ABPA Holdings Limited. Investor Report 31 December 2014

Transcription

1 ABPA Holdings Limited Investor Report 31 December 2014 Important Notice This Investor Report is being distributed by Associated British Ports Holdings Limited ( ABPH ) (as Group Agent) on behalf of ABPA Holdings Limited ( ABPAH ), ABP Acquisitions UK Limited ( ABPA ) and Associated British Ports ( ABP ) (together the Covenantors ) pursuant to the Common Terms Agreement ( CTA ). This Investor Report contains forward looking statements that reflect the current judgment of the management of the Covenantors regarding conditions that it expects to exist in the future. Forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will occur in the future and, accordingly, are not guarantees of future performance. Management s assumptions rely on its operational analysis and expectations for the operating performance of each of the Covenantors assets based on their historical operating performance and management expectations as described herein. Factors beyond management s control could cause events to differ from such assumptions and actual results to vary materially from the expectations discussed herein. Investors are cautioned that the assumptions and forecast information included herein are not fact and should not be relied upon as being necessarily indicative of future results and are cautioned not to place undue reliance on such assumptions and forecast information. It should also be noted that the information in this Investor Report has not been reviewed by the Covenantors' auditors. Basis of preparation This Investor Report is being distributed pursuant to the terms of the CTA Schedule 2, Part 1. Unless otherwise specified this Investor Report comments on the historic financial performance of the ABPAH group for the year to 31 December Defined terms used in this document have the same meanings as set out in the Master Definitions Agreement unless otherwise stated. 1

2 Contents 1. General Overview Business Update Business Developments Performance of the Business Significant Announcements/Publications Significant Board/Management Changes Capital Expenditure Acquisitions, Disposals, Joint Ventures and Outsourcing Financing and Current Hedging Position Restricted Payments Ratios and Compliance with Covenants

3 1. General Overview Continued strong operating performance in 2014 Revenue increased by 3.0% EBITDA growth of 5.7% and robust EBITDA margin at 59.4% Continued evidence of the strong defensive qualities and steady growth of a core infrastructure asset Fitch Ratings Ltd upgraded ABP Finance Plc to A- stable rating, Moody s affirmed Baa2 stable rating Further extension of ABP s debt maturity profile with a wide variety of domestic and international sources of finance All debt previously maturing in 2016 has been refinanced with earliest maturity now in Change Year ended 31 December from Revenue % Operating costs 1 (260.6) (253.8) 2.7% Underlying operating profit % Consolidated EBITDA % Consolidated EBITDA margin 59.4% 58.0% 1.4% Adjusted profit before tax % Cash generated by operations % Total tonnage (mt) % Passenger volumes (000s) 2, , % Consolidated Net Borrowings 6 1, , % 1 Operating costs are operating costs including profit/loss on sale of fixed assets, excluding depreciation/amortisation of acquisition related adjustments, profit on sale of associated undertaking and exceptional items. 2 Underlying operating profit is defined as operating profit before movement in fair value of investment properties, depreciation/amortisation of acquisition related adjustments, profit on sale of associated undertaking and exceptional items. 3 Consolidated EBITDA (earnings before interest, tax, depreciation and amortisation) is calculated in accordance with the definitions set out in the group s credit facilities and after excluding certain items (as set out in section 2.2.3). 4 Adjusted profit before tax is profit before tax, exceptional items, subordinated finance costs, profits from associated undertakings, revaluation gains on investment property and realised, unrealised losses on derivative financial instruments, foreign currency loan FX gains and losses and pension net interest. has been restated to reflect the impact of foreign currency loan FX gains and losses and pension net interest. 5 Excluding volumes where the group generates conservancy income only. 6 Consolidated Net Borrowings is the nominal net debt for covenant purposes, excluding subordinated loans, accrued interest, deferred borrowing costs, FX gains and losses, and cash deposits that are not held with an Acceptable Bank and restricted cash. 6 Consolidated Net Borrowings is the nominal net debt for covenant purposes, excluding subordinated loans and At 31 December 2014 Ratio of Adjusted Consolidated EBITDA to Net Interest Payable 2.42x 2.23x Ratio of Consolidated Net Borrowings to Consolidated EBITDA 6.27x 6.51x 3

4 The operating performance for the year ended 31 December 2014 reflects the following highlights: The group delivered growth in its operating performance during 2014 which continues to be underpinned by a diversified cargo base, long term contracts with a broad mix of customers and a significant level of guaranteed revenue. Revenue increased by 3.0% to 519.1m (: 503.8m) reflecting volume growth for biomass, import/export vehicles and containers driven by recent investment in facilities, partially offset by a reduction in coal volumes and the recognition, in, of income relating to the Immingham Oil Terminal following the finalisation of new contractual arrangements. Consolidated EBITDA (calculated in accordance with the definitions set out in the group s credit facilities) increased by 5.7% to 308.5m (: 292.0m) mainly reflecting the favourable revenue performance as costs remained broadly in line with prior year. Increased operating and maintenance costs associated with growth areas were partially offset by lower costs due to decreased coal volumes through the ABP operated Humber International Terminal. Consolidated EBITDA margin remained strong at 59.4% (: 58.0%) marginally higher than the prior year. Underlying operating profit (before movement in fair value of investment properties, depreciation/amortisation of acquisition related adjustments, exceptional items and profit on sale of associated undertaking) increased by 3.4% to 258.5m (: 250.0m). The group has also continued to progress a number of strategic growth projects: - completion of the development of an additional container berth (SCT5) at Southampton, increasing terminal capacity to handle the world s largest container vessels. The redevelopment of SCT 5 was completed in March 2014; - commissioning of new facilities for the storage and distribution of biomass at Immingham (Immingham Renewable Fuel Terminal, IRFT), in H1 2015; - commencement of the second phase of the construction works for IRFT, which will double storage capacity. This is scheduled to be operational in late 2015; and - works have commenced at the Port of Hull s Alexandra Dock to develop a 134 acre site on which Siemens will develop an offshore wind turbine and blade manufacturing facility. The project, referred to as Green Port Hull, is due to be operational in spring Further details of the above projects can be found in section 2.1. During 2014, the Group refinanced all remaining bank term and revolving facilities maturing in This was achieved using the proceeds of USD and sterling denominated private placements, as well as new term and revolving facilities. Between 31 December 2011 and 31 December 2014, the group has diversified its sources of funding and increased the average life of its external debt from 7 years to 12.5 years, with the first maturity in

5 2. Business Update 2.1 Business Developments The group s strategy is aimed at retaining and improving the group s position as the largest and leading port operator in the UK. The group focuses on delivering growth in its operating performance primarily by investment in infrastructure and equipment in partnership with quality customers. The group aims to be the first choice provider of port services and infrastructure to its customers. This strategy is underpinned by a diversified cargo base and long term contracts which provide significant levels of guaranteed revenues from a broad mix of customers often while operating as tenants on the group s estate. The strategy is formulated around a predominantly landlord business model. The group owns 21 ports around the UK and provides facilities (principally land, quays, cargo handling equipment and access to open water) and services (including stevedoring and warehousing) to users of its ports. The group s customers include terminal operators, licensed stevedores, shipping lines and cargo owners. The provision of port facilities accounts for the majority of the group s revenues. The group selectively undertakes value-added transport related services where the opportunity exists to enhance the value provided to our customers. In addition, the group is responsible for providing pilotage services and for the conservancy of harbour areas at the majority of its ports. In development of this strategy, the group continues to pursue a number of major investments, which have the potential to contribute significant growth during the coming years. Further information on these is provided below Southampton Container Expansion The container terminal at the Port of Southampton is the second largest container facility in the UK by throughput. In March 2014 the 80m redevelopment of SCT 5 (formerly berths 201/202) completed, comprising the construction of a new 500 metre long quay capable of handling ships with capacity of 18,000 Twenty-foot Equivalent Units, and installation of four new super post panamax cranes capable of reaching across ships 24 containers wide. In November 2014 a 40m dredging project to deepen and widen the approach channel which links international shipping lanes to the port was largely completed. The channel dredge enables the Port of Southampton to accommodate ships with a draught of up to 15.5 metres. Additional dredging to widen the channel also means that navigational safety and the ability of vessels to pass each other has also been improved. 5

6 2.1.2 Southampton Cruise Facilities Upgrade Southampton is the UK s leading cruise port with 1.6m passengers passing through the port in The group is undertaking investments totalling 27m to upgrade and reconfigure all four terminals to enhance capacity to cater for increasing vessel size, passenger processing capability and to improve the passenger experience. The terminal upgrades will ensure that the port is able to accommodate the highercapacity vessels of the two largest cruise operators served by the port, Carnival and Royal Caribbean Immingham Renewable Fuels Terminal Immingham Renewable Fuels Terminal ( IRFT ) is a new c. 130m facility that will be owned and operated by ABP at the Port of Immingham for the import, storage and onward distribution of wood pellet biomass fuel. The new terminal will serve the Drax power station in North Yorkshire, which is the largest power station in the UK, meeting around 8% of the UK s electricity demand. The Drax power station is currently being transformed into a significantly biomass-fuelled power station and has already converted two of its six generating units to run on wood pellet biomass instead of coal. Phase one of IRFT is now operational. Construction work commenced on phase two of the project in 2014 and is expected to be completed by Q When the second phase is complete, IRFT will provide 200,000 tonnes of storage capacity in eight silos making it the largest facility of its kind in the world Green Port Hull Green Port Hull is a collaboration between ABP, Hull City Council and East Riding Council to produce a world-class renewable energy hub at ABP s Port of Hull, which is ideally located in close proximity to the major Round 3 offshore wind farm zones being developed in the waters surrounding the UK. In September 2014 the group signed an agreement for lease with Siemens to develop a 134 acre site at Alexandra Dock, Hull, on which Siemens plans to establish an offshore wind turbine and blade facility with a riverside berth export capability. On completion of agreed works, expected in spring 2017 at a cost of 140m, Siemens will enter into two 15 year leases with an option to extend for up to a further 25 years. In November 2014 ABP awarded a contract to carry out construction works for the development to Graham Lagan Construction Group JV. 6

7 2.2 Performance of the Business The following section should be read in conjunction with the audited annual report and accounts of ABPAH, which are available from the Investor Relations section of the group s corporate website ( The table below summarises the consolidated results for the year ended 31 December 2014: Income statement 2014 Change from Ports and transport revenue % Property development revenue Revenue % Ports and transport costs (260.6) (252.8) -3.1% Property development costs - (1.0) - Operating costs (260.6) (253.8) -2.7% Underlying operating profit % (Decrease)/increase in fair value of investment properties (8.2) % Profit on disposal of share in associated undertaking Amortisation of acquisition accounting related adjustments (34.7) (34.7) - Exceptional pension loss - (31.2) - Group operating profit % Net finance costs (755.4) (155.6) % Share of profit in associated undertakings % Profit/(loss) before taxation (533.0) % Taxation 55.5 (10.1) % Profit for the period (477.5) % Cash generated by operations % Capital expenditure - cash % 7

8 2.2.1 Group operations Volumes and revenue During the year ended 31 December 2014, group revenue increased by 3.0% to 519.1m (: 503.8m) and cargo volumes handled by the group s ports (excluding Southampton conservancy only volumes) increased by 0.6% to 94.5m tonnes (: 93.9m tonnes) which compares with UK GDP growth of 1.8%. The table below provides an analysis of the changes in the group s volumes and revenue by cargo category compared with : Volumes 2014 million tonnes million tonnes Change from Dry bulks % Break bulks % Liquid bulks * % Ro-ro % Import/export vehicles % Containers % Total tonnage * % * Excludes Southampton volumes where ABP generates conservancy income only Passenger volumes s 000 s Change from Cruise passengers 1, , % Ferry passengers 1, , % Total 2, , % Ports and transport revenue 2014 Change from Dry bulks % Break bulks % Liquid bulks % Ro-ro % Import/export vehicles % Containers % Total commodity revenue % Cruise & ferry % Pilotage & conservancy % Property income Other % Total non commodity revenue % Total ports and transport revenue % * The revenue in respect of has been re-presented to reflect changes in the way that management information is reported whereby property income and smaller ancillary charges are now allocated to the related commodity to which the revenue relates. 8

9 The presentation of the comparative information for the twelve month period ended 31 Dec has been adjusted from that previously reported as outlined in the table below: Adjustment to ports and transport revenue As reported Restated Adjustment Dry bulks Break bulks Liquid bulks Ro-ro Import/export vehicles Containers Total commodity revenue Cruise & ferry Pilotage & conservancy Property income 81.2 (67.8) 13.4 Other 49.4 (11.5) 37.9 Total non commodity revenue (78.2) Total ports and transport revenue Significant developments for individual commodity volumes and revenue included the following: Dry bulks: volumes decreased by 2.7% with coal volumes down (driven by decreased demand and high UK stock levels for coal fired power station operators) partially offset by higher biomass and agribulk volumes with low levels of growth for other dry bulks. Revenue increased by 4.0% reflecting increase in biomass and other volumes more than offsetting the impact of lower coal. Break bulks: volumes increased by 6.9% driven by steel, forest products and bricks partially offset by lower scrap. Revenue increased by 18.4% reflecting price growth and volume increases including new export trials undertaken by a major steel customer in South Wales, additional low margin dredging undertaken by a third party and managed by the group on behalf of a major customer and a one off termination payment for a metal customer in Hull. Liquid bulks: volumes decreased by -4.3% versus, mainly reflecting a fall in oil partially offset by increased chemical volumes. Revenue decreased by 17.0% driven by the volume changes and reflecting the non recurrence of the release of provisions in following the favourable resolution of the litigation in relation to the Immingham Oil Terminal. Ro-ro: tonnage increased by 1.1% reflecting volume growth for a major customer at Immingham with volumes elsewhere remaining broadly flat. Revenue increased by 1.9% reflecting the growth in volumes. Import/export vehicles: volume increased by 10.3% reflecting growth in both imports and exports of UK manufactured vehicles. Revenue increased by 7.7% reflecting the volume growth and more modest growth in car storage income. Containers: volume increased by 17.3% mainly reflecting increases at Southampton following the opening of new facilities during the year and growth at Immingham. Revenue increased by 11.4% reflecting the impact of volume growth on variable revenue. 9

10 Cruise: The Port of Southampton remains the UK s number one cruise port however revenue decreased by 5.5% to 22.3m (: 23.6m) reflecting a 6.4% decrease in cruise passenger volumes and a 2.8% decrease in cruise calls to 422 (: 434) due to the redeployment of certain vessels to service fly cruises departing from the Mediterranean. Ferry: The majority of the group s ferry volumes relate to the North Sea routes operating from the Port of Hull and services from Plymouth to France and Spain. Revenue grew 1.2% to 8.2m in 2014 (: 8.1m) reflecting contracted price increases, with Ferry passenger volumes on the group s major routes decreasing by 1.7% during Pilotage and conservancy: revenue increased by 6.9% in 2014 to 54.3m (: 50.8m), reflecting increased steel vessel traffic in South Wales, additional dredging activity by a third party in Southampton, annual price increases and surcharges in respect of the Pilots National Pension Fund (PNPF) deficit payments. Property: This represents the rental income received for properties that can not be allocated directly to a commodity. Revenue in 2014 was in line with the previous year at 13.4m. Other revenue: decreased by 3.7% to 36.5m (: 37.9m) principally driven by a reduction in external dredging undertaken by UKD and smaller ancillary charges now being allocated to the related commodity from which the revenue is derived. Operating costs Ports and transport operating costs increased by 3.1% to 260.6m (: 252.8m). The table below provides an analysis of the group s operating costs compared with : Cost Category 2014 Change from Labour % Maintenance % Fuel % Dredging % Utilities % Other operating and administrative costs % Total costs excluding depreciation and amortisation % Depreciation % Amortisation % Loss on sale of non-current assets Total ports and transport costs % Property development costs Total operating costs % Labour costs: includes the cost of the group s operational, engineering, pilotage, administrative and management departments. Labour costs increased by 1.3% to 125.7m in 2014 driven by annual wage increases, increased staff numbers reflecting, in particular, the impact of increased biomass activity on the new ABP operated Immingham Renewable Fuel Terminal and costs associated with changes to the Board and senior management offset by reduction in coal activity at HIT. 10

11 Maintenance: represents operational expenditure required to repair, service and maintain the group s operating assets including quayside, plant and machinery and vessels. Maintenance costs increased by 13.8% to 18.2m (: 16.0m) with increased levels of work carried out due to higher activity and new facilities compared with. Fuel: predominantly represents fuel required to operate the group s fleet of pilot launches and dredgers. Fuel costs decreased by 11.1% in 2014 to 10.4m (: 11.7m), largely reflecting lower prices and decreased dredging activity. Dredging: represents third party dredging costs. Costs increased 33.3% to 2.4m in 2014 (: 1.8m) principally driven by an increase in the level of dredging managed by the group on behalf of a major customer. Utilities: increased by 8.6% to 7.6m in 2014 (: 7.0m) driven by price and usage increases. Other operating and administrative costs includes operating costs such as lease rentals, security and cleaning and overheads such as IT, legal and professional fees, business rates, insurance and bad debt provisions. Other operating and administrative costs decreased by 7.0% to 46.5m (: 50.0m) mainly reflecting non recurring provisions made in respect of restructuring costs and storm damage in late and an increase in subcontractor haulage and equipment lease rentals driven by high biomass and steel volumes partially offset by rates rebates Other profit and loss items (Decrease)/Increase in fair value of investment properties: The 2014 review of the fair value of the group s investment property portfolio resulted in an income statement loss of 8.2m (: gain of 57.0m). Profit on disposal of share in an associated undertaking: There were no disposals of shares in associated undertakings in During the group sold its 49% of Associated Global Logistics Limited ( AGL ), an Irish based logistics company to AGL s other shareholders for a total consideration of 0.4m, representing a profit on sale of 0.1m. Exceptional items: In the group recognised an exceptional cost of 31.2m in respect of liabilities relating to multi employer pension schemes of which ABP is a participating body. Further details are set out in note 12 to the accounts. Share of profit in associated undertaking: The group s share of profit from associated undertaking increased to 6.8m (: 1.6m) reflecting improved profitability of DPWS due to growth in container volumes. 11

12 Net finance costs: Net finance costs amounted to 755.4m (: 155.6m) and included: interest costs of 76.3m (: 68.1m) in relation to the group s external senior secured debt; interest payable of 307.9m (: 280.0m) in relation to the fully subordinated and unsecured loans from the company s immediate parent undertaking ABP SubHoldings UK Limited; and an unrealised loss of 307.5m (: gain of 252.9m) in relation to swaps held to hedge the group s exposure to interest and foreign currency exchange rate movements. The table below summarises the reconciliation between net finance costs and net interest payable as defined for covenant purposes: Net Interest Payable 2014 Net finance costs Adjusted for: Amortised costs (7.8) (9.7) Net interest payable on loans from parent undertaking (298.2) (271.2) Net unrealised (loss)/gain on derivatives at fair value through profit and loss (307.5) Non-cash finance costs in relation to pension scheme assets and liabilities (2.0) (2.6) Non-cash finance costs/income in relation to discounted assets/liabilities (1.0) (0.3) Net foreign exchange (loss)/gain on borrowings (11.3) 6.0 Net interest payable Taxation: The overall net tax credit for the year ended 31 December 2014 amounted to 55.5m (: charge 10.1m) and reflected a deferred tax credit of 57.5m (: charge 7.9m) and a current tax charge of 2.0m (: 2.2m) Reconciliation between Operating Profit and Consolidated EBITDA Consolidated EBITDA 2014 Operating Profit Amortisation Depreciation Decrease/(increase) in fair value of investment properties 8.2 (57.0) Profit on property transactions - (0.2) Loss on sale of non-current assets Profit on disposal of share in associated undertaking - (0.1) Exceptional items Foreign exchange loss Consolidated EBITDA *Consolidated EBITDA reported in the accounts of ABPA Holding Limited by 0.6m reflecting the adjustment in respect of pension deficit liability adjustment 12

13 2.2.4 Adjusted profit before tax Adjusted profit before tax as set out in the table below increased by 17.2% to 87.4m (: 74.6m). Adjusted Profit Before Tax 2014 * (Loss)/profit before taxation (533.0) 87.2 Decrease/(increase) in fair value of investment properties 8.2 (57.0) Exceptional items Net interest payable on loans from parent undertaking Net FX loss/(gain) on borrowings 11.3 (6.0) Pension net interest Net unrealised loss/(gain) on derivatives at fair value through profit and loss (252.9) Profit on sale of associated undertaking - (0.1) Share in profit in associated undertakings (6.8) (1.6) Adjusted Profit Before Tax *restated to remove the impact of foreign currency loan FX gains and losses and pension net interest (previously included in reported Adjusted Profit Before Tax as 78.0m) Cash flows The group continued to benefit from strong conversion of operating profits to cash flows with cash flow from operating activities amounting to 292.0m (: 273.5m) Cash flows from operating activities Cash generated by operations Interest paid (191.1) (178.3) Interest received Net cash inflow from operating activities Cash flows from investing activities Proceeds from sale of associated undertaking Proceeds from sale of property, plant and equipment Purchase of intangible assets (2.2) (1.1) Purchase of property, plant and equipment (149.6) (114.0) Purchase of investment property (36.1) (32.1) Net cash outflow from investing activities (187.5) (136.9) Cash flows from financing activities Drawdown of borrowings Payment of borrowing costs (4.2) (5.3) Repayment of borrowings (675.0) (877.0) Repayment of obligations under finance leases (0.7) (0.6) Net cash inflow from financing activities Change in cash and cash equivalents during the year (24.6) 7.8 Cash and cash equivalents at 1 January Cash and cash equivalents at 31 December

14 2.2.6 Consolidated Net Borrowings Consolidated Net Borrowings as defined for covenant purposes increased by 33.0m to 1,933.2m (: 1,900.2m). Consolidated Net borrowings Maturity 2014 Term and revolving facilities Private placements GBP floating rate Private placements GBP fixed rate Private placements USD fixed rate Public loans GBP & USD floating rate Public loans GBP & EUR fixed rate Finance leases Net cash (excluding restricted cash) (34.8) (59.4) Net Borrowings 1, ,856.3 Restricted cash and deposits not held with an Acceptable Bank Consolidated Net Borrowings 1, , Significant Announcements/Publications On 16 October 2014 a statement was issued regarding the possible sale of 33.33% shareholding in ABP (Jersey) Limited (the ultimate parent company of ABPA Holdings) by GS Infrastructure Partners (GSIP) and Infracapital Partners (Infracapital). On 31 March 2015 it was announced that GSIP and Infracapital had signed an agreement for the sale of their combined 33.33% stake in the Group. A consortium comprising Canada Pension Plan Investment Board ( CPPIB ) and Hermes Infrastructure has agreed to acquire a stake in the Group from GSIP and Infracapital of at least 30%, and may acquire a further 3.33% subject to pre-emption rights. The transaction values the combined 33.33% stake in ABP held by GSIP and Infracapital at 1.6 billion (on an equity value basis). The transaction is expected to complete in summer 2015, subject to receipt of customary anti-trust clearances. Other announcements are disclosed on the Media Centre and Investor Relations section of the group s corporate website (

15 Significant Board/Management Changes Executive Directors On 3 March 2014, Michelle Tilley and Andrew Harston were appointed to the Board of ABP as Quality & Compliance Director and Director, Short Sea Ports respectively. On 2 June 2014 Jens Nielsen joined ABP as Commercial Director. On 12 January 2015, Kay Penney was appointed to the Board of ABP as Director, Human Resources Non-Executive Directors David Kerr resigned as non-executive director of ABPA Holding Limited on 6 February Capital Expenditure Total capital expenditure for the year increased to 187.9m (: 147.2m). There are two elements to the group s capital expenditure: infrastructure replacement to maintain the operating capabilities of the group s assets and EBITDA generating capital projects. Replacement expenditure during 2014 amounted to 33.2m (: 31.4m). EBITDA generating capex for the year increased to 154.7m (: 115.8m) and included expenditure associated with the IRFT biomass project in Immingham of 62.2m, the container berth expansion project in Southampton of 39.1m and Green Port Hull of 11.4m. Further details of recent progress on the group s major projects can be found in section 2.1 Business Developments. 4. Acquisitions, Disposals, Joint Ventures and Outsourcing In December 2014 the group contracted to acquire the freehold of Marchwood and Cracknore Hard Industrial Estates on the southwest bank of the River Test, opposite the Port of Southampton. The estates cover a total area of 114 acres and existing tenants comprise some of the largest self-contained industrial and warehousing units in the south east of England. The industrial estates are intended to provide strategic long-term value for the group. The acquisition is scheduled to complete in June

16 Financing and Current Hedging Position During 2014, the Group refinanced all remaining bank term and revolving facilities maturing in This was achieved using the proceeds of USD and sterling denominated private placements, as well as, new term and revolving facilities. During the first half of 2014 the group refinanced 125m of bank term facilities and repaid 71.3m of revolving facilities with the proceeds of a GBP 50m US private placement completed in January 2014 and USD 235m (GBP 146.3m) of US private placements completed in February The maturity dates of these new facilities are noted below: USD GBP Maturity 80.0m m m m m m 50.0m In July 2014, the group refinanced a further 150m of bank term facilities and repaid 110m of revolving facilities with the proceeds from USD 235m (GBP 139.5m) and 115m of GBP private placements completed in July The maturity dates of these new facilities are noted below: USD GBP Maturity 32.5m m 50.0m m m 65.0m m 115.0m Term and revolving credit facilities maturing in December 2016 were fully refinanced and replaced with GBP 400m of revolving credit facilities in August In addition, the amendment and extension of the 364 day Liquidity Facilities to GBP 140m was also completed. The maturity dates of the revolving credit facilities are shown below: Type GBP Maturity Syndicated 300.0m 2019 Bilateral 100.0m 2022 In December 2014, the group entered into a GBP 74m, 10 year term facility with the European Investment bank to part fund the ABP development costs for Green Port Hull. The facility was fully drawn in January

17 The charts below show the profile of the group s funding as at 31 December 2014: RCF 17% USPP FXD (USD) 12% USPP FXD (GBP) 5% EIB 6% TERM 3% EMTN FRN (GBP) 6% EMTN FRN (USD) 2% Facilities EMTN FXD (EUR) 5% USPP FRN (GBP) 20% EMTN FXD (GBP) 24% Maturity Profile (Total facilities) USPP FRN (GBP) USPP FXD (GBP) USPP FXD (USD) RCF EIB TERM EMTN FRN (GBP) EMTN FRN (USD) EMTN FXD (EUR) EMTN FXD (GBP) As at December 2014, the group was slightly over hedged with a net 1.31bn of floating to fixed interest rate swaps hedging 1.3bn of floating rate exposure. The hedging position continues to be compliant with the group s hedging policy of maintaining between 75% and 110% of its senior debt fixed for a minimum seven year period. More detailed debt information can be found on the Investor Relations section of the group s corporate website ( 17

18 The following graph shows the current mandatory swap breaks profile (net swap notional), which were restructured in in line with longer dated debt maturities Mandatory Swap Breaks (Net Swap Notional) 31 December Parri Passu Super Senior 6. Restricted Payments During 2014, the group settled 41.5m (: 45.4m) of the interest associated with the loan from its immediate parent undertaking, representing the full amount of interest due on the subordinated Junior Loan Notes. 7. Ratios and Compliance with Covenants At 31 December * Forward-looking ratio calculations and projections are based on the most recent ITA Information provided to and certified by the Independent Technical Advisor and are consistent with maintaining a 10% headroom to Trigger Ratios. 7.1 We confirm that in respect of this investor report dated 31 December 2014, by reference to the most recent Financial Statements that we are obliged to deliver to you in accordance with Paragraph 1 (Financial Statements) of Part 1, (Information Covenants) of Schedule 2 (ABPAH Group Covenants) of the Common Terms Agreement: (a) the Historic Adjusted Consolidated EBITDA is or is estimated to be equal to or more than 1.75 times Historic Net Interest Payable for the Relevant Calculation Period; (b) the Projected Adjusted Consolidated EBITDA is or is estimated to be equal to or more than 1.75 times Projected Net Interest Payable for the Relevant Calculation Period; * 2016* 2017* Consolidated EBITDA Net Interest Payable Consolidated Net Borrowings 1, , , , ,567.1 Ratio of Adjusted Consolidated EBITDA to Net Interest Payable 2.23x 2.42x 2.33x 2.36x 2.33x Ratio of Consolidated Net Borrowings to Consolidated EBITDA 6.51x 6.27x 6.75x 6.75x 6.75x

19 (c) the ratio of Historic Consolidated Net Borrowings to Historic Consolidated EBITDA is or is estimated to be equal to or less than 7.75 as at the Relevant Calculation Date; and (d) the ratio of Projected Consolidated Net Borrowings to Projected Consolidated EBITDA is or is estimated to be equal to or less than 7.50 as at the Relevant Calculation Date We confirm that each of the above Ratios has been calculated in respect of the Relevant Calculation Period or as at the Relevant Calculation Date for which it is required to be calculated under the Common Terms Agreement. 7.3 We confirm that historic ratios have been calculated using, and are consistent and have been updated by reference to the most recently available financial information required to be provided by the Covenantors under Schedule 2 (ABPAH Group Covenants) of the Common Terms Agreement. 7.4 We confirm that all forward looking financial ratio calculations and projections: (i) have been made on the basis of assumptions made in good faith and arrived at after due and careful consideration; (ii) are consistent and updated by reference to the most recently available financial information required to be produced by the Covenantors under Schedule 2 (ABPAH Group Covenants) of the Common Terms Agreement; and (iii) are consistent with the Accounting Standards (insofar as such Accounting Standards reasonably apply to such calculations and projections). (iv) are based on the most recent ITA Information provided to and certified by the Independent Technical Advisor in accordance with Schedule 2 (ABPAH Group Covenants) of the Common Terms Agreement. 7.5 We also confirm that: (a) no Default or Trigger Event has occurred and is continuing, or if a Default or Trigger Event has occurred and is continuing, steps (which shall be specified) are being taken to remedy such Default or Trigger Event; (b) (c) the ABPAH Group is in compliance with the Hedging Policy; and this Investor Report is accurate in all material respects; Yours faithfully, Sebastian Bull Chief Financial Officer For and on behalf of ABPH as ABPAH Group Agent 19