RNS Number:3055R
Schiphol Nederland B.V.
15 February 2007
Schiphol Group: Net result, excluding extraordinary items, increases by 7.2% to
EUR 198 million
Including non-recurring income and fair value gains on property, net result
amounts to EUR 527 million
Press Release
Schiphol, 15 February 2007
* Result after tax, excluding fair value gains on the property
portfolio and excluding non-recurring income from finalisation of opening
balance sheet for tax purposes, up by 7.2% at EUR 198 million (2005: EUR 184
million), and exceeds the financial target we set ourselves
* Result after tax, including fair value gains on the property
portfolio and non-recurring income from finalisation of opening balance sheet
for tax purposes, up 173% at EUR 527 million (2005: EUR 193 million)
* Revenue topping one billion euros for the first time, up 9.4% at EUR
1,037 million (2005: EUR 948 million)
* Operating result up 1.7% at EUR 316 million (2005: EUR 311 million)
* EBITDA, at EUR 478 million, almost unchanged compared with 2005
* Proposed dividend of EUR 462 per share (2005: EUR 323) - based on a
more generous dividend policy with a payout ratio of 40% of the result after tax
excluding fair value gains on property and excluding non-recurring income from
finalisation of opening balance sheet for tax purposes (previous payout ratio
30%)
* Low return on regulated Aviation activities amply compensated by
Consumers and Real Estate - the strength of the AirportCity formula
Main business results
* 4.6% increase in passenger numbers at Amsterdam Airport Schiphol,
Rotterdam Airport and Eindhoven Airport to 48.3 million, with 46.1 million
passengers passing through Amsterdam Airport Schiphol (4.3% growth)
* Return on Aviation business considerably lower, owing to higher costs
and one-off environmental contributions.
* Concession revenues generated by the Consumers business area 7.7%
higher at EUR 120 million despite depressed sales following liquids & gels ban
* EUR 29 million fair value gains on investment property (2005: EUR 12
million)
* International activities contribute EUR 10 million to result after
tax (2005: EUR 6 million)
A word from CEO Gerlach Cerfontaine:
'We can look back with satisfaction on 2006 as a year in which we exceeded our
published financial forecasts. Amsterdam Airport Schiphol maintained its
position as one of the four most important airports in Europe. Once again, our
unique AirportCity formula proved its worth, with Consumers and Real Estate
together contributing 75% of the company's operating result.
This press release may contain certain forward-looking statements with respect
to the financial condition, results of operations and business of Schiphol Group
and certain of the plans and objectives of Schiphol Group with respect to these
items. By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in the
future and there are many factors that could cause actual results and
developments to differ materially from those expressed or implied by these
forward-looking statements. Forward-looking statements and forecasts are based
upon current data and historical experience which are not necessarily indicative
of future outcomes or the financial performance of Schiphol Group and should not
be considered in isolation.
This press release is based on the financial statements prepared by the Board of
Management and contains only some of them. The complete financial statements
will be put before the General Meeting of Shareholders for adoption on 12 April
2007. It follows that the publication of the company's accounts required by law
has not yet occurred. The auditors have issued an unqualified report on the
financial statements as prepared.
This is an English translation of the Dutch version of Schiphol Group's results
for 2006. In the event of any disparity between the Dutch original and this
translation, the Dutch text will prevail.
Key figures
EUR million unless stated otherwise 2006 2005 +/-
Financials
Revenue 1,037 948 9.4%
Fair value gains on investment property 29 12 130.8%
Operating expenses 759 659 15.2%
Operating result 316 311 1.7%
Result before tax 291 279 4.6%
Net result excluding fair value gains on investment property 198 184 7.2%
and effect of opening balance sheet for tax purposes
Results attributable to shareholders (net result) 527 193 173.2%
Depreciation, amortisation and impairment 162 167 - 3.0%
EBITDA 1) 478 478
Capex (investments in property, plant and equipment) 250 268 - 6.7%
Cash flow from operating activities 362 307 17.9%
Ratios
RONA after tax 2) 6.7% 6.7%
Return on equity (ROE) 3) 21.2% 8.9%
Leverage 4) 24.8% 29.4%
FFO / total debt 5) 35.9% 28.7%
FFO interest coverage ratio 6) 8.1x 6.8x
Earnings per share 7) 3,077 1,126 173.2%
Business volume (in numbers)
Air transport movements 8) 450,166 430,566 4.6%
Passenger movements (x 1,000) 8) 48,287 46,152 4.6%
Cargo (x 1,000 tonnes) 8) 1,527 1,450 5.3%
Average effective workforce in full-time equivalents 2,293 2,179 5.2%
1) EBITDA: operating result plus depreciation, amortisation and impairment
2) RONA after tax: operating result after tax / (average non-current assets
minus deferred tax assets)
3) ROE: net result attributable to shareholders / average total equity
4) Leverage: interest-bearing debt / (total equity + interest-bearing debt)
5) Funds from operations (cash flow from operating activities before changes in
working capital) / total debt
6) Funds from operations plus gross interest expense / gross interest expense
7) Based on net result attributable to shareholders. The net result is adjusted
to establish the dividend per share
8) Schiphol Group: Amsterdam Airport Schiphol, Rotterdam Airport and Eindhoven
Airport
Revenue
Revenue reported by Schiphol Group in 2006 amounted to EUR 1,037 million,
representing an increase of 9.4% compared with the 2005 figure of EUR 948
million. Aviation, with EUR 630.9 million (2005: EUR 572.5 million), made the
largest contribution, growing by 10.2% in 2006 (9.0% in 2005). Revenue generated
by Consumers amounted to EUR 230.5 million (2005: EUR 207.3 million), an
increase of 11.2% (7.1% in 2005), with Real Estate reporting a revenue of EUR
109.1 million (2005: EUR 104.3 million), an increase of 4.6% (8.5% in 2005) and
Alliances & Participations reporting EUR 66.2 million (2005: EUR 63.5 million),
an increase of 4.3% (2.6% in 2005).
Operating expenses
Operating expenses rose by 15.2% (EUR 100 million), from EUR 659 million to EUR
759 million, the increase being largely attributable to the increase in security
costs at Amsterdam Airport Schiphol by EUR 32 million. Energy costs increased by
EUR 10 million and consultancy and other professional fees were up by EUR 7
million (among others EUR 3.6 million for the Six Sigma project and EUR 2
million for the privatisation). Other factors in the increased operating
expenses in 2006 were a one-off contribution of EUR 10 million for the
alleviation of 'distress cases' among people suffering from aircraft noise in
the vicinity of Amsterdam Airport Schiphol and a contribution of EUR 8.5 million
to Stichting Mainport en Groen (for landscaping projects in the environs). Staff
costs were up by EUR 19 million, following the release of various employee
benefit provisions with a net amount of EUR 15 million in 2005. Finally, there
were environmental costs of EUR 5 million for aeration of drainage ditches when
the oxygen content of the water became depleted due to the effects of de-icing
fluids.
Operating result and the net result
The operating result for 2006 amounted to EUR 316 million, representing an
increase of 1.7% compared with the 2005 figure of EUR 311 million.
The net result (attributable to shareholders) for 2006 amounted to EUR 527
million, compared with EUR 193 million in 2005, the increase being largely
accounted for by non-recurring income of EUR 309 million resulting from the
settlement agreement reached with the Dutch Tax Authorities concerning the
opening balance sheet as at 1 January 2002. Without this non-recurring income
and without the fair value gains on our property (EUR 20 million after tax), the
net result was EUR 198 million, an increase of 7.2%.
The return on equity (ROE) came in at 21.2% (2005: 8.9%), partly on the strength
of the non-recurring income referred to above. Excluding the aforementioned
income and the investment property fair value gains, the ROE amounted to 8.0% in
2006 (2005: 8.5%).
Aviation
The Aviation business area is solely active at Amsterdam Airport Schiphol.
Aviation provides services and facilities to airlines, passengers and handling
agents. The Netherlands Competition Authority (NMa) regulates the charges which
are levied and sets limits on the returns generated.
Sources of revenue: airport charges (aircraft, passenger and security charges)
and concession fees (paid by oil companies for the right to provide aircraft
refuelling services). In 2006, the business area accounted for 61% of Schiphol
Group's revenues and 23% of the operating result.
EUR million 2006 2005 +/-
Revenue 631 573 10.2%
Operating expenses 558 473 17.8%
EBITDA 190 214 -11.3%
Operating result 73 100 -26.2%
Capex (Investments in property, plant and equipment) 173 187 -7.3%
RONA after tax 2.9% 4.1%
Amsterdam Airport Schiphol retained its position as Europe's fourth-largest
passenger and third-largest cargo airport in 2006, recording passenger growth of
4.3% and cargo growth of 5.3%. The number of air transport movements rose by
4.6%, involving smaller aircraft on average - the average maximum takeoff weight
was down by 2.3%, from 100.5 to 98.2 tonnes.
Revenues generated by the business area were up by 10.2%, at EUR 631 million.
Apart from the volume factors already mentioned, the increase of 2.0% in
aircraft and passenger charges and the 7.4% increase in the security charge,
both of which came into effect on 1 April 2006, lifted income. Security costs
increased by EUR 32 million and now account for 36% of Aviation's overall cost
base. Added to this, were higher environmental costs for drainage ditch aeration
when oxygen levels in the water became too low as a result of increased
concentrations of de-icing fluids (EUR 5 million), higher staff costs (EUR 23.5
million) and one-off contributions to Stichting Mainport & Groen (landscaping
projects) and for alleviating aircraft noise distress cases (together amounting
to EUR 18.5 million).
The business area saw costs per workload unit (WLU), a proxy to measure
efficiency, rise 13% in 2006 compared with 2005, to EUR 9.10. One WLU is the
equivalent of one passenger or 100 kg of cargo. Eliminating the extra security
costs, higher depreciation charges and the aforementioned one-off contributions,
the increase in Aviation's costs per WLU was 8%.
Capital expenditure by Aviation in 2006 at Amsterdam Airport Schiphol totalled
EUR 173 million, including the 70 MB baggage handling programme (EUR 33
million), the expansion of Hall D baggage facilities (EUR 16 million), Apron J
(EUR 17 million) and the construction of a new corridor linking Pier B and Pier
C (EUR 11 million). There were also investments in security (EUR 22 million) and
fire protection (EUR 15 million).
Consumers
The activities of the Consumers business area concern the granting of
concessions for airport shopping and cafe, bar and restaurant facilities,
operation of car parks and the marketing of advertising opportunities at
Amsterdam Airport Schiphol. The Consumers business area also has activities
outside the Netherlands concerned with retail activity management contracts.
Sources of revenue: concessions, parking, advertising and management fees. In
2006, the business area accounted for 22% of Schiphol Group's revenues and 43%
of the operating result.
EUR million 2006 2005 +/-
Revenue 231 207 11.2%
Operating expenses 94 83 13.7%
EBITDA 151 139 8.1%
Operating result 136 125 9.5%
Capex (Investments in property, plant and equipment) 12 16 -24.8%
RONA after tax 48.5% 40.8%
Revenues generated by Consumers were up 11.2% in 2006, at EUR 231 million, with
concession income making the biggest contribution, followed by parking fees. The
strongest revenue growth, however, was seen in advertising. Thanks to several
new contracts and a couple of major campaigns on the part of financial
institutions, advertising income increased 29% to EUR 13.7 million.
The increase in concession income was attributable to growth in passenger
numbers, a higher average spend per passenger and an increase in the average
level of concession fees. Car parking revenue was lifted by the increased
attractiveness of long-stay parking at Amsterdam Airport Schiphol due to the
introduction of the Smart Parking online booking product and higher charges for
short-stay parking. The liquids & gels ban in response to the foiled terrorist
attacks in London on 10 August 2006 had the effect of depressing overall
concession income by EUR 1.5 million. However, effective marketing campaigns and
the introduction of the gate delivery service minimised the impact, and
concession revenue for the whole of 2006 was in fact up by 7.7%.
Concession income from the See Buy Fly shops per departing passenger on
international flights, up from EUR 3.68 to EUR 3.75, were fractionally higher
over the year. This was partly attributable to the opening of new shops, such as
Rolex, Swatch and Mont Blanc. Car parking revenues per passenger rose by 2.2%,
to EUR 2.78 (2005: EUR 2.72).
Capital expenditures by Consumers in 2006 amounted to EUR 12 million, concerned
mainly with the acquisition of new flight information screens. The new screens
carry advertising messages as well as operational information. By year-end 2007,
all 2,000-plus old screens will have been replaced by 1,850 new Schiphol Dynamic
Displays.
At the end of 2006, agreement was reached with KLM for Schiphol Group to take
over the operation of the liquor and tobacco retail activities in the See Buy
Fly area, previously operated by KLM, with effect from 3 January 2007. In
connection with this agreement a new company, Schiphol Airport Retail BV, was
established for the independent operation of airport shops. From 2007, these
retail operations activities were added to the Consumers business area. Taking
over these activities is in line with the strategy of expanding non-aviation
activities.
Real Estate
The Real Estate business area develops, manages, operates and invests in
property at and around airports at home and abroad. The greater part of the
portfolio, comprising both airport buildings and commercial properties together
with the land they stand on is located on and around Amsterdam Airport Schiphol.
Sources of revenue: rents, including ground rents. The business area also makes
a significant contribution to Schiphol Group results with the other property
results (sales, release of land for development and fair value gains and losses
on property).
In 2006, the business area accounted for 11% of Schiphol Group's revenues and
32% of the operating result.
EUR million 2006 2005 +/-
Revenue 109 104 4.6%
Result on sale of investment property 10 10
Fair value gains on investment property 28 11 148.8%
Operating expenses 47 47
EBITDA 120 102 17.8%
Operating result 101 78 28.6%
Capex (Investments in property, plant and equipment) 69 50 37.9%
RONA after tax including fair value gains on investment 6.2% 4.3%
property and share in results of associates/interest
income
The operating result reported by Real Estate in 2006 rose by EUR 23 million.
This was the combined effect of improved results from the letting of operating
areas at Amsterdam Airport Schiphol, higher occupancy levels and strong
appreciation of the Real Estate property portfolio, amounting to EUR 29 million
in 2006 compared with EUR 11 million in 2005.
Sales of property yielded a profit of EUR 10 million (EUR 10 million in 2005).
They concerned two industrial premises. Profit was also recorded on the
contribution of land to Schiphol Logistics Park C.V., in which we now have an
interest of almost 40%. In contrast to preceding years, no property was
transferred to ACRE Fund in 2006.
The occupancy level of the portfolio rose from and 88.2% to 92.8%, excluding
buildings 70 and 72 (two properties, that are to be demolished and for whose
tenants new premises are being sought). On the Schiphol Airport site, where 90%
of the total portfolio is located, the occupancy figure at year-end 2006 was the
same as for 2005, at 87%.
Capital expenditure by Real Estate in 2006 amounted to EUR 69 million, of which
EUR 23 million was accounted for by an office and industrial premises at
Amsterdam Airport Schiphol and EUR 6 million by the construction of industrial
premises in Milan.
Alliances & Participations
The task of the Alliances & Participations business area is to roll out the
AirportCity formula internationally. Alliances & Participations manages the
regional airports in the Netherlands, the Schiphol Group interests in airports
abroad and Utilities.
Sources of revenue: mainly airport charges. The various Schiphol Group
associates also contribute to group results through performance fees and
dividends, as accounted for in share in results, and in the interest they pay on
loans. Intellectual Property fees are also reflected in the revenue. The Utility
activities generate revenue from the onward supply of electricity, gas and water
to third parties.
In 2006, the business area accounted for 6% of Schiphol Group's revenues and 2%
of the operating result. Equity method accounting means that changes in the
current value of the investments are not reflected in the results.
EUR million 2006 2005 +/-
Revenue 66 64 4.3%
Fair value gains on investment property 0 1
Operating expenses 61 56 8.9%
EBITDA 17 22 -22.2%
Operating result 6 9 -34.2%
Capex (Investments in property, plant and equipment) 6 24 -76.5%
RONA after tax including fair value gains on investment 6.5% 8.4%
property and share in results of associates/interest income
The operating result of Alliances & Participations was down by EUR 3 million in
2006. The greater part of the results of our investments in Brisbane Airport and
JFK IAT, New York, among others is, however, presented as share in results of
associates and financial income, together amounting to EUR 10.9 million (2005:
EUR 8.2 million) and is therefore not included in this operating result.
Airports outside the Netherlands
In 2006 we received EUR 10.0 million as our share in the results and as interest
income from our associate Brisbane Airport Corporation Holdings, in which
Schiphol Australia has an interest of 15.6%. A further EUR 1.6 million was
received in respect of intellectual property. The total of EUR 11.6 million
excludes the increase in the fair value of our interest in Brisbane. The number
of passengers using Brisbane Airport rose by 5.9% in 2006, from 15.9 million to
16.9 million.
JFK IAT, in which Schiphol USA has an interest of 40%, saw the number of
passengers using Terminal 4 at New York's JFK Airport rise from 6.6 million to
7.7 million, an increase of 17.1%. The basis fee and the performance fee
together produced a figure of EUR 1.2 million (EUR 1.3 million in 2005) for our
share in the result of this associate.
Despite an excellent bid and the many efforts, right up to ministerial level on
official visits to China, we failed to acquire an interest in the equity of
Nanjing Airport. We shall continue to pursue our international strategy with a
clear focus on China.
Airports in the Netherlands
The operating result of Rotterdam Airport was down by 36.2% at EUR 2.3 million,
owing to increased costs for security, energy and employee benefits among other
factors. The increase in staff costs was mainly due to a non-recurring addition
to employee benefit provisions whereas provisions were released in 2005. The
number of passengers using Rotterdam Airport rose by 3.2% to 1,077,114.
Eindhoven Airport on the other hand saw its operating result increase by 86% to
EUR 3.6 million, mainly on the back of a 20.9% rise in the number of passengers
to 1,143,557.
Other investments
The operating result of Utilities in 2006 fell by 81% to EUR 1.2 million (2005:
EUR 6.3 million), partly owing to the effect of incidental income in 2005. A
major factor, however, was the release of employee benefit provisions in 2005.
The Schiphol Telematics operating result increased by 80.4% in 2006, to EUR 4.4
million (2005: EUR 2.4 million). The business was broken up in 2006 into a
network business (now wholly-owned by Schiphol Group) and a service business
(now part of KPN).
Capital expenditure by Alliances & Participations in 2006 totalled EUR 6
million.
Investments and finance
The cash flow from operating activities improved from EUR 307 million in 2005 to
EUR 362 million in 2006. The main reason for this was that less corporate income
tax was paid in 2006, namely EUR 63 million compared with EUR 114 million in
2005.
The positive cash flow from operating activities and investing activities (free
cash flow) of EUR 119 million plus the existing cash balances were sufficient to
fund loan repayments and lease payments of EUR 35 million and dividend payments
of EUR 55 million. The net amount of cash balances and bank overdrafts rose by
EUR 37 million, from EUR 262 million to EUR 299 million.
The investments in property, plant and equipment during the year amounted to EUR
250 million compared with EUR 268 million in 2005.
The total amount of outstanding interest-bearing loans and lease liabilities as
at year-end 2006 was EUR 898 million (EUR 936 million in 2005). In 2006, new
loans and lease liabilities totalling EUR 9 million were contracted and
repayments totalling EUR 25 million were made. No new loans were issued under
the Euro Medium Term Note (EMTN) programme in 2006. The average interest expense
fell in 2006 from 5.05% in 2005 to 4.98%.
Dividend proposal
Commencing with 2006, there has been agreement with the shareholders that the
dividend should be 40% (has been 30% since 2003) of the result (attributable to
shareholders), excluding the fair value gains on investment property, after tax
and excluding the non-recurring income from the finalisation of the opening
balance sheet for tax purposes. The result of EUR 527 million gives earnings per
share of EUR 3,077 (2005: EUR 1,126). The adjusted result for the purposes of
the dividend calculation is EUR 198 million and the proposal is to declare a
dividend of EUR 462 (2005: EUR 323) per share.
Events after the balance sheet date
Oxygen levels in drainage ditches
At the end of January 2007 it was found that the water quality standards of the
Rijnland Polder Board were not being met in various respects. The Polder Board
has announced its intention to impose a fine on Schiphol Group for this
violation.
Privatisation
During the term of the new government coalition headed by Premier Balkenende
there will be no stock market flotation. This decision was contained in the
coalition government policy published on 7 February 2007. It is expected that
the new coalition will reverse the move by the previous government to annul the
decision of the City of Amsterdam to vote against amendment of the Articles of
Association. As a result, the City of Amsterdam has suspended its request before
the Enterprise Chamber (Ondernemingskamer) of the Amsterdam Court of Appeal for
an inquiry into the affairs surrounding the privatisation plans.
Prospects
The Board of Management expects passenger numbers at Amsterdam Airport Schiphol
to rise by almost 2 million (approx. 4% growth) in 2007 to a total of almost 48
million and cargo volume to rise to approximately 1.6 million tonnes.
The number of employees will be higher in 2007, partly owing to the takeover of
the liquor and tobacco sales activities.
Schiphol Group's capital expenditure in 2007 is expected to be around EUR 370
million, slightly less than half of which will concern aviation facilities at
Amsterdam Airport Schiphol. Financing charges will consequently increase. The
repayment commitments plus the required funding of the capital expenditure
compared with the available cash resources and the forecast cash flow from
operating activities indicates a limited borrowing requirement.
The Board expects the net result for 2007, excluding fair value gains on
property, to be slightly higher than the 2006 net result of EUR 198 million
(excluding fair value gains on property and excluding the non-recurring income
resulting from the finalisation of the opening balance sheet for tax purposes).
014-2007/rw/ms
Annual Report 2006
An electronic version of the 2006 Annual Report can be viewed as from mid-March
on the corporate website www.schipholgroup.com. Printed versions will be
available as from mid April by e-mailing investor_relations@schiphol.nl.
Information for the press:
Press conference 10:00 CET
Click the link below to view the full press release, including the balance
sheet, profit and loss account, statement of changes in shareholders' equity and
cash flow statement
http://hugin.info/132864/R/1105306/198702.pdf
This information is provided by RNS
The company news service from the London Stock Exchange
END
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