Associated British Ports Hldgs PLC
01 September 2004
EMBARGO: NOT FOR PUBLICATION OR BROADCAST
BEFORE 7.00 a.m. ON WEDNESDAY, 1 SEPTEMBER 2004
ASSOCIATED BRITISH PORTS HOLDINGS PLC
Interim Results for the six months ended 30 June 2004
4% growth in UK ports and £400m investment plan
Highlights
• UK ports and transport turnover up 6% to £182.2m (2003*: £172.0m)
• Underlying UK ports and transport operating profit up 4% to £70.1m
(2003*: £67.6m)
• Underlying group pre-tax profit up 7% to £65.2m (2003*: £61.2m)
• Underlying earnings per share up 7% to 14.3p (2003*: 13.4p)
• Interim dividend up 4% to 7.00p (2003*: 6.75p)
• Group pre-tax profit of £20.1m (2003*: £64.2m) and basic earnings per
share of 3.8p (2003*: 14.4p) - impacted by previously announced write-off
of £44.9m Dibden Terminal costs
• Plan to invest in excess of £400m over next 10 years in developing core UK
ports business
- including three new terminals operational on the Humber by 2006/2007
• New £44.5m coal terminal development at Port of Immingham announced
today - agreements signed with BHP Billiton, Drax Power and EDF Energy -
operational in 2006
• Announced today plans to dispose of a further £50m of non-core property
assets - sold £300.2m of non-core assets since early 2000
• Completed £49.8m of £130m share repurchase programme - when complete £216m
will have been returned to shareholders since early 2000
* Prior period restated for the effects of Financial Reporting Standard (FRS) 17
- Retirement Benefits and Urgent Issues Task Force (UITF) Abstract 38 -
Accounting for ESOP Trusts.
Bo Lerenius, Group Chief Executive, commented:
'The underlying growth achieved by the group's UK ports business in the first
half of the year once again demonstrates the benefit of focusing our business on
long-term contracts with quality customers. Today, this has been highlighted by
agreements we have reached with some of the UK's major energy suppliers to build
a £44.5m coal terminal at the Port of Immingham. This project, coupled with a
new roll-on/roll-off facility on the Humber, will generate additional growth
over the medium term and provide our customers with much needed solutions to
their needs.'
Attached is a copy of the interim statement. This comprises the text that will
be included in the Interim Results 2004, together with the group's profit and
loss account, balance sheet and cash flow statement as at 30 June 2004.
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/James Leviton/Don Hunter tel: +44 (0) 20 7251 3801
1 September 2004
---------------------------------------------------------
Notes to Editors:
Associated British Ports Holdings PLC is a leading provider to ship 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, Group Chief Executive of Associated
British Ports Holdings PLC, 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
2004 2003* Change
------------------------------------------------------------------------------
Profit and loss account
Group turnover £m 228.0 195.9 +16%
UK ports and transport turnover £m 182.2 172.0 +6%
Underlying UK ports and transport
operating profit# £m 70.1 67.6 +4%
UK ports and transport operating
profit £m 24.7 67.1 -63%
Total underlying operating profit -
continuing operations# £m 79.3 75.7 +5%
Underlying interest cover# Times 5.4 4.9 n/a
Underlying profit before taxation# £m 65.2 61.2 +7%
Profit before taxation £m 20.1 64.2 -69%
Underlying earnings per share# Pence 14.3 13.4 +7%
Basic earnings per share Pence 3.8 14.4 -74%
Dividends
Dividend per share Pence 7.00 6.75 +4%
Underlying dividend cover# Times 2.1 2.0 n/a
Cash flow statement
Net cash inflow from operating
activities including dividends received
from associated undertakings £m 110.5 81.6 +35%
Underlying operating profit cash
conversion# Percentage 138.0 106.1 n/a
Gross capital expenditure £m 26.3 40.1 -34%
Balance sheet
Net borrowings £m 445.0 453.2 -2%
Gearing Percentage 46.0 45.5 n/a
Net assets £m 968.1 996.8 -3%
Net assets per share Pence 304 303 -
------------------------------------------------------------------------------
# Before goodwill amortisation and exceptional items (see note 3).
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (see note 13).
Results
The group continued to grow during the first six months of 2004. Turnover
increased by 16 per cent to £228.0m (2003: £195.9m) and underlying pre-tax
profit increased by 7 per cent to £65.2m (2003*: £61.2m). Underlying earnings
per share, which benefited from the share repurchase programme commenced during
the first half of the year, also increased by 7 per cent to 14.3 pence per share
(2003*: 13.4 pence per share).
The core UK ports and transport business, which constituted 80 per cent of group
turnover and 88 per cent of underlying operating profit for the period,
announced a number of new developments and remains the major driver of the
group's performance. Long-term contracts secured in recent years enabled the
business to increase turnover by 6 per cent to £182.2m (2003: £172.0m) and
underlying operating profit by 4 per cent to £70.1m (2003*: £67.6m).
The US ports and transport activities, led by new business won in the second
half of 2003, increased turnover by 16 per cent to £19.9m (2003: £17.1m) and
underlying operating profit more than doubled to £2.2m (2003: £0.8m).
In line with the group's strategy to generate growth by investing in the core
business, new revenue-related investments totalling more than £33m were
contracted during the first half of the year. These projects, which have
construction lead times of up to 18 months, will only contribute to the group's
performance once they become operational.
As anticipated, non-core property and land sales made during 2003 and the first
half of this year led to turnover and operating profit from property investment
activities declining by 11 per cent to £3.9m (2003: £4.4m) and 16 per cent to
£2.7m (2003: £3.2m), respectively. The sale of an office development in Cardiff,
in May, for £16.5m meant that turnover from property development activities
increased substantially to £22.0m (2003: £2.4m). Operating profit increased to
£0.5m (2003: £0.1m). As part of the same transaction, the group completed the
sale of its interest in The Cardiff Bay Partnership for £15.8m. The net proceeds
were consistent with the net book value, consequently there was no profit or
loss on the transaction. The group's share of operating profit from the
partnership prior to its disposal was £0.8m, compared to £1.2m for the first six
months of 2003.
The contribution to total operating profit of the group's continuing associates
declined marginally to £3.8m (2003*: £4.0m) as the benefit of increased
throughput at Southampton Container Terminals (SCT) was offset by weaker volumes
and reduced ancillary income at Tilbury Container Services (TCS).
Net interest payable decreased to £14.9m (2003*: £15.7m). An increase in
interest costs resulting from the commencement of the group's latest share
repurchase programme was more than offset by an increase in financing income
recorded in relation to the surplus in the group's pension scheme.
In April, the government rejected the group's application to develop the Dibden
Terminal deep-sea container port at Southampton. As previously indicated, the
write-off of substantially all of the costs related to this project resulted in
an exceptional charge of £44.9m. Consequently, pre-tax profit for the period
decreased by 69 per cent to £20.1m (2003*: £64.2m) and basic earnings per share
declined by 74 per cent to 3.8 pence (2003*: 14.4 pence).
Interim dividend
Based on the group's financial performance in the first six months of the year
and the outlook for the remainder of the year, the directors have declared an
interim dividend of 7.0 pence per share (2003: 6.75 pence per share), which
represents an increase of 4 per cent. This will be paid on 29 October 2004 to
shareholders on the register at the close of business on 22 September 2004.
Balance sheet and cash flow
The group's cash flow generation remains strong, with cash flow conversion from
total underlying operating profit once again in excess of 100 per cent. With
£49.8m completed of the £130m share repurchase programme announced during the
first half, net borrowing increased from £436.8m at 31 December 2003 to £445.0m
at 30 June 2004 (2003: £453.2m). Gearing at 30 June 2004 was 46.0 per cent,
compared to 42.4 per cent at 31 December 2003*.
New accounting standards
The group adopted Financial Reporting Standard (FRS) 17 - Retirement Benefits in
full during the first half of 2004. Full details of the impact of adopting this
standard are set out in note 13 to the interim financial statements. It has not
affected cash flow.
A full actuarial valuation of the group's main defined benefit pension scheme
was completed in March. This confirmed the group's FRS 17 pension surplus at
£34.4m, as reported at 31 December 2003. Consequently, the group will maintain
its contribution holiday for the next three years.
A project to assess and plan for the adoption of International Financial
Reporting Standards (IFRS) from 1 January 2005 is under way. The group intends
to provide a reconciliation between its UK GAAP and IFRS results for 2004 prior
to the publication of its first set of IFRS results.
Review of operations
Ports & transport - UK
The UK ports business continued to grow in the first six months of the year.
Roll-on/roll-off trade, deep-sea container traffic at the Port of Southampton,
vehicle imports and exports, coal imports, forest products and cruise-ship call
volumes all increased during the first half. As a result, turnover from UK ports
and transport operations increased by 6 per cent to £182.2m (2003: £172.0m);
underlying operating profit increased by 4 per cent to £70.1m (2003*: £67.6m).
As previously reported, the cost reduction programme implemented during 2003 has
reduced the group's annual operating expenses by at least £3.0m per year from
the beginning of 2004. However, the consequent favourable impact on the group's
operating margins for the first half of the year was offset by the growth in
turnover at ABP Connect, the group's lower-margin value-added services
operation, and costs incurred by the Port of Immingham relating to ships waiting
to berth at Humber International Terminal following strong demand for imported
coal.
Significant developments in the operating performance of each business unit are
discussed below.
Hull & Goole
Turnover increased by 3 per cent. Strong growth in container and roll-on/
roll-off traffic and a recovery in coal import volumes was offset by a reduction
in grain export volumes.
At Hull, new storage facilities for North Sea Lumber (Sales) Ltd and Rix
Shipping became operational in March and May, respectively following new
investments totalling £1.4m. Both facilities were built on the back of 10-year
customer agreements. The port is also investing £1.1m in outdoor storage areas
for Marshall Maritime Services Ltd. The first phase of this project, which is
supported by a 10-year agreement, became operational in July.
At Goole, new developments included a £0.9m investment to extend the storage
facilities of South Dock Terminals, backed by a new seven-year agreement.
Grimsby & Immingham
Turnover increased by 3 per cent. Strong growth in container traffic and coal
and iron ore imports, together with improved volumes for import/export vehicles
and roll-on/roll-off traffic, mitigated reduced grain export volumes.
In January, a new £1.0m storage terminal for Rowlinson Timber, supported by a
10-year agreement, became operational at Immingham. In February, the group
agreed to develop a new riverside terminal for roll-on/roll-off traffic in
Immingham Outer Harbour at a cost of £27.5m following a 25-year agreement with
DFDS Tor Line of Denmark. Government approval to build Immingham Outer Harbour
was received in July and construction work on the project is due to begin in the
autumn. The facility is expected to become operational in mid-2006.
Today, the group announced a major extension of the Humber International
Terminal with the construction of a second deep-water berth and the creation of
a specialist coal-importing facility at Immingham. This follows agreements with
BHP Billiton, Drax Power and EDF Energy for the use of this facility. The new
£44.5m facility will be capable of handling up to 7.5m tonnes of coal each year
and will strengthen Immingham's status as the UK's leading port for imported
coal. The group already has government approval for this development.
Construction work on this project has just commenced and the new terminal is
expected to handle its first shipment of imported coal by mid-2006.
Immingham also agreed terms on a number of smaller customer-related investments.
These include a £0.8m storage terminal expansion for Humber Timber Terminals,
backed by a 10-year agreement and a £0.5m import facility for Whitemountain
Roadstone, for which Whitemountain must first obtain planning permission.
Southampton
Turnover increased by 5 per cent. Reduced grain export volumes were more than
offset by growth in container and roll-on/roll-off traffic, export vehicle
volumes and cruise-ship calls.
Services from a new roll-on/roll-off facility, built under a term contract with
Channel Freight Ferries, began in February. Southampton also continued to build
its reputation as the UK's number one cruise port, receiving a record 86
cruise-ship calls over the first six months of the year (2003: 76) and winning
three awards at the world's largest annual cruise conference in Miami.
South Wales Ports
Turnover increased by 5 per cent. Coal and iron ore imports increased; steel
imports and scrap metal volumes decreased.
The group completed a £2.3m investment in a new fleet of cranes and handling
equipment to support increased volumes of trade across key cargo sectors,
including forest products. At Cardiff, a new £1.1m steel-importing facility for
Marshall Maritime Services, built on the back of a 10-year agreement, became
operational in July. During the same month, the group also concluded a term
agreement to invest £0.5m in a timber terminal and a warehouse extension for
steel and timber products at the port.
Towards the end of July, the group agreed to invest £1.4m to expand the ABP
Dowds steel- handling terminal at the Port of Newport. This investment is backed
by a new 25-year agreement with W.E. Dowds. Also at Newport, a £3.5m investment
in major capital infrastructure works will become operational in September. This
project is being developed under a 20-year agreement with Sims Group, which is
also investing a further £8.0m to develop its operations at the port. The
overall project has benefited from a £1.7m Freight Facilities Grant in
recognition of its environmental benefits.
Shortsea Ports
Turnover increased by 7 per cent. Reduced grain exports were more than offset by
growth in timber imports and revenue from ancillary services.
At the Port of Plymouth, a £4.3m investment in major construction works, carried
out following a 15-year agreement with Brittany Ferries, was completed in July,
enabling the port to handle Brittany Ferries' new superferry. At Teignmouth, the
group has received government approval for a proposed £4.0m project to further
develop facilities at the port.
The £1.0m Lowestoft Haven Marina, a 140-berth marina built on Lake Lothing, was
officially opened in May. At Ipswich, construction of a new £6.1m roll-on/
roll-off berth, which is being built following a 20-year agreement with
Ferryways N.V., began in June. The new berth, which will enable Ferryways to
expand its services to Ostend, should be operational by January 2005.
ABP Connect
Turnover increased by 10 per cent. Growth in freight-forwarding services at Hull
and container throughput at Hams Hall was accompanied by improved volumes and
mix for vehicle-processing activities at Southampton.
Container-handling capacity at ABP Connect Cargoflow - Immingham (previously
known as Exxtor Terminal) increased following the completion of a £1.2m
surfacing programme to create additional storage space. This project was the
first in a £6.0m three-stage programme to enable the facility to accommodate
greater volumes of container throughput that are expected from the growing
number of feeder services calling at Immingham. Stage two, which is due to be
completed in September, will see the installation of an 'Autostore'
container-location system. The programme will be completed next year with the
delivery of a new 40-tonne gantry crane.
In addition, ABP Connect Cargoflow's container-handling facilities at Immingham
are to benefit from a £2.8m investment in two new rubber-tyre gantry cranes that
will increase capacity and enable the terminal to operate more efficiently.
Ports & transport - USA
AMPORTS, the group's ports and transport business in the USA, delivered a
much-improved performance. Vehicle volumes grew by 11 per cent in the first six
months of the year, led by two new customer accounts won in the second half of
2003 for imports by KIA in Baltimore, Maryland, and by General Motors in
Benicia, California.
Turnover from ports and transport operations (which exclude property investment
income) increased by 16 per cent to £19.9m (2003: £17.1m). The effect of the
weakening of the US dollar against sterling was more than offset by increased
volumes and revenue per vehicle.
Operating profit more than doubled to £2.2m (2003: £0.8m). This was due to both
increased vehicle volumes and increased vehicle storage revenue.
Property investment and development
The group continues to sell non-operational, port-located property and to
exploit the potential of its property portfolio. As a result, turnover from
property investment activities declined by 11 per cent to £3.9m (2003: £4.4m)
and operating profit reduced by 16 per cent to £2.7m (2003: £3.2m).
Turnover from property development activities increased to £22.0m (2003: £2.4m).
This was principally due to the sale of Caspian Point, the group's last office
development in Cardiff Bay, to Norwich Union for £16.5m in May. As the net book
value of all the assets included in the transaction equalled their base sale
price, operating profit increased only marginally to £0.5m (2003: £0.1m).
Associates
Operating profit from continuing operations of associates reduced by 5 per cent
to £3.8m (2003*: £4.0m).
While container throughput at SCT continued to grow, volumes declined at TCS.
Reduced container storage meant that TCS also experienced lower levels of
ancillary income during the first half.
The group's sale of its 45 per cent interest in The Cardiff Bay Partnership to
Norwich Union for £15.8m was completed in May. The partnership's contribution to
group operating profit up to the date of sale was £0.8m (2003: £1.2m).
Strategy update
Ports & transport - UK
The UK ports and transport operations, which constituted 80 per cent of group
turnover and 88 per cent of underlying operating profit for the period, continue
to be the main focus of the group's activities.
The group's strategy is to invest in its core business, based on long-term
contracts with quality customers, to generate internal rates of return of at
least 15 per cent. Nine new long-term contracts have been won in 2004 bringing
the total won over the past four-and-a-half years to more than 75. In addition,
the group continues to monitor maintenance capital expenditure with a view to
keeping this below the group's annual depreciation charge.
The group plans to invest more than £400m over the next 10 years in developments
in its core UK ports business. It expects to generate growth from regular
projects in all of its ports and from the four new river terminals planned on
the Humber.
The group has commenced construction of a £44.5m riverside terminal for coal
imports at the Port of Immingham and construction work is due to begin shortly
on the development of a £27.5m investment in a roll-on/roll-off riverside
facility, also at Immingham.
At the Port of Hull, the Department for Transport is currently considering the
necessary planning consents for the development of the third riverside terminal,
a £30m to £35m shortsea container terminal; in addition, the group continues to
evaluate the development of a fourth riverside terminal at Hull.
The group does not expect to make any major acquisitions in the near future. Its
view is that developing new projects within its own business that can deliver
the required rate of return represents a much more efficient use of capital.
Ports & transport - USA
The group will continue to grow its seaport business in line with its strategy
of growing existing business and developing new business through rigorously
targeted investment.
Disposal of non-core assets
Non-core property and land sales completed since 1 January 2000 totalled £197.2m
at the end of June 2004. The group has, therefore, almost achieved its target of
£200m for total non-core property and land sales set at the beginning of 2000.
Including the £71.0m received from the sale of Red Funnel Group in 2000 and the
£32.0m received for the Aviation division of AMPORTS in 2002, the total amount
of non-core asset sales since 1 January 2000 is £300.2m.
The group will continue to exploit the potential of its property portfolio by
selling non-operational property while retaining those assets essential to
support the growth strategy of the core business. It has set a new target of
£50m from further non-core property sales.
In April, the government rejected the group's application to develop the Dibden
Terminal deep-sea container port at Southampton. As a result, the group wrote
off £44.9m of related costs and announced its intention to begin a new £100m
share repurchase programme to increase the efficiency of its capital structure.
Following the sale of its property interests in Cardiff Bay, the group extended
this programme by a further £30m. To date, it has completed £49.8m of this
programme by repurchasing 11.3m shares at an average price of 439 pence per
share, before costs.
The group will continue to review its capital structure on an ongoing basis.
Board of directors
Following the retirement of Ross Sayers as Chairman at the Annual General
Meeting in April 2004, Chris Clark joined the board of ABPH as non-executive
Chairman on 1 August. He retired as Chief Executive of speciality chemicals
company Johnson Matthey in July. Chris offers a wealth of relevant experience
gained in a variety of leadership roles within Johnson Matthey and as a board
member of other companies. He is non-executive deputy chairman of Rexam plc and
a non-executive director of FKI plc.
Prospects
The government's decision on Dibden Terminal will have no significant short-term
impact on the group's underlying UK ports business; in the medium term, the
group will concentrate on the development of its major growth projects on the
Humber Estuary.
As a growth rate of 4 per cent in the UK ports business in the first half of
2004 demonstrates, the group continues to benefit from its many long-term
contracts with quality customers and its diversified cargo and geographic
spread.
The progress the group has achieved during the first half, coupled with the
satisfactory start to trading during the third quarter, leads the board to
believe that new contracts secured over recent years will underpin growth in the
UK ports business in 2004.
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (see note 13).
Unaudited group profit and loss account for the six months ended 30 June
Year ended
31 December
2004 2003* 2003*
Note £m £m £m
-------------------------------------- ---- -------- -------- ---------
Turnover including share of associated
undertakings
Continuing operations 251.0 218.1 448.3
Discontinued operations 0.9 1.3 2.5
-------------------------------------- ---- -------- -------- ---------
251.9 219.4 450.8
Less: share of turnover in associated
undertakings
Continuing operations (23.0) (22.2) (47.0)
Discontinued operations (0.9) (1.3) (2.5)
-------------------------------------- ---- -------- -------- ---------
Group turnover 2 228.0 195.9 401.3
Cost of sales (120.4) (93.7) (192.1)
-------------------------------------- ---- -------- -------- ---------
Gross profit 107.6 102.2 209.2
Administrative expenses (77.5) (31.0) (59.7)
-------------------------------------- ---- -------- -------- ---------
Group operating profit 30.1 71.2 149.5
-------------------------------------- ---- -------- -------- ---------
Analysed between:
Continuing operations before goodwill
amortisation and exceptional items 75.5 71.7 150.4
Goodwill amortisation - continuing (0.5) (0.5) (0.9)
Exceptional items - continuing 3 (44.9) - -
-------------------------------------- ---- -------- -------- ---------
Share of operating profit in
associated undertakings
Continuing operations 3.8 4.0 9.5
Discontinued operations 0.8 1.2 2.3
-------------------------------------- ---- -------- -------- ---------
Total operating profit 34.7 76.4 161.3
Profit on sale of fixed assets 3 0.3 3.5 4.8
-------------------------------------- ---- -------- -------- ---------
Profit on ordinary activities before
interest 2 35.0 79.9 166.1
Net interest payable 4 (14.9) (15.7) (31.8)
-------------------------------------- ---- -------- -------- ---------
Profit on ordinary activities before
taxation 20.1 64.2 134.3
-------------------------------------- ---- -------- -------- ---------
Analysed between:
Underlying profit before tax, goodwill
amortisation and exceptional items 65.2 61.2 130.4
Goodwill amortisation (0.5) (0.5) (0.9)
Exceptional items and profit on sale
of fixed assets 3 (44.6) 3.5 4.8
-------------------------------------- ---- -------- -------- ---------
Taxation on profit on ordinary
activities 5 (7.7) (17.0) (37.9)
-------------------------------------- ---- -------- -------- ---------
Profit on ordinary activities after
taxation 12.4 47.2 96.4
Dividends 6 (22.3) (22.2) (50.2)
-------------------------------------- ---- -------- -------- ---------
Retained (loss)/profit for the group
and its share of associated
undertakings (9.9) 25.0 46.2
-------------------------------------- ---- -------- -------- ---------
Earnings per share - basic 7 3.8p 14.4p 29.3p
Earnings per share - diluted 7 3.8p 14.3p 29.1p
Earnings per share - underlying 7 14.3p 13.4p 28.6p
-------------------------------------- ---- -------- -------- ---------
Dividend per share - interim 7.00p 6.75p 6.75p
Dividend per share - final 8.50p
-------------------------------------- ---- -------- -------- ---------
15.25p
-------------------------------------- ---- -------- -------- ---------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
Unaudited group balance sheet as at 30 June
At
31 December
2004 2003* 2003*
Note £m £m £m
----------------------------------- ---- -------- -------- ---------
Fixed assets
Intangible assets 14.0 14.9 14.5
Tangible operating assets 840.1 854.1 871.5
Tangible property assets 565.5 574.8 570.3
Investments 32.2 45.9 44.9
----------------------------------- ---- -------- -------- ---------
1,451.8 1,489.7 1,501.2
----------------------------------- ---- -------- -------- ---------
Current assets
Property developments and land held
for sale 24.8 38.2 41.6
Debtors - due within one year 99.3 91.9 95.3
Debtors - due after one year - 0.4 -
Cash and short-term deposits 9.7 8.0 7.1
----------------------------------- ---- -------- -------- ---------
133.8 138.5 144.0
Creditors - amounts falling due
within one year (111.5) (126.7) (126.7)
----------------------------------- ---- -------- -------- ---------
Net current assets 22.3 11.8 17.3
----------------------------------- ---- -------- -------- ---------
Total assets less current
liabilities 1,474.1 1,501.5 1,518.5
Creditors - amounts falling due
after more than one year (451.1) (454.1) (436.1)
Provisions for liabilities and
charges (67.9) (60.8) (65.6)
Deferred income (10.5) (9.7) (10.6)
----------------------------------- ---- -------- -------- ---------
Net assets excluding pension asset
and unfunded retirement benefit
liabilities 2 944.6 976.9 1,006.2
Pension asset 25.8 22.5 26.3
Unfunded retirement benefit
liabilities (2.3) (2.6) (2.2)
----------------------------------- ---- -------- -------- ---------
Net assets 2 968.1 996.8 1,030.3
----------------------------------- ---- -------- -------- ---------
Capital and reserves
Called-up share capital 79.5 82.3 82.3
Share premium account 87.1 81.1 84.1
Revaluation reserve 633.5 627.4 634.2
Other reserves 40.3 36.5 37.2
Profit and loss account 127.7 169.5 192.5
----------------------------------- ---- -------- -------- ---------
Equity shareholders' funds 8 968.1 996.8 1,030.3
----------------------------------- ---- -------- -------- ---------
----------------------------------- ---- -------- -------- ---------
Net assets per share 304p 303p 313p
Net borrowings £445.0m £453.2m £436.8m
Net borrowings as a percentage of
equity shareholders' funds 46.0% 45.5% 42.4%
----------------------------------- ---- -------- -------- ---------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trust (note 13).
Unaudited group cash flow statement for the six months ended 30 June
Year ended
31 December
2004 2003* 2003*
Note £m £m £m
-------------------------------------- ---- -------- -------- ---------
Net cash inflow from operating
activities 9 108.9 81.3 175.3
-------------------------------------- ---- -------- -------- ---------
Dividends received from associated
undertakings 1.6 0.3 3.4
-------------------------------------- ---- -------- -------- ---------
Returns on investments and servicing
of finance
Interest received 0.1 0.4 0.5
Interest paid (13.2) (13.5) (34.9)
Interest element of finance lease
rental payments - (0.1) (0.3)
-------------------------------------- ---- -------- -------- ---------
Net cash outflow from returns on
investments and servicing of finance (13.1) (13.2) (34.7)
-------------------------------------- ---- -------- -------- ---------
Taxation (17.0) (8.7) (24.0)
-------------------------------------- ---- -------- -------- ---------
Capital expenditure and financial
investment
Tangible operating assets (25.7) (36.7) (62.4)
Tangible property assets (1.5) (4.2) (7.3)
Grants received 0.9 0.8 1.7
Sale of fixed assets 1.6 4.3 7.3
-------------------------------------- ---- -------- -------- ---------
Net cash outflow from capital
expenditure and financial investment (24.7) (35.8) (60.7)
-------------------------------------- ---- -------- -------- ---------
Free cash flow 55.7 23.9 59.3
-------------------------------------- ---- -------- -------- ---------
Acquisitions and disposals
Sale of subsidiary undertakings - (1.6) (1.9)
Sale of investment in associated
undertakings 10 15.7 - -
-------------------------------------- ---- -------- -------- ---------
Net cash inflow/(outflow) from
acquisitions and disposals 15.7 (1.6) (1.9)
-------------------------------------- ---- -------- -------- ---------
Equity dividends paid (28.1) (27.1) (49.3)
-------------------------------------- ---- -------- -------- ---------
Cash inflow/(outflow) before use of
liquid resources and financing 43.3 (4.8) 8.1
-------------------------------------- ---- -------- -------- ---------
Management of liquid resources (1.3) (1.9) (0.6)
-------------------------------------- ---- -------- -------- ---------
Financing
Issue of shares 2.5 2.4 5.4
Consideration received on sale of own
shares - 0.4 1.0
Repurchase of shares (54.5) - (3.7)
Increase/(decrease) in borrowings 15.4 2.9 (8.6)
Capital element of finance lease rental
payments (0.1) - (3.5)
-------------------------------------- ---- -------- -------- ---------
Net cash (outflow)/inflow from
financing (36.7) 5.7 (9.4)
-------------------------------------- ---- -------- -------- ---------
Increase/(decrease) in cash in the
period 5.3 (1.0) (1.9)
-------------------------------------- ---- -------- -------- ---------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
Notes to the interim financial statements
1. Basis of preparation
The interim financial statements have been prepared in accordance with the
accounting policies set out in the group's financial statements for the year
ended 31 December 2003, except that FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts have been adopted during the period.
The effects of adopting FRS 17 - Retirement Benefits and UITF Abstract 38 -
Accounting for ESOP Trusts are set out in note 13 and comparative results have
been restated throughout the interim financial results to reflect the adoption
of FRS 17 - Retirement Benefits and UITF Abstract 38 - Accounting for ESOP
Trusts.
The interim financial statements are unaudited and do not comprise statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
comparative figures for the year ended 31 December 2003 are derived from the
statutory accounts filed with the Registrar of Companies. The auditors' report
on the statutory accounts was unqualified and did not contain a statement under
Section 237 of the Companies Act 1985.
2. Segmental analysis
Analysis of group turnover, profit on ordinary activities before interest and
net assets by class of business and geographical segment are given below.
Turnover is disclosed by origin. There is no material difference between
turnover by origin and turnover by destination.
Year ended
30 June 2004 30 June 2003* 31 December 2003*
UK USA Total UK USA Total UK USA Total
£m £m £m £m £m £m £m £m £m
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Group turnover
Ports and
transport 182.2 19.9 202.1 172.0 17.1 189.1 349.1 36.0 385.1
Property
investment 3.1 0.8 3.9 3.5 0.9 4.4 6.8 1.8 8.6
Property
development 22.0 - 22.0 2.4 - 2.4 7.6 - 7.6
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Group turnover 207.3 20.7 228.0 177.9 18.0 195.9 363.5 37.8 401.3
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Profit on ordinary activities
before interest
Ports and
transport 70.1 2.2 72.3 67.6 0.8 68.4 138.1 2.5 140.6
Property
investment 2.0 0.7 2.7 2.4 0.8 3.2 5.0 1.6 6.6
Property
development 0.5 - 0.5 0.1 - 0.1 3.2 - 3.2
Share of
operating profit
in associated
undertakings
Continuing
operations 3.8 - 3.8 4.0 - 4.0 9.5 - 9.5
Discontinued
operations 0.8 - 0.8 1.2 - 1.2 2.3 - 2.3
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
underlying
operating
profit 77.2 2.9 80.1 75.3 1.6 76.9 158.1 4.1 162.2
Goodwill
amortisation (0.5) - (0.5) (0.5) - (0.5) (0.9) - (0.9)
Exceptional
items (note 3) (44.9) - (44.9) - - - - - -
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Total
operating
profit 31.8 2.9 34.7 74.8 1.6 76.4 157.2 4.1 161.3
Profit on sale
of fixed
assets (note 3) 0.3 3.5 4.8
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Profit on
ordinary
activities
before
interest 35.0 79.9 166.1
---------------- ------ ------ ------ ------ ------ ------ ------ ------ ------
Year ended
30 June 2004 30 June 2003* 31 December 2003*
UK USA Total UK USA Total UK USA Total
£m £m £m £m £m £m £m £m £m
---------------- -------- ------ -------- -------- ------ -------- --- -------- ------ --------
Net assets
Net operating
assets
Ports and
transport 1,300.5 41.9 1,342.4 1,305.5 45.6 1,351.1 1,332.3 43.2 1,375.5
Property
investment 62.0 11.2 73.2 72.7 9.2 81.9 67.8 11.3 79.1
Property
development 22.6 - 22.6 36.3 - 36.3 39.7 - 39.7
Share of
associated
undertakings 32.2 - 32.2 30.7 - 30.7 29.7 - 29.7
---------------- -------- ------ -------- -------- ------ -------- --- -------- ------ --------
Continuing
operations 1,417.3 53.1 1,470.4 1,445.2 54.8 1,500.0 1,469.5 54.5 1,524.0
Discontinued
operations - - - 15.2 - 15.2 15.2 - 15.2
---------------- -------- ------ -------- -------- ------ -------- --- -------- ------ --------
1,417.3 53.1 1,470.4 1,460.4 54.8 1,515.2 1,484.7 54.5 1,539.2
Less: group
items
Goodwill 14.0 14.9 14.5
Net borrowings (445.0) (453.2) (436.8)
Pension asset 25.8 22.5 26.3
Unfunded
retirement
benefit
liabilities (2.3) (2.6) (2.2)
Net liabilities (94.8) (100.0) (110.7)
---------------- -------- ------ -------- -------- ------ -------- --- -------- ------ --------
Net assets 968.1 996.8 1,030.3
---------------- -------- ------ -------- -------- ------ -------- --- -------- ------ --------
The group's share of associated undertakings is stated after the deduction of
the group's share of net borrowings of £7.0m (2003: £19.0m).
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
3. Exceptional items and profit on sale of fixed assets
The group recorded a £44.9m charge in relation to the government's rejection of
its planning application for the development of Dibden Terminal. This charge
consists of the write-off of costs capitalised in relation to this development
together with a small provision for the related commitments.
Profit arising on the sale of fixed assets totalled £0.3m (2003: £3.5m), which
includes a final receipt of £0.5m (2003: £3.4m) relating to the insurance claim
resulting from a damaged pier in the USA.
The tax credit arising from the above items totalled £10.6m (2003: nil),
comprising a £10.7m credit for the Dibden Terminal costs and a £0.1m charge
relating to the sale of fixed assets.
4. Net interest payable
Net interest payable is shown after deducting interest receivable of £0.1m
(2003: £0.4m), FRS 17 - Retirement Benefits other finance income of £2.5m (2003:
£1.6m) and finance costs capitalised on payments for fixed assets of £0.4m
(2003: £0.6m).
5. Taxation
The taxation charge for the period is based on the estimated underlying
effective tax rate of 28.0 per cent for the year ending 31 December 2004 (year
ended 31 December 2003*: 27.8 per cent). The taxation charge for associates was
£1.1m (2003: £1.2m). The tax credit arising from exceptional items (note 3)
totalled £10.6m (2003: nil).
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
6. Dividends
An interim dividend of 7.00 pence per share (2003: 6.75 pence per share) will be
paid on Friday, 29 October 2004, to shareholders on the register at the close of
business on Wednesday, 22 September 2004.
7. Earnings per share
The calculation of earnings per share is based on 326.9m (2003: 328.7m) ordinary
shares, being the weighted average number of shares in issue and ranking for
dividend during the period.
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 items and profit on sale of fixed
assets.
Reconciliation of profit used for calculating basic and underlying earnings per
share:
Earnings per
Profit share
------ ------ -------- --- ------ ------ ------
Year ended Year ended
31 December 31 December
2004 2003* 2003* 2004 2003* 2003*
£m £m £m p p p
----------------------------- ------ ------ ------- ------ ------ ------
Profit on ordinary
activities after taxation -
basic earnings per share 12.4 47.2 96.4 3.8 14.4 29.3
Goodwill amortisation 0.5 0.5 0.9 0.1 0.1 0.2
Exceptional items (note 3) 44.9 - - 13.7 - -
Profit on sale of fixed
assets (note 3) (0.3) (3.5) (4.8) (0.1) (1.1) (1.4)
Attributable tax (10.6) - 1.7 (3.2) - 0.5
----------------------------- ------- ------ ------- ------ ------ ------
Profit on ordinary activities
after taxation - underlying
earnings per share 46.9 44.2 94.2 14.3 13.4 28.6
----------------------------- ------- ------ ------- ------ ------ ------
Reconciliation of weighted average number of shares used for calculating basic
and diluted earnings per share:
Number of shares Earnings per share
----------------------- --- --------------------
Year ended Year ended
31 December 31 December
2004 2003 2003 2004 2003* 2003*
m m m p p p
------------------------------ ------ ------ ------- ------ ------ ------
Weighted average number of
shares - basic earnings per
share 326.9 328.7 329.0 3.8 14.4 29.3
Dilution arising from share
option schemes 2.3 2.1 2.0 - (0.1) (0.2)
------------------------------ ------ ------ ------- ------ ------ ------
Weighted average number of
shares - diluted earnings per
share 329.2 330.8 331.0 3.8 14.3 29.1
------------------------------ ------ ------ ------- ------ ------ ------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
8. Reconciliation of movements in equity shareholders' funds
Year ended
31 December
2004 2003* 2003*
£m £m £m
---------------------------------------------------- -------- ------ --------
Profit on ordinary activities after taxation 12.4 47.2 96.4
Dividends (22.3) (22.2) (50.2)
---------------------------------------------------- -------- ------ --------
(9.9) 25.0 46.2
New share capital subscribed 2.5 2.5 5.4
Repurchase of shares (54.5) - (3.7)
Surplus arising on revaluation of tangible property
assets - - 7.8
Movement in pension asset and unfunded retirement
benefit liabilities - - 5.2
Consideration received on sale of own shares - 0.4 1.0
Currency translation differences on foreign currency
net investments (0.3) - (0.5)
---------------------------------------------------- -------- ------ --------
Net (decrease)/increase in equity shareholders'
funds (62.2) 27.9 61.4
Equity shareholders' funds at 1 January 1,030.3 968.9 968.9
---------------------------------------------------- -------- ------ --------
Equity shareholders' funds at period end 968.1 996.8 1,030.3
---------------------------------------------------- -------- ------ --------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
38 - Accounting for ESOP Trusts (note 13).
9. Reconciliation of operating profit to net cash inflow from operating
activities
Year ended
31 December
2004 2003* 2003*
£m £m £m
----------------------------------------------------- ------- -------- --------
Group operating profit 30.1 71.2 149.5
Non-cash items:
Depreciation and grant amortisation 14.5 13.1 27.6
Amortisation of goodwill 0.5 0.5 0.9
Impairment of fixed assets 41.7 - -
Cash inflow/(outflow) from movements in working
capital:
Property developments and land held for sale 18.3 0.8 1.7
Debtors (6.4) (0.8) (3.0)
Creditors 3.4 (2.2) (3.7)
Increase/(decrease) in provisions 3.4 (4.9) (5.1)
Decrease in pension asset net of unfunded retirement
benefit liabilities 3.4 3.6 7.4
----------------------------------------------------- ------- -------- --------
Net cash inflow from operating activities 108.9 81.3 175.3
----------------------------------------------------- ------- -------- --------
* Prior period restated for the effects of FRS 17 - Retirement Benefits and UITF
Abstract 38 - Accounting for ESOP Trusts (note 13).
10. Disposal
On 17 May 2004, the group sold its 45 per cent interest in The Cardiff Bay
Partnership to Norwich Union Life and Pensions Limited for a cash consideration
of £15.8m. The net proceeds of £15.7m, after taking into account costs of £0.1m,
were broadly in line with net book value of the group's interest in The Cardiff
Bay Partnership.
11. Analysis of changes in net borrowings during the period
Effect of
foreign
At exchange At At
1 January Cash flow rates 30 June 30 June
2004 2004 2004 2004 2003
£m £m £m £m £m
------------------------- ------- ------- ------- ------- -------
Cash at bank and in hand 1.6 1.3 - 2.9 1.2
Bank overdraft (4.0) 4.0 - - (2.6)
------------------------- ------- ------- ------- ------- -------
(2.4) 5.3 - 2.9 (1.4)
Borrowings - amounts
falling due within one
year (excluding
overdrafts) (4.1) - - (4.1) (4.8)
Borrowings - amounts
falling due after more
than one year (435.8) (15.3) 0.5 (450.6) (453.8)
------------------------- ------- ------- ------- ------- -------
(442.3) (10.0) 0.5 (451.8) (460.0)
Liquid resources 5.5 1.3 - 6.8 6.8
------------------------- ------- ------- ------- ------- -------
Net borrowings (436.8) (8.7) 0.5 (445.0) (453.2)
------------------------- ------- ------- ------- ------- -------
Liquid resources comprise short-term deposits with banks with maturity dates
between seven days and 12 months.
12. Reconciliation of net cash flow to movement in net borrowings for the six
months ended 30 June
Year ended
31 December
2004 2003 2003
£m £m £m
---------------------------------------------- -------- -------- --------
Increase/(decrease) in cash in the period 5.3 (1.0) (1.9)
Cash (inflow)/outflow from (increase)/decrease
in borrowings and lease finance (15.3) (2.9) 12.1
New finance leases - (2.5) (2.6)
Cash outflow from movement in liquid resources 1.3 1.9 0.6
Currency translation differences 0.5 1.4 5.1
---------------------------------------------- -------- -------- --------
Change in net borrowings resulting from cash
flows (8.2) (3.1) 13.3
Net borrowings at 1 January (436.8) (450.1) (450.1)
---------------------------------------------- -------- -------- --------
Net borrowings at period end (note 11) (445.0) (453.2) (436.8)
---------------------------------------------- -------- -------- --------
13. New accounting standards
FRS 17 - Retirement Benefits
The group has adopted FRS 17 - Retirement Benefits, which sets out the revised
accounting guidance on retirement benefits for the first time in these interim
financial statements. Prior to this, the group had complied with Statement of
Standard Accounting Practice 24 - Accounting for Pension costs (SSAP 24) and FRS
17 - Retirement Benefits transitional disclosure requirements. FRS 17 -
Retirement Benefits requires that the financial statements reflect at fair value
the assets and liabilities arising from an employer's retirement benefit
obligations and the related funding. The operating costs of providing retirement
benefits are recognised in the period in which they are incurred together with
any related finance costs and changes in the value of assets and liabilities.
This contrasts with SSAP 24, which required the costs of providing pensions to
be recognised on a systematic and rational basis over the period during which
the employer benefits from the employee's services.
UITF Abstract 38 - Accounting for ESOP Trusts
The group has also adopted UITF Abstract 38 - Accounting for ESOP Trusts for the
first time in these interim financial statements. This abstract requires the
deduction of shares held for the purposes of Employee Share Ownership Plans from
equity shareholders' funds on the balance sheet. Such shares were previously
reported as fixed asset investments. UITF Abstract 38 - Accounting for ESOP
Trusts also requires that gains or losses in an entity's own shares are recorded
within equity shareholders' funds on the balance sheet rather than through the
company's profit and loss account, which was the previous practice.
Comparative figures for the six months ended 30 June 2003 have been restated to
reflect the effects of FRS 17 - Retirement Benefits and UITF Abstract 38 -
Accounting for ESOP Trusts as follows:
FRS 17 UITF 38
Reported Adjustment Adjustment Restated
Six months ended 30 June 2003 £m £m £m £m
-------------------------------- -------- -------- -------- --------
Group profit and loss account
UK ports and transport
operating profit 74.5 (6.9) - 67.6
Share of operating profit in
associated undertakings 5.3 (0.1) - 5.2
Total underlying operating
profit 83.9 (7.0) - 76.9
Profit on ordinary activities
before interest and taxation 86.9 (7.0) - 79.9
Net interest payable (17.3) 1.6 - (15.7)
---------------------------------- ------- -------- -------- --------
Profit on ordinary activities
before taxation 69.6 (5.4) - 64.2
Taxation on profit on ordinary
activities (18.6) 1.6 - (17.0)
---------------------------------- ------- -------- -------- --------
Profit on ordinary activities
after taxation 51.0 (3.8) - 47.2
Dividends (22.2) - - (22.2)
---------------------------------- ------- -------- -------- --------
Retained profit for the group
and its share of associated
undertakings 28.8 (3.8) - 25.0
---------------------------------- ------- -------- -------- --------
Earnings per share - underlying 14.6p (1.2p) - 13.4p
---------------------------------- ------- -------- -------- --------
Group balance sheet
Investments 52.6 (6.2) (0.5) 45.9
Debtors - due after one year 86.4 (86.0) - 0.4
Provisions for liabilities and
charges (89.8) 29.0 - (60.8)
Pension asset net of unfunded
retirement benefit liabilities - 19.9 - 19.9
Net assets 1,040.6 (43.3) (0.5) 996.8
Equity shareholders' funds -
other reserves - investment in
own shares 37.0 - (0.5) 36.5
Equity shareholders' funds -
profit and loss account 212.8 (43.3) - 169.5
---------------------------------- -------- -------- -------- --------
Comparative figures for the year ended 31 December 2003 have been restated to
reflect the effects of FRS 17 - Retirement Benefits and UITF Abstract 38 -
Accounting for ESOP Trusts as follows:
FRS 17 UITF 38
Reported Adjustment Adjustment Restated
Year ended 31 December 2003 £m £m £m £m
---------------------------------- -------- -------- -------- --------
Group profit and loss account
UK ports and transport
operating profit 152.3 (14.1) (0.1) 138.1
Share of operating profit in
associated undertakings 12.0 (0.2) - 11.8
Total underlying operating
profit 176.6 (14.3) (0.1) 162.2
Profit on ordinary activities
before interest and taxation 180.5 (14.3) (0.1) 166.1
Net interest payable (35.0) 3.2 - (31.8)
---------------------------------- -------- -------- -------- --------
Profit on ordinary activities
before taxation 145.5 (11.1) (0.1) 134.3
Taxation on profit on ordinary
activities (41.2) 3.3 - (37.9)
---------------------------------- -------- -------- -------- --------
Profit on ordinary activities
after taxation 104.3 (7.8) (0.1) 96.4
Dividends (50.2) - - (50.2)
---------------------------------- -------- -------- -------- --------
Retained profit for the group
and its share of associated
undertakings 54.1 (7.8) (0.1) 46.2
---------------------------------- -------- -------- -------- --------
Earnings per share -
underlying 31.0p (2.4p) - 28.6p
---------------------------------- -------- -------- -------- --------
Group balance sheet
Investments 51.8 (6.9) - 44.9
Debtors - due after one year 88.1 (88.1) - -
Provisions for liabilities and
charges (94.4) 28.8 - (65.6)
Pension asset net of unfunded
retirement benefit liabilities - 24.1 - 24.1
Net assets 1,072.4 (42.1) - 1,030.3
Equity shareholders' funds -
other reserves - investment in
own shares 37.2 - - 37.2
Equity shareholders' funds -
profit and loss account 234.6 (42.1) - 192.5
---------------------------------- -------- -------- -------- --------
14. Company information
This preliminary announcement was approved by the board of directors on 1
September 2004. The Interim Results 2004 will be posted to all shareholders by
12 September 2004 and both this statement and the Interim Results 2004 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.
A webcast of the group's Interim Results 2004 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
