Management Review Jan - Sep 2014 November 6, 2014

Transcription

1 Management Review Jan - Sep November 6,

2 Index 1 Summary Introduction Summary of operating and financial information Operating Review Key business highlights for the third quarter Key ongoing R&D projects Presentation of financial information Consolidated financial statements Revenue Group operating costs EBITDA and Operating income Net financial expense Income taxes Profit for the period. Adjusted profit Other financial information R&D investment Capital expenditure Investor information Capital stock. Share ownership structure Share price performance in Dividend payments Key terms Appendix: Financial tables Statement of financial position (condensed) Financial indebtedness Group cash flow Page 2 of 34

3 1 Summary Page 3 of 34

4 1.1 Introduction Highlights for the first nine months, ended September 30, Our Distribution business agency air bookings increased by 4.5, to million In our IT Solutions business line, total Passengers Boarded increased by 14.1, to million Revenue increased by 9.4, to 2,585.0 million 1. Excluding the acquisitions of Newmarket International ( Newmarket ), UFIS Airport Solutions ( UFIS ) and i:fao Aktiengesellschaft ( i:fao ), comparable growth stood at 6.8 EBITDA increased by 9.3, to 1,037.5 million 1. Excluding the acquisitions of Newmarket, UFIS and i:fao, comparable growth stood at 7.0 Adjusted profit 2 increased to million 1, up 9.0. Excluding the acquisitions of Newmarket, UFIS and i:fao, comparable growth stood at 7.1 Covenant net financial debt stood at 1,530.8 million (1.18 times to covenant last twelve months EBITDA) at September 30, We have closed our first nine months of with highly positive results. Revenue and EBITDA have grown 9.4 and 9.3, respectively, which drove bottom line growth in Adjusted Profit of 9.0. This growth resulted from both the positive contributions of our Distribution and IT Solutions businesses as well as from our M&A activity in the first half of the year (Newmarket, UFIS and i:fao). The consistency of our operational and financial results evidence the robustness of our core businesses. In Distribution, our bookings have grown 3.9 up to September 30 (4.5 for air bookings), generating revenue growth of 4.2. This performance was driven by an underlying industry growth of 3.1, coupled with growing market share gains of 0.4 p.p. year-to-date (with remarkable market share gains of 0.8 p.p. in the third quarter of ). In addition, double-digit volume growth in our IT Solutions business of 14.1 year-to-date September, was generated by the large migrations in and and organic PB growth of our customer base of 4.1, generating revenue growth of Our market share in Distribution and IT Solutions in the third quarter has been supported by the migrations of Korean Air and Topas to Amadeus. Amadeus is committed to supporting our airline partners in realising their full revenue potential and to moving into intelligent merchandising and retailing. We believe this can be achieved through the personalisation of the traveller offer throughout the entire journey delivered through every channel by systems that are open, dynamic and intelligent. We recently announced our vision for a dynamic, intelligent and traveller-centric global travel ecosystem. While the full range of merchandising and retailing services included in our vision will take time to deliver, there is already a lot Amadeus is doing for the ecosystem evidenced by our leadership today in delivering merchandising solutions to our customers. Many elements of our envisaged ecosystem will be drawn upon existing and robust systems and solutions that already power our customers businesses. This vision is part of a long term ongoing project with plans for different parts of the puzzle to be brought live incrementally overtime and with next stages, such as the launch of our Global Merchandising System, taking place over the next three years. We believe Amadeus deep heritage in the travel industry, our track record of delivering for our customers, our combination of assets and resources, and our ability to deliver at every point of the traveller journey places us uniquely to develop the ecosystem our customers need and to deliver on our vision for the evolution of the travel industry. 1. Newmarket, UFIS and i:fao results are consolidated by Amadeus with effect from February 5,, February 1, and July 1,, respectively. 2. Excluding after-tax impact of the following items: (i) amortisation of PPA and impairment losses, (ii) changes in fair value of financial instruments and non-operating foreign exchange gains (losses), and (iii) other non-recurring items. See note on Adjusted Profit in section 4.6. Page 4 of 34

5 The pillar of our strategy is our focus on technology. Our investment in R&D reached 15.2 of our revenue in the first nine months of and was dedicated to supporting long term growth through customer implementations, product evolution, portfolio expansion, investment in new opportunities and further TPF decommissioning. As of September 30, our consolidated net financial debt was 1,530.8 million (based on covenants definition in our senior credit agreement), representing 1.18x net debt / LTM EBITDA. The increase from 1.01x at year-end is due primarily to the acquisitions during the first half of (Newmarket, UFIS and i:fao) and our dividend payments in January and July. On July 29, we paid a complementary dividend of million (gross). Together with the interim dividend paid at the beginning of the year, the total amount distributed of million in respect of the profit represented a 50 pay-out ratio and a 25 increase over prior year. Page 5 of 34

6 1.2 Summary of operating and financial information Summary of KPI Figures in million euros Operating KPI Air TA Market Share p.p. Air TA bookings (m) Non air bookings (m) (0.6) Total bookings (m) Passengers Boarded (m) Financial results Distribution Revenue 1, , , IT Solutions Revenue Revenue 2, , , EBITDA 1, , EBITDA margin () p.p. Adjusted profit Adjusted EPS (euros) Cash flow Capital expenditure Pre-tax operating cash flow n.a n.a. Indebtedness 5 30/09/ 31/12/ Change Covenant Net Financial Debt 1, , Covenant Net Financial Debt / LTM Covenant EBITDA 1.18x 1.01x 1. For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. Excluding after-tax impact of the following items: (i) amortisation of PPA and impairment losses, (ii) changes in fair value of financial instruments and non-operating exchange gains (losses) and (iii) other non-recurring items. Our adjusted profit was negatively impacted by extraordinary (non-deductible) costs amounting to 1.5 million related to the acquisition of i:fao and incurred in the first quarter of. 3. EPS corresponding to the Adjusted profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. Our adjusted EPS was negatively impacted by extraordinary (non-deductible) costs amounting to 1.5 million related to the acquisition of i:fao incurred in the first quarter of. 4. Calculated as EBITDA less capital expenditure plus changes in our operating working capital. 5. Based on the definition included in the senior credit agreement covenants. Page 6 of 34

7 2 Operating Review Page 7 of 34

8 2.1 Key business highlights for the third quarter The following include selected business highlights for the third quarter of : Distribution Airlines Ryanair reached a breakthrough agreement to bring a wide range of its fares and full ancillary services to Amadeus subscribers for the first time in over a decade. The low-cost carrier has already begun distributing via Amadeus innovative light ticketing technology. The displayed fares available are at parity with the Ryanair website and include Ryanair s new Business Plus fares, offering business and corporate travellers a tailored package. Bookings from low-cost carriers and hybrid airlines have been a steady growth area for Amadeus for many years and we remain committed to including further airlines from this sector. In addition to Ryanair, distribution agreements were signed with two new such airlines during the quarter and today 79 low-cost carriers have chosen Amadeus as their distribution partner. Travel agency bookings for low-cost carriers increased 17 year-on-year during the first nine months of the year. Since its introduction in 2007, Amadeus XML link has enabled low-cost carriers to benefit from the reach and yield provided by travel agency distribution, without the complexity associated with traditional ticketing processes for airlines. Nine content agreements with full-service carriers, in addition to the above low-cost and hybrid airlines mentioned, were signed or renewed as part of Amadeus on-going commitment to guarantee our global subscribers a comprehensive range of fares, schedules and availability. Over 80 of Amadeus airline bookings worldwide are made with airlines with whom Amadeus has a content agreement. September 23 marked the implementation of Germanwings complete range of published fares and ancillary services to all Amadeus subscribers as announced earlier in the year. Previously the Lufthansa subsidiary sold a limited range of its fares via Amadeus travel agency partners, using full e-ticketing. Now the airline has become the first in the world to also make its full range of published fares bookable using light ticketing functionalities, making it the first carrier to offer both full and light ticketing to travel sellers. Merchandising solutions from Amadeus attracted further customers with 4 new airlines signing-up for the Amadeus Ancillary Services solution, which is now integrated and supporting airlines to deploy ancillary services in 100 markets worldwide. One new airline also signed an agreement for the Amadeus Fare Family Solution. United Airlines has now implemented Amadeus Ancillary Services Solution to merchandise Economy Plus extra-legroom seats marking the industry s first NDC-XML solution in the travel agency channel in North America. At the end of the third quarter, 106 airlines had contracted for our Amadeus Ancillary Services solution, of which 63 had already been migrated, and 14 airlines had contracted for the Amadeus Fare Family Solution. On October 14, Amadeus unveiled its vision for a traveller-centric global travel ecosystem that will meet the demands of a complex and evolving travel shopping environment and unlock the opportunity of more than $130bn in additional airline revenue annually by The increasingly broad range of travel products and services available, as well as the proliferation of channels open to the customer, represent a significant opportunity for airlines to enhance both revenues and profitability. Industry estimates show that airlines are already earning $50bn in annual revenues through the sale of ancillary services, primarily through their direct channels. Amadeus research indicates that a further $53bn could be secured by 2020 by adopting an omni-channel strategy for these ancillary sales. In addition, new innovation in travel technology can bring a 3 Source: Amadeus gathered industry data from sources including IATA and Frost & Sullivan as well as its own proprietary research. Page 8 of 34

9 further $77bn in the same time frame. This vision will be underpinned by development of new travellercentric Global Merchandising System and the evolution of Amadeus retailing and distribution systems, with full integration across the Amadeus Altéa PSS Suite, delivering a single customer view and end-to-end traveller experience. Travel agencies and corporations The Amadeus commitment to its travel selling subscribers continued with the deployment of Amadeus Selling Platform Connect. Already more than 20 markets have been activated across Africa, Eastern Europe, Latin America and North America, and more regions will be coming soon. This new generation of the Amadeus Selling Platform is the industry s first fully online professional booking platform and requires no local installation. Fully adapted to meet the needs of modern travel agency customers, where more and more agents are working with their customers on the road or from home, users can work from any device with an internet connection. IT Solutions Airline IT South African Airways, which flies nine million passengers annually and is South Africa s national carrier, in September announced plans to migrate to Amadeus Passenger Revenue Accounting, which is fully integrated with the Altéa Suite to manage complex revenue accounting processes. It provides real-time sales and usage data for all types of revenue, processes interline information instantly, streamlines revenue-sharing between airline partners, and accelerates the interline cash flow cycle. There are currently 132 airlines around the world which have contracted for both Altéa Reservation and Altéa Inventory, 117 of which have contracted to use the full Altéa Suite. Based upon these contracts, Amadeus estimates that by 2017 the number of annual contracted Passengers Boarded will be close to one billion. The Amadeus Altéa Suite facilitates closer integration between partner airlines that need to share availability, fares, customer and booking information, enabling a seamless customer experience across alliance members. Altéa is the Star Alliance s Common IT Platform (CITP) and is used by two thirds of Star Alliance members, three quarters of Oneworld carriers and over half of the members of Skyteam. Thai Airways celebrated its successful migration to the complete Amadeus Altéa Suite to support its business goals by allowing enhanced operations and functionality, to improve customer service and drive more efficient business operations. The large-scale project, which involved training more than 12,000 Thai Airways employees worldwide, saw over 500,000 Passenger Name Records (PNRs) and 1.5 million e-tickets moved to the Amadeus Altéa Suite. Additionally, over 60 Thai Airways airport stations moved to Amadeus Altéa Departure Control Customer Management and Flight Management solutions. Airport IT During the third quarter further contracts were agreed with seven additional ground handlers for the use of Amadeus Altéa Ground Handler Departure Control, which enables ground handlers to provide efficient departure control services to a range of airline customers, from the flight arrival until the next flight departure. This raised the total number of Amadeus Altéa Ground Handler customers to 80 consolidating our leading portfolio of customers across all continents Payments Debit and credit cards from UnionPay, the largest card scheme worldwide with over 4.3 billion cards in circulation, were integrated into the Amadeus Payment Platform (APP) following an agreement reached with UnionPay International, a subsidiary of China UnionPay. Amadeus Payment Platform is used by over 300 Page 9 of 34

10 airlines worldwide and ensures a fast and easy payment process to all its travel provider users as authorisation is integrated in the ticketing and selling flow. Amadeus travel providers, including airlines and online travel agencies worldwide, now offer UnionPay cards as an online payment option across over 140 countries where UnionPay is accepted. This development makes it easier for many Chinese travellers to travel overseas, due to the fact that 80 of outbound Chinese tourists in paid for their travel via UnionPay s network. Additional news from the third quarter For the third consecutive year Amadeus has been included in the Dow Jones Sustainability Index (DJSI), an index where companies are selected based on a comprehensive assessment of long-term economic, environmental and social criteria that account for general as well as industry-specific sustainability trends. Only firms that lead their industries based on this assessment are included in the index. Amadeus which belongs to the IT Services & Internet Software sector was included in both the DJSI World Index and DJSI European Index. Amadeus actions to reduce carbon emissions and mitigate the business risks of climate change were further recognised publically when it was announced that Amadeus has been included in the Carbon Disclosure Project Climate Performance Leadership Index. The index presents 187 listed companies identified as demonstrating a superior approach to climate change mitigation. 2.2 Key ongoing R&D projects R&D investment in the first nine months of relates primarily to: Customer implementation efforts: Migration development work in relation to Altéa implementations carried out in the first nine months of the year (namely Southwest the international passengers business- and Korean Air, as well as a large number of migrations to the DCS module). Also, the contracted pipeline scheduled for migration in the coming years (such as Southwest the domestic passengers business-, Japan Airlines and Swiss Air). Additionally, implementation costs in relation to new customers adopting e-commerce and standalone solutions. Implementation of our new Revenue Accounting module in our launch customer British Airways. Implementation efforts in relation to our DCS solution for ground handlers, including those implemented in the first nine months of the year as well as those scheduled to be implemented in the coming years. Migration of travel agencies in Korea from the local reservation system, Topas, to the Amadeus platform. Implementation of customers to our portfolio of solutions for airlines and travel agencies, including the addition of low cost carriers to the platform and the expansion of our customer base in ancillary services products. Product portfolio expansion: For airlines, including revenue management, availability, schedules, mobile functionality and XML development in compliance with NDC standards. For travel agencies, travel management companies and for corporations, such as a new generation selling platform, search engines and mobile tools. Page 10 of 34

11 Investment in relation to the creation of the Total Travel Record (the future evolution of the PNR, containing all traveller information with cross-sell, cross-channel, multi-gds data and related customer management functionalities). Investment in our Global Merchandising Platform, including the expansion of merchandising capabilities, enhanced shopping and booking solutions and ancillary services. Regionalisation investment, with the aim to better adapt part of our product portfolio to specific regions. Increased resources dedicated to our new initiatives (hotel, rail, airport IT, payments, mobile and travel intelligence) to expand our current portfolio of solutions: Development of new modules of our airport IT suite of products, including those contracted by the Copenhagen and Munich airports. Development costs associated with our agreements with IHG and BeneRail within the scopes of our hotel and rail businesses, respectively. Enhanced distribution capabilities for hotel and rail. Investment in mobile, payments and travel intelligence, where we continue to work with different industry partners. Ongoing TPF decommissioning, which implies the progressive migration of the company s platform to nextgeneration technologies such as Linux and Unix (today, close to 90 of Amadeus software is supported by next-generation open systems, which allow for improved efficiency, greater flexibility in terms of the architecture and scalability of the platform), other cross-area technologies such as the Amadeus Collaborative Technology (a corporate program built to enhance the Amadeus system and which will bring a new technical platform and architecture for a new selling platform, shared by our two businesses) and system performance projects aiming to optimise service levels and system reliability and performance. Page 11 of 34

12 3 Presentation of financial information The consolidated financial information included in this document has been prepared in accordance with International Financial Reporting Standards (IFRS). Certain amounts and figures included in this report have been subject to rounding adjustments. Any discrepancies in any tables between the totals and the sums of the amounts listed are due to rounding. Acquisition of Newmarket On February 5, Amadeus acquired, 100 of the voting rights of NMTI Holdings, Inc. and its group of companies ("Newmarket ). The purchase consideration was million. The transaction was fully financed by a new bank loan facility, which was drawn down on February 4,. Newmarket was consolidated into Amadeus books from February 5,, following the approval of the acquisition by the US Federal Trade Commission in January. Newmarket continued its positive performance in the third quarter of, driving year-to-date revenue and EBITDA up by high-single digit and double-digit growth, respectively. EBITDA margin expanded in the first nine months of the year vs.. Acquisition of UFIS In addition, Amadeus acquired 100 of the voting rights of UFIS Airport Solutions AS, and its group of companies ( UFIS ) on January 24,. The purchase consideration was 18.8 million. The transaction was fully financed with cash. UFIS was consolidated into Amadeus books from February 1,. During the first nine months of the year, UFIS delivered positive results, supported by double-digit revenue growth. Acquisition of i:fao On June 23, Amadeus acquired of the voting rights of i:fao Aktiengesellschaft and its group of companies ( i:fao ) through a public takeover offer, for a total consideration paid in cash of 55.8 million. i:fao s assets and liabilities have been consolidated into the Amadeus statement of financial position as of June 30,. The i:fao results have been consolidated in our income statement since July 1,. i:fao posted positive operating results during the first nine months of the year, with revenue growth of highsingle digit. Adjusted EBITDA (excluding extraordinary costs associated to the company s acquisition) also delivered healthy growth. For purposes of comparability, our financial results are shown as reported (including the Newmarket, UFIS and i:fao consolidated results with effect from February 5,, February 1, and July 1,, respectively) as well as excluding the Newmarket, UFIS and i:fao consolidated results, in two separate columns, in the tables displayed throughout this report. In addition, the Change column in these tables shows the growth between the periods of and, excluding the Newmarket, UFIS and i:fao consolidated results. The financial statements of Newmarket, UFIS and i:fao consolidated into Amadeus books are provisional and subject to changes in the next quarter. Also, a purchase price allocation exercise will be carried out during the following twelve months to the acquisition date. As a consequence, the balances of the consolidated assets and liabilities of Newmarket, UFIS and i:fao may be adjusted, and income or loss effects may arise. As a result of the tender offer process launched and its associated costs in relation to the acquisition of i:fao, we incurred extraordinary (non-deductible) costs amounting to 1.5 million in the first quarter of. These Page 12 of 34

13 costs have negatively impacted our operating results, in particular our EBITDA, EBITDA margin, Operating income, Profit, Adjusted profit, EPS and adjusted EPS. Page 13 of 34

14 4 Consolidated financial statements Page 14 of 34

15 Group income statement Income Statement Figures in million euros Jan- Sep Revenue , , , Cost of revenue (219.2) (217.7) (198.5) 9.7 (665.2) (659.7) (616.4) 7.0 Personnel and related expenses (241.1) (229.5) (208.3) 10.2 (705.2) (678.9) (619.3) 9.6 Other operating expenses (57.5) (53.2) (55.7) (4.6) (172.7) (163.6) (173.2) (5.5) Depreciation and amortisation (91.1) (88.1) (77.1) 14.3 (245.5) (238.0) (214.7) 10.9 Operating income Net financial expense (8.0) (5.9) (15.8) (62.3) (40.5) (35.6) (53.4) (33.2) Other income (expense) (0.6) (0.6) (0.4) n.m. (1.1) (1.1) 2.5 n.m. Profit before income taxes Income taxes (74.6) (73.6) (67.5) 9.1 (237.8) (234.9) (219.5) 7.0 Profit after taxes Share in profit from associates and JVs (60.5) (47.7) Profit for the period Key financial metrics EBITDA , , EBITDA margin () (0.2 p.p.) p.p. Adjusted profit Adjusted EPS (euros) For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. Excluding after-tax impact of the following items: (i) amortisation of PPA and impairment losses, (ii) changes in fair value of financial instruments and non-operating exchange gains (losses) and (iii) other non-recurring items. 3. EPS corresponding to the Adjusted profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. 4.1 Revenue Revenue in the third quarter of increased by 7.9, from million in the third quarter of to million, excluding the consolidated results of Newmarket, UFIS and i:fao. For the first nine months of, revenue on the same basis increased 6.8, to 2,522.5 million. Revenue growth was driven by strong underlying growth in both our business lines. Page 15 of 34

16 Revenue Figures in million euros Distribution , , , IT Solutions Revenue , , , For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note Distribution Revenue in the Distribution business grew by 3.2 in the third quarter of (excluding the consolidated results of i:fao), resulting in year-to-date revenue growth of 4.2 (on the same basis). This increase was mainly driven by an increase in booking revenue. Booking revenue growth was in turn due to a combination of higher volume (3.9 increase in total bookings) and a slightly positive pricing impact, supported by the decline of rail bookings, with a lower unit booking fee. Evolution of operating KPI Amadeus air bookings increased by 6.1 in the third quarter of. Our market share increased by 0.8 p.p., supported by the migration of Topas to Amadeus, and reached a global share of In turn, the air TA booking industry accelerated its growth to 4.0. For the first nine months of, our air bookings grew by 4.5 and our market share gain 4 was 0.4 p.p. Operating KPI Change Change Air TA booking Industry growth Air TA market share p.p p.p. Air TA bookings (m) Non air bookings (m) (0.6) Total bookings (m) Air TA booking Industry Air travel agency bookings grew by 4.0 in the third quarter of, an acceleration vs. 2.6 growth reported in the first six months of the year. All regions accelerated vs. their performance in the first half, except for Central, Eastern and Southern Europe and Middle East and Africa, which slowed due to geopolitical situations in some key countries in the regions (such as Russia, Ukraine and Libya), and Latin America, where the industry continued declining (albeit at a lower rate). The industry growth in Asia and Pacific was significant, partly helped by the migration of Topas in South Korea to Amadeus. Year-to-date the industry increased by Market share is calculated based on the total volume of travel agency air bookings processed by the global or regional CRS. Excludes air bookings made directly through in-house airline systems or single country operators, the latter primarily in China, Japan and Russia. Also excludes bookings of other types of travel products, such as hotel rooms, car rentals and train tickets. Page 16 of 34

17 Amadeus bookings Our air TA bookings increased by 6.1 in the third quarter of, driving our growth in the first nine months to 4.5. Amadeus continued outperforming the industry, supported by our significant market share gains of 0.8 p.p. in the quarter. As of September 30, our global market share was 40.4, 0.4 p.p. higher than that of. Our bookings from Western Europe, which continue being the most significant contributor to our total air bookings, reduced their weight and North America s relative exposure continued increasing, as bookings in the region grew significantly, fuelled by market share gains. Our bookings in Asia and Pacific experienced significant growth, supported by market share gains, which were partly related to the migration of Topas to the Amadeus platform. In Latin America, our volumes were negatively impacted by the overall underperformance of the industry. Amadeus Air TA Bookings Figures in million of Total of Total Change Western Europe Asia and Pacific North America Middle East and Africa Central, Eastern and Southern Europe (1.7) Latin America (2.3) Total Air TA Bookings With regards to non-air distribution, bookings increased by 3.5 in the third quarter of, driven by volume increase in non-air products. Year-to-date, non-air bookings declined by 0.6, due to the decrease in rail bookings IT Solutions During the third quarter of, our IT Solutions business continued its growth trend, with a 21.2 increase in revenue (excluding the consolidated results of Newmarket and UFIS). On the same basis, comparable revenue growth was 14.9 in the first nine months of the year. Migrations to Altéa continue to represent the main growth driver, mostly driven by the successful migrations that took place during and the first nine months of (such as the migration of Korean Air in the third quarter of ), whilst we continue working on the contracted implementations scheduled for the coming years. Our IT transactional revenue has had a strong performance, mostly driven by the above mentioned migrations (Altéa PB volume growth of 14.1), as well as the growth experienced in the e-commerce and standalone solutions revenue lines. Average IT transactional revenue per PB was slightly higher year-todate. Revenue from direct distribution showed a moderate increase, driven by the organic growth of our customer base, partially offset by the negative effect of the migration of some of our existing users of our Reservations module (notably Thai Airways) to the Inventory module of our Altéa Suite in. Non-transactional revenue continued its positive trend, mainly driven by higher revenue from services. Page 17 of 34

18 Evolution of operating KPI Total number of passengers boarded increased by 11.5 to million in the third quarter of vs. the third quarter of, driven by the Altéa migrations implemented in the year as well as the full-year impact of those implemented in (such as Asiana, Thai Airways and Sri Lankan Airlines) and organic growth (+4.2). During the first nine months of, the volume of passengers boarded reached million, 14.1 higher than the first nine months of, fuelled by the above mentioned Altéa migrations and organic growth (+4.1). Operating KPI Change Change Passengers Boarded (PB) (m) Airlines migrated (as of Sep 30) Airlines migrated to at least the Altéa Inventory module, in addition to the Reservations module. As of September 30,, 46.7 of our total PB were generated by Western European airlines, a decrease vs. the same period in, given the increase in the weight of our PB volumes in Asia and Pacific. This increase was driven by the contribution of Asian airlines added to our platform over the last 12 months. This shift towards Asia and Pacific will continue, as we have a number of migrations of Asian carriers scheduled for the coming years (such as Japan Airlines). Similarly, our exposure to the North American region will increase as we migrate Southwest -the domestic passengers business- over the next few years. Amadeus PB Figures in million of Total of Total Change Western Europe Asia and Pacific Middle East and Africa Latin America Central, Eastern and Southern Europe North America n.m. Total PB Group operating costs Cost of revenue These costs are mainly related to: (i) incentive fees per booking paid to travel agencies, (ii) distribution fees per booking paid to those local commercial organisations which are not majority owned by Amadeus, (iii) distribution fees paid to Amadeus Altéa customers for certain types of air bookings made through their direct sales channels, and (iv) data communication expenses relating to the maintenance of our computer network, including connection charges. Cost of revenue increased by 9.7 from million in the third quarter of to million in the third quarter of, excluding the consolidated results of Newmarket, UFIS and i:fao. The increase in the quarter was mainly due to (i) higher air booking volumes in the Distribution business (+6.1), (ii) growth in distribution fees, driven by the higher weight over our total volumes of some of the Page 18 of 34

19 countries where Amadeus has non-fully owned ACOs (third party distribution), in particular in the Middle East and North Africa region, and (iii) increase in our unit incentive, driven by client mix and competitive pressure, with full year impact of deals signed during. Additionally, data communication costs increased in the period, driven by higher volume of transactions and connectivity activity around the globe. For the first nine month period, cost of revenue amounted to million on the same basis, an increase of 7.0 vs. the same period of. As a percentage of revenue, cost of revenue represented 26.2 in the first nine months of, in line with the percentage rate reported in Personnel and related expenses and other operating expenses Personnel and related expenses increased by 10.2 in the third quarter of, excluding the consolidated results of Newmarket, UFIS and i:fao, driving growth for the first nine months of the year to 9.6 on the same basis (from million in the first nine months of to million in the same period of ). During, a large number of employees who were previously working as contractors in our development centres were hired as permanent staff, resulting in a shift of operating costs from Other operating expenses to Personnel expenses. Our combined operating expenses cost line, including both Personnel expenses and Other operating expenses, increased by 7.1 in the third quarter of vs. the same quarter of (excluding the Newmarket, UFIS and i:fao consolidated results), or 6.3 in the first nine months of the year vs. the same period of (on the same basis). Personnel expenses + Other operating expenses Figures in million euros Personnel expenses + Other operating expenses (298.5) (282.7) (264.1) 7.1 (877.9) (842.5) (792.4) For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. The increase in these cost lines in aggregate at September 30, was driven by the combination of: An increase of 5 in average FTEs (permanent staff and contractors) in the first nine months of vs. the same period of. The annual salary reviews on a global basis. The slowdown in capitalised expense in the nine month period. Increases in various cost lines, driven by the business and geographical expansion, such as local taxes and costs associated to building and facilities. These effects were partially offset by efficiencies reached in our unitary cost, driven by the transfer of part of our development activity to countries with a lower unit cost. The increase in average FTEs was mainly driven by: Higher headcount in R&D across all our development sites, with a significant reinforcement of our teams in Bangalore and US. This increase focused on: Ongoing projects such as Revenue Management, as well as new projects related to functionality enhancements and portfolio expansion, such as ancillary services, merchandising capabilities, enhanced shopping and search solutions and mobile functionality. Notably, development efforts in the airport IT and hotel areas, as well as in payments, rail, mobile and travel intelligence. Page 19 of 34

20 Implementation work in all business areas, notably in airport IT, as we work on the implementation of the large number of contracts signed with ground handlers during and to our DCS offering for ground handlers, and in airline IT, in relation to our Revenue Accounting solution. Also, sustained level of implementation activity to our Altéa suite, in relation to airlines implemented in the year (namely Southwest the international passengers business- and Korean Air, as well as a large number of Altéa DCS implementations) and to the contracted pipeline (e.g. Southwest the domestic passengers business-, Japan Airlines and Swiss Air). Ongoing TPF decommissioning, which implies the progressive migration of the company s platform to open systems through next-generation technologies, such as Linux and Unix, as well as system performance projects aiming to maximise service levels and system reliability. Increase of our commercial and technical support driven by the expansion of our product portfolio (including the new initiatives), customer base and geographical reach (e.g. the US and Asia & Pacific) Depreciation and Amortisation D&A increased by 14.4 in the third quarter of, or 11.0 in the first nine months of, net of capitalised D&A, and excluding the consolidated results of Newmarket, UFIS and i:fao. Ordinary D&A increased by 18.2 in the third quarter of, or 15.5 in the first nine months (both excluding the consolidated results of Newmarket, UFIS and i:fao). This increase is mainly driven by higher amortisation of intangible assets, in turn mostly linked to the amortisation of capitalised development expenses on our balance sheet, as the associated product / contract started generating revenues during the year (for example, those costs related to Altéa migrations which were implemented in the period, as well as to certain projects related to product development). Additionally, depreciation expense was higher. In compliance with IFRS, impairment tests are carried out every year (and, in the absence of any impairment indicator, we generally concentrate them in the second half of the year). During the third quarters of and we reported certain impairment losses in relation to products that we estimate will not deliver the expected economic benefits, due to either unforeseen efforts required to deliver the customer's needs, or a reassessment downwards of the expected demand. Depreciation and Amortisation Figures in million euros Ordinary depreciation and amortisation (63.7) (62.5) (52.8) 18.2 (181.6) (178.8) (154.9) 15.5 Amortisation derived from PPA (18.5) (16.8) (16.8) 0.0 (55.1) (50.3) (52.3) (3.7) Impairments (8.9) (8.9) (7.5) 18.2 (8.8) (8.8) (7.5) 17.6 Depreciation and amortisation (91.1) (88.1) (77.1) 14.3 (245.5) (238.0) (214.7) 10.9 Capitalised depreciation and amortisation Depreciation and amortisation postcapitalisations (89.6) (86.6) (75.7) 14.4 (241.1) (233.6) (210.5) For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. Included within the other operating expenses caption in the Group Income Statement. Page 20 of 34

21 4.3 EBITDA and Operating income Operating Income for the third quarter of increased by 11.7 million or 5.1, driving our Operating Income in the first nine months of to million, 5.9 higher than that of, both excluding the consolidated results of Newmarket, UFIS and i:fao. The increase was driven by growth in our Distribution and IT Solutions business lines, partially offset by an increase in the indirect costs line and higher D&A charges. EBITDA amounted to million in the third quarter of excluding the consolidated results of Newmarket, UFIS and i:fao, representing a 7.5 increase vs. the third quarter of and a 39.3 margin over revenue. For the nine-month period, EBITDA amounted to 1,015.8 million on the same basis, 7.0 higher than that of. EBITDA margin expanded to 40.3, mainly driven by the increasing weight of the IT segment, with higher margins. Both EBITDA and Operating income were negatively impacted by extraordinary costs related to the acquisition of i:fao in the first quarter of. Excluding these costs, our EBITDA and operating income grew by 7.2 and 6.1, respectively, excluding the consolidated results of Newmarket, UFIS and i:fao, in the first nine months of vs. the same period of. The table below shows the reconciliation between Operating income and EBITDA. EBITDA Figures in million euros Operating income Depreciation and amortisation Capitalised depreciation and amortisation (1.5) (1.5) (1.4) 6.3 (4.4) (4.4) (4.2) 4.8 EBITDA , , EBITDA margin () (0.2 p.p.) p.p. 1. For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 4.4 Net financial expense Net financial expense Figures in million euros Financial income Interest expense (15.9) (14.1) (16.8) (16.1) (49.3) (44.6) (52.5) (15.0) Other financial expenses (0.6) (0.6) 0.3 n.m. (2.1) (2.1) (2.6) (20.9) Exchange gains (losses) n.m n.m. Net financial expense (8.0) (5.9) (15.8) (62.3) (40.5) (35.6) (53.4) (33.2) 1. For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. Net financial expense decreased by 62.3 in the third quarter of, or 33.2 in the first nine months of the year, from 53.4 million in the first nine months of to 35.6 million in the same period of, excluding the consolidated results of Newmarket, UFIS and i:fao. Page 21 of 34

22 This decrease is mainly explained by (i) a 15.0 lower interest expense (excluding the consolidated results of Newmarket, UFIS and i:fao), in turn mostly driven by a reduction in the average gross debt outstanding (excluding the new loan signed for the acquisition of Newmarket), and (ii) higher exchange gains. 4.5 Income taxes Income taxes for the first nine months of amounted to million vs million for the first nine months of (excluding the consolidated results of Newmarket, UFIS and i:fao, income taxes amounted to million). The income tax rate for the first nine months of was 31.5, below the 31.9 income tax rate in the same period of. 4.6 Profit for the period. Adjusted profit As a result of the above, profit in the first nine months of amounted to million, an increase of 10.0 vs. a profit of million in the first nine months of. Excluding the consolidated results of Newmarket, UFIS and i:fao, profit for the period increased by Adjusted profit Adjusted profit Figures in million euros Reported profit Adjustments Impact of PPA (3.7) Non-operating FX results and mark-to-market 3 (5.1) (5.3) (0.3) n.m. (6.2) (6.3) 0.3 n.m. Non-recurring items (1.7) n.m. Impairments Adjusted profit For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. After tax impact of amortisation of intangible assets identified in the purchase price allocation exercises. 3. After tax impact of changes in fair value of financial instruments and non-operating exchange gains (losses). After adjusting for (i) non-recurring items and (ii) accounting charges related to the PPA (purchase price allocation) amortisation and other mark-to-market items, adjusted profit increased by 6.4 in the third quarter of and by 7.1, to million, in the first nine months, both excluding the consolidated results of Newmarket, UFIS and i:fao. Page 22 of 34

23 4.6.2 Earnings per share (EPS) Earnings per share Weighted average issued shares (m) Weighted average treasury shares (m) (2.3) (2.3) (3.0) (2.7) (2.7) (3.4) Outstanding shares (m) EPS (euros) Adjusted EPS (euros) For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. EPS corresponding to the Profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. 3. EPS corresponding to the Adjusted profit attributable to the parent company. Calculated based on weighted average outstanding shares of the period. The table above shows EPS for the period, based on the profit attributable to the parent company (after minority interests), both on a reported basis and excluding the consolidated results of Newmarket, UFIS and i:fao. Our reported EPS grew by 8.6 in the first nine months of, and our adjusted EPS grew by 7.0, both excluding the consolidated results of Newmarket, UFIS and i:fao. Page 23 of 34

24 5 Other financial information Page 24 of 34

25 5.1 R&D investment R&D investment (including both capitalised and non-capitalised expenses) increased by 5.6 in the third quarter of vs. the same period in, excluding the Newmarket, UFIS and i:fao consolidated investment. R&D investment increased by 5.0 on the same basis in the first nine months of vs. the same period in. As a percentage of revenue, R&D investment amounted to 15.2 as of September 30,. The increase in R&D is explained by: Increased resources devoted to the new businesses, in particular (i) airport IT, linked to the contracts signed in the year as well as to portfolio development, (ii) hotel, including resources dedicated to our agreement with IHG, (iii) rail, with teams dedicated to our partners, such as BeneRail, and (iv) payments, mobile and travel intelligence. Higher investment carried out as a result of the high level of activity in terms of ongoing projects (portfolio expansion or product evolution initiatives, such as revenue management, search solutions, merchandising, shopping and booking capabilities and mobile functionality), and implementation activity related to the contracted pipeline to Altéa and to our DCS for Ground Handlers solution. Ongoing investment in the TPF decommissioning and increased efforts on system performance to sustain the highest possible reliability and service levels to our client base. It should be noted that a significant part of our research and development costs are linked to activities which are subject to capitalisation. The intensity of the development activity and the different stages in the ongoing projects have an effect on the capitalisation ratio in any given quarter, therefore impacting the level of operating expenses that are capitalised on our balance sheet. R&D investment Figures in million euros 2 2 R&D investment R&D as of of Revenue (0.3 p.p.) (0.3 p.p.) 1. For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. 2. Following a review of the costs incurred in a number of projects, certain costs which were previously not reported as R&D were identified as such and are reported under the R&D investment figure above since January. For comparability purposes, the figures have been adjusted to include such costs (which amounted to 20.5 million in the first nine months of ). The change in the category assigned to these costs from non-r&d to R&D does not have any impact on our operating costs, segment contribution margins, EBITDA or Profit in the Income Statement, nor on our cash generation in the Cashflow Statement. 3. Net of Research Tax Credit. 5.2 Capital expenditure The table below details the capital expenditure in the period, both in property, plant and equipment ( PP&E ) and intangible assets. Based on the nature of our investments in PP&E, the figures may show variations on a quarterly basis, depending on the timing of certain investments. The same applies to our investments in contractual relationships where payments to travel agencies may take place in different periods, based on the timing of the renegotiations. In turn, our capitalised R&D investment may fluctuate depending on the level of capitalisation ratio, which is impacted by the intensity of the development activity, the mix of projects undertaken and the different stages in which the ongoing projects are. Page 25 of 34

26 Capex in the third quarter of amounted to million (excluding the consolidated investment of Newmarket, UFIS and i:fao), 15.3 above that in the same period of. For the nine month period, capex (on the same basis) increased by 3.7 million or 1.2 vs.. As a percentage of revenue, capex represented 12.3, below 13.0 in the first nine months of. The increase in capex year-to-date was driven by a reduction of 9.4 million in capex in intangible assets, partially offset by an increase of 13.1 million in investment in PP&E. The decrease in capex in intangible assets was driven by (i) a decline in capitalised R&D, due to a reduction in the capitalisation ratio, which fluctuates depending on the intensity of the development activity, the mix of projects undertaken and the different stages in which the ongoing projects are, and (ii) lower payments in relation to the purchase of software licenses, mainly due to timing differences in the dates of the payments. In turn, signing bonuses paid in the period increased. The increase in capex in PP&E was mostly due to the acquisition of certain specific software at our data centre. Capital Expenditure Figures in million euros Capital Expenditure in PP&E Capital Expenditure in intangible assets (3.6) Capital Expenditure As of Revenue p.p (0.7 p.p.) 1. For comparability purposes, we have excluded the Newmarket, UFIS and i:fao results. The Change column above shows the comparable growth, excluding the impact of these acquisitions, as explained in this note. Page 26 of 34

27 6 Investor information Page 27 of 34