$405.2m

in capital expenditure
during the year

Our total profit after tax for the year to 30 June 2018 was up 95.3% to $650.1 million, while underlying profit after tax increased 6.2% to $263.1 million.

Revenue increased 8.7% to $683.9 million due to ongoing strong growth in retail, transport and investment property revenues. This was the first year of our new aeronautical charges for the five-year period 2018 to 2022 with aeronautical revenues for the year largely flat on the prior period as the growth in passengers and aircraft movements was largely offset by the reduction in charges in the first year of PSE3. Operating expenses increased 13.6% to $177.5 million, in part due to operational resources and asset management and maintenance. Our earnings before interest expense, taxation, depreciation, fair value adjustments and investments in associates (EBITDAFI) increased 7.0% to $506.4 million.

Our total share of the underlying profit from associates was $16.7 million for the 2018 financial year, up 12.1%. The underlying profit share from Queenstown Airport was up 26.7% to $3.8 million and the share from the Novotel hotel, in which we increased our shareholding to 40% in February 2017, was up 66.7% to $4.5 million.

We completed the sale of our 24.55% shareholding in North Queensland Airports in March 2018 for A$370 million. The sale ensures that we can focus on growing our New Zealand travel, trade and tourism businesses and can recycle the proceeds of the sale into supporting the significant investment in aeronautical infrastructure at Auckland Airport over the next five years.

The final dividend for the 2018 financial year is up 4.8% to 11.0 cents per share. It will be imputed at the company tax rate of 28% and paid on 19 October 2018 to shareholders who are on the register at the close of business on 5 October 2018. As a result, the total dividend for the 12 months to 30 June 2018 is up 6.1% to 21.75 cents per share. Our performance in the 2018 financial year means that underlying earnings per share have continued to increase, up 5.8% to 22.0 cents per share.

5.8%

increase in underlying
earnings per share

to

22.0 cents

per share

The 2018 financial year also saw the company maintain our strong focus on upgrading our airport infrastructure and providing the best possible customer experience during a time of significant change. We continued to invest more than $1 million every working day on our core airport infrastructure, delivering a new border processing and security screening space, customer dwell areas and 37 new retail store concepts that have enhanced the international departure experience. In addition, we completed the extension of Pier B of the international terminal, opening Gates 17 and 18 and further developed our airfield infrastructure, with the construction of two new fully-serviced remote airfield stands to help accommodate the ongoing growth in international aircraft.

The reinstatement of our dividend reinvestment plan, to provide funding flexibility to support our investment in new infrastructure and growth, continues to be welcomed by many of our shareholders. The dividend reinvestment plan will again be in place for the 2018 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.

The table below shows how we reconcile reported profit after tax and underlying profit after tax for the full-year periods ended 30 June 2018 and 30 June 2017.

The following adjustments have been made to show underlying profit after tax for the 12-month periods ended 30 June 2018 and 30 June 2017:

  • We have reversed out the gain arising from the sale of our investment in North Queensland Airports. This sale was a one-off transaction that does not reflect normal business activities
  • We have reversed out the impact of revaluations of investment property in 2018 and 2017. An investor should monitor changes in investment property over time as a measure of growing value. However, a change in one particular year is too short to measure long-term performance. Changes between years can be volatile and, consequently, will impact comparisons. Finally, the revaluation is unrealised and, therefore, is not considered when determining dividends in accordance with the dividend policy. None of the property, plant and equipment revaluation in 2018 affected reported profit. Therefore, no underlying profit adjustment was required in 2018, nor in 2017 in which there was no property, plant and equipment revaluation
  • We have reversed the impact of derivative fair value movements. These are unrealised and relate to basis swaps that do not qualify for hedge accounting as well as the ineffective valuation movement in other derivatives. The group holds its derivatives to maturity so any fair value movements are expected to reverse out over their remaining lives. Further information is included in note 18.2 of the financial statements
  • In addition, to be consistent, we have adjusted the revaluations of investment property and financial derivatives that are contained within the share of profit of associates in 2018 and 2017
  • We have also reversed the taxation impacts of the above movements in both the 2018 and 2017 financial years.

Underlying profit

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2018 2017
Reported profit
$M
Adjustments
$M
Underlying profit
$M
Reported profit
$M
Adjustments
$M
Underlying profit
$M
EBITDAFI per Income Statement 506.4 473.1 473.1
Share of profit of associates 16.7 16.7 19.4 (4.5) 14.9
Gain on sale of associate 297.4 (297.4)
Derivative fair value movement (0.7) 0.7 2.5 (2.5)
Investment property fair value increases 152.2 (152.2) 91.9 (91.9)
Property plant and equipment revaluation
Depreciation (88.9) (88.9) (77.9) (77.9)
Interest expense and other finance costs (77.2) (77.2) (72.8) (72.8)
Taxation expense (155.8) 61.9 (93.9) (103.3) 13.8 (89.5)
Profit after tax 650.1 (387.0) 263.1 332.9 (85.1) 247.8

Cash flows

2018
$M
2017
$M
Net cash flow from operating activities 321.2 307.1
Net cash flow applied to investing activities (33.5) (337.3)
Net cash flow applied to financing activities (226.1) 22.7
Net increase/(decrease) in cash held 61.6 (7.5)

Consolidated income statement

2018
$M
2017
$M
Income
Airfield income 122.1 119.6
Passenger services charge 179.1 174.3
Retail income 190.6 162.8
Rental income 97.6 84.9
Rates recoveries 6.0 5.6
Car park income 61.0 56.3
Interest income 2.2 2.3
Other income 25.3 23.5
Total income 683.9 629.3
Expenses
Staff 57.9 50.5
Asset management, maintenance and airport operations 69.5 55.6
Rates and insurance 13.7 12.2
Marketing and promotions 13.8 16.7
Professional services and levies 11.1 11.4
Other expenses 11.5 9.8
Total expenses 177.5 156.2
Earnings before interest expense, taxation,
depreciation, fair value adjustments and
investments in associates
(EBITDAFI)
506.4 473.1
Share of profit of associates and joint ventures 16.7 19.4
Gain on sale of associate 297.4
Derivative fair value (decrease)/ increase (0.7) 2.5
Investment property fair value increase 152.2 91.9
Earnings before interest, taxation and depreciation (EBITDA) 972.0 586.9
Depreciation 88.9 77.9
Earnings before interest and taxation (EBIT) 883.1 509.0
Interest expense and other finance costs 77.2 72.8
Profit before taxation 805.9 436.2
Taxation expense 155.8 103.3
Profit after taxation attributable to owners of the parent 650.1 332.9

Financial position analysis

As at 30 June 2018
$M
2017
$M
Non-current assets 8,018.4 6,399.5
Current assets 178.4 104.0
Total assets 8,196.8 6,503.5
Non-current liabilities 2,185.6 1,911.0
Current liabilities 329.1 563.5
Equity 5,682.1 4,029.0
Total equity and liabilities 8,196.8 6,503.5