Annual Financial Report

Manchester Airport Grp Funding PLC

05 July 2023

 

Issuer: Manchester Airport Group Funding PLC

Date: 5 July 2023

Manchester Airport Group Funding PLC

Company No. 8826541

Annual Results

The Issuer's parent, Manchester Airport Group Investments Limited ("MAGIL"), today publishes its Annual Financial Report and consolidated financial statements for the year ended 31 March 2023.

MAGIL's parent, Manchester Airports Holdings Limited ("MAHL"), today also publishes its Annual Financial Report and consolidated financial statements for the year ended 31 March 2023.

The Annual Reports and consolidated financial statements for MAHL and MAGIL, together with the Investor Presentation, Investor Report 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 5 July 2023 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 12 months ended 31 March 2023

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 for the 12 months to 31 March 2023.

Passenger numbers for the year were 54.0 million, an increase of 163.4% compared to the 20.5 million passengers in the previous year. This equated to 91% of pre-pandemic levels. MAGIL's revenue has increased by 122.8% to £1,027.4 million, which has resulted in an Adjusted EBITDA of £410.4 million, an increase of £285.3 million (228.1%).  MAGIL delivered an operating profit of £28.1 million for the year ended 31 March 2023 (2022: loss of £130.0 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 £412.0 million, and a profit from operations of £28.6 million.   

Key Financials	12 months ended 31 March 2023 (£m)	12 months ended 31 March 2022 (£m)	Change (%)
Revenue	1,027.4	461.2	122.8%
Adjusted EBITDA*	410.4	125.1	228.1%
Adjusted EBITDA*(excluding impact of IFRS 16)	376.9	94.3	299.7%
Operating profit/(loss) (before adjusted items)	169.3	(112.9)	n/a
Operating profit	28.1	(130.0)	n/a
Loss before taxation	(59.4)	(185.9)	68.0%

Passengers	12 months ended 31 March 2023 (m)	12 months ended 31 March 2022 (m)	Change (%)
Manchester	25.2	9.1	176.9%
London Stansted	25.5	10.3	147.6%
East Midlands	3.3	1.1	200.0%
Total	54.0	20.5	163.4%

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

Last year was one of the most significant in the aviation sector's history, the first full year following the removal of the restrictions imposed in response to the Covid-19 pandemic, enabling the full resumption of international travel.

Demand recovered well across all three of MAG's airports with volumes returning close to pre-pandemic levels, growing from 83.8% of 2020 volumes at the half year, to 90.6% at the financial year end. Total passenger numbers for the financial year reached 54.0 million.

Demand was particularly strong in the low cost, short-haul segment, with seat capacity and passenger volumes exceeding pre-Covid levels at various times in the last quarter of the financial year. This pattern was seen across the industry, however, the rate of recovery across MAG typically outpaced that of other UK airports. MAG's performance reflects the strength of demand within the catchment areas of our airports as well as our close relationships with airlines, based on a mutual desire to provide the best value and choice to the customers we jointly serve.

The rebound in the short-haul market was coupled with the return of long-haul travel, as international markets opened up and full service airlines advanced their own recoveries. This was reflected in the resumption or addition of long-haul routes from Manchester and London Stansted.

The whole of the UK aviation sector experienced challenges in meeting the rapid increase in demand following the removal of travel restrictions. This caused well documented operational issues in the early part of the financial year that impacted MAG's airports to varying extents, with Manchester more acutely impacted. MAG's teams worked hard to improve service levels as the summer progressed, enabling airlines to operate their planned schedules so that passengers' travel plans were protected throughout. Over the last year MAG has recruited more than 1,600 security officers across the Group. All three of MAG's airports are continuing to provide consistently good service levels, and we are committed to sustaining this performance and engaging with partners to optimise passenger experience.

Other headlines

·      In January 2023 MAG announced a £440m investment in the final phase of the £1.3bn Manchester Airport Transformation Programme (MAN-TP). Completing the transformation of Terminal 2 - which will double the size of the departure lounge and add a second security hall - will enhance the passenger experience, unlock billions in economic activity and create more than 500 jobs in the construction phase alone, with many more set to be generated as a result of the economic activity stimulated by the expansion of the airport.

·      In 2021, MAG secured planning permission to increase passenger capacity at London Stansted from 35 to 43 million passengers per year. The investment plans are now being developed that will enable Stansted to grow to reach that target. Meanwhile, MAG looks forward to setting out plans to further enhance East Midlands Airport's cargo capability, cementing its status as the UK's most important pure freight airport.

·      Across all three airports, MAG is making the necessary investments to introduce Future Security technology in line with agreed Government timescales. This will remove the need for passengers to take liquids, gels and large electrical items out of their hand luggage, significantly improving their airport experience.

·      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 2028 with the first of two one year extension options having been executed in May 2023. The revolving credit facility remained undrawn at 31 March 2023.

·      MAGIL's £1,460 million of listed bonds, together with the bank facilities described above and retained cash resources of £54.5 million as at 31 March 2023, provide it with a long-term stable funding platform. MAGIL's Total Net Debt (financial covenant basis) was £1,408.5 million at 31 March 2023, which was £304.8 million lower than as at 31 March 2020, at the beginning of the pandemic.

·      MAGIL's Leverage covenant for the 31 March 2023 Calculation Date was 3.7x, representing a reduction of 0.8x since the calculation in March 2020 (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.

·      No dividend will be paid by MAHL in respect of the year ended 31 March 2023. 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/) 

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                                               [e-mail]

MAG Press Office                                                [e-mail]        

 

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