MAG profits fall but jobs safe, says boss
MANCHESTER Airport Group has seen a 19% fall in its underlying profitability, and is to freeze pay across the group, but there will be no more job cuts, according to its chief executive.
The group’s full year results show an operating profit of £78.4m to the end of March 2009, compared with £96.5m a year earlier, on a turnover of £371.3m (£395.7m).
The company said although it had suffered a 6% decline in passenger numbers, operating profit margins had been strengthened by increased commercial income for each passenger, particularly in retail and car parking, which were up 7% and 5% respectively.
Pre-tax profit stood at £2.2m (2008: £87.8m) with a loss of £100.9m after tax (2008: profit of £80.8m).
The company said a large chunk of the fall in profit was down to a £42.4m reduction (12.5%) in the value of the group’s investment property portfolio.
Geoff Muirhead, group chief executive, told TheBusinessDesk: “Financially the underlying performance is around the same a the year before.
“The thing that has really hit us hard, apart from the general climate, is our property valuations but that doesn’t change the cash position of the group. Its been a year of good performances in challenging circumstances.”
The huge post tax loss is down to a deferred tax charge of £106.2m, resulting from the government’s abolition of Industrial Building Allowances.
Mr Muirhead said: “The government took the buildings allowance away and then also applied it retrospectively. This retrospective element is not a cash issue, its an accounting issue. We would have had tax credits of £106m over 20 years so we could have written it off over 20 years but instead we decided to take the hit in these accounts.
“We are very disappointed we don’t get that tax relief but we’ve taken I out now so it only has a one year impact and we can get back to showing our underlying performance in the accounts.”
The company, which also incurred restructuring costs of £7.9m, said net assets remain strong despite these reductions, at £789m (2008: £938m).
The group invested £78m over the year – a £1m fall on the previous year – in projects including new security areas at Manchester Airport, and improved retail and terminal developments across Manchester, East Midlands and Bournemouth.
But Mr Muirhead said that, excluding a one-off purchase of land last year, expenditure over the next year will be down by £20 to £30m on a like-for-like basis.
Although he does expects passenger numbers to keep falling, he said he does not plan to make more job cuts, other than the 118 it had already announced in February.
However, there will be a company-wide pay freeze and costs and investments will continue to be tightly controlled.
He said: “We did see this coming and we went through the whole organisation last year. I’m not envisaging doing that again, but non-people expenditure we will do.”
The company will pay a dividend of £20m, down £6m on last year.
Manchester Airport Group includes Manchester, East Midlands, Humberside and Bournemouth airports. It is owned by the ten Greater Manchester councils, with Manchester City Council holding a 55% stake and the remaining councils holding 5% each.
