19th May 2006 07:01
British Airways PLC19 May 2006 PRELIMINARY FINANCIAL RESULTS 2005-2006 OPERATING AND FINANCIAL STATISTICS Three months ended Twelve months ended March 31 Better/ March 31 Better/ 2006 2005 (Worse) 2006 2005 (Worse) Revenue £m 2,122 1,875 13.2% 8,515 7,772 9.6% Operating profit £m 93 46 102.2% 705 556 26.8% Profit/(loss) before tax £m 91 (6) nm 620 513 20.9% Profit after tax £m 83 6 nm 467 392 19.1% Net assets £m 2,074 1,397 48.5% 2,074 1,397 48.5% Basic earnings per share p 7.1 0.1 nm 40.4 35.2 14.8% Three months ended Twelve months ended March 31 Better/ March 31 Better/ 2006 2005 (Worse) 2006 2005 (Worse) TOTAL GROUP OPERATIONS TRAFFIC AND CAPACITY RPK (m) 26,780 26,062 2.8% 111,859 107,892 3.7%ASK (m) 36,657 35,677 2.7% 147,934 144,189 2.6%Passenger load factor (%) 73.1 73.0 0.1pts 75.6 74.8 0.8ptsCTK (m) 1,240 1,214 2.1% 4,933 4,954 (0.4)%RTK (m) 3,918 3,820 2.6% 16,105 15,731 2.4%ATK (m) 5,722 5,598 2.2% 23,106 22,565 2.4%Overall load factor (%) 68.5 68.2 0.3pts 69.7 69.7Passengers carried (000) 8,160 8,178 (0.2)% 35,634 35,717 (0.2)%Tonnes of cargo carried (000) 202 216 (6.5)% 795 877 (9.4)% FINANCIAL Operating margin (%) 4.4 2.5 1.9pts 8.3 7.2 1.1ptsPassenger revenue per RPK (p) 6.19 5.97 3.7% 6.10 6.02 1.3%Passenger revenue per ASK (p) 4.52 4.36 3.7% 4.61 4.51 2.2%Cargo revenue per CTK (p) 10.00 9.23 8.3% 10.10 9.73 3.8%Total traffic revenue per RTK (p) 45.48 43.69 4.1% 45.44 44.38 2.4%Total traffic revenue per ATK (p) 31.14 29.81 4.5% 31.67 30.94 2.4%Net operating expenditureper RTK (p) 43.11 42.49 (1.5)% 41.06 40.85 (0.5)%Net operating expenditureper ATK (p) 29.52 28.99 (1.8)% 28.62 28.48 (0.5)%Average fuel price before hedging(US cents/US gallon) 191.59 143.88 (33.2)% 188.22 136.44 (38.0)% TOTAL AIRLINE OPERATIONS (Note 1) OPERATIONS Average Manpower Equivalent (MPE) 45,171 45,914 1.6% 45,755 46,065 0.7%ATKs per MPE (000) 126.7 121.9 3.9% 505.0 489.9 3.1%Aircraft in service at period end 284 290 (6) 284 290 (6) Note 1: Excludes non airline activity companies, principally, Airmiles TravelPromotions Ltd, BA Holidays Ltd, BA Travel Shops Ltd, Speedbird InsuranceCompany Ltd and The London Eye Company Ltd. Summary International Financial Reporting Standards The preliminary financial results are reported in accordance with InternationalFinancial Reporting Standards (IFRSs). Comparative amounts for the year endedMarch 31, 2005 have been restated in accordance with IFRSs, with the exceptionof amounts in relation to the valuation of and movements in certain investmentsand derivatives, in respect of which the Group adopted International AccountingStandards 32 and 39 with effect from April 1, 2005. Group performance Group profit before tax for the year was £620 million, an improvement of 20.9%compared with £513 million in the previous year. Operating profit in the year, at £705 million, was £149 million better than lastyear. The operating margin of 8.3% was 1.1 points better than last year. Theimprovement in operating profit primarily reflects improvements in revenue - up9.6% - partially offset by increased operating costs, in particular fuel, whichwas up 44.7%, and employee costs, which were up 5.0%. Passenger yields (pence/RPK), excluding fuel surcharge, were up by 1.3% for the full year; seat factorwas up 0.8 points at 75.6% on capacity 2.6% higher in ASKs. Cargo volumes (CTKs) for the full year were down 0.4% compared with last year,with yields, excluding fuel surcharge, up 3.8%. Overall load factor for the fullyear was 69.7%, with no change from last year. Net cash inflow from operating, investing and financing activities was £357million for the twelve months, an increase of £814 million compared with lastyear. In 2005/6 repayments of borrowings totalling £479 million were made,compared with £1,271 million last year. The closing balance of cash, cashequivalents and current interest bearing deposits of £2,440 million was up £758million versus last year. Net debt fell by £1,281 million during the year to£1,641 million. This is the lowest level since March 31, 1992, and is down £5.0billion from the December 2001 peak. The net debt to total capital ratio of44.2% at March 31, 2006 was the lowest level since privatisation. Group profit before tax for the fourth quarter was £91 million, £97 millionbetter than last year. The operating profit for the quarter was £93 million, £47million better than last year, again primarily reflecting improvements inrevenue, including fuel surcharges, partially offset by increases in a number ofcosts, including fuel which was 65.1% higher than last year, and employee costswhich were up 3.3%. Below the operating profit level, the Group reported a gainof £27 million on the sale of fixed assets and investments, compared with a lossof £11 million last year, primarily due to the £26 million profit on disposal ofthe Group's interest in the London Eye Company. Group revenue for the quarter - at £2,122 million - was up 13.2% compared withlast year. Capacity in ASKs was 2.7% higher. Passenger yields (pence/RPK),excluding fuel surcharge, were up by 3.7% and seat factor was up 0.1 points to73.1%, a record for the fourth quarter. Unit costs per ATK increased by 1.8%. For the quarter, cargo volumes were up 2.1% compared with last year and yields(pence/CTK), excluding fuel surcharge, were up 8.3%. Overall load factor was up0.3 points at 68.5%. Costs For the year ended March 31, 2006, unit costs (pence/ATK) worsened by 0.5%compared with last year. This reflects a net cost increase of 2.9% on capacity2.4% higher in ATKs. For the quarter, unit costs worsened by 1.8% compared with the same period lastyear. This reflects a net cost increase of 4.1% on capacity 2.2% higher in ATKs. Operating expenditure increased in the quarter, primarily reflecting increasesin fuel costs (up 65.1% due to increases in the fuel price, lower hedgingprofits in 2005/6 compared with 2004/5, and the effect of a strengthening USDollar against Sterling), employee costs (up 3.3%) and aircraft operating leasecosts (up 20.0% due to the increased provision relating to RJ100 aircraftsub-leased to Swiss International Air Lines). Non-operating items Unrealised gains on fuel derivative hedges, recognised through the incomestatement under IAS 39, totalled £19 million in the year and £10 million in thequarter. Net financing cost for the year was £159 million, £18 million higher than theprevious year, primarily due to a charge of £13 million on retranslation ofcurrency borrowings compared with a credit of £56 million last year, partiallyoffset by lower loan, lease finance and hire purchase interest due to lower netdebt and a lower financing cost related to pensions. For the three month period, net financing cost was £37 million, down £12 millionon last year. Profits on disposals of fixed assets and investments for the year were £27million, primarily due to the London Eye disposal in February 2006. Thiscompares to £71 million last year (which included the profit of £86 million ondisposal of the Group's interest in Qantas). Taxation The effective tax rate is reduced to 25% primarily by the recognition of £20million of Advance Corporation Tax (ACT) which had previously been written offas irrecoverable. A further £74 million of ACT is available for potentialoffset against future periods' corporation tax charges. Earnings per share For the year ended March 31, 2006, profits attributable to shareholders were£451 million, equivalent to earnings of 40.4 pence per share, compared withearnings of 35.2 pence per share last year. The profit attributable toshareholders for the fourth quarter was equivalent to 7.1 pence per share,compared with earnings of 0.1 pence per share last year. Segmental analysis Operating results improved in each business segment. The network airlinebusiness (Heathrow, Gatwick, passenger and cargo) benefited from increasedrevenue partially offset by increased costs, notably fuel. The regional airlinebusiness (re-branded as BA Connect during the year) experienced revenue declinesas a result of significant competitive pressures. Net operating cost reductionsof 10.5% in this segment more than offset the fall in revenue. The non-airlinebusiness segment improved its operating result by £7 million. Net Debt / Total Capital ratio The year-end net debt/total capital ratio was 44.2 per cent, a 23.5 pointreduction from last year. The net debt/total capital ratio including operatingleases was 53.0 per cent, a 19.3 point reduction from last year. Pensions The Group's pre-tax pension liability, for all schemes in deficit, increasedfrom £2,191 million to £2,290 million. Of the £2,290 million, £1,791 million isrecognised on the balance sheet (compared with £1,807 million last year), and£499 million (compared with £384 million last year) is unrecognised, using the "corridor" approach under IAS 19. The liability is primarily in the New Airways Pension Scheme (NAPS). The NAPSdeficit increased to £2,070 million from last year's £1,969 million. Of the£2,070 million, £1,587 million is recognised on the balance sheet and £483million is unrecognised. The recognised portion of last year's £1,969 milliondeficit was £1,612 million and the unrecognised portion was £357 million. Thecompany's cash contributions to NAPS increased from £236 million in 2004/5 to£246 million in 2005/6. The company published proposals for dealing with theNAPS deficit in March 2006. Discussions with the trustees of NAPS and employeemembers are ongoing. Aircraft fleet The number of aircraft in service at March 31, 2006 was 284, a reduction of 6 onthe prior year. One new aircraft, an Airbus A321, was delivered in the year.Two aircraft, an Airbus A320 and a Boeing 737-400 returned to service followingsub-leases to GB Airways and Air One respectively. Aircraft returns to lessorscomprised one Boeing 737-500 aircraft and one de Havilland Canada DHC-8. OneBritish Aerospace 146 aircraft was sold, and six Avro RJs were sub-leased toSwiss International Air Lines. Alliance developments In June 2005, the Australian Competition and Consumer Commission extendedpermission for British Airways and Qantas to co-operate under their JointServices Agreement (JSA) for a further five years, valid from February 2005.Under the JSA, there is full strategic, tactical and operational co-operation onthe two carriers' flights that serve markets between the United Kingdom/Continental Europe and Southeast Asia/Australia. Codeshare relationships with America West Airlines and Swiss International AirLines were terminated, as these partners joined the Star Alliance. During the year, Royal Jordanian Airlines, JAL and Malev announced theirintention of seeking membership of oneworld. Outlook Market conditions remain broadly unchanged. For the year to March 2007, totalrevenue is expected to improve by 5%-6%, up from our previous estimate of 4%-5%,due to the impact of the latest fuel surcharges and seat factor increases.Capacity is expected to increase by 2.5%-3% , with a small decline in yieldsexcluding fuel surcharges. As previously stated, fuel costs, net of hedging, are expected to be about £600million more than last year. Costs excluding fuel are expected to be unchanged. As announced at Investor Day, our business plan will focus on preparing for themove to Terminal 5 in 2008, investing in products for our customers, and drivingto a competitive cost base to make our company fit for growth in the future. Certain information included in these statements is forward-looking and involvesrisks and uncertainties that could cause actual results to differ materiallyfrom those expressed or implied by the forward-looking statements. Forward-looking statements include, without limitation, projections relating toresults of operations and financial conditions and the company's plans andobjectives for future operations, including, without limitation, discussions ofthe company's Business Plan programmes, expected future revenues, financingplans and expected expenditures and divestments. All forward-looking statementsin this report are based upon information known to the company on the date ofthis report. The company undertakes no obligation to publicly update or reviseany forward-looking statement, whether as a result of new information, futureevents or otherwise. It is not reasonably possible to itemize all of the many factors and specificevents that could cause the company's forward- looking statements to beincorrect or that could otherwise have a material adverse effect on the futureoperations or results of an airline operating in the global economy. Informationon some factors which could result in material difference to the results isavailable in the company's SEC filings, including, without limitation thecompany's Report on Form 20-F for the year ended March 2005. CONSOLIDATED INCOME STATEMENT Three months ended Twelve months ended March 31 Better/ March 31 Better/ 2006 £m 2005 £m (Worse) 2006 £m 2005 £m (Worse)Traffic RevenuePassenger 1,658 1,557 6.5% 6,820 6,500 4.9%Cargo 124 112 10.7% 498 482 3.3% 1,782 1,669 6.8% 7,318 6,982 4.8%Other revenue 340 206 65.0% 1,197 790 51.5%REVENUE 2,122 1,875 13.2% 8,515 7,772 9.6%Employee costs 632 612 (3.3)% 2,346 2,235 (5.0)%Depreciation, amortisationand impairment 184 197 6.6% 717 739 3.0%Aircraft operating lease costs 30 25 (20.0)% 112 106 (5.7)%Fuel and oil costs 444 269 (65.1)% 1,632 1,128 (44.7)%Engineering and other aircraft costs 120 123 2.4% 473 432 (9.5)%Landing fees and en route charges 133 130 (2.3)% 559 556 (0.5)%Handling charges, catering andother operating costs 226 217 (4.1)% 955 918 (4.0)%Selling costs 125 115 (8.7)% 449 490 8.4%Currency differences (3) (1) nm (18) 15 nmAccommodation, ground equipmentand IT costs 138 142 2.8% 585 597 2.0% TOTAL EXPENDITURE ON OPERATIONS 2,029 1,829 (10.9)% 7,810 7,216 (8.2)% OPERATING PROFIT 93 46 102.2% 705 556 26.8% Fuel derivative gains* 10 nm 19 nmFinance costs (57) (67) 14.9% (221) (265) 16.6%Finance income 26 28 (7.1)% 93 97 (4.1)%Financing income and expenserelating to pensions (6) 4 nm (18) (29) 37.9%Retranslation (charges)/creditson currency borrowings (14) nm (13) 56 nmProfit/(loss) on sale of fixedassets and investments 27 (11) nm 27 71 (62.0)%Share of post-tax profits in associatesaccounted using the equity method 6 nm 28 24 16.7%Income relating to fixed asset investments (2) 2 nm 3 nm PROFIT/(LOSS) BEFORE TAX 91 (6) nm 620 513 20.9% Tax (8) 12 nm (153) (121) (26.4)%PROFIT AFTER TAX 83 6 nm 467 392 19.1% Attributable to:Equity holders of the parent 80 1 nm 451 377 19.6%Minority interest 3 5 nm 16 15 6.7% 83 6 nm 467 392 19.1% Earnings per share:Basic 7.1 0.1 nm 40.4 35.2 14.8%Diluted 7.0 0.1 nm 39.8 34.1 16.7% nm: Not meaningful * Fuel derivative gains reflect the ineffective portion of unrealised gains andlosses on fuel derivative hedges required to be recognised through the incomestatement under IAS 39. CONSOLIDATED BALANCE SHEET March 31 March 31 2006 £m 2005 £m NON-CURRENT ASSETSProperty, plant and equipmentFleet 6,606 6,944Property 974 1,000Equipment 302 385 7,882 8,329 Goodwill 72 72Landing rights 115 122Other intangible assets 46 60 233 254 Investments in associates 131 126Other investments 33 30Employee benefit assets 137 137Other financial assets 89 38 TOTAL NON-CURRENT ASSETS 8,505 8,914 NON-CURRENT ASSETS HELD FOR SALE 3 5 CURRENT ASSETS AND RECEIVABLESExpendable spares and other inventories 83 84Trade receivables 685 685Other current assets 458 301Other current interest bearing deposits 1,533 1,133Cash and cash equivalents 907 549 2,440 1,682 TOTAL CURRENT ASSETS AND RECEIVABLES 3,666 2,752 TOTAL ASSETS 12,174 11,671 SHAREHOLDERS' EQUITY AND LIABILITIESSHAREHOLDERS' EQUITYIssued share capital 283 271Share Premium 888 788Investment in own shares (26)Other reserves 690 152 TOTAL SHAREHOLDERS' EQUITY 1,861 1,185 MINORITY INTEREST 213TOTAL EQUITY 2,074 Equity minority interest 12Non-equity minority interest 200MINORITY INTERESTS 212 NON-CURRENT LIABILITIESInterest bearing long-term borrowings 3,602 4,045Employee benefit obligations 1,803 1,820Provisions for deferred tax 896 816Other provisions 135 112Other long term liabilities 232 212TOTAL NON-CURRENT LIABILITIES 6,668 7,005 CURRENT LIABILITIESCurrent portion of long-term borrowings 479 447Convertible borrowings 112Trade and other payables 2,822 2,642Current tax payable 75 36Short term provisions 56 32TOTAL CURRENT LIABILITIES 3,432 3,269 TOTAL EQUITY AND LIABILITIES 12,174 11,671 CONSOLIDATED CASHFLOW STATEMENT Twelve months ended March 31 Better/ 2006 £m 2005 £m (Worse) CASHFLOWS FROM OPERATING ACTIVITIESOperating profit 705 556 149Depreciation, amortisation and impairment 717 739 (22)Operating cashflow before working capital changes 1,422 1,295 127Decrease/(increase) in inventories and other receivables 23 (71) 94Increase in trade and other payables and provisions 150 15 135Other non-cash movements 12 8 4 Cash generated from operations 1,607 1,247 360Interest paid (211) (242) 31Taxation (57) (57) NET CASHFLOW FROM OPERATING ACTIVITIES 1,339 1,005 334 CASHFLOWS FROM INVESTING ACTIVITIESPurchase of property, plant and equipment (275) (356) 81Purchase of intangible assets (8) (32) 24Purchase of interest in associated companies (5) (5)Purchase of other investments (2) (2)Proceeds from sale of associated companies 427 (427)Proceeds from sale of other investment 1 1Proceeds from sale of property, plant and equipment 9 57 (48)Costs of disposal of subsidiary company (6) (12) 6Interest received 78 78Proceeds from sale of interest in the London Eye 78 78Dividends received 22 23 (1)Increase in interest bearing deposits (402) (487) 85 NET CASHFLOW FROM INVESTING ACTIVITIES (510) (302) (208) CASHFLOWS FROM FINANCING ACTIVITIESProceeds from long term borrowings 116 (116)Repayment of borrowings (64) (168) 104Payment of finance lease liabilities (415) (1,103) 688Exercise of share options 21 4 17Distributions made to holders of perpetual securities (14) (14)Other financing income 5 (5) NET CASHFLOW FROM FINANCING ACTIVITIES (472) (1,160) 688 Net increase/(decrease) in cash and cash equivalents 357 (457) 814Net foreign exchange difference 1 (18) 19Cash and cash equivalents at April 1 549 1,024 (475) CASH AND CASH EQUIVALENTS AT MARCH 31 907 549 358 These summary financial statements were approved by the Directors on May 18,2006. NOTES TO THE ACCOUNTSFor the period ended March 31, 2006 1 BASIS OF PREPARATION These summary financial statements have been prepared in accordance with therecognition and measurement criteria of International Financial ReportingStandards (IFRSs)* as adopted by the European Union (EU) with the exception ofthe disclosure requirements of IAS 34 - 'Interim Reporting'. IFRSs as adopted bythe EU differ in certain respects from IFRSs as issued by the InternationalAccounting Standards Board (IASB). However, the summary financial statements forthe periods presented would be no different had the Group applied IFRSs, asissued by the IASB. The accounting policies and basis of preparation differ fromthose set out in the Report and Accounts for the year ended March 31, 2005 whichwere prepared in accordance with United Kingdom accounting standards and theCompanies Act 1985 (UK GAAP). A preliminary summary of the significant accounting policies used in thepreparation of these financial statements under IFRSs and the impact of thechange from UK GAAP to IFRS on comparative periods as required by IFRS 1 -'First-time adoption of International Financial Reporting Standards' wereincluded in the Group's 'Release of financial information for 2004/05 underInternational Financial Reporting Standards' published on July 4, 2005. Therelease included the quarterly results for quarters ended June 30, 2004,September 30, 2004, December 31, 2004 and March 31, 2005 restated under therecognition and measurement rules of IFRSs and a summary of the significantdifferences to UK GAAP. The release also included restated balance sheets atthose dates in addition to the restated balance sheet at April 1, 2004, theGroup's transition date to IFRS. As permitted under IFRS 1, the Group elected to apply the requirements of IAS32 - 'Financial Instruments - Disclosure and Presentation' and IAS 39 -'Financial Instruments - Recognition and Measurement' from April 1, 2005. As aconsequence certain assets and liabilities are required to be recognised andmeasured at fair value. As a result of the application of IAS 39 the opening netassets of the Group increased by £183 million at April 1, 2005. The increaserepresents the fair value of financial instruments and available for salefinancial assets (£193 million, net of deferred tax), partially offset by theimpact of the Group's share of the opening reserves adjustments of associates(£10 million). The adoption of IAS 32 had no impact on the reserves or netassets of the Group except for minor presentational differences between minorityinterests and shareholders' equity. The £200 million Euro Perpetual Preferredsecurities, issued by British Airways Finance (Jersey) L.P. in 1999, (in whichthe general partner is British Airways Holdings Limited, a wholly ownedsubsidiary of British Airways Plc) have been classified as Minority Interest. Under IAS 39 - 'Financial Instruments - Recognition and Measurement',financial instruments are recorded initially at fair value. Subsequentmeasurement of those instruments at the balance sheet date reflects thedesignation of the financial instrument. The Group determines the classificationat initial recognition and re-evaluates this designation at each year-end exceptfor those financial instruments measured at fair value through profit or loss. Other investments (other than interests in associates) are designated asavailable-for-sale financial assets and are recorded at fair value. Any changein the fair value is reported in equity until the investment is sold when thecumulative amount recognised in equity is recognised in income. Any provisionsfor impairment of the carrying value are reflected in income when they arise.Exchange gains and losses on monetary items are taken to income unless the itemhas been designated and assessed as an effective hedging instrument inaccordance with the requirement of IAS 39. Exchange gains and losses onnon-monetary investments are reflected in equity until the investment is soldwhen the cumulative amount recognised in equity is recognised in income. Derivative financial instruments, comprising interest rate swap agreements,foreign exchange derivatives and fuel hedging derivatives (including options,swaps and futures) are measured at fair value on the Group balance sheet.Changes in the fair value of derivative financial instruments are reportedthrough operating income or financing according to the nature of the instrumentunless the derivative financial instrument has been designated as a hedge of ahighly probable expected future cashflow. Gains and losses on forward exchangecontracts to hedge capital expenditure commitments are recognised as part of thetotal sterling carrying cost of the relevant tangible asset as the contractsmature or are closed out. Gains and losses on derivative financial instrumentsdesignated as cash flow hedges and assessed as effective for the period, aretaken to equity in accordance with the requirements of IAS 39. Gains and lossestaken to equity are reflected in the income statement when either the hedgedcash flow impacts income or its occurrence ceases to be probable. Certain loan repayment instalments denominated in US dollars and Japanese yenare designated as cash flow hedges of highly probable future foreign currencyrevenues. Exchange differences arising from the translation of these loanrepayment instalments are taken to equity in accordance with IAS 39 requirementsand subsequently reflected in the income statement when either the futurerevenue impacts income or its occurrence ceases to be probable. Long term borrowings, are recorded at amortised cost. Certain leases containinterest rate swaps that are closely related to the underlying financing and, assuch, are not accounted for as an embedded derivative. These financial statements have been prepared on a historical cost conventionexcept for certain financial assets and liabilities, including derivativefinancial instruments and available-for-sale financial assets, that are measuredat fair value. The carrying value of recognised assets and liabilities that aresubject to fair value hedges are adjusted to record changes in the fair valuesattributable to the risks that are being hedged. * For the purposes of these statements IFRS also include International Accounting Standards(IAS). 2 FINANCE COSTS / INCOME Three months ended Twelve months ended March 31 March 31 2006 £m 2005 £m 2006 £m 2005 £m FINANCE COSTS Interest payable on bank and other loans and finance charges payable under finance leases and hire purchase contracts 59 67 223 265 Interest capitalised (1) (1) Change in fair value of interest rate swaps (1) (1) Total finance costs 57 67 221 265 FINANCE INCOME Bank interest receivable 26 22 93 83 Other financing income 6 14 Total finance income 26 28 93 97 FINANCING INCOME AND EXPENSE RELATING TO PENSIONS Net financing expense/(income) relating to pensions 5 (4) 17 29 Amortisation of actuarial losses on pensions 1 1 Total financing income and expense relating to pensions 6 (4) 18 29 Retranslation (charges)/credits on currency borrowings (14) (13) 56 3 PROFIT/(LOSS) ON SALE OF FIXED ASSETS AND INVESTMENTS Three months ended Twelve months ended March 31 March 31 2006 £m 2005 £m 2006 £m 2005 £m Net profit on sale of investment in Qantas 86 Net profit on sale of the London Eye Company Ltd 26 26 Net profit/(loss) on sale of other investments 2 (2) 5 (2) Net (loss) on the disposal of property, plant and equipment (1) (9) (4) (13) 27 (11) 27 71 4 TAX The tax charge for the year is £153 million made up of a current tax chargeof £96 million, being UK Corporation tax of £91 million, overseas tax of £4million and a prior year tax charge of £1 million; and £57 million by way ofdeferred taxes in the UK which includes the benefit of £20 million of AdvanceCorporation Tax previously written off. The current tax provision amounts to £75million at March 31, 2006 (March 31, 2005: £36 million). The deferred taxprovision amounts to £896 million at March 31, 2006 (March 31, 2005: £816million). The tax charge for the quarter is £8 million which comprises £16million current tax and a deferred tax credit of £8 million. The charge for thequarter has benefited from the recognition of £20 million Advance CorporationTax. 5 EARNINGS PER SHARE Basic earnings per share for the quarter ended March 31, 2006 are calculatedon a weighted average of 1,130,106,000 ordinary shares (March 31, 2005:1,072,055,000) and for the twelve months ended March 31, 2006, on a weightedaverage of 1,116,178,000 ordinary shares (March 31, 2005: 1,071,126,000) asadjusted for shares held for the purposes of employee share ownership plansincluding the Long Term Incentive Plan. Diluted earnings per share for thequarter ended March 31, 2006 are calculated on a weighted average of1,145,055,000 ordinary shares (March 31, 2005: 1,128,181,000) and for the twelvemonths ended March 31, 2006 on a weighted average of 1,138,545,000 ordinaryshares (March 31, 2005: 1,126,485,000). The number of shares in issue at March 31, 2006 was 1,130,882,000 (March 31,2005: 1,082,903,000) ordinary shares of 25 pence each. 6 RECONCILIATION OF MOVEMENT IN NET DEBT TO CHANGES IN CASH FLOWS Twelve months ended March 31 2006 £m 2005 £m Increase/(decrease) in cash and cash equivalents during the year 357 (457) Net cash used in repayment of long-term borrowings 479 1,155 Increase in interest bearing deposits maturing after 3 months 402 487 Change in net debt resulting from cash flows 1,238 1,185 New finance leases taken out and hire purchase arrangements made (11) (12) Conversion of Convertible Capital Bonds 2005 112 Exchange and other non-cash movements (58) 63 Movement in net debt during the period 1,281 1,236 Net debt at April 1 (2,922) (4,158) Net debt at period end (1,641) (2,922) Net debt comprises the current and non-current portions of long-termborrowings, convertible long-term borrowings and overdrafts, less cash and cashequivalents plus interest-bearing short-term deposits. 7 ANALYSIS OF LONG-TERM BORROWINGS March 31 March 31 2006 £m 2005 £m Interest bearing long-term borrowings comprise: Loans 1,030 1,105 Finance Leases 1,418 1,493 Hire purchase arrangements 1,154 1,447 3,602 4,045 Current portion of long-term borrowings comprise: Loans 86 63 Finance Leases 105 96 Hire purchase arrangements 288 288 479 447 8 RESERVES March 31 March 31 2006 £m 2005 £m Balance at April 1 152 (231) Transitional effects from the adoption of IAS 39 and IAS 32 183 Profit for the period 451 377 Exchange and other movements (96) 6 690 1529 The figures for the three months ended March 31, 2006 are unaudited and donot constitute full accounts within the meaning of Section 240 of the CompaniesAct 1985. The figures for the twelve months ended March 31, 2006 form part ofthe Annual Report and Accounts and were approved by the Board of Directors buthave not been delivered to the Registrar of Companies; the report of theauditors on the accounts is unqualified. AIRCRAFT FLEET(for information only) Number in service with Group companies at March 31, 2006 On Balance Sheet Off Balance Total March Changes Since Future Options aircraft Sheet Aircraft 2006 March 2005 deliveriesAIRLINE OPERATIONS (Note 1) (Note 7) (Note 8) Boeing 747-400 57 57Boeing 777 40 3 43Boeing 767-300 21 21Boeing 757-200 13 13Airbus A319 (Note 2) 21 12 33 32Airbus A320 (Note 3) 9 18 27 1 7Airbus A321 7 7 1 3Boeing 737-300 5 5Boeing 737-400 (Note 4) 19 19 1Boeing 737-500 9 9 (1)Turboprops (Note 5) 8 8 (1)Embraer RJ145 16 12 28Avro RJ100 (Note 6) 10 10 (6)British Aerospace 146 4 4 (1)GROUP TOTAL 207 77 284 (6) 10 32 Notes: 1. Includes those operated by British Airways Plc and BA Connect.2. Certain future deliveries and options include reserved delivery positions, and may be taken as any A320 family aircraft.3. Includes 1 Airbus 320 returned to service from sub-lease to GB Airways.4. Includes 1 Boeing 737-400 returned to service from sub-lease to Air One.5. Comprises 8 de Havilland Canada DHC-8s. Excludes 5 British Aerospace ATPs stood down pending return to lessor and 12 Jetstream 41s sub-leased to Eastern Airways.6. Excludes 6 Avro RJ100 sub-leased to Swiss International Air Lines.7. Future deliveries represent replacement aircraft for 10 A320s due to leave the fleet from 2007.8. Excludes 10 secured delivery positions for Boeing 777 aircraft. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
International Airlines