NATS Holdings Limited – Results for the year ended 31 March 2020
NATS Holdings Limited (NATS) today announced its results for the year ended 31 March 2020.
|Financial year ended 31 March||2020||2019|
|Revenue – £m||892.1||885.7|
|Profit before tax – £m||25.3||98.2|
|Capital expenditure – £m||158.5||156.5|
|Net debt1 – £m||170.7||73.9|
|Gearing2 – (%)||29.0%||25.7%|
|Dividends3 – £m||59.0||59.0|
|Flights handled (millions)||2.48||2.54|
|Safety: risk-bearing Airprox5 (attributable to NATS)||1||1|
|Delay seconds per flight (en route delay attributable to NATS for calendar years 2019 and 2018)||8.4||12.5|
|Enabled cumulative % reduction in CO2 emissions (average per flight against a 2006 baseline)||7.0%||6.9%|
- Profit before tax for the year ended 31 March 2020 is after a goodwill impairment charge of £49.0m (2019: nil)
- Excludes derivative financial instruments.
- Ratio of net debt (as defined by NERL’s Licence) to regulatory assets of the economically regulated business.
- Paid in financial year.
- An Airprox is a situation in which the safety of the aircraft was or may have been compromised in the opinion of a pilot or a controller. Data for 2019 is restated following an assessment by the UK Airprox Board in 2020.
2019/2020 financial year key points
NATS handled 2.48m flights (2019: 2.54m). Service performance improved on the prior year and met the 2019 regulatory targets for safety, delay and environmental flight efficiency.
The year-on-year profit reduction reflected our assessment of the likely impact of Covid-19 on the value of assets and investments.
NATS’ Board rejected the Civil Aviation Authority’s (CAA) plan for Reference Period 3 (RP3: 2020-2024) leading to a referral to the Competition and Markets Authority (CMA). The CMA’s findings were balanced but largely overtaken by the impacts of Covid-19 on the sector. The CAA will now need to reset the RP3 price control by the start of 2023.
The Government confirmed that after the Brexit transition period, NERL’s economic and safety regulation will be determined solely by the CAA, including the revised price control for the final years of RP3.
In conjunction with the CAA and the Department for Transport, we established the Airspace Change Organising Group to coordinate airspace modernisation for the industry.
We introduced space-based surveillance into our North Atlantic service to improve safety, flight efficiency and reduce emissions.
The MOD renewed its military area radar contract to 2030 and the Aberdeen Glasgow and Southampton airports group extended its ATC contract to 2029.
Covid-19 significantly reduced traffic levels from March 2020. Our response was to protect staff, maintain a safe operation, control expenditure and manage liquidity. In August 2020, we secured an additional £380m bank facility.
CEO, Martin Rolfe said:
“The year was good in terms of the quality of our service provision. We also progressed a number of major strategic projects designed to deliver the ATC capability UK aviation required for the future. However, as the year closed the impact of the Covid-19 pandemic was becoming more apparent. We adapted to this rapidly and have positioned ourselves well to manage the challenge to both us and our customers.
“The UK Airprox Board determined that one airprox was attributable to NATS for the 2019/20 financial year. We carried out thorough investigations to ensure causal factors were identified and changes implemented to address them. This process was reviewed by our Board and its Safety Review Committee.
“The need for the CMA referral was disappointing for all parties. While circumstances for the industry subsequently changed, their findings still provide some principles to guide the CAA’s review of RP3 that will take place considering the impact of Covid-19.”
“The immediate and steep reduction in air traffic volume from March 2020 impacted the entire aviation industry to a degree never seen before.
“Our focus has been to ensure we can continue providing a safe service and are well positioned to support the future recovery of the sector. Our short-term priorities included protecting employees, securing additional funding and temporarily suspending our capital investment programme. We have also started re-sizing the business, in anticipation of sustained lower demand, through a voluntary redundancy programme from which we anticipate in the region of 400 colleagues will leave the business by the end of the calendar year.”
“The resilience and adaptability of our people has been exceptional. We are well advanced in permanently adopting some of the innovation we have seen. I am grateful and very proud of everything the team has achieved in such difficult circumstances.”
Chairman, Dr. Paul Golby said:
“No previous demand shock, including 9/11, volcanic ash, the global financial crisis and Gulf wars, has posed such a significant threat and level of uncertainty to NATS’ business.
The Board has challenged and supported management in responding rapidly to protect the company’s staff, operation, cash conservation and funding.”
“While the timing, rate and extent of that recovery remains uncertain, the Board expects the regulatory framework underpinned by the requirements of the Transport Act 2000 will ensure that the company is able to finance its licensed activities. This confidence was reinforced by our lenders agreeing an additional bank facility through to 2022.”
To view the report in full, go to https://www.nats.aero/news/annual-report-accounts-2020/