Annual result announcment

Annual result announcment

Auckland International Airport Limited (AIAL) today announced another solid annual result, with continued growth in revenues and earnings before interest, tax and depreciation (EBITDA). There was also significant progress achieved in expanding and upgrading the airport facilities, along with major developments in the aeronautical and commercial businesses. The company has also undertaken a significant review of its vision and future strategy and has given consideration to a range of strategic initiatives to enhance long-term value.

Total revenue for the year ended 30 June 2007 was $321.9 million, an increase of 5.3 per cent over the previous year. There was solid revenue growth across all major aeronautical and commercial revenue lines, with the exception of airfield income.

EBITDA increased 1.1 per cent to $242.8 million. However, this result included a significant increase of $9.9 million in the provision relating to the company’s long-term incentive (LTI) plans. This resulted from the considerable rise in the company’s share price in the month prior to year end. Excluding this LTI provision, EBITDA increased 5.2 per cent to $252.7 million.

Surplus after tax for the year was $92.0 million, or $101.9 million excluding the LTI provision.

AIAL chairman, John Maasland, said “The company has made significant progress this year across a wide range of strategic and operational initiatives. The company has delivered another solid result, despite passenger growth below long-term trends, and increased depreciation and interest costs directly associated with the company’s substantial investment programme, combined with higher interest rates.”

Growth in total international passengers was 2.6 per cent, underpinned by solid growth in New Zealand travellers, along with very strong growth from some of the newer markets such as China and India. Domestic passenger growth was 2.1 per cent.

Chief executive, Don Huse, said “Throughout the 2007 year we started to see a rebound in passenger growth rates from the levels experienced throughout 2006, although overall at a level below the company’s long-term average of around 5 per cent per annum. Growth in international passengers in the second six months of the year was 3.8 per cent and we expect this improving trend to continue into the 2008 year.”

“Most importantly, significant progress was made in completing or progressing a number of major projects to expand and upgrade Auckland Airport. New facilities for regional services and a new retail precinct were opened in the domestic terminal in December last year. The new multi-level car park with covered access to the domestic terminal was opened in July 2006. Work to complete the extensive renovation of the Air New Zealand domestic terminal, the final stage of the domestic terminal upgrade, will be completed on time and on budget before Christmas this year.”

Mr Huse said, “The new $85 million project to expand the arrivals facilities at the international airport is also on track, with the first stage expected to open in April next year. Work on the new A380-capable Pier B at the international terminal is also underway and completion is planned for September 2008. This will provide much needed additional gate capacity, and will ensure Auckland Airport is fully ready for the expected arrival of A380s in 2009.”

The company also made strong progress on resetting important aeronautical charges and retail concessions this year. Following an extensive and comprehensive consultation process which commenced in August 2004, the company announced new aeronautical charges to apply from 1 September 2007. “The new charges, which are increasing broadly in line with inflation, were set following careful and detailed deliberation and consultation with our airline customers, and after significant concessions were made on both sides. We consider that a fair and reasonable outcome has been achieved”, Mr Huse said.

The company has also focussed on enhancing passenger facilities and services this year New retail concessions were awarded in the major business areas of duty free, foreign exchange and car rental. “These new concessions are expected to extend and enhance the range of products and services available to passengers at Auckland Airport.”

Chief financial officer, Robert Sinclair, said “This year the company invested $105.4 million in airport expansion and development projects. This included $44.1 million for the international terminal expanded arrivals projects and $20.6 million for the domestic terminal upgrades and retail precinct. The company also invested $18.0 million in property developments, with a number of properties being completed this year. In the 2008 year, we expect to invest around $161 million, bringing to an end a four year $500 million upgrade of Auckland Airport. The company has also commenced work on the first stage of the northern runway, which is expected to cost a total of around $32 million over four years, and is expected to be operational in late 2010 or 2011.”

Mr Maasland said, “The outlook for the company remains positive, with passenger growth rates improving, major airline customers undertaking significant fleet expansions and upgrades, improved airport services and facilities for passengers and major aeronautical and retail concession arrangements concluded.”

Over the next year, we expect passenger volumes to continue to improve, albeit remaining below the company’s long-term trend. Increased depreciation and interest costs resulting from the current investment programme will also influence the financial results for the current year. At this stage, the directors expect growth in revenues and EBITDA to be in the order of 7 per cent (based on EBITDA for the 2007 year excluding the LTI provision). This excludes any revaluation gain relating to the company’s investment property portfolio. As always, this view is subject to any material adverse events, significant one-off expenses, deterioration due to the current global market conditions or other unforeseeable circumstances that may occur.

In conjunction with the announcement of the shareholder proposal involving Dubai Aerospace Enterprises, AIAL announced a fully imputed dividend of 7 cents per share would be paid to shareholders prior to the proposed restructuring. The directors have declared a fully imputed dividend of 4.45 cents per share (amounting to $54.4 million) which will be paid on 19 October 2007 (to those shareholders on the register on 12 October 2007). This amount is consistent with last year’s final dividend. The balance of the 7 cents per share dividend, being 2.55 cents per share, will be paid to shareholders once all of the conditions relating to the proposal have been satisfied, but before the restructuring is completed.

Fast Facts:

12 months to 30 June 2007 12 months to 30 June 2006

Revenue $321.9 m $305.8 m

EBITDA $242.8 m $240.1 m

Surplus after tax $ 92.0 m $103.2 m

Dividend (cents per share) 8.20 8.20

Total aircraft movements

International 38,406 38,759

Domestic 117,469 122,140

Total passenger movements

International 6,373,427 6,213,647

Transit and transfer 912,970 889,388

Total International 7,286,397 7,103,035

Total Domestic 5,068,794 4,963,142

ENDS

Refer pdf attachments:

2007 year in review / Results at a glance / Directors’ report / PowerPoint presentation

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