M.A.G ANNOUNCES STRONG TRADING PERFORMANCE
• Encouraging progress made on re-shaping the business whilst delivering on key measures
• Passenger numbers increased by 1.5m (6.7%) to 24.0m passengers
• Revenue growth* of £29.6m (8.6%) to £373.2m
• Underlying operating profit** up £13.5m (26.0%) to £65.5m
• Cash flow from operations up £15.0m (13.6%) to £125.7m
• Carbon neutrality achieved at Regional Aiports in 2012
*After adjusting for the impact of the volcanic ash cloud in April & May 2010 Revenue growth is £23.9m (6.8%). Operating profit growth is £7.8m (13.5%)
**Underlying profit stated before adjusting for significant items
Key Performance Measures
M.A.G today announced its full year results for the year ending 31 March 2012, including improvement across most of the Group’s Key Performance Measures:
|Passengers (m)||24.0 m||22.5m||+6.7%|
|Free Cash Flow****||£33.3m||£24.8m||+34.3%|
|Carbon Reduction - CO2 emissions||31,108||74,414||+55.5%|
*Market Share relates M.A.G’s share of the UK market, excluding Heathrow Airport
**Operating Profit is stated before significant items
***ROCE is derived from operating profit pre-significant items as a percentage of Average Capital Employed. It is calculated on an historical basis
****Free Cash Flow is Net Cash from Operating Activities less Maintenance Capital Expenditure
Chief Executive, Charlie Cornish said:
“This year has been a period of transformation for M.A.G during which we have delivered strong performance against stretching targets in the context of tough global trading conditions for the aviation sector. It has been a great start on our journey towards becoming the premier airport services business”
In a challenging economic climate, M.A.G has grown its share of the UK aviation market by 0.4% to 15.8%, increasing passenger numbers across the group by 1.5m to 24.0m, which represents the first annual increase since 2008.
Revenue has grown to £373.2m, an increase of 8.6% on the prior year, reflecting growth in both aviation and commercial income. Revenue growth was strong, even after adjusting for the impact of the volcanic ash cloud which disrupted air services in the UK during Spring 2010. Adjusting for this, revenue growth was £23.9m (6.8%) higher than the prior year.
Aviation revenue follows the increase in passenger volumes through new and more frequent routes and more airlines. Commercial income reflects growth in retail and car parking revenues, driven by new offers, such as the ‘fast track’ security product, ‘pre-book’, ‘valet’, and ‘meet and greet’ parking products. Retail revenue has benefitted from a focus on maximising space with short term lettings and ‘pop-up’ concessions.
The largest airport in M.A.G’s portfolio, Manchester Airport, increased revenue to £282m, up 9.5% on 2010-11, with passenger numbers growing 1.4m to 19.1m and representing twelve months of consecutive growth. EBITDA rose 13.5% to £126.9m as a result of the improved revenue and effective cost control.
Manchester delivered ten months of consecutive market share gains during 2011-12 by introducing new carriers and securing further growth from existing airlines. Aviation revenue increases were driven by growth from Middle Eastern long haul and routes provided by low cost carriers.
Retail income has benefitted from the introduction of a number of new retailers, including Next, Jo Malone, and Bobbi Brown. The airport also benefitted from a number of pop-up retailers, including Pandora, InStyler, Oakley, and Radley.
The airport saw continued growth in car park services, particularly from pre-book, meet and greet and valet products.
East Midlands Airport performed well, generating over £50m of revenue, up 3.5% on last year with passenger numbers growing by 4.1% to 4.3 million, despite challenging market conditions. The airport continued to see strong airline performance throughout the year, remaining a successful base for charter operators and continuing to drive growth from its low cost operators. Lufthansa’s decision earlier this year to review future options for bmibaby will undoubtedly impact in the short-term but the airport has successfully secured agreements with other carriers to more than offset this impact from 2013.
Cargo and freight remains an integral part of East Midlands Airport, the largest airport for pure freight and the second busiest cargo airport in the UK, handling over 300,000 tonnes in 2012, remaining broadly in line with 2011 levels.
Shortly after the end of the year, and as part of a wider strategy to improve efficiency and operating flexibility, East Midlands Airport insourced its security operation comprising over 300 staff. Benefits to operating efficiency are expected to be generated in the current financial year as a result.
Trading conditions for Bournemouth Airport have been particularly challenging over the past two years, as airline operators have consolidated into larger airports. There are however signs that market conditions are now strengthening and the airport is seeing positive indications that growth will return from both the full service scheduled and low cost sectors. Aer Lingus regional have started operating a service to Dublin six days a week in summer 2012 alongside a three-times-per-week service by Blue Island to Guernsey and Jersey.
The reduced level of current trading activity resulted in an impairment provision of £38.5m being made against the airport’s property, plant & equipment during the year although its management is confident about increasing passenger volumes and profit levels given the encouraging progress made in securing new routes and services.
As the smallest airport in the Group’s portfolio, with annual passenger volumes around 275,000, M.A.G has believed for some time that the best long-term operational model for Humberside Airport was with a new owner. After receiving an offer for its 82.7% shareholding in the airport earlier in the year, M.A.G took the decision to sell its interest and the sale completed in August 2012. The airport has been included as a ‘discontinuing operation’ in the Group’s 2012 results, and a one-off impairment loss of £15.6m has been incurred relating to the write-down of the airport’s assets to the realisable value.
M.A.G Developments, the Group’s property and facilities management arm, manages a property portfolio valued at over £350m, yielding a property income which has grown by £4.4m during the year to £31.4m. In January 2012, George Osborne formally launched the £650m Manchester Airport City project which is aimed at transforming Manchester Airport from a regional transport hub into a global business destination in its own right, over the next ten to 15 years, building on the Enterprise Zone status awarded for the area by the Government in 2011.
The Group also completed the new £22m Radisson Blu hotel at East Midlands Airport. Two of M.A.G's airports (East Midlands and Bournemouth Airports) became the first airports in the UK to announce carbon neutral ground operations during the year. M.A.G first made the commitment in 2006 and has over the past six years invested in innovative techniques and projects aimed at reducing energy usage and championing renewable energy. Manchester Airport has invested £2m in energy saving projects over the past 12 months, resulting in a 16% reduction in electricity usage and the airport is on course to achieve the target of carbon neutral ground operations by 2015.
Summarising, Charlie Cornish, said: “M.A.G has grown strongly in the year and the journey to becoming the premier airport management and services company is underway.
“Although the general economic backdrop is not favourable, the Group is positioned to take advantage of airline growth opportunities, which will allow the continued out-performance of the UK passenger market, ensuring that this profitable growth drives better product offerings commercially and greater efficiencies.”
Published on: 23/08/2012 16:33:03