Airport Authority Announces Record Profit of HKD1.6 Billion


Hong Kong (AIRPORT AUTHORITY OF HONG KONG) - The Airport Authority Hong Kong today announced an all-time-high profit attributable to shareholder of HK$1,615 million for the year ended 31 March 2006, up 33% from the same period last year (FY2004/05 after restatement: $1,214 million). Turnover grew 10% to $7,076 million (FY2004/05 after restatement: $6,460 million). The Board declared a final dividend of $1,300 million (FY2004/05: $1,000 million) to the Government, a 30% increase over last year.

The financial results reflected the Airport Authority's adoption of the new and revised Hong Kong Financial Reporting Standards including the Hong Kong Accounting Standards (HKASs) and Interpretations (HK-Ints). Results of the FY2004/05 have been restated accordingly in order to comply with the revised standards. The Airport Authority's underlying business and cash flow position are unaffected by the adoption of the revised and new accounting standards.

The record-breaking operational performance in passenger and cargo throughput underpinned the encouraging financial results of the Airport Authority. A total of 41.6 million passengers and cargo of 3.5 million tonnes passed through Hong Kong International Airport (HKIA), a year-on-year increment of 9% and 10%, respectively. HKIA's growth fared favourably with global average growth in passenger throughput of 5% and cargo volume of 3% during the same period under review.

Commenting on HKIA's financial and operational performances, Chief Executive Officer of the Airport Authority Dr David J Pang said, "While HKIA benefited from the strong market for air transport, it takes a safe, secure and consistently well-run operation to fully exploit the potential of the robust market environment."

Despite the healthy growth in turnover, the Airport Authority's operating expenses increased less than 1% from $2,803 million in FY2004/05 to $2,820 million in FY2005/06, boosting earning before interest, taxes, depreciation and amortisation (EBITDA) to a record $4,256 million, a 16% rise over the previous year. Operating expenses have remained consistently flat over the last five years despite strong annual growth in revenue close to 8%, reflecting well on the Airport Authority's ability to effectively control expenses.

"HKIA remains the world's fifth busiest airport in terms of international traveller throughput, and have been the busiest international cargo airport for the last decade. During the year under review, we also welcomed eight new scheduled carriers to our network. HKIA now offers flights from about 80 airlines servicing more than 140 destinations worldwide," added Dr Pang.

The Airport Authority has also been improving its return on equity (ROE) over the years. "With stronger earnings, a more efficient capital structure and improved asset utilization, ROE in FY2005/06 rose to 4.9%, a level approaching that of similar infrastructure businesses in Hong Kong," said Mr Raymond Lai, Finance Director of the Airport Authority.

According to Dr Pang, the Airport Authority is undergoing a wide-ranging study to re-examine HKIA's growth strategies by critically assessing the demand, supply and competition/co-operation dynamics that the airport will face over the next two decades. Target for completion in the fourth quarter of the year, Master Plan 2025 will articulate the strategy to position HKIA to ensure a sustainable growth for the future.

Looking forward, Dr Pang remains positive on the outlook as HKIA would continue to benefit from the exponential growth in the Chinese Mainland's burgeoning economy and air traffic. The General Administration of Civil Aviation of China (CAAC) expected that the country's air passenger traffic will grow at an annual rate of 11%, outpacing the Airports Council International's forecast of 4% annual growth of global passenger traffic until 2020.

"I am confident that China's ever-growing aviation market will provide HKIA with enormous growth momentum for the years to come. We will continue to explore new opportunities and bring added value to Hong Kong and the Chinese Mainland by strengthening the competitiveness of HKIA and integrating with airports on the mainland," said Dr Pang. "A key focus will be to ensure the provision of sufficient supply to meet the growing demand for aviation services."

One of the planned efforts to enhance HKIA's competitive facilities and services is Terminal 2, scheduled for soft opening before the end of 2006. Equipped with check-in counters, immigration, customs and excise and quarantine facilities, Terminal 2 will also house a cross-boundary coach station and an extended Automated People Mover System that links to the existing passenger terminal (Terminal 1). Terminal 2 will provide additional handling capacity to cope with the increasing passenger volumes and further strengthen HKIA's role as a fusion point for multimodal transport, linking Hong Kong and the Chinese Mainland. Adjacent to Terminal 1, Terminal 2 will also feature SkyPlaza - a 35,000-square-metre of facilities embracing retail, catering and entertainment all under one roof.

Terminal 2 is part of a larger HKIA development called SkyCity under which new facilities being developed include a permanent terminal for ferries service the Pearl River Delta, two office towers, a hotel and a nine-hole golf course.

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