28 June 2024
Heathrow Funding Limited
Heathrow Finance plc
Publication of June 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 6 July 2017, 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 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, together with key business updates.
Additional information specific to Heathrow Finance is set out in
Appendix 6.
Over the first five months of the
year, we have seen a strong demand in traffic at Heathrow, with
32.4 million passengers travelling through the airport. For 2024,
we are forecasting passenger traffic of 82.8 million (+4.5% vs
FY23) - above the guidance included in our Q1 results and 1.4
million higher than our December 2023 Investor Report forecast.
This updated traffic forecast reflects the improved economic
outlook and a strong passenger demand. Operationally, we have
performed well, delivering great service and successfully getting
passengers on their way, particularly over the busy half terms,
Easter and May public holidays. In the first five months, security
performance has been very strong, with over 94% of passengers now
waiting less than 5 minutes and departure and arrival punctuality
higher than in 2023.
Given the higher traffic outlook,
Adjusted EBITDA is forecast to be £1,942 million (-12.8% vs FY23),
an increase of £57 million versus the December 2023 Investor
Report. Revenue is expected to increase £67 million versus the
December 2023 Investor Report to £3,517 million (-4.6% vs FY23),
with £2,232 million (-9.7% vs FY23) of aeronautical revenue and
£1,285 million (+5.9% vs FY23) of non-aeronautical revenue. The
significant decrease in aeronautical revenue versus 2023 is mainly
due to a 20% reduction in the regulatory charges from 1 Jan 2024.
Operating costs are forecasted to rise to £1,575 million (+7.9% vs
FY23), an increase of £9 million versus the December 2023 Investor
Report, to accommodate the increased demand. The estimated RAB at
the end of 2024 is £20,222 million. At Heathrow (SP) and Heathrow
Finance, we have sufficient headroom for our financial covenants in
2024. No dividends are currently forecast for 2024, although it is
plausible subject to financial performance. We will continue to
review optionality throughout the year.
During the first five months of the
year, Heathrow maintained momentum across carbon and
sustainability. We became an inaugural adopter of the Taskforce on
Nature-related Financial Disclosures (TNFD), allowing us to
transparently measure and improve our impact on nature. We
successfully issued a £350 million sustainability-linked bond
(SLB). It was our debut GBP SLB and the first SLB in the Sterling
market to include all scopes of emissions. We have also priced a
new Class A and Class B debt through the private placement market,
which includes our first use of proceeds green issuance. These
transactions reinforce our commitment to a sustainable financing
platform.
We have recently responded to two
key CAA consultations. First, the consultation on 'Setting future
price controls - review of approach', which followed on from the
DfT independent review of the CAA published in 2023, that
recommended the regulator should review the process, governance and
'mechanics' for conducting economic regulation. Heathrow has
outlined where improvements in approach, guidance, and
decision-making are needed and expects this consultation to inform
an enhanced price review for the next regulatory period (H8).
Second, the "H7 Final Issues" consultation addresses matters
remitted to the CAA by the CMA related to price control and
unresolved issues from the Final Decision. Finalising this is
important for providing certainty to stakeholders as we progress in
delivering our plans. A decision is needed before Heathrow's 2025
charges consultation.
Investments are underway under our
£4.3 billion H7 investment programme, and 2024 capital expenditure
remains unchanged at £936 million, 50% higher than in 2023. Good
progress has been made in upgrading 146 security lanes as part of
our investment in next-generation security equipment, and we have
appointed a lead contractor to replace the T2 baggage
system.
Finally, we have recently launched
our new strategy after almost a decade. This new strategy provides
a clear direction for us to align our efforts and ensure collective
progress toward our common objective - to be an extraordinary
airport fit for the future while renewing our commitment to making
every journey better and provide value for all our
customers.
The Investor Report document is
available in pdf format at the following link:
http://www.rns-pdf.londonstockexchange.com/rns/2506U_1-2024-6-27.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 statements of Heathrow (SP) Limited for the
year ended 31 December 2023.
-
consolidated financial statements of Heathrow Funding Limited for
the year ended 31 December 2023.
-
consolidated financial statements of Heathrow Finance plc for the
year ended 31 December 2023.
- regulatory
accounts for Heathrow Airport Limited for the year ended 31
December 2023.
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
