06 July 2005

The Web

On the right track

Excerpts from the address delivered by MIA CEO Peter Bolech at the company’s AGM held Monday

The theme for this year’s report - “On the right track” – is not merely a choice for want of a title, but truly enshrines our performance during the year under review and pre-empts a cautiously optimistic outlook on our plans for the future.
Indeed the record profit before tax of Lm5.13 million derived from an annual turnover of Lm16.58 million is no mean feat and neither was this achieved by sheer coincidence. Moreover we have increased our EBIT (Earnings Before Interest and Tax) from 24.8% to 35.7% and our Profit after Tax from 11.3% to 19.4%. Our results this year could even be interpreted to indicate that we are somewhat more successful than the most companies operating in Malta. In fact, we are playing in the same league as some major privatised European airports. However, the success registered is certainly the result of appropriately taken decisions, diligently implemented by a motivated loyal workforce and confirmed through the confidence shown by our shareholders.
This is moreover endorsed by the Government’s decision to sell a further 20% of its shares in MIA on the Stock market which is yet another show of confidence in our performance. On the other hand we cannot ignore the fact that in order to achieve the ambitious programme we have set, the journey remains an uphill one, as together with our partners the other stakeholders we persist in combating all the alien factors that hinder the desired growth of our tourism industry.
We have introduced the concept of MIA as a learning organisation that emphasises the necessity of training all across the board. So much so, all employees have now successfully completed a programme on customer enthusiasm and have been able to benefit from other specialised courses. This positive attitude has brought about a more intrinsic alliance between management and employees and we are pleased to say that we are already reaping the fruits of our endeavours not uniquely in financial terms but equally in performance results that have enabled us to deserve a widely coveted prize in the aviation sector. The AETRA Monitor Award for which we placed second worldwide in the smaller airports category servicing under five million passengers per annum and moreover fifth place overall among all European airports is the result of a survey which is the joint airport research study conducted by IATA, the International Air Transport Association, and ACI, the Airport Councils International. “On the right track” of course also does mean we are not yet there, nor will we ever reach a point whereby we will not have further development to strive for because most certainly this is not the nature of our dynamic business.
To this effect the Board of Directors convened to re-define the company’s strategic policy and to re-examine progress registered on its set goals in order to explore any possible need of refining the operation whilst reflecting on the current realities of the aviation industry. Throughout this exercise the Board found that it was satisfied with the results obtained from the strategic policies drawn up. However, a constant refinement of the actual policies is to be maintained in order to ascertain that these are in line with current market demands and therefore ensure even better results.
During the year under review, the Cruise & Fly concept has continued to develop and has yielded a turnaround of 21,000 passengers at MIA. The cargo strategy which is being implemented continues to achieve results and has seen a growth of 28% since MIA was privatised. Here certainly we are on the right track.
Moreover, MIA has afforded its efforts on passenger hubbing directed towards making Malta a multi-modal transport hub in the Mediterranean.
Airline marketing has also proved to be successful as an increase of 155,000 passenger movements - an increase of 6% of the previous year – have been recorded. Of these passenger movements 73% was generated by new destinations that were operated by six new airlines attracted to Malta by MIA. Our direct contribution towards the tourism industry is therefore not merely a significant grant which we afford to MTA’s budget, but equally the service of its marketing expertise and ceaseless efforts to promote Malta as a tourist destination. Suffice to mention that MIA is dedicating 4.6% of its annual budget towards promoting tourism for Malta and in this regards we are happy to welcome our new position on the Board of Directors of the Malta Tourism Authority.
As to the Mediterranean Business Park, notably MIA has already launched its plans both locally and abroad and these are beginning to attract interest from foreign investors, some of whom have already initiated talks with MIA in this regard.
Last year I mentioned that we were facing a new historical development with Malta’s accession to the European Union. Today when Malta’s EU membership is already one year old, I dare say that here again we are on the right track. Besides the facts I already outlined, it is worth mentioning that Malta’s new position within Europe has found us able and ready to comply with the requisites that membership imposes. Preliminary works for the implementation of Schengen requirements have already initiated and are on schedule. The entire project involves a LM1.5 million investment and will be completed by the first quarter of 2007. This comprises the eventual expansion of the air terminal, new retail outlets, the relocation of services and the segregation of Schengen and non-Schengen areas.
Another follow-up to the novel EU developments was the appointment of the second ground handling service provider. Globe Ground Malta commenced operation last March at MIA. We are pleased to welcome GGM Ltd. that is the local franchise of Service Air Globe Ground, an international company operating in 150 Airports worldwide. Globe Ground has in fact invested an initial 2 million Euros and is expected to proceed with doubling this investment in the next five years. At this stage I would like to refer to our retail operation and to the abolition of tax free benefits for passengers to / from EU destinations that has, as expected, left its mark with a drop in sales of mainly alcohol and tobacco and perfumes from our retail outlets. In order to compensate for this we have embarked on extensive restructuring works on the retail outlets and the upgrading of related facilities for travellers in such way that the retail sector has been modernised and revitalised to enhance the service for our clients. This down-trend repercussion has been felt in most other airports that have undergone the same process, but retail no doubt remains one of the most important revenue sources in an airport and in our case has formerly been able to account for as much as 11% of the total revenue. The improvements we have undertaken should warrant that in the not too distant future retail figures will resume the desired results.
At this point it is opportune for me to point out the generous dividend distribution made, as well as that being proposed at this meeting. The Company paid an interim net dividend of Lm1.7 million, equivalent to a gross dividend per share of 3.846 cents and is today proposing a further net dividend of Lm1.5 million, equivalent to a further gross dividend per share of 3.385 cents. The total dividends paid for this year amount to Lm3.2 million which represent a total gross dividend per share of 7.23 cents.

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