Rigby Group (RG) Plc & Subsidiary Undertakings. Annual Report 31 March Company Registration No

Transcription

1 Rigby Group (RG) Plc & Subsidiary Undertakings Annual Report 31 March Company Registration No

2 Rigby Group (RG) PLC Annual Report March Overview 1 Officers and professional advisers 6 Chairman s statement 7 Strategic report 11 Directors report 22 Directors responsibilities statement 25 Consolidated profit and loss account 27 Consolidated statement of total recognised gains and losses 28 Consolidated note of historical cost profits and losses 28 Consolidated balance sheet 29 Company balance sheet 30 Consolidated cash flow statement 31 Notes to the financial statements 32 Rigby Group Plc is the trading name of Rigby Group (RG) plc.

3 Rigby Group PLC Overview Technology.Airports.Hotels. Real Estate.Financial.Aviation. 1

4 Rigby Group Overview Rigby Group. 1.8bn revenue 6,000 employees 400m+ assets Technology. 1.72bn revenue 5,000 employees 300m annuity services 6 countries Airports. 2.2m passengers 5 airports operated 60 destinations Hotels. 50m assets 9 hotels 300 bedrooms 500 employees Real Estate. 40 prime London developments 400+ acres commercial development Award winning design Financials. 100m investments 75m financial services 40m private equity fund Aviation. 20 helicopters 150 employees No 1 UK privately owned helicopter company 2

5 RIGBY GROUP (RG) PLC (formerly Rigby Family Holdings Limited) AND SUBSIDIARY UNDERTAKINGS Rigby Group International STRATEGIC REPORT FOR THE YEAR ENDED 31 MARCH World Operational Regions Operating bases in 14 cities United Kingdom France Europe Key Facts Key Facts Key Facts 774m of group revenues (44%) Over 3000 permanent staff 6 Divisions 3 Technology businesses 5 Managed airports 9 hotels 845m of group revenues (48%) Over 2000 staff Operating bases in 23 cities 80m financial services 100m managed services Global services capability 650 staff German Division Dutch Real Estate Division Spain Rest of the World Key Facts Key Facts 2.5% group revenues Technology business 140 staff Operating bases in 6 cities IT distribution in North Africa Aviation Services in the South Atlantic IT Technology business in Dubai Distribution across 9 Middle East countries 3

6 World Operational Regions Operating bases in 14 cities Netherlands UK Germany Romania France North Africa Dubai Spain 4

7 5

8 OFFICERS AND PROFESSIONAL ADVISERS DIRECTORS Sir Peter Rigby P A Rigby J P Rigby S P Rigby H W Campion REGISTERED OFFICE Bridgeway House Stratford-upon-Avon Warwickshire CV37 6YX BANKERS HSBC Bank plc 4th Floor 120 Edmund Street Birmingham B3 2QZ Credit Industriel et Commercial SA (CIC) 57 Rue de la Victoire Cedex 09 Paris France Goldman Sachs International River Court 120 Fleet Street London EC4A 2BE BNP Paribas Immeuble Avenue 11 Centre d affaires Ile de France Nord Rue des Fontanet Nanterre France Sociètè Gènèrale 33 avenue de Wagram BP Cedex 17 Paris France UBS AG London Branch 1 Finsbury Avenue London EC2M 2AN SOLICITORS Wragge Lawrence Graham & Co LLP 2 Snowhill Birmingham B4 6WR DLA Piper UK LLP Victoria Square House Victoria Square Birmingham B2 4DL AUDITOR Deloitte LLP Chartered Accountants & Statutory Auditors Four Brindleyplace Birmingham B1 2HZ 6

9 Rigby Group PLC Chairman s Statement 7

10 A Landmark Year The year to March was a landmark year for the renamed Rigby Group. Following the successful disposal of our European technology distribution businesses in November 2012, we embarked on the transformation of our group by acquiring family owned assets, re branding businesses and acquiring new external businesses. Our group now comprises of six core divisions: technology; airports; hotels; real estate; financial services; and aviation. Sir Peter Rigby 8

11 CHAIRMAN S STATEMENT Rigby Group (RG) plc ( Rigby Group ) is the holding company for the business investments of the Rigby Family. The year to March was a landmark year for the renamed Rigby Group. Following the successful disposal of our European technology distribution businesses in November 2012, we embarked on the transformation of our group by acquiring family owned assets, re branding businesses and acquiring new external businesses. Our group now comprises of six core divisions: technology; airports; hotels; real estate; financial services; and aviation. The technology businesses are principally held by the SCC EMEA Limited group and trade under the SCC brand; The airport businesses are held by the Regional & City Airports Holdings Limited ( RCA ) group; The hotels businesses are held by the Eden Hotel Collection Limited group and trade under the Eden Hotel Collection brand; The real estate businesses are held by the Rigby Group Property Holdings Limited group, and trade under the Rigby & Rigby brand. This division also has a 50% interest in Coventry & Warwickshire Development Partnership LLP. The financial services businesses include investments in cash and structured products held by the ultimate holding company; a recently established private equity business; and leasing businesses which will trade under the Blu Finance brand in the near future; and The aviation businesses are held by the Patriot Aerospace Limited Group, trading under the British International Helicopters brand. During the year, the continuing businesses generated consolidated revenues of 1.71bn ( bn); EBITDA, before exceptional items, of 33.2m; and profit, before taxation and exceptional items, of 15.1m. Net assets at the year end were 257.8m ( m) and our net cash was 123.7m ( m). Our technology division is now ideally placed for future growth. Through the last 39 years we have built SCC into a market leading business in its core geographies of UK, France and Spain. For the first time in over 25 years we now have a single focused technology business and a clear strategy for the development of our services proposition. We are committed to invest in SCC both organically and through an earmarked investment fund of 100m for further strategic acquisitions. M2 represented the first such acquisition in February and we hope to complete further SCC related acquisitions in our current financial year. The group continued its strategic review of the technology division and in June, the group disposed of its entire shareholding in SCC Services BV ( SCC Holland ), which operated in The Netherlands. SCC Holland generated revenues of 76.0m, and incurred operating losses of 3.3m during the year, which are included within discontinued operations in the profit and loss account. Our airports division is now firmly established with three owned assets in Coventry Airport, Exeter International Airport (acquired in June ) and Norwich International Airport (acquired post year end, in June ). We furthermore operate Blackpool International Airport and Derry airports for their owners, together with Daedalus airfield for the Homes and Communities agency. We are an accredited operator of Air Traffic Services across four of our airports. Collectively we transit 2.2m passengers, manage in excess of 1,500 acres of airfields, employ in excess of 500 staff in our owned airports and operate a significant property portfolio. Our hotels business currently owns nine luxury hotels in the Midlands and South West. In January, we acquired a site in Salcombe where we plan to develop a 15m contemporary 50 bedroom hotel, our most ambitious project to date. Bovey Castle, acquired post year end in June, is now our flagship hotel with 64 bedrooms and 14 lodges all located within 275 acres near Dartmoor. We have planned major development projects, including a spa and bedroom block at Mallory Court Hotel; a new bedroom block at The Greenway Spa & Hotel; and a new spa and conference facility at Brockencote Hall. The division currently operates hotels valued in excess of 45m and employs over 500 staff. 9

12 RIGBY GROUP (RG) PLC AND SUBSIDIARY UNDERTAKINGS CHAIRMAN S STATEMENT (continued) Our real estate division continues to develop its two core businesses: super prime London residential development; and commercial property development. Rigby & Rigby has a strong market presence in London. During the year, the business worked on 12 residential projects and, post year end, completed its award winning St Saviours project for a client, which was subsequently sold for 41m. Within our airports division, we now have in excess of 500m of commercial property development opportunities, with 350m Gross Development Value planned at our 4.1m sq. ft. Gateway development surrounding Coventry Airport; an approved 100m scheme surrounding Norwich Airport; and further discrete development schemes totalling 50m at Coventry Airport and Exeter Airport. At the year end, the group had invested in excess of 70m with two private banks, which generated returns in excess of 1.1m. The group will also develop its existing technology Leasing Services businesses in the UK and France which will be rebranded as Blu Finance with the intention of becoming a leading force in the provision of leasing backed technology managed services. The group has also announced its intention to launch a 40m private Equity fund, managed under the Rigby Equity Investments brand. Our aviation division completed the major acquisition of British International Helicopters in May. This positions the group s commercial helicopter business as a significant provider in the commercial helicopter market with major clients including Ministry of Defence, QinetiQ and BBC. Subsequent to year end, the group acquired the Capital Air Charter group. Operating both the Capital Air Charter and Capital Air Ambulance services, the group has a long-standing reputation as an efficient, safe and commercially-capable operator offering executive corporate and private chartered flights, medical repatriation and urgent freight services throughout Europe. The group is undertaking the most significant transformation in its history. We have ambitious projects in every division to transform Rigby Group into a dynamic private business, appropriately diversified and market leading in its capabilities. In the coming years, we see significant opportunities to further increase the profitability of the group across all divisions. The group remains in a very strong position, with a net cash balance at 31 March of 123.7m to support both the organic and acquisitive growth planned for our divisions. We continue to be supported by an excellent management team together with loyal and committed employees; and despite our resources now exceeding 6,000 employees, we feel that the proactive and versatile family spirit remains strong in the group and I hope we continue to nurture this as the group expands and diversifies further. We were delighted to be named Family Business of the Year at the Private Business Awards and the family remains committed to ensuring Rigby Group continues to be recognised as one of the leading UK private businesses. Sir Peter Rigby Chairman & Chief Executive 10

13 Rigby Group PLC Strategic Report 11

14 STRATEGIC REPORT OUR STRATEGY The year to 31 March saw a continuation of the strategy to diversify the Rigby Group from being a principally technology-led group to being a group focused on six core areas: technology; airports; hotels; real estate; financial services and aviation. OUR BUSINESS MODEL Technology SCC - Transforming and enabling. SCC is a Technology Solutions Provider, supplying, integrating and managing our customers IT products and services, and is one of Europe s largest independent IT groups. With a successful heritage of profitable, sustainable growth during 39 years of operation, SCC helps customers to release immediate cost savings and get more for less out of investment in IT infrastructure. As both the marketplace and technologies get ever more complex, businesses are demanding a profitable return on infrastructure investment. SCC s customers include the emergency services and national security organisations as well as private sector logistics, communications and utility businesses across both the UK and Europe. SCC also manages the IT that underpins the foundations of national charities and UK heritage assets and has received pan-government accreditation for its public sector cloud services platform, Sentinel by SCC - enabling the company to provide a new generation of secure, flexible solutions to the UK Government and public sector bodies. We aim to be recognised by our customers, employees, vendors and partners as the Market Leading Technology Solutions Provider around the Infrastructure. Our strategy for increasing profitability and reducing cost for our customers focuses on a number of key areas: Enterprise Infrastructure, Datacentre Hosting & Cloud Infrastructure, IT Outsourcing, Desktop & Workplace, Software & Software Asset Management and Network & Security. Airports Regional and City Airports - Connected. Regional and City Airports ( RCA ) is Rigby Group s highly innovative airport division. RCA owns and operates Exeter International Airport, Norwich International Airport and Coventry Airport, holds management contracts for Blackpool International Airport and City of Derry Airport and is actively building its portfolio of owned or managed airport assets across the next five years. Regional airports are vitally important to the economic development of regions, not just in the UK but across the world. To survive and prosper, smaller regional airports need to cooperate and collaborate - enabling them to benefit from the economies of scale and sharing of best practice traditionally enjoyed by larger hub airports. This is the vision behind RCA. RCA has built a reputation as an efficient, safe and capable airport operator, driving improvements to route development, commercial revenues, operating costs and capital investment in order to deliver a consistently sound commercial return. As RCA grows it is increasingly able to leverage significant buying power and shared expertise. Already employing more than 500 people, RCA is on its way to becoming a leading player in the regional airport sector and is taking advantage of the lack of capacity at major hub airports in the UK to demonstrate how regional airports can ease the strain. 12

15 STRATEGIC REPORT (continued) OUR BUSINESS MODEL (continued) Hotels Eden Hotel Collection - Luxurious and individual. There is something very special about our unique portfolio of carefully chosen hotels. Each one has been selected for the boutique qualities it offers, the beautiful architecture, outstanding food, peaceful surroundings and the sense of total escape and relaxation we offer each and every guest who steps through our doors. Whilst each property in the collection has its own unique character and personality, all uphold the impeccable standards of service, quality and attention to detail for which the Eden Hotel Collection is renowned. The strength of our hotels lies in their individual nature, the care and attention that comes from a personal ownership and our dedicated teams who care deeply about their guests and their hotels. The Eden Hotel Collection currently operates eight luxury hotels: Bovey Castle in Devon, Mallory Court Hotel Hotel in Leamington Spa; Brockencote Hotel in Worcestershire; The Arden Hotel in Stratford-Upon-Avon; Greenway Hotel & Spa in Cheltenham; The Mount Somerset Hotel & Spa in Somerset; The Kings Hotel in Chipping Campden and Buckland Tout-Saints Hotel in Devon. The group also owns and is redeveloping the Tides Reach Hotel in Salcombe, Devon, which will reopen in late Real Estate Rigby & Rigby As one of London s leading developers of prime residential property, both for resale and for our private clients, every home Rigby & Rigby creates is individual and unique. Our name is synonymous with quality, bespoke design and attention to detail. Distinctive amongst London s leading developers, our clients benefit from a highly skilled and diverse in-house team which includes architects, designers, quantity surveyors and procurement professionals. Commercial Development Rigby Group is currently developing a large land bank with 500 million of development opportunities facilitated through its airport investments. Financial Services Investments Rigby Group manages in excess of 70 million of investments in equities, fixed income and commodities through a portfolio of banking partners. Finance Rigby Group s recently rebranded Blu Finance division generates in excess of 100 million of revenue within our Technology division providing integrated technology finance for customer solutions and services. Private Equity Rigby Equity Investments recently announced the launch of a 40 million private equity fund, focusing exclusively on Technology businesses to leverage group knowledge and experience to acquisition targets. 13

16 STRATEGIC REPORT (continued) OUR BUSINESS MODEL (continued) Aviation British International Helicopters - Integrated and versatile. British International Helicopters (BIH) is the UK s largest privately owned helicopter operator and the only Britishowned company operating in the offshore sector. Launched in 1986, BIH operates a fleet of 20 helicopters and employs over 150 personnel. The company is a well-regarded operator of medium and large helicopters with particular expertise in offshore operations and in the defence sector. For more than a decade, the company has operated the Flag Officer Sea Training (FOST) helicopter support programme for the Royal Navy through HMS Raleigh and the sea training areas it manages. BIH also provides the Ministry of Defence with helicopter services in support of British Forces in the Falklands and for troops and materials around the South Atlantic islands. In addition to offshore and defence, BIH comprises four more specialist divisions and a service list that includes Police and Air Ambulance capability; commercial helicopter support including surveying, pipeline patrols, TV mast calibration, load lifting and film work; VIP and commercial charter; flight training for both commercial and private pilots and helicopter engineering across a wide range of helicopter types through UK bases at Newquay, Coventry, Cardiff, Redhill and the Falklands. PRINCIPAL RISKS AND UNCERTAINTIES The senior management team (including the board of directors) of each division are responsible for reviewing the group s risk management process and internal control systems. The management team has considered the nature and significance of risks they are willing to take in pursuit of the group s strategic objectives. The group companies operate in a number of markets, all of which remain very competitive. The group benefits from a number of long standing relationships with many substantial suppliers and customers. All these relationships are the focus of significant management attention at all levels of the organisation to maximise opportunities and minimise any adverse impact on the financial performance of the group. The group s sales are primarily made in sterling and euros and the associated costs relating to this revenue are substantially in the corresponding currency. Where there is any currency risk, the group s treasury function takes out appropriate contracts to manage these exposures. The group is also exposed to financial risk through its financial assets and liabilities. The key financial risk is that proceeds from financial assets are insufficient to fund obligations from liabilities as they fall due. The most important components of financial risk are from interest rates, currency movements, credit, liquidity, cash flow and price. Due to the nature of the group s business, the only financial risks the directors consider relevant are credit, liquidity and funding risk. These are mitigated as follows: Credit risk The group s principal financial assets are cash and trade debtors. The credit risk associated with cash balances is limited as the counter parties have high credit ratings assigned by international credit - rating agencies. The principal credit risk arises therefore from its trade debtors. In order to manage credit risk, the directors set limits for customers based on a combination of payment history and third party credit references. Credit limits are reviewed by the credit control function on a regular basis in conjunction with debt ageing and collection history. A significant proportion of trade debtors are also covered by credit insurance. 14

17 STRATEGIC REPORT (continued) PRINCIPAL RISKS AND UNCERTAINTIES (continued) Liquidity and funding risk The group seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. The group has two principal sources of external funding, which have maturity dates in February 2015 and September Further details are set out in note 22 to the financial statements. The group has significant cash resources arising from the disposal of the Specialist Distribution Group companies during the year ended 31 March. Net cash at 31 March was million ( million), which is available to manage group financing requirements resulting from working capital fluctuations KEY PERFORMANCE INDICATORS The directors review summarised management information relating to group performance on a regular basis and receive detailed management reports and accounts from key subsidiary companies monthly. Performance is monitored through a number of Key Performance Indicators (KPI s) which are integral to the review process. Monthly management information compares performance for the month and year to date against performance in the comparable period in the previous financial year and against the budget set for the current financial year. The financial KPI s that form part of this review process are sales turnover growth, gross profit percentage, overhead costs as a percentage of sales and pre-tax return on sales. Working capital measurement, at a subsidiary level, includes inventory days, trade receivable days sales outstanding, overdue trade receivables and trade payable days. At a group level, the principal non-financial measure is sales revenue per employee. Other non-financial measures at subsidiary level include employee headcount, employee turnover and a number of operational KPI s in relation to the company s performance in respect of contractual arrangements with both customers and suppliers. The table below sets out the key Group KPI s: KPI 6 Turnover growth % 2.2% Gross profit percentage % 11.6% Overhead costs percentage % 11.3% Return on sales 4 0.9% 0.0% Revenue per employee () Return on Net Assets 7 3.7% 38.4% 1 Turnover growth measures the change in turnover from continuing operations 2 Gross profit percentage is defined as gross profit from continuing operations expressed as a percentage of turnover from continuing operations 3 Overhead costs percentage is defined as the aggregate of distribution costs and administrative expenses of continuing operations excluding exceptional items expressed as a percentage of turnover from continuing operations 4 Return on sales is defined as the profit or loss before taxation and exceptional items from continuing operations expressed as a percentage of turnover from continuing operations 5 Revenue per employee is defined as total turnover divided by the total average number of employees throughout the year 6 Due to the disposal of the SCC Services BV (formerly SCH Nederland BV) business in the current year the prior year KPI information has been restated to exclude this entity in order to be comparable with the current year KPI s 7 Return on Net Assets is defined as total net profit before taxation as a percentage of net assets at the year end. 15

18 STRATEGIC REPORT FOR THE YEAR ENDED 31 MARCH FACTS, FIGURES AND KEY METRICS BY DIVISION Technology 1,735m Revenue 11.5% Gross Profit 200.1m 1.8% 0.8% EBITDA 32.0m PBT 14.1m 11% RONA No.1 market position in France No. 2 market position in UK 69% Cloud Services growth 4,800 employees 650 employees in Romania growing at 70% 128.5m of net assets 34.2m of EBITDA in continuing businesses Airports 21.6m 37.0% Revenue Gross Profit 8.0m 4.3% EBITDA 0.9m -0.7% PBT ( 0.2m) 5.4% RONA 2.2m passengers 60 destinations served Over 1,500 acres 550 employees 47.0m of tangible fixed assets Hotels 9.9m 78% Revenue Gross Profit 7.8m 4.2% EBITDA 0.4m 1.6% PBT 0.2m 0.6% RONA 300 bedrooms 500 employees 44.6m of fixed assets 16

19 STRATEGIC REPORT FOR THE YEAR ENDED 31 MARCH Real Estate 6.2m Revenue 19.4% Gross Profit 1.2m 5.0% EBITDA 0.3m 1.4% PBT 0.1m 2.9% RONA 500.0m of gross development value projects 18 projects undertaken in 3 owned Mayfair residential developments Financial services Interest Income 1.1m 70m investments Revenues from leasing of 80m in France and 30m in UK 40m private equity investment fund launching Aviation 9.7m Revenue 56.2% Gross Profit 5.5m -0.9% EBITDA ( 0.1m) -38% PBT ( 3.7m) MOD Contracts in UK and Falkland Islands 20 Helicopters 15.4m of tangible fixed assets Notes and definitions: EBITDA: Earnings Before Interest Taxation Depreciation and Amortisation (of goodwill) and before Exceptional Operating Expenses. PBT: Profit Before Taxation. RONA: Return on Net Assets, being profit before tax as a percentage of consolidated divisional net assets as at 31 March. 17

20 STRATEGIC REPORT (continued) FINANCIAL REVIEW Results The consolidated profit and loss account of the group is set out on page 27. The group had a positive year in challenging economic conditions with turnover from continuing operations increasing to 1,707 million ( million), including 34.2 million generated from businesses acquired during the year. Comparisons with the prior year are difficult due to the acquisitions which took place during the year ended 31 March (including the Eden Hotel Collection group and the Coventry Airport business, both acquired on 31 March, and the Patriot Aerospace businesses which were acquired part way through the prior year), and the disposals which took place during the year ended 31 March. The operating profit for the continuing group, before charging exceptional operating expenses of 2.4 million ( million), was 14.7 million ( million). This includes operating profit of 1.6 million generated by businesses acquired during the year. The continuing profit, before taxation and exceptional items, was 15.1 million ( million), an increase of 14.9 million. This is evidence that the group s strategy to improve profitability is starting to bear fruit and the group is confident that profitability will continue to improve further in the forthcoming year. The discontinued operations in relate to SCC Services BV, where the disposal was completed in June. The discontinued operations in the prior year relate to SCC Services BV and the Specialist Distribution Group ( SDG ) businesses in the UK, France and The Netherlands, which were sold in November Discontinued operations generated turnover of 76.0 million ( million) and incurred an operating loss of 3.3 million ( million). The group results in the prior year include a profit on sale of discontinued operations of million which arose on the disposal of the SDG businesses. The loss before taxation attributable to discontinued operations was 3.1 million ( - profit of million). The group has continued to rationalise its cost base following the SDG disposal, although inefficiencies as a result of the separation of the SDG and SCC businesses have continued to suppress profitability during the financial year. It is anticipated that these inefficiencies will be largely eliminated during the 2015 financial year. Actions have also been taken to mitigate losses incurred by certain business, the actions including the disposal of SCC Services BV in The Netherlands post year end. SCC Services BV had remained suboptimal in the Dutch market and had generated operating losses of 3.3 million during the year and 7.0 million during the prior year. The group is also undertaking a strategic review of its aviation businesses, which generated operating losses of 2.9 million (including a goodwill amortisation charge of 2.0 million) during the year. The management structure has been changed, and there has been an increase in the proportion of the business that is underpinned by long term contracts with blue chip customers, such as the Ministry of Defence. Total group profit before tax reduced from million to 9.6 million, however the prior year results included profit before tax of million attributable to discontinued operations. Excluding the discontinued operations, there has been a substantial increase in underlying profits before taxation. The EBITDA (Earnings Before Interest, Taxation, Depreciation, Amortisation and Exceptional costs) was 33.2 million for the continuing group, and 31.0 million for the entire group. 18

21 STRATEGIC REPORT (continued) FINANCIAL REVIEW (continued) Financial position The consolidated balance sheet of the group is set out on page 29. The net assets of the group as at 31 March were million ( million), a decrease of 25.9 million, the principal movements being the retained profit for the year of 6.7 million; an increase in share capital of 2.2 million, being offset by foreign exchange translation losses of 2.5 million; dividends declared and approved of 3.0 million to shareholders; and a dividend of 30.0 million to paid to Rigby Capital Investments Limited, an investment vehicle owned by the principal shareholders. Gross assets were million ( million at the year-end), of which million ( million) comprises tangible and intangible fixed assets. Goodwill increased from 16.8 million to 28.1 million, with the major movements including 16.1 million goodwill arising on the M2 Smile group acquisition, 2.5 million goodwill arising on the British International Helicopters acquisition and 3.8 million goodwill arising on the Rigby & Rigby acquisition. Negative goodwill of 6.7 million arose on the Exeter Airport acquisition. The net goodwill amortisation charge for the year was 4.7 million, which includes a release of negative goodwill of 0.9 million. The group remains committed to large scale investments in tangible fixed assets, which increased by 25.0 million to million. This includes the impact of organic additions of 15.8 million, fixed assets in businesses acquired of 23.7 million and a depreciation charge of 13.1 million. Cash balances decreased by million, from million to million, largely due to cash being invested in structured investment products (included in current asset investments), which increased by 63.8 million; and the dividend of 30.0 million being distributed to Rigby Capital Investments Limited. Borrowings increased by 28.5 million to 60.5 million, including debt of 5.7 million included in businesses acquired during the year. The group has committed financing facilities of million, of which 60.5 million was utilised at year end. The group remains with sufficient cash balances and access to debt to achieve its strategic objectives. Cash flow The consolidated cash flow statement of the group is set out on page 31. Net cash remains strong at million ( million); there has been a reduction of 72.5 million, which was anticipated as a result of the strategy adopted by the group following the SDG disposal in November The group remains committed to making investments to diversify risk and maximise the returns for stakeholders. The main outflows during the year related to acquisitions ( 29.0 million), dividends paid during the year ( 32.4 million), and capital expenditure ( 15.3 million). Working capital management remains a key focus for the group, and actions are being taken to address and reverse the small working capital deterioration experienced as part of the inefficiencies from the SDG disposal. The group s relationship with its funders remains strong, with the group generating net cash inflows of 24.0 million from committed external financing facilities and from loans advanced by related parties. Exceptional Costs The group exceptional operating costs in the continuing group were 2.4 million ( million), which included 0.6 million relating to an ongoing French VAT dispute, 1.1 million relating to restructuring costs in the SCC business in the UK and 0.7 million relating to redundancy costs in the SCC businesses in France. Finance Costs Net finance costs reduced from 5.9 million to net finance income of 0.3 million which all related to continuing operations. Finance income of 3.4 million ( million) included income from current asset investments of 1.1 million and foreign exchange gains of 1.4 million. Finance costs reduced from 6.7 million to 3.1 million, however the prior year included one off foreign exchange losses of 3.0 million. Tax The tax charge for the year was 2.9 million ( - tax credit of 0.6 million), an effective tax rate of 30%. This was higher than the standard UK rate of 23% primarily due to deferred tax movements relating to prior years, unrelieved losses arising in The Netherlands and higher corporate income tax rates in France. 19

22 RIGBY GROUP (RG) PLC AND SUBSIDIARY UNDERTAKINGS STRATEGIC REPORT (continued) ACQUISITIONS As part of its diversification strategy, the group made a large number of acquisitions during the year: Technology division - acquisition of the M2 Smile ( M2 ) group in February for 12.5 million of cash. M2 is the UK s leading independent managed print services business. This key acquisition will see M2 one of only five nationwide independents in a rapidly growing UK sector merge with SCC UK s existing print services operation, enhancing the company s specialist capabilities in that area and underlining its determination to increase market share through a blend of organic growth and acquisition. Airports division - acquisition of Exeter International Airport in June for 2.5 million of cash for shares acquired and 3.0 million of cash to repay intercompany debt from the vendors. Exeter International Airport is the principal aerial gateway to and from the south west of the UK. It has a long history and current sound levels of activity on passenger, freight and general aviation activities. It is the home of Flybe, an important hub for the airline and its maintenance base and aviation academy, and also an important base for Thomson, Thomas Cook, Skybus and others. Airports division - acquisition of Regional & City Airports ( RCA ) in June for 0.3 million. RCA is a specialist airport management company which is focused on operating airports which accommodate up to 3 million passengers a year, cargo, freight, corporate and General Aviation. RCA is responsible for the overall operation of Blackpool and City of Derry Airports Hotels division - acquisition of Tides Reach hotel in January for 3.5 million. Rigby Group intends to redevelop the site to create a luxury waterfront boutique hotel. The new 50-bed hotel, complete with a spa and an extensive terrace with sea views will offer luxurious waterfront accommodation with high quality and contemporary dining with seasonal ingredients sourced from local suppliers. Real Estate division - acquisition of the Rigby & Rigby group in July for 4.5 million. Rigby & Rigby are a super prime London residential developer founded in 2006 and now established as London's leading listed building house developer with in excess of 30 projects. Aviation - acquisition of British International Helicopter Services ( BIH ) in May for 8.3 million of cash for shares acquired and 4.3 million of cash used to repay intercompany debt from the vendors. Launched in 1986, BIH is a well-regarded operator of medium and large helicopters with particular emphasis on offshore operations and in the defence sector. Approved by the Board of Directors and signed on behalf of the Board Sir Peter Rigby Director 26 September 20

23 STRATEGIC REPORT FOR THE YEAR ENDED 31 MARCH BIOGRAPHIES OF BOARD OF DIRECTORS Sir Peter Rigby Sir Peter Rigby is the founder, CEO and Chairman of the Rigby Group. He started the founding company in 1975 and today it is one of the biggest privately owned businesses in the UK. Sir Peter was also the Chairman of the Coventry & Warwickshire Local Enterprise Partnership (CWLEP) until 31 March, which aims to promote businesses and industry growth in the area. He is also a trustee of several key charities, including the Rigby Foundation, his family charitable trust. Steve Rigby Steve Rigby is Chief Operating Officer for the Rigby Group. Through recent years he has led a substantial change in the nature of the group by selling a number of subsidiaries, acquiring a series of businesses and most latterly in November 2012 successfully selling the SDG division. Steve leads on all Rigby Group investments, finance and Mergers & Acquisitions activity. James Rigby James Rigby is Chief Executive of SCC, Rigby Group s IT services business. Under his leadership Europe s biggest independent technology solutions provider has grown rapidly, repeatedly achieving double-digit growth.. George Campion George joined as Non-Executive Director in January 2010 and before his appointment he enjoyed a reputation as one of Birmingham's leading business advisors. George has held various senior roles throughout his 30 year career, first at Andersen and then at Deloitte. 21

24 DIRECTORS REPORT Rigby Group (RG) plc is incorporated as a public limited company and is registered in England with the registration number The directors present their annual report and the audited consolidated financial statements for the year ended 31 March. STRATEGIC REPORT The Companies Act 2006 requires the group to prepare a Strategic Report, set out on pages 11 to 21. The Strategic report includes information about the group s operations and business model, financial performance throughout the year and likely developments, key performance indicators and principal risks. PRINCIPAL ACTIVITIES The principal activity of the company is to be a holding company for the business investments of the Rigby Family. Details of these investments, and the principal activities of the group are provided in the Strategic report. The changes in the group s principal activities during the year under review are also detailed in the Strategic report. The directors are not aware, as at the date of this report, of any likely major changes in the group s activities in the next financial year, other than as mentioned in note 36. The subsidiary undertakings principally affecting the profits or net assets of the group in the year are listed in note 16 to the financial statements. RESULTS AND DIVIDENDS The audited financial statements are set out on pages 27 to 82. The group s activities resulted in a profit before tax of 9,624,000 ( - 108,809,000). The group profit for the year, attributable to shareholders, amounted to 6,728,000 ( - 109,441,000). The capital structure of the company was changed during the year and there was a bonus issue of shares out of profit and loss reserves, as set out in note 24 to the financial statements. The directors paid a dividend of 3.64 ( - Nil) per C ordinary share, totalling 30,000,000 ( - Nil); and declared a final dividend of 0.25 ( - Nil) per D ordinary share, totalling 400,000 ( - Nil) and 0.79 ( - Nil) per E ordinary share, totalling 2,027,000 ( - Nil). The directors also declared final dividends of 85 ( - 85) per A preference share, totalling 612,000 ( - 425,000). In the prior year, the directors declared a final dividend of 0.63 per A ordinary shares, totalling 2,009,000. Dividends are recognised in the financial statements when they are paid, or in the case of the final dividends, when they are approved by the shareholders. ACQUISITIONS AND GOODWILL The group completed several acquisitions during the year and since the year end, which are set out in the Strategic report. Further details of the acquisitions made during the year are set out in notes 2 and 14 to the financial statements. DISPOSALS During the year, in August, the group disposed of its 50% interest in Best Ware Maroc SA, incurring a loss of 33,000. Subsequent to year end, on 12 June, the group disposed of its entire shareholding in SCC Services BV (formerly SCH Nederland BV). The business has been treated as discontinued in the year ended 31 March. Further details of the discontinued operations are set out in note 2 to the financial statements. GOING CONCERN After making enquiries, the directors have a reasonable expectation that the company and group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in note 1 to the financial statements. 22

25 DIRECTORS REPORT (continued) DIRECTORS The directors who served during the year and subsequently were as follows: Sir Peter Rigby (Chairman & Chief Executive) P A Rigby J P Rigby S P Rigby H W Campion Director s indemnities The company has made qualifying third party indemnity provisions for the benefit of its directors which were made during the year and remain in force at the date of this report. POST BALANCE SHEET EVENTS Subsequent to year end, the group completed a number of acquisitions. In June, the group acquired the entire issued share capital of the DV3 Properties Bovey Castle Limited group, which owns and operates the Bovey Castle hotel in Devon. Also in June, the group acquired the entire issued share capital of the Omniport Limited group, which owns a majority stake in, and operates Norwich International Airport. In August, the group acquired a majority shareholding in the Capital Air Charter Holdings Limited group, which operates from Exeter Airport. CHARITABLE DONATIONS AND POLITICAL CONTRIBUTIONS During the year the group made charitable donations of 250,000 ( - 650,000). There were no political contributions made during the year ( - Nil). ENVIRONMENT The group recognises the importance of its environmental responsibilities in all the markets in which it operates. In all activities, working practices, and business relationships, we continuously work towards protecting, conserving and enhancing all aspects of the environment. In order to achieve these objectives, we seek to always meet the necessary regulatory requirements and continue to raise awareness of all employees to environmental issues. The group will always seek to minimise any impact on the environment through appropriate schemes, such as recycling, and manage all sites in an environmentally sensitive manner. We have put in place the necessary systems to manage, control and monitor performance in respect of environmental matters. Since September 2010, our technology business in the UK, SCC, has been working with leading Carbon Management Company CO2 Balance to calculate and offset the carbon dioxide emissions created from the operation of our Data Centres and Recycling facility to achieve CarbonZero status. This has been achieved through our support of projects such as the Energy Efficient Stove Project in Kenya and the Borehole Rehabilitation Project in Uganda. CORPORATE SOCIAL RESPONSIBILITY Corporate Social Responsibility issues are important to our stakeholders and we are determined to fulfil our responsibilities to our customers, employees, suppliers, communities and the global environment. Our approach is supported by our family values. We ensure that our business is conducted to rigorous ethical, professional and legal standards. We operate the business in an environmentally responsible manner, providing high quality and sustainable products and services to our customers with integrity and care; provide our people with a safe and rewarding workplace and act as good neighbours, making positive contributions to the communities in which we operate. 23

26 DIRECTORS REPORT (continued) BUSINESS ETHICS We are committed to ensuring full compliance with legislation relating to bribery and corruption. Our corporate conduct is based on our commitment to acting professionally, fairly and with integrity. The group has a number of fundamental principles and values which it believes are the foundation of sound and fair business practice and as such are important to uphold. We have a zero tolerance position in relation to bribery, wherever and in whatever form that may be encountered. It is our policy to comply with all laws, rules and regulations governing bribery and corruption, in all the countries in which we operate. Our comprehensive policy is applicable to all staff and covers all areas of our operations including Gifts and Hospitality, Events and Sponsorships, the making of all types of payments to businesses, charities or of a political nature and in the operation of credit policies within our businesses. EMPLOYEES Details of the number of employees and associated costs are disclosed in note 9 to the financial statements. Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment with the group continues and that appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees. The group places considerable value on the involvement of its employees and has continued to keep them informed on matters affecting them as employees and on the various factors concerning the performance of the group. This is achieved through formal and informal meetings and communications on the group s internal and external websites. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests. AUDITOR Each of the directors at the date of approval of this report confirms that: so far as the director is aware, there is no relevant audit information of which the company s auditor is unaware; and the director has taken all steps that he/she ought to have taken as a director to make himself/herself aware of any relevant audit information and to establish that the company s auditor is aware of that information. This confirmation is given and should be interpreted in accordance with the provisions of S418 of the Companies Act A resolution to reappoint Deloitte LLP as the company s auditor will be proposed at the forthcoming Annual General Meeting. Approved by the Board of Directors and signed on behalf of the Board Sir Peter Rigby Director 26 September 24

27 DIRECTORS' RESPONSIBILITIES STATEMENT The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the group and company and of the profit or loss of the group for that period. In preparing these financial statements, the directors are required to: select suitable accounting policies and then apply them consistently; make judgments and accounting estimates that are reasonable and prudent; state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the group will continue in business. The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group s and company s transactions and disclose with reasonable accuracy at any time the financial position of the group and company and enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The directors are responsible for the maintenance and integrity of the corporate and financial information included in the group s and company s websites. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. 25

28 26

29 CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 31 MARCH Continuing operations before exceptional items Continuing operations exceptional items Discontinued operations Total Total Note Turnover Existing operations 1,672, ,672,418 1,504,214 Acquisitions 34, ,175 3,235 Continuing operations 1,706, ,706,593 1,507,449 Discontinued operations ,048 76, , ,706,593-76,048 1,782,641 2,201,683 Cost of sales 3 (1,494,238) - (65,877) (1,560,115) (1,980,304) Gross profit 212,355-10, , ,379 Operating expenses before goodwill amortisation and exceptional operating expenses (192,934) - (12,384) (205,318) (210,081) Goodwill amortisation 14 (4,705) - - (4,705) (4,999) Exceptional operating expenses 4 - (2,439) (1,107) (3,546) (21,970) Total operating expenses 3 (197,639) (2,439) (13,491) (213,569) (237,050) Operating profit (loss) Existing operations 13,114 (2,439) - 10,675 (12,962) Acquisitions 1, ,602 (2,231) Continuing operations 14,716 (2,439) - 12,277 (15,193) Discontinued operations - - (3,320) (3,320) (478) 14,716 (2,439) (3,320) 8,957 (15,671) Share of joint ventures operating profit (loss) (1) Profit on sale of discontinued operations ,385 Profit (loss) on ordinary activities before finance charges 14,830 (2,439) (3,074) 9, ,713 Finance income (charges) (net) (5,904) Profit (loss) on ordinary activities before taxation 8 15,137 (2,439) (3,074) 9, ,809 Tax on profit (loss) on ordinary activities 11 (3,373) (2,887) 593 Profit (loss) on ordinary activities after taxation 11,764 (1,953) (3,074) 6, ,402 Equity minority interests 27 (9) - - (9) 39 Profit (loss) for the financial year 26 11,755 (1,953) (3,074) 6, ,441 27