BAA Interim Results for the Six Months to September 30, 2000
30 October 2000
BAA Interim Results for the Six Months to September 30, 2000
Business Editors
LONDON--Oct. 30, 2000--BAA plc, the U.K.-based
airport company, today announced its interim results for the six
months to September 30, 2000.
BAA returns to growth
-- Strong U.K. passenger traffic growth -- up 6.6%
-- Net retail income up 14% in the second quarter and up 1% for the
half year despite the loss of intra-EU duty free last year.
-- Profit before tax and exceptionals up 5.2% to (pound)322 million
((pound)306 million). Normalized profit before tax up 11.6%
to (pound)327 million ((pound)293 million).
-- Earnings per share before exceptionals up 7.6% to 22.6 pence (21.0
pence).
-- Interim dividend up 7.0% to 6.1 pence (5.7 pence).
-- Investment in the U.K.'s airport infrastructure up over 40%
to(pound)215 million ((pound)150 million).
BAA's financial results presentation to analysts and investors
will be broadcast live on BAA's website -- www.baa.co.uk -- at 9.30am
(GMT) on Monday October 30, 2000.
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SUMMARY OF RESULTS
6 months to Sept. 6 months to Sept. Change
30, 2000 30, 1999
---------------- ---------------- ------
U.K. airport passengers 69.5m 65.2m 6.6%
Revenue(a) (pound)1,178m (pound)1,114m 5.7%
Operating profit(a) (pound)368m (pound)345m 6.7%
Profit before tax
and exceptionals (pound)322m (pound)306m 5.2%
Normalized profit
before tax(b) (pound)327m (pound)293m 11.6%
Earnings per share
before exceptionals 22.6p 21.0p 7.6%
Earnings per share 22.5p 7.6p 196.1%
Interim dividend 6.1p 5.7p 7.0%
Capital expenditure (pound)234m (pound)182m 28.6%
(a) Excludes the joint venture BAA McArthurGlen and exceptionals
(b) Is stated before exceptionals, profits from disposals of BAA
McArthurGlen centers and BAA McArthurGlen interest charges
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BAA plc today announced profit before tax and exceptionals for the
six months to September 30, 2000 of (pound)322 million (September 30,
1999: (pound)306 million), an increase of 5.2%. This reflects strong
traffic growth in the first half, growth in net retail income and a
lower interest charge. Included in the prior year comparative is
(pound)16 million profit on disposals of BAA McArthurGlen centers. No
such disposals took place in the current period.
Normalized profit before tax, which excludes disposal profits and
interest charges from BAA McArthurGlen, was up 11.6% to (pound)327
million ((pound)293 million).
Earnings per share before exceptionals grew by 7.6% to 22.6 pence
(21.0 pence) benefiting from both a reduced effective rate of tax as a
result of increased capital allowances and the share buy-back program.
The interim dividend has been increased by 7.0% to 6.1 pence per
share (5.7 pence).
Chief Executive's Comment
BAA's chief executive, Mike Hodgkinson said, "These results
clearly demonstrate a return to growth after an extremely challenging
15 months post the abolition of intra-EU duty-free sales. Operating
profit was up almost 7% and profit before tax and exceptionals was up
over 5%. The interim dividend to our shareholders has been increased
by 7% to 6.1 pence.
"We are addressing the problems we faced last October. First, our
airport retail business has recovered well from the abolition of
intra-EU duty-free. Second, in respect of World Duty Free, we have
nearly completed the closure of the loss-making in-flight business
within the provision made last year and World Duty Free Americas is
now performing better. Third, legal action has been initiated with
respect to the Eurotunnel contract.
"After the strategic review, we said we would focus on our core
airports business and that is exactly what we are doing. We continue
to look at opportunities for profitable growth in our international
business and in e-business.
"Strong traffic growth, 6.6% in the first six months, continues at
BAA's U.K. airports. In particular, the three southeast airports
experienced growth of 7.1% and BAA continues to invest to improve
facilities and services for passengers. The (pound)200 million
capacity project at Stansted is well underway and ahead of program.
This project will allow Stansted, where passenger numbers are
currently growing at over 20% per annum, to continue to grow.
"Growth has been re-established in U.K. airports' net retail
income. The second quarter is the first one in which the year-on-year
comparison is like-for-like following the abolition of intra-EU
duty-free. This quarter shows an encouraging improvement in retail
performance. Both net retail income and net retail income per
passenger increased significantly by 14% and 7% respectively.
Indications are that duty and tax-free trading has stabilized and new
base levels have been established. Additionally, it is very clear from
the 14% growth in non-duty and tax-free net retail income that the
strategies implemented in areas unaffected by the change in
legislation have also been successful.
"We can now look forward positively to the continuing growth of
our core airports business."
Operating and Financial Review
Airports
In the first six months, 69.5 million (65.2 million) people
traveled through BAA's U.K. airports, an increase of 6.6%. U.K.
airport operating profit was up by 6.6% to (pound)337 million
((pound)316 million). The second quarter was the first, which is
directly comparable with the prior year following the abolition of
intra-EU duty-free.
U.K. airport charges revenue increased by 10.1% to (pound)348
million ((pound)316 million). This was a result of the passenger
volume increase and the impact of the regulatory formula, which
includes the second tranche of the duty-free increase, offset by
inflation and adjustments made for prior years.
Airport retail
(Quarter 2 -- July to September 2000)
The second quarter results are directly comparable to last year
following the anniversary of the abolition of intra-EU duty-free on
July 1, 1999.
Net retail income (including World Duty Free Europe) achieved
solid growth of 14% to (pound)132 million ((pound)116 million) and net
retail income per passenger grew by 7% to (pound)3.53 ((pound)3.29).
Duty and tax-free net retail income increased by 14% to (pound)35
million ((pound)31 million), the result of a good recovery in perfume
sales. Non-duty and tax-free income has also grown by 14% to (pound)83
million ((pound)73 million). These results indicate the extent to
which duty and tax-free trading has stabilized and the success of
strategies implemented in areas unaffected by the change in
legislation.
(Six months to September 30, 2000)
Overall for the six months, net retail income at the U.K. airports
(including World Duty Free Europe) was up 1% to (pound)245 million
((pound)242 million). This is despite the comparisons to last year
where the first quarter included intra-EU duty-free income
pre-abolition. Net retail income per passenger was (pound)3.53, 6%
below that of the previous year. Results by quarter are detailed
below:
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U.K. airport net retail income by quarter
1st quarter Variance 2nd quarter Variance
Apr-Jun 00 to Apr-Jun 99 Jul-Sep 00 to Jul-Sep 99
(pre-abolition) (post-abolition)
Net retail
income (pound)113m (11%) (pound)132m 14%
Net retail
income per
passenger (pound)3.54 (17%) (pound)3.53 7%
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World Duty Free Europe -- U.K. airports
World Duty Free Europe's U.K. airport operations achieved an
overall growth in revenues of 5.7% to (pound)168 million ((pound)159
million) in the six months. In the second quarter, the first directly
comparable to last year, revenues increased by 15.4% to (pound)90
million ((pound)78 million), reflecting the recovery from the
confusion post intra-EU duty-free abolition last year. These revenue
increases translated into a substantial operating profit improvement
to (pound)10 million ((pound)5 million).
World Duty Free (excluding World Duty Free Europe -- U.K.
airports)
(Operating profit - six months to September 30, 2000)
2000/01 1999/00
(pound)m (pound)m
World Duty Free Americas
(2000/01 - excluding in-flight) 10 8
Goodwill amortization (5) (9)
--- ---
5 (1)
International contracts (1) (1)
Eurotunnel contract
(1999/00 - three months) (5) (4)
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The continuing businesses of World Duty Free Americas show
improvements in performance in all divisions.
The in-flight business has been substantially closed within the
provision of (pound)21 million made in 1999/2000.
BAA's legal action for rescission of the Eurotunnel contract is
currently scheduled for a court hearing in early 2001.
BAA Lynton
BAA Lynton made an operating profit of (pound)14 million
((pound)22 million) on revenue of (pound)23 million ((pound)47
million). The decrease reflects reduced rents as a result of the sale
at the end of last year of eight hotels to the Airport Hotels
Partnership and other substantial disposals of non-airport related
assets. The sale of cargo related properties is currently being
negotiated.
Rail (Heathrow Express)
For the six months, the business has achieved an operating profit
of (pound)3 million (loss of (pound)1 million) on revenue up over 30%
to (pound)31 million ((pound)23 million). Almost ten million customers
have now traveled by Heathrow Express, including 2.4 million during
the period.
BAA McArthurGlen
BAA McArthurGlen opened one new designer outlet center at
Serravalle in Italy in September, and one at Livingston in Scotland at
the end of October, bringing the number of centers opened to 11. No
disposals were made during the period, whereas last year there was a
(pound)16 million profit on disposal.
Share Buy-Back Program
BAA has progressed the share buy-back program. The company has
bought a total of 24.9 million shares to date, at a total cost of
(pound)128 million (excluding (pound)1 million of associated costs) at
an average price of (pound)5.15.
Capital expenditure
BAA's total capital expenditure, excluding capitalized interest,
was (pound)234 million ((pound)182 million), of which (pound)215
million ((pound)150 million) was at the U.K. airports. The (pound)200
million Stansted capacity project is ahead of program and Gatwick
North and South terminals' international departure lounge extensions
are on track.
Interest charge
The net interest charge for the period, excluding joint ventures,
decreased by (pound)13 million to (pound)42 million ((pound)55
million) as a result of the significant cash inflow at the end of last
year and higher capitalized interest for the six months, (pound)19
million ((pound)14 million).
Taxation
The effective rate of taxation on profit before exceptional items
was 24.7% (25.8%), reflecting higher levels of capital allowances and
capitalized interest.
BAA ordinary shares trade on the London Stock Exchange; prices may
be accessed on Bloomberg under the symbol BAA LN, on the Reuter
Equities 2000 Service under BAA.L and on Quotron under BAANU.EU. BAA
ADRs, each equal to one ordinary share, appear on the pink sheets
under BAAPY. Additional information is available on BAA's home page:
http://www.baa.co.uk.
Note: For tabular results, please contact Taylor Rafferty at
212/889-4350