Half-year Results

HEATHROW (SP) LIMITED

RESULTS FOR THE 6 MONTHS

ENDED 30 JUNE 2025

More passengers choosing Heathrow - We welcomed more passengers in the first six months of 2025 than ever before, hitting a record 39.9 million despite macroeconomic uncertainty and geopolitical events. Larger aircraft and strong demand for Asia-Pacific and Middle East destinations were the primary growth drivers. Transatlantic travel remains healthy, and these links contributed to a 2.4% growth in trade through Heathrow. With a busy summer holiday getting underway and continued strong leisure demand, we remain on-track to meet our forecast of over 84 million passengers this year.

Most punctual hub in Europe underscores improving service(1) - More flights are departing on-time from Heathrow this year versus any other major hub in Europe in a sign that our strategy to boost service levels is working. This strong performance is coupled with 98% of passengers waiting less than five minutes at security and circa 99% of bags travelling with their passengers. These achievements were most recently recognised earlier this year by Travel Weekly readers who awarded Heathrow Best UK Airport.

Robust H1 EBITDA - In the first six months of 2025, revenue grew 1.9% to £1,724 million (2024: £1,692 million). The higher revenue was driven by more long-haul flying and more passengers enjoying Heathrow's world-class retail and food and beverage options. Adjusted operating costs increased by 3.2% to £765 million (2024: £741 million) due to higher maintenance costs to support operational performance, increased National Insurance contributions and higher electricity prices. Adjusted EBITDA increased 0.8% to £959 million (2024: £951 million). No dividend payments were made to Heathrow shareholders in Q2 2025.

Our next five-year investment plan will deliver the outcomes customers want - Our 2027-2031 investment plan is the next step in our strategy to become an extraordinary airport, fit for the future. Built around customer feedback and insight, our plan will improve passenger experience, boost operational resilience and enable airline growth. It is designed to be delivered affordably with the airport charge remaining competitive with global hubs and below what it was a decade ago. This private investment in UK infrastructure will boost jobs and drive growth in this Parliament. The CAA is now reviewing the plan.

Unlocking new capacity at the UK's gateway to growth - We will submit our proposal to Ministers by July 31st on how we can secure long-term capacity growth at the UK's hub airport. Our plans will be entirely privately financed and have the potential to kickstart economic growth across the whole of the UK from construction through to operation. Depending on the Government's response, we would aim to meet their ambition to secure planning permission in this Parliament and for the runway to be operational by 2035. New capacity would boost competition and choice for consumers, drive economic growth for the UK and improve operational resilience at the UK's hub airport.

Notes

(1) vs. European Union hubs  

(2) EBITDA for the six months ending 30 June 2025 of £905 million (30 June 2024: £985 million) is profit before interest (including fair value gains and losses on financial instruments), taxation, depreciation, amortisation and exceptional items (if any). Adjusted EBITDA is profit before interest (including fair value gains and losses on financial instruments), taxation, depreciation, amortisation, fair value gains and losses on investment properties and exceptional items (if any).

(3) Adjusted profit before tax excludes fair value gains and losses on investment properties and financial instruments and exceptional items (if any).

(4) Consolidated nominal net debt is short and long-term debt less qualifying cash and cash equivalents and term deposits. It includes index-linked swap accretion and the hedging impact of cross-currency interest rate swaps. It excludes pre-existing lease liabilities recognised upon transition to IFRS 16, accrued interest, bond issue costs and intra-group loans. 2024 figures are as at 31 December 2024.

(5) The performance of the Group is assessed using a number of Alternative Performance Measures ('APMs'), including adjusted EBITDA, adjusted profit before tax, consolidated nominal net debt and the Regulatory Asset Base. Management believe that APMs provide investors with an understanding of the underlying performance of the Group. A reconciliation of our APMs can be found in note 14.

(6) The Regulatory Asset Base ('RAB') is a regulatory construct, based on predetermined principles not based on IFRS. It effectively represents the invested capital uplifted by inflation on which we are authorised to earn a cash return. 2024 figures are as at 31 December 2024.

(7) Changes in passengers are calculated using unrounded passenger numbers.

Heathrow (SP) Limited is the holding company of a group of companies that fully own 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. Therefore, 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, investment or accounting advice. Heathrow does not make any representation or warranty as to the accuracy or completeness of the Public Information.

All information in these materials is the property of Heathrow and may not be reproduced or recorded without the prior written permission of Heathrow. 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 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 Heathrow nor any person who controls it (nor any director, officer, employee nor 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 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.

These materials must be read in conjunction with the Heathrow (SP) Limited Annual Report and Financial Statements for the year ended 31 December 2024.

Business Update

We have outlined key performance metrics that illustrate our progress for the six months ended 30 June 2025. The glossary section of this report provides detailed definitions for each indicator.

Passenger traffic

(1) For the six months ended 30 June.

(2) Calculated using rounded passenger figures.

(1) For the six months ended 30 June.

(2) Calculated using rounded figures.

(3) Cargo tonnage includes mail volumes.

For the first half of the year, the increase in traffic was primarily driven by an incremental year-on-year increase in passenger Air Transport Movements (ATMs) and Seats per Air Transport Movement (ATM). While 2024 benefited from an additional operational day as a result of the leap year, this year's performance reflects strong underlying demand. Passenger demand has been mixed across regions with most of the growth coming from Asia Pacific, Middle East and Latin America. Our cargo tonnage has seen continued growth during the first six months of the year, because of increased trade activity with North America ahead of the introduction of tariffs announced earlier this year.

Service and operational performance

(1) For the six months ended 30 June.

(2) 2024 comparative restated to be comparable H1 number.

In the first six months of 2025, we achieved an overall ASQ rating of 4.06 out of 5.00 (2024: 4.02) notwithstanding higher passenger numbers. Overall, 77 % of passengers surveyed between January and June 2025 rated their Overall Satisfaction with Heathrow as either 'Excellent' or 'Very good' (2024: 76%), with perceptions shifting from lower ratings towards 'Excellent'. The proportion of 'Poor' ratings was low at 0.4%.

Improvements compared to the same period in 2024 were particularly evident across 'Security' attributes. Other noticeable performance uplifts included 'Ease of Making Connections with other Flights', 'Signage to Access the Terminal', and 'Ease of Getting to the Airport.

Operational performance has been robust in the first six months of 2025. Security performance remains strong with 98.5% of regulated queue times in Central Search Areas below 5 minutes (2024: 98.3%) as the benefits of the CTiX scanner lanes provided by the Next Generation Security project are realised. We reported a marked improvement in arrivals and departures punctuality in the first six months compared with the same period in 2024 as the positive collaboration amongst ground handlers and airlines continues to drive process improvement as well as the impact of more stable weather conditions. Baggage performance has increased to 98.9% (2024: 98.4%) thanks to strong arrivals punctuality and handling improvements.

Capital expenditure

During the first six months of 2025, £570 million (2024: £552 million) of capital expenditure was incurred. This included £56 million in capital creditors movements (2024: £127 million for the acquisition of a building, as well as £32 million in capital creditors movements).

We continue to deliver our H7 Capital Plan, comprising over 450 projects across six programmes. Significant progress has been made in the deployment of CTiX scanners, with the majority of passengers now benefiting from this advanced security technology. 95% of our security officers and all engineering staff have completed training, ensuring a smooth and secure transition. We reached a major milestone with the finalisation of the Terminal 2 (T2) Baggage system design, developed in collaboration with five multidisciplinary partners. As part of the transition to the new system, five projects have been completed to maintain service and capacity of the existing baggage system currently housed in Terminal 1 (T1) until the new design is launched and fully operational. Our sustainability efforts continue to gain momentum. New EV charging stations are now operational airside in T2 and Terminal 3 (T3), supporting both airline operations and colleague transportation. We have installed new pre-conditioned air systems to 12 stands at T3 and Terminal 5 (T5) resulting in direct carbon savings from the reduction in aviation fuel burn. To elevate the passenger experience, we have introduced new retail and food & beverage offerings in T5 and an improved Heathrow Express website. The demolition of the Eastern Business Park has been completed, contributing to our long-term asset strategy and paving the way for future commercial development. We have commenced resurfacing works on the Northern Runway and taxiways. New high-tech runway temperature and icing sensors on the Southern Runway have also been installed. Under the Efficient Airport Programme we introduced a time stamp detection system across most of T5 as well as initial rollouts to T2 and T3, driving optimisation of activity to support punctuality. Enhanced flight data messages with Europe have also supported the delivery of additional airspace capacity and reduced delays.

Power Outage

The fire at the North Hyde substation on 21st March resulted in a wide-scale power outage and the need for Heathrow to temporarily close. Heathrow commissioned former Secretary of State for Transport Ruth Kelly to conduct a review, in order to provide a detailed account of the events surrounding Heathrow's preparedness and response to the outage. We have accepted and will implement all 28 recommendations, which are intended to strengthen the airport's resilience and ability to respond effectively to future incidents.  

National Energy Systems Operator ("NESO") has published its final report from the review into the North Hyde Substation outage. The report finds clear failings by National Grid Electricity Transmission ("NGET") that resulted in a loss for both Heathrow and airlines. We welcome this report which provides important insight into the external power supply failure that led to the airport's closure. Our expectation is that NGET takes accountability for these failings which the NESO report confirms could have been prevented. 

H8 Business Plan

Heathrow submitted its H8 business plan to the Civil Aviation Authority (CAA) in July 2025 as part of the next price control period, 2027-2031.

Our plan builds on our recent service improvements and is the next step in our strategy to become an extraordinary airport, fit for the future. The plan focuses on improving passenger experience, boosting operational resilience and unlocking additional capacity and growth for airlines in the medium-term. It includes stretching targets which will deliver greater value for money for customers, including 6% savings on operational costs (c. £300 million) and £500 million savings on the capital spend. With a £2 billion equity contribution from shareholders, the plan is affordable resulting in a 17% increase in the average aeronautical charge over the period - which remains below what it was a decade ago in real terms. Combined the plan will deliver 15 key outcomes for customers, including:

· 99% of bags travelling with passengers.

· 80% of flights departing on-time.

· 95% of passengers waiting less than five minutes at security.

· A step-change in service with more choice for passengers requiring additional support.

· Capacity for 10m more passengers annually.

· 20% increase in cargo capacity.

· Reduction in carbon emissions equivalent to 15% of 2024's footprint.

Full details of Heathrow's plan can be found on our website[1].

The CAA will now review and evaluate our plan over the next 12-18 months with their Initial Proposals to be published in March 2026. The overall H8 timeline has been delayed, with the final decision now expected in April 2027 - after the start of the H8 period - where a 2027 holding cap is likely, based on CAA's Initial Proposals).

Separately in July, the CAA published the initial scope of the wider Expansion Regulatory review. It is likely a formal consultation will launch in the Autumn of 2025 which Heathrow will respond to.

Long-term growth and capacity developments

In February, following the Government's demand for a third runway at Heathrow, we announced our investment plan to expand the UK's Gateway to Growth. With Heathrow at capacity, meeting growing demand is not possible without expansion, curtailing the UK's international competitiveness.

In the next stage of the process, we will submit our proposal to Government by July 31st. This will set out the Masterplan to secure long-term capacity growth, the investment programme, and what we need from Government to meet their ambition of receiving planning permission by the end of this Parliament. We will consider Government feedback on the proposal and progress on the policy changes required to deliver expansion before moving forward with a decision on applying for planning permission.

Connecting People and Planet

We published our 2024 Sustainability Report in March, demonstrating clear progress against our Connecting People and Planet Strategy objectives. During the first six months of the year, Heathrow maintained momentum across its sustainability strategy.

"In The Air", we have reduced emissions by 7.5% from 2019 to 2024 driven by carbon savings from Sustainable Aviation Fuel ("SAF"). Final analysis of 2024 data shows that SAF made up 2.9% of total jet fuel at Heathrow, exceeding our 2.5% target. In May, the Government introduced the SAF Bill to Parliament outlining next steps for a Revenue Certainty Mechanism. This is a major milestone towards de-risking investment in UK SAF production, an initiative Heathrow has long advocated for.

"On The Ground", we have reduced emissions by 14.6% from 2019 to 2024. Transition to low-emission vehicles has accelerated with new EV bus charging infrastructure implemented at T5. Lower carbon HVO (bio-diesel) usage by airport vehicles has also risen from 5% in 2023 to over 70% at June 2025. We have made positive progress in meeting our H7 surface access targets, most notably in passenger public transport mode share (45.2% in 2024 vs 45% H7 target), colleague single occupancy vehicle mode share (52% in 2024 vs 57% H7 target) and public transport catchment targets. This has been achieved through enhancements to the public transport network including the Elizabeth line and new bus and long-distance coach routes.

Recognising the need for pace and action - with our supply chain footprint currently 14% above the 2019 baseline due to increased capital expenditure - we completed an independent gap analysis to identify the steps needed to align our capital programmes with industry carbon management standards. This forms part of our journey toward PAS 2080 verification - the world's first specification for managing whole-life carbon in infrastructure - and embedding low-carbon principles into future investments.

Over 85% of airlines used quieter aircraft in 2024 (vs 65% in 2019) complying with the latest international noise standard. We recently updated our balanced scorecard to better align our top tier supply chain partners reporting against our sustainability strategy. Heathrow manages approximately 170 hectares of land across 13 biodiversity sites and we were awarded the London Wildlife Trusts biodiversity benchmark award for the 18th consecutive year for 10 of these sites this year.

Key management changes

His Excellency Jassem Saif Ahmed Al-Sulaiti was appointed as director on the HAHL Board on 16 April 2025 representing QIA. Lord Paul Deighton has extended his tenure as Chair of the HAHL Board for a limited period while a new Chair is appointed. The Nominations Committee has started its process to appoint the new Chair. Luke Bugeja resigned as a director of the HAHL Board on 3 July 2025 and William Briggs was appointed as a director representing Ardian with effect from the same date.

Ultimate shareholder update

On 3 July 2025 Ardian completed its acquisition of an additional 10.00 per cent stake in FGP Topco Limited, the holding company for Heathrow Airport Holdings Limited, from Ferrovial SE, Caisse de dépôt et placement du Québec (CDPQ) and the Universities Superannuation Scheme (USS), the applicable regulatory conditions having been satisfied. Ardian now holds a 32.61 per cent stake of the FGP Topco Limited in total.

Principal risks

The principal strategic, corporate, and operational risks as at 30 June 2025 remain unchanged and are consistent with those set out in the Annual Report and Financial Statements for the year ended 31 December 2024.

The recent North Hyde substation operational outage fell within the scope of the Organisational Resilience principal risk, as detailed on page 49 of the 2024 Annual Report. This principal risk captures the potential for major critical events that could lead to significant operational and business impact, including disruption or potential closure of the airport.

Financial Review

Basis of presentation of financial results

Heathrow (SP) Limited ('Heathrow SP') is the holding company of a group of companies (the 'Group'), which includes Heathrow Airport Limited ('HAL'), which owns and operates Heathrow Airport, and Heathrow Express Operating Company Limited ('Hex Opco') which operates the Heathrow Express rail service. Heathrow SP's consolidated financial statements are prepared in accordance with UK adopted international accounting standards.

The financial information presented within these condensed consolidated interim financial statements has been prepared on a going concern basis. More detail can be found in the going concern statement on page 14.

Alternative Performance Measures ('APMs')

Management uses APMs to monitor performance as it believes this more appropriately reflects the underlying financial performance of the Group's operations. These remain consistent with those included and defined in the Annual Report and Financial Statements for the year ended 31 December 2024.

Summary performance

(1) Adjusted operating costs exclude depreciation, amortisation, fair value gains and losses on investment properties and exceptional items (if any).

(2) Adjusted EBITDA is profit before interest (including fair value gains and losses on financial instruments), taxation, depreciation, amortisation, fair value gains and losses on investment properties and exceptional items (if any).

(3) Adjusted operating profit excludes fair value gains and losses on investment properties and exceptional items (if any).

(4) Adjusted profit before and after tax excludes fair value gains and losses on investment properties and financial instruments, exceptional items (if any) and the associated tax impact of these.

(5) Certain re-measurements consist of fair value gains and losses on investment property revaluations, gains and losses arising on the re-measurement of financial instruments, together with the associated fair value gains and losses on any underlying hedged items that are part of a cash flow, fair value and economic hedging relationship and the associated tax impact on these.

Revenue

For the six months ended 30 June 2025, revenue increased to £1,724 million (2024: £1,692 million), a 1.9% increase compared to the six months ended 30 June 2024.

Higher aeronautical revenue driven by evolving passenger mix including an increase in long haul traffic, which has offset the impact of lower H7 charges set by the CAA. Retail revenue grew, supported by strong performance in VIP and Fast Track services and robust food and beverage sales. This was partially offset by softer performance in the luxury and duty-free categories and continued weakness in the bureaux de change market. Other revenue increased, primarily due to growth in property income from new lets. More details can be found on page 17.

Adjusted operating costs

Adjusted operating costs increased by 3.2% to £765 million (2024: £741 million).

(1) Unadjusted operating costs for the six months ended 30 June 2025 were £1,157 million (2024: 1,038 million). This included depreciation and amortisation of £338 million (2024: £331 million) and fair value losses on investment properties of £54 million (2024: £34 million gain).

Employment costs decreased in the first six months of 2025, reflecting operational efficiencies and improved workforce planning. While there were increases in National Insurance, these were offset by reduced reliance on overtime. Operational costs increased, driven by ongoing cost pressures including enhanced security requirements, additional service mitigations, and higher contractual costs linked to National Insurance. Maintenance costs rose to support operational performance. Utilities and other costs were higher, reflecting increased electricity prices, marketing and digital costs, and spend on noise and vortex.

Net finance costs

In the six months ended 30 June 2025, net finance costs before certain re-measurements increased to £500 million (2024: £442 million). The RPI annual growth rate has increased year on year from 3.0% to 4.3%, resulting in a higher inflation accretion expense.

Fair value gain on financial instruments

A non-cash fair value gain on financial instruments of £136 million (2024: £111 million) is driven by movements in index-linked swap liabilities of £78 million and other derivatives of £58 million, respectively. The fair value is measured with reference to market expectations of inflation and interest rates: the inflation forward curve dropped by an average of 27bps and the interest rate forward curve decreased by an average of 52bps, resulting in a fair value gain

Taxation

The total tax charge for the six months ended 30 June 2025 was £62 million (2024: £95 million) on a profit before tax of £203 million (2024: £323 million).

The tax charge before certain re-measurements was £41 million (2024: £59 million). Based on a profit before tax and certain re-measurements of £121 million (2024: £178 million), this results in an effective tax rate of 33.9% (2024: 33.1%). This represents the best estimate of the annual effective tax rate expected for the full year, applied to the pre-tax profit before certain re-measurements for the six-month period. The tax charge is higher than the statutory rate of 25% primarily due to a large amount of depreciation, which is unallowable for tax purposes, increasing the tax charge for the year. In addition, for the six months ended 30 June 2025, a deferred tax charge of £21 million (2024: £36 million) was recognised on certain re-measurements arising from fair value movements on financial instruments and investment properties of £82 million (2024: £145 million). In the period, the Group paid £35m of corporation tax (2024: £25 million). 

Cash position

At 30 June 2025, the Group had £1,385 million (31 December 2024: £1,557 million) of cash and cash equivalents and term deposits, of which cash and cash equivalents were £235 million (31 December 2024: £1,132 million). In the six months ended 30 June 2025, there was a decrease of £897 million in cash and cash equivalents (2024: a decrease of £18 million). In addition, in the six months ended 30 June 2025, there was an increase of £725 million in term deposits (2024: a decrease of £486 million).

Cash generated from operations

In the six months ended 30 June 2025, cash generated from operations decreased 6.4% to £863 million (2024: £922 million). The following table reconciles adjusted EBITDA to cash generated from operations.

Restricted payments

In the six months ended 30 June 2025, total restricted payments (gross and net) made by Heathrow SP amounted to £322 million (2024: £66 million). This funded scheduled interest payments on debt at Heathrow Finance and dividends to ultimate shareholders of £250 million during the period.

Recent financing activity 

In the first six months of 2025, we issued a €600m 11-year Class A Sustainability-Linked Bond, our second Euro SLB following our inaugural 2023 issuance. We also priced£139 million in new Class B through the US private placement market across 2035 and 2045 maturities in May with proceeds received in July. These transactions complement our robust liquidity position and add additional diversification. 

Redemptions in the first six months of 2025 comprised the scheduled repayment of a £250 million Heathrow Finance bond in March and a Class A bond of C$500 million in May. 

During the first six months of the year, we made early paydowns of accretion on our inflation swaps totalling £157 million (2024: £206 million).

Debt and liquidity at Heathrow (SP) Limited

(1) 2024 figures are as at 31 December 2024.

(2) Lease liabilities relating to leases that existed at the point of transition to IFRS 16 (1 January 2019) are excluded from consolidated nominal net debt. All new leases entered into post-transition are included.

The average cost of Heathrow SP's nominal gross debt at 30 June 2025 was 3.53% (31 December 2024: 3.39%). This includes interest rate, cross-currency and index-linked hedge costs and excludes index-linked accretion. Including index-linked accretion, Heathrow SP's average cost of debt at 30 June 2025 was 5.90% (31 December 2024: 5.20%). The average life of Heathrow SP's gross debt as at 30 June 2025 was 9.7 years (31 December 2024: 9.9 years).

The Group's liquidity horizon is within our target range of 18 to 24 months. In making this assessment, the Directors have considered both the Heathrow SP Group of companies, as well as the wider Heathrow Finance plc group of companies (the 'Heathrow Finance Group'). This includes operating cashflows under the base case business plan and capital investment, debt service costs, debt maturities and repayments. This liquidity position takes into account £1,596 million in cash resources across the Heathrow Finance Group, as well as undrawn revolving credit facilities of £1,386 million.

Debt at Heathrow Finance plc

(1) 2024 figures are as at 31 December 2024.

Financial ratios

At 30 June 2025, Heathrow SP and Heathrow Finance continue to operate within required financial ratios. Gearing ratios are defined within the Glossary.

(1) 2024 figures are as at 31 December 2024.

Pension scheme

We operate a defined benefit pension scheme (the 'BAA Pension Scheme'), which closed to new members in June 2008. At 30 June 2025, the defined benefit pension scheme, as measured under IAS 19, was funded at 94.7% (31 December 2024: 96.2%). This translated into a deficit of £133 million (31 December 2024: £99 million). The £34 million increase in the deficit in the six months is largely due to a £100 million loss on assets and a £28 million experience loss reflecting actual inflation in the period partially offset by £92 million actuarial gains due to a 0.15% increase in discount rate and 0.15% decrease in inflation; current service costs of £5 million; a past service credit of £2 million; a finance charge of £2 million; and, contributions paid in the year. In the six months ended 30 June 2025, we contributed £7 million (2024: £7 million) into the defined benefit pension scheme. No deficit repair contributions have been paid in the six months (2024: £nil). The Directors believe that the scheme has no significant plan-specific or concentration risks.

Outlook

The outlook for our adjusted EBITDA performance in 2025 remains consistent with the guidance published in our June Investor Report on 27 June 2025.

DIRECTORS' RESPONSIBILITIES STATEMENT

The Directors confirm that these condensed consolidated interim financial statements have been prepared in accordance with UK adopted International Accounting Standard 34 'Interim Financial Reporting' and Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority, and that the interim management report includes a fair review of the information required by DTR 4.2.7, namely:

• an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year.

Condensed consolidated income statement for the six months ended 30 June 2025

(1) Amounts stated before certain re-measurements are non-GAAP measures.

(2) Certain re-measurements consist of: fair value gains and losses on investment property revaluations, gains and losses arising on the re-measurement of financial instruments, together with the associated fair value gains and losses on any underlying hedged items that are part of a cash flow, fair value and economic hedging relationship and the associated tax impact on these.

Condensed consolidated statement of comprehensive income for the six months ended 30 June 2025

 Condensed consolidated statement of financial position as at 30 June 2025

(1) This column is labelled audited as the amounts have been extracted from the company's audited consolidated financial statements for the year ended 31 December 2024.

 Condensed consolidated statement of changes in equity for the six months ended 30 June 2025

(1) This row is labelled audited as the amounts have been extracted from the company's audited consolidated financial statements for the year ended 31 December 2024.

Condensed consolidated statement of cash flows for the six months ended 30 June 2025

(1) Term deposits have an original maturity of over three months.

(2) Includes £10 million of lease interest paid (six months ended 30 June 2024: £9 million). By class, includes £40 million (six months ended 30 June 2024: £58 million) of interest paid on junior (Class B) debt.

(3) In the six months ended 30 June 2025 the Group elected to early pay £157 million (2024: £206 million) of accrued accretion paydowns, which were due to be settled within the next 12 months in line with the liquidity profile assessment of the Group.

(4) In 2024, the Group restructured two inflation-linked swaps by shortening the maturities from 2035. This resulted in a cash inflow to the Group of £14 million made up of £68 million net future interest and £54 million future accretion.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

The Group

The Company is the holding company of a group of companies that owns Heathrow Airport ('Heathrow') and operates Heathrow Express ('HEX'), the express rail service between Heathrow and central London. Heathrow (SP) Limited is a limited liability company, limited by shares, incorporated in the UK and registered in England and Wales, and domiciled in the UK. The Company is a private limited company and its registered office is The Compass Centre, Nelson Road, Hounslow, Middlesex, TW6 2GW. 

Primary financial statements format

A columnar approach has been adopted in the income statement and the impact of separately disclosed items is shown in separate columns. These columns include 'certain re-measurements' which management separates from the underlying operations of the Group. By isolating certain re-measurements, management believes the underlying results provides the reader with a more meaningful understanding of the performance of the Group, by concentrating on the matters over which it has most influence, whilst recognising that information on these additional items is available within the financial statements, should the reader wish to refer to them.

The column 'certain re-measurements' in the consolidated income statement contains the following: i. fair value gains and losses on investment property revaluations; ii. gains and losses arising on the re-measurement of financial instruments, together with the associated fair value gains and losses on any underlying hedged items that are part of a cash flow, fair value and economic hedging relationship; iii. the associated tax impacts of the items in (i) and (ii).

Accounting policies

Basis of preparation

The condensed consolidated interim financial statements cover the six-month period ended 30 June 2025 and have been prepared in accordance with UK adopted International Accounting Standard 34 'Interim Financial Reporting'.

The condensed consolidated interim financial statements do not include all the notes normally included in the annual consolidated financial statements. Accordingly, the financial information should be read in conjunction with the annual consolidated financial statements for the year ended 31 December 2024, which were prepared in accordance with UK adopted International Accounting Standards and the requirements of Companies Act 2006. The auditors' report on these statutory financial statements was unqualified, did not contain an emphasis of matter and did not contain a statement under section 498 of the Companies Act 2006.

Where financial information in the notes to the condensed consolidated interim financial statements, relating to year ended 31 December 2024, is labelled audited, the amounts have been extracted from the Group's audited consolidated financial statements for the year ended 31 December 2024.

The Group has applied the IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two income taxes.

The condensed consolidated interim financial statements for the six-month period ended 30 June 2025 have been prepared on a basis consistent with that applied in the preparation of the consolidated financial statements for the year ended 31 December 2024, except for the following new amendments which are effective for the period beginning 1 January 2025:

· Amendments to IAS 21 titled Lack of Exchangeability

These amendments haven't had any effect on the measurement and disclosures of any items included in the condensed consolidated interim financial statements of the Group.

Going concern

The Directors have prepared the financial information presented within these interim condensed consolidated financial statements on a going concern basis as they have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.

Background

Heathrow is economically regulated by the CAA which controls Heathrow's maximum airport charges. We are currently operating under the H7 price control period, which runs between 1 January 2022 and 31 December 2026, following conclusion of the CAA Final Decision in July 2024.

Passenger forecasts are fundamental to the going concern analysis as a measure of forecast income and expenses, and the Directors have considered trends in future expected passenger numbers. Through the first six months of 2025, there has been strong passenger demand for travel which gives confidence in our future expected passenger numbers. Nevertheless, this is against a backdrop of economic, interest rate and inflation uncertainty.

Given the stability of Heathrow's credit ratings and proven ability to raise debt at competitive rates, the Directors have revised the going concern scenarios to provide a more robust and informative assessment. The base case now incorporates forecast debt issuances, while the severe but plausible downside case assumes no access to debt markets. Passenger volumes remain a key sensitivity in this downside case, and a reverse stress test has also been conducted.

While Heathrow SP operates as an independent securitised group, the Directors have considered the wider Heathrow Group given the corporate structure, which involves cash generation across the Group and within the main operating company, Heathrow Airport Limited.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

Going concern continued

The wider Heathrow Group is bound by two types of debt covenant, tested on 31 December each year: the Regulatory Asset Ratio ('RAR'), a measure of the ratio of consolidated nominal net debt to the Regulatory Asset Base ('RAB'); and Interest Cover Ratio ('ICR'), a measure of operating cashflows to debt interest charge. These covenants exist at different levels within the Group's Class A and Class B debt. On that basis the Directors have assessed going concern for the period to 31 December 2026.

Base case

In determining an appropriate base case, the Directors have considered the following:

· Forecast revenue and operating cash flows from the underlying operations, based on a traffic forecast of 84.2 million in 2025;

· Forecast level of capital expenditure based on Heathrow's latest business plan; and

· The overall Group liquidity position, including cash resources and committed facilities available to it, its scheduled debt maturities and financing cash flows, and forecast debt issuances based on Heathrow's latest business plan.

Base case passenger forecast

There is inherent subjectivity in modelling future passenger numbers, nevertheless, passenger numbers have exceeded the prior period, with total passengers to 30 June 2025 of 39.9 million (2024: 39.8 million). Despite an uncertain economic environment impacting the cost-of-living of passengers, leisure demand has remained strong signalling that passengers are continuing to prioritise travel spend, but there are early signs of softness on North American business-heavy routes. The base case is based on a passenger forecast of 84.2 million for the year ended 31 December 2025.

Base case tariffs

The base case uses tariffs as set out in the CAA's Final Decision.

Base case cash flow and liquidity

The wider Heathrow Group can raise finance at both Heathrow SP Limited ('Heathrow SP') and Heathrow Finance plc ('Heathrow Finance'). Continued support for the Group's credit enabled Heathrow to successfully raise over £0.6 billion of debt in the first six months of 2025: a €600 million Class A sustainability-linked bond was issued in January 2025 and £139 million in Class B US private placements have been priced with proceeds to be received in July 2025. As at 30 June 2025, the wider group has total liquidity available of £3.0 billion, comprising of £1.6 billion of cash held at FGP Topco group and a £1.4 billion undrawn revolving credit facility. Total debt maturity for the period to 31 December 2026 is £2.0 billion at Heathrow SP and £0.1 billion at Heathrow Finance.

The Group has sufficient liquidity to meet its base case cash flow needs until at least 31 December 2026, with no breaches of its covenants in that period. This includes forecast operational costs, capital investment, debt service costs, debt issuances and scheduled debt repayments.

Severe but plausible downside case

The Directors have also considered severe but plausible downside scenarios as part of the going concern assessment. The Directors have considered the inherent judgement in forecasting future passenger numbers on cash flow generation, liquidity, and debt covenant compliance.

Under the Group's downside scenario, the Directors have considered passenger numbers at the low end of Heathrow's 2025 and 2026 passenger forecast to be a severe but plausible outcome. This considers the Group's views of plausible impacts caused by reduced passenger confidence and other economic factors. The low range of passengers represents a 1.0% reduction against the forecast base case for 2025 and 1.1% for 2026. The tariff assumptions remain the same as in the base case.

While deemed unlikely, the Directors have also assumed that the Group would be unable to access debt markets for any new funding. Taking this into account, under the severe but plausible scenario, the Group has sufficient liquidity to meet all forecast cash flow needs until at least 31 December 2026, with no breach of its covenants in that period.

Reverse stress test

In forming their assessment, the Directors have also performed a reverse stress test. This involved modelling the level of passengers which would result in a covenant breach as at 31 December 2025 or 31 December 2026. The model is based on a reduction in passenger numbers with no impact on costs. The Heathrow Finance plc ICR covenant is the most restrictive, and for there to be a breach at this level, forecast passenger numbers would need to decrease by over 24.0 million (28.5%) versus the base case in 2025 and by a similar margin in 2026. A further passenger number decrease would be required for the Group to breach its RAR covenants. These passenger levels are below the low end of the Group's passenger forecast and are not considered plausible by the Directors. Should circumstances arise that require Management to take corrective action, many previously utilised tactical actions could be available, including cost reduction, deferral of investment or temporary reprofiling of interest payments.

Conclusion

Having had regard to both liquidity and debt covenants and considering a severe but plausible downside and reverse stress testing, the Directors have concluded that there is sufficient liquidity available to meet the Group and Company's funding requirements for at least 12 months from the date of these interim condensed consolidated financial statements and that it is accordingly appropriate to adopt a going concern basis for their preparation.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

Significant accounting judgements and estimates

In applying the Group's accounting policies, the Directors have made judgements and estimates in a number of key areas. Actual results may, however, differ from estimates calculated and the Directors believe that the following areas present the greatest level of uncertainty.

Critical judgements in applying the Group's accounting policies

In preparing the six-month condensed consolidated interim financial information, the areas where judgement has been exercised by Directors in applying the Group's accounting policies remain consistent with those applied to the Annual Report and Financial Statements for the year ended 31 December 2024.

Key sources of estimation uncertainty

In preparing the six-month condensed consolidated interim financial information, the key sources of estimation uncertainty remain consistent with those applied to the Annual Report and Financial Statements for the year ended 31 December 2024.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

1. Segment information

The Group is organised into business units according to the nature of the services provided. Most revenue is derived from the activities carried out within the Airport. The exception to this is Heathrow Express, which is a separately identifiable operating segment under IFRS 8, with separately identifiable assets and liabilities, and hence management aggregates these units into two operating segments, as follows:

· Heathrow Airport (Aeronautical and commercial operations within the Airport and its boundaries).

· Heathrow Express (Rail income from the Heathrow Express rail service between Heathrow and London).

The performance of the above segments is measured on a revenue and Adjusted EBITDA basis. The reportable segments derive their revenues from a number of sources and this information is also provided to the Board on a monthly basis.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

1. Segment information continued

(1) Reflects fair value gain or loss on investment properties only.

2. Operating costs

(1) Operational costs consist of expenditure in relation to the standard operations of the airport.

(2) Other operating costs consist of primarily marketing costs and other general expenditure.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

3. Financing

(1) Includes accretion of £50 million (six months ended 30 June 2024: £39 million) on index-linked bonds.

(2) Includes accretion of £148 million (six months ended 30 June 2024: £121 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 5.30% (2024: 7.85%) to expenditure incurred on such assets.

(4) Includes foreign exchange retranslation loss on the currency bonds of £4 million (six months ended 30 June 2024: £5 million gain) which has moved systematically in the opposite direction to that of the cross-currency swaps which economically hedge the related currency bonds.

(5) The value of all currency bonds changes systematically in the opposite direction to that of the related cross-currency swaps, in response to movements in underlying exchange rates with a net nil impact in fair value for foreign exchange movements.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

4. taxATION CHARGE

The total tax charge for the six months ended 30 June 2025 was £62 million (2024: £95 million) on a profit before tax of £203 million (2024: £323 million).

The tax charge on profit before certain re-measurements was £41 million (2024: £59 million). Based on a profit before tax and certain re-measurements of £121 million (2024: £178 million), this results in an effective tax rate of 33.9% (2024: 33.1%). This represents the best estimate of the annual effective tax rate expected for the full year, applied to the pre-tax profit before certain re-measurements for the six-month period. The tax charge for both periods is higher than the statutory rate of 25% primarily due to a large amount of depreciation, which is unallowable for tax purposes, increasing the tax charge for the year.

In addition, for the six months ended 30 June 2025, a deferred tax charge of £21 million (2024: £36 million) was recognised on certain re-measurements arising from fair value movements on financial instruments and investment properties totalling £82 million (2024: £145 million).

Management remains confident that the deferred tax assets as at 30 June 2025 may be recovered against the unwind of existing deferred tax liabilities and future forecast taxable profits.

On 20 June 2023, Finance (No.2) Act 2023 was substantively enacted in the UK, introducing a global minimum effective tax rate of 15%. The legislation implements a domestic top-up tax and a multinational top-up tax, effective for accounting periods starting on or after 31 December 2023. Management has performed an assessment of the UK Pillar 2 rules based on the 2024 data and based on the assessment, the Group qualifies for one of the transitional safe harbours provided in the UK Pillar 2 rules. The non-UK entity is within the UK Controlled Foreign Company (CFC) rules, i.e., the entity is a non-exempt CFC and a CFC tax charge is already allocated within the respective "waters-edge" UK parent entity in respect of 100% of its equivalent UK taxable profits. The Group applies the exception under IAS 12 'income taxes' amendment for recognising and disclosing information about deferred tax assets and liabilities related to top-up income taxes.

There are no items which would materially affect the future tax charge.

5. Property, plant and equipment

The Regulatory Asset Base ('RAB'), the regulated mechanism made up of existing and new capital investment by which the group makes a cash return, was £21,029 million at 30 June 2025 (31 December 2024: £20,422 million).

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

6. Investment properties

(1) Fair value losses for the six months ended 30 June 2025 are primarily driven by a reduction in the fair value of car parks, due to planned maintenance and capital expenditure. Fair value gains for the year ended 31 December 2024 were primarily due to the impact of improved trading performance across the portfolio.

Investment properties valuations are prepared in accordance with the valuation manual issued by the Royal Institution of Chartered Surveyors and appraised by our property management company CBRE Limited, who are independent and have appropriate recognised qualifications and experience in the categories and location of our investment properties being valued.

On 24 December 2024, the Group acquired a new investment property at an acquisition cost comprising of the purchase price, stamp duty, and associated professional and legal fees. The purchase price was appraised by an external valuer during the bidding process. Following the acquisition, management conducted a review as of 31 December 2024 and concluded that the fair value of the investment property approximates the final purchase price in the completed transaction six days prior, as there had been no significant changes in the valuation assumptions that were previously applied. The investment property was included in the CBRE valuation described above as at 30 June 2025.

Management conducts a detailed review of each property to ensure the correct assumptions and inputs have been used. Meetings with the valuers are held on a periodic basis to review and challenge the assumptions used in the valuation techniques, where they are classified into 3 categories as follows:

Level 1 inputs are quoted prices from active markets at the measurement date using relevant information generated by market transactions involving identical or comparable (similar) assets.

Level 2 inputs are other quoted market prices directly or indirectly observable and involve a combination of inputs. Non-revenue generating employee car parks, airport operations and land valuations were generated by a market approach involving similar observable transactions along with land value reversion whilst the other assets were valued using the capitalised income approach incorporating net initial and equivalent yield. Some of the valuation incorporated rent free and void periods where relevant in order to determine the most reasonable valuation.

Level 3 inputs are based on unobservable inputs which relate to discounted cash flow technique using an appropriate asset discount rate including growth rates for the relevant revenues and costs based on our business plan. Most of this classification is made up of commercial car parks which account for 89% (31 December 2024: 85%) of the valuation. In the case of land, the discounted cash flow methodology has incorporated exit yields, occupancy and ancillary revenues.

There were no transfers between the fair value classifications for investment properties during the year.

By their nature, investment property valuations incorporate long-term passenger trends that incorporate market assumptions on climate change.

Changes in fair values are presented in the income statement as part of other income.

The investment property asset class balance at 30 June 2025 consists of 50% (31 December 2024: 51%) car parks, 21% (31 December 2024: 21%) airport operations and 29% (31 December 2024: 28%) land and others. Level 2 to 3 is split according to the following percentiles respectively: 53% (31 December 2024: 53%) and 47% (31 December 2024: 47%).

Notes to the condensed consolidated financial statements for the six months ended 30 June 2025

7. Borrowings