Annual Report 2007 Fraport Worldwide million passengers used the Group airports in 2007 million euros in revenue represent a new record for the Fraport Group million euros were earned (EBITDA) in 2007 employees on four continents ensured smooth processes and optimal service in 2007 Contents 2 Letter of the Chairman of the Executive Board 4 The Fraport Executive Board 6 Fraport Worldwide 18 Highlights of the Business Year 2007 Group management report 21 Group strategy 22 Vision and goals of the Fraport Group 24 Value management 25 Organization 27 Business development 2007 30 Revenue and earnings development 35 Asset and fi nancial situation 38 The Fraport share and Investor Relations 41 Employees 44 Remuneration of the Executive Board and the Supervisory Board 44 Sustainability report 45 Dependency report 46 Risks and opportunities 52 Signifi cant events after the balance sheet date 52 Outlook Consolidated fi nancial statements 56 Consolidated income statement of Fraport AG 57 Consolidated balance sheet 58 Consolidated cash fl ow statement 59 Changes in consolidated shareholders’ equity 60 Consolidated statement of movements in non-current assets 62 Segment reporting 64 Group notes Miscellaneous notes 118 Auditors’ report 119 Report of the Supervisory Board 122 Corporate governance report 127 Economic Advisory Board 128 Seven-year overview 130 Glossary 132 Financial calendar 133 Imprint Key Group fi gures of the Fraport AG Revenue and earnings* € million 2005 2006 2007 Revenue 2,089.8 2,143.9 2,329.0 Total revenue 2,141.7 2,250.3 2,425.8 EBITDA 542.5 578.4 580.5 EBIT 306.6 330.4 335.4 Result from ordinary operations 285.4 340.2 297.6 Group profi t for the year 161.5 228.9 213.7 Profi t attributable to equity holders of Fraport AG 161.2 229.3 208.7 Key profitability ratios % 2005 2006 2007 Return on revenue 13.7 15.9 12.8 EBITDA margin 26.0 27.0 24.9 EBIT margin 14.7 15.4 14.4 ROCE 13.5 13.5 11.4 ROFRA 10.8 11.8 10.9 e Key figures from the balance sheet and cash flow statement h € million 2005 2006 2007 Shareholders’ equity 2,157.9 2,346.1 2,493.3 Shareholders’ equity less minority interests and the proposed dividend 2,060.4 2,218.8 2,355.0 äc fl Equity ratio (%) 52.1 51.7 41.3 Total assets 3,951.6 4,294.5 5,704.7 Gearing (%) 9.1 9.5 23.2 nitt Capital employed 2,264.1 2,452.4 2,935.1 h Fraport assets 2,848.3 2,802.8 3,073.8 Operating cash fl ow 493.7 484.9 478.6 Sc Free cash fl ow 25.5 33.8 –248.6 Capital expenditures 682.4 591.4 1,577.3 The Fraport share € 2005 2006 2007 Number of fl oating shares on Dec. 31 91,078,430 91,368,619 91,456,593 Year-end price 44.90 54.02 53.87 Earnings per share (basic) 1.78 2.51 2.28 Dividend per share 0.90 1.15 1.15 Frankfurt Airport traffic figures 2005 2006 2007 Passengers (million) 52.2 52.8 54.2 Cargo (thousand metric tons) 1,963.1 2,127.8 2,169.0 Aircraft movements (thousand) 490.1 489.4 492.6 MTOW (Maximum take-off weights in thousand metric tons) 28,160.3 27,973.5 28,240.4 Seat load factor (%) 71.7 73.2 75.8 Employees 2005 2006 2007 Average number of employees 25,781 28,246 30,437 * Since January 1, 2006, other taxes are listed under other operating expenses. The fi gures for the previous year were adjusted for com- parison purposes Fraport investments Frankfurt Shanghai Orlando Cairo Delhi Hong Kong Dakar Lima Hanover Hahn Vienna Varna/ Burgas Antalya Expertise evolved over time Via Frankfurt to the world – professional Securing successful development In the more than 80 years of the company’s services on four continents Positive developments have been achieved history we have consistently developed Today you need a world map to illustrate the at the Group’s locations around the world: our business model. Starting as an airfi eld Fraport Group’s global presence. Fraport is Fraport AG not only operates Frankfurt Airport operator back in the 1920s, we have grown active in various aspects of airport business effi ciently and profi tably but also creates into the manager of a major international air on four continents. In addition to a control- and secures potential yields for the future by transportation hub: Today, Frankfurt Airport ling interest in the airports of Frankfurt-Hahn focusing on international growth markets. is one of the most successful and effi cient (Germany), Antalya (Turkey), Lima (Peru), This guarantees a sustainable increase in airport concepts world wide. Over several de- as well as Burgas and Varna airports on the shareholder value. Last year’s achievements cades, we have developed extensive expertise Bulgarian Black Sea coast, Fraport holds minor- continued our success story: in April, the re- in the operation of airports and the marketing ity fi nancial interests in the airports of Hanover newed concession for operating the passenger of airport space – expertise that is in great (Germany) and Delhi (India). Under manage- terminals at Antalya, in August, the acquisition demand globally. ment contracts, the company is also involved of additional shares in Lima Airport, and the at Cairo (Egypt) and Dakar (Senegal) airports. conclusion of negotiations resulting in Fraport Since the late 1990s, our competence has Fraport also offers other services and solutions taking a share in Xi’an Airport in China. The benefi ted not only our customers at Frankfurt for the airport industry: The service spectrum following pages show Fraport’s major airport but beyond – because we export our expertise ranges from airport IT optimization concepts investments around the globe. This will start worldwide. provided by our AirIT Inc. subsidiary in Or- with majority shareholdings on pages 8 to 15 lando, Florida, and analyses of the potential for and end with minority interests and manage- airports in China to ground-handling services ment services on pages 16 and 17. in Vienna (Austria). 2 Annual Report 2007 Letter of the Chairman of the Executive Board Fraport AG can again look back on a very eventful and successful business year. I can sincerely say that our organization’s international employees not only mastered their daily business in an exemplary way but again contributed to making our company increasingly competitive and better fi t for the future. The headlines we made throughout the year confi rm this. The signing in December of the zoning decision on airport expansion was the highlight of the year. Furthermore, this milestone confi rmed our endeavor to grow and fulfi ll our economic responsibility for the region. Conclusion of the basic agreement with Celanese AG/Ticona GmbH in June last year con- tributed signifi cantly to gaining zoning approval for FRA’s expansion. We achieved a new historic record at Frankfurt Airport, with 54.2 million passengers in 2007. Although passenger growth of 2.6 percent is only slightly more than half the rate of other European airports, this is excellent performance considering FRA’s capacity constraints and the even more moderate traffi c increase of 1.1 percent in the previous year. Including minority owned airports and manage- ment contracts, the airports of the Fraport Group achieved a passenger increase of 8.9 percent, percent passenger growth exceeding the level of European and worldwide passenger growth! Despite FRA’s capacity bottle- necks, revenue reached a new record high, with €2.3 billion. Increasingly stringent cost control helped improve EBITDA over the previous year to €580.5 million, irrespective of strongly rising capital expenditures and a new airport charges structure. The increase in capital spending in the year under review resulted primarily from remodeling measures in connection with the modernization of Frankfurt’s terminal facilities under the FRA North project. This project encompasses fi re safety improvements and preparations for the Airbus A380, as well as the creation of additional retail space and expansion of parking garages. These investments will result in a sustainable improvement in the value of Frankfurt Airport. In addition to the new landing runway, I wish to mention here – as buzzwords – only a few developments that are advancing our Frankfurt Airport City concept. These include: the Airrail Center and the Mönchhof and Gateway Gardens commercial parks. In addition to the positive development at Frankfurt, we also experienced – with our new airport investments – an extremely good year for our external business. Responsible for investments outside Frankfurt, our External Activities business segment had a nearly 25 percent jump in revenue to just under €540 million, thus contributing signifi cantly to the Group’s revenue growth. This growth was also clearly refl ected on the EBITDA and EBIT level. The above-average increase was primarily due to percent revenue increase in the positive development of our majority shareholdings in Bulgaria, the Lima hub in South America, external activities as well as our tourist airport in Antalya, Turkey. Secure and enhance market Let me assure you that our remarkable success is not a temporary phenomenon. Last year, we were position able to expand further our competitive position in the international market. The renewed conces- sion for terminal operations at Antalya Airport will allow us and our local partners to operate all three Letter of the Chairman of the Executive Board 3 Dr. Wilhelm Bender, Chairman of the Executive Board of Antalya’s terminals for the next 17 years.