BAA (SP) Limited Results for nine months ended 30 September 2011 October 2011
Highlights of first nine months of 2011 Traffic and retail performance • Record Heathrow traffic since end of Total passenger traffic +4.3% Heathrow passenger traffic +6.1% Q1 2011 NRI per passenger +6.2% Key financial highlights • Strong financial results Revenue +10.2% Adjusted EBITDA +17.1% • Further strengthening of capital Investment and financing structure Capital expenditure £659.9m Net debt (senior and junior) £10,351.0m RAB £13,633.4m 2 See page 17 for notes and defined terms
Continued strong traffic performance Passenger traffic • Record Heathrow traffic every month since end of Q1 2011 9 months ended 30 September • Reported performance partly reflects 2010 (m) 2011 (m) Change reversal of 2010 disruptions By airport • Underlying performance Heathrow 49.6 52.6 6.1% Stansted 14.4 14.1 -2.1% – total: +0.8% Total 64.0 66.7 4.3% – Heathrow: +2.4% – Stansted: -4.5% By market served • Recent Heathrow strength reflects UK 5.0 4.7 -5.7% Europe 32.7 34.2 4.3% increased momentum in North Long haul 26.3 27.9 6.1% Atlantic traffic Total 64.0 66.7 4.3% • Record Stansted load factors suggest gradually more positive demand dynamics 3 See page 17 for notes and defined terms
Heathrow’s traffic performance remains robust versus other major European hub airports Change in passenger traffic in year ended 30 September 2011 12.0% 10.6% 10.0% 8.0% 6.1% 6.0% 4.8% 4.3% 4.0% 2.0% 0.8% 0.0% Madrid Charles de Heathrow Frankfurt Schiphol Gaulle 4
2011 financials benefiting from higher tariffs and record traffic Sep YTD Sep YTD 2010 Change 2011 (figures in £m) Turnover 1,545.5 1,703.3 +10.2% 10.2% Adjusted operating costs 826.5 861.1 +4.2% 4.2% Adjusted EBITDA 719.0 842.2 +17.1% 17.1% Consolidated net debt (BAA (SP)) 9,921.2 10,351.0 4.3% +4.3% Consolidated net debt (BAA (SH)) 10,401.1 10,850.5 4.3% +4.3% RAB (Regulatory Asset Base) 12,776.0 13,633.4 6.7% +6.7% 5 See page 17 for notes and defined terms
Strong growth in aeronautical income… Analysis of aeronautical income • Year to date growth of 14.2% +14.2% • 11.7% growth in Q3 2011 956.7 – 13.0% growth at Heathrow and 1.6% at 837.5 97.9 Stansted +2.6% – tariff increases at both airports 95.4 Stansted • Heathrow yields continue to be affected by – higher than expected proportion of European traffic and quieter aircraft 858.8 +15.7% 742.1 – yield shortfall to be recovered through Heathrow ‘K factor’ in 2013/14 • 12.7% headline Heathrow tariff increase from 1 April 2012 Sep YTD 2010 Sep YTD 2011 6
…and continued excellent retail performance… Analysis of net retail income Change per • Benefit of higher passenger traffic passenger Change • Net retail income (‘NRI’) per +10.7% +6.2% passenger also up 6.2% to £5.42 361.9 – Heathrow: +6.3% 326.9 63.7 – Stansted: +3.2% +10.5% +15.2% 55.3 • Q3 2011 NRI per passenger: +3.5% Car parking • Continued momentum in tax and 121.0 +2.7% +7.1% duty free and specialist shops 113.0 Bureaux de change, – additional space in Terminals 3 and 5 catering and other – absorbed effect of Terminal 3 refurbishment 177.2 +7.2% 158.6 – benefit of more higher yielding +11.7% international passengers Airside and landside shops • Car parking growth maintained particularly in premium services Sep YTD 2010 Sep YTD 2011 7
…combined with continued cost control… Analysis of adjusted operating costs +4.2% • Expected increase in costs 861.1 826.5 – employment costs 129.0 +2.0% 126.5 – increased rates costs Intra-group charges/other • Employment costs reflect 207.9 -0.7% 209.3 – increased headcount Other costs – pay rises 99.2 +12.3% 88.3 • Higher rates costs reflect Rents and rates 176.2 +2.3% 172.3 – higher rateable values General expenses – no repetition of 2010 rebate 248.8 • 2011 full year cost forecast +8.1% 230.1 Employment costs – higher year on year growth than in first nine months Sep YTD 2010 Sep YTD 2011 – consistent with latest investor report 8 See page 17 for notes and defined terms
…have led to increased Adjusted EBITDA, supporting significant capital investment Adjusted EBITDA (Sep YTD 2008 – Sep YTD 2011) 900.0 Underlying Adjusted EBITDA 800.0 Reported 757.0 Adjusted EBITDA 700.0 600.0 500.0 (£m) 842.2 400.0 719.0 663.0 300.0 552.9 200.0 100.0 0.0 Sep YTD 2008 Sep YTD 2009 Sep YTD 2010 Sep YTD 2011 9 See page 17 for notes and defined terms
Reconciliation of interest payable with interest paid Sep YTD Sep YTD 2011 2010 SP External (figures in £m) Total Total debenture debt Net interest payable (profit and loss account) (531.5) (36.5) (621.8) (658.3) Adjust for fair value loss on financial instruments 12.1 0.0 72.9 72.9 Net interest payable net of fair value loss (519.4) (36.5) (548.9) (585.4) Amortisation of financing fees and fair value adjustments 52.8 0.0 40.3 40.3 Interest capitalised (16.2) 0.0 (21.5) (21.5) Underlying net interest payable (482.8) (36.5) (530.1) (566.6) Other adjustments to reconcile to interest paid Derivative interest prepayment amortisation 105.6 0.0 48.0 48.0 Movement in interest accruals/accretion/other 97.8 (4.6) 213.8 209.2 (279.4) (268.3) (309.4) Net interest paid (cash flow statement) (41.1) 10
Post-interest cash flow financed >70% of capital expenditure Net debt bridge (January 2011 – September 2011) 11,000 10,800 309.4 10,600 799.9 10,400 (£m) 81.1 659.9 10,200 179.3 10,000 10,351.0 9,800 9,921.2 9,600 9,400 Opening Capital Net interest paid Cash flow from Index-linked Other Closing nominal nominal net debt expenditure operations accretion net debt (01/01/11) (30/09/11) 11 See page 17 for notes and defined terms
Well over £1 billion debt capacity at BAA (SP) and BAA (SH) Recent development in London airport’s gearing ratios Rebalancing gearing Gearing reduction since 85% £134.8m re-distributed out between BAA (SP) December 2010 partly of BAA (SP) and BAA (SH) and BAA (SH) due to £134.8m proceeds of intercompany loan 81.9% 80% 81.4% 84.7% 79.6% 79.5% 79.5% 83.2% 75% 77.7% 75.9% 78.2% 75.7% 75.7% 70% 71.6% 70.5% 65% 68.8% 68.4% 67.5% 67.1% 66.2% 65.5% 65.1% 60% 31 March 2010 30 June 2010 30 September 31 December 31 March 2011 30 June 2011 30 September 2010 2010 2011 BAA (SP) senior gearing BAA (SP) junior gearing BAA (SH) gearing 12 See page 17 for notes and defined terms
Financing developments • Bank refinancing facility fully repaid in September • Re-classification of BAA’s bonds to iBoxx corporate indices • Sufficient liquidity to meet debt maturities, capital expenditure and interest payments until early 2013 13
Conclusion • Record Heathrow traffic since end of Q1 • Strong financial results • Further strengthening of capital structure • On track to deliver expected 2011 Adjusted EBITDA • Tariff increases provide foundation for further strong progress in 2012 14
Appendix 15
BAA (SP)’s consolidated net debt at 30 September 2011 Debt outstanding at 30 September 2011 Amount and features of available facilities Local S&P/Fitch Amount currency Rating Maturity Senior (Class A) (£m) (m) (£m) Bonds 680.2 999.9 680.2 A-/A- 2012/14 396.4 396.4 396.4 A-/A- 2013/15 512.9 749.9 512.9 A-/A- 2014/16 299.9 299.9 299.9 A-/A- 2016/18 433.8 500.0 433.8 A-/A- 2016/18 510.2 750.0 510.2 A-/A- 2018/20 249.8 249.8 249.8 A-/A- 2021/23 621.3 1,000.0 621.3 A-/A- 2021/23 749.6 749.6 749.6 A-/A- 2023/25 700.0 700.0 700.0 A-/A- 2026/28 199.9 199.9 199.9 A-/A- 2028/30 900.0 900.0 900.0 A-/A- 2031/33 398.7 398.7 398.7 A-/A- 2039/41 750.0 750.0 750.0 A-/A- 2041/43 Total bonds 7,402.7 7,402.7 Bank debt EIB Facility 304.5 304.5 304.5 n/a 2011/22 Capex/Working Capital Facility 1,400.0 2,350.0 2,350.0 n/a 2013 Total bank debt 1,704.5 2,654.5 Total senior debt 9,107.2 10,057.2 Junior (Class B) Bonds 400.0 400.0 400.0 BBB/BBB 2018 Bank debt Term Loan Facility 625.0 625.0 625.0 n/a 2014 Capex Facility 0.0 400.0 400.0 n/a 2013 Total junior debt 1,025.0 1,425.0 Gross debt 10,132.2 11,482.2 Cash (67.3) Index-linked derivative accretion 286.1 Net debt 10,351.0 Net debt is calculated on a nominal basis excluding intra-BAA group loans and including index-linked accretion 16
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