Heathrow6.45% S Regulatory News (88BX)

1 May 2018

Heathrow (SP) Limited

Results for the three months ended 31 March 2018

· Record start to the year - Passengers and trade flowing through Heathrow soared to record highs, as Heathrow climbed the global airport rankings coming in as the seventh best airport in the world and retaining the top spot in Western Europe for the fourth year running at the annual Skytrax Awards

· Better service at lower cost - Passenger satisfaction with Heathrow is at its highest level, supported in Q1 by Heathrow's investments in winter resilience which kept the UK's hub open during one of the worst winters in recent years while delivering lower operating costs per passenger

· Robust financial health - Lower operating costs per passenger and higher retail spending resulted in strong revenue growth of 3.8% to £680 million and increased Adjusted EBITDA by 5.2% to £402 million. Underpinned by a successful financing strategy that raised over £350 million in global markets

· Phasing out single-use plastics - Heathrow is aiming to lead the aviation industry in cutting single-use plastics, the first step of which is Heathrow's plan to recycle up to 13.5 million of the single-use coffee cups used at the airport annually

· Milestone moment for expansion - As Heathrow begins to design its preferred expansion masterplan, the airport called for the public to submit innovative ideas on how to further improve the project. The move follows the backing of the northwest runway by the Transport Select Committee and thousands of people participating in Heathrow's first planning consultation. Parliament is expected to vote on expanding Heathrow this summer, with the latest polling showing 75% of MPs back the project

John Holland-Kaye, Chief Executive Officer of Heathrow, said:

"We're delighted that passengers are choosing Heathrow in record numbers - it's is a strong signal that we're delivering value for money. We're within touching distance of Parliament voting on expanding Heathrow and now more than ever we're committed to developing and delivering a hub airport that Britain can be proud of for generations to come." 

(1) Adjusted EBITDA is earnings before interest, tax, depreciation and amortisation, certain re-measurements and exceptional items

(2) EBITDA is earnings before interest, tax, depreciation and amortisation

(3) Cash flow after investment and interest is cash generated from operations after net capital expenditure and net interest paid

(4) Pre-tax profit before exceptional items and certain re-measurements

(5) 2017 net debt and RAB figures at 31 December 2017. Nominal net debt excluding intra-group loans and including inflation-linked accretion

(6) Changes in passengers and retail revenue per passenger are calculated using unrounded passenger numbers

Heathrow (SP) Limited owns Heathrow airport and together with its subsidiaries is referred to as the Group. Heathrow Finance plc, also referred to as Heathrow Finance, is the parent company of Heathrow (SP) Limited.

Disclaimer

These materials contain certain statements regarding the financial condition, results of operations, business and future prospects of Heathrow. All statements, other than statements of historical fact are, or may be deemed to be, "forward-looking statements". These forward-looking statements are statements of future expectations and include, among other things, projections, forecasts, estimates of income, yield and return, pricing, industry growth, other trend projections and future performance targets. These forward-looking statements are based upon management's current assumptions (not all of which are stated), expectations and beliefs and, by their nature are subject to a number of known and unknown risks and uncertainties which may cause the actual results, prospects, events and developments of Heathrow to differ materially from those assumed, expressed or implied by these forward-looking statements. Future events are difficult to predict and are beyond Heathrow's control, accordingly, these forward-looking statements are not guarantees of future performance. Accordingly, there can be no assurance that estimated returns or projections will be realised, that forward-looking statements will materialise or that actual returns or results will not be materially lower than those presented.

All forward-looking statements are based on information available at the date of this document, accordingly, except as required by any applicable law or regulation, Heathrow and its advisers expressly disclaim any obligation or undertaking to update or revise any forward-looking statements contained in these materials to reflect any changes in events, conditions or circumstances on which any such statement is based and any changes in Heathrow's assumptions, expectations and beliefs.

These materials contain certain information which has been prepared in reliance on publicly available information (the "Public Information"). Numerous assumptions may have been used in preparing the Public Information, which may or may not be reflected herein. Actual events may differ from those assumed and changes to any assumptions may have a material impact on the position or results shown by the Public Information. As such, no assurance can be given as to the Public Information's accuracy, appropriateness or completeness in any particular context, or as to whether the Public Information and/or the assumptions upon which it is based reflect present market conditions or future market performance. The Public Information should not be construed as either projections or predictions nor should any information herein be relied upon as legal, tax, financial or accounting advice. Heathrow does not make any representation or warranty as to the accuracy or completeness of the Public Information.

Nothing in these materials constitutes or shall be deemed to constitute an offer or solicitation to buy or sell or to otherwise deal in any securities, or any interest in any securities, and nothing herein should be construed as a recommendation or advice to invest in any securities.

This document has been made available to you in electronic form. You are reminded that documents made available via this medium may be altered or changed during the process of electronic transmission and consequently neither Heathrow nor any person who controls it (nor any director, officer, employee not agent of it or affiliate or adviser of such person) accepts any liability or responsibility whatsoever in respect of the difference between the document made available to you in electronic format and the hard copy version available to you upon request from Heathrow.

Any reference to "Heathrow" means Heathrow (SP) Limited (a company registered in England and Wales, with company number 6458621) and will include its parent company, subsidiaries and subsidiary undertakings from time to time, and their respective directors, representatives or employees and/or any persons connected with them.

Strategic priorities

MOJO

We are committed to making Heathrow a great place to work by providing an environment where colleagues feel proud, motivated and enjoy what they do. We continue to enhance our leadership capabilities and provide great career opportunities supported by some of the best development and training. In the first quarter,91 colleagues were promoted and 321 colleagues attended training to advance their managerial skills.

Health and Safety are at the heart of how we run the airport. In the first quarter, we held 'King's Cross smouldering' fire safety workshops for colleagues to challenge attitudes towards safety. We will continue focusing on getting the basics right with the aim of attaining the International Safety Standard ISO45001 accreditation in 2019.

TRANSFORM CUSTOMER SERVICE

Passengers benefited from our uncompromising focus and investment in resilience via planning, training and equipment when the UK was hit by one of the worst winters in recent years. Britain's hub remained open and operations ran as usual with a minimal number of flight cancellations and a limited impact on departure punctuality and baggage connection.

The quality of Heathrow's service also received strong endorsement at the 2018 Skytrax World Airport Awards. Terminal 2 was voted for the first time ever the world's 'Best Airport Terminal', Heathrow was named the 'Best Airport in Western Europe' for the fourth year in a row as well as the 'Best Airport in the world for Shopping' for the ninth consecutive year.

During the first quarter, Heathrow achieved its highest ever overall passenger satisfaction reaching a record ASQ score of 4.20. This outstanding result is underpinned by a strong overall operational performance and strong levels of satisfaction across several key service attributes. In addition, 84% of passengers surveyed rated their Heathrow experience 'Excellent' or 'Very Good' (2017: 82%).

Heathrow Express

Heathrow Express rail service has been confirmed to at least 2028 under a new agreement that will enhance rail service connections for passengers and contribute to delivering an integrated transport hub at Heathrow. It will also critically help ensure that at least 50% of our air passengers travel by public transport by 2030, one of the key priorities of our sustainability agenda.

The agreement has been approved by the Department for Transport and will see Heathrow Express retaining the commercial aspects including marketing, ticket pricing and revenue, while FirstGroup's Great Western Railway subsidiary will manage the day-to-day operations of the Heathrow Express service under a management contract from later this year.

BEAT THE PLAN

New intercontinental routes

In March, Heathrow became the first European airport directly connecting to Australia with Qantas' inaugural service to Perth. In addition, Beijing Capital Airlines started two direct flights a week to Qingdao, with additional direct flights to other major Chinese cities coming later this year opening new trade links for Great Britain.

Record passenger traffic

A record 17.7 million passengers travelled through Heathrow. Our traffic growth was primarily driven by an increase in the number of flights, up 0.8% and reflecting the benefits of the scheme we launched in late 2017, strong load factors and an early Easter getaway.

Intercontinental traffic was the key geographic driver of our traffic growth increasing 3.5%, with notable growth in Asia Pacific on routes serving Mumbai, Tokyo and Guangzhou. Middle Eastern traffic remained healthy, in particular on routes to Saudi Arabia and Israel. European traffic saw notable growth on routes to Madrid, Barcelona and Istanbul. Domestic traffic continues to perform well, reflecting the benefits of Heathrow's discount on domestic flights and Flybe's additional services to Scotland. Cargo also had another robust quarter recording a 4.3% growth driven by increased trade with the USA, Spain and China.

(1) Calculated using unrounded numbers

SUSTAINABLE GROWTH

Heathrow 2.0

As one of the world's global transport hubs, Heathrow is aiming to use its unique position to lead the aviation industry in phasing out single-use plastics. The first step on this journey will see the airport bring together all of its suppliers and business partners to recycle as many as possible of the 13.5 million single-use coffee cups used annually at the airport. The move follows a successful trial at Heathrow's head office and could see the number of single-use coffee cups recycled in the UK increase by 200%. The UK uses 2.5 billion disposable coffee cups a year, yet it is estimated that only 0.25% are recycled. Heathrow is also looking at ways to reduce consumption of other single-use plastic products, such as bottles, stirrers and straws, as well as working with its retail partners to ensure reusable crockery is available for all sit-in restaurant customers. The progress on plastics is part of Heathrow's wider sustainability leadership strategy Heathrow 2.0 that aims to create a sustainable future for aviation.

Expansion - Heathrow developments

Our first planning consultation for Heathrow's expansion concluded on 28 March 2018. The 10-week engagement with the public saw thousands of residents visit 40 events held in local communities neighbouring the airport and across London, Surrey and the Thames Valley. Communities were encouraged to provide their feedback on options to deliver an expanded airport and on a selection of principles for new airspace design. Building on the feedback collected during these events, we recently invited interested UK businesses, entrepreneurs and leaders to share their innovative ideas on how to deliver expansion. The new initiative could ultimately see candidates partner with Heathrow to deliver a variety of infrastructure at the airport. All ideas will be expected to focus on opportunities that further improve customer service, drive cost efficiency, grow commercial revenues and deliver against sustainability targets. Pitches will also need to demonstrate how they meet the commitments outlined in the Government's draft Airports National Policy Statement ('NPS'). Any organisation or individual that can bring significant value to the nation's most critical infrastructure project, could be in the frame to become a future commercial development partner. The feedback collected through both processes will enable us to develop a preferred masterplan for expansion that seeks to balance the needs of all our stakeholders. Heathrow will consult on its preferred masterplan in 2019 if the Airports National Policy Statement is approved by Parliament in the coming months.

Heathrow is continuing its strong engagement with businesses across the UK in 2018 with its expanded Business Summit programme and search for Logistics Hubs which will help deliver expansion through pioneering use of offsite manufacturing. Heathrow will host 10 Business Summits across the UK this year, aiming to increase the number of SMEs in the airport's multi-billion pound supply chain. Heathrow Chairman Lord Deighton launched a nationwide tour of potential Logistics Hubs sites in February and Heathrow will have visited all 65 longlisted sites by the end of July before compiling a shortlist of sites to be invited to formal tender in 2019.

Expansion - Government developments

In March, the Transport Select Committee accepted the strategic case to expand Heathrow following a period of comprehensive scrutiny including public evidence sessions. The Committee endorsed the Government's plan to expand the airport and made several recommendations for the Government to consider before the NPS is put to a vote in Parliament this summer. While it is for the Government to consider the Committee's recommendations, Heathrow will continue to work with stakeholders to improve our plans and ensure that expansion is delivered in a way that is sustainable, affordable and financeable and maintains the UK's position as a global trading powerhouse.

Expanding Heathrow remains widely supported, particularly in Parliament, with the latest polling showing that 75% of MPs back the project.

Expansion - Regulatory developments

The CAA continues developing the expansion regulatory framework. On 30 April 2018, the regulator published a new consultation entitled 'Economic regulation of capacity expansion at Heathrow: policy update and consultation'. Responses are due by 29 June 2018.

Financial review

FINANCIAL RESULTS

Adjusted EBITDA

Adjusted EBITDA grew 5.2% to £402 million (2017: £382 million) in the period as a result of strong traffic performance, robust cost control and continued retail performance.

Revenue

Revenue was up 3.8% driven by strong traffic performance and continued momentum in retail income growth.

Aeronautical income was boosted by strong traffic growth and increased headline tariffs while Heathrow continued delivering value for passengers and airlines with average aeronautical revenue per passenger remaining flat at £22.67 (2017: £22.67).

Retail revenue growth, led by retail concessions and catering, reflected the strong traffic performance and higher participation. Retail concessions were also boosted by higher retail spend per participating passenger. Catering also saw benefit from redevelopment of Terminal 5 catering outlets. Retail revenue per passenger rose 2.3% to £8.82 (2017: £8.62).

Other revenue rose primarily driven by other regulated charges and property rents, higher consumption of utilities, the new Qantas Lounge and the independent award-winning Plaza Premium. Heathrow Express revenue was flat year on year as we transition from a yield to a volume strategy.

Operating expenses

Operating costs before depreciation and amortisation increased 1.8% primarily driven by higher winter resilience costs as we spent over £5 million in ensuring operations ran with limited disruption during one of the worst winters in recent years. Other costs were higher as we ramped up expansion-related costs. Operating costs before depreciation and amortisation declined 1.2% on a per passenger basis at £15.72 (2017: £15.91) despite these costs pressures.

Taxation

The tax charge for the period, before certain re-measurements, was £9m (2017: £12m) resulting in an effective tax rate of 27.3% (2017: 44.4%), compared to the UK statutory rate of 19% (2017: 19.25%). The total tax charge was £42m (2017: £31m).

For the period ended 31 March 2018, Heathrow (SP) Limited paid £14m (2017: £7m) in corporation tax.

Cash flow generated from operations

Cash generated from operations increased 2.8% to £405 million (2017: £394 million).

Capital expenditure

Heathrow invested £152 million (2017: £160 million) in the first quarter on a variety of programmes to improve the passenger experience, airport resilience and work through a broad asset replacement programme. We also continued to develop our plans for expanding Heathrow for which investments were over £25 million in the first quarter.

Restricted payments

In the three months ended 31 March 2018, ultimate shareholders received £114 million (2017: £94 million) in dividends reflecting the continued strong performance of the business. Total restricted payments paid by Heathrow (SP) Limited amounted to £84 million (net) or £159 million (gross). Other than the £113 million payment made by Heathrow (SP) to fund dividends to ultimate shareholders, net restricted payments related to meeting £46 million (2017: £35 million) of interest on the debenture between Heathrow (SP) and Heathrow Finance and the £75 million proceeds received from a loan at ADIF2.

FINANCING POSITION

Debt and liquidity at Heathrow (SP) Limited

Nominal net debt increased to £12,409 million (31 December 2017: £12,372 million). It comprised £11,308 million in bonds, £913 million in other term debt, and £334 million in index-linked derivative accretion offset by £146 million in cash and term deposits. Nominal net debt comprised £10,661 million in senior net debt and £1,748 million in junior debt.

The average cost of the Group's nominal gross debt at 31 March 2018 was 3.76% (31 December 2017: 3.92%). This includes interest rate, cross-currency and index-linked hedge impacts and excludes index-linked accretion. Including index-linked accretion, the Group's average cost of debt at 31 March 2018 was 5.64% (31 December 2017: 5.75%).

Heathrow expects to have sufficient liquidity to meet all its obligations in full until February 2020. The average life of debt was 11.6 years. This liquidity position takes into account £1.5 billion in undrawn loan facilities and term debt as well as cash resources at 31 March 2018 together with expected operating cash flow over the period.

Debt at Heathrow Finance

The consolidated group nominal net debt increased to £13,693 million (31 December 2017: £13,674 million). This comprised Heathrow (SP) Limited's nominal net debt of £12,409 million, Heathrow Finance's gross debt of £1,312 million and cash of £28 million held at Heathrow Finance.

Financial ratios

Heathrow's RAB was £15,773 million at 31 March 2018 (31 December 2017: £15,786 million). The Group's senior (Class A) and junior (Class B) gearing ratios were 67.6% and 78.7% respectively (31 December 2017: 67.3% and 78.4% respectively). Heathrow Finance's gearing ratio was 86.8% (31 December 2017: 86.6%).

Recent financing activity

In March 2018, Heathrow successfully returned to the Canadian bond market raising CAD 400 million in a 10-year public bond with a fixed rate coupon of 3.4%. Additionally, an 18-year £145 million US private placement was signed and will be drawn in June 2018. In April 2018, an existing £418 million Class A term loan facility was amended to extend its maturity from March 2020 to October 2021.

In line with our debt financing strategy, we continue to focus on ensuring our relatively limited funding requirements are targeted at maintaining our presence in existing public markets whilst capitalising selectively on private placement opportunities.

OUTLOOK

Heathrow's traffic in the year to date has been in line with expectations with rolling annual traffic exceeding 78 million at the end of March. On this basis, full year traffic and financial forecasts are expected to be in line with Heathrow's investor report published in December 2017.

2018 should also see several developments in relation to Heathrow's expansion including further regulatory updates and a Parliamentary vote on the NPS expected by the summer.

Heathrow (SP) Limited

for the three months ended 31 March 2018

a Certain re-measurements consist of: fair value gains and losses on investment property revaluations and disposals; gains and losses arising on the re-measurement and disposal of financial instruments, together with the associated fair value gains and losses on any underlying hedged items that are part of a fair value hedging relationship, the effects of the changes in tax rate and the associated tax impact of these and similar cumulative prior year items.

Heathrow (SP) Limited

for the three months ended 31 March 2018

a  Attributable to owners of the parent.

Heathrow (SP) Limited

as at 31 March 2018

Heathrow (SP) Limited

for the three months ended 31 March 2018

Heathrow (SP) Limited

for the three months ended 31 March 2018

1 Term deposits with an original maturity of over three months are invested at Heathrow Airport Limited and Heathrow (AH) Limited.

2 Group deposits are amounts settled with LHR Airports Limited during the year under the terms of the SSA.

Heathrow (SP) Limited

for the three months ended 31 March 2018

General information

The financial information set out herein does not constitute the Group's statutory financial statements for the year ended 31 December 2017 or any other period. Statutory financial statements for the year ended 31 December 2017 have been filed with the registrar of Companies on 22 February 2018. The annual financial information presented herein for the year ended 31 December 2017 is based on, and is consistent with, the audited consolidated financial statements of Heathrow (SP) Limited (the 'Group') for the year ended 31 December 2017. The auditors' report on the 2017 financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statements under section 498(2) or (3) of the Companies Act 2006.

Accounting policies

Basis of preparation

The consolidated financial statements of Heathrow (SP) Limited have been prepared in accordance with IFRS as issued by the International Accounting Standards Board ('IASB') and as adopted by the European Union ('EU') and prepared under the historical cost convention, except for investment properties, derivative financial instruments and financial liabilities that qualify as hedged items under a fair value hedge accounting system. These exceptions to the historical cost convention have been measured at fair value in accordance with IFRS and as permitted by the Fair Value Directive as implemented in the Companies Act 2006. 

The accounting policies adopted in the preparation of this consolidated financial information are consistent with those applied by the Group in its audited consolidated financial statements for the year ended 31 December 2017, with the exception of new financial reporting standards which have been applied from 1 January 2018 as follows:

IFRS 15 Revenue from Contracts with Customers

The Group adopted IFRS 15 using the modified retrospective approach which means that the cumulative impact of the adoption is recognised in retained earnings as of 1 January 2018 and that comparatives are not restated. The adoption of IFRS 15 resulted in an amount of £1 million charged to retained earnings at 1 January 2018.

IFRS 9 Financial instruments

The Group adopted IFRS 9 on 1 January 2018, and has reviewed its financial assets and liabilities and there is no change in relation to its financial liabilities which is the same under IAS 39. The financial assets under the new impairment model requires the recognition of impairment provisions based on expected credit losses (ECL) rather than only incurred credit losses as is the case under IAS 39.

The adoption of IFRS 9 has resulted in an ECL impairment provision of £2 million in relation to the Group's trade receivables, as at 1 January 2018, which was charged to retained earnings at that date.

Heathrow (SP) Limited

for the three months ended 31 March 2018

1 Segment information

Management has determined the reportable segments of the business based on those contained within the monthly reports reviewed and utilised by the relevant Board for allocating resources and assessing performance. These segments relate to the operations of Heathrow and Heathrow Express.

The performance of the above segments is measured on a revenue and Adjusted EBITDA basis, before certain re-measurements and exceptional items.

The reportable segments derive their revenues from a number of sources including aeronautical, retail, other regulated charges ('ORCs') and other products and services (including rail income), and this information is also provided to the Board on a monthly basis.

Table (a) details total revenue from external customers for the three months ended 31 March 2018 and is broken down into aeronautical, retail, ORCs and other in respect of the reportable segments. No information in relation to inter-segmental revenue is disclosed as it is not considered material. Also detailed within table (a) is Adjusted EBITDA and a reconciliation to the consolidated profit for the period.

Table (b) and table (c) detail comparative information to table (a) for the three months ended 31 March 2017 and the year ended 31 December 2017 respectively.

Heathrow (SP) Limited

Notes to the consolidated financial information

for the three months ended 31 March 2018

1 Segment information continued

Heathrow (SP) Limited

Notes to the consolidated financial information

for the three months ended 31 March 2018

2 Operating costs - ordinary

3 Financing

1 Includes accretion of £6 million (three months ended 31 March 2017: £6 million; year ended 31 December 2017: £48 million) on index-linked bonds.

2 Includes accretion of £41 million (three months ended 31 March 2017: £37 million; year ended 31 December 2017: £222 million) on index-linked swaps.

3 Capitalised interest included in the cost of qualifying assets arose on the general borrowing pool and is calculated by applying an average capitalisation rate of 5.68% (three months ended 31 March 2017: 5.11%; year ended 31 December 2017: 5.37%) to expenditure incurred on such assets.

Heathrow (SP) Limited

Notes to the consolidated financial information

for the three months ended 31 March 2018

4 Taxation

For the three months ended 31 March 2018, the profit before tax and certain re-measurements of £33 million (2017: £27 million) resulted in a tax charge of £9 million (2017: £12 million). This results in an effective tax rate of 27.3% (2017: 44.4%), compared to the UK statutory rate of 19% (2017: 19.25%). The higher effective tax rate reflects the fact that a substantial proportion of Heathrow's capital expenditure does not qualify for tax relief. The total tax charge recognised was £42 million (2017: £31 million) based on the profit before tax of £229 million (2017: £134 million), which includes the impact of certain re-measurements.

The Finance (No 2) Act 2015 enacted reductions in the main rate of UK corporation tax from 20% to 19% from 1 April 2017 and from 19% to 18% from 1 April 2020. The Finance Act 2016 enacted a further 1% reduction in the main rate of corporation tax to 17% from 1 April 2020. The effects of these rate reductions were reflected in the deferred tax balances in the 2016 financial statements.

Legislation was enacted, in November 2017, which, limits the deductibility of interest expense for UK corporation tax payers with effect from 1 April 2017. This regime is in response to the Organisation for Economic Co-operation and Development (OECD) reports on base erosion and profit shifting (BEPS). The legislation applies a fixed ratio rule which limits a group's UK tax deductions for net interest expense to 30 per cent of UK "tax-based" EBITDA. The legislation also contains a group ratio rule to allow groups that are highly leveraged for commercial reasons to obtain a higher level of net interest deductions, up to a limit in line with the group's overall external gearing position, and a public infrastructure exemption aimed at ensuring that any restriction does not impede the provision of external finance used to fund taxable UK public infrastructure. The Group expects to be protected from any disallowance as a result of the Group making a public infrastructure exemption election.

Heathrow (SP) Limited

Notes to the consolidated financial information

for the three months ended 31 March 2018

5 Borrowings

Heathrow (SP) Limited

Notes to the consolidated financial information

for the three months ended 31 March 2018

5 Borrowings continued

6 Cash generated from operations

ADI Finance 2 Limited - 'ADIF2'

Air Transport Movement 'ATM' - means a flight carried out for commercial purposes and includes scheduled flights operating according to a published timetable, charter flights, cargo flights but it does not include empty positioning flights, and private non-commercial flights

Airport Service Quality 'ASQ' - quarterly Airport Service Quality surveys directed by Airports Council International (ACI). Survey scores range from 1 up to 5

Baggage connection - numbers of bags connected per 1,000 passengers

Departure punctuality - percentage of flights departing within 15 minutes of schedule

Gearing ratios - under the Group's financing agreements are calculated by dividing consolidated nominal net debt by Heathrow's Regulatory Asset Base ('RAB') value

Regulatory asset ratio 'RAR' is trigger event at Class A and Class B and financial covenant at Heathrow Finance; Class A RAR trigger ratio is 72.5%; two Class B triggers apply: at Heathrow Finance it is 82.0% and at Heathrow (SP) Limited it is 85.0%; Heathrow Finance RAR covenant is 90.0% until Heathrow Finance 2019 Notes either mature, are repaid or consent is obtained to change covenant level from when covenant moves to 92.5%

Restricted payments - The financing arrangements of the Group and Heathrow Finance plc ("Heathrow Finance") restrict certain payments unless specified conditions are satisfied. These restricted payments include, among other things, payments of dividends, distributions and other returns on share capital, any redemptions or repurchases of share capital, and payments of fees, interest or principal on any intercompany loans

Security queuing - percentage of passengers passing through central security within five-minute period prescribed under Service Quality Rebate 'SQR' scheme