Saturday, February 21, 2015

Does Cairns Airport pay tax?

While in company reporting season mode it is noted that the results for NQ Airports can be found embedded in the results of Auckland International Airport which holds a 24.5% stake. The assets of NQ Airports are the Cairns Airport and the smaller Mackay Airport.

This the extract from the half year to December 31 2014 released by AIA this week:

The last column is percentage change from the previous corresponding half. While the profit after tax bottom line has jumped by 20.8% that is based on a revenue increase of a more modest 3.2% which was mostly attributed to domestic growth at Cairns.
The bottom line profit is also a relatively small percentage of the EBITDAFI so we need to go back to the more detailed 2014 annual report for a look at the components in here:

I wasn't sure what EBITDAFI was. It sounded more like a former Libyan finance minister. However the confusing FI relates to fair value adjustments and investments in associates. Depreciation, Amortisation and Interest then take a big whack out of EBITDA to get to the bottom line profit E.
The tax expense here in FY2014 for NQ Airports is actually a benefit. That doesn't necessarily mean NQA wont effectively pay tax as it distributes the profit as dividends which may then be taxable in the hands of the holders. 
Some background reading here may be a post from Michael West back in 2013 related to Sydney Airport with some mention of Auckland and NQ Airports:  Sydney Airport and the magical mystery tour.

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