Annual Report and Accounts 2012 NATS Holdings Limited
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Annual Report and Accounts 2012 NATS Holdings Limited Company Number: 04138218 3 CONTENTS Click on the pages to the right OuR buSiNESS to access each section. you may return to the contents page at any time by clicking on the arrow located in the bottom-left corner of each page. buSiNESS AND FiNANCiAL REviEw CONSOLidated FiNANCiAL statements Company ACCOuNTS APPENDix Our Business Our business 6 Highlights 9 Chairman’s statement 10 Our Business | Annual Report and Accounts 2012 | NATS Holdings Limited 6 OuR buSiNESS and communications services. It is Our vision is to become the economically regulated and operates under licence from the Civil Aviation Authority (CAA). It operates from two air acknowledged global leader traffic control centres, at Swanwick in in innovative air traffic solutions Hampshire and Prestwick in Ayrshire. NATS (Services) Ltd and airport performance. NATS (Services) Ltd (NATS Services) is a commercial business not subject to economic regulation, and provides air traffic services at most of the UK’s major NATS Holdings Ltd (NHL) owns two airports. These range from the world’s principal operating subsidiaries and busiest dual-runway airport, Heathrow, a number of other companies which, and Gatwick, the world’s busiest single- together with NHL, form the NATS Group. runway airport, to the city airports of NATS provides air traffic control services Glasgow and Edinburgh. NATS Services for aircraft flying ‘en route’ in UK airspace also manages air traffic at airports in and the eastern part of the North Atlantic Aberdeen, Birmingham, London City, through its subsidiary NATS (En Route) Luton, Manchester and Stansted. plc and at 15 airports in the UK and at NATS Services has a joint venture with Gibraltar through NATS (Services) Ltd. Spanish infrastructure company Ferrovial, Our vision is to become the acknowledged which is contracted to provide air traffic global leader in innovative air traffic control tower services at ten airports solutions and airport performance. in Spain. NATS Services also provides engineering, NATS (En Route) plc consultancy (including training), defence NATS (En Route) plc (NERL) is the sole and aviation information management provider of air traffic control services for services to customers in the UK and more aircraft flying ‘en route’ in UK airspace than 20 other countries. and the eastern part of the North Atlantic. It provides approach services to aircraft arriving at or departing from the major airports around London and air traffic control services to helicopters operating in the North Sea. NERL also has a long-term agreement to provide the military with engineering, surveillance Our Business | Annual Report and Accounts 2012 | NATS Holdings Limited 7 Annual Report and Accounts 2012 | NATS Holdings Limited 8 Annual Report and Accounts 2012 | NATS Holdings Limited 9 HigHLigHTS We are the first air navigation service provider to implement an environmental performance metric. Safety, operational and environmental u We are the first air navigation Financial performance performance service provider to implement an u Revenues increased by £88m to u We handled just under 2.2 million environmental performance metric, £865m (2011: £777m) mainly due to flights in the year (2011: 2.1 million) measuring the efficiency of flight net increases in regulatory revenue profiles to reduce CO emissions. and maintained our safety record, with 2 allowances following the price control no risk-bearing airprox attributable The new metric forms the cornerstone review for 2011 to 2014 and contract to NATS. Average delay per flight was of a new incentive regime which is renewals and growth in our commercial 7.3 seconds, up on 2011 (4.3 seconds) designed to deliver 600,000 tonnes business. Profit before tax also of CO savings over the next three as we successfully implemented a 2 improved by £89m to £195m (2011: significant systems upgrade. years, worth up to £120m at today’s £106m), largely due to these factors. fuel prices. u By providing customers with more u In line with our capital investment efficient flight profiles we enabled u We received our best ever customer plan for the year, we invested £128m savings of 25,000 tonnes of fuel satisfaction score in our annual survey (2011: £123m) in air traffic control (2011: 12,000 tonnes), equivalent with 81.1% of customers satisfied or infrastructure and systems. to 80,000 tonnes of CO emissions highly satisfied with our service (2011: 2 u Net debt at £509m (2011:£528m) (2011: 38,000 tonnes), worth 80.7%). was £19m lower than previously. The approximately £16.5m based on u We achieved a high level of contract level of gearing (net debt defined by average fuel prices of £655 per tonne renewals, launched our growth strategy bank covenants relative to regulatory (2011: £7.5m at average fuel prices and successfully generated new assets) of the economically regulated of £620 per tonne). business in new markets, securing business was 58% (2011: 57%). orders worth £495m in the UK and 20 other countries. These included u Shareholders received dividends of a new seven year contract with BAA £51m (2011: £40m) during the year. to continue to provide air traffic control services to five airports, a two year extension to the Gatwick airport contract and a five year contract awarded to our Spanish joint venture for air traffic control services to 10 airports. We also secured consultancy contracts in the USA, the Middle East and Asia-Pacific. Annual Report and Accounts 2012 | NATS Holdings Limited 10 CHAiRMAN’S STATEMENT Richard Deakin and the leadership team We continue delivering a world- rolled out their vision and strategy for the years ahead. These focus on two main requirements: to continue delivering a class service and growing the world-class service as the leading air navigation service provider in the UK business at home and abroad. market, and growing the business both at home and abroad through a new range of innovative services and solutions, “Are the skies any brighter yet?” designed to meet the changing needs Many boards in the aviation industry of airports, airlines, air navigation service must have asked this question as they providers, military and governments faced on-going economic challenges. around the world. In the West, the Eurozone crisis, double- Crucially, we do this from solid dip recession and pension costs foundations. I’m pleased to report that continued to dominate the headlines. our economically regulated business Meanwhile, emerging markets presented has made a good start in delivering its new opportunities for infrastructure service quality and cost efficiency targets and services in support of ambitious in the first full year of the new price expansion plans. control period (CP3). Also as expected And change continued to define the in this year, there was a net increase in regulatory arena. In 2012 the Single its revenue allowances which were reset European Sky (SES) performance to reflect allowed investment, operating scheme was introduced, setting the costs , pension contributions and cost of performance targets for national air capital, based on the traffic conditions traffic management plans. forecast for CP3. Our commercial business continued to perform well in NATS faced up squarely to these shifting fiercely competitive markets, successfully political, economic and regulatory renewing significant airport contracts in environments. In last year’s report, we the UK and winning new business overseas, talked of our potential and a new strategy including airport contracts in Spain to capitalise on core competencies. This through our joint venture with Ferrovial. year, we can point to the first steps taken to realise that opportunity. Annual Report and Accounts 2012 | NATS Holdings Limited 11 CHAiRMAN’S statement For the year, the group’s turnover In our commercial business, our expertise improved by £88m to £865m. This mainly in information management, designing resulted from net increases in revenue and managing complex airspace, and allowances in our economically regulated optimising runway capacity for our business, combined with the contribution customers, supports the world’s busiest from contract renewals and growth in our single and dual runway airports at Gatwick commercial business. As a result, group and Heathrow and is now helping us to win profit before tax increased by £89m new business internationally in markets to £195m. from the USA to India, and from the UAE to Singapore. Underpinning this success is our focus on the customer, which sets us apart as Recognising that the Executive team an air navigation service provider. Over have a key role to play both in delivering recent years we have created a range of our operations and in formulating and innovative ways to listen directly to their driving our growth strategy, we have needs and concerns, which we address welcomed several new members in the in our operations, in our investment and past year. I am particularly pleased with engineering transition programmes and the calibre of the current Executive team in our coordinated response to incidents, and the cohesiveness that has been disruptions and delays. We strive achieved in a short period of time. continually to find ways to contribute Martin Rolfe, Managing Director further, the latest example being our 3Di Operations, has joined NATS from metric for measuring and improving flight Lockheed Martin. His relationship with efficiency, saving both CO and fuel burn. 2 NATS dates back many years and his commercial experience will help ensure our regulated business has the flexibility to respond to the changing European environment. Gerry Skelton has also joined us from DB Schenker as HR Director, and Simon Warr from Jaguar Land Rover as Communications Director, both adding significantly to the Executive team’s strength. Annual Report and Accounts 2012 | NATS Holdings Limited 12 CHAiRMAN’S statement To enable the new strategy, the company Finally, we look forward to the Olympic has rightly recognised the need to recruit, and Paralympic Games which present one reward and manage talent differently, of NATS’ greatest operational challenges and is introducing new performance and ever.