RNS Number:3767K
Alpha Airports Group PLC
31 March 2005
Alpha Airports Group Plc
Preliminary Results for the Year Ended 31 January 2005
Unaudited
31 March 2005
* Sales growth of over 10% year on year benefiting from continuing growth
at the UK's regional airports and ongoing recovery in long-haul traffic.
* Retail sales growth of 11.3% and Inflight Retail sales growth of 40.6 %.
* As indicated in our pre-close statement, adjusted Group pre-tax profits*
down nearly 13% to #18.9m (2003/04: #21.7m) reflecting the start up losses
on certain new businesses and the investments we have made in the Flight
Services business to enhance prospects for future profitable growth. Profit
before taxation of #11.7m (2003/04: #17.4m) after deducting exceptional
charges of #4.0m.
* Retail operating profit was 32.9% ahead of the prior year.
* Maintained modest gearing and good interest cover despite capital
investment spend of #16.2m, extra working capital investment of #15.5m and
#4.5m net spend on acquisitions and disposals, all reflecting our ongoing
business growth. Net debt increased to #19.3m (2003/04: net cash #1.9m).
* Final dividend per share increased 7.1% to 3.0p (2003/04: 2.8p) giving a
full year dividend of 4.0p, up 5.3% from 2003/04 (3.8p).
* Successful launch of award winning 'Blue Sky' tray-less meal service in
November is generating significant UK and European airline interest.
* The new financial year has started as planned and trading is in line
with expectations.
* Adjusted pre-tax profit and adjusted earnings per share are before goodwill
amortisation and exceptional items and are presented to assist readers to assess
the underlying trading performance.
Commenting on the Preliminary results, Kevin Abbott, Chief Executive, said:
"Although underlying trading in the second half was in line with expectations,
profitability was impacted by the significant investment made to support future
business growth. Whilst this is disappointing in the short term, we believe
these initiatives will lead to enhanced growth prospects and performance in the
near and long term. We are seeing a continuing flow of opportunities to develop
the business and, with a healthy balance sheet and recovering markets, we are
well positioned to take our business forward in the current year."
Enquiries:
Alpha Airports Group Plc
Kevin Abbott, Chief Executive Tel: 020 7554 1400 (today)
Heather McRae, Finance Director Tel: 020 8580 3200 (thereafter)
Gavin Anderson & Company
Laura Hickman/ Amelia Ward Tel: 020 7554 1400
Website: www.alpha-group.com
Introduction
Alpha's business is providing retailing and catering services to the world's
airlines and airports. Our essence is "People making travel special." Alpha
currently operates from over 150 retail and catering outlets at 74 airports in
13 countries across the globe.
Group
2004/5 was a year of significant investment in the business to support future
growth. We are working on an unprecedented number and scale of opportunities to
build and grow the business, both organically and by acquisition.
Group sales including turnover from joint ventures for the twelve months ended
31 January 2005 were 12.8% ahead of the previous year at #497.2m (2003/04:
#440.9m). Turnover, excluding joint ventures, was 10.6% above last year at
#487.8m. This increase arose from continuing strong growth of short-haul
passengers and flights at the UK's regional airports and recovery in long-haul
traffic particularly at London Heathrow and in Jordan. We made a strong start in
the first half, which weakened slightly in the second half due to the impact of
the loss of the Air Canada business at Heathrow.
A disappointing pre-tax profit (before exceptional items and goodwill
amortisation) of #18.9m was 12.9% below the previous year (2003/04: #21.7m) and
can be attributed to a number of specific Flight Services development issues.
Firstly, in 2002 we made a decision to grow the business in Australia and move
towards becoming a recognised international flight caterer. We have been
successful during the year in securing new contracts with Cathay Pacific and
Royal Brunei. However, as previously indicated this new business has resulted in
significant start-up costs being incurred in the current year as four flight
service units were opened but are temporarily operating at an uneconomic level
of utilisation; we are actively seeking to secure additional business in 2005/6
and beyond, in what we strongly believe is an important mid to long-term
investment opportunity. We have also set-up a global inflight duty free
programme for Qantas from our Australian flight service units in Sydney,
Melbourne, Brisbane and Perth. Whilst this set-up initially proved a major
challenge, we have transferred best practice from the UK and the back-office
support, controls and a strong, qualified retail team are now well embedded.
Unfortunately, we incurred a significant start-up loss in the period, but with
the support and recognition of Qantas, we have now redefined and extended our
contract to ensure a viable base for both partners going forward.
In the UK, the delay between the start-up of our new American Airlines contract
and the September loss of Air Canada, and the resultant transition costs between
these two major customers as we retained our highly qualified staff for over
three months to ensure a successful American Airlines start-up, contributed to
the reduced profit levels in UK Flight Services. In addition, the investments
made in our new IT systems within our growing UK Flight Services bonded stores
to better manage our wide range of high value stocks, gave rise to significant
one-off costs during training and implementation, again leading to temporary
losses being incurred. We are confident that with new operating procedures now
in place, we will reduce costs in the current year, and can move to centralised
control and stocking in late 2005 to achieve a step-change in the future capital
commitment and profitability of this major growth business. Finally, our
business in the Netherlands has been in a period of transition from short-haul
charter logistics to quality long-haul catering and has incurred significant
losses in the year.
Flight Services
Sales (including turnover of joint ventures) within our Flight Services division
increased by 13.9% to #277.9m (2003/04: #244.0m) reflecting the return of
long-haul traffic and the ongoing growth of low cost airlines operating from the
UK regional airports. Turnover, excluding joint ventures, increased by 10% to
#268.5m with a 38% reduction in operating profit (before exceptional items and
goodwill amortisation) to #8.8m (2003/04: #14.2m) as a result of the issues
highlighted above. Our UK Flight Services business enjoyed a 2.1% growth in
meals served and maintained its market share despite the loss in the second half
of our Air Canada service contract at London Heathrow. During the year we have
been very successful in securing future new business, generating 14.4% growth in
future UK and European sales. The major new contract wins in the second half
were with American Airlines at Heathrow and Gatwick, and Excel Airways at
Gatwick.
A key to future business growth is our innovation capability, which will provide
further step-changes in the quality and cost of our service offerings. In
November 2004, we launched our creative and Mercury award winning Blue Sky
service with MyTravel Airways on a globally back-catered basis. Blue Sky offers
charter passengers an innovative tray-less meal and a more contemporary flexible
and high quality inflight meal experience. Blue Sky also provides significant
extra service time for the cabin crew and extra galley space for the airline to
use for either extending cost-effective back catering, or an increased range of
inflight retailing services. To support the most cost-effective servicing of
Blue Sky in the UK, we have transformed one of our Birmingham flight service
units to become a central food assembly unit. We are extremely pleased with the
progress of this service and believe that many of our UK customers will be
moving to a similar service proposition in the years ahead. Alpha can also see
opportunities to offer such services to grow our mainland European business on a
highly competitive basis with relatively low capital cost.
Whilst our Jordan business has continued to prosper with the return of long-haul
traffic, our Amsterdam unit has struggled to adapt cost-effectively to the
reshaped customer mix. We have had to bring in the new culinary skill sets
required, and unfortunately have had to release many of our experienced,
long-service logistics staff. This redundancy programme has cost #1.4 million,
and we have also incurred an additional #1 million operating loss in the year.
Whilst we are confident of an eventual return to profitability, we have made
provision to write-off the freehold property assets dedicated to this business.
In Australia, we have been successful in securing major new clients for our
recently acquired and refurbished flight kitchens at the international gateway
airports. However, with these kitchens operating currently at very low capacity
utilisations, we will continue to incur small ongoing losses until further major
customer gains are achieved.
Our Inflight Retail sales advanced 40.6% in the year reflecting the tremendous
growth of low fare travel, our growing onboard spends per passenger and new
business won. We have established additional bases for our airline customers in
Germany and Italy, with plans well advanced for further European bases and
expanded service offerings being developed for the current year. Following our
success with MyTravel last year, we have now been nominated to provide similar
inflight procurement and ranging services for Monarch Airlines with effect from
May 2005.
Retail
Another strong year for the Retail division with sales 11.4% ahead to #219.3m
(2003/04: #196.9m) and profits ahead 32.9% to #11.7m (2003/04: #8.8m) despite
the expansion of the EU from May 2004 and the impact of the Asian tsunami at the
end of December.
In the UK, our Alpha Airport Shopping 'pink' shops generated a 7.4% increase in
sales on a strong regional airport passenger base some 8.3% ahead of the
previous year. As anticipated, sales of duty free liquor and tobacco products
were down 2.2% as a result of the EU expansion.
Once again, our World News specialist stores recorded strong growth with
like-for-like sales ahead of last year by 11.7%. The ongoing, successful
performance of this brand was one of the key reasons we were awarded a new
7-year contract at Birmingham International Airport Terminal 1, which commenced
in January 2005. Our Glorious Britain brand, which operates primarily at
Heathrow, had another very successful year with sales up 26.8% on the previous
year's record.
We expanded our airport Retail Catering offer to Europe last year with a small
but successful concession which opened at Skavsta, Sweden, in April. This
contributed to the 13.9% growth in turnover of this business unit. With the
development of London Luton Airport currently underway, our airside catering
profit share contract will terminate in the early part of summer 2005.
Our UK business has secured a new contract to operate an Alpha Airport Shopping
'pink' shop, plus World News and Retail Catering outlets at the new Doncaster
Robin Hood airport, which commences at the end of April.
Our duty free business based in Florida had an excellent year, with passenger
growth 21.6% ahead of the previous year leading to a 28% increase in US$ sales,
reflecting focussed improvements in our range and hence spend per passenger.
After several years of an onerous, loss-making contract, we were delighted to be
awarded a new 5-year contract extension by the Greater Orlando Aviation
Authority, Florida, commencing 31 July 2005. This contract extension will
require a major capital investment of over #1m to upgrade the shops in advance
of the critical summer season.
In Asia, our Sri Lankan business was performing exceptionally well, with a year
on year 18.6% passenger growth up until the end of December, when the tragic
events of the Asian tsunami impacted results. Thankfully none of our staff were
lost or injured, and our business suffered no loss to property or stock. By the
end of January, passenger growth for the 12 months had declined to 15.6%, but we
still enjoyed a record growth in sales of over 24% in US$ during the year as a
whole. Our newly enlarged and relocated arrivals shop opened in early December,
with further investment planned in departures during 2005 to maximise the
opportunities available with our 5-year contract extension.
Exceptional charges
As previously announced our business in the Netherlands has undergone
substantial change during the year and we have had to undertake our second
significant redundancy programme towards the end of the year at a cost of #1.4m.
We have also provided an impairment charge of #3.9m against our freehold
property value in the Netherlands. In the UK, the launch of our award winning
Blue Sky Service offering has removed work from local units to our central
Birmingham facility. This has resulted in 107 redundancies in the UK at a cost
of #0.9m. Offsetting these charges of #6.2m is the release of our onerous
contract provision in relation to the US business in Orlando. The performance of
the business over the last 18 months and our expectations for the remaining six
months of the contract means we no longer require #1.5m of this provision and
accordingly it has been released.
Dividend
The Board has recommended an increase in the final dividend of 7.1% to 3.0 pence
per share, giving a full year dividend per share of 4.0 pence (2003/04: 3.8
pence). The dividend is payable on 8 June to shareholders on the register as at
6 May 2005.
Capital Investment
We have made significant capital investment in the business this year with
expenditure in excess of #16m, the highest in recent years and ahead of
depreciation of some #10m. Major projects in Flight Services included a new
'bonded' store for our flight business at Manchester and new hi-lift vehicles
for the increased UK and Eire business volumes and for our expanding business in
Australia. Within Retail, a significant new IT investment is underway, and new
or expanded shops were opened at Newcastle and Manchester.
Acquisitions and Disposals
In November 2004, we exchanged contracts to acquire 60% of the share capital of
Istanbul Duty Free ("IDF") for initial consideration including acquisition costs
of Euro6.1m (#4.2m) with two payments of contingent deferred consideration of Euro0.5m
(#0.3m) each. IDF operates duty free shops at two airports, together with duty
free border and port shops and also provides inflight retailing to a number of
local airlines.
We also increased our shareholding in our Italian associate company, Servair
Airchef from 25% to 50% at a cost of #2.9m. This followed the exercise of an
option by the vendor. Our major shareholder, Servair, also increased its
investment in Servair Airchef to 50% at the same time.
Due to the success of our Jordan investment, our local partner exercised his
right to acquire a further 10% equity stake in Jordan Flight Catering Company
Limited. The disposal generated sales proceeds of #1.7m and a profit on disposal
of #0.3m. During July we sold our 20% investment in Calibre Airline Systems as
part of a full sale of that company. Proceeds of #0.5m were received realising a
small profit on disposal of #0.4m.
Net Debt
Net debt increased during the year to #19.3m (2003/04: cash of #1.9m), however
our balance sheet remains strong and gearing levels remain conservative.
Increased capital investment, acquisitions net of disposals costing #4.5m and
increased working capital, mostly inventory, to support the business growth were
the main contributing factors to this net debt increase.
Special Reserve
During the year we released to distributable reserves the sum of #152.3m
previously retained as a "special reserve" in the accounts of the Company
improving the capital structure of the business and giving the Company increased
flexibility for the future. This "special reserve" was created in 1994 as a
result of a capital reduction following the flotation of the Group in January
1994. The "special reserve" could not form part of the Company's distributable
reserves until the Directors had satisfied themselves that all conditions
attached to the reserve no longer applied, and this event occurred during the
year.
Our People
Creating a great place to work for all our staff remains a critical strategic
priority. Our successful Alpha Heroes reward and recognition programme has been
extended in the current year to cover all our UK, Eire and Jersey staff, with a
Local Heroes scheme developed to be complementary at the local unit level. Our
employees have wholeheartedly endorsed these initiatives, with over 3,000
nominations received to recognise those staff that "go the extra mile". In our
annual, independent, confidential staff survey, we maintained an excellent upper
quartile performance when benchmarked against other quality UK employers, with
our key satisfaction score of 76%. Our staff turnover continued to decline from
24.3% in 2003/04 to 21.9% in 2004/05. We are continuing to invest to build a
great place to work, with a new tailored management development course launched
with Henley Management College to build a "future leaders" capability in depth
across the Group.
Strategy
The Group's strategy is to continue to focus on retailing and catering for
airlines and airports. Our pipeline of opportunities continues at a high level
of activity and we are confident of further success with a number of these
projects. Within Flight Services, we will continue to develop our Blue Sky
concept launched last autumn to secure new business growth with this Mercury
award-winning, innovative offer. Internationally, our Flight Services
credentials should enable us to capitalise on market opportunities in the UK,
Europe, the Middle East and Australia. In Retail, we have been focussing our
efforts on opportunities at a European level and will continue to work closely
with our UK partners to extend the range of services provided to them.
Outlook
The 2005/06 year has started as planned and trading remains in line with
expectations. Within Asia, passenger figures as a result of the tsunami are
15.7% down year-on-year, and we anticipate the trend to continue throughout the
first half with a recovery in the second half of the year. Over the past four
years we have transformed our business models to adapt to a larger faster
growing more competitive aviation market, with significant investment in people,
innovation and infrastructure. We continue to concentrate on further enhancing
our core business offerings and with a healthy balance sheet, excellent customer
and supplier relationships and a strong Alpha team in place, we are well
positioned to take the business forward and capitalise on the investments made.
Group Profit and Loss Account (unaudited)
for the year ended 31 January 2005
Before Exceptional
Exceptional Items
Items (Note 2) Total Total
2005 2005 2005 2004
Notes #m #m #m #m
------------------- ---- ------- ------- ----- -----
Turnover (including share of
joint venture) 1 497.2 - 497.2 440.9
Less share of turnover of
joint venture (9.4) - (9.4) -
------------------- ---- ------- ------- ----- -----
Turnover 487.8 - 487.8 440.9
Cost of sales (315.1) (2.3) (317.4) (281.5) *
------------------- ---- ------- ------- ----- -----
Gross profit 172.7 (2.3) 170.4 159.4
Net operating expenses before
goodwill amortisation (153.2) (2.4) (155.6) (137.6) *
Amortisation of goodwill (2.9) - (2.9) (3.2)
------------------- ---- ------- ------- ----- -----
Group operating profit 16.6 (4.7) 11.9 18.6
------- ------- ----- -----
Income from interests in
associated undertakings 1.0 - 1.0 0.5
Associated undertakings
goodwill amortisation (0.3) - (0.3) (0.4)
------- ------- ----- -----
0.7 - 0.7 0.1
------- ------- ----- -----
Profit on part disposal of
subsidiary undertaking -
continuing operations - 0.3 0.3 -
Profit on disposal of associate - 0.4 0.4 -
------------------- ---- ------- ------- ----- -----
Profit on ordinary activities
before interest 17.3 (4.0) 13.3 18.7
Interest receivable and
similar income - - - 0.1
Interest payable and similar
charges (1.6) - (1.6) (1.4)
------------------- ---- ------- ------- ----- -----
Profit on ordinary activities
before taxation 1 15.7 (4.0) 11.7 17.4
Taxation on profit on
ordinary activities 3 (5.9) 0.8 (5.1) (6.7)
------------------- ---- ------- ------- ----- -----
Profit on ordinary activities
after taxation 9.8 (3.2) 6.6 10.7
Minority interest (equity) (2.3) - (2.3) (1.6)
------------------- ---- ------- ------- ----- -----
Profit for the financial year 7.5 (3.2) 4.3 9.1
Equity dividends 4 (7.0) - (7.0) (6.5)
------------------- ---- ------- ------- ----- -----
Retained (loss)/profit for
the financial year 0.5 (3.2) (2.7) 2.6
------------------- ---- ------- ------- ----- -----
Earnings per share 5 2.49p 5.33p
Diluted earnings per share 5 2.46p 5.28p
------------------- ---- ------- ------- ----- -----
All results relate to continuing operations.
*The results for the year ended 31 January 2004 included net pre-tax exceptional
charges of #0.7m as explained in Note 2.
Statement of total recognised gains and losses
for the year ended 31 January 2005
2005 2004
#m #m
------------------------------- ------- -------
Profit for the financial year 4.3 9.1
Currency translation differences on foreign currency net assets
and certain loans (0.9) 0.2
------------------------------- ------- -------
Total recognised gains for the financial year 3.4 9.3
------------------------------- ------- -------
There are no differences between the reported results for the current and prior
year and the results for those years on an historical cost basis.
Balance Sheets (unaudited)
at 31 January 2005
Group Company
------------ -----------
2005 2004 2005 2004
(restated)* (restated)*
Notes #m #m #m #m
--------------------- ---- ------ -------- ------ -------
Fixed assets
Intangible assets 11.5 11.3 - -
Tangible assets 58.4 56.0 - -
Investments in subsidiaries - - 201.0 201.0
Investments in associate 0.5 3.7 - -
Interest in joint venture:
------ -------- ------ -------
- share of gross assets 6.5 - - -
- share of gross liabilities (5.5) - - -
- goodwill arising on acquisition 4.7 - - -
------ -------- ------ -------
5.7 - - -
--------------------- ---- ------ -------- ------ -------
76.1 71.0 201.0 201.0
--------------------- ---- ------ -------- ------ -------
Current assets
Stocks 32.1 22.5 - -
Debtors 38.5 28.2 57.3 47.6
Cash at bank and in hand 6 10.8 8.6 - -
--------------------- ---- ------ -------- ------ -------
81.4 59.3 57.3 47.6
--------------------- ---- ------ -------- ------ -------
Creditors: amounts falling due
within one year
Bank and other borrowings (30.1) (6.7) (26.6) (20.3)
Other creditors (69.7) (62.5) (18.2) (12.8)
--------------------- ---- ------ -------- ------ -------
(99.8) (69.2) (44.8) (33.1)
--------------------- ---- ------ -------- ------ -------
Net current (liabilities)/assets (18.4) (9.9) 12.5 14.5
--------------------- ---- ------ -------- ------ -------
--------------------- ---- ------ -------- ------ -------
Total assets less current
liabilities 57.7 61.1 213.5 215.5
Creditors: amounts falling due
after one year (0.5) - - -
Provisions for liabilities and
charges (1.8) (5.9) - -
--------------------- ---- ------ -------- ------ -------
Total net assets 1 55.4 55.2 213.5 215.5
--------------------- ---- ------ -------- ------ -------
Capital and reserves
Called up share capital 17.4 17.2 17.4 17.2
Share premium account 43.7 42.6 43.7 42.6
Capital redemption reserve 0.4 0.4 0.4 0.4
Other reserves - - - 152.3
Profit and loss account (8.5) (6.3) * 152.0 3.0 *
--------------------- ---- ------ -------- ------ -------
Shareholders' funds 7 53.0 53.9 213.5 215.5
Minority interests (equity) 2.4 1.3 - -
--------------------- ---- ------ -------- ------ -------
Total equity 55.4 55.2 213.5 215.5
--------------------- ---- ------ -------- ------ -------
*Amounts for the year ended 31 January 2004 have been restated as a result of
the adoption of UITF 38 "Accounting for ESOP Trusts" (see Note 7).
Approved by the Board of Directors on 31 March 2005
Kevin Abbott Heather McRae
Chief Executive Finance Director
Group Cash Flow Statement (unaudited)
for the year ended 31 January 2005
2005 2004
Notes #m #m
---------------------------- ---- ---- ----
Net cash inflow from operating activities 8.1 13.4 31.1
Dividends received from associates 0.2 0.2
Dividends received from joint ventures 0.1 -
Returns on investments and servicing of finance
Interest received - 0.1
Interest paid (1.6) (1.5)
Dividends paid to minority shareholders in subsidiary
undertakings (2.2) (1.1)
---------------------------- ----- ---- ----
Net cash outflow from returns on investments and
servicing of finance (3.8) (2.5)
---------------------------- ----- ---- ----
Taxation (4.7) (6.5)
-------------------------- ----- ---- ----
Capital expenditure and financial investment
Purchase of tangible fixed assets (16.2) (13.6)
Disposal of tangible fixed assets 0.1 0.4
-------------------------- ----- ----- -----
Net cash outflow for capital expenditure and financial
investment (16.1) (13.2)
-------------------------- ----- ----- -----
Acquisitions and disposals
Purchase of joint venture 9 (2.9) (0.7)
Purchase of business 10 (4.2) -
Cash acquired on purchase of business 10 0.4 -
Part disposal of subsidiary undertaking - continuing
operations 11 1.7 -
Disposal of associate 11 0.5 -
------------------------- ----- ----- -----
Net cash outflow for acquisitions and disposals (4.5) (0.7)
------------------------- ----- ----- -----
Equity dividends paid (6.6) (6.2)
------------------------- ----- ----- -----
Net cash (outflow)/inflow before financing (22.0) 2.2
------------------------- ----- ----- -----
Financing
Increase/(decrease) in unsecured loans less than 1 year 21.1 (3.0)
Issue of ordinary shares 1.3 0.2
------------------------- ----- ----- -----
Net cash inflow/(outflow) from financing 22.4 (2.8)
------------------------- ----- ----- -----
Increase/(decrease) in cash 0.4 (0.6)
------------------------- ----- ----- -----
Notes to the Financial Information
1. Segmental analysis
Turnover Profit before Taxation Net Assets
2005 2004 2005 2004 2005 2004
(restated)
#m #m #m #m #m #m
-------------------------- ----- ----- ----- ------ ----- ------
(a) Business sector analysis
Flight Services
- continuing operations * 268.5 244.0 7.8 13.7 44.4 36.7 **
- share of operating profit
of associates - - 0.6 0.5 - -
- share of joint venture 9.4 - 0.4 - 5.7 -
- associates and joint venture
goodwill amortisation - - (0.3) (0.4) - -
- subsidiaries goodwill
amortisation - - (1.1) (1.4) - -
- exceptional items
(continuing operations) - - (6.2) (2.9) - -
- profit on part disposal
of subsidiary undertaking
- continuing operations - - 0.3 - - -
- profit on disposal of
associate - - 0.4 - - -
-------------------------- ----- ----- ----- ------ ----- ------
277.9 244.0 1.9 9.5 50.1 36.7
-------------------------- ----- ----- ----- ------ ----- ------
Retail
- continuing operations * 219.3 196.9 11.7 8.8 24.6 16.6 **
- subsidiaries goodwill
amortisation - - (1.8) (1.8) - -
- exceptional items
(continuing operations) - - 1.5 2.2 - -
-------------------------- ----- ----- ----- ------ ----- ------
219.3 196.9 11.4 9.2 24.6 16.6
-------------------------- ----- ----- ----- ------ ----- ------
-------------------------- ----- ----- ----- ------ ----- ------
497.2 440.9 13.3 18.7 74.7 53.3
Net interest payable - - (1.6) (1.3) - -
Net (borrowings)/cash - - - - (19.3) 1.9
-------------------------- ----- ----- ----- ------ ----- ------
Turnover, profit on
ordinary activities
before taxation and net assets 497.2 440.9 11.7 17.4 55.4 55.2
-------------------------- ----- ----- ----- ------ ----- ------
(b) Geographical analysis
United Kingdom
- continuing operations * 404.9 367.8 13.2 14.2 43.8 25.3 **
- exceptional items
(continuing operations) - - (0.9) (0.3) - -
-------------------------- ----- ----- ----- ------ ----- ------
404.9 367.8 12.3 13.9 43.8 25.3
-------------------------- ----- ----- ----- ------ ----- ------
Rest of the World
- continuing operations * 82.9 73.1 6.3 8.3 25.2 28.0
- share of operating
profit of associates - - 0.6 0.5 - -
- share of joint venture 9.4 - 0.4 - 5.7 -
- associates and joint
venture goodwill amortisation - - (0.3) (0.4) - -
- subsidiaries goodwill
amortisation - - (2.9) (3.2) - -
- exceptional items
(continuing operations) - - (3.8) (0.4) - -
- profit on part disposal
of subsidiary undertaking -
continuing operations - - 0.3 - - -
- profit on disposal of
associate - - 0.4 - - -
-------------------------- ----- ----- ----- ------ ----- ------
92.3 73.1 1.0 4.8 30.9 28.0
-------------------------- ----- ----- ----- ------ ----- ------
497.2 440.9 13.3 18.7 74.7 53.3
Net interest - - (1.6) (1.3) - -
Net (borrowings)/cash - - - - (19.3) 1.9
-------------------------- ----- ----- ----- ------ ----- ------
Turnover, profit on
ordinary activities before
taxation and net assets 497.2 440.9 11.7 17.4 55.4 55.2
-------------------------- ----- ----- ----- ------ ----- ------
* Before goodwill amortisation and exceptional items.
** Amounts for the year ended 31 January 2004 have been restated as a result of
the adoption of UITF 38 "Accounting for ESOP Trusts" (see Note 7).
Turnover is disclosed by origin. There is no material difference in turnover by
destination. Net interest payable has not been allocated recognising the
centre's role and responsibility in allocating financial resources.
2. Exceptional items
The results for the year ended 31 January 2005 include net exceptional items of
#4.7m charged against operating profit, comprising redundancy payments in
respect of UK Flight operations (#0.9m) and the Netherlands Flight operations
(#1.4m), an impairment charge in respect of freehold property fixed assets in
the Netherlands (#3.9m), partly offset by the release of #1.5m from the
remaining onerous contract provision in Orlando, USA where trading performance
has been better than forecast.
In April 2004 a Group company disposed of 19.6% of its investment in a
subsidiary which owns 51% of Jordan Flight Catering Company Limited, for a net
consideration of #1.7m. The Group's profit on disposal, including disposal of
related goodwill, was #0.3m. In July 2004 the Group disposed of its 20%
shareholding in Calibre Airline Services Limited (an information technology
company), for a net consideration of #0.5m, realising a profit on disposal of
#0.4m.
In the year ended 31 January 2004 the Group implemented a new management
structure in Flight Services with a related redundancy cost of #2.9m. These
costs were partly offset by the release of #2.2m from two onerous contract
provisions. At Newcastle the Group exited a loss making contract during the year
and no further provision was required. In Orlando, USA trading performance was
better than forecast when the provision was established and consequently the
provision was reduced to the directors' current best estimate of losses up until
expiry of the contract in July 2005.
3. Taxation
2005 2004
#m #m
------------------------------------- ------ -------
Current tax
United Kingdom
Corporation tax at 30% (2003/04: 30%) 5.6 6.0
Double tax relief (1.9) (2.0)
Tax on exceptional items (0.3) (0.4)
Prior year adjustments (0.2) -
------------------------------------- ------ -------
3.2 3.6
Overseas
Corporation taxes 2.6 3.0
Share of taxation of associates 0.3 0.3
Share of taxation of joint venture 0.3 -
Tax on exceptional items (0.5) (0.5)
Prior year adjustments (0.2) (0.2)
------------------------------------- ------ -------
Total current tax 5.7 6.2
------------------------------------- ------ -------
Deferred tax
United Kingdom
Origination and reversal of timing differences (0.5) 0.2
Tax on exceptional items - 0.3
------------------------------------- ------ -------
(0.5) 0.5
Overseas
Origination and reversal of timing differences (0.1) -
------------------------------------- ------ -------
Total deferred tax (0.6) 0.5
------------------------------------- ------ -------
------------------------------------- ------ -------
Total tax on profit on ordinary activities 5.1 6.7
------------------------------------- ------ -------
Taxation as a percentage of profit before taxation 44% 38%
Taxation as a percentage of profit before taxation before
exceptional items 35% 40%
Taxation as a percentage of profit before taxation, exceptional
items and goodwill amortisation 31% 33%
------------------------------------- ------ -------
3. Taxation (continued)
The standard rate of tax for the year, based on the UK standard rate of
corporation tax is 30%. The actual tax charge for the current and the previous
year exceeds the standard rate for the reasons set out in the following
reconciliation:
2005 2004
#m #m
------------------------------- ------- -------
Profit on ordinary activities before tax 11.7 17.4
------------------------------- ------- -------
Tax on profit on ordinary activities at standard rate (30%) 3.5 5.2
Factors affecting tax charge for the period:
Adjustments to tax in respect of prior period (0.4) (0.2)
Adjustment in respect of foreign tax rates (0.9) (0.7)
Expenses not deductible for tax purposes 2.7 2.4
Capital allowance in excess of depreciation 0.1 0.2
Unrelieved overseas losses 1.1 -
Other short term timing differences (0.4) (0.7)
------------------------------- ------- -------
Total actual amount of current tax 5.7 6.2
------------------------------- ------- -------
4. Equity Dividends
2005 2004
#m #m
------------------------------- ------- -------
Interim dividend paid of 1.0p per ordinary share
(2003/04: 1.0p) 1.8 1.7
Proposed final dividend of 3.0p per ordinary share (2003/04: 5.2 4.8
2.8p) ------- -------
-------------------------------
Total dividend of 4.0p per ordinary share (2003/04: 3.8p) 7.0 6.5
------------------------------- ------- -------
5. Earnings per share
Profit for the year Earnings per share
------------ --------------
2005 2004 2005 2004
#m #m Pence Pence
------------------------ ------- ------- -------- --------
Profit for the financial year and
earnings per share 4.3 9.1 2.49 5.33
Adjustment for profit on part
disposal of continued operations (0.3) - (0.17) -
Adjustment for profit on disposal
of associate (0.4) - (0.23) -
Adjustment for goodwill
amortisation and impairment 3.2 3.6 1.86 2.11
Adjustment for exceptional items 4.7 0.7 2.73 0.41
Taxation relating to these items (0.8) (0.6) (0.46) (0.35)
------------------------ ------- ------- -------- --------
Adjusted profit and adjusted
earnings per share 10.7 12.8 6.22 7.50
------------------------ ------- ------- -------- --------
The weighted average number of shares in issue during the year was 172,366,466
(2003/04: 170,733,330). Earnings per share is calculated by dividing the profit
for the financial year by the weighted average number of shares in issue during
the year. Adjusted earnings per share is calculated by eliminating the effect of
goodwill amortisation and exceptional items, adjusted for any tax effect.
Diluted earnings per share of 2.46p (2003/04: 5.28p) is calculated by reference
to the profit for the financial year of #4.3m (2003/04: #9.1m) and the weighted
average number of shares in issue during the year of 172,366,466 (2003/04:
170,733,330), as adjusted for potentially dilutive ordinary shares of 2,113,322
(2003/04: 1,510,307).
6. Net (borrowings)/cash
2005 2004
#m #m
------------------------------- ------- ---------
6.1 Bank and other borrowings
Unsecured loans (24.1) (3.0)
Bank overdrafts (6.0) (3.7)
------------------------------- ------- ---------
Total bank and other borrowings due within one year (30.1) (6.7)
------------------------------- ------- ---------
6.2 Net (borrowings)/cash
Total bank and other borrowings (30.1) (6.7)
Cash at bank and in hand 10.8 8.6
------------------------------- ------- ---------
Net (borrowings)/cash (19.3) 1.9
------------------------------- ------- ---------
7. Reconciliation of movements in shareholders' funds
2005 2004
(restated)*
#m #m
----------------------------------- ------ -------
Profit for the financial year 4.3 9.1
Dividends (7.0) (6.5)
----------------------------------- ------ -------
Retained profit for the financial year (2.7) 2.6
Currency translation differences on foreign currency net
assets and certain loans (0.9) 0.2
Issue of shares 1.3 0.2
Credit in respect of long term incentive plan
amortisation charge 0.2 0.2
Goodwill charged to the profit and loss account
previously written off directly to reserves 1.2 1.2
----------------------------------- ------ -------
Net (decrease)/increase to shareholders' funds (0.9) 4.4
Opening shareholders' funds as previously reported 54.1 49.9
Prior year adjustment (see below) (0.2) (0.4)
----------------------------------- ------ -------
Opening shareholders' funds as restated 53.9 49.5
----------------------------------- ------ -------
Closing shareholders' funds 53.0 53.9
----------------------------------- ------ -------
* Amounts for the year ended 31 January 2004 have been restated as a result of
the adoption of UITF 38 "Accounting for ESOP Trusts". There is no effect on the
current or prior periods' Group profit as a result of this change in accounting
policy; the Group's balance sheet has been restated for prior periods to reflect
the shares purchased in July 2002 for the Chief Executive's Long Term Incentive
Plan ("LTIP") as a deduction from shareholders' funds (previously included
within investments). The LTIP was fully written off in the year ended 31 January
2005 and therefore there is no effect on the Group's balance sheet as at 31
January 2005. The effect on the Group's balance sheet at 31 January 2004 and 31
January 2003 was to decrease investments and shareholders' funds by #0.2m and
#0.4m respectively.
8. Notes to the cash flow statement
8.1 Reconciliation of operating profit to net cash inflow from operating
activities
2005 2004
#m #m
---------------------------------- -------- -------
Operating profit 11.9 18.6
Depreciation 10.0 9.9
Goodwill amortisation 2.9 3.2
Long term incentive plan amortisation charge 0.2 0.2
Fixed assets impairment 3.9 -
(Increase) in stocks (7.3) (2.7)
(Increase) in debtors (10.4) (2.6)
Increase in creditors 2.2 4.5
---------------------------------- -------- -------
Net cash inflow from operating activities 13.4 31.1
---------------------------------- -------- -------
8.2 Reconciliation of net cash flow to movement in net (debt)/cash
2005 2004
#m #m
------------------------------- ---------- --------
Increase in cash in the period 2.5 2.4
Increase in overdrafts in the period (2.1) (3.0)
(Increase)/decrease in debt and lease financing (21.1) 3.0
------------------------------- ---------- --------
Change in net (debt)/cash from cash flows (20.7) 2.4
Currency translation (0.5) (0.2)
------------------------------- ---------- --------
Movements in net (debt)/cash in period (21.2) 2.2
Net cash/(debt) at 1 February 1.9 (0.3)
------------------------------- ---------- --------
Net (debt)/cash at 31 January (19.3) 1.9
------------------------------- ---------- --------
8.3 Analysis of net (debt)/cash
1 February Cash Exchange 31 January
2004 flows movement 2005
#m #m #m #m
-------------------------- ------- ------- -------- -------
Cash at bank and in hand 8.6 2.5 (0.3) 10.8
Overdrafts (3.7) (2.1) (0.2) (6.0)
-------------------------- ------- ------- -------- -------
4.9 0.4 (0.5) 4.8
Debt due within 1 year (3.0) (21.1) - (24.1)
-------------------------- ------- ------- -------- -------
Total 1.9 (20.7) (0.5) (19.3)
-------------------------- ------- ------- -------- -------
9. Purchase of joint venture
On 4 August 2004 the Group purchased a further 25% shareholding in Servair
AirChef srl which, together with the original investment, made in February 2001,
results in a total shareholding in the company of 50%, representing a joint
investment with the Group's major shareholder, Servair. The original
shareholding was reported as an associate, but from 4 August 2004 the investment
has been reclassified as a joint venture.
10. Purchase of business
On 3 November 2004, the Group signed a contract to acquire 60% of the share
capital of Istanbul Duty Free, a company operating duty free concessions and
shops at seven locations in Turkey and providing inflight retailing to three
local airlines. The acquisition was completed on 14 December 2004 and the
results of the company were consolidated from that date.
11. Disposal of businesses
As previously discussed in Note 2 in July 2004 the Group disposed of its 20%
shareholding in Calibre Airline Services Limited (an information technology
company) and in April 2004 disposed of 19.6% of its share in Jordan Flight
Catering Company Limited.
12. Preliminary announcement
The preliminary results for the year ended 31 January 2005 are unaudited. The
accounting policies are the same as those set out in the financial statements of
the Group for the year ended 31 January 2004, except for the adoption by the
Group of UITF 38 "Accounting for ESOP Trusts" by means of a prior year
adjustment. The effect on the Group's profit and loss account and balance sheet
are shown in Note 7.
The financial information set out above does not constitute the Group's audited
statutory accounts within the meaning of section 240 of the Companies Act 1985.
The financial information for the year ended 31 January 2004 has been extracted
from the statutory accounts for that year which have been delivered to the
Registrar of Companies: the report of the auditors on those accounts was
unqualified and did not contain a statement under section 237 (2) or (3) of the
Companies Act 1985. The Group accounts for the year ended 31 January 2005 will
be finalised on the basis of the financial information presented by the
Directors in the preliminary announcement.
13. Dividend
The record date for the final dividend is 6 May 2005 and payment date is 8 June
2005.
14. Issue of annual reports and accounts
The Annual Report 2004/05 will be posted to shareholders by 29 April 2005.
Copies may be obtained after this date from the Company Secretary, Alpha
Airports Group Plc, Europa House, 804 Bath Road, Cranford, Middlesex, TW5 9US.
Telephone No. 020 8580 3200.
15. Annual General Meeting
The Annual General Meeting of Alpha Airports Group Plc will be held at the
Conference Centre, Park Inn, Bath Road, Heathrow on 2 June 2005 at 11am.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SDDEFSSISELD
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