2017 Annual Report
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2017 ANNUAL REPORT ASX-listed Sydney Airport comprises Sydney Airport Limited and Sydney Airport Trust 1 Contents Performance 1 highlights 2017 highlights 2 Our network 4 Investment program highlights 6 Chairman’s message 8 CEO’s message 9 Our leadership team 11 Operating and 2 financial review Our strategy and values 12 Our priorities 14 Financial performance 16 Aeronautical Services 18 Retail 24 Property and Car Rental 28 Landside Operations and Transport 32 Operating expenses 36 Cash flow 37 Capital expenditure 38 Capital management and distribution 40 Sustainability 3 summary Sustainability summary 42 Directors’ 4 report SAL Directors’ report 54 SAL Remuneration report 59 SAT1 Directors’ report 72 Financial 5 report Auditor’s signed reports 75 Financial report 84 Directors’ statements 121 Other 6 information Security holder information 123 Special notice and disclaimer 124 Corporate directory 125 ASX-Iisted Sydney Airport (the Group) is comprised This is an interactive PDF designed of Sydney Airport Limited (ABN 18 165 056 360) to make it easy to navigate. The (SAL) and Sydney Airport Trust 1 (ARSN 099 597 921) best way to view this report is with (SAT1). The Trust Company (Sydney Airport) Limited Adobe Reader. Click on the links on (ABN 83 115 967 087) (AFSL 301162) (TTCSAL) is the responsible entity of SAT1. This report is not an the contents page or use the home offer or invitation for subscription or purchase of or button in the footer to navigate a recommendation of securities. It does not take into the report, and use the underlined account the investment objectives, financial situation text links throughout the report to and particular needs of the investor. Before making an investment in Sydney Airport, the investor or view related content online. prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. Contents Performance 1 highlights 2017 highlights 2 Our network 4 Investment program highlights 6 Chairman’s message 8 CEO’s message 9 Our leadership team 11 Operating and 2 financial review Our strategy and values 12 Our priorities 14 Financial performance 16 Aeronautical Services 18 Retail 24 Property and Car Rental 28 Landside Operations and Transport 32 Operating expenses 36 Cash flow 37 Capital expenditure 38 Capital management and distribution 40 Sustainability 3 summary Sustainability summary 42 Our vision is to deliver a world‑class airport experience that fosters the growth of aviation for the benefit of Sydney, Directors’ NSW and Australia. 4 report As the gateway to Australia, Sydney Airport connects people, places SAL Directors’ report 54 and communities every day. SAL Remuneration report 59 SAT1 Directors’ report 72 Our focus is on continuing to strengthen these connections, building partnerships, focusing on sustainability and investing in initiatives that contribute to the experience our customers have as they move through the airport, as well as the Financial 30,900 people who form part of the broader airport community every day. 5 report We are proud to be a leader in innovation, embracing technologies that improve Auditor’s signed reports 75 the airport experience for our airline and passenger customers. Financial report 84 Directors’ statements 121 We remain focused on initiatives that make it easy for our customers to do business and get where they’re going by connecting people with the information they need, when they need it. Other information We recognise the role we play in the economic and social contribution to our 6 communities and remain focused on supporting the continued growth of the Security holder information 123 economy in Sydney and NSW and across Australia, delivering an airport that all Special notice and disclaimer 124 of Sydney can be proud of. Corporate directory 125 We are committed to the successful operation of Sydney ASX-Iisted Sydney Airport (the Group) is comprised Airport as a dynamic, sustainable and diverse business of Sydney Airport Limited (ABN 18 165 056 360) (SAL) and Sydney Airport Trust 1 (ARSN 099 597 921) that benefits our customers, investors, community and our (SAT1). The Trust Company (Sydney Airport) Limited (ABN 83 115 967 087) (AFSL 301162) (TTCSAL) is broader stakeholders now and for the long term. the responsible entity of SAT1. This report is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in Sydney Airport, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. SYDNEY AIRPORT | 2017 Annual Report 1 2017 highlights Financial highlights TOTAL DISTRIBUTION CAPEX INVESTMENT Investment since 2002 34.5¢ $4.3b 11.3% from 2016 in capacity, services and facilities NET OPERATING RECEIPTS CASH FLOW COVER RATIO 1 $787.3m 3.0x 16.6% from 2016 0.3x from 2016 Sustainability leadership DIVERSITY CARBON SAFETY INTENSITY CO2 PERFORMANCE PER PASSENGER 37.9 % Lost time incidents 3 female employees % 5 27.2 3 in 2016 38.9% female managers reduction since 2010 Lost time injury frequency rate 4 VALUING OUR AVIATION PEOPLE SAFETY HOURS 2 5.0 3.3 in 2016 87.5% 8,255 Passenger incident rate 5 employees enjoy working 0.97 at Sydney Airport 1.12 in 2016 1 The cash flow cover ratio is calculated using defined terms in the finance documents, summarised by cash flow divided by senior debt interest expense for a rolling 12 month period. 2 Annual hours spent by the ramp safety team carrying out engagement and enforcement activities. 3 The number of work-related injuries that result in at least one full day or shift being lost after the day in which the injury or illness occurred. 4 Lost time injuries per one million hours worked, incurred by employees. 5 Number of first aid and medical treatment injuries per 100,000 passengers. Excludes medical conditions and in-flight medical incidents. 2 1 2017 highlights highlights Performance Financial highlights 2 financial review Operating and TOTAL DISTRIBUTION CAPEX INVESTMENT TOTAL REVENUE REVENUE CONTRIBUTION Investment since 2002 BY BUSINESS UNIT Aeronautical Services 51% Retail 23% $1,483.3m Property and Car Rental 15% 34.5¢ $4.3b Parking and Ground Transport 8.7% from 2016 11% 11.3% from 2016 in capacity, services and facilities 3 summary Sustainability NET OPERATING RECEIPTS CASH FLOW COVER RATIO 1 EARNINGS BEFORE INTEREST, EBITDA TREND ($m) TAX, DEPRECIATION AND AMORTISATION (EBITDA) 2017 1,196 2016 1,086 $ m x $1,196.4m 2015 1,004 787.3 3.0 2014 948 16.6% from 2016 0.3x from 2016 10.2% from 2016 2013 894 4 report Directors’ Sustainability leadership 5 report Financial DIVERSITY CARBON SAFETY CUSTOMER SATISFACTION SCORE INTENSITY CO2 PERFORMANCE PER PASSENGER INTERNATIONAL DOMESTIC % Lost time incidents 3 OVERALL SATISFACTION OVERALL SATISFACTION 37.9 in 2016 in 2016 female employees % 5 4.01/5 3.89/5 3.95/5 3.91/5 in 2016 Ambience Cleanliness Wayfinding Ambience Cleanliness Wayfinding 6 27.2 3 information Other 38.9% female managers reduction since 2010 4.17/5 4.24/5 4.17/5 4.11/5 4.14/5 4.09/5 Lost time injury frequency rate 4 VALUING OUR AVIATION COMMUNITY COMMUNITY INVESTMENT GROWTH ($m) PEOPLE SAFETY HOURS 2 5.0 INVESTMENT 3.3 in 2016 2017 4.9 Passenger incident rate 5 $ m 2016 3.3 87.5% 8,255 4.9 2015 2.6 employees enjoy working 0.97 2014 1.5 at Sydney Airport 1.12 in 2016 48% from 2016 1 The cash flow cover ratio is calculated using defined terms in the finance documents, summarised by cash flow divided by senior debt interest expense for a rolling 12 month period. 2 Annual hours spent by the ramp safety team carrying out engagement and enforcement activities. 3 The number of work-related injuries that result in at least one full day or shift being lost after the day in which the injury or illness occurred. 4 Lost time injuries per one million hours worked, incurred by employees. 5 Number of first aid and medical treatment injuries per 100,000 passengers. Excludes medical conditions and in-flight medical incidents. 2 SYDNEY AIRPORT | 2017 Annual Report 3 Our network Passenger movements INTERNATIONAL TOTAL PASSENGERS 37% 7.2% from 2016 DOMESTIC AND 43.3m REGIONAL % % from 2016 63 3.6 1.6% from 2016 Aircraft movements INTERNATIONAL DOMESTIC FREIGHTERS TOTAL AIRCRAFT AIRLINES & REGIONAL MOVEMENTS AIRLINES 348,522 43 7 10 2017 348,522 AIRCRAFT 2016 346,437 MOVEMENTS 2015 335,001 2014 327,190 International 2013 326,228 73,646 Domestic 180,743 Regional 59,468 General aviation 26,096 0.6% from 2016 Freight 8,569 4 1 Our network highlights Performance Passenger Passengers 2 movements by geography 1 financial review Operating and INTERNATIONAL TOTAL 3 PASSENGERS 37% summary Sustainability 7.2% from 2016 DOMESTIC AND 43.3m REGIONAL % 3.6% from 2016 63 3 4 4 1.6% from 2016 5 report Directors’ 1 5 Aircraft report Financial movements 2 INTERNATIONAL DOMESTIC FREIGHTERS TOTAL AIRCRAFT AIRLINES & REGIONAL MOVEMENTS AIRLINES 6 43 7 10 information Other 348,522 1 2 3 4 5 ASIA NEW ZEALAND, THE GREATER EUROPE AND 2017 348,522 (EXCLUDING PACIFIC AND AMERICAS CHINA MIDDLE EAST AIRCRAFT GREATER OTHER 2016 346,437 MOVEMENTS CHINA) 2015 335,001 2014 327,190 International 73,646 2013 326,228 5.1m 3.4m 2.5m 2.9m 2.0m Domestic 180,743 passengers passengers passengers passengers passengers Regional 59,468 General aviation 26,096 0.6% from 2016 Freight 8,569 6.6% 2.8% 2.0% 16.7% 10.9% from 2016 from 2016 from 2016 from 2016 from 2016 1 Excludes Domestic-On-Carriage.