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AIA announces 12 % rise in profit

25 August 2005

Auckland International Airport announces 12 % rise in profit

Auckland International Airport Limited (AIAL) today announced a surplus after tax of $105.6 million for the year ended 30 June 2005 up 12.0 per cent over the previous year. The result was driven by continued strong growth in passenger and aircraft movements, with total passengers for the year exceeding 11 million for the first time.

Revenue was up 7.7 per cent to $282.6 million. Growth in revenues continued across the board in both the aeronautical and non-aeronautical areas of the business. With the company's tight control of its operating expenses, earnings before interest, taxation and depreciation (EBITDA) increased 8.7% to $221.4 million.

The total number of passengers through the port increased 4.6 per cent to 11,256,077 (including transit passengers), with international passenger movements up 5.2 per cent to 6,432,161 and domestic movements up 3.9 per cent to 4,823,916. Excluding transits and transfers, international passenger movements were up 6.6 percent.

Airport chief executive Don Huse said, "We are very pleased with another record financial result. The continued growth in earnings once again highlights the strong and stable business position and long-term prospects of Auckland Airport. In addition to focussing on the short-term financial results, we have undertaken significant planning this year looking out one year, five years, 25 years and beyond. With current levels of demand forecast to increase, the company is continuing its on-going investment programme with a range of key security and terminal and runway expansion projects completed or well underway."

Based on project work in progress and current planning, the airport company said capital expenditure will be around $135 million to $150 million each year for the next three years. This includes an expansion of the international terminal, a new pier to the international terminal, new car parking facilities and an upgrade of the domestic terminal.

AIAL chairman Wayne Boyd commented, "The company has established a very solid platform for the next significant stage of its growth. The strong business and financial position, detailed planning in conjunction with key stakeholders and the recent senior management appointments all provide directors with the confidence necessary to commit to the next stage of the company's development programme. This will ultimately provide for the region's commercial aviation needs for the next 50 years and beyond.

"Also reflecting this confidence, the directors recently announced a distribution of up to $200 million, comprising a special dividend of 12 cents per share paid on 5 August and an on-market share buy-back of up to $53 million to be conducted over 12 months. Mr Boyd said "This special distribution reinforces the company's commitment to increasing sustainable returns to shareholders and optimising the company's capital structure, while ensuring the company retains a strong balance sheet to fund its on-going investment programme.

The directors also consider it appropriate to increase the dividend payout ratio for the 2005 year to 95 per cent of the surplus after tax. Accordingly, a fully imputed final dividend of 4.45 cents per share (amounting to $54.4 million) has been declared."

This comes on top of an interim dividend of 3.75 cents per share, paid in March, taking total ordinary dividends this year to 8.20 cents per share, up from 6.95 cents the previous financial year.

Together with the special dividend of 12 cents per share, the company has distributed a total of $246.9 million to shareholders (20.2 cents per share) in respect of the 2005 financial year.

The market value of AIAL's investment property portfolio has increased from $157.6 million to $172.8 million. "Excluding capital expenditure on new and existing properties, the value of the portfolio increased by $10.7 million, a further increase on the $8.6 million uplift last year. This reflects in particular the increasing value of the company's land holdings in the South Auckland region. Note that this revaluation gain is recorded through revaluation reserves and under current financial reporting standards is not included in the surplus after tax result," Wayne Boyd said.

Don Huse commented that tourism and travel remains a strong growth industry. "This year we have seen further increases in travel by New Zealanders and Australians, stimulated in particular by a continuation of the competitive fare structures and strong marketing initiatives by new airlines, together with the introduction by Air New Zealand of its lower-fare Pacific Class international services. These services have provided travellers, especially on trans-Tasman routes, with a wider range of lower fare and schedule options."

Wayne Boyd added, "The directors are of the view that, while still positive, passenger growth rates will ease in the 2006 financial year. After taking into account the additional $8 million of interest costs (after tax) associated with funding the distribution to shareholders, the surplus after tax result for the 2006 year is expected to once again exceed $100 million."


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