Ref: Item. 1. Introduction. 2. What makes us MAG? 3. Commercial success at MAG. Aeronautical Growth. Non-Aeronautical Growth

Transcription

1 June 2014

2 Ref: Item 1. Introduction 2. What makes us MAG? 3. Commercial success at MAG Aeronautical Growth Non-Aeronautical Growth 4. Thank you for your time 2

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4 MAG is a significant contributor to the UK economy and integral to the regions it serves Description Market capitalisation [estimated] Metric 3.75bn* Turnover (FY 2012/13) 638m EBITDA (FY 2012/13) 234m Direct employees c3,650 Jobs at our airports 44,000 Number of airlines 60+ Number of destinations rd & 4 th largest airports in the UK MAN & STN Consecutive traffic growth Air Cargo carried through our airports 22 months 500,000 tonnes *Source: Management, based upon 16 x EBITDA 4

5 We are in this for the long-term, building on our heritage and embracing the future, to be the Premier Airport Management & Services Company The City of Manchester owns 35.5%, with 50% voting rights IFM owns 35.5%, with 50% voting rights AGMA (Association of Greater Manchester Authorities) own the remaining 29% We recognize the importance of being part of the regional & national economy. Our Public Sector ownership exposes us to that firsthand experience Our new Shareholder s recent involvement has encouraged us to look more to the outside world, seeking out best practice and challenging ourselves Such a unique structure creates a positive creative tension within the organization, that is: - MAG challenges the status quo, challenging ourselves and others why not? - We remain respectful of how change should be managed - We take a long term view Economic: 64.5% Voting: 50% MAG Economic: 35.5% Voting: 50% 5

6 Vision: By working with other industry leaders we are aiming to become the Premier Airport Management and Services Company To be the premier airport management and services company Mission: To deliver sustainable growth in shareholder value, balancing the needs of our customers, passengers, employees and communities in which we work, while maintaining the highest safety and security standards. 6

7 The North West is the most important area in the UK, outside the South East Between Manchester and Stansted alone MAG serves 32.3m people Manchester is regarded as the UK s second City, after London The North West contributes 9.4% or 125bn to the UK s GDP The North West is the third highest contributor to the UK economy, after London and the South East With our partners we are developing Airport City the largest regeneration programme in Europe MAG owns and operates the 3 rd and 4 th largest airports in the UK (Manchester & London Stansted) Manchester has more connectivity than Heathrow 7

8 We have outperformed market share growth for 22 consecutive months MAN TRAFFIC VOLUMES (MPPA) Manchester is the largest airport outside of London Serving over 180 destinations in 51 countries Working with over 60 airlines One of the fastest growing airports in the European Union (+4.5% in 2012) 8

9 MAG s core capabilities cover a range of complex, highly regulated airport operations that govern the passenger and airline experience Air Traffic Control Airfield Operations Terminal Operations Security Services Fire and Rescue Engineering and Maintenance Car Park and Bussing 9

10 MAG invests heavily in its local relationships and works with all Stakeholders We work in collaboration with the city of Manchester to grow our region MAG works alongside the development and inward investment agencies, to help promote our cities and regions We do business with some of the UK s biggest brands MAG collaborates with ground transport providers to provide connectivity with the airport We continue to look to the future and more opportunities 10

11 MAG are pioneers in sustainable development in the UK, below are just a few examples Both EMA and BOH airport operations became carbon neutral in 2012 Bournemouth s Arrivals building was the first terminal in Europe to be naturally ventilated - Reducing emissions and lowering operating costs EMA s new Security area is employing similar technology Manchester was the first Runway to have CAA approved LED lighting throughout EMA was the first UK airport to have two commercial wind turbines on site - Providing up to 7% of the airport s electricity needs The Radisson Blu at EMA was the first Four-Star hotel to be rated BREEAM Outstanding Recycling of grey-water Energy efficient construction - Bio-diesel power generation (CHP) EMA has it s own Willow plantation (for carbon offsetting purposes) 11

12 We want to be the premier airport management & services company HORIZON I ( ) HORIZON II ( ) HORIZON III ( ) Stable UK airport group emerging from economic downturn Financially robust airport group shaping UK market and forging strategic alliances with global partners Internationally acclaimed and fastest growing airports group BUILDING MARKET PLANS AND CAPABILITIES Key activities Identify business improvement opportunities Launch new MAG business model and reduce management costs Launch Airport City Extend LCC penetration Complete group market plans BUILDING SCALEABLE GROUP, GROWING MARKET SHARE Key activities Grow market share, outperforming UK sector Deliver operational efficiencies Disposal of Humberside Airport (2012) Acquire and integrate Stansted Create Airport City JV, minimising MAG equity commitments Enhance MAG talent pool due to increasing scale Win major airport management concession INTERNATIONALISING M.A.G, ADDING SHAREHOLDER VALUE Key activities Win 2 3 airport concessions Become the strategic partner of choice Complete Phase I of Airport City Enhance MAG talent pool due to larger scale Maximise related revenue streams Deliver profitable growth, outperforming UK markets Increase international connectivity 12

13 Airport City delivers growth and a new business destination 800 MILLION Development cost Partners 1.0m SQFT of office space 1.4m SQFT of logistics & industrial 2400 New hotel rooms 650,000 SQFT of advanced manufacturing 16,000 JOBS In full or part time employment AIRPORT CITY 13

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16 MAG manages a balanced and diversified portfolio of airline customers and market coverage Aviation profile Aviation profile Flight type share Airline share 13 % 9 % 16

17 Well balanced revenue base with diversified and resilient commercial activities Key comments Revenues by type MAG and STN combined The combined group benefits from an equal proportion of aeronautical and non-aeronautical revenues Aeronautical revenues are relatively diversified in terms of airlines and destinations compared with other similar large European airport operators Most of the non-aeronautical revenues come from the robust and dynamic retail, car parking and property-related activities which have been a key area of revenue growth for MAG 8% 13% 9% 48% Aviation income Retail income Car parking Property related income Other The new group enjoys solid aeronautical and non-aeronautical yields 22% Aeronautical yield per passenger ($/pax) Net retail and car park income yield per passenger ($/pax) Source: Annual accounts (latest available) 17 Source: Annual accounts (latest available) Note: NRI inc.revenue from retail and car parking, exc.utility re-charges and property

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19 Income ($) Net Yield ($) Income ($) Net Yield ($) Non-Aero income at MAG has performed strongly despite the financial downturn, with yield outperforming all UK airports, with the exception of Heathrow Strong Retail & Car Parking Performance MAG Non-Aero Revenues Retail MAG has grown non-aero revenues through the downturn, with 2012 revenues exceeding 2009 s in spite of 3.3m fewer passengers Retail yields CAGR 5.2% between FY07 and FY13, with the benefit of terminal redevelopment schemes at Manchester (T1 and T2), together with the protection from guaranteed minimums during the passenger decline Car parking yields (CAGR 4.9%) reflect strong growth in pre-book revenues, through the development of new products (meet and greet, low cost) and additional capacity Retail income Net Yield Competitor Benchmarking Non Aero Yields ($) Car Parking CAGR MAN 4.8% STN 2.6% LTN 6.1% LGW 2.3% Car Park Income Net Yield MAN STN LTN LGW

20 Our Approach 20

21 MAG starts and ends with the passenger s experience in mind, applying our core retail principles to deliver bespoke airport solutions Arrive at Airport Checkin Security Explore Essentials Transference Time to relax Harried & hassled Default spender Desire Relax Gate/Depart Licence to spend Means to an end Every customer is unique, every journey different We apply our core principles to airport retail: 1. Transference 2. Essentials 3. Explore 4. Desire 5. Relax Ensuring each zone forms part of the overall passenger journey 21 Passenger Journey

22 Stress level ASQ Mean Score MAN 4 QTR rolling average MAG has driven customer loyalty and non-aeronautical spend through transforming the customer journey Final stages of new development work in terminals Retail performance income/pax ( ) * Retail yield without GMS (Guaranteed Minimum Sum) has grown by an average of 5.9% per annum over the last 4 years Car Parking Check in Check in Security Landside Airside dwell TIME Security Airside dwell Before redevelopment: Highly stressed, minimal dwell time After redevelopment: Reduction in stress, increased quality dwell time In the same period low cost carrier market share has grown by 10.8 percentage points to 28.8% Previous configuration Post reconfiguration Source: Company information Nominal yields shown * Excludes impact of GMS

23 In 2006, T1 retail was only matching inflation, offering a poor customer experience Customer experience below expectations Confused passenger journey Under-performing yield Less than inspiring retail 23

24 An award-winning retailer T1 Redevelopment Awarded Gold at UK retail Oscars 50m redevelopment of Retail & Security areas 31% yield increase in 4 years 24

25 Terminal 2 Manchester s newest terminal, was looking outdated Lacked a sense of place Looking and feeling tired Underperforming retail Unacceptable customer experience Confusing passenger journey Actual 25

26 Each terminal is different, each passenger journey unique, MAG applies a dedicated approach throughout 30m redevelopment of Retail & Security areas 20% yield increase in 2 years The terminal remained live throughout No decrease in revenue Minimal impact to the customer journey Actual Actual 26

27 The MAG STN plan focuses upon yield enhancement and minimal maintenance expenditure STN current airside retail layout MAG s planned airside layout for STN Key Principles Redistribution of airside / landside space to provide additional 4,700 m2 of airside retail space. Relocation of security Creation of larger walk-through duty free store Zoning of retail offering 27 KEY: Currency & specialist Food & beverage Communal seating & retail pop-ups Duty free Toilets & ancillaries

28 The MAG STN plan has been built up on a store by store basis in collaboration with key partners Scheme Concept Designs MAG s retail development strategy for STN Re-configure physical space to create walk-through duty free area and improve passenger flow driving 40% yield growth Redevelopment work commences in FY14, with yield initially impacted by first closures, although core offering is maintained throughout redevelopment, including continuous duty free trade. Scheme benefits annualise in FY17 Track record of managing disruption during schemes Consolidate supplier terms across MAG/STN and improve based on scale Scheme uplifts comparable with performance seen from T1 and T2 redevelopments at MAN FY13 FY14 FY15 FY16 FY17

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30 000 s 000 s Yield has grown by 27.3% or $1.68/epax in 5 years, with a comparatively lower propensity to park $ % $6.15 Income and yield have increased Car-parking income has outpaced passenger growth Focussing on customer needs has seen the introduction of a number of new products and services at MAG eg: JetParks our low-cost product; Meet&Greet our highly convenient and competitive parking product and; The development of user access

31 Car parking represents over 13% of MAG s revenues, and is growing We have reacted to shifting trends in the industry that is, a decrease in the traditional higher-yielding turn up customer By embracing this change MAG has grown car-parking income by 51% in five years ( , excluding STN) We have reclaimed market share from off-site competitors, by developing our own attack brands: JetParks our attack brand, providing low-cost parking Meet & Greet maximum convenience, compelling offers Such an approach has seen our market share increase from 47% to 65% at Manchester With limited impact upon the more traditional Short Stay (predominantly Multi-storey/Garage) and Long-stay (surface parking) Long Stay maintaining traditional product Our medium term plans forecast continued growth in carparking at a CAGR of 3.1% Meet & Greet or valet-parking remains our highest growth product (we anticipate 40% growth this year) 31

32 It is not just the car-parks we have been developing, to help engage with our customers We have been investing in technology, processes, systems and control centres Providing innovative, competitively priced products, that are easily accessible in all formats have helped fuel our growth 32

33 Meet & Greet (Valet parking) has been and continues to be our major growth vehicle By providing, maximum convenience at a compelling price we have increased revenues, market share and above all customer satisfaction 33

34 Mean score 1-5 MAG has driven customer loyalty and car-parking income through the introduction of new convenient products and competitive pricing Quarter, mean score, 1-5 rating Parking facilities value for money / RANK 1 st / RANK 5 th Car-parking income has doubled in 5 years CAGR of 5.2% Customer satisfaction has increased significantly. MAN now ranks as number one for Value for Money in its benchmark group Source: ACI Europe 34

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36 This presentation (the Presentation ) is being furnished to the recipient(s) by The Manchester Airport Group PLC ( M.A.G ) for use solely in connection with potential future partnership agreements, strategic alignments and airport acquisitions. The Presentation is confidential and may not be used for any other purpose and may not be reproduced, disclosed or distributed by any party receiving a copy, to any other party, whether directly or indirectly, or through an agent or otherwise, without the express prior written consent of M.A.G. This Presentation has been prepared by M.A.G from a variety of sources. Although all information has been derived from sources believed to be reliable, it has not been independently verified by M.A.G nor has it been subject to due diligence. M.A.G expressly disclaims any and all liability for incomplete or inaccurate information contained in, or omitted from, the Presentation or any other written or oral or electronic media communication transmitted or made available. M.A.G and any of its subsidiaries, directors, officers, investors, partners, employees, representatives, affiliates or advisors (collectively "Representatives") do not make any express or implied representations or warranties with respect to the completeness or accuracy of any financial or other data contained in this Presentation. Except as otherwise stated, this Presentation speaks as to the date hereof. M.A.G nonetheless reserves the right to supplement or amend the information contained herein at any time, but does not assume any undertaking to supplement or amend the information contained herein as further information becomes available or in light of changing circumstances. Actual facts may vary substantially from these assumptions, and actual results may vary materially and adversely from the projected results contained herein. Nothing contained within this Presentation is nor should be relied upon as a promise or representation as to the future. The pro forma and estimated financial information contained herein was expressly prepared for use herein and is based on certain assumptions and management s analysis of information available at the time that this Presentation was prepared. There is no representation, warranty or other assurance that any of the projections will be realised. 36