Annual Report 2017
Upgrading international departure experience / New and expanded security screening and processing area / New retail hub / New passenger lounge / Roading and public transport upgrades / Providing more gates for international aircraft / Expanding our airfield / New five-star hotel / Building a new domestic jet terminal / Improving international arrival experience / Upgrading international check-in area / Second runway /
Building the future… For personal use only use personal For
...The biggest changes in our history are now being delivered. We’re investing more than $1 million every working day to implement our 30-year vision... Improve Improved international public transport arrival and roading experience New 5-star infrastructure ––––– 2020 hotel ––––– 2017 to 2022 ––––– 2020 Second runway Upgrade international ––––– 2028 departure experience ––––– 2017 & 2018 New domestic jet terminal
Upgrade ––––– 2022 international More international check-in area aircraft gates ––––– 2022 ––––– 2017, 2018 & 2020
For personal use only use personal For Airfield expansion ...with approximately $2 billion ––––– 2022 to be invested in aeronautical infrastructure over the next
CONCEPT IMAGERY IS INDICATIVE ONLY AND SHOULD NOT BE USED FOR PLANNING PURPOSES. DATES ARE SUBJECT TO CHANGE. five financial years. New international departure experience
A reconfigured landside farewell portal, a new and expanded security screening and processing area, a new retail hub and a new passenger lounge.
Current Status Opened the first stages of both the new security screening space and the new stores for our two duty free operators. Western retail and lounge area structure nearing Target Completion completion in readiness for
interior works. Mid-2018 For personal use only use personal For Extending Pier B of the international terminal
Additional international gate lounges and airbridges to accommodate two more A380 or B787 aircraft, or four smaller A320 or B737 aircraft.
Current Status New fuel pipelines installed; airfield stands 17 and 18 complete; construction of Target Completion gate lounges, gatehouse and
arrivals corridor underway. Early-2018 For personal use only use personal For Improving the airport’s roads and public transport infrastructure
New transport projects to improve travel around Auckland Airport and support better public transport options.
Current Status Upgraded Puhinui Road roundabout; expanded Park & Ride car park; upgraded traffic light phasing and lane configurations at key intersections; upgrading Nixon Road; ongoing advocacy for improvements to public Target Completion transport services and state highway
access to and from the airport. 2020 For personal use only use personal For 8 Annual Report 2017 Connecting 30-YEAR VISION FOR THE AIRPORT OF THE FUTURE Auckland with New Zealand & New Zealand with the world
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.
Contents
8 ———— Connecting Auckland with New Zealand & New Zealand with the world 10 ———— Nau mai & welcome 12 ———— Our year in numbers 14 ———— Faster, Higher, Stronger 16 ———— Investing in our infrastructure 20 ———— Investing in tourism growth 24 ———— Investing in our customer experience 28 ———— Being a good employer and neighbour 32 ————only use personal For Governance and leadership 34 ———— Financial summary
Online report View our interactive report at report.aucklandairport.co.nz It has been designed for ease of NOTE: CONCEPT IMAGERY IS INDICATIVE ONLY AND online use, with tablets in mind. SHOULD NOT BE USED FOR PLANNING PURPOSES. 10 Annual Report 2017
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 Nau mai 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 & welcome global market conditions or other unforeseeable circumstances. Nau mai and welcome to Auckland Airport’s annual report for the 2017 financial year.
The 12 months to 30 June 2017 was another We fast-tracked a number of planned Ara, our airport jobs and skills hub, continues Sir Henry van der Heyden | Chair strong year of growth right across our roading and transport improvements on to deliver real benefits, providing more than business with the company continuing to our own network to improve traffic flows, 1,300 training opportunities and placing focus on upgrading its airport infrastructure, including upgrading the Puhinui Road 190 people into jobs – 82% of whom were growing and supporting tourism and providing roundabout, upgrading the traffic light South Aucklanders. the best possible customer experience phasing and lane configurations at the In the year to 30 June 2017 the total number Adrian Littlewood | Chief Executive during a time of significant change. airport’s George Bolt Memorial Drive and of passengers using our airport increased by To help accommodate the ongoing increase Tom Pearce Drive intersection, and updating 10.2% to 19 million. Domestic passengers in passengers and aircraft, we continued to the lane configurations at the airport’s were up 8.9% to 8.6 million, international spend more than $1 million every working George Bolt Memorial Drive and Laurence passengers (excluding transit passengers) day on our core airport infrastructure. Stevens Drive roundabout. We also were up 11% to 9.7 million and international There are now 44 aeronautical projects announced, in June 2017, the details of transit passengers were up 16.8% to underway across the airport, each in excess four new transport projects as part of our 0.7 million. longer-term plan to improve travel around of $1 million, and we plan to invest around Total revenue was up 9.7% to $629.3 million, the airport over the next three years. $2 billion in aeronautical capital expenditure while operating expenses were up 8.8% to $247.8 m by the 2022 financial year. During the 2017 Late in the 2017 financial year we announced $156.2 million. Earnings before interest AN INCREASE OF 16.5% financial year, we progressed the upgrade our new aeronautical prices for the next five expense, taxation, depreciation, fair value of our international departure area and the financial years – the result of a year-long adjustments and investments in associates extension of Pier B of the international consultation process with airlines on (EBITDAFI) increased 9.9% to $473.1 million. Underlying profit terminal to provide two more aircraft gates investment plans, operations and pricing. The directors and management of Total profit after tax was up 26.9% to and expanded departure lounges. We also The outcome of that consultation process, in Auckland Airport understand the importance $332.9 million, while underlying profit after further developed our airfield including real terms, sees average annual international of reported profits meeting accounting tax was up 16.5% to $247.8 million. As a upgrading existing and building new remote passenger charges reducing by 1.7% per standards. However, due to the complexity result, our underlying earnings per share is aircraft stands. annum and domestic passenger charges of accounting standards, it may be difficult up 16.2% to 20.8 cents. Our final dividend for investors to compare one financial year’s increasing by just 0.8% per annum over the We have continued to sustainably grow travel for the 2017 financial year is up 16.7% to results with another. Therefore, we also next five years. We also confirmed that a markets to increase our air connectivity, which 10.5 cents per share, delivering a total provide an underlying profit measure to help runway land charge of $1.19 (excluding GST) is essential for a city and country reliant on dividend of 20.5 cents, an increase of 17.1% investors compare profits between years per passenger will likely be introduced from and to make comparisons between different tourism and trade for its economic prosperity. compared with the 2016 financial year. the start of the 2021 financial year once companies with confidence. We also believe We have also maintained our support for Auckland Airport’s performance in the 2017 certain operational and construction triggers that an underlying profit measure can assist the New Zealand tourism industry, especially financial year means the five-year average are met. investors to understand what is happening the operators who provide our international annual shareholder return is 26.3%. in a business such as Auckland Airport visitors with high-quality experiences. We Together, our modest price changes for the During the 2017 financial year, the Board where revaluation changes can distort also joined with other industry leaders 2018–2022 financial years and our $2 billion short-term financial results or where one-off elected to reinstate our dividend reinvestment to encourage the Government to develop infrastructure investment plan will deliver transactions, both positive and negative, plan to provide funding flexibility to support new and innovative ways to upgrade significant benefits for passengers. The new can occur. our investment in new infrastructure and tourism infrastructure. pricing and capital expenditure programme For several years, Auckland Airport has growth opportunities. The dividend also balances the needs of passengers, referred to underlying profits alongside Auckland Airport remained focused on its reinvestment plan will again be in place for the airport community, the tourism industry, reported results. We do so not only when customers during the 2017 financial year, the 2017 financial year final dividend, we report our results but also when we give our investors and the airlines – ensuring ensuring their journeys through the airport enabling shareholders to elect to purchase our market guidance (where we exclude fair Auckland Airport has the infrastructure it are fastonly use personal For and efficient and they have a range Auckland Airport shares at a 2.5% discount value changes and other one-off items) or needs to continue connecting Auckland of options when parking, shopping or staying to market price, instead of receiving the when we consider dividends and our policy with New Zealand and New Zealand with to pay 100% of underlying profit after tax, here. Improving travel times and flows dividend as cash. around the airport precinct has been a top the world. excluding unrealised gains and losses arising from revaluation of property or priority for the company in the 2017 financial The 2017 financial year also saw treasury instruments and other one-off year and we also continued to advocate to Auckland Airport continue to focus on a items. However, in referring to underlying central and local government the need for wide range of activities to improve profits, we acknowledge our obligation to better public transport services and state educational, employment and environmental show investors how such results have been highway access to and from the airport. outcomes at the airport, in our local derived. The reconciliation for the current period can be found on page 34. communities and across the Auckland region. ADRIAN LITTLEWOOD, CHIEF EXECUTIVE AND SIR HENRY VAN DER HEYDEN, CHAIR
Auckland International Airport Limited 12 Annual Report 2017
Our year in numbers 10.2% Passengers Domestic 8.6m 8.9% International 9.7m 11% International transits 0.7m 16.8% 19 m Revenue Underlying profit 9.7% $629.3m 16.5% $247.8m
Operating EBITDAFI Dividend per share Interim 17.6% Interim 10 cents 9.9% $473.1m 17.1% Final 16.7% 20.5 cents Final 10.5 cents
Total profit Underlying earnings per share 26.9% $332.9m 16.2% 20.8 cents
Five-year average annual shareholder return 26.3%
Health Ara – Airport Jobs Environmental and safety and Skills Hub impact $658,000 $346,000 For personal use only use personal For Reporting of safety Granted to community projects by the observations, hazards Training Energy use Invested in our local communities % and near misses opportunities % per passenger Auckland Airport Community Trust to support 27 1,342 7 learning, literacy and life skills in South Auckland Employee recordable Total job Waste to landfill 22% injury rate 190 placements 4% per passenger
South Aucklanders 156 placed in jobs
Auckland International Airport Limited 14 Annual Report 2017
Faster,
Faster, Higher, Stronger embraces our objective of making journeys better and is a commitment to Higher, improvement in everything we do. In 2013 the strategy set a number of new aspirations to drive our company’s performance. These high-level aspirations and our progress to date are not market guidance, and the results are likely to fluctuate from year to year. However, they provide the company with a sharp focus on important goals that underpin our long-term success. In the 2017 Stronger financial year, we continued to deliver on the aspirational goals of Faster, Higher, Stronger.
In the 2013 financial year, we announced our strategic plan to grow Aspirations: How we tracked in FY17: faster, aim higher and become stronger. Our five-year business strategy – Faster, Higher, Stronger – focuses us on ‘making journeys better’ for all customers and partners of Auckland Airport and responding to the challenges we have identified ahead. These challenges include fast-changing aviation markets and changing customer expectations, 400,000 356,315 competitive pressure in our retail and commercial property markets, and a booming New Zealand tourism industry. Double Chinese arrivals to 400,000 A slight decrease of 2,955 in FY17 by FY17, up from 213,781 in FY13
We’re growing We’re We’re being We’re $ m travel and strengthening fast, efficient investing for $60m 72.9 trade markets our consumer and effective future growth Build property rent roll to $60 million An increase of $9.9 million in FY17 business by FY17, up from $44 million in FY13 We have an ambitious We are strengthening We are improving our We are building on our and innovative approach and extending our performance by strong foundations for to helping New Zealand retail, transport and increasing the long-term, sustainable sustainably unlock growth accommodation productivity of our growth by investing in opportunities in travel, businesses to ensure we assets, processes and the infrastructure trade and tourism. can respond to evolving operations. A fast, required to meet Growing travel markets customer needs. This efficient and effective long-term customer with our airline and means we are increasing airport makes journeys needs. This makes 10m 9.7m industry partners makes the range of products and better by saving time journeys better both journeys better by services we provide and and money for airlines within the airport and Achieve 10 million international An increase of 1 million in FY17 providing customers making Auckland Airport and passengers. around our vibrant passengers by FY18, up from with greater choice and more appealing to our business district. more-convenient flight customers – in short, 7.3 million in FY13 schedules and providing we are making their better value for money for journeys better. all customers and partners
of Auckland Airport. For personal use only use personal For 20m 19 m Reach 20 million total passengers by An increase of 1.8 million in FY17 FY20, up from 14.5 million in FY13
Auckland International Airport Limited 16 Annual Report 2017
Investing “Auckland Airport is making a significant investment in its infrastructure which will in our both benefit and excite generations of Kiwis and international visitors. You can immediately tell from strategy the number of cranes above the international terminal and the number of construction workers on site that this is one of the biggest infrastructure upgrades currently underway in New Zealand.”
STEPHEN SELWOOD, CHIEF EXECUTIVE Investing in our infrastructure INFRASTRUCTURE NEW ZEALAND
During the 2017 financial year During the 2017 financial year we also Auckland Airport undertook its most commenced construction of the international significant upgrade programme ever in terminal’s Pier B extension. This project support of the strong and ongoing growth will provide two more gate lounges and in New Zealand tourism. We are now additional airbridges to accommodate the investing more than $1 million every working increasing number of international aircraft day on our core airport infrastructure using our airport. The first new gate lounge and over the next five financial years we and airbridges – Gate 17 – will open on $1m expect this level of aeronautical capital Pier B prior to the 2017/18 summer peak –––– WE ARE NOW INVESTING MORE THAN expenditure to total around $2 billion. Our season and the second gate lounge and $1 MILLION EVERY WORKING DAY ON OUR investment in infrastructure will ensure we airbridges – Gate 18 – will be completed by CORE AIRPORT INFRASTRUCTURE. can accommodate the current and forecast early-2018. This extension project will enable passenger and aircraft growth over the next Pier B to accommodate four A380 or B787 30 years, as well as the increasing traffic aircraft at the same time or, alternatively, volumes being experienced in our part of it could accommodate eight smaller Auckland and into the airport. international aircraft. $2b In the 12 months to 30 June 2017, we In addition to the investments we made in progressed the major upgrade of our our terminal infrastructure during the 2017 –––– OVER THE NEXT FIVE FINANCIAL YEARS WE EXPECT THIS LEVEL OF international departure area. This upgrade financial year, we significantly expanded our AERONAUTICAL CAPITAL EXPENDITURE includes a reconfigured landside farewell airfield infrastructure to better service TO TOTAL AROUND $2 BILLION. portal, a new and expanded security international aircraft during our busiest screening and processing area, a new months. We built a new taxiway – Taxiway retail hub and a new passenger lounge. It Echo – and completed the construction of a creates a uniquely New Zealand departure new international airfield stand, fully serviced experience and is themed a “haerenga”, with fuel and other utilities. We progressed or journey, from sea to land to sky. The the construction of a second, fully serviced construction of this significant infrastructure international airfield stand, which is For personal use only use personal For project is well underway, with the opening in scheduled for completion prior to the late June 2017 of the new security screening 2017/18 summer peak season. We space and the first phase of the new stores upgraded two remote international airfield for our two main duty free operators. stands so they can each accommodate an During the 2018 financial year we will deliver A380, or two smaller aircraft. These airfield the rest of the new international departure upgrade works significantly increased our experience, with the project due to be airfield pavement by more than 63,000m2, completed around the end of the 2018 or the equivalent of six rugby fields. financial year. When finished, our new PIER B EXTENSION UNDER CONSTRUCTION international departure area will be more than twice the size of the previous space.
Auckland International Airport Limited 18 Annual Report 2017
63,000m2 + –––– OUR AIRFIELD UPGRADE WORKS SIGNIFICANTLY INCREASED AIRFIELD PAVEMENT BY MORE THAN 63,000M2, OR THE EQUIVALENT OF SIX RUGBY FIELDS. DURING THE 2017 FINANCIAL YEAR, WE SIGNIFICANTLY EXPANDED OUR AIRFIELD INFRASTRUCTURE
–––– WE ANNOUNCED THE IMPLEMENTATION OF A TRANSIT LANE SYSTEM ACROSS THE AIRPORT PRECINCT OVER THE NEXT THREE FINANCIAL YEARS FOR BUSES AND HIGH-OCCUPANCY VEHICLES.
SCOTT STANDRING, PROJECT MANAGER, AIRPORT DEVELOPMENT & DELIVERY AN ICONIC NEW GATEWAY BRIDGE OVER GEORGE BOLT MEMORIAL DRIVE WAS ANNOUNCED IN THE 2017 FINANCIAL YEAR
In the 12 months to 30 June 2017, we We also fast-tracked a number of planned • improving traffic flows and improving The bridge will also significantly improve the also progressed the design and planning roading and transport upgrades on our own public transport access to the domestic walking and cycling experience between our approvals needed to build our second network. In the first half of the 2017 financial “Auckland Airport is an terminal by Christmas 2017 through the commercial precinct and the terminals. runway, and have advanced the concept year we: provision of more space for buses on planning of the new domestic jet terminal. economic powerhouse for Investment property • upgraded the Puhinui Road roundabout the terminal forecourt and a new and separate access road for taxis and buses The strong and ongoing growth of Auckland to help improve the eastern access the region and New Zealand, During the 2017 financial year, continues to put additional pressure to the airport from State Highway connecting workers, • implementing a transit lane system across Auckland Airport continued to invest in on the city’s transport infrastructure, 20B/Puhinui Road employers and manufacturers the airport precinct between December its property business. We completed including around Auckland Airport. Given construction of the new Quad 7 office • added more car parks to our Park & Ride 2017 and 2020 for buses and high- the importance of air connectivity for with their domestic and building, delivering 9,000m2 of office space facility, mostly for use by staff working at occupancy vehicles New Zealand’s travel, trade and tourism for both aeronautical and non-aeronautical the international terminal to remove staff international markets. The • upgrading Nixon Road by sectors, improving land transport access tenants on Leonard Isitt Drive. We also traffic from the inner airport roads October 2017 to provide a new route to and from Auckland Airport must remain investment being made by completed a 15,000m2 Fonterra chilled to Auckland Airport’s Park & Ride on a priority for central and local government • upgraded the traffic light phasing and lane and frozen facility on Timberly Road and Auckland Airport to upgrade Verissimo Drive without the need for transport agencies. The opening of the configurations at the airport’s George Bolt a fully-leased 9,600m2 development on its infrastructure, including drivers to use the main intersection that $1.4 billion Waterview Connection in Memorial Drive and Tom Pearce Drive Maurice Wilson Avenue. We commenced connects the domestic and international July 2017 has improved travel times between intersection to improve traffic flows the strong focus on improving construction on a new building to terminals at Tom Pearce Drive and the city and the airport and its surrounding • updated the lane configurations at the transport around the airport accommodate the Ministry for Primary George Bolt Memorial Drive. 2 suburbs. It has also positively impacted airport’s George Bolt Memorial Drive and and advocating to central Industries and a new 7,000m warehouse wider Auckland traffic flows. The $146 million Laurence Stevens Drive roundabout to These new transport projects will help and office facility for international freight- upgrade of the State Highway 20A/Kirkbride improve traffic flows and local government the improve traffic flows and travel times around forwarding specialist Röhlig Logistics. Road intersection – scheduled to open need to improve access to the airport, and help our transport network The new facility will complete the Stage 2 • developed new traffic management plans during the 2018 financial year – should also and from the airport, will accommodate the increasing number of development of The Landing, our world-class improve travel times to and from the airport. for use when the airport roading network buses that will travel to and from the airport business park. In the 12 months to is particularly busy. benefit us all – for many, in the future. 30 June 2017 we also advanced civil and We continued to advocate throughout the roading works on Phase 3 of The Landing, 2017 financial year for additional transport In June 2017 we announced four transport many years to come.” Our new gateway bridge will be a which will deliver an additional 12 hectares network improvements, in particular an projects as part of our longer-term plan to spectacular sight as you enter and leave For personal use only use personal For KIM CAMPBELL, CHIEF EXECUTIVE of developed land, to ensure we can upgrade to State Highway 20B/Puhinui Road improve travel around the airport over the Auckland Airport to the north towards the EMPLOYERS’ AND MANUFACTURERS’ accommodate new business seeking and improved public transport services. We next three financial years. These include: ASSOCIATION (NORTHERN) city. Designed by architects Warren and space close to the airport. are working closely with the New Zealand • construction of an iconic new gateway Mahoney, the suspension bridge will feature Transport Agency and Auckland Transport to bridge over George Bolt Memorial Drive a 40m-high concrete mast inspired by the advance both short and longer-term roading for pedestrians and cyclists to connect form of a huia feather with a white light- - and public transport solutions for South “the Quad” hotel and commercial precinct tipped column and Maori motifs. It will be an Auckland and the airport precinct, including with the airport terminals and take cars off urban beacon and precinct marker that will a rail service. the main road network be visible across the airport, both during the day and at night. 20 Annual Report 2017
QATAR AIRWAYS STARTED A NEW DAILY B777 SERVICE BETWEEN DOHA AND AUCKLAND IN FEBRUARY 2017
Investing in tourism growth
Sustainably growing Auckland Airport’s air Building on the capacity growth in the 2016 connectivity continues to be essential for our financial year, the 12 months to 30 June 7 long-term performance, and the combination 2017 also saw the launch of eight new of new airlines, new services and new international routes, seven new international –––– THE 2017 FINANCIAL YEAR SAW capacity provides the growth that underpins airlines and a 14.5% increase in international SEVEN NEW INTERNATIONAL AIRLINES. our ongoing success. seat capacity. In the 2017 financial year the total number • In July 2016, United Airlines introduced of passenger movements was up 10.2% a three-flights-per-week B787 Dreamliner to 19 million. International passengers service between Auckland and San (excluding transits) were up 11% to Francisco. From October 2016 this 9.7 million, and domestic passengers service increased to a daily service using were up 8.9% to 8.6 million. International a larger B777 aircraft; however, it was transit passenger movements were up placed on hold in April 2017 and will 14.5% 16.8% to 0.7 million. recommence in October 2017. • The success of Emirates’ Auckland to International –––– INTERNATIONAL SEAT CAPACITY Dubai direct daily service, launched in the INCREASED 14.5% IN THE 12 MONTHS The 12 months to 30 June 2017 saw the 2016 financial year, saw the airline replace TO 30 JUNE 2017. following broad-based growth in our its B777 aircraft with a larger A380 in international passenger markets: October 2016. • Australia grew by 6.2% • In November 2016, Hong Kong Airlines • Europe grew by 15.6% commenced a daily A330 service between Hong Kong and Auckland. The • North America grew by 29.1% airline increased this service to 10 flights • Asia grew by 7.4%. per week between December 2016 and February 2017. The above growth in arriving and departing
international passengers reflects the efforts • In December 2016, Tianjin Airlines For personal use only use personal For made by Auckland Airport and the commenced its first Australasian service, New Zealand tourism industry to diversify with up to three-flights-per-week using an international passenger growth across a A330 aircraft between Auckland and the number of markets and to mitigate the risks Chinese cities of Tianjin and Chongqing. that any one market declines in the future. • Also in December 2016, Hainan Airlines Pleasingly, travel by New Zealand residents started a new direct A330 service from was also strong, up by 11.5%, and now Shenzhen in southern China. represents 47% of our total growth in HOOKER VALLEY TRACK WITH VIEWS TO AORAKI (MT COOK) AND HOOKER GLACIER, SOUTH ISLAND international passengers.
Auckland International Airport Limited 22 Annual Report 2017
QUEENSTOWN AIRPORT’S PASSENGER NUMBERS CONTINUED TO GROW IN THE 12 MONTHS TO 30 JUNE 2017 8 –––– EIGHT NEW INTERNATIONAL ROUTES WERE LAUNCHED IN THE 2017 FINANCIAL YEAR.
$50,000 x2 –––– WE PROVIDED TWO GRANTS OF $50,000 TO SUPPORT OPERATORS WHO OFFER OUTSTANDING SEASONAL AND REGIONAL TOURISM PRODUCTS FOR VISITORS FROM CHINA, AUSTRALIA, NGATI WHATUA ORAKEI WELCOME THE SUN AND ACKNOWLEDGE THE EARTH IN THEIR RA KARAKIA CEREMONY UNITED STATES OR INDIA.
• In February 2017, Qatar Airways started Jetstar also experienced strong capacity is an exciting development for the region, Unfortunately, Mackay Airport’s passenger Given the ongoing strong growth in tourism, a new daily B777 service between Doha growth in the 12 months to 30 June 2017, the airport and passengers who now have numbers decreased by 8.4% to 774,969 we worked with Air New Zealand, and Auckland – our second direct Middle up by 8.9% or 197,000 seats. This growth more flexibility and connectivity across “As a large tourism operation during the 2017 financial year, in part due Christchurch Airport and Tourism Holdings Eastern route and the world’s longest- was a result of the airline operating a full year airline networks. Te Puia continues to see the to its Sydney route being cancelled and Limited during the 2017 financial year to duration commercial passenger flight. of regional services, with an average of 11 the ongoing softening of the mining and commission research on how best to fund To provide its visitors with greater choices return Jetstar services every day between benefits of Auckland Airport’s resources industry. New Zealand’s public tourism-related • Sichuan Airlines launched a three-times- and to help address car parking pressures, Auckland Airport and Nelson, Napier, infrastructure. The project proposed that per-week A330 service from Chengdu Queenstown Airport has opened a new efforts to grow international New Plymouth and Palmerston North. Tourism a new national tourism entity be created, in June 2017. Sichuan Airlines is the 150-space Park & Ride facility. In the 2017 inbound air capacity. The focused on developing local and mixed-use seventh airline flying passengers financial year Queenstown Airport also Auckland Airport plays an important tourism Queenstown Airport and infrastructure and funded by a targeted between Auckland and mainland China. expanded its commercial transport operator growth in air capacity has sector leadership role, ensuring there is North Queensland Airports tourism infrastructure levy and new pick-up and drop-off zone, and extended its meant a significant increase in sufficient capacity and connectivity to allow The 2017 financial year also saw government funding. The project report was We maintained our support for the short and long-term car parking facilities. tourism, travel and trade markets to continue Air New Zealand continue its international visitor numbers and revenue development of Queenstown Airport and to grow. provided to the Government to assist it with route expansion, adding a seasonal Pleasingly, Cairns Airport continued to play North Queensland Airports during the 2017 for Te Puia. This in turn has policy development. Following the report’s three-flights-per-week B787 service between its part in growing travel markets during We have continued to develop strategic financial year, providing strategic and launch, the Government announced that it Auckland and Osaka from November 2016. the 2017 financial year. The number of given us the confidence to off-shore markets, such as Australia, the commercial advice on everything from will invest $102 million over four years in a This is in addition to the new seat capacity international passengers increased 7.4% to invest over $20 million in new United States, Indonesia and India, to drive master-planning to aeronautical operations, new Tourism Infrastructure Fund to develop delivered by its Ho Chi Minh City, Houston 667,650, domestic passengers increased passenger volumes and demand, especially retail and funding. facilities that will enhance the mixed public and tourist infrastructure. The in the low, off-peak season. We also and Buenos Aires services, launched in the 3.5% to 4.4 million and transfer and transit visitor experience in the future. Government also announced it will invest 2016 financial year. Also in the 2017 financial Queenstown Airport’s passenger numbers passengers increased 17.3% to 171,603. continued to support New Zealand tourism $76 million over four years to improve the year, Norfolk Island Airlines reopened continued to grow in the 12 months to The airport’s strong international passenger Auckland Airport’s drive to operators during the 2017 financial year. Department of Conservation’s tourism- services on the Norfolk Island to 30 June 2017. It increased its number of performance was in part due to growth grow air capacity is tangible for Once again we brought together travel and related infrastructure. Auckland route. international passengers to more than on the airport’s Tokyo and Osaka routes, tourism industry leaders from throughout the 532,000, up 12.1%, and also increased which were up 19%. The arrival of a new Te Puia and as such we look country to participate in an international Domestic the number of domestic passengers to international airline, Jin Air, also contributed at increased air capacity as travel summit, and we also provided two 1.4 million, up 15.6%. grants of $50,000 to support operators who The 2017 financial year saw strong growth to the growth, as did increased flight one of the most critical leading offer outstanding seasonal and regional in Air New Zealand’s domestic seat capacity, In the 2017 financial year Queenstown frequencies by Hong Kong Airlines, SilkAir and Jetstar. We expect that Cairns Airport’s indicators in our business and tourism products for visitors from China, up byonly use personal For 8.8% or 650,000 seats. This growth Airport started welcoming evening flights Australia, United States or India. was driven by additional capacity from new during winter months, allowing the airport international passenger numbers will continue investment planning.” aircraft and increased frequency on the to maximise its operating hours of 6am to to grow in the 2018 financial year with the announcement that China Southern Airlines TIM COSSAR, CHIEF EXECUTIVE airline’s Wellington, Christchurch and 10pm and reduce peak-time pressure on – TE PUIA, ROTORUA Queenstown services. Pleasingly, market its facilities and services. All four airlines will commence a year-round, three-flights- stimulation saw passenger numbers increase operating at Queenstown Airport – per-week, service from Guangzhou to Cairns at a greater rate than capacity growth on Air New Zealand, Jetstar, Virgin Australia and in December 2017. Air New Zealand’s regional services. Qantas – are now certified to fly after-dark services in and out of the resort town. This
Auckland International Airport Limited 24 Annual Report 2017
Investing in our WE INSTALLED 45 MOBILE INTERNATIONAL SELF-SERVICE CHECK-IN customer experience KIOSKS TO HELP PROVIDE THE BEST POSSIBLE PASSENGER EXPERIENCE
During the 2017 financial year we remained travel choices with personalised services focused on our customers to ensure they and benefits. These include longer access + have safe and enjoyable journeys when to free and improved Wi-Fi, parking 30,000 travelling through Auckland Airport. upgrades and discounts, special offers from participating general, duty free and food and We delivered a number of improvements –––– MORE THAN 30,000 PEOPLE beverage retailers, and discounted entry to BECAME MEMBERS OF STRATA CLUB across our terminals to help provide the best Auckland Airport’s Emperor Lounge. More WITHIN THE FIRST FEW MONTHS possible passenger experience during a than 30,000 people became members of the OF LAUNCH. period of significant change, including: free-to-join programme within the first few • installing 45 mobile international self- months of launch. service check-in kiosks During the 2017 financial year we also • reconfiguring our international completed a significant upgrade to the check-in area to provide 13 more Auckland Airport app. The upgrade allowed serviced counters us to incorporate both the Strata Club and • upgrading our back-of-house international a number of user experience improvements, baggage handling system many of which were based on specific customer feedback. In the 12 months to • adding new technology to monitor 30 June 2017 downloads of the app real-time traffic movements across the increased by 71%, user sessions increased airport precinct so we can improve the by 56% and car parking bookings via the journey time information we provide app increased by 185%. through our mobile and digital channels Bus operations are commonplace in airports • expanding our popular concierge service across the world, facilitating the transfer of for international passengers who prefer passengers between lounges in the terminals a personalised and dedicated arrival and aircraft parked on remote airfield stands. facilitation service. At Auckland Airport buses have played a critical role in servicing new demand while
For personal use only use personal For We also recruited more than 60 Passenger Experience Assistants to help passengers new aircraft piers, gates and stands are during our busy December and January developed. Internationally, bus operations months, and additional Customer Service often represent approximately 10% of an Agents were recruited to proactively assist airport’s total international flight movements. travellers requiring assistance. During the 2017 financial year, 9% of our international flights were serviced using In March 2017 we launched Strata Club, buses and only 5% of our domestic flights inviting travellers and other customers to were serviced by buses – all of which related join our new, innovative, mobile-based to Jetstar’s regional flight operations. CAROLE CHANT, CUSTOMER SERVICE REPRESENTATIVE, AERONAUTICAL OPERATIONS programme designed to recognise their
Auckland International Airport Limited 26 Annual Report 2017
TOGETHER WITH TAINUI GROUP HOLDINGS WE PROGRESSED THE DESIGN OF A NEW 5-STAR, 300-ROOM PULLMAN HOTEL DURING THE 2017 FINANCIAL YEAR
–––– DOWNLOADS OF THE AUCKLAND AIRPORT APP INCREASED IN MARCH 2017 WE LAUNCHED OUR STRATA CLUB BY 71% IN THE 2017 FINANCIAL YEAR.
To improve the customer experience during We remain focused on the importance of Drop & Ride has reduced traffic volumes on bus operations, we purchased two Aviramp biosecurity screening to New Zealand. As the inner airport roads and in the drop-off/ mobile jet bridges and completed a tender a result, we have continued to work with pick-up zones at the terminals and is a quick “Auckland Airport is such an for a new airfield bus fleet. Aviramps are the Ministry for Primary Industries (MPI) to and easy way to drop off friends and family for covered ramps that protect passengers from improve its international arrival process, by their travel. We also introduced The Wait Zone incredible place to work – bad weather and allow passengers to enter introducing an additional baggage X-ray for domestic customers, a 30-minute free seeing the excitement of or exit their aircraft without having to machine, new detector dog teams and a parking option located just two minutes from passengers heading off on negotiate stairs. Aviramps also significantly new biosecurity area layout and by opening the terminal which helps keep traffic moving in improve the travel experience for passengers a Green Lane. The Green Lane, which was the domestic terminal’s drop-off/pick-up zone. their journey and the sense of constructed by Auckland Airport for MPI, with reduced mobility or using a wheelchair Two hotels are currently located at joy from both first-time and helps deliver faster processing times for by eliminating the need for a separate lift Auckland Airport, a 4.5-star Novotel hotel New Zealand and Australian passport returning travellers. As a team, vehicle. Our two Aviramps will be delivered in and a 2.5-star ibis budget hotel. Both hotels holders who arrive in the country and do not we are 100% committed to October 2017 and if the trial is successful, are popular with travellers and have high have any food or other biosecurity risk items we will purchase more. Our 10 new airfield occupancy rates. Together with Tainui Group ensuring an amazing to declare. buses will be supplied by SkyBus and are Holdings we progressed the design of a new scheduled to arrive in early 2018. They have experience every day of the During the 2017 financial year, we continued 5-star, 300-room hotel during the 2017 been specifically designed for the comfort of the process of selecting new tax and duty financial year and selected Accor to operate year for all passengers who passengers being transferred between the free retailers and food and beverage operators it as a Pullman hotel. This new luxury hotel will pass through our international terminals and aircraft parked on remote to sell products representing the best of be located close to our international terminal airfield stands. and domestic terminals.” New Zealand and the world. We will be and increases the accommodation options ANIL VARMA, MANAGER SECURITY AND EMERGENCY SERVICES, AERONAUTICAL OPERATIONS Auckland Airport continued to work closely announcing the names of new retailers closer available at the airport. The new 5-star hotel is TRISH COCHRANE with government agencies during the 2017 to the store opening dates, which will start scheduled to open in the 2020 financial year. TERMINAL SERVICES MANAGER AUCKLAND AIRPORT financial year to improve the efficiency of before Christmas 2017. border services for our passengers. In To further improve our customer experience particular we worked with the New Zealand before people reach the terminal buildings, Aviation Security Service (AvSec) to improve we have provided additional public car parks processing times by installing a seventh closer to the international terminal and at our securityonly use personal For screening machine in the Park & Ride facility. At Park & Ride, we also international departure area and improving introduced a new valet parking service and the international transit screening facility. a new Drop & Ride service.
Auckland International Airport Limited 28 Annual Report 2017
23 –––– 23 PEOPLE NOW TRAINED TO INVESTIGATE HEALTH AND SAFETY INCIDENTS ACROSS THE COMPANY.
68% –––– STAFF HEALTH AND SAFETY Being a good employer ENGAGEMENT INCREASED TO 68%, AN INDICATOR OF AN INCREASINGLY PROACTIVE CULTURE IN THIS and neighbour ALL-IMPORTANT AREA.
Our people The learning and development requirements of employees has also been a key focus for Our company’s ongoing financial and the company during the 2017 financial year. non-financial success is very much due to Investment in our people is essential and the efforts of the people who work here. ensures they have the skills they need to do Auckland Airport has therefore remained their jobs to the best of their abilities. To help focussed on being a good employer in the achieve this, in the 2017 financial year we 2017 financial year. refreshed the company’s on-boarding and The health and safety of employees, induction programme, completed talent contractors, customers and visitors remained reviews and succession plans, offered six a top priority for Auckland Airport in the new programmes under the professional 12 months to 30 June 2017. The company development framework and initiated a continued to grow the team responsible for new Leadership Congress for 70 of our supporting our employees, with 23 people senior managers. now trained to investigate health and safety Valuing different backgrounds and viewpoints incidents across the company, and underpins a constructive workplace significantly enhanced our permit to work environment and Auckland Airport has system for managing higher-risk and continued to focus on highlighting and non-routine physical works. Pleasingly, in celebrating the diversity of its people and its the 12 months to 30 June 2017 staff health commitment to inclusion throughout the and safety engagement increased to 68%, 2017 financial year. A particular focus in the an indicator of an increasingly proactive 12 months to June 2017 has been increasing culture in this all-important area. Underlying the number of women employed as a this result, the 2017 financial year saw a proportion of employees. During the 2017 27% increase in the reporting of safety financial year, women represented 38% of observations, hazards and near misses, a our workforce, 22% of our Leadership Team 22% decrease in the employee recordable and 38% of our Board, and 100% of our injury frequency rate and an 81% reduction in For personal use only use personal For Future Directors have been women. We have the contractor lost time injury frequency rate. also continued to celebrate cultural diversity, These further improvements are evidence with sponsorship of, and employee of a culture where people are increasingly involvement with, Auckland’s ASB Polyfest, focused on eliminating health and safety Ma-ori Language Week activities and the hazards before they cause injury. development of a company waiata.
MANUREWA HIGH SCHOOL’S JOSHUA ROBERTS DEVELOPING HIS SKILLS THROUGH ARA’S WORK EXPERIENCE PROGRAMME
Auckland International Airport Limited 30 Annual Report 2017
In addition to the number of investments In June 2017 we were proud to host the Our local communities tell us that education we are making in Auckland Airport’s people official launch of Ara – the Auckland Airport is important to them and Auckland Airport and people-related systems, ongoing Jobs and Skills Hub. The launch by the has continued to develop a comprehensive enhancements to the airport’s built and Minister of Tertiary Education, Skills and programme that empowers people through natural environment are also ensuring we Employment was attended by around 100 educational initiatives. In the 12 months to are a great place to work. The significant employers, community members, local 30 June 2017, we have awarded eight investments we are making in improving the schools, central and local government education scholarships to students from local airport’s transport network and our advocacy representatives, people connected to jobs schools. Our educational focus also saw 50 to improve public transport and state through Ara, training providers and people students from five local schools participate in a highway access will play a key role in the from across the wider airport community. work experience programme, and the ongoing long-term attractiveness of Auckland Airport It was a celebration of the achievements of sponsorship of the Counties Manukau Life as a place to do business and to work. Ara, which in the 12 months to 30 June 2017 Education Trust, ASB Polyfest and the organised 1,342 training opportunities and Auckland Arts Festival’s schools programme. In August 2016, to recognise the efforts of our placed 190 people into employment – 156 whole team and the contribution they made to As a major New Zealand company we are of them living in South Auckland and 74 of strong company performance in the 2016 committed to operating in an environmentally whom were previously receiving a central financial year, the Board and Chief Executive sustainable way and we are well on track to government benefit. approved a one-off performance bonus achieving our 2020 goal of reducing our payment of $1,500 (before tax) to all As we continue to build the airport of the environmental footprint by 20% per passenger. permanent employees who do not already future, we believe Ara will go from strength Pleasingly, in the 2017 financial year the participate in the short-term incentive scheme. to strength. It showcases long-term, amount of waste per passenger sent to sustainable, ‘shared value’ corporate social landfill decreased by a further 4% and Our neighbours responsibility by providing training and energy use per passenger fell by 7%. long-term employment opportunities for Throughout the 2017 financial year we have We established a transitional waste facility people in our local community, and at the continued to invest in our local community, to improve the sorting of aeronautical same time assisting the company to progress focusing our investment in our corporate biosecurity waste and successfully its infrastructure development programme. social responsibility priorities of employment, completed a three-year energy savings education and the environment. agreement with the Energy Efficiency and Conservation Authority (EECA). We also MARTIN FRYER, SUSTAINABILITY MANAGER, AIRPORT DEVELOPMENT & DELIVERY KATE THOMPSON, COMMUNICATIONS AND COMMUNITY RELATIONS MANAGER, PEOPLE & SAFETY
undertook a new climate change analysis to The Auckland Airport Community Trust increase our understanding and minimise our awarded $346,000 during the 2017 financial “Auckland Airport clearly risk in relation to climate change events. year to community projects which supported learning, literacy and life skills in the parts of In addition to our focus on education, understands its role in South Auckland most affected by aircraft noise. employment and the environment, we have ensuring the success of its continued to support local initiatives through The Trust also provided some homeowners $1,500 local community. As one of our community grants programme, including: with financial assistance to pay their share of the installation of noise mitigation packages. –––– THE BOARD AND the largest employers in the • 18 “Our Auckland” grants, each CHIEF EXECUTIVE APPROVED A community, it is impressive of $1,000, to community groups Throughout the 2017 financial year ONE-OFF PERFORMANCE BONUS across Auckland nominated by our Auckland Airport has continued to develop PAYMENT OF $1,500 (BEFORE TAX) TO to see how wide ranging its Auckland Airport staff its relationship with mana whenua. In ALL PERMANENT EMPLOYEES WHO addition to our regular engagement hui and DO NOT ALREADY PARTICIPATE IN THE support is, and its focus on • 8 “He Tangata” grants, totalling $40,000, consultation on airport development, the SHORT-TERM INCENTIVE SCHEME. to support organisations nominated by long term employment, as designers of our upgraded international local community members for the the key highlight.” departure experience and iconic gateway excellent work they do in South Auckland bridge have been working closely with iwi BACS – BUSINESS AND COMMUNITY • $120,000 to 12 charities across Auckland SHARES NEW ZEALAND on some of the projects’ key design features. and New Zealand – also known as our Auckland Airport also continues to support $346,000 “12 Days of Christmas” grants which the administration and maintenance of the distribute money donated by travellers Te Manukanuka o Hoturoa Marae which is –––– THE AUCKLAND AIRPORT into our collection globes. located at the airport and is an important COMMUNITY TRUST AWARDED $346,000 community asset. DURING THE 2017 FINANCIAL YEAR TO The many corporate social responsibility COMMUNITY PROJECTS IN THE PARTS OF initiatives undertaken by Auckland Airport SOUTH AUCKLAND MOST AFFECTED BY are detailed in our annual Corporate Social AIRCRAFT NOISE. Responsibility Report, which is available online: corporate.aucklandairport.co.nz/
For personal use only use personal For corporate-responsibility.
FIA TAUVELA, AIRPORT SECURITY COORDINATOR PRESENTS THE AUCKLAND AIRPORT AWARD ON THE SAMOAN STAGE AT ASB POLYFEST
Auckland International Airport Limited 32 Annual Report 2017
Governance Financial & leadership summary
Richard Didsbury Sydney visit Our total profit after tax for the year to The final dividend for the 2017 financial • We recognise gains or losses in the 30 June 2017 was up 26.9% to year is up 16.7% to 10.5 cents per share. income statement arising from valuation Richard Didsbury became a director of As part of its ongoing commitment to $332.9 million, while underlying profit after It will be imputed at the company tax rate movements in interest rate derivatives that the company in 2007 and is the Chair of excellence, learning from other successful tax increased 16.5% to $247.8 million. of28% and paid on 20 October 2017 to are not hedge accounted and where the Auckland Airport’s safety and operational risk companies and being engaged in regional shareholders who are on the register at the counter-party credit risk on derivatives committee. He has been a much-valued aeronautical developments, the Board met Revenue increased 9.7% to $629.3 million. close of business on 6 October 2017. As a has an impact on accounting hedging member of the Board for the past 10 years in Sydney in April 2017. Directors and This was, in part, due to ongoing strong result, the total dividend for the 12 months to relationships. These gains or losses, and a champion for health and safety and management visited Sydney Airport, which growth in aeronautical and investment 30 June 2017 is up 17.1% to 20.5 cents per as in the case of investment property, corporate social responsibility. Richard’s welcomes more than 40 million passengers property revenues. Operating expenses share. Our performance in the 2017 financial are unrealised and derivative gains or significant management and governance every year, and discussed infrastructure increased 8.8% to $156.2 million, in part year means that underlying earnings per losses are expected to reverse out over experience in property, infrastructure and development, trans-Tasman tourism and due to operational resources and asset share have continued to increase, up 16.2% their lives. tourism, combined with his passion for health and safety. A briefing was also held management and maintenance. Our to 20.8 cents per share. Auckland, has helped Auckland Airport to with Facebook to discuss its travel and earnings before interest expense, taxation, • To be consistent, we have adjusted the deliver strong results for investors, our city tourism activities and with Qantas to discuss depreciation, fair value adjustments and The reinstatement of our dividend revaluations of investment property and and the country. airline infrastructure requirements and alliances. investments in associates (EBITDAFI) reinvestment plan, to provide funding financial derivatives that are contained Directors and management also met with the increased 9.9% to $473.1 million. flexibility to support our investment in within the share of profit of associates Richard’s retirement was deferred by the New South Wales Government to discuss new infrastructure and growth, has been in the 2017 and 2016 financial years. Board in 2016 so that it could retain his skills SCOTT TASKER, GENERAL MANAGER Our total share of the underlying profit from the development of Sydney’s new airport in welcomed by many of our shareholders. and experience to support the company’s AERONAUTICAL COMMERCIAL associates was $14.9 million for the 2017 • We also allow for the taxation impacts of Badgerys Creek and met with Boeing to The dividend reinvestment plan will again aeronautical and property infrastructure financial year, up 29.6%. The underlying the above adjustments in the 2017 and discuss its view on the future of travel. be in place for the 2017 financial year final investment programme. Richard will now profit share from Queenstown Airport was up 2016 financial years. Leadership team change dividend, enabling shareholders to elect to retire at the annual meeting in October 2017 57.9% to $3 million and the share from the NZX Code reporting purchase Auckland Airport shares at a 2.5% and the Board is undertaking a search for a In July 2017, the Chief Executive announced Novotel hotel, in which we increased our discount to market price, instead of receiving new director to fill the vacancy. The company has amended this annual the appointment of Scott Tasker as shareholding to 40% in February 2017, was the dividend as cash. report to ensure it incorporates the new Auckland Airport’s new General Manager up 58.8% to $2.7 million. Our underlying corporate governance reporting principles Aeronautical Commercial. Scott will lead the profit share from North Queensland Airports The table on page 36 shows how we company’s route development work $14.9m issued by the New Zealand Stock Exchange, was up 16.5% to $9.2 million. reconcile reported profit after tax and programme, as well as its focus on tourism underlying profit after tax for the full-year –––– OUR TOTAL SHARE OF THE which take effect in the 2018 financial year. In the 2017 financial year we undertook a strategies and sustainably growing airline periods ended 30 June 2017 and UNDERLYING PROFIT FROM The following key amendments have been review of our 24.55% investment in North made to the corporate governance section of services to New Zealand. Scott brings 21 30 June 2016. ASSOCIATES WAS $14.9 MILLION Queensland Airports (NQA). We believe FOR THE 2017 FINANCIAL YEAR, our 2017 annual report, located on page 14 years of experience in the travel industry to NQA is a highly attractive asset and a great The following adjustments have been made UP 29.6%. of the 2017 financial statements: the role and for the past two and a half years he has led our aeronautical commercial investment with a strong growth strategy to show underlying profit after tax for the • All “Principles” are now in the same order activities in the Americas market and and a new and highly capable management 12-month periods ended 30 June 2017 as, and labelled in accordance with the overseen significant growth in new carriers team. However, our review has confirmed and 30 June 2016: that while NQA is a quality asset, it is not New Zealand Stock Exchange Code and additional capacity. Scott replaces • We have reversed out the impact of integral to our current business strategy. • Reference is made to the various Board Norris Carter who left Auckland Airport in revaluations of investment property and 57.9% committees and links provided to their November 2016 to become the Chief associates in the 2017 and 2016 financial individual policies Executive of North Queensland Airports. years. An investor should monitor –––– THE UNDERLYING PROFIT SHARE changes in investment property over time FROM QUEENSTOWN AIRPORT WAS UP • A skills matrix has been added to 57.9% TO $3 MILLION. Aeronautical pricing as a measure of growing value. However, demonstrate what attributes each a change in one particular period can be RICHARD DIDSBURY Director brings to the Board The Board retained its increased oversight DIRECTOR of aeronautical pricing throughout the too short for the purposes of measuring • Diversity reporting is now reported under 2017 financial year. The ad-hoc Board performance. Changes between periods Principle 2 sub-committee met regularly to provide can be volatile and, consequently, will For personal use only use personal For • Non-financial reporting has been governance oversight of this important have an impact on comparisons. Finally, highlighted and a link provided to the task, which assisted the company in the the revaluation is unrealised and, company’s 2016 Corporate Social development of its aeronautical charges for therefore, is not considered when Responsibility Report the financial years 2018–2022 in June 2017. determining dividends in accordance James Miller chaired the sub-committee with the dividend policy. • Additional information on the which was comprised of the following Chief Executive’s remuneration has directors: Justine Smyth; Christine Spring been provided and Patrick Strange. The Chair of the • Confirmation has been included that we company, Sir Henry van der Heyden, also have a takeover offer protocol. attended meetings of the subcommittee.
Auckland International Airport Limited 34 Annual Report 2017
Underlying profit Financial performance
2017 2016 2017 2016 $M $M Reported Underlying Reported Underlying Income profit Adjustments profit profit Adjustments profit $M $M $M $M $M $M Airfield income 119.6 103.4 EBITDAFI per Income Statement 473.1 – 473.1 430.3 – 430.3 Passenger services charge 174.3 154.9 Share of profit of associates 19.4 (4.5) 14.9 (8.4) 19.9 11.5 Retail income 162.8 157.5 Derivative fair value decrease 2.5 (2.5) – (2.6) 2.6 – Rental income 84.9 74.7 Investment property fair value increases 91.9 (91.9) – 87.1 (87.1) – Rates recoveries 5.6 5.4 Property, plant and equipment revaluation Car park income 56.3 52.1 decrease – – – (16.5) 16.5 – Interest income 2.3 1.7 Depreciation (77.9) – (77.9) (73.0) – (73.0) Other income 23.5 24.2 Interest expense and other Total income 629.3 573.9 finance costs (72.8) – (72.8) (79.1) – (79.1) Other taxation expense (103.3) 13.8 (89.5) (75.4) (1.6) (77.0) Expenses Profit after tax 332.9 (85.1) 247.8 262.4 (49.7) 212.7 Staff 50.5 46.8 Asset management, maintenance and airport operations 55.6 49.1 Cash flows Rates and insurance 12.2 11.5 2017 2016 Marketing and promotions 16.7 16.3 $M $M Professional services and levies 11.4 9.7 Net cash inflow from operating activities 307.1 270.5 Other expenses 9.8 10.2 Net cash outflow applied to investing activities (337.3) (217.7) Total expenses 156.2 143.6 Net cash inflow/(outflow) applied to financing activities 22.7 (38.7) Earnings before interest expense, taxation, depreciation, fair value adjustments and Net (decrease)/increase in cash held (7.5) 14.1 investments in associates (EBITDAFI) 473.1 430.3 Share of profit/(loss) of associates and joint ventures 19.4 (8.4) Derivative fair value increase/(decrease) 2.5 (2.6) Property, plant and equipment fair value revaluation – (16.5) Investment property fair value increase 91.9 87.1 Earnings before interest, taxation and depreciation (EBITDA) 586.9 489.9 Depreciation 77.9 73.0 Earnings before interest and taxation (EBIT) 509.0 416.9 Interest expense and other finance costs 72.8 79.1 Profit before taxation 436.2 337.8 Taxation expense 103.3 75.4 Profit after taxation attributable to owners of the parent 332.9 262.4
Financial position
2017 2016 As at 30 June $M $M Non-current assets 6,399.5 6,038.6 For personal use only use personal For Current assets 104.0 102.9 Total assets 6,503.5 6,141.5 Non-current liabilities 1,911.0 1,768.6 Current liabilities 563.5 492.2 Equity 4,029.0 3,880.7 Total equity and liabilities 6,503.5 6,141.5
Auckland International Airport Limited 36 Annual Report 2017
Share registrar Link Market Services Limited Level 11, Deloitte Centre 80 Queen Street, Auckland 1010 New Zealand PO Box 91976, Auckland 1142 New Zealand Email: [email protected] Website: www.linkmarketservices.co.nz New Zealand telephone: +64 9 375 5998 New Zealand facsimile: +64 9 375 5990 Australia telephone: +61 1300 554 474
Annual Report 2017 This annual report covers the performance of Auckland International Airport Limited for the period from 1 July 2016 to 30 June 2017. This volume contains overview information and a summary of our performance against financial and non-financial targets for the 2017 financial year. Our audited financial statements for the period from 1 July 2016 to 30 June 2017 are contained in a separate volume, which may be accessed at report.aucklandairport.co.nz
2017 Financial Statements The 2017 Financial Statements are available on our website report.aucklandairport.co.nz or you may elect to have a copy sent to you by contacting our investor relations team.
Electronic shareholder communication If you would like to receive all investor communications electronically, including interim and annual shareholder reports, please visit the Link Market Services website www.linkmarketservices.co.nz or contact them directly (details above).
Investor relations PO Box 73020, Auckland Airport Manukau 2150, New Zealand Telephone: +64 9 257 7043 Email: [email protected]
Website: www.aucklandairport.co.nz For personal use only use personal For
CONSTRUCTION OF THE NEW QUAD 7 OFFICE BUILDING WAS COMPLETED IN THE 2017 FINANCIAL YEAR
Auckland International Airport Limited Online report For personal use only use personal For View our interactive report at report.aucklandairport.co.nz It has been designed for ease of online use, with tablets in mind.
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