2021 Annual Report - Schiphol

Annual Report 2021

Royal Schiphol Group

Contents

Introduction

3

Message from the CEO

3

This is how we create value

5

2021: a year of innovation and modest recovery

6

About us and our Why

7

Our company

10

Our Why, ambition and strategy

13

SWOT analysis

16

Our Vision 2050

17

Material aspects Royal Schiphol Group

20

Targets 2022

23

Our results

Our performance in 2021 Quality of Network Quality of Life Quality of Service Safety Robust organisation Financial performance

Governance

Report of the Supervisory Board Board biographies Corporate Governance Remuneration Risk management

Royal Schiphol Group - 2021 Annual Report

2

25

Socio-economic

26

accountability

108

29

35

47

52

Financial Statements

130

57

63

Supplementary

82

information

226

83 90 94 99 102

Quality of Network page 29

Quality of Life page 35

Quality of Service page 47

Safety page 52

Robust organisation page 57

Contents Introduction About us and our Why Our results Governance Socio-economic accountability Financial Statements

Royal Schiphol Group - 2021 Annual Report

3

Message from the CEO

Building back better

The aviation sector is starting to recover from the COVID-19 pandemic, and at Royal Schiphol Group we are determined to 'build back better'. To do so, we are looking at how we can best meet the needs of our different stakeholders. The steps we are taking will position Schiphol Group as a frontrunner for sustainability and quality in the years to come.

COVID and traffic

Ambition

At the beginning of 2021, we were relatively optimistic that, with the support of vaccinations, we would leave the worst phase of the COVID-19 pandemic ? including lockdowns and severe travel restrictions ? behind us. We indicated that this would depend on the occurrence of new mutations, and indeed 2021 became the year of Delta and Omicron. This resulted in a slow start, a rampup during and after the summer, followed by a slowdown at the end of 2021 and the beginning of 2022. The re-emergence of the virus, together with lockdowns and restrictions has tested the resilience of everybody, at home and at work. The focus on health and protective measures, from the perspective of both staff and passengers, has continued.

The business impact on the pandemic was visible in the 2021 mid-year results. In the second half of the year, the underlying operational result and EBITDA turned positive, though the upward trend stalled due to the latest slowdown. Amsterdam Airport Schiphol has performed relatively well compared with other European airports; often number one in terms of flights, relatively high in passenger numbers and the best-connected airport in Europe in 2021 (source: ACI). Schiphol won two prizes: one for cargo and one for `best sense of place'. Cargo has been a highlight throughout the pandemic. For 2022, we expect further recovery. It is clear that people will enjoy travelling again when it is possible to do so. However, uncertainty remains, with the race between vaccinations and mutations set to continue globally in 2022.

Our ambition is clear. Our airport Group strives to be a frontrunner when it comes to sustainability and quality. Two big trends will define the way we travel: digitalisation and sustainability. We want to emerge stronger from this crisis. Our organisation has shrunk by 20% but it has become fitter. We are paying careful attention to our expenditure while continuing to make top-level investments with a budget of 750 million euros in 2021 and 2022 allocated to safety, quality, sustainability and innovation.In all our investments sustainability and circularity are embedded.

To the outside world, we look like an infrastructure company, but on the inside we are becoming a tech company. We work with an increasing number of digital models in our projects. Maintenance is predicted. Airport processes are managed by the Airport Operations Centre, where all partners ? from Air Traffic Control the Netherlands (LVNL) to airlines and handling agents ? work together to plan and execute the operation. Passengers can get more and more information from the Schiphol app. The paperwork in cargo handling is being digitalised. Local residents can also receive air traffic forecasts using the Notifly app, which shows the amount of air traffic expected at a given location.

Contents Introduction About us and our Why Our results Governance Socio-economic accountability Financial Statements

Royal Schiphol Group - 2021 Annual Report

4

Sustainability

Aviation's biggest challenge is the climate crisis and the pace at which the sector can be made more sustainable. It can be done, but it needs to be done faster. As aviation sector, we need to have achieved net zero by 2050 ? that commitment is clear. But we need to move as swiftly as possible now, in these first few years. Schiphol wants to lead the way, together with airlines, aircraft manufacturers, scientists and fuel producers.

2022 will be the year of sustainability ? a kick-start in making flying greener. We have to solve the dilemma we are all facing: wanting to fly, but not at the climate's expense. How will we do that with our stakeholders?

? By consuming less. More efficient and cleaner aircraft, taking the train when travelling shorter distances (with Schiphol as a multimodal hub).

? By making fuel greener. Using sustainable fuels, just like other sectors are doing. There will be a fuel-blending obligation. We, as a company and as consumers, must strive to stay ahead of this obligation.

? Through the development of electric flight and hydrogenpowered flight. There will be new aircraft and new engines.

? By making the airport operation zero emission and zero waste by 2030.

Our airport charges reward clean and quiet aircraft. Deploying these planes is up to five times cheaper. We encourage airlines to use sustainable fuels. At least 15 million euros has been made available for this in 2022 and the years to come. We are contributing to sustainable fuel projects ? both bio and synthetic ? in Delfzijl, Amsterdam and Rotterdam. We are working together with TU Delft, HvA, the Netherlands Aerospace Centre and the Dutch manufacturing industry. Together, we are turning our airports into living labs for aviation innovation. Schiphol is also fulfilling this role for the international 'TULIPS' partnership, for which the European Commission has awarded a subsidy of 25 million euros. The aim of TULIPS is to accelerate the roll-out of sustainable technology in aviation. We will also be setting up an

experience centre at Schiphol to inform travellers about how the aviation industry is becoming more sustainable and to invite them to buy sustainable fuel for (part of) their flight.

Living environment

Flying is not only about the wider world, it is also about the local living environment. The new coalition agreement in the Netherlands rightly speaks of `certainty and perspective' for all parties, including local residents. 2022 will be a very important year in this respect too. We are looking forward to the approval of our environmental permit request and to the finalisation of the Airport Traffic Decree. Then we can go from following anticipated rules to following established ones.

With quieter aircraft, the airspace restructuring, fewer night-time flights and the `minder hinder' noise-reduction programme, there will be fewer people experiencing severe noise-disturbance once Schiphol is back to 500,000 air traffic movements than in 2019. In terms of noise and CO2, 2018 was a peak year. From 2024 onwards, the number of people severely affected by this will continue on a downward trend. I have been calling for a new Living Environment Fund to improve the living environment for years now. With this new coalition, it appears to be on the horizon. We also have a responsibility to reduce the emissions of nitrogen and ultra-fine particles. We want to have an emissionfree airport operation by 2030. That is why we are introducing sustainable taxiing, making all transport at the airport electric and greener, and providing planes with shore power.

Social agenda

Ultra-fine particles are an important topic for employees at the airport. We have been working on research and measures for many years. In light of the TNO report on concentrations at the airport, we will continue to conduct research and are working on accelerating the intended measures and implementing new ones. This is part of Schiphol's wider social agenda. We are facilitating

collective labour agreements in all sectors, including for handling agents. We are searching for a new balance between fixed and flexible contracts at the airport; 75 former flex workers engaged in floor management are now in permanent employment. We are in consultation with all partners at Schiphol about the labour market and how to attract people (and what is needed for this, from terms of employment to working conditions).

Business management

The use of scenario planning remained important and helps us to understand progress in steering the business through uncertain times. The organisation did an excellent job in managing cost levels in relation to actual traffic numbers. We made important steps in managing our capex funnel and in project execution, which both remain focus areas for 2022. We note the delay to the finalisation of Schiphol's new A-Pier as we work to secure a new contractor for the project.

Our financial framework also depends on the tariff structure. Consulting the new three-year period was a major exercise. In December 2021, the Authority for Consumers and Markets (ACM) allowed us to introduce the new tariffs on 1 April, pending a final decision on the complaints.

The coming year

The coming year will be important, with an agenda that shapes the future of the Group and of Schiphol. Within the public debate, we are being challenged to combine our important role for the Netherlands ('crown jewel in the business climate') with drastically reducing our environmental footprint. As a team, we are looking forward to collaborating with all our partners and stakeholders to realise our ambitions.

Dick Benschop President & CEO of Royal Schiphol Group

Contents Introduction About us and our Why Our results Governance Socio-economic accountability Financial Statements

Royal Schiphol Group - 2021 Annual Report

5

This is how we create value

Input

3

Infrastructure capital

4

Social capital

5

Human capital

6

Intellectual capital

7

Natural capital

8

Financial capital

Stakeholders local residents

airlines

passengers

employees

shareholders

m

Why Connecting your world

Our Business model & Strategy

Destination

1

Ambition Creating the world's most sustainable, high quality airports

Our Vision 2050 Quality of Network

Business model

Quality of Life

Business areas

Aviation

Commercial

Alliances & Participations

Key risks

Trends & Developments

Governance

Quality of Service

Safety & Robust organisation

Output

Top Performance Indicators

ICA destinations

118

Material aspects

? Network of destinations

? Accessibility

Outcome & Impact

Wellbeing ? Connecting ? Environmental

impact and hindrance

CO2 emissions compared to 2019

-14%

? Zero-emission airports

? Sustainable aviation

? Circular economy

Reputation score

7.5

? Community and Noise

On-time Performance

77.6%

? Airport capacity

Prosperity ? B usiness climate ? Regional

development and jobs

Net Promoter Score

44

? Customer appreciation

Net Safety Score

95.1

? Safe, secure and responsible travel

UN Sustainable Development Goals

(SDGs)

Employee Promoter Score

31

? Employment practices

Return on Equity1

-8.8%

? Business continuity

? Responsible business

? Financial solidity

1 ROE including fair value changes and other one offs: 3.0%

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