Interim Results
September 27 2001 - 2:00AM
UK Regulatory
RNS Number:7193K
Alpha Airports Group PLC
27 September 2001
ALPHA Airports Group Plc
Results for the Six Months ended 31 July 2001
Unaudited 27 September 2001
SUMMARY
* Sales up 4% to #221.1m (2000: #212.7m)
* EBITDA up 27% to #16.7m (2000: #13.1m)
* Underlying profit before tax (before goodwill amortisation and
losses from discontinued operations) up 22% at #10.7m (2000: #8.8m)
* Major new UK contract awards by Manchester Airport and British
Airways
* Interim dividend unchanged at 1.0p per share
Mr Kevin Abbott, Chief Executive, commenting on the results today said:
"Our on-going focus to enhance service quality and improve efficiencies has
generated new contract awards, and has turned modest 4% sales growth into a
22% profit improvement. In these uncertain times it is too early to predict
the full consequences of the recent terrorist attack in the USA but ALPHA is
in good shape to meet both the challenges and opportunities which arise."
Enquiries:
ALPHA Airports Group Plc
Kevin Abbott, Chief Executive Tel: 020 7457 2345 (27 September 2001)
Heather McRae, Finance Director Tel: 020 8580 3200 (thereafter)
Gavin Anderson & Company
Laura Hickman Tel: 020 7457 2345
Amelia Hine
www.alpha-group.com
Results Overview
Sales
Total sales increased 4% to #221.1m. Flight Services sales increased only 1%
to #140.0m, whilst Retail sales increased 9% to #81.1m.
Profit
EBITDA has increased by 27% to #16.7m (2000: #13.1m) reflecting the enhanced
efficiencies in UK Flight, the benefit of overseas acquisitions and a
recovering retail performance in the UK.
Net Debt
Net debt was #17.8 m (2000: #5.6m) reflecting peak seasonal working capital
requirements. The increase since last July is a result of the international
investments made.
Taxation
The higher underlying tax rate of 36% (2000: 34%) on a profit before goodwill
amortisation of #10.7m, reflects the high corporation tax charge on profits
arising in Sri Lanka.
Dividend
In view of the wider uncertainty the Board has decided to leave the interim
dividend unchanged at 1.00 pence per ordinary share (2000 Interim: 1.00
pence). This dividend will be payable on 9 November 2001 to shareholders on
the Register as at 5 October 2001.
FLIGHT SERVICES
UK
Sales revenues in our core business declined 4%. This was caused by a 7%
decline in scheduled meals supplied to our major customers partly offset by a
5% growth in charter meals served, but leading to a 2% overall decline in
meals sold. Our ongoing Innovate process improvement programme has generated
further advances in employee productivity and reduced waste, thus delivering a
5% increase in profit.
British Airways has awarded ALPHA the Cityflyer Express contract at London
Gatwick from November 2001 onwards. It is anticipated that this may offset
some of the potential reduction in sales to British Airways as it eliminates
routes or transfers certain services from London Gatwick to London Heathrow.
Our In-Flight Retail business which provides duty free goods and trolley bar
services to airlines has achieved 16% sales growth in the UK, driven
principally by the rapid development of the UK low-cost airline sector. We
have recently signed a five year contract with the low-cost airline Go to
serve them at Stansted Airport.
International
Profits at our expanded Australian regional airport kitchen network improved
10%, despite a #0.5m bad debt charge for Ansett Airlines. Whilst this Ansett
bankruptcy has created short-term disruption, we expect to see a resumption of
airline services at our domestic regional airports within 3 months.
Our new associated company in Italy has traded profitably and has opened new
kitchens in Venice and Trapani, Sicily. On 1st August, we announced a #8.8m
investment for 51% control of a flight kitchen in Jordan.
RETAIL
UK
ALPHA has a strong retail presence in the UK's regional airports. In the
first half year, ALPHA has enjoyed a 15% growth in UK duty and tax free sales
on a 9% increase in international departing passengers.
As announced in July, ALPHA has been awarded a new five year contract at
Manchester Airport where ALPHA becomes the sole duty free retailer. ALPHA
has provided duty and tax free retail services at Manchester's Terminal 1 for
the past 19 years. Last year, we were awarded a 7 year contract extension for
Terminal 1. ALPHA has now been awarded duty and tax free concessions from
January 2002 for both Terminal 2 and Terminal 3. ALPHA will thus become
Manchester's exclusive duty and tax free retailer for liquor, tobacco and
perfume. Anticipated additional sales at the start of this 5 year contract
are some #35m per annum.
In addition, ALPHA has also been awarded a new 5 year contract for Liverpool's
John Lennon Airport. This contract covers duty and tax free retailing, World
News and airside retail catering.
ALPHA's UK specialist retailing business, which includes World News and
Glorious Britain, saw sales growth of 6% which was satisfactory given the high
exposure to a 2% decline in international passengers passing through London
Heathrow's Terminals 3 and 4. Whilst the RoadChef motorway services trial for
World News has generated a small profit it will not be extended. ALPHA will
exit the contract this autumn, with a full return of its #1.5m initial
investment.
Following the 1999 abolition of intra EU duty and tax free allowances, ALPHA
has restructured its UK shops, it supply chain and its central organisation.
We have seen the consequent benefits in the first half results, where UK sales
have increased 13% leading to an underlying break-even result (2000: loss of
#1.2m). However #0.7m of reorganisation costs have been incurred in the
period.
International
Overall our international retail sales have declined 5% primarily due to the
strength of the US dollar and weaker tourist spending in the Americas.
In the late summer, Sri Lanka's Colombo airport suffered a terrorist attack.
As a consequence, ALPHA's Sri Lanka retail results will be adversely affected
by reduced tourist numbers in the second half. Our first half Sri Lankan
profits were maintained, but full year results may be down some #1m on the
previous year. We believe that the situation will improve in the next
financial year as European tourists return to this quality holiday
destination.
Outlook
The recent terrorist attack in the USA has created significant uncertainty.
At this stage, it is just too early to predict the longer term consequences
for our business. But for this year, with the peak summer trading months
already behind us, ALPHA is in good shape.
Group Profit and Loss Account
Unaudited
Six Year ended
months
ended
31 July 31 July 31 Jan
2001 2000 2001
Notes #m #m #m
Turnover
- Continuing 221.1 211.4 431.5
- Discontinued - 1.3 1.5
Turnover 2 221.1 212.7 433.0
Cost of sales (150.4) (142.7) (296.5)
Gross profit 70.7 70.0 136.5
Administration expenses (61.5) (63.6) (121.3)
EBITDA 16.7 13.1 28.6
Depreciation on tangible assets (5.6) (5.1) (10.2)
Amortisation of goodwill (1.9) (1.6) (3.2)
Operating profit 9.2 6.4 15.2
Operating profit
- Continuing 9.2 7.5 16.3
- Discontinued - (1.1) (1.1)
Operating profit 9.2 6.4 15.2
Share of operating loss of associates
(including goodwill amortisation
of #0.3m (Six months ended July 2000:#nil) (0.2)
(Year ended Jan 2001:#0.2m)) - (0.2)
Loss on disposal of discontinued operations - (8.3) (8.4)
Profit/(loss) on ordinary activities before 2 9.0 (1.9) 6.6
interest
Interest receivable 0.2 0.1 0.2
Interest payable (0.7) (0.4) (0.9)
Profit/(loss) on ordinary activities before 2 8.5 (2.2) 5.9
taxation
Taxation on profit on ordinary activities (3.9) (2.6) (6.4)
Profit/(loss) for the financial period 4.6 (4.8) (0.5)
Equity dividends 3 (1.7) (1.7) (5.8)
Retained profit/(loss) for the financial period 2.9 (6.5) (6.3)
Earnings/(loss) per share 4 2.70p (2.76p) (0.29p)
Diluted earnings/(loss) per share 4 2.68p (2.76p) (0.29p)
IIMR headline earnings per share 4 3.99p 2.93p 6.55p
Adjusted earnings per share 4 3.99p 2.93p 6.55p
Statement of total recognised gains and
losses
Profit/(loss) for the financial period 4.6 (4.8) (0.5)
Currency translation differences on foreign (0.6) 0.5 0.3
currency net assets and certain loans
Total gains and losses recognised since last 4.0 (4.3) (0.2)
Annual Report
Group Balance Sheet
Unaudited
31 July 31 July 31 Jan
2001 2000 2001
Notes #m #m #m
Fixed assets
Intangible assets 18.8 17.2 17.7
Tangible assets 60.9 60.9 60.0
Investments 7 5.1 0.4 2.6
84.8 78.5 80.3
Current assets
Stocks 28.1 27.4 24.6
Debtors 36.8 39.0 28.0
Cash at bank and in hand 7.0 5.2 4.5
71.9 71.6 57.1
Creditors: amounts falling due within one year
Bank and other borrowings (7.5) (2.9) (7.4)
Other creditors (59.5) (69.6) (58.4)
(67.0) (72.5) (65.8)
Net current assets/(liabilities) 4.9 (0.9) (8.7)
Total assets less current liabilities 89.7 77.6 71.6
Creditors: amounts falling due after more than one
year
Bank and other borrowings (17.0) (7.0) -
Other creditors (0.2) (0.4) (0.6)
Provisions for liabilities and charges (6.6) (8.2) (8.0)
Total net assets 65.9 62.0 63.0
Capital and reserves
Called up share capital 17.1 17.2 17.1
Share premium account 42.2 42.2 42.2
Capital redemption reserve 0.4 0.3 0.4
Profit and loss account 6.2 2.3 3.3
Shareholders' funds 5 65.9 62.0 63.0
Total equity 65.9 62.0 63.0
Group Cash Flow Statement
Unaudited
Six Six Year
months months
ended ended ended
31 July 31 July 31 Jan
2001 2000 2001
Notes #m #m #m
Net cash inflow from operating 6(1) 6.5 4.7 20.3
activities
Net cash outflow from returns on
investments and
servicing of finance (0.5) (0.5) (0.8)
Taxation paid (3.0) (1.6) (6.7)
Net capital expenditure (6.4) (8.4) (12.3)
Purchases of businesses (5.9) (3.0) (6.2)
Disposal of business (0.7) (0.4) 0.7
Equity dividends paid (4.1) (3.9) (5.6)
Net cash outflow before financing (14.1) (13.1) (10.6)
Financing
Purchase of own shares - (1.2) (1.7)
Unsecured loan more than 1 year 17.0 7.0 6.0
Capital element of finance lease
payments
(0.2) (0.2) (0.6)
Net cash inflow from financing 16.8 5.6 3.7
Increase/(decrease) in cash 6(2) 2.7 (7.5) (6.9)
Notes to the Financial Information
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
2001, except for the adoption of FRS 19 " Deferred Taxation " which is
effective for the first time this year. The adoption of this standard has not
resulted in any restatement for the Group's financial statements for the year
ended 31 January 2001.
The interim financial statements are unaudited but have been reviewed by the
auditors. The comparative figures for the year ended 31 January 2001 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 2001 31 July 2000 31 Jan
2001
#m #m #m
(a) Turnover
Business sector analysis
Flight Services
- continuing operations 140.0 136.9 274.7
- discontinued operations - 1.3 1.5
140.0 138.2 276.2
Retail Services 81.1 74.5 156.8
Total turnover 221.1 212.7 433.0
Geographical analysis
United Kingdom 183.8 176.5 356.5
Rest of the world
- continuing operations 37.3 34.9 75.0
- discontinued operations - 1.3 1.5
37.3 36.2 76.5
Total turnover 221.1 212.7 433.0
Notes to the Financial Information
Continued
2. Segmental analysis
(continued)
Six Six Year
months months
ended ended ended
31 July 31 July 31 Jan
2001 2000 2001
#m #m #m
(b) Profit before taxation
Business sector analysis
Flight Services
- continuing operations 10.1 8.4 17.0
- discontinued operations - (1.1) (1.1)
- share of operating loss of associates (0.2) - (0.2)
(including goodwill amortisation)
- goodwill amortisation (1.0) (0.7) (1.4)
- loss on disposal of discontinued operations - (8.3) (8.4)
8.9 (1.7) 5.9
Retail Services
- continuing operations 1.0 0.7 2.5
- goodwill amortisation (0.9) (0.9) (1.8)
0.1 (0.2) 0.7
9.0 (1.9) 6.6
Net interest (0.5) (0.3) (0.7)
Profit/(loss) on ordinary activities before taxation 8.5 (2.2) 5.9
Geographical analysis
United Kingdom
- continuing operations 8.0 5.7 12.1
- goodwill amortisation (0.6) (0.6) (1.3)
7.4 5.1 10.8
Rest of the World
- continuing operations 3.1 3.4 7.4
- discontinued operations - (1.1) (1.1)
- share of operating loss of associates (0.2) - (0.2)
(including goodwill amortisation)
- goodwill amortisation (1.3) (1.0) (1.9)
- loss on disposal of discontinued operations - (8.3) (8.4)
1.6 (7.0) (4.2)
9.0 (1.9) 6.6
Net interest (0.5) (0.3) (0.7)
Profit/(loss) on ordinary activities before taxation 8.5 (2.2) 5.9
Notes to the Financial
Information
Continued
3. Dividends
An interim dividend of 1.0 pence (31 July 2000 1.0 pence) per ordinary share
will be paid on 9 November 2001 to shareholders on the register at the close of
business on 5 October 2001.
4. Earnings per share
Profit/(loss) for the Earnings per share
period
31 July 31 July 31 31 31 31 Jan
Jan July July
2001 2000 2001 2001 2000 2001
#m #m #m Pence Pence Pence
Profit/(loss) for the financial
period and
earnings/(loss) per share 4.6 (4.8) (0.5) 2.70 (2.76) (0.29)
Adjustment for loss on disposal of
discontinued operations - 8.3 8.4 - 4.77 4.87
Adjustment for goodwill 2.2 1.6 3.4 1.29 0.92 1.97
amortisation
Adjusted profit and IIMR headline 6.8 5.1 11.3 3.99 2.93 6.55
earnings per share
Adjusted profit and adjusted
earnings
per share 6.8 5.1 11.3 3.99 2.93 6.55
The weighted average number of shares in issue during the six months ended 31
July 2001 were 170,576,555 (31 July 2000:173,976,555 and 31 January 2001:
172,491,309).
Earnings per 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 earnings to eliminate certain items, adjusted for any
tax effect. Finally, the IIMR headline earnings per share is adjusted to arrive
at an adjusted earnings per share by eliminating the effect of exceptional
items and the loss on sale of fixed assets, adjusted for any tax effect.
Diluted earnings per share of 2.68p (2000/01: loss per share of 2.76p) has been
calculated by reference to the profit for the financial period of #4.6m (2000/
01: loss of #4.8m) and the weighted average number of shares in issue during
the period of 170,576,555 (2000/01: 173,976,555), as adjusted for potentially
dilutive ordinary shares of 1,144,699 (2000/01: 200,558).
Notes to the Financial Information
continued
5. Reconciliation of movements in shareholders' funds
Six Six Year
months months
ended ended ended
31 July 31 July 31
Jan
2001 2000 2001
#m #m #m
Profit/(loss) for the financial period 4.6 (4.8) (0.5)
Dividends (1.7) (1.7) (5.8)
Retained profit/(loss) for the financial period 2.9 (6.5) (6.3)
Currency translation differences on foreign currency net
assets and certain loans
(0.6) 0.5 0.3
Goodwill reinstated on disposal of businesses - 8.1 9.0
Goodwill charged to the profit and loss account
previously written off directly
to reserves 0.6 0.6 1.2
Purchase of own shares - (1.2) (1.7)
Net increase in shareholders' funds 2.9 1.5 2.5
Opening shareholders' funds 63.0 60.5 60.5
Closing shareholders' funds 65.9 62.0 63.0
6. Notes to the cash flow statement
6.1 Reconciliation of operating profit to net cash
inflow from
operating activities
Six Six Year
months months
ended ended ended
31 July 31 July 31
Jan
2001 2000 2001
#m #m #m
Operating profit 9.2 6.4 15.2
Depreciation 5.6 5.1 10.2
Goodwill amortisation 1.9 1.6 3.2
Increase in stocks (3.4) (6.3) (3.4)
Increase in debtors (8.8) (13.3) (3.2)
Increase/(decrease) in creditors 2.0 11.2 (1.7)
Net cash inflow from operating activities 6.5 4.7 20.3
Notes to the Financial Information
continued
6. Notes to the cash flow statement
(continued)
6.2 Reconciliation of net debt Six months Six months Year
ended ended ended
31 July 31 July 31 Jan
2001 2000 2001
#m #m #m
Increase/(decrease) in cash in the period
2.7 (7.5) 6.9)
Increase in debt financing (16.8) (6.8) (5.4)
Change in net debt from cash flows (14.1) (14.3) (12.3)
Translation differences (0.3) 0.1 0.3
Movements in net debt in period (14.4) (14.2) (12.0)
Opening net (debt)/cash (3.4) 8.6 8.6
Closing net debt (17.8) (5.6) (3.4)
7. Acquisitions
On 6 March 2001 the Group purchased the flight catering business of Banksia
Pacific Pty Ltd. for a consideration of #1.7m. This resulted in provisional
goodwill of #1.7m which is being amortised over 10 years.
On 2 April 2001 the Group acquired a 25% interest in AirChef 2000 Srl for a
consideration of #2.8m. This resulted in provisional goodwill of #2.5m which is
being amortised over 20 years.
On 19 May 2001 the Group purchased the flight catering business of Hyatt Hotel
Canberra at Canberra for a consideration of #1.4m. This resulted in provisional
goodwill of #1.4m which is being amortised over 10 years.
8. Post balance sheet event
On 1 August 2001 the Group acquired 51% of Jordan Flight Catering Co Ltd, a
flight kitchen operation in Jordan, for a cash consideration of #8.8m. The
joint venture will have exclusive rights to provide flight catering services at
Amman and all other Jordanian airports for seven years.
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