Final Results
British Airways PLC
19 May 2006
PRELIMINARY FINANCIAL RESULTS 2005-2006
OPERATING AND FINANCIAL STATISTICS
Three months ended Twelve months ended
March 31 Better/ March 31 Better/
2006 2005 (Worse) 2006 2005 (Worse)
Revenue £m 2,122 1,875 13.2% 8,515 7,772 9.6%
Operating profit £m 93 46 102.2% 705 556 26.8%
Profit/(loss) before tax £m 91 (6) nm 620 513 20.9%
Profit after tax £m 83 6 nm 467 392 19.1%
Net assets £m 2,074 1,397 48.5% 2,074 1,397 48.5%
Basic earnings per share p 7.1 0.1 nm 40.4 35.2 14.8%
Three months ended Twelve months ended
March 31 Better/ March 31 Better/
2006 2005 (Worse) 2006 2005 (Worse)
TOTAL GROUP OPERATIONS
TRAFFIC AND CAPACITY
RPK (m) 26,780 26,062 2.8% 111,859 107,892 3.7%
ASK (m) 36,657 35,677 2.7% 147,934 144,189 2.6%
Passenger load factor (%) 73.1 73.0 0.1pts 75.6 74.8 0.8pts
CTK (m) 1,240 1,214 2.1% 4,933 4,954 (0.4)%
RTK (m) 3,918 3,820 2.6% 16,105 15,731 2.4%
ATK (m) 5,722 5,598 2.2% 23,106 22,565 2.4%
Overall load factor (%) 68.5 68.2 0.3pts 69.7 69.7
Passengers carried (000) 8,160 8,178 (0.2)% 35,634 35,717 (0.2)%
Tonnes of cargo carried (000) 202 216 (6.5)% 795 877 (9.4)%
FINANCIAL
Operating margin (%) 4.4 2.5 1.9pts 8.3 7.2 1.1pts
Passenger revenue per RPK (p) 6.19 5.97 3.7% 6.10 6.02 1.3%
Passenger revenue per ASK (p) 4.52 4.36 3.7% 4.61 4.51 2.2%
Cargo revenue per CTK (p) 10.00 9.23 8.3% 10.10 9.73 3.8%
Total traffic revenue per RTK (p) 45.48 43.69 4.1% 45.44 44.38 2.4%
Total traffic revenue per ATK (p) 31.14 29.81 4.5% 31.67 30.94 2.4%
Net operating expenditure
per RTK (p) 43.11 42.49 (1.5)% 41.06 40.85 (0.5)%
Net operating expenditure
per ATK (p) 29.52 28.99 (1.8)% 28.62 28.48 (0.5)%
Average fuel price before hedging
(US cents/US gallon) 191.59 143.88 (33.2)% 188.22 136.44 (38.0)%
TOTAL AIRLINE OPERATIONS (Note 1)
OPERATIONS
Average Manpower Equivalent (MPE) 45,171 45,914 1.6% 45,755 46,065 0.7%
ATKs per MPE (000) 126.7 121.9 3.9% 505.0 489.9 3.1%
Aircraft in service at period end 284 290 (6) 284 290 (6)
Note 1: Excludes non airline activity companies, principally, Airmiles Travel
Promotions Ltd, BA Holidays Ltd, BA Travel Shops Ltd, Speedbird Insurance
Company Ltd and The London Eye Company Ltd.
Summary
International Financial Reporting Standards
The preliminary financial results are reported in accordance with International
Financial Reporting Standards (IFRSs). Comparative amounts for the year ended
March 31, 2005 have been restated in accordance with IFRSs, with the exception
of amounts in relation to the valuation of and movements in certain investments
and derivatives, in respect of which the Group adopted International Accounting
Standards 32 and 39 with effect from April 1, 2005.
Group performance
Group profit before tax for the year was £620 million, an improvement of 20.9%
compared with £513 million in the previous year.
Operating profit in the year, at £705 million, was £149 million better than last
year. The operating margin of 8.3% was 1.1 points better than last year. The
improvement in operating profit primarily reflects improvements in revenue - up
9.6% - partially offset by increased operating costs, in particular fuel, which
was up 44.7%, and employee costs, which were up 5.0%. Passenger yields (pence/
RPK), excluding fuel surcharge, were up by 1.3% for the full year; seat factor
was up 0.8 points at 75.6% on capacity 2.6% higher in ASKs.
Cargo volumes (CTKs) for the full year were down 0.4% compared with last year,
with yields, excluding fuel surcharge, up 3.8%. Overall load factor for the full
year was 69.7%, with no change from last year.
Net cash inflow from operating, investing and financing activities was £357
million for the twelve months, an increase of £814 million compared with last
year. In 2005/6 repayments of borrowings totalling £479 million were made,
compared with £1,271 million last year. The closing balance of cash, cash
equivalents and current interest bearing deposits of £2,440 million was up £758
million versus last year. Net debt fell by £1,281 million during the year to
£1,641 million. This is the lowest level since March 31, 1992, and is down £5.0
billion from the December 2001 peak. The net debt to total capital ratio of
44.2% at March 31, 2006 was the lowest level since privatisation.
Group profit before tax for the fourth quarter was £91 million, £97 million
better than last year. The operating profit for the quarter was £93 million, £47
million better than last year, again primarily reflecting improvements in
revenue, including fuel surcharges, partially offset by increases in a number of
costs, including fuel which was 65.1% higher than last year, and employee costs
which were up 3.3%. Below the operating profit level, the Group reported a gain
of £27 million on the sale of fixed assets and investments, compared with a loss
of £11 million last year, primarily due to the £26 million profit on disposal of
the Group's interest in the London Eye Company.
Group revenue for the quarter - at £2,122 million - was up 13.2% compared with
last year. Capacity in ASKs was 2.7% higher. Passenger yields (pence/RPK),
excluding fuel surcharge, were up by 3.7% and seat factor was up 0.1 points to
73.1%, a record for the fourth quarter. Unit costs per ATK increased by 1.8%.
For the quarter, cargo volumes were up 2.1% compared with last year and yields
(pence/CTK), excluding fuel surcharge, were up 8.3%. Overall load factor was up
0.3 points at 68.5%.
Costs
For the year ended March 31, 2006, unit costs (pence/ATK) worsened by 0.5%
compared with last year. This reflects a net cost increase of 2.9% on capacity
2.4% higher in ATKs.
For the quarter, unit costs worsened by 1.8% compared with the same period last
year. This reflects a net cost increase of 4.1% on capacity 2.2% higher in ATKs.
Operating expenditure increased in the quarter, primarily reflecting increases
in fuel costs (up 65.1% due to increases in the fuel price, lower hedging
profits in 2005/6 compared with 2004/5, and the effect of a strengthening US
Dollar against Sterling), employee costs (up 3.3%) and aircraft operating lease
costs (up 20.0% due to the increased provision relating to RJ100 aircraft
sub-leased to Swiss International Air Lines).
Non-operating items
Unrealised gains on fuel derivative hedges, recognised through the income
statement under IAS 39, totalled £19 million in the year and £10 million in the
quarter.
Net financing cost for the year was £159 million, £18 million higher than the
previous year, primarily due to a charge of £13 million on retranslation of
currency borrowings compared with a credit of £56 million last year, partially
offset by lower loan, lease finance and hire purchase interest due to lower net
debt and a lower financing cost related to pensions.
For the three month period, net financing cost was £37 million, down £12 million
on last year.
Profits on disposals of fixed assets and investments for the year were £27
million, primarily due to the London Eye disposal in February 2006. This
compares to £71 million last year (which included the profit of £86 million on
disposal of the Group's interest in Qantas).
Taxation
The effective tax rate is reduced to 25% primarily by the recognition of £20
million of Advance Corporation Tax (ACT) which had previously been written off
as irrecoverable. A further £74 million of ACT is available for potential
offset against future periods' corporation tax charges.
Earnings per share
For the year ended March 31, 2006, profits attributable to shareholders were
£451 million, equivalent to earnings of 40.4 pence per share, compared with
earnings of 35.2 pence per share last year. The profit attributable to
shareholders for the fourth quarter was equivalent to 7.1 pence per share,
compared with earnings of 0.1 pence per share last year.
Segmental analysis
Operating results improved in each business segment. The network airline
business (Heathrow, Gatwick, passenger and cargo) benefited from increased
revenue partially offset by increased costs, notably fuel. The regional airline
business (re-branded as BA Connect during the year) experienced revenue declines
as a result of significant competitive pressures. Net operating cost reductions
of 10.5% in this segment more than offset the fall in revenue. The non-airline
business segment improved its operating result by £7 million.
Net Debt / Total Capital ratio
The year-end net debt/total capital ratio was 44.2 per cent, a 23.5 point
reduction from last year. The net debt/total capital ratio including operating
leases was 53.0 per cent, a 19.3 point reduction from last year.
Pensions
The Group's pre-tax pension liability, for all schemes in deficit, increased
from £2,191 million to £2,290 million. Of the £2,290 million, £1,791 million is
recognised on the balance sheet (compared with £1,807 million last year), and
£499 million (compared with £384 million last year) is unrecognised, using the '
corridor' approach under IAS 19.
The liability is primarily in the New Airways Pension Scheme (NAPS). The NAPS
deficit increased to £2,070 million from last year's £1,969 million. Of the
£2,070 million, £1,587 million is recognised on the balance sheet and £483
million is unrecognised. The recognised portion of last year's £1,969 million
deficit was £1,612 million and the unrecognised portion was £357 million. The
company's cash contributions to NAPS increased from £236 million in 2004/5 to
£246 million in 2005/6. The company published proposals for dealing with the
NAPS deficit in March 2006. Discussions with the trustees of NAPS and employee
members are ongoing.
Aircraft fleet
The number of aircraft in service at March 31, 2006 was 284, a reduction of 6 on
the prior year. One new aircraft, an Airbus A321, was delivered in the year.
Two aircraft, an Airbus A320 and a Boeing 737-400 returned to service following
sub-leases to GB Airways and Air One respectively. Aircraft returns to lessors
comprised one Boeing 737-500 aircraft and one de Havilland Canada DHC-8. One
British Aerospace 146 aircraft was sold, and six Avro RJs were sub-leased to
Swiss International Air Lines.
Alliance developments
In June 2005, the Australian Competition and Consumer Commission extended
permission for British Airways and Qantas to co-operate under their Joint
Services Agreement (JSA) for a further five years, valid from February 2005.
Under the JSA, there is full strategic, tactical and operational co-operation on
the two carriers' flights that serve markets between the United Kingdom/
Continental Europe and Southeast Asia/Australia.
Codeshare relationships with America West Airlines and Swiss International Air
Lines were terminated, as these partners joined the Star Alliance.
During the year, Royal Jordanian Airlines, JAL and Malev announced their
intention of seeking membership of oneworld.
Outlook
Market conditions remain broadly unchanged. For the year to March 2007, total
revenue is expected to improve by 5%-6%, up from our previous estimate of 4%-5%,
due to the impact of the latest fuel surcharges and seat factor increases.
Capacity is expected to increase by 2.5%-3% , with a small decline in yields
excluding fuel surcharges.
As previously stated, fuel costs, net of hedging, are expected to be about £600
million more than last year. Costs excluding fuel are expected to be unchanged.
As announced at Investor Day, our business plan will focus on preparing for the
move to Terminal 5 in 2008, investing in products for our customers, and driving
to a competitive cost base to make our company fit for growth in the future.
Certain information included in these statements is forward-looking and involves
risks and uncertainties that could cause actual results to differ materially
from those expressed or implied by the forward-looking statements.
Forward-looking statements include, without limitation, projections relating to
results of operations and financial conditions and the company's plans and
objectives for future operations, including, without limitation, discussions of
the company's Business Plan programmes, expected future revenues, financing
plans and expected expenditures and divestments. All forward-looking statements
in this report are based upon information known to the company on the date of
this report. The company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
It is not reasonably possible to itemize all of the many factors and specific
events that could cause the company's forward- looking statements to be
incorrect or that could otherwise have a material adverse effect on the future
operations or results of an airline operating in the global economy. Information
on some factors which could result in material difference to the results is
available in the company's SEC filings, including, without limitation the
company's Report on Form 20-F for the year ended March 2005.
CONSOLIDATED INCOME STATEMENT
Three months ended Twelve months ended
March 31 Better/ March 31 Better/
2006 £m 2005 £m (Worse) 2006 £m 2005 £m (Worse)
Traffic Revenue
Passenger 1,658 1,557 6.5% 6,820 6,500 4.9%
Cargo 124 112 10.7% 498 482 3.3%
1,782 1,669 6.8% 7,318 6,982 4.8%
Other revenue 340 206 65.0% 1,197 790 51.5%
REVENUE 2,122 1,875 13.2% 8,515 7,772 9.6%
Employee costs 632 612 (3.3)% 2,346 2,235 (5.0)%
Depreciation, amortisation
and impairment 184 197 6.6% 717 739 3.0%
Aircraft operating lease costs 30 25 (20.0)% 112 106 (5.7)%
Fuel and oil costs 444 269 (65.1)% 1,632 1,128 (44.7)%
Engineering and other aircraft costs 120 123 2.4% 473 432 (9.5)%
Landing fees and en route charges 133 130 (2.3)% 559 556 (0.5)%
Handling charges, catering and
other operating costs 226 217 (4.1)% 955 918 (4.0)%
Selling costs 125 115 (8.7)% 449 490 8.4%
Currency differences (3) (1) nm (18) 15 nm
Accommodation, ground equipment
and IT costs 138 142 2.8% 585 597 2.0%
TOTAL EXPENDITURE ON OPERATIONS 2,029 1,829 (10.9)% 7,810 7,216 (8.2)%
OPERATING PROFIT 93 46 102.2% 705 556 26.8%
Fuel derivative gains* 10 nm 19 nm
Finance costs (57) (67) 14.9% (221) (265) 16.6%
Finance income 26 28 (7.1)% 93 97 (4.1)%
Financing income and expense
relating to pensions (6) 4 nm (18) (29) 37.9%
Retranslation (charges)/credits
on currency borrowings (14) nm (13) 56 nm
Profit/(loss) on sale of fixed
assets and investments 27 (11) nm 27 71 (62.0)%
Share of post-tax profits in associates
accounted using the equity method 6 nm 28 24 16.7%
Income relating to fixed asset
investments (2) 2 nm 3 nm
PROFIT/(LOSS) BEFORE TAX 91 (6) nm 620 513 20.9%
Tax (8) 12 nm (153) (121) (26.4)%
PROFIT AFTER TAX 83 6 nm 467 392 19.1%
Attributable to:
Equity holders of the parent 80 1 nm 451 377 19.6%
Minority interest 3 5 nm 16 15 6.7%
83 6 nm 467 392 19.1%
Earnings per share:
Basic 7.1 0.1 nm 40.4 35.2 14.8%
Diluted 7.0 0.1 nm 39.8 34.1 16.7%
nm: Not meaningful
* Fuel derivative gains reflect the ineffective portion of unrealised gains and
losses on fuel derivative hedges required to be recognised through the income
statement under IAS 39.
CONSOLIDATED BALANCE SHEET
March 31 March 31
2006 £m 2005 £m
NON-CURRENT ASSETS
Property, plant and equipment
Fleet 6,606 6,944
Property 974 1,000
Equipment 302 385
7,882 8,329
Goodwill 72 72
Landing rights 115 122
Other intangible assets 46 60
233 254
Investments in associates 131 126
Other investments 33 30
Employee benefit assets 137 137
Other financial assets 89 38
TOTAL NON-CURRENT ASSETS 8,505 8,914
NON-CURRENT ASSETS HELD FOR SALE 3 5
CURRENT ASSETS AND RECEIVABLES
Expendable spares and other inventories 83 84
Trade receivables 685 685
Other current assets 458 301
Other current interest bearing deposits 1,533 1,133
Cash and cash equivalents 907 549
2,440 1,682
TOTAL CURRENT ASSETS AND RECEIVABLES 3,666 2,752
TOTAL ASSETS 12,174 11,671
SHAREHOLDERS' EQUITY AND LIABILITIES
SHAREHOLDERS' EQUITY
Issued share capital 283 271
Share Premium 888 788
Investment in own shares (26)
Other reserves 690 152
TOTAL SHAREHOLDERS' EQUITY 1,861 1,185
MINORITY INTEREST 213
TOTAL EQUITY 2,074
Equity minority interest 12
Non-equity minority interest 200
MINORITY INTERESTS 212
NON-CURRENT LIABILITIES
Interest bearing long-term borrowings 3,602 4,045
Employee benefit obligations 1,803 1,820
Provisions for deferred tax 896 816
Other provisions 135 112
Other long term liabilities 232 212
TOTAL NON-CURRENT LIABILITIES 6,668 7,005
CURRENT LIABILITIES
Current portion of long-term borrowings 479 447
Convertible borrowings 112
Trade and other payables 2,822 2,642
Current tax payable 75 36
Short term provisions 56 32
TOTAL CURRENT LIABILITIES 3,432 3,269
TOTAL EQUITY AND LIABILITIES 12,174 11,671
CONSOLIDATED CASHFLOW STATEMENT
Twelve months ended
March 31 Better/
2006 £m 2005 £m (Worse)
CASHFLOWS FROM OPERATING ACTIVITIES
Operating profit 705 556 149
Depreciation, amortisation and impairment 717 739 (22)
Operating cashflow before working capital changes 1,422 1,295 127
Decrease/(increase) in inventories and other receivables 23 (71) 94
Increase in trade and other payables and provisions 150 15 135
Other non-cash movements 12 8 4
Cash generated from operations 1,607 1,247 360
Interest paid (211) (242) 31
Taxation (57) (57)
NET CASHFLOW FROM OPERATING ACTIVITIES 1,339 1,005 334
CASHFLOWS FROM INVESTING ACTIVITIES
Purchase of property, plant and equipment (275) (356) 81
Purchase of intangible assets (8) (32) 24
Purchase of interest in associated companies (5) (5)
Purchase of other investments (2) (2)
Proceeds from sale of associated companies 427 (427)
Proceeds from sale of other investment 1 1
Proceeds from sale of property, plant and equipment 9 57 (48)
Costs of disposal of subsidiary company (6) (12) 6
Interest received 78 78
Proceeds from sale of interest in the London Eye 78 78
Dividends received 22 23 (1)
Increase in interest bearing deposits (402) (487) 85
NET CASHFLOW FROM INVESTING ACTIVITIES (510) (302) (208)
CASHFLOWS FROM FINANCING ACTIVITIES
Proceeds from long term borrowings 116 (116)
Repayment of borrowings (64) (168) 104
Payment of finance lease liabilities (415) (1,103) 688
Exercise of share options 21 4 17
Distributions made to holders of perpetual securities (14) (14)
Other financing income 5 (5)
NET CASHFLOW FROM FINANCING ACTIVITIES (472) (1,160) 688
Net increase/(decrease) in cash and cash equivalents 357 (457) 814
Net foreign exchange difference 1 (18) 19
Cash and cash equivalents at April 1 549 1,024 (475)
CASH AND CASH EQUIVALENTS AT MARCH 31 907 549 358
These summary financial statements were approved by the Directors on May 18,
2006.
NOTES TO THE ACCOUNTS
For the period ended March 31, 2006
1 BASIS OF PREPARATION
These summary financial statements have been prepared in accordance with the
recognition and measurement criteria of International Financial Reporting
Standards (IFRSs)* as adopted by the European Union (EU) with the exception of
the disclosure requirements of IAS 34 - 'Interim Reporting'. IFRSs as adopted by
the EU differ in certain respects from IFRSs as issued by the International
Accounting Standards Board (IASB). However, the summary financial statements for
the periods presented would be no different had the Group applied IFRSs, as
issued by the IASB. The accounting policies and basis of preparation differ from
those set out in the Report and Accounts for the year ended March 31, 2005 which
were prepared in accordance with United Kingdom accounting standards and the
Companies Act 1985 (UK GAAP).
A preliminary summary of the significant accounting policies used in the
preparation of these financial statements under IFRSs and the impact of the
change from UK GAAP to IFRS on comparative periods as required by IFRS 1 -
'First-time adoption of International Financial Reporting Standards' were
included in the Group's 'Release of financial information for 2004/05 under
International Financial Reporting Standards' published on July 4, 2005. The
release included the quarterly results for quarters ended June 30, 2004,
September 30, 2004, December 31, 2004 and March 31, 2005 restated under the
recognition and measurement rules of IFRSs and a summary of the significant
differences to UK GAAP. The release also included restated balance sheets at
those dates in addition to the restated balance sheet at April 1, 2004, the
Group's transition date to IFRS.
As permitted under IFRS 1, the Group elected to apply the requirements of IAS
32 - 'Financial Instruments - Disclosure and Presentation' and IAS 39 -
'Financial Instruments - Recognition and Measurement' from April 1, 2005. As a
consequence certain assets and liabilities are required to be recognised and
measured at fair value. As a result of the application of IAS 39 the opening net
assets of the Group increased by £183 million at April 1, 2005. The increase
represents the fair value of financial instruments and available for sale
financial assets (£193 million, net of deferred tax), partially offset by the
impact of the Group's share of the opening reserves adjustments of associates
(£10 million). The adoption of IAS 32 had no impact on the reserves or net
assets of the Group except for minor presentational differences between minority
interests and shareholders' equity. The £200 million Euro Perpetual Preferred
securities, issued by British Airways Finance (Jersey) L.P. in 1999, (in which
the general partner is British Airways Holdings Limited, a wholly owned
subsidiary of British Airways Plc) have been classified as Minority Interest.
Under IAS 39 - 'Financial Instruments - Recognition and Measurement',
financial instruments are recorded initially at fair value. Subsequent
measurement of those instruments at the balance sheet date reflects the
designation of the financial instrument. The Group determines the classification
at initial recognition and re-evaluates this designation at each year-end except
for those financial instruments measured at fair value through profit or loss.
Other investments (other than interests in associates) are designated as
available-for-sale financial assets and are recorded at fair value. Any change
in the fair value is reported in equity until the investment is sold when the
cumulative amount recognised in equity is recognised in income. Any provisions
for impairment of the carrying value are reflected in income when they arise.
Exchange gains and losses on monetary items are taken to income unless the item
has been designated and assessed as an effective hedging instrument in
accordance with the requirement of IAS 39. Exchange gains and losses on
non-monetary investments are reflected in equity until the investment is sold
when the cumulative amount recognised in equity is recognised in income.
Derivative financial instruments, comprising interest rate swap agreements,
foreign exchange derivatives and fuel hedging derivatives (including options,
swaps and futures) are measured at fair value on the Group balance sheet.
Changes in the fair value of derivative financial instruments are reported
through operating income or financing according to the nature of the instrument
unless the derivative financial instrument has been designated as a hedge of a
highly probable expected future cashflow. Gains and losses on forward exchange
contracts to hedge capital expenditure commitments are recognised as part of the
total sterling carrying cost of the relevant tangible asset as the contracts
mature or are closed out. Gains and losses on derivative financial instruments
designated as cash flow hedges and assessed as effective for the period, are
taken to equity in accordance with the requirements of IAS 39. Gains and losses
taken to equity are reflected in the income statement when either the hedged
cash flow impacts income or its occurrence ceases to be probable.
Certain loan repayment instalments denominated in US dollars and Japanese yen
are designated as cash flow hedges of highly probable future foreign currency
revenues. Exchange differences arising from the translation of these loan
repayment instalments are taken to equity in accordance with IAS 39 requirements
and subsequently reflected in the income statement when either the future
revenue impacts income or its occurrence ceases to be probable.
Long term borrowings, are recorded at amortised cost. Certain leases contain
interest rate swaps that are closely related to the underlying financing and, as
such, are not accounted for as an embedded derivative.
These financial statements have been prepared on a historical cost convention
except for certain financial assets and liabilities, including derivative
financial instruments and available-for-sale financial assets, that are measured
at fair value. The carrying value of recognised assets and liabilities that are
subject to fair value hedges are adjusted to record changes in the fair values
attributable to the risks that are being hedged.
* For the purposes of these statements IFRS also include International
Accounting Standards(IAS).
2 FINANCE COSTS / INCOME
Three months ended Twelve months ended
March 31 March 31
2006 £m 2005 £m 2006 £m 2005 £m
FINANCE COSTS
Interest payable on bank and other loans and
finance charges payable under finance leases and
hire purchase contracts 59 67 223 265
Interest capitalised (1) (1)
Change in fair value of interest rate swaps (1) (1)
Total finance costs 57 67 221 265
FINANCE INCOME
Bank interest receivable 26 22 93 83
Other financing income 6 14
Total finance income 26 28 93 97
FINANCING INCOME AND EXPENSE RELATING TO PENSIONS
Net financing expense/(income) relating to pensions 5 (4) 17 29
Amortisation of actuarial losses on pensions 1 1
Total financing income and expense relating to pensions 6 (4) 18 29
Retranslation (charges)/credits on currency borrowings (14) (13) 56
3 PROFIT/(LOSS) ON SALE OF FIXED ASSETS AND INVESTMENTS
Three months ended Twelve months ended
March 31 March 31
2006 £m 2005 £m 2006 £m 2005 £m
Net profit on sale of investment in Qantas 86
Net profit on sale of the London Eye Company Ltd 26 26
Net profit/(loss) on sale of other investments 2 (2) 5 (2)
Net (loss) on the disposal of property, plant
and equipment (1) (9) (4) (13)
27 (11) 27 71
4 TAX
The tax charge for the year is £153 million made up of a current tax charge
of £96 million, being UK Corporation tax of £91 million, overseas tax of £4
million and a prior year tax charge of £1 million; and £57 million by way of
deferred taxes in the UK which includes the benefit of £20 million of Advance
Corporation Tax previously written off. The current tax provision amounts to £75
million at March 31, 2006 (March 31, 2005: £36 million). The deferred tax
provision amounts to £896 million at March 31, 2006 (March 31, 2005: £816
million). The tax charge for the quarter is £8 million which comprises £16
million current tax and a deferred tax credit of £8 million. The charge for the
quarter has benefited from the recognition of £20 million Advance Corporation
Tax.
5 EARNINGS PER SHARE
Basic earnings per share for the quarter ended March 31, 2006 are calculated
on a weighted average of 1,130,106,000 ordinary shares (March 31, 2005:
1,072,055,000) and for the twelve months ended March 31, 2006, on a weighted
average of 1,116,178,000 ordinary shares (March 31, 2005: 1,071,126,000) as
adjusted for shares held for the purposes of employee share ownership plans
including the Long Term Incentive Plan. Diluted earnings per share for the
quarter ended March 31, 2006 are calculated on a weighted average of
1,145,055,000 ordinary shares (March 31, 2005: 1,128,181,000) and for the twelve
months ended March 31, 2006 on a weighted average of 1,138,545,000 ordinary
shares (March 31, 2005: 1,126,485,000).
The number of shares in issue at March 31, 2006 was 1,130,882,000 (March 31,
2005: 1,082,903,000) ordinary shares of 25 pence each.
6 RECONCILIATION OF MOVEMENT IN NET DEBT TO CHANGES IN CASH FLOWS
Twelve months ended
March 31
2006 £m 2005 £m
Increase/(decrease) in cash and cash equivalents during the year 357 (457)
Net cash used in repayment of long-term borrowings 479 1,155
Increase in interest bearing deposits maturing after 3 months 402 487
Change in net debt resulting from cash flows 1,238 1,185
New finance leases taken out and hire
purchase arrangements made (11) (12)
Conversion of Convertible Capital Bonds 2005 112
Exchange and other non-cash movements (58) 63
Movement in net debt during the period 1,281 1,236
Net debt at April 1 (2,922) (4,158)
Net debt at period end (1,641) (2,922)
Net debt comprises the current and non-current portions of long-term
borrowings, convertible long-term borrowings and overdrafts, less cash and cash
equivalents plus interest-bearing short-term deposits.
7 ANALYSIS OF LONG-TERM BORROWINGS
March 31 March 31
2006 £m 2005 £m
Interest bearing long-term borrowings comprise:
Loans 1,030 1,105
Finance Leases 1,418 1,493
Hire purchase arrangements 1,154 1,447
3,602 4,045
Current portion of long-term borrowings comprise:
Loans 86 63
Finance Leases 105 96
Hire purchase arrangements 288 288
479 447
8 RESERVES
March 31 March 31
2006 £m 2005 £m
Balance at April 1 152 (231)
Transitional effects from the adoption of IAS 39 and IAS 32 183
Profit for the period 451 377
Exchange and other movements (96) 6
690 152
9 The figures for the three months ended March 31, 2006 are unaudited and do
not constitute full accounts within the meaning of Section 240 of the Companies
Act 1985. The figures for the twelve months ended March 31, 2006 form part of
the Annual Report and Accounts and were approved by the Board of Directors but
have not been delivered to the Registrar of Companies; the report of the
auditors on the accounts is unqualified.
AIRCRAFT FLEET
(for information only)
Number in service with Group companies at March 31, 2006
On Balance Sheet Off Balance Total March Changes Since Future Options
aircraft Sheet Aircraft 2006 March 2005 deliveries
AIRLINE OPERATIONS (Note 1) (Note 7) (Note 8)
Boeing 747-400 57 57
Boeing 777 40 3 43
Boeing 767-300 21 21
Boeing 757-200 13 13
Airbus A319 (Note 2) 21 12 33 32
Airbus A320 (Note 3) 9 18 27 1 7
Airbus A321 7 7 1 3
Boeing 737-300 5 5
Boeing 737-400 (Note 4) 19 19 1
Boeing 737-500 9 9 (1)
Turboprops (Note 5) 8 8 (1)
Embraer RJ145 16 12 28
Avro RJ100 (Note 6) 10 10 (6)
British Aerospace 146 4 4 (1)
GROUP TOTAL 207 77 284 (6) 10 32
Notes:
1. Includes those operated by British Airways Plc and BA Connect.
2. Certain future deliveries and options include reserved delivery positions,
and may be taken as any A320 family aircraft.
3. Includes 1 Airbus 320 returned to service from sub-lease to GB Airways.
4. Includes 1 Boeing 737-400 returned to service from sub-lease to Air One.
5. Comprises 8 de Havilland Canada DHC-8s. Excludes 5 British Aerospace ATPs
stood down pending return to lessor and 12 Jetstream 41s sub-leased to
Eastern Airways.
6. Excludes 6 Avro RJ100 sub-leased to Swiss International Air Lines.
7. Future deliveries represent replacement aircraft for 10 A320s due to leave
the fleet from 2007.
8. Excludes 10 secured delivery positions for Boeing 777 aircraft.
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