2012 Annual Report
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ANNUAL REPORT SECTION ONE: BUSINESS REVIEW 2 Year at a Glance 4 Chairman’s Report 6 Board of Directors 8 Chief Executive’s Report 10 Executive Team 18 Strategic Direction 20 Aeronautical Development 22 SECTION TWO: SUSTAINABLE GROWTH 24 Environment 25 Workplace Safety 29 Community Involvement 30 Corporate Social Responsibility 31 SECTION THREE: SUMMARY FINANCIAL STATEMENTS 32 Statement of Financial Performance 34 Statement of Comprehensive Income 35 Statement of Changes in Equity 35 Statement of Financial Position 36 Statement of Cash Flows 37 Accounting Policies 38 Comparison of Actual to Forecast Results 40 Five Year Summary 41 Financial Performance Overview 42 Directory 44 VOLUME TWO: FULL FINANCIAL STATEMENTS (available at www.cial.co.nz or on request) 2 BUSINESS REVIEW CHRISTCHURCH INTERNATIONAL AIRPORT | GENERATING VALUE & EMPLOYMENT FACTS ABOUT 3 CHRISTCHURCH INTERNATIONAL AIRPORT ROLE The airport company, sometimes referred to as The airport company is responsible for ensuring CIAL, is responsible for running Christchurch the airport meets all safety and compliance Airport. It owns the airport terminal and airfields, requirements for passengers, visitors and as well as more than 800 hectares of land. aircraft. As part of its safety provisions, the airport has its own Fire Service with four large Regular activities for the airport company state of the art fire-fighting vehicles, along with include ensuring the terminal building is several smaller vehicles, 35 firemen and a full- safe, clean and warm, patrolling the airfield, time Wildlife Officer whose role is to keep the maintaining runways, managing car parking airfield as free of birds and pests as possible. facilities and ensuring airlines, passengers, visitors and tenants have the services they need. CIAL works closely with government agencies including Customs, Immigration, Ministry Within the terminals, it leases space to for Primary Industries, Aviation Security businesses such as rental cars, food outlets, and Airways. cafes, bookshops. On the airfield, it leases space to airlines, freight companies, the Canterbury The airport is one of the city’s main assets and is Aero Club and the US Air Force for Antarctic a key piece of infrastructure for the Canterbury operations. Although the airport company region and the South Island. It is owned 75% does not own aircraft or the control tower, it by Christchurch City Holdings Limited, which is works closely with the aviation community, a subsidiary of the Christchurch City Council, including airlines and the Airways Corporation, and 25% by the Crown, or the government. It but does not make decisions about flights and is run as a commercial business and expected flight timetables. to make a profit. CONTRIBUTION Christchurch Airport is New Zealand’s second 6% of the total GDP for Canterbury and 3.9% largest airport and welcomes five and a half of the total GDP for the South Island as a whole. million passengers a year. About the same In that year, almost 6000 people were employed number come through the airport to greet and farewell those passengers, so that’s around on the airport campus in full time, part time or 11 million visitors to the campus each year. casual roles, making it the largest single centre Put another way, we have the same number of employment in the South Island. The airport of people arriving daily on the campus as the also created employment for more than 20,000 number of people living in the city of Timaru. full time equivalents on and off campus, which is 8.3% of total full time equivalent workers The contribution from the airport is significant. (FTEs) in the Canterbury region and 4.4% of There are two main parts to that contribution - total FTEs for the whole South Island. one is activity generated by the expenditure of foreign and domestic visitors who pass directly Christchurch International Airport is a carbon through the airport. The other is activity from all neutral company and has received carboNZero operations on the airport – that’s activity such certification from Landcare Research following as the operations of the airport itself, property, a detailed measurement and analysis process. aircraft and airfield maintenance etc. CIAL is the first airport company in the A recent study into the economic impact of the Southern Hemisphere to attain certified carbon airport reveals that in 2010, Christchurch Airport neutral status and is the second carbon neutral generated $1.7 billion in regional GDP. That’s certified airport company in the world. ANNUAL REPORT 2012 | BUSINESS REVIEW YEAR AT A GLANCE 4 Total Passenger Movements Total Commercial Aircraft Movements 6.5 100 90 6 80 5.5 THOUSANDS MILLIONS PAX 70 5 60 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FINANCIAL YEAR FINANCIAL YEAR International and Domestic Passenger Movements Capital Expenditure 5 120 100 4 80 3 60 $ MILLIONS MILLIONS PAX 2 40 1 20 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FINANCIAL YEAR Domestic International FINANCIAL YEAR Operating Revenue EBITDA (Earnings before interest, tax, depreciation and amortisation) (excluding revaluation of investment property and earthquake costs) 120 70 110 60 100 $ MILLIONS $ MILLIONS 50 90 80 40 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FINANCIAL YEAR FINANCIAL YEAR Surplus After Taxation (Adjusted as noted on page 5) Dividend Payment 30 18 16 25 14 20 12 $ MILLIONS $ MILLIONS 15 10 10 8 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FINANCIAL YEAR FINANCIAL YEAR Net Asset Backing per Share Return on Average Shareholders’ Equity 12 5 10 4 8 3 PERCENTAGE $ PER SHARE 6 4 2 2008 2009 2010 2011 2012 2008 2009 2010 2011 2012 FINANCIAL YEAR FINANCIAL YEAR CHRISTCHURCH INTERNATIONAL AIRPORT | GENERATING VALUE & EMPLOYMENT 5 5,551,600 PASSENGER MOVEMENTS Total passenger movements decreased by 224,100 (3.9%) over the same period ending 30 June 2011 (5,775,700), reflecting the continued impact of the events of the past two years. 73,184 COMMERCIAL AIRCRAFT MOVEMENTS Total aircraft movements decreased by 2,345 (3.1%) over the same period ending 30 June 2011 (75,529). $113.1 million Operating REVENUE Operating revenue increased by 15.5% for the year to 30 June 2012 compared with the same period last year (2011: $97.9 m). This reflecting strong growth in property and commercial revenues, as well as new revenue from the acquisition of the International Antarctic Centre. $63.9 million EBITDA EBITDA from operations, excluding revaluation of investment property and earthquake costs increased by 6.7% over the same period ending 30 June 2011 ($59.9m) $19.6 million ADJUSTED SURPLUS AFTER TAX The surplus after tax excluding any residual deferred tax adjustment, but including a revaluation of investment property, decreased by $2.2m (10.1%) over the same period ending 30 June 2011 ($21.8m). $17.175 million CASH DIVIDENDS PAID No interim dividend was paid in the half year to 31 December 2010, and therefore the final dividend for 2011, paid in October 2011, took full consideration of this. $63.0 million INVESTMENT IN AIRFIELD, TERMINAL, CAR PARKING AND Property PROJECTS $10.73 per share NET ASSET BACKING Net asset backing per share in 2012 was $10.73 ($10.44 2011). ANNUAL REPORT 2012 | BUSINESS REVIEW CHAIRMAN’S REPORT 6 The company’s business Agreement policy changes will provide welcome new has performed creditably opportunities for Christchurch International Airport in for the financial year the long-haul market. ended 30 June 2012, One of the key features of the financial year to 30 June given the circumstances 2012 has been the company’s aeronautical pricing of Christchurch and Canterbury. Reduced passenger reset. We have signalled to our airline customers a numbers and, in turn, reduced capacity, have adversely pricing reset that will give the company a reasonable affected aeronautical income, but other parts of the return on its investment in the new terminals over business have improved their performance. their life. Commercial and property revenue is up sharply, reflecting good outcomes from strategies implemented Major airports in New Zealand have a regulatory by management and confirming the value of pricing framework imposed on them by the Airport revenue diversification. Authorities Act and airport charges and costs are subject to scrutiny by the Commerce Commission. For the financial year, our aeronautical revenue Because that framework requires prices to be set on remained relatively flat, at $40.4m. Property rental and five-year cycles, recovery of an appropriate return on concession revenues, and commercial revenues were up significant investments made during a pricing cycle 16.5% and 96.2% respectively, to $51.3m and $19.8m. cannot be achieved in the early life of an investment if While there will be further opportunities to advance very large pricing increases are to be avoided. revenue growth in commercial and property activities, it Right now, the company is at the peak of its investment is aeronautical revenue that the company is particularly cycle as a result of building the much-needed new keen to grow. We see this growth principally arising domestic and regional terminals, but in our pricing reset from new international routes, increased capacity on we have acknowledged the need to take a longer-term existing international routes and from domestic traffic. In view on return on our terminal investment. particular, we see improving economic conditions, both generally and from increased economic activity focused That position recognises not only the current position of on Christchurch as the rebuilding of the city gets into the air transport sector, but also the need to encourage the full swing, as likely to contribute to domestic growth. re-growth of traffic through Christchurch International Also, the Government’s recently announced Air Service Airport after the seismic activity Christchurch has CHRISTCHURCH INTERNATIONAL AIRPORT | GENERATING VALUE & EMPLOYMENT 7 experienced.