Tav Havalimalari Hldg Ord

Ladies and gentlemen, thank you for standing by. I am Gayle, your chorus call operator. Welcome and thank you for joining the Dove Airports Investor Day live webcast to present and discuss the 2024 full year financial results. At this time, I would like to turn the conference over to Mr. Sherekan Kapitan, CEO, and Ms. Burcu Girish, Deputy CEO and CFO. Mr. Kapitan, you may now proceed.

Hi, thank you for the introduction. So let me start with the review of year 2024. It was a very good year for us, both operationally and financially. In total, we managed to receive 107 million passengers, which is 11% above our last year's, above 2023 passenger number. The good part is that we had a 13% increase on the international part of the passenger. So we reached up to 71 million passengers at year 2024. Of course, several factors contribute to this success. Major fleet expansion of some airlines, the strong travel demand also, the expansion of the global middle class. In all our airports, we had an exceptional growth. As you know, we are in emerging markets. Not only in Turkey, but the other markets, we had a huge demand, mostly double-digit increase on all our airports. In terms of our financial performance, both our revenue and EBITDA grow by 27%. Our revenue reached to 1 billion 660 million euros. Our EBITDA reached to 489 million euros. Our net income reached also to 183 million. Our net debt to EBITDA improved to 3.5 multiple. So in terms of our strategic investments, we were in a three-year investment period. The three A's, which we call as Almaty Airport, Ankara Airport and Antalya Airport, most of these investments are completed. Almaty is fully completed. We took into operation of the new asset as of June last year. For Antalya, we are expecting the completion of the investment by early April and same for Ankara airport. So in total, we had an investment program which is exceeding 2.5 billion euros, including the upfront lease payments of the Turkish assets. In terms of the outlook for 2025, we expect to have a 110 to 120 million passenger range for the total of our airports. We anticipate to achieve an EBITDA of 520 to 590 million euros and hope that We will reach to our all-time high EBITDA of 573 million, which was in 2018 while we were managing Istanbul Ataturk Airport. We will reach it. We will also expect to continue deleveraging, and we are targeting a net debt to EBITDA ratio of 2.5 to 3 times ratio. Looking ahead, this year marks our 25th year of operations, starting with Istanbul Ataturk Airport. We are excited for the new opportunities coming up. In the next 20 years, we see that the passenger traffic in the world will double to 20 billion passengers. End of 2024, the global passenger traffic ended with 9.5 billion. So doubling of the traffic in the next 20 years means that there will be a lot of infrastructure need. for the airports to accommodate this growth. We believe that with our experience, with our financial positioning and the visionary shareholders, we believe that we'll play a great role in the coming 25 years of aviation. So, of course, we also remain committed to talk signature service excellence in every aspect of passenger experience across all airports, including ground handling, duty-free food and beverage, hospitality services and the technology services. With this, I extend my deep gratitude to our employees, shareholders, investors and business partners for their support in building TAO Airports into a globally respected brand. So I will talk a bit about the traffic performance. When you look at TAO's performance, as I said earlier, The total number of passengers in 2024 was 11% above 2023 figures. In terms of international passengers, we were 13% above 2023. Our major drivers, like Antalya, in Antalya we had 7% growth over 2023. In Ankara, the international traffic was 14% above 2023, mainly because of AIJET, which has its base in Ankara. It's a subsidiary of Turkish Airlines. Also, in Izmir, we have an international continuing growth of 16%. In 2023, we also grow double digits. This is also related to Sun Express and Pegasus growing in Izmir. In Almaty, the international traffic grew by 24%. Almaty is our new jewel as the center of Central Asia. With the new investment, we believe that in 2025 we'll have better results and better figures related to Almaty. Of course, geopolitics had an effect on our international traffic. Since September, we had a minus 3% effect. But seeing that the conflict is resolved between Israel and the Gaza Strip, we hope that the traffic coming from Israel will be back and hoping that this Russian-Ukrainian conflict will be over soon. And it will be a surplus on the top of our current expectation. So if I talk a bit about our source markets, the Germany market is very strong. especially in Turkey. Russian market is also strong. German market and UK market are the rising stars for the Turkish market. When we look at the destinations of the Tau airports in total, again, Germany takes the pole position, then comes Russia and UK. When we look at Turkish airports, very similar. Germany with 27% in Tau Manish Turkish airports, the five airports that we have. And Russia comes with 19% and UK follows by 11%. So I now hand over to Burcu for the financial results.

Thank you Serkan. Good afternoon everyone and welcome. So just to go over our figures, as Serkan mentioned, it was a successful year for us with very substantial growth in our revenues. We surpassed our guidance by far. 27 percent growth year on year in euro terms in revenue, we reach 1.66 billion euros. Unfortunately, our OPEX, cash OPEX also increased 27 percent, which, as you know, we always try to keep under control. But due to, you know, hyperinflation situation in Turkey and the minimum wage increases, It was a bit that we couldn't run away from such increases in some of the OPEX. As you know, almost 40-45% of our OPEX is staff costs and linked to minimum wage increases. And when EURTL stays relatively stable, these inflationary pressures played a role in our cash OPEX. Having said that, going forward, we expect these inflationary pressures to reduce. as inflation comes down in Turkey. So hopefully the worst is behind us and we won't see this much effect in the upcoming years, including 25 and 26. The pressure should be less. Nevertheless, the EBITDA, still we were able to increase it by 27% to a record, not all-time record yet, but still so far an increase, a 100 million euro increase to 489 million euros This was a very good achievement, as I said, despite these pressures. And our EBITDA margin, we were able to keep almost stable, even 0.1 percentage point increase despite the pressures. So we were at 29.5% on the margin. As you know, also, we are not a pure play company of airport concessions only. We have fuel sales, we have service businesses. So just to keep in mind that our EBITDA margin is not by itself a measure of success or insuccess, but it is just a natural result of this breakdown to different types of revenues. But it's more important, I think, to focus on the growth, the 27% growth year on year on the Euro-based EBITDA, which, as I said, we added another 100, even 105 million euros to our previous year's EBITDA. When we move to the net income, again, these numbers can be a bit misleading because it looks like as if there's a drop from 249 to 183 in terms of net income. It does look like a drop, but it is because we had so many one-offs in 23, including an asset sales in Tiba. We sold some shares in Tiba, in Medina, as you will remember. And this has brought us 83 million gain, one-off gain, for the year 23. There was some inflation accounting, deferred tax impact. So all in all, if we add all these positive one-offs for 23, we come up with 177 million euros. We added up for your benefit on page seven of the webcast presentation. You can have a look there. So if you deduct that, you will see that the ordinary course of income for was in fact only 74 million, not 249 million. So from 74 million to 183 million, it's 147% growth in the ordinary course of business income. So I think we can conclude that this is a very good result in terms of net income, ordinary course of business net income increase, not taking into account the one-offs of last year. In terms of CAPEX, we were in line with our guidance, even a bit below our guidance, which is good. This was caused by some lags this year due to the solar power and BTA, until the CAPEX being a bit lagged, and this will realize in 25 instead of 24. This is okay. I'm happy to report that our free cash flow is now 154 million positive. which is a good number despite all this heavy capex and interest payments and everything, we had this free cash flow and we expect this free cash flow to be even better in 2025 and 2026. Our net debt was quite stable. Again, despite all this additional capex and investments, we were able to keep it stable at 1.7 billion. Number of passengers, Serkan also gave a lot of details, so I won't go over, but we had a good year with 11% increase, 106.5 million, and especially on the international, 13% increase, where we reached 71.2 million international passengers. And our duty-free tax was, again, almost flat, around 9 euros. We expect When Antalya opens, Antalya is not consolidated, as you will remember, but we expect the due-to-free revenues and spend-per-packs to increase substantially for Antalya when we have the new retail areas. When we open the terminal in April, we will triple the retail areas compared to current terminal, and we expect a real spend-per-packs increase in due-to-free and other commercial income as well. So moving on to some quarterly and annual results and comparison to last year. On page eight, you can see some graphs where we compare both quarterly and full year results. As I mentioned, the revenue growth was substantial. For the full year, it's 27%. And for quarter, it was a whopping 31%. Having said that, as I again mentioned, the OPEX was also under pressure, so we ended up with 27% EBITDA increase. Maybe we can talk a bit about the revenue composition, and this will be on page 9. Currently, we have this 40% aviation, 60% non-aviation situation. breakdown. This is moving towards, as we grow our non-aviation income, especially, you know, Almaty opened up last year. We have the half-year impact, but we will have the full-year impact. So as our commercial revenues and non-aviation revenues become higher, this breakdown is moving towards a more 50-50 in the future. But even where we are at 64-40, it's a good one. On the revenue side, you will see also, I didn't mention when we were talking about the summary, but we had some one-offs. You will see that the lounge business grew a lot. So when you see the lounge business, the revenue is growing, almost doubling from 87 to 157. We explained the reason as consolidating the Paris Lounge Network fully because we acquired it and we used to do equity pickup. Now we have the full network. full lounges so it kind of helped us double this business this is a very I mean in terms of profit the margin is not so high so it is not an airport concession business like 40% 45% 50% it is more 15% type of business but it is a growing business and it is a promising business and now it grew to be a 200 million euro business almost and bringing 30 million euro EBITDA for a next year's plan. Moving on, maybe we can talk also a bit about the debt structure because we get a lot of questions on that. I can turn to page 16 of your presentations where we have the debt. so i don't know if we have our rating agencies online as well but we put ourselves a very strict deadline to refinance our antalya upcoming antalya bridge normally our antalya bridge maturity is end of september this year but we put ourselves a target internal target to refinances much earlier by the end of q1 we it's going very well so we're talking about the 2.5 2.6 billion This is one of the biggest refinancing in Turkey right now, and we are happy to report that we are achieving very good terms and conditions. The credit committee approvals are almost totally in place, and we are on track to do this. As you may remember from the past announcements, we had already done the same for Ankara, bridge refinancing to long-term. This is at a smaller scale because that was a €300 million refinancing, but we achieved almost 175 basis margin improvement. This one also we look to achieve 200 basis points improvement in margin going into the long term. So all in all, I think we're in a good place regarding our debt. Our debt maturity and the door-to-door maturity is 7.7 years. Average maturity is five years. And our average cost of debt is around 6.6%. A very important metric for us, as you know, is net debt to EBITDA. And we have given a guidance, a long-term guidance in the year 2022 to reduce it from its record levels, to reduce it two or three times. And we are very much on track with this. And even we are above the track, I mean, let's say ahead of the track, because we have given a 3.5, 4.5. And we are at already 3.5. So everything looks to be on track. The cash generation is there. The debt renewals with better terms and conditions are there. The CAPEX is almost completed. We will go over the investment program in detail, including Almaty. But it is on very much track. And it is now being recycled into pre-cash flow generation, as we can see in the results. One maybe last page we can go over before I hand over to Serkan is on page 17. As I mentioned, our cash capex was 256, which is in line with the guidance. And regarding dividends, I know some of you may also wonder about dividends. We have also given kind of a guidance, not a formal official guidance, but we have kind of guided the community that we we wouldn't be distributing dividends during this CAPEX scheme where we were heavily indebted and the debt was super expensive, so we didn't want to incur more debts to pay dividends. However, as we are saying, we are hopefully coming to the end of this period and the Board and the General Assembly will reassess the dividend policy on when to restart the dividend. This year, since we continued, I mean in 2024, since it continued, the board advised the General Assembly not to distribute any dividends. So handing over to Serkan to talk about our investment.