CHAIRMAN S ORAL REPORT / COPENHAGEN AIRPORT ANNUAL GENERAL MEETING

Transcription

1 CHAIRMAN S ORAL REPORT / COPENHAGEN AIRPORT ANNUAL GENERAL MEETING Let me start by saying that the financial statements have been prepared in accordance with the international standards for financial reporting. You can see an image of the Annual Report on the screen behind me and there should be printed copies of the report for shareholders who have not had the opportunity to read it online. As we write in the Annual Report, Copenhagen Airport plays a vital role for Danish society. Our aim is to connect up Denmark and create the best possible connectivity to the world: for the benefit of Danish companies to attract international investment and tourism for the benefit of all Danes who travel out into the world every year and to fulfil our social responsibility. This role brings with it a natural interest from political quarters and from the public. Following meticulous preparations, in July 2017 the government presented its National Aviation Strategy. This turns the focus onto the political efforts to create increased connectivity through aviation. In this, CPH plays a central role. I would like to acknowledge the increased political focus on the importance of aviation. We have been calling for this for a number of years.

2 We now look forward to working with authorities, organisations, politicians and, not least, our customers on developing Copenhagen Airport. (RESULTS FOR THE YEAR) First, let s take a look at the results for the year. With 29 million 177 thousand 833 passengers, we set a new record. However, at just 0.5%, the growth in passenger numbers was significantly lower than in previous years. This was due in particular to Air Berlin s bankruptcy in the autumn and the decline in SAS s transfer traffic. Having said that, growth since 2009 has averaged 5% per annum. In 2017, revenue grew by 0.4% to DKK 4 billion 439 million. Profit after tax, excluding one-off items, ended up at DKK 1 billion million. We on the Board of Directors regard this as satisfactory. (DANISH LABOUR MARKET SUPPLEMENTARY PENSION (ATP)) As most of you will undoubtedly have noticed, the ownership now looks rather different than at the last Annual General Meeting. At the end of 2017, Danish Labour Market Supplementary Pension ATP became a new coowner. This came about after Macquarie European

3 Infrastructure Fund decided to sell its ownership in Copenhagen Airports Denmark CAD. This means that ATP and the Canadian pension fund OTPP now own 59.4% of CPH through CAD. On the screen behind me, you can see the composition of the shareholder group following January s expiry of the purchase offer to the rest of the shareholders: The Danish State owns 39.2%. o This is a considerable stake. I'd like to stress that we really value the collaboration we have with the Danish Ministry of Finance, which administers the State s ownership share. Copenhagen Airports Denmark owns 59.4%. Danish private and institutional investors own 1.3%. And foreign investors own 0.1%. With the Danish company ATP as a long-term majority owner together with the Canadian pension fund OTPP, the ownership has now been clarified. This means we can focus on continuing to develop the airport. (REGULATION) As a private company that is partly state-owned and regulated, CPH depends on the politically determined regulatory framework. The government s National Aviation Strategy set out the importance of aviation for Denmark, namely that air routes create growth and jobs that Denmark s connectivity to the world is crucial

4 and that CPH s position as a hub must be strengthened. We could not agree more. Following on from the government s National Aviation Strategy, there has been particular focus and debate on the framework for the charges that the airlines pay to use the airport discussions to which we have actively contributed. The new statutory order establishing the framework for the upcoming charges negotiations for 2019 has now been finalised. The regulations will have a significant impact on the airport s finances. We must now begin adapting the company accordingly so that we can look ahead. In the same breath, it is important for me to emphasise that the statutory order also stresses that CPH must have a financial incentive to invest in the aviation infrastructure and to secure more routes and increased connectivity for Denmark. We need to work to come up with long-term and responsible solutions in dialogue with the authorities and airlines. And we ve already started. (THE AIRPORT FOR THE WHOLE OF DENMARK) Before Christmas, we actually made an early start on the work. We decided to reduce the charges paid by the airlines to use the airport. So on 1 April the charges were reduced overall by 10%. This includes a new incentive scheme that will strengthen CPH as a traffic hub.

5 The charges will be up to 35% lower for those airlines flying at least three times a day on the shorter routes between CPH and regional airports such as Billund, Bornholm, Gdansk and Gothenburg. One of the aims is to get as many people as possible to choose to fly via Copenhagen and out into the world rather than via e.g. London or Frankfurt. This is important. The competition for air routes between European airports is fierce. Every route creates growth and jobs. So it is important to strengthen the hub. This is a vital part of our corporate responsibility. (OUR CORPORATE RESPONSIBILITY) In 2017, we updated the strategy for our corporate responsibility. We have established strategic goals within three focus areas: People, Planet and Position. When it comes to Position, we have a special responsibility to develop CPH as an important part of the Danish infrastructure and to strengthen Denmark s international connectivity. o And we have a special responsibility towards our neighbours and the local community of which we are a part. We want to be even better neighbours and are launching a range of initiatives concerning everything from greater visibility in our local environment to a new, active neighbour website. And what about People? As a company, we have a special responsibility towards around 2,600 employees of our own and around 21,000 employees of the 700 plus companies here on site.

6 We have a responsibility to be an attractive workplace with a healthy working environment. We are responsible for safety, service and the good passenger experience. If we look at the employees at CPH, we are making good progress: o The number of occupational injuries per million working hours has fallen from 8.7 to 7.6. o Absence due to illness has fallen from 5.08% to 4.65%. o Our employee engagement remains high. In fact, our engagement index rose from 81 to 83 on a 100 scale and almost 93% of all employees took part in the last engagement survey. When it comes to Planet, let me give you a few examples: o We have maintained the goal of maximum 1 kg of CO2 emissions per passenger and we have set a new goal of 0.75 kg in o We have achieved our 2020 goal for energy savings three years early this is one of the reasons why CPH won Energiforum Danmark s Energy and Environmental Award These are just two specific examples of how we are pursuing our long-term corporate responsibility goal to be carbon-neutral and reduce our climate impact even though we are growing and developing the airport.

7 (EXPANDING CPH) It is a vital part of our corporate responsibility to create the best possible connectivity for Denmark. This includes the responsibility to expand the airport and create capacity for more air routes, growth and jobs. If you look at the map behind me of the central part of the airport, all the yellow areas are major construction projects. We have not had so much construction activity and so many cranes at the site since the turn of the millennium. In fact, we have never invested so heavily in the airport as we are now. Overall in 2017 we invested around DKK 1.5 billion: We have expanded the central security checkpoint to double the size. This gives more light and space and a better experience for passengers. And it gives us more capacity. o Danish Minister for Transport Ole Birk Olesen acknowledged our achievements when the area was opened at the start of February. On the ground floor below the central security checkpoint, we have expanded Terminal 2, adding 1,500 square metres for passengers and a range of new food outlets and shops. In Terminal 3, we have replaced the floor and are expanding by 1,500 square metres. At the same time, we are building Denmark s longest indoor bridge a 100-metre shortcut from the metro directly to the central security checkpoint, SAS Fast Track and Terminal 2.

8 Airside, we are doubling the size of the busy passenger area between Pier A and Pier B, adding 4,000 square metres, which means lots of extra space for passengers and for 25 new shops and food outlets. And just after the turn of the year we had the topping out of the future Pier E the largest construction project since the 1990s. We are developing 36,000 square metres with 13 gates for large long-haul aircraft in particular and a brandnew building for passport control. o We were delighted that Danish Minister of Finance Kristian Jensen was able to take part in the topping out on a lovely, bitterly cold January day. The many construction projects have not made the passengers journey through the airport easier. Here, I'd really like to praise everyone for their great patience during the construction work our employees, the airlines, the ground handlers, the concessionaires, the authorities and not least the passengers. (THE PASSENGERS) Because it goes without saying that the 80,000 or so passengers who pass through the terminals every day have been aware of and at times been inconvenienced by the many projects and construction screens. Yet passenger satisfaction has remained high. On a 100 scale, it only fell slightly, from 84 to 82. On the one hand, this reflects that the framework around the journey through the airport has not been optimal.

9 On the other hand, it is great that there was only a two-point fall. This is a reflection of the good service that the employees and many companies out there deliver every day even when construction work is taking place and everything is a bit more difficult for passengers. In 2017, we had a full 18 days with more than 100,000 passengers. This is the new norm on big travel days. And the airlines, ground handlers, authorities and CPH have geared up their organisation, service and collaboration to the new reality. Let me give you a few examples of good collaboration: At very short notice, the rules on passport control were significantly tightened last summer. This was a huge challenge. There were concerns about hour-long queues and the risk of travellers not making their flights. But in just a few months we worked closely with the police to create more capacity, get more staff and launch a major joint information campaign. The police s stricter passport control did NOT result in long queues. But it is not over yet. We have just come through the big travel days of Easter. We're now looking forward to what we anticipate will be a very busy summer, when the joint efforts will be seriously put to the test. For the same reason, we're in full swing with building a new passport control in the future Pier E. It will be ready next year.

10 Another example of good collaboration and great patience has been at the central security checkpoint. Here, despite extremely challenging conditions relating to the construction work, we managed to keep spirits high AND average waiting times below five minutes. And despite narrow walkways, very little space and large construction screens, passenger satisfaction with the central security checkpoint rose from 79 to 80. (THE NON-AERONAUTICAL BUSINESS) We now turn to the non-aeronautical part of the revenue for the year. This comprises shops, food outlets, parking, hotel and rent. Here, revenue fell by 2.7% to almost DKK 1.8 billion. This was due in particular to the fact that with the new Norwegian operator of the hotel which last year changed its name from Hilton to Clarion we don't recognise hotel operation in the same way. If we take a quick look behind the figures, revenue from the shopping centre and parking grew by 6% and 4% respectively also brought the good news of the upcoming hotel with 600 rooms and a conference centre next to Clarion. Tårnby Municipality has approved the local plan, so the building work can begin probably this year. Another example of good collaboration. (THE AERONAUTICAL BUSINESS)

11 And now to the aeronautical business. Here, revenue grew by 2.6% to almost DKK 2.7 billion. In 2017, there were a total of 174 destinations to choose from. The trend is that more people are flying direct and more people are flying long haul while fewer people are choosing to take a domestic flight or travel via Copenhagen and out into the world. The number of transfer passengers fell by 8.4% to 2.8 million, with SAS accounting for 82% of the transfer traffic at CPH. Domestic traffic fell by 5.8% to 1.6 million passengers. We're working to reverse this trend. Let me consider domestic traffic and a few of our initiatives here: We now have a special domestic lane at the central security checkpoint. This year, as previously mentioned, we'll be offering lower charges for those airlines that fly more than once a day to e.g. other Danish airports. Together with the regional airports and domestic airlines, we launched a major campaign to raise awareness of how quick and easy it is to fly around Denmark. And I'd also like to mention that we're working to make domestic flying part of the online journey planner Rejseplanen.dk. Now from Denmark to the wider world. Here, the airport has focused in particular on attracting new long-haul routes and more services. In

12 2017, new direct routes included New Delhi and Agadir. In 2017, the number of passengers on long-haul routes grew by 6%, with 3.2 million passengers flying on one of the 38 intercontinental routes during the year. And the work is continuing. This means that in 2018 we can look forward to a new route with Cathay Pacific to Hongkong, a new route with Royal Jordanian to Amman and also a significant expansion of the long-haul traffic to Beijing when Air China opens the route to Copenhagen. (AIR CARGO) The year also brought good news for air cargo, which is important not just for Danish companies and e- commerce, but also for passenger flights, where belly cargo can account for up to 10% of earnings. In 2017, Taarnby Municipality approved the local plan for a future Airport Business Park. So now we can begin developing an area of 150,000 square metres by the Øresund. This means that in time our cargo capacity can be doubled from 500,000 to 1,000,000 tons annually. (ROSKILDE) And of course we musn't forget Roskilde Airport, which has been part of Copenhagen Airports since In 2017, a private investor began building a large hangar. When it is finished, Roskilde will be able to handle the largest business jets on the market.

13 Roskilde was named best airport in Scandinavia for handling business jets. Roskilde Airport is also maintaining its position as an important training venue for pilots and a base for private aircraft, taxi flights and flying schools. (THE CPH SHARE) And now some information on our share. At the end of the financial year, Copenhagen Airport s market capitalisation was DKK 44.7 billion. CPH s shares are listed in Nasdaq Copenhagen s Nordic Large Cap segment, which consists of companies with a market capitalisation of EUR 1 billion or more. (REMUNERATION) And a bit about the remuneration of the Board of Directors and Executive Management. The remuneration of Board members consists of a fixed fee that is comparable with what other Large Cap companies pay. The Deputy Chairmen and Chairman of the Board receive a fee of two and three times the ordinary fee respectively. Members of the Audit and Risk Management Committee also receive remuneration. The remuneration levels have remained unchanged since The Board of Directors is therefore recommending an inflation-adjusted increase of 10%.

14 This means that the remuneration for an ordinary member of the Board of Directors will be DKK 330,000. I refer you to the agenda item on approval of the Board s remuneration for the current year. And I'd like to mention that the members who have been appointed by the majority shareholders have decided to waive their fees. In the case of the Executive Management, the remuneration comprises a fixed basic salary and both a short-term and a long-term incentive plan. A relatively large proportion of the Executive Management s total salary is performance-related, because the Board wants to give an incentive to ensure continued good value creation for the company. It is the view of the Board of Directors that the remuneration of the Executive Management is at a reasonable level and that it reflects the management s independent efforts, responsibilities and value creation. (OUTLOOK) A little about our outlook for Based on the airlines traffic programmes, the total number of passengers is expected to increase. The growth in revenue is expected to be negative in the range of 1-2%. This is mainly due to the fact that the charges have been reduced from April 2018.

15 Excluding special items and the hotel operation, we expect negative growth in revenue in the range of %. Profit before tax is expected to be in the range of DKK 1.35-DKK 1.45 billion, excluding one-off items. I'd like to finish by saying a big thank you to CPH s employees and management for the year s results. The Board of Directors and I would like to acknowledge that the employees have delivered great service and worked in a focused way with our updated Wold Class Hub strategy, not least on partnerships with our customers. So in order recognise the efforts of the employees, we're once again awarding a bonus. This year we have DKK 19.1 million to distribute. Last, but by no means least, I'd like to thank the shareholders for your interest. Thank you for coming today. I'll now hand over to our CEO, Thomas Woldbye.