profit* 43.4 - 43.4
Non-recurring items 4(a) - (6.0) (6.0)
Intangible amortisation 4(b) - (5.1) (5.1)
Share of interest and tax on - (2.1) (2.1)
joint ventures and associates
Operating profit after joint 43.4 (13.2) 30.2
ventures and associates
Finance income 5 0.6 - 0.6
Finance charges 5 (7.0) - (7.0)
Other finance (charges)/ 3 (1.8) - (1.8)
income - pensions
Profit before taxation 35.2 (13.2) 22.0
Taxation 6 (9.3) 2.6 (6.7)
Profit for the year 25.9 (10.6) 15.3
Attributable to equity 25.9 (10.6) 15.3
shareholders
Earnings per ordinary share 8
Basic 43.8p (17.9)p 25.8p
Diluted 43.8p (17.9)p 25.8p
Before
exceptional Exceptional
and other and other 2008
items items Total
Notes £m £m £m
Revenue 2 1,667.1 - 1,667.1
Net operating costs (1,636.1) (11.6) (1,647.7)
Operating profit 31.0 (11.6) 19.4
Share of post-tax results of 5.1 (1.5) 3.6
joint ventures and associates
Operating profit after joint 36.1 (13.1) 23.0
ventures and associates
Analysed as:
Underlying operating profit* 36.5 - 36.5
Non-recurring items 4(a) - (7.3) (7.3)
Intangible amortisation 4(b) - (4.3) (4.3)
Share of interest and tax on (0.4) (1.5) (1.9)
joint ventures and associates
Operating profit after joint 36.1 (13.1) 23.0
ventures and associates
Finance income 5 2.3 - 2.3
Finance charges 5 (10.0) (7.7) (17.7)
Other finance (charges)/ 3 2.3 - 2.3
income - pensions
Profit before taxation 30.7 (20.8) 9.9
Taxation 6 (12.1) 1.0 (11.1)
Loss for the year 18.6 (19.8) (1.2)
Attributable to equity 18.6 (19.8) (1.2)
shareholders
Earnings per ordinary share 8
Basic 31.3p (33.3)p (2.0)p
Diluted 31.3p (33.3)p (2.0)p
*Underlying operating profit is consistently presented adjusting for
non-recurring exceptional items, intangible amortisation associated with
goodwill impairment on associate assets and contract amortisation, and the
Group's share of interest and tax on joint ventures and associates to provide
an appreciation of the impact of those items on operating profit.
GROUP STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2009 (year ended 31 December 2008)
2009 2008
Total Total
Notes £m £m
Profit/(loss) for the year 15.3 (1.2)
Actuarial loss on defined 3 (50.0) (48.7)
benefit pensions
Actuarial loss on unfunded (0.2) -
pension arrangements
Deferred tax associated with 14.1 13.6
defined benefit pensions
Losses on cash flow hedges (1.2) -
Income tax effect 0.3 -
Net exchange adjustments (1.7) 4.7
Net losses recognised (38.7) (30.4)
directly in equity
Total recognised loss for the (23.4) (31.6)
year
Attributable to equity (23.4) (31.6)
shareholders
The parent company Statement of Comprehensive Income includes a profit for the
year of £63.4m (2008: £18.5m) and a net actuarial loss on defined benefit
pensions of £36.1m (2008: £35.1m).
GROUP AND COMPANY BALANCE SHEETS
as at 31 December 2009 (31 December 2008)
Group Company
2009 2008 2009 2008
Notes £m £m £m £m
Assets
Non-current assets
Intangible assets 9 100.5 102.1 - -
Property, plant and 140.8 169.4 31.6 36.8
equipment
Investments 41.8 47.1 292.5 293.4
Derivative financial 0.1 - 0.1 -
assets
Deferred tax assets 19.9 15.0 19.0 10.0
303.1 333.6 343.2 340.2
Current assets
Inventories 12.0 9.3 - -
Trade and other 158.9 157.4 224.7 169.6
receivables
Available for sale 1.4 2.7 - -
investment
Derivative financial 2.5 0.4 2.5 0.4
assets
Cash and cash 31.5 19.6 10.5 2.6
equivalents
206.3 189.4 237.7 172.6
Liabilities
Current liabilities
Borrowings (12.8) (58.6) (12.2) (57.7)
Derivative financial (2.2) (17.1) (2.2) (17.1)
liabilities
Trade and other payables (200.0) (195.8) (247.5) (213.8)
Current income tax (9.7) (9.9) - -
liabilities
Provisions (2.6) (2.0) - -
(227.3) (283.4) (261.9) (288.6)
Net current liabilities (21.0) (94.0) (24.2) (116.0)
Total assets less 282.1 239.6 319.0 224.2
current
liabilities
Non-current liabilities
Borrowings (150.1) (126.0) (150.1) (125.8)
Other payables (1.3) (0.2) - -
Derivative financial (1.3) (0.9) (1.3) (0.9)
liabilities
Provisions (5.3) (6.6) - -
Deferred tax liabilities - (7.7) - (5.2)
Retirement benefit 3 (84.5) (35.6) (84.5) (35.6)
obligations
(242.5) (177.0) (235.9) (167.5)
Net assets 39.6 62.6 83.1 56.7
Shareholders' equity
Ordinary shares 15.1 15.1 15.1 15.1
Share premium account 15.8 15.8 15.8 15.8
Investment in own shares (3.3) (3.3) - -
Hedge accounting reserve 15 (0.9) - (0.9) -
Retained earnings (8.7) 13.4 31.5 4.2
Capital redemption 21.6 21.6 21.6 21.6
reserve
Total equity 39.6 62.6 83.1 56.7
The accounts were approved by the board of directors on 8 March 2010 and signed
on its behalf by:
William Thomson, Paul Dollman,
Chairman
Group Finance Director
GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY
As at 31 December 2009 (31 December 2008)
Ordinary Share Investment Hedge Retained Capital Total
shares premium in own accounting earnings redemption
account shares reserve reserve
£m £m £m £m £m £m £m
Group
As at 31 15.1 15.8 (3.3) - 13.4 21.6 62.6
December 2008
Profit for the - - - - 15.3 - 15.3
year
Share-based - - - - 0.4 - 0.4
payments
Movement in the - - - (0.9) - - (0.9)
year
Actuarial loss - - - - (36.1) - (36.1)
(net of deferred
tax)
Exchange - - - - (1.7) - (1.7)
adjustments
As at 31 15.1 15.8 (3.3) (0.9) (8.7) 21.6 39.6
December 2009
As at 29 15.0 15.1 (3.4) - 60.1 21.6 108.4
December 2007
Loss for the - - - - (1.2) - (1.2)
year
Dividends - - - - (15.5) - (15.5)
New share 0.1 0.7 - - - - 0.8
capital issued
Movement in own - - 0.1 - - - 0.1
shares
Share-based - - - - 0.4 - 0.4
payments
Actuarial loss - - - - (35.1) - (35.1)
(net of deferred
tax)
Exchange - - - - 4.7 - 4.7
adjustments
As at 31 15.1 15.8 (3.3) - 13.4 21.6 62.6
December 2008
Company
At 31 December 15.1 15.8 - - 4.2 21.6 56.7
2008
Profit for the - - - - 63.4 - 63.4
year
Movement in the - - - (0.9) - - (0.9)
year
Actuarial loss - - - - (36.1) - (36.1)
(net of deferred
tax)
As at 31 15.1 15.8 - (0.9) 31.5 21.6 83.1
December 2009
At 29 December 15.0 15.1 - - 36.2 21.6 87.9
2007
Profit for the - - - - 18.5 - 18.5
year
Dividends - - - - (15.5) - (15.5)
New share 0.1 0.7 - - - - 0.8
capital issued
Share-based - - - - 0.1 - 0.1
payments
Actuarial loss - - - - (35.1) - (35.1)
(net of deferred
tax)
As at 31 15.1 15.8 - - 4.2 21.6 56.7
December 2008
The profit for the year for the company of £63.4m (2008: £18.5m) is the same
under both IFRS and UK GAAP.
GROUP AND COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 December 2009 (year ended 31 December 2008)
Group Company
2009 2008 2009 2008
Notes £m £m £m £m
Cash flows from operating activities
Cash generated from 11 52.0 39.2 (7.7) (9.9)
operations
Interest received 0.8 2.2 - 0.1
Interest paid (7.9) (17.5) (7.2) (9.6)
Tax (paid)/recovered (5.5) (4.6) (1.3) 0.7
Net cash from operating 39.4 19.3 (16.2) (18.7)
activities
Cash flows from investing activities
Investment in joint 0.9 (8.7) - -
ventures and associates
Loan repaid by joint 2.3 0.5 - -
venture
Loan repaid by associate - 0.1 - -
Proceeds from disposal of 0.6 12.2 -
investments
Acquisition of subsidiaries (1.6) (13.0) - -
Net cash acquired with - 1.2 - -
subsidiaries
Purchase of property, plant (15.1) (40.4) - -
and equipment
Intangible asset additions (4.1) (2.4) - -
Proceeds from sale of 16.9 9.1 6.0 -
property, plant and
equipment
Dividends received 4.2 3.3 - -
Net cash used in investing 4.1 (38.1) - -
activities
Cash flows from financing activities
Net proceeds from issue of - 0.8 - 0.8
ordinary share capital
Repayment of borrowings 10 (54.3) (16.5) (54.3) (16.7)
Proceeds from borrowings 10 14.3 45.9 14.3 45.9
Dividends paid to ordinary - (15.5) - (15.5)
shareholders
Amounts repaid by/(provided - - 49.4 3.9
to) subsidiaries
Net cash from financing activities (40.0) 14.7 9.4 18.4
Increase/(decrease) in net 10 3.5 (4.1) (0.8) (0.3)
cash and cash equivalents
Effects of exchange rate (0.2) 0.3 (0.2) 0.3
movements
Opening net cash and cash 17.2 21.0 0.8 0.8
equivalents
Closing net cash and cash 20.5 17.2 (0.2) 0.8
equivalents*
*Net cash and cash equivalents include cash at bank and in hand and bank
overdrafts.
Notes to the Accounts
The consolidated accounts of the Group for the year ended 31 December 2009 were
approved and authorised for issue in accordance with a resolution of the
directors on 8 March 2010. John Menzies plc is a limited company incorporated
in Scotland and is listed on the London Stock Exchange
1. Accounting policies
A summary of the more significant accounting policies, which have been
consistently applied, is set out below.
The following new standards, amendments to standards and interpretations have
been issued but are not effective for 2009 and have not been adopted early:-
IFRS 1 '(Amendment) Limited Exemption from Comparative IFRS 7 disclosures' is
effective for periods on or after 1 July 2010
IFRS 2 '(Amendment) Group Cash-settled Share-based Payment Transactions' is
effective for periods on or after 1 January 2010
IFRS 3 'Business Combinations (Revised)' is effective for annual periods on or
after 1 July 2009
IFRS 9 'Financial Instruments: Classification & Measurement' is effective for
periods on or after 1 January 2013
IAS 24 '(Revised) Related Party Disclosures' is effective for periods on or
after 1 January 2011
IAS 27 'Consolidated and Separate financial statements (Revised)' is effective
for annual periods on or after 1 July 2009
IAS 32 '(Amendment) classification of right Issues' is effective for annual
periods on or after 1 February 2010
IAS 39 '(Amendment) Eligible Hedged items' is effective for annual periods on
or after 1 July 2009
IFRIC 14 '(Amendment) Prepayments of a Minimum Funding Requirement' is
effective for periods on or after 1 January 2011
IFRIC 17 'Distribution of non-cash Assets to owners' is effective for annual
periods on or after 1 July 2009
IFRIC 18 'Transfers of assets from customers' is effective for annual periods
on or after 1 July 2009
IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments' is
effective for periods on or after 1 July 2010
The Group has adopted the following new and amended IFRS's as of 1 January
2009:
The adoption of IAS 1 (revised) has required the reconciliation of movements in
equity, previously disclosed in Note 21 in the accounts for the year ended 31
December 2008, to be presented as a primary statement entitled 'Statement of
Changes in Equity'. In addition the Statement of Recognised Income and Expense
has been replaced with the Statement of Comprehensive Income.
IFRS 7 'Financial Instruments: Disclosures' required additional disclosures as
shown in Note 16.
IFRS 8 'Operating segments' . In adopting IFRS 8 the Group has concluded that
the operating segments were the same as the business segments determined under
IAS 14 'Segmental Reporting'. Details of these operating segments are disclosed
in Note 2.
IAS 23 `Borrowing costs'. In adopting IAS 23 (revised) the Group has amended
its accounting policy and, from 1 January 2009, now capitalises borrowing costs
on qualifying assets. The implementation of this policy has had no material
impact on the Group's accounts.
As permitted by section 408 of the Companies Act 2006 no income statement is
presented for the Company.
Basis of consolidation
The consolidated accounts, which have been prepared under the historical cost
convention and in accordance with EU Endorsed International Financial Reporting
Standards (IFRS), IFRIC interpretations and the Companies Act 2006 applicable
to companies reporting under IFRS, incorporate the accounts of the Company and
its subsidiaries, joint ventures and associates from the effective date of
acquisition or to the date of deemed disposal.
The consolidated accounts of the Group include the assets, liabilities and
results of the Company and subsidiary undertakings in which John Menzies plc
has a controlling interest, using accounts drawn up to 31 December except where
entities have non-coterminus year ends. In such cases, the information is based
on the accounting period of these entities and is adjusted for material changes
up to 31 December. Accordingly, the information consolidated is deemed to cover
the same period for all entities throughout the Group.
Joint ventures and associates
A joint venture is an entity in which the Group holds an interest on a
long-term basis and which is jointly controlled by the Group and one or more
other venturers under a contractual agreement.
An associate is an undertaking, not being a subsidiary or joint venture, over
which the Group has significant influence and can participate in the financial
and operating policy decisions of the entity.
The Group's share of the results of joint ventures and associates is included
in the Group Income Statement using the equity method of accounting.
Investments in joint ventures and associates are carried in the Group Balance
Sheet at cost plus post-acquisition changes in the Group's share of the net
assets of the entity, less any impairment in value. The carrying values of
investments in joint ventures and associates include acquired goodwill.
Revenue
Distribution - revenue is recognised on the weekly dispatched value of goods
sold, excluding value-added tax.
Aviation - cargo revenue is recognised at the point of departure for exports
and at the point that the goods are ready for dispatch for imports. Other ramp,
passenger and aviation-related services income is recognised at the time the
service is provided in accordance with the terms of the contract. Revenue
excludes value-added and sales taxes, charges collected on behalf of customers
and intercompany transactions.
Property, plant and equipment
Property, plant and equipment is stated at cost, including acquisition
expenses, less accumulated depreciation. Depreciation is provided on a
straight-line basis at the following rates:
Freehold and long leasehold properties - over 50 years
Short leasehold properties - over the remaining lease term
Plant and equipment - over the estimated life of the asset.
Inventories
Inventories, being goods for resale and consumables, are stated at the lower of
purchase cost and net realisable value.
Pensions
The operating and financing costs of pensions are charged to the income
statement in the period in which they arise and are recognised separately. The
costs of past service benefit enhancements, settlements and curtailments are
also recognised in the period in which they arise. The difference between
actual and expected returns on assets during the year, including changes in
actuarial assumptions, are recognised in the statement of comprehensive income.
Pension costs are assessed in accordance with the advice of qualified
actuaries.
With regard to defined contribution schemes, the income statement charge
represents contributions made.
Pension financing costs are now shown separately in the income statement.
Taxation
Current tax is the amount of tax payable or recoverable in respect of the
taxable profit or loss for the period.
Deferred tax is provided in full, using the liability method, on temporary
differences between the carrying amount of an asset or liability in the balance
sheet and its tax base. Deferred tax arising from the initial recognition of an
asset or liability in a transaction, other than a business combination, that at
the time of the transaction affects neither accounting nor taxable profit or
loss, is not recognised. Deferred tax liabilities represent tax payable in
future periods in respect of taxable temporary differences. Deferred tax assets
represent tax recoverable in future periods in respect of deductible temporary
differences, the carry forward of unused tax losses and the carry forward of
unused tax credits.
Deferred tax is determined using the tax rates and tax laws that have been
enacted or substantively enacted at the balance sheet date and are expected to
apply when the deferred tax asset is realised or the deferred tax liability is
settled. Deferred tax is provided on temporary differences arising on
investments in subsidiaries, joint ventures and associates, except where the
timing of the reversal of the temporary difference can be controlled and it is
probable that the temporary difference will not reverse in the foreseeable
future. A deferred tax asset is recognised only to the extent that it is
probable that future taxable profits will be available against which the asset
can be utilised.
Current and deferred tax is recognised in the income statement except if it
relates to an item recognised directly in equity or in other comprehensive
income, in which case it is recognised directly in equity or in the Group
Statement of Comprehensive Income.
Intangible assets
Goodwill
Goodwill arising on consolidation represents the excess of the cost of an
acquisition over the fair value of the Group's share of the net assets of the
acquired subsidiary, associate or joint venture at the date of acquisition.
Goodwill acquired is recognised as an asset and reviewed for impairment at
least annually by assessing the recoverable amount of each cash-generating unit
to which the goodwill relates. When the recoverable amount of the
cash-generating unit is less than the carrying amount, an impairment loss is
recognised.
Any impairment is recognised in the income statement.
Goodwill arising on the acquisition of joint ventures and associates is
included within the carrying value of the investment.
Goodwill arising on acquisitions before 26 December 2004 (the date of
transition to IFRS) has been retained at the previous UK GAAP amounts subject
to being tested for impairment at that date.
Contracts
The fair value attributed to contracts at the point of acquisition is
determined by discounting the expected future cash flows to be generated from
that asset at the risk-adjusted weighted average cost of capital for the Group.
This amount is included in intangible assets as "contracts" and amortised over
the estimated useful life on a straight-line basis. Separate values are not
attributed to internally-generated customer relationships.
Contract amortisation is business-stream dependent. At Distribution, contracts
capitalised are not amortised due to the very long-term nature of the business
in the UK. These contracts are, however, tested annually for impairment using
similar criteria to the goodwill test. At Aviation, contracts are amortised on
a straight-line basis over ten years as this period is the minimum time-frame
management considers when assessing businesses for acquisition.
Development costs
Development expenditure incurred on individual projects is carried forward only
if all the criteria set out in IAS 38 "Intangible assets" are met. Following
the initial recognition of development expenditure, the cost is amortised over
the project's estimated useful life, usually three to five years.
Computer software
Costs associated with developing or maintaining computer software programs are
recognised as an expense as incurred. Costs that are directly attributable with
the production of identifiable and unique software products controlled by the
Group, and that will probably generate economic benefits exceeding costs beyond
one year, are recognised as intangible assets. Direct costs include the costs
of software development employees. Costs are amortised over their estimated
useful lives, usually three to five years.
Leases
Leases are classified as finance leases whenever the terms of the lease
transfer substantially all the risks and rewards of ownership to the lessee.
All other leases are classified as operating leases.
Assets acquired under finance leases are capitalised in the balance sheet at
their fair value or, if lower, at the present value of the minimum lease
payments, each determined at the inception of the lease. The corresponding
liability to the lessor is recorded in the balance sheet as a finance lease
obligation. The lease payments are apportioned between finance charges (charged
to the income statement) and a reduction of the lease obligations.
Rental payments under operating leases are charged to the income statement on a
straight-line basis over applicable lease periods.
Available for sale investments
Investments are classified as available for sale if their carrying amount will
be recovered principally through a sale transaction rather than through
continuing use. Available for sale investments are stated at the lower of
carrying value and fair value less costs to sell.
Trade receivables
If there is objective evidence that the Group will not be able to collect all
of the amounts due under the original terms of an invoice, a provision on the
respective trade receivable is recognised. In such an instance, the carrying
value of the receivable is reduced, with the amount of the loss recognised in
the income statement.
Cash and cash equivalents
Cash and cash equivalents in the balance sheet comprise cash at bank and in
hand and short-term deposits with an original maturity of three months or less.
Bank overdrafts are shown within borrowings in current liabilities in the
balance sheet.
Foreign currencies
Foreign currency assets and liabilities of the Group are translated at the
rates of exchange ruling at the balance sheet date. The trading results of
overseas subsidiaries, joint ventures and associates are translated at the
average exchange rate ruling during the year, with the exchange difference
between average rates and the rates ruling at the balance sheet date being
taken to reserves.
Any differences arising on the translation of the opening net investment,
including goodwill, in overseas subsidiaries, joint ventures and associates,
and of applicable foreign currency loans, are dealt with as adjustments to
reserves. All other exchange differences are dealt with in the income
statement.
Derivative financial instruments and hedging activities
The Group uses forward contracts and cross-currency swaps as derivatives to
hedge the risk arising from the retranslation of foreign currency denominated
items.
The Group has derivatives which are designated as hedges of overseas net
investments in foreign entities (net investment hedges) and derivatives which
are designated as hedges of the exchange risk arising from the retranslation of
highly probable forecast revenue denominated in non-local currency of some of
our overseas operations (cash flow hedges).
In all cases, the derivative contracts entered into by the Group have been
highly effective during the reporting period, and are expected to continue to
be highly effective until they expire. As a result, all derivatives have been
recorded using hedge accounting, which is explained below.
All derivatives are measured at fair value, which is calculated as the present
value of all future cash flows from the derivative discounted at prevailing
market rates.
Changes in the fair value of the effective portion of net investment hedges are
recorded in equity, and are only recycled to the income statement on disposal
of the overseas net investment.
Changes in the fair value of the effective portion of cash flow hedges are
recorded in equity until such time as the forecast transaction occurs, at which
time they are recycled to the income statement. If, however, the occurrence of
the transaction results in a non-financial asset or liability, then amounts
recycled from equity would be included in the cost of the non-financial asset
or liability. If the forecast transaction remains probable but ceases to be
highly probable then, from that point, changes in fair value would be recorded
in the income statement within finance costs. Similarly, if the forecast
transaction ceases to be probable then the entire fair value recorded in equity
and future changes in fair value would be posted to the income statement within
finance costs.
Provisions
Provisions are recognised when the Group has a present obligation (legal or
constructive) as a result of a past event, it is probable that an outflow of
resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.
Share capital
Ordinary shares are classed as equity. Where the Company purchases its own
shares the consideration paid including any directly attributable incremental
costs, is deducted from the equity attributable to the Company's equity holders
until the shares are cancelled, reissued or disposed of.
Share-based payments
Equity-settled share-based payments are measured at fair value at the date of
grant and recognised as an expense over the vesting period. The amount
recognised as an expense is adjusted to reflect the actual number of share
options that vest unless the options do not vest as a result of a failure to
satisfy market conditions. Fair value is measured by use of a relevant pricing
model.
Critical accounting estimates and judgements
The Group makes estimates and assumptions concerning the future. These
estimates will, by definition, seldom equal the related actual results
particularly so given the prevailing difficult economic conditions and the
level of uncertainty regarding their duration and severity.
The Board has considered the critical accounting estimates and assumptions used
in the Accounts and concluded that the main areas of significant risk which may
cause a material adjustment to the carrying amount of assets and liabilities
within the next financial year is in respect of the carrying value of
intangible assets and the assumptions used to calculate pension benefits.
Impairment of long-lived assets
The Group periodically evaluates the net realisable value of long-lived assets,
including goodwill, other intangible assets and tangible fixed assets, having
regard to a number of factors, including business plans, projected results and
discounted future cash flows.
Assets that have an indefinite useful life, such as goodwill, are not subject
to amortisation and are tested annually for impairment or whenever events or
changes in circumstance indicate that the carrying amount may not be
recoverable.
Assets that are subject to amortisation are tested for impairment whenever
events or changes in circumstance indicate that the carrying amount may not be
recoverable.
An impairment loss is recognised for the amount by which the asset's carrying
amount exceeds its recoverable amount. The recoverable amount is the higher of
an asset's fair value less costs to sell and value in use. The fair value is,
in most cases, based on the discounted present value of the future cash flows
expected to arise from the cash generating unit to which the goodwill relates,
or from the individual asset or asset group.
Estimates are used in deriving these cash flows and the discount rate. The
complexity of the estimation process and issues related to the assumptions,
risks and uncertainties inherent with the application of the intangible and
tangible fixed asset accounting policies affect the amounts reported in the
financial statements.
In particular, if different estimates of the projected future cash flows or a
different selection of an appropriate discount rate or long-term growth rate
were made, these changes could materially alter the projected value of the cash
flows of the asset and, as a consequence, materially different amounts would be
reported in the financial statements. These estimates are interlinked and
specific to the circumstances of each asset, so that it is not appropriate to
indicate how reported amounts might change if different estimates were made.
Pensions
The assumptions include corporate bond yields, investment return, price and
salary inflation and mortality assumptions. Full details of assumptions used to
calculate the pension assets and liabilities are found in Note 3.
Exceptional items
Exceptional items are those material items which, by virtue of their size or
incidence, are presented separately in the income statement to enable a full
understanding of the Group's financial performance. These exclude certain
elements of intangible asset impairment and amortisation, which are also
presented separately in the income statement.
Transactions which may give rise to exceptional items include restructurings of
business activities (in terms of rationalisation costs and onerous lease
provisions) and gains or losses on the disposal of businesses.
Dividend distributions
Final ordinary dividends are recognised as liabilities in the accounts in the
period in which the dividends are approved by the Company's shareholders.
Financial risk factors
The Group is exposed to financial risks: liquidity risk, interest rate
fluctuations, foreign exchange exposures and credit risk. More details on these
are disclosed in Note 16.
2. SEGMENT INFORMATION
For management purposes the Group is organised into two operating divisions:
Distribution and Aviation. These two divisions are organised and managed
separately based upon their key markets and each is treated as an operating
segment and reportable segment in accordance with IFRS8.
The operating and reportable segments were determined based on the reports
reviewed by the Board which are used to make decisions about the allocation of
resources between the two divisions.
The Distribution segment provides newspaper and magazine distribution services
across the UK along with marketing services. The Aviation segment provides
cargo and passenger ground handling services across the world.
The Board assesses the performance of the operating segments based on a measure
of adjusted segment result before exceptional items and intangibles
amortisation. Net finance income and expenditure are not allocated to segments
as this type of activity is driven by the central treasury function.
The amounts provided to the Board with respect to total assets and total
liabilities are measured in a manner consistent with that of the Accounts. The
assets are allocated based on the operations of the segment and the physical
location of the asset. The liabilities are allocated based on the operations of
the segment.
The Group's interest bearing liabilities are not considered to be segment
liabilities but rather are managed by the central treasury function.
Segment information is presented in respect of the Group's operating segments
together with additional geographic information. Transfer prices between
segments are set on an arm's length basis.
Segment results Distribution Aviation Corporate Group
2009 £m £m £m £m
Revenue 1,218.5 507.2 - 1,725.7
Operating profit/(loss) 26.7 (1.4) (1.0) 24.3
Share of post-tax results 1.3 2.9 - 4.2
of joint ventures
Share of post-tax results - 1.7 - 1.7
of associates
Operating profit/(loss) 28.0 3.2 (1.0) 30.2
after joint ventures and
associates
Net finance expense (8.2)
Profit before tax 22.0
Analysed as:
Pre-exceptional operating 28.6 15.8 (1.0) 43.4
profit/(loss)*
(Loss)/gain on disposal of - (0.5) 1.7 1.2
property, plant and
equipment (Note 4)
Gain on disposal of - 0.2 - 0.2
interest in joint venture
(Note 4)
Impairment provisions (Note - (2.8) - (2.8)
4)
Onerous lease provision - - (1.7) (1.7)
(Note 4)
Rationalisation costs (Note - (4.7) - (4.7)
4)
Contract amortisation (Note - (3.3) - (3.3)
9)
Share of tax on joint (0.6) (1.5) - (2.1)
ventures and associates
Operating profit/(loss) 28.0 3.2 (1.0) 30.2
after joint ventures and
associates
2008 £m £m £m £m
Revenue 1,166.2 500.9 - 1,667.1
Operating profit/(loss) 22.7 (0.6) (2.7) 19.4
Share of post-tax results 0.1 2.5 - 2.6
of joint ventures
Share of post-tax results - 1.0 - 1.0
of associates
Operating profit/(loss) 22.8 2.9 (2.7) 23.0
after joint ventures and
associates
Net finance expense (13.1)
Profit before tax 9.9
Analysed as:
Pre-exceptional operating 23.9 14.1 (1.5) 36.5
profit/(loss)*
Gain on disposal of - 8.2 - 8.2
interest in joint venture
Impairment provisions (Note (0.8) (4.8) - (5.6)
4)
Onerous lease provision - (3.8) (1.2) (5.0)
(Note 4)
Rationalisation costs (Note - (6.7) - (6.7)
4)
Contract amortisation (Note - (2.5) - (2.5)
9)
Share of interest on joint (0.1) (0.3) - (0.4)
ventures and associates
Share of tax on joint (0.2) (1.3) - (1.5)
ventures and associates
Operating profit/(loss) 22.8 2.9 (2.7) 23.0
after joint ventures and
associates
* Pre-exceptional operating profit/(loss) is defined as operating profit/(loss)
excluding intangible amortisation as shown in Note 4(b) and exceptional items
but including the pre-tax share of results from joint ventures and associates.
Distribution Aviation Corporate Group
2009 £m £m £m £m
Segment assets 184.2 267.9 5.9 458.0
Unallocated assets 51.4
Total assets 509.4
Segment liabilities (124.0) (70.2) (18.5) (212.7)
Unallocated liabilities (257.1)
Total liabilities (469.8)
Segment assets/(liabilities) 60.3 196.4 (11.3) 245.3
Unallocated net liabilities (205.7)
Net assets 39.6
2008 £m £m £m £m
Segment assets 167.6 317.5 3.3 488.4
Unallocated assets 34.6
Total assets 523.0
Segment liabilities (108.3) (80.7) (33.6) (222.6)
Unallocated liabilities (237.8)
Total liabilities (460.4)
Segment assets/(liabilities) 59.3 236.8 (30.3) 265.8
Unallocated net liabilities (203.2)
Net assets 62.6
Unallocated assets comprise deferred tax assets, cash and cash equivalents.
Unallocated liabilities comprise retirement benefit obligations, borrowings,
current income tax liabilities and deferred tax liabilities.
Distribution Aviation Corporate Group
2009 £m £m £m £m
Capital expenditure 7.0 8.1 - 15.1
Depreciation 5.8 18.2 0.9 24.9
Amortisation of intangible 1.2 3.5 - 4.7
assets (Note 9)
Goodwill impairment (Note 4) - 1.8 - 1.8
Gain on disposal of property, - - (1.7) (1.7)
plant and equipment
2008 £m £m £m £m
Capital expenditure 8.7 31.6 - 40.3
Depreciation 5.6 17.1 0.9 23.6
Amortisation of intangible 0.5 2.5 - 3.0
assets (Note 9)
Goodwill impairment (Note 4) - 4.8 - 4.8
(Gain)/loss on disposal of - (0.3) 0.4 0.1
property, plant and equipment
Geographic information
Revenue Segment non-current
assets
2009 2008 2009 2008
£m £m £m £m
United Kingdom 1,369.0 1,316.2 182.9 181.4
Continental Europe 112.5 128.2 35.3 46.4
Americas 126.6 116.9 25.8 32.0
Rest of the World 117.6 105.8 60.3 61.4
1,725.7 1,667.1 304.3 321.2
3. PENSIONS
Pension schemes
With regard to the principal Group-funded defined benefit scheme in the UK (the
Menzies Pension Fund), to which the employees contribute, the charge to the
income statement is assessed in accordance with independent actuarial advice
from Hymans Robertson LLP ("the Actuary"), using the projected unit method.
Certain Group subsidiaries operate overseas and participate in a number of
pension schemes, which are of a defined contribution nature. The income
statement charge for defined contribution schemes represents the contributions
payable.
The pension charge to the income statement is analysed as follows:
2009 2008
£m £m
Menzies Pension Fund 1.6 2.3
Other schemes 7.4 7.1
9.0 9.4
The Actuary undertook a valuation of the Menzies Pension Fund as at 31 December
2009 (2008 : 31 December) under IAS 19.
In deriving the results the Actuary used the projected unit method and the
following financial assumptions:
2009 2008
% %
Rate of increase in salaries 3.50 3.60
Rate of increase in pensions (prior to 1 3.60 3.35
April 2006)
Rate of increase in pensions (after 1 2.50 2.50
April 2006)
Price inflation 3.50 3.10
Discount rate 5.70 6.40
Assumptions regarding future mortality experience are set based on advice from
the Actuary in accordance with published statistics and experience in the
business.
The average life expectancy in years of a pensioner retiring at 65 on the
balance sheet date is:
2009 2008
Male 20.5 18.4
Female 22.3 21.2
The average life expectancy in years of a pensioner retiring at 65, 20 years
after the balance sheet date is:
2009 2008
Male 21.8 19.2
Female 24.3 22.0
Fair value of assets (and expected return on assets)
Long-term Value at Long-term Value at
rate of December rate of December
return 2009 return 2008
% £m % £m
Equities 7.9 141.1 7.3 110.5
Bonds 5.7 46.2 6.1 44.3
Property 6.9 23.9 6.3 26.8
Other 0.5 0.7 2.0 0.8
Total value of assets 211.9 182.4
Defined benefit obligation (296.4) (218.0)
Recognised in balance (84.5) (35.6)
sheet
Related deferred tax asset 23.7 10.0
Net pension liabilities (60.8) (25.6)
Sensitivity analysis
A reduction in the discount rate will increase the assessed value of the
defined benefit obligation and a rise in the discount rate will decrease the
assessed value of the defined benefit obligation. The overall effect of a
change in the discount rate for the Fund of 0.1% would be an increase/decrease
to the defined benefit obligation of around 1.8%/£5.3m.
The effect of changing the assumption regarding life expectancy by one year
longer than the disclosed table would be to increase the assessed value of the
defined benefit obligation by around 3% to £305m.
Components of pension expense
2009 2008
Amounts charged to operating profit £m £m
Current service cost 1.8 2.3
Past service cost 0.2 -
Gains on curtailments and settlements (0.4) -
Total amount charged to the Income 1.6 2.3
Statement
Amounts included in finance costs £m £m
Expected return on pension scheme assets 11.9 15.8
Interest on pension liabilities (13.7) (13.5)
Net financial (charge)/return (1.8) 2.3
Pension expense 3.4 -
Amounts recognised in the Statement of £m £m
Comprehensive Income
Gain/(loss) on assets 26.4 (78.1)
(Loss)/gain on defined benefit obligation (76.4) 29.4
Actuarial loss (50.0) (48.7)
Change in scheme assets during the year £m £m
Fair value of assets at start of year 182.4 250.2
Expected return on assets 11.9 15.8
Company contributions 4.5 3.6
Employee contributions 1.3 1.4
Assets distributed on settlements (1.5) -
Benefits and expenses paid (13.1) (10.5)
Gain/(loss) on assets 26.4 (78.1)
Fair value of assets at end of year 211.9 182.4
The actual return on scheme assets was a gain of £38.3m (2008: a loss of £
62.3m)
Change in defined benefit obligation during £m £m
the year
Defined benefit obligation at start of year 218.0 240.7
Current service cost 1.8 2.3
Past service cost 0.2 -
Interest cost 13.7 13.5
Liabilities extinguished on settlements (1.9) -
Employee contributions 1.3 1.4
Benefits and expenses paid (13.1) (10.5)
Loss/(gain) on defined benefit obligation 76.4 (29.4)
Defined benefit obligation at end of year 296.4 218.0
Expected employer contributions for 2010 are estimated to be £6 million.
History of experience gains and losses
2009 2008 2007 2006 2005
£m £m £m £m £m
Gain/(loss) on scheme assets 26.4 (78.1) (2.7) 12.0 19.8
Percentage of scheme assets 12.5% 42.8% 1.0% 5.0% 9.5%
Actuarial (loss)/gain on (76.4) 29.4 (0.5) 11.4 (29.4)
defined benefit obligation
Percentage of scheme 25.8% 13.5% 0.2% 5.0% 12.2%
liabilities
Total value of assets 211.9 182.4 250.2 237.2 208.5
Defined benefit obligation (296.4) (218.0) (240.7) (231.8) (241.1)
Recognised in balance sheet (84.5) (35.6) 9.5 5.4 (32.6)
4 (a) EXCEPTIONAL ITEMS
2009 2008
Notes £m £m
Gain on disposal of property, (i) 1.2 -
plant and equipment
Gain on disposal of interest in (ii) 0.2 8.2
joint venture
Impairment provisions (iii) (1.0) (3.8)
Onerous lease provision (iv) (1.7) (5.0)
Rationalisation costs (v) (4.7) (6.7)
(6.0) (7.3)
(i) The Group completed a number of property and equipment sale and
leaseback arrangements, which resulted in a gain on disposal of
£1.2m.
(ii) During 2009 the Group disposed of the 50% interest in Freshport
BV for a consideration of £0.6m and in 2008 disposed of the 50%
interest in Talma Menzies SRL for a consideration of £10.3m.
(iii) The 2009 impairment provision reduces the carrying value of the
Group's 40% interest in Menzies Chengdu Aviation Services
Limited, which is held as an available for sale asset, to its
estimated recoverable amount.
During 2008, following a deterioration in the North American
cargo handling market the acquired goodwill in respect of
Aeroground Inc was tested for impairment in accordance with IAS
36 and a goodwill charge of £3.0m (approximately 1/3 of the
original amount capitalised) was recognised. This goodwill
impairment resulted from poor post-acquisition performance
exacerbated by global market conditions. The recoverable amount
of the cash-generating unit was measured based on a value in use
calculation and a pre-tax discount rate of 11.1%. The Group's
investment in associate company Worldwide Magazine Distribution
Ltd was also reviewed for impairment in accordance with IAS 36
and restated to reflect current trading performance. As a
result, an impairment charge of £0.8m was recognised.
(iv) This provision is in respect of future obligations on leasehold
properties, which became empty during 2009 and 2008.
(v) Costs of rationalising excess capacity comprising asset
write-downs and staff redundancy costs in the Aviation business
during 2009 and 2008.
4 (b) INTANGIBLE AMORTISATION
2009 2008
£m £m
Goodwill impairment (i) (1.8) (1.8)
Contract amortisation (ii) (3.3) (2.5)
(5.1) (4.3)
(i) As permitted under the transitional requirements of IFRS1, the
acquisition accounting of business combinations completed prior
to the transition date has not been restated. As a result, assets
which were previously capitalised as goodwill have not been
reclassified as other intangible assets. Accordingly, these
financial statements include an impairment charge of £1.8m (2008:
£1.8m) reflecting the remaining life of the current licence at
Menzies Macau Aviation Services Ltd.
(ii) This charge relates to contracts capitalised as intangible assets
on the acquisition of businesses.
The taxation effect of the exceptional items is a net credit of £
0.6m (2008: £1.1m).
5. FINANCE COSTS
2009 2008
£m £m
Finance income:
Bank deposits 0.6 2.3
0.6 2.3
Finance charges:
Bank loans and overdrafts (6.9) (9.9)
Preference dividends (0.1) (0.1)
Foreign currency loss - (7.7)
(7.0) (17.7)
Net finance costs (6.4) (15.4)
During 2008 the Group executed cross-currency basis swaps which reduced its
interest costs by £1.0m. The foreign currency loss incurred of £7.7m was
exactly matched by tax relief of £7.7m. The tax relief comprised £2.2m at the
standard rate of corporation tax in the UK of 28% and a non-taxable exchange
gain of £5.5m.
6. TAXATION
2009 2008
(a) Analysis of charge in year £m £m
Current tax
UK corporation tax on profits for the year - 0.8
Overseas tax 3.2 4.8
Adjustments to prior years' liabilities (0.5) -
Total current tax 2.7 5.6
Deferred tax
Origination and reversal of temporary 3.8 4.5
differences
Adjustments to prior years' liabilities (0.1) -
3.7 4.5
Retirement benefit obligations 0.3 1.0
Total deferred tax 4.0 5.5
Tax on profit on ordinary activities 6.7 11.1
(b) Current and deferred tax related items credited directly to equity
Deferred tax on actuarial loss on retirement (14.1) (13.6)
benefit obligations
Deferred tax on fair value movement on (0.3) -
interest rate hedges
Current tax on net exchange adjustments 0.2 (0.7)
Tax credit reported in equity (14.2) (14.3)
c) Reconciliation between tax charge and the product of accounting profit
multiplied by the Group's domestic tax rate for the years ended 31 December
2009 and 31December 2008 is as follows:
Profit before tax 22.0 9.9
Profit before tax multiplied by standard 6.2 2.8
rate of corporation tax in the UK 28% (2008:
28.5%)
Non-deductible expenses (principally 2.2 2.8
goodwill impairment and intangible
amortisation)
Depreciation on non-qualifying assets 0.1 0.4
Unrelieved overseas losses 2.1 3.8
Profits covered by losses forward (0.7) (0.6)
Higher tax rates on overseas earnings 0.2 0.8
Deferred tax on undistributed reserves of (0.6) 0.1
associate
Joint venture and associate post-tax result (1.7) (1.0)
(included in profit before tax)
Adjustments to prior years' liabilities (0.6) -
Overseas deferred tax assets (recognised)/ (i) (0.5) 3.9
written-off
Increase in deferred tax liability due to (ii) - 5.4
the abolition of industrial buildings
allowances
Non-taxable exchange gain - (5.5)
Tax-exempt gain on disposal of interest in - (1.8)
joint venture
At the effective corporation tax rate of 6.7 11.1
30.5% (2008: 112.1%)
(i) In 2009 the Group recognised deferred tax assets in relation to losses
carried forward by a subsidiary operating in South Africa. In prior years the
Group recognised deferred tax assets in relation to losses carried forward by,
and other temporary differences available to, subsidiaries operating mainly in
the Netherlands and the USA. Trading conditions in these territories were such
that it was no longer possible to say with a degree of certainty that, in the
short-term, future taxable profits would be available against which the carry
forward tax losses, and other temporary differences, could be utilised. As a
consequence, the Group wrote-off £3.9m of deferred tax assets in 2008.
(ii) The phased abolition of industrial buildings allowances by the end of
March 2011 was enacted in the Finance Act 2008. As a consequence, there was a
one-off increase in the Group's deferred tax liability of £5.4m in 2008.
(d) Factors that may affect future tax charges
The Group has estimated tax losses carried forward, which arose in subsidiary
companies operating in the undernoted jurisdictions, that are available for
offset against future profits of those subsidiaries. Deferred tax assets have
not been recognised in respect of these losses as they have arisen in
subsidiaries where it is not probable that future taxable profits will be
available against which such assets could be utilised.
Losses Expiry
£m
USA 31.4 Carry forward indefinitely
Netherlands 24.0 Not earlier than 1 January
2012
Germany 26.1 Carry forward indefinitely
Hungary 1.3 Carry forward indefinitely
Norway 2.4 Carry forward indefinitely
Sweden 1.4 Carry forward indefinitely
The Group has capital losses in the UK of approximately £12.8m that are
available for offset against future taxable gains arising in the UK. No
deferred tax asset has been recognised in respect of these losses.
7. DIVIDENDS
2009 2008
£m £m
Dividends on equity shares:
Ordinary - Final paid in respect of 2008, nil - 11.0
(2007 :18.4p) per share
- Interim paid in respect of 2009, nil - 4.5
(2008: 7.56p) per share
- 15.5
Dividends of £0.1m were waived by employee share trusts during 2008.
Investment in own shares
The Company's ordinary shares are held in trust for an employee share scheme.
At 31 December 2009 the trusts held 1,020,387 (2008: 1,031,387) ordinary 25p
shares with a market value of £3,038,202 (2008: £1,101,006).
8. EARNINGS PER SHARE
Basic Underlying*
2009 2008 2009 2008
£m £m £m £m
Operating profit 24.3 19.4 24.3 19.4
Share of post-tax results of joint 5.9 3.6 5.9 3.6
ventures and associates
Add back:
Exceptional items (Note 4(a)) - - 6.0 7.3
Intangible amortisation (Note 4 - - 5.1 4.3
(b))
Share of tax on joint ventures and - - 2.1 1.5
associates
Net finance costs (8.2) (13.1) (8.2) (5.4)
Profit before taxation 22.0 9.9 35.2 30.7
Taxation (6.7) (11.1) (6.7) (11.1)
Exceptional tax - - (2.6) (1.0)
Earnings for the year 15.3 (1.2) 25.9 18.6
Basic
Earnings per ordinary share 25.8 (2.0)
(pence)
Diluted earnings per ordinary 25.8 (2.0)
share (pence)
Underlying*
Earnings per ordinary share 43.8 31.3
(pence)
Diluted earnings per ordinary 43.8 31.3
share (pence)
Number of ordinary shares in issue(millions)
Weighted average 59.188 59.445
Diluted weighted average 59.188 59.499
The weighted average number of fully paid shares in issue during the
year excludes those held by the employee share trusts. The diluted
weighted average is calculated by adjusting for all outstanding share
options which are potentially dilutive i.e. where the exercise price is
less than the average market price of the shares during the year.
* Underlying earnings are presented as an additional performance
measure. They are stated before exceptional items, intangible
amortisation and share of tax on joint ventures and associates.
9. INTANGIBLE ASSETS
Computer
Goodwill Contracts Software Total
£m £m £m £m
Cost
At 31 December 2008 60.0 51.9 6.2 118.1
Additions 0.1 0.2 3.8 4.1
Transferred from fixed assets - - 2.6 2.6
Currency translation (1.8) (2.1) - (3.9)
At 31 December 2009 58.3 50.0 12.6 120.9
Amortisation and impairment
At 31 December 2008 8.1 4.4 3.5 16.0
Amortisation charge - 3.3 1.4 4.7
Currency translation - (0.3) - (0.3)
At 31 December 2009 8.1 7.4 4.9 20.4
Net book value
At 31 December 2009 50.2 42.6 7.7 100.5
At 31 December 2008 51.9 47.5 2.7 102.1
£m £m £m £m
Cost
At 29 December 2007 44.1 34.2 4.8 83.1
Acquisitions 2.3 9.6 - 11.9
Additions - 1.0 1.4 2.4
Currency translation 13.6 7.1 - 20.7
At 31 December 2008 60.0 51.9 6.2 118.1
Amortisation and impairment
At 29 December 2007 0.1 1.4 3.0 4.5
Amortisation charge - 2.5 0.5 3.0
Impairment provision (Note 4 3.0 - - 3.0
(a))
Currency translation 5.0 0.5 - 5.5
At 31 December 2008 8.1 4.4 3.5 16.0
Net book value
At 29 December 2008 51.9 47.5 2.7 102.1
At 30 December 2007 44.0 32.8 1.8 78.6
Goodwill acquired through business combinations and intangible assets with
indefinite lives have been allocated at acquisition to cash generating units
(CGU's) that are expected to benefit from the business combination. The
carrying amount of the goodwill and intangible assets with indefinite lives
have been allocated to the operating units as per the table below.
2009 2008
Goodwill Contracts Goodwill Contracts
£m £m £m £m
Aviation
Netherland Cargo 8.3 - 9.0 -
North American Cargo 7.8 - 8.7 -
Australia Cargo 6.0 - 5.3 -
UK Cargo 2.6 - 2.6 -
South Africa 2.9 - 2.5 -
Scandinavia 2.9 - 2.9 -
Ogden worldwide 9.2 - 10.3 -
Other 4.3 - 4.3 -
44.0 - 45.6 -
Distribution
Turners News 4.8 - 4.8 -
EM News Distribution (NI) Ltd - 3.1 - 3.1
Chester Independent Wholesale - 7.1 - 7.1
News Ltd
North West Wholesale News Ltd - 2.7 - 2.7
The Network - field marketing - 1.4 - 1.4
Other 1.4 4.2 1.5 4.3
6.2 18.5 6.3 18.6
Total 50.2 18.5 51.9 18.6
The Group tests goodwill and intangible assets with indefinite lives annually
for impairment, or more frequently if there are indications that these might be
impaired. The basis of these impairment tests including key assumptions are set
out below.
The recoverable amounts of the cash-generating units (CGUs) are determined from
value in use calculations. These calculations use future cash flow projections
based on financial forecasts approved by management. The key assumptions for
these forecasts are those regarding revenue growth, net margin and the level of
working capital required to support trading, which management estimates based
on past experience and expectations of future changes in the market.
The discount rate assumptions use an estimate of the Group's weighted average
post-tax cost of capital calculated at 5.3% plus an adjustment for the
uncertainty risk attributable to individual CGU's. The pre-tax discount rate
used is 11.1% (2008: 11.1%).
Aviation
Value in use calculations are based on Board approved plans for 2010 and 2011
extrapolated to a 10-year period as this timeframe is more representative of
the industry's normal investment period. Short-term revenue growth rates over
the period to 2014 range from -8.9% to +10% and reflect management's specific
location expectations and the expected recovery in cargo volumes over the
period that are now being reported by IATA. Thereafter, revenue growth rates
range from 0.5% to 3.5% and are derived using the best available market
information (such as Boeing's 2009 Aviation Industry Review) adjusted for the
specific risks and challenges relating to Menzies Aviation. Net margin
assumptions are based on historic experience.
Base case forecasts show significant headroom above carrying value for each CGU
with the exception of the UK and North American cargo operations. Sensitivity
analysis has been undertaken for each CGU to assess the impact of any
reasonably possible change in key assumptions. With the exception of the UK and
North American cargo operations there is no reasonably possible change that
would cause the carrying values to exceed recoverable amounts.
In respect of the UK and North American cargo operations, management has
concluded that a reasonably possible change in a key assumption could cause the
carrying values to exceed recoverable amounts. Under the current assumptions,
the recoverable amount exceeds carrying amount by £0.1m for UK cargo and £0.6m
for North American cargo. Any decrease in the expected growth rate for UK cargo
(4% average over the period to 2014 thereafter 3%) and a decrease of 0.1% for
North American cargo (3.6% average over the period to 2014 thereafter 1.2%)
will result in the respective carrying values being equal to recoverable
amounts.
Distribution
Contract amortisation is business-stream dependent. At Distribution, contracts
capitalised are not amortised due to the very long-term nature of the business
in the UK. These contracts are, however, tested annually for impairment using
similar criteria to the goodwill test.
Value in use calculations are based on Board approved plans for 2010
extrapolated to a 10-year period using a long-term growth rate of 0%. Net
margin assumptions are based on historic experience.
Base case forecasts show significant headroom above carrying value for each
CGU. Sensitivity analysis has been undertaken for each CGU to assess the impact
of any reasonably possible change in key assumptions. There is no reasonably
possible change that would cause the carrying values to exceed recoverable
amounts.
10. ANALYSIS OF CHANGES IN NET BORROWINGS
2008 Cash Currency 2009
flows translation
£m £m £m £m
Cash at bank and in hand 19.6 12.1 (0.2) 31.5
Bank overdrafts (2.4) (8.6) - (11.0)
Net cash and cash equivalents 17.2 3.5 (0.2) 20.5
Bank loans due within one year (56.0) 54.3 0.1 (1.6)
Loan stock due within one year (0.1) - - (0.1)
Preference shares (1.4) - - (1.4)
Finance leases (0.3) - - (0.3)
Debt due after one year (124.4) (26.5) 2.4 (148.5)
Net derivative liabilities (17.6) 12.2 4.5 (0.9)
(182.6) 43.5 6.8 (132.3)
The currency translation movement results from the Group's policy of hedging
its overseas net assets, which are denominated mainly in US$ and Euro. The
translation effect on net debt is offset by the translation effect on net
assets resulting in an overall net exchange loss of £1.7m (2008: gain of £
4.7m). This net loss/gain is recognised directly in equity.
11. CASH GENERATED FROM OPERATIONS
Group Company
2009 £m 2008 £m 2009 £m 2008 £m
Operating profit/(loss) 24.3 19.4 - (5.4)
Depreciation 24.9 23.6 0.9 1.0
Amortisation of intangible 4.7 3.0 - -
assets
Impairment provisions (Note 4 1.0 3.8 - -
(a))
Share-based payments 0.4 0.4 - 0.1
Cash spend on dilapidations on - (3.0) - (3.0)
onerous lease
Onerous lease provisions 1.7 5.0 1.7 1.2
Cash spend on onerous leases (2.0) (1.0) (0.6) -
(Gain)/loss on sale of property, (1.7) 0.1 (1.7) -
plant and equipment
Gain on disposal of investment (0.2) (8.2) - -
in joint venture
Pension charge 1.6 2.3 0.2 0.2
Pension contributions in cash (4.5) (3.6) (4.5) (3.6)
Rationalisation costs 4.7 6.7 - 0.8
Cash spend on rationalisation (6.1) (5.3) (0.3) -
costs
(Increase)/decrease in (2.7) 3.1 - -
inventories
(Increase)/decrease in trade and (2.2) (9.3) (0.6) 0.2
other receivables
Increase/(decrease) in trade and 8.1 2.2 (2.8) (1.4)
other payables and provisions
52.0 39.2 (7.7) (9.9)
12. FINANCIAL INSTRUMENTS
Group Company
2009 2008 2009 2008
£m £m £m £m
Derivative financial
instruments
Cash Flow Hedges
Foreign exchange forward - (2.2) - (2.2)
contracts
Interest rate swaps (1.2) - (1.2) -
Foreign Currency Net Investment
Hedge
Foreign exchange forward 0.3 (15.4) 0.3 (15.4)
contracts
Total derivative financial (0.9) (17.6) (0.9) (17.6)
instruments
Current 0.3 (16.7) 0.3 (16.7)
Non-current (1.2) (0.9) (1.2) (0.9)
(0.9) (17.6) (0.9) (17.6)
The Group only enters into derivative financial instruments that are
designated as hedging instruments.
The fair values of the derivative financial instruments are included at
the amount at which the instrument could be exchanged in a current
transaction between willing parties, other than a forced or liquidation
sale. The derivative financial instruments are classified as
non-current based on the remaining maturity of the related hedged item.
Fair Value Hierarchy
As at 31 December 2009, the Group held the following financial
instruments measured at fair value. The Group uses the following
hierarchy for determining and disclosing the fair value of financial
instruments by valuation technique:
Level 1 quoted (unadjusted) prices in active markets for identical
: assets or liabilities
Level 2 other techniques for which all inputs which have a significant
: effect on the recorded fair value are observable, either
directly or indirectly
Level 3 techniques which use inputs which have a significant effect on
: the recorded fair value that are not based on observable
market data
Assets measured at fair value
Financial assets at fair value Total Level 1 Level 2 Level 3
through the income statement
£m £m £m £m
Foreign exchange contracts - 2.6 - 2.6 -
hedged
Liabilities measured at fair value
Financial liabilities at fair Total Level 1 Level 2 Level 3
value through the income
statement £m £m £m £m
Foreign exchange contracts - 2.3 - 2.3 -
hedged
Interest rate swaps 1.2 - 1.2 -
During the year ended 31 December 2009, there were no transfers between Level 1
and Level 2 fair value measurements, and no transfers into and out of Level 3
fair value measurements
Group Company
2009 2008 2009 2008
£m £m £m £m
Interest-bearing loans and
borrowings
Obligations under finance 0.3 0.3 - -
leases
Bank overdrafts 11.0 2.4 10.8 1.7
Non-amortising bank loans 122.8 151.7 122.8 151.7
Amortising term loan 27.2 28.7 27.2 28.7
Preference shares 1.4 1.4 1.4 1.4
Unsecured loan stock 0.1 0.1 - -
Total interest-bearing loans & 162.9 184.6 162.3 183.5
borrowings
Current 12.8 58.6 12.2 57.7
Non-current 150.1 126.0 150.1 125.8
162.9 184.6 162.3 183.5
Interest-bearing loans and Maturity
borrowings
Obligations under finance leases January 2011 - July 2013
Bank overdrafts n/a
Non-amortising bank loans June 2010 - January 2013
Amortising term loan March 2020
Preference shares Non-redeemable
Unsecured loan stock On demand (by July 2012)
Other than trade receivables and payables, there are no financial
assets or liabilities excluded from the above analysis.
No financial assets or liabilities were held or issued for trading
purposes.
The Company has issued 1,394,587 cumulative preference shares of £1
each. These shares are not redeemable and pay an interest coupon of 9%
semi-annually.
The amortising term loan is repayable between 2010 and 2020 with
interest payable at a fixed rate of 6.23%.
The loan has a weighted average maturity of 5 years (2008: 6 years).
Non-amortising bank loans are drawn against unsecured, committed
revolving bank credit facilities maturing between June 2010 and January
2013.
Group Company
2009 2008 2009 2008
£m £m £m £m
Net Debt
Derivative financial 0.9 17.6 0.9 17.6
instruments
Interest-bearing loans and 162.9 184.7 162.3 183.5
borrowings
Total borrowings 163.8 202.2 163.2 201.1
Less: cash at bank, cash in 31.5 19.6 10.5 2.6
hand and short-term deposits
132.3 182.6 152.7 198.5
2009 2008
Book Fair Book Fair
value value value value
£m £m £m £m
Financial assets and financial
liabilities
Short-term borrowings 1.8 1.9 56.1 56.3
Medium-term borrowings 131.5 132.4 104.9 105.9
Long-term borrowings 18.4 20.2 20.8 23.4
Derivative financial 0.9 0.9 17.6 17.6
instruments
Finance leases 0.2 0.2 0.3 0.3
Bank overdrafts 11.0 11.0 2.4 2.4
Total financial assets and 163.8 166.7 202.2 206.0
financial liabilities
Less: cash at bank, cash in 31.5 31.5 19.6 19.6
hand and short-term deposits
Net Debt 132.3 135.2 182.6 186.4
The fair value of the fixed term, amortising borrowing is calculated as the
present value of all future cash flows discounted at prevailing market rates.
Trade and other receivables and trade and other payables carrying values are
assumed to approximate their fair values due to their short-term nature.
A separate table has not been prepared analysing the Company's book values and
fair values. The £0.6m difference in book values relates to interest bearing
loans and borrowings and is deemed to be short-term in nature.
Floating Fixed rate 2009 Total Floating Fixed rate 2008 total
rate financial financial rate financial financial
financial liabilities liabilities financial liabilities liabilities
liabilities liabilities
Currency £m £m £m £m £m £m
Sterling 59.2 103.7 162.9 131.4 30.2 161.6
Euro - - - 4.4 - 4.4
US dollar - - - 18.6 - 18.6
Net 0.9 - 0.9 17.6 - 17.6
derivative
liabilities
60.1 103.7 163.8 172.0 30.2 202.2
Group Company
As 31 December 2009, the 2009 2008 2009 2008
expiry profile of undrawn
committed facilities was as
follows: £m £m £m £m
Less than one year 20.0 19.8 20.0 19.8
Between one and two years 33.9 - 33.9 -
Between two and five years - 2.8 - 2.8
53.9 22.6 53.9 22.6
Cash Flow Hedges
Foreign exchange forward contracts
At 31 December 2009 the Group held foreign currency forward contracts designed
as hedges of transaction exposures arising from non-local currency revenue.
These contracts were in line with the Group's policy to hedge significant
forecast transaction exposures for a maximum 18 months forward.
The cash flow hedges of non-local revenue were assessed to be highly effective.
Interest rates swaps
The Group's policy is to minimise exposures to interest rate risk by ensuring
an appropriate balance of long-term and short-term floating rates.
During 2009 the Group hedged the exposure to interest rate rises by entering
into £75m of interest rate swap agreements, whereby the Group pays a fixed rate
of interest and receives a variable rate of LIBOR+margin on the notional
amount.
£50m of these interest rate swaps mature in July 2011 with the remaining £25m
maturing in June 2012.
At 31 December 2009, 68.1% (2008: 22.0%) of the Group's borrowings were fixed.
2009 2008
Assets Liabilities Assets Liabilities
£m £m £m £m
Fair value of Cash Flow 0.4 (0.4) - (2.3)
Hedges - currency forward
contracts
Fair value of Cash Flow - (1.2) - -
Hedges - interest rate swaps
0.4 (1.6) - (2.3)
Current 0.4 (0.4) - (1.9)
Non current - (1.2) - (0.4)
0.4 (1.6) - (2.3)
For 2009, if interest rates on UK pound-denominated borrowings had been 0.5%
higher/lower with all other variables held constant, post-tax profit for the
year would have been £0.3m (2008:£0.6m) lower/higher, mainly as a result of
higher/lower interest expense on floating rate borrowings.
Foreign currency net investment hedges
The Group's treasury policy is to hedge the exposure of currency denominated
assets to foreign exchange risk. This is primarily achieved using forward
contracts denominated in the relevant foreign currencies.
Gains or losses on the retranslation of these hedges are transferred to
reserves to offset any gains or losses on translation of the net investments in
the subsidiary undertakings.
The notional principal amounts of the outstanding forward foreign exchange
contracts are:
Group Company
2009 2008 2009 2008
million million million million
Euro EUR 19.4 24.5 19.4 24.5
US dollar USD 34.0 56.0 34.0 56.0
Czech koruna CZK 99.0 319.2 99.0 319.2
Australian AUD 11.9 24.5 11.9 24.5
dollar
New Zealand NZD 5.3 8.1 5.3 8.1
dollar
Swedish krona SEK 12.0 49.1 12.0 49.1
Norwegian krone NOK 5.0 17.5 5.0 17.5
Hungarian forint HUF - 325.0 - 325.0
Indian rupee INR 668.6 1,289.7 668.6 1,289.7
Sterling Equivalent
2009 2008
£m £m
Euro EUR 17.2 23.7
US dollar USD 21.1 38.9
Czech koruna CZK 3.3 11.5
Australian AUD 6.6 11.9
dollar
New Zealand NZD 2.4 3.3
dollar
Swedish krona SEK 1.0 4.3
Norwegian krone NOK 0.5 1.7
Hungarian forint HUF - 1.2
Indian rupee INR 8.9 18.4
2009 2008
Assets Liabilities Assets Liabilities
£m £m £m £m
Fair value of foreign 2.2 (1.9) 0.4 (15.8)
currency net
investment hedges
Current 2.1 (1.8) 0.4 (15.3)
Non-Current 0.1 (0.1) - (0.5)
Foreign currency sensitivity
For 2009, if the UK pound had weakened/strengthened by 10% against the US
dollar or the Euro, with all other variables held constant the effect would
have been:
2009 2008
Change in Change in Effect on Effect on Effect on Effect
GBP/USD GBP/EUR Profit Equity Profit on
Rate Rate Before BeforeTax Equity
Tax
£m £m £m £m
10% 0.5 0.7 0.2 5.1
(10%) (0.5) (0.6) (0.2) (4.2)
10% 0.5 (1.7) 0.5 2.6
(10%) (0.5) 1.4 (0.5) (2.1)
The Group's exposure to foreign currency changes for all other currencies is
not material.
Capital Risk Management
The Group's objectives when managing capital are to safeguard the Group's
ability to continue as a going concern in order to provide returns for
shareholders and benefits for other stakeholders and to maintain an optimal
capital structure to reduce the cost of capital.
Credit Risk
The Group considers its exposure to credit risk at 31 December to be as
follows:
2009 2008
£m £m
Bank deposits 31.5 19.6
Trade receivables 117.8 109.9
149.3 129.5
For banks and financial institutions, the Group's policy is to transact with
independently rated parties with a minimum rating of 'A'. If there is no
independent rating, the Group assesses the credit quality of the counterparty
taking into account its financial position, past experience and other factors.
Liquidity Risk
The Group manages liquidity risk by maintaining adequate reserves and banking
facilities by continuously monitoring forecast and actual cash flows.
The following is an analysis of the Group's financial liabilities and
derivative date financial liabilities into relevant maturity based on the
remaining period at the balance sheet date to the contractual maturity date.
The amounts disclosed in the table are the contractual undiscounted cash flows.
Floating rate interest is estimated using the prevailing rate at the balance
sheet date.
Net values of transaction hedging are disclosed in accordance with the
contractual terms of these derivative instruments.
2009
Due Due Due Due over
within 1 between between 5 years
year
1-2 years 2-4 years
£m £m £m £m
Interest bearing loans (15.6) (77.7) (58.2) (18.0)
and borrowings
Preference shares (0.1) (0.1) (0.1) (1.5)
Other liabilities (0.1) (0.1) - -
Trade and other payables (201.1) (1.3) - -
Financial derivatives (48.7) (14.9) (0.3) -
Total (265.6) (94.2) (58.6) (19.5)
2008
Due Due Due Due over
within 1 between between 5 years
year
1-2 years 2-4 years
£m £m £m £m
Interest bearing loans (63.4) (5.3) (106.9) (20.7)
and borrowings
Preference shares (0.1) (0.1) (0.1) (1.5)
Other liabilities (0.1) - - (0.2)
Trade and other payables (195.8) (0.2) - -
Financial derivatives (89.0) (14.2) - -
Total (348.4) (19.8) (107.0) (22.4)
13. CONTINGENT LIABILITIES
There are contingent liabilities, including those in respect of disposed and
acquired businesses, which are not expected to give rise to any significant
loss to the Group.
In addition, in the normal course of business, the Company has guaranteed
certain trading obligations of its subsidiaries.
14. ACQUISITIONS
On 7 January 2009 Menzies Aviation acquired the trade and fixed assets of Kion,
a ramp services business based at Mexico City airport, for a consideration of £
0.5m, including costs of £0.1m.
A performance-related payment of up to £1.6m may become payable in respect of
The Network (Field Marketing & Promotions) Company Limited, acquired in 2008,
up to May 2011.
15. HEDGE ACCOUNTING RESERVE
This reserve records the portion of the gains or losses on hedging instruments
used as cash flow hedges that are determined to be effective.
16. CASHFLOW
2009 2008
£m £m £m £m
Operating Profit 24.3 19.4
Share-based payments 0.4 0.4
Depreciation 24.9 23.6
Amortisation of 4.7 3.0
intangibles
Net pension movement (1.4) (1.3)
Working capital 3.2 (4.0)
Exceptional items 6.0 7.3
Cash spend on (8.1) (9.3)
exceptional items
Dividends from associates and joint 4.2 3.3
ventures
Non-cash items (0.5) 0.1
Operating cash flow 57.7 42.5
Purchase of property, plant and (15.1) (40.4)
equipment
Intangible asset additions (4.1) (2.4)
Sale of property, plant and 1.0 9.1
equipment
Net capital expenditure (18.2) (33.7)
Net interest paid (7.1) (7.6)
Foreign currency loss - (7.7)
Tax paid (5.5) (4.6)
Free cash flow 26.9 (11.1)
Equity dividends paid - (15.5)
Additional pension (1.5) -
payment
Acquisitions (1.6) (11.8)
Cash raised from asset 16.5 -
sales and leasebacks
Other investments 3.2 4.1
Shares - 0.8
Total movement 43.5 (33.5)
Opening net debt (182.6) (111.3)
Currency movement 6.8 (37.8)
Closing net debt (132.3) (182.6)
17. ACCOUNTING POLICIES
This statement has been prepared in accordance with accounting standards and
policies consistent with those set out in the Group Accounts for the year ended
31 December 2009.
18. ACCOUNTS
The figures used in this statement, which was approved by the directors on 8
March 2010, are not the Group's statutory accounts within the meaning of
Section 434 of the Companies Act 2006 for the year, but are taken from those
accounts. The auditors' report on the statutory accounts was unqualified and
did not contain a statement under Section 428 (4(f)) of the Companies Act 2006.
19. ANNUAL REPORT
The Annual Report and Accounts will be available on 9 April 2010 and the Annual
General Meeting will be held at the Roxburgh Hotel in Edinburgh on 21 May 2010
at 12.15pm. Statutory accounts for the year ended 31 December 2008 have been
delivered to the Registrar of companies and those for the year to 31 December
2009 will be delivered following the Company's Annual General Meeting.
END
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| 02-03-10 | PRN |
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In conformity with Rule 5.6.1 of the Disclosure and Transparency Rules Sourcebook, the Company hereby notifies the market of the following: The Company's issued share capital as at today's date consists of 60,213,907 ordinary shares of 25p each with voting rights. There are no such shares held in treasury. The above figure (60,213,907) may be used by shareholders as the denominator for the calculations by which they will determine if they are required to notify their interest in, or change to their interest in, the Company under the FSA's Disclosure and Transparency Rules. John Geddes Company Secretary 0131 459 8180
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| 12-02-10 | PRN |
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TR-1 (i) NOTIFICATION OF MAJOR INTERESTS IN SHARES 1. Identity of the issuer or the underlying issuer of existing shares to which voting rights are attached (ii):
JOHN MENZIES PLC
An acquisition or disposal of financial instruments which may result in the acquisition of shares already issued to which voting rights are attached An event changing the breakdown of voting rights Other (please specify):
LIMITED
OPPORTUNITIES
MASTER FUND
is crossed
or reached if different) (v):
8. Notified details: A: Voting rights attached to shares
CODE
B: Financial Instruments Resulting situation after the triggering transaction (xii)
N/A N/A N/A N/A N/A
Total (A+B)
9. Chain of controlled undertakings through which the voting rights and/or the financial instruments are effectively held, if applicable (xv):
N/A Proxy Voting: 10. Name of the proxy holder: N/A 11. Number of voting rights proxy holder will cease to hold: N/A 12. Date on which proxy holder will cease to hold voting rights: N/A 13. Additional information: Registered Owner: 14. Contact name: SIMON THORNTON 15. Contact telephone number: 01481 737 600 (Tel #); 01481 710 348 (Fax #) Annex Notification Of Major Interests In Shares (xvi) A: Identity of the person or legal entity subject to the notification obligation JOHN MENZIES PLC Full name (including legal form for legal entities) JOHN MENZIES PLC Contact address (registered office for legal entities) 108 PRINCES STREET, EDINBURGH, EH2 3AA Phone number 0131 225 8555 Other useful information (at least legal representative for legal persons) B: Identity of the notifier, if applicable (xvii) JOHN MENZIES PLC Full name JOHN GEDDES Contact address 108 PRINCES STREET, EDINBURGH, EH2 3AA Phone number 0131 225 8555 Other useful information (e.g. functional relationship with the person or legal entity subject to the notification obligation) C: Additional information Notes i. This form is to be sent to the issuer or underlying issuer and to be filed with the competent authority. ii. Either the full name of the legal entity or another method for identifying the issuer or underlying issuer, provided it is reliable and accurate. iii. This should be the full name of (a) the shareholder; (b) the person acquiring, disposing of or exercising voting rights in the cases provided for in DTR5.2.1 (b) to (h); (c) all the parties to the agreement referred to in DTR5.2.1 (a), or (d) the direct or indirect holder of financial instruments entitled to acquire shares already issued to which voting rights are attached, as appropriate. In relation to the transactions referred to in points DTR5.2.1 (b) to (h), the following list is provided as indication of the persons who should be mentioned:
iv. Applicable in the cases provided for in DTR 5.2.1 (b) to (h). This should be the full name of the shareholder or holder of financial instruments who is the counterparty to the natural person or legal entity referred to in DTR5.2. v. The date of the transaction should normally be, in the case of an on exchange transaction, the date on which the matching of orders occurs; in the case of an off exchange transaction, date of the entering into an agreement. The date on which threshold is crossed should normally be the date on which the acquisition, disposal or possibility to exercise voting rights takes effect (see DTR 5.1.1R (3)). For passive crossings, the date when the corporate event took effect. [DEL::DEL] These dates will usually be the same unless the transaction is subject to a condition beyond the control of the parties. vi. Please refer to the situation disclosed in the previous notification, In case the situation previous to the triggering transaction was below 3%, please state `below 3%'. vii. If the holding has fallen below the minimum threshold , the notifying party should not be obliged to disclose the extent of the holding, only that the new holding is less than 3%. For the case provided for in DTR5.2.1(a), there should be no disclosure of individual holdings per party to the agreement unless a party individually crosses or reaches an Article 9 threshold. This applies upon entering into, introducing changes to or terminating an agreement. viii. Direct and indirect ix In case of combined holdings of shares with voting rights attached `direct holding' and voting rights `indirect holdings', please split the voting rights number and percentage into the direct and indirect columns-if there is no combined holdings, please leave the relevant box blank. x Voting rights attached to shares in respect of which the notifying party is a direct shareholder (DTR 5.1) xi. Voting rights held by the notifying party as an indirect shareholder (DTR 5.2.1) xii If the holding has fallen below the minimum threshold, the notifying party should not be obliged to disclose the extent of the holding, only that the new holding is below 3%. xiii date of maturity / expiration of the finical instrument i.e. the date when the right to acquire shares ends. xiv If the financial instrument has such a period-please specify the period- for example once every three months starting from the [date] xv. The notification should include the name(s) of the controlled undertakings through which the voting rights are held. The notification should also include the amount of voting rights and the percentage held by each controlled undertaking, insofar as individually the controlled undertaking holds 3% or more, and insofar as the notification by the parent undertaking is intended to cover the notification obligations of the controlled undertaking. xvi. This annex is only to be filed with the competent authority. xvii. Whenever another person makes the notification on behalf of the shareholder or the natural person/legal entity referred to in DTR5.2 and DTR5.3.
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| 08-01-10 | PRN |
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JOHN MENZIES PLC: PDMR SHAREHOLDING This form is intended for use by an issuer to make a RIS notification required by DR 3.1.4R(1).
director/person discharging managerial responsibilities should complete
Please complete all relevant boxes in block capital letters.
1. Name of the issuer JOHN MENZIES PLC 2. State whether the notification relates to (i) a transaction notified in accordance with DR 3.1.4R(1)(a); or (ii) DR 3.1.4(R)(1)(b) a disclosure made in accordance with section 793 of the Companies Act 2006; or (iii) both (i) and (ii) (iii) 3. Name of person discharging managerial responsibilities/director MR IAN HARLEY 4. State whether notification relates to a person connected with a person discharging managerial responsibilities/director named in 3 and identify the connected person N/A 5. Indicate whether the notification is in respect of a holding of the person referred to in 3 or 4 above or in respect of a non-beneficial interest
NOTIFICATION IS IN RESPECT OF DIRECTOR NAMED IN 3 ABOVE 6. Description of shares (including class), debentures or derivatives or financial instruments relating to shares ORDINARY £0.25 SHARES 7. Name of registered shareholders(s) and, if more than one, the number of shares held by each of them
MR IAN HARLEY 8. State the nature of the transaction
PURCHASE OF SHARES 9. Number of shares, debentures or financial instruments relating to shares acquired 2,000 10. Percentage of issued class acquired (treasury shares of that class should not be taken into account when calculating percentage) 0.003% 11. Number of shares, debentures or financial instruments relating to shares disposed
N/A 12. Percentage of issued class disposed (treasury shares of that class should not be taken into account when calculating percentage)
N/A 13. Price per share or value of transaction 328.555p 14. Date and place of transaction 08 JANUARY 2010, LONDON 15. Total holding following notification and total percentage holding following notification (any treasury shares should not be taken into account when calculating percentage) 4,000 0.006% 16. Date issuer informed of transaction
8 JANUARY 2010 If a person discharging managerial responsibilities has been granted options by the issuer complete the following boxes
17. Date of grant
N/A 18. Period during which or date on which it can be exercised
N/A 19. Total amount paid (if any) for grant of the option
N/A 20. Description of shares or debentures involved (class and number)
N/A 21. Exercise price (if fixed at time of grant) or indication that price is to be fixed at the time of exercise
N/A 22. Total number of shares or debentures over which options held following notification
N/A 23. Any additional information
N/A 24. Name of contact and telephone number for queries
MR SCOTT IRVINE 0131 225 8555 Name and signature of duly authorised officer of issuer responsible for making notification
MR JOHN GEDDES
COMPANY SECRETARY Date of notification
08 JANUARY 2010
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It would be a good point to make if the business was reliant on air cargo. But my understanding is that of its aviation arm, only 20% or so of revenues come from cargo.
Furthermore, distribution is going great guns - picking up 40% of Dawsons for 500k was an immense deal. Lets look and see if the divi will be restored next APril - but my guess is that we are looking at some more upside... |
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| 23-11-09 | ||||
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i work for them and the amount of cost cutting going on across the 2 companies is massive bumper profits this year
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Independent say buy its time to go
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Expect these to fall air cargo is awfull at the mo, take profits if i were you guys senn
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They have not been approved or issued by Interactive Investor Trading Limited.
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