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MAHB quarterly net profit down on FRS 139 adoption

Thursday February 17, 2011

Malaysia Airports Holdings Bhd’s (MAHB) net profit fell 29% to RM100mil for the fourth quarter ended Dec 31, 2010 against RM140.9mil a year earlier.

The airport operator said the lower profit was mainly due to its adoption of the FRS 139, resulting in a higher share of losses in associate company Sabiha Gokcen International Airport (SGIA), whereby the concession payable by SGIA was recognised at fair value and subsequently at amortised cost.

It said that the gains and losses arising from the changes in the fair value were recognised in the income statement.

MAHB owns 20% of SGIA, which developed, operates and manages an airport in Istanbul, Turkey.

“In addition, the figure for the preceding year had included a reversal of lease rental payable to the Government totalling RM52mil, and backdated user fee in respect of financial year 2008 paid to the Government of RM45.8mil following the signing of the operating agreements.

“Further, there were also certain other one-off transactions pursuant to the signing of the operating agreements and share sales agreements for the disposal of Sepang International Circuit Sdn Bhd and NECC Sdn Bhd,” MAHB said in notes accompanying its financial results.

At a briefing yesterday, chief financial officer Faisal Mansor said, however, that after taking into consideration the said transactions, MAHB had performed better operationally as reflected by the higher passenger and revenue numbers.

For the three months ended Dec 30, 2010, MAHB made a net operating profit of RM121.7mil against RM120.4mil while revenue was up 3.7% to RM494.4mil versus a year earlier. Its earnings per share were lower at 9.15 sen versus 12.86 sen before.

MAHB said the improved revenue in the current quarter was mainly attributed to stronger results from the group’s airport operations, driven by strong recovery in air travel demand.

For the whole of 2010, MAHB’s net profit fell 22.2% to RM293.8mil from RM377.9mil. Revenue rose to RM1.81bil from RM1.63bil a year earlier on the back of higher pax growth of 12.7%.

Faisal said if MAHB had not adopted the FRS 139, its net profit would have been RM325.1mil for FY10.

MAHB’s airport operations rose 11.9% to RM1.67bil in FY10 due to strong pax movements. However, its non-airport operations declined 2.1% to RM137.6mil. In its airport operations, aeronautical income increased to RM868.7mil while non-aeronautical income rose to RM806.5mil.

“We are quite positive on it (achieving improved results) in FY11. We are quite optimistic that we will achieve a 10% growth in earnings before interest, tax and amortisation (EBITDA) to RM776mil in FY11 driven by higher pax numbers,” he said, adding that the 10% growth was its short-term prospective.

“We believe our EBITDA will exceed RM1bil and revenue will hit RM3bil by 2014,” Faisal said.

MAHB, he said, had allocated RM300mil to RM400mil for capital expenditure for FY11, excluding the construction of KLIA2.

He said of the amount, RM200mil to RM300mil was for operational improvements and the balance for investments in other airports.

“We are in the advance stage of the bidding process and hopefully, we can announce one or two new airports in the first quarter,” he said, adding that MAHB was also trying to get more airlines to fly into Malaysia.

MAHB is looking to secure the expansion work for Prince Mohammed Bin Abdulaziz Airport (Medina) in Saudi Arabia through a consortium.

When asked about the status of KLIA2, which is estimated to cost RM2bil, Faisal would only say: “I’d love to (give an update), but we will leave it for another session.”

He said the remaining tender to be awarded for the works on KLIA2 was “nothing the size of the three that have been given out”. It is believed that the tender is for the construction of a new runway for KLIA2.

On another note, Faisal said MAHB was “looking into” increasing its aeronautical fees.

MAHB’s current passenger service charge (PSC) is RM51 for international travellers and RM9 for domestic travellers at all airports.

Low-cost carrier terminals charge a lower rate of RM25 per passenger for international travel and RM6 for domestic.

Faisal said Malaysia still had the lowest airport charges in the region.

Singapore charges more than RM70, while Thailand and Hong Kong impose about RM80 and RM75 respectively.

This article is a verbatim copy of the original article from The Star.

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