Alpha Airports Group - Interim Results
October 01 1998 - 4:30AM
UK Regulatory
RNS No 7275h
ALPHA AIRPORTS GROUP PLC
1st October 1998
RESULTS FOR THE SIX MONTHS ENDED 31 JULY 1998
Unaudited
HIGHLIGHTS
* Excluding the impact of the expiry of ALPHA Retail's Heathrow management
contract, sales rose in all three divisions by over 10%
* Underlying pre tax profit* was, as expected, lower than last year falling
7.5% to #12.3m (1997/98: #13.3m)
* Adjusted earnings per share fell 11.5% to 4.94p (1997/98: 5.58p)
* Exceptional provision of #5.9m arising from losses in ALPHA Retail's duty
free contract in Orlando
* Interim dividend maintained at 1.84p (1997/98: 1.84p)
Commenting on today's announcement Rodney Galpin, Chairman of ALPHA Airports
Group Plc, said
"Despite being unable to sell its Retail division for fair value, ALPHA has
developed several important operational initiatives which, although bringing
no immediate financial reward are fundamental to improving our medium-term
prospects. These measures include Retail contract extensions and Catering's
move to identify and implement best practice."
*Underlying pre tax profit is stated before exceptional costs of #7.0m
(1997/98: exceptional profit #0.7m) and before goodwill amortisation #0.6m
(1997/98: nil)
Enquiries:
ALPHA Airports Group Plc
Kevin Abbott, Chief Executive Tel: 0171 457 2345 (1 October 1998)
Stuart Siddall, Finance Director Tel: 0181 580 3200 (Thereafter)
Gavin Anderson & Company Tel: 0171 457 2345
Marc Popiolek
Laura Hickman
Summary
The Group's underlying pre tax profit on ordinary activities before
exceptional items and goodwill amortisation for the half year to 31 July 1998
was #12.3m. These results were, as expected, below those for the first half
of 1997/98 (#13.3m before the exceptional profit of #0.7m) following the
expiry of ALPHA Retail's Heathrow management contract in March this year.
Performance was also held back by losses of #1.4m (first half 1997/98 loss of
#0.1m) in our Orlando Duty Free business. The increased loss in Orlando is
disappointing and stems from the poor level of passenger numbers and reduced
passenger spending.
Retail
ALPHA Retail's UK operations continue to perform well with increased sales
volume and operating profit.
The UK Retail business is focused on the challenges that the potential
abolition of European duty free allowances will bring in 1999. With our
airport partners, we are developing Travel Retail concepts that will be
available for the first time to domestic travellers.
We have continued to extend and re-negotiate our contracts with the UK
Regional Airports. Contracts representing approximately 50% of current sales
now have an expiry date of between 2002 and 2006. In addition we have revised
the basis of rental payments for some of our UK Regional Airports such that
rents arising on approximately 50% of our UK Regional Airport Duty Free
business will be based on profit sharing arrangements if the expected
abolition of Intra European Duty Free allowances occurs.
Our Duty Free business in Sanford, Florida and Orient Lanka, Sri Lanka have
performed well. In Barbados the travel retail business which was acquired in
early 1998 is responding to the improved retailing skills that ALPHA Retail
provides.
I am pleased to report that the Retail business has secured 7 new specialist
shops in the United Kingdom and 1 in Sanford, Florida in 1998. The estimated
annual sales of these shops is approximately #3.5m.
Our Inflight Retailing business secured a 25% increase in sales. Our overseas
operations reported a loss as expected, but two important full service
concessions for Air India and Canadian Airlines were commenced.
Ground Handling
Ground Handling business was affected adversely by a decline in air traffic
between the USA and Asia. Nevertheless, the results for the first half of
1998/99 were in line with the same period last year. In the Spring of this
year ALPHA Ground Services lost business with an annual value of #5.5m at JFK,
New York as a result of the opening of a new terminal. Elsewhere in the USA
we have seen a net gain in business despite the loss of contracts arising from
US airlines linking in code-share arrangements with our international airlines
customers.
Catering
Catering profits advanced 9.6% over last year. Meal volume was up 11.7% with
21.2 million meals served. Approximately 50% of the growth arose as a result
of low-value return catering out of our UK facilities for shorthaul flights
into Europe.
Most importantly, we have improved service levels to our airline customers,
and we have established and trained a powerful team of ALPHA specialists to
implement best practice throughout our kitchen network. We have incurred
additional wage costs, partly to secure these enhanced service levels, and
partly to reflect rapidly rising wage levels at some of our airports where
there is very strong competition for skilled staff.
The closure of our oldest Heathrow kitchen was achieved ahead of schedule.
Business from this kitchen has been integrated within our other two Heathrow
kitchens, and the consolidation of the Corporate and ALPHA Catering's
divisional offices will be completed by October 1998. In addition three
kitchens in the UK are undergoing significant refurbishment and expansion at a
cost of #3m.
Taxation
The Group's underlying tax rate before exceptional items remained at 27%. As
a consequence of the goodwill amortisation, and the exceptional provisions
where only partial tax relief has been reflected in line with Financial
Reporting Standards, the total tax rate was 34%.
Dividend
The Board has decided to hold the interim dividend at 1.84 pence (1997/98:
1.84 pence) per ordinary share. This dividend with a scrip alternative will
be payable on 24th November 1998 to shareholders on the Register as at 16th
October 1998.
Debt
Net debt increased by #2.8m to #74.1m. In August 1998 the Group replaced its
existing term facilities with a 5 year #100m facility. In total the Group has
committed facilities of #113m and has capacity to fund growth of the Group's
core businesses at a steady pace.
During August 1998 the Government of Sri Lanka exercised its option to sell
its remaining 37% stake in Orient Lanka Limited to the ALPHA Group for #7m.
Consequently we expect debt to rise in the second half of the year.
Interest cover (before exceptional items) was 5.6 times (1997/98: 5.9 times).
Exceptional loss #7.0m
We have reviewed the performance of the Orlando Duty Free shops. As we cannot
foresee a major recovery in passenger numbers the results are not going to
improve significantly over the short term. Consequently, we have reported an
exceptional provision of #5.9m in respect of this contract.
Exceptional costs incurred in relation to the unsuccessful sale of the Retail
Division totalled #2.1m. These relate to pre-sale advisory fees,
restructuring costs, and the costs of refinancing that were necessitated by
the planned sale.
Closure of Catering's Heathrow kitchens has been achieved ahead of schedule.
With 50% of our customers transferring to our two remaining Heathrow kitchens,
redundancy costs have been lower than previously anticipated and we have
reduced the closure provision made in 1997/98 by #1m.
Strategy
The Group has reviewed its strategy following its decision to withdraw ALPHA
Retail from sale. With extended financing in place, we can develop the core
businesses at a steady pace. We will continue to focus on European growth at
regional airports where we expect to joint venture with local partners.
In Catering, we will implement best practice, enhance our service offering and
thus extend our contracts with our major customers, and grow with them as they
develop their European business. In Ground Handling, we will expand our US
commercial resources to offset the enhanced risk of contract losses due to
code-sharing and alliances. As the European Ground Handling market opens up,
we will aim to extend our Ground Handling activities into the UK and, in joint
venture with local partners, into mainland Europe. In Retail, we are focused
on the challenges and opportunities that will arise upon the planned abolition
of Intra EU Duty Free. We envisage future opportunities to exploit new Travel
Retail concepts with partners in mainland Europe.
Year 2000 Compliance
The Group continues to address the effects of the Millennium date change on
its business.
Plans are in place covering most of the critical business systems and in many
cases these are well advanced with effective implementation of the first of
these expected by the end of 1998. Work is ongoing in respect of other key
systems where solutions are being formulated. However, appropriate
contingency plans will be developed to ensure business continuity where it is
felt key systems may be at risk.
Key external suppliers are being contacted and we are working together with
the objective of seeking an uninterrupted supply of goods and services to the
company.
It is estimated that the cost of modifying or replacing systems directly as a
result of the Millennium issue will be around #1.4m in total of which #1m has
still to be incurred.
Economic and Monetary Union (EMU)
Preparations are also being made to enable ALPHA to adapt its commercial and
financial processes so that it can conduct business in the Euro after its
initial introduction from 1st January 1999. Conversion of internal systems to
the Euro will not require significant level of expenditure.
Outlook
During the summer months we have seen increased uncertainty in some of the
markets in which we operate. However, the UK Regional Duty Free market seems
to have been less affected than other markets and we expect ALPHA Retail's UK
Regional Duty Free business to perform satisfactorily. As previously
indicated, with the expiry of ALPHA Retail's Heathrow management contract our
Retail profits will be below those achieved in 1997/98.
Ground Handling is likely to see a small reduction in volume in the second
half as a result of decreased Asian traffic and reduced activity in New York.
Catering Services is expected to see less growth in the second half. We
continue to invest resources for the development of best practice throughout
our kitchen network, and we expect to continue to incur additional costs to
maintain the high service levels achieved through the summer.
Group Profit and Loss Account
Unaudited
Total
Six Six Year
Before Except- months months ended
Except- ional ended ended 31
ional Items 31 July 31 July January
Items (Note 5) 1998 1997 1998
Notes #m #m #m #m #m
Turnover 2 325.3 - 325.3 341.9 702.2
Cost of sales (189.6) 0.7 (188.9) (199.3) (410.9)*
----- ----- ----- ----- -----
Gross profit 135.7 0.7 136.4 142.6 291.3
Administration
and other costs
before goodwill
amortisation (120.3) (7.7) (128.0) (126.6) (271.3)*
Goodwill
amortisation 4 (0.6) - (0.6) - -
----- ----- ----- ----- -----
Total administration
and other costs (120.9) (7.7) (128.6) (126.6) (271.3)
----- ----- ----- ----- -----
Other operating
income - exceptional
profit
on sales of current - - - 0.7 0.7
asset investment ----- ----- ------ ----- -----
14.8 (7.0) 7.8 16.7 20.7
Operating profit/(loss)
Income from interest
in associated
undertakings (0.4) - (0.4) - -
----- ----- ----- ----- -----
Profit/(loss) on
ordinary activities
before interest 2 14.4 (7.0) 7.4 16.7 20.7
Interest receivable 0.2 - 0.2 0.3 0.7
Interest payable (2.9) - (2.9) (3.0) (5.9)
------ ----- ----- ----- -----
Profit/(loss) on
ordinary activities
before taxation 2 11.7 (7.0) 4.7 14.0 15.5
Taxation on profit
on ordinary
activities (3.2) 1.6 (1.6) (3.2) (6.4)
----- ----- ----- ----- -----
Profit/(loss) on
ordinary activities
after taxation 8.5 (5.4) 3.1 10.8 9.1
Minority interest
(equity) (0.8) - (0.8) (0.7) (1.5)
----- ----- ----- ----- ----
Profit/(loss) for
the financial
period 7.7 (5.4) 2.3 10.1 7.6
Dividends 3 (3.1) - (3.1) (3.1) (9.0)
----- ----- ----- ------ ----
Retained profit/
(loss) for the
period 4.6 (5.4) (0.8) 7.0 (1.4)
==== ==== ==== ==== ====
Net earnings per
share 6 1.35p 6.00p 4.52p
IIMR headline
earnings per share 6 1.71p 6.00p 4.52p
Adjusted earnings
per share 6 4.94p 5.58p 11.60p
*The amounts for the year ended 31 January 1998 include exceptional items as
described in Note 5.
Statement of total recognised gains and losses
Six months Six months Year
ended ended ended
31 July 31 July 31 Jan
1998 1997 1998
#m #m #m
Profit for the
financial period 2.3 10.1 7.6
Currency translation
differences on foreign
currency net assets
and certain loans (0.1) (1.4) (1.2)
---- ----- -----
Total recognised
gains for the period (2.2) (8.7) (6.4)
----- ----- -----
There are no differences between the reported results for the current and
prior periods and the results for those periods restated on a historical cost
basis.
Group Balance Sheet
Unaudited
31 July 31 July 31 Jan
1998 1997 1998
Notes #m #m #m
Fixed assets
Tangible assets 80.7 85.9 79.7
Investments - 0.4 0.5
----- ---- -----
80.7 86.3 80.2
----- ---- -----
Current assets
Stocks 29.4 32.2 27.1
Debtors 63.5 58.1 53.5
Cash at bank and
in hand 5.3 5.5 2.7
---- ---- -----
98.2 95.8 83.3
----- ----- ----
Creditors: amounts
falling due within
one year
Bank and other
borrowings (1.8) (5.7) (8.0)
Other creditors (95.7) (99.7) (91.0)
----- ----- -----
(97.5) (105.4) (99.0)
----- ----- -----
Net current
assets/(liabilities) 0.7 (9.6) (15.7)
Total assets less
current liabilities 81.4 76.7 64.5
Creditors: amounts
falling due after
more than one year
Bank and other
borrowings 10(b) (75.4) (70.2) (63.4)
Other creditors (4.6) (4.2) (1.8)
----- ----- -----
(80.0) (74.4) (65.2)
----- ----- -----
Provision for
liabilities (9.5) (4.4) (9.9)
and charges ----- ----- -----
Total net liabilities (8.1) (2.1) (10.6)
----- ----- -----
Capital and reserves
Called up share capital 17.1 16.8 16.8
Share premium account 40.7 38.5 38.7
Profit and loss account (68.4) (59.9) (68.1)
----- ----- -----
Shareholders' funds 7 (10.6) (4.6) (12.6)
Minority interests
(equity) 2.5 2.5 2.0
----- ----- ----
Total Equity (8.1) (2.1) (10.6)
----- ----- -----
Group Cash Flow Statement
Unaudited
Six months Six months Year
ended ended ended
31 July 31 July 31 Jan
1998 1997 1998
Notes #m #m #m
Net cash inflow from
operating activities 8(1) 14.2 21.9 45.9
Net cash outflow for
returns on investments
and servicing of
finance (3.1) (3.6) (6.6)
Taxation paid (0.8) (1.0) (9.1)
Net capital expenditure (8.1) (7.7) (15.3)
Acquisition of
subsidiary undertaking 9 (1.3) - (0.1)
Equity dividend (3.6) (5.6) (8.5)
paid ----- ----- -----
Net cash (outflow)/inflow
before financing (2.7) 4.0 6.3
----- ----- -----
Financing
Debt due beyond
one year
- Unsecured loan
repayable in 2000 (see note 10(b)) 8.0 - -
Repayment of external
borrowings (1.5) (5.1) (11.9)
Capital element of
finance lease payments (0.4) (0.4) (0.9)
------ ----- -----
Net cash inflow/(outflow)
from financing 6.1 (5.5) (12.8)
----- ----- -----
Increase/(decrease)
in cash 8(2) 3.4 (1.5) (6.5)
----- ----- ------
Notes to the Interim Financial Statements
1. Basis of accounting
The consolidated interim financial statements have been prepared under the
historical cost convention and in accordance with applicable accounting and
financial reporting standards. The accounting policies are the same as
those set out in the financial statements of the Group for the year ended 31
January 1998, except for the adoption of FRS10 "Goodwill and Intangible
Assets" which is now effective. FRS10 requires that goodwill arising on
acquisitions occurring after 1 February 1998 is capitalised and amortised
through the profit and loss account over its useful economic life and will
be subject to regular impairment review. This represents a change from the
previous accounting policy under which goodwill arising prior to 1 February
1998 was written off direct to reserves upon acquisition. As permitted by
the FRS10 transitional arrangements, goodwill previously written off to
reserves has not been reinstated.
This change in accounting policy has had no effect on the current period
profit and loss account but has necessitated a prior year adjustment
transferring goodwill previously charged against a 'Goodwill reserve' to the
profit and loss reserve.
The taxation charge is based on the estimated effective rate for the full
year.
The interim financial statements are unaudited but have been reviewed by the
auditors, and their report to the Directors is set out on page 16. The
comparative figures for the year to 31 January 1998 have been extracted from
the Group's financial statements which have been delivered to the Registrar
of Companies. The auditors' report on those statements was unqualified and
did not include a statement under Section 237(2) or (3) of the Companies Act
1985.
2. Segmental Analysis Six months Six months Year
ended ended Ended
31 July 31 July 31 Jan
1998 1997 1998
#m #m #m
(a) Turnover
Business sector
analysis
ALPHA Catering
Services 115.6 104.1 212.6
ALPHA Retail Services 132.4 169.7 345.5
ALPHA Inflight
Retailing 18.1 14.5 31.3
ALPHA Ground Services 59.2 53.6 112.8
---- ---- ----
Total turnover 325.3 341.9 702.2
---- ---- ----
Geographical analysis
United Kingdom 233.3 260.8 531.2
USA 65.9 57.7 123.6
Rest of the world 26.1 23.4 47.4
---- ---- ----
Total turnover 325.3 341.9 702.2
---- --- ----
2. Segmental analysis Six months Six months Year
(continued) ended ended Ended
31 July 31 July 31 Jan
1998 1997 1998
Notes #m #m #m
(b) Profit before taxation
Business Sector analysis
ALPHA Catering Services
- before exceptional
items 6.8 6.2 13.2
- exceptional
items 5 1.0 - (12.2)
--- ---- ----
7.8 6.2 1.0
--- ---- ----
ALPHA Retail Services
- before exceptional
items 5 4.0* 6.1 12.7
- exceptional
items (5.9) 0.7 (0.7)
--- ---- ----
(1.9) 6.8 12.0
--- ---- ----
ALPHA Inflight Retailing
- before exceptional
items 5 (0.1) - 0.1
- exceptional items - - (0.3)
--- ---- ----
(0.1) - (0.2)
--- ---- ----
ALPHA Ground Services 3.7 3.7 7.9
Corporate exceptional 5 (2.1) - -
provision --- ---- ----
7.4 16.7 20.7
Net Interest (2.7) (2.7) (5.2)
--- ---- ----
Profit on ordinary 4.7* 14.0 15.5
activities before --- ---- ----
taxation
*stated after deducting goodwill amortisation #0.6m (1997/98 #nil).
In the six months to 31 July 1997 ALPHA On Board Sales & Services and Flight
Bonds were included within ALPHA Retail Services and have now been
reclassified as ALPHA Inflight Retailing to reflect the operational
structure.
In January 1998, Jersey Retail was included in ALPHA Inflight Retailing, but
is now part of ALPHA Retail Services. Accordingly, the prior period figures
for the six months ended 31 July 1997 and the year ended 31 January 1998
have been restated to show the segments on a comparable basis.
2. Segmental Analysis Six months Six months Year
(continued) ended ended ended
31 July 31 July 31 Jan
1998 1997 1998
Notes #m #m #m
(b) Profit before
taxation -
Geographical
analysis
United Kingdom
- before
exceptional items 9.4 9.9 21.1
- exceptional
items 5 (1.1) - (7.9)
----- ------ ------
8.3 9.9 13.2
----- ------ ------
USA
- before
exceptional items 2.7 3.8 7.8
- exceptional
items 5 (5.9) - -
----- ------ ------
(3.2) 3.8 7.8
----- ------ ------
Rest of the world
- before
exceptional items 2.3* 3.0 5.0
- exceptional
items 5 - - (5.3)
----- ------ ------
2.3 3.0 (0.3)
----- ------ ------
7.4 16.7 20.7
Net interest (2.7) (2.7) (5.2)
------ ------ ------
Profit on ordinary 4.7* 14.0 15.5
activities ------ ------ ------
before taxation
*stated after deducting goodwill amortisation #0.6m (1997/98 #nil).
3. Dividends
An interim dividend of 1.84 pence (31 July 1997 - 1.84 pence) per ordinary
share will be paid on 24 November 1998 to shareholders on the register at
the close of business on 16 October 1998.
4. Goodwill amortisation
As discussed in the Annual Report 1997/98 with effect from 1 February 1998
goodwill which arose on the acquisition of the 63% shareholding of Orient
Lanka Limited in 1996 is being amortised over 8.5 years (the remaining life
of the licence). The amortisation charge for the six months ended 31 July
1998 was #0.6m.
5. Exceptional items
The exceptional items for the half year to 31 July 1998 comprise #5.9m in
respect of the duty free retail operations in Orlando (an impairment
provision of #1.6m in respect of the fixed assets, and #4.3m being the
directors' estimate of the unavoidable costs accruing under this onerous
contract); #2.1m costs associated with the unsuccessful sale of the retail
division, pre-sale restructuring costs and the refinancing costs incurred in
anticipation of such sale: offset by the release of #1.0m being exceptional
closure costs made in 1997/98 which are no longer required.
The full year to 31 January 1998 included exceptional items of #1.8m in cost
of sales and #12.1m in administration and other costs, and an exceptional
profit on the sale of a current asset investment. The exceptional items
comprised a writedown of fixed assets in the UK and France (#7.4m), closure
costs for one of the kitchens at Heathrow Airport (#3.8m), a provision in
respect of uncertainties associated with the group's joint venture in Hong
Kong (#1.2m), and costs associated with closing two overseas businesses of
AOBSS and the cost of consolidating corporate offices (#1.5m). The profit
on the sale of the current investment arose from the sale of Euro-Hub
shares.
6. Earnings per share
Profit/(loss) for the period Earnings per share
31 31 31 31 31 31
July July Jan July July Jan
1998 1997 1998 1998 1997 1998
#m #m #m Pence Pence Pence
Profit for the
financial period
and net earnings
per share 2.3 10.1 7.6 1.35 6.00 4.52
Adjustment for
goodwill amortisation 0.6 - - 0.36 - -
--- ---- ---- --- ---- ----
Adjusted profit and
IIMR headline
earnings per share 2.9 10.1 7.6 1.71 6.00 4.52
Adjustment for
exceptional provisions 7.0 - 13.9 4.16 - 8.27
Adjusted for
exceptional profit
on sale of current
asset investment - (0.7) (0.7) - (0.42) (0.42)
Taxation relating
to these items (1.6) - (1.3) (0.93) - (0.77)
--- ---- ---- --- ---- ----
Adjusted profit and
adjusted earnings
per share 8.3 9.4 19.5 4.94 5.58 11.60
--- ---- ---- --- ---- ----
Weighted average number of shares in issue during the six months to 31 July
1998 were 168,607,435 (31 July 1997: 167,896,429 and 31 January 1998:
168,055,238).
Net earnings per ordinary share are calculated by dividing the profit for
the financial period by the weighted average number of shares in issue
during the period. An additional measure of earnings per share has been
recommended by the Institute of Investment Management and Research (IIMR).
The IIMR headline earnings require the adjustment of standard earnings to
eliminate certain items, adjusted for any tax effect.
7. Reconciliation of movements in shareholders' funds
Six months Six months Year
ended ended ended
31 July 31 July 31 Jan
1998 1997 1998
#m #m #m
Profit for the
financial period 2.3 10.1 7.6
Dividends (3.1) (3.1) (9.0)
--- ---- ----
Retained (loss)/profit
for the financial (0.8) 7.0 (1.4)
period
Issue of additional
share capital to 2.3 0.3 0.5
shareholders
Currency translation
differences on
foreign currency net (0.1) (1.4) (1.2)
assets and certain
loans
Amount written back
in respect of goodwill
amortised in profit
and loss account 0.6 - -
--- ---- ----
Net increase/(decrease)
to shareholders' funds 2.0 5.9 (2.1)
Opening shareholders'
funds (12.6) (10.5) (10.5)
--- ---- ----
Closing shareholders'
funds (10.6) (4.6) (12.6)
--- ---- ----
8. Notes to the cash flow statement
(1) Reconciliation of operating profit to net cash inflow/(outflow) from
operating activities
Operating profit 7.8 16.7 20.7
Depreciation (including
exceptional items
#1.6m) 7.9 5.9 20.0
Goodwill amortisation 0.6 - -
Increase in stocks (0.8) (9.0) (4.0)
Increase in debtors (8.9) (8.6) (1.7)
Increase in creditors 7.6 16.9 10.9
--- ---- ----
Net cash inflow from
operating activities 14.2 21.9 45.9
--- ---- ----
(2) Reconciliation to net debt
Increase/(decrease) in
cash in the period 3.4 (1.5) (6.5)
(Increase)/decrease in
debt and lease financing (6.1) 5.5 12.8
--- ---- ----
Change in net debt
from cash flows (2.7) 4.0 6.3
Translation differences (0.1) 0.7 0.5
--- ---- ----
Movements in net debt
in period (2.8) 4.7 6.8
Opening net debt (71.3) (78.1) (78.1)
--- ---- ----
Closing net debt (74.3) (73.4) (71.3)
--- ---- ----
9. Acquisition of a business
On 1 February 1998 the Group acquired a 51% interest in a duty free and duty
paid retail business in Barbados for a cash consideration of #1.3m. Goddard
Enterprises Limited, Barbados, holds the remaining interest. Although the
fair value adjusted balance sheet is still being finalised, there is not
likely to be a material amount of goodwill arising on this acquisition.
10. Post balance sheet events
(a) On 29 August 1998 the government of Sri Lanka exercised its option to
sell the group its remaining 37% interest in Orient Lanka Limited at a cost
of approximately #7.0m. The goodwill arising on this transaction
(approximately #5m) will be capitalised and amortised over approximately
eight years in accordance with FRS10 (Goodwill and Intangible Assets).
(b) Subsequent to 31 July 1998 the unsecured loan facility due for
repayment in 2000 was repaid and a new loan facility of #100m due for
repayment in 2003 became effective. Under the terms of this facility,
proceeds from the sale of assets up to a maximum of #30m will be used to
reduce the facility amount available.
11. Related party transactions
In addition to the ongoing business relations described in the ALPHA Groups
Annual Report 1997/98, the ALPHA Group has a commission agreement with Mr R
S Jayawardena, who occupies a senior position in the ALPHA Group, to develop
business and provide support for ALPHA activities performed in the Indian
Sub-Continent. For the period to 31 July 1998 #65,000 is payable (for the
year ended 31 January 1998 #120,000).
12. Payment to former director
Mr P F Ashworth resigned as a director on 24 June 1998. He received a
severance payment of #140,000 plus the retention of certain benefits to 30
June 1998.
13. Approval of Financial Statements
The financial statements were approved by a committee of the Board of
Directors on 1 October 1998.
Review Report by the Auditors to the Board of Directors of ALPHA Airports
Group Plc
We have reviewed the interim financial statements for the six months ended
31 July 1998, which are the responsibility of, and have been approved by,
the Directors. Our responsibility is to report on the results of our
review.
Our review was carried out having regard to the Bulletin "Review of Interim
Financial Information" issued by the Auditing Practices Board. This review
consisted principally of applying analytical procedures to the underlying
financial data, assessing whether accounting policies have been consistently
applied, and making enquiries of the group management responsible for the
financial accounting matters. The review excluded audit procedures such as
tests of controls and verification of assets and liabilities and was
therefore substantially less in scope than an audit performed in accordance
with Auditing Standards. Accordingly, we do not express an audit opinion on
the interim financial statements.
On the basis of our review:
- In our opinion the interim financial information has been prepared
using accounting policies consistent with those adopted by ALPHA Airports
Group Plc in its financial statements for the year ended 31 January 1998
except for the adoption of FRS 10 "Goodwill and intangible assets" as
described in Note 1.
- We are not aware of any material modifications that should be made to
the interim financial information as presented.
PricewaterhouseCoopers
Chartered Accountants
London
END
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