Investor Presentation Offer of 6.25% Retail Bonds Maturing 15 May ...

Investor Presentation Offer of 6.25% Retail Bonds Maturing 15 May ...

Investor PresentationOffer of 6.25% Retail Bonds Maturing 15 May 202115 October 2013

Agenda• Business Overview• Aeronautical and Commercial Overview• Capital Expenditure - Key Items and Timing• 2013 Annual Results• Key Credit Considerations• Regulatory Environment Overview• Treasury• Bond Offer Issue Terms & Timetable• Questions?Page 1

Business OverviewWellington Airport is the gateway toNew Zealand’s capital city and central region• WIAL employs approximately 90 of the 1,500 peopleestimated to work at the Airport• Almost 5.4 million passengers 2012/13• ~ 100,000 aircraft movements a year• Passenger growth is driven by airline competition,economic growth and propensity to travel1959• EBITDAF for year ended 31 March 2013 was $82.9m• $813m in total assets and $385m total liabilities at 31March 2013• $250m forecast infrastructure expenditure over next 5years ($110m aeronautical facilities)Solid BusinessTODAYPage 2

Business OverviewHigh service quality and strong credit rating• Rated amongst the best airports for service quality inAustralasia (ASQ survey)• Most cost efficient of the major airports in Australasia• Voted Australasia’s Leading Airport at the World TravelAwards 2011• Rated 4 th best terminal in the world as reported in USAToday and the Daily Mail (2012• NZ Airports (wholly owned by Infratil) 66% ownership(since 1998) and Wellington City Council 34%ownership• Long-term credit rating of BBB+/Positive Outlook (S&P)• Light handed airport regulationPage 3

Aeronautical Business Overview• Aeronautical charges approximately 60% of total revenue• Passengers (“pax”) mainly domestic (approximately 86%) withhigh proportion of business travellers and passengers visitingfriends/family• WIAL historically demonstrated resilience to external negativeevents, e.g. pandemics, GFC, earthquakes• Aeronautical charges reset at least once every five years underAAA• Consultation in progress to set prices for 1 May 2014 to 31 March2019• Strong demand on main trunk routes, driven by an increase inJetstar capacity (market share now 20%) and competitiveresponse from Air NZLast 10 years average pax growth 3.3% p.aLast 40 years average pax growth 3.3% p.a• When airlines have historically ceased to operate, new airlineshave commenced operations - most recently Jetstar• Trans-Tasman market is changing with airline alliances betweenAir New Zealand and Virgin Australia; Qantas and Emirates• New hangar for executive jet services constructed in 2011Page 4

Commercial Business Overview• Continuing focus on vehicle business with redevelopment ofinfrastructure and planning for increase in capacity, includingmulti-level parking• Continued enhancement of terminal retail offering with:- Subway opened in July 2012- Donut King opened in Dec 2011- Witchery opened in Dec 2012- JR Duty Free refurbishment in Aug 2012• Stable growth in Airport Retail Park with good customer base• Airport gateway redeveloped for a ‘Z’ service station (opened inOct 2012) and Burger King food outlet (opened in Feb 2013)• New offsite café in Lyall Bay due to open late 2013• Opportunities for development of commercial property including:- Expansion of the Airport Retail Park- Development of an on-site airport hotelPage 5

Capital Expenditure - Key Items$250m forecast capex over next 5 years including:• Redevelopment of the land transport and parking infrastructure includingassessing expansion of multi-level car parking• Expansion of the Main Terminal Building and Southern Piers• Runway and taxi works• Noise mitigation programme of local properties• Planning for a hotel, which may to lead to construction commencing in 2014Runway extension• Development cost not included in $250m capex forecast• 300 metre extension accommodates long haul flights by modern jet aircraft• Economic case being further developed but widespread support in region• Required funding would be on commercial terms - likely to require supportfrom central and/or local Government• Work in progress to achieve regulatory approval from the Civil AviationAuthority and construction under the RMAWIAL 2030 Master Plan• Provides 20 year vision for the Airport• Included $450m forecast capex• Most recent Master Plan published in 2009Page 6

Capital Expenditure - TimingForecast key capital projectsRunway and Taxiway works 2017 - 2021Southern Apron development 2019 - 2022Main Terminal Building(Southern Piers, Baggage Hall and Redevelopment)2015 - 2017Car Park Developments and Land Transportation 2014 - 2017HotelMain Terminal Building2014 - 20152020 - 2024CAPITALDEVELOPMENTS INLAST 15 YEARSPage 7

2013 Annual ResultsMost recently published results - year ended 31 March 2013$65.3 $68.2 $72.3$75.5$82.9• EBITDAF of $82.9m (an increase of $7.4m)• $6.7m increase in revenue to $106.2m• 9.8% increase in landing and terminal charges• 3.8% increase in passenger services revenue• 3.9% increase in domestic passengers$96.1Revenueincluding iSite Limited$104.6$114.7$99.5$106.2• 1.3% increase in international passengers• Strong growth of Jetstar domestic services• International landing charges favourable due to pax growth,including from Air NZ/Virgin AllianceFinancial Position $ million 2013 2012Cash and bank 5.7 2.7Current assets 13.0 10.5Non current assets 794.1 781.5Total assets 812.8 794.7Debt funding 249.2 255.5Deferred tax 90.8 85.9Other liabilities 45.1 45.0Total equity 427.7 408.3Page 8

2013 Annual Results• Strong commercial growth due to increase in Income PerPassenger (IPP) to $6.10 and increase in property revenue$65.3 $68.2 $72.3$75.5$82.9• Increase in duty free income primarily due to dedicated operator JRDuty Free and increase in passengers• Increase in transport revenue of 12% due to strong car parking,taxi and car rental income• New retail offerings with Subway, Donut King, Witchery, Z, BurgerKing and JR Duty Free refurbishment$96.1Revenueincluding iSite Limited$104.6$114.7$99.5$106.2• Operating costs almost flat despite 18% increase in insurancecosts• Copies of WIAL’s Annual Report are available Position $ million 2013 2012Cash and bank 5.7 2.7Current assets 13.0 10.5Non current assets 794.1 781.5Total assets 812.8 794.7Debt funding 249.2 255.5Deferred tax 90.8 85.9Other liabilities 45.1 45.0Total equity 427.7 408.3Page 9

Key Credit ConsiderationsStrong Competitive Advantage• Aeronautical business regulated under Airport Authorities Act1966 (AAA) and information disclosure regime• Commercial business subject to competitive market and notregulated• Gateway to New Zealand’s second most populous regionStable and Predictable• Cash flows have been stable and predictable• Historic long term trend for passenger growth• Supportive and financially stable shareholders: 66% majorityowned by NZ Airports (Infratil) and 34% by Wellington CityCouncilRegulatory Environment• Active working relationship with regulators• New information disclosure regime effective December 2010Financial and Economic Resilience• Resilient passenger numbers and commercial growthexpenditure programmed supports future growth• S&P rating BBB+/Positive OutlookPage 10

Regulatory Environment OverviewAirport regulatory regime in New Zealand - dual till with informationdisclosure:• Aeronautical business subject to limited competition and regulated• Commercial (non-aeronautical) business – subject to competitivemarket and not regulated• WIAL may set aeronautical prices following consultation with itssubstantial airline customers under the AAA• WIAL is currently consulting with its airline customers to set pricesfrom 1 May 2014 to 31 March 2019Page 11

Regulatory Environment OverviewCommerce Commission monitors Wellington, Auckland andChristchurch Airports under Part 4 of the Commerce Act:• Regulatory outcomes monitored by the new ID regime, coveringreturns, service quality, efficiencies, investment and innovation• Merits appeal undertaken by WIAL, other main airports and Air NZ forland valuation and cost of capital• Commission required to undertake a one-off review of the new regime(56G), and report to Ministers• Commission published its report in February 2013 and concluded that:• ID regime is effective in respect of innovation, service quality andpricing efficiency at WIAL• WIAL’s current prices are in line with the Commission’sacceptable range but it was not limited in seeking excessiveprofits• WIAL disputes the Commission’s findings, but has commenced newconsultation to ensure that future pricing is in line with theCommission’s benchmark and will incorporate the outcome of themerits appealPage 12

TreasuryDebt Maturity ProfileBank debt refinanced in 2012 with total $90m facilities, $60m maturing inJune 2014 and $30m in June 2016.Growth capex funded by operating cash and existing debt facilities.Treasury Management Policy• Minimum liquidity requirements of committed capex plus 6 months opex• Refinancing strategies provided to the Board at least 12 months beforematurity, and agreed not less than 2 months before maturity• Reporting to the Board monthly, Policy provides delegation toManagement via Treasury Committee to actively manage treasury risks• Policy last updated in Dec 2012 and is renewed at least every 3 yearsor otherwise updated as required• Policy references the commitment to maintain or improve WIAL’s creditrating of BBB+Financial CovenantsFavourable headroom across banking covenants (*) :Banking Covenants31 March201331 March201231 March2011External Liabilities less than 60% ofTotal Tangible Assets (TTA)34.0% 35.5% 38.7%EBITDA/External interest > 180% 410.2% 384.3% 378.6%Senior Debt/EBITDA < 6 times 3.09 3.41 3.57Net Total Assets > $100m $540m $514m $453m(*) Retail bond covenants: total interest bearing debt less than 70% of TTA, and total secured debt less than 10% of TTAPage 13

Bond Offer Issue TermsRetail Bond Offer Issue TermsIssuerIssuer Credit RatingIssue AmountStatusWellington International Airport LimitedBBB+/Positive Outlook (Standard and Poor’s)NZ$50m (with ability to accept over subscriptions up to an additional NZ$25m)Unsecured, unsubordinated bondsMaturity 15 May 2021Interest RateBrokerageDenominationsJoint Lead ManagersListing6.25% (or higher rate advised by WIAL to NZX during offer period – additional 0.5% shouldTotal Interest Bearing Debt exceed 60% of Total Tangible Assets)0.75% new applications, 0.25% rollover applicationsMinimum $10,000 holding then $1,000 incrementsANZ Bank New Zealand Limited, First NZ Capital Securities Limited, Forsyth Barr Limitedand Westpac Banking Corporation, acting though its New Zealand BranchApplication has been made to NZX for permission to quote the bonds on the NZX DebtMarket and all the requirements of NZX that can be complied with on or before the date ofthis presentation have been duly complied with. However, NZX accepts no responsibility forany statement in this presentation.Page 14

Bond Offer Issue TermsBond Offer Issue TermsInterest paymentsSemi-annualAllotment 15 November 2013Allocation First in first served prior to 1 November 2013WIAL to then consider reserved allocations to JLM’sA public pool will likely be retainedFinancial covenantsTotal Secured Liabilities < 10% of Total Tangible Assets (TTA)Total Interest Bearing Debt < 70% of TTACore assets Core airport assets must be retained by WIAL per Master Trust Deed dated 1 December 2008Cross defaultNo cross default with banking facilitiesEvent of default if WIAL cannot pay debts as they fall due (same as banking facilities andwholesale bonds maturing June 2019 and 2020)Page 15

Bond Offer TimetableActionDateOffer opens 24 October 2013Applications accepted from 24 October 2013JLM allocations considered 1 November 2013Offer closes for redemption rollovers 8 November 2013Offer closes 11 November 2013Allotment 15 November 2013Expected listing date 18 November 2013First interest payment 15 May 2014Page 16

DisclaimerFor a copy of the simplified disclosure prospectus dated 10 October 2013 relating to the retail bonds maturing 15 May 2021 (the “Prospectus”)contact your registered financial services provider or an independent qualified professional adviser, visit or call Wellington International Airport Limited (“WIAL”) on 04 385 5100.This presentation has been prepared by WIAL solely for the purpose of providing background information on WIAL to enable brokers to promotethe retail bonds maturing 15 May 2021 (the “Bonds”) outlined in the Prospectus.By attending and/or receiving a copy of this presentation, the recipient agrees that the information in it is given subject to the provisions of theProspectus. In particular:(a)(b)(c)(d)although, to the best of WIAL’s knowledge and belief, the information contained in this presentation is true and accurate in all materialrespects, no representation or warranty to that effect or any other effect, express or implied, is given in relation to that information;this presentation is not intended to be, and does not constitute, a recommendation by WIAL, ANZ Bank New Zealand Limited, First NZCapital Securities Limited, Forsyth Barr Limited or Westpac Banking Corporation, acting though its New Zealand Branch, to invest in theBonds;this presentation does not purport to contain all the information that may be necessary or desirable for the recipient’s particular investmentrequirements: andthis presentation contains notes to be accompanied by an oral presentation and is incomplete without that oral presentation.Page 17


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