We’re investing more than $1 million every working day to implement our 30-year vision...

... with approximately $2 billion to be invested in aeronautical infrastructure over the next five financial years.

Welcome

Connecting Auckland with New Zealand and New Zealand with the world

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Auckland Airport is the third busiest international airport in Australasia. More than three-quarters of all international visitors to New Zealand arrive here, with 19 million passengers having travelled through our terminals in the past 12 months. We play a significant role in supporting New Zealand businesses, with around $15 billion worth of freight passing through the airport every year. Around 15,000 people, across more than 100 businesses, work here. The wider airport precinct features a world-class business park, commercial office buildings, transport and logistics warehouses, hotels and leisure and recreation facilities.

We are proud of what has been achieved at Auckland Airport since it opened in 1966. Today, we are focused on making Auckland an aviation hub for New Zealand and the Pacific Rim, and on being able to accommodate the increasing number of passengers and aircraft wanting to use Auckland Airport. Implementation of our 30-year vision to build the “airport of the future” is well underway. It’s creating jobs, boosting tourism and household incomes and lifting our regional economy and we are playing our part in maintaining New Zealand’s reputation as one of the world’s great travel destinations.

Nau mai & welcome

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Adrian Littlewood, Chief Executive and Sir Henry van der Heyden, Chair

Nau mai and welcome to Auckland Airport’s annual report for the 2017 financial year.

The 12 months to 30 June 2017 was another strong year of growth right across our business with the company continuing to focus on upgrading its airport infrastructure, growing and supporting tourism and providing the best possible customer experience during a time of significant change.

To help accommodate the ongoing increase in passengers and aircraft, we continued to spend more than $1 million every working day on our core airport infrastructure. There are now 44 aeronautical projects underway across the airport, each in excess of $1 million, and we plan to invest around $2 billion in aeronautical capital expenditure by the 2022 financial year. During the 2017 financial year, we progressed the upgrade of our international departure area and the extension of Pier B of the international terminal to provide two more aircraft gates and expanded departure lounges. We also further developed our airfield including upgrading existing and building new remote aircraft stands.

We have continued to sustainably grow travel markets to increase our air connectivity, which is essential for a city and country reliant on tourism and trade for its economic prosperity. We have also maintained our support for the New Zealand tourism industry, especially the operators who provide our international visitors with high-quality experiences. We also joined with other industry leaders to encourage the Government to develop new and innovative ways to upgrade tourism infrastructure.

Auckland Airport remained focused on its customers during the 2017 financial year, ensuring their journeys through the airport are fast and efficient and they have a range of options when parking, shopping or staying here. Improving travel times and flows around the airport precinct has been a top priority for the company in the 2017 financial year and we also continued to advocate to central and local government the need for better public transport services and state highway access to and from the airport.

We fast-tracked a number of planned roading and transport improvements on our own network to improve traffic flows, including upgrading the Puhinui Road roundabout, upgrading the traffic light phasing and lane configurations at the airport’s George Bolt Memorial Drive and Tom Pearce Drive intersection, and updating the lane configurations at the airport’s George Bolt Memorial Drive and Laurence Stevens Drive roundabout. We also announced, in June 2017, the details of four new transport projects as part of our longer-term plan to improve travel around the airport over the next three years.

Late in the 2017 financial year we announced our new aeronautical prices for the next five financial years – the result of a year-long consultation process with airlines on investment plans, operations and pricing. The outcome of that consultation process, in real terms, sees average annual international passenger charges reducing by 1.7% per annum and domestic passenger charges increasing by just 0.8% per annum over the next five years. We also confirmed that a runway land charge of $1.19 (excluding GST) per passenger will likely be introduced from the start of the 2021 financial year once certain operational and construction triggers are met.

Together, our modest price changes for the 2018–2022 financial years and our $2 billion infrastructure investment plan will deliver significant benefits for passengers. The new pricing and capital expenditure programme also balances the needs of passengers, the airport community, the tourism industry, our investors and the airlines – ensuring Auckland Airport has the infrastructure it needs to continue connecting Auckland with New Zealand and New Zealand with the world.

The 2017 financial year also saw Auckland Airport continue to focus on a wide range of activities to improve educational, employment and environmental outcomes at the airport, in our local communities and across the Auckland region. Ara, our airport jobs and skills hub, continues to deliver real benefits, providing more than 1,300 training opportunities and placing 190 people into jobs – 82% of whom were South Aucklanders.

In the year to 30 June 2017 the total number of passengers using our airport increased by 10.2% to 19 million. Domestic passengers were up 8.9% to 8.6 million, international passengers (excluding transit passengers) were up 11% to 9.7 million and international transit passengers were up 16.8% to 0.7 million.

Total revenue was up 9.7% to $629.3 million, while operating expenses were up 8.8% to $156.2 million. Earnings before interest expense, taxation, depreciation, fair value adjustments and investments in associates (EBITDAFI) increased 9.9% to $473.1 million.

Total profit after tax was up 26.9% to $332.9 million, while underlying profit after tax was up 16.5% to $247.8 million. As a result, our underlying earnings per share is up 16.4% to 20.8 cents. Our final dividend for the 2017 financial year is up 16.7% to 10.5 cents per share, delivering a total dividend of 20.5 cents, an increase of 17.1% compared with the 2016 financial year. Auckland Airport’s performance in the 2017 financial year means the five-year average annual shareholder return is 26.3%.

During the 2017 financial year, the Board elected to reinstate our dividend reinvestment plan to provide funding flexibility to support our investment in new infrastructure and growth opportunities. The dividend reinvestment plan will again be in place for the 2017 financial year final dividend, enabling shareholders to elect to purchase Auckland Airport shares at a 2.5% discount to market price, instead of receiving the dividend as cash.

We expect underlying profit after tax (excluding any fair value changes and other one-off items) for the 2018 financial year to be between $248 million and $257 million. This guidance would deliver underlying earnings per share growth of up to 3.7% compared with the 2017 financial year and reflects the impact of our new aeronautical prices commencing in the 2018 financial year.

As always, this guidance is subject to any material adverse events, significant one-off expenses, non-cash fair value changes to property, and deterioration as a result of global market conditions or other unforeseeable circumstances.

Sir Henry van der Heyden
Chair
Adrian Littlewood
Chief Executive

Underlying profit

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$247.8m
an increase of 16.5%

The directors and management of Auckland Airport understand the importance of reported profits meeting accounting standards. However, due to the complexity of accounting standards, it may be difficult for investors to compare one financial year’s results with another. Therefore, we also provide an underlying profit measure to help investors compare profits between years and to make comparisons between different companies with confidence. We also believe that an underlying profit measure can assist investors to understand what is happening in a business such as Auckland Airport where revaluation changes can distort short-term financial results or where one-off transactions, both positive and negative, can occur.

For several years, Auckland Airport has referred to underlying profits alongside reported results. We do so not only when we report our results but also when we give our market guidance (where we exclude fair value changes and other one-off items) or when we consider dividends and our policy to pay 100% of underlying profit after tax, excluding unrealised gains and losses arising from revaluation of property or treasury instruments and other one-off items. However, in referring to underlying profits, we acknowledge our obligation to show investors how such results have been derived. The reconciliation for the current period can be found on the financial summary page.