Sydney Airport

Investment Highlights Disclaimer

General Securities Warning

This presentation has been prepared by Airport Holdings Limited (ACN 075 295 760 / AFSL 236875).

This presentation 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 Trust 1 (ARSN 099 597 921) or Sydney Airport Trust 2 (ARSN 099 597 896) (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.

Information, including forecast financial information, in this presentation should not be considered as a recommendation in relation to holding, purchasing or selling shares, securities or other instruments in Sydney Airport. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts by their very nature, are subject to uncertainty and contingencies many of which are outside the control of Sydney Airport. Past performance is not a reliable indication of future performance.

2 Sydney Airport

ASX listed Limited (“SAHL”) holds 85% of the Southern Cross Airports Corporation Holdings Group (“Sydney Airport”), the operator of Sydney Kingsford Smith Airport Benefits of single airport exposure: Developments in the last six months: • SAHL’s sole purpose is the ownership and operation • Holdover agreement on aeronautical charges for of Sydney Airport airlines representing over 90% of passengers (“pax”) for the next 3 years – Complete clarity of Sydney Airport’s earnings profile and growth potential • Announcement of New Vision for Sydney Airport – improving connectivity, capacity, ground access and – Significant opex savings congestion – 2012 alignment of net operating receipts and distributions – Including MoUs agreed with and Virgin

– Enhanced exposure to resilient and lower risk • Partnership with Destination NSW, the leading business government agency for tourism • Entry of AirAsia X and Scoot • Active engagement with State Government on ground transport and Federal Government on air rights liberalisation

3 Source: Sydney Airport Investment merits

Sydney Airport is one of the world’s most attractive infrastructure investment propositions

99 year leasehold • Lease until 2097

• Core catchment area: 7.3m people in NSW and 4.5m people in Sydney Catchment area • Major international airport in NSW

Strong passenger • Both a business and tourism hub, in a growing Australian economy growth profile • Strong Asian connections – growth of middle class in China, India, Malaysia & Indonesia

Largest Australian • Disproportionate contribution of international passengers International airport • Account for approximately 75% of EBITDA but only 12% of total slots and 33% of pax

• Direct agreements with airlines include contractually agreed charges increases on new Light handed regulatory aeronautical assets – the Necessary New Investment model (“NNI Model”) framework • Dual till principle enshrined in regulatory framework • Real operating costs1 are largely fixed, and have a low traffic elasticity Fixed cost model • Operating costs mainly relate to management and administration functions • Generally, CPI escalation in retail, periodic car parking price reviews and CPI or market rent Commercial reviews for property improvements • Development of additional parking bays to meet demand • Expiry of Terminal 3 lease in 2019 and Jet Base lease in 2020 Potential upsides • MoUs signed for the New Vision proposal of integrated alliance networks

1 Excludes security costs which are passed through to airport users 4 Source: Sydney Airport Location

Sydney Airport provides airport services to Sydney and NSW, and air transport is the only practical means of travel between the major centres of • Sydney Airport is only 8km south of Sydney’s central business district

– Tightly integrated into Sydney’s transport network • Air transport in Australia enjoys a modal advantage

– The largest major markets of Melbourne and Brisbane are amongst the closest, both approximately 730km away or a 10 hour drive • Sydney has a unique position within Australia

– Major financial and business centre: exposure to Distance Pop. Sydney Pax1 Rank2 - financial, general industrial and service and resource Market sectors (km) (m) (m) Domestic Melbourne 731 4.1 7.9 1 – Large tourism market: 2.6m international and 7.6m domestic visitors per year Brisbane 726 2.0 4.4 2 Perth 3,320 1.7 1.7 5

Adelaide 1,182 1.2 1.8 4

Gold Coast 642 0.6 2.3 3

1 Passengers carried to/from Sydney for the year ending June 2011 2 Rank is relative position of route in Sydney Airport’s domestic network.

5 Source: Distance based on great circle; Australian Bureau of Statistics; BITRE; Countrylink; Sydney Airport Traffic: Overview

Sydney Airport has experienced strong and robust traffic growth since 1991

• Total traffic has grown at 4.7% pa since 1991, in Sydney Total Traffic vs GDP 1991-2011 excess of Australian GDP growth of 3.4% pa 300 Sydney Total Traffic (LHS) GDP Index (Aus) – Due to increased propensity to fly as population 250 becomes wealthier and reductions in real air fares OECD GDP Index (RHS) 200 • This is despite some loss of market share in international traffic, in part due to expansion of direct 150 markets to larger Australian cities 100 • Sydney with strong business, financial and tourism markets remains well positioned for international 50 growth ‐ 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

6 Source: BITRE (Sydney Airport traffic to 2001); Sydney Airport (Sydney Airport traffic from 2002), Australian Bureau of Statistics Traffic: Growth

Sydney Airport expects continued benefits from economic growth in Asia – 52% of the world’s population now in reach of Sydney Airport • More than half of the global population lives within range of an A330/B777 • China and India populations are individually larger than EU and USA combined • Additional opportunities from longer range of Boeing 787, as well as opening up of routes not able to viably support a B747 or A380 • Sydney Airport is well positioned for growth with China in particular:

– 62% Australian market share to China

– Market growth of 37% pa from 2009 A330/B777 Range – 11 hours – Home to the largest Chinese diaspora in Australia, as 52% of world population within A330/B777 Range well as a tourist destination Market Population (m) • Similarly large Indian diaspora – though there are no China 1,371 direct services to India at present China and India India 1,210 3x larger than EU • Additional growth opportunities in other Asian EU 502 and US destination markets e.g. Thailand, Malaysia and USA 313 Indonesia

7 Source: Sydney Airport A powerful business model

Sydney Airport represents a compelling value proposition

Delivers growth Provides downside Business model Potential upsides... through... protection from...

• Aero charges, largely on a • Passenger growth • Periodic negotiation of • Terminal 3 and Jet Base per passenger basis, with aeronautical charges based lease expiry • Increased aeronautical increases primarily through on a return on charges, from agreed • New Vision development returns on aeronautical aeronautical capital aeronautical capex investments (NNI Model) • Contracted NNI Model for • Increased commercial • Commercial performance new aero capex with revenues generally at through capturing retailing, aeronautical WACC inflation or inflation plus car parking and property growth • Retail contracts typically rents from passengers and including minimum users of the airport • Less a broadly fixed cost guarantees base based on an • A low fixed cost base outsourced model • Property revenues are not based on an outsourced passenger related model, driving EBITDA •With sustainable capex margins above 80% improving aeronautical or • Expansionary capex is commercial returns, mainly flexible and can be delayed • Capex, recovered through debt funded or brought forward in line NNI Model or commercial with changes in demand revenue growth • Leveraged to equity holders through an • Debt funding of capex to appropriately geared maintain efficient capital capital structure structure 8 Business model

Sydney Airport is made up of four revenue generating businesses, underpinned by a fixed cost model, and the ability to debt fund capex

Aero (incl. security) Retail Property Car parking

2011 $479m $223m $156m $110m Revenue

• Majority of non-security • Contract/ lease costs – labour and management and direct maintenance • Contract/ lease • Contract management Costs management costs and some direct costs • Security costs passed • Some cost pass through through

• Rent generally agreed for 5-7 years based on the maximum of • Short and long term and • Fully agreed with • Predominantly property valet parking linked to airlines1 – % of turnover, with leases YoY changes pax pax growth Key dynamics • Escalation contingent • CPI link and market driven, or • Optimisation of product upon aero investment reviews – Minimum guarantees and price mix with new (NNI Model) • Also includes car rental generally capacity and technology underpinned by CPI indexation

1 Excluding regionals 9 Source: Sydney Airport Growth drivers in each business

Growth is driven by underlying passenger growth, investment, CPI links and management initiatives to improve the capacity of non-aeronautical businesses

Drivers Aero (incl. security) Retail Property Car parking

International •Yes •Yes • Minimal linkage •Yes pax growth • Key driver of revenue • Key driver of revenue

Domestic pax •Yes •Yes •Yes • Minimal linkage growth • Mainly Terminal 2 • Terminal 2 only • All terminals

• Embedded in WACC on • CPI links and market • Generally CPI links • Periodic price reviews Indexation NNI in existing contracts reviews

• Additional NNI capex, • Incremental retail space • Additional space Initiatives as agreed with airlines in T1 and T2 • 27% expansion in • Market rate reviews parking bays in 2012 • Growth in LCCs • Contract renewals

• Expiry of Jet base lease Future potential • Commercial re-set in • Terminal 3 lease expiry • Product optimisation / in 2020 and Terminal 3 mid-2015 in 2019 off peak utilisation growth factors in 2019

10 Source: Sydney Airport Downside protection

Downside protection through aeronautical contracts, CPI links, minimum guarantees in retail, and non-passenger related property revenues

Aero (incl. security) Retail Property Car parking

Contract • Agreements in place • Varying roll off mainly • Wide range of leases • None terms until June 2015 between 2015 - 2018

• Underpinned by • NNI return on new aero minimum guarantees • CPI links and/or market capex – CPI embedded • Periodic price reviews Price changes which generally include reviews in WACC CPI escalation

Short term increment • NNI return on new aero •CPI + • CPI and/or market • Periodic price reviews with no pax capex new offerings reviews growth

11 Source: Sydney Airport Operational returns

Success of business model is demonstrated by underlying operational performance over the last 5 and 10 years

2003 – 2011 Performance 2007 – 2011 Performance Pax growth 4.8% pa 2.8% pa EBITDA growth 9.0% pa 6.8% pa OpFCF1 growth 12.2% pa 12.3% pa Capex almost doubled per annum from c. Broadly consistent capex per annum in Comment A$115m2 to c. A$210m3 2007 and 2011

10 yr pax, EBITDA and OpFCF

1,000 40.0

800 30.0 600 (m)

m 20.0 pa

$ 400 Pax 10.0 200

‐ ‐ 2003 2004 2005 2006 2007 2008 2009 2010 2011

EBITDA OpFCF Pax

1 OpFCF defined as EBITDA less capex. Accounting treatment of capex changed in 2007 and capex data for 2003-2006 is calendarised so capex pre-2007 is not directly comparable with data from 2007 onwards, 2 Average capex 2003-2005, 3 Average capex 2009-2011 including T1 redevelopment 12 Source: Sydney Airport Shareholder returns

Sydney Airport has grown its cash available after debt service at 11% pa over the last 5 years, based on a sustainable cash flow model • Cash flow available after debt service approximates • This model has enabled traffic growth of c. 3% pa to the sustainable distributions generated by Sydney be translated into cash flow available after debt Airport, based on service growth of 11% pa over the last 5 years – EBITDA • The model is sustainable going forward given the debt funding for capex in place for the next 3 years – Plus net interest

– Less maintenance capex

– Plus change in reserves 5 yr growth in traffic, EBITDA, and cash flow after debt Sydney Airport EBITDA vs equity distributions service 12% Sydney Airport ‘07 ‘08 ‘09 ‘10 ‘11 CAGR 100% 10% EBITDA 607 649 689 773 790 6.8% 8% Cash flow after debt 280 259 340 435 422 10.8% service 6% 11% Other movements (including timing 573 207 (39) (36) (38) 4% 7% differences, specials) CAGR (CY2007-11) 2% Distributions paid 853 466 301 399 384 3%

-% Traffic EBITDA Cash Avail After Debt Service1 1 Includes impact of degearing 13 Source: Sydney Airport Capital management

The capital structure is appropriate for the business characteristics, and provides investors with a stable funding source for capex and an appropriate gearing of free cash flow

• Net Debt to EBITDA has declined over time to 6.6x4 Sydney Airport Net Debt: EBITDA evolution since 2003

at 31 December 2011, de-risking the investment 12.0x

• Credit metrics comfortable with cash flow coverage 10.0x of over 2x interest 8.0x • Credit rating of BBB / Baa2 / BBB maintained since privatisation through GFC due to degearing, strong 6.0x Debt/EBITDA

growth outlook and defensive nature of revenues Net 4.0x

• Airport tapped multiple major financial markets over 2.0x the last 10 years: ‐ x FY03 ‐ June YE FY07 ‐ Dec YE FY11 ‐ Dec YE – Domestic and international bank markets

– US, Canadian and Australian bond markets CY2009 CY2010 CY2011 Cashflow for Debt Service ($m) 710 788 806 • Capex requirements comfortably met by increases in 1 debt capacity Gearing Ratio 41% 39% 43% Cashflow Cover Ratio2 2.1x 2.4x 2.2x – Strong credit understanding of link between capex Net Debt / EBITDA3 8.0x 7.3x 6.6x4 and revenues Drawn Debt ($m) 5,855 5,976 6,1754 – Looking forward, the 3 year capex profile is expected to add less than 5% pa to existing debt quantum – equivalent to CPI changes over this period

1 Ratio calculated using defined terms contained in our debt documents, which can be summarised as net senior finance debt divided by enterprise value, as adopted by the Board on the basis of a valuation range provided by the independent valuer 2 Ratio calculated using defined terms contained in our debt documents, which can be summarized as cash flow divided by senior debt interest expense for a rolling 12 month period 3 Ratio calculated as (gross debt less cash) / EBITDA 14 4 Excludes $650m SKIES that were redeemed on 3 January 2012 New Vision: Background

Sydney Airport’s New Vision has been designed to improve connectivity, capacity and ground access • On 5 December 2011, Sydney Airport announced a new concept for how the airport would operate by 2019. Under the New Vision, Sydney Airport would develop two precincts integrating international, domestic & regional services • Sydney Airport has the support of its major airline partners:

– International airlines representing over 90% of passengers have signed extended pricing agreements to increase focus on developing the New Vision

– Qantas Group and Virgin Australia have both signed Memoranda of Understanding which establish principles for a collaborative approach to the development of the New Vision

Key Benefits  Improved transfer product and passenger experience Improved Connectivity  Increased aircraft utilisation  Reduced airline costs  More effective use of land and airside infrastructure Increased Capacity  Increased gate utilisation through co-location and use of swing gates  Quicker turnaround of aircraft Reduced Congestion  Reduced runway crossings  Reduced peak gate flows by 10-20% across each precinct  Reduced passenger embarking/disembarking time during busy hours Better Ground Access  Reduced kerbside passengers and vehicles during busy hours

15 Source: Sydney Airport New Vision: Clear benefits

16 Source: Sydney Airport Summary

• Powerful business model • Growth from the Australian economy • Substantial CPI protection • Additional short term and medium term downside protections • Appropriate financing of capex secured to 2014 • Sustainable distribution model and history of delivering cash flow growth

17 Thank you for your attention