Annual Report and Accounts 2010-11 - Manchester Airport

12Financial ReviewHeadlinesOperating profit of £51.3m (2010: £56.1m)reflects growth in commercial operationsagainst the backdrop of continuing difficulteconomic conditions and the £5.8m impactof the volcanic ash cloud closure of UKairspace.The Group generated increased cash fromoperations of £110.7m (2010: £105.7m).Investment has continued in infrastructure tosupport strategic developmentopportunities.Overall passenger numbers reduced by 4.6% to 22.8m,primarily reflecting the trend across the UK airport marketand including the impact of the disruption to servicescaused by the April 2010 volcanic ash. Despite this,revenue has increased by 0.4% to £350.2m(2010: £348.9m). The volcanic ash is estimated to havereduced passenger numbers by approximately 0.5m andreduced operating profit by approximately £5.8m.Adjusting for this revenue would have grown by 2.1%.Summary of the year’s results (£m)2011 2010 Change %Passenger numbers 22.8 23.9 (4.6%)Revenue 350.2 348.9 0.4%Operating profit before significant items 51.3 56.1 (8.6%)Profit after taxation 84.7 36.9 128.5%Cash generated from operations 110.7 105.7 (4.7%)Increase in net debt 25.3 26.5 (4.5%)Net debt 372.9 347.6 7.3%Equity shareholders’ funds 817.0 769.1 6.2%Ash cloud profit impact% growth % growthincluding ash excluding ashcloud impact cloud impactPassenger numbers (%) (4.6%) (2.4%)Income:Aviation (0.9%) 1.0%Retail concessions (0.9%) 1.1%Car parking 2.8% 4.9%Property and property related income 6.0% 6.0%Other 0.5% 1.9%Total income 0.4% 2.1%Operating profit (8.6%) 3.0%All commercial revenue streams reported growth on a perpassenger basis, with yield growth reflecting both thesuccess of MAG’s strategic capital investments andcommercial responses to changes within the market.Costs continue to be tightly controlled. Underlyingoperating costs, excluding marketing support costs, havereduced compared to the prior year as a result ofimprovements delivered by ongoing efficiencyprogrammes. Depreciation has increased by £3.1mreflecting the increase in capital investment.Reported operating profit reduced by £4.8m to £51.3m(2010 £56.1m), however excluding the volcanic ash impactof £5.8m underlying profit is up by £1.0m (1.8%) year onyear.Cash flow generated from operating activities hasincreased to £110.7m (2010: £105.7m), This has enabledthe business to continue to invest effectively in both theexisting infrastructure and in strategic developmentopportunities.During the year the group paid the first £10m of itsinvestment in the Metrolink extension. In total thisinvestment will amount to £50m, providing a direct lightrail transport link from central Manchester to the airportand the new Airport City development once the line iscompleted in 2016.The tax charge benefited from the change in corporationtax rate announced in the Budget. The closing deferredtax liability has been reduced to reflect the lower tax rateon future charges. The resulting taxation credit in the yearis £4.1m (2010: charge £8.7m).The UK property market has started to show signs ofrecovery and this together with development work aroundour property portfolio is reflected in a £13.0m (4.0%)upward revaluation on investment property to £334.8m(2010: £325.6m).Net debt increased by £25.3m to £372.3m(2010: £347.6m) driven by continued investment.The Manchester Airport Group PLC Annual Report and Accounts 2010-11