OPERATIONAL AND FINANCIAL PERFORMANCE
Traffic growth from existing carriers with new routes, fuller planes and increased flight frequencies
Additional traffic from new airlines joining Gatwick
Investment programme delivering new and improved facilities that transform the passenger and airline experience
Continuing trend of improvement in operational performance is delivering near record levels of customer service
Robust financial performance reflecting passenger growth, increased income per passenger and careful cost management
+ 3.5%
UNDERLYING TRAFFIC GROWTH *
+ 14.4%
EBITDA GROWTH
£105m
CAPITAL EXPENDITURE
£2,453m
RAB**
£1,474m
SENIOR NET DEBT**
* Underlying traffic growth is 3.5% as Olympics reduced traffic by an estimated 170k passengers in 2012. Actual traffic growth was 4.4%
**All figures are for the six months ended 30 September 2013 except RAB, Senior Net Debt and Senior RAR which are shown as at 30 September 2013
HIGHLIGHTS
2
0.60x
SENIOR RAR **
RECORD SERVICE AND SATISFACTION LEVELS
Service quality at record levels Consistently high on-time departures performance
Security queuing beats targets
4
change of ownership
Sustained passenger ratings at near 12/13 record levels
4.06
4.07 4.08
4.16 `
4.23
Average
50%
60%
70%
80%
90%
100%
08/09 09/10 10/11 11/12 12/13 13/14
% Measures Failed % Measures Passed
75%
80%
85%
90%
95%
100%
08/09 09/10 10/11 11/12 12/13 13/14
North Terminal Average <5 min South Terminal Average <5 min Target
55.0%
60.0%
65.0%
70.0%
75.0%
10/11 11/12 12/13 13/14
Peak months are June, July & August
3.9
4.0
4.1
4.2
4.3
08/09 09/10 10/11 11/12 12/13 13/14
Overall QSM Target
4.21
RECORD SERVICE LEVEL RANKINGS (ASQ)
5
0.0
1.0
2.0
3.0
4.0
5.0
1 2 3 4 5 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
Benchmarking Q3 2013
Average LGW
0.0
1.0
2.0
3.0
4.0
5.0
1 2 3 4 5 6 7 8 9 10 11 13 14 15 16 17 18 19 20 21
Benchmarking Q4 2009
Average LGW
12th of 21 in
Q4 2009
6th of 23 in
Q3 2013
• Results of ASQ rankings from data collected from multiple European airports
• Over 100,000 passengers interviewed at gate each year across Europe
• Gatwick now achieving both a record score and also a record highest position, in an increasing survey size
INCUMBENT…
Announcements indicate increasingly diversified route mix
European market continues to be Gatwick’s largest and grew by 5.2%
Norwegian launched 12 new routes, Vietnam & Turkish increasing
frequencies
Growth in long haul leisure complemented by growth in
business (Dubai, Moscow, China)
BA basing new 777 & Emirates expecting A380 at Gatwick in 2014
Announced new routes to New York, Los Angeles and Paris
More new airlines attracted to Gatwick, in competition with other
London airports
Vueling 14 flights per week to Barcelona
Air Arabia 3 per week to North Africa
WOWair 14 per week to Iceland
Garuda launch delayed to May 14 as Jakarta runway needs remedial
work. 3 flights per week, rising to 5 in Sep 14 – the UK’s only direct
connection
6
and NEW AIRLINES
TRAFFIC GROWTH FROM…
DELIVERING AIRPORT TRANSFORMATION PROGRAMME
DELIVERY OF INVESTMENT PROGRAMME ON SCHEDULE
£105m invested in H1 2013/14
£1,089m invested since start of Q5 (April 2008)
£1,172m total projected investment in Q5
PROJECTS COMPLETED IN LAST 6 MONTHS
Second phase of ST IDL refurbishment – 11 new stores (£11m)
Pier 5 Phase 1 reconfiguration (£23m)
Flood alleviation (£4m)
Redevelopment of UKBF Arrivals area (£3m)
PROJECTS ONGOING IN 2013/14
Pier 5 Phase 2 reconfiguration (£45m)
Pier 1 redevelopment (£42m)
New crew reporting facility (£20m)
Review of capital programme for the period beyond March 2014
7
LARGEST RETAIL DEVELOPMENT IN GATWICK’S HISTORY
GATWICK RETAIL IS CHANGING…
- 23 retail redevelopment projects in last year in NT alone
- Summer 13 saw a record number of new store openings in the ST in one day, including a new 6,000ft2 Harrods department store
- ST development completes in Dec13 when new brands launching include Victoria’s Secret, Zara, Joules, Superdry, Snow & Rock, Ted Baker and Fat Face
8
…AND PASSENGERS LOVE IT! Customer satisfaction is at a record high
- in Oct13, 81.5% of passengers rated retail outlets as ‘excellent’ or ‘good’ - Catering was at 85% on the same basis and has received 2 awards for ‘best in class’ in the last 3 months
INCREASED MOVEMENTS, INCREASED SIZE AND FULLER PLANES…
9
…results in higher capacity from Gatwick’s most limiting resource – a single runway
2012 H1 2013 H1 Change %
ATMs (k) 135.3 139.0 +2.7%
Seats per ATM 174.7 174.9 +0.1%
Load factors 84.3% 85.6% +1.3% pts
Passengers (m) 19.9 20.8 +4.4%
CONTINUED TREND OF STEADY TRAFFIC GROWTH
Recent growth • 2013 H1 total traffic has increased by +4.4% • Underlying 2013 H1 growth +3.5% (Olympics reduced traffic by an estimated 170k passengers in 2012) • 12 month trailing traffic at 35.2m, by end October 2013; 3.3% higher than the equivalent period last year
10
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
-16%
-14%
-12%
-10%
-8%
-6%
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
14%
16%Jun-0
8
Aug-0
8
Oct-
08
De
c-0
8
Feb
-09
Apr-
09
Jun-0
9
Aug-0
9
Oct-
09
De
c-0
9
Feb
-10
Apr-
10
Jun-1
0
Aug-1
0
Oct-
10
De
c-1
0
Feb
-11
Apr-
11
Jun-1
1
Aug-1
1
Oct-
11
De
c-1
1
Feb
-12
Apr-
12
Jun-1
2
Aug-1
2
Oct-
12
De
c-1
2
Feb
-13
Apr-
13
Jun-1
3
Aug-1
3
Movin
g A
vera
ge T
ota
l
Month
ly y
ear-
on-y
ear
traff
ic g
row
th (
%)
YOY Growth by month (%)
Moving Average Total
GATWICK HEATHROW STANSTED LUTON
TRAFFIC GROWTH IN A COMPETITIVE MARKET
Gatwick’s ability to attract new airlines as well as expand existing carriers is reflected in an increase in traffic growth
However, the market remains competitive with growth opportunities being distributed across rival airports
11
Last 12 months
+3.1% Last 12 months
+1.5%
Last 12 months
+0.6% 8.5%
7.6%
-0.4%
11.9%
4.7% 4.1%
-5.3%
3.8%
1.2%
-0.9%
-4.4%
1.3% 1.3% 1.8% 1.8%
1.0%
4.4% 4.3%
1.3% 0.3%
-6.0%
-4.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
6 mths to Sep11 6 mths to Mar12 6 mths to Sep12 6 mths to Mar13 6 mths to Sep13
Last 12 months
+3.1%
SOLID FINANCIAL PERFORMANCE DELIVERING EBITDA TARGET
£m 6 MTHS ENDED 30
SEP 2012 6 MTHS ENDED
30 SEP 2013 CHANGE
Passengers (m) 19.9 20.8 4.4%
Turnover 325.8 360.6 10.7%
Operating costs (excl depreciation and amortisation) (153.8) (163.9) 6.6%
EBITDA (pre-exceptionals) 172.0 196.7 14.4%
Depreciation (61.0) (52.1) (14.6)%
Interest and other charges (31.6) (46.4) 46.8%
Profit for the 6 months to 30 Sep 79.4 98.2 23.7%
Capital expenditure 119.1 104.8 (12.0)%
Net debt* 1,318.2 1,399.2 6.2%
RAB* 2,297.2 2,453.1 6.8% *Net debt and RAB are shown as at 30 Sep 2012 and 2013
12
10.7% INCREASE IN TURNOVER REFLECTING TRAFFIC GROWTH AND HIGHER SPEND PER PASSENGER
Turnover analysis
TOTAL £325.8m £360.6m +10.7% Aeronautical revenues increased by 11.6%, half of which is due to capex trigger payments in 2012
Net retail income per passenger increased by 2.0% to £3.55 as new stores and rejuvenated IDL drive higher spending • 23 projects in NT in last 12 months • 11 new stores in H1 2013 in ST • Includes new 6,000ft2 Harrods store
Net car parking revenue per passenger increased by 15.7% to £1.47 • Improved yield management in peak
season • Increased premium products eg valet • New offers eg hotel park and stay
13
37.2 39.6
33.5 39.5
69.7 74.6
185.4 206.9
2012 H1 2013 H1
Aeronautical Retail Car parking Other income
+11.6%
+7.0%
+17.9%
+6.5%
6.6% INCREASE IN COSTS TO SUPPORT SERVICE LEVELS, INCREASE EFFICIENCY AND REGULATORY WORK
Staff costs increase driven by • Increase in security staff to support
improved service levels • 2% increase in average salaries • Pension costs up £1.7m • Severance costs £1.0m
General expenses reflects • Increased consultancy cost to support
Q6 regulatory and R2 work • Contract savings
Rates costs increase as Capital Programme returns more assets to operational status
14
Operating costs analysis
TOTAL £153.8m £163.9m +6.6%
Note: operating costs excluding depreciation and amortisation
18.2 19.4
26.7 27.1
46.4 47.9
62.5 69.5
2012 H1 2013 H1
Staff Costs (net) General + Other Expenses
Rates + Utilities Maintenance + IT
+11.2%
+3.2%
+1.5%
+6.6%
Maintenance & IT costs increase due to reprioritisation and rephasing of maintenance spend
NET DEBT 31 MARCH 2013 TO 30 SEPTEMBER 2013
15
178.6 113.9
8.5
50.0
1.9
1,403.5 1,399.2
1,100.0
1,150.0
1,200.0
1,250.0
1,300.0
1,350.0
1,400.0
1,450.0
1,500.0
1,550.0
Opening Capitalexpenditure
Net interest Cash flow fromops
Restrictedpayment
Other Closing
£m
Note: net interest includes £5.5m capitalised interest
FUNDING PLATFORM ESTABLISHED – BANK REFINANCING WITHIN NEXT YEAR
FINANCIAL RATIO
12 MONTHS ENDED 30 SEPTEMBER 2012
12 MONTHS ENDED 30 SEPTEMBER 2013
Cash flow (per covenant) £180.1m £220.4m
Total interest (net) £36.5m £70.9m
Senior ICR 4.93x 3.11x
Trigger <1.50x <1.50x
Senior Net Debt (per covenant) £1,382.7m £1,474.4m
RAB £2,297.2m £2,453.1m
Senior RAR 0.60x 0.60x
Trigger >0.70x >0.70x
DEBT MATURITY PROFILE REDUCES REFINANCING RISK
STRONG LIQUIDITY POSITION TO FUND REMAINING Q5 INVESTMENT PROGRAMME OF £82m :
£300m 2041/43 Class A Bond
£300m 2037/39 Class A Bond
£300m 2026/28 Class A Bond
£300m 2024/26 Class A Bond
£222m Dec-14 Bank Facilities (drawn)
Annual cash flow from operations £269m for the 12 months ended 30 September 2013
Undrawn bank commitments £234m as at 30 September 2013
Restricted payment proposed £55m December 2013
16
REGULATORY UPDATE
17
CAA published Q6 Final Proposals on 3 October, 2013
• CAA will “introduce a new regulatory approach for GAL based on the airport’s commitments to airlines and underpinned by a CAA licence”
• Commitments are a 7 year, legally binding contractual undertaking between GAL and its airlines, embedded in the airport's Conditions of Use
Regulatory timetable
• 30 day consultation on Q6 Final Proposal, ended 4 November 2013
• CAA publishes market power determination & proposed licence January 2014
• CAA grants licence February 2014
• Appeal (if any) of market power determination or licence terms March 2014
• Airport Commitments & licence come into force 1 April 2014
• Appeal hearings (if any) with CAT or CMA Spring/Summer 2014
THE AIRPORTS COMMISSION - TIMELINE
28 Feb
2013 15 Mar
2013 15 Mar
2013
17 May
2013 19 Jul
2013 Spring
2014 Summer
2014 11 July
2013 6 Sept
2013
27 Sept
2013
Summer
2015 Dec
2013
18
Gatwick delivers the increased connectivity that the UK needs
True competition leads to passenger choice, better service and lower fares
Economic benefits spread more
widely across the south east
More certainty of delivery
Great resilience to disruption
Less environmental impact
Supported by County Councils around Gatwick
LONDON GATWICK …THE BEST SOLUTION
19
LONDON GATWICK: THE DELIVERABLE SOLUTION
LONDON GATWICK BAA Heathrow
Connectivity Legacy Charter Low Cost Legacy Charter Low Cost
Noise
Lden (55-60 dBA)
2011
3,700 – 13,800 households
affected 256,000 households affected
Air Quality Complies with legal standards Breaches legal standards today
Cost £5bn+ Up to £18bn
Speed Open 2025 Open earliest 2030
Surface Access Manageable
Minimal funding
Congested
£billion public contribution
Resilience HIGH LOW
Consumer choice Grows Shrinks
Economy Distributed Concentrated
20
• Despite the ongoing tough economic conditions in key European markets, traffic growth has continued through incumbent and new airlines and routes
• Robust financial performance in line with expectations, reflecting passenger growth, new retail and car parking products delivering increased income per passenger, and careful cost management
• All service quality measures achieved for all but one month and significant improvements in customer survey scores and overall airport ranking
• Investment programme on track, delivering new, improved and innovative facilities
• Continuing to state London Gatwick’s case as the obvious choice for further expansion of airport capacity
CONCLUSION
Full details of today’s announcement at: gatwickairport.com/investor
21
DISCLAIMER
This material contains certain tables and other statistical analyses (the “Statistical Information”) which have been prepared in reliance on publicly available information and may be subject to rounding. Numerous assumptions were used in preparing the Statistical 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 Statistical Information. As such, no assurance can be given as to the Statistical Information’s accuracy, appropriateness or completeness in any particular context; nor as to whether the Statistical Information and/or the assumptions upon which it is based reflect present market conditions or future market performance. The Statistical 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. Gatwick Airport Limited (“GAL”) does not make any representation or warranty as to the accuracy or completeness of the Statistical Information.
These materials contain statements that are not purely historical in nature, but are “forward-looking statements”. These include, among other things, projections, forecasts, estimates of income, yield and return, and future performance targets. These forward-looking statements are based upon certain assumptions, not all of which are stated. Future events are difficult to predict and are beyond GAL’s control. Actual future events may differ from those assumed. All forward-looking statements are based on information available on the date hereof and neither GAL nor any of its affiliates or advisers assumes any duty to update any forward-looking statements. 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 that those presented.
This material should not be construed as an offer or solicitation to buy or sell 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 sent to you in electronic form. You are reminded that documents transmitted via this medium may be altered or changed during the process of electronic transmission and consequently neither GAL 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 sent to you in electronic format and the hard copy version available to you upon request from GAL.
Any reference to “GAL” will include any of its affiliated associated companies and their respective directors, representatives or employees and/or any persons connected with them.
22