REG - Manchester Airport - Half-year Report

Moody'sAnnouncement

07/12/2022 08:15

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RNS Number : 7942I  Manchester Airport Grp Funding PLC  07 December 2022

Issuer: Manchester Airport Group Funding PLC

Date: 7 December 2022

 

 

Manchester Airport Group Funding PLC

Company No. 8826541

 

Interim Results

 

The Issuer's parent, Manchester Airport Group Investments Limited ("MAGIL"),
today publishes its Interim Financial Report and consolidated financial
statements for the half year ended 30 September 2022.

MAGIL's parent, Manchester Airports Holdings Limited ("MAHL"), today
also publishes its Interim Financial Report and consolidated financial
statements for the half year ended 30 September 2022.

The Annual Reports and consolidated financial statements for MAHL and MAGIL,
together with the Investor Presentation, and Compliance Certificate for MAGIL,
are available on Manchester Airports Group's Investor Relations website at
magairports.com/investor-relations.

Investor Presentation

A conference call to present the results to bondholders, bank lenders, rating
agencies and credit analysts will be held on Wednesday 7 December 2022 at
10.00 am (UK time). The call will be hosted by Jan Bramall, Chief Financial
Officer, Ken O'Toole, Deputy Chief Executive Officer and Iain Ashworth,
Corporate Finance Director.

MAGIL results for the 6 months ended 30 September 2022

The removal of all remaining UK travel restrictions in March 2022 triggered a
rapid increase in pent up demand for travel and has resulted in MAGIL
delivering a strong financial performance.

Passenger numbers for the 6 month period were 30.5 million, an increase of
362.1% compared to the 6.6 million passengers in the equivalent period of
2021. This equated to 84% of pre-pandemic levels. MAGIL's revenue has
increased by 238.1% to £537.6 million, which has resulted in an Adjusted
EBITDA of £259.9 million, an increase of £234.3 million.  MAGIL's Operating
profit of £22.1 million for the 6 months ended 30 September 2022 (2021: loss
of £75.1 million). This result was heavily impacted by a one-off adjusted
item charge of £119.7 million following the extinguishment of the Group's
deferred debt agreement (DDA) for the exit from the Greater Manchester Pension
Fund ("GMPF") pension scheme. The GMPF settlement also gave rise to a £116.7m
increase in reserves and therefore an overall net movement of £3.0m. The
split of the net movement between income statement and reserves is in
accordance with the requirements of IAS 19. All of MAG's defined benefit
pension schemes are now closed to future accrual.

MAGIL's parent, MAHL, reported an Adjusted EBITDA of £261.0 million, and a
profit from operations of £22.8 million.

 

 Key Financials                                 6 months ended 30 September 2022 (£m)   6 months ended 30 September 2021 (£m)   Change (%)
 Revenue                                        537.6                                   159.0                                   238.1%
 Adjusted EBITDA*                               259.9                                   25.6                                    915.2%
 Adjusted EBITDA*(excluding impact of IFRS 16)  243.6                                   10.2                                    2,288.2%
 Operating profit (before adjusted items)       143.8                                   (78.9)                                  n/a
 Operating profit                               22.1                                    (75.1)                                  n/a
 Loss before taxation                           (28.2)                                  (105.2)                                 73.2%

 

 Passengers       6 months ended 30 September 2022 (m)  6 months ended 30 September 2021 (m)  Change (%)
 Manchester       14.3                                  2.7                                   429.6%
 London Stansted  14.0                                  3.5                                   300.0%
 East Midlands    2.2                                   0.4                                   450.0%
 Total            30.5                                  6.6                                   362.1%

 

 

*Adjusted EBITDA is earnings before interest, tax, depreciation, amortisation,
gains and losses on sales and valuation of investment properties, and adjusted
items

 

 

The first six months of this financial year have seen MAGIL deliver the first
full summer season since the onset of the coronavirus pandemic.

Pent-up demand for travel was suddenly released by the removal of testing and
quarantine restrictions in March this year. The fact that the aviation sector
knew that this demand would come back did not make it easier to prepare for,
given the difficult labour market and that it can typically take up to three
months to train and vet new aviation recruits before they can start work.

It is important to acknowledge that service levels in some parts of MAGIL's
business were, at times, not where we expect them to be. This was particularly
true in the early months of the summer and applied both to the operations in
MAGIL's direct control and those delivered by our partners, such as airlines,
ground handling companies and those that deliver assisted travel services.

With much of MAGIL's operational difficulties relating to recruitment
challenges, we are pleased now to be in a position where more than 2,000 new
colleagues have started work with us, which underlines how important our
airports are to the communities surrounding them in relation to employment.

More than 30 million people travelled through MAGIL's airports between April
and the end of September, representing 84% of the equivalent period in 2019,
pre-pandemic. Many of these people will have been going on holiday, travelling
for business or visiting friends and family overseas for the first time in
more than two years.

We are proud, as ever, of our role in facilitating these journeys for those
living and working in our catchment area, which covers the majority of the UK.

Other headlines

 

·      Significant investment was completed at MAG's airports in the
immediate years prior to the COVID-19 pandemic. Following the outbreak, MAG
reduced and refocussed expenditure on essential maintenance, safety critical
activity and completion of existing schemes.  Phase 2 of MAG's main capital
project; the Manchester Airport Transformation Programme ("MANTP"), is now
complete. The Terminal 2 extension opened in July 2021 and has been well
received by airlines and passengers. Manchester Airport's modern facilities
will continue to be the international gateway for the North, providing
passenger and airline facilities for the future, and supporting commercial
yields and operating efficiencies. Following the strong recovery, MAGIL has
begun a process to remobilise its previously paused investment plans and will
recommence activity in 2023, which will be phased and modular in nature, in
line with MAG's financing strategy and credit metrics commensurate with
maintaining strong investment grade ratings.

 

·      On 27 May 2022 MAGIL completed a refinancing of its 500 million
revolving credit facility and a £90 million liquidity facility, which were
scheduled to mature in June 2023. The total facility sizes and lenders
remained unchanged. The new facilities mature in May 2027 with options to
extend by up to two years, subject to lenders' agreement. Subsequent to the
period end, on 31 October 2022 the revolving credit facility, which had
remained fully drawn since March 2020, was repaid in full.

 

·      MAGIL's £1,460 million of listed bonds, together with the bank
facilities described above and retained cash resources of £613.5 million as
at 30 September 2022, provide it with a long-term stable funding platform.
MAGIL's Total Net Debt (excluding IFRS 16) was £1,333.7 million at 30
September 2022, which was £379.6 million lower than as at 31 March 2020, at
the beginning of the pandemic.

 

·      Following two years of waivers, MAGIL's Leverage covenant for the
30 September 2022 Calculation Date was 3.6x, representing a reduction of 0.9x
since the last calculation in March 2022 (4.5x). Interest Cover was 5.9x.

 

·      MAG's financing strategy incorporates its strong investment grade
ratings with Fitch (BBB negative outlook) and Moody's (Baa1 stable outlook)
and a long-term financing structure to support growth.

 

·      Following the impact of COVID-19 and in accordance with the
Amendment and Waiver Deed no dividends have been paid throughout the covenant
waiver period including up to the date of the Compliance Certificate delivered
on 7 December 2022. Dividends paid by MAHL are funded via Distributions from
MAGIL.

 

·      In October 2022, MAG re-affirmed its commitment to develop zero
carbon airports, providing education, training and employment opportunities
for all, and to ensuring we give a voice to the local communities we serve as
we develop and grow. We are already working on a range of important programmes
to deliver against these commitments, from the formation of new youth forums
at each airport and a pledge to develop a new, industry-leading apprenticeship
programme, to our partnerships with Fulcrum BioEnergy and HyNet to provide
sustainable aviation fuel and new hydrogen technologies. The latest Corporate
and Social Responsibility report, together with other investor material
related to ESG, is available on MAG's Responsible Business website
(magairports.com/responsible-business/csr-reports/
(https://www.magairports.com/responsible-business/csr-reports/) )

 

 

Note on MAGIL Results

 

Reconciliations between the financial results of MAGIL and MAHL and MAGIL's
Adjusted EBITDA (excluding impact of IFRS 16) are available in the appendix of
the Investor Presentation, which is available on MAHL's Investor Relations
website at magairports.com/investor-relations.

 

Enquiries:

 

Investor
Relations
investor.relations@magairports.com (mailto:investor.relations@magairports.com)

 

MAG Press Office
 
press.office@magairports.com (mailto:press.office@magairports.com)
 

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