BAA RESULTS
FOR THE SIX MONTHS TO 30 SEPTEMBER 2003
BAA, the international airports group, today reported improved passenger growth
and overall performance during its second quarter.
"August 2003 was our busiest month ever," said Mike Clasper, BAA chief
executive. "A record number of passengers and a strong performance from our
retail business over the summer has helped to mitigate the effects of the Iraq
War and SARS in the first quarter. We continue to forecast traffic growth for
the year of 4% across our UK airports".
In the second quarter, traffic increased by 2.8% compared to last year. Net
retail income was up by 5.4% to �156 million and net retail income per
passenger up 2.8% at �3.97. Group operating profit for the three month period
increased by 2.0% (at �203 million) and profit before tax was ahead by 1.1% at
�185 million, despite an �11 million reduction in FRS 17 finance income,
reflecting the status of the pension scheme deficit at 31 March 2003.
In the half year to 30 September 2003, traffic increased by 2.5%. Net retail
income was up 4.4% to �286 million and net retail income per passenger rose
1.8% to �3.98. Operating profit decreased by �6 million (1.7%) to �351 million.
Profit before tax was down by �14 million (4.3%) to �312 million, impacted by a
�22 million reduction in FRS 17 finance income and the effects of the Iraq War
and SARS.
Capital expenditure in the half year increased from �326 million to �603
million of which �318 million related to the investment in Terminal 5. The
Terminal 5 programme remains slightly ahead of schedule and on budget. Good
progress has been made over the summer months and the programme is now 28%
complete. On site, the terminal building itself is starting to take shape.
"We are delighted with the progress on Terminal 5," said Mr Clasper. "All teams
on site are working together with energy, commitment and professionalism on
what is a complex and exciting undertaking."
In a separate announcement today, BAA said it had reached agreement with
British Airways for the airline to occupy Terminal 5 in a single move in 2008,
rather than phasing its occupancy over four years between 2008 and 2012.
"This is good news for British Airways, which will be able to achieve greater
efficiency. It is good news for our other Heathrow airlines, since it will
enable all airlines to realise opportunities more quickly than would otherwise
be the case, and it is good news for BAA. We will benefit from the provision of
capacity for growth earlier than previously planned, and create opportunities
to improve operational efficiency and retail spend," said Mr Clasper.
A pre-recorded interview with BAA's chief executive, Mike Clasper, is available
from 7.30 am (Greenwich Mean Time) on BAA's website - www.baa.com/results - on
Thursday 6 November 2003. The financial results presentation will be broadcast
live at 9.30am (GMT) on the website.
SUMMARY OF RESULTS
Results by half year (2003/04)
6 months to 6 months to Change
30 Sept 2003 30 Sept 2002 %
Passenger traffic 72.1m 70.3m 2.5
Group revenue �1,041m �1,009m1 3.2
Group operating profit �351m �357m (1.7)
Net retail income2 �286m �274m 4.4
Net retail income per passenger2 �3.98 �3.91 1.8
Profit before tax �312m �326m (4.3)
Earnings per share 20.2p 21.2p (4.7)
Interim dividend 6.6p 6.3p 4.8
Capital expenditure �603m �326m 85.0
1 Restated to classify �10 million of airline marketing support costs as a
reduction in revenue, previously reported as an operating cost.
2 See notes following UK airports section for definitions.
Results by quarter (2003/04)
1st % change 2nd % change
quarter from quarter from
2002/03 2002/03
Passenger traffic 32.7m 2.2 39.4m 2.8
Group revenue �484m 2.5 �557m 3.7
Group operating profit �148m (6.3) �203m 2.0
Profit before tax �127m (11.2) �185m 1.1
Earnings per share 8.2p (11.8) 12.0p 0.8
BAA plc, the international airport group, today announced that, for the three
months to 30 September 2003, passenger traffic grew by 2.8% and group revenue
increased 3.7% to �557 million (30 September 2002: �537 million restated).
Group operating profit was up 2.0% in the period to �203 million (�199
million). Profit before tax increased by 1.1% to �185 million (�183 million)
despite the �11 million reduction in FRS 17 finance income, reflecting the
status of the pension scheme deficit at 31 March 2003.
For the six months to 30 September 2003 group revenue increased by 3.2% to �
1,041 million (�1,009 million) on a passenger traffic increase of 2.5%. For the
same period, operating profit was down 1.7% at �351 million (�357 million) and
profit before tax decreased by 4.3% to �312 million (�326 million), as a result
of the �22 million reduction in FRS 17 finance income and the effects of the
Iraq War and SARS.
Earnings per share for the half year were 20.2 pence (21.2 pence). The interim
dividend declared is 6.6 pence (6.3 pence).
CHIEF EXECUTIVE'S COMMENT
Operating and investment review
"In the last three months traffic continued to recover. Retail delivered a very
good performance in challenging circumstances. This has provided us with a
sound financial performance during the second quarter, following a difficult
start to the year as a result of the Iraq War and SARS.
Our three London airports now have busy winter schedules in place, with over 30
additional services to existing and new destinations, thereby further
supporting our expectation of a 4% growth in traffic across our UK airports
this year.
Investment in security and maintenance has continued in line with the programme
set out at the beginning of the financial year. This reflects the completion of
the significant recruitment of security staff over the last two years and
planned increases in maintenance activity. The investment being made now
creates a platform from which we can drive efficiency in the future. For
example, in the area of maintenance, refocusing of our processes and resources
on planned, preventative and improved maintenance is expected to deliver
savings in the long-term.
Terminal 5
A key achievement in the first half of the year has been our progress on the
Terminal 5 site, which remains on budget and slightly ahead of schedule. Of the
budgeted cost of �3.9 billion (March 2003 prices), �1.03 billion has been spent
to the end of September1.
-----------------------------
1 Excluding �178 million present value of deferred consideration payable over
35 years to the vendor of land for Terminal 5.
The achievements to date (and the main areas of expenditure) include:
* Over 50% of all earthworks complete
* 20% into the substructures phase
* Five out of nine tunnel bores completed
* Embankments for the M25 spur road nearly 40% complete
* Steelwork for the M25 spur road bridge complete
* Early release of Thames Water land allowing site works to begin ahead of
schedule.
We announced management changes in July to reflect the current focus on the
delivery phase of the Terminal 5 programme. We have taken this opportunity to
review the project and, with British Airways, agreed a change to the timetable
for their occupation of Terminal 5 in a single move in 2008, rather than in
stages between 2008 and 2012.
This acceleration in the project, and change of scope, benefits British Airways
and all the other airlines which use Heathrow, as well as BAA. British Airways
will be able to achieve greater efficiency. For other Heathrow airlines, it
means that British Airways will vacate Terminals 1 and 4 in 2008, enabling us
to redevelop those facilities more quickly and effectively. We will not have to
build additional facilities in the central terminal area for the transitional
period. The change also offers BAA opportunities to improve operational
efficiency and retail spend as Terminal 5 absorbs more traffic, and the other
four terminals become less congested. As part of this accelerated move, we also
now intend to complete Satellite 2 in Spring 2011 rather than, as planned,
2012. The costs of the programme acceleration and the related facilities
required at Terminal 5 result in an additional investment of �100 million,
bringing the project total to �4.0 billion (March 2003 prices). This will be
fully offset by cost savings in the central terminal area from the improved
redevelopment process.
This change to the Terminal 5 and central terminal area capital investment
programmes will take place entirely within Heathrow's planned capital
expenditure plan for the current regulatory period (2003-2008) of �4.4 billion.
Future runways
The Government's White Paper on future aviation policy is expected next month.
BAA's position is that technically feasible runway options exist at each of
Heathrow, Gatwick and Stansted. We do not at this stage know which airports
will be selected or in which order of priority.
Financial review
UK airports
The performance of our UK airports significantly improved during the second
quarter, thereby helping to offset partially the first quarter adverse
financial effects of the Iraq War and SARS epidemic. In the six months to 30
September 2003, passenger traffic was 2.5% above last year, at 72.1 million
(70.3 million) passengers. This contributed to a 4.5% increase in total
revenue, to �962 million (�921 million), and 0.9% decline in operating profit,
to �336 million (�339 million) of our UK airports (including World Duty Free).
Traffic
In the second quarter traffic was up 2.8% at UK airports, compared to a 2.2%
rise in the first quarter, with August being BAA's busiest month on record. At
Heathrow, traffic in the second quarter was up 0.4%, compared to a decline of
2.2% in the first quarter as a result of the Iraq War and SARS. Stansted also
had stronger growth in the second quarter, up 14.2% compared with 11.7% in the
first three months, as the low cost carriers continued to increase capacity.
Southampton Airport, up 64.5% over the half year, passed the one million annual
passenger milestone.
Airport charges
For the half year in total, 2.5% growth in traffic generated a 6.5% increase in
UK airport and other traffic charges revenue to �394 million (�370 million
restated), reflecting the approved price rises at Heathrow and Gatwick
partially offset by yield dilution at other airports.
Retail
UK airport retailing, including the operations of World Duty Free, continued to
exceed expectations, with net retail income2 in the second quarter up by 5.4%
to �156 million and net retail income per passenger3 up 2.8% at �3.97. The
recovery in passenger numbers at Heathrow resulted in improved performance in
the long haul terminals 3 and 4 compared to the first quarter. Duty-free,
airside shops and catering have all performed well. Summer fragrance ranges
were popular and catering was boosted by new restaurant facilities,
particularly at Heathrow and Stansted. The first phases of a redesign programme
of the main duty free stores at Heathrow Terminals 1 and 4 have been very
successful.
In the half year, net retail income increased by 4.4% to �286 million (�274
million) and net retail income per passenger rose by 1.8% to �3.98 (�3.91).
--------------------------------------------
2 UK airports net retail income is defined as the revenues received directly
from third party retail operators, the concession fee paid to the airports by
World Duty Free and World Duty Free's operating profit.
3 Net retail income per passenger is net retail income divided by the number of
passengers (excluding helicopter passengers)
Operating profit
Operating profit of the UK airports, including the profit of World Duty Free,
was up 2.6% at �195 million in the second quarter. The partial offset of the
growth in revenue continues to reflect primarily the investment in security and
maintenance, planned at the start of the financial year, and higher
depreciation and insurance charges.
In the half year, World Duty Free's operating profit increased by 8.3% to �13
million (�12 million).
International
BAA's investments, joint ventures and management contracts in international
airports realised a total operating profit of �12 million (�6 million) in the
six months. This improvement includes a �3 million4 bonus management fee from
Melbourne Airport as a result of the airport achieving profit significantly
above the agreed shareholder investment case. Naples' profit increased
primarily due to strong traffic growth (up 7.8%). Perth and Oman also increased
our share of profit from our investments.
----------------------------
4 Included in other operations in segmental information.
Heathrow Express
Despite the adverse effects of the Iraq War and SARS during the first quarter,
Heathrow Express performed at a similar level to the same period last year,
carrying 2.4 million (2.5 million) passengers providing revenue of �32 million
(�31 million) during the six month period. Operating profit of Heathrow Express
was flat at �5 million.
BAA Lynton
BAA Lynton achieved an operating profit of �7 million (�9 million excluding
discontinued operations), down 22.2% partly as a result of reduced rental
income following property sales last year, in line with its strategy.
Interest charge and other financing costs
Group net interest charge, excluding joint ventures and associates, was �41
million (�54 million), net of �38 million (�9 million) capitalised interest. �
26 million (�nil) of the �38 million (�9 million) capitalised interest related
to Terminal 5. Other finance income of �nil (�22 million) was recorded in line
with FRS 17.
Taxation
The tax charge of �97 million (�101 million) represents an effective rate of
31% (31%).
Earnings per share
Earnings per share in the second quarter were 12.0 pence, an increase of 0.8%.
In the six months earnings per share fell by 4.7% to 20.2 pence (21.2 pence).
Dividend
The interim dividend payable has increased by 4.8% to 6.6 pence (6.3 pence),
reflecting the Group's policy to maintain a progressive dividend growth rate.
Balance sheet
At 30 September 2003, BAA had net assets of �4,773 million (�4,575 million: 31
March 2003) supported by tangible fixed assets of �8,314 million (�7,802
million: 31 March 2003). Included in net assets was a pension scheme deficit
and other post retirement liabilities, net of deferred tax, of �186 million (�
221 million: 31 March 2003). Since 31 March 2003, the pension deficit has
improved by �35 million, due to a �142 million rise in the value of assets,
partially offset by a �107 million increase in pension and other post
retirement liabilities (net of deferred tax).
Capital expenditure
Group capital expenditure, excluding capitalised interest, was �603 million (�
326 million). Terminal 5 accounted for �318 million of the capital investment
in the first six months of the year. At Heathrow, apart from Terminal 5, the
major spend was on the continuing redevelopment of Terminal 1 to accommodate
long haul traffic, segregation of Pier 5 at Terminal 3 and work on the airfield
to accommodate the A380. At Gatwick work has begun on Pier 6 at North Terminal,
a key project which will be completed in 2005/6, in line with the regulatory
conditions.
Borrowings
In line with previous guidance, net borrowings increased by �393 million to �
2,311 million (�1,918 million: 31 March 2003) to fund Terminal 5 and other
capital investment. Gearing was 48% (42%: 31 March 2003).
For further information on BAA's results, visit website: www.baa.com/results
Segmental summary
Excluding joint ventures and associates
Revenue Revenue* Operating Operating
to to profit to profit to
30 Sept 30 Sept 30 Sept 30 Sept
2003 2002 2003 2002
�m �m �m �m
Airports - UK and overseas 801 769 329 332
World Duty Free - UK airports 191 186 13 12
Rail - Heathrow Express 32 31 5 5
BAA Lynton 8 17 7 9
Other 9 5 (3) (2)
Total - continuing operations 1,041 1,008 351 356
Discontinued operations - 1 - 1
TOTAL 1,041 1,009 351 357
* restated to classify �10 million of airline marketing support costs as a
reduction in revenue, previously reported as an operating cost.
Results by quarter (2003/04)
1st % change 2nd % change
quarter quarter
from from
2002/03 2002/03
Group revenue �484m 2.5 �557m 3.7
Group operating profit �148m (6.3) �203m 2.0
Profit before tax �127m (11.2) �185m 1.1
Earnings per share 8.2p (11.8) 12.0p 0.8
BAA plc RESULTS FOR SIX MONTHS ENDED 30 SEPTEMBER 2003
Consolidated profit and loss account for the six months ended 30 September 2003
Year 30 30
ended September September
31 2003 2002
March
2003 restated
�m (see note
2)
�m �m
(unaudited) (unaudited)
1,911 Continuing operations 1,046 1,012
22 Discontinued operations - 16
1,933 Revenue - group and share of joint ventures 1,046 1,028
(9) Less share of joint venture revenue - continuing (5) (4)
operations
(15) Less share of joint venture revenue - - (15)
discontinued operations
1,909 Group revenue 1,041 1,009
(1,322) Operating costs (690) (652)
582 Continuing operations 351 356
5 Discontinued operations - 1
587 Group operating profit 351 357
3 Share of operating profit in joint ventures - 2 1
continuing operations
7 Share of operating profit in joint ventures - - 4
discontinued operations
1 Share of operating profit in associates - 1 1
continuing operations
598 Total operating profit 354 363
14 Profit on the sale of fixed assets in continuing - -
operations - exceptional item
612 Profit on ordinary activities before interest 354 363
1 Income from other fixed asset investments 1 1
(108) Net interest payable - group (41) (54)
(7) Net interest payable - joint ventures (2) (5)
(1) Net interest payable - associates - (1)
41 Other finance income - group - 22
538 Profit on ordinary activities before taxation 312 326
(162) Tax on profit on ordinary activities (97) (101)
376 Profit on ordinary activities after taxation 215 225
(2) Equity minority interests (1) (1)
374 Profit for the period attributable to 214 224
shareholders
(202) Equity dividends (70) (67)
172 Retained profit for the group and its share of 144 157
joint ventures and associates
35.3p Earnings per share 20.2p 21.2p
34.0p Earnings per share before exceptionals 20.2p 21.2p
34.0p Diluted earnings per share 19.3p 20.1p
Statement of total recognised gains and losses for the six months ended 30
September 2003
Year 30 30
ended September September
31 March 2003 2002
2003 �m �m
�m (unaudited) (unaudited)
374 Profit for the period attributable to 214 224
shareholders *
156 Unrealised surplus on revaluation of - -
investment properties
(7) Reversal of revaluation surplus on investment - -
property transferred to operational assets
(1) Share of associates' unrealised deficit on - -
revaluation of investment properties
5 Revaluation of assets previously held within - 6
joint ventures at cost, net of deferred tax
(722) Actuarial gain/(loss) relating to net pension 71 (518)
liability
217 Deferred tax associated with actuarial (gain) (21) 155
/loss relating to net pension liability
1 Currency translation differences on foreign 2 (2)
currency net investments
23 Total recognised gains and losses relating to 266 (135)
the period
* Including joint ventures and associates profit of �1m (30 September 2002: �
nil; 31 March 2003: �3m).
Reconciliation of movements in shareholders' funds for the six months ended 30
September 2003
Year 30 30
ended September September
31 March
2003 2003 2002
�m �m
restated
(see note
10)
�m (unaudited) (unaudited)
374 Profit for the financial period attributable 214 224
to shareholders
(202) Equity dividends (70) (67)
172 Retained profit for the financial period 144 157
(351) Other net recognised gains and losses 52 (359)
relating to the period
17 New share capital subscribed 2 1
(162) Net additions to/(reductions in) 198 (201)
shareholders' funds
4,737 Opening shareholders' funds 4,575 4,737
4,575 Closing shareholders' funds 4,773 4,536
Consolidated balance sheet as at 30 September 2003
31 March 30 September 30 September
2003 2003 2002
�m restated
(see note 10)
�m �m
(unaudited) (unaudited)
Fixed assets
10 Intangible assets 10 10
7,802 Tangible assets 8,314 7,379
Investments in joint ventures:
75 Share of gross assets 65 104
(72) Share of gross liabilities (54) (69)
30 Loans 20 26
33 31 61
7 Investments in associates 7 6
142 Other investments 140 78
7,994 8,502 7,534
Current assets
27 Stocks 29 169
218 Debtors 274 233
876 Short-term investments 800 1,099
280 Cash at bank and in hand 99 95
1,401 1,202 1,596
(812) Creditors: amounts falling due within one (792) (703)
year
589 Net current assets 410 893
8,583 Total assets less current liabilities 8,912 8,427
Creditors: amounts falling due after more
than one year
(2,299) Other creditors (2,330) (2,346)
(730) Convertible debt (837) (730)
(3,029) (3,167) (3,076)
Provisions for liabilities and charges
(552) Deferred tax (584) (521)
(198) Other provisions (193) (210)
(750) (777) (731)
(8) Equity minority interests (9) (8)
4,796 Net assets excluding pension and other post 4,959 4,612
retirement liabilities
(221) Pension and other post retirement (186) (76)
liabilities
4,575 Net assets including pension and other post 4,773 4,536
retirement liabilities
1,070 Share capital 1,070 1,066
3,505 Reserves 3,703 3,470
4,575 Equity shareholders' funds 4,773 4,536
�4.28 Net asset value per share �4.46 �4.26
Consolidated cash flow statement for the six months ended 30 September 2003
Year ended 30 September 30 September
31 March 2003 2002
2003 �m �m
�m (unaudited) (unaudited)
Operating activities:
587 Operating profit 351 357
257 Depreciation 128 125
1 Amortisation - -
11 (Increase)/decrease in stocks (2) (2)
(29) Increase in debtors (55) (39)
5 Increase in creditors 9 1
(1) Decrease in provisions (1) -
48 Decrease in net pension liability 21 24
879 Net cash inflow from operating 451 466
activities
2 Dividends received from joint ventures - 2
and associates
Returns on investments and servicing of
finance:
(211) Interest paid (92) (103)
70 Interest received 25 28
1 Dividends received from other fixed 1 1
asset investments
(2) Dividends paid to minority interests - (1)
(142) (66) (75)
(144) Net cash outflow from taxation (43) (62)
Capital expenditure and financial
investment:
(680) Additions to operational assets (613) (293)
- Additions to investment properties (1) (6)
9 Sale of operational assets 1 1
63 Sale of investment properties - -
(54) Net reductions/(increase) in long-term 4 9
investments
(662) (609) (289)
Acquisitions and disposals:
41 Disposal of joint ventures 11 -
8 Dissolution of joint venture - 9
118 Disposal of subsidiary undertakings (2) -
(5) Net cash disposed of with subsidiary - -
undertakings
162 9 9
(196) Equity dividends paid (135) (129)
(101) Cash outflow before use of liquid (393) (78)
resources and financing
Management of liquid resources:
48 Cash returned from deposit 164 56
(84) Purchase of commercial paper (88) (315)
(36) 76 (259)
Financing:
17 Issue of shares 2 1
298 Net increase in debt 134 332
315 136 333
178 (Decrease)/increase in cash in the (181) (4)
period
NOTES
1. Basis of preparation
This statement has been prepared in accordance with the accounting policies
used in the 2002/03 annual report.
A review of asset lives has been undertaken during the half year. One major
asset category life (lifts and travelators) has been reduced from 25 to 20
years. A number of minor asset categories have also been amended to more
accurately reflect their useful economic lives. The overall financial impact of
the changes is not material.
Comparative figures as at 30 September 2002 have been restated to be consistent
with the presentation used in the full financial statements for the year ended
31 March 2003 in respect of the split between continuing and discontinued
operations, deferred tax (see Note 10) and marketing support (see Note 2).
The information shown for the year ended 31 March 2003 does not constitute
statutory accounts within the meaning of Section 240 of the Companies Act 1985
and has been extracted from the full financial statements for the year ended 31
March 2003, which have been filed with the Registrar of Companies. The auditors
at that date (Deloitte formerly Deloitte & Touche) have reported on those
accounts; their report was unqualified and did not contain statements under
section 237(2) or (3) of the Companies Act 1985.
The interim financial statement was approved by the directors on 5 November
2003.
2. Accounting policy
The accounting policy for the treatment of marketing support, used to promote
new routes at Stansted Airport, was amended in the final quarter of 2002/03.
Marketing support has, in the current year, been accounted for as a reduction
in revenue, having been previously treated as an operating cost in accordance
with the amended policy. In the directors' opinion this accounting treatment
more fairly reflects the nature of these transactions. Prior year figures for
the half year have been restated to reflect this change resulting in a
reduction in Stansted's revenue by �10m. There is no impact on group operating
profit.
3. Segmental information
Revenue
Year ended 30 September 30 September
31 March 2003 2002
2003 restated
�m (see note 2)
�m �m
(unaudited) (unaudited)
Airports
787 Heathrow 430 410
277 Gatwick 168 160
132 Stansted 74 71
1,196 Total UK regulated airports 672 641
69 Glasgow 40 40
60 Edinburgh 33 32
27 Aberdeen 15 14
14 Southampton 11 8
170 Total UK non-regulated airports 99 94
63 Total international airports 30 34
1,429 Total airports 801 769
352 World Duty Free
191 186
BAA Lynton
46 Continuing operations 8 17
7 Discontinued operations - 1
53 Total BAA Lynton 8 18
64 Rail 32 31
11 Other operations * 9 5
1,909 Group 1,041 1,009
Share of joint ventures and associates
9 Continuing operations 5 4
15 Discontinued operations - 15
24 5 19
1,933 Group and share of joint ventures and 1,046 1,028
associates
Analysed between:
1,837 United Kingdom - continuing operations 1,006 973
22 United Kingdom - discontinued operations - 16
33 Europe - continuing operations 16 19
30 North America - continuing operations 14 15
11 Other - continuing operations 10 5
1,933 1,046 1,028
* Includes the �3m (September 2002: �nil; March 2003: �nil) bonus management
fee from Melbourne Airport.
3. Segmental information (continued)
Operating profit
Year ended 30 September 30 September
31 March 2003 2002
2003 �m �m
�m (unaudited) (unaudited)
Airports
340 Heathrow 191 188
93 Gatwick 69 71
43 Stansted 24 28
476 Total UK regulated airports 284 287
24 Glasgow 18 19
22 Edinburgh 13 13
10 Aberdeen 5 6
3 Southampton 3 2
59 Total UK non-regulated airports 39 40
6 Total international airports 6 5
541 Total airports 329 332
22 World Duty Free 13 12
BAA Lynton
19 Continuing operations 7 9
5 Discontinued operations - 1
24 Total BAA Lynton 7 10
9 Rail 5 5
(9) Other operations * (3) (2)
587 Group 351 357
Share of joint ventures and associates
4 Continuing operations 3 2
7 Discontinued operations - 4
11 Total share of joint ventures and 3 6
associates
598 Group and share of joint ventures and 354 363
associates
Analysed between:
577 United Kingdom - continuing operations 342 351
10 United Kingdom - discontinued operations - 5
5 Europe - continuing operations 5 5
2 Europe - discontinued operations - -
1 North America - continuing operations 1 1
3 Other - continuing operations 6 1
598 354 363
* Includes the �3m (September 2002: �nil; March 2003: �nil) bonus management
fee from Melbourne Airport.
4. Net interest payable and similar charges
The interest charge is shown net of interest capitalised in respect of the
Group of �38m (30 September 2002: �9m; 31 March 2003: �31m) including �26m
(September 2002: �nil; March 2003 �11m) in respect of Terminal 5, of which �5m
relates to the unwinding of the discount on provisions.
FRS 17 other finance income is �nil (30 September 2002: �22m; 31 March 2003: �
41m).
5. Tax on profit on ordinary activities
The taxation charge for the six months ended 30 September 2003 has been based
on the estimated effective rate for the full year before exceptionals of 31%
(September 2002: 31%). In the year ended 31 March 2003 the effective rate was
31%.
6. Equity dividends
The directors have declared an interim dividend of 6.6p (30 September 2002:
6.3p) per share payable on 21 January 2004 to shareholders on the register at
14 November 2003.
7. Earnings per share
Year ended 30 September 30 September
31 March 2003 2002
2003 (unaudited) (unaudited)
�360m Net profit for the financial period �214m �224m
before exceptional items
�14m Exceptional items - -
�374m Profit attributable to shareholders �214m �224m
�21m Interest on convertible bonds �10m �10m
�395m Diluted profit �224m �234m
1,058m Average number of shares in issue 1,062m 1,057m
4m Share options 2m 5m
47m Conversion of 4.875% bonds due 2004 43m 47m
53m Conversion of 2.94% bonds due 2008 53m 53m
- Conversion of 2.625% bonds due 2009 - -
(non-diluting)
1,162m Diluted average number of shares in issue 1,160m 1,162m
34.0p Earnings per share before exceptional 20.2p 21.2p
items
1.3p Profit per share on exceptional items - -
35.3p Earnings per share 20.2p 21.2p
34.0p Diluted earnings per share 19.3p 20.1p
Earnings per share figures before exceptional items have been disclosed to show
the impact of the exceptional items on the underlying results of the business.
8. Tangible fixed assets
The Group's investment properties are included at 31 March 2003 valuations as
adjusted for additions and disposals since that date.
Airport fixed assets in the course of construction (excluding capitalised
interest) include �1,207m in respect of Terminal 5 at Heathrow Airport (30
September 2002: �677m; 31 March 2003: �896m). Included in the Terminal 5 assets
is the net present value of compensation payable for land acquired. The
operational assets employed by the vendor of land at Terminal 5 have to be
relocated and the present value of the estimated deferred payments to be made
over the next 35 years to the vendor in compensation for relocation of �178m
(30 September 2002: �196m; 31 March 2003: �187m), is included within other
provisions in the balance sheet.
9. Creditors: amounts falling due after more than one year
Year ended 30 September 30 September
31 March 2003 2002
2003 �m �m
�m (unaudited) (unaudited)
Borrowings:
30 Secured 30 65
2,221 Unsecured 2,258 2,234
2,251 2,288 2,299
Other unsecured creditors:
24 Deferred income 20 22
24 Other creditors 22 25
2,299 2,330 2,346
Convertible debt:
312 BAA plc 4.875% �314 million convertible - 312
bonds due 2004
418 BAA plc 2.94% �424 million convertible 419 418
bonds due 2008
- BAA plc 2.625% �425 million convertible 418 -
bonds due 2009
730 837 730
The secured borrowings are secured on certain properties.
The �314 million 4.875% convertible bonds were redeemed at their principal
amount, together with interest accrued, on 19 September 2003.
On 19 August 2003, the company issued �425 million 2.625% convertible bonds
convertible at the option of the holder into fully paid �1 ordinary shares of
the company at a price of 576p per share at any time up to 5 August 2009. The
company has the right to redeem the bonds under certain circumstances, which
currently have not been met, and unless previously redeemed or converted, the
company will redeem the bonds at par on 19 August 2009.
10. FRS 19 - Deferred Tax
FRS 19 "Deferred Tax" was adopted in the year ended 31 March 2002, which
required a change to the accounting treatment of deferred tax. This resulted in
a prior year adjustment recorded in that year, whereby �404m of deferred tax
liabilities were recognised, which had not previously been recorded. During the
final quarter of the year ended 31 March 2003, improved interrogation of the
fixed asset registers led to the Group identifying that the prior year
adjustment for deferred tax was understated by �70m. In the accounts for the
year ended 31 March 2003, the recognition of this element of understatement was
accordingly also treated as a prior year adjustment. This adjustment has not
resulted in a change to the reported retained profit for the Group in the six
months ended 30 September 2002.
11. Pensions
Pension and other post retirement liabilities comprise a deficit on the main
pension scheme of �174m (30 September 2002: �65m; 31 March 2003: �209m) and
provision for unfunded pension obligations and post retirement medical benefits
of �12m (30 September 2002: �11m; 31 March 2003: �12m). All amounts are net of
deferred tax.
12. Notes to the cash flow statement
Analysis of net debt 1 April Cash Exchange Other 30 30
2003 flow movements non September September
cash 2003 2002
�m �m �m �m �m �m
Cash at bank and in hand 280 (181) - - 99 95
Overdrafts (3) - - - (3) -
Short-term investments 876 (76) - - 800 1,099
Borrowings due within one (90) 28 (2) (18) (82) (71)
year
Borrowings due after more (2,981) (162) - 18 (3,125) (3,029)
than one year
(1,918) (391) (2) - (2,311) (1,906)
13. Contingent liabilities
Holders of $109m of Loan Notes of World Duty Free Americas, Inc. (now known as
WDFA Inc.), which was sold by BAA in October 2001, have issued proceedings
against BAA, World Duty Free plc and the purchaser of WDFA Inc., for $109m and
punitive damages, claiming they conspired to convey the assets of WDFA Inc.
with the intent of impairing the holders' rights as creditors under the Loan
Notes and also that BAA guaranteed the Loan Notes. BAA denies the allegations
and appropriate legal advice has confirmed that the claim has no merit. The
case is progressing with a court date set for 17 November 2003.
PUBLICATION OF HALF YEAR RESULTS
The results for the six months ended 30 September 2003, will be published in
the Financial Times on 7 November 2003.
Independent review report to BAA plc
Introduction
We have been instructed by the company to review the financial information,
which comprises the profit and loss account, the balance sheet, the cash flow
statement, the other primary statements and the related notes. We have read the
other information contained in the interim statement and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.
Directors' responsibilities
The interim statement, including the financial information contained therein,
is the responsibility of, and has been approved by the directors. The directors
are responsible for preparing the interim statement in accordance with the
Listing Rules of the Financial Services Authority which require that the
accounting policies and presentation applied to the interim figures should be
consistent with those applied in preparing the preceding annual accounts except
where any changes, and the reasons for them, are disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and
applying analytical procedures to the financial information and underlying
financial data and, based thereon, assessing whether the accounting policies
and presentation have been consistently applied unless otherwise disclosed. A
review excludes audit procedures such as tests of controls and verification of
assets, liabilities and transactions. It is substantially less in scope than an
audit performed in accordance with United Kingdom Auditing Standards and
therefore provides a lower level of assurance than an audit. Accordingly we do
not express an audit opinion on the financial information. This report,
including the conclusion, has been prepared for and only for the company for
the purpose of the Listing Rules of the Financial Services Authority and for no
other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 September 2003.
PricewaterhouseCoopers LLP
Chartered Accountants
London
5 November 2003
END