NATS, the UK’s leading air traffic management provider, on Friday 30th June reported its third successive year of profit, as the company reaches the landmark 5th anniversary of the Public Private Partnership (PPP) in 2001.
Pre-tax profit for NATS Holdings Ltd (NHL) and its subsidiaries (“the NATS group” or “NATS”), for the year ended 31 March 2006, was £80.3m. This compares with £85.3m for 2004/5.
For the first time this year NATS has reported its financial results in line with International Financial Reporting Standards (IFRS), which has also required adjustment of the figures reported in 2004/5. NATS’ profit of £1.8m in 2002/3 and results for prior years were reported under UK Generally Accepted Accounting Practices (UK GAAP).
The group also declared a dividend for 2005/6 of £2.5m which will be paid in July to shareholders, who include NATS employees.
Paul Barron - Chief Executive
Paul Barron, Chief Executive, said: “This year we have consolidated our performance and proved that, five years on from the PPP, NATS is exceeding expectations at the time.
“We have had a great year. We have delivered a good profit and return on investment, and maintained our high safety and service standards against a background of record traffic volumes.
“We have signed some innovative deals to invest in our future and reinforced our intention to lead in Europe by rebranding, clearly differentiating us as we establish ourselves as the industry’s partner of choice. We have a proper commercial outlook, a working partnership with our customers and a mature relationship with our trades unions.”
This year’s results were delivered against growth in UK traffic of almost six per cent. NATS handled safely a new record level of 2.3 million flights yet maintained service standards with an average delay per flight of just 22 seconds.
The company signed a ground-breaking £725m contract with the Ministry of Defence to provide air traffic control (ATC) systems for the next 15 years; and established a Joint Venture company with its Spanish counterpart Aena, to develop an air traffic management system which will underpin the two-centre strategy at the heart of NATS’ £1bn long-term investment plan.
NATS’ rebranding illustrated the company’s business transformation and, coinciding with the 5th anniversary of the PPP, represented a clear milestone in its evolution.
“The 5th anniversary of the PPP is a landmark for NATS,” said Mr Barron. “We have proved that being commercially successful does not mean compromising safety and we continue to demonstrate that safety is at the heart of our business.
“It has been a challenging five years given the US terrorist attacks so soon after the PPP, and the subsequent downturn in traffic which ultimately required a complete financial restructuring.
“We continue to go through a great deal of change, but five years on we have a clear sense of direction and the confidence of knowing that this is a robust company well placed to take advantage of the continuing growth in our industry.”
NATS reported revenues of £686.7m, up £47.7m from 2004/5. Profitability of the group was driven by the continued strong financial performance of NATS (En Route) plc (NERL), the UK en-route service provider, which reported external revenues of £573.5m (2004/5: £542.3m), and a pre-tax profit of £74.7m (2004/5: £81.6m).
NERL’s financial position was strengthened by successful refinancing of its £215.9m bank facilities to reduce the margin and fees payable, and a reduction in net debt. Since the publication of last year’s results, Moody’s has upgraded the underlying rating of NERL from Baa1 to A3 outlook positive.
This was the last year of NERL’s first regulatory control period. The new charge control conditions are forecast to deliver reductions in charges to customers and tighter financial incentives on service quality.
NSL also had a successful year, winning its first overseas airport contract with Gibraltar and, in the UK, winning the contract for Bristol Airport and renewing its contract with Birmingham. Its profit before tax improved by £0.6m to £14.0m (2004/5: £13.4m).
