Interim Report of Copenhagen Airports A/s (cph) for the Period 1 January – 31 March 2018

Stock Exchange Announcement 2018
Copenhagen, 15 May 2018?

The Board of Directors has today approved the interim report for the period 1 January – 31 March 2018.

Summary of the first three months of 2018

A total of 6.3 million passengers passed through Copenhagen Airport in the first three months of the year, up 0.4% on the same period in 2017. The long-haul, intercontinental routes were the main factor in the increase, with 9.9% more passengers than in the same quarter last year.

CPH has worked hard to expand the number of long-haul routes in recent years, making it easier for Danish businesses to access new markets and easier for tourists to come to Denmark. New routes opened in 2017 included New Delhi in India, with new routes to Hong Kong and Amman in Jordan added this year. These have been instrumental in securing the pleasing growth in long-haul traffic in the first quarter of 2018. The end of March saw the launch of the airport’s biggest-ever summer schedule. This offers 52 new destinations compared to the winter season, ten of them completely new to the airport. New routes and connections are extremely important to Danish trade and industry, and not least the tourism sector. Each new route opened to Copenhagen Airport makes it easier for tourists to come to Denmark, and it is evident that this plays a big part in attracting more international visitors.

The number of local departing passengers was up 3.5%, while transfer passengers were down 8.2%. The 0.4% increase in the total number of passengers led to a 1.7% increase in revenue, while profit before tax, excluding one-off items, was DKK 324.7 million, up 7.2% on Q1 2017.

New security checkpoint opened

In February this year, Copenhagen Airport unveiled a major expansion to its central security checkpoint. This is a critical and central part of the airport, which is why CPH has been working on a major expansion for the last few years. The central security checkpoint now covers twice its previous area and has five new lanes, providing significantly more space for passengers and helping to ensure that people get a good start to their journey. In 2017, the average waiting time at security was under 5 minutes, despite the reduced space and building work throughout the year.

Major investments this year

Copenhagen Airport invested approximately DKK 1.5 billion in expansions and improvements in 2017, but investments are expected to rise to DKK 1.8-2.1 billion this year. In Q1 2018, capital investments totalled DKK 480.1 million, which was 79.7% higher than in the same period last year.

CPH has an ambitious expansion plan – Expanding CPH – and has chosen to further increase the pace of investment in 2018. This means that CPH will complete the major expansion of Terminal 2 airside and construction of a walkway from the metro station to security. The new Pier E is another major construction project, and here CPH has expanded the scope to include construction of a brand-new building for passport control and even more aircraft stands and gates, predominantly for the large long-haul aircraft.

Growth in the non-aeronautical business

The non-aeronautical part of the business, including the shopping centre and parking, grew because of the increase in passenger numbers. Revenue in the shopping centre rose by 4.2%, which is mainly due to an increase within restaurants and cafés, while parking contributed 5.8%.

During the first three months of the year, CPH opened a number of new food outlets and shops landside. This has been done in response to the requests of many passengers for more places to get a cup of coffee or something to eat before going through security, as well as other people wanting to get something to eat or drink while waiting for incoming flights.

Highlights of results

• Passenger numbers at Copenhagen Airport increased by 0.4% in the first three months of 2018. The number of local departing passengers grew by 3.5% and the number of transfer and transit passengers decreased by 8.2%.
   
• Revenue grew by 1.7% to DKK 1,012.8 million (2017: DKK 996.0 million), primarily driven by the increase in departing international passengers.
   
• EBITDA, excluding one-off items, increased by 5.5% to DKK 573.7 million (2017: DKK 543.6 million). Reported EBITDA rose by 4.7% to DKK 564.9 million (2017: DKK 539.5 million).
   
• EBIT, excluding one-off items, increased by 6.4% to DKK 372.9 million (2017: DKK 350.6 million).  Reported EBIT rose by 5.1% to DKK 364.1 million (2017: DKK 346.5 million). EBIT was affected by a 4.0% increase in depreciation charges because of the large investments in growth.
   
• Net financing costs were in line with last year.
   
• Profit before tax, excluding one-off items, increased by 7.2% to DKK 324.7 million (2017: DKK 302.8 million). Reported profit before tax increased by 5.8% to DKK 315.9 million (2017: DKK 298.7 million).
   
• Capital expenditure was DKK 480.1 million in the first three months of 2018 (2017: DKK 266.8 million). The first three months have been affected by expansion of capacity at the central security checkpoint, improvement of wide-body facilities, expansion of Terminal 2 airside, establishment of Pier E, expansion of Terminal 3 landside and miscellaneous corrective maintenance work.

New financial reporting standards in 2018
Effective 1 January 2018, CPH has implemented new financial reporting standards, including IFRS 9 Financial Instruments and IFRS 15 Revenue from Contracts with Customers.

The total effect of implementing IFRS 9 and IFRS 15 has been immaterial and there is therefore no impact on the outlook for 2018.

Outlook for 2018

The outlook for traffic growth, profit before tax and capital expenditure is unchanged from the announcement of 1 March 2018.

Outlook for revenue growth
Based on the expected traffic programme for 2018, an increase in the total number of passengers is expected. The development in passenger numbers is a dynamic factor that is subject to both positive and negative influence from general economic developments, decisions by airlines relating to routes and capacity, and isolated events in the aviation industry. The increase in passenger numbers is expected to have a favourable impact on revenue, while growth is more than offset by the reduction in airport charges announced at the end of 2017. Charges are being reduced from April 2018 through two specific initiatives. Firstly, the charges that all airlines pay to use the airport are being reduced and, secondly, a special hub incentive scheme is being introduced, lowering charges for frequent feeder flights between regional airports and CPH by 35%. Overall, CPH's charges are expected to decrease by an average of 10% from April 2018.

Growth in revenue excluding one-off items and hotel operation is expected to be negative in the range of 0.5-1.5% due to the announced reduction in charges.

Outlook for profit before tax
Operating costs are expected to be higher than in 2017, primarily due to the expected rise in passenger numbers, stricter regulatory requirements and cost inflation, although this will partly be offset by a continuing focus on operating cost efficiencies. Overall, depreciation charges and financing costs are expected to be higher than in 2017, primarily as a result of a significantly increased investment level.

Excluding one-off-items, profit before tax in 2018 is expected to be in the range of DKK 1,350-1,450 million.  Excluding one-off items, EBITDA is expected to be lower in 2018 than in 2017 due to the reduction in charges.

Outlook for capital investments
CPH expects to continue to invest in growth for the benefit of passengers and airlines, and is therefore continuing with Expanding CPH, its plan to expand and develop the airport as passenger numbers increase.

CPH expects to significantly increase its investments again in 2018, to an estimated DKK 1.8-2.1 billion, to accommodate Expanding CPH. Planned investments include expansion of the central security checkpoint, improvement of wide-body facilities, a new walkway in Terminal 3, border control and expansion of Terminal 2 airside (the area after the central security checkpoint). CPH will also be investing in non-aeronautical projects for the benefit of airlines and passengers.

P.O. Box 74
Lufthavnsboulevarden 6
2770 Kastrup, Denmark

Contact:
Lars Jønstrup Dollerup
CFO

Tel.:  +45 3231 3231
Fax:  +45 3231 3132
E-mail: cphweb@cph.dk
www.cph.dk

CVR no. 14 70 72 04

Attachment

• Q1 2018 Announcement to the Copenhagen Stock Exchange