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MALAYSIA AIRPORTS Expects Another Successful Year In 2014

20 March 2014

Sepang, 20 March 2014 - 15th Annual General Meeting for the Financial Year Ended 31 December 2013

Malaysia Airports Holdings Berhad ("Malaysia Airports") held its Annual General Meeting (AGM) this morning at the Sama-Sama Hotel KLIA, being the first few amongst public listed companies (with Financial Year Ended 31 December 2013) to hold its AGM early, which is a testimony of its efficiency and strong track record of corporate governance. The AGM began with Malaysia Airports's Chairman Tan Sri Dato' Sri Dr. Wan Aziz Wan Abdullah expressing Malaysia Airports's deep empathy, hope and prayers for flight MH 370 that went missing. "Our hearts and prayers go to all the passengers and crew on board MH370, as well as to their family members and those affected. We pray and hope that by god's will, the missing aircraft will be found soon and that the passengers and crew are safe. We would like our shareholders to know that we are extending our full cooperation and support to the Government Authorities and Malaysia Airlines during this difficult time. " he said in his opening address.

In line with the Board succession plan, Malaysia Airports welcomed three new Directors on the Board namely Tuan Haji Rosli Abdullah, Datuk Seri Yam Kong Choy, and Datuk Zalekha Hassan; all three being Independent Non-Executive Directors. Malaysia Airports looks forward to their fresh business outlook and contribution towards the future of the Group. At the same time Malaysia Airports gave thanks and gratitude to Datuk Alias Haji Ahmad, Datuk Siti Maslamah Osman and Datuk Syed Faisal Albar for their invaluable services to the Malaysia Airports' Board during their tenure.

Financial Performance Overview
The year 2013 was a very successful year for Malaysia Airports, as it outperformed its financial headline key performance indicator ("KPI") for the financial year ended 31 December 2013 ("FY2013") by achieving an EBITDA of RM827.5 million (without construction revenue and cost), 10.2% higher than its target. This achievement is better than expected as the passenger numbers marked the highest growth in the past twenty years.

Nevertheless, there is a decline in the Profit after tax ("PAT") driven by higher total costs mainly attributed to higher user fee, staff costs, repair and maintenance costs. The total user fee payable to the Government for FY2013 grew by 139.8% to RM237.8 million compared to RM99.2 million recorded in the financial year ended 31 December 2012 ("FY2012"). Previously, the amount of user fee that has been recognised in the income statement represented half of the total user fee payable to the Government of Malaysia, while the other half was to reduce the amount due for the Balance Residual Payment arising from Malaysia Airports' restructuring exercise which was completed in February 2009. Upon the full settlement of the Balance Residual Payment in April 2013, the user fee is now fully recognised in the income statement.

The increase in operating revenue was attributed to stronger results from the airport operations segment, driven by robust air travel demand especially in the Asia Pacific region. Malaysia Airports recorded a passenger growth of 18.4% in FY2013, outpacing the forecasted passenger growth rate of 7.1% for 2013, with a record number of 79.6 million passengers having passed through Malaysia Airports's 39 airports in Malaysia. Both international and domestic passenger movements recorded strong growth at 16.8% and 19.9% respectively. The total passenger movements in KLIA increased by 19.1%, whereby both KLIA-MTB & LCCT recorded positive growth of 24.6% and 13.2% respectively. All other airports recorded an aggregate growth in total passenger movements of 17.3%.

Total aircraft movements grew by 14.2%, with the domestic sector recording a higher growth of 15.1% compared to the international sector, which recorded a 12.6% growth.

Dividend
Malaysia Airports remains committed in enhancing shareholder value and hence, we have in place, a dividend payment policy of at least 50% of the Group's profit after tax and minority interest. For FY2013, the Board had announced an interim dividend of 6% amounting to RM73.9 million, of which RM65.3 million was reinvested in Dividend Reinvestment Plan ("DRP") while RM8.6 million was paid in cash on 30 January 2013. A single tier final dividend of at least 5.78 sen was approved today by the shareholders at the AGM. Also passed by Malaysia Airports's shareholders is the resolution for Malaysia Airports to issue new shares with respect to the DRP until the convening of the next AGM.

Sukuk Musharakah Issuance
One of the main highlights of 2013 is Malaysia Airports's successful issuance of RM500.0 million Senior Sukuk Musharakah via a dual tranche offering on 6 September 2013. The issuance was pursuant to its newly established Senior Sukuk Programme which together with its Perpetual Subordinated Sukuk Programme have a combined aggregate nominal value of up to RM2.5 billion (collectively known as the "Programmes"). The Senior Sukuk offering which is based on the Islamic principle of Musharakah, comprises a 3-year, RM250.0 million tranche and a 5-year, RM250.0 million tranche at a yield of 3.85% and 4.15% respectively. The Senior Sukuk proceeds were used to part-finance the development of klia2 which is expected to be operational on 2 May 2014. To date, Malaysia Airports had issued Sukuk amounting to RM3.6 billion to finance the construction of klia2.

The Senior Sukuk and Perpetual Subordinated Sukuk Programmes have been assigned long-term ratings of AAA and AA2 respectively by RAM Rating Services Berhad. It was an achievement for Malaysia Airports, considering the fact that the Perpetual Subordinated Sukuk Programme was the first rated Perpetual Subordinated Sukuk Programme in Malaysia which is in line with Malaysia Airports's commitment to support the Government's ongoing initiatives and efforts in positioning Malaysia as an international Islamic financial centre. The favourable ratings accorded to the Programmes reflect the strong fundamentals of Malaysia Airports and the strategic importance of Malaysia Airports's business operations to the Government of Malaysia in view of its role as the operator for the key gateways to the nation.

Istanbul Sabiha Gökçen International Airport and LGM Acquisition
MALAYSIA AIRPORTS had also announced on 23 December 2013, that it had exercised its right of first refusal to acquire an additional 40% stake in Istanbul Sabiha Gökçen Uluslararasi Havalimani Yatirim Yapim Ve Isletme A.S. ("Istanbul Sabiha Gökçen International Airport") and LGM Havalimani Isletmeleri Ticaret Ve Turizm A.S. ("LGM") respectively, for a total consideration of €225.0 million. Malaysia Airports aims to complete the acquisition by the first half of 2014.

With the increase of its stake in the Istanbul Sabiha Gökçen International Airport to 60%, Malaysia Airports will be the single-largest shareholder in one of the fastest growing airports in the world. The acquisition is in line with Malaysia Airports's intention to diversify its earnings.

On 3 March 2014 Malaysia Airports had completed a private placement of 124 million new shares via an accelerated book-build exercise raising approximately RM980 million to fund the acquisition. Subsequently on 12 March 2014, the new shares were listed on Bursa Malaysia which marked the successful completion of the private placement exercise.

2014 Industry Outlook
Malaysia Airports will continue to enjoy the benefit from the entry of new airlines and expansion of local carriers which are expected to continue in 2014. Apart from the seven new foreign airlines that have started their operations in 2013, Malaysia Airlines and AirAsia Group are expected to continue contributing strongly to the passenger growth, while Malindo Air is expected to be launching new routes in 2014. Malaysia Airlines' entry into the One World alliance in February 2013 has proven to be a critical catalyst to the increase of KLIA's market outreach as well as its breadth of connectivity across continents and will continue to provide important support for passenger growth in 2014. The expected seat capacity expansion amongst the airlines coupled with strong tourist arrivals pursuant to the Visit Malaysia Year 2014 bode well for Malaysia Airports's growth momentum. Therefore, Malaysia Airports is confident to record another remarkable passenger growth of 9.7% in 2014. "As far as Malaysia Airports is concerned, we are shifting into a higher gear, our retail arm is ready to tap the opportunities of the forthcoming opening of klia2," Tan Sri Dato' Sri Dr. Wan Aziz commented on the potential revenue growth driven by retail and commercial segment.

klia2 Operational Readiness and Airport Transfer (ORAT)
With the assurance from the terminal building contractors that the final works at klia2 are on schedule, and the Certificate of Completion and Compliance (CCC) will be obtained in April, klia2 is on track to open on 2 May 2014. Malaysia Airports has started ORAT at the beginning of February and it is progressing well with all the stakeholders. To date 12 trials have been conducted involving a total of 2,818 participants, 3,659 baggage, and 170 flights covering the domestic, international and transfer operations. Public participation involving more than 1000 people has been incorporated from the time the terminal building received the recommendation from the Fire Department on its compliance to the Fire and Safety requirements, on 27 February 2014.

Among the ongoing ORAT activities that have been performed include the mobilisation of the terminal operations and aviation security personnel, hand-over of keys and site possession to Government regulatory agencies and airlines, renovation and fit-out works by retailers, DCA's inspection and flight calibration of Runway 3, Baggage Handling System (BHS) testing and commissioning, BHS reliability and load test during non-operational trial period involving 30,000 bags, airport security sterilisation, fuel hydrant pipeline network system testing and commissioning, fire safety awareness program for all tenants and full ICT integration test.

In regard to the safety aspects of klia2, IKRAM Premier Consulting (IPC), an independent consultant appointed by the Ministry of Transport has found klia2 to be safe, as stated by the Minister of Transport. IPC's evaluation had focused on the safety aspects of the taxiway, apron, runway 3 and the surrounding areas, as well as the terminal building.

Taking Malaysia Airports to The Next Level
Malaysia Airports revealed its new Vision and strategy themes for the next phase of growth and business planning, from 2015 to 2020. It has re-defined its Vision to being 'The Global Leader in Creating Airport Cities' and announced its Strategy Themes in support of the Vision. The Strategy Themes announced are: Delight Our Guests; Build Successful Partnerships; Provide Total Transport and Digital Connectivity; Accelerate and Diversify Non-Aero Base; and Sustain Our Environment and Community. With the new Vision and Strategy Themes in place, Malaysia Airports aspires to be the benchmark and recognised as a reference point internationally, in proactively enabling the sustainable development of attractive services, economy and communities in the vicinity of its airports.

The Managing Director Tan Sri Bashir Ahmad said "In achieving this new Vision, we believe that our people remain our greatest asset. Recognising this we recently embarked on a group-wide journey to rejuvenate and strengthen our corporate culture to be Friendly and Firm, Business Driven and Responsible, and Progressive and Practical. I believe that the Company is destined for greater things in the years to come."

Appreciation
Tan Sri Dato' Sri Dr. Wan Aziz concluded the AGM by thanking all shareholders, customers, airline partners, Government agencies, retailers, joint venture partners, vendors and suppliers for their support all these years. "Without the support of all the stakeholders, we could not have achieved the successes," he remarked.


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