Final Results

TBI PLC 10 June 2003 TBI PLC Preliminary Results for the Year ended 31 March 2003 The TBI Group is one of the UK's leading airport operators. It owns and operates London Luton, Belfast International and Cardiff International Airports. The Group also owns and/or operates a number of overseas airports and airport-related businesses. SUMMARY â€¢ Group turnover was Â£177.6 million (2002: Â£186.2 million) â€¢ EBITDA* was Â£47.3 million (2002: Â£53.1 million) â€¢ Operating profit was Â£23.6 million (2002: Â£23.4 million) â€¢ Profit before amortisation, tax and exceptional items was Â£23.3 million (2002: Â£29.1 million) â€¢ Profit before tax was Â£10.2 million (2002: Â£16.5 million) â€¢ Earnings per share before amortisation and exceptional items: 2.86 pence (2002: 3.52 pence) â€¢ Earnings per share were 0.82 pence (2002: 1.47 pence) â€¢ Proposed final dividend of 1.60 pence, maintaining the total dividend for the year at 2.30 pence â€¢ Bmibaby established a second UK base at Cardiff in November 2002; Ryanair started a base operation at Stockholm Skavsta in April 2003 â€¢ Improved performance at London Luton following further reorganisation initiatives â€¢ Airport terminal passengers rose to 15.2 million during the year Note: Earnings reductions are primarily attributable to the loss of the full service airlines from Belfast International Airport, as announced previously and include net additional insurance and security costs of some Â£1.7 million * Operating profit before depreciation, amortisation and exceptional items. Keith Brooks, Chief Executive, comments: 'In a tough environment for the market as a whole, and the air transport sector in particular, TBI has again demonstrated its resilience. This is the first full year to reflect a fundamental rebasing of our airline custom and, as such, represents a base level of earnings for the future. 'TBI enters the current year well positioned to capitalise on the growth forecast for low cost travel in particular, with an attractive collection of assets and a management team which has proven its ability to adapt and innovate in an ever-changing environment. ' 10 June 2003 ENQUIRIES: TBI plc Today: 020 7457 2020 Keith Brooks, Chief Executive Thereafter: 020 7408 7300 Caroline Price, Finance Director College Hill Tel: 020 7457 2020 Justine Warren Gareth David TBI PLC Preliminary Results for the year ended 31 March 2003 CHAIRMAN'S STATEMENT This has been another very challenging year for all those involved in the aviation industry, and TBI is no exception. For a variety of well understood reasons the number of passengers travelling by commercial aircraft has reduced this year on a worldwide basis. At the same time, the costs of insurance and security for all aviation related businesses, including airports, have risen markedly. Our airports have not been completely immune to such factors and this year has seen net additional insurance and security costs of some Â£1.7 million. However, whilst not immune from the general downturn, the number of passengers travelling from our owned or managed airports marginally increased in 2003 - remarkable in the circumstances. The reason for the relative immunity is the very limited presence of full service airlines and long haul services at our UK airports, and it is those airlines and services which have borne the brunt of the general decrease in passenger numbers. Instead the largest airline customers of our four European airports are budget or low cost airlines, all of which have enjoyed significant increases in the number of passengers carried, both generally and through our airports in particular. This trend of an increasing number of passengers using low cost compared with full service airlines, is part of a structural change in the industry which has been underway for some time. A consequence of this change is manifest in the financial performance this year which saw earnings reduced. Part of this reduction is attributable to the increased costs already mentioned, but part also to the different revenues provided by the low cost carriers. Operating Profit was Â£23.6 million (2002: Â£23.4 million) while EBITDA reduced by some Â£5.8 million to Â£47.3 million (2002: Â£53.1 million) but that should be put in the context of the Â£1.7 million, some 29.3% of the total, relating to additional insurance and security. Similarly earnings per share and earnings per share before amortisation and exceptional items have reduced to 0.82 pence and 2.86 pence from 1.47 pence and 3.52 pence last year respectively. These reductions have not been caused by reduced levels of activity and our assets continue to provide good cash flows, and display considerable potential. However, whilst this has undoubtedly been a year of consolidation it does represent very much a base year. Our airline passenger profile is now established and the dramatic impact on earnings from the replacement of one type of customer by another is, we believe, behind us. Instead, our aeronautical revenues have a much more homogenised appearance and, in future, increases in passenger numbers should convert into increased earnings. As a result, the Board is recommending holding the dividend. That means a final dividend of 1.60 pence per share to be paid on 1 October 2003, bringing the total dividend for the year to 2.30 pence per share. The robustness of our businesses, and indeed the changed customer profile, have not been achieved by accident. The initiatives which saw new bases established at Skavsta and Cardiff by Ryanair and bmibaby respectively are good examples of airports and airlines working together to exploit market demand and to take advantage of changed passenger requirements. We are confident that we shall be part of similar successes in the future as low cost traffic, particularly intra-Europe, continues to grow. During the year, the Board was further strengthened by the appointment of Larry Gouldthorpe who has responsibility for all our interests in the Americas. Tim Simon, who has been a non-executive director since 1995, will be standing down at the Annual General Meeting. Tim has been a stalwart supporter from the early days of our development as a listed property company, through the metamorphosis into an airports group and in the recent challenging times. He leaves us with our heartfelt thanks and best wishes for the future. Current trading and outlook In these changed times for aviation and the world economy, economic fundamentals are more important than ever. At TBI we have an attractive collection of assets which have demonstrated their robustness, and which remain scarce and sought after. Demand for use of our airports shows no sign of abatement and we have a management team which has again proved its ability to adapt and innovate. These are a great collection of strengths with which to go forward and build on, and we are sure we will. The current year has started well, with growth in traffic at each of our four UK and European airports. Together with the further expansion plans of our low cost airline customers and completion of enhanced passenger and retail facilities at a number of locations, this gives us confidence in anticipating steady trading progress during the current year. Stanley Thomas CHAIRMAN 10 June 2003 OPERATIONAL REVIEW Introduction Our strategy remains consistent: to be an operator of regional airports where we can make a difference. That ability to make a difference reflects a variety of aspects; the exact nature and role of our involvement, the political environment, as well as the economic fundamentals of the airport and the region in question. Our past behaviour bears out this strategy. We earn approximately 56% of our owned and operated airport turnover from airline customers. Our airline customer base has significantly changed within the past two years. In the year to March 2001, 32% of our terminal passengers were travelling on full service airlines. In the year to March 2003 this number fell to 21% and in the UK it represented only 10%. However the absolute number of terminal passengers travelling through TBI airports increased by 1% to 15.2 million in 2003. This was because, in the meantime, the low cost airlines increased the number of routes, flights and passengers - taking their proportion of our traffic from 39% in 2001 to an anticipated 63% in 2004, based on services already announced by those airlines. Expansion of low cost traffic The low cost airlines using TBI airports have also altered significantly during the year. In November 2002 bmibaby established its second UK base at Cardiff Airport, initially flying over 100 times a week and carrying some 180,000 passengers in the five months to March 2003. The people of Wales have responded with enthusiasm to 'the Baby' and bmibaby have recently based a further aircraft at Cardiff which will increase the flying to some 160 times a week and provide anticipated annualised passenger numbers of some 750,000. In London Luton, easyJet started its Paris route during the year and announced new routes into Faro and Alicante for 2003/4. In Belfast, MyTravelLite began operations to Birmingham; bmibaby launched services to East Midlands and Cardiff and continues to grow with the recent introduction of services to Manchester. In addition, despite the takeover of Go by easyJet (previously both customers of Belfast), absolute passenger numbers from the two airlines increased by 34%. Perhaps the most dramatic news for TBI on the low cost front was that Ryanair started a base operation at Stockholm Skavsta with effect from 4 April 2003 - with an immediate anticipated increase in annual passenger numbers for Skavsta from 0.3 million in 2003 to 1.5 million in 2004. We charge low cost airlines only a proportion of the per passenger fee we would charge a flag carrier, principally because their aircraft turn-round times are much faster. This fundamental shift in the economic model has been seen most vividly in the past year or two. We are now at a revised base level of revenues, retaining almost no flag carrier services within the UK. Henceforward we should be able to demonstrate once again the financial dynamics of the airport business - more flights, more passengers, incremental revenues, more profits. Outlook for airport traffic Passenger development at TBI's European airports for the first two months of the new financial year (April and May) has been encouraging. Total passenger numbers increased 23% over the same period last year to 2.3m. Low cost traffic led the growth across the portfolio increasing by 42% to 1.7m passengers, while full service fell 30% to 151,000 passengers and charter reduced by 3% to 439,000 passengers. The charter figures are respectable given the pressures facing this market including the Gulf War and the weakening pound. On an airport-by-airport basis all of our core airport locations saw passenger growth of over 10%. Cardiff and Stockholm saw the greatest growth of 36% and 272% respectively: Cardiff through its development as bmibaby's second UK hub and Stockholm through the impact of Ryanair's decision to create its Scandinavian hub at Skavsta. Belfast saw the lowest growth of 10%. In terms of the total passengers carried over the period the low cost sector accounted for the great majority at 74%, up from 65% last year. As a result of the growth at Cardiff and Stockholm, Luton's dominance in the portfolio has fallen, accounting for 50% of total passengers carried over the period (2002: 53%). Passengers Approximately 35% of our owned and operated airport turnover is generated directly from passengers spending as they pass through an airport. Generally we do not undertake passenger spend opportunities ourselves. Instead, we enter into rental arrangements, so that the outlet pays us a turnover-related rent, usually subject to a minimum guarantee. Our major sources of income are car parking (40%), retail (30%) and catering (11%). Car parking revenues can be substantial. In London Luton we earned some 21% of total turnover from car parking activities; and we are almost at the point where demand exceeds supply. As a result, decisions as to capacity and pricing must be taken in the foreseeable future. We are also considering the ways in which to optimise performance of our car parks across the Group - in-sourcing, out-sourcing and everything in between. Taken together, there are currently some 18,700 spaces at our three UK airports, generating net revenues of Â£18.4 million. Retailing and catering Retail, both airside and landside, has been the subject of a revised contract covering Belfast and Cardiff airports. At both locations, the increases in passenger numbers will open more doors and provide more options as to which retailers will consider establishing an outlet. At London Luton most of our retail concessions reach the end of their lease term in 2004; this offers us an excellent opportunity to ensure that our retail mix is improved to better reflect our passenger profile and increase revenue per passenger. Catering activities in the UK have this year been subject to a cross-airport deal which has resulted in a better quality of catering and a better financial deal for us. This has been a prime example of the power of the Group - the ability to offer a significant contract within the context of UK regional airports has undoubtedly resulted in a better deal for TBI as a whole as well as the individual entities. In addition to a single substantial contract, we also have other catering concessions in our airports which, taken together, mean that we earned on average some 28 pence per arriving or departing passenger. This represents a 17% increase on prior year levels. In Belfast, in particular, we have high hopes of further increases as a result of the new landside food court which opened in April 2003, and the more recent opening of an airside restaurant, run by Paul Rankin, the renowned Belfast, Michelin-starred chef. Capital expenditure Capital expenditure programmes during the year proceeded largely as planned. Mostly these took the form of normal maintenance and investment. However there were two particular projects that were very substantial for the entities undertaking them. The first was at London Luton, where a Â£5.0 million project to develop and construct a walkway and holding areas for passengers was designed and delivered on budget and on time. This facility has improved the operational efficiency of the airport as well as the customers' experience. The other significant project, at Stockholm Skavsta, will straddle 2003 and 2004. Our existing terminal building had capacity for approximately one million passengers, which offered comfortable headroom for Skavsta, with its 0.3 million passengers. It was announced in late February 2003 that Skavsta would become a Ryanair base, with an immediate increase in passenger numbers to 1.5 million per annum expected. Ever cautious, we had not begun any construction work but the operational, logistical and development challenge that this has placed on the local team and its supporters around the Group has been immense. An extended terminal, designed specifically to suit the requirements of a low fare operator and its passengers, has been designed and construction has commenced. In the meantime temporary measures, such as a tent the size of a football pitch, have been adopted - true ingenuity and a fine example of the mentality required in order to do good business going forward. We are confident that all our airports will benefit from the experiences of the Skavsta team. South East Regional Air Study ('SERAS') and London Luton Airport In July 2002, The Department for Transport ('DfT') in its consultation document on the future of aviation, recognised the valuable contribution which London Luton plays in the airport infrastructure in the UK and in particular the south east of England. We have long recognised London Luton's importance to the debate both in terms of its strategic value and catchment area and also as a true competitor to the quasi monopolistic BAA plc. Notwithstanding the DfT's options, which suggest that London Luton can provide capacity of 31 million passengers per annum, we believe that London Luton has the capability of making a greater contribution than that foreseen in the original documents. FINANCIAL REVIEW The trading results for the year ended 31 March 2003 are the first full year to reflect a fundamental rebasing of our airline customer base; and reflect a new foundation level for the future. Operating profit has increased marginally from Â£23.4 million to Â£23.6 million. This is largely a result of a reduction in turnover of Â£8.6 million offset by the reduced cost of exceptional items. Profit before tax in 2003 fell to Â£10.2 million from Â£16.5 million reflecting the impact of 'below the line' exceptional items. In 2003 we had 'below the line' additional costs of Â£2.6 million on the disposal of our property business and in 2002 there was a Â£4.9 million profit on sale of our Australian interests. Further commentary on our financial performance is set out below, where we concentrate on EBITDA rather than operating profit as the directors believe this is the performance measure most relevant to readers of our financial statements. In a tough environment for the market as a whole, and the air transport sector in particular, TBI has again demonstrated its resilience. EBITDA was Â£47.3 million (2002: Â£53.1 million). This 11% decrease reflects fully the withdrawal of the flag carrier airlines from our Belfast airport, some 0.7 million fewer passengers of flag carrier airlines flew from Belfast in 2003 than in 2002. Despite this and the other challenges facing the industry, including the threat of war with Iraq hanging over much of the year, the number of passengers using our airports increased marginally during the year to 15.2 million passengers. Turnover Total turnover in the year was Â£177.6 million (2002: Â£186.2 million). Of this Â£8.6 million decrease, some Â£7.3 million arose in our owned and managed airports, and is reflected all the way to EBITDA. This bears out the adage that these airports are relatively fixed cost businesses; and the corollary of this is that from our base level of turnover we should see any incremental revenues likewise reflected all the way through the profit and loss account. Costs During the year the costs of business increased. Insurance premiums, on a net basis, increased by some 50% to Â£3.5 million, and we expect to see a further increase in 2004. We do not self insure to any significant degree. However, central costs, at an EBITDA level, reduced by a further 10% to Â£4.6 million. These costs have reduced by over 30% since 2001, and are now at a sustainable level for this business. Central costs reflect the cost of being a plc; a properly composed board, appropriate advisers, a group risk management team, a group company secretariat, a group IT function and a group financial accounting team. Group EBITDA Our airports performed stoically and the results demonstrate the resilience of our business to many of the issues affecting the market and our industry. Of our Group EBITDA, excluding central costs, 86% is generated by our operations within the UK. EBITDA from our UK airports was Â£42.2 million (2002: Â£48.6 million). EBITDA less net Capital employed EBITDA less net EBITDA less net interest interest as a interest as a Year ended 31 percentage of capital percentage of capital March 2003 employed employed 2003 2002 Â£'m Â£'m % % Belfast 10.0 106.1 9 15 Cardiff 10.9 65.5 17 23 London Luton 21.3 159.5 13 12 UK airports 42.2 331.1 13 15 Bolivia 3.2 24.0 13 16 Orlando Sanford 0.8 24.1 3 4 Stockholm Skavsta (0.4) 28.5 n/a n/a Airport management 2.9 8.3 35 36 Airport services 0.8 18.1 4 8 Airport total 49.5 434.1 11 13 Other operations 2.4 27.3 9 5 Head office (4.6) (11.7) n/a n/a Net interest/Net debt (12.5) (149.1) 8 8 Total 34.8 300.6 12 14 Capital employed excludes all net debt, including inter-company debt, but includes all applicable goodwill. The shift from full fare to low cost airlines during the year, together with increased security and insurance costs, has resulted in a reduction in EBITDA at Belfast International of Â£5.6 million to Â£10.0 million. For similar reasons, EBITDA at Cardiff International reduced by some Â£1.7 million to Â£10.9 million and EBITDA at London Luton increased by some Â£0.9 million to Â£21.3 million largely as a result of previous reorganisation initiatives. EBITDA performance for our other businesses, on aggregate is similar to last year at some Â£9.7 million. This includes improved performances at Stockholm Skavsta and the Cardiff Hilton with a decline in EBITDA performance in Bolivia and in our Airport Services business. Exceptional items Exceptional costs comprised predominantly two items - reorganisation and other staff related costs at London Luton of some Â£2.0 million, and the redemption of a loan note owed to TBI, which resulted in us forgiving Â£1.0 million of the Â£20.0 million deferred consideration relating to our disposal of the property business in 1999, effectively a 0.5% discount from the original Â£190.0 million purchase consideration and Â£1.6 million of accrued interest receivable. Net interest The net interest charge for the year was Â£12.5 million (2002: Â£11.8 million); including Â£1.6 million interest previously accrued but forgiven in relation to the redemption of the property business loan note mentioned above. The weighted average interest cost was 6.35% (2002: 6.50%). One of the more expensive debt facilities in the Group relates to the old project finance we inherited at London Luton and, further to considerable debate with the minority shareholder at London Luton, refinancing on better terms is expected to be completed shortly. As at 31 March 2003, net debt was Â£149.1 million (2002: Â£152.6 million). Tax The total tax charge for the year was Â£4.0 million (2002: Â£6.4 million). Due to the utilisation of historic losses only Â£2.3 million will be reflected as a cash cost, the balance being mainly the reversal of a deferred tax asset as we utilise our brought forward tax losses. As highlighted last year the benefit of those historic losses in the UK has been felt over the past seven years or so. Many of those losses have now been utilised, but we still have over Â£25.0 million of UK tax losses available to mitigate the cash cost of tax to the Group in 2004 and beyond. In addition we still have substantial losses available in some of our overseas operations and the extent to which we can benefit from these will depend on the profitability of those operations. Earnings per share Earnings per share and earnings per share adjusted for goodwill and exceptional items, were 0.82 pence (2002: 1.47 pence) and 2.86 pence (2002: 3.52 pence) respectively. Dividends The dividend is held and the proposed final dividend is 1.60 pence, making a full year's dividend of 2.30 pence. The dividend is currently not covered by profits for the financial year but is being distributed from brought forward reserves. However, the dividend is being paid from cash inflows from the operating activities of the Group for the year after allowing for tax, net interest and capital expenditure. Cashflow We generated Â£42.9 million of cash (2002: Â£40.3 million) from the operating activities of the Group. The cash outflow on capital expenditure during the year was Â£16.9 million, of which approximately Â£11.5 million was on recurrent capital programmes. The two large projects undertaken during the year were at London Luton and at Skavsta, and are detailed earlier in this review. Defined benefit pension schemes We operate defined benefit pension schemes in London Luton, Belfast International, Cardiff International and in certain of our US operations. We have complied with the transitional arrangements of FRS17 and the current excess of liabilities over assets, as defined in FRS17, is some Â£14.8 million after allowing for the associated tax effects. Accounting policies We have reviewed our accounting policies as set out in the financial statements and we consider them to be the most appropriate to our business activities. TBI PLC Consolidated profit and loss account for the year ended 31 March 2003 Notes 2003 2002 Â£'000 Â£'000 Turnover 1 177,618 186,170 Cost of sales (24,417) (27,078) Gross profit 1 153,201 159,092 Administrative expenses (129,563) (135,735) Operating profit before depreciation, amortisation and 1 47,268 53,061 exceptional items Depreciation - normal 1 (13,045) (12,235) - exceptional 1 - (5,743) Amortisation of intangible assets - normal 1 (8,280) (8,244) - exceptional 1 - 5,630 Exceptional items (2,305) (9,112) Operating profit 1 23,638 23,357 Additional cost on disposal of property business (1,000) - Profit on sale of investments and joint ventures - 4,940 Net interest payable 2 (12,481) (11,752) Profit on ordinary activities before tax 1 10,157 16,545 Tax on profit on ordinary activities 3 (3,953) (6,397) Profit on ordinary activities after tax 6,204 10,148 Equity minority interests (1,606) (1,909) Profit for the financial year 4,598 8,239 Dividends 4 (12,854) (12,854) Retained loss for the financial year (8,256) (4,615) Earnings per share 5 0.82p 1.47p Diluted earnings per share 5 0.82p 1.47p Earnings per share (basic and diluted) before amortisation 5 2.86p 3.52p and exceptional items The turnover and operating profit shown above are derived from continuing operations. TBI PLC Balance sheets 31 March 2003 2003 2002 2003 2002 Group Group Company Company Â£'000 Â£'000 Â£'000 Â£'000 Fixed assets Goodwill 133,059 141,688 - - Other intangible assets 11,364 13,140 - - Intangible assets 144,423 154,828 - - Tangible assets 217,877 214,520 755 536 Investment properties 135,077 123,283 1,100 1,050 Trade investments 1,676 1,232 - - Investments in subsidiaries - - 216,844 216,844 499,053 493,863 218,699 218,430 Current assets Stock 1,243 1,026 - - Debtors 28,914 45,646 264,981 290,758 Cash at bank and in hand 27,768 35,181 6,117 10,479 57,925 81,853 271,098 301,237 Current liabilities Creditors - amounts falling due within one year (63,433) (61,068) (87,702) (98,628) Net current (liabilities)/assets (5,508) 20,785 183,396 202,609 Total assets less current liabilities 493,545 514,648 402,095 421,039 Creditors - amounts falling due after more than one (170,387) (200,037) (67,304) (88,697) year Accruals and deferred income (4,638) (2,747) (1,850) - Provisions for liabilities and charges (17,889) (16,784) - - Net assets 300,631 295,080 332,941 332,342 Capital and reserves Called up share capital 55,889 55,889 55,889 55,889 Share premium account 166,611 166,611 166,611 166,611 Capital reserve 49,634 49,634 69,653 69,653 Revaluation reserve 15,959 7,137 50 - Profit and loss account 13,800 18,677 40,738 40,189 Equity shareholders' funds 301,893 297,948 332,941 332,342 Equity minority interests (1,262) (2,868) - - Capital employed 300,631 295,080 332,941 332,342 TBI PLC Consolidated cash flow statement for the year ended 31 March 2003 2003 2003 2002 2002 Â£'000 Â£'000 Â£'000 Â£'000 Net cash inflow from operating activities 42,915 40,345 Returns on investments and servicing of finance Interest received 1,155 3,802 Interest paid (11,336) (13,629) Interest element of finance lease and hire purchase (390) (419) repayments Net cash outflow from returns on investments and (10,571) (10,246) servicing of finance Tax (161) (2,601) Capital expenditure and financial investment Additions to tangible fixed assets (12,002) (4,331) Additions to investment properties (4,911) (3,215) Sale of tangible fixed assets 259 143 Grant received - 101 Net cash outflow for capital expenditure and financial (16,654) (7,302) investment Acquisitions and disposals Purchase of trade investments (561) (1,232) Other acquisitions (378) (451) Sale of trade investments and joint ventures - 28,700 Net cash (outflow)/inflow for acquisitions and disposals (939) 27,017 Equity dividends paid (12,854) (12,041) Management of liquid resources Cash withdrawn from/(placed on) deposit 4,607 (5,499) Sale/(purchase) of US securities 92 (1,629) Net cash inflow/(outflow) from management of liquid 4,699 (7,128) resources Financing Proceeds from loan note 19,000 - Bank loans drawn down 3,546 2,829 Repayment of bank loans (27,767) (28,102) Capital element of finance lease and hire purchase (2,572) (2,355) repayments Net cash outflow in respect of financing (7,793) (27,628) (Decrease)/increase in net cash in the year (1,358) 416 TBI PLC Consolidated statement of total recognised gains and losses for the year ended 31 March 2003 2003 2002 Â£'000 Â£'000 Profit for the financial year 4,598 8,239 Unrealised surplus/(deficit) on revaluation of investment properties 8,822 (7,544) Exchange differences on overseas investments 3,379 (45) Total net gain for the year 16,799 650 Prior year adjustment in respect of FRS 19 - (5,034) Total gains/(losses) recognised in the year 16,799 (4,384) TBI PLC Notes to the financial statements 31 March 2003 1. Segmental information Business analysis In the segmental information provided below, Airport Ownership relates to airports which are either owned or operated under long term agreements. Turnover is derived from third parties. 2003 2002 Â£'000 Â£'000 Turnover Airport Ownership Traffic income 76,531 82,659 Commercial income 48,453 49,856 Tenant income 12,565 12,296 Airport Services 26,271 30,230 Airport Management 4,686 3,838 Total airports 168,506 178,879 Other operations 9,112 7,291 177,618 186,170 Gross profit Airport Ownership Traffic income 76,531 82,659 Commercial income 48,453 49,856 Tenant income 12,565 12,296 Airport Services 3,893 4,847 Airport Management 4,411 3,711 Total airports 145,853 153,369 Other operations 7,348 5,723 153,201 159,092 Operating profit before depreciation, amortisation and exceptional items Airport Ownership 45,821 52,442 Airport Services 794 1,804 Airport Management 2,861 2,618 Total airports 49,476 56,864 Other operations 2,379 1,322 Head office costs (4,587) (5,125) 47,268 53,061 Depreciation Airports - normal (11,378) (10,937) - exceptional - (5,743) Other operations (1,420) (1,035) Head office costs (247) (263) (13,045) (17,978) Amortisation of intangible assets Airports - normal (8,280) (8,244) - exceptional - 5,630 (8,280) (2,614) Operating profit Airports 27,513 35,251 Other operations 959 287 Head office costs (4,834) (12,181) 23,638 23,357 Profit on ordinary activities before tax Airports 27,513 35,251 Other operations 959 287 Head office costs (4,834) (12,181) Additional cost on disposal of property business (1,000) - Profit on sale of investments and joint ventures - 4,940 Net interest payable (12,481) (11,752) 10,157 16,545 TBI PLC Notes to the financial statements (continued) 31 March 2003 1. Segmental information (continued) 2003 2002 Â£'000 Â£'000 Net assets Airports 433,921 427,496 Other operations 15,822 20,214 Net debt (Note 6) (149,112) (152,630) 300,631 295,080 Other operations include the hotel, aircraft and unallocated head office assets and liabilities. Geographical analysis (origin and destination) 2003 2002 Â£'000 Â£'000 Turnover United Kingdom 124,373 128,616 Rest of Europe 3,749 3,022 North America 38,390 42,665 South and Central America 11,106 11,789 Australasia - 78 177,618 186,170 Profit on ordinary activities United Kingdom 21,473 19,956 before tax Rest of Europe (1,216) (1,815) North America (451) 2,204 South and Central America 2,832 2,928 Australasia - 5,024* Net interest (12,481) (11,752) 10,157 16,545 * This includes the profit on sale of investments and joint ventures Net assets United Kingdom 346,937 343,789 Rest of Europe 28,494 25,286 North America 62,961 68,474 South and Central America 11,351 10,161 Net debt (Note 6) (149,112) (152,630) 300,631 295,080 TBI PLC Notes to the financial statements (continued) 31 March 2003 2. Net interest payable 2003 2002 Â£'000 Â£'000 Interest payable and similar charges Interest payable on bank and similar loans 11,057 13,256 Interest on finance lease and hire purchase arrangements 390 419 Bank charges 396 298 Amortisation of debt issue costs 479 483 Total 12,322 14,456 Interest receivable and similar income Short term deposits and corporate bonds 1,385 1,272 Interest receivable from other investments 63 1,432 Forgiveness of accrued interest receivable - exceptional (1,607) - Total (159) 2,704 Net interest payable 12,481 11,752 3. Tax 2003 2002 Â£'000 Â£'000 (a) Analysis of charge in the year Current tax UK corporation tax on profits for the year 1,350 - ACT written off during the year - 236 Adjustments in respect of previous periods (46) (639) 1,304 (403) Foreign tax 1,009 959 Total current tax (Note 3(b)) 2,313 556 Deferred tax Origination and reversal of timing differences 1,640 5,841 Total deferred tax 1,640 5,841 Total tax on profit on ordinary activities 3,953 6,397 Current tax assessed for the year takes into account tax relief claimed at the UK standard rate of corporation tax of 30% on: â€¢ the exceptional cost of Â£1.0 million arising on the additional cost on disposal of the property business â€¢ the exceptional cost of Â£1.6 million arising on the forgiveness on accrued interested receivable TBI PLC Notes to the financial statements (continued) 31 March 2003 3. Tax (continued) (b) Factors affecting the current tax charge for the year The current tax assessed for the year is lower than the standard rate of corporation tax in the UK of 30%. The differences are explained below: 2003 2002 Â£'000 Â£'000 Profit before tax 10,157 16,545 Profit multiplied by standard rate of corporation tax in the UK of 30% 3,047 4,964 (2002: 30%) Accelerated capital allowances (1,695) (1,384) Other timing differences (486) (174) Tax losses (344) (5,823) ACT written off - 236 Adjustments relating to prior year (46) (639) Permanent differences 1,814 3,329 Higher tax rates on overseas earnings 23 47 Current tax charge for year (Note 3(a)) 2,313 556 4. Dividends 2003 2002 2003 2002 Pence per share Pence per share Â£'000 Â£'000 Interim dividend - paid 0.70 0.70 3,912 3,912 Final dividend - proposed 1.60 1.60 8,942 8,942 2.30 2.30 12,854 12,854 5. Earnings per share Earnings per share have been calculated in accordance with FRS 14, 'earnings per share', by dividing the profit for the financial year by the weighted average number of ordinary shares in issue during the year, based on the following information: 2003 2002 Profit for the financial year (Â£'000) 4,598 8,239 Earnings before amortisation and exceptional items (Â£'000) 15,995 19,699 Basic weighted average share capital 559 559 (number of shares, million) Diluted weighted average share capital 559 560 (number of shares, million) The difference between the basic and the diluted weighted average number of shares is wholly attributable to outstanding share options. TBI PLC Notes to the financial statements (continued) 31 March 2003 5. Earnings per share (continued) The calculation of earnings per share before amortisation and exceptional items is based on the following analysis: 2003 2002 Â£'000 Â£'000 Profit for the financial year 4,598 8,239 Exceptional items 4,912 4,285 Amortisation 8,280 8,244 Tax effect on above adjustments (1,795) (1,069) 15,995 19,699 The earnings per share before amortisation and exceptional items have been presented as the directors consider that this provides a more meaningful indication of the Group's underlying financial performance. 6. Analysis of net debt Cash Loan Other bank Sub total Debt due Debt due Finance lease Total note deposits within after one and hire receivable one year year purchase arrangements Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 At 31 March 2002 4,478 20,000 30,703 55,181 (9,074) (191,032) (7,705) (152,630) Cashflow (1,358) (19,000) (4,699) (25,057) 10,689 13,532 2,572 1,736 Non-cash changes - (1,000) - (1,000) (10,264) 9,787 (945) (2,422) Exchange movements (444) - (912) (1,356) 123 5,414 23 4,204 At 31 March 2003 2,676 - 25,092 27,768 (8,526) (162,299) (6,055) (149,112) At 31 March 2001 4,063 20,000 23,583 47,646 (2,874) (222,050) (6,999) (184,277) Cashflow 416 - 7,128 7,544 (1,921) 27,194 2,355 35,172 Non-cash changes - - - - (4,280) 3,797 (3,061) (3,544) Exchange movements (1) - (8) (9) 1 27 - 19 At 31 March 2002 4,478 20,000 30,703 55,181 (9,074) (191,032) (7,705) (152,630) The funding arrangements at London Luton Airport Group Limited impose restrictions on the transferability of net debt items held at London Luton Airport Group Limited to other Group companies without the funder's consent. The funding arrangements at Orlando Sanford International, Inc. impose restrictions on the transferability of net debt items held at Orlando Sanford International, Inc. to other Group companies without the funder's consent. TBI PLC Airport operational information Airport ownership with a controlling interest At 31 March At 31 March At 31 March At 31 March At 31 March At 31 March 2003 2002 2003 2002 2003 2002 London Luton Belfast International Cardiff International Airport Airport Airport Total passengers ('000) Charter 1,033 1,402 725 781 1,006 1,133 Scheduled 591 562 355 1,048 253 322 Low cost 4,950 4,596 2,589 1,840 255 70 Transit 25 37 25 16 9 16 Total 6,599 6,597 3,694 3,685 1,523 1,541 Terminal passengers Spend per head Â£4.05 Â£4.02 Â£2.18 Â£2.28 Â£2.85 Â£2.75 Net passenger supplement Â£3.19 Â£3.17 Â£2.70 Â£3.43 Â£5.60 Â£6.07 per head Total Â£7.24 Â£7.19 Â£4.88 Â£5.71 Â£8.45 Â£8.82 Charter services Number of tour operators 23 25 22 23 40 36 Number of seats offered 1,205 1,656 812 890 1,097 1,250 ('000) New charter destinations 1 3 1 - 7 6 Scheduled services Number of major airlines 5 5 3 7 3 3 Number of seats offered 788 777 543 1,725 451 572 ('000) Low cost services Number of major airlines 3 2 4 2 2 1 Number of seats offered 6,379 5,648 3,538 2,440 487 99 ('000) Freight tonnage 21,342 25,242 45,819 46,413 3,071 2,881 Some of the scheduled services from London Luton - Amsterdam, Barcelona, Belfast, Dublin, Edinburgh, Geneva, Glasgow, Malaga, Nice, and Paris. Some of the scheduled services from Belfast International Airport - Amsterdam, Birmingham, Bristol, Cardiff, Edinburgh, Glasgow, Liverpool, London Gatwick, London Luton and London Stansted. Some of the scheduled services from Cardiff International Airport - Amsterdam, Dublin, Edinburgh, Geneva, Glasgow, Malaga, Milan, Munich, Paris and Toulouse. Airport ownership with a controlling interest, shown above, relate to airports which are either owned or operated under long term agreements. TBI PLC Airport operational information Airport ownership with a controlling interest (continued) At 31 March At 31 March At 31 March At 31 March At 31 March At 31 March 2003 2002 2003 2002 2003 2002 Orlando Sanford Stockholm Skavsta Airport Bolivian Airports Total passengers ('000) Charter 917 949 - - - - Scheduled - 5 10 9 1,973 1,861 Low cost 210 233 321 255 - - Transit 62 132 7 7 351 325 Total 1,189 1,319 338 271 2,324 2,186 Terminal passengers Spend per head Â£3.18 Â£3.74 Â£1.95 Â£1.18 Â£1.32 Â£1.58 Net passenger supplement Â£1.16 Â£1.42 Â£0.79 Â£0.36 Â£2.33 Â£2.53 per head Total Â£4.34 Â£5.16 Â£2.74 Â£1.54 Â£3.65 Â£4.11 Charter services Number of tour operators 26 23 - - - - Number of seats offered ('000) 1,158 999 - - - - New charter destinations 2 12 - - - - Scheduled services Number of major airlines - 1 1 1 9 9 Number of seats offered ('000) - 10 35 51 3,518 3,838 Low cost services Number of major airlines 2 1 1 1 - - Number of seats offered ('000) 428 466 437 359 - - Freight tonnage 6,937 7,719 15,055 11,790 5,354 5,680 Some of the services from Orlando Sanford - Allentown, Atlanta, Cancun, Charlotte, London Gatwick, Manchester, Newburgh, Portsmouth, Punta Cana and San Juan. Some of the services from Stockholm Skavsta Airport - Frankfurt Hahn and London Stansted. Some of the services from the Bolivian Airports - Asuncion, Bogota, Caracas, Lima, Mexico City, Miami, Panama City, Paris, Quito and Rio de Janeiro. Airport ownership with a controlling interest, shown above, relate to airports which are either owned or operated under long term agreements. TBI PLC Additional financial information 2003 2002 Â£'000 Â£'000 Total operating profit before depreciation, amortisation and exceptional items London Luton 21,305 20,413 Belfast International 10,015 15,619 Cardiff International 10,896 12,574 Orlando Sanford 778 1,085 Stockholm Skavsta (376) (960) Bolivia 3,203 3,711 Airport Services 794 1,804 Airport Management - North America 1,174 998 - London Luton Airport 1,364 1,220 - Australia - 84 - Costa Rica 323 316 Total - airports division 49,476 56,864 Other operations 2,379 1,322 Head office (4,587) (5,125) Total operating profit before depreciation, amortisation, and 47,268 53,061 exceptional items Exceptional items (2,305) (9,112) Depreciation - normal (13,045) (12,235) - exceptional - (5,743) Amortisation - normal (8,280) (8,244) - exceptional - 5,630 Profit before interest, tax and profit on sale of investments 23,638 23,357 and joint ventures (Loss)/profit on sale of investments and joint ventures (1,000) 4,940 Net interest payable excluding exceptional interest items (10,874) (11,752) Exceptional interest items (1,607) - Profit on ordinary activities before tax 10,157 16,545 Tax on profit on ordinary activities (3,953) (6,397) Profit for the financial year 6,204 10,148 Profit attributable to shareholders before amortisation and 15,995 19,699 exceptional items (Note 5) Earnings per share before amortisation and exceptional items 2.86p 3.52p TBI PLC Additional financial information (continued) Turnover from owned and managed airports 2003 2002 Â£'000 Â£'000 London Luton 64,858 64,526 Belfast International 27,007 32,809 Cardiff International 21,882 22,735 Orlando Sanford 9,121 10,243 Stockholm Skavsta 3,899 3,025 Bolivia 10,782 11,473 Total 137,549 144,811 Owned and managed airports relate to airports which are either owned or operated under long term agreements. Accounting Policy This preliminary announcement has been prepared on the basis of accounting policies consistent with those set out in the annual report and accounts for the year ended 31 March 2002. Audit Status The financial information set out in this announcement does not constitute the Group's statutory accounts for the years ended 31 March 2003 or 31 March 2002. The financial information has, however, been extracted from statutory accounts for those years which have been audited. The auditors' reports on those statutory accounts were unqualified. This preliminary announcement was approved by the Board on 9 June 2003. This information is provided by RNS The company news service from the London Stock Exchange

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