Final Results

8th Mar 2011 07:00

JOHN MENZIES PLC

PRELIMINARY RESULTS ANNOUNCEMENT

8 MARCH 2011HIGHLIGHTS 2010 2009 Change

Turnover (including JVs & Associates) £1,964.2m £1,845.2m UP 6%

Underlying profit before taxation (1) £45.0m £35.2m UP 28% Free cash flow (2) £43.8m £26.9m UP 63% Underlying earnings per share (3) 57.9p 43.8p UP 32% * John Menzies plc delivers an excellent full year result * + Operating profits significantly ahead as strategy delivers + Strong cash generation at both operating divisions + Sound financial position to support future earnings growth + Menzies Aviation continues to grow with profits up 56% + Menzies Distribution increases profits by 3% despite difficult markets + Final dividend of 14p making a full year payment of 19p reflects confidence in future prospects

Iain Napier, Chairman said:

"2010 was a highly successful year for the Group, in which we achieved significant profit growth and delivered on our strategy. The Group is highly cash generative and, for the second year running, our Aviation division delivered greater net cash flow than our Distribution division.

The growth drivers for the Aviation division are strong, particularly in the ground handling business, where there is a large and available market. Whilst market conditions for the Distribution division are challenging, the division is an excellent cash generator and holds a strong market position.

As a result of this excellent performance, I am pleased to announce a final dividend of 14p.

Overall, at the Group level the year has started positively with trading ahead of last year. With a reduced interest charge, resulting from lower overall debt levels and the positive start to the year at Menzies Aviation, we believe the Group is well placed to deliver further earnings growth and shareholder value."

Notes (1) Underlying profit before taxation is defined as profit before taxation, intangible amortisation and exceptional items. (2) Free cash flow is defined as the cash generated by the business after net capital expenditure, interest and taxation, before special pension contributions, acquisitions, disposals, cash raised, ordinary dividends and net spend on shares. (3) Underlying earnings per share is profit after taxation and minority interest, but before intangible amortisation and exceptional items, divided by the weighted average number of ordinary shares in issue. (4) Underlying operating profit includes each division's share of pre-tax profit from joint ventures and associates, and excludes intangible amortisation and exceptional items.

For further information:

Paul Dollman, Group Finance Director, John Menzies plc 0131 459 8018

John Geddes, Group Company Secretary, John Menzies plc 0131 459 8180

Jonathan Brill/Caroline Stewart, Financial Dynamics 020 7831 3113

Notes to Editors:

1. John Menzies plc is one of Scotland's largest companies. The company has

two operating divisions, Menzies Aviation and Menzies Distribution. Both divisions operate in distinct B2B sectors where success depends on providing an efficient, high quality, time-critical service to their customers and partners.

2. The company was established in 1833 and its head office is in Edinburgh,

Scotland. Today the company is an international business with operations

worldwide.

3. Menzies Aviation is one of the world's leading independent suppliers of

aviation handling services to the aviation market providing ground and cargo services for many of the world's leading airlines at some of the busiest international airports. The division employs 16,000 people worldwide servicing over 500 airline customers at 116 locations in 27 countries. In 2010 the division handled more than 700,000 flight turns, 71 million passengers and 1.7 million tonnes of cargo.

4. Menzies Distribution is a leading provider of added value distribution and

marketing services to the newspaper and magazine supply chain in the UK. The division handles around 5.2 million newspapers and 2.6 million magazines (covering 3,000 magazine titles) each day, with deliveries to more than 25,000 customers. The division employs 4,000 people at 48 sites throughout the UK - and is a strongly cash generative business, with around 45% of the newspaper and magazine wholesale distribution market in the UK. It has a track record of investment in innovation and customer service delivery.

5. Further information on John Menzies plc can be found at:

www.johnmenziesplc.com, www.menziesdistribution.com and

www.menziesaviation.com. GROUP PERFORMANCEOVERVIEW

The Group produced an excellent result in 2010 with underlying profit before taxation up 28% to £45.0m.

The highly cash generative nature of the Group was clearly demonstrated. Net debt has reduced to below £100m largely as a result of the strong cash performance of both divisions. Higher profits in the period helped free cash flow to £43.8m or 74.5p per share, an increase of £16.9m on the previous year. Menzies Aviation was again the largest contributor of cash producing a free cash flow of £34.3m compared to £21.4m at Menzies Distribution.

At Menzies Aviation turnover increased to £626.0m (£542.4m: 2009) with underlying operating profit up 56% to £24.6m. This excellent result was driven by a sharp increase in overseas cargo volumes and continued organic expansion within the ground handling business. This performance compares favourably after allowing for some £2.2m of lost profits during the volcanic activity in April, although this was partly offset by very strong de-icing revenues in January and December.

Menzies Distribution delivered operating profits of £28.8m up 3.2% (on a consistent 52 week basis) with turnover of £1,338.2m up 4% on the same basis. The marketplace remained difficult with volume declines in the key product categories but the division again produced a robust cost performance which helps to mitigate the drop in gross profit.

DEBT AND INTEREST

Net debt at the year end was £99.0m which was £33.3m lower than last year. The key covenant ratio of Total debt / EBITDA is now below 1.5 times which triggers a reduction in interest costs on Group borrowings. Some £75m of banking facilities were re-negotiated ahead of time resulting in the Group now having secured the required facilities through to 2014 and beyond. The Group's interest cover increased from 6.7 times to 9.0 times at the year end.

EXCEPTIONAL ITEMS

There was an exceptional credit of £4.6m in the year resulting from some members of the main UK pension scheme exchanging future non-statutory increases in pension for a higher fixed pension. Offsetting most of this were exceptional costs of £2.3m in Distribution associated with reorganisation costs following the contract wins and a write-down of £2.2m in Aviation being the majority of the goodwill associated with UK Cargo.

PENSIONS

The actuarial deficit within the pension fund (net of deferred tax) reduced from £60.8m to £34.9m during the year. This is a combination of an increase in asset values during the year and an overall reduction in liabilities mainly due to actions taken during the year to cap future benefits for active members and the impact of the move to CPI on deferred members. The reduced deficit will result in a lower reported interest cost going forward.

EARNINGS PER SHARE

The effective tax rate on underlying profit for the year was 24.2% compared to 26.4% last year. The lower tax rate and reduced number of shares in issue together with higher profits contributed to an increase of 32% in our underlying earnings per share from 43.8p in 2009 to 57.9p in 2010.

DIVIDEND

The Board has declared a final dividend of 14p giving a full year dividend payment of 19p. At this new level dividend cover is 3.0 times. The dividend will be paid on 24 June 2011 to shareholders on the Register of Members at the close of business on 27 May 2011.

MENZIES AVIATION 2010 2009 Turnover (including JVs & £626.0m £542.4m Associates) Underlying operating profit (4) £24.6m £15.8m

PERFORMANCE

Menzies Aviation had a very good year with profits up 56% to £24.6m.

Operating profits were boosted by a sharp return in overseas cargo volumes across the network and the continued excellent performance within the ground handling business. This result was achieved despite the disruption caused in April following the volcanic activity across Northern Europe which cost £2.2m, although this was partly mitigated by increased de-icing revenues in January and December.

The ground handling business is the major contributor in both revenue and profit terms and this trend is expected to increase as the division expands.

The division was highly cash generative producing a free cash flow of £34.3m which demonstrates its ability to self finance its future growth.

Operational efficiency remains at the heart of the business. Significant investment was made in systems with the continuing roll out of the biometric recognition Time and Attendance system and other core systems that allows the division to operate in the same way at all airports regardless of location. This investment in systems together with investment in training and safety initiatives led to Menzies Aviation being the first global aviation services business to achieve the IATA ISAGO accreditation. This industry standard is important and reinforces the commitment to service excellence.

The flexibility of the ground handling business model together with the commitment and willingness of our staff was demonstrated during the year when flights were cancelled during the six days of volcanic activity that closed airports across Northern Europe. Costs were kept to a minimum as shifts patterns were altered and staff took holidays or banked hours which helped mitigate losses.

During the year the business of Transilvania Handling Services, a Romanian ground handling company, was acquired for £1.3m, including £0.3m of deferred consideration. This acquisition allowed the business to expand into four new airports in Romania and is a good example of expanding regional density with the new operations being controlled from the existing operation in Bucharest.

CARGO HANDLING

The division enjoyed a significant profit improvement within the cargo handling business following a sharp increase in volume across the network. Despite a disappointing performance in the UK, where absolute volumes were only up 6.2%, absolute volumes as a whole were up 23% (lfl up 20%) which helped this product category overall return to profitability.

Despite the volume recovery, structural challenges continue at some major airports where over capacity exists leading to depressed yields and predatory pricing. As a result, the division has some loss making operations in the USA and UK, although they are cash positive due to historical capital investments. Improvement plans are in place and positive progress is being made.

In contrast the operations where capacity does not significantly exceed demand, in countries such as India and Australia, had an excellent year and were profitable. In India, tonnes were up significantly on the previous year. At Hyderabad a dedicated perishable centre for pharmaceutical products was opened which allows the fast track of products through the cargo centre. Where the market dynamics are attractive cargo handling remains a good business and typically is linked to existing ground handling businesses, which allows a one stop shop offering to airlines.

The division was a net winner of twelve contracts during the year, but the loss of a major contract with Cathay Pacific in Chicago, USA, resulted in the overall annualised earnings position being negative.

CARGO FORWARDING

The cargo forwarding business had a good year benefiting from the increase in cargo volume, with operating profit up 31%. Air Menzies International is our cargo forwarding business, which essentially brokers the belly space of passenger airlines, working exclusively with freight forwarders and courier companies, offering highly competitive air freight rates and transport services around the world.

The business has aggressive expansion plans. It has a global presence with key hub operations in Australia, South Africa, UK and the USA. During the year investment in management expertise and new IT systems was made that will help give the business a competitive advantage in what is an attractive and growing marketplace.

GROUND HANDLING

The ground handling business continued on its strong growth path. Absolute volumes were up 9% (lfl up 3.3%). The division were net winners of 52 contracts that will contribute more than £25m additional revenue.

The divisional strategy of growing organically by leveraging existing customer relationships resulted in a major contract award from Lufthansa and bmi at London Heathrow. In addition to this, new contracts were awarded by key customers including Emirates, Alaska Airlines and South African Airways.

In the UK the ground handling business performed very well, benefiting from the annualised effect of major contract gains made during 2009 and a number of new contracts. The commencement of the contract to handle some 100 flights per day for Lufthansa and bmi at London Heathrow's Terminal One, which involved the TUPE transfer of four hundred staff, was a success with immediate benefits delivered to the customer. The team now handles over 200 flights per day out of Terminal One and is the largest independent handler at London Heathrow.

Continental Europe, and in particular Spain, made an increased contribution with turns up strongly on the previous year.

In India, the division's first contract with an indigenous low cost airline, Kingfisher Airways, commenced in Hyderabad with some 168 flights per week. This is an exciting entry into a very large potential market and it is hoped that this relationship can be enhanced.

Operations in South Africa had a good year benefiting from increased activity around the World Cup. The division's reputation for first class customer service was recognised by a number of awards, most notably from airport operators in South Africa, following the World Cup. Service excellence is a key pillar in the divisional strategy and is a significant lever in winning new business.

Australia and New Zealand continued to perform well with aircraft turns in Australia benefiting from the strong local economy.

In the Americas, the USA proved to be a slightly more difficult market with expansion harder to obtain. The USA remains a very large attractive market but at the same time is quite mature. The division is building its reputation in the area and it is well placed to expand its business in the coming years. Mexico and the Caribbean performed well although a number of Mexican and some USA locations were affected by the bankruptcy of Mexicana Airlines.

STRATEGY

The divisional strategy is unchanged. The focus remains to work with attractive airlines in attractive markets creating product, station and regional density. The division is clearly demonstrating its ability to deliver against this strategy.

The ground handling business will continue to grow, predominantly organically, in what is a very large available market. The results illustrate that this can be done without the division being cash consumptive.

Cargo handling remains an attractive product category where good returns can be made but it is essential that our ethos of attractive customers in attractive markets is followed. Some major airports, particularly in the UK and USA, have over capacity and, as a result, returns are poor. Therefore, our focus will be on markets that are not over supplied and where returns are sustainable.

The aviation services sector has strong and deliverable growth prospects. Growth will primarily come from winning more customers at existing airports and with existing customers at new airports, but the division will also evaluate entry into new markets during the next twenty four months.

MENZIES DISTRIBUTION

2010 2009* Turnover (including JVs & £1,338.2m £1,286.2m Associates) Underlying operating profit £28.8m £27.9m

*Adjusted to a 52 week basis (2009 reported results were for a 53 week period)

PERFORMANCE

Menzies Distribution produced a solid performance in a difficult marketplace. Underlying operating profits were up 3.2% on a consistent 52 week basis. The full year result was adversely impacted late in the year by the severe weather conditions encountered across the UK, and particularly Scotland. This impacted sales across all categories and is estimated to have cost the division £0.5m.

As well as producing a robust profit performance, the division also delivered £ 21.4m of free cash flow which continues to underpin the overall cash generative nature of the Group.

During the year major operational projects were undertaken to absorb the new business won from Dawsons News and Smiths News. Further operational efficiency was achieved by the rationalisation of the branch network which involved the creation of two new major hub branches and the merger or closure of some smaller branches.

MENZIES DISTRIBUTION - CORE BUSINESS

Overall volumes within the core product categories were largely in line with expectations. The rate of decline in newspaper sales stabilised during the year with like for like sales down 3.5%. Monthly magazine sales were slightly ahead of expectations with like for like sales down 3.3%. Weekly magazine sales however, were slightly behind expectations and finished the year down 6.5% on the previous year. There was little launch activity to stimulate the market during the year with publishers reluctant to invest at a time of consumer uncertainty.

Absolute volume of both newspapers and magazines were up reflecting the new business won during the year.

The sales of stickers, despite the World Cup, were disappointing after a large amount of returns in Q3. In addition, sales of traditional football related collections over Christmas have been below expectation.

During the year a further £23.1m of new revenue, gained from Smiths News at the time of the publisher negotiations in 2009, was transferred and has been successfully integrated.

2010 has been a year of operational change. The new major hub branches at Preston and Maidstone, opened in late 2009, are fully integrated and have allowed further rationalisation of the branch network. Stage one of this process is complete and delivered cost benefits during the year. Stage two will take place during 2011.

Overall the division produced another excellent cost performance producing cost savings of £3.5m, again outstripping inflation. The division has a proven track record in reducing costs and increasing efficiency in the face of declining volume.

The roll out of SAP commenced. The first branch to go live was in Norwich. This was successfully completed in September and was followed by the first major hub branch, Newbridge, which went live in November. So far the implementation has gone well. After a pause over the festive period, the full branch roll out will commence in March 2011 with the cost benefits being delivered in 2012.

Further progress has been made in securing regional press contracts with an additional £28m of new revenue secured during the year. In the last eighteen months the division has secured £36m of new revenue from the regional press market.

MENZIES MARKETING SERVICES - NEW REVENUE VENTURES

During the year the four existing businesses were brought under the banner of Menzies Marketing Services (MMS) with a single Managing Director. This move is designed to bring greater management control and strategic vision to the ventures and also to identify synergies between the businesses.

Over the last 12 months, MMS continued to grow in size and scope. Growth has however been slower than planned due to the wider economic outlook but the re-structuring that has taken place leaves these businesses well placed to expand. It is hoped that over the next three years MMS can become a significant contributor to profit.

Throughout the year, two businesses were acquired. Trinity Field Marketing was merged with The Network which lengthened the reach of our existing Field Marketing offering. Also Reed Aviation, a press export business which has strong synergies to the existing Menzies Travel Media company, was acquired.

STRATEGY

A three pillar strategy (Execute, Re-design, Diversify) was implemented during 2009. Real progress has been made on all three fronts.

Within the EXECUTE phase, new regional press business has been delivered, all major distribution contracts have been re-negotiated giving security of tenure through to 2014 and operationally the integration of the new business secured from Dawson News and Smiths News has been seamlessly integrated. Following the integration of the new business, branch rationalisation opportunities have been identified. Stage one of these has been delivered and 2011 will see stage two completed.

The RE-DESIGN phase has now started. The major project to implement SAP, which will provide a step change in the running of the business, has progressed with two branches now live and a roll out programme for the rest of the network in place.

Finally, the DIVERSIFY phase has seen significant progress with the launch of Menzies Marketing Services, two small acquisitions and the re-entry into the digital marketplace. In addition, in Ireland new contracts have been won in the Irish Republic which strengthens the business and allows it to pursue other opportunities that exist.

OUTLOOK

At Menzies Aviation the year has started well with the division trading ahead of last year. Contract win momentum has continued. Notable contracts have been gained in both cargo and ground handling since the year end, including a contract with Jetstar, the Australian low cost airline, to handle 70 flights per week at their hub in Darwin and a cargo handling contract with Asiana at London Heathrow.

At Menzies Distribution trading is broadly in line with last year. The full roll out of SAP will continue, with the next branch going live in March, and this together with further branch rationalisation opportunities will help drive efficiencies from the business.

Overall, at the Group level the year has started positively with trading ahead of last year. With a reduced interest charge, resulting from lower overall debt levels and the positive start to the year at Menzies Aviation, we believe the Group is well placed to deliver further earnings growth and shareholder value.

GROUP INCOME STATEMENT

for the year ended 31 December 2010 (year ended 31 December 2009)

Before exceptional Exceptional and other and other 2010 items items Total Notes £m £m £m Revenue 2 1,837.6 - 1,837.6 Net operating costs (1,796.7) (3.2) (1,799.9) Operating profit 40.9 (3.2) 37.7 Share of post-tax results of 11.3 (4.1) 7.2joint ventures and associates Operating profit after joint 2 52.2 (7.3) 44.9ventures and associates Analysed as: Underlying operating profit* 52.2 - 52.2 Non-recurring items 4(a) - 0.1 0.1 Associate goodwill impairment 4(b) - (1.8) (1.8) Contract amortisation 4(b) - (3.3) (3.3) Share of interest on joint - 0.2 0.2ventures and associates Share of tax on joint - (2.5) (2.5)ventures and associates Operating profit after joint 52.2 (7.3) 44.9ventures and associates Finance income 5 1.1 - 1.1 Finance charges 5 (6.9) (0.2) (7.1) Other finance charges - 3 (1.4) - (1.4)pensions Profit before taxation 45.0 (7.5) 37.5 Taxation 6 (10.9) 1.6 (9.3) Profit for the year 34.1 (5.9) 28.2 Attributable to equity 34.0 (5.9) 28.1shareholders Attributable to 0.1 - 0.1non-controlling interests 34.1 (5.9) 28.2 Earnings per ordinary share 8 Basic 57.9p (10.0)p 47.8p Diluted 57.7p (10.0)p 47.7p Before exceptional Exceptional and other and other 2009 items items Total Notes £m £m £m Revenue 2 1,725.7 - 1,725.7 Net operating costs (1,692.1) (9.3) (1,701.4) Operating profit 33.6 (9.3) 24.3 Share of post-tax results of 9.8 (3.9) 5.9joint ventures and associates Operating profit after joint 43.4 (13.2) 30.2ventures and associates Analysed as: Underlying operating profit* 43.4 - 43.4 Non-recurring items 4(a) - (6.0) (6.0) Associate goodwill impairment 4(b) - (1.8) (1.8) Contract amortisation 4(b) - (3.3) (3.3) Share of tax on joint - (2.1) (2.1)ventures and associates Operating profit after joint 43.4 (13.2) 30.2ventures and associates Finance income 5 0.6 - 0.6 Finance charges 5 (7.0) - (7.0) Other finance charges - 3 (1.8) - (1.8)pensions Profit before taxation 35.2 (13.2) 22.0 Taxation 6 (9.3) 2.6 (6.7) Profit for the year 25.9 (10.6) 15.3 Attributable to equity 25.9 (10.6) 15.3shareholders Attributable to - - -non-controlling interests 25.9 (10.6) 15.3 Earnings per ordinary share 8 Basic 43.8p (17.9)p 25.8p Diluted 43.8p (17.9)p 25.8p

*Underlying operating profit is consistently presented adjusting for non-recurring exceptional items, intangible amortisation associated with goodwill impairment on associate assets and contract amortisation, and the Group's share of interest and tax on joint ventures and associates to provide an appreciation of the impact of those items on operating profit.

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the year ended 31 December 2010 (year ended 31 December 2009)

2010 2009 Notes £m £m Profit for the year 28.2 15.3 Actuarial gain/(loss) on 3 29.5 (50.0)defined benefit pensions Actuarial loss on unfunded - (0.2)pension arrangements Deferred tax associated with (8.8) 14.1defined benefit pensions Losses on cash flow hedges - (1.2) Income tax effect - 0.3 Net exchange adjustments 6.2 (1.7) Other comprehensive income 26.9 (38.7)for the year, net of tax Total comprehensive income 55.1 (23.4)for the year Attributable to equity 55.0 (23.4)shareholders Attributable to 0.1 -non-controlling interests 55.1 (23.4)

GROUP AND COMPANY BALANCE SHEETS

as at 31 December 2010 (31 December 2009)

Group Company 2010 2009 2010 2009 Notes £m £m £m £m ASSETS Non-current assets Intangible assets 9 100.5 100.5 - - Property, plant and 128.2 140.8 30.7 31.6equipment Investments accounted 41.7 41.8 292.7 292.5using the equity method Derivative financial - 0.1 - 0.1assets Deferred tax assets 11.0 19.9 8.6 19.0 281.4 303.1 332.0 343.2 Current assets Inventories 13.6 12.0 - - Trade and other 165.9 158.9 205.6 224.7receivables Available for sale - 1.4 - -investment Derivative financial 1.3 2.5 1.3 2.5assets Cash and cash equivalents 26.6 31.5 8.4 10.5 207.4 206.3 215.3 237.7 LIABILITIES Current liabilities Borrowings (60.5) (12.8) (60.2) (12.2) Derivative financial (2.5) (2.2) (2.5) (2.2)liabilities Trade and other payables (205.9) (200.0) (273.7) (247.5) Current income tax (13.4) (9.7) - -liabilities Provisions (3.3) (2.6) - - (285.6) (227.3) (336.4) (261.9) Net current liabilities (78.2) (21.0) (121.1) (24.2) Total assets less current 203.2 282.1 210.9 319.0 liabilities Non-current liabilities Borrowings (63.2) (150.1) (63.1) (150.1) Other payables (1.9) (1.3) (5.1) - Derivative financial (0.7) (1.3) (0.7) (1.3)liabilities Provisions (3.8) (5.3) - - Retirement benefit 3 (47.8) (84.5) (47.8) (84.5)obligations (117.4) (242.5) (116.7) (235.9) Net assets 85.8 39.6 94.2 83.1 Shareholders' equity Ordinary shares 15.1 15.1 15.1 15.1 Share premium account 16.3 15.8 16.3 15.8 Investment in own shares (5.9) (3.3) - - Hedge accounting reserve 15 (0.9) (0.9) (0.9) (0.9) Retained earnings 39.5 (8.7) 42.1 31.5 Capital redemption reserve 21.6 21.6 21.6 21.6 Total shareholders' equity 85.7 39.6 94.2 83.1 Non-controlling interest 0.1 - - -in equity Total equity 85.8 39.6 94.2 83.1The accounts were approved by the board of directors on 7 March 2011 and signedon its behalf by:Iain Napier, Paul Dollman, Chairman Group Finance Director GROUP AND COMPANY STATEMENT OF CHANGES IN EQUITY As at 31 December 2010 (31 December 2009) Ordinary Share Investment Hedge Retained Capital Total shares premium in own accounting earnings redemption account shares reserve reserve £m £m £m £m £m £m £m Group As at 31 December 15.1 15.8 (3.3) (0.9) (8.7) 21.6 39.62009 Profit for the - - - - 28.2 - 28.2year Other - - - - 26.9 - 26.9comprehensive income Total - - - - 55.1 - 55.1comprehensive income New share capital - 0.5 - - - - 0.5issued Share-based - - - - 0.8 - 0.8payments Dividends paid - - - - (7.7) - (7.7) Repurchase of own - - (2.6) - - - (2.6)shares As at 31 December 15.1 16.3 (5.9) (0.9) 39.5 21.6 85.72010 As at 31 December 15.1 15.8 (3.3) - 13.4 21.6 62.62008 Profit for the - - - - 15.3 - 15.3year Other - - - (0.9) (37.8) - (38.7)comprehensive income Total - - - (0.9) (22.5) - (23.4)comprehensive income Share-based - - - - 0.4 - 0.4payments As at 31 December 15.1 15.8 (3.3) (0.9) (8.7) 21.6 39.62009 Company At 31 December 15.1 15.8 - (0.9) 31.5 21.6 83.12009 Loss for the year - - - - (2.6) - (2.6) Other - - - - 20.7 - 20.7comprehensive income Total - - - - 18.1 - 18.1comprehensive income New share capital - 0.5 - - - - 0.5issued Share-based - - - - 0.2 - 0.2payments Dividends paid - - - - (7.7) - (7.7) As at 31 December 15.1 16.3 - (0.9) 42.1 21.6 94.22010 At 31 December 15.1 15.8 - - 4.2 21.6 56.72008 Profit for the - - - - 63.4 - 63.4year Other - - - (0.9) (36.1) - (37.0)comprehensive income Total - - - (0.9) 27.3 - 26.4comprehensive income As at 31 December 15.1 15.8 - (0.9) 31.5 21.6 83.12009

GROUP AND COMPANY STATEMENT OF CASH FLOWS

for the year ended 31 December 2010 (year ended 31 December 2009)

Group Company 2010 2009 2010 2009 Notes £m £m £m £m Cash flows from operating activities

Cash generated from operations 11 58.2 52.0 (10.4) (7.7)

Interest received 1.0 0.8 - - Interest paid (6.4) (7.9) (5.5) (7.2) Tax paid (5.1) (5.5) (0.3) (1.3) Net cash from operating 47.7 39.4 (16.2) (16.2)activities Cash flows from investing activities Investment in joint ventures 1.0 0.9 - -and associates Loan repaid by joint venture 0.1 2.3 - - Proceeds from disposal of investments 1.6 0.6 - - Acquisitions 14 (1.7) (1.6) - - Purchase of property, plant (11.6) (15.1) - -and equipment Intangible asset additions (3.9) (4.1) - - Proceeds from sale of 4.1 16.9 - 6.0property, plant and equipment Dividends received 7.9 4.2 - - Net cash used in investing activities (2.5) 4.1 - 6.0 Cash flows from financing activities Proceeds from issue of 0.5 - 0.5 -ordinary share capital Purchase of own shares (2.6) - (2.6) - Repayment of borrowings 10 (88.7) (54.3) (88.7) (54.3) Proceeds from borrowings 10 50.2 14.3 50.2 14.3 Dividends paid to ordinary (7.7) - (7.7) -shareholders Amounts repaid by subsidiaries - - 64.8 49.4

Net cash from financing activities (48.3) (40.0) 16.5 9.4

(Decrease)/increase in net 10 (3.1) 3.5 0.3 (0.8)cash and cash equivalents Effects of exchange rate 0.8 (0.2) - (0.2)movements Opening net cash and cash 20.5 17.2 (0.2) 0.8equivalents Closing net cash and cash 18.2 20.5 0.1 (0.2)equivalents*

*Net cash and cash equivalents include cash at bank and in hand and bank overdrafts.

Notes to the Accounts

The consolidated accounts of the Group for the year ended 31 December 2010 were approved and authorised for issue in accordance with a resolution of the directors on 7 March 2011. John Menzies plc is a limited company incorporated in Scotland and is listed on the London Stock Exchange.

1. Accounting policies

A summary of the more significant accounting policies, which have been consistently applied, is set out below.

The following new standards, amendments to standards and interpretations have been issued but are not effective for 2010 and have not been adopted early:-

IFRS 1 '(Amendment) Limited Exemption from Comparative IFRS 7 disclosures' is effective for periods on or after 1 July 2010

IFRS 9 'Financial Instruments: Classification & Measurement' is effective for periods on or after 1 January 2013

IAS 24 '(Revised) Related Party Disclosures' is effective for periods on or after 1 January 2011

IAS 32 '(Amendment) Classification of Rights Issues' is effective for annual periods on or after 1 February 2010

IFRIC 14 '(Amendment) Prepayments of a Minimum Funding Requirement' is effective for periods on or after 1 January 2011

IFRIC 19 'Extinguishing Financial Liabilities with Equity Instruments' is effective for periods on or after 1 July 2010

The Group has adopted the following new and amended IFRS's as of 1 January 2010:

IFRS 2 '(Amendment) Group Cash-settled Share-based Payment Transactions'

IFRS 3 'Business Combinations (Revised)'

IAS 27 'Consolidated and Separate financial statements (Revised)'

IAS 39 '(Amendment) Eligible Hedged items'

IFRIC 12 'Service Concession Agreements'

IFRIC 15 'Agreements for the Construction of Real Estate'

IFRIC 17 'Distribution of non-cash Assets to owners'

IFRIC 18 'Transfers of assets from customers'

As permitted by Section 408 of the Companies Act 2006 no income statement is presented by the Company.

Basis of consolidation

The consolidated accounts, which have been prepared under the historical cost convention and in accordance with EU Endorsed International Financial Reporting Standards (IFRS), IFRIC interpretations and the Companies Act 2006 applicable to companies reporting under IFRS, incorporate the accounts of the Company and its subsidiaries, joint ventures and associates from the effective date of acquisition or to the date of deemed disposal.

The consolidated accounts of the Group include the assets, liabilities and results of the Company and subsidiary undertakings in which John Menzies plc has a controlling interest, using accounts drawn up to 31 December except where entities have non-coterminus year ends. In such cases, the information is based on the accounting period of these entities and is adjusted for material changes up to 31 December. Accordingly, the information consolidated is deemed to cover the same period for all entities throughout the Group.

Joint ventures and associates

A joint venture is an entity in which the Group holds an interest on a long-term basis and which is jointly controlled by the Group and one or more other venturers under a contractual agreement.

An associate is an undertaking, not being a subsidiary or joint venture, over which the Group has significant influence and can participate in the financial and operating policy decisions of the entity.

The Group's share of the results of joint ventures and associates is included in the Group Income Statement using the equity method of accounting. Investments in joint ventures and associates are carried in the Group Balance Sheet at cost plus post-acquisition changes in the Group's share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

Revenue

Distribution - revenue is recognised on the weekly dispatched value of goods sold, excluding value-added tax.

Aviation - cargo revenue is recognised at the point of departure for exports and at the point that the goods are ready for dispatch for imports. Other ramp, passenger and aviation-related services income is recognised at the time the service is provided in accordance with the terms of the contract. Revenue excludes value-added and sales taxes, charges collected on behalf of customers and intercompany transactions.

Property, plant and equipment

Property, plant and equipment is stated at cost, including acquisition expenses, less accumulated depreciation. Depreciation is provided on a straight-line basis at the following rates:

Freehold and long leasehold properties - over 50 years

Short leasehold properties - over the remaining lease term

Plant and equipment - over the estimated life of the asset

Inventories

Inventories, being goods for resale and consumables, are stated at the lower of purchase cost and net realisable value.

Pensions

The operating and financing costs of pensions are charged to the income statement in the period in which they arise and are recognised separately. The costs of past service benefit enhancements, settlements and curtailments are also recognised in the period in which they arise. The difference between actual and expected returns on assets during the year, including changes in actuarial assumptions, are recognised in the statement of comprehensive income.

Pension costs are assessed in accordance with the advice of qualified actuaries.

With regard to defined contribution schemes, the income statement charge represents contributions made.

Pension financing costs are shown separately in the income statement.

Taxation

Current tax is the amount of tax payable or recoverable in respect of the taxable profit or loss for the period.

Deferred tax is provided in full, using the liability method, on temporary differences between the carrying amount of an asset or liability in the balance sheet and its tax base. Deferred tax arising from the initial recognition of an asset or liability in a transaction, other than a business combination, that at the time of the transaction affects neither accounting nor taxable profit or loss, is not recognised. Deferred tax liabilities represent tax payable in future periods in respect of taxable temporary differences. Deferred tax assets represent tax recoverable in future periods in respect of deductible temporary differences, the carry forward of unused tax losses and the carry forward of unused tax credits.

Deferred tax is determined using the tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date and are expected to apply when the deferred tax asset is realised or the deferred tax liability is settled. Deferred tax is provided on temporary differences arising on investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised.

Current and deferred tax is recognised in the income statement except if it relates to an item recognised directly in equity or in other comprehensive income, in which case it is recognised directly in equity or in the Group Statement of Comprehensive Income respectively.

Intangible assets

Goodwill

Goodwill arising on consolidation represents the excess of the cost of an acquisition over the fair value of the Group's share of the net assets of the acquired subsidiary, associate or joint venture at the date of acquisition. Goodwill acquired is recognised as an asset and reviewed for impairment at least annually by assessing the recoverable amount of each cash-generating unit to which the goodwill relates. When the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised.

Any impairment is recognised in the income statement.

Goodwill arising on the acquisition of joint ventures and associates is included within the carrying value of the investment.

Goodwill arising on acquisitions before 26 December 2004 (the date of transition to IFRS) has been retained at the previous UK GAAP amounts subject to being tested for impairment at that date.

Contracts

The fair value attributed to contracts at the point of acquisition is determined by discounting the expected future cash flows to be generated from that asset at the risk-adjusted weighted average cost of capital for the Group. This amount is included in intangible assets as "contracts" and amortised over the estimated useful life on a straight-line basis. Separate values are not attributed to internally-generated customer relationships.

Contract amortisation is business-stream dependent. At Distribution, contracts capitalised are not amortised due to the very long-term nature of the business in the UK. These contracts are, however, tested annually for impairment using similar criteria to the goodwill test. At Aviation, contracts are amortised on a straight-line basis over ten years as this period is the minimum time-frame management considers when assessing businesses for acquisition.

Development costs

Development expenditure incurred on individual projects is carried forward only if all the criteria set out in IAS 38 "Intangible assets" are met. Following the initial recognition of development expenditure, the cost is amortised over the project's estimated useful life, usually three to five years.

Computer software

Costs associated with developing or maintaining computer software programs are recognised as an expense as incurred. Costs that are directly attributable with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets. Direct costs include the costs of software development employees. Costs are amortised over their estimated useful lives, usually three to five years.

Leases

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets acquired under finance leases are capitalised in the balance sheet at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is recorded in the balance sheet as a finance lease obligation. The lease payments are apportioned between finance charges (charged to the income statement) and a reduction of the lease obligations.

Rental payments under operating leases are charged to the income statement on a straight-line basis over applicable lease periods.

Available for sale investments

Investments are classified as available for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Available for sale investments are stated at the lower of carrying value and fair value less costs to sell.

Trade receivables

If there is objective evidence that the Group will not be able to collect all of the amounts due under the original terms of an invoice, a provision on the respective trade receivable is recognised. In such an instance, the carrying value of the receivable is reduced, with the amount of the loss recognised in the income statement.

Cash and cash equivalents

Cash and cash equivalents in the balance sheet comprise cash at bank and in hand and short-term deposits with an original maturity of three months or less. Bank overdrafts are shown within borrowings in current liabilities in the balance sheet.

Foreign currencies

Foreign currency assets and liabilities of the Group are translated at the rates of exchange ruling at the balance sheet date. The trading results of overseas subsidiaries, joint ventures and associates are translated at the average exchange rate ruling during the year, with the exchange difference between average rates and the rates ruling at the balance sheet date being taken to reserves.

Any differences arising on the translation of the opening net investment, including goodwill, in overseas subsidiaries, joint ventures and associates, and of applicable foreign currency loans, are dealt with as adjustments to reserves. All other exchange differences are dealt with in the income statement.

Derivative financial instruments and hedging activities

The Group uses forward contracts and cross-currency swaps as derivatives to hedge the risk arising from the retranslation of foreign currency denominated items.

The Group has derivatives which are designated as hedges of overseas net investments in foreign entities (net investment hedges) and derivatives which are designated as hedges of the exchange risk arising from the retranslation of highly probable forecast revenue denominated in non-local currency of some of our overseas operations (cash flow hedges).

In all cases, the derivative contracts entered into by the Group have been highly effective during the reporting period, and are expected to continue to be highly effective until they expire. As a result, all derivatives have been recorded using hedge accounting, which is explained below.

All derivatives are measured at fair value, which is calculated as the present value of all future cash flows from the derivative discounted at prevailing market rates.

Changes in the fair value of the effective portion of net investment hedges are recorded in equity, and are only recycled to the income statement on disposal of the overseas net investment.

Changes in the fair value of the effective portion of cash flow hedges are recorded in equity until such time as the forecast transaction occurs, at which time they are recycled to the income statement. If, however, the occurrence of the transaction results in a non-financial asset or liability, then amounts recycled from equity would be included in the cost of the non-financial asset or liability. If the forecast transaction remains probable but ceases to be highly probable then, from that point, changes in fair value would be recorded in the income statement within finance costs. Similarly, if the forecast transaction ceases to be probable then the entire fair value recorded in equity and future changes in fair value would be posted to the income statement within finance costs.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

Share capital

Ordinary shares are classed as equity. Where the Company purchases its own shares the consideration paid including any directly attributable incremental costs, is deducted from the equity attributable to the Company's equity holders until the shares are cancelled, reissued or disposed of.

Share-based payments

Equity-settled share-based payments are measured at fair value at the date of grant and recognised as an expense over the vesting period. The amount recognised as an expense is adjusted to reflect the actual number of share options that vest unless the options do not vest as a result of a failure to satisfy market conditions. Fair value is measured by use of a relevant pricing model.

Critical accounting estimates

The Group makes estimates and assumptions concerning the future. These estimates will, by definition, seldom equal the related actual results particularly so given the prevailing difficult economic conditions and the level of uncertainty regarding their duration and severity.

The Board has considered the critical accounting estimates and assumptions used in the Accounts and concluded that the main areas of significant risk which may cause a material adjustment to the carrying amount of assets and liabilities within the next financial year is in respect of the assumptions used to calculate pension benefits.

The assumptions include corporate bond yields, investment return, price and salary inflation and mortality assumptions. Full details of assumptions used to calculate the pension assets and liabilities are found in Note 3.

Exceptional items

Exceptional items are those material items which, by virtue of their size or incidence, are presented separately in the income statement to enable a full understanding of the Group's financial performance. These exclude certain elements of intangible asset impairment and amortisation, which are also presented separately in the income statement.

Transactions which may give rise to exceptional items include restructurings of business activities (in terms of rationalisation costs and onerous lease provisions) and gains or losses on the disposal of businesses.

Dividend distributions

Final ordinary dividends are recognised as liabilities in the accounts in the period in which the dividends are approved by the Company's shareholders.

Financial risk factors

The Group is exposed to financial risks: liquidity risk, interest rate fluctuations, foreign exchange exposures and credit risk. More details on these are disclosed in Note 12.

2. SEGMENT INFORMATION

For management purposes the Group is organised into two operating divisions: Distribution and Aviation.

These two divisions are organised and managed separately based upon their key markets. The Distribution segment provides newspaper and magazine distribution services across the UK along with marketing services. The Aviation segment provides cargo and passenger ground handling services across the world.

Following a review of internal reporting, the information presented to the Board for the purpose of resource allocation and assessment of segment performance is focused on the performance of each division as a whole but also contains performance information on a number of operating segments within the Aviation division. The Board assesses the performance of the operating segments based on a measure of adjusted segment result before exceptional items and intangibles amortisation. Net finance income and expenditure are not allocated to segments as this type of activity is driven by the central treasury function. The Board does not monitor assets and liabilities on a divisional basis.

Segment information is presented in respect of the Group's reportable segments together with additional

geographic and balance sheet information. Transfer prices between segments are set on an arm's length basis.

Comparatives have been adjusted to reflect the new reporting format.

Business segment information Revenue Pre-exceptional operating profit/(loss ) 2010 2009 2010 2009 £m £m £m £m Distribution 1,338.2 1,302.7 28.8 28.6 Aviation - ground handling 369.8 324.4 21.8 20.1 - cargo handling 156.7 132.7 5.0 (4.3) - cargo forwarding 98.7 78.2 2.3 1.5 - discontinued 0.8 7.1 (1.2) 1.5 - unallocated costs - - (3.3) (3.0) 626.0 542.4 24.6 15.8 Corporate - - (1.2) (1.0) 1,964.2 1,845.1 52.2 43.4 Joint ventures and associates (126.6) (119.4) - - 1,837.6 1,725.7 52.2 43.4

A reconciliation of segment pre-exceptional operating profit/(loss) to profit before tax is provided below.

Distribution Aviation Corporate Group 2010 £m £m £m £m Operating profit 24.8 9.5 3.4 37.7 Share of post-tax results of 1.2 4.2 - 5.4joint ventures Share of post-tax results of - 1.8 - 1.8associates Operating profit after joint 26.0 15.5 3.4 44.9ventures and associates Net finance expense (7.4) Profit before tax 37.5 Analysed as: Pre-exceptional operating 28.8 24.6 (1.2) 52.2profit/(loss)* Pension credit (Note 4) - - 4.6 4.6 Impairment provisions (Note 4) - (4.0) - (4.0) Rationalisation costs (Note 4) (2.3) - - (2.3) Contract amortisation (Note 9) - (3.3) - (3.3) Share of interest on joint - 0.2 - 0.2venture and associates Share of tax on joint ventures (0.5) (2.0) - (2.5)and associates Operating profit after joint 26.0 15.5 3.4 44.9ventures and associates 2009 £m £m £m £m Operating profit/(loss) 26.7 (1.4) (1.0) 24.3 Share of post-tax results of 1.3 2.9 - 4.2joint ventures Share of post-tax results of - 1.7 - 1.7associates Operating profit/(loss) after 28.0 3.2 (1.0) 30.2joint ventures and associates Net finance expense (8.2) Profit before tax 22.0 Analysed as: Pre-exceptional operating 28.6 15.8 (1.0) 43.4profit/(loss)* (Loss)/gain on disposal of - (0.5) 1.7 1.2property, plant and equipment Gain on disposal of interest in - 0.2 - 0.2joint venture (Note 4) Impairment provisions (Note 4) - (2.8) - (2.8) Onerous lease provision (Note - - (1.7) (1.7)4) Rationalisation costs (Note 4) - (4.7) - (4.7) Contract amortisation (Note 9) - (3.3) - (3.3) Share of tax on joint ventures (0.6) (1.5) - (2.1)and associates Operating profit/(loss) after 28.0 3.2 (1.0) 30.2joint ventures and associates

*Pre-exceptional operating profit/(loss) is defined as operating profit/(loss) excluding intangible amortisation as shown in Note 4(b) and exceptional items but including the pre-tax share of results from joint ventures and associates.

Distribution Aviation Corporate Group 2010 £m £m £m £m Segment assets 176.7 270.0 4.1 450.8 Unallocated assets 38.0 Total assets 488.8 Segment liabilities (113.7) (86.9) (17.6) (218.2) Unallocated liabilities (184.8) Total liabilities (403.0) Segment assets/(liabilities) 63.0 183.1 (13.5) 232.6 Unallocated net liabilities (146.8) Net assets 85.82009 £m £m £m £m Segment assets 184.2 267.9 5.9 458.0 Unallocated assets 51.4 Total assets 509.4 Segment liabilities (124.0) (70.2) (18.5) (212.7) Unallocated liabilities (257.1) Total liabilities (469.8) Segment assets/(liabilities) 60.2 197.7 (12.6) 245.3 Unallocated net liabilities (205.7) Net assets 39.6

Unallocated assets comprise deferred tax assets, cash and cash equivalents.

Unallocated liabilities comprise retirement benefit obligations, borrowings, current income tax liabilities and deferred tax liabilities.

Distribution Aviation Corporate Group 2010 £m £m £m £m Capital expenditure 3.4 9.3 - 12.7 Depreciation 5.9 17.2 0.9 24.0 Amortisation of intangible assets 1.7 3.6 - 5.3(Note 9) Goodwill impairment (Note 4) - 1.8 - 1.8 (Gain)/loss on disposal of (0.4) 0.7 - 0.3property, plant and equipment 2009 £m £m £m £m Capital expenditure 7.0 8.1 - 15.1 Depreciation 5.8 18.2 0.9 24.9

Amortisation of intangible assets 1.2 3.5 - 4.7 (Note 9)

Goodwill impairment (Note 4) - 1.8 - 1.8 Gain on disposal of property, - - (1.7) (1.7)plant and equipment Geographic information Revenue Segment non-current assets 2010 £m 2009 2010 £m 2009 £m £m United Kingdom 1,412.9 1,369.0 153.5 163.4 Continental 128.0 112.5 32.2 35.3Europe Americas 140.9 126.6 24.3 25.8 Rest of the World 155.8 117.6 60.4 58.6 1,837.6 1,725.7 270.4 283.13. PENSIONSPENSION SCHEMES

With regard to the principal Group-funded defined benefit scheme in the UK (the Menzies Pension Fund), to which the employees contribute, the charge to the income statement is assessed in accordance with independent actuarial advice from Hymans Robertson LLP ("the Actuary"), using the projected unit method. Certain Group subsidiaries operate overseas and participate in a number of pension schemes, which are of a defined contribution nature. The income statement charge for defined contribution schemes represents the contributions payable.

The pension charge to the income statement is analysed as follows:

2010 2009 £m £m Menzies Pension Fund 1.7 1.6 Other schemes 7.3 7.4 9.0 9.0FINANCIAL ASSUMPTIONS

The Actuary undertook a valuation of the Menzies Pension Fund as at 31 December 2010 (2009 : 31 December) under IAS 19.

In deriving the results the Actuary used the projected unit method and the following financial assumptions:

2010 2009 % % Rate of increase in salaries 3.30 3.50 Rate of increase in pensions (prior to 1 May 3.40 3.602006) Rate of increase in pensions (from 1 May 2006 2.50 2.50to 1 June 2010) Rate of increase in pensions (after 1 June 1.00 -2010) Price inflation 3.30 3.50 Discount rate 5.40 5.70

Assumptions regarding future mortality experience are set based on advice from the Actuary in accordance with published statistics and experience in the business. As a result of the March 2009 triennial valuation, the scheme memberships were analysed into further categories and scheme mortality by category was adjusted in light of better information to take account of experience.

The average life expectancy in years of a pensioner retiring at 65 on thebalance sheet date is: 2010 2009 Male 20.0 20.5 Female 21.7 22.3

The average life expectancy in years of a pensioner retiring at 65, 20 years after the balance sheet date is:

2010 2009 Male 20.6 21.8 Female 22.8 24.3

Fair value of assets (and expected return on assets)

Long-term Value at Long-term Value at rate of December rate of December return 2010 return 2009 % £m % £m Equities 7.7 158.4 7.9 141.1 Bonds 5.4 57.1 5.7 46.2 Property 6.7 26.1 6.9 23.9 Other 0.5 0.2 0.5 0.7 Total value of assets 241.8 211.9 Defined benefit obligation (289.6) (296.4) Recognised in balance sheet (47.8) (84.5) Related deferred tax asset 12.9 23.7 Net pension liabilities (34.9) (60.8)Sensitivity analysis

A reduction in the discount rate will increase the assessed value of the defined benefit obligation and a rise in the discount rate will decrease the assessed value of the defined benefit obligation. The overall effect of a change in the discount rate for the Fund of 0.1% would be an increase/decrease to the defined benefit obligation of around 1.8%/£5.2m.

The effect of changing the assumption regarding life expectancy by one year longer than the disclosed table would be to increase the assessed value of the defined benefit obligation by around 3% to £298m.

Components of pension expense

2010 2009 Amounts (credited)/charged to operating profit £m £m Current service cost 1.7 1.8 Past service cost - 0.2 Gains on curtailments and settlements (4.6) (0.4) (2.9) 1.6 Amounts included in finance costs £m £m Expected return on pension scheme assets 15.2 11.9 Interest on pension liabilities (16.6) (13.7) Net financial charge (1.4) (1.8) Pension (income)/expense (1.5) 3.4 Amounts recognised in the Statement of £m £mcomprehensive income Gain on assets 18.2 26.4 Gain/(loss) on defined benefit obligation 11.3 (76.4) Actuarial gain/(loss) 29.5 (50.0) Change in scheme assets during the year £m £m Fair value of assets at start of year 211.9 182.4 Expected return on assets 15.2 11.9 Company contributions 5.7 4.5 Employee contributions 1.2 1.3 Assets distributed on settlements - (1.5) Benefits and expenses paid (10.4) (13.1) Gain on assets 18.2 26.4 Fair value of assets at end of year 241.8 211.9

The actual return on scheme assets was a gain of £33.4m (2009: a gain of £ 38.3m).

Change in defined benefit obligation during the £m £myear Defined benefit obligation at start of year 296.4 218.0 Current service cost 1.7 1.8 Past service cost - 0.2 Interest cost 16.6 13.7 Gains on curtailments and settlements (4.6) (1.9) Employee contributions 1.2 1.3 Benefits and expenses paid (10.4) (13.1) (Gain)/loss on defined benefit obligation (11.3) 76.4 Defined benefit obligation at end of year 289.6 296.4

The net impact on the scheme liability of changing the inflation measure from RPI to CPI is a £7m reduction in the liability.

Expected employer contributions for 2011 are estimated to be £9m.

History of experience gains and losses

2010 2009 2008 2007 2006 £m £m £m £m £m Gain/(loss) on scheme assets 18.2 26.4 (78.1) (2.7) 12.0 Percentage of scheme assets 7.5% 12.5% 42.8% 1.0% 5.0% Actuarial gain/(loss) on 11.3 (76.4) 29.4 (0.5) 11.4defined benefit obligation Percentage of scheme 3.9% 25.8% 13.5% 0.2% 5.0%liabilities Total value of assets 241.8 211.9 182.4 250.2 237.2 Defined benefit obligation (289.6) (296.4) (218.0) (240.7) (231.8) Recognised in balance sheet (47.8) (84.5) (35.6) 9.5 5.44 (a) EXCEPTIONAL ITEMS 2010 2009 Notes £m £m Pension credit (i) 4.6 - Rationalisation costs (ii) (2.3) (4.7) Impairment provisions (iii) (2.2) (1.0) Onerous lease provision (iv) - (1.7) Gain on disposal of property, plant (v) - 1.2 and equipment Gain on disposal of interest in (vi) - 0.2 joint venture 0.1 (6.0)

(i) During the year the Group completed a pension increase exchange exercise

whereby pensioners in the Menzies Pension Fund were offered an increased

pension in exchange for foregoing future non-statutory annual increases.

(ii) Costs of rationalising excess capacity comprising asset write-downs and

staff redundancy costs in the Distribution business during 2010 and in

the Aviation business during 2009.

(iii) As a result of a decline in 2010 volumes and revenues in the UK cargo

handling business and an excess supply capacity in the market the acquired goodwill in respect of Menzies World Cargo was tested for impairment in accordance with IAS 36 and a goodwill charge of £2.2m was recognised, leaving a residual balance of £0.3m. The recoverable amount of the cash-generating unit was measured based on a value in use calculation and a pre-tax discount rate of 11%. The 2009 impairment provision reduced the carrying value of the Group's 40% interest in Menzies Chengdu Aviation Services Limited, which was held as an available for sale asset, to its estimated recoverable amount.

(iv) This provision was in respect of future obligations on leasehold

properties, which became empty during 2009.

(v) During 2009 the Group completed a number of property and equipment sale

and leaseback arrangements, which resulted in a gain on disposal of £

1.2m.

(vi) During 2009 the Group disposed of the 50% interest in Freshport BV for a

consideration of £0.6m.

4 (b) INTANGIBLE AMORTISATION

2010 2009 £m £m Goodwill impairment (i) (1.8) (1.8) Contract amortisation (ii) (3.3) (3.3) (5.1) (5.1)(i) As permitted under the transitional requirements of IFRS1, the acquisition accounting of business combinations completed prior to the transition date has not been restated. As a result, assets which were previously capitalised as goodwill have not been reclassified as other intangible assets. Accordingly, these financial statements include an impairment charge of £1.8m (2009: £1.8m) reflecting the remaining life of the current licence at Menzies Macau Aviation Services Ltd.

(ii) This charge relates to contracts capitalised as intangible assets on the

acquisition of businesses. The taxation effect of the exceptional items is a net charge of £0.9m (2009: net credit of £0.6m). 5. FINANCE COSTS 2010 2009 £m £m Finance income: Bank deposits 1.1 0.6 1.1 0.6 Finance charges: Bank loans and overdrafts (6.8) (6.9) Preference dividends (0.1) (0.1) (6.9) (7.0) Net finance costs (5.8) (6.4) 6. TAXATION

(a) Analysis of charge in year

2010 2009 £m £m Current tax UK corporation tax on profits for the year 4.8 - Overseas tax 4.8 3.2 Adjustments to prior years' liabilities (1.4) (0.5) Total current tax 8.2 2.7 Deferred tax Origination and reversal of temporary differences 0.3 3.8 Impact of UK rate change (0.1) - Adjustments to prior years' liabilities (1.1) (0.1) (0.9) 3.7 Retirement benefit obligations 2.0 0.3 Total deferred tax 1.1 4.0 Tax on profit on ordinary activities 9.3 6.7 (b) Current and deferred tax related items charged/(credited) outside profit orloss 2010 2009 £m £m Deferred tax on actuarial gain /(loss) on 8.8 (14.1)retirement benefit obligations Deferred tax on fair value movement on interest - (0.3)rate hedges Current tax on net exchange adjustments (0.1) 0.2 Tax charge/(credit) reported outside profit or 8.7 (14.2)loss

(c) Reconciliation between tax charge and the product of accounting profit multiplied by the Group's domestic tax rate for the years ended 31 December 2010 and 31 December 2009 is as follows:

2010 2009 £m £m Profit before tax 37.5 22.0 Profit before tax multiplied by standard rate 10.5 6.2of corporation tax in the UK 28% Non-deductible expenses (principally goodwill 2.7 2.2impairment and intangible amortisation) Depreciation on non-qualifying assets 0.6 0.1 Unrelieved overseas losses 1.0 2.1 Utilisation of previously unrecognised losses (0.8) (0.7) Higher tax rates on overseas earnings - 0.2 Deferred tax on undistributed reserves of - (0.6)associate Joint venture and associate post-tax result (2.0) (1.7)(included in profit before tax) Adjustments to prior years' liabilities (2.6) (0.6) Impact of UK rate change on deferred tax (0.1) - Overseas deferred tax assets recognised - (0.5) At the effective corporation tax rate of 24.8% 9.3 6.7(2009: 30.5%)

In June 2010 the UK Government announced its intention to reduce the main rate of corporation tax from 28% to 24%. The fall will be phased in over a period of four years with a 1% reduction in the main corporation tax rate for each year starting on 1 April 2011. The Finance (No. 2) Act 2010, enacted on 27 July 2010, included legislation on the initial phase to reduce the main rate of corporation tax from 28% to 27% from 1 April 2011. The deferred tax asset at 31 December 2010 has been calculated at 27%. The estimated effect of the proposed reductions in rate by 2014 would be to decrease the net deferred tax asset by £ 0.8m. Most of the UK deferred tax asset relates to the UK pension deficit and it is expected that the majority of the reduction will be debited to other comprehensive income and will not have a material effect on the effective tax rate or on profit.

(d) Factors that may affect future tax charges

The Group has estimated tax losses carried forward, which arose in subsidiary companies operating in the undernoted jurisdictions, that are available for offset against future profits of those subsidiaries. Deferred tax assets have not been recognised in respect of these losses as they have arisen in subsidiaries where it is not probable that future taxable profits will be available against which such assets could be utilised.

Losses Expiry £m USA 39.4 Carry forward indefinitely Netherlands 23.0 Not earlier than 1 January 2012 Germany 22.6 Carry forward indefinitely Hungary 1.4 Carry forward indefinitely Norway 8.2 Carry forward indefinitely Sweden 1.6 Carry forward indefinitely

The Group has capital losses in the UK of approximately £13.7m that are available for offset against future taxable gains arising in the UK. No deferred tax asset has been recognised in respect of these losses.

7. DIVIDENDS 2010 2009 £m £m Dividends on equity shares: Ordinary - Interim, in lieu of final, paid in 4.8 - respect of 2009, 8p (2008: nil) per share - Interim paid in respect of 2010, 5p 2.9 - (2009: nil) per share 7.7 -

Dividends of £0.1m were waived by employee share trusts during 2010.

Investment in own shares

The Company's ordinary shares are held in trust for an employee share scheme. At 31 December 2010 the trusts held 1,727,793 (2009: 1,020,387) ordinary 25p shares with a market value of £8,163,822 (2009: £3,038,202).

8. EARNINGS PER SHARE Basic Underlying* 2010 2009 2010 2009 £m £m £m £m Operating profit 37.7 24.3 37.7 24.3

Share of post-tax results of joint 7.2 5.9 7.2 5.9 ventures and associates

Add back: Exceptional items (Note 4(a)) - - (0.1) 6.0 Intangible amortisation (Note 4(b)) - - 5.1 5.1 Share of interest on joint ventures - - (0.2) -and associates Share of tax on joint ventures and - - 2.5 2.1associates Net finance costs (7.4) (8.2) (7.2) (8.2) Profit before taxation 37.5 22.0 45.0 35.2 Taxation (9.3) (6.7) (9.3) (6.7) Exceptional tax - - (1.6) (2.6) Non-controlling interests (0.1) - (0.1) - Earnings for the year 28.1 15.3 34.0 25.9 Basic Earnings per ordinary share (pence) 47.8 25.8 Diluted earnings per ordinary share 47.7 25.8 (pence) Underlying* Earnings per ordinary share (pence) 57.9 43.8 Diluted earnings per ordinary share 57.7 43.8(pence) Number of ordinary shares in issue(millions) Weighted average 58.753 59.188 Diluted weighted average 58.892 59.188

The weighted average number of fully paid shares in issue during the year excludes those held by the employee share trusts. The diluted weighted average is calculated by adjusting for all outstanding share options which are potentially dilutive i.e. where the exercise price is less than the average market price of the shares during the year.

* Underlying earnings are presented as an additional performance measure. They are stated before exceptional items, intangible amortisation and share of tax on joint ventures and associates.

9. INTANGIBLE ASSETS Goodwill Contracts Computer Total Software £m £m £m £m Cost At 31 December 2009 58.3 50.0 12.6 120.9 Acquisitions (Note 14) 0.3 1.3 - 1.6 Additions - - 3.9 3.9 Currency translation 2.1 0.4 - 2.5 At 31 December 2010 60.7 51.7 16.5 128.9 Amortisation and impairment At 31 December 2009 8.1 7.4 4.9 20.4 Amortisation charge - 3.3 2.0 5.3 Impairment (Note 4(a)) 2.2 - - 2.2 Currency translation 0.2 0.3 - 0.5 At 31 December 20010 10.5 11.0 6.9 28.4 Net book value At 31 December 2010 50.2 40.7 9.6 100.5 At 31 December 2009 50.2 42.6 7.7 100.5 Cost At 31 December 2008 60.0 51.9 6.2 118.1 Additions 0.1 0.2 3.8 4.1 Transferred from fixed assets - - 2.6 2.6 Currency translation (1.8) (2.1) - (3.9) At 31 December 2009 58.3 50.0 12.6 120.9 Amortisation and impairment At 31 December 2008 8.1 4.4 3.5 16.0 Amortisation charge - 3.3 1.4 4.7 Currency translation - (0.3) - (0.3) At 31 December 2009 8.1 7.4 4.9 20.4 Net book value At 31 December 2009 50.2 42.6 7.7 100.5 At 31 December 2008 51.9 47.5 2.7 102.1

Goodwill acquired through business combinations and intangible assets with indefinite lives have been allocated at acquisition to cash generating units (CGU's) that are expected to benefit from the business combination. The carrying amount of the goodwill and intangible assets with indefinite lives have been allocated to the operating units as per the table below.

2010 2009 Goodwill Contracts Goodwill Contracts £m £m £m £m Aviation Netherland Cargo 8.0 - 8.3 - North American Cargo 8.0 - 7.8 - Australia Cargo 7.0 - 6.0 - UK Cargo 0.3 - 2.5 - South Africa 3.5 - 2.9 - Scandinavia 3.1 - 2.9 - Ogden worldwide 9.5 - 9.2 - Other 4.3 - 4.4 - 43.7 - 44.0 - Distribution Turners News 4.8 - 4.8 - EM News Distribution (NI) Ltd - 3.1 - 3.1 Chester Independent Wholesale - 7.1 - 7.1News Ltd North West Wholesale News Ltd - 2.7 - 2.7 The Network - field marketing - 1.4 - 1.4 Other 1.7 3.8 1.4 3.8 6.5 18.1 6.2 18.1 Total 50.2 18.1 50.2 18.1

The Group tests goodwill and intangible assets with indefinite lives annually for impairment, or more frequently if there are indications that these might be impaired. The basis of these impairment tests including key assumptions are set out below.

The recoverable amounts of the cash-generating units (CGUs) are determined from value in use calculations. These calculations use future cash flow projections based on financial forecasts approved by management. The key assumptions for these forecasts are those regarding revenue growth, net margin, capital expenditure and the level of working capital required to support trading, which management estimates based on past experience and expectations of future changes in the market.

The post-tax discount rate assumptions of 8% (2009: 8%) is based on the Group's weighted average post-tax cost of capital having considered the uncertainty risk attributable to individual CGU's. The equivalent pre-tax discount rate is 11% (2009: 11%). The 11% pre-tax rate has been applied to pre-tax cash flows.

Aviation

Value in use calculations are based on Board approved budgets and plans for a three year period. Cash flows beyond the three year period are extrapolated by growth rates that reflect management's specific location expectations for 2014 and 2015 incorporating a long-term growth rate derived using the best available market information (such as Boeing's 2010 Aviation Industry Review) adjusted for the specific risks and challenges relating to Menzies Aviation. Short-term revenue growth rates over 2014 and 2015 range from 2.2% to 6.5% (2009: -8.9% to +10%) and longer term revenue growth rates range from 1% to 3.5% (2009: 0.5% to 3.5%). Net margin assumptions are based on historic experience.

In 2009, the three year plan cash flows were extrapolated to a 10-year period prior to applying a long-term growth rate. Following a review of comparator companies impairment disclosures, management has reduced this extrapolation period to 5 years prior to applying a long-term growth rate. If the 2009 value in use calculation had been carried out on a similar basis to 2010 no impairment provision would have been required.

Base case forecasts show significant headroom above carrying value for each CGU with the exception of the UK cargo operations. Sensitivity analysis has been undertaken for each CGU to assess the impact of any reasonably possible change in key assumptions.

In 2010, the company has recognised an impairment of £2.2m in relation to its UK Cargo operations. This has been included in Net Operating Costs in the Income Statement. Whilst cargo markets outside the UK have already shown significant volume growth in 2010 and worldwide volumes are expected to grow in excess of 5% over the next 20 years, the UK market has continued to lag behind the rest of the world. The impairment is a result of a decline in 2010 volumes and revenues at UK Cargo and excess supply capacity in the market. Management continue to expect that UK cargo volumes will show significant recovery in the near term followed by steady long-term growth. The key growth assumptions used in the value in use calculation during the post Board approved plan period were Revenue growth of 4.5% in 2014, 5.0% in 2015 and 3.5% thereafter. The long-term growth assumption of 3.5% reflects underlying actual historic cargo volume growth in the world market.

In 2009, in respect of the UK and North American cargo operations, management concluded that a reasonably possible change in a key assumption could cause the carrying values to exceed recoverable amounts. During 2010 North American cargo volumes have increased by 23%, which was well ahead of market expectations resulting in significantly improved cash flows.

Distribution

Contract amortisation is business-stream dependent. At Distribution, contracts capitalised are not amortised due to the very long-term nature of the business in the UK. These contracts are, however, tested annually for impairment using similar criteria to the goodwill test.

Value in use calculations are based on Board approved three year plans extrapolated to a 5-year period using short-term growth rates of between 0% and 2% that reflect management's specific business expectations for 2014 and 2015 incorporating a long-term growth rate of between 0% and 2%. Net margin assumptions are based on historic experience.

Base case forecasts show significant headroom above carrying value for each CGU. Sensitivity analysis has been undertaken for each CGU to assess the impact of any reasonably possible change in key assumptions. There is no reasonably possible change that would cause the carrying values to exceed recoverable amounts.

In 2009, the plan cash flows were extrapolated to a 10-year period prior to applying a long-term growth rate. Following a review of comparator companies impairment disclosures, management has reduced this extrapolation period to 5 years prior to applying a long-term growth rate. If the 2009 value in use calculation had been carried out on a similar basis to 2010 no impairment provision would have been required.

10. ANALYSIS OF CHANGES IN NET BORROWINGS 2009 Cash flows Currency 2010 translation £m £m £m £m Cash at bank and in hand 31.5 (5.7) 0.8 26.6 Bank overdrafts (11.0) 2.6 - (8.4)

Net cash and cash equivalents 20.5 (3.1) 0.8 18.2

Bank loans due within one year (1.6) (50.2) - (51.8) Loan stock due within one year (0.1) - - (0.1) Preference shares (1.4) - - (1.4) Finance leases (0.3) 0.1 - (0.2) Debt due after one year (148.5) 86.7 - (61.8) Net derivative liabilities (0.9) 1.9 (2.9) (1.9) (132.3) 35.4 (2.1) (99.0)

The currency translation movement results from the Group's policy of hedging its overseas net assets, which are denominated mainly in US$ and Euro. The translation effect on net debt is offset by the translation effect on net assets resulting in an overall net exchange gain of £6.2m (2009: loss of £ 1.7m). This net gain/(loss) is recognised in other comprehensive income.

11. CASH GENERATED FROM OPERATIONS Group Company 2010 £m 2009 £m 2010 £m 2009 £m Operating profit/(loss) 37.7 24.3 (1.0) - Depreciation 24.0 24.9 0.9 0.9 Amortisation of intangible assets 5.3 4.7 - - Impairment provisions (Note 4(a)) 2.2 1.0 - - Share-based payments 0.8 0.4 0.2 - Onerous lease provisions - 1.7 - 1.7 Cash spend on onerous leases (1.4) (2.0) (0.9) (0.6) Loss/(gain) on sale of property, 0.3 (1.7) - (1.7)plant and equipment Gain on disposal of investment in - (0.2) - -joint venture Pension charge 1.7 1.6 0.1 0.2 Pension credit (4.6) - (4.6) Pension contributions in cash (5.7) (4.5) (5.7) (4.5) Rationalisation costs 2.3 4.7 - - Cash spend on rationalisation costs (1.5) (6.1) - (0.3) Increase in inventories (1.6) (2.7) - -

(Increase)/decrease in trade and (3.9) (2.2) 0.1 (0.6) other receivables

Increase/(decrease) in trade and 2.6 8.1 0.5 (2.8)other payables and provisions 58.2 52.0 (10.4) (7.7)12. FINANCIAL INSTRUMENTS Group Company 2010 2009 2010 2009 £m £m £m £m Derivative financial instruments Cash Flow Hedges Foreign exchange forward contracts 0.3 - 0.3 - Interest rate swaps (1.2) (1.2) (1.2) (1.2) Foreign Currency Net Investment Hedge

Foreign exchange forward contracts (1.0) 0.3 (1.0) 0.3

Total derivative financial (1.9) (0.9) (1.9) (0.9)instruments Current (1.1) 0.3 (1.1) 0.3 Non-current (0.8) (1.2) (0.8) (1.2) (1.9) (0.9) (1.9) (0.9)

The Group only enters into derivative financial instruments that are designated as hedging instruments.

The fair values of foreign currency instruments are calculated by reference to current market rates. The fair value of interest rate swaps are calculated by reference to current market rates taking into account future cash flows.

Fair Value Hierarchy

As at 31 December 2010, the Group held the following financial instruments measured at fair value. The Group uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:

Level 1 quoted (unadjusted) prices in active markets for identical assets or : liabilities Level 2 other techniques for which all inputs which have a significant effect : on the recorded fair value are observable, either directly or indirectly Level 3 techniques which use inputs which have a significant effect on the : recorded fair value that are not based on observable market data Assets measured at fair value Financial assets at fair value Total Level 1 Level 2 Level 3through the income statement £m £m £m £m Foreign exchange contracts - 1.3 - 1.3 -hedged Liabilities measured at fair value Financial liabilities at fair Total Level 1 Level 2 Level 3value through the income statement £m £m £m £m Foreign exchange contracts - 2.0 - 2.0 -hedged Interest rate swaps 1.2 - 1.2 -During the year ended 31 December 2010, there were no transfers between Level 1and Level 2 fair value measurements, and no transfers into and out of Level 3fair value measurements Group Company 2010 2009 2010 2009 £m £m £m £m Interest-bearing loans and borrowings Obligations under finance leases 0.2 0.3 - - Bank overdrafts 8.4 11.0 8.3 10.8 Non-amortising bank loans 88.0 122.8 88.0 122.8 Amortising term loan 25.6 27.2 25.6 27.2 Preference shares 1.4 1.4 1.4 1.4 Unsecured loan stock 0.1 0.1 - - Total interest-bearing loans & 123.7 162.9 123.3 162.3borrowings Current 60.5 12.8 60.2 12.2 Non-current 63.2 150.1 63.1 150.1 123.7 162.9 123.3 162.3 Interest-bearing loans and Maturity borrowings Obligations under finance leases January 2011 - July 2013 Bank overdrafts n/a Non-amortising bank loans January 2011 - January 2013 Amortising term loan March 2020 Preference shares Non-redeemable Unsecured loan stock On demand (by July 2012)

Other than trade receivables and payables, there are no financial assets or liabilities excluded from the above analysis.

No financial assets or liabilities were held or issued for trading purposes.

The Company has issued 1,394,587 cumulative preference shares of £1 each. These shares are not redeemable and pay an interest coupon of 9% semi-annually.

The amortising term loan is repayable between 2011 and 2020 with interest payable at a fixed rate of 6.23%.

The loan has a weighted average maturity of 3 years (2009: 4 years).

Non-amortising bank loans are drawn against unsecured, committed revolving bank credit facilities maturing between November 2011 and January 2013.

Group Company 2010 2009 2010 2009 £m £m £m £m Net Debt Derivative financial instruments 1.9 0.9 1.9 0.9 Interest-bearing loans and 123.7 162.9 123.3 162.3borrowings Total borrowings 125.6 163.8 125.2 163.2 Less: cash at bank, cash in hand 26.6 31.5 8.4 10.5and short-term deposits 99.0 132.3 116.8 152.7 2010 2009 Book Fair Book Fair value value value value £m £m £m £m Financial assets and financial liabilities Short-term borrowings 52.0 52.0 1.8 1.9 Medium-term borrowings 47.5 48.8 131.5 132.4 Long-term borrowings 15.6 17.6 18.4 20.2 Derivative financial instruments 1.9 1.9 0.9 0.9 Finance leases 0.2 0.2 0.2 0.2 Bank overdrafts 8.4 8.4 11.0 11.0 Total financial assets and 125.6 129.1 163.8 166.7financial liabilities Less: cash at bank, cash in hand 26.6 26.6 31.5 31.5and short-term deposits Net Debt 99.0 102.5 132.3 135.2

The fair value of the fixed term, amortising borrowing is calculated as the present value of all future cash flows discounted at prevailing market rates.

Trade and other receivables and trade and other payables carrying values are assumed to approximate their fair values due to their short-term nature.

A separate table has not been prepared analysing the Company's book values and fair values. The £0.4m difference in book values relates to interest bearing loans and borrowings and is deemed to be short-term in nature.

Floating Fixed rate 2010 Total Floating Fixed rate 2009 Total rate financial financial rate financial financial financial liabilities liabilities financial liabilities liabilities liabilities liabilities Currency £m £m £m £m £m £m Sterling 21.4 102.0 123.4 59.2 103.7 162.9 South 0.3 - 0.3 - - -African rand Net 1.9 - 1.9 0.9 - 0.9derivative liabilities 23.6 102.0 125.6 60.1 103.7 163.8 Group Company As 31 December 2010, the expiry 2010 2009 2010 2009profile of undrawn committed facilities was as follows: £m £m £m £m Less than one year 58.0 20.0 58.0 20.0 Between one and two years - 33.9 - 33.9 Between two and five years 12.1 - 12.1 - 70.1 53.9 70.1 53.9 Cash Flow Hedges

Foreign exchange forward contracts

At 31 December 2010 the Group held foreign currency forward contracts designed as hedges of transaction exposures arising from non-local currency revenue. These contracts were in line with the Group's policy to hedge significant forecast transaction exposures for a maximum 18 months forward.

The cash flow hedges of non-local revenue were assessed to be highly effective.

Interest rates swaps

The Group's policy is to minimise exposures to interest rate risk by ensuring an appropriate balance of long-term and short-term floating rates.

During 2009 the Group hedged the exposure to interest rate rises by entering into £75m of interest rate swap agreements, whereby the Group pays a fixed rate of interest and receives a variable rate of LIBOR+margin on the notional amount.

£50m of these interest rate swaps mature in July 2011 with the remaining £25m maturing in June 2012.

At 31 December 2010, 88.6% (2009: 68.1%) of the Group's borrowings were fixed.

2010 2009 Assets Liabilities Assets Liabilities £m £m £m £m

Fair value of Cash Flow Hedges - 0.4 (0.1) 0.4 (0.4) currency forward contracts

Fair value of Cash Flow Hedges - - (1.2) - (1.2)interest rate swaps 0.4 (1.3) 0.4 (1.6) Current 0.4 (0.5) 0.4 (0.4) Non current - (0.8) - (1.2) 0.4 (1.3) 0.4 (1.6)

For 2010, if interest rates on UK pound-denominated borrowings had been 0.5% higher/lower with all other variables held constant, post-tax profit for the year would have been £0.1m (2009: £0.3m) lower/higher, mainly as a result of higher/lower interest expense on floating rate borrowings.

Foreign currency net investment hedges

The Group's treasury policy is to hedge the exposure of currency denominated assets to foreign exchange risk. This is primarily achieved using forward contracts denominated in the relevant foreign currencies.

Gains or losses on the retranslation of these hedges are transferred to reserves to offset any gains or losses on translation of the net investments in the subsidiary undertakings.

The notional principal amounts of the outstanding forward foreign exchangecontracts are: Group Company 2010 2009 2010 2009 million million million million Euro EUR 16.0 19.4 16.0 19.4 US dollar USD 31.8 34.0 31.8 34.0 Czech koruna CZK 99.0 99.0 99.0 99.0 Australian dollar AUD 11.9 11.9 11.9 11.9 New Zealand dollar NZD 2.5 5.3 2.5 5.3 Swedish krona SEK 17.5 12.0 17.5 12.0 Norwegian krone NOK - 5.0 - 5.0 Indian rupee INR 630.6 668.6 630.6 668.6 South African rand ZAR 67.0 - 67.0 - Sterling Equivalent 2010 2009 £m £m Euro EUR 13.7 17.2 US dollar USD 20.3 21.1 Czech koruna CZK 3.4 3.3 Australian dollar AUD 7.8 6.6 New Zealand NZD 1.2 2.4dollar Swedish krona SEK 1.7 1.0 Norwegian krone NOK - 0.5 Indian rupee INR 9.0 8.9 South African ZAR 6.5 -rand 2010 2009 Assets Liabilities Assets Liabilities £m £m £m £m Fair value of foreign 0.9 (1.9) 2.2 (1.9)currency net investment hedges Current 0.9 (1.9) 2.1 (1.8) Non-Current - - 0.1 (0.1)

Foreign currency sensitivity

For 2010, if the UK pound had weakened/strengthened by 10% against the USdollar or the Euro, with all other variables held constant the effect wouldhave been: 2010 2009 Change in Change in Effect on Effect on Effect on Effect on GBP/USD GBP/EUR Profit Equity Profit Equity Rate Rate Before Tax BeforeTax £m £m £m £m 10% 0.3 (1.0) 0.5 (0.6) (10%) (0.3) 1.1 (0.5) 0.7 10% 0.7 1.1 0.5 1.4 (10%) (0.7) (1.4) (0.5) (1.7)

The Group's exposure to foreign currency changes for all other currencies is not material.

Capital Risk Management

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce the cost of capital.

Credit Risk

The Group considers its exposure to credit risk at 31 December to be asfollows: 2010 2009 £m £m Bank deposits 26.6 31.5 Trade receivables 133.4 117.8 160.0 149.3

For banks and financial institutions, the Group's policy is to transact with independently rated parties with a minimum rating of 'A'. If there is no independent rating, the Group assesses the credit quality of the counterparty taking into account its financial position, past experience and other factors.

Liquidity Risk

The Group manages liquidity risk by maintaining adequate reserves and banking facilities by continuously monitoring forecast and actual cash flows.

The following is an analysis of the Group's financial liabilities and derivative date financial liabilities into relevant maturity based on the remaining period at the balance sheet date to the contractual maturity date.

The amounts disclosed in the table are the contractual undiscounted cash flows. Floating rate interest is estimated using the prevailing rate at the balance sheet date.

Net values of transaction hedging are disclosed in accordance with the contractual terms of these derivative instruments.

2010 Due within Due Due Due over 1 year between between 5 years 1-2 years 2-4 years £m £m £m £m Interest bearing loans and (61.4) (3.1) (46.9) (15.1)borrowings Preference shares (0.1) (0.1) (0.3) (1.5) Other liabilities (0.1) (0.1) - - Trade and other payables (205.9) (1.9) - - Financial derivatives (64.3) (0.3) - - Total (331.8) (5.5) (47.2) (16.6) 2009 Due within Due Due Due over 1 year between between 5 years 1-2 years 2-4 years £m £m £m £m Interest bearing loans and (15.6) (77.7) (58.2) (18.0)borrowings Preference shares (0.1) (0.1) (0.3) (1.5) Other liabilities (0.1) (0.1) - - Trade and other payables (201.1) (1.3) - - Financial derivatives (48.7) (14.9) (0.3) - Total (265.6) (94.2) (58.8) (19.5)13. CONTINGENT LIABILITIES

There are contingent liabilities, including those in respect of disposed and acquired businesses, which are not expected to give rise to any significant loss to the Group.

In addition, in the normal course of business, the Company has guaranteed certain trading obligations of its subsidiaries.

14. ACQUISITIONS

During the year, the Group acquired 100% of the share capital or trading assetsof the following businesses:Division Aviation Distribution Distribution Name Transilvania Trinity Reed Total Handling Field Aviation Services SRI Marketing Limited Date of acquisition 29/9/10 30/6/10 31/10/10 £m £m £m £m Purchase consideration Cash paid 1.0 0.3 0.4 1.7 Deferred consideration 0.3 - 0.1 0.4 Total purchase consideration 1.3 0.3 0.5 2.1 Fair value of net assets 1.3 - 0.7 2.0acquired Goodwill - 0.3 (0.2) 0.1

The assets and liabilities arising from the acquisitions are as follows:

Non-current assets Intangible assets (contracts) - 1.3 - - 1.3fair value Property, plant and equipment 0.1 - - 0.1 Current assets 0.2 - 1.3 1.5 Current liabilities (0.3) - (0.6) (0.9) Net assets acquired 1.3 - 0.7 2.1

The acquired businesses contributed revenues of £2.0m from the date of acquisition. If the businesses had been acquired on 1 January 2010 revenues contributed would have been £6.8m. The results from acquisitions were not material.

In 2009 Menzies Aviation acquired the trade and fixed assets of Kion, a ramp services business based at Mexico City Airport, for a consideration of £0.5m, including costs of £0.1m.

A performance-related payment of up to £1.6m may become payable in respect of The Network (Field Marketing & Promotions) Company Limited, acquired in 2008, up to May 2011.

15. HEDGE ACCOUNTING RESERVE

This reserve records the portion of the gains or losses on hedging instruments used as cash flow hedges that are determined to be effective.

16. CASHFLOW 2010 2009 £m £m £m £m Operating profit 37.7 24.3 Share-based payments 0.8 0.4 Depreciation 24.0 24.9 Amortisation of intangibles 5.3 4.7 Net pension movement (1.0) (1.4) Working capital (2.9) 3.2 Exceptional items (0.1) 6.0 Cash spend on exceptional (2.9) (8.1)items Dividends from associates and joint 7.9 4.2ventures Non-cash items 0.3 (0.5) Operating cash flow 69.1 57.7 Purchase of property, plant and (11.6) (15.1) equipment Intangible asset additions (3.9) (4.1) Sale of property, plant and 0.7 1.0 equipment Net capital expenditure (14.8) (18.2) Net interest paid (5.4) (7.1) Tax paid (5.1) (5.5) Free cash flow 43.8 26.9 Equity dividends paid (7.7) - Additional pension payment (3.0) (1.5) Acquisitions (1.7) (1.6) Cash raised from asset 5.0 16.5sales and leasebacks Other investments 1.1 3.2 Net spend on shares (2.1) - Total movement 35.4 43.5 Opening net debt (132.3) (182.6) Currency movement (2.1) 6.8 Closing net debt (99.0) (132.3)17. ACCOUNTING POLICIES

This statement has been prepared in accordance with accounting standards and policies consistent with those set out in the Group Accounts for the year ended 31 December 2010.

18. ACCOUNTS

The figures used in this statement, which was approved by the directors on 7 March 2011, are not the Group's statutory accounts within the meaning of Section 434 of the Companies Act 2006 for the year, but are taken from those accounts. The auditors' report on the statutory accounts was unqualified and did not contain a statement under Section 428 (4(f)) of the Companies Act 2006.

19. ANNUAL REPORT

The Annual Report and Accounts will be available on 7 April 2011 and the Annual General Meeting will be held at the Roxburgh Hotel in Edinburgh on 20 May 2011 at 12.15pm. Statutory accounts for the year ended 31 December 2009 have been delivered to the Registrar of companies and those for the year to 31 December 2010 will be delivered following the Company's Annual General Meeting.

vendor

---

Related Shares:

MNZS.L