Cox & Kings Sheet 2015 Part II.Pmd
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POISED FOR FUTURE GROWTH Cox & Kings Limited 75th Annual Report 2014-15 Poised For Future Growth Over the last three decades, Cox & Kings Ltd. has transformed itself from an air-ticketing agent in Mumbai into a diversified, multinational travel conglomerate with a focus on the new-age global consumer. The company nurtures a deeply entrepreneurial spirit; embracing change is in our DNA. CONTENTS Cox & Kings is today well established across 23 countries in businesses which range from experiential learning for children to flexible individual holidays and from packaged group tours to hybrid hotels. Fiscal 2014-15 was in summary a year of rejuvenation. We enhanced our dominance in existing markets, forged new partnerships to drive future growth and strengthened our Balance Sheet. If the last few years were characterised by breath-taking change, then FY15 was the year in which the transformation was complete. We look to the future with tremendous confidence and enthusiasm, anchored firmly by our roots. Business Overview 01 Financial Statements Standalone Chairman's Letter 20 Independent Auditor’s Report 98 Board of Directors 22 Financial Statements 102 Financial Highlights 24 Significant Accounting Policies 106 Corporate Information 26 Notes 108 Financial Information of Subsidiary Companies 137 Management Discussion & Analysis 27 Consolidated Statutory Reports Auditor’s Report 144 Directors' Report 41 Financial Statements 148 Report on Corporate Governance 77 Significant Accounting Policies 152 Corporate Social Responsibility Report 95 Notes 155 Annual Report 2014-15 | 01 Poised For Future Growth Over the last three decades, Cox & Kings Ltd. has transformed itself from an air-ticketing agent in Mumbai into a diversified, multinational travel conglomerate with a focus on the new-age global consumer. The company nurtures a deeply entrepreneurial spirit; embracing change is in our DNA. Cox & Kings is today well established across 23 countries in businesses which range from experiential learning for children to flexible individual holidays and from packaged group tours to hybrid hotels. Fiscal 2014-15 was in summary a year of rejuvenation. We enhanced our dominance in existing markets, forged new partnerships to drive future growth and strengthened our Balance Sheet. If the last few years were characterised by breath-taking change, then FY15 was the year in which the transformation was complete. We look to the future with tremendous confidence and enthusiasm, anchored firmly by our roots. 01 Cox & Kings operates in multiple countries across four distinct business verticals. 02 | Cox & Kings Limited A Diversified, Multinational Travel Conglomerate Cox and King is well established across 23 countries, including India, U. K., USA, UAE, Australia and Japan among others. We operate four key verticals; Leisure – India, Leisure – International, Education and Meininger. Leisure – India is best known by the ubiquitous Cox & Kings brand in India, where we are an integrated travel enterprise, offering the best and widest range of travel options to individuals, groups and businesses in the fastest-growing major economy in the world. 16% 4% Leisure – International operates in multiple 29% countries under a plethora of packaged travel 22% brands, including Cox & Kings, Superbreak and Explore, among others. Each brand holds a highly competitive niche market position and enjoys a loyal customer base. 29% Education operates under the brand names PGL and NST, among others, mainly in the U.K. & Australia. Experiential learning is the way forward for children in the 21st century as the classroom method increasingly loses its Leisure - India relevance in creating the workforce of tomorrow. We are experts in this area and Leisure - International intend to take our brands across the world. Education We operate 16 hybrid hotels in Europe under the Meininger brand. Our unique selling Meininger proposition is that we can deliver today’s Others traveller a clean, safe, stay in city-centre locations for as low as €15 per night. 03 The new age consumer invests in her own personal story. 04 | Cox & Kings Limited We Serve the New-age Consumer The new-age consumer thinks and behaves quite differently from her previous avatar. The new-age consumer is more intent on learning and growing through personal experience rather than purchasing goods for self-satisfaction. The next hundred years will be characterized by a sea-change in consumer choices, which sees the average consumer investing more in their own personal story rather than trying to emulate choices made by others. Within consumer services, travel and education will be the most sought-after avenues of personal investment. We intend to play a lead role in this evolving landscape. We have the most suitable brands backed by many decades of experience which will enable us to have a hand in shaping tomorrow’s global citizen and, perhaps, tomorrow’s society. 05 Our rapid growth rate over the last decade has been driven by our employees’ and partners’ spirit of Entrepreneurship. 06 | Cox & Kings Limited We Nurture a Deeply Entrepreneurial Spirit From our humble roots in an office in Mumbai, Cox & Kings Ltd. has grown into a travel conglomerate that spans 23 countries serving millions of customers every year. This could only have been made possible by our commitment to fostering an entrepreneurial spirit among employees and partners. Our successful partnership with franchisees in India is testament to our commitment to the spirit of entrepreneurship. Our franchisee model has evolved from a mere experiment into becoming the mainstay of our Leisure – India business. Indeed, it is now a key source of sustainable competitive advantage in the most exciting market in the world. Each of our multiple businesses at multiple locations in Leisure – International has independent charge of their own operations coupled with the freedom to draw from the parent company’s strengths in other locations. This unique organizational structure creates a spirit of both freedom and accountability which ultimately works for the benefit of our customers and shareholders. In Education, our key managers have been running the business for decades and are as passionate today as they were when they had first joined. They have largely been responsible for the business reaching its enduring market leadership and they will play an instrumental role in taking the brands global. At Meininger, we have a very young workforce, which keeps the atmosphere lively and convivial, in consonance with the relative youth of our guests. 07 We have strengthened our Balance sheet through a slew of measures. 08 | Cox & Kings Limited Cox & Kings has a strong Balance Sheet We embarked on an ambitious debt reduction program in FY14 and at the end of FY15 we can proudly say that we have been successful. We completed a R1,000-crore qualified institutional placement of equity shares at a price of R305 per share in November 2014. The issue was subscribed to by marquee global and Indian institutional investors. The process of sale of the non-core business of Camping, which kicked off in FY14, was completed in September 2014 for a gross consideration of GBP89.2 million. Net debt/shareholders’ funds We also received a sum of R56 crores from the promoters as upfront contribution for warrants issued in January 2015 convertible 1.6x into equity shares within 18 months at a price of R309.85 per share. All these steps, together with cash flows from operations, enabled us to reduce our net debt to Shareholders’ funds ratio to a very comfortable 0.7x in FY15 from 1.6x at the end 0.7x of FY14. Our Net Debt/EBITDA ratio also fell to a healthy, capital-efficient 2.8x in FY15 (excluding Camping) from 4.5x in FY14 (including Camping). FY14 FY15 09 Corporate Vision Leisure & Education (Leisure – International) ŸConsolidate our leadership ŸBe the market leader in position as an integrated travel experiential learning (Education) house in India (Leisure – India) ŸBe the urban traveller’s home ŸOperate as a specialist tour operator (Meininger) across multiple geographies 10 | Cox & Kings Limited Group strategy Consolidate our presence in Leisure – India ŸBuild market share in India’s highly fragmented travel industry ŸExpand franchise network within India Leverage our global platform to cross-sell products across geographies Continue to consolidate product sourcing operations globally ŸHigher volumes will lead to better bargaining power with suppliers ŸIdentifying and exploiting counter-seasonal idiosyncrasies will lead to better-targeted buying power Grow the Education business in newer geographies Aggressively expand Meininger 11 Divisional description Leisure – India (22% of net every customer and every budget. transport, tours, attractions, revenues) sightseeing, visas, insurance, etc. Our Cox & Kings brand has been the Our Retail – Outbound business travel market leader in India for many provides group and individual Our Retail – Domestic business years, enjoying tremendous recall and packaged tours and customized provides group and individual consumer trust. We are an integrated holidays abroad, which entails end-to- packaged tours and customized travel house with solutions to suit end management of tickets, hotels, holidays within India, which entails 12 | Cox & Kings Limited end-to-end management of tickets, solutions to meet every need across services for Indian business travellers hotels, transport, tours, attractions, multiple locations. within India as well as abroad. We have sightseeing