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OPENHAGEN ROUP Copenhagen Airport

VIEWS: 22 PAGES: 87

									                                                            Content


The Group Annual Report – which, pursuant to section        Management´s report
149 of the Danish Financial Statement Act, is an extract    Highlights of 2005                                   2
of the Company’s Annual Report – does not include           A competitive airport                                3
the financial statements of the Parent Company,             Financial highlights and key ratios                  4
Copenhagen Airports A/S. The financial statements
of the Parent Company, Copenhagen Airports A/S,
have been prepared as a separate publication which          Vision                                               7
is available on request from Copenhagen Airports A/S
or at www.cph.dk.
                                                            Management’s financial review                       11
The financial statements of the Parent Company,             Traffic                                             12
Copenhagen Airports A/S, form an integral part of           Commercial                                          18
the full annual report. The full annual report, including   International                                       23
the financial statements of the Parent Company, Copen-      Review of other financial items                     30
hagen Airports A/S, will be filed with the Danish Com-      Outlook for 2006                                    31
merce and Companies Agency, and copies are also
available from the Agency on request.
                                                            Corporate governance                                33
The allocation of the profit for the year including         Risk factors                                        35
proposed dividend is described on page 57.

                                                            Environmental impact – the airports at Copenhagen
                                                            and Roskilde                                        39
                                                            Employees                                           40
                                                            Shareholder information                             42



                                                            Financial statements
Copenhagen Airports A/S                                     Accounting policies                                 46
Lufthavnsboulevarden 6                                      Income statement                                    53
DK-2770 Kastrup                                             Balance sheet                                       54
Denmark                                                     Cash flow statement                                 56
                                                            Statement of equity                                 57
Tel       +45 32 31 32 31                                   Notes to the financial statement                    59
Fax       +45 32 31 31 32                                   Management´s statement and auditor’s report         76
E-mail    webmaster@cph.dk
Web       www.cph.dk
                                                            Other corporate information
Investor Relations                                          Supervisory Board                                   77
Tel       +45 32 31 22 12                                   Executive Board                                     80
Fax       +45 32 31 31 63                                   Group structure                                     82
E-mail    ibr@cph.dk
                                                                        Highlights of 2005


                                                                        • Operating and financial performance for the             • Based on expected traffic growth of 4-6% at
                                                                          year was in line with expectations                        Copenhagen Airport, pre-tax profit for 2006 is
                                                                                                                                    expected to be in the region of DKK 1.0 billion,
                                                                        • Passenger numbers at Copenhagen Airport                   equivalent to a 10% increase when taking into
                                                                          rose 5.0%                                                 account certain one-off costs incurred in 2005

                                                                        • Revenue increased 10.2% to DKK 2,738.4 million          • In 2005 the Company distributed DKK 587.3 mil-
                                                                                                                                    lion to the shareholders consisting of DKK 296.4
                                                                        • EBIT amounted to DKK 971.0 million                        million as dividends paid for 2004 and DKK 290.4
                                                                          (2004: DKK 973.9 million)                                 as share buy-back. Due to the low liquidity in the
                                                                                                                                    share, the Company can no longer use share buy-
                                                                        • Profit from investments in associates increased           back as a means of distribution to the shareholders.
                                                                          26.4% to DKK 89.4 million                                 Hence the Supervisory Board recommends that the
                                                                                                                                    Annual General Meeting approves a payout ratio
                                                                        • Profit before tax increased 4.4% to                       for 2005 of 100% equivalent to DKK 670.4 million
                                                                          DKK 853.5 million                                         or DKK 85.42 per share. The proposed dividend
                                                                                                                                    implies that the distribution as a percentage of
                                                                        • Profit after tax increased 13.1% to DKK 670.4 million     earnings is kept in line with previous years
| Group Annual Report 005 | Management´s report | Highlights of 005




                                                                                                                                  Terms used
                                                                                                                                  Copenhagen Airports, CPH, the Group, the Company
                                                                                                                                  Used synonymously about Copenhagen Airports A/S consolidated
                                                                                                                                  with its subsidiaries and associates
                                                                                                                                  Copenhagen Airport
                                                                                                                                  The airport at Copenhagen, Kastrup, owned by
                                                                                                                                  Copenhagen Airports A/S
                                                                                                                                  Roskilde Airport
                                                                                                                                 The airport at Roskilde owned by Copenhagen Airports A/S
A competitive airport




In 2005, the total number of passengers at Copenhagen           world’s largest airlines: Starting this spring, the US air-
Airport was 20 million, the highest in the airport’s history.   lines Continental Airlines and Delta will launch direct
With a growth rate of 5% in passenger numbers in                daily flights to New York and Atlanta, respectively.
2005, Copenhagen Airport retained its position as the           In the autumn, the airline Emirates will launch flights
largest airport in Scandinavia.                                 between Copenhagen Airport and Dubai offering con-
                                                                nections to 77 destinations in 54 countries.
The position as the hub of Scandinavia supports
growth in the Øresund region, among other things                On 14 December 2005, Macquarie Airports an-
because access to many and good flight connections              nounced that they were the new majority shareholder
is an important competitive parameter when interna-             of Copenhagen Airports A/S with a controlling interest
tional companies are looking for a new location in              of 52.4%. The airport will continue to be a well-
which to set up operations.                                     managed company with growth potential through its
                                                                position as a hub for air traffic to and from Scandinavia,
November saw the completion of negotiations for a               northern Germany and the Baltic region. Copenhagen



                                                                                                                              | Group Annual Report 005 | Management´s report | A competitive airport
new three-year agreement between Copenhagen Air-                Airport brings Macquarie Airports’ portfolio of airports
port and the airlines using the airport. The agreement,         to six. The combination of the CPH management and
which runs from 1 January 2006 to 31 December                   Maquarie Airports expertise in managing international
2008, shows CPH’s preparedness to meet the airlines.            airports is a good platform for growth in passenger
We reduce our charges, assume a larger share of the             numbers and the continuing development of
security costs, despite new security measures which are         Copenhagen Airport in the longer term.
a significant burden for the airport, and give the air-
lines a cash bonus when passenger numbers increase.             Copenhagen Airports will continue to pursue its goal of
                                                                being largest in Scandinavia, most efficient in Europe
In 2005, we saw a long-standing wish come true when             and best in the world. These efforts were successful in
the Danish Ministry of Transport and Energy decided             2005 as Copenhagen Airport was again rated the most
to phase out the passenger tax from 1 January 2006.             efficient airport in Europe by the Air Transport Research
The politicians’ decision has given us a good marketing         Society (ATRS) and also received an award for being rated
tool, which we are using actively vis-à-vis the airlines.       Europe’s best airport. These awards of recognition will
                                                                help set the course for future growth and strengthen
During 2005, Copenhagen Airport also hosted Routes,             the airport’s position as the hub of Scandinavia.
a route development forum held every second year
with 1,600 delegates from all over the world. As a
result of our increased focus on route development,
we took advantage of the Routes venue to announce               Niels Boserup
that we had reached agreements with two of the                  President and CEO                                                               

    | Group Annual Report 005 | Management´s report | Financial highlights and key ratios




                                                                                             Financial highlights and key ratios
Financial highlights and key ratios


DKK million                                                     2005             2004             2003             2002            2001
Note


Income statement
Revenue                                                         2,738           2,485            2,213            2,145            2,041
EBITDA                                                          1,329           1,450            1,276            1,210            1,130
EBIT                                                              971             974              807              737              658
Profit from investments                                            89               71               23              (31)             41
Net financing costs                                               207             227              223              178              207
Profit before tax                                                 854             818              608              528              492
Profit for the year                                               670             593              432              364              356


Balance sheet
Property, plant and equipment                                   6,299           6,127            6,135            6,381            6,655
Investments                                                     1,844           1,584            1,542            1,767            1,669
Total assets                                                    8,553           8,340            8,556            8,543            8,846
Equity                                                          3,412           3,231            3,179            3,261            3,273
Interest-bearing debt                                           3,762           3,516            3,907            4,155            4,473
Capital investments                                               510             450              211              179              488
Financial investments                                             103               78                1             355            1,192


Cash flow statement
Cash flow from operating activities                               897           1,094            1,037              873              890
Cash flow from investing activities                              (609)            (507)           (203)            (524)          (1,752)
Cash flow from financing activities                              (581)            (771)           (377)            (482)           1,002




                                                                                                                                            | Group Annual Report 005 | Management´s report | Financial highlights and key ratios
Cash at end of year                                                30             322              505               47              181


Key ratios
EBITDA margin                                                  48.5%           58.3%            57.7%            56.4%            55.4%
EBIT margin                                                    35.5%           39.2%            36.5%            34.4%            32.2%
Asset turnover rate                                              0.42             0.38            0.33             0.31             0.29
Return on assets                                               14.8%           15.1%            12.2%            10.7%             9.4%
Return on equity                                               20.2%           18.5%            13.4%            11.1%            11.4%
Equity ratio                                                   39.9%           38.7%            37.2%            38.2%            37.0%
Earnings per DKK 100 share                                       85.5             71.3            50.0             40.1             39.1
Cash earnings per DKK 100 share                                 131.1           128.6            104.2             92.3             90.9
Net asset value per DKK 100 share                               434.7           399.6            375.0            367.3            359.7
Payout ratio                                                 100.0%            50.0%            38.4%            33.5%            25.6%
Dividend per DKK 100 share                                      85.42           35.58            18.21            13.38            10.00
NOPAT margin                                                  27.6%            31.1%            26.9%            24.4%            28.3%
Turnover rate of capital employed                                0.34             0.32            0.28             0.26             0.27
ROCE                                                            9.4%           10.1%             7.5%             6.3%             7.6%



The definitions of ratios are in line with the recommendations from December 2004 made by the Association of Danish Financial Analysts,
except for the ratios not defined by the Association. Definitions of ratios are published at www.cph.dk




                                                                                                                                                                  5

    | Group Annual Report 005 | Management´s report | Xxxxxxxxxx
Vision
‘Largest in Scandinavia, most efficient in Europe, best in the world’


Largest in Scandinavia                                      Most efficient in Europe

A position as the largest airport in Scandinavia is an      A prerequisite for successful and responsible growth is
important starting point for achieving the greatest         constant efficiency in the airport’s operations and serv-
possible growth.                                            ices. A competitive price is also an important factor
                                                            for securing growth. The price must be commensurate
The larger the route network and the more frequen-          with the services provided and concurrently meet
cies an airport can offer, the more attractive it is for    customers’ expectations.
passengers to use. In any given area, the airport which
already has the largest number of routes, frequencies       In 2005, Copenhagen Airport was rated the most
and passengers will be the airlines’ natural choice         efficient airport in the world by the Air Transport
when they establish new routes to and from that area.       Research Society (www.atrsworld.org) for the second
With 20 million passengers, 132 destinations and 61         consecutive year. This rating was based on the ATRS
airlines, Copenhagen Airport is today the largest air-      Airport Benchmarking Report, which measures and
port in Scandinavia. This means that trips to and from      compares performance in three aspects of airport
Scandinavia are often fastest and most efficient when       operations: (a) productivity and efficiency, (b) com-
made via Copenhagen, the hub of Scandinavia.                petitiveness in terms of costs and (c) financial
                                                            performance and airport charges.
The position as the hub of Scandinavia is attractive
and the most important asset in the competition for         CPH’s focus on efficiency makes it possible for Copen-
passengers and airlines. Moreover, it is of great impor-    hagen Airport to offer a quality product at competitive
tance to the development and growth in the Øresund          prices. Although CPH’s aggregate airport charge has
region. An international airport with easy access to many   been below average amongst comparable airports,
destinations in the world is an important prerequisite      Copenhagen Airport’s competitiveness has nevertheless
when a business decides to set up in a region.              been weakened by the special Danish tax of DKK 75
                                                            per departing passenger. In late 2005, the Danish
With its focus on growth, by retaining and attracting       politicians decided to phase out the passenger tax
passengers and airlines, Copenhagen Airport must            over two years, so that it will be abolished altogether
retain its position as the largest airport in Scandinavia   by the beginning of 2007. This decision will contribute
in future.                                                  to strengthening the competitive position of Copen-
                                                            hagen Airport.

                                                                                                                        | Group Annual Report 005 | Management´s report | Vision




                                                                                                                                       
                                                            Charges regulation at Copenhagen Airport                132 destinations
                                                            Since 2000, the level of charges at Copenhagen Air-
                                                            port has been fixed by voluntary agreements between     Copenhagen Airport offers more destinations than any other

                                                            CPH and the airlines; these agreements run for terms    airport in Scandinavia.

                                                            of three years at a time.
                                                                                                                                                          CPH       OSL          ARN

                                                            2005 was the third year under the second voluntary      Intercontinental                        19         2           9
                                                            price agreement, which ran from 2003 until the end      Europe                                  84        47          52
                                                            of 2005 and allowed price increases averaging 2.75%     Nordic                                  22         7          11
                                                            annually in 2003, 2004 and 2005.                        Domestic                                 7        23          30
                                                                                                                    Total                                 132         79         102
                                                            Negotiations for a new three-year charges agreement                                           Source: OAG September 2005

                                                            to take effect on 1 January 2006 were finalised in
                                                            November 2005. The agreement ensures that Copen-
                                                            hagen Airport’s prices will also be competitive over
                                                            the next three-year period. The main contents of the
                                                            new agreement are that charges will be reduced by
                                                            3% in 2006, whilst they will be increased by 1% in
                                                            2007 and another 1% in 2008. In order to promote
                                                            traffic growth, a bonus scheme will furthermore be
                                                            introduced to act as an incentive to the airlines for
                                                            generating passenger growth. Finally, a discount will
                                                            be introduced for large aircraft in order to make it
                                                            more attractive to open new overseas routes.
| Group Annual Report 005 | Management´s report | Vision




               
Best in the world

The ambition is that a visit to Copenhagen Airport
should be a good experience. CPH has many years
of experience in building, operating and maintaining
high-quality airports, and our experience shows that
passengers appreciate good experiences.

Time and time again, Copenhagen Airport makes the
list of ’preferred airports’ according to various passenger
surveys, including surveys made by IATA (www.iata.com)
and the ACI, the international association of airports.
This position has partly been achieved through efficient
handling of traffic, comfortable and attractive physical
facilities, a nice atmosphere and, not least, good
shopping.

To remain among the best airports in the world, CPH
intends to continue developing this concept. This will
include constant improvement of efficiency in traffic
handling for the benefit of the airlines and flexibility
in adapting to changes in the passenger mix, so as
to constantly create the best conditions for a good
experience and for revenue growth.




                                                              | Group Annual Report 005 | Management´s report | Vision




                                                                             
                                                                                    1       2




                                                                                    3       4




                                                                                    5       6




1-6: Handling companies                                        responsibilities with respect to check-in, document          Airlines which often have aircraft at an airport have their
The airlines can choose whether they provide the               control, boarding and baggage handling.                      own contracts with the fuel provider at CPH to supply
services required in their day-to-day operations them-                                                                      fuel for their aircraft and with the catering companies
selves (check-in, baggage handling, assistance, etc) or        When an aircraft lands at the airport, it is guided into     to deliver food for their aircraft. However, these serv-
whether they want to contract these services out to a          its parking position by a so-called “docking-guidance        ices can also be provided through a handling company.
third-party supplier. A third-party supplier is a specialist   system” – also called APIS (Aircraft Parking Information
in providing the services connected with all kinds of          System). Afterwards, the handling company connects           While the passengers are on their way to the arrivals
passenger and aircraft handling, and they usually have         the air ventilation, power supply, etc. and rolls the pas-   area, baggage is transported to and loaded onto the
contracts with several airlines at the same time. This         senger bridge to the forward doors of the aircraft.          baggage belts by handling company workers. If a
arrangement offers a high degree of flexibility in the                                                                      bag is missing, it is the responsibility of the handling
use of their resources and facilities for the benefit of       While the aircraft is parked at the gate, baggage            company to find and deliver it to the customer.
both airlines and airport.                                     and any cargo is taken to and from the aircraft by
                                                               handling company personnel. Cleaning, water                  There are three handling companies at Copenhagen
A handling company is an airline’s representative at the       for the toilets, etc. are also things the handling           Airport: SAS Ground Service (SGS), Novia and Servisair.
airport and, to a great extent, it assumes the airline’s       company takes care of.                                       CPH does not provide these services.
Management’s financial review


Income statement                                                   On this basis the Group’s EBITDA margin fell from
                                                                   58.3% in 2004 to 48.5% in 2005.
DKK million                    2005      2004      Ch.    Ch. %

Revenue                      2,738.4   2,485.3   253.1    10.2%    Amortisation of intangible assets and depreciation of
Operating costs              1,767.4   1,511.4   256.0    16.9%    property, plant and equipment fell by DKK 118.3 mil-
Operating profit              971.0     973.9     (2.9)   (0.4%)   lion to DKK 357.8 million in 2005, primarily as a result
Profit from investments                                            of changes to the useful economic lives of assets in
in associates after tax        89.4      70.7     18.7    26.4%    accordance with IAS 16.
Net financing costs           206.9     227.0    (20.1)   (8.9%)
Profit before tax             853.5     817.6     35.9    4.4%     Operating profit fell by DKK 2.9 million to DKK 971.0
Tax on profit for the year    183.1     224.8    (41.7) (18.5%)    million, equivalent to an EBIT margin of 35.5% in
Net profit for the year       670.4     592.8     77.6    13.1%    2005 (2004: 39.2%).

                                                                   The profit from the Group’s international activities
Performance compared with forecasts                                (associated companies) rose by 26.4% to DKK 89.4
The Group achieved a pre-tax profit of DKK 853.5 mil-              million. Most of the growth came from the investment
lion in 2005, which was 3.5% above the level forecast              in Newcastle International Airport.
in the Q3 2005 interim report. The improvement was
to a great extent the result of higher-than-expected               Net financing costs fell by DKK 20.1 million year on
traffic growth in Q4 2005.                                         year as a result of lower exchange losses compared
                                                                   with 2004.
Performance compared with 2004
Consolidated revenue increased by DKK 253.1 million                Consolidated profit before tax rose DKK 35.9 million
to DKK 2,738.4 million in 2005. The growth in revenue,             year on year and amounted to DKK 853.5 million.
which should be seen, among other things, against
the backdrop of a 5.0% increase in passenger numbers,              IAS 16 and IAS 28




                                                                                                                              | Group Annual Report 005 | Management´s report | Management’s financial review
reflects growth in both traffic and concession revenues,           The amendments adopted to the international ac-
and the Group’s hotel operation also showed progress.              counting standards IAS 16 and IAS 28 are described in
                                                                   greater detail in “Accounting policies” (page 46-52).
Operating costs increased by DKK 256.0 million to                  The change does not influence the cash flow.
DKK 1,767.4 million in 2005. Increased staff costs
accounted for DKK 129.7 million of this increase.                  Change in corporate tax rate from 30% to 28%
Primarily as a result of stricter security requirements,           The reduction of the Danish corporate tax rate from
the number of employees rose by 167 to a total of                  30% to 28% resulted in a DKK 54.2 million reduction
1,652 full-time equivalents, which was an 11%                      of deferred tax at 1 January 2005, which is included
increase year on year.                                             in tax on the profit for the period.

The DKK 244.6 million increase in external costs was               Operating review
mainly attributable to higher costs as a result of stricter        The operating and financial performance is reviewed
security requirements, a DKK 68.9 million increase in              by segment on pages 12-28.
maintenance costs (IAS 16), DKK 24.1 million of costs
incurred in connection with an employee share offer,
DKK 38.0 million of costs incurred in connection with
the tender offer submitted in Q4 2005 by Macquarie
Airports for the shares of CPH and DKK 34 million
of costs relating to offers regarding investments in
Hungary and Bulgaria and other one-off costs related
to CPH International.

                                                                                                                                11
                                                             Traffic


                                                             Financial performance in 2005
                                                                                                                       Adjusted for this, the growth rate was 11.9%, which
                                                             Revenue                                                   was attributable to the increase in passenger numbers,
                                                             A breakdown of the segment revenue, which rose by         the 4.0% increase in charges on 1 January 2005 and
                                                             9.7%, is shown in the chart on page 13.                   relatively more locally departing passengers, who are
                                                                                                                       subject to higher charges than transfer passengers.
                                                             Take-off charges were favourably affected by a 1.5%
                                                             adjustment of charges on 1 January 2005 and a 0.4%        The lower parking charges were the result of changes
                                                             increase in the take-off mass. The increase in take-off   in frequencies and overnight parking of aircrafts.
                                                             charges was partially offset by increased discounts for
                                                             cargo and discounts for new passenger routes. The         The increase in handling revenues was a consequence
                                                             fact that the increase in take-off mass was not as high   of the growth in the number of departing passengers.
                                                             as the growth in passenger numbers reflects better        The increase in other revenue represented increased
                                                             capacity utilisation by the airlines.                     sales of security services, among other things.

                                                             Passenger charges increased by DKK 107.8 million,         EBIT
                                                             of which DKK 21.9 million was attributable to the         EBIT was affected by increased costs to meet the
                                                             security charge of DKK 9.10 per departing passenger       stricter security requirements and costs related to
                                                             introduced on 1 April 2004 to partially cover costs       the sale of employee shares.
                                                             incurred to meet the stricter security requirements.



                                                             A geographic hub

                                                             Copenhagen Airport is the hub
                                                             of Scandinavia – the hub of air
                                                             traffic to and from Scandinavia
                                                             and the Baltic region. The air-
                                                             port’s traffic status is anchored
                                                             in its location as the southern-
                                                             most major airport in Scandinavia
                                                             with a catchment area constitut-
                                                             ing the market basis for transfer
                                                             traffic at the airport. The large
| Group Annual Report 005 | Management´s report | Traffic




                                                             geographic distances in Norway
                                                             and Sweden and the relatively
                                                             low population density in these
                                                             areas make Copenhagen Airport
                                                             the natural airport for transfer
                                                             traffic. This transfer traffic is
                                                             driven not only by SAS’s route
                                                             network but just as much
                                                             by demographic factors in
                                                             Scandinavia.


                                                             Intra-European traffic in
                                                             particular is anchored in the
                                                             passenger base in the Øresund
                                                             region, whilst trans-Atlantic
                                                             and Asian traffic comes from
                                                             the Nordic countries and from
                                                             Nothern Germany.
 1
Financial performance 2005                                      Market

DKK million                 2005      2004      Ch.    Ch. %    Some of the major factors underlying the strong position
Revenue                  1,601.8    1.459.6   142.2    9.7%     in Scandinavia of Copenhagen and the Øresund region
Profit before interest     395.3     430.6    (35.3)   (8.2%)   are (1) the fact that the area has the largest regional
Segment assets           3,897.3    3,950.2   (52.9)   (1.3%)   population and labour force in the Nordic region;
Number of employees        1,132       985     147     14.9%    (2) it is strategically well located at the entrance to the
                                                                Baltic Sea; and (3) it has easy international accessibility
Revenue                                                         through Copenhagen Airport. In addition, the region
                                                                has a high concentration of universities and research
DKK million                 2005      2004      Ch.    Ch. %    centres, which is a factor contributing to the well-
Take-off charges           511.1     502.2      8.9    1.8%     educated labour force, about 30% of whom hold
Passenger charges          895.6     787.8    107.8    13.7%    academic degrees. Copenhagen and the Øresund
Parking charges             28.4      29.8     (1.4)   (4.7%)   region form the largest growth centre in Scandinavia.
Handling                    94.7      90.3      4.4    4.9%
Other                       72.0      49.5     22.5    45.5%    CPH is the largest airport in Scandinavia, both in terms
Total                    1, 601.8   1,459.6   142.2    9.7%     of the total number of passengers, the percentage of
                                                                transfer passengers, international traffic, intercontinental
                                                                routes and the number of destinations.
Business scope
                                                                This is one of the reasons why Copenhagen Airport is
The Traffic business comprises the operations, functions        considered the Scandinavian hub for air traffic to and from
and facilities which the airports at Copenhagen and             Scandinavia, northern Germany and the Baltic region.
Roskilde make available so that airlines can operate their
flights. Revenue from this business comprises passenger,        Route development
take-off and parking charges paid by the airlines for           Trends in the aviation industry are towards increased
using the facilities made available by the airports. In         competition among airports to attract new airlines and
addition, revenue includes other traffic-related revenues       routes. This is very much the result of the rising supply
such as revenues from payments for the use of                   of value for money airfares, with the airlines quite simply
handling facilities at the airport.                             looking for the destinations where they can get the most
                                                                competitive deal. This makes it even more important to
                                                                market and sell Copenhagen Airport to the airlines as
Strategy                                                        the hub of Scandinavia, so CPH has increased its focus
                                                                                                                               | Group Annual Report 005 | Management´s report | Traffic

                                                                on marketing towards the airlines in recent years.
The strategy for Traffic is to establish the framework for
opening additional frequencies to existing as well as new       A very important favourable factor in the expansion of
destinations through a close dialogue with the airlines.        the route network out of Copenhagen Airport is the
                                                                Danish government’s decision to phase out the Danish
The supply of destinations and frequencies at Copenhagen        passenger tax. In 2005, the passenger tax was DKK 75
Airport is supported by introductory discounts for new          per departing passenger, resulting in extra costs to the
routes and efficient traffic handling at competitive prices.    airlines of about half a billion Danish kroner per year.
                                                                Under the agreement on the Danish budget, the pas-
In combination with offering a wide range of destinations       senger tax will be reduced to DKK 37.50 in 2006 and
and frequencies, CPH’s strategy is for Copenhagen               abolished completely in 2007.
Airport to add to the passenger’s travel experience.
Implementing this strategy involves a continual effort          Copenhagen Airport expects that new international
to create a unique atmosphere at the airport, as well           routes will open in 2006, partly as a result of the
as convenient and practical access conditions and               phasing out of the passenger tax.
innovative solutions which together offer passengers
good experiences.                                                                                                               1
                                                             In addition, we expect that the abolition of the pas-       Copenhagen Airport saw a rapid growth in the number
                                                             senger tax will have a positive impact on domestic air      of locally departing passengers in 2005, growth driven
                                                             traffic after several years of weak growth. Domestic        by a larger percentage of leisure travellers. In 2005,
                                                             traffic is hit particularly hard by the passenger tax, as   the percentage of leisure travellers was higher than
                                                             the tax is charged for all passengers travelling out of     the percentage of business travellers for the first time.
                                                             a Danish airport. This means that on a domestic return      The increase in the number of locally departing passen-
                                                             flight, the passenger tax is charged twice.                 gers was also caused by a growing number of airlines
                                                                                                                         serving the European destinations, which has intensified
                                                             Traffic developments in 2005                                competition on these routes resulting in lower prices.
                                                             Passenger numbers at Copenhagen Airport increased
                                                             by 5.0% in 2005 to reach 20 million passengers, the         The percentage of passengers travelling on low-cost
                                                             highest number ever in the history of Copenhagen            flights continues to have an impact on traffic patterns,
                                                             Airport. This ensured Copenhagen Airport’s continued        with low-cost airlines focusing on point-to-point services
                                                             position as Scandinavia’s largest airport.                  without connecting services. For this reason, low-cost
                                                                                                                         passengers are classified as locally departing passengers
                                                             The number of transfer passengers was down 6.3%             out of Copenhagen Airport. In 2005, Copenhagen
                                                             in 2005. This negative trend switched to slight growth      Airport had 2.0 million low-cost passengers, which
                                                             in the last few months of the year, also due to an          was 10% of all passengers. This represented a 10.5%
                                                             increase in the number of transfer passengers from          increase on 2004. In the low-cost market, Sterling
                                                             the traditional feeder market.



                                                             Local market


                                                             Copenhagen Airport’s local
                                                             catchment area includes
                                                             about four million people
                                                             within two hours’ driving
                                                             distance and six million peo-
                                                             ple with three hours’ travel
                                                             time. With an average travel
                                                             activity of more than one
                                                             trip per inhabitant in the
                                                             two-hour catchment area,
                                                             Copenhagen Airport has
| Group Annual Report 005 | Management´s report | Traffic




                                                             what is even by European
                                                             standards a high utilisation
                                                             rate in the local market.




 1
became the second-largest operator out of Copenha-             of air cargo, an increase of 5.8%, carried on passenger
gen, with 52% of low-cost traffic after its acquisition        flights as well as a total of 8,535 all-cargo flights.
of Maersk Air.
                                                               In late 2004, CPH adjusted its take-off charge for all-
Nordic traffic rose by 0.3% in 2005. This low growth           cargo flights with a take-off weight of more than 200
rate was mainly due to declining traffic to Norway and         tonnes, making Copenhagen Airport competitive with
Sweden, which was down by 2.8%. A general reduc-               its nearest competitors on the continent and also cheapest
tion of frequencies to a number of Norwegian and               in Scandinavia. This resulted in a sharp increase in
Swedish destinations is the main reason for the de-            the number of large all-cargo flights in 2005, a trend
cline. However, passenger numbers increased to Oslo,           that is expected to continue in 2006, with several
Stockholm and Gothenburg, partly due to increased              all-cargo airlines showing an interest in flying out of
availability of value for money airfares. Traffic to Finland   Copenhagen Airport.
grew by 13.8% in total, due to increased availability
of value for money airfares and new destinations.              Also in 2005, French-owned WFS (Worldwide Flight
                                                               Services) began building a new 7000-square-metre
European traffic increased by 7.3% in 2005, also be-           cargo terminal in the eastern area of the airport,
cause of the higher number of value for money airfares.        which will be used for handling air cargo. WFS
Intercontinental traffic did not see the same growth           expects to begin operating around March 2006,
in 2005 as in 2004, which was due to a larger number           which will add another option for the many users
of direct routes out of competing airports. Also in            of air cargo services.
2005, intercontinental traffic rose by 6.0%.
                                                               The growth in the number of cargo flights to and from
Domestic traffic rose by 3.4% in 2005. This increase           CPH is very much driven by sharply increasing imports
was very much the result of an intensive competition           from Asia. There are now 13 weekly flights by B747
between Cimber Air and Danish Air Transport on the             freighters to Asia, which has almost doubled the
service to Rønne. Danish Air Transport started flights         number of large freighters between Copenhagen
to Rønne in the summer of 2005.                                Airport and destinations in Asia compared with
                                                               three years ago.
Northern Europe’s air cargo hub
As a result of its unique geographic location, Copenhagen      External conditions
Airport is considered the air cargo hub of Scandinavia,        Operating an airport in Denmark requires an operating
the Baltic States and the southern Baltic-rim countries.       licence issued by the Danish Civil Aviation Administration
In 2005, Copenhagen Airport handled 355,087 tonnes             (CAA) based on regulations fixed by ICAO (the Interna-
                                                                                                                            | Group Annual Report 005 | Management´s report | Traffic

                                                               tional Civil Aviation Organisation). The operating licence
                                                               specifies, among other things, that Copenhagen Airport
                                                               meets the CAA’s requirements with respect to technical
                                                               facilities and equipment at an airport. The operating
                                                               licence was renewed in November 2005, permitting
                                                               unchanged operations until 1 December 2010.

                                                               Security
                                                               Increased EU security requirements at European airports
                                                               have resulted in more security staff being hired at CPH
                                                               and changes to the physical facilities at the airport in
                                                               various areas. One of the requirements under the new
                                                               EU regulation implemented after 9/11 was that airports
                                                               must have one or more security zones. The so-called
                                                               “C-SRA area” is the highest security standard in EU
                                                               airports, with 100% checking of all persons, passengers
                                                               and vehicles passing through checkpoints. To facilitate       15
                                                             the operation of flights and handling services at            At the end of 2005, the first part of the construction
                                                             Copenhagen Airport, the airport’s C-SRA area will be         of a noise barrier along Terminal 1 was completed.
                                                             expanded to include the apron in the northern part of        In addition to the noise barrier, the project selected
                                                             the airport from and including January 2006. Security        includes an internal connecting pier between Terminal 1
                                                             checkpoints with facilities for screening people and         and Terminal 2 with moving sidewalks. This solution
                                                             vehicles must be set up before an area can be classified     will significantly improve service for passengers and
                                                             as a C-SRA area.                                             allows the option of using Terminal 1 for traffic other
                                                                                                                          than domestic at some point in the future.

                                                             Activities in 2005                                           In 2005, CPH also continued and expanded a scheme of
                                                                                                                          CUSS check-in kiosks (CUSS: Common Use Self Service)
                                                             In November 2005 CPH and the airlines reached an             in Terminals 2 and 3. The kiosks allow passengers to
                                                             agreement on charges for the coming three years              check in on their own. Unlike traditional check-in
                                                             (2006-2008).                                                 machines, the CUSS kiosks are not airline-specific: any
                                                                                                                          airline wishing to offer this service to its passengers
                                                             The main feature of the new agreement is a 3% reduc-         can link up to the system. At the end of 2005, there
                                                             tion of charges in 2006, to be followed by a 1% increase     were 23 kiosks in use.
                                                             in 2007 and by a further 1% rise in 2008. In order to
                                                             support traffic growth at Copenhagen Airport, a cash         To facilitate the flow of the growing number of Asian
                                                             bonus plan will be introduced to act as an incentive to      passengers through the airport, CPH put up signs in
                                                             airlines to generate passenger growth. To increase traffic   Chinese and Japanese in the airport’s non-Schengen
                                                             to overseas destinations, a discount has been introduced     area in 2005.
                                                             on operations with large aircraft. The weight-based
                                                             charge will be cut in half for the part of the weight
                                                             which exceeds 200 tonnes.

                                                             With this agreement, the airlines and the airport will
                                                             have a shared interest in attracting additional passengers
                                                             and new routes out of Copenhagen. This will strengthen
                                                             Copenhagen Airport’s position as an air traffic hub in
                                                             northern Europe and benefit the entire region.

                                                             In 2005, CPH hosted Routes, a route development
| Group Annual Report 005 | Management´s report | Traffic




                                                             forum at which airlines and airports from the entire
                                                             world meet and discuss new routes. The conference
                                                             was a unique opportunity to place CPH on the map,
                                                             and we expect that hosting Routes will help promote
                                                             new routes being opened out of CPH.

                                                             To make it easier for passengers to pass through the
                                                             airport, CPH opened a large transfer centre in 2005,
                                                             the first in Europe. All handling companies are repre-
                                                             sented in the transfer centre, a 1000-square-metre
                                                             glass-covered atrium structure with counters and service
                                                             staff along one side and a café environment and
                                                             internet link-up facilities along the other. The transfer
                                                             centre freed up the areas in which the former service
                                                             centres were located; these areas are now being used
                                                             for commercial purposes.
 1
                                                                   1       2




                                                                   3       4




1: New bar/restaurant in Pier B                           the world’s largest airport retailers. About 35,000 dif-   4: 8,500 parking spaces
The shops in the shopping centre are renovated or         ferent products are sold at Copenhagen Airport.            In 2005, Copenhagen Airport built a new multi-storey
replaced regularly to ensure that the shopping centre                                                                carpark to the east of Terminal 3. The carpark has
always meets customer expectations of an exclusive,       3: A hot dog with everything                               1,030 spaces, which brought the total number of
well-assorted and international shopping street. One of   One of the latest initiatives in the food and beverage     parking spaces at the airport’s carpark facilities up
the changes was the closure of Tivolikroen in the area    area is a real Danish hot-dog stand. This concept          to about 8,500 spaces at the end of 2005. As the
near Pier B and the opening in its place of a modern      represents a part of Danish culture which many people      demand for parking spaces continues to rise, another
bar/restaurant, the Eyecon, on 26 January 2006.           do not, off-hand, expect to find at an airport. The two    multi-storey carpark is under construction. This carpark
                                                          hot-dog stands are located in Terminal 3 and in the        is expected to be ready for use in August 2006.
2: Partnership with the Nuance Group                      baggage-reclaim area. They were designed in collabo-
Ten out of the airport’s 49 shops are operated by the     ration with Steff Houlberg Fastfood to fit in with the
Nuance Group. Owned by Italian-based Gruppo PAM           rest of the airport’s interior design.
and with 350 shops in 17 countries, Nuance is one of
                                                                Commercial


                                                                Financial performance in 2005                                  Financial performance 2005


                                                                Revenue                                                        DKK million                 2005      2004      Ch.     Ch. %

                                                                Revenue rose by 10.1% year-on-year, primarily due              Revenue                   1,097.9    997.1    100.8    10.1%
                                                                to increased concession revenues and an increase in            Profit before interest     589.2     558.0     31.2     5.6%
                                                                activities at the hotel.                                       Segment assets            2,731.5   2,434.4   297.1    12.2%
                                                                                                                               Number of employees          492       473      19      4.0%
                                                                Concession revenue
                                                                The reduction in revenues from the shopping centre             Concession revenue
                                                                should be seen in light of lower duty- and tax-free
                                                                sales following the accession of ten new EU member             DKK million                 2005      2004     Ch.      Ch. %

                                                                states as from May 2004.                                       Shopping centre            425.0     439.0    (14.0)    (3.2%)
                                                                                                                               Parking                    135.7     114.1     21.6    18.9%
                                                                The improvement in revenue from the parking concession         Other                      117.2      87.3     29.9    34.2%
                                                                reflects the larger number of locally departing passengers     Total                      677.9     640.4     37.5     5.9%
                                                                and a relatively larger number of passengers from
                                                                southern Sweden travelling to the airport by car.              Rent


                                                                The increase in other revenues was partly attributable         DKK million                 2005      2004      Ch.     Ch. %

                                                                to new contracts and increased revenues from the               Rent from premises         141.5     127.0     14.5    11.4%
                                                                airport bars and restaurants as a growing number of            Rent from land              39.5      38.7      0.8     2.1%
                                                                passengers are travelling on economy class or low-cost         Other                        16.0       7.8     8.2    105.1%
                                                                flights without access to airport lounges or in-flight         Total                      197.0     173.5     23.5    13.5%
                                                                meal services.
                                                                                                                               Sales of services, etc.
                                                                Rent
                                                                The increase in rent was attributable to new leases and        DKK million                 2005      2004      Ch.     Ch. %

                                                                contractual rent increases.                                    Hotel operation            180.6     147.0     33.6    22.9%
                                                                                                                               Other                       42.4      36.2      6.2    17.1%
                                                                The increase in other rent was attributable to one-off in-     Total                      223.0     183.2     39.8    21.7%
                                                                come relating to the preparation of a site for construction.
| Group Annual Report 005 | Management´s report | Commercial




                                                                Sales of services, etc.                                        Business scope
                                                                The improvement of the hotel operation’s perform-
                                                                ance was the result of the rising occupancy rate, partly       The Commercial business comprises the facilities and
                                                                due to increased conference activities, which had a            services provided by the airport to passengers and
                                                                favourable impact on accommodation revenues as well            other users of the airport, including shops, restaurants,
                                                                as revenues from the restaurants and other activities.         rest areas, lounges, parking facilities and the hotel. By
                                                                                                                               far the majority of activities have been outsourced to
                                                                EBIT                                                           professional operators to promote increased growth.
                                                                The growth in revenue was partially offset by increased        Consequently, Copenhagen Airports is not directly
                                                                costs for preventive maintenance and by increased              involved in the day-to-day operation of these activities
                                                                operating costs at the hotel as a result of the growing        but negotiates and renegotiates contracts and handles
                                                                activity and costs related to the sale of employee shares.     the general maintenance and development of the area.

                                                                                                                               This business area also includes leasing of CPH’s
                                                                                                                               buildings, premises and land to third-party lessees.



 1
Strategy                                                       that CPH employees understand the philosophy
                                                               behind the strategy and provide service to passengers
Copenhagen Airport wishes to serve as a model for              in accordance with CPH’s corporate values. To this end,
the aviation industry in the field of commercial activities.   Copenhagen Airport has developed the Copenhagen
The airport seeks to achieve this goal by monitoring           Airport Shopping Center Academy training programme
international trends in the industry, by being innovative      to ensure the greatest possible customer satisfaction
and by having the competencies and tools necessary             at the shopping centre. The basic philosophy behind
to develop and optimise both new and existing                  the training programme is that smiling employees can
business areas.                                                motivate passengers to buy more, with rising sales per
                                                               passenger as a result. For this reason, retail staff are
For the shopping centre, the strategy is to be more than       trained to serve customers of different nationalities
’just another shopping centre’. Some 34% of passen-            and have learned about buying behaviour in passengers
gers at the airport are transfer passengers who do not         who are pressured for time.
experience any Danish and Scandinavian culture beyond
what they see at the airport. While they are waiting, the
airport should show them the best that Denmark and             Market
Scandinavia has to offer in architecture, design and art.
                                                               Over the past few years, a change in the traffic pat-
The activities aimed at throwing a spotlight onto art,         tern has caused an increase in the number of locally
architecture and culture include annual design festivals       departing passengers. This trend is primarily driven by
and the interior design and atmosphere at Copenhagen           growth in the number of low-cost passengers, which
Airport. The design elements also encourage passen-            has, however, to some extent been offset by a drop in
gers to move around in the terminals and explore the           the number of transfer passengers. However, the
many art and design features on their own.                     change in the traffic pattern has affected the passen-
                                                               ger mix at the shopping centre and resulted in new
The commercial strategy for the shopping centre is based       initiatives in the Commercial business.
on various types of market surveys intended to reveal
information on passenger behaviour and demand. The
results of the surveys are primarily used for concept          Concession revenue
development in the terminal area, i.e. new shops or
the refurbishment of existing ones. The airport works          Shopping centre
closely together with the concessionaires to put               The shopping centre consists of 11 duty- and tax-free
                                                                                                                            | Group Annual Report 005 | Management´s report | Commercial
together a product range to match today’s customers,           shops and 38 specialty shops which, together with 13
with the overall goal of optimising sales in the shops         food and beverage entities, take up a total area of about
and thus achieving the highest possible earnings per           10,000 square metres in the transit area. In addition to
passenger. A great emphasis is attached to renewal             the transit area, on landside, Copenhagen Airport has
and innovation to ensure that the shopping centre              14 specialty shops, services and food and beverage
always meets customer expectations of an exclusive,            entities, certain temporary shops in the ’Arcade’ and
well-assorted and international shopping street.               2,200 square metres of speciality shops and food and
                                                               beverage entities at the ’Circle’, which is located near
A good collaboration between Copenhagen Airport                the Hilton hotel and the motorway access.
and the concessionaires is a prerequisite for imple-           The shopping centre competes with retail facilities at
menting a successful strategy for the Commercial               other airports, with in-flight retailing and with shopping
business area. Satisfaction among concessionaires              in the Copenhagen city centre. In spite of this, the
is measured once a year, and continuing efforts are            shopping centre has a strong position due to the
made to improve the level of satisfaction. The efforts         geographic location of the airport as the main airport
include focusing on operational support, staff facilities      in Scandinavia and its good reputation as the best airport
and communications, and on creating a team spirit              in Europe in terms of such features as service, shopping,
that unites CPH and the concessionaires. One of the            atmosphere and quality. This status also makes it easier
most important prerequisites for meeting the goal is           to draw attractive concepts and brands.                       1
                                                                Duty- and tax-free sales are Copenhagen Airport’s               in 2005. The carpark has 1030 spaces, which increased
                                                                largest source of revenue from the shopping centre.             the number of spaces in the carpark facilities at Copen-
                                                                However, these sales were adversely affected by the             hagen Airport to about 8500 at the end of 2005. As
                                                                ten new countries joining the EU on 1 May 2004. To              demand continues to rise, construction of an additional
                                                                Copenhagen Airport, enlargement of the EU meant a               multi-storey carpark with 1400 spaces is under way
                                                                decline in the number of non-EU passengers and thus             and expected to be ready for use in August 2006.
                                                                in the number of passengers eligible to make duty-
                                                                and tax-free purchases. Furthermore, duty- and tax-             Property development
                                                                free sales were adversely affected by the introduction          CPH owns 420,000 square metres of land for develop-
                                                                in Norwegian airports of duty- and tax-free sales on            ment to the east of the airport. Due to the well-devel-
                                                                arrival in July 2005, which intensified competition for         oped infrastructure, easy access by train, car, air and
                                                                Scandinavian customers.                                         boat, the area holds development potential as a major
                                                                                                                                cargo hub in the Øresund Region. The area is leased
                                                                In addition, sales of tax-free products are affected by a       by aviation-related businesses and used for other airport-
                                                                widespread perception that passengers no longer save            related activities which do not necessarily require a
                                                                money by buying perfume and cosmetics at the airport.           location close to the terminal area. In 2005, a building
                                                                However, a price survey made by Vilstrup, an opinion-           owned by CPH was converted and leased as a distribu-
                                                                research institute, has ascertained that Copenhagen             tion warehouse; a new cargo handling terminal is
                                                                Airport is still competitive in the field of perfume and        currently under construction.
                                                                cosmetics, as prices at the airport are about 20% below
                                                                recommended retail prices. CPH recorded a drop in duty-         Rent
                                                                and tax-free sales per passenger in 2005, which was             The target group for CPH’s leasing activities is aviation-
                                                                most likely the result of a conversion project but also         related companies. The leasing business helps support
                                                                of a difficult year for Nuance, the concession operator.        the Company’s principal activity: airport operation. This
                                                                Among other things, the shops experienced a number of           creates mutual synergies, with lessees benefiting from
                                                                out-of-stock situations, especially due to logistic problems.   the advantages of being located in the airport area.
                                                                For this reason, a collaboration project between CPH and
                                                                Nuance was started up in early 2005, and this led to the        Lessees at Copenhagen Airport are characterised by
                                                                identification of a number of improvement opportunities.        their changing requirements. Some companies need
                                                                One of the effects was that in late 2005 Nuance completed       to reduce the space leased for certain periods of time,
                                                                implementation of a SAP system, which will provide the          whilst others need more space; newcomers also need
                                                                necessary lift to logistics.                                    space. To retain current lessees and attract new ones,
| Group Annual Report 005 | Management´s report | Commercial




                                                                                                                                the airport’s buildings are continually being converted
                                                                However, the combined reduction in duty- and tax-free           and renovated to ensure that they always meet the
                                                                sales per passenger was partially offset by a growing           changing demands of the area’s users by providing
                                                                number of passengers.                                           a high maintenance standard and efficient layout,
                                                                                                                                fixtures and fittings, as well as efficient logistics.
                                                                The increase in revenues to Copenhagen Airport from
                                                                food and beverage continued in 2005 at a growth rate            The occupancy rate in the terminal area, the airport’s
                                                                of 66%. One of the factors driving this growth was the          most attractive area, was 100% in 2005, and the de-
                                                                change in traffic pattern, i.e. more passengers travelling      mand for facilities such as ticket offices and office
                                                                on low-cost flights or on economy class without access          premises persisted.
                                                                to airline lounges or in-flight meal services.
                                                                                                                                Sales of services, etc.
                                                                Parking                                                         Sales of services primarily have to do with the airport’s
                                                                The number of passengers driving to the airport has             hotel activities. The Hilton Copenhagen Airport recorded
                                                                increased significantly in recent years, resulting in opti-     a 23% year-on-year increase in revenue in 2005. This
                                                                mum utilisation of the airport’s carpark facilities. In         growth was generated as a result of increased use of
                                                                order to meet the growing demand for parking, a new             the conference facilities, higher average room rates,
 0                                                             multi-storey carpark to the east of Terminal 3 was built        higher occupancy rates and focused marketing efforts
aimed at the private leisure market. In 2005, the Hilton   demand among people for the chance to do their
Copenhagen Airport was rated “Best Hotel in Copen-         shopping in a relaxed atmosphere at home seated at
hagen” by the highly-reputed US financial magazine         the computer. This frees up time immediately before
Global Finance and was also rated “Denmark’s Best          departure for relaxing or for making use of the air-
Hotel” for the fourth consecutive year.                    port’s other facilities. In the food and beverage field,
                                                           the favourable general trend created a basis for con-
Marketing                                                  tinued renovation and concept development. One of the
In 2005, there was a continued focus on utilising the      changes was that the Tivolikroen closed down in the
earnings potential inherent in informing passengers        area by Pier B, and a new bar was opened in late 2005.
of the advantages of doing their shopping at the           The bar was the first part of a new restaurant called
shopping centre. The primary focus is on supporting        the Eyecon, which was completed 26 January 2006.
and profiling commercial activities such as duty- and
tax-free sales, the specialty shops, and the food and      Another new food and beverage initiative was a real
beverage entities. One of the projects is to make peo-     Danish hot-dog stand concept. This concept represents
ple aware, through media at the airport as well as out-    an element of Danish culture which passengers do not
side the airport, of the savings shopping at the duty-     immediately expect to find at an airport. The two hot-
and tax-free shop still represents. Marketing activities   dog stands are located in Terminal 3 and in the baggage-
also focus on generating earnings from activities at       reclaim area. They were designed in a collaboration
the airport and putting passengers in the right mood       between the airport and Steff Houlberg Fastfood, so
for shopping in the many specialty shops and visiting      that they fit into the rest of the airport’s interior design
one of the many cafes or restaurants.                      and architecture.

                                                           In March, 7-Eleven opened its largest store in Europe
Activities in 2005                                         to date. The 200-square-metre store at Copenhagen
                                                           Airport is located landside in the area connecting
Copenhagen Airport made a number of improvements           Terminal 2 and Terminal 3. The 7-Eleven store was the
in 2005, also with a number of initiatives reflecting      beginning of an expansion of the landside shopping
the passenger pattern and customer demand for              area, which targets both passengers, meeters and
experiences and innovation in the transit area.            greeters, and staff.

In the field of shopping, Copenhagen Airports and          Furthermore, the airport is constantly working to
Nuance, the operator of the duty- and tax-free store,      increase dwelltime, i.e. the time available to passen-
                                                                                                                          | Group Annual Report 005 | Management´s report | Commercial
collaborated to implement a new product categorisation     gers after they arrive at the airport and until their
to make it easier for passengers to gain an overview of    flight takes off. The goal is for passengers not to spend
the products sold and thus to make it easier for them      unnecessary time queuing for things such as checking
to find enough time to shop before departure.              in and security checks. By making this process more
Copenhagen Airport saw online sales of duty- and           efficient, passengers can begin their journeys in a
tax-free products grow to DKK 9.1 million in 2005, a       more relaxed atmosphere and without running into
six-fold increase over 2004. This growth in online sales   bottleneck problems.
via www.tax-free.dk indicates that there is a rising




                                                                                                                           1
                                                                       1       2




                                                                       3       4




1: UK – Newcastle                                         2: Mexico – Cancún                                            3-4: Scandinavia’s hub
Since 2001, Copenhagen Airports has owned 49%             In spite of a drop in traffic in the last few months          CPH is the largest airport in Scandinavia in terms
of the shares in Newcastle International Airport, oper-   of 2005 due to Hurricane Wilma, ASUR is retaining             of total passenger numbers, percentage of transfer
ating in a public private partnership with the airport.   its forecast of traffic growth in the long term, and          passengers, international traffic, intercontinental
Newcastle International Airport is the ninth-largest      construction has begun on a Terminal 3 at Cancún              routes and number of destinations. For these and
airport in the UK and one of the country’s most rapidly   International Airport. It is expected that the project will   other reasons, Copenhagen Airport is considered
growing regional airports, not least as a result of its   make it the most modern and efficient airport terminal        Scandinavia’s hub for air traffic to and from Scandi-
great success in the low-cost market. In 2005,            in Mexico, with a high service level that will greatly        navia, northern Germany and the Baltic region.
Newcastle International Airport reached a record          benefit both passengers and airlines.
of 5,2 million passengers, up from 4,7 million
passengers in 2004: a growth rate of 10.2% year
on year.
International


Financial performance                                        Financial performance 2005


Revenue rose by 35.3% to DKK 38.7 million as                 DKK million                2005       2004       Ch.    Ch. %

a result of growing revenues from NIAL, UK and a             Revenue                     38.7      28.6      10.1    35.3%
consulting contract in Oman.                                 EBIT                       (13.5)     (14.7)     1.2    (8.2%)
                                                             Profit from investments
Sales to NIAL consisted of consulting services in            in associates               89.4      70.7      18.7    26.4%

connection with the refurbishment of the terminal            Profit before interest      75.9      56.0      19.9    35.5%
and commercial activities, as well as a performance-         Segment assets              13.2       26.1    (12.9)   (49.4%)
based fee related to NIAL’s operating profit.                Investments in associates 1,840.9   1,582.8    258.1    16.3%
                                                             Number of employees           28        27        1      3.7%
Sales to ITA/ASUR, Mexico, are primarily related to
the implementation of the new long-term expansion            Profit/(loss) from investments after tax
plans, continuing commercial-activity optimisation
and management assistance.                                   DKK million                2005       2004      Ch.     Ch. %

                                                             NIAL                        33.6      12.7      20.9 164.6%
Sales to HMA, China, were consulting services provided       ITA, ASUR, HMA              55.8      60.4      (4.6)   (7.6%)
in connection with activities to increase capacity in        Other                        0,0       (2.4)     2.4         -
anticipation of future traffic growth.                       Total                       89.4      70.7      18.7    26.4%


EBIT
EBIT rose by DKK 1.2 million, partly as a result of the      Business scope
revenue growth and partly as a result of higher costs
in connection with potential investments in Hungary          CPH has invested DKK 2,037 million in foreign airports
and Bulgaria.                                                since 1998 in order to generate additional financial
                                                             growth and create value.
Profit from investments after tax
The profit share from NIAL improved year on year. The        CPH has decided to invest in foreign airports with
growth in passenger numbers primarily came from the          greater growth potential than in Denmark. These
low-cost segment. The growth in revenue was partially        investments were also made in order to reduce the
offset by increased energy costs, etc.                       Company’s dependence on its activities in Copenhagen.

                                                                                                                               | Group Annual Report 005 | Management´s report | International
The profit from investments in ITA/ASUR rose as a            CPH is an international, attractive airport partner as a
result of a 29.4% increase in commercial revenues.           result of its position as one of the best airports in the
The improvement was also attributable to the increase        world in terms of factors such as service and quality. In
by 11% in CPH’s investment in ITA in April 2004 and          addition, the Company provides financial strength and
by 12.5% on 29 April 2005 to a total of 49%. This            stable earnings growth as a result of efficient operations,
brought CPH’s combined direct and indirect ownership         tight cost management and investments that match
in ASUR to 9.85%.                                            market conditions.

CPH’s share of profit after tax from HMA was lower           The Company’s international activities are handled
than in 2004, partly as a result of a decline in passenger   through a wholly-owned subsidiary: Copenhagen
numbers. In addition, profit was adversely affected by       Airports International A/S (CPH International).
corporate income tax payable by HMA at the rate of
7.5% as from 2005. HMA had been exempt from
corporate income tax until 2005.




                                                                                                                                
                                                                   Strategy                                                     of the two airports including EUR 140 million investments
                                                                                                                                during the first 3-4 years. The selection of CPH as con-
                                                                   CPH’s international strategy is based on many years of       cessionaire was appealed by two of the other bidders
                                                                   experience and know-how as an airport operator in            for the concession, and the case was considered by the
                                                                   Denmark and as an international consultant to airports       Supreme Administrative Court of Bulgaria. The Court
                                                                   abroad. Based on this airport expertise, CPH Interna-        made a decision in favour of the two other bidders. It is
                                                                   tional has developed “The Winning Concept”, which            unknown if a new privatisation process will occur.
                                                                   describes and operationalises the airport’s competencies
                                                                   in such a way that they can be repeated and reused           In 2005, CPH and Mexican businessman Fernando Chico
                                                                   at other airports. The concept sums up experience            Pardo completed the consolidation of the ownership of
                                                                   gathered over a number of years.                             Inversiones y Tecnicas Aeroportuarias, S.A. de C.V. (ITA).
                                                                                                                                Following this consolidation, CPH holds a 49% interest
                                                                   A key element in the process of adding value to              and Fernando Chico Pardo holds a 51% interest. At the
                                                                   foreign investments is active exploitation of the            beginning of 2005, CPH held 36.5% of the shares in ITA.
                                                                   following core competencies:

                                                                   • Operating efficiencies                                     Mexico
                                                                   • Flexible and financially profitable infrastructure
                                                                     expansion to match expected traffic growth and             CPH made its first international investment in
                                                                   • Optimisation of commercial potential                       Mexico in December 1998

                                                                                                                                In 1998, the Mexican government selected a consortium
                                                                   Activities in 2005                                           consisting of Copenhagen Airports and three partners
                                                                                                                                as winners of a tender process for 15% of the share
                                                                   CPH International was involved in a number of acquisi-       capital in a new holding company, Grupo Aeroportuario
                                                                   tion projects and consulting activities in 2005, includ-     del Sureste, S.A. de C.V. (ASUR). The consortium ac-
                                                                   ing a consulting agreement in Oman in a collaboration        quired the interest in ASUR through a Mexican-based
                                                                   with COWI, a Danish-based engineering consultancy.           company: Inversiones y Tecnicas Aeroportuarias, S.A.
                                                                   The consulting work involves two of the largest airports     de C.V. (ITA), which as a strategic partner has special
                                                                   in Oman: Seeb Airport and Salalah Airport. It is expected    rights and obligations with respect to the operation
                                                                   that the two airports will reach a combined capacity of      of ASUR.
| Group Annual Report 005 | Management´s report | International




                                                                   14 million passengers per year. CPH International assists
                                                                   COWI in the development of runways, terminals, air
                                                                   traffic control towers and other buildings and facilities.   The nine airports in Mexico


                                                                   In 2005, CPH looked into acquiring Budapest Airport,
                                                                   but decided to withdraw from the bidding process in
                                                                   October.

                                                                   Also in 2005, Copenhagen Airports A/S was selected
                                                                   as the preferred concessionaire at the Varna and Bourgas
                                                                   airports in Bulgaria. The concession is part of the
                                                                   privatisation by the Bulgarian state of the two airports,
                                                                   which handle a combined 3 million passengers per
                                                                   year. Both airports hold great growth potential, with
                                                                   the Bulgarian Black Sea coast one of the most rapidly
                                                                   growing tourist areas in Europe. On 12 June, Copen-
                                                                   hagen Airports signed the concession agreement with
                                                                   the Bulgarian government. The concession agreement
                                                                 runs for 35 years and covers operation and expansion
ASUR holds the right to operate and expand a group          Operations and capacity
of nine airports located in south-eastern Mexico for        Since CPH invested in ASUR, most of the nine airports
a 50-year concession period. The area attracts many         have undergone comprehensive renovation and
international tourists due to its rich cultural heritage,   expansion in order to increase capacity, raise the level
archaeological attractions and, not least, the Caribbean    of quality and improve the commercial facilities at
coastline that features popular tourist destinations        the airports.
such as Cancún and Cozumel.
                                                            Most recently, construction started on a new Terminal
CPH holds a combined interest in ASUR which in-             3 and another runway at the airport in Cancún. The two
creased during the course of 2005 from 7.98% to             investments will total about USD 150 million. Finally,
9.85%. This was achieved through CPH’s increased            all nine airports are now prepared for the implementation
ownership interest in ITA. In addition to its investment    of a new baggage security system. System operations
through ITA, CPH also holds a 2.5% direct interest in       will commence in early 2006 and allow 100% screening
ASUR, which was acquired in ASUR’s IPO in 2000.             of checked baggage in compliance with international
                                                            security regulations.
Traffic
Since CPH became a partner of ASUR, the expecta-            The level of charges at ASUR’s nine airports follows
tions of a great traffic potential have been fulfilled.     a charges agreement with the Mexican government
The average annual growth rate of passenger num-            which runs through 2008.
bers at the nine airports was 7.7% all through 2004.
This favourable trend continued in the first half of        Commercial
2005, with a year-on-year growth of 9.1%.                   CPH has been working on raising commercial
                                                            revenues of ASUR. Through replacement and im-
However, in the second half of 2005, the tourist desti-     provement of its commercial concepts, introduction
nations Cancún and Cozumel were hit by two major            of international operators under new commercial
hurricanes which caused severe damage. This resulted        terms and conditions, and better utilisation of the
in a sharp decline in traffic in H2 2005 and thus also      airports’ premises for commercial purposes, ASUR has
lower-than-expected traffic for the full year. It is        increased its commercial revenue by 320% over the
expected that 80% of the hotel capacity will be             past five years. Commercial revenue accounted for
rebuilt by mid 2006.                                        25% of total revenue in 2005, compared with about
                                                            9% in 2000.

                                                                                                                        | Group Annual Report 005 | Management´s report | International




                                                                                                                         5
                                                                   ASUR share price performance                             United Kingdom
                                                                   ASUR was listed on the New York and Mexican stock
                                                                   exchanges in 2000, with CPH actively contributing to     CPH made its second international investment in
                                                                   the process. Since its flotation in 2000, the price of   May 2001, in Newcastle International Airport
                                                                   ASUR’s shares has increased from USD 15.13 to USD
                                                                   32.34 at year-end 2005.                                  In May 2001, CPH acquired 49% of the shares in
                                                                                                                            Newcastle International Airport Ltd. (NIAL). The remaining
                                                                                                                            51% of the shares are held by seven northern-England
                                                                                                                            local authorities which form part of a so-called “public
                                                                                                                            private partnership” together with CPH. Located in
                                                                                                                            north-eastern England, Newcastle International Airport
                                                                                                                            was the ninth-largest airport in the UK in 2005.

                                                                                                                            Appointed in 2002, NIAL’s current management was
                                                                                                                            asked to prepare a new long-term business profile.
                                                                                                                            They also initiated a turn-around process focusing on
                                                                                                                            restructuring operations, adjusting costs and increasing
                                                                                                                            the focus on traffic growth and earnings from com-
                                                                                                                            mercial activities.

                                                                                                                            As a consequence of the restructuring and adjustment
                                                                                                                            of costs, the number of employees has dropped by
                                                                                                                            about 40%, a reduction achieved through voluntary
                                                                                                                            redundancy agreements and normal attrition. The
                                                                   The value of CPH’s investment in ASUR, through direct    process was completed in 2004.
                                                                   and indirect ownership, is DKK 604 million, based
                                                                   upon the officially quoted price of the shares at 31     Traffic
                                                                   December 2005 (DKK 358 million at 31 December            The number of passengers using Newcastle International
                                                                   2004).                                                   increased from 3.4 million in 2001 to 5.2 million in
                                                                                                                            2005, equivalent to an average growth rate of 10.2%.
| Group Annual Report 005 | Management´s report | International




                                                                                                                            This strong growth is attributable to growth in the low-
                                                                                                                            cost segment, which now accounts for 39% of traffic
                                                                                                                            at NIAL. One of the reasons for this rise is easyJet´s April



                                                                   Newcastle International




 
2003 opening of a north-eastern England base at NIAL         Meilan Airport
with two aircraft. The base has expanded since then to
a total of six aircraft and a growing number of flights.
In addition, Ryanair, Hapaq-Lloyd and Jet2 now have
flights out of Newcastle.

Traditional domestic and international traffic also grew
in 2005 at rates of 9.2% and 4.4%, respectively.

Charter traffic was down by 5% year on year in 2005,
partly as a result of a general decline in charter traffic
in the UK.

Commercial
CPH worked closely together with NIAL to develop and
optimise revenues from the latter’s commercial busi-
ness, a collaboration which also includes ongoing ad-        In 2005, the number of passengers was 7.0 million. The
justments of the concepts and products. In addition,         decline in the number of passengers was due to tem-
CPH was involved in the tender processes for the car         porarily insufficient aircraft capacity on the part of the
hire and advertising concessions, which resulted in new      Chinese airlines, which meant that the primary routes
and improved contracts and revenues for the airport.         between Beijing, Shanghai and Guangzhou were
                                                             given priority by the Chinese airlines and the Civil Avi-
Commercial revenues rose by 43.5% from GBP 15.4              ation Administration of China. It is expected that addi-
million in 2004 to GBP 22.1 million in 2005. The refur-      tional aircraft capacity will be added in 2006. With a
bishment and expansion of the shopping area made a           view to stimulating domestic traffic, HMA intends to
major contribution to this growth. The renovated and         insource cargo operations in 2006 in order to improve
expanded shopping centre was completed in late               the level of service provided to the airlines and raise
August 2004.                                                 operating profits on the individual routes.

In 2005, two contracts were signed: (1) a contract for the   International traffic to Meilan Airport accounted for
establishment of a new three-star airport hotel and (2) a    2-3% of the total traffic. The international traffic from

                                                                                                                          | Group Annual Report 005 | Management´s report | International
contract for the development of the southside area of        Singapore, Malaysia, Thailand, Korea and Japan is
the airport. The latter comprises new aircraft maintenance   expected to increase in the coming years.
facilities, a cargo area, a terminal and a business park.



China

In November 2002, CPH made its third interna-
tional investment, in Hainan Meilan Airport

In November 2002, CPH acquired a 20% stake in the
Chinese airport company Hainan Meilan Airport Com-
pany Ltd. (HMA). HMA operates Meilan Airport, which
is located on the island of Hainan in southern China.

Traffic
The number of passengers using Meilan Airport in-
creased from 5.6 million in 2002 to 7.5 million in 2004.
                                                                                                                           
                                                                   Operations and capacity                                       HMA share price performance
                                                                   As one of only four airports in China, Meilan Airport         HMA’s shares are listed on the Hong Kong stock
                                                                   was approved in 2005 by the World Health Organisation         exchange. Since the company’s flotation in 2002, the
                                                                   as a “hygienic airport”. Some of the effects of this          price of the shares has increased from the IPO price of
                                                                   approval were the establishment of various laboratory         HKD 3.78 per share to HKD 4.125 at year-end 2005.
                                                                   facilities at Meilan Airport and stricter quality assurance
                                                                   of food and beverage supplies to the airlines.                The value of CPH’s investment in HMA is DKK 318 million
                                                                                                                                 based on the officially quoted price of the shares at 31
                                                                   CPH’s technical assistance in 2005 included consultancy       December 2005 (DKK 436 million at 31 December 2004).
                                                                   on the expansion of the terminal area, assistance that
                                                                   resulted in substantial savings on construction costs.
                                                                   CPH was also able to ensure that the terminal extension
                                                                   meets the quality requirements.

                                                                   Commercial
                                                                   The focus on optimising commercial revenues will
                                                                   continue in 2006. Through concession agreements
                                                                   with Select Service Partner (SSP) and Duty Free Shop-
                                                                   pers (DFS), the new terminal area allows Meilan Air-
                                                                   port to offer domestic passengers an attractive range
                                                                   of restaurants and shopping facilities. Once the in-
                                                                   sourcing of cargo operations has been completed,
                                                                   HMA intends to begin netotiations with global cargo
                                                                   operators with the aim of optimising the earnings
                                                                   potential and improving the services provided to
                                                                   the airlines.
| Group Annual Report 005 | Management´s report | International




 
                                                                                      1       2




                                                                                      3       4




1: Who handles what?                                         system where the baggage is going. The Baggage Sort-         of goods from Asia, which are quickly forwarded via
Copenhagen Airports A/S handles operations,                  ing Department handled 7,696,186 pieces of departing         the airport’s cargo centre to their final destinations in
maintenance and expansion at its Copenhagen and              baggage in 2005, which was 2% more than in 2004. A           northern Europe, Scandinavia, the Baltic States and
Roskilde airports. This includes airport security, traffic   total of 1,614,320 pieces were handled manually.             Russia. The last leg of the journey is usually by lorry.
coordination, cleaning, passenger service, snow clear-
ance, site and facilities maintenance, and fire services.    3: Two fire stations                                         In October 2005, Singapore Airlines Cargo (SIA Cargo)
Other areas are handled by various collaborative             The Copenhagen Airport Fire Department holds fire            increased its frequencies out of Copenhagen from
partners.                                                    drills in an area in the south-eastern part of the airport   five to nine cargo flights a week. In addition, SIA
                                                             area: the 70 firemen regularly hold fire and rescue          Cargo is adding three new cargo destinations to and
2: Bagage sorting                                            drills on a 30-metre-long mock-up, a model of an             from Copenhagen: New Delhi and Bangalore, India,
The sorting facility has a capacity of approximately         aircraft built for training purposes. The mock-up can        and Chicago, USA. This means that there are now 13
8,200 pieces of baggage per hour. On the busiest day         simulate many kinds of fire in an aircraft, providing        weekly B747 cargo flights to Asia out of Copenhagen
of the year, 3 July 2005, a total of 36,958 pieces of        a total of 16 different fire scenarios.                      Airport, twice as many as in 2003. With the new cargo
baggage were sorted. In practice, baggage is sorted ac-                                                                   services to Copenhagen, the Scandinavian business
cording to the bar codes that are attached to the bags       4: Air cargo on ‘first class’                                community will have even more connections to eastern
at check-in. The bar code is read by bar code readers in     The three pilots from Korean Air Cargo fly regularly on      Asia as well as main-deck capacity to the large growth
the same way as at the supermarket; the system then          the route Seoul-Vienna-Copenhagen and Copenhagen-            markets in India and to Chicago, one of the major hubs
looks up the bar code in a database, and that tells the      Seoul. Each flight carries between 50 and 110 tonnes         in the USA.
                                                                                     Review of other financial items


                                                                                     Net financing costs                                                Cash flow from investing activities
                                                                                                                                                        Investments in property, plant and equipment totalled
                                                                                                                                                        DKK 564.1 million in 2005 and included the commis-
                                                                                     DKK million                 2005     2004        Ch.     Ch. %     sioning of a centralised service centre for transfer
                                                                                     Interest                    184.6   172.8       11.8      6.8%     passengers in Terminal 3, the new P10 multi-storey
                                                                                     Market value adjustments      6.4     45.8      (39.4)   (86.0%)   carpark, phase 1 of a noise barrier along Terminal 1
                                                                                     Other                        15.9      8.4        7.5    89.3%     and ongoing projects, including a metro station.
                                                                                     Total                       206.9   227.0       (20.1)   (8.9%)    Moreover, CPH has paid DKK 102.5 million to buy a
                                                                                                                                                        12.5% equity stake in ITA.
                                                                                     The increase in interest expenses was partly due to the
                                                                                     average higher borrowings. Market value adjustments                Cash flow from financing activities
                                                                                     represent mark-to-market adjustments of forward                    The cash flow from financing activities was affected by
                                                                                     exchange contracts and a capital loss from refinancing             a DKK 82.4 million lower outflow of cash to buy treasury
                                                                                     of a mortgage loan in 2005. The comparative figure                 shares and a DKK 126.6 million higher dividend payment
                                                                                     for 2004 includes DKK 23.6 million of mark-to-market               than in 2004. In addition, the Group has raised short-
                                                                                     adjustments of interest rate swaps, where the hedges               term guaranteed loans of DKK 495.3 million in 2005
                                                                                     exceeded actual borrowing requirements. CPH hedges                 and repaid DKK 330.9 million on long-term loans. At
                                                                                     the currency exposure of its expected cash flows 12                31 December 2005, the Group had unused short-term
                                                                                     months ahead, primarily relating to dividends and                  facilities for approximately DKK 1.1 billion.
                                                                                     fees from associates.

                                                                                                                                                        Equity statement
                                                                                     Income tax

                                                                                     Tax on the profit for the year, DKK 183.1 million, was             DKK million                                    2005       2004

                                                                                     affected by a number of non-deductible costs incurred              Balance at 1 January                         3,230.7    3,178.8
| Group Annual Report 005 | Management´s report | Review of other financial items




                                                                                     in 2005. Furthermore, the effect of the reduction of               Profit for the year                           670.4      592.8
                                                                                     the Danish corporate tax rate from 30% to 28% has                  Adjustment of investments in associates        (47.7)         -
                                                                                     been recognised. The effect relating to a provision for            Currency translation of inv. in associates    171.5       (62.9)
                                                                                     deferred tax was an income of DKK 54.2 million.                    Interest hedges through swaps                  (61.1)      67.1
                                                                                                                                                        Tax effect of hedges                           17.1       (20.1)
                                                                                                                                                        Purchase of treasury shares                   (290.9)    (373.3)
                                                                                     Cash flow statement                                                Dividends paid                                (296.4)    (165.7)
                                                                                                                                                        Dividends on treasury shares                   18.1        14.0
                                                                                                                                                        Balance at 31 December                       3,411.7    3,230.7
                                                                                     DKK million                          2005       2004        Ch.

                                                                                     Cash flows from                                                    Reduction of share capital (share buy-back)
                                                                                     Operating activities                897.2     1.094.1    (196.9)   The Company’s share capital has been reduced through
                                                                                     Investing activities                (609.1)    (506.5)   (102.6)   the cancellation of part of the Company’s holding of
                                                                                     Financing activities                (580.9)    (770.5)    189.6    treasury shares, by a nominal value of DKK 48,193,000.
                                                                                     Total cash flow                     (292.8)    (182.9    (109.9)   Following the reduction, the share capital amounts to
                                                                                     Cash at beginning of year           322.4      505.3     (182.9)   DKK 784,807,000 nominal value. The Company did not
                                                                                     Cash at end of year                  29.6      322.4     (292.8)   hold any treasury shares at year-end 2005.

                                                                                     Cash flow from operating activities                                Employee share plan 2005
                                                                                     The cash flow from operating activities was lower than             In May 2005, the Company sold 23,402 shares at DKK
                                                                                     in the same period of 2004. This was partly due to the             105 per share to the employees. 95% of the employees
                                                                                     effect of IAS 16, which increased maintenance costs by             bought shares. The costs incurred in that connection,
                                                                                     DKK 68.9 million and tax payments by DKK 66.4 million.             DKK 24.1 million, were recognised as staff costs in 2005.
  0
Outlook for 2006


In its Q3 2005 report, CPH forecast a 3-4% increase         connection with Macquarie Airports’ tender offer for
in the total number of passengers for the full year         the shares of CPH, costs relating to potential investments
and growth in 2006 at a corresponding level.                in Budapest and Bulgaria and costs relating to em-
                                                            ployee shares, the increase is expected to be in the
Actual developments in Q4 2005 led to 5% year-on-           area of 10% compared with 2005.
year growth in passenger numbers in 2005. Against
that backdrop and, moreover, based on the expected          Forward-looking statements
traffic pattern in 2006, the total number of passengers     – risks and uncertainties
is expected to grow by 4-6% year on year in 2006.           This annual report includes forward-looking statements
The growth should be seen in light of the lower tax         as described in the US Private Securities Litigation Act
on air tickets from 1 January 2006 and SAS’s launch         of 1995 and similar acts of other jurisdictions, including
of one-way low-cost tickets from Q4 2005.                   in particular statements concerning future revenues,
                                                            operating profits, business expansion and investments.
Traffic revenue will be adversely affected by the 3%
reduction of charges from 1 January 2006 and af-            Such statements are subject to risks and uncertainties
fected by the agreement with the airlines concerning        as various factors, many of which are beyond CPH’s
bonus in respect of passenger growth, whilst a partial      control, may cause actual results and performance
compensation for additional security costs will increase    to differ materially from the forecasts made in this
revenue. Overall, traffic revenues are not expected to      annual report.
increase significantly.
                                                            Such factors include general economic and business
The larger number of passengers will have a positive        conditions, changes in exchange rates, the demand
effect on concession revenue.                               for CPH’s services, competitive factors within the avia-
                                                            tion industry, operational problems in one or more of
Moreover, CPH expects to be able to make relative           the Group’s businesses, and uncertainties relating to
reductions in operating costs, whilst the new, higher       acquisitions and divestments. See “Risk factors” on
security level from January 2006 is retained. At the same   pages 35-37.
time there will be a number of one-off costs in 2006
that will impact the reported results including the
payment of DKK 75 million in retention bonus to the


                                                                                                                         | Group Annual Report 005 | Management´s report | Outlook for 00
Executive Board.

The operating margin as well as the operating profit is
expected to increase in 2006 compared with 2005.

The international activities are expected to show
substantial growth again in 2006, partly as a result of
anticipated traffic growth, and partly on account of
the favourable impact from initiatives in the commercial
business. The growth should be seen against the back-
drop of the hurricane which hit the Gulf of Mexico in
October 2005 and reduced revenues in ASUR.

CPH’s net financing costs in 2006 are expected to
be slightly lower than the 2005 level.

Against this background, CPH’s profit before tax for
2006 is expected to be in the region of DKK 1.0 billion,
equivalent to an increase of about 20% over the 2005
level. Adjusted for one-off costs incurred in 2005 in                                                                     1
                                                      1       2                                                                     3




                                                                  4     5




1: Northern Europe’s air cargo hub                          The vehicle was so heavy that the aircraft’s nose wheel     5: Assistance service
The geographic location of Copenhagen Airport               had to be jacked up during the loading operation, for       The handling companies provide assistance to pas-
means that CPH is considered the air cargo hub              which two high loaders and a large crane were used.         sengers with impaired mobility or who otherwise need
of Scandinavia, the Baltic States and the southern          Inside the hold, the vehicle was carefully positioned in    help. By law, the airlines are currently responsible
Baltic-rim countries. In 2005, Copenhagen Airport had       the middle of the aircraft, right over the wings, and       for providing this service to their passengers. New
355,087 tonnes of air cargo, a 5.8% increase year on        then tied down with about 100 straps. With its 23           legislation in this field transfers this responsibility from
year. The air cargo was carried by various passenger        tonnes, the vehicle made up about a quarter of the          the airlines to the airport starting in 2008. In practice
flights and a total of 8,535 all-cargo operations.          total load carried by the aircraft.                         this means that the airport will have to establish a
                                                                                                                        centralised system in the near future. The costs of the
2, 3: Heavy cargo                                           4: ILS huts                                                 assistance services will be distributed equally among
In the autumn of 2005, one of the heaviest objects          The little candy-striped houses at the end of the run-      the airlines based on the total number of passengers
ever to be loaded onto a cargo aircraft at Copenha-         ways are called ILS huts (Instrument Landing System),       they each carry to and away from the airport.
gen Airport was carefully manoeuvred into place in a        and the equipment in these huts helps aircraft land         There is space for eight people in the small vehicles,
Korean Air Cargo Boeing 747 for transport to Seoul,         in all kinds of weather. They broadcast a signal into       which, by the way, wear a kind of “slippers” to protect
South Korea.                                                the air at an angle that specifies the angle the aircraft   the airport’s wooden floors.
                                                            must follow in its approach and another signal that
The object was a 23-tonne AGV (Automatic Guided             indicates the direction of the runway. Both signals are
Vehicle), a sophisticated industrial vehicle which can be   received by an antenna in the aircraft and transmitted
designed and programmed to lift and transport various        to the autopilot. The system is very important, espe-
objects. The vehicle was manufactured in Sweden for         cially in foggy weather. The latest types of aircraft can
delivery to a South Korean steelworks.                      land by autopilot alone.
Corporate governance


The Copenhagen Stock Exchange recommends that com-              Furthermore, CPH’s HR strategy, training policy, ethical
panies listed on the Exchange consider the recommenda-          guidelines and senior employee policy are available on
tions of the Copenhagen Stock Exchange Corporate Gov-           CPH’s website and intranet. Working environment is part
ernance Committee (the Nørby Committee). In addition,           of CPH’s environmental policy, and reporting on industrial
the companies should take a position on these recommen-         injuries is included in CPH’s environmental report.
dations by applying the “comply or explain” principle
from 2006. The Committee’s recommendations should be            Tasks and responsibilities of the Supervisory Board
considered a supplement to the corporate governance             The tasks and responsibilities of the Supervisory Board and
requirements under current Danish law.                          Executive Board are defined in the rules of procedure for the
                                                                Supervisory Board and in the instructions for the Execu-
CPH and corporate governance                                    tive Board. Supervisory Board meetings are scheduled in
Since 2001, Copenhagen Airports (CPH) has taken the             consultation with the Executive Board in order to ensure
Nørby Committee recommendations under advisement                an optimal reporting and relationship between the two
and, with effect from 2005, has been following the              boards. The tasks, duties and responsibilities of the Chair-
Nørby Committee recommendations and applying the                man of the Supervisory Board are described in the Compa-
“comply or explain” principle.                                  ny’s rules of procedure, which are reviewed once a year.
                                                                The Executive Board’s reporting to the Supervisory Board
Corporate governance report                                     follows the Supervisory Board’s instructions to the Execu-
Below is a report explaining the position CPH takes on each     tive Board, which are also reviewed once a year.
of the main sections of the Nørby Committee recommen-
dations. CPH has decided to comply with the Committee’s         Composition of the Supervisory Board
recommendations. With respect to the recommendation             The Supervisory Board of CPH has six members elected by
concerning the independence of the members of the               shareholders and three elected by CPH employees. The
Supervisory Board, it has been decided to put more em-          employee-elected Board members have the same rights,
phasis on the composition of competences at the Board.          duties and responsibilities as the members elected by the
                                                                shareholders.The Supervisory Board endeavours to make
The role of the shareholders and their interaction with         use of the special competencies of each Board member,
the management of the Company                                   which can be seen in its recommendation of new mem-
CPH endeavours to provide information to shareholders via       bers and in an internal profile description. According



                                                                                                                                | Group Annual Report 005 | Management´s report | Corporate governance
its website, interim reports, annual reports, electronic and    to the recommendations from the Copenhagen Stock
printed newsletters and announcements to the Copenhagen         Exchange Corporate Governance Committee, cf. Section
Stock Exchange, as well as at general meetings in April 2005.   5.4, the majority of the members of the Supervisory
                                                                Board appointed by the General Assembly should be in-
The role of stakeholders and their importance                   dependent. With the acquisition by Macquarie Airports
to the Company                                                  Copenhagen Aps of 52.4% of the share capital in CPH
CPH’s human resources and environmental impact are ex-          and the subsequent election of five Macquarie Airports
plained in this Annual Report, as they also are in the Com-     representatives to the Supervisory Board of CPH in Janu-
pany’s separately issued environmental report. The Company      ary 2006, the Supervisory Board comprises these five
maintains an ongoing and active dialogue with customers,        members, the chairman who is independent, and three
suppliers, employees, authorities and other stakeholders.       members appointed by the employees. At the appoint-
                                                                ment of board members, Macquarie Airports, as the ma-
Openness and transparency                                       jority shareholder, has taken the recommendations from
The Company’s information and IR policies ensure that           the Copenhagen Stock Exchange Corporate Governance
important information of significance to shareholders and       Committe into consideration. In this respect Macquarie
other stakeholders is published immediately. The informa-       Airports is of the opinion that it is important that each
tion is published in Danish and English via the Copenhagen      member of the Supervisory Board has comprehensive
Stock Exchange and on CPH’s website. The Company                professional skills and is able to contribute with her/his
held investor presentations in 2005 in connection with          knowledge and experience to the benefit of the develop-
publication of its 2004 Annual Report and its capital mar-      ment of the Company. The Supervisory Board is aware that
ket day, as well as some 150 additional investor meetings.      the interests of other shareholders must be safeguarded on        
The investor presentations are available on CPH’s website.      an equal footing with those of the majority shareholder.
                                                                          The Company has not fixed an age limit for members            schemes for the members of the Executive Board are
                                                                          of the Supervisory Board: it depends on an individual         disclosed in the payroll note to the Annual Report.
                                                                          assessment. In February 2006, the average age of the
                                                                          Board members was 48 years, with members ranging              Risk management
                                                                          from 29 to 66 years of age. All members of the Super-         The Company has elected to structure its work with
                                                                          visory Board elected at the general meeting are elected       risk management in accordance with the international
                                                                          for terms of one year. The Chairman and Deputy Chair-         recommendations of COSO (Committee of Sponsoring
                                                                          man are elected directly by the shareholders every            Organizations of the Tradeway Commission) on risk man-
                                                                          year. With effect from 26 January 2006, the Super-            agement: “Enterprise Risk Management – Integrated
                                                                          visory Board has decided it will establish a number of        Framework”. Since the autumn of 2004, CPH has been
                                                                          committees, including a strategy committee, an audit          working with risk identification and risk assessment. Risk
                                                                          and corporate governance committee, an HR commit-             handling was initiated in 2005, whilst the other areas will
                                                                          tee, and a safety, environment and health committee.          be covered in 2006. CPH developed an Enterprise Risk
                                                                          The Supervisory Board performs an annual self-evalua-         Management model in 2005 under which material risks
                                                                          tion based on expected individual Board member con-           to CPH are quantified regularly. The model allows simu-
                                                                          tributions to the work of the Board as a whole. The           lation of the consequences of these events for CPH, and
                                                                          Supervisory Board also evaluates the Executive Board          the information thus derived is incorporated in the con-
                                                                          vis-a-vis the Executive Board incentive plan. In addi-        tinual risk management process. CPH’s risk management
                                                                          tion, the Executive Board is continually evaluated by         activities and the identification of material risks are de-
                                                                          the Chairman of the Supervisory Board.                        scribed separately in the Annual Report (page 35-37).

                                                                          Remuneration of Supervisory Board                             Audit
                                                                          and Executive Board members                                   At the annual general meeting held in April 2005, the
                                                                          After the introduction of an incentive plan for the           Supervisory Board elected to recommend to the share-
                                                                          Executive Board in 2004, the Supervisory Board con-           holders that the Company should use only one audit
                                                                          siders the total remuneration paid to the members of          firm, PricewaterhouseCoopers. The audit plan and
                                                                          the Executive Board and the Supervisory Board to be           audit fees are discussed by the Supervisory Board, the
                                                                          at a competitive level. There are no share option plans       Executive Board and the auditors. The Supervisory
                                                                          for the members of the Executive Board or Supervisory         Board has instructed the Executive Board to contract
| Group Annual Report 005 | Management´s report | Corporate governance




                                                                          Board. A general description of the remuneration policy       for the supply of non-audit services in accordance with
                                                                          for members of the Supervisory Board and Executive            the guidelines applicable in Denmark, in order to main-
                                                                          Board is included in the payroll note in the annual report    tain the independence of the auditors. Once a year,
                                                                          to allow shareholders the opportunity to bring it up at       the Supervisory Board evaluates the Company’s internal
                                                                          the annual general meeting. The remuneration policy is        control systems and the management guidelines for and
                                                                          intended to promote good long-term behaviour. Starting        monitoring of these systems. With a view to optimising
                                                                          in the 2005 Annual Report, the Company will publish           a number of these control systems, the Company intends
                                                                          the total and individual remuneration paid to members         to conduct an expanded review in accordance with the
                                                                          of the Supervisory Board and Executive Board. The             relevant COSO guidelines. In connection with the pres-
                                                                          Company does not use defined benefit pension plans.           entation of the Annual Report, the Supervisory Board,
                                                                          In connection with Maquarie Airports’ offer regarding ac-     Executive Board and auditors review the accounting
                                                                          quisition of a controlling majority of CPH, the Supervisory   policies within the most important areas and make ac-
                                                                          Board at that time made, conditional of such an acquisi-      counting estimates. This process includes an evaluation
                                                                          tion, a special agreement about a one-off remuneration        of whether the accounting policies are appropriate.
                                                                          to each of the four members of the Executive Board with       The Company has decided to present its interim reports
                                                                          the aim of securing the management continuity. The            (quarterly reports) in accordance with IAS 34 as from
                                                                          remuneration will be payable 12 months after 19               2005. The results of the Annual Report audit and
                                                                          December 2005, provided that the executive in question        interim report reviews are, along with the auditors’
                                                                          has not resigned from his position with the Company           observations and conclusions on the Company’s internal
                                                                          before that date. These agreements and severance pay          controls, documented in the long-form audit report,
                                                                                                                                      which is presented to the Supervisory Board.
Risk factors


Risk management                                             Airport’s largest customer. SAS was the source of about
                                                            48% of traffic revenues at Copenhagen Airport in
Risk management at Copenhagen Airports is based on          2005 (2004: about 51%). In the short term, Copenha-
Danish as well as international corporate governance        gen Airport’s status as a Scandinavian hub is therefore
recommendations, including the recommendations of           dependent on SAS’s finely meshed route network out
COSO and the Nørby Committee.                               of Copenhagen, primarily to European destinations.

Through identification and quantification of a number       Traffic at Copenhagen Airport is based on an underlying
of strategic, financial and operational risks and a simu-   demand for air transport via CPH and also on a growing
lation of the consequences of the events relevant to        demand for low-cost tickets, about which it could be
the CPH Group, CPH has identified the risks that are        said that the routes are creating the market. CPH’s
critical in relation to the creation of value in CPH.       dependence on SAS in the longer run is thus not as
                                                            pronounced as the airline’s share of traffic at Copen-
                                                            hagen Airport might indicate.

                                                            Low-cost airline growth leads to a market expansion
                                                            at CPH, but also results in more direct services between
                                                            some of the airports from or to which CPH’s transfer
                                                            passengers travel. As a result, the increase in transfer
                                                            traffic at Copenhagen Airport becomes lower than
                                                            would otherwise have been the case.

                                                            CPH seeks to counter this risk through a general
                                                            improvement of the transfer product and by making
                                                            this product more visible.

                                                            Economic and political changes
                                                            An expansion of the EU’s borders is tantamount to
Risk profile                                                a reduction in the number of destinations whose
                                                            passengers can buy duty-free products. The adverse
CPH’s risk acceptance has been determined in consid-        impact on duty-free sales of a further EU enlargement
eration of the relation of each risk to the Company’s       will vary depending on which countries join the Union.
                                                                                                                       | Group Annual Report 005 | Management´s report | Risk factors
core competencies. Fundamentally, CPH seeks to              CPH seeks to counter this risk in the long term by
hedge in the market risks that do not relate to the         working on developing new revenue streams.
Company’s core competencies. Conversely, the risk
acceptance is greatest in areas where CPH possesses         The activity level at Copenhagen Airport is subject to
the core competencies that have made Copenhagen             general economic fluctuations. Economic downturns
Airport one of the world’s best airports.                   would thus also have an adverse impact on passenger
                                                            numbers at airports. The market diversification the
                                                            Company effected through its international acquisitions
Strategic risks                                             helps mitigate this risk to some extent.

Whilst the strategic risks are the most material risks      Traffic revenue accounts for most of CPH’s revenues
to the Company’s long-term performance, they are            The latest agreement on charges expired at the end
generally deemed to have limited short-term conse-          of 2005, and future adjustment of traffic charges was
quences.                                                    consequently subject to a certain political risk. CPH
                                                            has succeeded in negotiating a voluntary agreement
Structural changes in the aviation industry                 with the airlines for the period 2006-2008. As part
Developments in the aviation industry have had an           of this agreement, CPH has undertaken to bear all
adverse impact on the profitability of SAS, Copenhagen      costs of any new regulatory requirements during             5
                                                                  the three-year term of the agreement. The risk in re-             Except of receivables from CPH’s collaborator SAS and
                                                                  spect of traffic charges during the period from 2006-             the largest concessionaire Nuance, credit risk on receiv-
                                                                  2008 is therefore limited to developments in passen-              ables is allocated on many customers. CPH’s procedures
                                                                  ger numbers and any new regulatory requirements. In               on receivables reduces the credit risk.
                                                                  2009, a new charges regulation principle: Regulation
                                                                  Framework (RFW), will be subjected to a review.                   Interest rate risks
                                                                                                                                    Fluctuations in the interest rate level would affect both
                                                                  As part of the Danish Budget for 2006, the special                the Company’s income statement and its balance sheet.
                                                                  Danish airport tax of DKK 75 per passenger starting
                                                                  a trip from a Danish airport will be phased out over a            Assuming the Company’s loan portfolio with related
                                                                  two-year period (2006 and 2007). CPH has considered               interest swaps remains at its current level, a change in
                                                                  the favourable political risk of an abolition of the tax,         interest rates by one percentage point would result in a
                                                                  and believes that, everything else being equal, such              DKK 4.1 million change in annual interest expenses and
                                                                  an abolition would have an appreciable effect on both             a DKK 203 million change in the market value of loans
                                                                  supply and demand.                                                and interest swaps. The effect to the financial state-
                                                                                                                                    ments is a change of the profit of the year of DKK 3
                                                                  International investments                                         million and a change of the equity of DKK 21 million.
                                                                  In connection with its international activities, CPH
                                                                  seeks to maximise its risk-adjusted return by assuming            Exchange rate risks
                                                                  risks in the areas in which it holds the core competencies        Fluctuations in selected exchange rates would affect
                                                                  that have made Copenhagen Airport one of the best                 both the Company’s income statement and its balance
                                                                  airports in the world.                                            sheet. Basically, exchange rate fluctuations would only
                                                                                                                                    have a moderate impact on the Company’s results of op-
                                                                                                                                    erations because most of its revenues and costs are settled
                                                                  Financial risks                                                   in Danish kroner. The balance sheet is affected by the
                                                                                                                                    currency translation of investments in foreign companies.
                                                                  CPH’s financial risks are managed from head office. The
                                                                  principles and framework governing the Company’s financial        CPH has decided not to hedge its investments due to
                                                                  management are laid down once a year, as a minimum,               their long-term horizon, whilst dividends and other
                                                                  by the Supervisory Board. The financial risks arise solely as a   balances denominated in foreign currency are hedged.
                                                                  result of the Company’s operations and investment activity,       Through hedging CPH seeks to reduce the effects of ex-
                                                                  and these risks are hedged to the greatest possible extent.       change fluctuations on non-current foreign currency loans.
| Group Annual Report 005 | Management´s report | Risk factors




                                                                  Credit risks
                                                                  CPH regularly assumes credit risks in connection with             Operating risks
                                                                  financial contracts and in connection with receivables
                                                                  from airlines, concessionaries and tenants.                       CPH assumes a number of operating risks related to op-
                                                                                                                                    erations. Much of CPH’s competitiveness and uniqueness
                                                                  The credit risk concerning financial contracts is calcu-          is determined by the way in which the Company’s main
                                                                  lated per counterparty based on the actual market                 processes are handled. For that reason, operating risks
                                                                  value of the contracts entered into. The credit expo-             related to the main processes are highly significant in
                                                                  sure to financial counterparties at 31 December 2005              terms of customer perception of the airport and the op-
                                                                  totalled DKK 30 million (DKK 254 million at year-end              portunities to continue the value creation process at CPH.
                                                                  2004), which was primarily attributable to money
                                                                  market deposits with Danish banks.                                The operating risks may be of a certain significance to
                                                                                                                                    the Company’s short-term and long-term performance,
                                                                  CPH seeks to limit this exposure by distributing any              but most operating risks are not deemed to have a
                                                                  claims on several counterparties and by entering into             material impact on the Company’s ability to meet its
                                                                  contracts only with financial counterparties that                 strategic goals.
                                                                have high credit ratings.
Traffic handling process                                     Passenger flow
It is key to passenger satisfaction with the airport that    Efficient and service-orientated handling of the flow of
CPH does everything possible to prevent all kinds of         passengers is important with respect to passenger per-
operating interruptions. In spite of these efforts,          ception of user friendliness and to the commercial activities
certain operating interruptions must be considered           at the airport. Consequently, any queuing at check-in
unavoidable, such as interruptions due to weather            and passport control has an adverse effect on passenger
conditions. CPH makes continuous efforts to increase         satisfaction and CPH’s commercial revenues. The Com-
                                                                                                                             | Group Annual Report 005 | Management´s report | Risk factors
its preparedness for these events so that flight cancel-     pany’s Management is aware of the significant commer-
lations and delays can be kept to a minimum.                 cial earnings potential involved if queuing is minimised.
                                                             CPH seeks to limit this risk by planning, by always work-
Passenger safety and security is the Company’s ultimate      ing with the police and handling companies and by col-
priority. For this reason, a large share of the resources    lecting detailed information on passenger behaviour and
used at CPH is spent on tasks related to safety, security    passenger demand.
and control. In spite of this, there is a risk of aircraft
accidents and terrorist attacks. CPH makes great efforts     The real estate leasing process
to prevent these situations, however, and the probability    A number of contract-related risks exist in connection
of such events occurring is therefore deemed to be           with CPH’s leasing of premises and land. CPH seeks
relatively low.                                              to limit these risks through contract management and
                                                             by seeking legal assistance when entering into and
As a result of the terrorist attacks in 2001, CPH has        terminating contracts.
taken out separate airport liability insurance as well as
insurance that covers damage to buildings and building
contents. The insurance sums of these policies are the
maximum that can be commercially insured.
                                                                                                                              
                                                                                      1




                                                                                      2       3




1: De-icing                                                   De-icing is performed before take-off on platforms          3: Better connection between Terminal 1
Ice, snow, frost and sleet on an aircraft may affect its      specially designated for that purpose.                      and Terminal 2
functionality, stability and control. Therefore, it is very                                                               In future, it will be even easier than it is today to walk
important that all ice, snow, frost and sleet is removed      2: The Vilhelm Lauritzen terminal                           from the domestic part of Copenhagen Airport to the
from the surface of the aircraft before take-off, and         Designed by Danish architect Vilhelm Lauritzen, this        international terminals. CPH is in the process of con-
that the aircraft is protected from reformation of frost      terminal was considered to be ground-breaking when          structing a new building to create a better connection
and snow. Two handling companies, SAS Ground                  it opened in 1939, not only in terms of architecture        between Terminal 1 (domestic) and Terminal 2 (inter-
Service and Nordic Aero, are responsible for de-icing         and construction, but also in service principles and pas-   national). Construction at the domestic terminal began
aircraft at Copenhagen Airport during the winter              senger comfort. On 19 September 1999, the terminal          in September 2005. The first phase is the noise barrier,
months. De-icing is performed by spraying the aircraft        was slowly moved across the airport area over the           which was completed by 1 January 2006, whilst the
with a heated glycol-based fluid to remove and protect        course of a weekend on flat-bed trucks and “parked”         entire building, including the moving sidewalks, will
against additional snow, ice, frost and sleet. De-icing is    near the Maglebylille gate. The terminal was later          be finished in late 2006.
carried out pursuant to applicable rules issued by the        renovated and restored to its original condition.
AEA (Recommendations for De-icing and Anti Icing of
Aircraft on the Ground) and ISO 11076-standards.
Environmental impact – the airports at Copenhagen
and Roskilde

Planning                                                         stipulated in the framework approval from the Danish
The location of Copenhagen Airport was laid down in              Environmental Protection Agency, which was reduced
the Copenhagen Airport Expansion Act adopted by the              as from 1 January 2005. From 1 January 2005, the
Danish parliament in 1980 and amended in 1992. The               environmental authorities reduced the night-time noise
Act incorporated a balancing of the benefits to society          level permitted to affect the residential areas around
of maintaining and improving Copenhagen Airport as a             Copenhagen Airport. CPH’s noise monitoring system
traffic hub on the one hand against environmental con-           logged events exceeding the limit. The events were
siderations on the other hand. General guidelines on the         passed on to the Danish Civil Aviation Administration
use of the land at Copenhagen Airport were laid down in          (CAA) for an assessment of whether the noise restric-
the so-called regional plan directive issued by the Danish       tions in the aviation legislation have been observed. The
Ministry of the Environment in 1997, whilst detailed rules       CAA found that none of the events logged exceeded
on the use of the airport land are laid down in the Ministry’s   the restrictions.
local plan, which was also issued in 1997.
                                                                 Soil and ground water
Environmental approvals                                          As a consequence of 80 years of airport-related activities
The environmental impact of CPH’s airports at Copenhagen         on the land, soil contamination is often found in connec-
and Roskilde is regulated by the environmental authorities       tion with construction work at Copenhagen Airport. The




                                                                                                                                 | Group Annual Report 005 | Management´s report | Environmental impact – the airports at Copenhagen and Roskilde
through terms established in the environmental approval.         Danish authorities have changed their priorities with respect
The most important approvals are the framework approval          to remediation of soil contamination with the effect that
from the Danish Environmental Protection Agency with             today CPH more often than previously does not remedy
respect to noise and air pollution in connection with air        contamination if it can be documented that the contam-
traffic and the Copenhagen County environmental approval         ination does not constitute a risk to the ground water or
of other activities. Waste water and waste are regulated         to the indoor climate in buildings. In collaboration with
by the Municipality of Taarnby. The approvals include            Copenhagen County, CPH has initiated a comprehensive
requirements to operations and future expansion, and             ground water monitoring programme. CPH’s procedures
they were granted on the basis of a 1997 environmental           for handling contaminated soil will remain in compliance
impact assessment (EIA) of the expansion of Copenhagen           with Danish law and CPH is committed to the remediation
Airport. The Danish Environmental Protection Agency has          programme and will ensure that this will be undertaken
notified CPH, that it intends to reassess the framework          in the most efficient manner.
approval in May 2007.
                                                                 Environmental impact assessment of Roskilde Airport
Environmental policy                                             In 2005, CPH got so far with the EIA of Roskilde Airport
Being an environmentally responsible organisation, CPH           that the technical reports for the EIA report were sub-
must be operated and developed to achieve consistently           mitted to the Greater Copenhagen Council (HUR), and
better environmental results. The improvements are made          an application for environmental approval was filed
by taking preventive action and using cleaner technology,        with the County of Roskilde. The application comprises
through increased environmental awareness among em-              both the operation of the existing airport and establish-
ployees and partners, and through an open dialogue               ment and operation of an expansion of the facilities
about the Company’s environmental impact.                        and the number of operations. HUR and Roskilde County
                                                                 are currently preparing drafts of an amendment to the
Environmental impact                                             regional plan with the EIA report and the environmental
Noise                                                            approval, which are expected to be made available to
The main environmental impact from CPH’s activities is           the public in 2006.
noise in the residential areas around Copenhagen Airport.
CPH constantly monitors developments in noise impact             Environmental report
and implements measures to limit the noise. Noise moni-          CPH issues an environmental report each year which de-
toring data show a fall in noise impact in 2005 compared         scribes developments in key figures for the most significant
with 2004. The decline was primarily attributable to a           environmental impact factors, which CPH is responsible
fall in the number of ATMs during the period. The noise          for. The environmental report is available at www.cph.dk,
impact continues to be below the noise requirement               and a print version is available on request to CPH.                
                                                               Employees


                                                               Vision and strategy                                          Employee satisfaction

                                                               In a close collaboration between the Communications          Each year, CPH conducts an employee satisfaction survey
                                                               Department and Human Resources, efforts are made to          – the CPH Barometer – involving all employees at the
                                                               ensure that the general communication of information         airports at Copenhagen and Roskilde. The CPH Barom-
                                                               to employees enhances their knowledge and under-             eter is an opportunity for staff to express anonymously
                                                               standing of our corporate vision and strategy. We seek       how satisfied they are with their workplace. The results
                                                               to inform through relevant articles, interviews and man-     of the survey are connected with CPH’s vision and
                                                               agement comments on subjects relating to the Company’s       the goals and values upon which the work of the HR
                                                               operations. Topics such as the significance of competitive   Department is based.
                                                               airport charges and the importance of low operating
                                                               and capacity costs were some of the subjects covered         In order to ensure that the CPH Barometer actually
                                                               in our communications in 2005. Other areas of focus          functions as a dialogue tool, the HR Department
                                                               are traffic growth and the competitive position of CPH,      held dialogue meetings in 2005 at which department
                                                               including an understanding of the competition between        discussed their own results with management and
                                                               traditional airlines and low-cost carriers.                  employees. Thus the employee satisfaction survey lays
                                                                                                                            the groundwork for dialogue and for development
                                                                                                                            within the individual departments.
                                                               Management development
                                                                                                                            In addition, all employees have an annual performance
                                                               All managers at CPH go through a 12-month in-house           interview at which they can discuss their performance,
                                                               management development programme consisting of               well-being, career opportunities and plans in a one-to-
                                                               eight modules. In 2005, 18 managers completed the            one interview with their immediate superior. Perform-
                                                               programme, which gives participants new management           ance interviews are compulsory for all employees.
                                                               tools and creates a basis for an in-house network that
                                                               can offer these managers valuable help with the
                                                               challenges they face in their day-to-day work.               Health and well-being

                                                               The training programme is subject to a continual process     Through the free availability of modern fitness facilities
                                                               of evaluation: a new start-up module was added recently      and participation in a number of sporting events, CPH
                                                               which takes a close look at people’s reaction patterns       seeks to increase employee awareness of the benefits
                                                               in certain situations. The programme starts out with         of leading a healthy and active life. For the treatment
| Group Annual Report 005 | Management´s report | Employees




                                                               a measurement of each manager’s personal and                 and prevention of work-related diseases, the Company
                                                               management qualifications, and this forms the basis          offers services such as physiotherapy, massage, zone
                                                               of his or her training in the programme.                     therapy and chiropractic treatment, as well as assistance
                                                                                                                            from a psychologist and a substance abuse consultant.
                                                               In addition, all managers at CPH are urged to be a part
                                                               of the Company’s management network. The objective           There was an increased focus on health and exercise in
                                                               of this network is to allow managers to gather together      2005. For instance, the HR Department sponsored a
                                                               across the organisation for various activities and events    number of activities under that theme in collaboration
                                                               aimed at promoting dialogue and “sparring”. The              with the Communications Department: e.g. running,
                                                               theme of the dialogue and inspiration meetings in            yoga, lectures on healthy and exciting food, and an
                                                               2006 will be “Attitudes”.                                    event with lecturers who demonstrated the importance
                                                                                                                            of mental health and the ability to laugh in improving
                                                                                                                            both physical and mental well-being. In addition, the
                                                                                                                            HR Department implemented a fruit scheme in the
                                                                                                                            staff cafeteria that allows employees to purchase fruit
                                                                                                                            at a reduced price.

 0
Communications

A good image comes from within, employees being           large operational departments. The survey showed
the goodwill ambassadors of our organisation. Our         that 90% of staff make use of both the intranet and
goal is to increase staff motivation by maintaining a     the newsletter, and that, compared with other large
high level of communication to them of information        Scandinavian companies, CPH is at the top of the
about the organisation.                                   heap with respect to the level of satisfaction with
                                                          in-house communications. No major surveys are
New employees are invited to take an “introduction day”   scheduled for 2006, but the ability of the organisation
to meet various key persons, including the President      to communicate effectively is measured regularly in
and CEO and the managers of the different business        smaller quantitative and qualitative surveys. These
                                                                                                                    | Group Annual Report 005 | Management´s report | Employees
areas. Introduction day participants are also presented   surveys are an important tool in our forward-looking
with information on the Company’s values, attitudes       strategic work with in-house communications.
and the HR strategy.

General in-house information is primarily disseminated
via the Company’s intranet and a bi-monthly newsletter.
The basis for communications aimed at employees is
that they must be reliable, relevant, targeted, open
and up to date. The Communications Department
conducts regular staff opinion surveys on the level of
information provided and how well it allows them to
follow and keep up to date on developments both at
CPH and in the aviation industry in general. A change
in the Company’s in-house communications concept
was followed up with a survey in 2004 in two of our



                                                                                                                     1
                                                                             Shareholder information


                                                                             CPH’s share was a component of the OMXC20 index in             The market capitalisation of Copenhagen Airports was
                                                                             2005. The OMXC20 is the leading Danish equity index,           DKK 14,831.4 million at the end of the financial year,
                                                                             comprising the 20 most traded shares on the Copen-             compared with DKK 9,703.3 million at the same time
                                                                             hagen Stock Exchange. As a result of the anticipated           the previous year, an increase of 53%.
                                                                             very low liquidity of the share following the acquisition
                                                                             of a majority interest by Macquarie Airports in late 2005,
                                                                             the Copenhagen Stock Exchange decided to remove                Shareholders
                                                                             CPH from the OMXC20 index effective 1 January 2006.
                                                                                                                                            CPH had 3,992 registered shareholders at 31 December
                                                                             As part of improving communications between CPH,               2005. At the end of the year, Macquarie Airports
                                                                             its shareholders and equity market players, the CPH IR         Copenhagen ApS held 52.4% and the Danish State
                                                                             Department conducted a readers survey in 2005 about            held 39.2% of the Company’s share capital. The re-
                                                                             the Company’s newsletter for shareholders. The news-           maining shares were held by private and institutional
                                                                             letter is issued in both a printed and a digital version.      investors in Denmark and abroad.

                                                                             In 2005, digital communication with shareholders and           Of CPH’s employees, 1,594 (about 95%) are shareholders
                                                                             players on the Danish and international equity markets         in CPH. CPH has issued employee shares three times
                                                                             was enhanced by a webcast of the verbal presentation           since its flotation in 1994, most recently in connection
                                                                             of the 2004 financial statements and an interview              with the Company’s 80th anniversary in 2005, when
                                                                             with Niels Boserup, President and CEO of CPH. Both             the Supervisory Board of CPH decided to use 26,000
                                                                             the 2005 Annual General Meeting and the press and              treasury shares to set up a new employee share plan.
                                                                             analyst conference with Macquarie Airports in October          Each employee was offered the opportunity to buy 15
                                                                             were webcasted as well.                                        shares at DKK 105 per share, with the shares subject
                                                                                                                                            to selling restrictions until 1 January 2011.

                                                                             IR policy                                                      The purpose of issuing employee shares is to motivate
                                                                                                                                            employees and signal that they are an important part
                                                                             CPH’s IR policy is to offer a consistently high level of in-   of the CPH’s success. It is the Company’s experience
| Group Annual Report 005 | Management´s report | Shareholder information




                                                                             formation on Company goals, performance and outlook            that employee shares help promote long-term employee
                                                                             through an active and open dialogue with shareholders,         interest in the development of CPH.
                                                                             investors and other stakeholders. The information is pro-
                                                                             vided to help ensure understanding of CPH’s current and        Management’s interests at 31 December 2005
                                                                             expected future situation.
                                                                                                                                            Supervisory Board
                                                                                                                                            John Stig Andersen: 63 shares (48 at year-end 2004)
                                                                             Shares                                                         Jørgen Abildgaard Friis: 62 shares (249 at year-end 2004)
                                                                                                                                            Keld Elager-Jensen: 63 shares (84 at year-end 2004)
                                                                             At 31 December 2005, CPH’s share capital comprised
                                                                             7,848,070 shares at a nominal value of DKK 100 each            Executive Board
                                                                             or a total of DKK 784,807,000. CPH only has one share          Niels Boserup: 63 shares (1,000 at year-end 2004)
                                                                             class, and no shares carry special rights.                     Kjeld Binger: 62 shares (397 at year-end 2004)
                                                                                                                                            Torben Thyregod: 63 shares (423 at year-end 2004)
                                                                             The CPH shares are listed on the Copenhagen Stock              Peter Rasmussen: 63 (250 at year-end 2004)
                                                                             Exchange under Securities Code ISIN DK0010201102.
                                                                             Turnover in CPH shares on the Copenhagen Stock                 Each share has a nominal value of DKK 100.
                                                                             Exchange during the 2005 financial year totalled 5.5           No options or warrants have been issued to the
                                                                             million shares, equivalent to 70% of the total share           members of the Company’s Supervisory Board or
                                                                             capital, or an average of 21,005 shares per business           Executive Board.
                                                                             day. The total value of the shares traded was DKK
                                                                           8,565.7 million (2004: DKK 3,906.7 million).
The following shareholders held more than 5% of the           CPH has not purchased treasury shares since the Annual
share capital at 20 February 2006: Macquarie Airports         General Meeting held in April 2005. At the end of the
Copenhagen ApS and the Danish State.                          year, CPH held none of its own shares.



Share buy-back programme                                      Capital structure and dividend policy

As part of CPH’s regular adjustment of its capital struc-     So far it has been the Company’s dividend policy to
ture, the shareholders adopted at the Annual General          maintain or increase the dividend pay out ratio. In
Meeting the Supervisory Board’s proposal to reduce            order to adjust the capital structure in previous years,
CPH’s share capital by cancelling a number of the Com-        the Company has in addition to dividends bought
pany’s treasury shares, i.e. a block of shares with a total   back own shares and invested in foreign airport
nominal value of DKK 48,193,000. This reduced the             activities (assets).
share capital to a nominal value of DKK 784,807,000.
                                                              As a result of Macquarie Airports’ acquisition of a
In addition to the share capital reduction, shareholders at   majority of the Company’s shares combined with the
the Annual General Meeting in 2005 also authorised the        Danish government’s shareholding of 39.2%, the liquidity
Supervisory Board to buy up to 10% of the Company’s           in the share is low, and therefore share buy-back is
own shares before the Annual General Meeting in 2006.         no longer an effective means of adjusting the capital
                                                              structure. At the same time, the Company has no
On 24 October 2005, Macquarie Airports Copenhagen             plans for material acquisitions of foreign airport
ApS submitted a tender offer to buy the shares of             activities in the near future. The proposed payout ratio
Copenhagen Airports. The Supervisory Board recom-             of 100% for 2005 is in line with previous years’ cash
mended that the offer be accepted and decided, in             distributions consisting of dividends paid and share
the light of the new situation, that CPH would no             buy-backs.
longer participate in the privatisation of Budapest
Airport. It was also decided not to activate the
Company’s share buy-back programme.




                                                                                                                         | Group Annual Report 005 | Management´s report | Shareholder information




                                                                                                                           
                                                                             IR activities in 2005                                     Announcements to the Copenhagen Stock
                                                                                                                                       Exchange in 2005
                                                                             CPH’s Investor Relations Department held 154 share-
                                                                             holder meetings in Denmark and abroad in 2005. A          06-01-05:   Own shares
                                                                             capital market day was held in September for analysts,    17-01-05:   Own shares
                                                                             investors and the press. The purpose of the meeting       03-03-05:   Annual Report 2004 announcement
                                                                             was, among other things, to give the participants an      08-04-05:   Copenhagen Airports A/S selected as
                                                                             insight into Copenhagen Airports’ group structure,                    preferred concessionaire for the airports
                                                                             strategy, investment criteria, international activities               at Varna and Bourgas, Bulgaria
                                                                             and the airport’s view on the industry.                   21-04-05:   Copenhagen Airports Annual General
                                                                                                                                                   Meeting
                                                                             Investor presentations are available at CPH´s             29-04-05:   Copenhagen Airports increases investment
                                                                             corporate web site under ’Investor’. See                              in ITA from 36.5% to 49%
                                                                             www.cph.dk.                                               12-05-05:   Copenhagen Airports interim report for
                                                                                                                                                   the three months to 31 March 2005
                                                                                                                                       13-05-05:   Change in the Supervisory Board of
                                                                             Peer Group                                                            Copenhagen Airports
                                                                                                                                       10-06-05:   Copenhagen Airports signs concession
                                                                             CPH monitors the share price performance of other                     agreement with the Bulgarian state
                                                                             listed airports. A comparison of share price perform-     18-08-05:   Copenhagen Airports interim report for
                                                                             ance for the airports in Vienna, London, Frankfurt                    the six months to 30 June 2005
                                                                             and Zurich is available at www.cph.dk.                    26-08-05:   CPH shortlisted to make final and binding
                                                                                                                                                   bid for Budapest Airport
                                                                                                                                       01-09-05:   Decision on increase of security charge
                                                                             Analysts                                                  13-10-05:   Change in the Supervisory Board of
                                                                                                                                                   Copenhagen Airports
                                                                             As a result of the acquisition by Macquarie Airports      24-10-05:   Budapest Airport privatisation process and
                                                                             of a majority interest in CPH in late 2005, virtually                 share buyback programme
| Group Annual Report 005 | Management´s report | Shareholder information




                                                                             no analysts cover the CPH share.                          24-10-05:   Declaration by the Supervisory Board of
                                                                                                                                                   Copenhagen Airports A/S in connection
                                                                                                                                                   with Macquarie Airports Copenhagen
                                                                             Financial activities 2006                                             ApS’ tender offer
                                                                                                                                       03-11-05:   Copenhagen Airports interim report for
                                                                             26-01-06:   Extraordinary general meeting                             the nine months to 30 September 2005
                                                                             20-02-06:   Annual accounts 2005                          09-11-05:   Adjustment of traffic charges at Copen-
                                                                             06-04-06:   Annual general meeting 2006                               hagen Airport
                                                                             04-05-06:   Interim report first quarter 2006             06-12-05:   Approval of schedule of charges for the
                                                                             16-08-06:   Interim report second quarter 2006                        period 1 January 2006 to 31 December
                                                                             02-11-06:   Interim report third quarter 2006                         2008




  
45
     | Group Annual Report 2005 | Financial statements
                                                                          Accounting policies


                                                                          Basis of preparation                                            The impact on the income statement in 2005 was a
                                                                                                                                          reduction of EBITDA by DKK 69.8 million, whilst EBIT
                                                                          The consolidated financial statements of CPH are                increased by approximately DKK 100 million. The
                                                                          prepared in accordance with the International Financial         amendment has no impact on the Group’s cash flows, it
                                                                          Reporting Standards (IFRS), as approved by the European         solely involves a shift of cash flows between operating
                                                                          Union and additional Danish disclosure requirements             activities and investing activities.
                                                                          to listed companies.
                                                                                                                                          The amendment of IAS 16 solely has an impact going
                                                                          The additional Danish disclosure requirements are stated        forward, and the comparative figures have therefore
                                                                          in the Danish Statutory Order on Adoption of IFRS issued        not been adjusted.
                                                                          in pursuance of the Danish Financial Statements Act
                                                                          and the rules issued by the Copenhagen Stock Exchange.          IAS 28 and IAS 19
                                                                                                                                          The implementation of IAS 28 has not, in itself, given
                                                                          The consolidated financial statements also comply               rise to any appreciable changes to the Group’s results
                                                                          with the IFRS, which are issued by the IASB.                    of operations and equity. But in this connection, the
                                                                                                                                          amended IAS 19 from December 2004 has been applied.
                                                                          In order to provide aggregate financial information,            The amended IAS 19 allows actuarial gains and losses
                                                                          some of information required under IFRS is disclosed            on pension obligations to be recognised directly in
                                                                          in the Management’s report.                                     equity. The recognition of investments in associates
                                                                                                                                          has been changed in accordance with the amendment
                                                                          New accounting standards, accounting                            of IAS 19.
                                                                          policy and estimate changes
                                                                          CPH implemented with effect as from 2004 the                    The adjustment of pension liabilities at NIAL has been
                                                                          amendments adopted in December 2003 to IAS 1, 2,                recognised in the equity of this associate and likewise
                                                                          8, 10, 17, 21, 24, 27, 31, 32, 33, 39 and 40 and the            in the Group’s equity as at 1 January 2005, and thus
                                                                          new standards IFRS 2, 4, 5 and 6.                               the adjustment will not affect the income statement.

                                                                          With effect as from 2005, CPH implemented the                   IAS 40
                                                                          amendments to IAS 16 and IAS 28 adopted in Decem­               In connection with the development of the Airport
                                                                          ber 2003 and an amendment to IAS 19 adopted in                  Business Park at Kastrup, CPH is subject to IAS 40 on
| Group Annual Report 2005 | Financial statements | Accounting policies




                                                                          December 2004.                                                  investment properties. Investment properties are stated
                                                                                                                                          separately under property, plant and equipment. Invest­
                                                                          IAS 16                                                          ment properties are measured at cost less accumulated
                                                                          For CPH, the amendment of IAS 16 has resulted in                depreciation. Residual values are stated separately
                                                                          longer useful lives of certain assets classified as property,   for each investment property. The properties will be
                                                                          plant and equipment, whilst it is estimated that the            depreciated over their useful lives like other property,
                                                                          assets classified as property, plant and equipment will         plant and equipment.
                                                                          have no residual value at the end of their useful lives.
                                                                                                                                          Most recently adopted financial reporting standards
                                                                          The extension of the useful lives also has the effect           The IASB and the EU have approved the following
                                                                          that certain maintenance projects formerly capitalised          new financial reporting standards and interpretations,
                                                                          by CPH as additions to property, plant and equipment            which came into force on 1 January 2006 or later, and
                                                                          will be recognised in the income statement as mainte­           which are deemed to be relevant to CPH.
                                                                          nance costs in future.
                                                                                                                                          The amendments to IAS 39 on recognition and meas­
                                                                          The amendment resulted partly in a reduction of de­             urement of financial instruments from 2005, which
                                                                          preciation charges on property, plant and equipment             came into force on 1 January 2006, are not expected
                                                                          by approximately DKK 100 million per year, and partly           to have any material impact on CPH’s future results of
                                                                          in an increase in maintenance costs for property, plant         operations or equity.
  46                                                                      and equipment by approximately 68.9 million per year.
IFRS 7 on disclosure of financial instruments, including    consolidation are prepared in accordance with CPH’s
financial risks, and the amendment to IASs on disclosure    accounting policies.
on capital structure, which comes into force on 1 January
2007. IFRS 7 will be analysed in greater detail in order    Acquisitions are accounted for using the purchase
to determine which information must be disclosed.           method. Intangible assets in acquired companies
                                                            which concern concessions and the like for airport
General information                                         operation are recognised and amortised over periods
The annual report is prepared on the basis of the           of up to 50 years based on an individual assessment,
historical cost principle. Assets and liabilities are       including the term of the concession. The amount at
subsequently measured as described below.                   which the cost of the company acquired thereafter
                                                            exceeds CPH’s share of the fair value of the net assets
Assets are recognised in the balance sheet when it is       at the time of acquisition is recognised as goodwill.
probable that future economic benefits will flow to         Goodwill is not amortised; instead impairment tests
CPH, and when the value of the asset can be reliably        are made regularly, minimum once a year, and any
measured.                                                   impairment is charged to the income statement.

Liabilities are recognised in the balance sheet when it     Newly acquired or newly established companies are
is probable that future economic benefits will flow         recognised in the consolidated financial statements
from CPH, and when the value of the liability can be        from the date of acquisition. Companies divested or
reliably measured.                                          wound up are consolidated in the income statement
                                                            until the date divested or wound up. The comparative
Recognition and measurement take into consideration         figures are not restated to reflect acquisitions or
gains, losses and risks that arise before the time of       divestments.
presentation of the annual report and that confirm or
invalidate matters existing at the balance sheet date.      Foreign currency translation
                                                            Transactions denominated in foreign currencies are
CPH’s functional currency is Danish kroner. This cur­       translated at the exchange rate ruling at the transaction
rency is used as the measurement and presentation           date. Gains and losses arising as a result of differences
currency in the preparation of the annual report. Thus,     between the exchange rate at the transaction date
other currencies than Danish kroner are considered          and the exchange rate at the date of payment are


                                                                                                                        | Group Annual Report 2005 | Financial statements | Accounting policies
foreign currencies.                                         recognised in the income statement as financial
                                                            income or financial expenses.
Basis of consolidation
The annual report comprises the Parent Company,             Receivables, payables and other monetary items
Copenhagen Airports A/S, and companies in which             denominated in foreign currencies that have not been
the Parent Company directly or indirectly controls the      settled on the balance sheet date are translated at
majority of the votes or in any other way controls the      the exchange rates ruling at the balance sheet date.
companies (subsidiaries). Companies in which the            Differences between the exchange rate ruling at the
Group controls less than 50% of the votes and does          balance sheet date and at the transaction date are
not have control but exercises a significant influence      recognised in the income statement as financial
are considered associates.                                  income or financial expenses.

In the consolidation, intercompany income and expenses,     When translating the financial statements of foreign
shareholdings, dividends and balances, and unrealised       subsidiaries and associates, the income statement is
intercompany gains and losses on transactions be­           translated at average exchange rates, while balance
tween the consolidated companies are eliminated.            sheet items are translated at the exchange rates ruling
                                                            at the balance sheet date. Exchange differences arising
CPH’s annual report is prepared on the basis of the         on the translation of the foreign companies’ equity at
financial statements of the Parent Company and the          the beginning of the year and on the translation of
subsidiaries. The financial statements used in the          foreign company income statements from average                47
                                                                          exchange rates to the exchange rate ruling at the              Income tax and deferred tax
                                                                          balance sheet are taken directly to equity.                    The Parent Company is taxed jointly with its wholly­
                                                                                                                                         owned Danish subsidiaries. With effect from 19 Dec­
                                                                          If the financial statements of foreign subsidiaries and        ember 2005 the Parent company is also joint taxed
                                                                          associates are presented in a currency in which the accu­      with Macquarie Airports Copenhagen Holding ApS
                                                                          mulated inflation over the past three years has exceeded       and Macquarie Airports Copenhagen ApS. Corporate
                                                                          100%, adjustment is made for inflation. The inflation          income tax is allocated proportionately among the
                                                                          adjusted financial statements are translated into DKK          Danish companies based on taxable income. The jointly
                                                                          at the exchange rates ruling at the balance sheet date.        taxed companies pay tax under the Danish on­account
                                                                                                                                         tax scheme.
                                                                          Derivative financial instruments
                                                                          In connection with CPH’s hedging of future trans­              Current tax liabilities are carried on the balance sheet
                                                                          actions, derivative financial instruments are often            as Current liabilities to the extent such items have not
                                                                          used as part of CPH’s risk management.                         been paid.

                                                                          Derivative financial instruments are recognised in the         Tax overpaid on account is included as a separate line
                                                                          balance sheet at their fair value on the transaction           item under Receivables.
                                                                          date under Other receivables or Other payables, re­
                                                                          spectively. The fair value of interest rate and currency       Supplements, deductions and allowances regarding
                                                                          swaps is determined as the present value of expected           tax payments are recognised under Financial income
                                                                          future cash flows. The fair value of forward currency          or expenses.
                                                                          transactions is determined using the forward exchange
                                                                          rate at the balance sheet date.                                Income tax for the year, consisting of the year’s current
                                                                                                                                         tax and the year’s deferred tax, is recognised in the
                                                                          Changes in the fair value of derivative financial instru­      income statement as regards the amount that can be
                                                                          ments that are designated as fair value hedges of a            attributed to the profit for the year and posted directly
                                                                          recognised asset or a recognised liability are recognised      on equity as regards the amount that can be attributed
                                                                          in the income statement together with any changes in           to movements directly on equity. Any prior­year tax
                                                                          the fair value of the hedged asset or hedged liability.        adjustments are disclosed separately in the notes to
                                                                                                                                         the financial statements.
| Group Annual Report 2005 | Financial statements | Accounting policies




                                                                          Changes in the fair value of derivative financial instru­
                                                                          ments designated as hedges of expected future trans­           Deferred tax is calculated on the basis of the tax rules
                                                                          actions relating to purchases and sales denominated            and tax rates in the various countries that will apply under
                                                                          in foreign currency are recognized in equity under             the legislation in force at the balance sheet date when
                                                                          reserve for foreign currency and interest rate hedges.         the deferred tax item is expected to crystallise as current
                                                                          If the expected future transaction results in the recog­       tax. Changes in deferred tax resulting from changes in
                                                                          nition of assets or liabilities, gains and losses previously   tax rates are recognised in the income statement.
                                                                          deferred in equity are transferred from equity and
                                                                          included in the initial measurement of the cost of the         Deferred tax is calculated according to the balance
                                                                          asset or liability, respectively. Other amounts deferred       sheet liability method on all temporary differences
                                                                          in equity are transferred to the income statement in           between the accounting and tax value of assets and
                                                                          the period in which the hedged transaction affects             liabilities. Deferred tax adjustments are made regarding
                                                                          the income statement.                                          unrealised intercompany gains and losses.

                                                                          Changes in the fair value of derivative financial instru­      Deferred tax is not recognised for investments in subsid­
                                                                          ments used to hedge net investments in independent             iaries and associates if the shares are not expected to be
                                                                          foreign subsidiaries and associates are recognised             sold within a short period of time.
                                                                          directly in equity with respect to the effective part of
                                                                          the hedge, while the ineffective part is recognised in         Deferred tax assets are recognised in the balance sheet
  48                                                                      the income statement.                                          at the value at which they are expected to be realisable.
Income statement                                              are measured in the balance sheet at the lower of the
                                                              fair value and the present value of future lease payments.
Revenue                                                       The present value is calculated using the interest rate
Revenue comprises the year’s traffic revenue, rent,           implicit in the lease as the discount factor, or an ap­
concession revenue and sales of services, net of value        proximate value. Assets held under finance leases are
added tax and price reductions directly related to            subsequently accounted for as CPH’s other property,
sales. Please see the following section on segment            plant and equipment.
information.
                                                              The capitalised lease obligation is recognised in the balan­
Traffic revenue comprises passenger, take­off and             ce sheet as a liability, and the financial charge is recog­
parking charges and is recognised when the related            nised in the balance sheet over the term of the contract.
services are provided.
                                                              All lease contracts that are not considered finance
Concession revenue comprises sales­related revenue            leases are considered operating leases. Payments in
from Copenhagen Airport’s shopping centre, parking            connection with operating leases are recognised in
facilities, etc. and is recognised in step with the revenue   the income statement over the term of the leases.
generated by the concessionaires.
                                                              Amortisation and depreciation
Rent comprises rent for buildings and land and is             Amortisation and depreciation comprise the year’s
recognised over the terms of the contracts.                   charges for this purpose on CPH’s intangible assets
                                                              and property, plant and equipment.
Revenue from Sales of services, etc. comprises revenue
from the hotel operation and other activities of an           Profit from participating interests in associates
operating nature, which are recognised when delivery          Investments in subsidiaries and associates are recog­
of the services takes place.                                  nised and measured according to the equity method
                                                              in the consolidated financial statements.
External costs
External costs comprise administrative expenses and           In the income statement, the proportionate share of
other operating and maintenance costs.                        the profit after tax for the year is recognised under the
                                                              line item Profit from investments in associates after tax.


                                                                                                                             | Group Annual Report 2005 | Financial statements | Accounting policies
Staff costs
Staff costs comprise salaries, wages and pensions to          In the balance sheet, the proportionate interest in the
CPH’s staff as well as other staff costs.                     carrying amount of the companies is recognised deter­
                                                              mined according to the Group’s accounting policies
Regular pension contributions under defined contribu­         minus or plus unrealised intercompany gains or losses
tion schemes are recognised in the income statement           and plus or minus remaining unallocated value in ex­
in the period in which they arise. For civil servants         cess of the carrying amount of the assets.
seconded by the Danish State, the Group recognises a
pension contribution in the income statement, which           Gains and losses on the divestment of associates are
is fixed each year by the State and paid to the State         determined as the difference between the sales price and
on a regular basis.                                           the carrying amount of the net assets at the date of di­
                                                              vestment less anticipated costs involved in the divestment.
Pension obligations under defined benefit schemes are         Gains or losses are recognised in the income statement.
recognised based on an actuarial calculation and are
included in the valuation of investments in associates.       Financials
                                                              Financial income and expenses include interest, realised
Rent and lease costs                                          and unrealised exchange differences, amortisation of
On initial recognition, lease contracts for property,         mortgage loans and other loans, supplements and
plant and equipment under which CPH has substan­              allowances under the on­account tax scheme and
tially all risks and rewards of ownership (finance leases)    value adjustments of securities and similar items.               49
                                                                          Balance sheet                                                   Plant and machinery
                                                                                                                                          Runways, roads, etc. (foundation)                    80 years
                                                                          Intangible assets                                               Surfaces of new runways, roads, etc.                 10 years
                                                                          Major projects in which computer software is the princi­        Technical installations on runways                   15 years
                                                                          pal element are recognised as assets if there is sufficient     Technical installations (lifts, etc.)                20 years
                                                                          certainty that the capital value of future earnings can cover   Technical installations in buildings                 25 years
                                                                          the related costs. Computer software primarily comprises
                                                                          external costs and other directly attributable costs.           Other fixtures and fittings, tools and equipment
                                                                                                                                          Computer equipment                                   3­5 years
                                                                          Amortisation is charged on a straight­line basis com­           Energy plant                                         15 years
                                                                          mencing upon completion of the project. The amorti­             Vehicles, etc.                                     5­15 years
                                                                          sation period is 3­5 years.                                     Furniture and fittings                               10 years
                                                                                                                                          Hotel equipment                                    15­20 years
                                                                          Property, plant and equipment                                   Security equipment                                   10 years
                                                                          Property plant and equipment is measured at cost less           Technical equipment                                  10 years
                                                                          accumulated depreciation.                                       Other equipment                                        5 years


                                                                          Cost comprises the cost of acquisition and costs directly       Previously, buildings were depreciated over 30­40
                                                                          related to the acquisition up until the time when the           years, runways etc. over 10­40 years and plant and
                                                                          asset is ready for use. In the case of assets of own            machinery etc. over 10­15 years. For the other types
                                                                          construction, cost comprises direct costs attributable          of non­current assets, the changes only consist of
                                                                          to the construction work, including salaries and wages,         immaterial changes to the useful lives of the assets.
                                                                          materials, components, and work performed by sub­
                                                                          contractors. Loan costs are not included in cost.               Maintenance of sewer systems and runway and road
                                                                                                                                          surfaces as well as certain types of maintenance of
                                                                          The depreciation base is determined as cost less any            buildings and technical facilities recognised as property,
                                                                          residual value. Depreciation is charged on a straight­          plant and equipment will be recognised in the income
                                                                          line basis over the estimated useful lives of the assets        statement as maintenance costs in future as a result of
                                                                          and begins when the assets are ready for use.                   the changes to the useful lives of the assets.
| Group Annual Report 2005 | Financial statements | Accounting policies




                                                                          Land is not depreciated.                                        Gains and losses on the sale of non­current assets are
                                                                                                                                          recognised under External costs.
                                                                          Useful lives of property, plant and equipment:
                                                                                                                                          Investments
                                                                          Land and buildings                                              Investments in associates are valued according to the
                                                                          Land improvements (sewers, etc.)                     40 years   equity method.
                                                                          Buildings                                            80 years
                                                                          Leased buildings                                  30­40 years   Shares held in other companies are measured at fair
                                                                          Fitting out                                        5­10 years   value. The fair value of listed securities is the market
                                                                                                                                          value on the balance sheet date (the sales value).
                                                                          Investment properties
                                                                          Land improvements (sewers, etc.)                     40 years   Other receivables include the fair value of financial
                                                                          Buildings                                         40­80 years   instruments used to hedge investments.
                                                                          Fitting out                                        5­10 years
                                                                          Technical installations (lifts, etc.)                20 years   Impairment of assets
                                                                          Technical installations in buildings                 25 years   The carrying amount of intangible assets and property,
                                                                                                                                          plant and equipment as well as investments is assessed
                                                                                                                                          minimum once a year to determine whether there are
                                                                                                                                          indications of any impairment of the value beyond what
  50                                                                                                                                      is expressed in the amortisation or depreciation harges.
If that is the case, an impairment charge is taken             Cash flow statement
against the recoverable amount of the assets, if that is
lower than the carrying amount.                                The cash flow statement shows CPH’s cash flows for
                                                               the year distributed on operating, investing and financ­
The recoverable amount of the asset is determined as           ing activities, net changes for the year in cash as well
the higher of the net selling price and the value in use.      as CPH’s cash at the beginning and end of the year.
If it is not possible to determine a recoverable amount
for the individual assets, the assets are assessed             Cash
together in the smallest group of assets for which a           Cash includes cash and balances in accounts at no or
reliable recoverable amount can be determined in an            short notice.
overall assessment.
                                                               Cash flow from operating activities
Receivables                                                    The cash flow from operating activities comprises pay­
Receivables are recognised in the balance sheet at             ments from customers less payments to employees
amortised cost less any write down. Provisions are             and suppliers adjusted for financial items paid and in­
determined on the basis of an individual assessment            come taxes paid.
of each receivable.
                                                               Cash flow from investing activities
Equity                                                         The cash flow from investing activities comprises cash
Dividends expected to be declared in respect of the            flows from the purchase and sale of intangible assets,
year are stated under equity. Dividends are recognised         property, plant and equipment and investments, in­
as a liability at the time of adoption by the shareholders     cluding acquisitions.
in general meeting.
                                                               Cash flow from financing activities
Treasury shares are recognised at cost directly in equity      The cash flow from financing activities comprises cash
(retained earnings). If treasury shares are subsequently       flows from the raising and repayment of long­term
sold, any consideration is correspondingly recognised          and short­term debt to financial institutions as well as
directly in equity.                                            payments to shareholders.

Financial institutions


                                                                                                                          | Group Annual Report 2005 | Financial statements | Accounting policies
Loans such as mortgage loans and loans from financial          Segment information
institutions are recognised when obtained at the proceeds
received less transaction costs incurred. In subsequent        The segment information, which follows CPH’s account­
periods, the loans are measured at amortised cost so           ing policies, is based on the management structure
that the effective interest charges are recognised in          and reflects the differences in the risk profiles of the
the income statement over the term of the loan.                segments. The Group’s segments are described below.

Other payables                                                 Traffic business
Other payables primarily comprise holiday pay liabilities,     The operations and functions which the airports at
income taxes, other taxes and interest payable, which          Kastrup and Roskilde make available so that airlines
are measured at nominal value. Other liabilities also          can operate their flights, including facilities required
comprise the fair value of derivative financial instruments.   for the passengers’ traffic through these airports.

Prepayments and deferred income                                Commercial business
Prepayments recognised under assets comprise costs             The facilities and services provided at the airports to
incurred relating to the following financial year.             passengers and others, including parking facilities,
Deferred income recognised under liabilities comprises         shops, restaurants, resting areas, lounges and the
payments received relating to income in subsequent             hotel. The vast majority of the operations have been
financial years.                                               concessioned to private concessionaires. Furthermore,
                                                                                                                            51
                                                                          the business area comprises the segment engaged in           Segment liabilities comprise liabilities that have arisen
                                                                          leasing of CPH’s buildings, premises and land to             out of the segment operations, including Prepayments
                                                                          non­group lessees.                                           received from customers, Trade payables and Other
                                                                                                                                       payables.
                                                                          International business
                                                                          Consulting to other airports and investments in
                                                                          foreign airports.                                            Significant accounting policies

                                                                          The International business segment comprises CPH’s           CPH’s choice of historical cost rather than fair value as
                                                                          operations and investments outside Denmark.                  the basis for measuring property, plant and equipment
                                                                          Consequently, no further geographic segmentation             has a material impact on the accounting of results of
                                                                          has been made.                                               operations and equity. See the paragraphs above on
                                                                                                                                       property, plant and equipment, investment properties
                                                                          Group revenue in the segments comprises:                     and investments in associates for more details on
                                                                                                                                       CPH’s accounting policies.
                                                                          Traffic business
                                                                          Passenger, take­off and parking charges and other in­
                                                                          come, including handling.                                    Significant accounting judgments
                                                                                                                                       and estimates
                                                                          Commercial business
                                                                          Concession revenue, rent from buildings, premises and        The estimates made by CPH in the determination of
                                                                          land as well as the hotel operation.                         the carrying amounts of assets and liabilities are based
                                                                                                                                       on assumptions that are subject to future events. These
                                                                          International business                                       include, among other things, estimates of the useful
                                                                          Sales of consulting services concerning airport operation.   lives of non­current assets and their residual values.

                                                                          Allocation to the segments is based on the following         A number of estimates are made when assessing the
                                                                          criteria: vehicles: consumption; operations and mainte­      need for impairment. For a description of the most
                                                                          nance: area used; staff functions: external revenue          important assumptions etc. used in connection with
                                                                          generated by the segments and average number of              impairment tests for investments in foreign airports
| Group Annual Report 2005 | Financial statements | Accounting policies




                                                                          employees. Internal allocation among the segments            including their intangible assets, see note 11.
                                                                          is made on a cost­covering basis.
                                                                                                                                       For a description of CPH’s risks, see the section
                                                                          The operating results of the segments comprise directly      thereon in the Management’s report.
                                                                          attributable revenue less related operating costs. Op­
                                                                          erating costs comprise External costs, Staff costs and
                                                                          Amortisation and depreciation of intangible assets and
                                                                          property, plant and equipment.

                                                                          Segment assets comprise non­current assets used
                                                                          directly in the operating activities of each segment and
                                                                          current assets directly attributable to the operating
                                                                          activities of each segment, including Trade receivables,
                                                                          Other receivables and Prepayments and Deferred income.
                                                                          Jointly used properties are allocated to the segments
                                                                          on the basis of the amount of space used.




  52
Income statement
1 January ­ 31 December


DKK million                                                  2005      2004

Note


          Traffic revenue                                  1,435.1   1,319.7
          Concession revenue                                772.6     730.6
          Rent                                              200.2     176.6
          Sale of services, etc.                            330.5     258.4
  1, 2 Revenue                                             2,738.4   2,485.3


       3 External costs                                     668.4     423.8
       4 Staff costs                                        741.2     611.5
 9, 10 Amortisation and depreciation                        357.8     476,1
          Operating profit                                  971.0     973,9


       5 Profit from investments in associates after tax     89.4      70.7
       6 Financial income                                    20.7      50.0
       7 Financial expenses                                 227.6     277.0
          Profit before tax                                 853.5     817.6


       8 Tax on profit for the year                         183.1     224.8
          Profit for the year                               670.4     592.8


          Earnings per DKK 100 share (basic and diluted)     85.5      71.3
          EPS is expressed in DKK




                                                                               | Group Annual Report 2005 | Financial statements | Income statement




                                                                                53
                                                                    Balance sheet
                                                                    Assets at 31 December


                                                                    DKK million                                                   2005      2004

                                                                    Note


                                                                             NON-CURRENT ASSETS


                                                                           9 Total intangible assets                              56,7      51,7


                                                                       10 Property, plant and equipment
                                                                             Land and buildings                                 3,325.6   3,532.5
                                                                             Investment properties                               159.8          ­
                                                                             Plant and machinery                                2,151.4   2,081.0
                                                                             Other fixtures and fittings, tools and equipment    332.1     224.1
                                                                             Property, plant and equipment in progress           329.6     289.5
                                                                             Total property, plant and equipment                6,298.5   6,127.1


                                                                             Investments
                                                                       11 Investments in associates                             1,840.9   1,582.8
                                                                       12 Other investments                                         3.3       0.9
                                                                             Total investments                                  1,844.2   1,583.7


                                                                             Total non-current assets                           8,199.4   7,762.5



                                                                             CURRENT ASSETS


                                                                             Receivables
                                                                       13 Trade receivables                                      227.6     193.6
                                                                             Other receivables                                    37.9      25.5
                                                                           8 Income tax receivable                                18.4        0.0
                                                                             Prepayments                                          39.9      35.5
                                                                             Total receivables                                   323.8     254.6
| Group Annual Report 2005 | Financial statements | Balance sheet




                                                                             Cash                                                 29.6     322.4


                                                                             Total current assets                                353.4     577.0


                                                                             Total assets                                       8,552.8   8,339.5




 54
Balance sheet
Equity and liabilities at 31 December


DKK mio.                                       2005       2004

Note


          EQUITY


          Share capital                       784.8      833.0
          Reserve for hedging                  52.3       96.3
          Reserve for currency translation    (193.3)    (364.8)
          Retained earnings                  2,767.9    2,666.2
          Total equity                       3,411.7    3,230.7



          NON-CURRENT LIABILITIES


       8 Provisions for deferred tax          750.5      813.7
   14 Financial institutions                 3,210.2    3,182.9
   20 Other payables                          208.2      399.9
          Total non-current liabilities      4,168.9    4,396.5



          CURRENT LIABILITIES


   14 Financial institutions                  552.2      333.0
          Prepayments from customers           55.9       49.7
          Trade payables                      202.4      151.2
       8 Income tax payable                      0.0      36.8
   15 Other payables                          135.5      129.3
          Deferred income                      26.2       12.3
          Total current liabilities           972.2      712.3


          Total liabilities                  5,141.1    5,108.8

                                                                   | Group Annual Report 2005 | Financial statements | Balance sheet
          Total equity and liabilities       8,552.8    8,339.5


   16 Financial commitments
   17 Related parties
   18 Treasury shares
   19 Concession for airport operation
   20 Financial instruments
   21 Financial risks




                                                                    55
                                                                          Cash flow statement
                                                                          1 January ­ 31 December


                                                                          DKK million                                                                  2005       2004

                                                                          Note


                                                                                 CASH FLOW FROM OPERATING ACTIVITIES


                                                                             22 Received from customers                                             2,705.1     2,538.2
                                                                             23 Paid to staff, suppliers, etc.                                      (1,337.5)    (997.0)
                                                                                 Cash flow from operating activities before financials and tax      1,367.6     1,541.2
                                                                             24 Interest received                                                      14.6       48.1
                                                                             25 Interest paid                                                        (200.6)     (276.9)
                                                                                 Income taxes paid                                                   (284.4)     (218.3)
                                                                                 Cash flow from operating activities                                  897.2     1,094.1



                                                                                 CASH FLOW FROM INVESTING ACTIVITIES


                                                                                 Payments for intangible assets and property, plant and equipment    (564.1)     (472.1)
                                                                                 Capital contributions in associates                                 (102.5)      (77.7)
                                                                                 Dividends from associates                                             57.5       43.3
                                                                                 Cash flow from investing activities                                 (609.1)     (506.5)



                                                                                 CASH FLOW FROM FINANCING ACTIVITIES


                                                                                 Repayments of long­term loans                                       (330.9)     (328.5)
                                                                                 Repayments of short­term loans                                      (176.1)          ­
                                                                                 Proceeds from short­term loans                                       495.3       83.0
                                                                                 Payments to acquire treasury shares                                 (290.9)     (373.3)
                                                                                 Dividends paid                                                      (278.3)     (151.7)
                                                                                 Cash flow from financing activities                                 (580.9)     (770.5)
| Group Annual Report 2005 | Financial statements | Cash flow statement




                                                                                 Net change in cash                                                  (292.8)     (182.9)


                                                                                 Cash at beginning of year                                            322.4      505.3
                                                                                 Cash at end of year                                                   29.6      322.4




  56
Statement of equity 2005
1 January ­ 31 December


DKK million

Note

                                                                                       Reserve for
                                                            Share      Reserve for       currency        Retained
                                                           capital       hedging       translation       earnings             Total

        Balance at 1 January 2005                           833.0            96.3           (364.8)       2,666.2         3,230.7


 11,20 Currency translation of investments
        in associates                                                                       171.5                           171.5
        Adjustment of investment in associated
        companies regarding IFRS change of
        accounting policy (pensions etc.)                                                                    (47.7)          (47.7)
    20 Interest hedges through swaps                                         (61.1)                                          (61.1)
        Tax effect of hedges                                                 17.1                                             17.1
        Net effect taken directly to equity                                  (44.0)         171.5            (47.7)           79.8
        Net profit for the year                                                                             670.4           670.4
        Total recognised gains and losses                                    (44.0)         171.5           622.7           750.2


    18 Purchase of treasury shares                                                                          (290.9)         (290.9)
        Cancellation of treasury shares                      (48.2)                                           48.2             0.0
        Dividends paid                                                                                      (296.4)         (296.4)
        Dividend on treasury shares                                                                           18.1            18.1
        Other equity movements                               (48.2)                                         (521.0)         (569.2)


        Balance at 31 December 2005                         784.8            52.3          (193.3)        2,767.9         3,411.7


        See the Parent Company’s statement of equity with respect to which reserves are available for distribution. Dividend per
        share is stated under financial highlights and key ratios. Retained earnings include proposed dividends of DKK 670.4 million.
        Proposed dividend per share amounts to DKK 85.42.


                                                                                                                                        | Group Annual Report 2005 | Financial statements | Statement of equity




                                                                                                                                          57
                                                                          Statement of equity 2004
                                                                          1 January ­ 31 December


                                                                          DKK million

                                                                          Note

                                                                                                                                                                 Reserve for
                                                                                                                                      Share      Reserve for       currency        Retained
                                                                                                                                     capital       hedging       translation       earnings             Total

                                                                                  Balance at 1 January 2004                           910.0            45.4           (298.6)       2,479.6         3,136.4
                                                                                  Effect of accounting policy changes                                                   (3.3)           45.7            42.4
                                                                                  Restated balance at 1 January 2004                  910.0            45.4           (301.9)       2,525.3         3,178.8


                                                                           11,20 Currency translation of investments
                                                                                  in associates                                                                        (62.9)                          (62.9)
                                                                              20 Interest hedges through swaps                                         67.1                                             67.1
                                                                                  Tax effect of hedges                                                 (20.1)                                          (20.1)
                                                                                  Net effect taken directly to equity                                  47.0            (62.9)                          (15.9)
                                                                                  Net profit for the year                                                                             592.8           592.8
                                                                                  Total recognised gains and losses                                    47.0            (62.9)         592.8           576.9


                                                                                  Prior year adjustments                                                 3.9                            (3.9)            0.0
                                                                              18 Purchase of treasury shares                                                                          (373.3)         (373.3)
                                                                                  Cancellation of treasury shares                      (77.0)                                           77.0             0.0
                                                                                  Dividends paid                                                                                      (165.7)         (165.7)
                                                                                  Dividend on treasury shares                                                                           14.0            14.0
                                                                                  Other equity movements                               (77.0)            3.9                          (451.9)         (525.0)


                                                                                  Balance at 31 December 2004                         833.0            96.3          (364.8)        2,666.2         3,230.7


                                                                                  See the Parent Company’s statement of equity with respect to which reserves are available for distribution. Dividend per
                                                                                  share is stated under financial highlights and key ratios. Retained earnings include proposed dividends of DKK 296.4 million.
                                                                                  Proposed dividend per share amounts to DKK 35.58.
| Group Annual Report 2005 | Financial statements | Statement of equity




  58
Notes


DKK mio.                                        Traffic   Commercial International      Total

Note


       1 Segmental information


         2005


         Net revenue                            1,601.8       1,097.9         38.7    2,738.4
         Operating profit/(loss)                 395.3         589.2         (13.5)    971.0
         Profit from investment in associates                                 89.4      89.4
         Profit before financial income          395.3         589.2          75.9    1,060.4
         Segment assets                         3,897.3       2,731.5         13.2    6,642.0
         Investments in associates                                         1,840.9    1,840.9
         Non­allocated assets                                                           69.9
         Total assets                           3,897.3       2,731.5      1,854.1    8,552.8
         Segment liabilities                      84.2         250.4           4.6     339.2
         Non­allocated liabilities                                                    4,801.9
         Total liabilities                        84.2         250.4           4.6    5,141.1


         Investments in non­current assets       144.2         345.7         102.5     592.4
         Depreciation                            239.4         117.8           0.6     357.8
         Average number of employees             1,132           492           28      1,652



         2004




                                                                                                | Group Annual Report 2005 | Financial statements | Notes to the financial statements
         Net revenue                            1,459.6        997.1          28.6    2,485.3
         Operating profit/(loss)                 430.6         558.0         (14.7)    973.9
         Profit from investment in associates                                 70.7      70.7
         Profit before financial income          430.6         558.0          56.0    1,044.6
         Segment assets                         3,950.2       2,434.4         26.1    6,410.7
         Investments in associates                                         1,582.8    1,582.8
         Non­allocated assets                                                          346.0
         Total assets                           3,950.2       2,434.4      1,608.9    8,339.5
         Segment liabilities                      60.6         187.6           2.4     250.6
         Non­allocated liabilities                                                    4,858.2
         Total liabilities                        60.6         187.6           2.4    5,108.8


         Investments in non­current assets       318.6         152.6          74.9     546.1
         Depreciation                            315.2         160.2           0.8     476.2
         Average number of employees               985           473           27      1,485




                                                                                                  59
                                                                                        Notes


                                                                                        DKK million                                                 2005      2004

                                                                                        Note


                                                                                               2 Net revenue


                                                                                                 Traffic revenue
                                                                                                 Take­off charges                                  511.1     502.1
                                                                                                 Passenger charges                                 895.6     787.8
                                                                                                 Other charges                                      28.4      29.8
                                                                                                 Total traffic revenue                            1,435.1   1,319.7


                                                                                                 Concession revenue
                                                                                                 Shopping centre                                   433.7     438.9
                                                                                                 Handling                                           94.7      90.3
                                                                                                 Other concession revenue                          244.2     201.4
                                                                                                 Total concession revenue                          772.6     730.6


                                                                                                 Rent
                                                                                                 Rent from premises                                141.5     127.1
                                                                                                 Rent from land                                     42.5      41.7
                                                                                                 Other rent                                         16.2        7.8
                                                                                                 Total rent                                        200.2     176.6


                                                                                                 Sales of services, etc.
                                                                                                 Hotel operation                                   180.6     147.0
                                                                                                 Other sales of services                           149.9     111.4
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                                 Total sales of services, etc.                     330.5     258.4


                                                                                                 Total                                            2,738.4   2,485.3


                                                                                                 Rent relating to leases interminable by lessee
                                                                                                 Within 1 year                                      86.4      69.6
                                                                                                 Between 1 and 5 years                             252.4     209.8
                                                                                                 After 5 years                                     300.4     315.1
                                                                                                 Total                                             639.2     594.5




  60
Notes


DKK million                                                                                                      2005           2004

Note


       3 External costs


         Operation and management                                                                                412.0          284.5
         Energy                                                                                                   48.4           42.6
         Administration                                                                                          175.4           83.4
         Other                                                                                                    32.6           13.2
         Total external costs                                                                                    668.4          423.7


         Audit fee to Pricewaterhouse Coopers appointed at the annual general meeting amounted to DKK 1.2 million
         (DKK 1.1 million in 2004). Fees for other services provided by PricewaterhouseCoopers amounted to DKK 3.5 million
         (DKK 2.8 million in 2004). Audit fee to Grant Thornton in 2004 amounted to DKK 0.2 million. Fees for other services
         provided by Grant Thornton in 2004 amounted to DKK 0.2 million.



       4 Staff costs


         Salaries and wages                                                                                      654.9          562.2
         Pensions                                                                                                 48.6           40.6
         Other social security costs                                                                               4.1             3.0
         Other staff costs                                                                                        63.2           34.0
                                                                                                                 770.8          639.8
         Less amount capitalised as fixed assets                                                                  29.6           28.3
         Total                                                                                                   741.2          611.5




                                                                                                                                           | Group Annual Report 2005 | Financial statements | Notes to the financial statements
         Cash emoluments to Executive Board incl. pension, company cars, etc.                                     12.1           10.8
         Three­year incentive plan for members of the Executive Board, see below                                   6.4             5.5
         Emoluments to Supervisory Board                                                                           1.8             1.6


         Emolument to the Supervisory Board for 2006 comprise an annual fixed fee of DKK 438k to the chairman, DKK 263k to
         the deputy chairman, and DKK 175k to other board members. Emolument to members of the Executive Board comprise
         a fixed fee (including pension), certain benefits (free car etc.) and an incentive plan which is described below.


         The total emolument in 2005 to Chairman Henrik Gürtler amounted to DKK 438k. The total emolument to Deputy Chairman
         Ivar Samrén amounted to DKK 263k. The total emoluments to other members of the Supervisory Board amounted to DKK
         175k per annum.


         The total emolument in 2005 to President and CEO Niels Boserup amounted to DKK 6.7 million. The total emolument to
         Executive Vice President Keld Binger amounted to DKK 4.8 million. The total emolument to Senior Vice President and CFO
         Torben Thyregod amounted to DKK 4.1 million. The total emolument to Senior Vice President Peter Rasmussen amounted
         to DKK 2.9 million. Pension contributions to members of the Executive Board are paid in regularly to private pension companies.
         The Group has no liabilities related thereto.




                                                                                                                                             61
                                                                                        Notes


                                                                                        DKK million

                                                                                        Note


                                                                                               4 Staff costs (continued)


                                                                                                 In 2004, an incentive plan was implemented for members of the Executive Board, equalling 2% of the total value creation
                                                                                                 over a three­year period. The value creation is calculated as average capital employed multiplied by the spread between
                                                                                                 the return on capital employed (ROCE) and the company’s weighted average cost of capital (WACC).


                                                                                                 No bonus will be paid out if the actual value creation during the three­year period does not exceed DKK 300 million. More­
                                                                                                 over, bonus will be calculated, as a maximum, on value creation of DKK 1,200 million. Bonus will be pensionable income.


                                                                                                 Bonus earned will be paid out at the end of the three­year period. A member of the Executive Board will not receive bonus
                                                                                                 if he leaves his position (except in case of retirement due to age or if the company is taken over), nor if such member’s
                                                                                                 contract is terminated due to material breach on the part of the member.


                                                                                                 The expected bonus relating to the already completed part of the three­year period has been recognised in the income
                                                                                                 statement and recognised as a liability under the line item Other payables.


                                                                                                 In connection with the tender offer to acquire CPH shares issued by Macquarie ref. tender offer of 24 October 2005, the
                                                                                                 Supervicory Board has entered into individual agreements with members of the Executive Board, whereas the members
                                                                                                 of the Executive Board waives prior agreements in respect of severence pay in connection with change of control of CPH
                                                                                                 against a cash payment of an amount equal to 1.5 times the prior severence amount, due 12 months after the date of the
                                                                                                 execution of the purchase offer concerning the CPH shares, provided that the Director has not terminated his position with
                                                                                                 CPH. The total amount, which is due in this respect, amounts to approximately DKK 75 million. The amount is expensed
                                                                                                 over the 12 month period.
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                                 The average number of people employed by the Group in 2005 was 1,652 full­time equivalents. This figure includes 91
                                                                                                 civil servants who, pursuant to the Copenhagen Airports Act, have retained their employment with the State. The average
                                                                                                 number of people employed by the Group in 2004 was 1,485 full­time equivalents, of whom 100 were civil servants.


                                                                                                 The Group makes annual pension contributions to the State. The contributions are paid for employees who, under their
                                                                                                 contracts of employment, are entitled to pensions from the State. The rate of pension contributions is fixed by the Minister
                                                                                                 of Finance and was 19.7% in both 2005 and 2004. In 2005, the pension contributions amounted to DKK 4.0 million
                                                                                                 (2004: 4.3 million).


                                                                                                 For the other employees, pension contributions are paid to private pension companies pursuant to individual or collective
                                                                                                 agreements.




  62
Notes


DKK million                                                                                                 2005             2004

Note


       5 Profit from investments in associates after tax


         NIAL Holdings Plc., United Kingdom                                                                 33.6              12.7
         Hainan Meilan Airport Company Ltd.
         Inversiones y Tecnicas Aeroportuarias S.A. de C.V. (ITA)
         Grupo Aeroportuario del Sureste S.A. de C.V. (ASUR)                                                55.8              60.4
         Other                                                                                               0.0              (2.4)
         Total                                                                                              89.4              70.7



       6 Financial income


         Interest on balances with banks, etc.                                                               2.0               9.8
         Interest on other receivables                                                                       4.9              32.1
         Exchange gains                                                                                     13.8               8.1
         Total                                                                                              20.7              50.0


         Exchange gains include unrealised exchange losses related to a long­term loan of DKK 257.0 million (2004 gains of
         DKK 147.0 million) denominated in US dollars offset by unrealised exchange gains on currency swaps of DKK 257.0 million
         (2004 losses of DKK 147.0 million) relating to the same loan.



       7 Financial expenses




                                                                                                                                      | Group Annual Report 2005 | Financial statements | Notes to the financial statements
         Interest on debt to financial institutions, etc.                                                  191.5             214.7
         Exchange losses                                                                                    20.2              53.9
         Other financing costs                                                                              14.3               6.7
         Amortisation of loan costs                                                                          1.6               1.7
         Total                                                                                             227.6             277.0




                                                                                                                                        63
                                                                                        Notes


                                                                                        DKK million                                                2005      2004

                                                                                        Note


                                                                                               8 Tax on profit for the year


                                                                                                 Tax expense
                                                                                                 Current income tax                               229.2     224.7
                                                                                                 Deferred tax charge                               (63.2)    20.2
                                                                                                 Total                                            166.0     244.9


                                                                                                 Tax is allocated as follows:
                                                                                                 Tax on profit of the year                        183.1     224.8
                                                                                                 Tax on movement in equity                         (17.1)    20.1
                                                                                                 Total                                            166.0     244.9


                                                                                                 Income tax payable
                                                                                                 Balance at 1 January                              36.8      30.3
                                                                                                 Tax paid on account in current year              (252.3)   (205.7)
                                                                                                 Reimbursement of tax overpaid in previous year    37.1        9.1
                                                                                                 Payment of tax underpaid in previous year         (68.2)    (21.0)
                                                                                                 Foreign tax deducted at source                     (1.0)     (0.7
                                                                                                 Tax on profit for the year                       229.2     224.8
                                                                                                 Balance at 31 December                            (18.4)    36.8


                                                                                                 Provision for deferred tax
                                                                                                 Balance at 1 January                             813.7     793.5
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                                 Change of tax percentage                          (54.2)      0.0
                                                                                                 Prior­year adjustment                               0.0       0.1
                                                                                                 Tax on profit for the year                          8.1       0.0
                                                                                                 Tax on amounts posted on equity                   (17.1)    20.1
                                                                                                 Balance at 31 December                           750.5     813.7


                                                                                                 Breakdown of deferred tax provision:
                                                                                                 Property, plant and equipment                    762.6     820.4
                                                                                                 Trade receivables                                  (2.1)     (1.6)
                                                                                                 Prepayments                                        (0.2)      5.4
                                                                                                 Other payables                                     (9.8)    (10.5)
                                                                                                 Total                                            750.5     813.7




  64
Notes


DKK million                                                        2005     2004

Note


       8 Tax on profit for the year (continued)


         Breakdown of tax on profit for the year:
         Tax estimated at 28% (30% in 2004) of profit before tax   236.8    245.0
         Tax effect of:
         Profits of associates                                     (22.9)   (21.6)
         Tax­exempt income                                           0,0     (0.3)
         Non­deductible costs                                       18.3      1.7
         Reduction of provision for deferred tax due to
         reduction of the tax percentage                           (54.2)     0.0
         Prior­year adjustment                                       5.1      0.0
         Total                                                     183.1    224.8



       9 Intangible assets


         Computer software
         Cost
         Accumulated cost at 1 January                             119.6    101.4
         Completion of assets in progress                           16.9     18.2
         Accumulated cost at 31 December                           136.5    119.6


         Amortisation




                                                                                     | Group Annual Report 2005 | Financial statements | Notes to the financial statements
         Accumulated amortisation at 1 January                      72.8     54.9
         Amortisation                                               18.3     17.9
         Accumulated amortisation at 31 December                    91.1     72.8


         Carrying amount at 31 December                             45.4     46.8


         Computer software in progress
         Cost
         Accumulated cost at 1 January                               4.9      5.2
         Additions                                                  23.3     17.9
         Completion of assets in progress                          (16.9)   (18.2)
         Carrying amount at 31 December                             11.3      4.9


         Total intangible assets                                    56.7     51.7




                                                                                       65
                                                                                        Notes


                                                                                        DKK million                                                                                               2005       2004

                                                                                        Note


                                                                                           10 Property, plant and equipment


                                                                                               Land and buildings
                                                                                               Cost
                                                                                               Accumulated cost at 1 January                                                                    4,954.0    4,841.2
                                                                                               Reclassification                                                                                  (266.8)       0.0
                                                                                               Disposals                                                                                           (0.8)      (8.5)
                                                                                               Completion of assets under construction                                                           187.6      121.3
                                                                                               Accumulated cost at 31 December                                                                  4,874.0    4,954.0


                                                                                               Depreciation
                                                                                               Accumulated depreciation at 1 January                                                            1,421.5    1,234.9
                                                                                               Reclassification                                                                                   (15.8)       0.0
                                                                                               Depreciation                                                                                      143.2      193.2
                                                                                               Depreciation on disposals                                                                           (0.5)      (6.6)
                                                                                               Accumulated depreciation at 31 December                                                          1,548.4    1,421.5


                                                                                               Carrying amount at 31 December                                                                   3,325.6    3,532.5


                                                                                               Of which leased assets                                                                            454.5      472.2


                                                                                               Investment properties
                                                                                               Cost
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                               Accumulated cost at 1 January                                                                        0.0        0.0
                                                                                               Reclassification                                                                                  159.8         0.0
                                                                                               Accumulated cost at 31 December                                                                   159.8         0.0


                                                                                               Depreciation
                                                                                               Accumulated depreciation at 1 January                                                                0.0        0.0
                                                                                               Depreciation                                                                                         0.0        0.0
                                                                                               Accumulated depreciation at 31 December                                                              0.0        0.0


                                                                                               Carrying amount at 31 December                                                                    159.8         0.0


                                                                                               Fair value of investment properties                                                               159.8         0.0


                                                                                               Investment properties comprises land acquired for developing Copenhagen Airport Business Park.




  66
Notes


DKK million                                                 2005       2004

Note


   10 Property, plant and equipment (continued)


       Plant and machinery
       Cost
       Accumulated cost at 1 January                      4,174.6    4,048.3
       Reclassification                                    (179.3)       0.0
       Disposals                                              0.0       (0.4)
       Completion of assets under construction             231.5      126.7
       Accumulated cost at 31 December                    4,226.8    4,174.6


       Depreciation
       Accumulated depreciation at 1 January              2,093.5    1,876.6
       Reclassification                                    (154.6)       0.0
       Depreciation                                        136.5      217.0
       Accumulated depreciation at 31 December            2,075.4    2,093.6


       Carrying amount at 31 December                     2,151.4    2,081.0


       Other fixtures and fittings, tools and equipment
       Cost
       Accumulated cost at 1 January                       833.6      797.9
       Reclassification                                    286.1         0.0
       Disposals                                            (11.4)      (3.7)




                                                                                | Group Annual Report 2005 | Financial statements | Notes to the financial statements
       Completion of assets under construction              53.9       39.4
       Accumulated cost at 31 December                    1,162.2     833.6


       Depreciation
       Accumulated depreciation at 1 January               609.5      565.1
       Reclassification                                    170.4         0.0
       Depreciation                                         59.8       48.0
       Depreciation on disposals                             (9.6)      (3.6)
       Accumulated depreciation at 31 December             830.1      609.5


       Carrying amount at 31 December                      332.1      224.1


       Property, plant and equipment under construction
       Cost
       Accumulated cost at 1 January                       289.5      124.1
       Additions                                           513.1      452.8
       Completion of assets under construction             (473.0)    (287.4)
       Carrying amount at 31 December                      329.6      289.5




                                                                                  67
                                                                                        Notes


                                                                                        DKK million                                                                                                       2005             2004

                                                                                        Note


                                                                                           11 Investments


                                                                                               Investments in associates
                                                                                               Cost
                                                                                               Accumulated cost at 1 January                                                                           1,937.9          1,865.5
                                                                                               Additions                                                                                                 102.5              77.7
                                                                                               Disposals                                                                                                    0.0             (5.3)
                                                                                               Accumulated cost at 31 December                                                                         2,040.4          1,937.9


                                                                                               Revaluation and impairment
                                                                                               Accumulated revaluation and impairment at 1 January                                                      (355.1)          (324.9)
                                                                                               Revaluation and impairment on disposals                                                                    (47.8)             5.3
                                                                                               Dividends                                                                                                  (57.5)           (43.3)
                                                                                               Exchange differences                                                                                      171.5             (62.9)
                                                                                               Profit after tax                                                                                            89.4             70.7
                                                                                               Accumulated revaluation and impairment at 31 December                                                    (199.5)          (355.1)


                                                                                               Carrying amount at 31 December                                                                          1,840.9          1,582.8


                                                                                               Impairment of investments with goodwill
                                                                                               Goodwill has been allocated to NIAL Holdings Plc (NIAL) and Hainan Meilan International Airport Company Ltd. (HMA),
                                                                                               which are both considered independent cash­generating units.
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                               In the impairment tests, the carrying amount is compared with the recoverable amount, which is determined as the higher
                                                                                               of the discounted cash flows and the fair value. Below is a list of the key factors applied in the determination of the recoverable
                                                                                               amounts for NIAL. Specific annual rates of growth are not stated for HMA in order not to violate the Hong Kong stock exchange
                                                                                               regulations. See the Management Report for more detailed descriptions of the individual investments.




  68
Notes


DKK million                                                                                              2005     2004

Note


   11 Investments (continued)


       NIAL
       Assets with values in excess of the carrying amount (goodwill) classified as intangible assets,
       whose value does not deteriorate (DKK million)                                                    529.9    553.1


       Management continuously updates a ten­year business, which forms the basis for the
       determination of the recoverable amount, which is higher than the carrying amount.
       Experience with long­term projections is comprehensive, and the industry is unpredictable,
       for which reason the specific cash flows are projected beyond five years. The key
       factors in the calculation of the discounted cash flows are:


       Annual traffic growth rates are determined based on Management’s current knowledge
       about developments in the market compared with information in the White Paper on
       general traffic developments in traffic in the UK.                                                5.5%     5.1%


       Developments in charges, which are expected to fall in real terms from the current level
       due to growing pressure from both low­cost airlines and traditional airlines. The inflation
       rate is expected to be 2.5%, which indicates negative growth in charges in real terms
       over the next 10 years at an annual rate of 4.5%.                                                 (2.0%)   1.2%


       The growth in commercial revenue per passenger is expected to track the general economic
       growth in the UK, and to increase on the introduction of new activities.                          2.3%     3.8%




                                                                                                                          | Group Annual Report 2005 | Financial statements | Notes to the financial statements
       The average growth in costs is to a large extent capacity­related. There are no plans for
       significant capacity increases within the next ten years, which means that costs are
       primarily driven by general price increases, including increases in real salaries and wages.      2.5%     3.1%


       The aggregate capital investment programme is based on an analysis of requirements to
       maintenance, replacement and expansion in order to handle the expected traffic volume.
       (stated in GBP million), fixed prices.                                                             83.1     60.8


       At the end of the forecast period, a terminal value is determined by means of a growth
       formula assuming constant and unlimited growth in the free cash flow.                             2.3%     2.5%


       An average cost of capital (WACC) determined on the basis of market data at 31 December.          7.2%     8,2%


       HMA
       Assets with values in excess of the carrying amount (goodwill) classified as intangible assets,
       whose value does not deteriorate (DKK million)                                                    103.9     87.6


       The recoverable amount is determined based on the fair value of HMA’s shares, which are
       listed on the Hong Kong Stock Exchange. The recoverable amount is slightly lower than the
       carrying amount as at 31 December 2005. As at 31 January 2006 the recoverable amount
       is above the carrying amount.


                                                                                                                            69
                                                                                        Notes


                                                                                        DKK million                                                                                      2005   2004

                                                                                        Note


                                                                                           12 Other financial assets


                                                                                               Other investments
                                                                                               Cost
                                                                                               Accumulated cost at 1 January                                                              0.8     0.8
                                                                                               Accumulated cost at 31 December                                                            0.8     0.8


                                                                                               Revaluation and impairment
                                                                                               Accumulated revaluation and impairment at 1 January                                        0.1    1.0
                                                                                               Market value adjustments                                                                   2.4    (0.9)
                                                                                               Accumulated revaluation and impairment at 31 December                                      2.5     0.1


                                                                                               Carrying amount at 31 December                                                             3.3     0.9


                                                                                               The year’s fair value adjustment is recognised in the income statement under financials



                                                                                           13 Trade receivables


                                                                                               Writedown for bad and doubtful debts
                                                                                               Accumulated writedown at 1 January                                                         5.5   23.6
                                                                                               Writedown                                                                                  2.2     0.8
                                                                                               Reversal of prior­year writedowns                                                          0.0   (18.9)
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                               Accumulated writedown at 31 December                                                       7.7     5.5


                                                                                               The year’s movements are recognised in the income statement under External costs




  70
Notes


DKK million                                                                                                   2005              2004

Note


   14 Financial institutions
                                                                                         Remaining
                                                                      Market value             debt
       Currency                                                       31 Dec. 2005      (in currency)


       DKK                                                                  1,454.6        1,419.2          1,419.2           1,412.9
       USD                                                                  2,034.7           300.0         1,897.2           1,640.3
       Loan costs for amortisation                                              (8.5)                           (8.5)            (9.5)
       Liability concerning leased assets                                     454.5                           454.5            472.2
       Total financial institutions                                         3,935.3                         3,762.4           3,515.9


       Financial institutions by time to expiry
       Due within 1 year
       Liabilities concerning leased assets                                                                    17.7             17.7
       Other liabilities                                                                                      534.5            315.3
       Total                                                                                                  552.2            333.0


       Due within 1-5 years
       Liabilities concerning leased assets                                                                    38.8             56.5
       Other liabilities                                                                                      715.7            819.5
       Total                                                                                                  754.5            876.0


       Due after 5 years




                                                                                                                                         | Group Annual Report 2005 | Financial statements | Notes to the financial statements
       Liabilities concerning leased assets                                                                   398.0            398.0
       Other liabilities                                                                                    2,057.7           1,908.9
       Total                                                                                                2,455.7           2,306.9


       The Group has undertaken not to mortgage its assets to other lenders as long as the above loans exist. However, mortgages
       on new assets in security of the purchase consideration and a minor part of the existing assets are not subject to this under­
       taking. Furthermore, the Group has undertaken not to obtain more debt than a maximum of 4.5 times the Group’s EBITDA
       and to continuously be able to maintain the equity ratio at a minimum of 30%. Moreover, net financing costs may not
       exceed half the Group’s EBIT or a third of EBITDA.


       Interest rate swaps have been contracted to swap floating rate debt equivalent to a total of DKK 350 million to fixed
       rates in the rage of 5.1­5.5%. This caused a marginal increase of the duration of the aggregate debt, which is 6­7 years.
       The fixed rate loans of USD 300 million have been swapped to DKK both in terms of principal and interest payments.


       The Group has unused short­term facilities for approximately DKK 1.1 billion.


       Payments on the leased assets are subject to the level of activity, and it is consequently not possible to determine
       the present value thereof. For additional information, please see note 16.




                                                                                                                                           71
                                                                                        Notes


                                                                                        DKK million                                                                                                       2005             2004

                                                                                        Note


                                                                                           15 Other payables


                                                                                               Holiday pay and other payroll items                                                                       103.8              73.9
                                                                                               Interest payable                                                                                            41.3             43.8
                                                                                               Other costs payable                                                                                         (9.6)            11.6
                                                                                               Balance at 31 December                                                                                    135.5            129.3



                                                                                           16 Financial commitments


                                                                                               The Group has entered into finance leases regarding buildings and other fixed assets. The assets will be transferred to
                                                                                               Copenhagen Airports A/S at the net carrying amount on expiry of the leases. The leases are irrevocable by Copenhagen
                                                                                               Airports A/S until 31 December 2008, when the last lease expires without notice. The counterparties can terminate the leases
                                                                                               at six months’ notice. If the agreements had terminated on 31 December 2005, the purchase commitment would have
                                                                                               amounted to DKK 454.5 million. The corresponding amount at 31 December 2004 was DKK 472.2 million. See note 10.


                                                                                               The Group is committed to provide redundancy pay to civil servants pursuant to the provisions of the Danish Civil Servants Act
                                                                                               as described in note 4.


                                                                                               At 31 December 2005, the Group had entered into contracts to build facilities and other commitments totalling DKK 255.0
                                                                                               million. The corresponding amount at 31 December 2004 was DKK 37.3 million.


                                                                                               Under a management agreement between Hilton International and Copenhagen Airports’ Hotel and Real Estate Company
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                               A/S, the Company has undertaken to pay the contractual consideration to Hilton for managing the hotel. The agreement
                                                                                               expires on 31 December 2021.


                                                                                               The Parent Company is taxed jointly with its wholly­owned Danish subsidiaries. With effect from 19 December 2005 the Parent
                                                                                               Company is also joint taxed with Macquarie Airports Copenhagen Holding Aps and Macquarie Airports Copenhagen Aps.



                                                                                           17 Related parties and ownership


                                                                                               The Group’s related parties are the Danish State, cf. its ownership interest, the foreign associates, cf. the Group structure,
                                                                                               and the Supervisory Board and Executive Board, cf. note 4.


                                                                                               The Group provides consultancy services to its foreign associates, primarily consisting of the transfer of know­how and
                                                                                               experience relating to efficient airport operations, cost effective expansion of infrastructure, flexible capacity utilisation
                                                                                               and optimisation of commercial potential. Revenue from such consulting activities in 2005 totalled DKK 38.7 million
                                                                                               (2004: DKK 28.2 million).


                                                                                               Trading between the companies of the Group took place on arm’s length conditions.


                                                                                               The ultimate parent company for CPH is Macquarie Airports Holding (Bermuda) Limited (MAHBL). MAHBL’s Group Annual
                                                                                               Report, where CPH is included as a subsidiary, can be requested from Macquarie Airports.



  72
Notes


DKK million                                                                                                     2005           2004

Note


   18 Treasury shares


                                                                                        Percentage
                                                                           Number          of share
                                                                           of shares         capital


       Holding at 1 January                                               244,925           2.94%               255.9         356.7
       Acquired during the year                                           237,005           2.85%               290.9         373.3
       Cancelled                                                          481,930           5.79%               546.8         474.1
       Holding at 31 December                                                     0         0.00%                 0.0         255.9


       The Company has decided not to use the autorisation given by the shareholders in general meeting to buy back up to 10%
       of Copenhagen Airports´ own shares in the period until the next annual general meeting, subject to a maximum of DKK
       800 million.



   19 Concession for airport operation


       Pursuant to section 55 of the Danish Air Transport Act, special licenses from the Minister of Transport are required for air­
       port operation. The licences for the airports at Kastrup and Roskilde, which are issued by the Danish Civil Aviation Adminis­
       tration, will expire on 1 December 2010. The licences are granted for periods of five years at a time.


       The Minister of Transport may lay down regulations concerning the charges that may be levied on the use of a public air­




                                                                                                                                       | Group Annual Report 2005 | Financial statements | Notes to the financial statements
       field – “Charges Regulation”. For additional information, see the Copenhagen Airports Act, the Danish Air Traffic Act, the
       Copenhagen Airport Expansion Act, the articles of association of Copenhagen Airports A/S and EU regulations, including
       regulations concerning design, operation, facilities, etc.



   20 Financial instruments


       Net fair values of derivative financial instruments
       The net fair value at 31 December 2005 of outstanding swaps to hedge future cash flows will be transferred from the re­
       serve for fair value to the income statement when the interest payments are made.


       Swaps
       The notional principal of outstanding DKK interest rate swaps totalled DKK 350 million at 31 December 2005. (2004:
       DKK 500 million).


       The notional principal of outstanding USD interest rate swaps totalled USD 300 million at 31 December 2005 (2004: USD
       300 million).


       Certain derivative financial instruments not classified as hedges
       See note 7 Financial expenses.




                                                                                                                                         73
                                                                                        Notes


                                                                                        DKK million                                                        2005        2004

                                                                                        Note


                                                                                           21 Financial risks


                                                                                               See the section Risk factors in Management’s Report.



                                                                                           22 Received from customers


                                                                                               Net revenue                                              2,738.4     2,485.3
                                                                                               Change in trade debtors and prepayments from customers      (33.3)      52.9
                                                                                               Total                                                    2,705.1     2,538.2



                                                                                           23 Paid to staff, suppliers, etc.


                                                                                               Operating costs                                          (1,409.6)   (1,035.2)
                                                                                               Change in other receivables                                 (36.7)       (1.5)
                                                                                               Change in cost­related trade creditors                     108.8        39.7
                                                                                               Total                                                    (1,337.5)    (997.0)



                                                                                           24 Interest received, etc.


                                                                                               Interest received, etc.                                     20.7        50.0
| Group Annual Report 2005 | Financial statements | Notes to the financial statements




                                                                                               Unrealised exchange gains on cash                            (2.1)       (0.3)
                                                                                               Unrealised exchange gains on other financial assets           0.0         0.0
                                                                                               Change in interest receivable                                (4.0)       (1.6)
                                                                                               Total                                                       14.6        48.1



                                                                                           25 Interest paid, etc.


                                                                                               Interest paid, etc.                                       (227.6)     (277.0)
                                                                                               Amortisation of loan costs                                    1.6         1.7
                                                                                               Unrealised exchange losses                                  24.8          1.7
                                                                                               Change in interest payable                                    0.6        (3.3)
                                                                                               Total                                                     (200.6)     (276.9)




  74
Management’s statement and auditor’s report


The Group Annual Report – which according to the              Copenhagen Airports A/S form an integral part of the
Accounting Act § 149 is an extract of the Company             full annual report. The full annual report, including the
Annual Report – does not include the financial state­         financial statements of the Parent Company Copenhagen
ments of the Parent Company, Copenhagen Airports              Airports A/S, will be filed with the Danish Commerce
A/S. The financial statements of the Parent Company           and Companies Agency, and copies are also available
Copenhagen Airports A/S have been prepared as a               from the Agency on request.
separate publication which is available on request
from Copenhagen Airports A/S or at www.cph.dk.                The allocation of the profit for the year including
The financial statements of the Parent Company                proposed dividend is described on page 57.



Management’s statement on the Annual Report

The Executive and Supervisory Boards have today               companies. We consider the accounting policies applied
considered and adopted the Annual Report of                   appropriate. Accordingly, the Annual Report gives a true
Copenhagen Airports A/S for 2005.                             and fair view of the financial position at 31 December
                                                              2005 of the Group and the Parent Company as well
The Consolidated Financial Statements were prepared           as of the results of the Group and Parent Company
in accordance with International Financial Reporting          operations and consolidated cash flows for the
Standards as adopted by the EU and the Parent Company         financial year 2005.
Financial Statements were prepared in accordance
with the Danish Financial Statements Act. Further, the        We recommend that the Annual Report be adopted
Annual Report was prepared in accordance with the             at the Annual General Meeting.




                                                                                                                          | Group Annual Report 2005 | Financial statements | Management’s statement and auditor’s report
additional Danish annual report requirements for listed



                                           Copenhagen, 20 February 2006

                                                  Executive Board




      Niels Boserup                Kjeld Binger                /Torben Thyregod                 /Peter Rasmussen
   President and CEO          Executive Vice President      Executive Vice President        Senior Vice President CFO



                                                 Supervisory Board




                Henrik Gürtler                     Kerrie Mather                         Martyn Booth
                  Chairman                        Deputy Chairman




               Philippe Hamon                         John Stent                        Hamish de Run




            Jørgen Abildgaard­Friis               John Stig Andersen                   Keld Elager­Jensen                   75
                                                                                                  Auditor’s report                                            disclosures in the Annual Report. An audit also in­
                                                                                                                                                              cludes assessing the accounting policies applied and
                                                                                                  To the Shareholders of Copenhagen Airports A/S              significant estimates made by Management, as well as
                                                                                                  We have audited the Annual Report of Copenhagen             evaluating the overall annual report presentation. We
                                                                                                  Airports A/S for the financial year 2005. The Consoli­      believe that our audit provides a reasonable basis for
                                                                                                  dated Financial Statements have been prepared in a          our opinion.
                                                                                                  ccordance with International Financial Reporting
                                                                                                  Standards as adopted by the EU and the Parent               Our audit has not resulted in any qualification.
                                                                                                  Company Financial Statements have been prepared
                                                                                                  in accordance with the Danish Financial Statements          Opinion
                                                                                                  Act. Further, the Annual Report has been prepared           In our opinion, the Annual Report gives a true and fair
                                                                                                  in accordance with the additional Danish annual             view of the financial position at 31 December 2005 of
                                                                                                  report requirements for listed companies.                   the Group and of the results of the Group operations
                                                                                                                                                              and consolidated cash flows for the financial year 2005
                                                                                                  The Annual Report is the responsibility of Company          in accordance with International Financial Reporting
                                                                                                  Management. Our responsibility is to express an             Standards as adopted by the EU and additional Danish
                                                                                                  opinion on the Annual Report based on our audit.            annual report requirements for listed companies.

                                                                                                  Basis of Opinion                                            In addition, in our opinion, the Annual Report gives
                                                                                                  We conducted our audit in accordance with interna­          a true and fair view of the financial position at 31
                                                                                                  tional and Danish Auditing Standards. Those standards       December 2005 of the Parent Company and of the
                                                                                                  require that we plan and perform the audit to obtain        results of the Parent Company operations for the
                                                                                                  reasonable assurance that the Annual Report is free of      financial year 2005 in accordance with the Danish
| Group Annual Report 2005 | Financial statements | Management’s statement and auditor’s report




                                                                                                  material misstatement. An audit includes examining,         Financial Statements Act, and additional Danish
                                                                                                  on a test basis, evidence supporting the amounts and        annual report requirements for listed companies.




                                                                                                                                            Copenhagen, 20 February 2006

                                                                                                                                              PricewaterhouseCoopers
                                                                                                                                      Statsautoriseret Revisionsinteressentskab




                                                                                                                                Kim Füchsel                          Jens Otto Damgaard
                                                                                                                     State Authorised Public Accountant       State Authorised Public Accountant




  76
Supervisory Board




Henrik Gürtler                                      Kerrie Mather                             Martyn Booth



Henrik Gürtler                                                         Kerrie Mather
Chairman, CEO – born 1953                                              Deputy Chairman, CEO, Macquarie Airports
                                                                       – born 1960
• M.Sc. in Chemical Engineering from the Technical University of
  Denmark, 1976                                                        • Executive Director of Macquarie Bank Limited since 1998
• Research Chemist at Novo Nordisk, 1977                               • Chief Executive Officer of Macquarie Airports since 2002
• Project manager/coordinator of Enzymes R&D, 1981-84, head of
  department of Enzymes R&D, 1984-86, and head of function, 1986-91    • Member of the board of Birmingham International Airport Limited
• Director of human resources of Novo Nordisk, 1991-92, and director   • Member of the board of Sydney Airport Corporation Limited
  of human resources development, 1992-93                              • Member of the board of Brussels International Airport Company
• Director of health care production at Novo Nordisk, 1993-95,         • Member of the board of Macquarie Airports Copenhagen Holdings ApS
  and COO and member of the group management with special              • Member of the board of Macquarie Airports Copenhagen ApS
  responsibility for corporate staff, 1996-2000                        • Deputy Chairman of the supervisory board of Copenhagen Airports A/S




                                                                                                                                               | Group Annual Report 2005 | Other corporate information | Supervisory Board
• CEO of Novo A/S since 2000

                                                                       Martyn Booth
• Chairman of the supervisory board of Novozymes A/S
                                                                       Global Head of Macquarie Airports – born 1950
• Member of the supervisory board of Novo Nordisk A/S
• Member of the supervisory board of COWI A/S
                                                                       • Economic adviser to HM Treasury 1976-1982
• Member of the supervisory board of Brødrene Hartmanns Fond
                                                                       • Head of finance at Heathrow Airport 1982-1985
• Member of the supervisory board of Copenhagen Airports A/S since
                                                                       • Director of corporate strategy at BAA 1988-1994
  2002 and chairman since 2004
                                                                       • Joined Macquarie Bank Limited as an Executive Director in 2000
                                                                         when the Bank acquired the Portland Group, the international
                                                                         consulting business which was co-founded in 1994


                                                                       • Member of the board of Sydney Airport Corporation Limited
                                                                       • Member of the board of Brussels International Airport Company
                                                                       • Member of the board of Aeroporti di Roma S.p.A
                                                                       • Member of the supervisory board of Copenhagen Airports A/S




                                                                                                                                                 77
                                                                               Philippe Hamon                                       John Stent                                   Hamish de Run



                                                                               Philippe Hamon                                                            Hamish de Run
                                                                               Head of Business Development, Macquarie Airports                          Associate Director, Macquarie European Airports
                                                                               – born 1939                                                               – born 1976

                                                                               • Appointed Commercial Director of BAA plc 1979–1987                      • Senior accountant of Ernst & Young 1995-2001
                                                                               • Director General of the Brussels-based Airports Council International   • Associate with Hastings Funds Management, with responsibility for
                                                                                 (Europe) 1987-2004                                                        its Australian Airport Investments 2001-2004
                                                                               • Senior Advisor to Macquarie Bank Limited since 2004                     • Previously a member of the Board of Perth Intl. Airport
                                                                                                                                                         • Worked on the initial public offering of a Macquarie Infrastructure
                                                                               • Member of the board of Brussels International Airport Company             Company which is listed on the NYSE
                                                                               • Member of the board of Macquarie Airports Copenhagen Holdings ApS       • Employed as an Associate Director of Macquarie Bank Limited
                                                                               • Member of the board of Macquarie Airports Copenhagen ApS                  since 2004
                                                                               • Member of the supervisory board of Copenhagen Airports A/S
| Group Annual Report 2005 | Other corporate information | Supervisory Board




                                                                                                                                                         • Member of the board of Birmingham International Airport Limited
                                                                               John Stent                                                                • Member of the supervisory board of Copenhagen Airports A/S
                                                                               Division Director, Macquarie European Airports
                                                                               – born 1955

                                                                               • Head of finance of British Airport Services 1988–1991
                                                                               • Financial Director of Heathrow Airport 1991–1995
                                                                               • CEO of Stansted Airport 1997–2002
                                                                               • CEO of the Heathrow Terminal 5-program 2002-2003
                                                                               • Since 2003 Division Director of Brussels and Birmingham Airports
                                                                                 as well as Macquarie Airports Copenhagen Holdings ApS and
                                                                                 Macquarie Airports Copenhagen ApS


                                                                               • Member of the board of Birmingham International Airport Limited
                                                                               • Member of the board of Brussels International Airport Company
                                                                               • Member of the board of Macquarie Airports Copenhagen Holdings ApS
                                                                               • Member of the board of Macquarie Airports Copenhagen ApS
                                                                               • Member of the supervisory board of Copenhagen Airports A/S




  78
Jørgen Abildgaard Friis                              John Stig Andersen                           Keld Elager-Jensen



Jørgen Abildgaard Friis                                                   Keld Elager-Jensen
Guarding officer – Born 1966                                              Electrician – Born 1955

• Guarding officer at Copenhagen Airports A/S, employed since 1989        • Joined Copenhagen Airports A/S in 1996
                                                                          • Shop steward for the electricians in the Technical Terminal Service
• Employee representative member of the Supervisory Board                   and Technical Baggage Service, Copenhagen Airports A/S
  since 2003
                                                                          • Employee representative member of the Supervisory Board
John Stig Andersen                                                          since 2003

Controller – Born 1957

• Joined the Copenhagen Airports Authority in 1975, later Copenhagen
  Airports A/S




                                                                                                                                                  | Group Annual Report 2005 | Other corporate information | Supervisory Board
• Controller, responsible for the operating and capital budgets as well
  as real estate administration, Copenhagen Airports A/S


• Employee representative member of the Supervisory Board
  since 1995




                                                                                                                                                    79
                                                                             Executive Board




                                                                             Niels Boserup*                                                              Kjeld Binger*
                                                                             President and CEO – born 1943                                               Executive Vice President – born 1954

                                                                             • Journalist from the Danish School of Journalism, 1969                     • B.Sc. in Structural and Civil Engineering
                                                                             • Exam. insurance agent, 1983                                               • Joined Copenhagen Airports A/S in 1994, initially as head of the
                                                                             • Business editor of Jyllandsposten, 1970-76, chief editor from 1973          Planning and Projection Department, executive vice president during
                                                                             • Communications manager of B&W, 1976-82, vice president                      1997-2000, and CEO of Copenhagen Airports International A/S
                                                                               responsible for marketing, HR and PR from 1979                              since 2000
                                                                             • Vice president and executive vice president of Baltica, 1982-89
                                                                             • Executive vice president of Codan Forsikring A/S, 1989-1991               • Chairman of the supervisory board of Copenhagen Airports’ Hotel
                                                                             • CEO of Copenhagen Airports A/S since 1991                                   and Real Estate Company A/S
                                                                                                                                                         • Chairman of the supervisory board of ITA (Inversiones y Tecnicas
                                                                             • Chairman of the supervisory board of William Demant Holding A/S             Aeroportuarias, S.A. de C.V.)
                                                                             • Chairman of the supervisory board of Oticon A/S                           • Member of the supervisory board of Hainan Meilan Airport Company Ltd.
| Group Annual Report 2005 | Other corporate information | Executive Board




                                                                             • Chairman of the supervisory board of Øresundsinstituttet                  • Member of the supervisory board of Newcastle International Airport Ltd.
                                                                             • Chairman of the supervisory board of TV2                                  • Member of the supervisory board of ASUR (Grupo Aeroportuario del
                                                                             • Deputy Chairman of the supervisory board of the Wonderful                   Sureste S.A. de C.V.)
                                                                               Copenhagen Foundation
                                                                             • Member of the supervisory board of the Øresund Science Region
                                                                             • Member of the supervisory board of Copenhagen Capacity
                                                                             • Member of the supervisory board of ACI Europe
                                                                             • President of ACI World, 2004/2007
                                                                             • Member of the supervisory board of Newcastle International Airport Ltd.
                                                                             • Chairman of the supervisory board of Copenhagen Airports
                                                                               International A/S




                                                                             * Registered with the Danish Commerce and Companies Agency under
                                                                              the provisions of the Danish Public Companies Act
  80
Torben Thyregod                                                      Peter Rasmussen
Senior Vice President, CFO – born 1963                               Senior Vice President, Company Secretary – born 1949

• M.Sc. in Business Administration and Auditing, 1990                • Master of Law, 1978
• E*MBA from the Scandinavian International Management Institute     • Worked for the department of the Ministry of Transport, 1978-86
 (SIMI), 1998                                                        • Secretary to the executive board from 1986 and later head of
• Worked for PriceWaterhouseCoopers, 1990-94                           secretariat of the Copenhagen Airports Authority
• Joined Copenhagen Airports A/S in 1994 as chief accountant,        • Head of secretariat from 1990, and senior vice president of
 promoted to finance manager in 1997 and CFO responsible for Group     Copenhagen Airports A/S from 1995
 finance, human resources and information technology since 2000      • Senior vice president of Copenhagen Airports A/S responsible for the
                                                                       Group secretariat and Group legal affairs, investor relations, environ-
• CEO and member of the supervisory board of Copenhagen airports       mental affairs, quality assurance and Roskilde Airport since 2000
 Hotel and Real Estate Company A/S
• Member of the supervisory board of Copenhagen Airports             • Chairman of the supervisory board of Airport Coordination Denmark A/S




                                                                                                                                                 | Group Annual Report 2005 | Other corporate information | Executive Board
 International A/S                                                   • Member of the supervisory board of Copenhagen Airports’ Hotel and
                                                                       Real Estate Company A/S
                                                                     • Member of the supervisory board of Copenhagen Airports
                                                                       International A/S




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82
     | Group Annual Report 2005 | Other corporate information | Group structure




                                                                                  Group structure

								
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