Aéroport de Paris - 2018 Registration document

BUSINESS OVERVIEW 06

DESCRIPTION OF ACTIVITIES BY SEGMENT

on Hall K, the redesign of Hall L and the completion of preparatory work on the Orly junction, ◆ continuing to enhance the brand portfolio, notably via the three strategic families (Beauty, Fashion & Accessories and the French Art of Living). In 2018, several new brands enhanced our retail (Louis Vuitton) and restaurant portfolios (Teppan with Thierry Marx, a new restaurant with Guy Martin: “The French Taste” etc.). In addition to these openings, many new temporary points of sale were opened to boost retail activity, including both shops and restaurant, ◆ standing out from the competition on service quality; ◆ developing brand awareness before arrival at the airports by targeting frequent flyers and international customers; ◆ continuing to capitalise on the economic model by rolling it out in the catering businesses (through the creation of a fast food joint venture with SSP, EPIGO), and sensibly expanding the field of action of joint ventures outside our platforms. The implementation of this strategy, combined with the creation of additional retail surfaces and the ongoing improvement of the passenger traffic mix, will allow the Group to achieve revenues per departing passenger of €23 for airside shops on a full-year basis after these infrastructure projects have been delivered at the end of the 2016-2020 e . Lastly, in April 2019, the Group published a certain number of insights and medium-term forecasts in terms of revenue per passenger for the retail activities in Paris. Sales/passenger in the airside Shops and Bars & Restaurants (including catering in the reserved area), could amount to €27 in 2025, with an intermediate estimate of €25.50 in 2021, with 2021 being the first full year after the delivery of the infrastructure planned as part of the 2016- 2020 Economic Regulation Agreement. These forecasts do not, however, constitute new targets but translate a vision which supplements the Connect 2020 plan, based on Aéroports de Paris' proposals for the next 2021-2025 Economic Regulation Agreement, for which the content is liable to change up to its signature.

◆ a unique business model, with two main types of concessionaires: joint ventures held 50% by Aéroports de Paris and 50% by a specialist in the business in question, and the brands themselves. This business model gives Aéroports de Paris a good level of control over the implementation of its strategy; ◆ two pillars for demand: ◆ stimulating demand, particularly by creating brand recognition upstream of the airport arrival, notably in the key markets (specifically China), ◆ the impact of traffic growth. This strategy has enabled Aéroports de Paris to benefit from consistent growth in revenue per passenger from 2006 to 2015, increasing from €9.8 to €19.7 at end 2015. After a difficult 2016, marked by a sharp decline in tourism in Paris, the growth in Sales/Pax resumed in 2017, with a slight 0.4% increase, penalised by a sharp decline in tobacco sales linked to the implementation of plain packaging in France. In 2018, revenue per passenger continued to increase slowly, despite major work being carried out in certain terminals. This growth was driven in particular by Relay stores and the Luxury offering. The group has thus built a robust travel retail model for the Paris airports that has met growing competition from the town centre offering and has adapted to an environment that is uncertain in both legislative and economic terms. Under CONNECT 2020 1 , Aéroports de Paris intends to consolidate and continue the development of its retail activities via three strategic priorities: ◆ providing the ultimate Parisian shopping and dining experience by: ◆ standardising the offering within the international terminals through six major projects at Paris-Orly and Paris-Charles de Gaulle between 2016 and 2020. The first 2016 milestones of this major development approach were met including, at Paris-Charles de Gaulle, the start of the first steps in the redesign of Hall K of Terminal 2E and completion of the redesign of the international area of Terminal 1 (an intermediate step prior to the project to link the international terminals). In 2018, the main changes were the continuation of work

Change in the total area dedicated to retail

2018

2017

(in thousands of sq.m.)

Airside shops

30 23

29 22

of which, shops in International areas of which, shops in Schengen areas

6 6

6 6

Landside shops

Bars and restaurants

22 58

23 58

TOTAL

Joint-ventures’ activities Groupe ADP receives income from the joint-ventures based on their turnover which is recorded under retail activities. The share of income from joint ventures is recorded as operating income from ordinary activities between EBITDA and the operating income from ordinary activities (ROC) in Groupe ADP’s consolidated financial statements. With respect to Média Aéroports de Paris, held 50/50 by Aéroports de Paris and JCDecaux France SAS and managed jointly, the Group is considering exercising accounting control as a result of the clause in

the Média Aéroports de Paris Articles of Association which enables it to exercise a purchase option on the shares held by the partner at the end of the procedure provided for in the event of disagreement. The business activity is described in the Breakdown of revenue. The Group has joint operational and accounting control in 2018 over the other partnerships (Société de Distribution Aéroportuaire, Relay@ADP, EPIGO).

1 See the Strategy section in this Chapter.

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AÉROPORTS DE PARIS ® REGISTRATION DOCUMENT 2018