Our reported profit after taxation for the 2019 financial year was $523.5 million – a decrease of 19.5% on the prior year's reported profit of $650.1 million. Excluding the gain arising from the sale of our investment in North Queensland Airports in the prior year and fair value changes, our underlying profit after taxation for the 2019 financial year was $274.7 million, an increase of 4.4% on the prior year's underlying profit of $263.1 million.

Revenue increased 8.7% to $743.4 million due to ongoing strong growth across a number of business segments, including retail, car parking and rental income. Aeronautical revenue for the 2019 financial year was up 3.8% on 2018, with the growth in passenger numbers and aircraft movement partially offset by the reduction in revenue associated with lower aeronautical charges year on year. Operating expenses increased 6.3% to $188.6 million, in part due to higher operating costs for rates and insurance, as well as higher operating costs for asset management, maintenance and airport operations. Our earnings before interest expense, taxation, depreciation, fair value adjustments and investments in associates (EBITDAFI) increased 9.6% to $554.8 million.

Our total share of the underlying profit from associates was $8.2 million for the 2019 financial year, a decrease of $8.5 million on the prior year following the sale of Auckland Airport’s investment in North Queensland Airports. The underlying profit share from Queenstown Airport was up 7.9% to $4.1 million and the share from the Novotel Hotel was down 8.9% to $4.1 million.

The final dividend for the 2019 financial year is up 2.3% to 11.25 cents per share. It will be imputed at the company tax rate of 28% and paid on 18 October 2019 to shareholders who are on the register at the close of business on 4 October 2019. As a result, the total dividend for the 12 months to 30 June 2019 is up 2.3% to 22.25 cents per share. Our performance in the 2019 financial year means that underlying earnings per share have continued to increase, up 3.6% to 22.8 cents per share.

The 2019 financial year saw the company make significant progress on the development of key infrastructure projects, as part of our plan to build an airport of the future. We completed the 36,000m2 upgrade to our International Terminal departures area, delivering an improved experience for customers by offering a new retail and a food and beverage precinct and a new aviation security screening area. In addition, we completed major transport upgrades to Nixon Road and the Landing Road intersection, reducing travel times for customers. We also commenced work on two of our key anchor projects – the expansion of our airfield and the upgrade of our inner core roading network.

The dividend reinvestment plan, which provides 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 2019 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 2019 and 30 June 2018.

2019 2018
Reported
profit
$M
Adjustments
$M
Underlying
profit
$M
Reported
profit
$M
Adjustments
$M
Underlying
profit
$M
EBITDAFI per Income Statement 554.8 - 554.8 506.4 - 506.4
Share of profit of associates 8.2 - 8.2 16.7 - 16.7
Gain on sale of associate - - - 297.4 (297.4) -
Derivative fair value movement (0.6) 0.6 - (0.7) 0.7 -
Investment property fair value increases 254.0 (254.0) - 152.2 (152.2) -
Property, plant and equipment revaluation (3.8) 3.8 - - - -
Depreciation (102.2) - (102.2) (88.9) - (88.9)
Interest expense and other finance costs (78.5) - (78.5) (77.2) - (77.2)
Taxation expense (108.4) 0.8 (107.6) (155.8) 61.9 (93.9)
Profit after tax 523.5 (248.8) 274.7 650.1 (387.0) 263.1

The following adjustments have been made to show underlying profit after tax for the year ended 30 June 2019 and 30 June 2018:

  • We have reversed out the gain arising from the sale of our investment in North Queensland Airports that occurred in the prior financial year. 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 2019 and 2018. 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;
  • Consistent with the approach to revaluations of investment property, we also have reversed the revaluation of the building and services class of assets within property, plant and equipment for the 2019 financial year. The fair value changes in property, plant and equipment are less frequent than are investment property revaluations, which also makes comparisons between years difficult;
  • We have reversed out 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
  • We have also reversed the taxation impacts of the above movements in both the 2019 and 2018 financial years.