Aéroports de Paris SA: 2018 half-year results driven by good performance of all the activities and group's international development

FINANCIAL RELEASE
30 July 2018

Aéroports de Paris SA
2018 half-year results driven by good performance of all the activities
and group's international development
2018 half-year results^[1]

• Groupe ADP traffic's^[2]: +10.9%^[3], at 130.4 million passengers
• Paris Aéroport traffic's (Paris-Charles de Gaulle and Paris-Orly): +3.0% at 49.9 million passengers in spite of the strikes (+4.6% excluding the strikes)
• Good performance of consolidated revenue (€2,099 million, up by €640 million, i.e. +43.9%), driven by all the activities and by the positive impact of the full consolidation, in Groupe ADP's financial statements, of TAV Airports results since the 2^nd half of 2017 and AIG's results since April 2018^[4]. Excluding the full consolidation of both entities' results, revenue was up by 3.0%, at €1,502 million
• Good progression of retail activities (+3.0%) in spite of a sales per passenger^[5] down by 1.3%, at €17.9
• EBITDA at €815 million, up by €205 million, i.e. +33.6%, thanks to the positive impact of the full consolidation of TAV Airports and AIG, the dynamism of traffic and the control over expenses. Excluding the full consolidation of TAV Airports and AIG, EBITDA is down by 6.3 % compared to 2017 due to the capital gain linked to the cargo hub buildings accounted for during the 1^st half of 2017. Excluding the full consolidation of TAV Airports and AIG's results and the capital gain linked to the cargo hub buildings, EBITDA was up by 4.5%, as of 30 June 2018
• Operating income from ordinary activities (including operating activities of associates) at €469 million, up by €127 million, i.e. +37.4%, due to the full consolidation of TAV Airports and the the re-evaluation of the already-owned  9.5%-stake in AIG
• Net result attributable to the Group (NRAG) at €205 million, up by €43 million

Revision of Groupe ADP 2018 forecasts published on 22 February 2018

• Traffic growth assumption for Paris Aéroport between +2.5% and +3.5% in 2018 compared to 2017 - unchanged
• Traffic growth assumption for TAV Airports: revision of TAV Airports' traffic growth assumption^[6]: growth above 30% in 2018 compared to 2017 (vs. between +10% and +12% previously)
• Revision of consolidated EBITDA^[7] forecast: increase between +17% and +22% in 2018 (vs. between +10% and +15%) compared to 2017, with the full-year effect of the full consolidation of TAV Airports and the effect of the full consolidation of AIG since April 2018
  • 2018 consolidated EBITDA excluding the full consolidation of TAV Airports and AIG: increase between +2.5% and +3.5% in 2018 compared to 2017 - unchanged
  • Revision of TAV Airports EBITDA^7/[8] forecast : increase between +14% and +16% in 2018 compared to 2017 (vs. between +5% and +7% previoulsy)

Maintained pay-out of 60% of NRAG 2018 - unchanged 

Augustin de Romanet, Chairman and CEO of Aéroports de Paris SA - Groupe ADP, stated:
"Traffic of Groupe ADP increased by 10.9% to reach 130.4 million passengers over the 1^st half of 2018. 1^st half-year results are solid for all the activities. EBITDA reached €815 million, up by 33.6 % compared to 2017. The infrastructure works, as planned by the ERA 3, are on track, in particular the commissioning, during the 2^nd quarter of 2018, of the luggage sorting system under the hall L of the terminal 2E. Abroad, a new step has been passed in April, with the take-over of Airport International Group, concessionary of Amman international airport in Jordan. Results of the firm are now fully consolidated. Over the 1^st half, TAV Airports posted very good results thanks notably to the acquisition of Antalya since May 2018 and the traffic growth of 17.7%. At last, Groupe ADP follows its long term development strategy, by preparing the future terminal T4, an infrastructure allowing to increase Paris-Charles de Gaulle's capacity by 35 to 40 million passengers by 2037. This emblematic, structuring and ambitious project for the attractiveness of Île-de-France and its territories will be built in several phases and its global cost is estimated between €7 billion and €9 billion. "

2018 half-year consolidated accounts

The application of the norm IFRS 9, relative to the financial instruments, is of +€6 million on the financial result as of 30 June 2018. The effect of the application of the norm IFRS 15, modifying the principles for revenue recognition, has no significant impact on the financial statements (impact below €1 million).

Revenue

Over the 1^st half of 2018, Groupe ADP consolidated revenue stood at €2,099 million, up by €640 million, mainly thanks to:

• The full consolidation of TAV Airports since the 2^nd half of 2017, which contributed to revenue up to €544million and the full consolidation of AIG since April 2018, which contributed to revenue up to €53 million. Excluding the full consolidation of both entities, Groupe ADP consolidated revenue stood at €1,502 million, up by 3.0%;
• The growth in airport fees in Paris Aéroport (+4.5%, at €526 million), driven by the passenger traffic dynamics (+3.0% in the Parisian airports) and the increase in tariffs since 1 April 2018 (+2.125%), in spite of the strikes;
• The increase of retail and services segment by 3.3%, to €478 million, driven notably by the performance of retail activities (+3.0%, to €225 million);
• The growth in real estate segment's revenue (+5.3%), to €137 million mainly thanks to the positive effect of the full acquisition of the "Dôme" building, in Paris-Charles de Gaulle.

Other activities segment and intersegment eliminations are impacted by the sale of a 80%-stake in Hub Safe that has led to a change in consolidation method for the firm results since the 4^th quarter of 2017^[9]. Hub Safe's results are now integrated as share in associates from non-operating activities. Over the 1^st half of 2018, the net loss in revenue, linked to the share of external revenue of Hub Safe amounted to €5 million compared to 1^st half of 2017.

Over the 1st half of 2018, intersegment eliminations^[10] amounted to €118 million, down by 24.2%, due to the change in Hub Safe's consolidation method which activities were mainly realised intragroup.

EBITDA

Group operating expenses stood at €1,299 million over the 1^st half of 2018. Excluding the full consolidation of TAV Airports and AIG, operating expenses were almost stable (+0.5%), at €946 million due to the good control over expenses made by the group. The operating expenses of the parent company, Aéroports de Paris, are almost stable at +0.1%.

The distribution of operating expenses is as follows:

• Consumables stood at €93 million. Excluding the full consolidation of TAV Airports and AIG, consumables were up by 3.2%, at €61 million, due to the increased need in winter products over the 1^st quarter of 2018;
• The cost related to external services stood at €556 million. Excluding the full consolidation of TAV Airports and AIG, these expenses increased by 13.3%, to €382 million due to the increase of use of sub-contracting, linked to the sale of a 80%-stake in Hub Safe, for an amount of €34 million;
• Employee benefit costs stood at €445 million. Excluding the full consolidation of TAV Airports and AIG, employee benefit costs were down by 9.5% and stood at €324 million, notably due to the partial sale of Hub Safe over the last quarter of 2017 for an amount of €32 million. As of 30 June 2018, the average number of employees stood at 26,367 employees^[11].

• Taxes other than income taxes stood at €179 million. Excluding the full consolidation of TAV Airports and AIG, taxes other than income taxes decreased by 3.2% mainly due to the settlement of litigations.
• Other operating expenses stood at €25 million. Excluding the full consolidation of TAV Airports and AIG, other operating expenses were down by 25.0%, at €8 million.

Other income and expenses stood at €14 million, vs. €93 million over 1^st half of 2017, i.e. a decrease of €79 million: over the 1^st half of 2017, other income and expenses included notably the capital gain linked to the cargo hub buildings for €63 million.

Over the 1^st half of 2018, consolidated EBITDA stood at €815 million. The consolidated gross margin^[12] rate was 38.8%.

Excluding the full consolidation of TAV Airports and AIG, EBITDA stood at €571, down by €39 million, i.e. 6.3%, due to the capital gain linked to cargo hub buildings^[13] for €63 million accounted for during the 1^st half of 2017. The gross margin rate was 38.0%.

At constant scope, i.e. (i) restating the capital gain linked to the cargo hub buildings out of 2017 EBITDA, and (ii) excluding the full consolidation of TAV Airports and AIG in 2018 EBITDA, 2018 first half-year EBITDA was up by 4.5% thanks to the dynamism of traffic and the control over expenses. The gross margin rate was up by 0.5pt compared to 2017.

Net result attributable to the Group

Over the 1^st half of 2018, amortisation and depreciation stood at €386 million. Excluding the full consolidation of TAV Airports and AIG, amortisation and depreciation increased slightly (+1.7%, to €234 million).

Operating income from ordinary activities (including operating activities of associates) stood at €469 million, due notably to:

• The scope effect of the full consolidation TAV Airports since the 2^nd half of 2017, for an amount of €115 million;
• The capital gain of the re-evaluation of the already-owned 9.5%-stake in AIG for an amount of €23 million;
• A provision on international stake for an amount of €14 million over the 1^st half of 2018 vs. €46 million over the 1^st half of 2017.

Operating income stood at €468 million.

The net financial result stood at -€119 million. Excluding the full consolidation of TAV Airports and AIG, financial result stood at 
-€52 million, improving by €12 million notably due to the application of the norm IFRS 9 for an amount of +€6 million and a provision on international stake for an amount of €6 million (vs. €9 million in the 1^st half of 2017). 

As of 30 June 2018, Groupe ADP net debt stood at €5,029 million, vs. €3,797 million as of 31 December 2017. Excluding the full consolidation of TAV Airports and AIG, Groupe ADP's net debt stood at €3,816 million. TAV Airports' net debt stood at €782 million. AIG's net debt stood at €431 million.

The share of profit of non-operating associates stood at €1 million.

The income tax expense stood at €132 million over the 1^st half of 2018.

Taking into account all these items, the net result attributable to the Group increased by €43 million, to €205 million.

Analysis by segment

Aviation

Over the 1^st half of 2018, aviation segment revenue was up by 3.0%, at €906 million.

Revenue from airport fees (passenger fees, landing fees and aircraft parking fees) was up by 4.5%, at €526 million over the 1^st half of 2018, benefiting from the growth in passenger traffic (+3.0%) and the increase in tariffs, in spite of the strikes. For information, tariffs (excluding PRM^[14] fees) have increased by 2.125% as of 1 April 2018.

Ancillary fees were up by 2.6%, at €119 million.

Revenue from airport safety and security services was up by 1.2%, at €244 million.

Other income, which mostly consists in re-invoicing the French Air Navigation Services Division, leasing associated with the use of terminals and other works services made for third parties, decreased by 11.4%, at €17 million.

EBITDA was up by 9.0%, at €264 million. The gross margin rate increased by 1.6 points and stood at 29.1%.

As a consequence, the operating income from ordinary activities was strongly up by 24.2%, at €124 million over the 1^st half of 2018.

Retail and services

Over the 1^st half of 2018, revenue from Retail and services up by 3.3%, at €478 million.

Revenue from retail (rents received from airside and landside shops, bars and restaurants, banking and foreign exchange activities, and car rental companies, as well as revenue from advertising) was up by 3.0% over the 1^st half of 2018, at €225 million.

• Among this item, the rents from airside shops stood at €149 million, up by 2.9%, positive traffic mix being offset by the negative impact of strong Euro and important works in terminal 2E, halls K and L leading to shops closing during the work. The sales per passenger^[15] is down by 1.3%, at €17.9;
• Rents from landside shops increased by 7.6%, at €9 million;
• Rents from bars and restaurants kept on posting a strong growth of 14.9%, at €22 million, thanks to rise in power of EPIGO and the full year impact of the opening in 2017 of new shops.

Media Aéroports de Paris saw a decrease of 6.7% of its revenue, at €24 million, due to a shift in activity from the end of 2016 to the 1^st half of 2017 and a lower attractiveness of the terminal 2E advertising areas during the works. EBITDA is down by 20.4% at €3 million and its net result is down by 32.6% and €1 million.

Revenue from car parks is up slightly (+1.0%), and stood at €87 million.

Revenue from industrial services (supply of electricity and water) was down (-1.8%), at €67 million.

Rental revenue (leasing of spaces within terminals) was quasi stable (+0.7%), at €74 million.

Other revenue saw an increase of €9 million, at €25 million, notably thanks to an increase of €6 million of the revenue linked to the re-invocing of studies and works for the project Société du Grand Paris.

EBITDA of the segment was down by 4.0%, at €243 million. The gross margin rate was down by 3.8 points, at 50.7%.

The share of profit from operating associates (Société de Distribution Aéroportuaire, RELAY@ADP and EPIGO) was null, down by €2 million, notably due to a lower performance of SDA during the 1^st half of 2018.

Operating income from ordinary activities (including operating activities of associates) decreased by 8.0 %, at €180 million.

Real Estate

Over the 1^st half of 2018, real estate revenue was up by 5.3%, at €137 million.

External revenue^[16] (€114 million) was up by 4.6 %, notably thanks to the positive effect of the full acquisition of the "Dôme" building, in Paris-Charles de Gaulle for an amount of €2 million.

EBITDA of the segment was down by 45.0%, at €67 million, due to the capital gain linked to the cargo hub buildings^[17] accounted for in "Other income and expenses" for an amount of €63 million during the 1^st half of  2017.

Excluding the profit linked to the cargo hub buildings, the EBITDA was up by 14.7%.

The share of profit from operating associates stood at €2 million, up by €4 million due to a reversal of provision on studies following the confirmation of the Belaïa project, within Coeur d'Orly.

As a consequence, operating income from ordinary activities (including operating activities of associates) decreased strongly, at €44 million, vs. €98 million over 1^st half of 2017. Excluding the capital gain linked to the cargo hub buildings, operating income from ordinary activities was up by 28.1%.

International and airports developments

Please note that the impact of the application of the norm IFRS 15 on the revenue from International and airport development segment is considered as not significant (below €1 million).

Over the 1^st half of 2018, revenue from International and airport developments increased strongly by €596 million, to €624 million, due to the full consolidation of TAV Airports' results since July 2017 and the full consolidation of AIG's results since April 2018. EBITDA stood at €230 million.

ADP Ingénierie^[18] revenue was down by 6.1%, at €22 million linked to the negative base effect of the non-renewal of revenues accounted for in 2017, linked to services provided for the work of Groupe ADP headquarter and a decrease in backlog in the Middle East. EBITDA and operating income from ordinary activities (including operating activities of associates) stood at
-€7 million (vs. a negative result of €8 million for the 1^st half of 2017). As of 30 June 2018, ADP Ingénierie's backlog stood at €82 million, strongly up compared to end of 2017 (€61 million).

ADP International, excluding ADP Ingénierie, saw its revenue increase by €54 million, to €58 million, out of which €53 million due to the full consolidation of AIG since April 2018. Excluding the full consolidation of AIG, revenue was up by 19.6 %, at €5 million. EBITDA stood at €9 million (vs. -€9 million over the 1^st half of 2017), thanks to the contribution of the full consolidation of AIG's results for an amount €15 million. Operating income from ordinary activities (including operating activities of associates) stood at €3 million (vs. a result of -€53 million as of 1^st half of 2017), due to:

• A provision on international stake amounting to €14 million during the 1^st half of 2018 vs. 46 million during the 1^st half of 2017;
• The capital gain of the re-evaluation of the already-owned 9.5%-stake in AIG for an amount of €23 million.

Over the 1^st half of 2018, TAV Airports achieved an increase in revenue of 5%, to €545 million. EBITDA^[19] rose by 15%, to €228 million thanks to the dynamic growth in traffic and the good holding of the operating expenses^[20] (-1% at €318 million). Its net result attributable to the group is strongly up (+55%), at €93 million.

Share of profit from operating associates stood at €38 million over the 1^st half of 2018, vs. - €38 million over the 1^st half of 2017, i.e. an increase of €76 million. This evolution is mainly explained by the change of €32 million of the account provisions on international stake (see above), by the impact of the share from operating associates of TAV Airports, of which Antalya since May 2018, for €25 million and the impact of the capital gain of the re-evaluation of the 9.5%-stake in AIG for an amount of €23 million (see above).

Operating income from ordinary activities (including operating activities of associates) for International and airport developments stood consequently at €116 million, compared to a result of -€57 million for the 1^st half of 2017.

Other activities

Over the 1^st half of 2018, other activities segment revenue decreased by 37.0%, to €72 million. As a reminder, since 29 September 2017, date of the sale of 80%-stake in Hub Safe, Hub Safe has been accounted for as non-operational associates. From this date, the share in profit has been accounted for as share in associates from non-operating activities.

Segment EBITDA increased by 1.3%, to €13 million thanks to revenues linked to re-invoicing of studies and works made for the project CDG Express for an amount of €6 million.

Over the 1^st half of 2018, Hub One saw its revenue decreasing by 3.6%, to €72 million. EBITDA decreased by 28.5%, to €8 million due to re-negotiation of intragroup contracts, with impact on the group accounts. The operating income from ordinary activities (including operating activities of associates) decreased by 69.6%, to €1 million.

The operating income from ordinary activities (including operating activities of associates) of the segment was up by 9.8%, at €6 million.

Change in passenger traffic

• Group stake-weighted traffic^[21]

• Paris Aéroport traffic

Over the 1^st half of 2018, Paris Aéroport traffic grew by 3.0% compared to the same period last year, with a total of 49.9 million passengers welcome. 33.9 million passengers travelled through Paris-Charles de Gaulle (+3.0%) and 16.0 million through Paris-Orly (+2.9%).

Geographical breakdown is as follows:

• International traffic (excluding Europe) was up (+5.6%), driven by the growth in the following destinations: the French Overseas Territories (+10.5%), the Middle-East (+8.5%), Africa (+6.0%), North America (+5.2%) and Asia-Pacific (+3.9%). Only Latin America is down (-2.1%);
• European traffic (excluding France) was up by 3.0%;
• Traffic within France was down by 3.2%.

The number of connecting passengers decreased by 3.7%. The connecting rate stood at 21.5%, down by 1.4 points compared to 1^st half of 2017.
The load factor was up by 2.5 points, at 85.3%.
The number of air traffic movements (339,612) was down by 1.5%.

Dividend voted by the Annual General Meeting

The Annual General Meeting of Shareholders held on 4 May 2018 voted to pay a dividend of €3.46 per share for financial year 2017, with an ex-dividend date of 8 June 2018. Given the interim payment (€0.70) made on 8 December 2017, the balance (€2.76) was paid on 8 June 2018. This dividend corresponds to a payout ratio of 60% of the net result attributable to the Group for financial year 2017, and is unchanged since that of financial year 2013.

Appointment within Groupe ADP

Augustin de Romanet, Chairman & Chief Executive Officer of Groupe ADP, appointed Hervé Wattecamps Human Resources Director, member of the Executive Committee. He took up duties on 9 July.

Hervé Wattecamps, Lieutenant General, 59, is an engineer. He graduated from the Ecole spéciale militaire of Saint Cyr (Saint Cyr Military Academy) and the Ecole de Guerre (War School).

For the first twenty years of his carreer, he managed the operations of French alpine troops (27th Mountain Infantry Brigade). He then developed a 15 year-expertise in the area of human resources. In 2012, Hervé Wattecamps became director of the infantry and artillery officer and non-commissioned officer training schools.

Since 2015, he has been Human Resources Director for the French Army, member of the Executive Committee. He devised and conducted change management for the institution's human resources.

"PACTE" draft bill containing provisions related to Groupe ADP

On the 18^th ,June 2018, the draft bill related to the economic growth and transformation of companies (n°1088) (the PACTE draft bill) was presented to the Council of Ministers and contains, in the articles 44 to 50, provisions related to Groupe ADP.

The draft bill provides for the authorization of the transfer to private sector of the majority of Groupe ADP's capital, puts a time limit of 70 years on the right to operate Parisian airports, whereupon the French State will get the full ownership of the land and the infrastructures located in Île-de-France and adapts accordingly the group's business regulation.

2017 regulated ROCE^[22]

As of 31 December 2017, the ROCE for the regulated scope (after tax) stood at 5.05%. The operating income for the regulated scope for 2017 amounted to €424 million, before corporate taxes. The sum of the regulated asset base and the change in working capital stood at €5,083 million.

Revision of 2018 forecasts

The achievement of these forecasts are subject to the assumption of traffic growth in Paris Aéroport and the good run of TAV Airports' strategy.

2016-2020 Period guidances

Groupe ADP 2016-2020 targets, as announced on 13 October 2015 remain unchanged and have to be understood independently from the effect of the full consolidation of TAV Airport. Groupe ADP will continue to present a consolidated EBITDA excluding the effect of the full consolidation of TAV Airport in order to follow the 2020 EBITDA target.

Forecasts presented here-above are based on data, assumptions and estimates considered as reasonable by the management of the group.

Publication of TAV Airports 1^st half-year results

Over the 1st half of 2018, TAV Airports published revenue stood at €550 million, up by 8% compared to the same period last year. EBITDA^[23] was up by 25%, at €254 million. Net result attributable to the Group is up strongly (+55%), at €93 million.

Revision of TAV Airports 2018 forecasts

On 26 July 2018, during the publication of their results for the 1^st half of 2018, TAV Airports revised its forecasts for 2018:

• Istanbul Atatürk Airport international passenger traffic: growth of between +8% and +10% in 2018 compared to 2017 (vs. between +6% and +8% previously)
• Istanbul Atatürk Airport international origin/destination passenger traffic: growth of between +11% and +13% in 2018 compared to 2017 (vs. between +9% and +11% previously)
• Total TAV Airports passenger traffic: traffic growth assumption^[24]: growth above 30% in 2018 compared to 2017 (vs. between +10% and +12% previously)
• Revenue: increase between +4% and +6% in 2018 compared to 2017 (vs. between +2% and +4% previously)
• EBITDA^1/[25]: increase between +14% and +16% in 2018 compared to 2017 (vs. between +5% and +7% previously)
• Net profit: significant double digit increase (vs. double digit increase previously)
• Capex: around €120 million (vs. around €80 million previously)

• Tuesday 31 July 2018: analysts meeting at 9:00 am Paris time, webcasted in live on our website at the following address: webcast. The presentation is available at the following address: finance.groupeadp.fr
• Next traffic figures publications:
  • Tuesday 14 August 2018: July 2018 traffic figures
• Next financial results publication:
  • Monday 29 October 2018: 2018 first 9-months revenue

Audrey Arnoux: + 33 1 74 25 70 64 - invest@adp.fr

Lola Bourget: + 33 1 74 25 23 23

finance.groupeadp.fr

Investor Relations: Audrey Arnoux, Head of Investor Relations +33 1 74 25 70 64 - invest@adp.fr
Press contact: Lola Bourget, Head of Medias and Reputation Department +33 1 74 25 23 23
Groupe ADP develops and manages airports, including Paris-Charles de Gaulle, Paris-Orly and Paris-Le Bourget. In 2017, the group handled through its brand Paris Aéroport more than 101 million passengers and 2.3 million metric tonnes of freight and mail at Paris-Charles de Gaulle and Paris-Orly, and more than 127 million passengers in airports abroad through its subsidiary ADP International. Boasting an exceptional geographic location and a major catchment area, the Group is pursuing its strategy of adapting and modernizing its terminal facilities and upgrading quality of services; the group also intends to develop its retail and real estate businesses. In 2017, group revenue stood at €3,617 million and net income at €571 million.
Registered office: 1, rue de France, 93 290 Tremblay-en-France. Aéroports de Paris is a public limited company (Société Anonyme) with share capital of €296,881,806. Registered in the Bobigny Trade and Company Register under no. 552 016 628.      
groupeadp.fr

• 2018 first half consolidated financial statement

• Consolidated balance sheet as of 30 June 2018

• Consolidated statement of cash flows as of 2018 first half of 2018