STAKEHOLDER PRESENTATION MARCH 2017
AIRPORTS COMPANY SOUTH AFRICA 2 CONTENTS 3 OVERVIEW 8 GOVERNANCE 10 ECONOMIC REGULATION 15 FINANCIAL PLAN 24 FUNDING PLAN 28 KEY TAKEOUTS
OVERVIEW
AIRPORTS COMPANY SOUTH AFRICA 4 FOOTPRINT GHANA KOTOKA INTERNATIONAL AIRPORT IN ACCRA (Technical advisory and consulting services) BRAZIL GUARULHOS INTERNATIONAL AIRPORT IN SÃO PAOLO (Equity investment) SOUTH AFRICA TOTAL ANNUAL DEPARTING PASSENGERS 19 374 329 AIRCRAFT LANDINGS 284 285 TOTAL PERMANENT EMPLOYEES 2 841 INDIA CHHATRAPATI SHIVAJI INTERNATIONAL AIRPORT IN MUMBAI (Equity investment)
AIRPORTS COMPANY SOUTH AFRICA 5 VISION 2025 TO BE THE MOST SOUGHT-AFTER PARTNER IN THE WORLD FOR THE PROVISION OF SUSTAINABLE AIRPORT MANAGEMENT SOLUTIONS BY 2025 RUN AIRPORTS DEVELOP AIRPORTS GROW OUR FOOTPRINT
AIRPORTS COMPANY SOUTH AFRICA 6 SUSTAINABILITY FRAMEWORK People and Society Broad-based social inclusion and deracialisation of the economy Sustainability Framework Business Economic Growth Environment Environmental Sustainability
AIRPORTS COMPANY SOUTH AFRICA 7 FIVE BUILDING BLOCKS FOR SUCCESS 1 OUR GOVERNANCE FRAMEWORK AND OPERATING MODEL 2 BUSINESS DIGITISATION 3 ENVIRONMENTAL SUSTAINABILITY FRAMEWORK 4 SUPPLY CHAIN MANAGEMENT EVOLUTION 5 ECONOMIC TRANSFORMATION FRAMEWORK
GOVERNANCE
AIRPORTS COMPANY SOUTH AFRICA 9 GOVERNANCE STRUCTURE ACSA Board Audit & Risk Committee Board Investment Committee Executive Committee Remuneration and Nominations Committee Social & Ethics Committee Board Regulation Committee Chief Financial Officer* Chief Executive Officer* Chief Audit Executive Chief Strategy and Performance Officer Chief Financial Chief of Staff Officer Group Manager Transformation Company Secretary Chief Operating Officer Group Executive Business Development Group Executive Human Resources Group Executive Corporate Affairs Group Executive Governance and Assurance Group Executive Airports Management Group Executive Infrastructure Asset Mngt Group Executive Technical Services and Solutions Chief Information Officer General Manager O.R. Tambo International Airport General Manager Cape Town International Airport General Manager King Shaka International Airport General Manager Regional Airports * Executive Director
ECONOMIC REGULATION
AIRPORTS COMPANY SOUTH AFRICA 11 ECONOMIC REGULATORY 2015/16 2016/17 2017/18 2018/19 2019/20 Permission Application -7.50% -7.50% 0.0% 0.0% 0.0% Corporate Plan 0.0% 0.0% -35.5% 5.8% 7.4% ECONOMIC REGULATORY REVIEW Limited progress made since the publication of the Draft Amendment Bill Amendment to primary legislation to introduce a merit-based appeals mechanism was not finalised in time for the 2015/16 to 2019/20 Permission Pre-funding remains absent from the funding model FINAL PERMISSION DECISION 2016 2020 Agreements with the Economic Regulator To be resolved Sharing of proceeds of a land sale transaction Explicit disallowance of projects Smoothing of revenue over permission period Direct adjustment to OPEX forecast Reasonable efficiency factors Ring-fencing of share investments
AIRPORTS COMPANY SOUTH AFRICA 12 RETURNS VS REGULATORY WACC 14,0% 12,0% 11,4% 10,6% 10,6% 10,4% 10,0% 8,0% 7,9% 6,9% 6,0% 5,1% 5,9% 4,0% 2,0% 0,0% 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Return on capital employed Regulatory WACC Claw-backs that would have been effective in 2015/16 were postponed (and compounded) to 2017/18 by the delay to the Permission
R million AIRPORTS COMPANY SOUTH AFRICA 13 TOTAL ASSETS VS RAB 30000 25000 20000 15000 10000 5000 0 2012/13 2013/14 2014/15 2015/16 2016/17 2017/18 2018/19 2019/20 Total Fixed Assets RAB Difference between RAB & Total Fixed Assets attributable to the following: Work in progress Assets restatement due to IFRS
FINANCIAL PLAN
AIRPORTS COMPANY SOUTH AFRICA 15 KEY FINANCIAL HIGHLIGHTS 2015/16FY 6.8% REVENUE R8.3BN (2015: R7.8BN) 59.0% CAPITAL EXPENDITURE R1.3BN (2015: R830M) 4.9% TOTAL ASSETS R29.9BN (2015: R28.5BN) 20.3% PROFIT AFTER TAXATION R1.96BN (2015: R1.63BN) 7.1% EBITDA R5.2BN (2015: R4.8BN) 8.6% DEPARTING PASSENGERS 19.4M (2015: 17.8M) 6.8% TOTAL LIABILITIES R12.7BN (2015: R13.7BN) 4.0% AIRCRAFT LANDINGS 284K (2015: 273K)
AIRPORTS COMPANY SOUTH AFRICA 16 TRAFFIC VOLUME DEPARTING PAX(THOUSANDS) PAX GROWTH RATE 16 000 14 000 12 000 10,0% 9,0% 8,0% 7,0% 8,6% 10 000 8 000 6 000 4 000 2 000 6,0% 5,0% 4,0% 3,0% 2,0% 1,0% 2,4% 2,7% 4,3% 4,3% - International Regional Domestic Unscheduled 0,0% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020 AIRCRAFT LANDINGS (THOUSANDS) LANDING GROWTH RATE 180 160 140 120 100 6,0% 5,0% 4,0% 3,0% 4,0% 4,9% 3,0% 80 60 40 20 - International Regional Domestic Unscheduled 2,0% 1,0% 0,0% -1,0% 0,4% -0,1% 2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
R million AIRPORTS COMPANY SOUTH AFRICA 17 PROJECTED FINANCIAL INDICATORS 10 000 13,0% 9 000 8 647 10,4% 8 448 11,0% 8 000 7 703 7 000 7 042 9,0% 6 000 5 000 4 000 3 000 4 964 4 262 5,1% 4,2% 3 062 2 915 5,9% 5,1% 3 357 3 237 6,9% 6,8% 3 840 2 835 7,0% 5,0% 3,0% 2 000 1 000 1 949 815 1 044 1 502 1,0% - 2017 2018 2019 2020 Total revenue EBITDA Cash generated Net profit Return on equity Return on capital employed -1,0%
R million AIRPORTS COMPANY SOUTH AFRICA 18 REVENUE ANALYSIS 10 000 9 000 8 000 50% 49% 48% 60% 50% 7 000 38% 38% 40% 6 000 5 000 30% 4 000 3 000 20% 2 000 10% 1 000-2016 2017 2018 2019 2020 0% Aeronautical revenue Non-aeronautical revenue Non-aeronautical % Total revenue is based on the total revenue allowance as permitted by the economic regulator
R million AIRPORTS COMPANY SOUTH AFRICA 19 NON-AERONAUTICAL REVENUE 4 000 3 500 3 000 2 500 2 000 1 500 1 000 500 77 65 59 940 12 864 27 783 729 208 688 216 190 646 188 180 612 580 536 549 287 268 255 226 236 1 111 1 178 1 267 1 386 1 497 - Actual Forecast Budget Plan Plan 2016 2017 2018 2019 2020 Retail Car rental Car parking Advertising Property Advisory services Growth in international passengers at Cape Town International Airport reduced the yield per passenger for retail revenue in the 2016/17 forecast
R million AIRPORTS COMPANY SOUTH AFRICA 20 OPERATING EXPENSES 5 000 4 500 4 000 3 500 3 000 2 500 2 000 1 500 124 154 246 320 313 913 160 198 274 406 335 1 045 160 309 288 413 362 1 085 164 309 329 396 393 1 232 172 336 343 395 417 1 296 1 000 500 1 179 1 277 1 364 1 518 1 654-2016 2017 2018 2019 2020 Personnel Costs Outsourced Services Utilities Corporate Services & Administration Rates & Taxes Information & Communciation Services Marketing The Group continues to focus on sustainable cost reductions within the context of the strategic focus areas Some regulated charges continue to increase at a rate above inflation
R million R million AIRPORTS COMPANY SOUTH AFRICA 21 CAPITAL EXPENDITURE CAPEX SPENT 2014 TO 2017 PROJECTED CAPEX 2018 TO 2020 1 400 2 500 2 232 1 200 1 000 1 321 2 000 1 953 112 133 800 928 830 966 1 500 977 1 060 600 400 1 000 757 67 286 268 2 200-2014 2015 2016 2017F 500-315 64 768 189 514 30 156 2018 2019 2020 2018 to 2020 Capex Budget amounts to R4.9 billion Capacity Efficiency & Technology Statutory & Compliance Commercial Refurbishment & Replacement
AIRPORTS COMPANY SOUTH AFRICA 22 MAJOR PROJECTS Cargo warehouse and office refurbishment - 2018 Terminal A refurbishment and redevelopment - 2020 Remote apron stands - 2023 New domestic arrivals Terminal - 2020 New runway realignment 2021 Aircraft parking stands - 2023 KING SHAKA Apron stands and bravo taxiway extension - 2020 * Please refer to annexures for detailed major projects
FUNDING PLAN
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 YTD AIRPORTS COMPANY SOUTH AFRICA 24 DEBT EVOLUTION & MATURITY PROFILE EVOLUTION OF DEBT (R BILLION) DEBT MATURITY PROFILE (R BILLION) 20 4,5 4,0 Inflation linked bond 15 17 3,5 10 10 3,0 2,5 5 2,0 0 1,5 1,0 (5) 0,5 0,0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2029 2030 2031 Change in debt levels Debt levels Fixed rate bonds Bank Loans Inflation linked bonds DFI Loans (INCA & AFD) Credit rating agency Date Long-term national scale Global scale Outlook 10 May 2016 Aa1.za Baa2 Negative
AIRPORTS COMPANY SOUTH AFRICA 25 THREE YEAR FUNDING REQUIREMENTS 1 463 10 262 4 941 2 889 503 2 728 2 406 788 O p e n i n g C a s h C a s h Generated Ta x I n v e s t i n g A c t i v i t i e s D e b t R e p a y m e n t O t h e r c o s t s I n t e r e s t & O t h e r F i n a n c e C o s t s E n d i n g C a s h Capex & debt redemptions to be funded by cash carried forward plus cash generated Debt redemptions total R2.9 billion Refinancing requirements considerations AIR01 fixed rate bonds and AIRL01 inflation linked bonds
AIRPORTS COMPANY SOUTH AFRICA 26 KEY CREDIT METRICS EBITDA INTEREST COVER RATIO (ABOVE 3X) NET DEBT TO EBITDA RATIO (BELOW 4X) 5,7x 5,8x 6,3x 6,1x 2,9x 3,3x 3,9x 3,7x 4,2x 4,1x 2,9x 1,7x 2,2x 2,3x 1,8x 1,5x 1,4x 2,0x 1,9x 1,6x 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018F 2019F 2020F 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018F 2019F 2020F NET DEBT/CAPITALIZATION (BELOW 65%) DSCR RATIO BY AVAILABLE CASH (ABOVE 1.5X) 5.9x 62% 59% 53% 46% 39% 31% 26% 24% 23% 22% 2.1x 2.0x 2.2x 2.2x 3.3x 4.9x 1.9x 4.5x 2011A 2012A 2013A 2014A 2015A 2016A 2017E 2018F 2019F 2020F 2012A 2013A 2014A 2015A 2016A 2017E 2018F 2019F 2020F
KEY TAKEOUTS 27
AIRPORTS COMPANY SOUTH AFRICA 28 KEY TAKEOUTS STRATEGY THAT IS AIMED AT LONG TERM SUSTAINABLE VALUE CREATION CONTINUOUSLY IMPROVING THE PASSENGER EXPERIENCE IDENTIFYING AND SECURING NEW BUSINESS OPPORTUNITIES STRENGTHENING REPUTATION AND CONTINUING TO BUILD WIN-WIN PARTNERSHIPS WITH OUR STAKEHOLDERS MANAGING AND DEVELOPING A HIGH PERFORMANCE TEAM MOVING TOWARDS A DIGITIZED BUSINESS ACCELERATING SUSTAINABILITY AND TRANSFORMATION PROGRAMMES REDUCING ENVIRONMENTAL IMPACT
ANNEXURE: MAJOR PROJECTS 29
AIRPORTS COMPANY SOUTH AFRICA 30 A. ORTIA TERMINAL A REFURBISHMENT ADDITIONAL BAGGAGE CAROUSEL IN TERMINAL A BUSSING GATES RAS
AIRPORTS COMPANY SOUTH AFRICA 31 B. CTIA CTIA RUNWAY CTIA APRONS New Realigned Runway Existing Runway DOMESTIC ARRIVALS TERMINAL 2 New Domestic Arrivals Terminal 2
AIRPORTS COMPANY SOUTH AFRICA 32 C. KSIA BRAVO TAXIWAY EXTENSION
AIRPORTS COMPANY SOUTH AFRICA 33 DISCLAIMER The information contained in this presentation is confidential, and is intended solely for this presentation. This presentation may contain information proprietary to the Airports Company South Africa SOC Limited ( the Company ), and may not be reproduced or disseminated in whole or in part without the Company's written consent. The Company is not acting as your adviser in any transaction that may be proposed herein, and this presentation does not constitute a recommendation, guidance or proposal to enter into any transaction. Any decision to enter into a transaction should be made on the basis of information contained within an offering circular, programme memorandum or prospectus published in relation to such an offering. The Company does not guarantee or otherwise assure the expected results of any transaction as envisaged in this presentation. You shall not be entitled to place any reliance on the information contained in this presentation for the purposes of entering into any proposed transaction or otherwise.