13 December 2024
Heathrow Funding Limited
Heathrow Finance plc
Publication of December 2024
Investor Report
On behalf of Heathrow Airport
Limited, Heathrow Express Operating Company Limited, Heathrow (AH)
Limited and Heathrow (SP) Limited ("Heathrow SP"), LHR Airports Limited (as
Security Group Agent) is today distributing its semi-annual
Investor Report to various parties pursuant to the terms of the
Common Terms Agreement entered into on 18 August 2008 (as amended)
(the "CTA").
The Investor Report is also being
distributed by Heathrow Finance plc ("Heathrow Finance") to various parties
pursuant to Heathrow Finance's £250 million 5.75% Senior Secured
Notes dated 13 October 2014 and due 2025, £275 million 3.875%
Senior Secured Notes dated 5 June 2017 and due 2027, the £300
million 4.125% Senior Secured Notes dated 15 November 2019 and due
2029 and the £400 million 6.625% Senior Secured Notes dated 12
March 2024 and due 2031 (the "Heathrow Finance Bonds"), a note
purchase agreement dated 14 September 2018 (the "Note Purchase Agreement") and pursuant
to Heathrow Finance's facilities agreements dated 22 November 2018,
23 November 2018, 1 February 2019, 8 May 2019, 16 August 2019 and 2
December 2019 (the "Heathrow
Finance Facilities Agreements").
The Investor Report contains
information relevant to creditors of both Heathrow SP (and its
subsidiaries) and Heathrow Finance.
The attention of potential readers
of the Investor Report is drawn to page 2 of the document, which
contains an Important Notice, including in relation to certain
forward-looking statements included in the Investor Report, and
contains a description of the basis on which the operational and
financial information included in the document has been
prepared.
The Investor Report includes an
updated forecast for 2024 and 2025 for the financial performance of
Heathrow SP prepared on a consolidated basis, forecast nominal debt
and financial ratios for Heathrow SP and Heathrow Finance. Heathrow
SP, through its indirect subsidiary, Heathrow Airport Limited, owns
Heathrow Airport.
This report sets out the actual
financial performance and ratios for Heathrow (SP) in 2023 and
forecast figures for 2024 and 2025, together with key business
updates. Additional information specific to Heathrow Finance is set
out in Appendix 6.
A record 76.8 million passengers
chose to travel through Heathrow as of November 2024. Our traffic
grew across various regions, driven by a rise in passenger ATMs and
slight increases in seat factors. As a result, we remain Europe's
busiest airport. For the second consecutive year, Heathrow was
recognised as the most connected airport in the world. Heathrow has
also been recognised as the best airport in the UK in the Condé
Nast 2024 Readers' Choice Awards while the airport's premier retail
offerings were awarded "Best in Class" at the Frontier Awards, and
Heathrow's VIP services received the title of "Best Private Airport
Experience" from the Forbes Travel Guide Awards.
We improved our service levels
despite a higher number of passengers, airspace challenges, and now
at-capacity terminals. With 75% of passengers rating their overall
satisfaction as 'Excellent' or 'Very Good' and nearly 92% of
passengers passing through security in less than five minutes, we
continue to deliver value for our customers and with our departure
punctuality exceeding arrivals, Heathrow is boosting operational
performance across the wider aviation industry.
We now expect 83.8 million
passengers in 2024 (+5.8% vs. FY23), aligned with our Q3 guidance.
Adjusted EBITDA is forecasted at £1,963 million (-11.9% vs. FY23).
Revenue is anticipated to decline to £3,499 million (-5.1%
vs. FY23) as we continue to see the impact of lower aero
charges. Operating costs are projected at £1,535 million (+5.2% vs.
FY23). The estimated Regulatory Asset Base (RAB) at the end of 2024
is £20.5 billion.
Passenger numbers for 2025 are
expected to rise to 84.2 million (+0.5% vs. FY24). Adjusted
EBITDA is projected to reach £1,952 million (-0.6% vs. FY24).
Revenue is anticipated to be £3,568 million (+2.0% vs FY24),
with aeronautical revenue decreasing to £2,193 million
(-1.3% vs FY24) due to lower aero charges, while non-aeronautical
revenue is expected to rise to £1,375 million (+7.7% vs FY24),
driven by the higher passenger volume. Operating costs are
projected to increase to £1,617 million (+5.3% vs FY24) as
management initiatives to contain costs are offset by higher people
costs due partly to higher national insurance, cost pressures of
maintaining resilience while operating close to full capacity and
investment in technology and sustainability. The RAB is forecast to
be £21.0 billion at the end of 2025 as we progress with our
investment plans.
To create value for our customers
and unlock growth, we are increasing our investment by over £200
million during H7 to £4.5 billion. We will invest over £1 billion
annually in both 2024 and 2025, with our H7 investments progressing
as planned.
On the regulatory front, the H8
price control process is underway. Constructive Engagement (CE)
between Heathrow and Airlines has begun, and the Civil Aviation
Authority (CAA) published its H8 draft Method Statement
Consultation in November, together with an FTI report covering the
cost of capital. We will submit detailed responses over December
and January.
On December 12, 2024, Ferrovial and
the Tagging Shareholders announced that they had completed the sale
of 37.62% of the share capital of FGP Topco Limited; details of the
new shareholders composition, as well as the new board members, can
be found on page 13.
Finally, we continue to progress
with our Sustainability plan. We are refreshing our People and
Planet beacon (sustainability 2.0), and we are targeting 2.5% of
SAF delivery in 2024, with plans to increase the incentive to 3% in
2025. We also successfully issued two sustainability-linked bonds
(SLBs), becoming the first in the Sterling and Swiss franc markets
to include all scopes of emissions. We also accessed the private
placement market with our first use of proceeds from green
issuance. These transactions reinforce our commitment to expanding
our sustainable finance platform.
The Investor Report document is
available in pdf format at the following link:
http://www.rns-pdf.londonstockexchange.com/rns/9482P_1-2024-12-12.pdf
The Investor Report is available from
today via the Heathrow Investor Centre at
https://www.heathrow.com/company/investor-centre/reports/investor-reports
By way of reminder, pursuant to the
CTA, the Heathrow Finance Bonds, Note Purchase Agreement and the
Heathrow Finance Facilities Agreements (as appropriate), the
following is available on the Heathrow Investor Centre at
https://www.heathrow.com/company/investor-centre/reports/annual-accounts:
- consolidated
financial information of Heathrow (SP) Limited for the six months
ended 30 June 2024
- consolidated
financial information of Heathrow Funding Limited for the six
months ended 30 June 2024
- consolidated
financial statements of Heathrow Finance plc for the six months
ended 30 June 2024
For investor enquiries please
contact Leandro Garcia, Debt Investor Relations Manager, +44 (0)
07718 516109.
(1)
Adjusted EBITDA is earnings before interest, tax, depreciation and
amortisation, and exceptional items