RNS Number:6802C
Schiphol Nederland B.V.
23 August 2007
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link below:
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Schiphol Group: strong rise in net result for the first half of 2007, chiefly
due to results from real estate projects
Press Release
Schiphol, 23 August 2007
* The net result reported by Schiphol Group, including fair value gains
on property, for the first half of 2007 was up by 62.3% compared with the
corresponding period in 2006, from EUR 88.0 million to EUR 142.8 million.
* Excluding fair value gains on property amounting to EUR 45.3 million,
the net result rose by 42.3%, from EUR 76.6 million to EUR 109.1 million. 70% of
these fair value gains are related to the development, purchase and renovation
of property and 30% are linked to fair value gains on the existing property
portfolio.
* Excluding fair value gains on the property portfolio and excluding a
non-recurring tax credit of EUR 12.7 million arising from the provisional
settlement of the tax return for 2004, the net result rose by 25.8%, from EUR
76.6 million to EUR 96.4 million.
* Schiphol Group's revenue for the first half of 2007 increased by
11.4%, from EUR 486.0 million to EUR 541.4 million.
* The operating result rose by 28.7%, from EUR 139.4 million to EUR
179.3 million.
* EBITDA increased by 19.8%, from EUR 221.4 million to EUR 265.2
million.
* Earnings per share rose by 62.3%, from EUR 514 to EUR 834.
Summary of main business results
* The number of passengers using Amsterdam Airport Schiphol, Rotterdam
Airport and Eindhoven Airport rose by 4.7% to 23.6 million, of whom 22.4 million
travelled through Amsterdam Airport Schiphol (3.9%).
* The costs of the government imposed security measures at Amsterdam
Airport Schiphol increased by EUR 3.2 million (3.3%) to EUR 101.0 million. The
revenue from the Security Service Charge in the first half of 2007 lagged behind
by EUR 0.5 million.
* The Consumers business area saw a decline in average expenditure in
the See Buy Fly shops at Amsterdam Airport Schiphol from EUR 17.09 to EUR 16.55
per international departing passenger, due in part to the measures concerning
liquids and gels.
* The Real Estate business area reported a sharp increase in fair value
gains on property from EUR 16.1 million in 2006 to EUR 45.3 million, chiefly due
to development, purchases and renovation of property within the portfolio.
* The international activities of the Alliances & Participations
business area contributed EUR 11.2 million to the result before tax for Schiphol
Group in the form of interest income and dividends (first half of 2006: EUR 6.9
million).
Gerlach Cerfontaine, President & CEO of Schiphol Group, commented:
"We are pleased with the financial results achieved in the first half of 2007.
Once again, the AirportCity concept has proved its worth. We will continue to
develop and expand this concept. We are maintaining our expectation that for the
full year 2007, the number of passengers at Amsterdam Airport Schiphol will
increase by approximately 4%."
This release may contain certain forward-looking statements with respect to the
financial condition, results of operations and business of Schiphol Group and
certain of the plans and objectives of Schiphol Group with respect to these
items. By their nature, forward-looking statements involve risk and uncertainty
because they relate to events and depend on circumstances that will occur in the
future and there are many factors that could cause actual results and
developments to differ materially from those expressed or implied by these
forward-looking statements. Forward-looking statements and forecasts are based
upon current data and historical experience which are not necessarily indicative
of future outcomes or the financial performance of Schiphol Group and should not
be considered in isolation.
This is an English translation of the Dutch version of Schiphol Group's 2007
interim results. In the event of any disparity between the Dutch original and
this translation, the Dutch text will prevail.
Key figures
EUR million unless stated otherwise HY 07 HY 06 +/- 2006
Revenue 541.4 486.0 11.4% 1,037
Result from sales of property 2.8 0.0 - 10
Fair value gains on property 45.3 16.1 180.6% 29
Operating expenses 410.1 362.7 13.1% 759
Operating result 179.3 139.4 28.7% 316
Result before tax 173.2 124.1 39.6% 291
Net result (result attributable to 142.8 88.0 62.3% 527
shareholders)
Net result excl. fair value gains on 109.1 76.6 43.3% 198
property 1)
Depreciation, amortisation and impairment 85.9 82.0 4.8% 162
EBITDA 2) 265.2 221.4 19.8% 478
Investments in intangible assets and 180.4 103.7 74.0% 260
property, plant & equipment
Cash flow from operating activities 3) 139.8 116.5 20.0% 362
Ratios
Leverage 4) as at 30 June 23.3% 28.8% 24.8%
FFO interest coverage 5) 5.4x 5.1x 8.1x
Earnings per share 834 514 62.3% 3.077
Business volume (in numbers)
Air transport movements 6) 227,089 214,993 5.6% 450,166
Passenger movements (x 1,000) 6) 23,623 22,571 4.7% 48,287
Cargo (x 1,000 ton) 6) 765 739 3.6% 1,527
Average effective work force based on FTEs 2,446 2,266 7.9% 2,293
1) 2006 does not include non-recurring income arising from the opening balance
for tax purposes of EUR 309 million
2) EBITDA: operating result plus depreciation, amortisation and impairment
3) See cash flow statement for details
4) Leverage: interest-bearing debt / (total equity + interest-bearing debt)
5) (Cash flow from operational activities corrected for operating capital plus
gross interest expenses) / gross interest expenses
6) Concerns Schiphol Group: Amsterdam Airport Schiphol, Rotterdam Airport and
Eindhoven Airport
Revenue
The revenue reported by Schiphol Group for the first half of 2007 amounted to
EUR 541.4 million. Compared to the EUR 486.0 million achieved during the
corresponding period in 2006, this represented an increase of 11.4%. The revenue
is divided among the four business areas as follows:
EUR million HY 07 HY 06 +/- 2006
Aviation 306.9 294.2 4.3% 631
Consumers 140.0 109.5 27.9% 231
Real Estate 61.0 52.4 16.4% 109
Alliances & Participations 33.5 29.9 12.0% 66
Revenue 541.4 486.0 11.4% 1,037
The revenue generated by the Consumers business area in particular showed a
considerable increase. With effect from 2007, this figure includes the revenue
from the sales of liquor and tobacco in the shops taken over from KLM as at 3
January. This revenue amounted to EUR 30.8 million in the first half of 2007.
Other property results
The other property-related results amounted to EUR 48.1 million, representing an
increase of EUR 31.9 million compared with the first half of 2006. This was due
to higher fair value gains on property in 2007 and the sale of the Flight Square
office building in Eindhoven.
Operating expenses
The operating expenses for the first half of 2007 were up by 13.1% to EUR 410.1
million.
* Total costs of outsourced work and external charges rose by 16.7%
from EUR 199.8 tot EUR 233.1 million. With effect from 2007, the cost price of
sales for liquor and tobacco is a part of this item (EUR 19.0 million in the
first half of 2007). In addition, there were higher security costs at Amsterdam
Airport Schiphol. For the first half of 2007, spending on security at Schiphol
amounted to EUR 101.0 million. Compared with the corresponding period in 2006,
this represents an increase of EUR 3.2 million (+3.3%). The remaining increase
was due to higher costs of working for third parties and the insourcing of
external personnel, higher commercial costs (in connection with the liquids and
gels measures and the airline reward programme), higher consultancy costs (in
connection with the Six Sigma programme) and higher investment-related expenses;
* Employee benefits rose by 11.7%, from EUR 75.7 million to EUR 84.5
million, partly as a result of the increase compared to 2006 of the average
number of staff members by 180 FTEs (7.9%) to 2,446 FTEs in 2007. Part of this
increase (more than 100 FTEs) is related to the takeover of the liquor and
tobacco retail activities from KLM as at 3 January 2007. Furthermore, the
increase in employee benefits was due in part to the new collective labour
agreement concluded in the spring of 2007;
* Depreciation and amortisation charges were up by 4.8%, from EUR 82.0
to EUR 85.9 million, primarily resulting from higher amortisation on
contract-related intangible assets and automated applications, along with
additional depreciation on runways;
* Other operating expenses increased by EUR 1.4 million, from EUR 5.3
to EUR 6.7 million.
Operating result
The operating result for the first half of 2007 was up by 28.7%, from EUR 139.4
million to EUR 179.3 million. EBITDA (the operating result after depreciation,
amortisation and impairment) amounted to EUR 265.2 million, compared to EUR
221.4 million for 2006. The 11.4% revenue increase is lower than the rise in
operating costs, which amounted to 13.1%. The liquor and tobacco retail
activities have a lower margin than the existing activities of the Consumers
business area. Furthermore, in the Real Estate business area both the revenue
and costs of low margin work for third parties (tenants) increased. If adjusted
to account for these effects, the revenue grew 1.0% more than the operating
expenses.
Financial income and expenses
Net financial income and expenses (net expense) for the first half of 2007 came
in at EUR 14.5 million, compared to EUR 20.0 million for the corresponding
period in 2006. The first half of 2006 still showed negative translation
differences amounting to EUR 3.4 million on amounts owed by associated companies
(Brisbane Airport Corporation Ltd). This exchange risk was hedged with effect
from September 2006 with the help of a forward exchange transaction.
Furthermore, in 2007, an additional amount of EUR 1.0 million in construction
period interest was capitalised on investment projects.
Net result
For the first half of 2007, the net result of Schiphol Group rose by 62.3%, from
EUR 88.0 million to EUR 142.8 million. This increase can be attributed in part
to the rise of fair value gains on the group's property portfolio, from EUR 11.4
million after tax in 2006 to EUR 33.7 million in 2007 (before tax, EUR 16.1
million and EUR 45.3 million respectively). In addition, a non-recurring tax
credit of EUR 12.7 million is accounted for in the net result, arising from the
provisional settlement of the tax return for 2004. Excluding the fair value
gains on property and the non-recurring tax credit, net result rose by 25.8%,
from EUR 76.6 million to EUR 96.4 million. The remaining difference is largely
accounted for by the one-off higher costs made last year related to aeration of
the drainage ditches (EUR 4.7 million), lower financial expenses (EUR 5.6
million), improved share in results of associates (EUR 3.6 million) and a
decrease in the corporate tax rate from 29.6% in 2006 to 25.5% in 2007 (EUR 5.1
million).
Prospects
Due to good results from the property portfolio, the Board of Management expects
the net result for the year 2007, excluding non-recurring income arising from
the settlement of the tax return for 2004 to be 20-25% higher compared to the
net result in 2006, excluding the non-recurring positive result arising from the
finalisation of the opening balance for tax purposes in 2006.
Schiphol Group's Board of Management is maintaining its profit projection
contained in the 2006 annual report. The net result for the whole of 2007, is
expected to show an increase of 5-10% on 2006, excluding fair value gains of the
property portfolio and excluding the aforementioned non-recurring income from
tax gains.
The investment level for 2007 is expected to be higher than the previously
estimated amount of EUR 370 million. The higher investment level is linked to
investments in the baggage systems, property, and contract-related intangible
fixed assets.
Developments in the individual business areas
Aviation
The Aviation business area is active solely at Amsterdam Airport Schiphol.
Aviation provides services and facilities to airlines, passengers and handling
agents. The Netherlands Competition Authority (NMa) regulates the charges which
are levied and sets limits on the returns generated. Sources of revenue: airport
charges (aircraft, passenger and security charges) and concession fees (paid by
oil companies for the right to provide aircraft refuelling services). In the
first half of 2007, the business area accounted for 56.7% of Schiphol Group's
revenues and 16.9% of the operating result.
EUR million HY 07 HY 06 +/- 2006
Revenue 306.9 294.2 4.3% 631
Operating expenses 276.6 267.0 3.6% 558
EBITDA 92.3 86.0 7.3% 190
Operating result 30.4 27.2 11.6% 73
Investments in intangible assets and 79.5 73.0 8.9% 173
property, plant & equipment
In the first six months of 2007, the revenue reported by Aviation rose by 4.3%
to EUR 306.9 million, due mainly to a 5.1% increase in revenue from airport
charges to EUR 297.5 million. Of this increase, 3.6% is the result of an
increase in the number of passengers (by 3.9% to 22.4 million) and the number of
air transport movements (by 5.2% to 212,704). These developments were partially
cancelled out by a 1.4% drop in the average MTOW, from 98.6 to 97.3 tonnes, a
consequence of the use of smaller aircraft on average.
The remaining 1.5% of the higher income from airport charges was due to an
increase as at 1 April 2006 of aircraft-related fees (by an average of 2%),
passenger-related fees (by 2%) and the Security Service Charge (by 7.4%). Thanks
in part to the charge increase of the Security Service Charge, the loss from
security activities in the first six months of 2007 only amounted to EUR 0.5
million, compared to a loss of EUR 3.9 million for the corresponding period in
2006.
Operating expenses rose by 3.6% to EUR 276.6 million. Apart from security, the
costs of hired and company staff and the costs of major maintenance and
depreciation also rose, partly in connection with the problems in late 2006 with
the top layer of Runway 18L-36R (Aalsmeer runway). The mild winter led to lower
costs related to winter weather countermeasures, and, in contrast to 2006,
limited costs with respect to the aeration of drainage ditches.
The business area saw the costs per workload unit (WLU), a measure of
efficiency, increase marginally by 0.3% in the first half of 2007 compared with
the first half of 2006, reaching a figure of EUR 9.25. One WLU equals one
passenger or 100 kg cargo.
Investment in property, plant and equipment at Amsterdam Airport Schiphol in the
first half of 2007 totalled EUR 79.5 million, including new baggage handling
facilities (an increase in capacity and screening equipment for hand baggage),
Lounge 1, the Rinse Hofstra ring road and fire safety. Runway 18L-36R (Aalsmeer
runway) was given a new top layer, and major repairs were carried out on the
18R-36L (Polder runway). The first half of 2007 saw the start of a pilot
programme where travellers can scan their passports themselves. Also, the
security scan was used to screen passengers for the first time. Using the
security scan reduces the number of manual searches.
As in the previous year, out of the four largest European airports Schiphol had
the lowest IR rate - the percentage of baggage items that do not arrive at the
destination at the same time as the passenger - for the first six months of the
year. Punctuality for arrivals lagged behind in the first six months of 2007,
with a figure of 80.8% compared to 82.0% in 2006; for departures, punctuality
fell by 2.8 percentage points to 71.9%. This is due mainly to bad weather in the
month of June.
Regulatory Developments
In April, the Netherlands Competition Authority (NMa) approved the allocation
system proposed by Schiphol Group relating to assets, expenses and revenues, for
the determination of the aviation-related charges at Amsterdam Airport Schiphol.
The system was in part used to establish the charges that will be effective from
1 November 2007. Airlines lodged objections to both the Allocation system as
well as to the aforementioned airport charges. The charges will increase for
noisy aircraft, night flights and transfer passengers; the charges will decrease
for quieter aircraft and passengers boarding locally. The net effect of the
charge increase and decrease will be nil, if the traffic volume remains
unchanged.
Consumers
The activities of the Consumers business area concern the operation of shops and
car parks, the granting of concessions (including shops, bar and restaurant
facilities) and the marketing of advertising opportunities at Amsterdam Airport
Schiphol. The Consumers business area also has activities outside the
Netherlands involving amongst others the operation of retail outlets via
management contracts.
Sources of revenue: retail sales, parking charges, concession fees, advertising
and management fees.
In the first half of 2007, the business area accounted for 25.9% of Schiphol
Group's revenue and 36.4% of the operating result.
EUR million HY 07 HY 06 +/- 2006
Revenue 140.0 109.5 27.8% 231
Operating expenses 74.7 45.4 64.5% 94
EBITDA 75.9 72.0 5.4% 151
Operating result 65.3 64.1 1.9% 136
Investments in intangible assets and 35.4 5.2 579.1% 12
property, plant & equipment
In the first six months of 2007, revenue rose by 30.5 million (27.8%) to EUR
140.0 million. With effect from 2007, this includes the revenue from retail
sales of liquor and tobacco in the shops taken over from KLM as at 3 January
2007. Until the end of 2006, these revenues were earned by KLM based upon which
the Consumers business area received a concession fee.
Concession income fell due to this acquisition, and also because of security
measures with respect to liquids and gels. Higher income from other concessions
(bars and restaurants and other shops) compensated in part for this drop. The
average See Buy Fly spending per international departing passenger at Amsterdam
Airport Schiphol decreased by 3.2% in the first half year, from EUR 17.09 to EUR
16.55. In the first half of 2007, a new sealable plastic bag was introduced,
which made it possible to terminate the gate delivery system implemented in
2006.
Income generated from parking at Amsterdam Airport Schiphol increased by 6%, or
EUR 2.1 million, to EUR 37.8 million, partly owing to more people parking and a
longer average parking duration. Parking revenues per passenger, excluding
transfer passengers, rose by 1.0%, from EUR 2.89 in 2006 to EUR 2.92 in 2007.
Operating expenses increased, due in part to the cost price and other expenses
related to the liquor and tobacco activities, and because of higher commercial
costs in connection with the measures relating to liquids and gels. In the first
half of 2007, the operating result rose by 1.9% to EUR 65.3 million.
The 27.8% revenue increase lagged behind the 64.5% increase in operating
expenses. The margin of the liquor and tobacco activities is lower than that of
the existing activities of the Consumer business area.
The business area's investments in intangible assets and plant, property and
equipment in the first six months of 2007 totalled EUR 35.4 million. Investments
included contract-related intangible fixed assets (in connection with the
takeover of the retail activities for liquor and tobacco) and in the expansion
of long stay parking facilities.
The first Starbucks location in the Netherlands was opened in the area beyond
Passport Control. In addition, Schiphol Plaza saw the opening of an America
Today shop and the Airport Business Point. The latter is a comfortable lounge
where business people can relax after they arrive while they wait for their
driver.
The Privium programme, which employs iris recognition to enable frequent
travellers to quickly pass the border, was introduced at Amsterdam Airport
Schiphol in 2001. This programme now has nearly 38,000 members; over 8,000 more
than at the end of the first half of 2006.
New cooperation agreements
In March 2007, Schiphol Group and Guangdong airport in Guangzhou, China signed
an agreement for the development of commercial retail activities and bar and
restaurant facilities at the airport in Guangzhou. Based on a business plan, the
parties intend to create a long-term alliance for non-aviation activities at the
airport in Guangzhou.
On 3 May 2007, Schiphol Group and The Nuance Group AG signed a letter of intent
to establish a joint venture, which will encompass Schiphol Group's liquor and
tobacco concession and The Nuance Group AG's chocolate shops.
Real Estate
The Real Estate business area develops, manages, operates and invests in
property at and around airports at home and abroad. The greater part of the
portfolio, comprising both airport buildings and commercial properties is
located on and around Amsterdam Airport Schiphol.
Sources of revenue: rents, including ground rents. The business area also makes
a significant contribution to Schiphol Group results with the other property
results (sales, release of land for development and the fair value gains or
losses on property).
In the first half of 2007, Real Estate accounted for 11.3% of Schiphol Group's
revenues and 44.5% of the operating result.
EUR million HY 07 HY 06 +/- 2006
Revenue 61.0 52.4 16.4% 109
Result from sales of property 2.8 - - 10
Fair value gains on property 45.4 16.1 181.3% 28
Operating expenses 29.1 23.2 25.7% 47
EBITDA 88.4 55.7 58.6% 120
Operating result 79.9 45.3 76.3% 101
Investments in intangible assets and 59.1 22.8 158.8% 69
property, plant & equipment
Rental income rose by 8.8%, from EUR 49.6 to EUR 54.0 million, partly owing to
non-recurring income of EUR 2.5 million from an early termination penalty
payment of a rental contract, growth in the property portfolio (from 427,297 m2
as at December 2006 to 480,809 m2 as at June 2007) and due to an increase in the
occupancy rate of the properties owned by the business area (from 92.8% as at
December 2006 to 94.4% as at June 2007, excluding office buildings 70 and 72).
The revenue from other activities increased from EUR 1.4 to EUR 5.4 million,
primarily due to higher proceeds from work for third parties.
In the first half of 2007, property was sold for an amount of EUR 8.6 million,
resulting in a book profit of EUR 2.8 million. No properties were sold in the
first half of 2006.
The fair value gains on property rose sharply in the first half of 2007, from
EUR 16.1 million in 2006 to EUR 45.4 million in 2007. This increase was thanks
to the development, purchase and renovation of new properties and a rise in the
appraised value of existing properties. Largely on the basis of this, the
operating result of the Real Estate business area rose considerably by EUR 34.6
million to EUR 79.9 million in the first half of 2007. Excluding fair value
gains on property, the operating result increased by 18.2%, from EUR 29.2
million to EUR 34.5 million.
Operating expenses increased by EUR 5.9 million to EUR 29.1 million. EUR 3.1
million of this increase is due to an increase in work for third parties. These
activities carry virtually no margin which therefore contributed to the lower
revenue growth in relation to the increase in operating expenses.
Real Estate's investments in property, plant and equipment in 2007 totalled EUR
59.1 million. This investment was mainly in the construction of a multi-tenant
office building at Schiphol-Centre, which will be home to Microsoft and other
companies and will have a total floor area of 32,000 m2.
The construction of Cargo Building 9 at Cargo World Schiphol Southeast was
completed. Menzies Aviation and Skylink, two cargo handling agents, lease 75% of
this building. The remaining 25% was leased to World Flight Services with effect
from July 2007. The building has a warehouse area of 24,600 m2 and 3,900 m2 of
office space. Real Estate also purchased two cargo buildings at Schiphol-South.
A contract was concluded with Panalpina, one of the world's largest logistics
service providers, for the development of a cargo building on the apron at
Schiphol-Southeast, consisting of a warehouse of 10,000 m(2) and 2,000 m(2) of
office space.
At Malpensa Airport in Italy, construction was completed on a second-line cargo
building with an area of 12,000 m(2) at the Avioport Logistics Park. This
building has been leased in full to Agusta Westland.
Alliances & Participations
The task of the Alliances & Participations business area is to roll out the
AirportCity formula internationally. Alliances & Participations consists of
Schiphol Group's interests in the domestic airports, airports abroad and other
investments.
Sources of revenue from domestic airports: mainly airport charges and parking
fees. The airports abroad contribute to group results through performance fees
and dividends as accounted for in share in results, the interest they pay on
loans and through Intellectual Property fees. The other investments include
Schiphol Telematics and Utilities. Schiphol Telematics provides telecom services
at and around the airport. The Utility activities generate revenue from the
transport of electricity and gas and from the supply of water. In the first half
of 2007, the business area accounted for 6.2% of Schiphol Group's revenue and
2.2% of the operating result. By applying the equity accounting method, changes
in the market value of the investments are not reflected in the results.
EUR million HY 07 HY 06 +/- 2006
Revenue 33.5 29.9 12.0% 66
Fair value gains on property -0.1 - - -
Operating expenses 29.7 27.2 9.5% 61
EBITDA 8.7 7.6 14.4% 17
Operating result 3.8 2.8 37.1% 6
Investments in intangible assets and 6.4 2.7 137.7% 6
property, plant & equipment
Domestic airports
Both Rotterdam Airport and Eindhoven Airport achieved higher revenue from
airport charges, Rotterdam mainly due to an increase in the charges as at 1
April 2007 and Eindhoven primarily because of a sharp rise in the number of
passengers. Both airports also saw growth in their revenue from parking. The
operating result of Eindhoven Airport remained at the same level as in 2006,
owing to increasing costs and some non-recurring costs. Rotterdam Airport,
however, saw a rise in its operating result.
Passenger numbers at Eindhoven Airport grew by 40.0% in the first half of the
year, to more than 710,000, primarily due to the addition of four new low-cost
destinations. The number of passengers at Rotterdam Airport was up by 1.2% in
the first half of 2007 (from 516,000 in 2006 to 522,000 in 2007).
The Lelystad Municipal Council agreed to a proposal from the Municipal Executive
to endorse the growth of Lelystad Airport to a maximum of 4 million passengers
annually. The Environmental Impact Assessment for extending the runway to 2,100
metres and using the airport for commercial traffic was accepted by the Ministry
of Transport, Public Works and Water Management in June.
International airports
The international activities of the business area contributed a total of EUR
11.2 million in the form of interest income and dividends to Schiphol Group's
result before tax (first half of 2006: EUR 6.9 million). The biggest
contribution was made by Brisbane Airport (EUR 10.1 million). This includes an
extra dividend payment of EUR 3.1 million resulting from a non-recurring tax
benefit.
The number of passengers using Terminal 4 at JFK Airport, New York, in the first
six months of 2007 rose by 17.3% to 4.1 million. In the first six months of
2007, 8.5 million passengers travelled through Brisbane Airport; 9.1% more than
in the corresponding period in 2006.
Schiphol International did not succeed in establishing a strategic partnership
with Nanjing Lukou International Airport in China. Part of the partnership would
have involved an investment in the share capital of the airport. Nanjing ended
up selecting another party.
Other participations
A small drop in the operating result of Utilities (by EUR 0.4 million) was
compensated for by a slight increase in the operating result of Schiphol
Telematics (by EUR 0.8 million).
Other developments
In March 2007, Schiphol Group published its Spatial Development Plan (Ruimtelijk
Ontwikkelingsplan) (see www.schipholgroup.com). This plan sets out the entirety
of the planned spatial programme until 2015. With this plan, Schiphol Group
wants to provide clarity to the City of Haarlemmermeer, other government bodies
and stakeholders about its plans for expansion in the next ten years and its
underlying rationale and arguments. The Spatial Development Plan offers a basis
for new zoning plans to be drawn up.
In May 2007, Schiphol Group published its long-term vision under the title 'A
worldwide network for a competitive Randstad' (Een wereldwijd netwerk voor een
concurrerende Randstad) (see www.schipholgroup.com). This vision encompasses the
middle to long-term period from 2015/2025 to 2030. Schiphol Group compiled this
vision document to give shape to the Dutch government's request arising from the
publication of its Standpoint on Schiphol (2006). In their paper, the Cabinet
announces an exploratory exercise to clarify the options to deal with potential
long-term capacity problems at main port Schiphol.
In June 2007, Schiphol Nederland BV and the unions reached a final agreement on
a new two-year collective labour agreement. The new agreement provides for
structural wage increases of 2.75% as at 1 April 2007 and 1 April 2008.
Non-recurring payments of 0.25% were also agreed on for December 2007 and
December 2008. In addition, agreement was reached on the extension of the profit
sharing scheme.
On 5 July, the Lower House of the Dutch Parliament endorsed the "Alders table"
agreement to allow Schiphol to grow to 480,000 air transport movements annually
until 2010. This proposal is linked to several disturbance-reducing measures and
a number of other measures to improve the quality of life around the airport.
These measures are set out in two covenants, which are explained in further
detail on page 17 of this press release. The Alders table is a consultative
committee of local stakeholders and representatives from the aviation sector,
led by the Royal Commissioner in Groningen, Hans Alders.
On 13 July, the Minister of Transport, Public Works and Water Management and the
Minister of Housing, Spatial Planning and the Environment accepted the
Environmental Impact Assessment (MER) for the short term (until 2010). Compiled
by Schiphol Group and Air Traffic Control the Netherlands (LVNL), this MER maps
out the environmental impact based on a scenario of 480,000 air transport
movements that meets the criteria established by the government.
On this basis, a new Airport Traffic Decision will be drawn up in the second
half of 2007, which is expected to enter into force at the start of 2008. Based
on this proposed resolution, the Inspectorate of Transport, Public Works and
Water Management will enforce anticipatory measures regarding nuisance at the
airport for the use year 2007. This means that the noise impact at the
enforcement points around Schiphol will be tested against the new limits of the
draft decision rather than against the 'old' limits.
Credit Rating
Standard & Poor's (AA- with negative outlook) and Moody's Investor Service (Aa3
with stable outlook) have reaffirmed their credit rating for NV Luchthaven
Schiphol and Schiphol Nederland BV as at 20 July 2007 and 9 February 2007
respectively.
Events after the balance sheet date
During the first half of 2007 and shortly after the balance sheet date, a number
of developments occurred with respect to the Groenenberg site. For brevity's
sake, please refer to the explanation provided on page 16 of this press release.
Interim consolidated financial report
Consolidated profit and loss account for the first half of 2007
Consolidated balance sheet as at 30 June 2007
Condensed consolidated statement of changes in shareholders' equity
Condensed consolidated cash flow statement for the first half of 2007
Notes to the interim consolidated financial report
General information
NV Luchthaven Schiphol is a public limited liability company based at Schiphol
in the municipality of Haarlemmermeer. The address of the company's registered
office is Evert van der Beekstraat 202, 1118 CP, Schiphol, the Netherlands. NV
Luchthaven Schiphol trades under the name of Schiphol Group.
Schiphol Group is an airport operator and, more particularly, an operator of
AirportCities. It is our ambition to rank among the world's leading airports.
Our aim is to create sustainable value for our stakeholders by developing
AirportCities and by positioning Amsterdam Airport Schiphol as a leading, highly
efficient air, rail and road transport hub offering its visitors and locally
based businesses all the services they require on a 24/7 basis.
Accounting policies
This interim consolidated financial report ('report') was prepared in accordance
with IAS 34 Interim Financial Reporting. This report has not been audited. This
report should be read in conjunction with the Schiphol Group financial
statements for the year ended 31 December 2006.
Full details of the accounting policies used in this report can be found in the
2006 financial statements of Schiphol Group. There has been no change in the
accounting policies in 2007. With effect from 2007, Schiphol Group is required
to apply one new standard and one new interpretation: IFRS 7, Financial
Instruments: Disclosures and IFRIC 10, Interim Financial Reporting and
Impairment. These two new standards do not have any impact on the notes and
financial information in this interim report.
The abovementioned policies are in accordance with IFRS(1) and have been
consistently applied to all the information presented in this report except
where otherwise indicated. During the first half of 2007, no new IFRS standards
or interpretations were published which will be mandatory for reporting on
financial years ending 31 December 2007. Nor has Schiphol Group voluntarily
applied any IFRS standards or interpretations that do not come into force until
a later date in this interim report.
Financial information is presented in thousands of euros except where otherwise
stated.
With effect from 2007, only the interest-earning assets or interest-bearing
liabilities from financial lease contracts will still be recognised on the lines
lease assets (fixed and floating) and lease liabilities (long-term and current)
on the consolidated balance sheet. The assets and liabilities arising from
rental incentives and the lump sums received to purchase long leases are not
interest earning or bearing and, for this reason, will be accounted for under
other assets (fixed and floating) and other liabilities (long-term and current)
with effect from 2007. The comparative figures for 2006 have been adjusted
accordingly.
Information on seasonal effects
Operating airports is a seasonal business. The income and expenses included in
this report for the first six months of 2007 relate to approximately 48% (first
six months of 2006: 48%) of the expected air transport movements for the full
year and approximately 47% (first six months of 2006: 47%) of the expected
passenger movements for the full year.
Segment information
Revenue by business segment was as follows:
The operating result by business segment was as follows:
Other notes
1. Revenue
Revenue by activity and business area:
In 2006, Schiphol Group reached final agreement with KLM NV on the full
acquisition of the liquor and tobacco concession in the See Buy Fly area. With
effect from 3 January 2007, the takeover date, these activities will be carried
out by Schiphol Airport Retail BV (a wholly owned subsidiary of Schiphol
Nederland BV). The revenue from retail sales of EUR 30.8 million in 2007
concerns the proceeds from these retail activities. The cost of sales of EUR 19
million related to this revenue is accounted for on the line 'Costs of
outsourced work and other external charges' under operating expenses.
Previously, these activities were performed by KLM Tax Free Services, and
Schiphol Group received a concession fee. Up to and including 2006, this fee was
accounted for under income from concessions.
2. Other results from property
The result from sales of property amounted to EUR 2.8 million in 2007 (nil in
2006). This concerned the sale of the Flight Square office building in
Eindhoven.
In 2007, fair value gains on property amounted to EUR 45.3 million (EUR 16.1
million in 2006). 70% of these fair value gains are related to the development,
purchase and renovation of property and 30% are linked to fair value gains on
the existing property portfolio.
3. Tax on profits
In the first half of 2007, the effective tax burden amounted to 17.6% (28.8% in
2006) at a standard tax rate of 25.5% (29.6% in 2006). The larger positive
difference in 2007 between the effective tax rate and the standard tax rate is
the result of a non-recurring tax credit of EUR 12.7 million from the
provisional settlement of the 2004 tax return. The non-recurring income of EUR
309 million arising from the opening balance sheet for tax purposes was
accounted for in the second half of 2006.
4. Intangible assets
The amount of EUR 27.9 million relating to the takeover of the liquor and
tobacco concession is equal to the net fair value of the identifiable assets and
liabilities. A significant part of the acquisition fee (EUR 24.3 million) was
allocated to the concession contracts that were taken over from KLM Tax Free
Services. These contracts are accounted for as contract-related intangible
assets in Schiphol Nederland BV. This is the main cause of the increase in the
intangible assets balance sheet item. These assets are amortised according to
the straight-line method over a period of five years, and taken to the
depreciation/amortisation item in the profit and loss account. The remaining
part of the acquisition fee (EUR 3.6 million) is allocated to other assets,
other liabilities and cash and cash equivalents accounted for within Schiphol
Airport Retail BV. No goodwill was recognised as a result of the takeover.
5. Investments in property
In 2007, the investments in the property item rose by EUR 112.8 million. This
was due in part to the completion of new buildings with a book value as at 30
June 2007 of EUR 60.1 million (Cargo terminal 9 and Avioport Logistics Park
Warehouse B) and the purchase of buildings with a book value as at 30 June 2007
of EUR 52.5 million (Cargo terminal 5 and Valkweg 1).
6. Deferred taxation
The on balance deferred tax asset fell by EUR 24.2 million in 2007. This drop
was primarily related to the creation of deferred tax liabilities to an amount
of EUR 11.7 million in connection with the abovementioned fair value gains on
property of EUR 45.3 million and the write-down of deferred tax assets to an
amount of EUR 10.8 million in connection with the settlement of several
derivatives with a value of EUR 42.2 million (see also point 9).
7. Retained profits
The net result (result attributable to shareholders) of EUR 142.8 million for
2007 (EUR 88.0 million for 2006) was added to the retained profits.
After the resolution approving the proposed profit appropriation presented in
the 2006 financial statements was passed by the General Meeting of Shareholders
on 12 April 2007, a dividend totalling EUR 79.1 million was distributed to
shareholders in 2007. This corresponds to a dividend of EUR 462 per share.
8. Other reserves
Other reserves comprises the conversion differences reserve, the reserve for
other financial interests and the reserve for hedging transactions.
The movement in the reserve for hedging transactions in 2007 amounted to EUR 2.9
million, mainly relating to the settlement of several hedging transactions
concerning the repayment of two loans from the EMTN programme. The movement in
2006 of EUR 9.1 million primarily related to the revaluation of EMTN loans and
the associated derivatives.
9. Loans and derivatives
In June 2007, Schiphol Group repaid two loans from the EMTN programme. This
concerns a loan of JPY 5 billion and a loan of USD 75 million. At the same time,
two derivatives associated with these loans were settled; a currency swap of JPY
5 billion and a currency interest swap of USD 75 million. These transactions
resulted in a joint cash outflow totalling EUR 25.1 million.
In June 2007, a new loan of EUR 50 million was placed under the EMTN programme
with a term of 1.5 years and a variable interest rate (Euribor + margin).
10. Other provisions
It was established in 2004 that Schiphol Group faced a liability in connection
with several claims and disputes. As in 2006, the provision of EUR 10 million
recognised in respect of the combined amount of these claims and disputes in
2004 remained unchanged in the first half of 2007.
The most important of the above claims and disputes concerns the consequences of
the ban on development of the Groenenberg site. Based on the insights available
in 2003, development of the Groenenberg site could seriously compromise the use
of Runway 18L-36R. In February 2003, The State Secretary at the Ministry of
Transport, Public Works and Water Management accordingly issued a ban on
development for this site under the provisions of Section 38 of the Aviation Act
(old act). In June 2003, the beneficial owner of the site (Chipshol) filed a
claim against Schiphol Group for the losses resulting from the imposition of
this development ban. On 12 January 2005, the Court at Haarlem ruled in an
interlocutory judgment that Schiphol Group was liable to pay compensation of an
amount to be determined. In its judgement of 4 April 2007, the Court at Haarlem
determined in principle that the amount of the compensation would be set at EUR
16 million, plus interest payable with effect from 21 March 2003 to the date the
compensation is paid in full. In this provisional determination of compensation,
no account was taken of the supplementary recommendations of the panel of
experts with respect to tax losses, nor of the possibility of lifting the ban on
development. In its judgement, the Court at Harlem acknowledged that the lifting
of the ban on development could limit the losses considerably.
On 28 June 2007, in response to the request from Schiphol Group and Chipshol,
the Minister of Transport, Public Works and Water Management lifted the ban on
development. Based on enhanced insight and new data, the Minister decided that
it was no longer necessary to maintain the ban on development for the entire
site. This means that, taking into account the legal provisions applicable at
the present time, the Groenenberg site may still be developed. Schiphol Group
asked the Court at Haarlem to take account of the lifting of the ban on
construction in its current principal proceedings. The Court may decide to
consent to this, or it may decide that it is necessary to commence new
proceedings because of the consequences resulting from the lifting of the ban on
development. A final determination of the compensation cannot be expected in the
short term, due to the various procedural developments (including an appeal
against the interlocutory judgment).
Chipshol asked the Court at Haarlem to issue a provisional judgement in which
Schiphol Group is ordered to start with the payment of the abovementioned
compensation including interest (a total of EUR 19 million). In its judgement of
13 June 2007, the Court endorsed the payment from Schiphol to Chipshol, in the
form of an advance. As a condition, however, the Court stated that Chipshol
first had to provide a bank guarantee of EUR 21.5 million to Schiphol, as
security in the event that Chipshol is ordered to repay the amount in the
follow-up to the principal proceedings. On 19 July, after receiving the
abovementioned bank guarantee on 18 July, Schiphol Group paid an amount of EUR
19 million to Chipshol.
On the basis of recent developments, the management believes that, at present,
the estimate drawn up with respect to Schiphol Group's liabilities during the
compilation of the 2006 financial statements does not need to be revised.
11. Net cash flow, cash and cash equivalents
The net cash flow in 2007 amounted to EUR 196.6 million negative, compared to
EUR 58.1 million negative in 2006. Partly as a result, the balance of cash and
cash equivalents fell from EUR 307.6 million from 31 December 2006 to EUR 102.8
million by 30 June 2007. The main cause of the larger net cash outflow was
higher expenditure under investments and financing arrangements. The expenditure
arising from investments amounted to EUR 171.8 million in 2007, compared to EUR
115.3 million in 2006, and largely concerned contract-related intangible assets,
assets for operational activities and property. Expenditure arising from
financing amounted to EUR 164.6 million in 2007, compared to EUR 59.4 million in
2006 and concerns, among others, a higher dividend payment and the repayment of
loans and settlement of derivatives.
Contingent assets and liabilities
General
The 2006 financial statements included a note on the contingent assets and
liabilities as at 31 December 2006. No new contingent assets and liabilities of
a material nature have been identified during the first half of 2007 nor have
there been any important developments relating to the existing contingent assets
and liabilities as at 31 December 2006, apart from the following:
Diversion of the A9 motorway
In the spring of 2007, Schiphol Group and the Haarlemmermeer Municipal Authority
reached agreement on a contribution of EUR 14.8 million from the Elzenhof area
development budget for the diversion of the A9 motorway. This amount will be
indexed. To this contribution Schiphol Group has attached the condition that
irrevocable planning cooperation must be provided to the development of 100,000
m2 of the Elzenhof site that is owned by Schiphol Group. This cooperation may be
in the form of an exemption from Article 19 or in the form of zoning plans. The
latter co-determines the time at which Schiphol Group will make the
abovementioned payment, and the relevant instalments.
As also stated in the 2006 financial statements, Haarlemmermeer Municipal
Authority and Schiphol Nederland BV and other parties reached an agreement as
early as in 2005 concerning how the diversion of the A9 motorway in Badhoevedorp
should be financed. At the time, Schiphol Group agreed to a conditional
contribution to the diversion costs with a maximum of EUR 15 million, which will
be payable in 2011 according to the current planning. This contribution will
also be indexed annually, but the indexation has not been included in the
abovementioned amount.
Covenants "quality of life" and "disturbance-reducing measures at Schiphol"
In June 2007, the Minister of Transport, Public Works and Water Management and
the Minister of Housing, Spatial Planning and the Environment, the Province of
North Holland, the cities of Haarlemmermeer, Amsterdam and Amstelveen, Air
Traffic Control the Netherlands, NV Luchthaven Schiphol (Schiphol Group) and
Koninklijke Luchtvaart Maatschappij NV concluded two covenants.
"Quality of life" covenant
The objective of this covenant is to draw up two implementation plans, in an
integrated fashion and no later than on 1 January 2008. The first plan concerns
the environmental projects at micro-climate level for the short term, which will
contribute to the improvement of the environmental quality in specific
residential areas (Zwanenburg, Halfweg, Aalsmeer, Uithoorn, Amstelveen). The
second plan concerns the so-called 'distressing cases': cases of residents and
businesses which, in the spirit of the law, are, but to the letter of the law,
are not eligible for legal compensation, and which can be characterised as
'distressing'. The Province of North Holland keeps a list of these cases and, in
cooperation with Schiphol Group, draws up a framework on the basis of which
individual cases can be financially compensated. In 2006, Schiphol Group made a
one-off amount of EUR 10 million available with respect to distressing cases.
Moreover, the covenant dictates that the parties will set up an administrative
committee to be chaired by the Province of North Holland, and that this
administrative committee will establish a foundation to promote the quality of
the residential, working and living environment in the Schiphol region, for
example by implementing the covenant, the approved plans and the associated
engagements. Finally, the covenant establishes that the parties will conclude a
covenant for the medium term, no later than in January 2008 and following on
from the short-term plans. From their own position and responsibilities and in
the shortest possible term, the parties will study the options and the
desirability of financing the implementation of the planned projects. The
requirement to assist in the financing of the projects concerned will be imposed
on the municipalities cities in which these projects will be realised.
"Disturbance-reducing measures at Schiphol" covenant
The goal of this covenant is to realise measures that will reduce noise
disturbance from air traffic and improve the utilisation of the environmental
area. In cooperation with one or more of the other parties involved, Schiphol
Group has in particular a role in the promotion of quiet air traffic by means of
charges differentiation and the prioritisation of slots, the limitation of
disturbance from ground noise in the north of Hoofddorp through the construction
of a ridged noise barrier (under certain conditions, no later than in September
2009) and research into further disturbance-reducing measures behind this noise
barrier, research into disturbance-reducing measures for the residents of
Amstelveen, the continuation of the current activities with respect to noise
measurement (NOMOS) and the limited expansion thereof, and the development of an
environmental simulator (no later than in March 2008), which will provide
clarity into the perception of aircraft noise on the ground. Finally, Schiphol
Group will make efforts to move approximately 10,000 flights from Schiphol
airport to Lelystad airport before 2010 and to adapt the local airport
infrastructure in a timely manner for this purpose. Other planned measures will
include the adaptation of runway use and flight routes and research into custom
solutions for noise disturbance. Schiphol Group and Air Traffic Control the
Netherlands will determine in consultation how the measures included in this
covenant will be funded. Any problem areas that arise will be submitted to the
committee of parties involved in the covenant (the 'Alders table').
The Schiphol Group management is not yet able to draw up a reliable estimate of
the investments and costs Schiphol Group will have to bear in the coming years
on the basis of these covenants.
Joint venture with Nuance
In May 2007, Schiphol Group and The Nuance Group AG drew up a letter of intent
with the objective of continuing the retail activities of Schiphol Airport
Retail BV (liquor and tobacco) and the retail activities of The Nuance Group
(Netherlands) BV (chocolate) in the See Buy Fly area in the form of a joint
venture. It is expected that this joint venture will be operational in the
second half of 2007. To this end, Nuance will acquire a 50% interest in Schiphol
Airport Retail BV (phase 1). After this, Schiphol Airport Retail BV will acquire
the activities of The Nuance Group (Netherlands) BV (phase 2).
Schiphol, 22 August 2007
For the interim consolidated financial report for the first half of 2007
Supervisory Board
P.J. Kalff, Chairman
A. Ruys, Vice Chairman
H. van den Broek
F.J.G.M. Cremers
T.A. Maas-de Brouwer
W.F.C. Stevens
T.H. Woltman
Board of Management
Prof G.J. Cerfontaine, President
Dr. P.M. Verboom, Member of the Board of Management/Chief Financial Officer
A.P.J.M. Rutten, Member of the Board of Management/Chief Operations Officer
To the Shareholders, Supervisory Board and Board of Management of NV Luchthaven
Schiphol
Review report
Introduction
We have reviewed the accompanying consolidated interim financial information for
the six-month period ended 30 June 2007, of NV Luchthaven Schiphol, Schiphol,
which comprises the balance sheet as at 30 June 2007, the profit and loss
account, the condensed consolidated statement of changes in equity, the
condensed cash flow statement for the six-month period then ended and the notes
thereto. The Board of Directors is responsible for the preparation and
presentation of this consolidated interim financial information in accordance
with IAS 34, 'Interim Financial Reporting' as adopted by the European Union. Our
responsibility is to express a conclusion on this interim financial information
based on our review.
Scope
We conducted our review in accordance with Dutch law including standard 2410,
'Review of Interim Financial Information Performed by the Independent Auditor of
the Entity'. A review of interim financial information consists of making
inquiries, primarily of persons responsible for financial and accounting
matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with auditing
standards and consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in an audit.
Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the accompanying consolidated interim financial information as at 30 June
2007 is not prepared, in all material respects, in accordance with IAS 34,
'Interim Financial Reporting', as adopted by the European Union.
Amsterdam, 22 august 2007
PricewaterhouseCoopers Accountants NV
J.A.M. Stael RA
END
--------------------------
(1) Any reference to IFRS means the entire set of rules included in
International Accounting Standards (IAS), International Financial Reporting
Standards (IFRS) and Standing Interpretations of the International Financial
Reporting Interpretations Committee (IFRIC) as endorsed for use in the EU.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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