John Menzies plc Annual Report 2003

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FY2003 Annual Report · John Menzies plc

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J o h n M e n z i e s p l c
A n n u a l R e p o r t 2003

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Allaround

the worldandjust

aroundthe corner

John Menzies plc
108 Princes Street, Edinburgh, EH2 3AA

Tel +44 (0) 131 225 8555 Fax +44 (0) 131 226 3752

Company No. 34970

E-mail: ir@johnmenziesplc.com

www.johnmenziesplc.com

John Menzies is focused on customers
who need efficient, time critical
logistics services. Our two specialist
divisions, Menzies Distribution and
Menzies Aviation, are both leaders in
their markets. Both rely on people as
their greatest asset; use leading edge
technology; and constantly strive to
deliver excellent customer service.

4 Chairman’s Statement

9 Chief Executive’s Review

11 Menzies Distribution

14 Menzies Aviation

19 Financial Review

24 Board of Directors

All around the world...

... and just around the corner

North America
As part of the ongoing review of our portfolio
our Canadian operations were sold during the
year and we closed our operations at Oakland
and Dallas. Other stations within the region
performed well with an excellent return from
our Los Angeles station which continues to
prosper in a highly competitive environment.

Caribbean
Our Caribbean portfolio continued to prosper
and the outlook for 2004 is bright with
the announcement of an exclusive deal
at Santo Domingo, Dominican Republic
to provide a full ground handling service
within the airport’s cargo area.

Africa
We now have three relatively young but
successful franchise operations with local
partners in Africa. This reaffirms our view
that working with local partners is a valuable
route to market.

United Kingdom
During the year our new ground handling
offering to Low Cost Airlines cemented its
position as the handler of choice for low cost
carriers. In December a joint venture was
signed with easyJet to provide all passenger
and ramp handling at their main hub,
London Luton Airport.

Europe
Our European stations performed well during
the year. At Amsterdam, a previously
underperforming station, a positive result
was returned and the station was awarded
“Best Independent Handler” by the airport
authority, reinforcing our commitment to
delivering excellent customer service.

Asia
Operations in Macau and Hong Kong were
badly affected by the outbreak of the SARS
virus during 2003. However, overall volumes
have now returned and we expect a strong
performance during 2004.

Australia & New Zealand
Contract gains have aided our operations in
New Zealand and a new management team
is focused on raising returns in this region.

Ipswich
Ipswich is one of our 3 branches from which
we serve most of East Anglia, a region in
which we have now been represented for
over 40 years.

Swansea
Driven by our commitment to customer
service our Swansea branch will re-locate
to new premises during the year.

London
In April 2004, our fourth and final 'super
branch' will open, completing the £16m
rationalisation programme which has seen
10 of our branches in the UK merged into
4 'super branches'. This rationalisation has
been successful, and the benefits of these
new distribution centres are already evident
to our suppliers and our customers.

Inverness
From the most northerly of our 13 Scottish
distribution centres, some 430 retailers are
supplied with newspapers and magazines
364 days a year. This branch covers an area
which includes the Shetland Islands, the
Orkney Isles, the Outer Hebrides and many
other remote locations on the mainland,
demonstrating our commitment to retailers,
both large and small.

Edinburgh
From the Distribution headquarters in
Edinburgh, working in conjunction with
publishers and retailers alike, our specialist
marketing skills help to drive sales
throughout the UK in both the newspaper
and magazine sectors.

Stockton
Stockton branch completed the successful
trial of the “pack-by-light” initiative which
helps to automate the nightly newspaper
packing process. As a result of this successful
trial the initiative will be rolled out to all
branches during 2004.

C H A I R M A N ’ S STAT E M E N T

The new team have taken up the reins with vigour and
have conducted a bottom up review of our core operations.
Their early actions are already having a positive impact,
and I firmly believe that their backgrounds and experience
will serve the Group well in the years to come.

Board

As I previewed in last year’s
statement, David Mackay retired from
the Chief Executive role at the end
of May after 40 years of service with
the Company. His contribution to the
strategic development of the Group
has been enormous, reinforced by his
loyalty and determination, and our
thanks are very much due to him.

Patrick Macdonald, as Chief Executive,
and Paul Dollman, as Finance Director,
have taken up the reins with vigour
and have conducted a bottom up
review of our core operations and
of the opportunities for building on
these. Their early actions are already
having a positive impact, and I firmly
believe that their backgrounds and
experience will serve the Group well
in the years to come.

Results

The Group has made good progress,
with profits at the operating level,
before Menzies Pension Fund charges,
increasing by 15.1% to £25.2m.
In addition, management has
focused particular attention on
cash flow, with a very substantial
improvement in free cash flow to
£20.7m, £14.7m greater than last year.

In common with many other
companies, our pension fund,
previously more than fully funded, has
been materially affected by the sharp
falls in the stock market and as a
result we recommenced contributions
during the year. The impact on profits
of a swing from a £3.6m pensions
credit to a £1.2m charge more than
offset the above increase in operating
profits. The Board has decided
to adopt the FRS 17 accounting
treatment for pensions for 2004.
More detail is provided in the
Financial Review.

Menzies Distribution is a highly
efficient operation, closely managed
with good cost control, and has
benefited from continued investment
in the business, its own inventiveness
and some buoyancy in its markets.
All this has resulted in a very
satisfactory improvement in the
division’s results.

Menzies Aviation has had another
difficult year, bearing the impact of
SARS which particularly affected our
operations in Macau and Hong Kong,
and of a weak cargo market at
Heathrow where volumes, both
import and export, were disappointing.
Nonetheless the division marginally
outperformed the previous year and
trading was materially stronger
in the last quarter of the year.

Dividend

Your Board is recommending a
final dividend of 12.6p per share,
maintaining our full year level
at 18.1p.

Strategy

Both our divisions are capable of
further growth. Distribution has
a well proven and strong base and
we will seek to add to this base
wherever possible. On the Aviation
side the focus is very much on
return on capital with a period
of consolidation to establish
a sound platform of profitable
businesses from which to deliver
shareholder value.

WILLIAM THOMSON, CHAIRMAN

Menzies Distribution is an industry leader in providing
range management and space planning advice to a wide
number of retailers. Its 'Space Ranger' service helps to
ensure that the right range of titles are in the right place
at the right time.

C H A I R M A N ’ S STAT E M E N T
(continued)

Peter Smith, who reaches 60 this year,
steps down as Chief Executive of
Menzies Aviation following the AGM
at the end of April. He has developed
this business over the last 8 years
from small beginnings to being one
of the major international players in
this field and we are most grateful to
him for his unfailing commitment in
building it into a worldwide business.

We are delighted that, after extensive
evaluation of external and internal
candidates, Craig Smyth has been
promoted to succeed Peter. Craig has
been with this business for most of
his career, rising to Finance Director
and latterly to Director responsible
for the Americas. We envisage that,
after a suitable period, Craig will be
appointed to the Board.

Charles Ramsay is due to retire later
this year. In the light of this we are
recruiting a non-executive director
with an appropriate financial
background, who will also take
over the Chairmanship of the Audit
Committee from Michael Walker,
who has been appointed as the Senior
Independent Non-Executive Director.

Corporate Governance

Investor Communications

Following the Higgs Report the new
rules and guidelines which have been
established as part of the new
Combined Code come into effect
for companies with a financial year
commencing on or after 1st November
2003. These set out an ethos for the
management of a company which
we generally support and for the most
part already comply with. We are
in the course of adopting specific
policies appropriate to the Company.

Following the changes to the Board
noted above, we will have three
independent non-executive directors.
The founding Menzies family
members remain substantial
shareholders of the Company and
as such it is appropriate that they
be represented on the Board and
its committees. Dermot Jenkinson
and Ian Harrison both have relevant
business experience, and, I believe,
act in the best interests of all
shareholders.

I am delighted that our work in
maintaining close contact with our
investors has again been recognised,
with the highly regarded IR Magazine
2003 Grand Prix award for Best
Smaller Company investor relations.

Staff

Customer satisfaction is a key
ingredient in any business, but
particularly so in the Service Industry.
An essential element of this is the
quality of staff and I would like to
record my thanks to our staff for
their dedication and contribution.

Prospects

The new year has got off to a positive
start in both our businesses. I am
in no doubt that we have a talented
management team and that the
outlook for the Group is encouraging.

WILLIAM THOMSON
CHAIRMAN

Our task is clear. We must protect and improve our core
by building on our reputation for operational excellence.
This means getting the basics right and building
sustainable platforms for growth.

C H I E F E X E C U T I V E ’ S R EV I E W

Summary

We have delivered, I believe,
an encouraging result for 2003.
We are now reaping the benefits
of the management actions taken
to improve performance, including
stronger capital discipline, tighter
working capital management,
a streamlined management structure
and cost reductions at Aviation and
in the Corporate Centre. As a result
we have achieved strong free cash
flow in 2003.

Performance

Turnover for 2003 was £1,240.7m, up
3.7% on 2002. Distribution turnover
was 4.3% higher at £1,001.0m, largely
as a result of newspaper cover price
increases and a strong performance
from magazines. Aviation revenue
rose by 1.2% to £239.7m reflecting
a difficult marketplace, particularly
the impact of the SARS virus on
international airline travel.

Total operating profit before the costs
of the Menzies Pension Fund (“MPF”)
was £25.2m, £3.3m (15.1%) ahead
of 2002. Distribution operating profits
were 8.7% higher at £31.2m. Aviation
made an operating profit of £4.1m,
up £0.4m on last year.

As calculated under SSAP 24, the MPF
incurred a charge for the full year
of £1.2m, in line with expectations.
This is an adverse swing of £4.8m
from the 2002 credit of £3.6m.
As a result, headline operating profit
before tax (see note 1) of £23.9m was
£2.0m below last year and headline
earnings per share (EPS) was 28.9p
per share, down 4.0p on last year.

The Board has decided to adopt FRS 17
in 2004 to provide investors with
greater clarity of earnings going
forward. The cash contribution to the
MPF in 2003 was £4.5m and the profit
and loss charge under FRS 17 would
have been £4.4m. In 2004, we expect
a cash contribution of between £5m
and £5.5m and a profit and loss
charge under FRS 17 of around £5m.

There were exceptional costs of
£17.2m mainly due to the write down
of the carrying values of our assets
in Menzies World Cargo UK and Talma
Peru. Although both businesses are
expected to trade profitably during
2004, trading conditions remain
difficult and do not support the full
carrying value of goodwill. The cash
element of the exceptional costs
totalled £3.0m and this reflects the
restructuring costs at Aviation and
the Corporate Centre. As a result,
FRS 3 EPS was (7.3)p, down 25.5p
on last year.

Cashflow

The greater emphasis on cash
flow during the year resulted in
a robust performance. Despite the
recommencement of contributions
to the MPF, free cash flow (see note 2)
improved by £14.7m from £6.0m in
2002 to £20.7m in 2003 as a result of
tighter working capital management
and better trading. However, there
are some timing differences and
the underlying improvement is
around £8m.

With the £20m redemption of
preference shares during the year, net
debt at the end of 2003 was £63.3m
compared to £58.2m at the end of
2002. Due to the timing differences
noted above, underlying net debt is
considered to be around £70m.

1. Headline profit before tax is defined as profit

before tax, goodwill amortisation and
exceptional items.

2. Free cash flow is the cash generated by the
business after capital investment, interest,
tax and preference dividends and before
acquisitions, disposals and ordinary dividends.

PATRICK MACDONALD, CHIEF EXECUTIVE

C H I E F E X E C U T I V E ’ S R EV I E W
(continued)

At Distribution the constant drive to apply innovation to
our processes saw the completion of the ‘Pack-by-light’
trial. ‘Pack-by-light’ helps to partly automate the nightly
newspaper packing process. This highly successful
innovation will be rolled out to our branch network
during 2004.

Menzies Distribution

(£m)

2003 2002 Variance

Turnover

1,001.0 959.6

+4.3%

Operating profit

31.2

28.7

+8.7%

Menzies Distribution has again
performed successfully with results
driven by newspaper cover price
increases and strong magazine
launches, particularly in the
second half.

Sales were up 4.3% overall with
newspapers 5.7% up and magazines
up by 4.6%. The only disappointment
was stickers where sales fell by 19.6%
(2002 was boosted by strong World
Cup sales).

Operating profit was up 8.7%
reflecting the full year benefit derived
from the branch rationalisation
programme and tight cost control.
The last remaining element of the
branch rationalisation programme
(East London) remains on course
to be completed by summer 2004.

Menzies Distribution remains
committed to introducing new
technology to improve service levels.
‘Pack-by-light’ technology, a real time
system for controlling the newspaper
packing process, is being introduced
across the branch network. This will
produce a parcel-specific contents
note thereby providing better
documentation for retailers.We
continue to invest in industry leading
allocation systems for newspapers
and magazines. Working with
publishers, each day we determine
the allocation of publications to our
customers. We also process returns
and inform newspaper publishers
of the previous day’s sales for each
of their publications.

Menzies Distribution is an industry
leader in providing range
management and space planning
advice to a wide number of retailers.
Unique software has supported the
introduction of ‘Space Ranger’, a free
service to independent retailers
to help ensure that the right range
of titles are in the right place at
the right time.

‘Menzies Superleague’, supported by
our advanced systems, gives publishers
the opportunity to drive promotional
and sales building activity through
a nationwide network of 4,500
independent retailers. This commitment
to customers was recognised when
Distribution won the ACE Press Award
2003 for Service and Communication
to Retailers by a Wholesaler.

The DTI has recently announced
that the current vertical agreement
exclusion for the newspaper and
magazine industry will be repealed
in May 2005. We believe the current
system of exclusive territories provides
the greatest range for retailers and
consumers and is the lowest cost route
to market. It is also the model used
widely in the EU. We remain committed
to supporting the industry and are well
placed to meet potential developments
in the competitive environment.

I N V E ST I N G I N T E C H N O LO GY TO M A I N TA I N A N A DVA N TA G E

Menzies Aviation's Hermes cargo management system is
a significant investment in software which has enhanced
our service offering to airlines and freight forwarders.
It helps to manage airside and landside events and
provides real time tracking of our cargo operations,
including EDI messaging which can interface with our
customers' systems.

Menzies Distribution continues to invest in industry
leading allocation systems for newspapers and magazines.
Working with publishers, each day we determine the
allocation of publications to our customers.

C H I E F E X E C U T I V E ’ S R EV I E W
(continued)

Menzies Aviation has developed a ground handling
product specifically for low cost airlines. In December
2003, we secured a four year joint venture with easyJet
to perform all their passenger and aircraft handling at
their base at London Luton Airport.

Menzies Aviation

UK and Europe

Americas

(£m)

2003 2002 Variance

Turnover

239.7 236.9

+1.2%

Operating profit

4.1

3.7 +10.8%

Menzies Aviation delivered an
encouraging performance with
profits of £4.1m, up 10.8% on 2002
despite difficult trading conditions
experienced during the year.
In particular, the SARS virus had a
significant impact on our operations
at Macau and Hong Kong. Markets
were generally more stable in the
second half of the year.

The management structure was
simplified and we now have a director
with clear responsibility for each of
our three regions, UK and Europe, Asia
Pacific and the Americas. We have
reduced overheads by £1.3m per
annum, with full effect in 2004.

Volumes at MWC UK were flat but
losses were reduced due to cost
savings. We acquired Fr8, the cargo
handling facility at Schiphol airport,
towards the end of 2002. Initial
results were disappointing but
we have taken rigorous actions and
fourth quarter results were better.
Turnover on our Connect contracts
grew significantly as a result of the
new contract for bussing workers on
the Heathrow Terminal 5 construction
project. European ground handling
revenue was 21.3% up with higher
activity at Prague and Bucharest
airports. Our operations at Rome
were sold in early 2003 at book value.

Our increased emphasis on
operational excellence was recognised
when Amsterdam Schiphol Airport
awarded its prestigious 'Best Handler'
Award for 2003 to Menzies Aviation.

We have developed a ground handling
product for low cost airlines which
we initiated with bmibaby at East
Midlands in late 2002. In December
2003, we secured a four year joint
venture with easyJet to perform all
their passenger and aircraft handling
at their base at London Luton Airport.

North American trading remained
difficult and we are focusing on
reducing costs and winning new
business. Our operations at Dallas
and Oakland were closed and we will
continue efforts to turn around other
poorly performing stations. We sold
our Canadian stations in Toronto and
Ottawa for a book loss of £1.1m.

Turnover in Latin America and the
Caribbean grew by 3.1% and the
region remains profitable. However,
new contract wins in Mexico were
not as profitable as expected, as
schedules were reduced, and we
are taking action to reduce costs.

Asia Pacific

Conditions remain difficult in
Australia and JASA, acquired in late
2002, has underperformed.
Management is focused on turning
this around. New Zealand has
performed strongly since securing
a major new contract. The adverse
profit impact of the SARS virus was
£1.6m and particularly hit our
operations at Macau and Hong Kong,
but we have seen recovery in the
second half with overall volumes
returning to expected levels.

The continued success of our business lies in our people
and importantly, their development. Staff training
continues to have focus and be delivered in the business
and 2004 will see further development opportunities.

C H I E F E X E C U T I V E ’ S R EV I E W
(continued)

Strategy

I took over in May 2003 and during
the summer, in conjunction with
divisional management, undertook a
review of our businesses. The Group
is now following a three step
approach. Firstly, get the basics right –
John Menzies is a service business
specialising in time critical logistics
and we need to deliver great service
at the right price to our customers.
Secondly, build scaleable platforms
by innovating to provide our
customers with a unique service
offering. Thirdly, grow from strength:
extend our offering in areas where
we have expertise, developing new
opportunities and acquisitions
which create sustainable shareholder
value. These steps are underpinned
by strong ‘engines’ driving finance
(the application of capital discipline
and shareholder value measures
such as economic value added),
process (operational quality,
the development of metrics and
continuous improvement) and
people (development of skills and
management capability to build
our businesses).

At Distribution, we are building on
the business’ reputation for delivering
operational excellence. This means
continuing to introduce new
technology to improve customer
service and controlling costs through
process improvement. In addition,
we will seek appropriate opportunities
to grow by product innovation, added
value services and continued
attention to customer needs.

Aviation spans a broad portfolio.
Whilst we have some stations that
are performing strongly, we also have
some operations that face structural
challenges. The medium term
objective is to fix the underperformers
and focus on getting the basics right
(operational excellence, customer
service, cost management). We will
concentrate on ‘adjacency’, selectively
seeking expansion opportunities
primarily with existing stations and
existing customers.

Corporate

The cost saving programme
undertaken in the summer has
produced annualised savings of
£1.0m. We have amalgamated our
Corporate offices into one location
and the central team is now
re-shaped to service the Group’s
needs more effectively.

People

In my first year with John Menzies plc,
I have visited our different businesses
around the UK and abroad and have
been impressed with the expertise
and enthusiasm of our people at all
levels. I would like to thank them for
their hard work and professionalism
during 2003.

Regrettably, the changes at Aviation
and the Corporate Centre involved
some redundancies but both teams
are now better able to face the
challenges ahead.

Building robust succession planning
for the Group is essential and in
2004, in addition to our commitment
to training for staff, management
development is a priority.
We will place greater emphasis on
leadership skills and the sharing of
best practices.

Outlook

Distribution remains tightly managed
and is committed to delivering
excellent customer value. It is an
industry leader in technical innovation
and is well placed to meet potential
developments in the competitive
environment.

Aviation has been repositioned to
perform more robustly in current
market conditions and benefit from
any market uplift. This process will
continue in 2004. Its challenge is
to perform consistently across all
stations and to realise its shareholder
value potential.

The medium term fundamentals ofour
markets remain good and the outlook
for the Group in 2004 is positive.

PATRICK MACDONALD
CHIEF EXECUTIVE

GILLIAN GIBSON, MENZIES DISTRIBUTION

MARIE KEAY, MENZIES AVIATION

During 2003 we achieved strong cashflow. This resulted
from action taken to improve performance including
strong capital discipline, a streamlined management
structure and cost reduction at Aviation and the
Corporate Centre.

F I N A N C I A L R EV I E W

Overview

The trading results before exceptional items can be summarised as follows:

Turnover

Distribution Services

Aviation Services

Total

Operating profit

Distribution Services

Aviation Services

Total

Central costs

Pension (debit) / credit

Interest

Headline PBT*

Headline Earnings per share**

2003
£m

2002
£m

Change
%

1,001.0

239.7

1,240.7

959.6

236.9

1,196.5

31.2

4.1

35.3

(6.5)

(1.2)

(3.7)

23.9

28.9p

28.7

3.7

32.4

(7.0)

3.6

(3.1)

25.9

32.9p

4.3

1.2

3.7

8.7

10.8

9.0

7.1

(19.4)

(7.7)

(12.2)

*Headline PBT is defined as profit before tax, goodwill amortisation and exceptional items.

**Headline earnings per share is defined as profit after tax, minority interest and preference dividends,
but before goodwill amortisation and exceptional items, divided by the weighted average number
of ordinary shares in issue.

Menzies Distribution has again
performed very well during 2003
showing an increase in operating
profit of 8.7% to £31.2m. This is
achieved by continuing to invest in
new technology to improve customer
service and by controlling costs
through process improvement.
Menzies Aviation has had a
challenging year as the aviation
market suffered from difficult trading
conditions, particularly the SARS
virus outbreak in the Far East.
Despite these difficulties the Division
achieved an increase in operating
profit to £4.1m.

Central costs of £6.5m reduced by
7.1% from the previous year as a
result of the business rationalisation
programme undertaken in the second
half of 2003. Headline earnings per
share reduced to 28.9p from 32.9p
due to the increased pension charge,
higher interest and a higher effective
tax rate of 27.6% compared with
21.6% in 2002.

Shareholders’ funds were £81.7m
at December 2003 compared with
£115.4m at December 2002.
Principal movements were the
scheduled redemption of £20m
of 8.58% preference shares in June
and dividends of £11.2m.

In addition, post-exceptional profit
for the year of £3.1m was offset by
taxation of £6.2m combined with
an increase in share capital of £0.4m
and currency translation movements
of £0.3m.

The Group generated an operating
cashflow of £40.6m compared
to £22.9m in 2002. Disposal of
businesses, loan notes redeemed and
share issues raised a further £5.3m.
£20m was used to repay the 8.58%
preference shares. Some £19.7m was
re-invested in the business whilst
dividend and tax payments accounted
for £13.8m. Net debt increased from
£58.2m to £63.3m. Excluding the
effect of refinancing the preference
shares, underlying net debt fell
by £14.9m. However, there are some
timing differences and the underlying
improvement is around £8m.
Underlying net debt is considered
to be around £70m.

Interest

The net interest charge is analysed
as follows:

2003
£m

2002
£m

Bonds

US dollar term loan

Overdrafts /cash

Associates

Net interest charge

2.6

0.9

0.2

–

3.7

2.6

1.1

(0.5)

(0.1)

3.1

The increase in the interest charge
results mainly from the repayment
of the preference shares in June 2003.

PAUL DOLLMAN, GROUP FINANCE DIRECTOR

F I N A N C I A L R EV I E W
(continued)

Pensions

The Group continued to account
for pension costs in respect of the
Menzies Pension Fund during the year
under SSAP 24. As anticipated the
SSAP 24 profit and loss account credit
for 2002 of £3.6m has been replaced
by a £1.2m pension charge in 2003.

Additional detailed disclosures
required under the transitional
arrangements of FRS 17 are given
in Note 4. These disclosures show a
net FRS 17 deficit, after deferred tax,
of £26.3m.

The Board has decided to adopt FRS 17
in full for 2004 to provide investors
with greater clarity of earnings
going forward. The following table
summarises the profit and loss
account and balance sheet impacts
as if FRS 17 had been fully adopted
for 2003:

Profit and loss account

Current service cost

Expected return on pension scheme assets

Interest on pension liabilities

Net financial return

Net charge

Balance Sheet

Shareholders’ funds

Pension adjustment (net of deferred taxation)

Adjusted shareholders’ funds

Profit and loss reserve per Accounts

Pension adjustment (net of deferred taxation)

Profit and loss deficit

The Board has been proactive on this
front and has taken a number of
decisions to reduce fund liabilities
and address the potential fund deficit.
These include the recommencement
of contributions to the pension fund
in the second half of 2003 in the
amount of £4.5m, closing the defined
benefit final salary scheme to
new members for a period of five
years and introducing a defined
contribution scheme.

The cash contribution to the pension
fund in 2004 is expected to be
between £5m and £5.5m.

£m

9.7

(9.1)

2003
£m

(5.0)

0.6

(4.4)

81.7

(62.6)

19.1

38.4

(62.6)

(24.2)

Goodwill

Capitalised goodwill amounts to
£45.1m compared to £69.0m in 2002.

In addition to the regular goodwill
amortisation of £3.6m exceptional
impairment provisions have been
made in respect of the Group’s joint
venture operation in Peru of £7.8m
and £4.7m predominantly in respect
of cargo operations in the UK.

Under FRS 11 there is a requirement
to carry out an impairment review
of the carrying value of goodwill
where there is an adverse change
in the business or market.

As a result of a more competitive
trading environment in Peru,
following the liberalisation of the
aviation cargo market, the Board
has reviewed the carrying value
of goodwill in this business and
considers it to be impaired. Given
the uncertainty in this market it is
considered prudent to provide for
full impairment and £7.8m has been
charged as an operating exceptional
item. A similar impairment review
has been carried out in respect of
Menzies World Cargo’s UK operations
and £4.7m has been charged as an
operating exceptional item.

These impairment charges may be
reversed in the future if there is a
change in economic circumstances.

Goodwill of £4.3m was realised on the
disposal of the Group’s 49% interest
in Aeroporti di Roma Handling SpA.

Exceptional items

During the year the Group incurred
£15.7m of exceptional costs in respect
of Aviation Services. These comprise:

• goodwill impairment provisions
for cargo operations of £12.5m,
described above,

• rationalisation costs of £2.1m in
the second half of 2003, mainly
staff costs,

• a £1.1m loss on disposal of aviation

operations in Canada in June.

In addition Central Services
rationalisation costs of £0.9m
were incurred.

Taxation

The effective Headline tax rate for the
year was 27.6% compared with 21.6%
in 2002 and is analysed as:

Tax due at UK rate

Non tax-deductible items

Unrelieved overseas losses

Overseas rate impact

Utilisation of tax losses

Adjustments in respect

of prior years

Headline tax rate

30.0

1.8

10.5

0.8

(5.9)

(9.6)

27.6

The tax rate on Headline earnings
continues to be below the standard
UK rate as a result of the realisation
of both carry forward overseas tax
losses and the resolution of prior year
matters with the Inland Revenue.
Exceptional items of £17.2m attracted
tax relief of £0.4m. Goodwill
amortisation of £3.6m does not
attract any tax relief. Tax paid during
the year was £2.4m. Payments
are expected to increase for the
12 months to December 2004.

Fixed Assets

Purchases of fixed assets totalled:

Plant &
Equip-
Property ment

Distribution Services

Aviation Services

Central Services

£m

0.5

1.0

–

Total
£m £m

5.5

6.0

9.9 10.9

0.1

1.5

15.5 17.0

During the year Distribution Services
continued the fit-out of the major
new units in Central Scotland and
East London and invested some
£4m in new technology.

Aviation Services capital expenditure
included some £2.5m on equipment
to service new contracts. In addition
some £3m of new buses were
purchased to service the growing
Connect business at Heathrow.

Working Capital

Working Capital movement is
analysed as follows:

Stocks

Debtors

Creditors

2003
£m

(2.1)

4.4

6.0

8.3

2002
£m

0.4

(6.1)

(5.3)

Significant management attention
has been focused on improving the
Group’s working capital position.
In particular, the net cash inflow
in 2003 reflected improved debtor
collection within Aviation Services
and higher trade creditors at
Distribution Services as a result of
the year ending on 27th December.

F I N A N C I A L R EV I E W
(continued)

Cashflow

Operating Profit

Depreciation

Goodwill amortisation

Pension prepayment

Working capital

Cash spend on exceptionals

Non cash items

Operating cash flow

Purchase of fixed assets

Sale of fixed assets

Net capital expenditure

Dividends from associates and

joint ventures

Net interest paid

£m

(17.0)

0.8

Preference and minority dividends paid

Tax paid

Free cash flow

Preference shares redeemed

Loan notes redeemed

Equity dividends paid

Acquisitions

Disposals

Total movement

Opening net debt

Currency movement

Closing net debt

2003
£m

24.0

15.8

1.8

(3.3)

8.3

(3.9)

(2.1)

40.6

(16.2)

3.5

(3.7)

(1.1)

(2.4)

20.7

(20.0)

0.3

(10.3)

(3.5)

4.6

0.4

(7.8)

(58.2)

2.7

(63.3)

£m

(14.0)

1.5

Acquisitions and disposals

In February the Group acquired an
80% interest in Atlantis Air Cargo
Management Inc., based in Panama.

In March the Group sold its 49%
interest in Aeroporti di Roma
Handling SpA.

The Group’s Aviation Services
operation in Canada was sold in June.

Treasury operations

From a Treasury perspective the main
financial risks faced by the Group are
liquidity, interest rate fluctuations
and foreign exchange exposures.
The Board has approved policies
for each of these risks, which are
managed on a day-to-day basis by
Group Treasury. The purpose of these
policies, which remained unchanged
throughout the year, is to ensure that
adequate funds are available to the
Group at all times and that financial
risks arising from the Group’s
operating and investment activities
are carefully managed. Accordingly,
Group policy is not to enter into
transactions of a speculative nature.

2002
£m

25.5

14.0

1.5

(3.6)

(5.3)

(4.9)

(4.3)

22.9

(12.5)

4.6

(3.5)

(1.8)

(3.7)

6.0

–

3.3

(9.9)

(22.1)

5.8

1.8

(15.1)

(46.8)

3.7

(58.2)

The Group Treasurer reports formally
on a monthly basis to a Treasury
Committee under the chairmanship
of the Group Finance Director
and operates within scope and
authorisation levels specified by
the Board.

Liquidity: operations are financed by
a mixture of shareholders’ funds, long
term bonds and bank borrowings.
The objective is to ensure a mix of
funding methods offering flexibility
and cost effectiveness to match the
needs of the Group. Surplus cash is
currently held, and Group policy is
to make major deposits only with
substantial institutions with high
credit ratings. In addition to its fully
drawn down term loans the Group
has £68.2m of unutilised committed
facilities, which mature by
January 2007.

Interest rate fluctuations: the Group’s
policy is to arrange core debt with
fixed rate borrowings. The £35m
bonds are fixed at 7.362%. Foreign
currency bank borrowings totalling
£34.8m are floating at rates ranging
from 1.25% to 3.525%, which mature
within the next 12 months. Other
borrowings and cash deposits are
at variable rates.

Foreign exchange exposures: the
Group’s exposure to currency risk at
a transactional level is minimal, with
day-to-day transactions of overseas
subsidiaries largely carried out in local
currency.

The Group’s exposure to balance sheet
translation risk in respect of its
overseas net investments is
minimised by borrowings in the
functional currency of the investment
and by use of derivative financial
instruments, which have the effect
of converting sterling borrowings into
borrowings of the functional currency.

Approximately 11% of Group turnover
and 34% of assets are denominated
in overseas currencies. The Group
does not actively hedge exchange rate
movements on the translation of
overseas profits except where those
profits are effectively matched by
foreign currency interest costs.

The majority of the Aviation Services
operations are located outside the UK
and operate in currencies other than
sterling. The rates of exchange to
sterling for those currencies which
have principally affected the Group’s
results are shown in the table below.

Credit risk: the Group is exposed to
credit related losses in the event of
non-performance by counterparties
to financial instruments, but does not
expect any failure by them to meet
their obligations given the policy
of selecting only counterparties with
high credit ratings.

Further disclosure in respect of
the above is included in Note 16
to the Accounts.

PAUL DOLLMAN
GROUP FINANCE DIRECTOR

Average
for year to
Dec 2003

1.636

1.451

Year end
27 Dec
2003

1.776

1.426

Average
for year to
Dec 2002

1.502

1.592

Year end
28 Dec
2002

1.602

1.539

US$

Euro

B OA R D O F D I R E C TO R S

WILLIAM THOMSON (Notes 1,4) was appoint-
ed Chairman in May 2002, and has been a
non-executive director since 1987. He is
Chairman of E G Thomson (Holdings) Ltd,
British Assets Trust plc and Fidelity Japanese
Values plc, and a non-executive director
of Dobbies Garden Centres. Age 63.

PATRICK MACDONALD was appointed to
the Board on 1st January 2003, and became
Chief Executive following David Mackay’s
retirement in May 2003. Previously with GE
Capital as Vice President responsible for global
sourcing, he has also held senior positions
with
The Boston Consulting Group and Unilever.

IAIN CALLAGHAN was appointed to the Board
in January 1997 as Managing Director of
Menzies Distribution. Since joining the Group
in 1965, he has worked in most functions
of this business. He is also a Trustee of the
Association of Newspaper and Magazine
Wholesalers and a member of the newspaper
and magazine industry’s Joint Industry
Stakeholder Group. Age 56.

PETER SMITH joined the Group as Chief
Executive of Menzies Aviation in 1996.
His career in aviation has included senior posi-
tions in the UK and overseas as well
as a period as an independent consultant
to the airline industry. He was appointed
a director in 1999, and leaves after the
Annual General Meeting in 2004. Age 59.

PAUL DOLLMAN was appointed as Group
Finance Director in 2002. A chartered account-
ant, he was previously Finance Director for
William Grant & Sons Ltd, and has also held
senior financial positions with Inveresk PLC,
Maddox Group plc and Clydesdale Retail Group.
Age 47.

DERMOT JENKINSON (Notes 1,2,3,4) was
appointed to the Board in 1986 where he held
various executive responsibilities prior to
assuming a non-executive role in 1999. He is
co-founder and Chairman of beCogent Ltd, and
is a director of a number of other private com-
panies. Age 49.

IAN HARRISON (Notes 1,2,3) was appointed
a non-executive director in 1987 and is
Chairman of the Remuneration Committee.
He is a director of Record Currency
Management Limited. Age 47.

CHARLES RAMSAY (Notes 1,2,3) was appointed
a non-executive director in 1990. He is
Chairman of Cockburns of Leith Ltd. He will
retire from the Board this year. Age 67.

MICHAEL WALKER (Notes 1,2,3,4) joined the
Board in 1995 and was appointed senior inde-
pendent non-executive director in 2003. He is
Chairman of the Audit Committee.
He is also Chairman of solicitors Maclay Murray
& Spens, and is a director of Securities Trust
of Scotland plc, Murray VCT 2 plc and Murray
VCT 3 plc. Age 51.

DAVID COLTMAN (Notes 1,3) was appointed a
non-executive director in 2001. He has held
various senior positions with airlines in the
UK and with United Airlines in Chicago, and is
Chairman of Edinburgh Worldwide
Investment Trust plc. Age 61.

NOTES 1. Non-executive, 2. Member of Audit Committee, 3. Member of Remuneration Committee, 4. Member of Nominations Committee
2
David Mackay retired from the Board on 20th May 2003.

Financial Report

Corporate Information

Report on Directors’ Remuneration

37 Directors’ Shareholdings

38 Directors’ Responsibilities

Independent Auditors’ Report

40 Group Profit and Loss Account

41 Group and Company Balance Sheets

42 Group Cash Flow Statement

43 Notes on Accounts

Five Year Summary

Shareholder Information

Principal Business Addresses

C O R P O R AT E I N F O R M AT I O N

Directors

The names of the directors of the Company are listed on page 24.

The directors who retire by rotation at the Annual General Meeting are Mr D J Jenkinson, Mr M J Walker and Mr D A Coltman
who, being eligible, offer themselves for re-election.

Principal Activities

The principal activities of the Company and its subsidiaries (“the Group”) are the wholesale distribution of newspapers and
magazines and the provision of cargo and ground handling services at airports. A review of the development of the business
is contained in the Chief Executive’s Review on pages 8 to 17.

Going Concern

After making appropriate enquiries, the directors are satisfied that the Group has adequate resources to continue in business
for the foreseeable future and, accordingly, consider that it is appropriate to adopt the going concern basis in preparing
the accounts.

Dividends

The directors recommend the payment of a final dividend of 12.6 pence per ordinary share, payable on 30th June to members
on the Register at the close of business on 4th June 2004. The shares will be quoted as ex-dividend on 2nd June 2004.

This final dividend, together with the interim dividend of 5.5 pence per ordinary share paid on 1st December 2003, makes
a total dividend of 18.1 pence per ordinary share for the year ended 27th December 2003.

Annual General Meeting

A separate document has been sent to all shareholders containing the Notice of Meeting and explaining the Special Business
to be transacted at the Annual General Meeting to be held on 30th April 2004 at the Roxburghe Hotel, Edinburgh.

Substantial Shareholdings

In addition to the directors’ interests, the Company has been notified of the following interests of three per cent or more in
its issued ordinary share capital at 15th March 2004:

D C Thomson & Co. Ltd

Mr J M Menzies

Mr D F Ramsay

Mrs S J Speke

Mrs K P Slater

Number of
Shares

4,990,000

4,189,650

2,639,878

2,039,920

1,981,552

Percentage of
Issued Capital

8.7

7.3

4.6

3.6

3.5

Corporate Governance

The Board is committed to high
standards of corporate governance.

Following the publication of the
Higgs Review and Smith Report,
the Combined Code set out in the
Listing Rules of the Financial Services
Authority (the Code) has been
significantly expanded, and applies
to companies for years starting on
1st November 2003. It will therefore
apply in full to the Group next year.

The Board supports the spirit behind
this expanded Code and expects to
achieve compliance except as noted
below, and has already implemented
a number of changes. Due to
the history of this Company,
and particularly the continuing
involvement of the Menzies family
which established a prudent and
supportive ethos within the
Company from an early stage in its
development, the Board will continue
to include and to benefit from the
involvement of certain non-executive
directors who are not considered to
be independent under the Code.
They will continue to serve on the
Board’s committees. Following the
retirement of C A Ramsay and
the expected appointment of a new
independent non-executive director
during the year, the Board will
include three independent and two
non-independent non-executive
directors as defined by the Code.

For the current Annual Report, the
provisions of the “previous” Code
apply, and the Board confirms that
it supports the Principles of Good
Governance and Code of Best Practice
contained in it. These principles are

included in the Board’s own Code of
Practice which outlines the role and
responsibilities of the Board and is
regularly reviewed and updated as
necessary. The Board has complied
with these Principles with the
exception of the appointment of
directors who are not independent as
defined within them to its committees.

Board of Directors

The Board comprises six non-executive
directors, including the Chairman,
and four executive directors, providing
a wide range of skills and experience.
Their biographies are on page 24.
The roles of the Chairman, who is
non-executive, and Chief Executive
are separate and clearly defined.
Following a review of its practices
during the year, the Board now
appoints non-executive directors
for an initial term of three years,
and has recognised the role of
a senior independent director.

The Board met nine times during
the year, with a formal schedule of
matters specifically reserved to it for
decision. These include the approval
of financial statements, acquisitions
and disposals, material agreements,
major non-recurring projects, treasury
policies, major capital expenditures
and strategic plans. It also delegates
specific responsibilities with written
terms of reference to the Board
Committees detailed below.
Information of an appropriate quality
is issued in a timely manner to assist
the Board in performing its duties.
All Board meetings were attended
by all directors with the exception
of Mr Walker and Mr Harrison who
each attended eight meetings.

New directors receive appropriate
induction and training. All members
of the Board have access to the
advice and services of the Company
Secretary and may take independent
professional advice and training
as appropriate at the expense of
the Company.

The Board has established four
committees with defined terms
of reference, as follows:

Group Executive Committee

The Group Executive Committee is
chaired by the Chief Executive and
consists of the executive directors
together with certain senior
executives. It is responsible for the
implementation of strategy and
plays a central role in planning,
budgeting and in risk identification
and management within the Group’s
operations. It normally meets ten
times a year.

Nominations Committee

A Nominations Committee comprising
the Chairman and two non-executive
directors is responsible for
recommending new members to
the Board for appointment. It has
adopted terms of reference modelled
closely on the new Code, and meets
as required. The Chief Executive
normally attends its meetings.
The Board as a whole is responsible
for the appointment of its own
members and for nominating them
for election by shareholders on first
appointment and thereafter for
re-election at three yearly intervals.

C O R P O R AT E I N F O R M AT I O N
(continued)

Remuneration Committee

The Report on Directors’
Remuneration on pages 32 to 36
details the constitution and role
of the Remuneration Committee,
and how the principles of the Code
relating to directors’ remuneration
have been applied. The committee
is chaired by Mr Harrison and meets
at least twice a year.

Audit Committee

The Audit Committee assists
the Board in the execution of its
responsibilities for corporate
governance and internal control,
and has adopted terms of reference
modelled closely on the new Code.
It consists of four non-executive
directors, chaired by Mr Walker, and
meets three times a year. It reviews
the Group’s internal control structure,
approves the outsourced internal
audit (Controls Assurance) and
external audit programmes, approves
the fees for each, and reviews reports
from management, from the external
Controls Assurance specialists, and
from the external auditors on their
work. It also reviews the Group’s
financial statements and any
proposed changes in accounting
policies prior to approval by the Board.
Furthermore, it keeps under review
the objectivity and independence of
the external auditors and the nature
and extent of the non-audit services
which they provide.

Communication

The Group has developed a
comprehensive programme to ensure
that effective communication with
shareholders, analysts and the

financial press is maintained
throughout the year. Through its
annual and interim reports, results
and other announcements, and
presentations to institutional
shareholders, the Group seeks to
present its strategy and performance
in an objective and balanced manner.

The Group received several awards for
investor relations during the year: in
the UK PLC Awards for 2002, for Best
Investor Communication; and in the
IR Magazine awards, for Best Investor
Relations in the Support Sector, the
Grand Prix for Best Smaller Company
Investor Relations, and was highly
recommended in the award for Best
Investor Relations Officer in the
Non-FTSE 100 Sector. Information
is also available through the Group’s
website at www.johnmenziesplc.com.

Shareholders attending the Annual
General Meeting are invited to ask
questions during the meeting and
also to meet the directors after the
formal business of the meeting has
concluded. The Chairmen of the Audit
and Remuneration Committees are
also available to answer questions
from any shareholder at this meeting.
Full details of proxy votes cast on
each resolution are made available
to shareholders at the meeting.

Internal Control

The directors are responsible for the
Group’s system of internal control,
which covers financial, operational
and compliance controls together
with risk management. Whilst no
system can provide absolute
guarantee and protection against
material loss, the system is designed

to give the directors reasonable
assurance that problems can be
identified promptly and remedial
action taken as appropriate.
The directors have reviewed the
effectiveness of the system of
internal control for the accounting
period under review.

The key features of the Group’s
internal control system are:

Control Environment

A key factor in the Group’s approach
to internal control is the recognition
of the need for risk awareness and
the ownership of risk management
by executives at all levels. Each
operating Division has its own Board.
A Statement of Group Policies
and Procedures sets out the
responsibilities of these Divisional
Boards, including authority levels,
reporting disciplines and responsibility
for risk management and internal
control. Certain activities, including
treasury, taxation, insurance, pension
and legal matters are controlled
centrally with reports reviewed by
the Board as appropriate.

Risk Identification and Review

Key identified risks are reviewed at
both Group and operating Divisional
Board level on an ongoing basis, with
a formal annual review of risks and
controls supported by the Group’s
Controls Assurance provider. The Chief
Executive and Group Finance Director
have regular formal meetings with
each Divisional Board to review their
performance, strategy and risk
management. Annual compliance
statements on internal control are
certified by each Divisional Board.

A Treasury Review Committee meets
regularly to review the adequacy of
the Group’s facilities against potential
utilisation and commitments.

Financial Reporting

There is a comprehensive Group-wide
system of financial reporting. Figures
reported include profit, cash flows,
capital expenditure, balance sheet
and relevant performance indicators.
Each operating Division prepares an
annual budget which is approved
by the Board. Thereafter a formal
re-forecasting exercise is undertaken
at least twice during the year. Actual
monthly results are monitored against
budget, forecasts and the previous
year’s results. Any significant
variances are investigated and
acted upon as appropriate.

Investment Appraisal

There are clearly defined investment
guidelines for capital expenditure.
All such expenditure is subject to
formal authorisation procedures, with
major proposals being considered by
the Board. Post investment appraisals
are conducted for all major
capital projects.

Audit Committee

The Audit Committee considers
reports from management, the
Controls Assurance provider and
the external auditors, and makes its
recommendations to the Board, prior
to the approval of the Annual Report.

Employees

The Board recognises that the Group’s
success depends on the quality and
performance of its employees.

The principles of equal opportunities
are recognised through published
employment policies which are
designed to attract, retain and
motivate quality staff, and to give full
consideration to the employment of
disabled people. Should an employee
become disabled when working for
the Company, efforts would be made
to continue their employment, and
retraining would be provided if
necessary.

The Board believes in creating
throughout the Group a culture based
on sound ethical practices which is
open and free from discrimination
and harassment, and will not tolerate
discrimination in any form.

Employees are encouraged to become
involved in the financial performance
of the Group; its savings-related share
option scheme is open to all UK
employees, of whom some 1,500
are members.

Internal communications are designed
to ensure that employees throughout
the Group are kept informed about
the direction and performance of
their own Division and the Group
as a whole. The Group magazine
“The Reporter” and Menzies Aviation’s
“The MAG” are issued on a regular
basis and the interim and final
results are circulated throughout
the business.

Over the past year our investment
in employee training has increased.
All new staff are provided with
training, which for Menzies
Distribution staff is supported by
newly developed interactive CD-Rom
training. The Group recognises the
importance of employee and

management development in
securing the future of the business,
and is developing new initiatives to
provide advice, support and training
to Divisional management.

Supplier Payment Policy

The Group does not operate a
standard code in respect of payments
to suppliers. Each Division is
responsible for agreeing the terms
and conditions under which business
transactions with its suppliers are
conducted, including the terms
of payment. It is Group policy that
payments to suppliers be made in
accordance with the agreed terms,
provided that the supplier has
performed in accordance with all
relevant terms and conditions.

The Company does not have any
trade creditors, so the number of
creditor days outstanding at the year
end was nil.

Donations

Donations to various charitable,
community and arts organisations
totalling £100,000 were made during
the year. Individual employees are
encouraged to be active members of
their local communities, and this total
includes donations to causes
supported by them.

It is the Company’s policy not to make
political donations, and no political
donations were made during the year.

Auditors

A resolution to reappoint
PricewaterhouseCoopers LLP
as auditors to the Company and
authorising the Board to set their
remuneration will be proposed at
the Annual General Meeting.

C O R P O R AT E I N F O R M AT I O N
(continued)

Corporate Social Responsibility

Key CSR Factors

Corporate Social Responsibility (CSR)
factors play an increasing role in the
attitudes of investors, government
and customers towards businesses.
Indeed, a considered approach to
CSR is an underlying factor in any
determination to provide quality
services. The directors consider that
this overall approach is prevalent
throughout the Group. For 2002, they
retained the Responsible Corporation
Ltd, independent specialists in this
field, to review this so as to help them
to maintain a reasonable and balanced
CSR profile reflecting the nature of
the business. Responsible Corporation
worked with the Group in 2002
to benchmark its CSR position,
to understand its key risks and to
assist it in formulating an appropriate
action plan, and endorsed the Group’s
Corporate Social Responsibility
report in its 2002 Annual Report.
The following comments update
that report:

Summary

The Group has in place appropriate
policies to cover its key CSR risks.
Its management structure and senior
managers’ responsibilities naturally
cover CSR factors as part of the
Group’s determination to provide
quality service.

The continuing priority given to
appropriate cost management ensures
that the business and environmental
drivers work in the same direction.
The Group’s UK CO2 emissions cannot
be considered as having a high
environmental impact, and the Group
has also taken a leading role in the
recycling of unsold newspapers and
magazines.

Given the nature of the Group’s
business, there are two main areas
which it needs to ensure are covered
by CSR policies since they relate to
risks to reputation and consequently
to revenues. Other policies are of
secondary importance relatively
for the Group.

The Group’s position on these
key areas is as follows:

Health and Safety

The Group has suitable policies
in place, together with systems
for implementation and feedback,
supplemented by training and regular
audits. Both Divisions recognise
that implementation through the
alignment of current working
practices to best practice is critical.
In particular Menzies Aviation, in
addition to a general drive to improve
Health and Safety standards in all
stations, is extending its Behavioural
Risk Improvement schemes, piloted
last year, to its operations in certain
other airports. It has also established
during the year a standardised global
accident reporting system designed
to enable clear definition and
recording of reportable accidents
to UK standards which will
enable it to focus clearly on any
improvements required.

Each Division has a Health and Safety
Committee which meets monthly,
supported by trained managers,
which reviews statistics and how
their records, already low by their
industry standards, can be improved.
The Group Board receives a monthly
report on any significant matters,
and an annual report on health and
safety covering training, statistics
and activity during the year.

By the nature of accidents, there
can be no guarantee that they will
never recur. The measures taken
by the Group are intended to place
emphasis on prevention and
continuing vigilance.

Environment

The key environmental impacts of
the Group are through energy usage,
principally fuel and electricity
consumption, in addition to waste
from returned unsold copies of
newspapers and magazines specific
to Menzies Distribution.

Estimates of CO2 emissions indicate
that the Group cannot be considered
as having a high environmental
impact. Other environmental impacts
within the Group are low due to the
nature of the business. As the normal
budgetary controls and business
efficiency targets act to constrain
and progressively improve the
environmental impact of the
Company’s operations, there is no
added value in maintaining derived
CO2 emissions targets.

The need to reduce fuel costs,
with consequential benefits to CO2
emissions, is addressed by optimising
delivery schedules in order to keep
costs down to a minimum.

tracking systems, Menzies Distribution
continually seeks to minimise the
levels of surplus copy consistent with
maintaining full availability of product
so far as possible at all times within
the 21,500 retail outlets served by the
Group. Menzies Distribution manages
the collection and consolidation
of unsold newspapers from these
21,500 retail units for recycling.
Unsold magazines, with their high
grade paper, are likewise collected,
cleansed, consolidated and delivered
to recycling plants, in an initiative
commended by the Institute of
Logistics and Transport. Some 50,000
tonnes of magazines and periodicals
and 65,000 tonnes of newspapers are
recycled from Menzies Distribution
customers each year.

There are thus clear business
drivers which closely align the key
environmental impacts of the Group
with control of costs, whether in
energy usage or in waste from
unsold product.

By order of the Board

C A ANDERSON
SECRETARY

15th March 2004

Delivery schedule optimisation is
a key business driver for Menzies
Aviation’s trucking and coaching
services, and particularly for Menzies
Distribution, which has grasped the
initiative in this area as evidenced
by the award received in 2002 from
The European Institute of Transport
Management. In addition, the
effectiveness of the news/magazine
supply chain is underlined by the
Freight Transport Association’s 1998
survey, which states that it “delivers
a higher line volume of the shortest
life product to a higher number of
consumers through a greater number
of retail outlets during a more
compressed time period than any
supply chain previously studied by the
Consultants”. This is underpinned by
a report to be published shortly on the
Biffaward Programme on Sustainable
Resource Use administered by the
Royal Society for Nature Conservation
and Biffa Waste Management Ltd
which recommends that, in order to
avoid a significant increase in certain
emissions, “The magazine supply
chain should continue to support the
principles of geographical wholesaler
agreements and consolidated supply.”
The report also examines the potential
use of alternative fuel such as LPG,
but concludes that it offers, on a net
basis, “little potential advantage”.

Controls over waste for unsold
newspapers and magazines are
closely linked to the need to reduce
operating costs by matching so far
as possible supply with demand.
By providing quality information
quickly to the publishers, and by
developing sophisticated demand

R E P O R T O N D I R E C TO R S ’ R E M U N E R AT I O N

Remuneration Committee

The Remuneration Committee
determines the remuneration of the
Chairman and the executive directors
on behalf of the Board and
shareholders. It has formal Terms
of Reference set by the Board, and
has during the year adopted new
terms of reference modelled on the
new Combined Code. Its members
are all non-executive directors
as identified on page 24 under
the chairmanship of Mr Harrison.
The Company Secretary is secretary
of the Committee.

The Chairman of the Committee
accounts to shareholders at the
Annual General Meeting for the
decisions of the Committee.

The Chief Executive attends meetings
as appropriate, as does Mrs S O’Donnell,
Group Human Resources Manager,
who has been appointed by the
Committee to provide information
to assist it in its deliberations.

Members of the Remuneration
Committee have no personal financial
interest other than as shareholders
in the matters to be decided and
no day-to-day involvement in the
running of the business of the Group.

In considering and determining
suitable remuneration packages
for the executive directors the
Remuneration Committee has given
full consideration to the relevant best
practice provisions set out in the
Combined Code.

Remuneration Policy

The Group recognises that its
continuing success depends on
the quality and motivation of its
employees. The policies followed
by the Group aim to ensure that
its remuneration practices are
competitive, thereby enabling it
to attract, retain and motivate
executives who have the experience,
skills and talents to operate and

develop its businesses to their
maximum potential. These practices
are reviewed each year to ensure that
they support the Group’s business
objectives and the creation of
shareholder value. The Remuneration
Committee follows these principles
with regard to the executive directors,
and also reviews the principles
underlying the remuneration of
senior executives.

Basic Salary and Benefits

The Group’s policy for the current and
future years is that directors’ salaries
should be maintained at competitive
levels for comparable positions
reflecting, where appropriate, the
international nature of its business,
and that additional reward for success
be built in to the remuneration
package through incentives designed
to share with directors any increasing
profitability of the Group and
increased wealth generated for
shareholders. The principal
benefits-in-kind are the provision
of a car (or car allowance), private
medical insurance and life cover.

Performance Related Bonuses

The executive directors participate
in a bonus scheme which is subject
to the achievement of challenging
Group and individual business targets
designed to encourage excellent
performance. The Committee has
discretion to vary bonus payments
for each executive director based on
performance. The maximum potential
payment for 2003 was 50% of basic
salary for the Chief Executive and
45% for the other executive directors.
Bonus payments are subject to the
approval of the Committee and are
non-pensionable.

Share Options

Share options are granted to each
executive director normally on an
annual basis at a level of one times
salary. All grants are discretionary, and
awards may be varied depending on

specific circumstances. Mr Dollman
and Mr Macdonald were granted
options at three times salary during
2002 and 2003 respectively, reflecting
market conditions at the time of their
recruitment, and would normally
expect to receive annual grants
of options.

Prior to September 2000, share
options were not subject to any
performance hurdle. Given the
Group’s shareholding profile, it was
considered that the interests of
directors and shareholders were
already adequately aligned.

Options granted since the adoption
of the current share option scheme
in September 2000 have been subject
to a performance hurdle and lapse if
this is not achieved. The Committee
considers that any performance
hurdles should be kept as simple as
possible, and should be closely aligned
to shareholder interest, and that
currently the use of an earnings per
share ratio to determine performance
best meets these combined
requirements.

The options granted in November
2000 lapsed during the year as the
performance target was not met.
Options granted in April 2002 have
a performance condition which
requires the Group to exceed the
three-year growth target approved by
the Board in February 2002. Options
granted in May 2003 are exercisable
on a sliding scale if growth in headline
earnings per share exceeds RPI plus
9.27% to 25.97% in the three years
to December 2005, adjusted to
normalise pension and tax charges.
Mr Dollman was granted options,
following his appointment, in
November 2002 with the three-year
growth target as approved by the
Board in February 2002 on an interim
basis. This was changed during the
year to the May 2003 option
performance hurdle, thus ensuring
that his and the other executive
directors’ hurdles were fully aligned.

In addition the Group operates a
savings-related share option scheme
which all UK employees, including
executive directors, are entitled to
join. Under this scheme, options are
granted over the Company’s shares at
a discount of 20% from the prevailing
market price at the time of grant to
eligible employees at an aggregate
value based on savings of up to
£250 per month over three years,
with savings scaled back if an
invitation is oversubscribed.

Service Contracts

Each of the executive directors has
a service contract with the Company,
the dates of which are listed in the
table of remuneration below.
The Group’s policy on notice periods
is that they should be for an initial
period of two years following
appointment, reducing thereafter
to 12 months’ notice, with any
termination payment restricted
to the actual loss incurred by the
director. Mr Smith, Mr Dollman and
Mr Macdonald each have service
contracts on this basis. The service
contracts for Mr Mackay, who retired
in May 2003, and for Mr Callaghan
provided for payment of two years’
salary; Mr Callaghan’s contract was
amended during the year to reduce
the notice period to 12 months as
above, and to further restrict the
companies by which he could be
employed following any termination
of his service contract.

The Remuneration Committee
considers that the notice periods
stated above are reasonable and in
the interests of shareholders having
due regard to prevailing market
conditions and practice among
companies of comparable size.

Performance Graph

The following graph compares the
Company’s total shareholder return
for the five years to December 2003
with the equivalent performance
of the FTSE All-Share and SmallCap
Indices. It should be noted when
reviewing the comparisons that,
since 1998, the Group has completed
a fundamental strategic change, from
a mixed retail/wholesale operation
to one focused on newspaper and
magazine distribution and aviation
services. The directors therefore
consider that the most appropriate
comparison is with these two indices,
as set out below.

Non-executive Directors

The remuneration of the
non-executive directors is determined
by the Board on the recommendation
of the Chief Executive on an annual
basis within the limits contained in
the Articles of Association and takes
account of market rates based on
independent advice as required.
The directors involved, together with
the Chairman, do not have service
contracts, their terms and conditions
being determined by the Board on
election or re-election by
shareholders, and do not participate
in any of the Group’s bonus, share or
pension schemes. Each director’s date
of reappointment is shown in the
table of remuneration on page 34.

Directors’ and Officers’ Liability
Insurance

The Company maintains liability
insurance for the directors and
officers of the Company and its
subsidiaries.

180.0

160.0

140.0

120.0

100.0

80.0

60.0

1998

1999

2000

2001

2002

2003

John Menzies

FSTE SmallCap Index

FSTE All-Share Index

R E P O R T O N D I R E C TO R S ’ R E M U N E R AT I O N
( c o n t i n u e d )

The following sections of this Report have been audited.

Directors’ Emoluments

Directors’ emoluments for the year to 27th December 2003 (28th December 2002) are:

Name
(Date of service contract or appointment) (a)

Salary/fees
£’000

In lieu
of pension
£’000

Bonus
£’000

Car
allowance
£’000

Benefits
£’000

Other
£’000

Total
December
2003
£’000

Total
December
2002
£’000

W R E Thomson (9.5.03)

P J Macdonald (25.8.02)

P B Dollman (8.8.02)

I M Callaghan (13.12.96)

P S Smith (1.12.99) (c)

D J Jenkinson (7.9.01)

I C L Harrison (2.5.02)

C A Ramsay (7.9.01)

M J Walker (2.5.02) (d)

D A Coltman (7.9.01)

D J Mackay (5.5.93) (e)

Payments to former directors

Total

103

325

227

271

210

154

–

50 (b)

–

339

–

103

393

244

335

232

501

–

133

349

289

562

201

1,958

1,757

Notes
(a) For executive directors, this is the date of their service contract, and for non-executive directors, the latest date of reappointment

to the Board.

(b) Provision of pension benefits under the Group’s approved pension arrangements is restricted as a consequence of the Finance Act 1989

(the ‘earnings cap’). Mr Macdonald elected to receive a salary supplement in lieu of the balance of his pension entitlement.

(c) Mr Smith, who leaves the Company after the 2004 AGM, will receive a termination payment of up to one year’s salary under his service
contract together with an appropriate proportion of any annual bonus on the 2004 performance of Menzies Aviation to be determined
by the Remuneration Committee.

(d) Mr Walker’s fees are paid to Maclay Murray & Spens.

(e) Mr Mackay retired on 20th May 2003 after almost 40 years service. Following his retirement and in recognition of the contribution he had
made to the Group, he was gifted his company car which at that time had an estimated market value of £26,150, and was granted an
ex gratia award of 100,000 ordinary shares by a share trust at a market value of £312,500. He also waived all rights over all his outstanding
share options except his savings-related share options, which the Board had resolved that he may retain under the rules of the scheme,
the exercise prices of which ranged from 391p to 520p per share.

Share Options

Name

P J Macdonald

P B Dollman

I M Callaghan

P S Smith

D J Mackay (g)
(Retired 20.5.03)

At 28th
December
2002

Granted
during
period

Exercised/
lapsed
during

At 27th
December
2003 or date
period (b) of retirement

Exercise
price (pence)

Date
exerciseable
from

Expiry date

–
–

360,577

2,709*

205,166

2,680*

–

15,000
10,000
10,000
25,000
70,300
25,000
54,331
67,458

2,680*

–

10,000
5,000
5,000
5,000
15,000
10,000
25,000
40,897
55,891

2,680*

–
–

25,000
25,000
30,000
123,000
18,549
225,563

2,680*

–
–
593*

–
–
–
–
–
–
–
–
–
78,723

–
–
–
–
–
–
–
–
–
–
64,103

593*

–
–
–
–
–
–
–

–
–

–
–
–

–
–
–
–
–
–

54,331 (e)

–
–
–

–
–
–
–
–
–
–

40,897 (e)

–
–
–
–

–
–
–
–
–

225,563 (e)

360,577(d)
2,709*

205,166 (d)
2,680*
593*

15,000
10,000
10,000
25,000
70,300
25,000
–

67,458 (f)
2,680*
78,723 (d)

10,000
5,000
5,000
5,000
15,000
10,000
25,000
–

55,891 (f)
2,680*
64,103 (d)
593*

25,000
25,000
30,000
123,000
18,549
–

–

2,680*

312
286

329
275
286

653
501
520
461
492
391
399
331
275
312

596
520
461
404
492
348
391
399
331
275
312
286

501
520
461
492
391
399
275

13.5.06
1.12.06

8.11.05
1.11.05
1.12.06

25.2.97
27.2.98
1.3.99
21.2.00
7.4.01
28.1.03
20.11.03
10.4.05
1.11.05
13.5.06

16.10.98
1.3.99
21.2.00
10.10.00
7.4.01
18.2.02
28.1.03
20.11.03
10.4.05
1.11.05
13.5.06
1.12.06

27.2.98
1.3.99
21.2.00
7.4.01
28.1.03
20.5.03
20.5.03

12.5.13
1.6.07

7.11.12
1.5.06
1.6.07

24.2.04
26.2.05
28.2.06
20.2.07
6.4.08
27.1.10
19.11.10
9.4.12
1.5.06
12.5.13

15.10.05
28.2.06
20.2.07
9.10.07
6.4.08
17.2.09
27.1.10
19.11.10
9.4.12
1.5.06
12.5.13
1.6.07

20.5.04
20.5.04
20.5.04
20.5.04
20.5.04
20.5.04
30.11.03

Notes:
(a) All the above options were issued under the executive share option scheme at nil cost with the exception of those items marked *

which have been issued under the Group’s savings-related share option scheme.

(b) No options were exercised during the year or up to date of retirement (see (g) below).

(c) The market price for shares in John Menzies plc ranged from 253.5p to 359p during the period and was 317.5p at 27th December 2003.

(d) These options are exercisable on a sliding scale if growth in headline earnings per share exceeds RPI plus 9.27% to 25.97% in the three years
to December 2005, adjusted to normalise pension and tax charges. The performance condition for Mr Dollman’s options was initially set as
at (f), but was changed during the year so as to align it with the other executive directors’.

(e) These options were subject to the performance condition that growth in headline earnings per share for the three years to 30th April 2003

be equal to or greater than 6% above the level of the UK RPI. The condition was not met, and these options have therefore lapsed.

(f) These options require the Group to exceed the three-year growth target approved by the Board in February 2002, failing which the options

will lapse.

(g) Mr Mackay waived all his outstanding options following his retirement with the exception of those marked *.

R E P O R T O N D I R E C TO R S ’ R E M U N E R AT I O N
(continued)

D I R E C TO R S ’ S H A R E H O L D I N G S

Pensions

Scheme Benefits

The interests, all ordinary shares, of the directors in the share capital of the Company at 27th December 2003
and 28th December 2002 were as follows:

W R E Thomson

P J Macdonald

P B Dollman

I M Callaghan

P S Smith

D J Jenkinson

I C L Harrison

C A Ramsay

M J Walker

D A Coltman

Beneficial

Note 1

Non-beneficial

Beneficial

Note 1

Non-beneficial

Beneficial

Non-beneficial

Beneficial

2003

4,000

6,150

3,150

2002

4,000

10,194

20,501

16,501

2,258,360

2,514,885

3,570,360

2,122,832

2,514,885

82,350

1,712,600

759,286

1,000

7,000

1,000

7,000

Notes
1. These holdings are joint beneficial interests.

2. In addition to the above holdings, Mr Thomson and Mr Walker, as directors of a subsidiary which is a trustee of employee trusts in which

they have no beneficial interest, have non-beneficial interests in 545,527 shares.

3. There have been no subsequent changes to these interests as at 15th March 2004.

The executive directors are members of the Menzies Pension Fund, a defined benefit contributory scheme which provides
pension on retirement at age 60 of up to two-thirds of pensionable earnings, or the ‘earnings cap’ if lower together with
additional benefits as below. Pensionable earnings are based on salary excluding bonuses.

Unfunded Arrangement

The pensionable salaries for Mr Macdonald, Mr Smith and Mr Dollman are restricted as a consequence of the ‘earnings cap’.
Of these directors, Mr Macdonald has elected to receive a salary supplement in lieu of his unapproved pension entitlement,
and the others have an unfunded pension undertaking from the Company to provide in total the same level of pension as if
the ‘earnings cap’ did not apply. This entitlement is effective from their date of appointment as a director.

Pension details are as follows:

Director

P J Macdonald

P B Dollman

I M Callaghan

P S Smith

D J Mackay (*)

*(to date of retirement)

Increase in
accrued
pension
during year
£’000

Total accrued
pension
entitlement
at 27th Dec
2003 (a)
£’000

10(d)

152

226

Age

Transfer Value (b) (c)

28th Dec
2002
£’000

Increase excl
members’
contributions
£’000

27th Dec
2003
£’000

–

2,269

1,754

733

4,427

515

4,109

501

212

312

Notes:
(a) The pension benefits disclosed above include unfunded benefits. Unfunded transfer values at 27th December 2003 totalled £289,000.

(b) Transfer values represent the value of assets which the pension scheme would need to transfer to another pension provider on transferring
the scheme’s liability in respect of the directors’ pension benefits. They do not represent sums payable to individual directors and therefore
cannot be added meaningfully to annual remuneration.

(c) Transfer values have been calculated in accordance with ‘Retirement Benefit Schemes (GN 11)’ published by the Institute of Actuaries and
the Faculty of Actuaries. This methodology determines the values attributable to the deferred pensions for younger members by reference
mainly to the UK All-Share Index and for members nearing normal retirement date mainly to the Gilts Over 15 Years Index. The movements
in the transfer values shown above are therefore strongly influenced by the movements in these indices. At the year end the UK All-Share
Index showed a significant rise whereas the Gilts Over 15 Years Index only showed a small increase over the year.

(d) The increase in Mr D J Mackay’s accrued pension reflects the difference in benefits between 28th December 2002 and 20th May 2003.

Annual General Meeting

This Report will be tabled for consideration by shareholders at the Annual General Meeting to be held on 30th April 2004.

By order of the Board

C A ANDERSON
SECRETARY

15th March 2004

D I R E C TO R S ’ R E S P O N S I B I L I T I E S

in respect of the preparation of accounts

The directors are required by law to
prepare accounts for each financial
year which give a true and fair view
of the state of affairs of the Company
and the Group as at the end of the
financial year and of the profit or loss
and cash flows of the Group for the
financial year then ended.

In preparing the accounts the
directors are required to:

• Maintain adequate accounting

records;

• Apply suitable accounting policies
in a consistent manner and make
reasonable and prudent judgements
and estimates where necessary;

• Comply with the provisions of the

Companies Act 1985 and all
applicable accounting standards;

• Prepare the accounts on a going

concern basis.

The directors confirm that these
accounts comply with these
requirements. The directors are also
responsible for safeguarding the
assets of the Company and the Group
and hence for taking reasonable steps
for the prevention of fraud and
other irregularities.

The maintenance and integrity
of the Menzies Group website is
the responsibility of the directors;
the work carried out by the auditors
does not involve consideration
of these matters and, accordingly,
the auditors accept no responsibility
for any changes that may have
occurred to the financial statements
since they were initially presented
on the website.

Legislation in the United Kingdom
governing the preparation and
dissemination of financial statements
may differ from legislation in
other jurisdictions.

I N D E P E N D E N T A U D I TO R S ’ R E P O R T

to the members of John Menzies plc

We have audited the financial
statements which comprise the profit
and loss account, the balance sheet,
the cash flow statement, the
statement of total recognised gains
and losses and the related notes.
We have also audited the disclosures
required by Part 3 of Schedule 7A of
the Companies Act 1985 contained
in the directors’ remuneration report
(‘the auditable part’).

Respective responsibilities of
directors and auditors

The directors’ responsibilities for
preparing the annual report and the
financial statements in accordance
with applicable United Kingdom law
and accounting standards are set
out in the statement of directors’
responsibilities. The directors are also
responsible for preparing the directors’
remuneration report.

Our responsibility is to audit the
financial statements and the
auditable part of the directors’
remuneration report in accordance
with relevant legal and regulatory
requirements and United Kingdom
Auditing Standards issued by the
Auditing Practices Board. This report,
including the opinion, has been
prepared for and only for the
Company’s members as a body in
accordance with Section 235 of the
Companies Act 1985 and for no other
purpose. We do not, in giving this
opinion, accept or assume
responsibility for any other purpose
or to any other person to whom this
report is shown or into whose hands
it may come save where expressly
agreed by our prior consent in writing.

We report to you our opinion as to
whether the financial statements
give a true and fair view and whether
the financial statements and the
auditable part of the directors’
remuneration report have been
properly prepared in accordance
with the Companies Act 1985.

We also report to you if, in our
opinion, the directors’ report is
not consistent with the financial
statements, if the Company has not
kept proper accounting records, if we
have not received all the information
and explanations we require for our
audit, or if information specified by
law regarding directors’ remuneration
and transactions is not disclosed.

We read the other information
contained in the annual report and
consider the implications for our
report if we become aware of any
apparent misstatements or material
inconsistencies with the financial
statements. The other information
comprises only the corporate
information, the unaudited part of
the directors’ report on remuneration,
the chairman’s statement, the
chief executive’s review and the
financial review.

We review whether the corporate
governance statement reflects the
Company’s compliance with the seven
provisions of the Combined Code
specified for our review by the Listing
Rules of the Financial Services
Authority, and we report if it does
not. We are not required to consider
whether the Board’s statements on
internal control cover all risks and
controls, or to form an opinion on
the effectiveness of the Company’s
or Group’s corporate governance
procedures or its risk and
control procedures.

Basis of audit opinion

We conducted our audit in accordance
with auditing standards issued by the
Auditing Practices Board. An audit
includes examination, on a test basis,
of evidence relevant to the amounts
and disclosures in the financial
statements and the auditable part
of the directors’ remuneration report.
It also includes an assessment
of the significant estimates and
judgements made by the directors

in the preparation of the financial
statements, and of whether the
accounting policies are appropriate
to the Company’s circumstances,
consistently applied and adequately
disclosed.

We planned and performed our audit
so as to obtain all the information
and explanations which we
considered necessary in order to
provide us with sufficient evidence
to give reasonable assurance that
the financial statements and the
auditable part of the directors’
remuneration report are free from
material misstatement, whether
caused by fraud or other irregularity
or error. In forming our opinion we
also evaluated the overall adequacy
of the presentation of information
in the financial statements.

Opinion

In our opinion:

• the financial statements give a true
and fair view of the state of affairs
of the Company and the Group at
27th December 2003 and of the
loss and cash flows of the Group
for the year then ended;

• the financial statements have been
properly prepared in accordance
with the Companies Act 1985; and

• those parts of the directors’

remuneration report required
by Part 3 of Schedule 7A to the
Companies Act 1985 have been
properly prepared in accordance
with the Companies Act 1985.

PricewaterhouseCoopers LLP
Chartered Accountants and Registered
Auditors
Edinburgh
15th March 2004

G R O U P P R O F I T A N D LO S S AC C O U N T

for the 52 weeks ended 27th December 2003 (52 weeks ended 28th December 2002)

G R O U P A N D C O M PA N Y B A L A N C E S H E E T S

as at 27th December 2003 (28th December 2002)

Turnover: Group and share of joint ventures
and associates
Less share of:

Joint ventures
Associates

Group turnover

Net operating costs

Continuing operations
Discontinued operation

Group operating profit / (loss)

Share of operating (loss) / profit in

Joint ventures
Associates

Total operating profit / (loss)

Loss on disposal of businesses

Profit / (loss) on ordinary activities before interest

Net interest payable

Profit / (loss) on ordinary activities before taxation

Taxation

Profit / (loss) after taxation

Minority interests

(Loss) / profit for the financial year

Dividends (including non–equity)

Retained loss for the financial year

Earnings per ordinary share
Headline
FRS 3
Headline / FRS 3 diluted

Before
exceptional
items
£m

Exceptional
items
(Note 5)
£m

2003
Total
£m

Before
exceptional
items
£m

Exceptional
items
(Note 5)
£m

Notes

1,240.7

(16.5)
(20.9)

1,203.3

–

–
–

–

1,240.7

1,196.5

(16.5)
(20.9)

(13.7)
(50.0)

1,203.3

1,132.8

–

–
–

–

2002
Total
£m

1,196.5

(13.7)
(50.0)

1,132.8

(1,181.5)

(15.5)

(1,197.0)

(1,112.0)

(1.4)

(1,113.4)

20.8
–

20.8

–
4.7

25.5

–

25.5

(3.1)

22.4

(5.6)

16.8

(0.7)
(0.7)

(1.4)

–
(1.0)

(2.4)

(2.3)

(4.7)

–

(4.7)

–

(4.7)

21.8
–

21.8

(0.4)
2.6

24.0

–

24.0

(3.7)

20.3

(6.6)

13.7

(15.5)
–

(15.5)

(0.6)
–

(16.1)

(1.1)

(17.2)

–

(17.2)

0.4

(16.8)

6.3
–

6.3

(1.0)
2.6

7.9

(1.1)

6.8

(3.7)

3.1

(6.2)

(3.1)

(0.1)

(3.2)

(11.2)

(14.4)

28.9p

(7.3)p
(7.3)p

32.9p

STAT E M E N T O F TOTA L R E C O G N I S E D G A I N S A N D LO S S E S
for the 52 weeks ended 27th December 2003 (52 weeks ended 28th December 2002)

(Loss) / profit for the financial year
Currency translation

Total recognised (losses) / gains for the financial year

2003
£m

(3.2)
0.3

(2.9)

20.1
(0.7)

19.4

–
3.7

23.1

(2.3)

20.8

(3.1)

17.7

(5.6)

12.1

(0.1)

12.0

(12.1)

(0.1)

18.2p
18.2p

2002
£m

12.0
(2.7)

9.3

Notes

£m

11
12

–
1.4
(0.7)
0.3

Fixed assets
Intangible assets
Tangible assets

Investments

– joint ventures
Goodwill
Share of gross assets
Share of gross liabilities
Shareholder loans

– associates
– other
– subsidiaries

Total investments

Current assets
Stocks
Debtors – amounts due after more than one year 14
14
16

– amounts due within one year

Cash at bank and in hand

Creditors: amounts falling due within one year
Bank loans and overdrafts
Other

Net current assets

Total assets less current liabilities

Creditors: amounts falling due after
more than one year
Loans and other borrowings
Other

Provision for liabilities and charges
Deferred taxation
Other

Capital and reserves
Called up share capital
Share premium account
Profit and loss account
Capital redemption reserve

Equity shareholders' funds

Non–equity share capital

Shareholders' funds

Minority interests

16
15

19
19

20
21
21
21

2003
£m

27.4
116.3

1.0
23.2
3.9
–

28.1

171.8

12.9
51.9
90.4
32.1

187.3

(27.1)
(157.1)

(184.2)

3.1

174.9

(68.2)
(1.5)

(14.4)
(9.0)

81.8

14.3
6.0
38.4
21.6

80.3

1.4

81.7

0.1

81.8

Group

Company

£m

8.9
4.1
(3.5)
0.6

2002
£m

34.6
116.1

10.1
32.0
3.6
–

45.7

2003
£m

–
4.7

–
–
–
–
–
–
–
97.9

97.9

2002
£m

–
4.8

–
–
–
–
–
–
–
98.6

98.6

196.4

102.6

103.4

10.8
48.6
96.7
55.7

–
42.5
79.2
5.7

211.8

127.4

(6.6)
(91.4)

(98.0)

29.4

132.0

–
42.5
130.0
2.6

175.1

(15.7)
(86.0)

(101.7)

73.4

176.8

(22.3)
(153.0)

(175.3)

36.5

232.9

(91.5)
(2.8)

(12.9)
(10.2)

115.5

14.3
5.6
72.5
1.6

94.0

21.4

115.4

0.1

115.5

(62.8)
–

(91.5)
–

–
–

69.2

14.3
6.0
25.9
21.6

67.8

1.4

69.2

–

69.2

0.3
–

85.6

14.3
5.6
42.7
1.6

64.2

21.4

85.6

–

85.6

The accounts were approved by the Board of Directors on 15th March 2004 and signed on its behalf by:

Patrick Macdonald, Chief Executive

Paul Dollman, Group Finance Director

G R O U P CA S H F LOW STAT E M E N T

for the 52 weeks ended 27th December 2003 (52 weeks ended 28th December 2002)

Net cash inflow from operating activities

Dividends from joint ventures and associates

Returns on investments and servicing of finance

Interest received
Interest paid
Preference dividends paid
Minority interest dividends

Net cash outflow from returns on investments and servicing of finance

Tax paid

Capital expenditure and financial investment

Purchase of tangible fixed assets
Sale of tangible fixed assets

Net cash outflow from capital expenditure and financial investment

Acquisitions and disposals

Investment in joint ventures and associates
Purchase of subsidiaries
Net overdrafts acquired with subsidiaries
Disposal of associates
Net cash disposed of with subsidiaries

Net cash inflow / (outflow) from acquisitions and disposals

Equity dividends paid

Net cash inflow / (outflow) before use of liquid resources and financing

Management of liquid resources

Decrease / (increase) in short term deposits

Net cash inflow / (outflow) from management of liquid resources

Net cash inflow / (outflow) before financing

Financing

Proceeds from shares issued
Redemption of preference shares
Loan notes redeemed
(Decrease) / increase in loans

Net cash (outflow) / inflow from financing

Notes

24a

£m

1.9
(5.6)
(1.0)
(0.1)

(17.0)
0.8

(1.9)
(1.6)
–
4.7
(0.1)

2002
£m

22.9

4.6

(5.3)

(3.7)

2003
£m

40.6

3.5

(4.8)

(2.4)

£m

1.3
(4.8)
(1.8)
–

(14.0)
1.5

(16.2)

(12.5)

(0.2)
(21.5)
(0.4)
5.8
–

1.1

(10.3)

11.5

30.0

(16.9)

0.4
(20.0)
0.3
(29.2)

30.0

41.5

(48.5)

(7.0)

1.8
–
3.3
32.5

(16.3)

(9.9)

(20.2)

(16.9)

(37.1)

37.6

0.5

(Decrease) / increase in cash in the year

24b,c

N OT E S O N AC C O U N T S

Accounting policies

Accounting convention and
presentation

The accounts have been prepared
under the historical cost convention
and in accordance with applicable
accounting standards. There were
no material differences between
reported profits and historical profits
on ordinary activities of the Group
both before and after taxation. In
accordance with Section 230 of the
Companies Act 1985 no profit and
loss account is presented for the
Company. A summary of the more
significant accounting policies, which
have been consistently applied,
is given below.

Basis of consolidation

The consolidated accounts incorporate
the accounts of the Company and
its subsidiaries, joint ventures and
associates from the effective date
of acquisition or to the date of
deemed disposal.

Turnover

Distribution Services – revenue is
recognised on the invoiced value
of goods sold.

Aviation Services – cargo revenue is
recognised at the point of departure
for exports and at the point that the
goods are ready for dispatch
for imports. Other ramp, passenger
and aviation related services income
is recognised in accordance with
when the service was performed.
Turnover excludes value added and
sales taxes, charges collected
on behalf of customers and
intercompany transactions.

Tangible fixed assets and depreciation

Tangible fixed assets are stated at
cost, including acquisition expenses,
less accumulated depreciation.
Depreciation is provided on a straight
line basis at the following rates:

Freehold and long leasehold properties
–

over 50 years.

Short leasehold properties
–

over the remaining lease term.

Plant and equipment
–

over the estimated life of the asset.

Stocks

Stocks, being goods for resale and
consumables, are stated at the lower
of purchase cost and net realisable
value.

Pensions

The cost of providing retirement
benefits in the Group defined benefit
scheme is charged to the profit and
loss account over the period of the
relevant employee's service. Variations
identified at each actuarial valuation
date are spread over the average
remaining service lives of members.
Pension costs are assessed in
accordance with the advice of
qualified actuaries. With regard to
defined contribution schemes and
a non–Group defined benefit scheme,
in which the Group participated, the
profit and loss charge represents
contributions made.

Deferred taxation

Deferred tax is provided in full on all
timing differences which result in an
obligation at the balance sheet date
to pay more tax, or a right to pay less
tax, at a future date, at rates expected
to apply when they crystallise. Timing
differences arise from the inclusion
of items of income and expenditure
in taxation computations in periods
different from those in which they are
included in accounts. Deferred tax is
not provided on unremitted earnings
of subsidiaries, joint ventures and
associates where there is no
commitment to remit these earnings.
Deferred tax assets are recognised to
the extent that it is regarded as more
likely than not that they will be
recovered. Deferred tax assets and
liabilities are not discounted.

Goodwill

Goodwill, representing the excess
of purchase consideration over the
fair value of net assets acquired,
is capitalised and amortised on a
straight line basis over its estimated
useful life of up to 20 years. Goodwill
arising on each aquisition is reviewed
separately for impairment as necessary
and, where appropriate, charged to
the profit and loss account. Goodwill
arising on acquisitions prior to April
1998 (Note 21) has been set off
directly against reserves in line
with the provisions of FRS 10.

Foreign currencies

Foreign currency assets and liabilities
of the Group are translated at the
rates of exchange ruling at the balance
sheet date. The trading results of
overseas subsidiaries, joint ventures
and associates are translated at
the average exchange rate ruling
during the year, with the exchange
difference between average rates
and the rates ruling at the balance
sheet date being taken to reserves.

Any differences arising on the
translation of the opening net
investment, including goodwill, in
overseas subsidiaries, joint ventures
and associates, and of applicable
foreign currency loans, are dealt with
as adjustments to reserves. All other
exchange differences are dealt with
in the profit and loss account.

Foreign currency contracts are
accounted for as hedges and matched
with the accounting treatment of
the relevant hedged item.

Leases

Assets acquired under finance
leases are capitalised in the balance
sheet and are depreciated over their
useful lives or over the lease term,
whichever is shorter. The interest
element of the rental obligations
is charged to the profit and loss
account as incurred.

Rental payments under operating
leases are charged to the profit and
loss account on a straight line basis
over applicable lease periods.

N OT E S O N AC C O U N T S
(continued)

Segmental analysis

Net operating costs

By class of business
Distribution Services
Aviation Services

Central Services
Pension (debit) / credit and prepayment

Goodwill amortisation

Reconciliation of net assets:
Net debt
Unallocated net liabilities

Net assets

By geographical origin
United Kingdom
Continental Europe
Americas
Rest of the World

Joint Ventures and Associates included above
Distribution Services

Joint ventures
Associates

Aviation Services
Joint ventures
Associates

Goodwill amortisation

– joint ventures
– associates

Joint Ventures and Associates by geographical origin
United Kingdom
Continental Europe
Americas
Rest of the World

Turnover

2003
£m

2002
£m

1,001.0
239.7

1,240.7
–
–

1,240.7
–

959.6
236.9

1,196.5
–
–

1,196.5
–

1,240.7

1,196.5

1,104.2
57.8
53.9
24.8

1,053.2
62.9
57.5
22.9

1,240.7

1,196.5

11.6
12.9

4.9
8.0

37.4

–
–

8.6
14.1

5.1
35.9

63.7

–
–

37.4

63.7

24.5
0.2
4.7
8.0

37.4

22.9
25.9
4.9
10.0

63.7

Pre-exceptional
operating profit/(loss)

Net assets

2003
£m

31.2
4.1

35.3
(6.5)
(1.2)

27.6
(3.6)

24.0

21.6
3.3
(1.5)
0.6

24.0

–
0.2

0.1
3.7

4.0

(0.5)
(1.3)

2.2

0.2
(0.2)
(0.2)
2.4

2.2

2002
£m

28.7
3.7

32.4
(7.0)
3.6

29.0
(3.5)

25.5

21.1
2.3
(0.6)
2.7

25.5

(0.2)
0.1

0.6
6.2

6.7

(0.4)
(1.6)

4.7

(0.2)
0.9
0.3
3.7

4.7

2003
£m

26.9
109.3

136.2
–
51.9

188.1
–

188.1

(63.3)
(43.0)

81.8

123.8
17.6
13.5
33.2

188.1

–
0.7

1.0
22.5

24.2

–
–

2002
£m

30.2
137.0

167.2
–
48.6

215.8
–

215.8

(58.2)
(42.1)

115.5

122.9
26.1
29.3
37.5

215.8

0.7
0.8

9.4
31.2

42.1

–
–

24.2

42.1

0.7
0.3
0.7
22.5

24.2

1.7
5.7
9.2
25.5

42.1

Turnover by geographical origin and destination do not materially differ.

Goodwill amortisation is attributable to Distribution Services – £0.4m (2002: £0.4m) and Aviation Services – £3.2m (2002: £3.1m).

The results of acquisitions during the year were not material.

Goods for resale and consumables
Other operating charges
Employment costs (Note 4)
Goodwill amortisation (Note 11)
Depreciation (Note 12)
Exceptional operating expenses (Note 5)

Other operating charges include:

Hire charges – plant and machinery
Rent of properties
Loss on disposal of fixed assets

During the year the Group (including its overseas subsidiaries) obtained the
following services from the Group’s auditor at costs as detailed below:

Statutory UK audit
Overseas audit
Due diligence work:

– United Kingdom
– Rest of the World

The auditors' remuneration for the parent company was £15,000 (2002: £15,000).

Employees

Wages and salaries
Social security costs

Pension charge / (credit)

The average number of full time equivalent persons employed during the year was:

Distribution Services
Aviation Services
Central Services

The numbers above include 4,924 full time equivalent persons employed outside the UK (2002: 4,424).

Continuing Discontinued
£m

£m

2003
£m

927.5
53.4
183.0
1.8
15.8
15.5

885.3
48.7
162.5
1.5
14.0
0.7

1,197.0

1,112.7

6.7
18.5
0.4

7.2
21.4
0.1

0.3
0.2

–
0.1

–
–
–
–
–
0.7

0.7

–
–
–

2003
£m

163.2
16.2

179.4
3.6

183.0

2003
number

3,938
6,664
54

10,656

2002
£m

885.3
48.7
162.5
1.5
14.0
1.4

1,113.4

6.7
18.5
0.4

0.3
0.2

0.1
0.1

2002
£m

150.3
14.5

164.8
(2.3)

162.5

2002
number

4,037
5,874
59

9,970

N OT E S O N AC C O U N T S
(continued)

Employees (continued)

Pension schemes
With regard to the principal Group funded defined benefit scheme in the UK (the Menzies Pension Fund), to which the employees contribute,
the charge to the profit and loss account is assessed in accordance with independent actuarial advice from Aon Consulting ("the Actuary")
using the projected unit method. Certain Group subsidiaries operate overseas and participate in a number of pension schemes, which are
largely of a defined contribution nature. The profit and loss charge for defined contribution schemes represents the contributions made.
A subsidiary company participated in the UK defined benefit scheme of a third party and accordingly the profit and loss charge in respect
of this particular scheme represented the contributions made during the period of participation.

SSAP 24 regular pension costs
The net pension charge / (credit) to the profit and loss account is analysed as follows:

Menzies Pension Fund
Regular pension cost
Interest on balance sheet prepayment
Amortisation of deficit / (surplus)

Other schemes

2003
£m

2002
£m

2.7
(4.0)
2.5

1.2
2.4

3.6

2.8
(3.7)
(2.7)

(3.6)
1.3

(2.3)

In respect of the Menzies Pension Fund, the Actuary prepared a valuation update as at December 2002 when the market value of the scheme's
assets was £119.6m. The actuarial value represented 116% of the value of the benefits that had accrued to members, yielding a surplus of
£15.3m. The next actuarial valuation will be prepared as at December 2003.

Interest on the balance sheet prepayment is calculated using a market related rate of investment return of 8.25%. The deficit / surplus over the
balance sheet prepayment is charged / credited to the profit and loss account on a straight line basis over the anticipated remaining service
lives of the current members. The assumptions used in the actuarial valuation to determine the valuation results were:

Rate of return on investments
Rate of increase in salaries
Rate of increase in pensions
Rate of increase in price inflation

Employer contributions of £4.5m (2002: nil) were paid during the year.

8.25
2.75
3.25
2.25

FRS 17 disclosures
The Actuary undertook a valuation update of the Menzies Pension Fund as at 29th December 2003 (2002: 31st December) for the purposes
of disclosure under FRS 17.

In deriving the results the Actuary used the projected unit method and the following financial assumptions:

Rate of increase in salaries
Rate of increase in pensions
Rate of increase in price inflation
Discount rate

2003
%

3.25
3.25
2.75
5.40

2002
%

2.75
3.25
2.25
5.50

2001
%

3.25
3.25
2.75
5.75

Net pension (liability) / asset
The assets in the scheme and the expected rates of return as at 29th December 2003 were as follows:

Equities
Bonds
Cash

Total market value of assets
Present value of scheme liabilities

(Deficit) / surplus in scheme
Related deferred tax asset / (liability)

Net pension (liability) / asset

Long term
rate of return

8.0
5.4
3.0

Long term
rate of return

8.5
6.0
3.0

Long term
rate of return

9.5
5.8
3.0

Value at
December
2003
£m

117.9
30.9
4.7

153.5
(191.1)

(37.6)
11.3

(26.3)

Value at
December
2002
£m

99.6
19.7
0.6

119.9
(164.7)

(44.8)
13.4

(31.4)

If FRS 17 had been adopted in the Accounts, the Group's net assets and profit and loss reserve would be as follows:

Net assets per Accounts
Pension adjustment (net of deferred taxation)

Net assets

Profit and loss reserve per Accounts
Pension adjustment (net of deferred taxation)

Profit and loss (deficit) / reserve

£m

81.8
(62.6)

19.2

38.4
(62.6)

(24.2)

£m

115.5
(65.4)

50.1

73.5
(65.4)

8.1

Value at
December
2001
£m

134.4
21.7
2.2

158.3
(148.2)

10.1
(3.0)

7.1

£m

116.4
(24.4)

92.0

73.6
(24.4)

49.2

N OT E S O N AC C O U N T S
(continued)

Employees (continued)

Exceptional items

FRS 17 disclosures
Had the Group adopted FRS 17 early, profit and loss reserves would have been adjusted as follows:

Amounts charged to profit and loss account

Current service cost
Past service costs

Total amount charged to profit and loss account

Amounts included as other finance costs

Expected return on pension scheme assets
Interest on pension liabilities

Net financial return

Amounts recognised in the statement of total recognised gains and losses

Actual return less expected return on assets
Experience gains / (losses) on liabilities
Impact of changes in assumptions relating to the present value of scheme liabilities

Actuarial gain / (loss)

Movement in the (deficit) / surplus during the year

(Deficit) / surplus in the Fund brought forward
Current service cost
Employer contribution
Past service costs
Net financial return
Actuarial gain / (loss)

Deficit in the Fund carried forward

FRS 17 five year history

2003

£m

5.0
–

5.0

£m

9.7
(9.1)

0.6

£m

14.0
2.1
(9.0)

7.1

£m

(44.8)
(5.0)
4.5
–
0.6
7.1

(37.6)

The following disclosures will be built up over time as a five year history

Difference between actual and expected return on scheme assets
Experience gains / (losses) on scheme liabilities
Amount recognised in statement of total recognised gains and losses

% of scheme
assets/
liabilities

9%
1%
4%

2003
£m

14.0
2.1
7.1

% of scheme
assets/
liabilities

38%
3%
33%

2002
£m

4.9
–

4.9

£m

12.6
(8.5)

4.1

£m

(46.0)
(4.7)
(3.4)

(54.1)

£m

10.1
(4.9)
–
–
4.1
(54.1)

(44.8)

2002
£m

(46.0)
(4.7)
(54.1)

Exceptional operating expenses:
Aviation Services
Central Services
Discontinued operation

Distribution Services – joint venture
Aviation Services – associate

Total exceptional operating expenses

Non-operating exceptional items:
Net loss on disposal of businesses

Total non-operating exceptional items

Notes

a
b
c

d
e

2003
£m

(14.6)
(0.9)
–

(15.5)
(0.6)
–

(16.1)

(1.1)

2002
£m

(0.7)
–
(0.7)

(1.4)
–
(1.0)

(2.4)

(2.3)

Total exceptional items

(17.2)

(4.7)

2003: Goodwill impairment required following the Board’s review of the carrying value of goodwill in the Group’s joint venture in Peru,

as a result of uncertainty in this market – £7.8m, and following an adverse change in the business and market
predominantly at Menzies World Cargo – £4.7m (Note 11).

Costs incurred as a result of the business rationalisation programme undertaken during the year – £2.1m.

2002: Cost of rationalising excess capacity, comprising asset write downs, property costs and related staff costs.

Costs incurred as a result of the business rationalisation programme undertaken during the year – £0.9m.

c On 30th October 2002 the Group was fined ¤8.64m (£5.6m) by the European Commission for restriction of cross-border trading

in Nintendo products.

In December 2002 Nintendo agreed to settle a legal action raised against them by the Group in the amount of ¤7.5m (£4.9m).

These amounts were paid in February 2003.

Provision against investment in joint venture (Note 13).

The Group's share of the cost of reducing excess capacity in Aeroporti di Roma Handling SpA.

2003: On 10th March the Group sold its 49% interest in Aeroporti di Roma Handling SpA for a consideration equal

to net book value.

On 20th June the Group sold its Aviation Services operation in Canada at a loss of £1.1m.

2002: On 28th February the Group sold Mecanix, a vehicle repair and maintenance facility at Heathrow, at a loss of £0.2m.

On 31st March the Group closed its Aviation Services operation in South Korea at a cost of £1.0m.

On 1st April the Group sold its Aviation Services operation in Germany at a loss of £1.1m.

Directors

A detailed analysis of Directors' remuneration, together with shareholdings and options, is provided on pages 32 to 37.

N OT E S O N AC C O U N T S
(continued)

Interest

Receivable:

Bank deposits
Share of associates

Payable:

Bank loans and overdrafts

Net interest payable

Taxation

(a) Analysis of charge in year

Current tax
UK corporation tax on profits for the year
Overseas tax
Adjustments to prior years' liabilities
Share of joint ventures
Share of associates

Total current tax

Deferred tax
Origination and reversal of timing differences
Adjustments to prior years' liabilities

Total deferred tax

Tax on profit on ordinary activities

2003
£m

(2.1)
–

(2.1)

5.8

3.7

2002
£m

(1.4)
(0.1)

(1.5)

4.6

3.1

Taxation (continued)

No provision has been made for deferred tax on the sale of properties where potentially taxable gains have been rolled over into replacement
assets. Such tax would become payable only if the properties were sold without it being possible to claim rollover relief, or the Group's existing
capital losses could not be utilised. The total amount unprovided for is £1.9m (2002: £1.6m). At present it is not envisaged that any tax will
become payable in the foreseeable future.

Some of the Group's overseas operations, particularly in the Netherlands, Hong Kong, Germany and the USA, have generated tax losses
in the past, the future utilisation of which is uncertain. The Group has therefore not recognised a deferred tax asset of £22.2m (2002: £17.3m)
in respect of tax losses of overseas companies.

No deferred tax asset has been provided in respect of capital losses within the Group. There are no current and binding contracts to sell any
of the Group's assets and no sales are anticipated in the foreseeable future. The recoverability of these losses is therefore uncertain and as
such, has not been provided in the accounts. The amount at 30% which may be recovered against future capital gains is £9.7m (2002: £8.5m).

No deferred tax is recognised on the unremitted earnings of overseas subsidiaries, joint ventures and associates. As the earnings are
continually reinvested, no tax is expected to be payable on them in the foreseeable future.

2003
£m

2002
£m

Dividends

Dividends on equity shares:
Ordinary

– Interim paid, 5.5p (2002: 5.5p) per share
– Final proposed, 12.6p (2002: 12.6p) per share

Dividends on non-equity shares:
Preference shares

Dividends of £0.1m (2002: £0.1m) were waived by employee share trusts (Note 13) during the year.

2003
£m

3.1
7.2

0.9

11.2

2002
£m

3.1
7.2

1.8

12.1

5.4
0.9
(2.3)
0.1
0.6

4.7

1.4
0.1

1.5

6.2

4.5
1.2
(3.8)
0.2
1.6

3.7

1.9
–

1.9

5.6

The tax charge includes a credit of £0.4m (2002: nil) in respect of exceptional items.

The tax charge for the year is higher (2002: lower) than the standard rate of corporation tax in the UK (30%). The differences are explained below:

(b) Factors affecting tax charge for the year

Profit on ordinary activities before tax

2003
£m

3.1

2002
£m

17.7

Profit on ordinary activities multiplied by standard rate of corporation tax in the UK (30%)

0.9

5.3

Effects of:
Permanent differences (principally goodwill amortisation and exceptional items)
Capital allowances in excess of depreciation and other timing differences
Pension prepayment
Utilisation of tax losses
Adjustments to prior years' liabilities
Unrelieved overseas losses
Higher tax rates on overseas earnings

Current tax charge for year

6.2
(0.4)
(1.0)
(1.4)
(2.3)
2.5
0.2

4.7

3.4
(0.8)
(1.1)
(1.3)
(3.8)
1.6
0.4

3.7

N OT E S O N AC C O U N T S
(continued)

10.

Earnings per share

12.

Tangible fixed assets

Operating profit
add back: goodwill amortisation
Exceptional items
Interest

Profit before taxation
Taxation
Minority interests
Preference dividends

Earnings for the year

Headline
Earnings per ordinary share (pence)
Diluted earnings per ordinary share (pence)

FRS 3
Earnings per ordinary share (pence)
Diluted earnings per ordinary share (pence)

Number of ordinary shares in issue (millions)
Weighted average
Diluted weighted average

Headline

FRS 3
Post exceptional items

2003
£m

24.0
–
(17.2)
(3.7)

3.1
(6.2)
(0.1)
(0.9)

(4.1)

2002
£m

25.5
–
(4.7)
(3.1)

17.7
(5.6)
(0.1)
(1.8)

10.2

(7.3)
(7.3)

18.2
18.2

2003
£m

24.0
3.6
–
(3.7)

23.9
(6.6)
(0.1)
(0.9)

16.3

28.9
28.9

2002
£m

25.5
3.5
–
(3.1)

25.9
(5.6)
(0.1)
(1.8)

18.4

32.9
32.9

56.359
56.399

55.903
55.941

The weighted average number of fully paid shares in issue during the year excludes those held by the employee share trusts (Note 13).
The diluted weighted average is calculated by adjusting for all outstanding share options which are potentially dilutive i.e. where the exercise
price is less than the average market price of the shares during the year.

11.

Intangible assets – goodwill

Cost
At 28th December 2002
Acquisitions (Note 25)
Disposals (Note 25)
Fair value adjustment
Currency translation

At 27th December 2003

Amortisation
At 28th December 2002
Charge for the year
Exceptional impairment (Note 5)
Disposals (Note 25)
Currency translation

At 27th December 2003

Net book value
At 27th December 2003

At 28th December 2002

Joint
ventures
£m

Associates
£m

Subsidiaries
£m

10.0
–
–
–
(0.8)

9.2

1.1
0.5
7.8
–
(0.2)

9.2

–

8.9

28.6
–
(4.8)
–
(2.5)

21.3

3.1
1.3
–
(0.5)
(0.3)

3.6

17.7

25.5

38.0
0.2
–
(0.9)
(0.1)

37.2

3.4
1.8
4.7
–
(0.1)

9.8

27.4

34.6

Total
£m

76.6
0.2
(4.8)
(0.9)
(3.4)

67.7

7.6
3.6
12.5
(0.5)
(0.6)

22.6

45.1

69.0

The fair value adjustment relates to the finalisation of the formal completion accounts process in respect of Fr8 BV.

Group

Company

Freehold
£m

Long
leasehold
£m

Short
leasehold
£m

Plant and
equipment
£m

Total
£m

Freehold
£m

Long
leasehold
£m

Short
leasehold
£m

Total
£m

Cost
At 28th December 2002
Acquisitions (Note 25)
Additions
Transfers
Disposals
Currency translation

At 27th December 2003

Depreciation
At 28th December 2002
Charge for the year
Disposals
Currency translation

At 27th December 2003

Net book value
At 27th December 2003

At 28th December 2002

37.2
–
0.4
(0.1)
(0.2)
–

37.3

3.6
0.7
–
–

4.3

33.0

33.6

0.5
–
–
–
–
–

0.5

0.1
0.1
–
–

0.2

0.3

0.4

33.0
–
1.1
0.1
(0.7)
0.5

34.0

6.8
2.2
(0.5)
–

8.5

25.5

26.2

90.2
0.2
15.2
–
(3.0)
(0.8)

160.9
0.2
16.7
–
(3.9)
(0.3)

101.8

173.6

34.3
12.8
(2.3)
(0.5)

44.3

57.5

55.9

44.8
15.8
(2.8)
(0.5)

57.3

116.3

116.1

5.6
–
–
–
–
–

5.6

1.0
0.1
–
–

1.1

4.5

4.6

0.1
–
–
–
–
–

0.1

–
–
–
–

–

0.1

0.3
–
–
–
–
–

0.3

0.2
–
–
–

0.2

0.1

6.0
–
–
–
–
–

6.0

1.2
0.1
–
–

1.3

4.7

4.8

N OT E S O N AC C O U N T S
(continued)

13.

Investments

14.

Debtors

Group

Shares
in joint
ventures
£m

Loans
to joint
ventures
£m

Shares in
associates
£m

Loans to
associates
£m

Own
shares
held
£m

Other
£m

0.6
0.2
–
0.1
–
–
(0.3)
0.1

0.7

8.9
(0.5)
(7.8)
–
(0.6)

–

0.7

9.5

0.6
0.4
–
(0.7)
–
–
–
–

0.3

–
–
–
–
–

–

0.3

0.6

5.9
1.1
–
–
(1.5)
3.3
(3.2)
(0.4)

5.2

25.5
(1.3)
–
(4.3)
(2.2)

17.7

22.9

31.4

0.6
–
(0.3)
–
–
–
–
–

0.3

–
–
–
–
–

–

0.3

0.6

3.6
0.1
–
–
–
–
–
–

3.7

–
–
–
–
–

–

–
0.2
–
–
–
–
–
–

0.2

–
–
–
–
–

–

3.7

3.6

0.2

–

Company

Subsi-
diaries
£m

98.6
–
–
–
(0.7)
–
–
–

97.9

–
–
–
–
–

–

97.9

98.6

Total
£m

11.3
2.0
(0.3)
(0.6)
(1.5)
3.3
(3.5)
(0.3)

10.4

34.4
(1.8)
(7.8)
(4.3)
(2.8)

17.7

28.1

45.7

Cost excluding goodwill
At 28th December 2002
New investments
Loan notes redeemed
Exceptional provision (Note 5)
Disposals (Note 25)
Share of profits after tax
Dividends received
Currency translation

At 27th December 2003

Goodwill
At 28th December 2002
Amortisation
Exceptional impairment (Note 5)
Disposals (Note 25)
Currency translation

At 27th December 2003

At 28th December 2002

Joint ventures
The Group holds:

a 50% interest in the ordinary share capital of Ogden & Talma Aviation Services of Peru SA
a 50% interest in the ordinary share capital of Dolphin Logistics Ltd
a 33.3% interest in the ordinary share capital of Eurobip, a border inspection post facility at London Heathrow.

During the year the Group subscribed £0.2m to acquire a 50% interest in the ordinary share capital of Freshport BV, a border inspection
post facility at Schiphol. In addition, the Group subscribed £0.3m of interest bearing loan notes at par in cash. The Group also subscribed
£0.1m of interest bearing loan notes at par in cash in Dolphin Logistics Ltd.

Associates
The Group holds:

a 29% interest in the ordinary share capital of MASC-Ogden Aviation Services (Macau) Ltd
a 30% interest in the ordinary share capital of Worldwide Magazine Distribution Ltd
a 26.7% interest in the ordinary share capital of TC Cox and Son (Tonbridge) Ltd
a 29% interest in the ordinary share capital of Great Wall Menzies International Transportation Ltd.

During the year the Group subscribed £1.1m to acquire a 40% interest in the ordinary share capital of Menzies Chengdu Aviation Services Ltd.

Own shares held
The Company's ordinary shares are held in trust for an employee share scheme and are treated as assets of the Group. The trusts are funded
by loans from a Group subsidiary. At 27th December 2003 the trusts held 859,815 (2002: 800,238) ordinary 25p shares with a market value
of £2,729,913 (2002: £2,620,779).

Other
During the year the Group subscribed £0.2m to acquire a 14.2% interest in the preferred stock of Roundpoint Inc., a developer of technology
for displaying news and media product on portable digital devices.

Due within one year

Trade debtors
Other debtors
Prepayments and accrued income
Amounts owed by Group companies

Due after more than one year

Pension prepayment
Amounts owed by Group companies

15.

Creditors

Due within one year

Trade creditors
Accruals and deferred income
Corporation tax
Other taxes and social security costs
Dividends
Unsecured loan stock (Note 16)
Amounts owed to Group companies

Due after more than one year
Accruals and deferred income

Group

Company

2003
£m

69.2
13.2
8.0
–

90.4

51.9
–

51.9

2002
£m

73.9
13.9
8.9
–

96.7

48.6
–

48.6

2003
£m

–
1.3
0.9
77.0

79.2

–
42.5

42.5

Group

Company

2003
£m

89.1
45.5
10.1
5.1
7.2
0.1
–

2002
£m

84.2
49.3
8.2
3.9
7.3
0.1
–

157.1

153.0

2003
£m

–
4.0
–
–
7.2
–
80.2

91.4

2002
£m

–
4.9
0.6
124.5

130.0

–
42.5

42.5

2002
£m

–
9.9
–
–
7.3
–
68.8

86.0

1.5

2.8

–

N OT E S O N AC C O U N T S
(continued)

16.

Financial instruments

16.

Financial instruments (continued)

The objectives, policies and strategies pursued by the Group in relation to financial instruments are described within
the Financial Review on page 19.

Fair values and hedges
Set out below is an analysis of the fair and book value of the Group’s financial instruments as at 27th December 2003.

Group

Company

2003
£m

2002
£m

2003
£m

2002
£m

Maturity profile
Borrowings due within one year:

Bank loans and overdrafts
Unsecured loan stock (Note 15)

Total borrowings due within one year

Borrowings due after one year:

Loans repayable between one and two years
Loans repayable between two and five years
Loans repayable after five years

Total borrowings due after one year

Total borrowings
Less: Cash at bank and in hand

Net debt

27.1
0.1

27.2

7.6
48.4
12.2

68.2

95.4
32.1

63.3

22.3
0.1

22.4

5.8
62.5
23.2

91.5

113.9
55.7

58.2

6.6
–

6.6

6.3
44.8
11.7

62.8

69.4
5.7

63.7

Other than trade debtors and creditors there are no financial assets or liabilities excluded from the above analysis.

No financial assets or liabilities were held or issued for trading purposes.

Borrowing facilities
At 27th December 2003, the Group had undrawn committed facilities of £68.2m (2002: £54.1m) with the following expiry profile:

Less than one year
Between one and two years
Between two and five years

2003
£m

35.4
8.9
23.9

68.2

In addition to these undrawn committed facilities, the Group has undrawn uncommitted facilities totalling £2.7m (2002: £2.7m).

15.7
–

15.7

5.8
62.5
23.2

91.5

107.2
2.6

104.6

2002
£m

37.6
–
16.5

54.1

Primary financial instruments held or issued to finance the Group's operations:

Short term borrowings
Medium term borrowings
Long term borrowings

Cash and deposits

Derivative financial instruments held to manage currency translation and
transaction exposure:

Cross currency basis swaps
Foreign currency forward contracts

2003
Book
value
£m

27.2
56.0
12.2

95.4

32.1

1.3
–

1.3

2003
Fair
value
£m

27.2
56.0
12.2

95.4

32.1

1.3
(0.2)

1.1

2002
Book
value
£m

22.4
68.3
23.2

2002
Fair
value
£m

22.4
68.3
23.2

113.9

55.7

–
–

–

–
–

–

The fair values of the cross currency basis swaps and the foreign currency forward contracts were determined by reference to quoted market
prices.

The fair value of provisions, preference shares and other financial liabilities are not considered to be materially different from their book value.

Losses on hedges
Unrecognised gains and losses on instruments used for hedging, and the movements therein, are as follows:

Unrecognised gains on hedges as at 28th December 2002
Losses arising in the year to 27th December 2003 that were not recognised in the year

Unrecognised losses on hedges as at 27th December 2003

£m

–
(0.2)

(0.2)

N OT E S O N AC C O U N T S
(continued)

16.

Financial instruments (continued)

17.

Operating lease commitments

Interest rate and currency risk profile of financial assets and liabilities

Financial assets and liabilities
The interest rate and currency profile of the Group's financial assets and liabilities (excluding trade debtors and trade creditors) at
27th December 2003 is shown below.

Currency

Sterling
Euro
US dollar
Hong Kong dollar
Other

Floating
rate
financial
assets
£m

Fixed
rate
financial
assets
£m

2003
Total
financial
assets
£m

Floating
rate
financial
assets
£m

Fixed
rate
financial
assets
£m

2002
Total
financial
assets
£m

17.6
4.8
6.0
0.4
2.3

31.1

1.0
–
–
–
–

1.0

18.6
4.8
6.0
0.4
2.3

32.1

44.5
3.7
4.0
0.2
1.7

54.1

1.6
–
–
–
–

1.6

46.1
3.7
4.0
0.2
1.7

55.7

Annual commitments in respect of leases which expire:

within one year
within two to five years
after five years

The Company has no operating lease commitments (2002: nil).

The floating rate financial assets of £31.1m (2002: £54.1m) are at interest rates linked to Base rates and LIBID. The fixed rate financial assets
of £1.0m (2002: £1.6m) are on 1 month fixed deposit at 3.85% (2002: on 2 month fixed deposit at 3.8125%).

Currency

Sterling
Euro
US dollar
Hong Kong dollar
Czech koruna
Other

Floating
rate
financial
liabilities
£m

Fixed
rate
financial
liabilities
£m

2003
Total
financial
liabilities
£m

Floating
rate
financial
liabilities
£m

Fixed
rate
financial
liabilities
£m

2002
Total
financial
liabilities
£m

25.7
2.6
31.8
0.4
–
–

60.5

34.9
–
–
–
–
–

34.9

60.6
2.6
31.8
0.4
–
–

95.4

4.7
11.4
56.1
0.5
4.5
1.8

79.0

34.9
–
–
–
–
–

34.9

39.6
11.4
56.1
0.5
4.5
1.8

113.9

Floating rate financial liabilities of £60.5m (2002: £79.0m) comprise bank loans, overdrafts and unsecured loan stock. Interest on these
liabilities is determined by reference to short term rates linked to Base rates and LIBOR.

Fixed rate financial liabilities comprise loans repayable between 2007 and 2009 of £34.9m (2002: £34.9m) on which interest is at a fixed
rate of 7.362%. These loans have a weighted average maturity of 4.1 years (2002: 5.1 years).

18.

Capital commitments

Contracted but not provided

Group

Property

Other

2003
£m

2.9
7.6
9.3

19.8

2002
£m

1.3
7.5
9.5

18.3

2003
£m

2002
£m

1.0
4.9
–

5.9

1.7
3.3
–

5.0

Group

Company

2003
£m

0.9

2002
£m

3.4

2003
£m

–

2002
£m

–

N OT E S O N AC C O U N T S
(continued)

19.

Provisions for liabilities and charges

Deferred taxation
Provided:

Accelerated capital allowances and other timing differences
Pension prepayment

Movement in year:

Profit and loss charge (Note 8)

Other – property related

At beginning of year
Provided during year
Utilised during year

At end of year

Group

2003
£m

2002
£m

(1.2)
15.6

14.4

(1.7)
14.6

12.9

1.5

1.9

2003
£m

10.2
1.2
(2.4)

9.0

2002
£m

10.5
1.8
(2.1)

10.2

The property related provision is in respect of obligations for vacated leasehold properties where applicable sublet income may be insufficient
to meet obligations under head leases.

Contingent liabilities
There are contingent liabilities, including those in respect of disposed and acquired businesses, which are not expected to give rise to any
significant loss to the Group. In particular, the Group had a range of contractual protections, including an indemnity for alleged unpaid taxes
in Mexico, in connection with the acquisition of Ogden Ground Services from Covanta Energy Corporation in 2000. Following Covanta Energy
Corporation filing a voluntary petition for Chapter 11 reorganisation in the US, the Group waived these rights in return for a $1.7m reduction
in deferred consideration payable.

In addition, in the normal course of business, the Company has guaranteed certain trading obligations of its subsidiaries.

20.

Share capital

Authorised

73,056,248 Ordinary shares of 25p each
20,000,000 8.58% Cumulative redeemable preference shares of £1 each,
redeemed at par on 20th June 2003
1,735,938 9% Cumulative preference shares of £1 each

Allotted, called up and fully paid

57,247,804 Ordinary shares of 25p each, fully paid (2002: 57,108,336 shares)
20,000,000 8.58% Cumulative redeemable preference shares of £1 each,
fully paid, redeemed at par on their redemption date of 20th June 2003
1,394,587 9% Cumulative preference shares of £1 each, fully paid (2002: 1,394,587 shares)

2003
£m

18.3

–
1.7

20.0

14.3

–
1.4

15.7

2002
£m

18.3

20.0
1.7

40.0

14.3

20.0
1.4

35.7

As a result of options being exercised, 139,468 Ordinary shares having a nominal value of £0.03m were issued during the year at a share
premium of £0.4m.

At 27th December 2003 options granted and outstanding under the Company's executive share option schemes amounted to 2,607,074
ordinary shares (2002: 2,663,298). These options are exercisable at varying dates up to 12th May 2013 and at prices varying from 312p
to 653p per share.

N OT E S O N AC C O U N T S
(continued)

21.

Reserves

24.

Cash flow

At 28th December 2002
Preference share redemption
Movement during the year
(Loss) / profit for the year
Dividends
Currency translation

At 27th December 2003

Group

Profit and
loss
account
£m

Share
premium
account
£m

5.6
–
0.4
–
–
–

6.0

72.5
(20.0)
–
(3.2)
(11.2)
0.3

38.4

Company

Capital
redemption
reserve
£m

Share
premium
account
£m

Profit and
loss
account
£m

Capital
redemption
reserve
£m

1.6
20.0
–
–
–
–

21.6

5.6
–
0.4
–
–
–

6.0

42.7
(20.0)
–
14.4
(11.2)
–

25.9

The cumulative amount of goodwill resulting from acquisitions undertaken before April 1998, which has been written off to reserves,
is £28.9m (2002: £28.9m).

22.

Minority interests

At beginning of year
Dividend
Share of profit after tax

At end of year

23.

Reconciliation of movements in shareholders’ funds

(Loss) / profit for the financial year
Dividends
New share capital issued (Note 20)
Preference shares redeemed (Note 20)
Currency translation

Net decrease in shareholders' funds
Shareholders' funds at beginning of year

Shareholders' funds at end of year

The reduction in dividends results from the redemption of preference shares in June.

2003
£m

0.1
(0.1)
0.1

0.1

2003
£m

(3.2)
(11.2)
0.4
(20.0)
0.3

(33.7)
115.4

81.7

1.6
20.0
–
–
–
–

21.6

2002
£m

–
–
0.1

0.1

2002
£m

12.0
(12.1)
1.8
–
(2.7)

(1.0)
116.4

115.4

Reconciliation of operating profit to net cash inflow from operating activities

Total operating profit (pre-exceptional items)
Depreciation
Goodwill amortisation
Share of operating loss in joint ventures
Share of operating profit in associates
Cash spend on exceptional items
Movement on pension prepayment
Other items not involving the movement of cash
(Increase) / decrease in stocks
Decrease in debtors
Increase / (decrease) in creditors

Net cash inflow from operating activities

Operating cash flows relating to acquisitions and disposals during the year were not material.

Reconciliation of net cash flow to movement in net debt

(Decrease) / increase in cash in the year
(Decrease) / increase in short term deposits
Decrease / (increase) in debt

Movement in net debt in the year
Net debt at beginning of year

Net debt at end of year

Analysis of changes in net debt

Cash at bank and in hand
Bank overdrafts

Short term deposits
Bank loans due within one year
Loan stock due within one year
Debt due after one year

2003
£m

24.0
15.8
1.8
0.4
(2.6)
(3.9)
(3.3)
0.1
(2.1)
4.4
6.0

40.6

2003
£m

(7.0)
(30.2)
32.1

(5.1)
(58.2)

(63.3)

2002
£m

Cash flows
£m

Currency
translation
£m

12.4
(7.0)

5.4
43.3
(15.3)
(0.1)
(91.5)

(58.2)

6.6
(13.6)

(7.0)
(30.0)
8.8
–
20.4

(7.8)

–
–

–
(0.2)
–
–
2.9

2.7

2002
£m

25.5
14.0
1.5
–
(4.7)
(4.9)
(3.6)
0.4
0.4
0.4
(6.1)

22.9

2002
£m

0.5
17.0
(28.9)

(11.4)
(46.8)

(58.2)

2003
£m

19.0
(20.6)

(1.6)
13.1
(6.5)
(0.1)
(68.2)

(63.3)

N OT E S O N AC C O U N T S
(continued)

25.

Acquisitions and disposals

Acquisitions

Net assets acquired:

Tangible fixed assets (Note 12)
Debtors
Creditors

Satisfied by:

Cash
Acquisition costs

Goodwill (Note 11)

On 14th February 2003 the Group acquired an 80% interest in Atlantis Air Cargo Management Inc., Panama.

The directors consider that the fair value of the assets and liabilities acquired is not materially different to their book value.

Disposals

Net assets disposed:
Goodwill (Note 11)
Investments (Note 13)
Tangible fixed assets
Debtors
Cash
Creditors

Disposal costs
Deferred consideration
Consideration received in cash

Loss on disposal

Aeroporti
di Roma
Handling SpA
£m

Menzies
Aviation
Group
(Canada) Ltd
£m

4.3
1.5
–
–
–
–

5.8

0.1
(1.1)
(4.8)

–

–
–
0.4
0.7
0.1
(0.1)

1.1

0.2
–
(0.2)

1.1

Atlantis
Air Cargo
Management
Inc.
£m

0.2
0.1
(0.1)

0.2

0.3
0.1

0.4

0.2

Total
£m

4.3
1.5
0.4
0.7
0.1
(0.1)

6.9

0.3
(1.1)
(5.0)

1.1

On 10th March 2003 the Group sold its 49% interest in Aeroporti di Roma Handling SpA for a consideration equal to net book value.

On 20th June 2003 the Group sold its Aviation Services operation in Canada at a loss of £1.1m.

26.

Related party transactions

During the year the Group transacted with related parties in the normal course of business and on an arm's length basis. Details of these
transactions are shown below:

Related party

Ogden & Talma Aviation Services of Peru SA
Eurobip
Freshport BV

Group
share
holding
%

50
33.3
50

Sales to
related
party
£m

Purchases
from related
party
£m

Amounts owed
to related
party at 27th
December
2003
£m

0.7
–
0.3

–
0.2
–

–
0.1
–

Mr W R E Thomson, a director of the Company, is a director of Dolphin Logistics Limited and has an interest in E G Thomson (Holdings) Limited
which owns 50% of Dolphin (Note 13).

During the year the Group incurred fees for legal services amounting to £nil (2002: £0.1m) to Maclay Murray & Spens, of which Mr M J Walker,
a director of the Company, is a partner.

During the year the Group purchased services to the value of £0.2m from beCogent Limited, of which Mr D J Jenkinson, a director of the
Company, is the co-founder and Chairman.

27.

Subsidiary companies

The principal subsidiaries, Menzies Distribution Limited, Menzies Group Holdings Limited, Menzies Aviation Group plc and Menzies Aviation
Holdings Limited are ultimately wholly owned by the Company and operate mainly in the United Kingdom. The issued share capital of these
subsidiaries is mainly in the form of equity shares.

F I V E Y EA R S U M M A RY

S H A R E H O L D E R I N F O R M AT I O N

Turnover (excluding joint ventures and associates)
Distribution Services
Aviation Services

Continuing operations
Discontinued operations

Operating profit
Distribution Services
Aviation Services

Central Services
Pension (charge) / credit

Continuing operations
Goodwill amortisation
Discontinued operations

Total operating profit
Exceptional items

Profit / (loss) before interest
Interest payable

Profit / (loss) before taxation

Per ordinary share
Dividends
Headline earnings
FRS 3 earnings

* 53 week year

12 months
to December
2003
£m

12 months
to December
2002
£m

8 months
to December
2001
£m

12 months to April

2001
£m

2000*
£m*

976.5
226.8

1,203.3
–

936.9
195.9

1,132.8
–

578.8
128.8

707.6
55.9

844.2
137.1

981.3
306.8

847.5
67.6

915.1
383.0

1,203.3

1,132.8

763.5

1,288.1

1,298.1

31.2
4.1

35.3
(6.5)
(1.2)

27.6
(3.6)
–

24.0
(17.2)

6.8
(3.7)

3.1

28.7
3.7

32.4
(7.0)
3.6

29.0
(3.5)
–

25.5
(4.7)

20.8
(3.1)

17.7

16.5
(3.8)

12.7
(4.7)
3.3

11.3
(2.2)
(5.7)

3.4
(22.5)

(19.1)
(2.0)

(21.1)

26.3
4.3

30.6
(6.9)
5.0

28.7
(1.7)
22.9

49.9
(34.8)

15.1
–

15.1

30.0
2.2

32.2
(7.1)
5.0

30.1
(0.4)
4.2

33.9
2.0

35.9
(2.6)

33.3

18.1 p
28.9 p
(7.3) p

18.1 p
32.9 p
18.2 p

12.1 p
0.4 p
(38.7) p

18.1 p
62.8 p
2.7 p

17.1 p
37.9 p
48.0 p

Internet

Payment of Dividends

It is in the interests of shareholders
and the Company for dividends to
be paid directly into bank or building
society accounts. Any shareholder
who wishes to receive dividends
in this way should contact the
Company’s Registrar to obtain
a dividend mandate form.

Dividends are paid as follows:

Ordinary shares

Interim
30th November

Final
30th June

9% Preference shares

Interim
1st April

Final
1st October

The final dividend on the ordinary
shares will be payable to shareholders
on the register at 4th June 2004.

Investor Relations

For further copies of the Annual
Accounts or other investor relations
enquiries, please contact:

John Menzies plc
108 Princes Street
Edinburgh
EH2 3AA
Tel: 0131 459 8186
Fax: 0131 226 3752
E-mail: ir@johnmenziesplc.com

The Group operates a website
which can be found at
www.johnmenziesplc.com
This site is regularly updated to
provide you with information about
the Group and each of its operating
divisions. In particular all of the
Group’s press releases and
announcements can be found on
the site together with copies of
the Group’s accounts.

Registrars

Any enquiries concerning your
shareholding should be addressed
to the Company’s Registrars:

Capita IRG plc
Attn Simon Stafford
The Registry
34 Beckenham Road
Beckenham
Kent
BR3 4TU

Tel: 0870 162 3100
Fax: 0208 639 2487
E-mail: ssd@capitaIRG.com

The Registrar should be notified
promptly of any change in
a shareholder’s address.

Share Price

The current share price of John
Menzies plc ordinary shares can
be obtained from the Group’s
website and on FT Cityline by
dialling 0906 8433339 (calls cost
50p per minute).

Low Cost Dealing Service

The Group has arranged a low cost
dealing service for those wishing to
buy or sell shares in John Menzies plc.
To use this service please call 0845
601 0995 and quote ref: LOW C0014.

Alternatively write to:
John Menzies plc –
Share Dealing Service
Stocktrade
PO Box 1076
10 George Street
Edinburgh
EH2 2PZ

P R I N C I PA L B U S I N E S S A D D R E S S E S A N D A DV I S O R S

Principal Business Addresses

Principal Advisors

John Menzies plc
108 Princes Street,
Edinburgh, EH2 3AA
Tel +44 (0) 131 225 8555
Fax +44 (0) 131 226 3752
E-mail: ir@johnmenziesplc.com

Menzies Distribution
2 Lochside Avenue,
Edinburgh Park,
Edinburgh, EH12 9DJ
Tel +44 (0) 131 467 8070
Fax +44 (0) 131 469 4797

Menzies Aviation
5 The Enterprise Centre,
Kelvin Lane, Crawley,
West Sussex, RH10 9PT
Tel +44 (0) 1293 583300
Fax +44 (0) 1293 526478

Auditors
PricewaterhouseCoopers LLP
Erskine House,
68-73 Queen Street,
Edinburgh, EH2 4NH

Corporate Financial Advisors
and Joint Brokers
Dresdner Kleinwort Wasserstein
20 Fenchurch Street,
London, EC3P 3DB

Joint Brokers
Bell Lawrie White
48 St Vincent Street,
Glasgow, G2 5TS