Brussels Airport Company NV Annual Investor call 2018 August, 2018
1. Executive Summary 2. Traffic Growth 3. Capital Expenditure 4. Financial Overview Full Year 2017 5. Existing development plots update 2
Executive Summary Item Comment Situation Traffic Revenues Opex Profitability and cash flow generation Regulatory framework Debt structure management Liquidity Financial ratios Passenger traffic increased by 13.6% vs FY16 (and +5.6% vs FY15) supported by a stable 81% Origin & Destination base Total revenues increased by 2.2% in FY17 (+13.1% excluding the impact of 50 mio insurance payment). Aero revenues and commercial revenues experienced an increase of 13.9% and 17.6% respectively year-on-year as recovery from the 2016 terrorist attacks is compounded with strong underlying growth. Total Opex increase of 3.3% vs last year, demonstrating efficiencies of scale with +13.6% PAX growth. Opex figures remain above long-term average due to the additional security and personnel costs associated with the response to the events of March 2016. Despite these additional operating costs, Brussels Airport s EBITDA margin remains the highest amongst its peer group at 58.5% on a full year basis. Disciplined capital expenditure and stable profitability ensured continued strong net cash flow growth to 218 mio. Based on a new agreement for the next quinquennium, tariffs will increase by 1.7% + CPI annually to 2021. Result of intermediate tariff consultation on security cost pass-through allows Brussels Airport to recoup these costs. 2017 refinancing of the 400 mio outstanding bank debt contributed to reducing senior debt costs to 37 mio vs 46 mio for FY16. The 50 mio RCF and 250 mio Capex facilities have been refinanced by a 600 mio 5+1+1 GCP facility at highly attractive terms Minimal medium-term refinancing risk due to 2017 refinancing earliest maturity in 2020. 600 mio bank facilities and 48 mio liquidity facility, both undrawn, provide a substantial liquidity buffer Net Debt / EBITDA of 4.1x and Senior ICR of 5.7x continue to significantly outperform forecasts and demonstrate prudent financial policy of shareholders and management. Brussels Airport has demonstrated exceptional resilience and recovery evidenced by 2017 results and financial ratios 3
1. Executive Summary 2. Traffic Growth 3. Capital Expenditure 4. Financial Overview Full Year 2017 5. Existing development plots update 4
Traffic Growth Long-Term Traffic Growth Resilience through the cycle and a sustainable growth trajectory Long-term PAX evolution demonstrates a resilient, sustainable growth model 26 24 22 20 18 16 14 12 10 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 PAX (m) Brussels Airport has achieved a 3.6% CAGR in total passenger numbers over 2005-2017, despite this time period containing both the most severe recession in modern history and the terrorist attacks in 2016 From the 2008 pre-crisis peak to 2009 trough, Brussels Airport saw a PAX drop of only 8.8% This is a smaller decrease than Gatwick Airport (c.11.6%), Copenhagen Airport (c.9.1%), Manchester Airport (c.11.5%) and Aeroporti di Roma (c.9.3%) Source: Brussels Airport, company websites 5
Traffic Growth Record High PAX Achieved In 2017 Rapid recovery from impact of 2016 attacks has accompanied clear increase in underlying demand Traffic Overview Passengers (in thousands) Departing passengers 2017 2016 vs 2016 Originating tax passengers 9,971.7 8,665.4 +15.1% Transfer tax passengers 2,282.3 2,075.9 +9.9% Exempt passengers 112.5 102.9 +9.4% Total departing passengers 12,366.5 10,844.2 +13.7% Total arriving passengers 12,417.3 10,974.2 +13.1% Total passengers 24,783.9 21,818.4 +13.6% Full tax pax equivalent 11,433.1 10,003.3 +14.3% Traffic in 2017 increased by +13.6% on 2016, strongly bouncing back from the impact of the 2016 terror attacks The 24.8 mio 2017 passengers is also 5.9% above the 2015 prior record, demonstrating continued growth in underlying demand 6
Traffic Growth YTD 2018 showing Continued Sustainable Growth With a YTD traffic growth of ca. 4.5% vs 2017, Brussels Airport is well on the way to deliver another record year 7
Traffic Growth 2016-2017 Growth Led By Short Haul Growth in all segments except Leisure following Brussels Airlines acquiring Thomas Cook s Belgian assets Change in passengers per segment 2016-2017 (in thousands) 25,500 25,000 24,500 227 186 219 319 3 24,000 801 23,500 23,000 22,500 1,855 23,673 24,474 24,701 24,887 24,787 24,784 24,784 22,000 21,500 21,818 21,818 21,000 Total Passengers 2016 Short Haul Brussels Airlines Short Haul Other Long Haul Brussels Airlines Long Haul Other Low Cost Leisure Other Total Passengers 2017 8
1. Executive Summary 2. Traffic Growth 3. Capital Expenditure 4. Financial Overview Full Year 2017 5. Existing development plots update 9
Capital Expenditure Investing For Growth Value adding capex supporting the corporate strategy Capex Evolution (in mio) Targeted expansionary capex of 73 mio in 2017 to support the growth strategy of BAC These new efforts mainly target infrastructure development and maintenance in order to accommodate the capacity for growing passenger numbers The expansionary capex is fully flexible in line with traffic growth and can be stopped when required Since 2012, maintenance capex has been on average c.25% of total capex, providing a material cashflow buffer in a downturn 140 120 100 80 60 40 20 0 124 100 21 106 97 80 19 22 60 22 24 21 103 78 87 58 39 73 2012 2013 2014 2015 2016 2017 Expansionary Maintenance BRUcargo West Development Capex Split 2017 People & Digital 13% Compliance & Services 11% Landside 11% Cargo 10% Terminal 29% Airfield 26% 10
Capital Expenditure Capex Program Modular And Largely Discretionary Widely distributed capex profile minimises execution risk and allows fine-tuned response to a changing environment No single capex project accounts for more than 10.7% of total spending, and the top ten account for only 65.3% Out of a total 2018 capex budget of c. 150 mio, approximately 35 mio is for regular maintenance, with the remainder being dedicated to more flexible expansionary capex Skyhall potential development Distribution of 2018 capex profile by primary projects Top 5 Projects Migration hold baggage screening % of Total Capex 10.7% Apron renovation 7.3% Centralised de-icing 5.3% BRUCargo West development 5.3% Centralisation of bussing services 5.3% 11
1. Executive Summary 2. Traffic Growth 3. Capital Expenditure 4. Financial Overview Full Year 2017 5. Existing development plots update 12
Financial Overview Rapid Recovery Of Revenues In Line With Traffic 17.1% increase in Aeronautical Revenues due to traffic increase Aeronautical Revenues ( mio) 2017 2016 vs LY Passenger Fees 315.9 269.2 +17.4% Landing & Take off fees 45.3 38.8 +16.8% Parking fees 5.4 4.8 +11.1% 400 Hz/PCA 7.2 6.5 +10.7% Gross Aeronautical Revenues 373.7 319.2 +17.1% Gross Aeronautical Revenue growth (+17.1%) is in line with traffic increase (+13.6%) and tariff increase (+3.8%) (CPI +1.7%) 13
Financial Overview Increasing Proportion Of Commercial Revenue 17.6% growth in commercial revenue evidences execution of BAC revenue growth and diversification plan Commercial Revenues ( mio) 2017 2016 vs LY Shopping 42.0 36.0 +16.7% Services 3.8 3.9-2.2% Food & Beverages 20.5 18.0 +14.3% Advertising 6.0 5.2 +16.1% Mobility Services 23.5 18.5 +27.3% Total Commercial Revenues 95.9 81.5 +17.6% Commercial revenues are 17.6 % above 2016: Shopping results increased by 16.7% vs LY, mainly influenced by the increase in passenger traffic, and improved commercial performance at stores. F&B full year revenues are 14.3% above LY, mainly due to traffic increase. Advertising revenues are 16.1% above LY from traffic growth, higher impact sites, and digitisation. Full year Mobility Services increased by 27.3% vs LY from traffic increase, continued car rental and Interpark growth 14
Financial Overview Real Estate Assets Continue To Perform Strongly Real Estate income achieved diversified growth, with underlying other income performing strongly Real Estate ( mio) 2017 2016 vs LY Brucargo 19.3 16.9 +14.1% Airport Business District 12.2 11.3 +7.3% Terminal 7.0 6.4 +9.5% Recharges 5.8 6.0-4.3% Staff parking 6.6 6.7-0.3% Total Real Estate Revenues 50.9 47.3 +7.5% Other Operating Income ( mio) 2017 2016 vs LY Handling 8.7 7.4 +17.6% IT Services 6.2 5.7 +8.0% Check in 4.4 3.3 +32.1% Other Income 10.1 62.6-83.8% Total Other Operating Income 29.4 79.0-62.8% Real estate revenues are 7.5% above LY. Brucargo performance improved by 14.1%, mainly due to revenues from the former ING lease concessions (FedEx & Lufthansa Technik) that have been acquired by BAC and the new DHL building Airport Business District outperforms 2016 by 7.3% thanks to the step-up of the Sabena Aerospace contract Other operating income decrease due to one-time impact of EUR 50 mio insurance claim reimbursement in 2016. 15
Financial Overview Stable Operating Costs Per PAX Operating costs per passenger stable on long-term trend Opex summary ( mio) 2017 2016 LY Personnel Costs 69.7 66.8 +4.4% Maintenance 54.8 52.0 +5.4% Security Services 38.4 39.2-2.1% Pax Services 14.0 10.0 +40.0% Utilities 8.7 9.9-12.0% Professional Services & Consultancy 9.2 8.9 +3.6% Advertising & Marketing 6.2 6.4-2.0% Other Operating Costs 7.2 6.9 +5.0% Other Non operating Costs 12.0 12.6-4.6% Total Operating Expenses 220.4 212.7 +3.6% Opex per pax (in ) +2.9% +3.5% 8.76 9.07 8.40 8.37 Dec FY2012 Dec FY2013-7.4% -0.4% Dec FY2014 Dec FY2015 +16.5% -8.8% 9.75 Dec FY2016 8.89 Dec FY2017 Operating costs per passenger decreased by 8.8% on 2016, as increased passenger numbers were largely accommodated within existing personnel base Increased maintenance and PAX services are delivering an improved passenger experience 16
Financial Overview Robust Earnings Profile Stable pre-specifics EBITDA performance demonstrates both effectiveness of insurance policy and robust recovery EBITDA summary ( mio) 2017 2016 vs LY Aeronautical Revenues 354.9 311.7 +13.9% Commercial Revenues 95.9 81.5 +17.6% Real Estate & Property 50.9 47.3 +7.5% Other Operating Income 29.4 79.0-62.8% Total Revenues 531.1 519.6 +2.2% Total Operating Expenses -220.4-212.7 +3.6% EBITDA (pre specifics) 310.8 306.9 +1.3% Specifics -3.0-15.2-80.4% EBITDA (post specifics) 307.8 291.7 +5.5% +1.3% EBITDA growth (pre-specifics) vs. LY mainly due to : Traffic increase Tariff increase Increased commercial spend 50 mio 2016 insurance payment (incl. in Other Operating Income) functioned as intended to smooth earnings Opex has not increased at same rate resulting in an increase in EBITDA Specifics in 2016 include 13.2 mio in BI and Reconstruction costs. 17
Financial Overview Strong Credit Metrics Brussels Airport continues to show a resilient EBITDA and solid ratios despite exceptionally adverse circumstances Brussels Airport continues to show strong financial metrics, recovering rapidly from the events of 2016 Key Summary ( mio) 2017 2016 Net and gross debt levels remain well under control, with currently no drawings under the 600 mio bank facilities and refinancing risk mitigated through the 2017 refinancing A combination of improved EBITDA, reduced cost of debt due to the 2017 refinancing, and disciplined capex profile, Senior ICR has improved to 5.7x Similarly, stable debt, cash generation, and growing EBITDA has improved Net Debt / EBITDA to 4.1x (4.5x Gross Debt / EBITDA) 2017 traffic and financial data demonstrate the extreme resilience and recovery of the business following adverse conditions EBITDA 311 307 EBITDA post Specifics 308 292 NPAT (Bac Statutory) 88 65 SHL Loan 558 558 Net Debt 1,251 1,337 Gross Debt 1,375 1,375 Cash 124 38 Senior interest paid 37 46 Capex 97 106 Net Debt/EBITDA 4.1x 4.3x Senior ICR 1 6.6x 4.7x (1) Available cashflow (EBITDA less tax and 30% of capex) over senior interest 18
Financial Overview Significant Improvement In WC Since 2008 Brussels Airport continued its deleveraging path and further strengthened its financial metrics DSO has decreased steadily from a level of 65 days in 2008 to 30 days in 2017, as Brussels Airport continues to focus on structural improvements in credit control and payment terms The DPO has made the opposite movement over the same period and increased from 42 days to 71 days in 2016 This DPO level is in line with our policy and contractual agreements to pay suppliers on average 2 months after receipt of the invoices Evolution DSO & DPO (since 2008, based on an annual average) 80 70 60 50 40 30 20 10-2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Av. DSO 65 56 47 42 43 42 38 35 39 30 Av. DPO 42 57 58 71 67 67 65 70 75 71 19
Financial Overview 2017 Refinancing Overview Significant extension of the maturity profile at historically low cost Successful refinancing of the bank Term Debt and the Capex drawing in May 2017 and refinancing and upsizing of the Capex/RCF facility to EUR 600m Refinancing of the EUR 380 mio bank term debt and EUR 20 mio Capex Facility drawing by issuing a combination of an 7 yr public bond (EUR 300 mio) and a 12 yr USPP (EUR 100 mio), significantly extending the maturity profile Amendment of Common Terms Platform to remove certain constraints out of the finance docs such as SPV/JV restrictions, rights in remedy process, improve flexibility around EIB entry into the financing structure The Debt Service Reserve Account has been replaced with a designated Liquidity Facility provided by relationship banks Cancellation of the MRA, freeing up EUR 48m of trapped cash Simplifying the bank debt by replacing the Capex Facility and existing RCF with General Corporate Purposes RCF Sources & Uses Sources mio Tenor Public Bond 300 2024 Private Placement 100 2029 Total / WAL 400 8.25 Uses mio Tenor Repay Bank Facilities 380 2018 Repay Capex Facility drawing 20 2018 Total / WAL 400 1.00 New Maturity Profile (post issuance) Capital structure fully termed out into long term markets No refinancing events before July 2020 Balanced maturity profile BAC has proven track-record of access to public and private markets 800 600 400 200 0 500 155 48 600 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Undrawn RCF Undrawn LF Public Bond 1 Public Bond 2 EURPP 1 EURPP 2 USPP 1 USPP 2 Refinancing 120 300 200 100 20
Financial Overview Prudent Financial Policy Proven track record of reinvestment into the Airport and conservative financial policy A long-term policy of steady, value-accretive capex has positioned Brussels Airport well for future growth Leverage has demonstrably remained well within covenants and capital markets engagement responsive to events A majority of anticipated capex budget is expansionary and is largely discretionary in case of downturn Shareholders and management remain aligned and committed to an investment-grade rating as evidence of long-term stewardship over an essential piece of national infrastructure Expected financial ratios Senior net debt / EBITDA 1 Senior ICR 2 6.0x 8.0x 5.0x 6.0x 4.0x 4.0x 3.0x 2.0x 2.0x 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 0.0x 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Expected to remain below 5x on steady-state basis In a downturn, initial increase due to completion of committed capex, but medium-term reversion from cancellation of superfluous expansionary projects Expected to remain c.6x on a steady-state basis As per net debt / EBITDA, initial impact from EBITDA downturn expected to rapidly become mitigated by flexible expansionary capex Long-term financing achieved in 2017 minimises mediumterm interest rate risk (1) c. 30 mio cash assumed retained (2) Available cashflow (EBITDA less tax and 30% of capex) over senior interest 21
1. Executive Summary 2. Traffic Growth 3. Capital Expenditure 4. Financial Overview Full Year 2017 5. Existing development plots update 22
Existing development plots Existing development plots update Focus on value creation and reshaping the airport ABD zone Gateway & Passport The redevelopment of the Gateway building (34,000 sq m offices) by Codic and Immobel was finalized by the end of 2016. The building has been bought by Befimmo and is rented out to Deloitte for 18 years. Deloitte moved into the building in Q1 2017. Passport (28,000 sqm offices) is developed alongside Gateway and is already rented out for 90% to KMPG, Microsoft and Tribes. They gradually move into the building since March 2018. First phase of the development of Airport Business District With the move of DHL to the North zone in Q3 2017, the existing plot can be reused for the development of the first phase of the new Airport Business District, as presented in the masterplan 2040. In a first phase, this new building will provide commercial real estate, parking, public transport, hangar space and terminal capacity. 30,000 extra sqm offices will be available as from 2022. Parking Tower P30 The construction of the parking tower P30 (75,000 sq m), with a total capacity of 2,500 parking places, is part of the long term parking strategy at Brussels Airport. Beyond answering increasing parking places needs following the growth of Brussels Airport s activities, it will play an important role in the initial development of the Airport Business District ( ABD ) and will allow to improve our passengers experience with an upgraded car rental product. 23
Existing development plots Existing development plots update Focus on value creation and reshaping the airport Cargo zone Ziegler 5,000 sq m warehouse and 1,150 sq m offices will be developed and owned by Patronale Real Estate, based on a 50 yr building right agreement. The new building will be operational as from Q3 2019 (1 year delay). BLD-832 The second phase of the building right with Montea for BLD-832 has been finalized. WFS will move to their build-tosuit project of 9,000 sq m in Q4 2018. Redevelopment North zone Based on the approved Landside Masterplan, the design of the North zone (development of 90,000 sq m hangars and apron is being detailed in cooperation with a design study office. Tenants with MRO activities and catering will be the future occupiers of this zone (to be confirmed). A first development case will be the new premises of Lufthansa Technik (25,000 sq m hangar and apron). Parties as Safran, Moyson and Sabena Aerospace have also shown their interest. Delivery expected as from 2022. Swissport Cargo Services In light of the redevelopment of BLD-704, of 1 st line warehouse of 30,000 sq m and 5,000 sq m offices has been foreseen. We expect the building permit to be filed by Q4 2018 and the building to be finalized by Q3 2020. Parking DHL New Parking building development of 975 parking slots will be developed by DHL on Montea s land lease. Expected delivery date as from Q3 2019. 24
Existing development plots Existing development plots update Focus on value creation and reshaping the airport Valuables transport accomodation The construction of a Valuables transport accommodation is a sub project from the Swissport Cargo Redevelopment project (BLD-704). Both Swissport Cargo Services and Brinks, the current main value transport company active at Brussels Airport, are demanding a separate facility for the valuables transport accommodation (vault), currently housed in BLD-704. The building will have a surface of 900sqm. Expected delivery as from Q2 2019. AICC (Animal Inspection & Care Center) The construction of a Border Inspection Post (1,500 sq m) for living animals and some goods of animal origin (BIP) is a derived project from the Swissport Cargo Redevelopment project (BLD-704 project code SPC01I). BAC will develop this center as a facility separate from the BLD-704 redevelopment with the full support from FAVV (Federaal Agentschap voor de Voedselveiligheid). Brucargo West A greenfield of 80,000sqm first line zone is being prepared to built 50,000 sq m warehouse, 6,500 sq m offices and 350 parking slots. The architect and study office have been selected and 3 future tenants have already been found. By Q4 2017 we aim to sign a letter of intent with Kuehne & Nagel, WFS and Expeditors with delivery date of the project by Q2 2020. 100% of the project will be rented out. BLD-703 The objective of the project is to refurbish and provide the necessary first line warehouse (11,000 sq m), office and outside space to Dnata (new handler) in order to enable them to start operating as from December 1st, 2018 at BRUcargo 25
Questions
Appendix: Financials 2017 P&L and Cash flow Income statement ( mio) 2017 2016 vs LY Cash Flow ( mio) 2017 2016 vs LY Aeronautical Revenues 354.9 311.7 +13.9% Commercial Revenues 95.9 81.5 +17.6% Real Estate & Property 50.9 47.3 +7.5% Other Operating Income 29.4 79.0-62.8% Total Revenues 531.1 519.6 +2.2% Total Operating Expenses -220.4-212.7 +3.6% EBITDA (pre specifics) 310.8 306.9 +1.3% Specifics -3.0-15.2-80.4% EBITDA (post specifics) 307.8 291.7 +5.5% Depreciation -95.2-94.7 +0.5% Goodwill depreciation 0.0 0.0 n.m. EBITDA 307.8 291.7 +16.0 Net current capex -97.1-106.3 +9.1 Change in Working Capital 7.4-4.2 +11.6 Operating cash flow 218.1 181.3 +36.8 Other current assets/liabilities 0.5 0.7-0.2 Tax & extraordinary cash flow -32.7-37.0 +4.4 Financial cash flow excl distribution -90.4-59.8-30.5 Distribution cash flow -78.7-93.7 +15.0 Net cash flow 16.8-8.5 +25.4 Cash opening balance 106.6 115.2-8.5 Cash closing balance 123.5 106.6 +16.8 EBIT 212.6 197.1 +9.7% 27
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