Heathrow (SP) Limited Results for six months ended 30 June 2017 27 July 2017
2017 half year highlights
Strong first half of 2017 • Record passenger service levels and operational performance Operational 1 • Record 37.1 million passengers, up 3.9%, drove recent highlights upgraded outlook for 2017 • Cargo volumes accelerate 9.1% • Revenue of £1,374 million, up 4.1% and Adjusted Financial EBITDA of £835 million, up 6.9% 2 performance • Strong cost control and better value • Over £1.0 billion in debt financing completed while simplifying capital structure • Raising service standards and operational resilience Strategic • Focusing on further cost efficiencies and incremental 3 aims revenue • Expansion programme remains on track; good progress toward delivering expansion at close to current prices See page 23 for notes, sources and defined terms 3
Strongest traffic growth for several years Passenger traffic by market • Record traffic continues in 2017 H1 2017 versus H1 2016 – growth primarily from higher load factors UK • Long haul traffic key growth driver Europe 2.3m North America 15.5m +2.7% – up 4.7% driven by Middle East and Asia Pacific 8.2m +3.1% +1.6% – Middle East up 13.1% due to A380s/new M. East services Asia Pacific 3.6m 5.4m – Asia Pacific up 5.7% on growth in existing routes +13.1% +5.7% Africa Latin America • Increased momentum also seen in short haul 1.5m 0.6m -0.1% – notable continental Europe increases due to extra +4.1% flights and larger planes – domestic up with new Flybe Scottish services • Cargo up 9.1%, mainly due to North America 37.1 million passengers • 76.7m forecast for 2017 +3.9% – up 1.4% on 2016 driven by higher load factors 4
Heathrow’s resilience re-emerges in an uncertain environment Passenger traffic at European hubs Year on year growth in traffic for Recent evolution of change 12 months to 30 June 2017 in rolling 12 month traffic 14.0% +8.5% 12.0% +7.2% 10.0% Passenger volume change Heathrow 8.0% Frankfurt 6.0% +2.8% +2.5% 4.0% +2.1% Charles de Gaulle 2.0% Istanbul 0.0% -2.0% Schiphol -4.0% Madrid -2.6% -6.0% Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Istanbul Frankfurt Heathrow Charles de Madrid Schiphol Gaulle Annual 67.6 60.0 62.0 77.0 52.2 66.1 passengers (m) Runways 3 4 4 4 6 2 See page 23 for notes, sources and defined terms 5
Record service standards complemented by robust operations Quarterly passenger satisfaction Passenger satisfaction European ranking Q2 2010 – Q2 2017 Q2 2017 4.50 4.20 ASQ score (out of 5) 4.30 4.16 ASQ score (out of 5) 4.00 4.10 3.80 3.90 3.60 3.70 3.40 3.50 3.20 3.30 Q2-10 Q4-10 Q2-11 Q4-11 Q2-12 Q4-12 Q2-13 Q4-13 Q2-14 Q4-14 Q2-15 Q4-15 Q2-16 Q4-16 Q2-17 European competitors European comparators Heathrow European top quartile European average Departures Baggage performance within 15 minutes of schedule misconnect rate per 1,000 passengers 50 90% 83% 40 81% 79% 40 80% 30 70% 14 63% 13 20 11 60% 10 0 50% 2007 2016 H1 2016 H1 2017 2007 2016 H1 2016 H1 2017 Best Airport in Western Europe 2016 Europe’s Best Airport World’s Best Airport Shopping (over 40millionpassengers) World’s Best Independent Airport Lounge See page 23 for notes, sources and defined terms 6
Heathrow expansion on track Completed To come Heathrow Government CAA CAA CAA CAA final Heathrow policy decision on launches report to consultation 2 CAA update on Category B consultation Secretary of H7 review costs on expansion State on airline regulatory engagement framework 2019 2020 2021 2018 2017 NPS ‘designated’ CAA initial Government Government Heathrow Heathrow initial Heathrow submits Government by Government proposals for decision to consultation on draft consultation 1 H7 business Development decision to grant H7 regulation grant DCO National Policy plan published Consent Order DCO Statement (NPS) to (DCO) application be followed by parliamentary scrutiny 7
Heathrow expansion on track • Government renews support for expansion post Heathrow’s initial planning consultation to general election release scope and design options – broad cross party support • NPS process moves forward – transport select committee and chairman appointed – parliamentary scrutiny post summer recess – vote expected in H1 2018 • Good progress towards delivering expansion at close to current prices – good engagement with airlines – options to improve passenger experience at lower cost • Heathrow is committed to deliver a sustainable expansion • Heathrow’s initial planning consultation later this year – details on scope and design for various options 8
CAA progresses expansion regulatory framework CAA extends Q6 and progresses H7 • Q6 extended to at least 31 December 2020 regulatory framework – intended to align H7 with expansion timetable • Financeability and affordability at heart of expansion regulatory construct • Other key points of focus – RAB-based regulation and single till approach to continue – cost of debt indexation – largely or fully retaining RPI-based regulation until at least 2025 • What’s next? – responses due by 22 September 2017 – Q4 2017 consultation on WACC ranges, Q6+2 price and Category C costs – Heathrow’s H7 initial business plan expected in December 2018 9
Financial review
Financial highlights H1 H1 Versus (£ million) 2017 2016 H1 2016 1,320 Revenue 1,374 +4.1% 539 539 Operating costs - Adjusted EBITDA 835 781 +6.9% Capital expenditure 318 303 +5.0% Change June Dec from 2017 2016 30 Dec 16 Consolidated nominal net debt Heathrow (SP) 12,454 11,908 +4.6% 13,132 13,005 Heathrow Finance +1.0% RAB 15,485 15,237 +1.6% See page 23 for notes, sources and defined terms 11
Strong traffic and renewed retail momentum boost revenues Analysis of revenue (£m) • Record traffic boosts aeronautical revenue +4.1% 1,320 1,374 – +ve: traffic growth – -ve: lower tariff (RPI-1.5% formula); yield dilution 814 • Renewed retail momentum 802 +1.5% – retail revenue per passenger: Q1: +6.4%; Q2: +8.7% – surging traffic and sterling depreciation boosted revenue, particularly duty and tax-free and airside 313 280 +11.8% specialist shops – catering income growth spikes on Terminal 5 food 247 238 +3.8% outlet redevelopment and increased passenger participation before boarding H1 2016 H1 2017 – Terminal 4 luxury retail redevelopment started Aeronautical Retail Other contributing to growth H1 2016 Change Per passenger (£) H1 2017 Aeronautical revenue 22.44 21.92 -2.3% Retail revenue 7.84 8.43 +7.6% 12
Outstanding cost performance Analysis of operating costs (£m) • Pro forma costs down 1.3% or 5.0% on a per 539 - 539 passenger basis – adjusted for 2016 £14 million one-off utilities benefit 178 180 +1.1% and 2017 £7 million capitalisation of expansion costs – achieved whilst welcoming 1.4 million extra passengers and maintaining world class service -6.9% 131 122 – cost reductions mainly in operational costs – new NATS contract, other third party supplies and lower -3.5% 83 86 insurance costs 64 +1.6% 63 90 • On track to deliver £600 million Q6 efficiencies 81 +11.1% – further organisational change being implemented to H1 2016 H1 2017 drive towards final target Employment Operational Maintenance – energy demand management and recurrent savings Business rates Utilities & Other from renegotiated contracts to deliver further savings Per passenger (£) H1 2016 H1 2017 Change 15.08 14.52 -3.7% Operating costs Pro forma operating 15.47 -5.0% 14.71 costs See page 23 for notes, sources and defined terms 13
Operating cash flow significantly exceeds capital expenditure and interest payments Heathrow (SP) nominal net debt January 2017 – June 2017 19 12,500 267 12,250 641 820 (£m) 318 12,000 12,454 11,750 121 11,908 11,500 Opening Capital Net interest paid Cash flow from Index-linked Net Tax/other Closing (1 January 2017) expenditure on external debt operations accretion dividends/other (30 June 2017) restricted payments See page 23 for notes, sources and defined terms 14
Substantial gearing headroom retained Evolution of gearing ratios 100% 95% HF 2025 & 2027 Notes covenant 90% HF 2019 Notes covenant H1 2016 H1 2017 85% Class B gearing trigger 84.8% 85.3% 84.9% 85.4% 84.5% 80% 82.4% 75% 80.4% 78.4% 79.0% 78.7% 78.2% 77.2% 70% Class A gearing trigger 65% 68.7% 68.0% 67.6% 67.5% 67.4% 66.7% 60% 31 December 31 December 31 December 31 December 30 June 30 June 2013 2014 2015 2016 2016 2017 Heathrow (SP) Class A gearing Heathrow (SP) Class B gearing Heathrow Finance gearing See page 23 for notes, sources and defined terms 15
Recommend
More recommend
