Airports Company South Africa (ACSA) continued its steady run of improving financial results when the company announced today a 17% increase in revenue to R1,86 billion from R1,59 billion for the year ended 31 March 2004. Operating profit grew by 19% to R902m (2003: R759,6 million). Earnings per share decreased to 94,33 cents (2003:132,14 cents) and Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) rose to R1,124 billion from R916,5 million.
The Board of Directors has recommended a dividend of 72 cents a share compared with 32 cents in 2003. ACSA, the first state owned enterprise since 1994 to pay its shareholder a dividend has now paid R804 million to its shareholders since the maiden dividend of R36.3 million in 1996/97.
Ms. Monhla Hlahla, Managing Director of ACSA commented that the satisfactory performance was partly built on a 7,4% increase in departing passenger volumes to 11,9 million. This growth came from an increase of 7.9% in domestic passenger volumes and 6,4% in international passenger volumes. Domestic and international landings aircraft increased by 6.4% and 2.3% respectively, while regional landings shrunk by 2.1%, however, overall aircraft landings declined moderately by 2%.
“Continuing the rising trend, there was further growth of income from non-aeronautical revenue stream. Revenue from retail grew by 15% in value terms, which is satisfactory in the light of poor trading conditions”.
“Advertising revenue grew strongly by 39% to R67.9 million through using new technology and substantially new large format advertising, by increasing the revenue share derived from partners and finding more efficient ways of funding advertising infrastructure”.
“Revenue from property rose by 6% to R138,4 million from R130,2 million in 2003. The latter figure included provisions reversed to income arising from the sale of the NATCOS Tank Farm and upfront rentals in respect of a cargo warehouse. If these factors are taken into account, growth in earnings from property in the year under review was in fact some 25%”.
“It is gratifying to note that the Commercial Division has steadily increased shareholder value in this way. I am happy to say that long-term strategies are in place to ensure that income from these sources and from our consultancy business unit, Airport Management Services (AMS) have the capacity for substantial growth in the years ahead as our resourceful management team continues to innovate and find new opportunities to grow shareholder value”.
Improved operational efficiency
“Management’s determination to improve operational efficiencies is reflected in performance indicators. The return on investment rose to 18.8% from 18.4% last year, based on historical asset base.”
“The year under review marked the highly satisfying conclusion of a five year programme of investing R3 billion in new or significantly upgraded airport infrastructure”. “The result is an impressive network of world-class airports that make a lasting impression on foreign visitors and on our own citizens”.
“To complement our world-class airport facilities and focus on operational efficiencies, in the last two years we have run a customer care training programme for our airport staff with a R4 million budget over four-years. This has had a recognisable effect on our levels of service, as confirmed by regular independent passenger opinion surveys”.
“These expansions and upgrades have brought ACSA’s airports network into line with the best in the world, as evidenced by the number of international awards ACSA has won recently”. “The 2003 global airport award programme, managed by IATA and Airports Council International and called AETRA, ranks airports in terms of operational efficiency across 25 service elements as perceived by passengers. AETRA 2003 rated Cape Town International Airport (CIA) as the best in the world in terms of overall satisfaction for airports handling 5 - 15 million passengers a year. In the same category, O.R. Tambo International Airport (ORTIA) ranked fifth, close behind just completed facilities in Athens, Vancouver and Oslo. Durban International Airport (DIA) was ranked second in the world for airports handling up to 5 million passengers a year”.
“(In the AETRA 2002 programme, DIA was ranked second in the World's Best Domestic Airport category and was named by IATA as the world's Best Planned Airport.)” “CIA, DIA and ORTIA were rated second, third and fourth respectively in the Best Airports in the Middle East / Africa region, Dubai taking first place”.
“To continue of our efforts of being a leading airport operator, ACSA ACSA has earmarked a further R3.58 billion for investment in infrastructure upgrades over the next five years. Projects will include measures to increase capacity and efficiencies at all airports, including the domestic airports in the cities of Kimberley, Bloemfontein and East London”.
“This constant improvement of facilities places us in a fortunate position. Infrastructure developments are planned way in advance, through detailed master plans, to cater for anticipated traffic growth”. “We will consult with the airlines continually to determine whether we should augment these planned expansions and upgrades in the light of the requirements of the 2010 World Cup”. “Major plans include a multi-storey parkade at CIA with in-house check-in counters and an international passenger transfer facility in the ORTIA terminal, which will be integrated with the planned Gautrain Rapid Rail Link between ORTIA, Sandton and Johannesburg”.
“At ORTIA, Echo Apron, in conjunction with the Northern Pier development, will increase our flagship’s capacity to accommodate the new wide-body long-haul aircraft such as the A380 at connecting stands. Future plans for ORTIA embrace facilities to improve efficiencies in aircraft movements, such as larger aprons and high speed exit lanes, as well as upgrades to the International Arrivals and International Departures terminals to create more capacity, together with an additional motor vehicle parkade and aircraft connecting bridges”.
Transformation and empowerment
“Parallel with our activities to upgrade airport infrastructure over the years, we have been engaged in transforming our business and social environments by steadily implementing employment equity policies, empowering emerging enterprises wherever possible and improving community living standards in targeted areas through focused corporate social investment programmes”.
“As an indication of what we have accomplished in our progressive approach to employment equity, African males and females now make up 32% of the Group's top officials and managers, with Coloured and Indian representatives making up a further 24% of the total at that level. Of the Group's professional employees, 65% are previously disadvantaged individuals (82% if white females are included)”.
“The HR division is focusing on six other principal areas to help drive business efficiencies and the optimum use of our human capital resources. These are concerned essentially with talent management, training, performance management, staff retention, employee relations, remuneration and benefits”.
Capital Expenditure Funding
“To fund our capital expenditure programmes mentioned above, we will continue to use the company’s existing medium and long term borrowing facilities, together with retained earnings”.
“Together with our shareholders, management is, however, investigating a possible capital restructuring of the company. We want to be able to use the capital markets more freely to be able to borrow at better rates, perhaps through a bond issue, so that we can finance our infrastructure projects more efficiently. This has the potential to save millions for the company and the country”.
“This we believe, will add value to our current processes with the industry (airlines and Regulating Committee) to engage on an appropriate regulatory regime to incentivise ACSA towards efficiency and innovation while continue to invest in cost effective infrastructure development.”
“Subject to a satisfactory resolution to these regulatory issues, I am confident that the expertise, enterprising spirit, innovation and enthusiasm of our people in all branches of the business will ensure further noteworthy improvements in efficiency and profitability for ACSA,” concluded Ms Hlahla.