Schiphol Group Annual Report 2008 Schiphol Group Schiphol Group Annual Report 2008 Creating AirportCities Schiphol Group Annual Report 2008 Contents Facts & figures 4 Important Events in 2008 6 Schiphol Group at a glance 8 Foreword 10 Report of the Supervisory Board 13 Shareholder information 18 Objectives and Strategy 21 Report of the Management Board 25 Turkish Airlines Accident - Financial performance 27 On 25 February 2009, a tragic accident took place - Aviation business area 33 near Amsterdam Airport Schiphol during the attempted landing of Turkish Airlines flight TK 1951, - Consumers business area 47 resulting in nine deaths and over eighty injuries, many of them serious. The aircraft crashed several - Real Estate business area 55 hundred metres before reaching the runway and broke into three pieces. The relevant agencies are - Alliances & Participations business area 63 currently conducting an investigation into the cause of this crash. - Business risks 73 We wish to express our deepest condolences to the - Human Resource Management 80 victims, their families and friends. - Prospects 83 In addition, we would like to express our appreciation for the efforts of all those who were involved in the Corporate Governance 84 relief operation. Remuneration Report 87 We understand that the accident has raised safety concerns with local residents and will continue the Events after balance sheet date 91 dialogue with local parties to resolve them. The Board & Management 92 The Management Board Financial Statements 98 Other information 210 Appendices 214 Glossary 219 Maps 222 Financial figures Traffic Volume Amsterdam Airport Schiphol, Rotterdam Airport & Eindhoven Airport combined Revenue EUR million Earnings per share in EUR Passengers Cargo 2008 1,154 2008 1,083 x 1,000 tonnes Air transport movements 2007 1,146 2007 1,844 2008 50,074 2008 1,567,727 2008 458,050 2006 1,273 + 1,804 2007 50,432 2007 1,610,282 2007 465,686 2005 1,126 2006 48,287 2006 1,526,516 2006 450,166 2004 939 2005 46,152 2005 1,449,872 2005 430,566 Opening balance sheet for tax purposes 2004 44,370 2004 1,421,066 2004 431,456 EBITDA EUR million Dividend per share in EUR 2008 466 2008 proposal 371 2007 594 2007 543 Business Area information 2006 462 2005 323 2004 271 Revenue Total investments Operating result Operating Result 4% EUR million Investments in fixed assets and 7% 5% cash flow from operating activities 2008 294 11% EUR million 2007 420 17% 350 32% 2008 421 27% 2007 375 313 Aviation 1,154m 948350m mln. 294m 260 Consumers 948 mln. 2006 362 Real Estate Alliances & 26% RONA after tax 2005 268 Participations 307 65% 62% 2008 5.6% 6% 2004 293 2007 9.2% 327 Investments 47% Cash flow Aviation Real Estate Key figures* RONA after tax RONA after tax 2008 2.0% 2008 4.9% 2007 3.9% 2007 10.0% EUR million unless stated otherwise 2008 2007 Results Consumers Alliances & Participations RONA after tax RONA after tax Revenue 1,154 1,146 0.7% 2008 41.6% 2008 4.1% Fair value gains on investment property 19 112 - 82.9% 2007 45.9% 2007 9.8% Operating expenses 881 841 4.8% Operating result 294 420 - 29.9% Result before tax 251 395 - 36.6% Net result excluding fair value gains on investment property 173 233 - 25.8% Net result (attributable to shareholders) 187 316 - 40.8% Schiphol Group locations Depreciation, amortisation and impairment 172 175 - 1.4% Cash flow from operating activities 421 313 34.2% Balance Sheet Total assets 5,409 4,287 26.2% 1 Shareholders’ equity 2,887 2,957 - 2.4% 4 Average non-current assets (excl. deferred tax asset) 4,142 3,554 16.5% 1 2 4 6 2 5 4 Ratios 2 3 3 Return on equity 6.4% 11.1% 3 Leverage 38.6% 23.5% 1 FFO / total debt 19.3% 34.3% FFO interest coverage ratio 6.5x 7.7x Personnel 1 Amsterdam Airport Schiphol 1 Retail Joint Venture - Arlanda Stockholm 1 Shareholder - Brisbane Airport Average effective workforce in full-time equivalents 2,506 2,459 1.9% 2 Rotterdam Airport 2 Shareholder - Vienna International Airport 2 Shareholder - JFK International Terminal 4 3 Eindhoven Airport 3 Real Estate - Avioport Milan Malpensa 3 Joint Venture - Angkasa Pura Schiphol Jakarta Indonesia 4 Airport Lelystad 3 Real Estate - Villa Carmen Milan Malpensa 3 “Saphire” programme, Indonesia * Refer to glossary for definitions of the ratios and abbreviations. 4 Shareholder - Aéroports de Paris 4 Real Estate - Tradeport Hong Kong 5 Management contract - Aruba Airport 6 Management contract - Guangzhou Baiyun International Airport 4 Schiphol Group Annual Report 2008 5 Important Events in 2008 Signing of the cooperation agreement between Aéroports de Paris and Schiphol Group by former President & CEO Gerlach Cerfontaine and the President & CEO of AdP, Pierre Graff (right) Important Events in 2008 Alliance with Aéroports de Paris Less growth due to introduction of On 1 December, we entered into a collaboration Air Passenger Tax with Aéroports de Paris S.A. (AdP) in order to create On 1 July 2008 the government introduced a tax on a leading global airport alliance. To reinforce our all passengers departing from Dutch airports. The mutual commitment to the alliance, AdP and Schiphol amount was set at EUR 11.25 for flights within the group entered into an 8% cross-shareholding agree- EU and various Mediterranean countries, and EUR ment. This alliance is expected to significantly benefit 45.00 for other destinations. The tax immediately had the core activities of both companies, as well as our a negative effect on the growth of air traffic from competitive position relative to other airports in Amsterdam Airport Schiphol, as many passengers Europe and the Middle East. began to use airports in Germany and Belgium. This negative trend was further reinforced in subsequent months as a result of the global financial and economic Alders Platform recommendation regarding crisis. In October, Prime Minister Balkenende provided growth in the period until 2020 assurances that the introduction of a European On 1 October, the Alders Platform made a recommen- Emissions Trading Scheme for the aviation sector dation to the government regarding the controlled, should not be allowed to result in an accumulation selective growth of Amsterdam Airport Schiphol until of costs which would put Amsterdam Airport Schiphol More stringent access control 2020. This integrated recommendation, set out in at a competitive disadvantage. 1 July saw the introduction of additional European three voluntary agreements, is based on the premise security measures at Amsterdam Airport Schiphol. that Amsterdam Airport Schiphol may expand to These measures are intended to ensure that passen- 580,000 air transport movements in 2020, of which Payment of super dividend gers cannot come into contact with personnel or a total of 70,000 non-mainport-specific flights will be On 17 April, the shareholders of Schiphol Group goods that have not been screened, once they have accommodated at regional airports. An experiment agreed to our proposal regarding the payment of passed through the security check. To this end, special will also be conducted to assess a new noise measure- a super dividend of EUR 500 million in 2008 and – checkpoints have been created at various locations in ment and enforcement system. The government subject to certain strict conditions – the payment of order to screen all persons and vehicles entering the approved the recommendation on 10 October and a second super dividend of up to EUR 500 million in apron area. will include it in the Aviation Policy Document to 2009. In late September EUR 500 million was paid out. be issued in early 2009. Further elaboration of climate plan Successful bond issue In an effort to further elaborate the 2007 Climate Government adopts plans to earmark area Despite the major problems affecting the financial Plan for Amsterdam Airport Schiphol, we formulated for parallel Runway 06-24 markets, we succeeded in November in placing the Sustainable Mobility Perspective and the Energy In order to keep all options open with regard to the a Eurobond of EUR 700 million maturing on Blueprint in 2008. These documents provide a more future realisation of a parallel Runway 06-24 at 23 January 2014 under our existing Euro Medium specific rundown of our plans to realise the Climate Amsterdam Airport Schiphol, the government Term Note (EMTN) programme. The proceeds will help Plan objectives. announced in April that it will apply the Spatial meet part of our longer-term financial requirements Planning Act to prevent any undesirable spatial and was also used to finance the first tranche of the developments within the area in question. This meas- super dividend payment and part of the participation 25th Business Traveller Award ure proved necessary when provincial authorities in in Aéroports de Paris. In September, British business travellers voted North Holland refused to renew the spatial planning In December we re-opened the 2014 Eurobond and Amsterdam Schiphol Airport winner of the Business earmark for a parallel Runway 06-24, which expired issued EUR 100 million in additional bonds. Traveller Award in the ‘Best Airport in Europe’ cate- on 1 April. gory for the 25th time since 1980. Other nominees in this category were the airports in Munich, Zurich and Copenhagen. 6 Schiphol Group Annual Report 2008 7 Schiphol Group at a glance Schiphol Group at a glance Mission Profile Activities AirportCity. Amsterdam Airport made up of airport charges, retail We aim to rank among the world’s Schiphol Group is an airport Schiphol Group is organised and The operation of airports and Schiphol is an important contribu- sales, concession fees, rents, leases leading airport companies.