Baa Makes 102m Windfall Tax Provision
BAA has made a provision of 102m to pay for the government's windfall tax on privatised utilities, although the airports group said yesterday that the exact amount due would depend on a final agreement with the Inland Revenue. BAA said the figure was at the top end of its expectations. The group had estimated liability at between 70m-100m.
The group announced first-quarter pre-tax profits of 136m, up 4.5 per cent, before taking into account the provision. Profits for the three months to June 30 were depressed by 8m by the effect of rephasing traffic charges. This is part of a 4-year programme, agreed with airlines, of phasing out the differential between peak and off-peak passenger charges. This has the effect of transferring profits from the first to the second half of the year. The group is in the third year of the programme.
Last year's rephasing resulted in a 5m reduction in first quarter profits. Profits were further reduced by 3m after BAA's decision, announced in April, to stop capitalising interest on work on Terminal Five at London's Heathrow airport until the project had received planning permission, as well as government approval. The public inquiry into the proposed terminal has taken longer than expected, and a government decision was not now expected until 2000.
Without the rephasing of charges and the Terminal Five accounting change, first quarter profits would have been 13.1 per cent higher than last time. Earnings per share before the windfall tax provision were 10.1p, a 6.3 per cent increase on last year's 9.5p. After the windfall tax provision, earnings were just 0.3p.
The group's airports handled 26.5m passengers in the quarter, an increase of 7.8 per cent over the same period last year. The figures did not include the effects of the British Airways' cabin crew strike, which took place last month. Revenue from airport and traffic charges rose 4.2 per cent to 136m.
This was the first quarter that BAA was operating under its new regulatory formula for London airports, announced last year. This reduced revenue from London airport charges by 2.5m. Revenue from retailing was up 7.1 per cent to 161m. BAA said that the retailing business benefited from the growth in passenger numbers but was depressed by the strength of sterling. Property revenue was up 8.9 per cent to 59m.