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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Alpha Airports | LSE:AAP | London | Ordinary Share | GB0000281328 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 109.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
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Alpha Airports Group PLC
06 July 2006
Alpha Airports Group Plc
Confirmation of results for year ended 31 January 2006; completion of Special
Committee investigation
Alpha Airports Group Plc is one of the world's leading aviation support services
companies, providing retailing and catering services for airlines and airports.
Alpha's 6,900 staff service over 100 airlines worldwide and operate from over
200 outlets at 83 airports in 15 countries.
* Results for year ended 31 January 2006 audited and reconfirmed with no
adjustment
* Group's finances strong and trading sound
* Board continues to recommend a final dividend of 3.2p
* Investigation by Special Committee completed, conclusions presented to the
Board and actions underway
* Graham Frost steps down as Chairman of the Company
* Search for new Chairman underway; Peter Williams will act as Chairman in
the meantime.
Peter Williams, recently appointed Chief Executive, commented:
"I am delighted that last year's results have been confirmed. The Special
Committee's conclusions have been considered by the Board and a number of
actions are now underway to ensure appropriate internal controls and corporate
governance procedures are in place. We can now move to put the distraction of
recent events behind us and focus on taking the business forward.
"With strong finances and sound trading prospects, Alpha is in good shape and
has a bright future."
6 July 2006
Enquiries:
Alpha Airports Group Plc Tel: 020 8580 3226
Peter Williams, Chief Executive
Tim Redburn, Finance Director
College Hill Tel: 020 7457 2020
Mark Garraway
Stephen Davie
Chairman's Statement
The events of the past two months have overshadowed what was otherwise a period
of ongoing progress for the Group.
Suspension
The issues that gave rise to the suspension of the Company's shares are set out
fully in the Special Committee's Report below, but in summary they did not
affect the results for the year in terms of profit or cash and there is no
suggestion that they gave rise to any indirect advantage either financial or
otherwise for any member of staff or the Board. However, they fall short of the
levels of corporate governance that a public company should adhere to and the
Board is determined to deal properly with that issue following the resignation
of both the Chief Executive, Kevin Abbott, and the Finance Director, Heather
McRae, on 16 May.
Following these resignations we were fortunate to recruit Peter Williams as
Chief Executive and Tim Redburn as interim Finance Director. Both Peter and Tim
are highly rated and seasoned executives who have already made excellent
progress in restoring confidence with all of our stakeholders including
shareholders, customers, suppliers and employees as well as with all of our
external advisers. With the search for a permanent Finance Director underway,
the Board is confident the management of the Group is in safe hands.
Following the issue of the Report of the Special Committee and the issue by
PricewaterhouseCoopers LLP (PwC) of an unqualified Audit Report on the Group, I
consider that it is now appropriate for me to step down from the Board to enable
a new Chairman to be appointed who can provide long-term support for both Peter
Williams and the Company. The search for my successor has commenced and Peter
Williams will act as Chairman of the Board until an appointment is made.
Preliminary results reconfirmed
I am pleased to report that after a thorough review by the Company and its
advisers and completion of the audit by PwC, we have been able to reconfirm the
results of the Group for the year ended 31 January 2006, as released on 30
March, with no adjustment. These results are now audited.
Dividend
The Board continues to recommend a final dividend of 3.2p (2004/05: 3.0p),
giving a full year dividend per share of 4.2p (2004/05: 4.0p). Following
approval at the AGM, the dividend would be payable on 6 October 2006 to
shareholders on the register as at 8 September 2006.
Review of the year
The year under review was a period of significant developments across the
airline and airport industries. The growth of low-cost carriers despite the
sharp rise in oil prices, privatisation of airport assets around the world, bid
activity both in the UK and internationally for airport operators, and
industrial relations strife, were all headline news and are factors influencing
our thinking on the future shape of the business.
Against a backdrop of increasing competitive pressures in the UK, and following
a disappointing first half profit, the management team focused on building a
stronger performance in our core UK market through a programme of continued
innovation. In the latter part of the year, a programme of cost reduction was
introduced, the benefits of which are now being seen in an improving margin
performance.
It is, therefore, particularly pleasing to report that the overall performance
for the year benefited from a much improved second half in the UK, alongside
ongoing strong growth in our international business. We are particularly
encouraged by our international business, which continues to grow from strength
to strength.
Alpha is an internationally recognised aviation support company. At a recent
worldwide industry event, Alpha was acclaimed the "2006 Airport Travel Retailer
of the Year" as voted for by our global suppliers. In our airline services
business, we remain the only top three global player to generate both sales
growth and ongoing profitability over the past five years.
Across our business, the Group continues to generate high performances for our
airline and airport customer partners, and we continue to gain new customer
partners. Today, Alpha's 6,900 staff service over 100 airlines worldwide and
operate from over 200 outlets at 83 airports in 15 countries.
Whilst truly a global business, Alpha's UK and Ireland operations remain the
bedrock of the business, accounting for some 82% of Group revenues. In a highly
competitive environment, we are pleased with the rate of top line growth but
this has not been reflected in our bottom line performance. In the year under
review, just 41% of operating profit (before exceptional items and impairment
charges and after including the share of post tax profits of associate and joint
venture) came from the UK and Ireland markets. This represents an operating
profit return on sales of only 2%.
Conversely, our international business, representing only 18% of the Group's
sales, and 59% of the Group's operating profit, generated an operating profit
return on sales of 12%.
With competition set to intensify as European competitors seek to expand their
presence in the UK and Ireland, improving our domestic return on sales is an
absolute priority if we are to retain our market leading positions in the UK and
Ireland.
Since the year end, progress has been made on restructuring the Group into two
distinct business units focusing on our UK and international businesses. Within
the UK, the business has been further restructured into two divisions, Alpha
Airline Services and Alpha Airport Services.
Whilst we will continue to explore further international development
opportunities, it is clear that management's focus must remain on improving the
profitability of our business in the UK.
Results
This is the first set of full year results that the Group is reporting under
International Financial Reporting Standards (IFRS). With the balance of
earnings weighted towards the second half, underlying pre-tax profit (before
exceptional items and impairment charges and after including the post tax
results of joint venture and associate) increased 6.3% to #18.5m, on sales 13%
ahead of last year at #551m. With significantly lower net exceptional items
compared to the previous year, profit before tax increased 40% to #18.4m.
In the UK and Ireland, operating profit (before exceptional items and impairment
charges and after including the post tax results of joint venture and associate)
declined 33%, from #13.1m to #8.8m, despite 9% ongoing sales growth.
Conversely, our international business generated a significant 98% increase in
operating profit from #6.3m to #12.5m on an excellent 34% sales growth partly
driven by acquisitions.
This was a year of significant investment for the Group:-
* #21m in capital expenditure, including our major IT and business
transformation project (IRIS); and
* #4m in acquisitions in Romania and Bulgaria.
The net debt as at the year end was #37m but debt has risen in subsequent months
due to seasonal variances and further investment. During the year we entered
into a new #100m five year multi-currency revolving banking facility which gives
us headroom to leverage further expansion of the business.
Pensions
As with many employers, we have had to review our pension provision going
forward. We have moved to a 'career average' basis, against the previous 'final
salary' provision, so as to maintain an excellent ongoing pension benefit, but
at a cost that is affordable to both the employee and the employer. With an
employee contribution level of 8% of salary already in place, we knew that our
employees were unwilling to pay even more to protect their previous 'final
salary' benefit.
Outlook
The costs associated with the share suspension and the investigation, together
with the other consequential costs, will give rise to an exceptional item in the
half year ending 31 July 2006, which is expected to be in the region of #3m.
Operating profit for the first four months of the year is ahead of the
comparable period with improved performances overseas and in UK Airline
Services. With an ongoing commitment to innovation, tighter operational focus
and strong finances in place, the Board believes the current year should see
further progress. However the balance of the year will be affected by the
absence of the contribution from the ThomsonFly contract which ended in April
2006.
The aviation services market remains highly competitive but we are confident
that the new senior management team has made a good start by restoring
confidence with all our stakeholders and will bring fresh impetus to drive Alpha
forward.
Graham Frost
Chairman
Report of the Special Committee
Following receipt of a notification from the Company's auditors,
PricewaterhouseCoopers LLP (PwC), withdrawing their approval to the statement of
preliminary results for the year ended 31 January 2006 which were announced on
30 March 2006, the Company requested a temporary suspension in the listing of
its shares on 25 April 2006.
In view of the seriousness of the issues, the Board established a Special
Committee of two non-executive directors - Terry Stannard and Lesley James -
with the full powers of the Board itself to look into and deal as they saw fit
with all related matters. As a first step, the Special Committee instructed an
independent law firm, Ashurst, to investigate the matters fully. The Special
Committee was increased to four directors by the appointment of Peter Williams
and Tim Redburn on 22 May 2006.
PwC's withdrawal of their approval to the statement of preliminary results
related to the Group's new contractual arrangements with a customer entered into
in October 2005 (the "October 2005 arrangements").
The independent investigation into the October 2005 arrangements by Ashurst is
now complete and on the basis of that investigation the conclusions reached by
the Special Committee are as set out below. In addition, the preliminary
results of the Group for the year ended 31 January 2006 announced on 30 March
2006 have been reconfirmed with no adjustment.
Special Committee Conclusions
1. The October 2005 arrangements purported to make material changes to
the structure of the commercial dealings between the Group and the customer in
2005/06, but did not significantly change the amounts payable to or services
provided by the Group in its financial year. Material aspects of the October
2005 arrangements were not intended to have proper commercial effect and were
therefore not genuine transactions.
2. A five year contract between the Group and the customer associated
with the October 2005 arrangements is an agreement with proper economic
substance.
3. By entering into the October 2005 arrangements, the Group consciously
assisted that customer to put itself in a position in which it might have been
able to manipulate its own financial statements in circumstances in which the
customer's parent company was preparing for an initial public offering. No
claim has been brought or asserted against the Group to date as a result of
these circumstances. It is not possible to say at present whether any such
claims might be brought in the future or, if they were brought, whether they
would be successful in any material respect. If any valid claim were to be
brought, the Group would seek to pursue its own claims against third parties.
4. In connection with the audit, the Group made certain statements to
PwC which misrepresented the true effect of the October 2005 arrangements. In
some respects that was the result of a conscious decision by some senior
personnel of the Group.
5. The legal advice taken by the Group was a very significant factor in
the thinking of all those in a position of responsibility in relation to the
October 2005 arrangements. It remains the case that those responsible for the
Group entering into these arrangements considered them to be in the best
interests of the Group, because the arrangements involved a long-term contract.
No evidence has been found of personal gain by anyone at the Group involved in
the matter. The Special Committee has considered the roles of those in the Group
who were responsible for the Group entering into the October 2005 arrangements
and has already taken appropriate action.
6. The Special Committee concludes that the level of corporate
governance fell short of the standards expected and the Board expects to take
various steps to strengthen the corporate governance, internal control and risk
management of the Group and to review the advice received from its advisers on
this matter.
7. The work of the Special Committee is now complete.
Operational Review
During the first few months of 2006, the former management team undertook a
wide-ranging review of operations.
The aim was to create a high level strategy to deploy Alpha's resources more
effectively towards achieving long-term growth opportunities. In a growing but
highly competitive environment, margin pressure is, and will remain, the norm.
Current margin performance is such that with just a 1% improvement in UK and
Ireland return on sales, profitability can be significantly improved. The
strategic review identified actions to be taken in the short-term that will
deliver benefits in the current financial year as well as identifying
longer-term profit growth opportunities. In conducting the review, particular
note was taken of the fragmented nature of the market and the likelihood of
consolidation in the future.
With a new executive team now in place the existing strategy will inevitably be
reviewed and potentially revised. This will include an exercise to ensure that
the appropriate financial and control structures for the company going forward
are also in place.
Two essential plans, however, are likely to remain in place, namely:
- Plan For Profit, focusing on our existing UK and Ireland business to ensure it
is performing to its maximum potential; and
- Plan For Growth, which will see the transformation of the size, nature and
scope of the business, both organically and by acquisition of new assets.
To implement Plan For Profit three priorities were identified:-
1. To reorganise the business to better reflect our customers' own
organisations. We uniquely supply both retail and catering services to airports
and airlines. A major reorganisation of the UK business into two distinct
operating units has been implemented: Alpha Airline Services (trading as Alpha
Flight Services), to provide retailing and catering solutions for airlines; and
Alpha Airport Services (trading as Alpha Retail), to provide retailing and
catering solutions for airports. This reorganisation will enable us to reduce
costs, leverage synergies between the airport and airline businesses and improve
our capacity to lead consolidation in the market.
2. We have identified significant economies of scale and competitive advantage
to be available through the establishment of an integrated UK and Ireland supply
chain network. This will deliver enhanced buying power, improve response times,
align our logistical capability to our strategic goals, and enable our customers
and suppliers to work more effectively both with us, and all together, for
mutual benefits.
3. We have developed a strong 'Alpha culture' amongst our people. This has
delivered benefits to the business, but it can and must be developed further.
Through more focused incentivisation and reward, we will ensure that our people
are most effectively contributing to overall profit performance.
Plan For Growth is an ongoing programme and includes the development of our
international operations as well as a more expansive view of the role the Group
can play in the consolidation of the industry and in other related markets.
The Group has built a significant international presence and now has the
platform on which to be more selective in the opportunities it wants to pursue.
In future, we will focus on those geographies that allow us to best utilise our
core skills and capabilities.
Our success in Sri Lanka, where we have developed the best retailing performance
in South Asia, and the huge growth potential of the Indian market exemplify a
focus on fast emerging markets which are replicating the UK's model of providing
retailing and catering services for privatised airports and low-cost carriers.
In Australia, having built a network of quality flight kitchens, we are
delighted to have been appointed by Malaysian Airlines as their Australian
network partner from May 2006. This is a major step, but not the last, in our
Australian development plans. With the Malaysian Airlines contract, our
international flight kitchens will be operating at 30% capacity utilisation
giving us significant potential for future growth.
We will continue to review the criteria by which we assess international
opportunities. International development will not be restricted to tendering
for airport and airline contracts, but will also include a greater emphasis on
acquisitions in both the airport and airline services arena.
In building our current scale, we have developed a range of skills and
capabilities that would allow us to play a leading role in consolidation of the
industry. We have also identified transport related industries, such as rail,
where we believe our core retail and catering skills could be deployed.
Much work needs to be done in refining our strategy and this will be a key
priority for the new senior management. However we are convinced that there are
exciting opportunities to pursue in the future.
UK and Ireland
Airlines
2005/06 began with the successful start-up of catering services to American
Airlines at Heathrow and Gatwick. However, the very difficult employment market
at Heathrow meant that after start-up, when staff from other Alpha units
returned to their bases, we struggled to recruit the specialist skills required,
and had to rely on excessive and expensive overtime from our Heathrow staff. We
thank our Heathrow staff for their tremendous efforts and support during this
period, but we incurred short-term excess labour costs of nearly #1.5m during
this period. By late summer, we had achieved the required full employment
target at Heathrow.
We were reappointed for a further five year term as retailers and caterers for
the newly formed and fast growing Excel Airways/Air Atlanta airlines group, and
similarly retained the BA CitiExpress contract as they make the transition to BA
Connect, with an Alpha-designed retail onboard service. Sadly, we lost the
ThomsonFly catering contract from Spring 2006 after 30 years' service at
Manchester and Birmingham. This is a major loss to the Group, and with
additional regional airport capacity being invested by LSG Skychefs and its
partners, it implies increased competition going forward in our core regional
airport network. Alpha has again reviewed its organisational structures, and
developed a clear plan to deliver ongoing improvements to our commercial offers
at a reduced delivery cost. This plan necessitated significant restructuring,
with 143 roles made redundant at a cost of #2.1m in 2005/06.
Investment in our business is key to our future strategy. We have invested #6m
into our Manchester operations, closing two old facilities at the end of their
leases, creating a new bonded warehouse facility, and expanding and upgrading
our ten year old flight kitchen. These upgraded facilities will help to provide
the lower cost base and flexibility that is essential to underwrite future
profitability. Similarly, at Birmingham we have upgraded and extended our
flight kitchen, and converted the previous charter flight kitchen into our Blue
Sky Service central assembly unit. In Dublin, with the ongoing growth of our
low-cost and charter airline customer base, we have moved to bigger, better
premises.
Our recently launched Blue Sky Service has been a tremendous success, generating
at least 19% enhanced traveller satisfaction onboard. The lower cost benefits
of this service have been appreciated by our launch customer MyTravel Airways,
with more customers committed for the 2006 season. Similarly, the quality of
our frozen entrees from our dedicated Manchester facility has been increasingly
recognised over the past three years, with annual growth of both customers and
service, leading to a record year in 2005 with over 11 million meals served.
For easyJet, we have helped to deliver ongoing growth in retail sales and
profits per passenger, and we have opened new European bases in Basle and more
recently in Milan Malpensa. With trials of highly innovative hot and fresh food
offers underway, we are confident of further growth in the retail spends and
traveller satisfaction onboard our low-cost and charter airline partners.
Whilst much progress was made with many customers, the year ended with profit
below 2004/05's level, due primarily to the #1.5m excess wage costs associated
with the launch of services to American Airlines.
Airports
Overall, our sales growth of 8% matched the excellent ongoing 8% growth of
passengers through the UK and Ireland regional airports. However, profits
declined significantly due to a combination of enhanced bonus rents payable and
#1m revenue investment cost in a new IT system, IRIS, across our UK Retail
estate. This IT investment of circa #8m will lead to a transformation in our
supply chain management capabilities, and enhanced supplier sales/order sharing,
with a target of increased sales from enhanced stock availability of
bestsellers.
We have invested significantly in new designs and fixtures across the pink Alpha
Airport Shopping tax and duty free stores. The showcase for this is our new #2m
store in Birmingham International T1, which opened in January 2006, as the
foundation of our new seven year contract. The store design built on the
success of recent developments introduced into our Manchester T2 and Newcastle
stores - a brightly coloured white spirits wall, a black gloss and dark wood
whisky and cognac wall, a tasting bar, and upgraded handbags and sunglasses
fixtures. In Manchester T2 alone, the new fixtures - designed to drive consumer
interest, hence penetration and sales - have generated a 49% increase in sales
of malt whisky, with deluxe whiskies up 30% and vodka up 21%. Every site in
which Alpha has installed new fixtures has provided double digit sales growth,
proving that contemporary design is commercially worthwhile.
Further developments throughout 2005/06 included a new specialities area in
Manchester T1, a new Sunglasses Studio in Liverpool John Lennon Airport, new
Bijoux Terner accessories portfolio stores in Liverpool John Lennon Airport and
Newcastle International Airport, our first ever Arrivals store in Manchester T1,
and the opening of a wide range of Alpha retail and catering offers at the new
Doncaster Robin Hood Airport.
Increased congestion at peak times at many of our airport locations means the
conversion of passengers into shoppers remains a challenge. In our UK duty free
stores, transaction spend of shoppers increased 5% but we suffered a 7% decline
in shopper penetration. Improving upon the 'penetration' challenge remains the
key priority for Alpha and our airport partners. Alpha is committed to store
expansion and upgrades, based on proven developments, and our airport partners
are working with us to enhance the customer experience to generate further dwell
time opportunities in the key post-security airside environment.
Our World News landside stores are under pressure due to the drive by the
airports to move passengers airside promptly. To drive landside penetration and
spend, we successfully introduced a hard-hitting promotion, 'Low Flying Prices',
combined with 'exclusive' landside only offers. Innovation continues to be the
most important component of our World News brand development, with new concepts
such as the introduction of an instore media network, 'World News Airplay', plus
additional revenue streams generated via SMS text messaging.
Glorious Britain's success at its core London Heathrow base continued, with 13%
overall sales growth. Glorious Britain was again named 'Souvenir Retailer of
the Year' and furthermore, was acclaimed as the 'Greatest of the Greats' at the
annual UK Gift Retailing awards ceremony. Glorious Britain further developed
its gift consultancy services for St George's Chapel, Windsor, and launched a
transactional website to enable our regular customers to buy additional gifts
from anywhere in the world. We also developed two 'Scottish Presence' stores at
Prestwick Airport, offering an extensive range of Scottish themed gifts and
souvenirs.
2005/06 was a year of major progress for our airport catering offers. In
response to customer demand at Dublin we have expanded our offers and extended
into airside catering. New developments include food courts for Nottingham East
Midlands Airport and the newly opened Doncaster Robin Hood Airport, a Bar 08 at
Eurotunnel, and upgraded offers at Inverness. Our focus on enhanced consumer
satisfaction is reflected by an independent consumer survey, which identified a
significant improvement in customer service over the year, and a 96% product
satisfaction rating at the year end.
Of future potential is our World News Cafe brand, which combines the convenience
of our 'ctn' (confectionery, tobacco and news) and books offer with a quality,
but simple, catering service. From our first unit in Jersey, World News Cafe
now extends across the UK and internationally. In 2005/06 we invested in units
at Birmingham (UK), Amman (Jordan), Sofia (Bulgaria) and Bucharest (Romania).
The flexibility and scalability of this offer makes it perfect for small scale
units in remote satellite areas and gate rooms, as well as for full scale
offers.
International
Our international retailing and catering businesses continued to prosper and
grow, generating record sales and profits. By region, performances were as
follows:-
Asia
Despite the tsunami's negative impact on European tourist numbers, sales and
profits in Sri Lanka were maintained at the previous year's level. We benefited
from moving into expanded and better located stores in both arrivals and
departures (as the key opportunity in our extended contract), generating
increases in penetration levels. Alpha continued its impressive growth in wine
sales to the country's expanding hotel, bar and consumer markets (via
supermarkets), with sales up 32%. Our Maldives business was significantly down,
reflecting a 36% decline in departing passengers. Conversely, the business we
manage in Cochin (India) continued its impressive growth, with sales up 50% on a
15% growth in passengers. We are firmly focused on - and highly qualified for -
the exciting development opportunities available in Indian duty free, as airport
privatisation develops and the low-cost airline market continues its growth.
Middle East
Alpha enjoyed another successful year's performance in Amman, Jordan. The
year's major development was the move into airport catering, with the successful
establishment of four new World News Cafes at Queen Alia International Airport,
Amman.
Australia
After 2004/05's major contract developments and resultant start-up losses, 2005/
06 was a year of consolidation. The business is now cash positive and generates
only small operating losses. We continue to seek out new international airline
customers, and we are delighted to have recently been appointed by Malaysian
Airlines, to service them at five airports across Australia. This customer
builds on our halal cuisine capabilities. Our global inflight retailing
contract with Qantas has performed significantly better after last year's
start-up losses.
United States of America
After last year's 'pink' upgrade to our Orlando Sanford duty free store, we
enjoyed an 11% increase in passenger spends. We are currently making a US$2m
investment to upgrade our Greater Orlando Aviation Authority, Orlando
International duty free stores to the latest Alpha 'pink' design, and anticipate
similar sales improvements during our new five year contract extension.
Mainland Europe
Our European business was expanded with recent acquisitions made in Turkey,
Romania and Bulgaria. In its first full year with Alpha, our Turkish operation
performed well, with expansion of our upgraded inflight retailing offers to two
new charter airlines. In Romania, we implemented significant changes in
management after the acquisition, and swiftly applied Alpha policies. This led
to increased sales, reduced costs and thus enhanced profit. We won a new World
News Cafe concession, further extending our range of catering offers at Henri
Coanda International Airport, Bucharest. In Bulgaria, we again implemented
significant management restructuring, promoting local professionals to senior
roles. Furthermore, with a more proactive relationship with the Sofia Airport
Authority, we have been awarded concessions for a World News Cafe and a Deli
Sandwich Bar in the soon to be opened international terminal.
In Italy, our Servair AirChef airline and airport catering joint venture
continued its impressive growth and development, with ten new airline customers
joining our new Rome Fiumicino flight kitchen, and first-time entry into the
airline cabin cleaning market in Milan. We are particularly pleased to welcome
Continental Airlines in Rome, won as part of a successful pan-European offer by
Alpha, Servair and Servair AirChef. Alpha opened its first airport retail
outlets in both Rome Fiumicino and Rome Ciampino airports. Our six new
speciality shops were 'highly commended' in the industry's media evaluation of
the best global watches and jewellery offers.
In Belgium, our associate operation with Virgin Express continued to progress
and in Holland, our Amsterdam flight kitchen proved the benefits of the
significant restructuring undertaken in 2004 and 2005 by delivering high quality
services at substantially reduced costs, thus converting significant recent
losses into a break-even performance. We are targeting further sales and profit
progress in 2006/07.
In Sweden, our airport catering operations at the fast growing Stockholm Skavsta
Airport, based on continued growth of low-cost passengers, enjoyed a 77% sales
growth and generated a worthwhile first full year profit contribution.
Across Europe, Alpha's unique offer of retailing and catering services to
airlines and airports continues to present exciting development opportunities,
both in terms of the growth opportunities available at our existing airport
locations and in terms of further European expansion opportunities.
Our People
Creating a great place to work for all our people remains the bedrock of Alpha's
continued success. We are absolutely committed to continuing to build a culture
of openness and trust. Only then can we deliver Alpha's goal of 'People Making
Travel Special'.
Our staff turnover - a key indicator of satisfaction - has continued to decline
from 21.9% to 21.6%. This is less than half the level of the UK retail and
catering industry.
We are delighted that our many Health and Safety initiatives continue to be
supported by all our colleagues. Our total accidents across the UK and Ireland
reduced by 10%, to a level that is 40% better than other equivalent UK and
Ireland retailing and catering employers.
We remain committed to the effective delivery of high-quality training for all
our staff. We were delighted to have been recognised for our 'Basic Security
Awareness' e-learning training module at the recent Institute of IT Training
awards ceremony.
After the Sri Lanka tsunami disaster, Alpha's people - supported both by the
global duty free retail industry and Alpha, in terms of matched employee giving
- raised over #0.2m, and have successfully rehoused 20 families in Kalutara,
Southern Sri Lanka.
Financial Review
There have been no changes to these results following the events that led to the
share suspension on 25 April 2006 compared with the Preliminary Statement which
was published on 30 March 2006.
This is the first set of annual results that the Group is reporting under
International Financial Reporting Standards ('IFRS') which as previously
indicated have no material impact upon the underlying cashflows or trading
activity of the Group.
The impact of this change on previously reported results under UK GAAP was to
increase profit before tax by #1.4m to #13.1m for the year ended 31 January
2005.
Results
Group sales at #550.9m were 12.9% ahead of last year (#487.8m). In the UK and
Ireland sales increased 9% to #449.7m driven by a strong passenger growth of 8%
across our UK regional airports. Internationally, the business benefited from
the full year effect of our acquisition in late 2004 in Turkey, the acquisition
in Romania and new retail shops opened at the two airports in Rome.
International sales expanded 34% to #101.2m.
Profit before tax (before exceptional items and impairment charges and after
including the post tax results of joint venture and associate) increased #1.1m
(6.3%) to #18.5m. In the UK and Ireland, despite the increase in sales,
operating profit (before exceptional items and impairment charges and after
including the post tax results of joint venture and associate) declined to #8.8m
from #13.1m in the previous year due primarily to start-up costs in Alpha
Airline Services combined with business investment costs and higher concession
rents within Alpha Airport Services.
Internationally we had the opposite experience with operating profit (before
exceptional items and impairment charges and after including the post tax
results of joint venture and associate) growth of over 98% to #12.5m. The
turnaround of underperforming businesses in Australia and Amsterdam from 2004
and the international expansion during the year contributed to this excellent
performance.
Exceptional items
We have incurred a net charge of #0.1m in relation to items that individually
require a note of explanation.
Following the announcement of the loss of the ThomsonFly contract last November
we swiftly carried out a restructuring of the UK and Ireland Airline Services
business and made 143 positions redundant at a cost of #2.1m.
The Group has suffered a loss in relation to a suspected fraud carried out by a
third party adviser to the Group. Investigation has indicated that the Group
has lost about #2.5m in a fraud across a number of European countries and a
provision of #2.5m has been recorded in the results.
The planned changes to the Group Pension Scheme have resulted in a reduction of
#4.5m in the deficit. This represents a reduction in past service benefits and
is credited to the Group income statement.
As noted in the Chairman's Statement, it is intended to show in the half year to
31 July 2006 the costs which have arisen as a consequence of the share
suspension, the investigation conducted by and on behalf of the Special
Committee, the additional audit work undertaken by PwC, the legal advice
provided to individuals and payments made in lieu of notice. These costs are
expected to be in the region of #3m.
Net interest and finance charge
Net interest payable of #2.8m has increased 40% in the year from #2.0m
reflecting a higher level of net debt throughout the year following our
extensive capital investment programme and overseas acquisitions. The Group
negotiated a new #100m five year multi-currency revolving banking facility
during the year providing the benefit of lower interest rates from July 2005.
Taxation
The tax charge for the year was #4.6m representing a tax rate of 24.9% (2004/05:
29.3%) when compared against profit before tax (before exceptional items and
impairment charges). This reduction reflects the increase in profits from
international locations (Jordan, Romania and Turkey) where the taxation rate is
significantly lower than the UK. The tax charge has also benefited from the use
of tax losses which had not been previously recognised and the recovery of a
prior year tax charge in the UK as the computations for a number of earlier
years have now been finalised.
Cashflow
Net debt at 31 January 2006 increased by #16.6m to #37.1m (2004/05: #20.5m).
The last two years have been periods of significant investment in the business
with capital expenditure well in excess of depreciation levels.
Net cash from operating activities at #17.2m was #9.4m ahead of last year and
was improved by an increase in profit (after adjusting for non-cash items) and a
#6m benefit from lower working capital absorption compared with the previous
year. After paying dividends of #9.0m including minority interests, the
remaining cash was approximately #8m. Capital expenditure of #21.3m and an
acquisition (#3.9m) thus contributed to the significant (#16.6m) increase in
debt.
Shareholders' funds
There was a slight decrease in shareholders' funds during the year to #39.3m
(2004/05: #40.0m) the main movement being an increase in the deficit on retained
earnings. The profit for the year transferred to reserves of #10m was utilised
by the 2004/05 final dividend and the 2005/06 interim of #7m in total. The net
increase in the actuarial loss of the defined pension benefit of #4.4m was
greater than the post-dividend retained earnings resulting in a reduction in
shareholders' funds.
Capital investment
During the year, we have invested significantly in our business with capital
expenditure of #21.3m. Within Alpha Airline Services at Manchester we have
consolidated two large facilities into one and incurred expenditure of #1.9m
during the year with a similar amount expected to be incurred in 2006/07. We
also invested in 14 new hi-lift vehicles to service our new American Airlines
contract at Heathrow and Excel Airways at Gatwick. Within the Airport Services
business, we have continued to invest in our new IT system (IRIS) and have
heavily invested in new retail units and upgraded outlets, for example, #1.8m in
new outlets at the new Doncaster Robin Hood Airport in 2005. We have upgraded
stores at Manchester T2 (#0.5m) and invested in new shops at Birmingham (#2m)
with further investment to come. Internationally, our capital mainly comprised
hi-lift vehicles in Jordan and Australia where we have recently taken delivery
of new hi-lifts which will service the A380s, together with new shop-fittings in
the USA and Sri Lanka.
Acquisitions
In April 2005, we acquired 64.2% of a flight and retail catering business based
at Henri Coanda International Airport, Bucharest, for consideration of #3.9m.
The goodwill on acquisition of this business is #3.5m. The business has traded
successfully since its acquisition.
Pensions
Following the results of our triennial valuation of the Alpha Airports Group
Pension and Life Assurance Plan which was conducted as at 6 April 2005, the
Group and the Trustees agreed that the final salary scheme would be changed to a
career average scheme with effect from 6 April 2006. These changes have been
made to help address the deficit on the Group Pension Scheme. The Group has
increased its ongoing contributions by 0.9% to 11.3% and will pay an amount of
#3.8m in 2006 and #3.0m per annum thereafter to fund the past service deficit.
This will give an annual cash cost of approximately #6m in 2006.
Under IAS19, the net pension fund deficit has increased to #21.3m compared with
#19.7m at 31 January 2005. The movement in the deficit reflects an increase in
the scheme liabilities of 21% to #98.5m. The liabilities have increased due to
changes in longevity and a reduction in the discount rate, offset by a reduction
of #4.5m to reflect the changes to a career average pension. The increase in
liabilities has been offset by an increase of 28% in the assets to #68.0m.
Accounting policies
We have reviewed the accounting policies as set out in the financial statements
and continue to consider them the most appropriate to our business activities.
ENDS
Group Income Statement for the year ended 31 January 2006
2006 2005
Before Exceptional Before Exceptional
Exceptional Items Exceptional Items
Items (Note 3) Total Items (Note 3) Total
Notes #m #m #m #m #m #m
Continuing and acquired
operations
Revenue 2 550.9 - 550.9 487.8 - 487.8
Cost of sales (360.1) 0.3 (359.8) (315.6) (2.0) (317.6)
Gross profit 190.8 0.3 191.1 172.2 (2.0) 170.2
Administrative expenses (170.2) (0.4) (170.6) (153.5) (2.0) (155.5)
Operating profit 2 20.6 (0.1) 20.5 18.7 (4.0) 14.7
Interest payable and similar
charges (3.2) - (3.2) (2.0) - (2.0)
Interest receivable 0.4 - 0.4 - - -
Share of post-tax profits of
associate and joint venture 0.7 - 0.7 0.4 - 0.4
Profit before tax 18.5 (0.1) 18.4 17.1 (4.0) 13.1
Taxation charge on ordinary
activities (4.6) - (4.6) (5.1) 0.8 (4.3)
Profit for the year 13.9 (0.1) 13.8 12.0 (3.2) 8.8
Attributable to:
Equity shareholders 10.0 6.5
Minority interest 3.8 2.3
Profit for the year 13.8 8.8
Earnings per share from continuing and acquired
operations (Note 5)
- Basic 5.74p 3.78p
- Diluted 5.66p 3.73p
Group Statement of Recognised Income and Expense
Year Year
ended ended
31 Jan 31 Jan
2006 2005
#m #m
Profit for the year 13.8 8.8
Currency translation differences on foreign
currency net assets 0.3 (0.9)
Actuarial losses on defined benefit
pension schemes (6.3) (3.2)
Deferred tax on pension scheme 1.9 0.9
Net losses not recognized in
income statement (4.1) (3.2)
Total recognised income 9.7 5.6
Attributable to:
Equity shareholders 5.9 3.3
Minority interests 3.8 2.3
9.7 5.6
Group Balance Sheet at 31 January 2006
2006 2005
Notes #m #m
Assets
Non-current assets
Goodwill 16.4 12.9
Intangible assets 7.3 2.6
Property, plant and equipment 62.1 56.8
Investments accounted for using equity method 6.9 6.5
Other debtors 2.6 2.1
Deferred taxation 8.5 9.2
103.8 90.1
Current assets
Inventories 35.9 32.1
Trade and other receivables 45.0 36.6
Cash and cash equivalents 6 16.0 10.8
Deferred taxation 2.1 -
99.0 79.5
Liabilities
Current liabilities
Financial liabilities - bank and other borrowings 6 (52.8) (30.6)
Trade and other payables (68.2) (61.4)
Current tax liabilities (1.3) (3.1)
Provisions for liabilities and charges (3.2) (1.5)
(125.5) (96.6)
Net current liabilities (26.5) (17.1)
Non-current liabilities
Bank and other borrowings 6 (0.3) (0.7)
Other non-current liabilities (0.6) (0.5)
Deferred taxation (1.9) (0.9)
Retirement benefit obligations (30.4) (28.2)
Provisions for liabilities and charges (0.4) (0.3)
(33.6) (30.6)
Net assets 43.7 42.4
Shareholders' equity
Ordinary shares 7 17.4 17.4
Share premium 7 43.9 43.7
Capital redemption reserve 7 0.4 0.4
Other reserves 7 (0.6) (0.9)
Retained earnings 7 (21.8) (20.6)
Total shareholders' equity 39.3 40.0
Minority interests 7 4.4 2.4
Total equity 43.7 42.4
Group Cash Flow Statement For the year ended 31 January 2006
2006 2005
Notes #m #m
Cash flows from operating activities
Cash generated from operations 8 23.8 14.1
Interest received 0.4 -
Interest paid (2.7) (1.6)
Tax paid (4.3) (4.7)
Net cash from operating activities 17.2 7.8
Cash flows from investing activities
Acquisition of businesses 9 (3.9) (7.1)
Cash acquired on purchase of business 0.3 0.4
Part disposal of subsidiary - 1.7
Disposal of associate - 0.5
Proceeds from sale of property, plant and equipment - 0.1
Expenditure on intangible assets (software) (5.2) (1.4)
Purchase of property, plant and equipment (16.1) (14.8)
Dividends received from associate 0.2 0.2
Dividends received from joint venture 0.1 0.1
Net cash used in investing activities (24.6) (20.3)
Cash flows from financing activities
Net proceeds from issue of ordinary share capital 0.2 1.3
Repayment of finance leases (0.5) (0.7)
Repayment of long term #60m facility (39.9) -
Loans from #100m facility 39.9 -
Increase in loans 26.4 21.1
Net (decrease)/increase in bank overdrafts (4.1) 2.3
Dividends paid to shareholders (7.0) (6.6)
Dividends paid to minority interests (2.0) (2.2)
Net cash used in financing activities 13.0 15.2
Effects of exchange rate changes (0.4) (0.5)
Net increase in cash and cash equivalents 5.2 2.2
Cash and cash equivalents at 1 February 10.8 8.6
Total cash and cash equivalents at 31 January 16.0 10.8
Notes to the Financial Information
1 Basis of preparation
This financial information has been prepared in accordance with International Financial Reporting Standards
('IFRS') adopted for use in the EU and the interpretations issued by the International Accounting Standards
Board.
The comparative figures for the year ended 31 January 2005 are not the Company's statutory accounts for
the financial year. Those accounts, which were prepared under UK GAAP, have been reported on by the
Company's auditors and delivered to the Registrar of Companies. The report of the auditors was
unqualified, did not include references to any matters to which the auditors drew attention by way of
emphasis without qualifying their reports and did not contain statements under Section 237 (2) or (3) of the
Companies Act 1985.
The figures for the year ended 31 January 2005 are derived from the accounts for that financial year, as
restated to comply with IFRS requirements. A full reconciliation of these adjustments was published in
The Interim Report 2005/06 and will be provided again in the Annual Report and Accounts to be published
in July 2006.
2 Segment reporting
The Group considers that in the future its activities will be more aligned to geographical segments than to business
segments. As this is a reversal of assumptions used in previous years, both segment analyses are presented as primary
segments this year, but in future geographical segment will be disclosed as the primary segment and business segment
will be disclosed as the secondary segment.
2 (a) Business segments
Airline Services Airport Services Unallocated Group
2006 2005 2006 2005 2006 2005 2006 2005
#m #m #m #m #m #m #m #m
(1) Profit for the year
Continuing and acquired
operations
Revenue 298.5 268.5 252.4 219.3 - - 550.9 487.8
Profit before exceptional items 10.1 7.1 10.5 11.6 - - 20.6 18.7
Exceptional items - cost of
sales 0.1 (2.3) 0.2 - - - 0.3 (2.3)
Exceptional items - admin
expenses (1.0) (3.9) 0.6 1.5 - - (0.4) (2.4)
Profit on part disposal of
subsidiary undertaking - 0.3 - - - - - 0.3
Profit on disposal of associate - 0.4 - - - - - 0.4
Operating profit 9.2 1.6 11.3 13.1 - - 20.5 14.7
Interest payable and similar
charges - - - - (3.2) (2.0) (3.2) (2.0)
Interest receivable - - - - 0.4 - 0.4 -
Share of post-tax profits of
associate and joint venture 0.7 0.4 - - - - 0.7 0.4
Profit before tax 9.9 2.0 11.3 13.1 (2.8) (2.0) 18.4 13.1
Taxation charge on ordinary
activities - - - - (4.6) (4.3) (4.6) (4.3)
Profit for the year 9.9 2.0 11.3 13.1 (7.4) (6.3) 13.8 8.8
There are no material sales between the business segments. Interest (payable)/receivable has not been allocated
recognising the centre's role and responsibility in allocating financial resources.
2 Segment reporting
2 (b) Geographical segments
UK & Ireland International Unallocated Group
2006 2005 2006 2005 2006 2005 2006 2005
#m #m #m #m #m #m #m #m
(1) Profit for the year
Continuing and acquired
operations
Revenue 449.7 412.4 101.2 75.4 - - 550.9 487.8
Profit before exceptional items 8.8 13.1 11.8 5.6 - - 20.6 18.7
Exceptional items - cost of
sales 0.3 (0.9) - (1.4) - - 0.3 (2.3)
Exceptional items - admin
expenses (0.4) - - (2.4) - - (0.4) (2.4)
Profit on part disposal of
subsidiary undertaking - - - 0.3 - - - 0.3
Profit on disposal of associate - - - 0.4 - - - 0.4
Operating profit 8.7 12.2 11.8 2.5 - - 20.5 14.7
Interest payable and similar
charges - - - - (3.2) (2.0) (3.2) (2.0)
Interest receivable - - - - 0.4 - 0.4 -
Share of post-tax profits of
associate and joint venture - - 0.7 0.4 - - 0.7 0.4
Profit before tax 8.7 12.2 12.5 2.9 (2.8) (2.0) 18.4 13.1
Taxation charge on ordinary
activities - - - - (4.6) (4.3) (4.6) (4.3)
Profit for the year 8.7 12.2 12.5 2.9 (7.4) (6.3) 13.8 8.8
There are no material sales between the geographical segments. Interest (payable)/receivable has not been allocated
recognising the centre's role and responsibility in allocating financial resources.
3 Exceptional items
Profit before tax includes net exceptional items of #0.1m for the year ended 31 January 2006 and #4.0m for
the year ended 31 January 2005 as follows:
2006 2005
Cost Administrative Cost Administrative
of Sales Expenses Total of Sales Expenses Total
Notes #m #m #m #m #m #m
UK Airline Services
redundancies (1.2) (0.7) (1.9) (0.6) (0.3) (0.9)
UK Airport Services
redundancies (0.2) - (0.2) - - -
Gain on transfer to
Career Average Pension
Scheme 3.1 1.7 2.8 4.5 - - -
UK suspected fraud 3.2 - (2.5) (2.5) - - -
Netherlands redundancies - - - (1.4) - (1.4)
Netherlands property
impairment - - - - (3.9) (3.9)
USA provision release 3.3 - - - - 1.5 1.5
Profits on disposals of
and part-disposals of
investments - - - - 0.7 0.7
0.3 (0.4) (0.1) (2.0) (2.0) (4.0)
3.1 Following the results of an actuarial valuation on 6 April 2005, the Alpha Airports Group Pension and Life
Assurance Plan has changed from a final salary pension scheme to a career average based pension provision with
effect from 6 April 2006. The effect of this change is to reduce the deficit by #4.5m and this change in past
service cost is reflected through the Group income statement. Due to the size and nature of this change in past
service cost, the amount is shown as an exceptional item and a deferred tax amount at the UK standard rate of tax
has been charged through the Group income statement.
3.2 A charge of #2.5m was made in respect of the Group's cost of a suspected fraudulent activity carried out by a
third party service provider, which has gone into liquidation since the year end. A deferred tax amount at the UK
standard rate of tax has been credited to the income statement in respect of this charge.
3.3 At 31 January 2005, the remaining overseas contract provision in Orlando, USA was released since trading
performance has been better than forecast.
4 Equity Dividends
2006 2005
#m #m
Final paid in respect of year ending 31 Jan 2005: 3.0p (2003/04: 2.8p) per
10p share 5.2 4.8
Interim paid in respect of year ending 31 Jan 2006: 1.0p (2004/05: 1.0p) per
10p share 1.8 1.8
7.0 6.6
In addition, the Directors are proposing a final dividend in respect of the financial year ending 31
January 2006 of 3.2p per 10p share which will absorb an estimated #5.6m of shareholders' funds. It
will be paid on 6 October 2006 to shareholders who are on the register of members on 8 September 2006.
5 Earnings per share
(a) Basic and diluted earnings per share in respect of continuing and acquired operations
Basic earnings per share is calculated by dividing the earnings attributable to ordinary shareholders by
the weighted average number of ordinary shares outstanding during the year.
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to
assume conversion of all dilutive potential ordinary shares.
Reconciliations of the earnings and weighted average number of shares used in the calculations are as
follows:
Weighted average
Profit for the number of shares Earnings per share
year
2006 2005 2006 2005 2006 2005
#m #m millions millions Pence Pence
Basic EPS
10.0 6.5 174.3 172.4 5.74 3.78
Effect to reflect dilutive ordinary
shares under options - - 2.3 2.1 (0.08) (0.05)
Diluted EPS 10.0 6.5 176.6 174.5 5.66 3.73
(b) Underlying earnings per share
Underlying profit for the financial year and underlying earnings per share have been calculated to exclude
the effect of goodwill impairment and exceptional items in order that the effects of these items on
reported earnings can be fully appreciated.
Reconciliations of the underlying profit for the financial year and underlying earnings per share are as
follows:
Profit for Earnings per share
the year
2006 2005 2006 2005
#m #m Pence Pence
Basic EPS 10.0 6.5 5.74 3.78
Adjustments for:
- exceptional items (Note 3) 0.1 4.0 0.06 2.33
- taxation relating to these items - (0.8) - (0.46)
- add back goodwill impairment - 0.3 - 0.17
Underlying EPS 10.1 10.0 5.80 5.82
6 Net debt
2006 2005
#m #m
Cash and cash equivalents 16.0 10.8
Bank loans due within one year -
unsecured (50.5) (24.1)
Bank overdrafts due within one year -
unsecured (1.9) (6.0)
Finance lease obligations within one
year (0.4) (0.5)
Finance lease obligations over one
year (0.3) (0.7)
(37.1) (20.5)
7 Shareholders' funds and statement of changes in shareholders' equity
Capital
Share Share redemption Other Retained Minority Total
capital premium reserve reserves earnings Total Interests Equity
#m #m #m #m #m #m #m #m
At 1 February 2004 17.2 42.6 0.4 - (18.7) 41.5 1.3 42.8
Share options
- proceeds from share options 0.2 1.1 - - - 1.3 - 1.3
- value of employee services - - - - 0.2 0.2 - 0.2
Exchange adjustments - - - (0.9) - (0.9) - (0.9)
Profit for the year - - - - 6.5 6.5 2.3 8.8
Actuarial losses on defined
benefit pension scheme - - - - (3.2) (3.2) - (3.2)
Deferred tax on pension scheme - - - - 0.9 0.9 - 0.9
Credit in respect of long term
incentive plan - - - - 0.2 0.2 - 0.2
Minority interest share of
acquisition - - - - - - 1.1 1.1
Minority interests - adjustment on
part disposal of subsidiary - - - - 0.1 0.1 (0.1) -
Dividends - - - - (6.6) (6.6) (2.2) (8.8)
At 31 January 2005 17.4 43.7 0.4 (0.9) (20.6) 40.0 2.4 42.4
Share options
- proceeds from share options - 0.2 - - - 0.2 - 0.2
- value of employee services - - - - 0.2 0.2 - 0.2
Exchange adjustments - - - 0.3 - 0.3 - 0.3
Profit for the year - - - - 10.0 10.0 3.8 13.8
Actuarial losses on defined benefit
pension scheme - - - - (6.3) (6.3) - (6.3)
Deferred tax on pension scheme - - - - 1.9 1.9 - 1.9
Minority interest share of
acquisition - - - - - - 0.2 0.2
Dividends - - - - (7.0) (7.0) (2.0) (9.0)
At 31 January 2006 17.4 43.9 0.4 (0.6) (21.8) 39.3 4.4 43.7
8 Net cash from operating activities
2006 2005
#m #m
Profit before tax 18.4 13.1
Share of post-tax profit of joint venture (0.4) (0.1)
Share of post-tax profit of associated undertaking (0.3) (0.3)
Interest payable and similar charges 3.2 2.0
Interest receivable (0.4) -
Depreciation and amortization 11.9 10.6
Increase/(decrease) in exceptional provisions 1.7 (3.4)
(Decrease)/increase in retirement benefit provisions charged/ (4.5) 0.4
(credited) to income statement
Profit on part disposal of subsidiary undertaking - continuing - (0.3)
operations
Profit on disposal of associate - (0.4)
Share options 0.2 0.1
Fixed asset impairment - 3.9
Goodwill impairment - 0.3
Long term incentive plan amortisation - 0.2
charge
Changes in working capital (excluding effects of acquisitions and disposals of
subsidiaries)
Increase in inventories (3.2) (7.3)
Increase in trade and other receivables (9.0) (10.3)
Increase in creditors 6.1 5.6
Increase in provisions 0.1 -
Cash generated from operations 23.8 14.1
9 Acquisition of businesses
9.1 Abela Rocas SA (Romania)
On 12 April 2005, the Group acquired 64.18% of the share capital of Abela Rocas SA (now called Alpha
Rocas SA), an airline and airport services business in Romania.
The goodwill arising on the acquisition was #3.5m as follows:
Book Fair Value
Value adjustments Fair value
#m #m #m
Investment in associate 0.1 (0.1) -
Tangible fixed assets 0.3 - 0.3
Inventories 0.2 - 0.2
Trade receivables 0.6 - 0.6
Creditors (0.6) - (0.6)
Cash at bank and in hand 0.2 0.1 0.3
Taxation - (0.2) (0.2)
Total net assets at acquisition 0.8 (0.2) 0.6
Minority Interests (0.2)
Total net assets acquired 0.4
Goodwill 3.5
Consideration 3.9
Consideration satisfied by:
Cash (including costs of
acquisition) 3.9
The book value of the assets and liabilities has been taken from the management accounts of Abela
Rocas SA at 12 April 2005 at actual exchange rates on that date. The fair value adjustments comprise
#0.1m for the write off of a small investment in an associated company, the results for which had
never been consolidated into the results of Abela Rocas SA, an exchange adjustment in respect of cash
balances and a provision for dividend taxes in respect of 2003 and 2004.
The outflow of cash and cash equivalents on the acquisition of Abela Rocas SA was as follows:
#m
Cash consideration 3.9
Cash acquired (0.3)
3.6
The revenue of Abela Rocas SA for the year ended 31 December 2004 was #4.7m, for the period from 1
January 2005 to 12 April 2005 was #1.5m and for the period from 12 April 2005 to 31 January 2006 was
#5.3m.
The profit before tax of Abela Rocas SA for the year ended 31 December 2004 was #1.3m, for the period
from 1 January 2005 to 12 April 2005 was #0.2m and for the period from 12 April 2005 to 31 January
2006 was #1.7m.
For the period from 12 April 2005 to 31 January 2006 Abela Rocas SA contributed #1.5m to operating
cash flow, paid interest of #nil, paid tax of #0.2m and spent #nil on capital expenditure.
9.2 Abela Airport Services EOOD (Bulgaria)
On 28 April 2005, the Group acquired 100% of the share capital of Abela Airport Services EOOD (now
called Alpha Airport Services EOOD), an airline and airport services business based in Bulgaria, for a
consideration of Euro1 and costs of #15,000. The only assets acquired were fixed assets of #0.3m against
which a full impairment was booked on acquisition. As a result there was no goodwill generated on this
acquisition.
The revenue of Abela Airport Services EOOD for the year ended 31 December 2004 was #0.6m, for the
period from 1 January 2005 to 28 April 2005 was #0.3m and for the period from 28 April 2005 to 31
January 2006 was #0.7m.
The loss before tax of Abela Airport Services EOOD for the year ended 31 December 2004 was #0.2m, for
the period from 1 January 2005 to 28 April 2005 was #0.1m and for the period from 28 April 2005 to 31
January 2006 was #0.2m.
10 Adjusted figures
The Group uses adjusted figures as key underlying performance measures. Adjusted figures are stated before
exceptional items and goodwill impairment including share of post-tax profits of associates and joint ventures.
2006 2005
#m #m
Operating profit 20.5 14.7
Adjustments:
Share of profit from associate/joint venture 0.7 0.4
Goodwill
impairment - 0.3
Exceptional items (Note 3) 0.1 4.0
Adjusted operating
profit 21.3 19.4
Profit before tax 18.4 13.1
Adjustments:
Goodwill
impairment - 0.3
Exceptional items (Note 3) 0.1 4.0
Adjusted profit
before tax 18.5 17.4
Profit attributable to equity shareholders 10.0 6.5
Adjustments:
Goodwill
impairment - 0.3
Exceptional items (Note 3) 0.1 4.0
Taxation on these items - (0.8)
Adjusted attributable profit 10.1 10.0
11. Preliminary announcement
The enclosed financial information is derived from the full Group Financial Statements for the year ended 31
January 2006 and does not constitute the full statutory statements of Alpha Airports Group Plc for the years
ended 31 January 2006 and 31 January 2005. The financial information for the years ended 31 January 2006 and
31 January 2005 are prepared under IFRS. For the year ended 31 January 2005 the statutory accounts were
originally presented under UK GAAP. The Group Financial Statements, on which the independent auditors have
given an unqualified report, which does not contain a statement under section 237 (2) or (3) of the Companies
Act 1985, will be delivered to the Registrar of Companies in due course and posted to shareholders in advance
of the Annual General Meeting.
The Group Financial Statements also include the financial statements of the parent company, prepared under
UK GAAP, on which the independent auditors have also given an unqualified report. However this report does
contain a statement under section 237 (2) of the Companies Act 1985 indicating that, in the opinion of the
independent auditors, in respect of the matters discussed in the Report of the Special Committee of the
Board, the Company did not take reasonable steps to secure that a subsidiary kept proper accounting records
during the year ended 31 January 2006 and accordingly the Company has not complied with Section 221 of the
Companies Act 1985.
12 Issue of annual reports and accounts
The Annual Report 2005/06 will be posted to shareholders by 21 July 2006. 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.
This preliminary announcement contains certain forward looking statements. These
statements are subject to risks and uncertainties because they relate to events
that may or will occur in the future and could cause actual results to differ
materially from those expressed. Many of these risks and uncertainties relate to
factors that are beyond Alpha's ability to control or estimate precisely, such
as future market and economic conditions, the actions of competitors,
operational problems and the actions of government regulators. Alpha undertakes
no obligation to update forward-looking statements.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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