Associated British Ports Hldgs PLC
18 February 2004
EMBARGO: NOT FOR PUBLICATION OR BROADCAST
BEFORE 7.00 a.m. ON WEDNESDAY, 18 FEBRUARY 2004
ASSOCIATED BRITISH PORTS HOLDINGS PLC
Annual Results for the year ended 31 December 2003
Financial highlights
• UK ports and transport turnover up 7% to £349.1 million (2002: £325.7
million).
• UK ports and transport operating profit up 8% to £151.4 million (2002: £140.5
million), underlying UK ports and transport operating profit up 8% to £152.3
million (2002: £141.4 million).
• Pre-tax profit up 5% to £145.5 million (2002: £139.1 million), basic
earnings per share up 3% to 31.7 pence (2002: 30.9 pence).
• Underlying pre-tax profit up 3% to £141.6 million (2002: £138.1 million),
underlying earnings per share up 2% to 31.0 pence (2002: 30.4 pence)
reflecting this year's reduction in property sales.
• Dividend up 3% to 15.25 pence (2002: 14.75 pence).
• Continued strong cash flow, underlying operating profit to operating cash
flow conversion 101% (2002: 115%).
Operational highlights
• Strategy implementation continues to produce growth in UK ports
Growth in roll-on/roll-off trade, deep-sea container traffic, vehicle imports
and exports, agribulks, forest products, imported coal and cruise-ship calls.
Agreement reached for the development of a £27.5 million two berth roll-on/
roll-off facility at the Port of Immingham with DFDS Tor Line PLC.
Approval process for deep-sea container terminal development at Dibden,
Southampton, on schedule - Government decision expected in 2004.
Cost-reduction programme complete - will deliver cost savings of at least £3.0
million per annum from 2004.
• Continuing pipeline of new business
12 new long-term contracts won in 2003.
Over 65 new contracts won over the last four years.
Bo Lerenius, Group Chief Executive, commented on the results and prospects:
'The strong performance of the group's UK ports business is particularly
pleasing. Our business model is consistent, resilient and highly transparent.
Half of the group's UK ports business for 2004 is already under contract. While
any significant improvement in the global economy is uncertain it is improving
slowly, which is good for business in general. We also finished 2003 strongly,
which offers some encouragement for the year to come.'
Enquiries:
Associated British Ports Holdings PLC
Bo Lerenius, Group Chief Executive tel: +44 (0) 20 7430 1177
Richard Adam, Group Finance Director
Margie Collins, Corporate Communications Manager
Finsbury
James Murgatroyd tel: +44 (0) 20 7251 3801
James Leviton
18 February 2004
Notes to Editors:
Associated British Ports Holdings PLC is a leading provider to shippers and
cargo owners of innovative and high-quality port facilities and services.
The group's principal subsidiary, Associated British Ports (ABP), is the UK's
largest and leading ports group, handling almost a quarter of the country's
seaborne trade.
The group owns and operates AMPORTS in the USA, which handles car imports and
exports and provides auto-processing services.
The group's property investment and property development activities are focused
on opportunities within its ports.
The group employs around 3,000 people, mainly at port locations in the UK and
USA.
This, and other news releases relating to the group, can be found on the group's
website, www.abports.co.uk
Photographs:
Print resolution images of Bo Lerenius, Associated British Ports Holdings PLC's
Group Chief Executive, operational management and general port scenes to
accompany this press release, can be viewed and downloaded free of charge from
www.vismedia.co.uk
Key financial figures
2003 2002 Change
Profit and loss account
Group turnover - continuing operations £m 401.3 401.9 n/a
UK ports and transport turnover £m 349.1 325.7 +7%
Underlying UK ports and transport operating
profit * £m 152.3 141.4 +8%
UK ports and transport operating profit £m 151.4 140.5 +8%
Total underlying operating profit -
continuing operations * £m 176.6 172.2 +3%
Underlying interest cover * Times 5.0 4.7 n/a
Underlying profit before taxation * £m 141.6 138.1 +3%
Profit before taxation £m 145.5 139.1 +5%
Underlying earnings per share * Pence 31.0 30.4 +2%
Basic earnings per share Pence 31.7 30.9 +3%
Dividends
Dividend per share Pence 15.25 14.75 +3%
Underlying dividend cover * Times 2.0 2.0 n/a
Cash flow statement
Net cash inflow from operating activities
including dividends received from
associated undertakings £m 178.8 201.5 -11%
Underlying operating profit cash conversion * Percentage 101.2 114.6 n/a
Gross capital expenditure £m 68.0 76.7 -11%
Balance sheet
Net borrowings £m 436.8 450.1 -3%
Gearing Percentage 40.7 44.6 n/a
Net assets £m 1,072.4 1,009.3 +6%
Net assets per share Pence 326 308 +6%
*Before goodwill amortisation and exceptional items
RESULTS
The group's core ports and transport businesses and associated undertakings
produced a strong performance for the year. They benefited from a significant
contribution from new business contracts secured over recent years,
cost-reduction initiatives implemented in 2003, and improving economic
conditions in the latter part of the year.
As a result of reduced property sales, group turnover from continuing operations
decreased marginally to £401.3 million (2002: £401.9 million). However, the
strong performance of the core UK ports and transport business, which
contributed £152.3 million to operating profit, an increase of 7.7 per cent on
2002 (£141.4 million), enabled total operating profit from continuing
operations, before goodwill and exceptional items, to grow by 2.6 per cent to
£176.6 million (2002: £172.2 million).
Benefiting from reduced interest costs, underlying pre-tax profit increased by
2.5 per cent to £141.6 million (2002: £138.1 million) and underlying earnings
per share increased by 2.0 per cent to 31.0 pence (2002: 30.4 pence). With the
benefit of reduced goodwill amortisation of £0.9 million (2002: £1.6 million)
and increased profit from the sale of fixed assets of £4.8 million (2002: £0.7
million), pre-tax profit and basic earnings per share increased by 4.6 per cent
to £145.5 million (2002: £139.1 million) and by 2.6 per cent to 31.7 pence per
share (2002: 30.9 pence per share), respectively. Taking into account the
proposed final dividend of 8.5 pence per share, the total dividend per share
increased by 3.4 per cent to 15.25 pence (2002: 14.75 pence).
Ports & transport - UK
Turnover in the UK ports and transport business increased by 7.2 per cent to
£349.1 million in 2003 (2002: £325.7 million) and underlying operating profit
grew by 7.7 per cent to £152.3 million (2002: £141.4 million). The
cost-reduction programme which was announced in 2002 resulted in savings of over
£1.5 million during 2003. These savings more than balanced the impact on the
group's margins of the increased insurance costs previously reported and the
lower-margin growth achieved by the group's value-added services operation, ABP
Connect. The cost-reduction programme will generate at least £3.0 million of
savings per annum from 2004.
Total annual throughput at the group's 21 UK ports increased by 3.4 per cent to
124.1 million tonnes (2002: 120.0 million tonnes). Excluding iron ore imports
driven by Corus in South Wales and low margin oil, both of which had limited
impact on the group's results, throughput at the group's UK ports grew by 5.7
per cent. Importantly, key trades such as roll-on/roll-off trade, deep-sea
container traffic, vehicle imports and exports, agribulks, forest products,
imported coal and cruise-ship calls, continued to grow.
Significant developments in the operating performance of each business unit are
discussed below.
Hull & Goole
Turnover increased marginally by 0.5 per cent, with growth in imports of forest
products, roll-on/roll-off traffic and grain exports being partly offset by
reductions in coal and scrap metal volumes. During the year, a £0.6 million
investment in timber storage facilities to accommodate new business from Grange
Fencing, suppliers of value-added products to B&Q and Jewson, was completed at
Hull. In addition, towards the end of the year the group agreed to invest £1.4
million in additional storage facilities on the back of 10-year agreements with
North Sea Lumber (Sales) Ltd and Rix Shipping. Container traffic handled by
Hull was significantly higher than the previous year. A public inquiry into
Quay 2005, the proposed riverside berth development to enable the port to handle
larger short-sea container vessels, was held in July 2003. The group expects
the government's decision by the end of the first half of 2004.
At Goole, the group completed a £0.7 million investment in new storage and
distribution facilities under a long-term agreement with RMS Europe. A new £1.0
million railfreight terminal became operational in December, improving the
port's rail infrastructure and enabling a higher proportion of cargo - including
imports of steel coils and import/export containers - to be transported by rail.
The Strategic Rail Authority awarded the group a £0.7 million Freight
Facilities Grant towards the cost of constructing the terminal in recognition of
the scheme's environmental benefits.
Grimsby & Immingham
Turnover increased by 2.4 per cent, with growth in container volumes, grain
exports, roll-on/roll-off traffic, coal imports and vehicle imports/exports.
Grimsby & Immingham maintained its position as the UK's number-one port in the
tonnage statistics for 2002 published by the Department for Transport towards
the end of 2003. Immingham's forest products trade was boosted by two
developments which became operational during the year: the £1.0 million
Immingham Forest Products Terminal, constructed under a term agreement with
Bowater Incorporated and a new £0.8 million warehouse, built under a five-year
agreement with Humber Timber Terminals Ltd. In addition, a new £1.0 million
storage terminal for Rowlinson Timber, built on the back of a 10-year agreement,
became operational during January 2004.
A new £1.1 million agribulk facility for IAWS, built at Immingham under a
15-year contract, became operational in August, and the £2.0 million ABP
Freshney Cargo Services Terminal, which was developed on the back of a long-term
agreement, also commenced service in August. The new terminal enabled Sea-Cargo
AS - a long-term customer of Freshney Cargo Services - to relocate from Grimsby
to Immingham and improve its services by using larger and faster vessels. The
group has also increased capacity at Grimsby to support the continued growth of
Volkswagen Group's vehicle volumes. Following the decision by Cobelfret to move
from the Port of Immingham at the end of 2004, the group is actively seeking new
roll-on/roll-off business to fill the spare capacity.
Southampton
Turnover rose by 9.9 per cent, with growth in grain exports, vehicle imports and
container traffic. The port's cruise business continued to grow, with 202
cruise calls in 2003 (2002: 176), including more inaugural cruise-ship visits
than in any previous year.
Three projects totalling £10.0 million to improve and expand the port's cruise
facilities were completed in 2003. The Mayflower Cruise Terminal, P&O Cruises'
UK base, benefited from a £6.5 million major reconstruction following a new
10-year agreement. Queen Elizabeth II Terminal was refurbished following a £2.0
million investment underpinned by an agreement with Cunard Line, confirming
Southampton as Cunard's UK base until 2009. It is also the home port of Queen
Mary 2, the world's largest cruise liner. The £1.5 million City Cruise
Terminal, the port's third cruise terminal, became operational in August.
ABP also invested £1.2 million in a new roll-on/roll-off facility built under a
term agreement with Channel Freight Ferries at Southampton. Services from this
facility are due to commence in February 2004.
South Wales Ports
Turnover declined by 0.2 per cent compared with the previous year. A reduction
in the imports of steel slab by Corus was balanced by growth in timber imports
and scrap exports, together with a recovery in iron ore and coal import volumes.
The region also saw a number of significant new developments during the year.
Timber business benefited from new developments at Newport and Barry. At
Newport, a £4.6 million investment in new storage facilities, following a
20-year agreement with Saint-Gobain, became operational in June. In December, a
new £0.8 million pallet-production facility backed by a 10-year agreement with
the Scott Timber group, the UK's leading pallet manufacturer, became operational
at Barry.
In excess of £2.5 million is being invested in steel-handling facilities at
Cardiff and Newport. Investment in Cardiff is backed by two new customer
contracts: a 10-year agreement with Marshall Maritime Services for a new,
bespoke steel-importing facility; and a five-year agreement with Duferco UK Ltd
for the modification of an existing warehouse. At Newport, the group's £0.8
million investment in a new mobile harbour crane was backed by a three-year
agreement with Corus.
The group is also investing £3.5 million in major capital infrastructure works
at Newport on the back of a 20-year agreement with Sims Group. As a separate
project, Sims Group is to invest £8.0 million in its scrap metal and
fridge-recycling operations at the port to make it one of their flagship
facilities.
Shortsea Ports
Turnover increased by 12.5 per cent, with growth in grain exports and roll-on/
roll-off traffic. At the Port of Ayr, a £1.0 million investment in a warehouse
facility built under a 20-year contract with Peacock Salt became operational in
June. A £4.3 million investment in marine works at Plymouth to accommodate
Brittany Ferries' new superferry, Pont Aven, is due to become fully operational
in July 2004. This investment is supported by a 15-year agreement with Brittany
Ferries.
The £1.0 million Lowestoft Haven Marina development, which has a 140-berth
capacity, was completed in December. At the Port of Ipswich, we are investing
£6.1 million on the construction of a second roll-on/roll-off berth following a
20-year agreement with Ferryways NV. This facility will enable Ferryways to
expand its services. A public inquiry into a proposed £4.0 million project to
develop port facilities at Teignmouth was held in September. The group expects
the government's decision during 2004.
ABP Connect
Turnover in the group's value-added services business increased by 16.3 per
cent. New developments in 2003 included B&Q's decision to handle containerised
UK imports through ABP Connect's Exxtor Terminal at the Port of Immingham.
Exxtor Terminal also won new container business from Samskip Ltd and CMA CGM.
Hams Hall Railfreight Terminal in Birmingham underwent a £2.2 million expansion
following a £1.2 million grant from the Strategic Rail Authority. The grant was
awarded on the back of a new daily railfreight service between Hams Hall and
Scotland that has reduced the amount of goods transported by road.
Ports & transport - USA
Turnover from AMPORTS' continuing ports and transport operations (which excludes
property investment income) increased by 8.5 per cent on a local currency basis;
however, the weakening of the US dollar against sterling meant that reported
turnover fell marginally to £36.0 million (2002: £36.1 million). Reported
operating profit, which benefited from an improvement in the US dollar revenue
earned per vehicle processed and a reduction in overhead costs following the
sale of the Aviation division, increased by 66.7 per cent to £2.5 million (2002:
£1.5 million).
AMPORTS processed 587,000 vehicles during 2003, a slight increase on the 582,000
vehicles handled during the previous year. The company continued to win new
business, with KIA importing vehicles through Baltimore, Maryland, and General
Motors importing vehicles through Benicia, California, during the latter part of
the year.
Property investment
Non-core property and land sales during 2002 and 2003 led to a 7.5 per cent
decline in total turnover from UK and USA property investment to £8.6 million
(2002: £9.3 million). Consequently, operating profit from UK and USA property
investment declined by 2.9 per cent to £6.6 million (2002: £6.8 million).
Property development
The delayed sale of 29 acres of land at the Port of Garston, originally planned
for 2003 and which is now to be the subject of a public inquiry, was a key
factor in turnover from property development declining to £7.6 million (2002:
£30.8 million). Operating profit from property development activities was £3.2
million (2002: £12.0 million).
During 2003, the group sold a further £6.7 million of non-core property and
land. This brings the value of non-core property and land sold since 1 January
2000 to £175.7 million. The group remains on track to achieve its target of
£200.0 million of non-core property and land sales by the end of 2004.
Associates
The group's share in the turnover of associates increased by 12.2 per cent to
£49.5 million (2002: £44.1 million). Its share of operating profit rose 14.3
per cent to £12.0 million (2002: £10.5 million).
Both Southampton Container Terminals (SCT) and Tilbury Container Services (TCS)
experienced increased container throughput in 2003. SCT handled 1,378,000
container units, an increase of 8.0 per cent, and TCS handled 322,000, an
increase of 16.1 per cent. The Cardiff Bay Partnership produced a result
similar to the previous year, as expected.
Interest
Net interest payable of £35.0 million was £2.7 million below the previous year
(2002: £37.7 million). The reduced net charge was the result of both lower
average net borrowings and historically low USA and UK interest rates. Interest
received amounted to £0.6 million (2002: £0.7 million). Amounts capitalised,
primarily in relation to costs incurred in the group's plans to develop Dibden
Terminal at Southampton, totalled £1.3 million (2002: £1.1 million).
The group's underlying average rate of interest increased slightly to 7.6 per
cent (2002: 7.4 per cent); underlying interest cover improved to 5.0 times
(2002: 4.7 times).
Taxation
The underlying tax charge for the year of £39.5 million (2002: £38.7 million)
equates to an underlying effective tax rate of 27.9 per cent, similar to the
28.0 per cent effective tax rate for 2002. This rate compares favourably with
the weighted standard rate of tax of 30.2 per cent for the UK and the USA, the
two countries in which the group operates and benefits from the utilisation of
brought forward capital losses against its UK property sales.
Goodwill amortisation and exceptional items
Goodwill amortisation of £0.9 million was £0.7 million lower than the previous
year following the disposal of AMPORTS Aviation division during December 2002.
Exceptional items included a profit of £4.8 million on the sale of fixed assets
(2002: £0.7 million). This related primarily to the further proceeds from an
insurance claim used to reconstruct a damaged pier in the USA.
Earnings per share
Underlying earnings per share, before goodwill amortisation and exceptional
items, increased by 2.0 per cent to 31.0 pence per share (2002: 30.4 pence per
share).
Basic earnings per share, which benefited from the £4.8 million profit arising
from the sale of fixed assets, increased by 2.6 per cent to 31.7 pence per share
(2002: 30.9 pence per share).
Dividend
In determining the level of dividend in any one period, the directors pay
particular attention to the group's underlying earnings per share and underlying
dividend cover. Based on the group's performance for the year, the directors
have recommended a final dividend of 8.5 pence per share; this would make a
total dividend for the year of 15.25 pence per share, an increase of 3.4 per
cent on 2002.
Underlying dividend cover of 2.0 times remains close to that for the previous
year.
Balance sheet
Shareholders' funds increased by £63.1 million to £1,072.4 million and represent
326 pence per share (2002: 308 pence per share).
Following the five-yearly independent revaluation of its tangible property
assets by Cushman & Wakefield Healey & Baker, the group recorded a revaluation
surplus of £7.8 million for the current year.
Return on capital employed
The group's 10.7 per cent underlying return on capital employed was similar to
the previous year; both compare favourably with the 1999 level of 9.5 per cent,
when the current strategy was implemented.
Cash flow
The group's business model generates strong operating cash flow. Its underlying
operating cash conversion from total underlying operating profit was 101.2 per
cent. Cash flow from operations, which includes dividends from associated
undertakings, totalled £178.8 million for the year, compared with £201.5 million
in 2002. At £60.3 million, free cash flow was below the 2002 level of £66.7
million.
Gross capital expenditure of £68.0 million (2002: £76.7 million) included £4.8
million of further capital expenditure on the Dibden Terminal project at
Southampton, £5.9 million on the reconstruction of a damaged pier in the USA and
£5.1 million on the Mayflower Cruise Terminal at the Port of Southampton.
There are two elements to the group's capital expenditure: maintenance or
infrastructure expenditure; and revenue-earning capital projects. Maintenance
expenditure during 2003 was just below the level of depreciation and the group
aims to maintain this performance in 2004. By contrast, the only restriction
the group places on revenue-earning capital projects is that they earn an
internal rate of return on investment of at least 15 per cent. The group does
not intend to enter into any major speculative investments.
Revenue-earning capital expenditure amounted to £41.7 million (2002: £52.0
million). As many of these new projects will become operational in the near
future, their impact on the results for 2003 was negligible.
Assuming that it is able to obtain the necessary consents and customer
agreements, the group intends to invest in excess of £1 billion over the next 10
years, principally in further riverside terminals on the Humber, at Dibden
Terminal, Southampton, and in regular growth projects at its other ports.
Borrowings and gearing
Due to the strong underlying operating cash flow, net borrowings decreased by
£13.3 million to £436.8 million (2002: £450.1 million). Gearing reduced to 40.7
per cent (2002: 44.6 per cent) as a result.
Adoption of new accounting standards
The group adopted FRS 17 - Retirement Benefits under its transitional
arrangements in 2001 and continued to report on this basis during 2003. Under
FRS 17, the group's pension arrangements had a surplus of assets over
liabilities of £34.4 million at the end of 2003. The group is therefore
maintaining its contribution holiday in 2004. Full adoption of FRS 17 during
2003 would have reduced the group's pre-tax profit by £10.5 million.
STRATEGY
We are very pleased with the performance of our core ports and transport
business this year, and our UK operations in particular. They had another good
year and contributed 86 per cent of the group's total operating profit for 2003.
The 12 new contracts that we signed during the year take the total number of
major contracts we have won since the beginning of 2000 to over 65.
Included within our ports and transport business is ABP Connect, our value-added
services business, which has also performed well. Turnover increased by 16 per
cent to £70.3 million and operating profit increased by almost 30 per cent to
£5.4 million during the year, which is in line with our expectations. We have
set ABP Connect another tough target for 2004 and expect further growth in this
area.
Even though our UK ports business has outgrown the quoted UK ports sector over
the past four years, we believe that there is still more to come. We will
therefore maintain our strategy of growing the business in a low-risk way.
Assuming we get the necessary approvals, we plan to invest more than £1 billion
over the next 10 years. Up to £600 million is expected to be invested in a
deep-sea container terminal at Dibden, Southampton, four new river terminals
planned for the Humber will cost around £140 million, with the balance of the
planned investment being utilised by regular growth projects in all of our
ports.
As the recent Transport Select Committee report acknowledged, the UK's
competitive position is being seriously undermined by an imminent lack of
deep-sea container capacity. Unless our current deep-sea facilities are
expanded, Southampton Container Terminals is expected to be at full capacity
within two years. We expect a decision on Dibden in 2004.
Of the Humber projects, we have recently reached an agreement with DFDS Tor Line
PLC for the development of a two-berth roll-on/roll-off facility at the Port of
Immingham, involving an investment of £27.5 million under a 25-year agreement.
It is anticipated that this facility will become operational towards the end of
2005. The proposed coal terminal at Immingham, for which we already have the
necessary approvals, continues to be progressed. We expect to receive
permission for both the planned roll-on/roll-off facility at Immingham and the
shortsea container terminal at Hull by the end of the first half of the year.
The fourth terminal will take longer to develop.
We will only build these new terminals once we have secured customers for them.
Our strong strategic position - ABP's 21 ports are in some of the UK's best
locations - means that we can afford to be disciplined in how we do business.
We only make significant investment once we have secured solid, long-term
contracts, usually of 10 years or more, offering an internal rate of return of
at least 15 per cent.
Although returns from our six vehicle-processing terminals in the USA are
improving - volumes have almost doubled over the past three years and we have
won a lot of new car import and export business - we do not anticipate any
further significant investment or expansion in the near future. We will
continue to grow the existing business, but it is a small part of our overall
ports and transport operations.
Our commitment to organic growth and the potential in our core UK ports business
mean that we do not expect to make any major acquisitions in the near future.
We believe that developing new projects within our own business that can deliver
the required rate of return represents a much more efficient use of capital than
paying a premium and increasing our risk profile by buying another business.
Our non-core property and land disposal programme is very much on target and
should be completed in 2004. We will continue to sell surplus land.
BOARD OF DIRECTORS
George Duncan, non-executive Deputy Chairman and Senior Independent Director,
retired from the board at the Annual General Meeting on 15 April 2003. He
served the company as a non-executive director for 17 years, during which time
the group benefited greatly from his considerable wisdom and boardroom
experience. The board wish him well.
Andrew Simon, who joined the board in 1994, replaced George Duncan as Senior
Independent Director.
Ross Sayers has informed the board that he does not intend to stand for
re-election at the end of his current term. Mr Sayers has recently taken on
additional, external responsibilities and for these reasons, combined with the
fact that his departure at the end of his term of appointment would have fallen
during a strategically important period for the company, it has been agreed that
Mr Sayers will formally step down as Chairman and as a director of the company
immediately after the Annual General Meeting on 21 April 2004.
Mr Sayers joined the board in 2001 and the directors of the company would like
to take this opportunity to thank him for his leadership and guidance during his
tenure as Chairman, a period in which the company has made significant progress.
The process of selecting a new Chairman is underway.
PROSPECTS
While any significant improvement in the general economic climate is uncertain,
the group's UK ports business is in the strong position of having many long-term
contracts with quality customers. We are confident that our healthy cash flow,
diverse spread of geographical and cargo risk and increased growth during the
second half of 2003, combined with new contracts which have been secured over
the past four years, will underpin the continued growth of the group's UK ports
business in 2004.
Group profit and loss account for the year ended 31 December
Total Total
2003 2002
Note £m £m
Turnover including share of associated undertakings
Continuing operations 450.8 446.0
Discontinued operations - 27.9
450.8 473.9
Less: share of turnover in associated undertakings (49.5) (44.1)
Group turnover 2 401.3 429.8
Cost of sales (192.1) (211.8)
Gross profit 209.2 218.0
Administrative expenses (45.5) (59.8)
Group operating profit 163.7 158.2
Analysed between:
Continuing operations before goodwill amortisation and exceptional items 164.6 161.7
Goodwill amortisation - continuing (0.9) (0.9)
Exceptional items - continuing 3 - (5.5)
Discontinued operations before goodwill - 3.6
Goodwill amortisation - discontinued - (0.7)
Share of operating profit in associated undertakings 12.0 10.5
Total operating profit 175.7 168.7
Profit on disposal of discontinued operations 3 - 7.4
Profit on sale of fixed assets 3 4.8 0.7
Profit on ordinary activities before interest 2 180.5 176.8
Net interest payable 4 (35.0) (37.7)
Profit on ordinary activities before taxation 145.5 139.1
Analysed between:
Underlying profit before tax, goodwill amortisation and exceptional items 141.6 138.1
Goodwill amortisation (0.9) (1.6)
Exceptional items 3 4.8 2.6
Taxation on profit on ordinary activities (41.2) (38.0)
Profit on ordinary activities after taxation 104.3 101.1
Dividends 5 (50.2) (48.5)
Retained profit for the group and its share of associated undertakings 54.1 52.6
Earnings per share - basic 6 31.7p 30.9p
Earnings per share - diluted 6 31.5p 30.6p
Earnings per share - underlying 6 31.0p 30.4p
Dividend per share - interim 5 6.75p 6.50p
Dividend per share - final 5 8.50p 8.25p
15.25p 14.75p
Group balance sheet as at 31 December
2003 2002
Note £m £m
Fixed assets
Intangible assets 14.5 15.4
Tangible operating assets 871.5 834.0
Tangible property assets 570.3 568.8
Investments 51.8 50.2
1,508.1 1,468.4
Current assets
Property developments and land held for sale 41.6 38.3
Debtors - due within one year 95.3 93.4
Debtors - due after one year 88.1 82.9
Cash and short-term deposits 7.1 6.4
232.1 221.0
Creditors - amounts falling due within one year (126.7) (129.9)
Net current assets 105.4 91.1
Total assets less current liabilities 1,613.5 1,559.5
Creditors - amounts falling due after more than one year (436.1) (449.5)
Provisions for liabilities and charges (94.4) (92.0)
Deferred income (10.6) (8.7)
Net assets 2 1,072.4 1,009.3
Capital and reserves
Called-up share capital 82.3 82.0
Share premium account 84.1 77.4
Revaluation reserve 634.2 627.9
Other reserves 37.2 37.0
Profit and loss account 234.6 185.0
Equity shareholders' funds 9 1,072.4 1,009.3
Net assets per share 326p 308p
Net borrowings £436.8m £450.1m
Net borrowings as a percentage of equity shareholders' funds 40.7% 44.6%
Group cash flow statement for the year ended 31 December
2003 2002
Note £m £m
Net cash inflow from operating activities 10 175.4 199.1
Dividends received from associated undertakings 3.4 2.4
Returns on investments and servicing of finance
Interest received 0.5 0.8
Interest paid (34.9) (36.9)
Interest element of finance lease rental payments (0.3) (1.0)
Net cash outflow from returns on investments and servicing of finance (34.7) (37.1)
Taxation (24.0) (25.7)
Capital expenditure and financial investment
Tangible operating assets (62.4) (70.0)
Tangible property assets (7.3) (6.7)
Grants received 1.7 -
Sale of fixed assets 7.3 3.4
Movement on investment in own shares 0.9 1.3
Net cash outflow from capital expenditure and financial investment (59.8) (72.0)
Free cash flow 60.3 66.7
Acquisitions and disposals
Purchase of business and subsidiary undertakings - (0.3)
Sale of subsidiary undertakings (1.9) 29.4
Net cash (outflow)/inflow from acquisitions and disposals (1.9) 29.1
Equity dividends paid (49.3) (46.6)
Cash inflow before use of liquid resources and financing 9.1 49.2
Management of liquid resources (0.6) (2.0)
Financing
Issue of shares 5.4 4.8
Repurchase of shares (3.7) -
Decrease in borrowings (8.6) (48.8)
Capital element of finance lease rental payments (3.5) (3.3)
Net cash outflow from financing (10.4) (47.3)
Decrease in cash in the year (1.9) (0.1)
Reconciliation of net cash flow to movement in net borrowings for the year ended
31 December
2003 2002
Note £m £m
Decrease in cash in the year (1.9) (0.1)
Cash outflow from decrease in borrowings and lease finance 12.1 52.1
New finance leases (2.6) -
Cash outflow from movement in liquid resources 0.6 2.0
Currency translation differences 5.1 4.8
Change in net borrowings resulting from cash flows 13.3 58.8
Net borrowings at 1 January (450.1) (508.9)
Net borrowings at 31 December 11 (436.8) (450.1)
Notes to the preliminary financial statements
1. Basis of preparation
The preliminary results have been prepared in accordance with the accounting
policies set out in the group's financial statements for the year ended 31
December 2003. Financial Reporting Standard 17 - Retirement Benefits continues
to be adopted under the transitional rules.
The preliminary results, which do not comprise statutory accounts within the
meaning of section 240 of the Companies Act 1985, represent an abridged version
of the group's full financial statements for the year ended 31 December 2003
which were approved by the board on 18 February 2004 and upon which the group's
auditors have given an unqualified report.
2. Segmental analysis
Analysis of group turnover, profit on ordinary activities before interest and
net assets by class of business and geographical segment is given below.
Turnover is disclosed by origin. There is no material difference between
turnover by origin and turnover by destination.
UK USA Total UK USA Total
2003 2003 2003 2002 2002 2002
£m £m £m £m £m £m
Group turnover
Ports and transport
Continuing operations 349.1 36.0 385.1 325.7 36.1 361.8
Discontinued operations - - - - 27.9 27.9
349.1 36.0 385.1 325.7 64.0 389.7
Property investment 6.8 1.8 8.6 7.3 2.0 9.3
Property development 7.6 - 7.6 30.8 - 30.8
Group turnover 363.5 37.8 401.3 363.8 66.0 429.8
Profit on ordinary activities before interest
Ports and transport
Continuing operations 152.3 2.5 154.8 141.4 1.5 142.9
Discontinued operations - - - - 3.6 3.6
152.3 2.5 154.8 141.4 5.1 146.5
Property investment 5.0 1.6 6.6 5.0 1.8 6.8
Property development 3.2 - 3.2 12.0 - 12.0
Share of operating profit in associated
undertakings 12.0 - 12.0 10.5 - 10.5
Total underlying operating profit 172.5 4.1 176.6 168.9 6.9 175.8
Goodwill amortisation (0.9) - (0.9) (0.9) (0.7) (1.6)
Exceptional items
- administrative expenses (note 3) - - - (5.5) - (5.5)
Total operating profit 171.6 4.1 175.7 162.5 6.2 168.7
Profit on disposal of discontinued
operations (note 3) - 7.4
Profit on sale of fixed assets (note 3) 4.8 0.7
Profit on ordinary activities before
interest 180.5 176.8
2. Segmental analysis (continued)
UK USA Total UK USA Total
2003 2003 2003 2002 2002 2002
£m £m £m £m £m £m
Net assets
Net operating assets
Ports and transport 1,420.4 43.2 1,463.6 1,355.2 42.5 1,397.7
Property investment 67.8 11.3 79.1 73.2 9.4 82.6
Property development 39.7 - 39.7 39.2 - 39.2
Share of associated undertakings 51.8 - 51.8 49.3 - 49.3
Continuing operations 1,579.7 54.5 1,634.2 1,516.9 51.9 1,568.8
Less: group items
Goodwill 14.5 15.4
Net borrowings (436.8) (450.1)
Net liabilities (139.5) (124.8)
Net assets 1,072.4 1,009.3
The group's share of associated undertakings is stated after deducting the
group's share of net borrowings of £23.1 million (2002: £22.1 million).
3. Exceptional items
Net profit arising from the sale of fixed assets totalled £4.8 million (2002:
£0.7 million), which includes £5.1 million (2002: £0.5 million) relating to an
insurance claim resulting from a damaged pier in the USA. The exceptional tax
charge arising from these items totalled £1.7 million.
During the year ended 31 December 2002, the group recorded £5.5 million of
exceptional operating expenses in relation to a review of its cost base,
generated a profit of £7.8 million in respect of the sale of AMPORTS Aviation
division and a £0.4 million charge on the closure of Southern Emergency
Vehicles, a small vehicle modification business located in the USA. The
exceptional tax credit arising from these items totalled £0.7 million,
comprising a £1.7 million credit for the restructuring charge in respect of the
group's review of its cost base and a £1.0 million charge relating to the sale
of AMPORTS Aviation division.
4. Net interest payable
Fixed Variable
rate rate Total Total
2003 2003 2003 2002
£m £m £m £m
Interest payable and similar charges
Eurobonds 28.0 - 28.0 28.0
Bank loans 0.2 5.3 5.5 7.8
Bank overdraft and other borrowings - 0.2 0.2 0.2
Finance leases 1.1 - 1.1 1.0
Liabilities for retirement benefits - 0.2 0.2 0.3
Other 0.2 0.2 0.4 0.7
Less: finance costs capitalised on payments for fixed assets - (1.3) (1.3) (1.1)
29.5 4.6 34.1 36.9
Interest receivable and similar income - (0.6) (0.6) (0.7)
Total group 29.5 4.0 33.5 36.2
Share of interest in associated undertakings 1.2 0.3 1.5 1.5
30.7 4.3 35.0 37.7
5. Dividends
2003 2002
£m £m
Interim dividend paid of 6.75p (2002: 6.5p) per ordinary 25p share 22.2 21.4
Proposed final dividend of 8.5p (2002: 8.25p) per ordinary 25p share 28.0 27.1
50.2 48.5
If approved, the final dividend would be payable on 30 April 2004 to
shareholders on the register at the close of business on 26 March 2004.
6. Earnings per share
The calculation of the earnings per share is based on 329.0 million (2002: 327.0
million) ordinary shares being the weighted average number of shares in issue
and ranking for dividend during the year.
The directors consider that underlying earnings per share is a more appropriate
basis for comparing performance between periods than basic earnings per share.
Figures calculated on this basis have been provided to show the effect of
excluding goodwill amortisation, exceptional administrative expenses, profit on
disposal of discontinued operations and profit on sale of fixed assets.
Reconciliation of the profit used for calculating the basic and underlying
earnings per share:
Profit Earnings per share
2003 2002 2003 2002
£m £m p p
Profit on ordinary activities after taxation
- basic earnings per share 104.3 101.1 31.7 30.9
Goodwill amortisation 0.9 1.6 0.2 0.5
Exceptional items - administrative expenses (note 3) - 5.5 - 1.7
Profit on disposal of discontinued operations (note 3) - (7.4) - (2.3)
Profit on sale of fixed assets (note 3) (4.8) (0.7) (1.4) (0.2)
Attributable tax 1.7 (0.7) 0.5 (0.2)
Profit on ordinary activities after taxation
- underlying earnings per share 102.1 99.4 31.0 30.4
Reconciliation of weighted average number of shares used for calculating basic
and diluted earnings per share:
Number of shares Earnings per share
2003 2002 2003 2002
m m p p
Weighted average number of shares - basic earnings per share 329.0 327.0 31.7 30.9
Dilution arising from share option schemes 2.0 3.0 (0.2) (0.3)
Weighted average number of shares -
diluted earnings per share 331.0 330.0 31.5 30.6
7. Statement of group total recognised gains and losses for the year ended
31 December
2003 2002
£m £m
Profit on ordinary activities after taxation 104.3 101.1
Surplus/(deficit) arising on revaluation of tangible property assets 7.8 (5.5)
Currency translation differences on foreign currency net investments (0.5) (0.9)
Total recognised gains for the year 111.6 94.7
8. Note of group historical cost profits and losses for the year ended
31 December
2003 2002
£m £m
Profit on ordinary activities before taxation 145.5 139.1
Realisation of property revaluation surpluses of previous years 1.5 8.3
Historical cost profit on ordinary activities before taxation 147.0 147.4
Taxation on profit on ordinary activities (41.2) (38.0)
Dividends (50.2) (48.5)
Historical cost profit for the year retained for the group and its share of
associated undertakings 55.6 60.9
9. Reconciliation of movements in equity shareholders' funds for the year
ended 31 December
2003 2002
£m £m
Profit on ordinary activities after taxation 104.3 101.1
Dividends (50.2) (48.5)
54.1 52.6
New share capital subscribed 5.4 4.7
Repurchase of shares (3.7) -
Surplus/(deficit) arising on revaluation of tangible property assets 7.8 (5.5)
Currency translation differences on foreign currency net investments (0.5) (0.9)
Net increase in equity shareholders' funds 63.1 50.9
Equity shareholders' funds at 1 January 1,009.3 958.4
Equity shareholders' funds at 31 December 1,072.4 1,009.3
10. Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
£m £m
Group operating profit 163.7 158.2
Non-cash items:
Depreciation and grant amortisation 27.6 24.5
Amortisation of goodwill 0.9 1.6
Pension prepayment movement (5.2) (6.7)
Cash inflow/(outflow) from movements in working capital:
Property developments and land held for sale 1.7 11.9
Debtors (3.0) (3.4)
Creditors (3.9) 6.7
(Decrease)/increase in provisions (6.4) 6.3
Net cash inflow from operating activities 175.4 199.1
During the year ending 31 December 2002, included within net cash inflow from
operating activities is £4.4 million in relation to discontinued operations.
These operations utilised £0.3 million in relation to capital expenditure and
financial investment.
11. Analysis of changes in net borrowings during the year
Effect of
foreign
At exchange At
1 January Cash flow rates 31 December
2003 2003 2003 2003
£m £m £m £m
Cash at bank and in hand 1.5 0.2 (0.1) 1.6
Bank overdraft (1.9) (2.1) - (4.0)
(0.4) (1.9) (0.1) (2.4)
Borrowings - amounts falling due within one year
(excluding overdrafts) (5.6) 1.5 - (4.1)
Borrowings - amounts falling due after more than
one year (449.0) 8.0 5.2 (435.8)
(455.0) 7.6 5.1 (442.3)
Liquid resources 4.9 0.6 - 5.5
Net borrowings (450.1) 8.2 5.1 (436.8)
Liquid resources comprise short-term deposits with banks with maturity dates
between seven days and 12 months.
12. Company information
This preliminary statement was approved by the board of directors on 18 February
2004. The 2003 Annual Report and Accounts will be posted to all shareholders by
9 March 2004 and both this statement and the Annual Report and Accounts will be
available via the Internet at www.abports.co.uk or on request from the Company
Secretary, Associated British Ports Holdings PLC, 150 Holborn, London, EC1N 2LR.
The Annual General Meeting will be held at the Queen Elizabeth II Conference
Centre, Broad Sanctuary, Westminster, London SW1P 3EE on Wednesday, 21 April
2004 at 12 noon. A webcast of the group's 2003 results presentation will also
be available via the Internet at www.abports.co.uk/investor/index.asp.
This information is provided by RNS
The company news service from the London Stock Exchange
