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MAHB outperformed its financial headline KPI on the back of 15.5% growth in revenue in FY2013

27 January 2014

Sepang, 27 January 2014 - Malaysia Airports Holdings Berhad ("MAHB") outperformed its financial headline KPI in 2013 by achieving an EBITDA of RM 827.7mil (without construction revenue and cost), 10.2% higher than its target. This achievement is better than expected as the passenger number marked the highest growth in the past twenty years.

However, there is a decline in the Profit after tax ("PAT") driven by higher total costs mainly attributed by higher user fee, staff costs, repair and maintenance costs as well as utilities costs. The total user fee payable to the Government for FY2013 grew by 137.3% to RM235.3 million compared to RM99.2 million recorded in FY2012. Previously, the amount of user fee that has been recognised in the income statement represents half of the total user fee payable to the Government of Malaysia, while the other half is to reduce the amount due for the Balance Residual Payment arising from MAHB's 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.

With construction revenue and cost, MAHB recorded a revenue of RM4,098.8 million for the financial year ended 31 December 2013 ("FY2013"), representing a growth of 15.5% compared to RM3,548.1 million in the corresponding period in 2012 ("FY2012"). However, Earnings before interest, tax, depreciation and amortisation ("EBITDA") declined by 3.2% to RM899.7 million, from RM929.7 million in FY2012. Consequently, PAT declined by 1.3% to RM389.1 million in FY2013, compared to RM394.3 million recorded in FY2012.

In line with the adoption of IC Interpretation 12: Service Concession Arrangements ("IC 12") effective 1 January 2012, MAHB recognises the construction revenue and costs in accordance with FRS 111: Construction Contracts by reference to the stage of completion of the construction works of klia2 and Penang International Airport, which are construction works on public sector infrastructure assets and services currently being undertaken by MAHB. In FY2013, MAHB recognised the construction revenue and costs in relation to the aforesaid projects amounting to RM1,635.9 million and RM1,563.9 million respectively.

Excluding the effects of IC 12, revenue for FY2013 was RM2,462.9 million, which was 13.9% higher than the RM2,163.0 million registered in FY2012. PAT for FY2013 was RM317.2 million, which was 4.2% lower than the RM331.0 million registered in FY2012.

Airport Operations Segment
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. MAHB recorded passenger growth of 18.4% in FY2013, outpacing the expected passenger growth rate of 7.1% for 2013, with a record number of 79.5 million passengers having passed through MAHB'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 14.2% to 737,759, with the domestic sector recording a higher growth of 15.1% compared to the international sector, which recorded a 12.6% growth.

The revenue generated by airport operations segment improved by 15.0% to RM2,325.4 million, mainly driven by aeronautical revenue which had improved by 16.8% on the back of strong increase in passenger and aircraft numbers. The increase in revenue was also attributed to the implementation of the new landing and parking charges with the increase of 9% and 18% respectively (compounded annually effective 1 January 2012, 1 January 2013 and 1 January 2014).

The non-aeronautical revenue recorded a growth of 13.1% to RM1,114.4 million on the back of improved performance in the retail and rental businesses. MAHB's own retail business grew 13.7%, driven by increase in passenger volume and higher retail spending by passengers. Revenue from rental of space, advertising and other commercial segments grew 12.4% to RM504.4 million, contributed mainly by higher rental royalty resulting from the higher sales at KLIA and increased car park revenue due to higher number of air passengers and airport visitors.

Non-airport Operations Segment
The non-airport operations segment recorded revenue of RM137.5 million in FY2013, representing a decrease of 2.4% from RM140.9 million recorded in FY2012mainly due to lower revenue recorded in agriculture and horticulture segment as well as the hotel segment. The agriculture and horticulture segment registered lower revenue of RM30.9 million in FY2013 which was 32.2% lower than the RM45.6 million registered in FY2012 due to lower price attained for fresh fruit bunches per tonne coupled with a lower production volume for the period (2013: RM471/64,819MT vs. 2012: RM579/78,285MT). Similarly, the hotel segment revenue dropped by 12.2% to RM65.9 million, mainly due to lower food and beverages revenue. However, the decline was offset by contribution from the project, repair and maintenance segment which recorded a higher revenue of RM40.7 million in FY2013.

Industry Review
Globally, air travel demand continues to record optimistic trends based on rising business confidence and recovering economic conditions, especially in key emerging markets like China and ASEAN. The International Air Transport Association, International Civil Aviation Organisation and Airports Council International have predicted 2014 global passenger growth to be in the range of 4.5% to 6.0%.

Industry Outlook
MAHB continues 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 oneworld 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 MAHB's growth momentum. Therefore, MAHB is confident to record another remarkable passenger growth of 9.7% in 2014.

In addition, klia2 which is expected to commence operations on 2 May 2014 will contribute positively to MAHB Group's revenue, largely fuelled by the expected higher passenger movements and complemented by enhancements in its retail and commercial operations. However, klia2 which was developed to accommodate future growth in passenger and aircraft movements would incur higher operating expenditure as compared with the existing KLIA-Low cost carrier terminal. Nevertheless, MAHB's performance is expected to further improve from 2015 onwards with full year operations of klia2, as MAHB continues on its journey towards greater operational efficiency and profitability.

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