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Airports Profit Surge

August 30
10:13 2014

Airports Fiji Limited has confirmed consistently recording profits in the past two years.

The net profit before tax for 2011 was $12.24 million, 2012 was $14.13 million whereas 2013 recorded $16.02 million.

airportExecutive chairman, Faiz Khan, attributed the results to a combination of revenue increases in aeronautical and non aeronautical streams; and improvement in cost structures.

Revenue increased by $880,342 or 1.4 per cent in 2013 compared to 2012.

On the other hand expenditure reduced in 2013 by $1 million or 2.1 per cent compared to 2012.

Mr Khan described this as significant progress.

“However, we are not completely there yet as we continue to redefine our revenue and cost structures,” he said.

Although the overall expenditure decreased, the notable expenditure that increased was the record payroll cost in 2013 that went in excess of $14.27 million.

The reason noted for the increased payroll cost was the increment in pay of most of their workforce over the past two years.

Shareholders equity in 2013 increased by $13.1 million compared to 2012.

 

Positive cashflows

Mr Khan noted it was cash flow positiveness that was the major notable feature in their financial performance over the past two years.

“Profit does not equate to cash flow. You can have $16 million profit but no cash at bank,” he said.

“You may have spent all your money in capital investments, often times not wisely to create a longer term impairment or depreciation effect.”

Mr Khan revealed that as at December 31, their cash and equivalents stood at a record $34.2 million.

He said this was a trend that has continued where despite undertaking major capital works this year, their cash and cash equivalents grew to further unprecedented levels of $44.5 million as at July 2014.

“The simple philosophy behind all of this positive change is that we spend wisely both for operational and capital expenditures, under value for money principles,” he said.

“A capital expenditure may not affect net profit in the year incurred, but even a $100,000 capital expenditure affects your businesses future profitability.

“Simplified – a good investment gives positive returns whereas a bad investment is a burden.”

 

Future outlook

What does all these numbers mean? Mr Khan said it simply indicated the future looks bright.

Airports Fiji Limited is forecasting similar operational results for 2014 and 2015 compared to 2013 record results.

Mr Khan said this would be despite construction works undertaken to upgrade the Nadi Airport Terminal into a world-class facility where they will significantly lose commercial spaces for temporary periods of time,

“Post upgrades, we are forecasting our net profit before tax to grow to $35 million in 2016,” he said.

“The positive results have meant that we have become self sufficient borrowing on our own strength.

“That has enabled the $102 million Nadi Airport Terminal Modernisation Project to take place without a burden to the taxpayers.

“It also means that we can in future improve our entire network of airports and airstrips around Fiji depending on principles of economic growth.

“Value principles do not apply to our 14 other Nausori and outer island airports that currently do not have the traffic numbers.

“Nadi can become a better engine for the overall growth of the aviation network in all parts of Fiji.”

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