1 Chief Executive ’ s review
Cont ’ d
Service line financial performance
From April 2012 we organised our activities according to service lines , each representing a core set of products and services that we offer to our customers . A brief description of each service line is provided below together with a summary of financial and operational performance . The principal financial targets for each service line are revenue and contribution . The latter takes account of the operating costs which service line managers are able to influence directly . For this reason depreciation charges , exceptional items , costs managed outside of service lines and variances to budgeted pension costs , for example , are not included in service line contribution . The volatility of market conditions between setting the budget for pension costs and the rate being known at the start of the financial year , combined with the size of the scheme , means these variances can be material . A reconciliation of service line contribution to the group ’ s operating profit is provided in the notes to the financial statements .
This year saw good financial performance across each of our service lines with each reporting a growth in revenue and an improvement in service line contribution .
NATS Airspace
NATS Airspace includes all of NATS ’ economically regulated activities : UK en route services provided to aircraft operating in controlled airspace ; en route services to traffic in that part of the North Atlantic where NATS provides a navigation service ; approach services for aircraft arriving at and departing from the five main London airports ; services to North Sea helicopter operators ; and services and infrastructure provided to the military .
Revenue from NATS Airspace increased to £ 711.7m ( 2012 : £ 693.0m ), principally due to an increase in UK en route revenues , after allowing for lower traffic volumes and higher inflation than assumed in the CP3 settlement ,
Financial performance : and due to better service performance . Offsetting these were reductions arising from the deferred recovery of permitted revenue adjustments under EC charging rules and the impact of pricing below the level of permitted revenue allowances . The latter was a response to the difficult economic environment facing our en route and London Approach customers and saved them c . £ 1m this financial year and c . £ 5m in the 2014 financial year .
Service line contribution improved to £ 368.1m ( 2012 : £ 345.9m ). Attributed operating costs were lower mainly reflecting staff pension charges ( at budgeted rates ), capitalised staff costs and lower headcount which offset annual pay increases and indexation uplifts on property maintenance costs .
2013 2012
Revenue (£ m ) 711.7 693.0 Service line contribution (£ m ) 368.1 345.9 Capital expenditure (£ m ) 127.0 127.1 Operational performance : Flights handled (‘ 000s ) 2,126 2,167 Risk-bearing airprox ( no .) nil nil Average delay per flight ( seconds ) 1.3 7.0 Enabled fuel savings ( tonnes ) 6,926 25,000
28 Annual Report and Accounts 2013 | NATS Holdings Limited