Heathrow

23 July 2026

HEATHROW (SP) LIMITED

RESULTS FOR THE 6 MONTHS

ENDED 30 JUNE 2026

Resilient hub and strong passenger service - Heathrow welcomed a record 40 million passengers in the first half of 2026, a testament to the resilience of hub airports in geopolitical headwinds. Whilst passenger demand to the Middle East has softened, Heathrow's network has adapted with significant growth in North America (up 1.6%) and Asia-Pacific (up 7.9%), a 5.4% increase in transfer passengers and nearly a 1% increase in cargo through the UK's largest port. Our focus on delivering excellent service saw us maintain our position as Europe's most punctual hub¹ with more flights getting away on-time than anywhere else, and passengers ranked Heathrow as one of the world's best airports with the best airport shopping in the annual Skytrax awards.

Upgrading our customer experience - We are focussed on improving our existing facilities for our passengers and airlines. This year we became the first major hub in the world to fully install the latest scanners meaning all passengers can leave liquids and laptops in their bags at security checkpoints - the completion of a £1 billion investment programme. We have started work on a new "front door" for T4 which will upgrade the check-in area, reduce vehicle congestion and provide a new, larger multi-storey car park for the terminal. We have upgraded key components of the baggage system used by T2 which is already improving resilience.

Robust underlying financial performance - In the first six months ended 30 June 2026, revenue grew by 0.3% to £1,729 million (six months ended 30 June 2025: £1,724 million). Adjusted operating costs increased by 6.4% to £814 million, driven largely by increased Government taxes (business rates and national insurance) and investments in new technology which aims to drive future efficiencies and further improvements to operational performance. Adjusted EBITDA fell by 4.6% to £915 million (six months ended 30 June 2025: £959 million). Gearing remains near historic lows at 83.2% and liquidity is strong at £3.8 billion, sufficient to meet all of our obligations for at least the next 18 months. As a result of high passenger satisfaction scores, strong operational performance and the airport's robust financial position, shareholders received a £200 million dividend in the period.

Expansion remains on-track - The Government is consulting on the draft Heathrow Expansion National Policy Statement which designates Heathrow as Critical National Growth Infrastructure for the role we play in driving economic growth across every nation and region of the UK. Our privately funded proposal will deliver growth, reinvigorating industrial supply chains including UK steel and creating tens of thousands of apprenticeships and quality jobs spread across the country. When the third runway is up and running, it will boost trade through Heathrow by 50% and attract millions more visitors and investors to the UK. By Government's own assessment, the project is expected to deliver 60,000 jobs and £40 billion of economic growth. That is why the project is widely supported by trade unions and businesses across the country, as well as 68% of local people. We will respond to the Government's consultation to try to ensure the final policy framework enables us to deliver these benefits at pace.

Regulatory update - The CAA continues to refine the regulatory model for expansion. Longer-term certainty, smarter incentives and independent expert assurance are key reforms that will enable us to deliver the project with better outcomes for consumers. Airlines with a significant presence at split operator airports have raised concerns that this model can undermine passenger experience and fail to deliver purported competition benefits, questioning the evidence for why it should be applied to Heathrow. In order for us to begin delivering the benefits of expansion, including unlocking lower fares for passengers, it's critical that the CAA keeps up momentum in its decision making on this issue. We want to unlock early growth and invest in our existing facilities before expansion and are providing additional evidence to the CAA ahead of its next H8 decision in November.

As at or six months ended 30 June	2026	2025	Change (%)
(£m unless otherwise stated)
Revenue	1,729	1,724	0.3
Adjusted EBITDA(2)(5)	915	959	(4.6)
Cash generated from operations	880	863	2.0
Profit before tax	447	203	120.2
Adjusted profit before tax(3)(5)	115	121	(5.0)
Heathrow (SP) Limited consolidated nominal net debt(4)(5)	16,350	15,706	4.1
Heathrow Finance plc consolidated nominal net debt(4)(5)	18,025	17,622	2.3
Regulatory Asset Base(5)(6)	21,662	21,263	1.9
Passengers (millions)(7)	40.0	39.9	0.2

"Despite geopolitical headwinds, we welcomed a record 40 million passengers in the first half of the year while delivering strong customer service, culminating in passengers ranking Heathrow as one of the best airports in the world. I'm proud of the work colleagues have done to achieve this in the face of these challenges. Our plan for the future is about much more than just building a third runway - this project is a real opportunity to provide an economic boost to every region and nation of the country. It will back British industry by pumping billions of pounds of private investment into our UK supply chain, revitalising the UK's steel sector as well as creating tens of thousands of new jobs and skilled apprenticeships across the country. It will unlock significant new capacity, opening new domestic and international routes, making travel more affordable for passengers and providing a £150bn boost to British trade with markets around the world. For too long, indecision and debate has prevented these benefits from being delivered. Over the next several weeks, we'll be working with the new Government to make sure we can deliver these benefits for communities and workers right across the country." Thomas Woldbye | Heathrow CEO

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.

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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 2025.

Business Update

We have outlined key performance metrics that illustrate our progress for the six months ended 30 June 2026. The glossary section of this report provides detailed definitions for each indicator.

Passenger traffic

Passenger traffic (millions)(1)	2026	2025	Var (%)(2)
UK	2.2	2.2	0.3
Europe	16.3	15.8	2.7
North America	9.8	9.7	1.6
Asia Pacific	5.8	5.4	7.9
Middle East	3.1	4.1	(25.1)
Africa	1.7	1.6	7.2
Latin America	1.1	1.1	(1.5)
Total passengers	40.0	39.9	0.2

(1)         For the six months ended 30 June.

(2)        Calculated using unrounded passenger figures.

Other traffic performance indicators(1)	2026	2025	Var (%)(2)
Passenger ATM ('000)	229.5	233.5	(1.7)
Seat factor (%)	78.8	77.3	1.9
Seats per ATM	221.2	221.0	0.1
Cargo tonnage ('000)(3)	788	783	0.6

(1)         For the six months ended 30 June.

(2)        Calculated using unrounded figures.

(3) Cargo tonnage includes mail volumes.

Heathrow welcomed a record 40.0 million passengers in the first six months of 2026, up 0.2% on the same period last year (2025: 39.9 million). Performance has varied between quarters with strong growth in Q1 (+3.7%) partially offset by weaker performance in Q2 (-2.7%), reflecting the impact of the conflict in the Middle East and ongoing geopolitical uncertainty.

Overall passenger growth was supported by larger aircraft, new routes and a significant increase in connecting passengers, which rose 5.4% year-on-year. Seat factors also improved although this was due to a reduction in air traffic movements compared with the previous year.

The conflict in the Middle East disrupted flights and passenger activity in affected regions, resulting in a 25% decline in Middle East traffic compared with last year. However, airlines and passengers adapted to ongoing network challenges, underpinning strong growth across Asia Pacific and Africa alongside resilient performance in short-haul and transatlantic markets.

Heathrow's network further expanded with eight new routes launched during the spring across Europe, Asia and North America including the UK's only direct service to St Louis, the USA's 'gateway to the west'. Heathrow continues to attract new airlines welcoming three new carriers to its summer schedule: Alaska Airlines, ITA Airways and Pakistan International Airlines.

Despite ongoing geopolitical challenges, cargo volumes increased by 0.6% year-on-year. This growth was achieved with fewer aircraft movements, highlighting Heathrow's resilience and reinforcing its role as a critical hub for global trade.

Service and operational performance

Service standard performance indicators(1)	2026	2025
ASQ	4.11	4.06
Arrival punctuality (%)	79.0	81.1
Departure punctuality (%)	80.0	80.8
Security performance (%)	98.6	98.5
Baggage connection (%)(2)	98.3	98.8

(1)         For the six months ended 30 June.

(2)        2025 metric updated for consistency with the 2026 calculation.

In the six months ended 30 June 2026, an overall ASQ rating of 4.11 out of 5.00 was achieved (2025: 4.06) despite operating near capacity, representing the highest H1 score since 2019. Overall, 79% of passengers surveyed between January and June 2026 rated their Overall Satisfaction with Heathrow as either 'Excellent' or 'Very Good' (2025: 77%). The proportion of 'Poor' ratings remained low at 0.4%.

Compared with the same period last year, all satisfaction metrics remained stable or improved. Improvements were evident across Security attributes, attributed to the roll out of Next Generation Security Scanners. Other substantial performance gains included 'Availability of Charging Stations' and 'Wi-Fi'.

Operational performance remained strong across key metrics despite challenges. Ongoing conflict in the Middle East continued to affect flight routes and volumes. Combined with a period of unsettled weather and storms, this resulted in a slight decline in punctuality compared with 2025. Security performance continues to benefit from Next-Generation Security screening technology that has been rolled out across all terminals resulting in 98.6% of passengers going through security within 5 minutes (2025: 98.5%). Baggage performance remains a critical service for our customers, requiring close coordination between Heathrow, airlines and ground handlers. As Heathrow continues to operate at full capacity, we are investing in baggage asset resilience, with the H8 settlement needing to support timely investment in critical airport infrastructure.

Capital expenditure

During the first six months of 2026, £642 million of capital expenditure was incurred (six months ended 30 June 2025: £570 million). This included £37 million in capital creditors movements (six months ended 30 June 2025: £56 million in capital creditors movements).

Heathrow has maintained strong momentum across its H7 capital investment programme progressing more than 350 projects spanning all six strategic programmes. Investment continues to enhance the customer experience and deliver important milestones across the airport's capital portfolio, supporting the long-term development of Heathrow's infrastructure and service.

Next-Generation Security is now fully operational across every terminal, with passengers and colleagues screened through compliant lanes using CT scanner technology. This strengthens security, improves resilience and enhances the passenger experience by allowing passengers to leave liquids and technology in their bags. It has also contributed to improved queue performance across terminals.

The Terminal 2 Baggage programme completed all Terminal 1 asset replacement works, reducing operational risk, while the new baggage recovery facility progressed through system installation. Demolition of Terminal 1 has also begun and, once complete, will support commissioning of the baggage recovery facility.

Commercial developments included the launch of a new VIP online booking portal, continued progress on the Terminal 5 luxury retail zone and further advancement of Eastern Business Park towards completion.

Operational resilience was strengthened through the completion of northern airfield taxiway resurfacing and cargo tunnel refurbishment. Terminal 4 hold baggage resilience works were delivered ahead of schedule and in Terminal 3, refurbishment of one more aircraft stand was completed including replacement of the airbridges. Installation and commissioning of the new fire training rig was finalised.

Efficiency improvements, enabled by targeted capital investment in technology and process enhancements, included real-time aircraft turn management at Terminal 5, providing live monitoring that contributes to reduced delays and improved gate efficiency. The Integrated Intelligent Queue Programme is operational, enabling real-time passenger flow and queue management. The Border Force Holding Facility is now operational and new runway temperature sensors have also been integrated into the operations control centre, strengthening winter resilience planning.

Together, these achievements demonstrate disciplined capital delivery and continued progress against Heathrow's long-term strategic investment plan, supporting improvements in passenger experience, operational resilience, sustainability and capacity for future growth.

H8 Updates

On 31 March 2026, the CAA published the Initial Proposals for the H8 period (CAP3232). The CAA have created a range and a mid-point for the calculation of airport charges, which reflects the early stage of Initial Proposals. The CAA will finalise their views on the appropriate level for the H8 price control after further consultation. The range sits between £27.20 for a lower bound and £30.81 for a higher bound (midpoint £28.77). This is based on CPIH-real, 2024 prices.

Following a final round of Constructive Engagement, Heathrow responded to the Initial Proposals on 29 May 2026, putting forward a set of targeted, evidence-based adjustments to expand and refine its capital programme, better align operating cost and revenue assumptions and reinforce focus on consumer outcomes. In June 2026, the CAA also launched a consultation on the 2027 holding cap which they propose to be £28.398 (2027 price). The holding cap is based on their Initial Proposals profiled charge for 2027 with certain adjustments. Responses are due by 28 July 2026. The CAA's final proposals are expected to be published in November 2026 ahead of its final decision in April 2027.

Heathrow Expansion

On 18 June 2026, the UK Government announced that it had completed its review of the Airports National Policy Statement ('ANPS') and launched a public consultation on a draft revised policy statement, renamed the Heathrow Expansion National Policy Statement ('HENPS'). Consultation on the HENPS has begun and will continue until 1 September 2026. Until the time that any revised policy statement is approved by UK Parliament, the ANPS will remain in place.

In parallel, the CAA have been consulting on the regulatory approach to early expansion costs. Heathrow has highlighted the importance of setting a fair, evidence-based WACC consistent with established regulatory finance principles and current market conditions. Furthermore, Heathrow has emphasised the need for flexibility in early cost allowances to reflect updated forecasts and the benefits of early property acquisition to reduce risk and long-term costs.

In spring 2026, the CAA published its draft licence modification decision on how early costs relating to expansion incurred by Heathrow in 2025 and 2026 can be recovered. The CAA's final decision is expected in July 2026. Later in 2026 it will consult on the regulatory treatment of early costs from 2027 onwards.

Heathrow and the CAA are also progressing a sequence of consultations to assess wider regulatory models for expansion. In January 2026, Heathrow provided an evidence led response focussed on securing a regulatory framework that can deliver expansion on time, at the lowest whole life cost, and with strong consumer outcomes, consistent with Government timescales.

On 15 May 2026, the CAA published a consultation (CAP3251) shortlisting regulatory models for expansion for further consideration. In June 2026, Heathrow provided a response which was broadly supportive of the CAA's direction, endorsing an enhanced single RAB model with an integrated owner-operator, underpinned by a long-term regulatory framework beyond the standard five-year cycle and targeted improvements to governance, incentives and cost assurance. On 16 July, the CAA published a consultation (CAP3286) reflecting the published HENPS and confirming the direction of travel from May's shortlist with further work to assess potential merits and develop a package of interventions during the rest of 2026.  Responses are due in August, with a more detailed implementation plan expected from the CAA in September.

Connecting People and Planet During the first six months of 2026, Heathrow continued to focus on initiatives to reduce emissions "In the Air" and "On the Ground" as well as environmental outcomes for local communities.

The 2025 Sustainability Report was published in March, setting out progress against the Connecting People and Planet strategy and highlighting both achievements and areas where further action is needed.

In March, the integrated Climate Adaptation Strategy was published, the first of its kind from an airport, setting out how to prepare and respond to climate-related risks. A new Air Quality Action Plan was also published, outlining the actions required to deliver on air quality commitments under the Connecting People and Planet strategy.

"In The Air": In 2026, the updated SAF incentive is targeting voluntary demand 2% above the UK's 3.6% SAF mandate, meaning up to 5.6% of all aviation fuel used at Heathrow could be SAF this year. Engagement with Government has also continued on delivery of the SAF Bill and the development of a Revenue Certainty Mechanism to help scale UK SAF production.

"On The Ground": Recognising the need to decouple infrastructure growth from emissions growth in response to supply chain emissions exceeding the 2019 baseline, work continued to strengthen carbon management across Heathrow's capital programmes and improve the quality of emissions data and reporting to support future decision-making. Reported progress against our 2019 baseline is subject to ongoing improvements in data quality and methodologies, which are expected to result in an increase in reported surface access emissions and will be reflected in future disclosures.

High environmental standards continue to be maintained across the airport estate. Following an annual audit by the Wildlife Trust, Heathrow retained its Biodiversity Benchmark Accreditation for the 19th consecutive year. Transparency for local communities also continued to improve through the "Your Area" web tool, which provides location-specific information about aircraft noise and how it changes over time.

Key management changes

Mine Hifzi resigned as Company Secretary to the Heathrow Airport Holdings Limited ('HAHL') Board on 25 March 2026. Following the period end, Steve Allen joined as Interim General Counsel and Company Secretary to the HAHL Board on 1 July 2026. Yiqiang Zhan replaced David Xie as CIC's nominated Shareholder Non-Executive Director on the HAHL Board with effect from 24 February 2026.

Ultimate shareholder update

There have been no changes to the shareholders of FGP Topco Limited since 3 July 2025.

Principal risks

The principal strategic, corporate, and operational risks as at 30 June 2026 remain unchanged and are consistent with those set out in the annual report and financial statements for the year ended 31 December 2025.

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 15.

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 2025.

Summary performance

Six months ended 30 June	2026 £m	2025 £m
Revenue	1,729	1,724
Adjusted operating costs(1)	(814)	(765)
Adjusted EBITDA(2)	915	959
Depreciation and amortisation	(349)	(338)
Adjusted operating profit(3)	566	621
Net finance costs before certain re-measurements	(451)	(500)
Adjusted profit before tax(4)	115	121
Tax charge on profit before certain re-measurements	(46)	(41)
Adjusted profit after tax(4)	69	80
Including certain re-measurements(5):
Fair value gain/(loss) on investment properties	328	(54)
Fair value gain on financial instruments	4	136
Tax charge on certain re-measurements	(83)	(21)
Profit after tax	318	141

(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 (net finance costs), 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 2026, revenue increased to £1,729 million (six months ended 30 June 2025: £1,724 million), a 0.3% increase compared to the six months ended 30 June 2025.

Six months ended 30 June	2026 £m	2025 £m	Var. %
Aeronautical	1,041	1,079	(3.5)
Retail	373	365	2.2
Other	315	280	12.5
Total revenue(1)	1,729	1,724	0.3

(1)         Revenue does not contain any adjustments for non-GAAP items.

Aeronautical revenues were impacted by reduced ATMs and the operation of more cleaner and quieter aircraft reducing noise and carbon charges. Retail revenue was higher supported by continued demand for premium services, increased food and beverage sales with new outlets and a boost in bookshop revenues. Recent softness in passenger numbers since the conflict in the Middle East started resulted in a flat performance in duty free and decline in luxury spending with Bureau de Change also falling consistent with global trends. Other revenues rose thanks to an increase in Other Regulated Charges, growth in property income and new lets as well as a boost in surface access performance. More details can be found on page 17.

Adjusted operating costs

Adjusted operating costs increased by 6.4% to £814 million (six months ended 30 June 2025: £765 million).

Six months ended 30 June	2026 £m	2025 £m	Var. %
Employment	235	230	2.2
Operational	254	226	12.4
Maintenance	126	122	3.3
Rates	69	59	16.9
Utilities and other	130	128	1.6
Adjusted operating costs(1)	814	765	6.4

(1)         Unadjusted operating costs for the six months ended 30 June 2026 were £835 million (six months ended 30 June 2025: 1,157 million). This included depreciation and amortisation of £349 million (2025: £338 million) and fair value gain on investment properties of £328 million (six months ended 30 June 2025: £54 million loss).

Employment costs were higher due to wage pressures, an increase in National Insurance and new investment in digital resources that were only partially offset by cost reduction efforts. The increase in operational costs was driven by Passengers Requiring Support investments and additional technology costs to support digitalisation initiatives which are expected to deliver future operational efficiencies. Maintenance costs increased due to the higher spend in baggage and maintaining the airport's asset base. Business rates were higher due to government policy taking effect. Utilities and other expenses rose slightly as the impact of energy efficiency schemes, greater use of biomass boiler and focus on reducing consultancy spend were offset by higher CAA related costs as well as spend on Noise and Vortex and community engagement initiatives.

Net finance costs

In the six months ended 30 June 2026, net finance costs before certain re-measurements decreased to £451 million (six months ended 30 June 2025: £500 million). The RPI annual growth rate has decreased year on year from 4.3% to 3.1%, resulting in a lower inflation accretion expense.

Fair value gain on financial instruments

A non-cash fair value gain on financial instruments of
£4 million (six months ended 30 June 2025: £136 million) is driven by favourable movements in interest rate swaps of
£124 million offset by adverse movement on inflation-linked swaps liabilities of £128 million, and net ineffectiveness gain of £7 million. The fair value is measured with reference to market expectations of inflation and interest rates: the inflation forward curve increased by an average of 36bps and the interest rate forward curve also increased by an average of 40bps, resulting in an overall fair value gain for the period.

Taxation

The total tax charge for the six months ended 30 June 2026 was £129 million (six months ended 30 June 2025: £62 million) on a profit before tax of £447 million (six months ended 30 June 2025: £203 million).

The tax charge before certain re-measurements was
£46 million (six months ended 30 June 2025: £41 million). Based on a profit before tax and certain re-measurements of £115 million (six months ended 30 June 2025: £121 million), this results in an effective tax rate of 40.0% (six months ended 30 June 2025: 33.9%). 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 period. In addition, for the six months ended 30 June 2026, a deferred tax charge of £83 million (six months ended 30 June 2025: £21 million) was recognised on certain re-measurements arising from fair value movements on financial instruments and investment properties of £332 million (six months ended 30 June 2025: £82 million). In the period, the Group paid
£9 million of corporation tax (six months ended 30 June 2025: £35 million). 

Cash position

As at 30 June 2026, the Group had £1,928 million
(31 December 2025: £1,117 million) of cash and cash equivalents and term deposits, of which cash and cash equivalents were £260 million (31 December 2025:
£301 million) and term deposits were £1,668 million (31 December 2025: £816 million).

Cash generated from operations

In the six months ended 30 June 2026, cash generated from operations increased 2.0% to £880 million (six months ended 30 June 2025: £863 million). The following table reconciles adjusted EBITDA to cash generated from operations.

Six months ended 30 June	2026 £m	2025 £m
Cash generated from operations	880	863
Exclude:
Increase/(decrease) in trade and other receivables	22	(7)
Increase in inventories	1	1
Decrease in trade and other payables	11	97
Difference between pension charge and cash contributions	1	5
Adjusted EBITDA	915	959

Restricted payments

In the six months ended 30 June 2026, total restricted payments (gross and net) made by Heathrow SP amounted to £494 million (six months ended 30 June 2025: £322 million). This funded scheduled interest payments on debt and early repayment of facilities at Heathrow Finance and dividends to ultimate shareholders of £200 million (six months ended 30 June 2025: £250 million) during the period.

Recent financing activity 

In the first six months of 2026, Heathrow successfully raised £1.35 billion from international and domestic debt markets through four public bond issuances: a £400 million 8-year Class B bond in February, a C$600 million 9-year bond in April, a CHF205 million 8-year bond in May, and a €500 million 11-year bond in June. Following the period end, in July a
£150 million Class A term loan priced in December 2025 was drawn down.

Redemptions during the first six months of 2026 comprised of the early repayment of a £135 million Heathrow Finance term facility in March.

In the first six months of 2026, £300 million of new interest rate swaps and £423 million of extensions on existing swaps were executed to comply with our fixed rate hedging policy requirements.

Debt and liquidity

As at 30 June	2026 £m	2025(1) £m
Bond issuances	15,568	14,183
Other term debt	2,054	2,054
Index-linked derivative accretion	576	501
Lease liabilities(2)	80	85
Consolidated nominal gross debt	18,278	16,823
Qualifying cash and cash equivalents and term deposits	(1,928)	(1,117)
Consolidated nominal net debt	16,350	15,706
Senior net debt	13,642	13,410
Junior net debt	2,708	2,296

(1)         2025 figures are as at 31 December 2025.

(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 as at 30 June 2026 was 3.70% (31 December 2025: 3.68%). This includes interest rate, cross-currency and index-linked hedge costs and excludes index-linked accretion. Including index-linked accretion, the Group's average cost of debt as at 30 June 2026 was 5.89% (31 December 2025: 6.40%).

The average life of the Group's gross debt as at 30 June 2026 was 9.3 years (31 December 2025: 9.8 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 £2,257 million in cash resources across the Heathrow Finance Group, as well as £1.5 billion in undrawn and revolving credit facilities.

Debt at Heathrow Finance group

As at 30 June	2026 £m	2025(1) £m
Heathrow SP's nominal net debt	16,350	15,706
Heathrow Finance's nominal gross debt	2,004	2,139
Heathrow Finance's qualifying cash and cash equivalents and term deposits	(329)	(223)
Consolidated nominal net debt	18,025	17,622

(1)         2025 figures are as at 31 December 2025.

Financial ratios

As at 30 June 2026, Heathrow SP and Heathrow Finance continue to operate within required financial ratios. Gearing ratios are defined within the Glossary.

As at 30 June	2026 £m	2025(1) £m
Heathrow's RAB	21,662	21,263
Regulatory asset ratio 'RAR'
Heathrow SP's senior (Class A)	63.0%	63.1%
Heathrow SP's junior (Class B)	75.5%	73.9%
Heathrow Finance	83.2%	82.9%

(1)         2025 figures are as at 31 December 2025.

Pension scheme

We operate a defined benefit pension scheme (the 'BAA Pension Scheme'), which closed to new members in June 2008. As at 30 June 2026, the defined benefit pension scheme, as measured under IAS 19, was funded at 105.0% (31 December 2025: 100.6%). This translated into a surplus of £121 million (31 December 2025: £16 million). The movement is driven by actuarial gains of £105 million (attributable to a 40bps increase in the discount rate); contributions paid in the period of
£5 million (six months ended 30 June 2025: £7 million); offset by service costs of £3 million and administration charges of £2 million.

In addition, the triennial funding valuation of the BAA Pension Scheme, completed by the Trustees in December 2025 and based on the position as at 30 September 2024, confirmed a £7 million surplus. As a result, no deficit repair contributions are required. The previous valuation as at 30 September 2021 also reported a surplus (£119 million), with no deficit contributions needed at that time. The Directors believe that the scheme has no significant plan-specific or concentration risks.

Fair value gain on investment properties

A non-cash fair value gain on investment properties of £328 million (six months ended 30 June 2025: £54 million loss) was recognised during the period. The fair value increase is primarily driven by car parks of £99 million, car hire of £125 million, hangars and maintenance bases of £52 million, lounges of £23 million and other investment properties of £39 million, partially offset by decreases in residential properties of £4 million and advertising assets of £6 million. Fair values are determined by Savills UK Ltd, the Group's new independent external valuer. Updated market evidence, improved income rental expectations, revised assumptions and lower discount rates on certain assets were the primary drivers of the fair value gain.

Outlook

The outlook for our adjusted EBITDA performance in 2026 remains consistent with the guidance published in our June Investor Report on 26 June 2026.

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 2026

		Unaudited Six months ended 30 June 2026			Unaudited Six months ended 30 June 2025
		Before certain re-measurements(1)	Certain re-measurements(2)	Total	Before certain re-measurements(1)	Certain re-measurements(2)	Total
	Note	£m	£m	£m	£m	£m	£m
Revenue	1	1,729	-	1,729	1,724	-	1,724
Operating costs	2	(1,163)	328	(835)	(1,103)	(54)	(1,157)
Operating profit		566	328	894	621	(54)	567
Financing
Finance income	3	30	-	30	45	-	45
Finance costs	3	(481)	4	(477)	(545)	136	(409)
Net finance costs		(451)	4	(447)	(500)	136	(364)
Profit before tax		115	332	447	121	82	203
Taxation charge	4	(46)	(83)	(129)	(41)	(21)	(62)
Profit for the period		69	249	318	80	61	141

(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 2026

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit for the period	318	141
Items that will not be subsequently reclassified to the consolidated income statement
Actuarial gain/(loss) on pensions
Gain/(loss) on plan assets	24	(75)
Decrease in scheme liabilities	55	48
Items that may be subsequently reclassified to the consolidated income statement
Cash flow hedges
Gain/(loss) taken to equity	12	(39)
Transfer to finance costs	24	4
Impact of cost of hedging
Gain taken to equity	-	4
Other comprehensive income/(expense) for the period, net of tax	115	(58)
Total comprehensive income for the period	433	83

Condensed consolidated statement of financial position as at 30 June 2026

	Note	Unaudited 30 June 2026 £m	Audited(1) 31 December 2025 £m
Assets
Non-current assets
Property, plant and equipment	6	11,885	11,500
Right of use assets		302	307
Investment properties	7	2,938	2,610
Intangible assets		318	307
Retirement benefit surplus	10	121	-
Derivative financial instruments	9	900	967
Trade and other receivables		23	10
		16,487	15,701
Current assets
Inventories		21	20
Trade and other receivables		403	388
Derivative financial instruments	9	56	34
Term deposits		1,668	816
Cash and cash equivalents		260	301
		2,408	1,559
Total assets		18,895	17,260
Liabilities
Non-current liabilities
Borrowings	8	(18,661)	(17,633)
Derivative financial instruments	9	(1,116)	(981)
Deferred income tax liabilities		(1,343)	(1,195)
Lease liabilities		(364)	(370)
Retirement benefit obligations	10	(19)	(4)
Provisions		(2)	(2)
Trade and other payables		(1)	(2)
		(21,506)	(20,187)
Current liabilities
Borrowings	8	(1,586)	(1,394)
Derivative financial instruments	9	(103)	(149)
Lease liabilities		(43)	(41)
Provisions		(2)	(2)
Current income tax liabilities		(13)	(2)
Trade and other payables		(588)	(564)
		(2,335)	(2,152)
Total liabilities		(23,841)	(22,339)
Net liabilities		(4,946)	(5,079)
Equity
Capital and reserves
Share capital		11	11
Merger reserve		(3,758)	(3,758)
Hedging reserve		31	(5)
Accumulated losses		(1,230)	(1,327)
Total equity		(4,946)	(5,079)

(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 2025.

Condensed consolidated statement of changes in equity for the six months ended 30 June 2026

		Attributable to owners of the Company
	Note	Share capital £m	Merger reserve £m	Hedging reserve £m	Accumulated losses £m	Total equity £m
Balance as at 1 January 2025 (audited)(1)		11	(3,758)	52	(1,244)	(4,939)
Comprehensive income
Profit for the period		-	-	-	141	141
Other comprehensive (expense)/income
Cash flow hedges, net of tax, on:
Loss taken to equity		-	-	(39)	-	(39)
Transfer to finance costs		-	-	4	-	4
Impact of cost of hedging, net of tax, on:
Gain taken to equity		-	-	4	-	4
Actuarial (loss)/gain on pensions, net of tax, on:
Loss on plan assets		-	-	-	(75)	(75)
Decrease in scheme liabilities		-	-	-	48	48
Total comprehensive (expense)/income		-	-	(31)	114	83
Transactions with owners
Dividends paid	5	-	-	-	(250)	(250)
Total transactions with owners		-	-	-	(250)	(250)
Balance as at 30 June 2025 (unaudited)		11	(3,758)	21	(1,380)	(5,106)
Balance as at 31 December 2025 (audited)(1)		11	(3,758)	(5)	(1,327)	(5,079)
Comprehensive income
Profit for the period		-	-	-	318	318
Other comprehensive income
Cash flow hedges, net of tax, on:
Gain taken to equity		-	-	12	-	12
Transfer to finance costs		-	-	24	-	24
Actuarial gain on pensions, net of tax, on:
Gain on plan assets		-	-	-	24	24
Decrease in scheme liabilities		-	-	-	55	55
Total comprehensive income		-	-	36	397	433
Transactions with owners
Dividends paid	5	-	-	-	(300)	(300)
Total transactions with owners		-	-	-	(300)	(300)
Balance as at 30 June 2026 (unaudited)		11	(3,758)	31	(1,230)	(4,946)

(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 2025.

Condensed consolidated statement of cash flows for the six months ended 30 June 2026

	Note	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Cash flows from operating activities
Cash generated from operations	11	880	863
Taxation:
Corporation tax paid		(9)	(35)
Net cash generated from operating activities		871	828
Cash flows from investing activities
Purchase of:
Property, plant and equipment		(564)	(512)
Investment properties		(1)	(2)
Intangible assets		(40)	-
Increase in term deposits(1)		(852)	(725)
Interest received		23	38
Net cash used in investing activities		(1,434)	(1,201)
Cash flows from financing activities
Dividends paid		(300)	(250)
Proceeds from issuance of bonds		1,347	497
Repayment of bonds		-	(266)
Fees and other financing items		(8)	(1)
Interest paid to Heathrow Finance plc		(75)	(72)
Repayment of debenture payable to Heathrow Finance plc		(119)	-
External interest paid(2)		(279)	(244)
Settlement of accretion on index-linked swaps		(24)	(12)
Early settlement of accretion on index-linked swaps(3)		-	(157)
Payment of lease liabilities		(20)	(19)
Net cash generated from/(used in) financing activities		522	(524)
Net decrease in cash and cash equivalents		(41)	(897)
Cash and cash equivalents at beginning of period		301	1,132
Cash and cash equivalents at end of period		260	235

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

(2)    Interest paid on senior (Class A) debt of £234 million (six months ended 30 June 2025: £204 million), which includes £10 million of lease interest paid (six months ended 30 June 2025: £10 million), and interest paid on junior (Class B) debt of £45 million (six months ended 30 June 2025: £40 million).

(3)    During the six months ended 30 June 2025 the Group elected to early pay £157 million of accrued accretion, which was due to be settled within the following 12 months in line with the liquidity profile assessment of the Group.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

General information

These condensed consolidated interim financial statements were approved for issue on 22 July 2026.

These condensed consolidated interim financial statements do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 December 2025 were approved by the board of directors on 24 February 2025 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498 of the Companies Act 2006.

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 provide the reader with an understanding of the underlying 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 and disposals; (ii) derivative financial instruments and the fair value gains and losses on any underlying hedged items that are part of a fair value 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 2026 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 2025, which were prepared in accordance with UK-adopted International Accounting Standards and the requirements of Companies Act 2006.

The accounting policies adopted in the preparation of these condensed consolidated interim financial statements for the six months ended 30 June 2026 have been consistently applied to the comparative information for the six months ended 30 June 2025 and the year ended 31 December 2025.

Where financial information in the notes to the condensed consolidated interim financial statements, relating to year ended 31 December 2025, is labelled audited, the amounts have been extracted from the Group's audited consolidated financial statements for the year ended 31 December 2025.

The Group has applied the IAS 12 exception to recognising and disclosing information about deferred tax assets and liabilities related to Pillar 2 income taxes.

New standards and interpretations not yet adopted

At the date of authorisation of these condensed consolidated interim financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective (and in some cases have not yet been adopted by the UK Endorsement Board):

·      IFRS 18 Presentation and Disclosures in Financial Statements.

·      IFRS 19 Subsidiaries without Public Accountability: Disclosures and the related Amendments to IFRS 19 issued in August 2025.

·      Amendments to IAS 21 titled Translation to a Hyperinflationary Presentation Currency.

·      IFRS 20 Regulatory Assets and Regulatory Liabilities.

The Group's financial reporting will be presented in accordance with the new standards and amendments as they become effective.

With the exception of IFRS 18 and IFRS 20, the new standards and amendments are not expected to have a material impact on the consolidated results, financial position or cash flows of the Group.

IFRS 18 replaces IAS 1, carrying forward many of the requirements in IAS 1 unchanged and complementing them with new requirements. The Directors have not completed a full review but anticipate that the application of the new IFRS 18 requirements will change the Group's future financial statements. In particular the following requirements to:

·      Present specified categories and defined subtotals in the statement of profit or loss, which is likely to change how operating profit is calculated and reported. The Directors have not finalised analysis on the amount of the change.

·      Provide disclosures on management-defined performance measures ('MPMs') in the notes to the financial statements.

·      Improve aggregation and disaggregation.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

New standards and interpretations not yet adopted continued

The Directors have amended the aggregation of some information and some categorisation labels in the notes to the condensed consolidated interim financial statements. In some cases, this has resulted in a restatement of the comparative figure. For example, in note 1 the category 'other services' has been renamed 'travel services' and the relevant values updated accordingly.

IFRS 20 introduces accounting requirements for regulatory assets and liabilities arising from rate-regulated activities. The Directors have not completed a full review but anticipate that the application of the new IFRS 20 requirements will change the Group's future financial statements. In particular the following requirements to:

·      Recognise regulatory assets and regulatory income when the Group has an enforceable right to increase future rates to recover previously incurred costs.

·      Recognise regulatory liabilities and regulatory expense when the Group has an obligation to reduce future rates to reflect over‑recoveries.

·      Provide disclosures of the impact of regulation on financial performance and financial position.

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. In assessing the going concern position of the Group, the Directors have considered the principal risks and uncertainties likely to impact financial performance, cash flow, liquidity and covenant compliance for the period to October 2027.

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. The H8 price control period will run between 1 January 2027 and 31 December 2031. Initial Proposals were published by the CAA in March 2026 and Final Proposals are expected in November 2026. Separately, consultation with the CAA regarding the regulation of early costs of capacity expansion are ongoing. As such, the Directors do not yet have certainty over tariffs from 2027, which fall within the going concern assessment period.

The Company is part of the wider Heathrow Group, with the ultimate parent undertaking being FGP Topco Limited. In considering the going concern assessment, the Directors have considered the wider Heathrow Group given the corporate structure.

The wider Heathrow Group can raise finance at both Heathrow (SP) Limited ('Heathrow SP') and Heathrow Finance plc ('Heathrow Finance') and 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.

Base case scenario

Passenger forecasts are fundamental to the going concern analysis as a measure of forecast revenue and operating cash flows. There is inherent subjectivity in modelling future passenger numbers, particularly in times of economic uncertainty and geopolitical instability. Total passenger numbers to 30 June 2026 were 40.0 million (2025: 39.9 million). Following the recent conflict in the Middle East, overall traffic demand softened in the second quarter, and continued geopolitical volatility is expected to dampen global traffic until there is a resolution, following which passenger numbers are expected to recover towards previously forecast levels. The base case assumes forecast passenger numbers of 83.6 million for the year ended 31 December 2026, a 1% reduction from 2025.

The base case uses tariffs for the year ended 31 December 2026 set out in the CAA's H7 Final Decision and capital expenditure forecast in Heathrow's latest business plan. From 1 January 2027, tariff and capital expenditure assumptions reflect the CAA's Initial Proposals published in March 2026. The Initial Proposals provided a range of potential tariffs and capital expenditure outcomes: the mid-point has been incorporated into the base case.

Continued support for the Group's credit enabled Heathrow to successfully raise over £1.3 billion of debt in the first six months of 2026, including a £400 million 8-year Class B bond, a CAD 600 million 9-year Class A bond, a CHF 205 million 8-year Class A bond and a EUR 500 million 11-year Class A bond. A further £350 million 4-year Class A bond was issued in July 2026. In January 2026, our revolving credit facility of £1.4 billion was extended for two 2 years to September 2029. As at 30 June 2026, the wider group has total liquidity available of £3.8 billion, comprising of £2.3 billion of cash held and £1.5 billion in undrawn and revolving credit facilities. Total debt maturity for the period to 31 October 2027 is £1.7 billion at Heathrow SP and £0.3 billion at Heathrow Finance. The base case also includes forecast debt issuances based on Heathrow's latest business plan. The successful execution of the Group's 2026 funding plan and continued access to debt markets support this assumption.

The Group has sufficient liquidity to meet its base case cash flow needs until at least 31 October 2027, with no breaches of its covenants in that period.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

Going concern continued

Severe but plausible downside scenario

The Directors have also considered a severe but plausible downside scenario that considers inherent uncertainty in passenger numbers, but also regulatory uncertainty over tariffs from 1 January 2027 until finalised by the CAA.

Passenger numbers at the low end of Heathrow's Board approved passenger forecast is considered to be a severe but plausible outcome. This considers the Group's views of plausible impacts caused by conflict in the Middle East, reduced passenger confidence and other economic factors. The low range of passengers represents a 4.2% reduction against the forecast base case for 2026.

The tariff and capital expenditure assumptions remain the same as in the base case for 2026. Until the CAA's H8 Final Decision is published there is inherent uncertainty over the allowed tariffs and the size of the capital programmes from 2027. The severe but plausible scenario reflects the tariff at the low-end of the range presented in the CAA's Initial Proposals and maintains the same level of capital expenditure as the base case for prudence.

While deemed unlikely, the Directors have also assumed that the Group would be unable to access debt markets for any new funding and that dividends would not be declared under such circumstances. Only committed facilities are included in the severe but plausible downside scenario.

Under the severe but plausible downside scenario, the Group has sufficient liquidity to meet all forecast cash flow needs until at least 31 October 2027, with no breach of its covenants in that period.

Reverse stress test

The Directors have performed reverse stress tests to assess the level of downside risk required to breach financial covenants within the going concern assessment period. The analysis considered extreme reductions in passenger numbers and, separately, the potential impact of a materially lower tariff outcome from 2027, pending the CAA's H8 Final Decision.

The Directors concluded that only highly remote reductions in passenger numbers or a substantially reduced tariff would result in a covenant breach. These outcomes are significantly more severe than the assumptions reflected within the severe but plausible downside scenario are considered highly unlikely by the Directors. Should circumstances arise that require corrective action, many previously utilised tactical actions remain available, such as 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 scenario 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 approval of these interim condensed consolidated financial statements and that it is accordingly appropriate to adopt a going concern basis for their preparation.

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 differ from these estimates. The estimates and assumptions are reviewed on an on-going basis.

The areas of significant judgement and estimation uncertainty for the six months ended 30 June 2026 remain consistent with those applied to the annual report and financial statements for the year ended 31 December 2025.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

1. Segment and Revenue reporting

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 distinct revenues, costs and separately identifiable assets and liabilities. Information reported to the HAHL Board as Chief Operating Decision Maker for the purposes of resource allocation and assessment of segment performance relates to the operations of 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.

Table (a)	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Revenue
Aeronautical
Movement charges	398	421
Parking charges	56	53
Passenger charges	587	605
Total aeronautical revenue	1,041	1,079
Retail
Retail concessions(1)	132	135
Non-concession retail(1)	56	52
Catering	48	44
Car parking	92	91
Travel services(1)	45	43
Total retail revenue	373	365
Other
Other regulated charges	161	138
Property revenue	17	13
Property (lease related income)	72	67
Non-Heathrow Express rail income	17	18
Heathrow Express	48	44
Total other revenue	315	280
Total revenue	1,729	1,724
Segment analysis:
Heathrow Airport	1,681	1,680
Heathrow Express	48	44
Adjusted EBITDA	915	959
Segment analysis:
Heathrow Airport	902	942
Heathrow Express	13	17
Reconciliation to statutory information:
Depreciation and amortisation	(349)	(338)
Operating profit (before certain re-measurements)	566	621
Fair value gain/(loss) on investment properties (certain re-measurements)	328	(54)
Operating profit	894	567
Finance income	30	45
Finance costs (after certain re-measurements)	(477)	(409)
Profit before tax	447	203

(1)    The Directors have updated the aggregation of some items of revenue. The updated aggregation has been reflected in the comparative amounts. In the six months ended 30 June 2025 this affects the categories of 'retail concessions' (previously reported of £125 million), 'non-concession retail' (previously 'other retail' of £30 million), and 'travel services' (previously 'other services' of £75 million).

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

1. Segment and Revenue reporting continued

Table (b)	Unaudited Six months ended 30 June 2026		Unaudited Six months ended 30 June 2025
	Depreciation & amortisation(1) £m	Fair value gain(2) £m	Depreciation & amortisation(1)(3) £m	Fair value loss(2) £m
Heathrow Airport	(329)	328	(319)	(54)
Heathrow Express	(20)	-	(19)	-
Total	(349)	328	(338)	(54)

(1)    Includes intangible asset amortisation charges of £28 million (six months ended 30 June 2025: £26 million).

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

(3)    The split of depreciation and amortisation between the Heathrow Airport and Heathrow Express segments for the period ended 30 June 2025 has been updated to reflect the impact of IFRS 16 adjustments to Heathrow Express leases.

Table (c)	Unaudited 30 June 2026		Audited 31 December 2025
	Assets £m	Liabilities £m	Assets £m	Liabilities £m
Heathrow Airport	15,371	(958)	14,603	(933)
Heathrow Express	519	(42)	539	(48)
Total operations(1)	15,890	(1,000)	15,142	(981)
Unallocated assets and liabilities:
Cash and cash equivalents, term deposits and external borrowings	1,928	(17,709)	1,117	(16,367)
Derivative financial instruments	956	(1,219)	1,001	(1,130)
Deferred and current tax liabilities	-	(1,356)	-	(1,197)
Retirement benefit surplus/(obligations)	121	(19)	-	(4)
Amounts owed to group undertakings	-	(2,538)	-	(2,660)
Total	18,895	(23,841)	17,260	(22,339)

(1)    The Directors have re-allocated the right-of-use assets and lease liabilities (previously £307 million and £411 million respectively) to operational categories where they can be reliably apportioned. The updated allocation has been reflected in the comparative amounts for the year ended 31 December 2025.

2. Operating costs

	Note	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Employment		235	230
Operational(1)		254	226
Maintenance		126	122
Business rates		69	59
Utilities		56	59
Other general expenditure(2)		74	69
Operating costs before depreciation, amortisation and certain re-measurements		814	765
Depreciation and amortisation
Property, plant and equipment	6	299	291
Intangible assets		28	26
Right of use assets		22	21
		349	338
Operating costs before certain re-measurements		1,163	1,103
Fair value (gain)/loss on investment properties (certain re-measurements)	7	(328)	54
Total operating costs		835	1,157

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

(2)    The largest balance in this category is marketing costs of £26 million (six months ended 30 June 2025: £26 million). Other expenses in this category are individually immaterial.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

3. Financing

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Finance income
Interest on deposits	30	44
Interest receivable from group undertakings	-	1
Total finance income	30	45
Finance costs
Interest on borrowings:
Bonds and related hedging instruments(1)	(346)	(354)
Bank loans, overdrafts and unwind of hedging reserves	(56)	(50)
Net interest expense on external derivatives not in hedge relationship(2)	(74)	(97)
Facility fees and other charges	(6)	(4)
Net pension finance costs	-	(3)
Interest on debenture payable to Heathrow Finance plc	(71)	(74)
Finance costs on lease liabilities	(10)	(10)
Total borrowing costs	(563)	(592)
Less: capitalised borrowing costs(3)	82	47
Total finance costs	(481)	(545)
Net finance costs before certain re-measurements	(451)	(500)
Certain re-measurements
Fair value gain/(loss) on financial instruments
Interest rate swaps: not in hedge relationship relationship	124	52
Index-linked swaps: not in hedge relationship	(128)	78
Cross-currency swaps: not in hedge relationship(4), (5)	2	(4)
Ineffective portion of cash flow hedges(5)	4	1
Ineffective portion of fair value hedges(5)	3	11
Foreign exchange contracts	(1)	(2)
	4	136
Net finance costs	(447)	(364)

(1)    Includes accretion of £35 million (six months ended 30 June 2025: £50 million) on index-linked bonds.

(2)    Includes accretion of £99 million (six months ended 30 June 2025: £148 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 6.37% (six months ended 30 June 2025: 5.30%) to expenditure incurred on such assets.

(4)    Includes foreign exchange retranslation gain on the currency bonds of £2 million (six months ended 30 June 2025: £4 million loss) 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 2026

4. Taxation charge

	Unaudited Six months ended 30 June 2026			Unaudited Six months ended 30 June 2025
	Before certain re-measurements £m	Certain re-measurements £m	Total £m	Before certain re-measurements £m	Certain re-measurements £m	Total £m
UK corporation tax
Current tax
Current tax charge at 25% (six months ended 30 June 2025: 25%)	(20)	-	(20)	(19)	-	(19)
Deferred tax
Current period charge	(26)	(83)	(109)	(22)	(21)	(43)
Taxation charge	(46)	(83)	(129)	(41)	(21)	(62)

The total tax charge for the six months ended 30 June 2026 was £129 million (six months ended 30 June 2025: £62 million) based on a profit before tax of £447 million (six months ended 30 June 2025: £203 million).

The tax charge on profit before certain re-measurements was £46 million (six months ended 30 June 2025: £41 million). Based on a profit before tax and certain re-measurements of £115 million (six months ended 30 June 2025: £121 million), this results in an effective tax rate of 40.0% (six months ended 30 June 2025: 33.9%). 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% (six months ended 30 June 2025: 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 period (six months ended 30 June 2025: primarily due to a large amount of depreciation, which is unallowable for tax purposes, increasing the tax charge for the period).

In addition, for the six months ended 30 June 2026, a deferred tax charge of £83 million (six months ended 30 June 2025: £21 million) was recognised on certain re-measurements arising from fair value movements on financial instruments and investment properties totalling £332 million (six months ended 30 June 2025: £82 million).

Management remains confident that the deferred tax assets as at 30 June 2026 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%, increasing to 17% for 2026. 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 which will apply for 2026 and the likely position for the Group. The expectation is that the FGP Topco Limited Group qualifies for one of the transitional safe harbours provided in the UK Pillar 2 rules, as was the case for 2024 and 2025. The FGP Topco Limited Group does not therefore have any current tax exposure in the UK in relation to Pillar 2.

The FGP Topco Limited Group has a captive insurance company located in the Isle of Man, a jurisdiction with a statutory corporate income tax rate below 17%. As a result, the profits arising in this entity are likely to attract the domestic top-up tax in the Isle of Man. For UK tax purposes these profits are captured by the Controlled Foreign Company ('CFC') regime, against which management expects to receive a tax credit for the Isle of Man domestic top-up tax.

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.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

5. Dividends

During the period, the Company declared total dividends of £300 million (six months ended 30 June 2025: £250 million) to its shareholder, Heathrow Finance plc.

Dividends of £300 million (£0.05 per share) were declared and paid on 12 March 2026. Of this amount, £200 million was used to finance dividends being paid by FGP Topco Limited, the ultimate parent company of the Group, to its shareholders (six months ended 30 June 2025: declared and paid on 7 March 2025 for £250 million (£0.04 per share) to finance dividends being paid by FGP Topco Limited).

6. Property, plant and equipment

	Terminal  complexes £m	Airfields £m	Plant and equipment £m	Land and support facilities £m	Rail £m	Assets in the course of construction £m	Total £m
Cost
1 January 2025 (audited)	12,265	2,145	1,152	514	1,225	2,306	19,607
Additions	-	-	1	-	-	1,226	1,227
Write-offs	-	-	-	-	-	(3)	(3)
Borrowing costs capitalised	-	-	-	-	-	115	115
Disposals	(13)	(3)	(13)	-	-	-	(29)
Transfer to investment properties	-	-	-	-	-	(32)	(32)
Transfer to intangible assets	-	-	-	-	-	(123)	(123)
Transfer to completed assets	22	198	44	27	(9)	(282)	-
31 December 2025 (audited)	12,274	2,340	1,184	541	1,216	3,207	20,762
Additions	-	-	-	-	-	601	601
Transfer from investment properties	-	-	-	1	-	-	1
Borrowing costs capitalised	-	-	-	-	-	82	82
Disposals	(16)	(8)	(4)	-	(1)	-	(29)
Transfers to completed assets	88	138	207	41	2	(476)	-
30 June 2026 (unaudited)	12,346	2,470	1,387	583	1,217	3,414	21,417
Accumulated depreciation
1 January 2025 (audited)	(6,444)	(719)	(782)	(163)	(591)	-	(8,699)
Charge for the year	(421)	(59)	(73)	(14)	(24)	-	(591)
Disposals	13	3	12	-	-	-	28
31 December 2025 (audited)	(6,852)	(775)	(843)	(177)	(615)	-	(9,262)
Charge for the period	(209)	(32)	(36)	(10)	(12)	-	(299)
Disposals	16	8	4	-	1	-	29
30 June 2026 (unaudited)	(7,045)	(799)	(875)	(187)	(626)	-	(9,532)
Net book value
31 December 2025 (audited)	5,422	1,565	341	364	601	3,207	11,500
30 June 2026 (unaudited)	5,301	1,671	512	396	591	3,414	11,885

The Regulatory Asset Base ('RAB'), the regulated mechanism made up of existing and new capital investment by which the Group makes a cash return, as at 30 June 2026 was £21,662 million (31 December 2025: £21,263 million).

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

6. Property, plant and equipment continued

Recoverability of expansion costs

Assets under construction relating to the Expansion programme had a carrying value of £623 million as at 30 June 2026 (31 December 2025: £551 million), net of impairment.

In assessing the recoverability of these assets and whether they continue to meet the recognition requirements of IAS 16, management considers whether it remains probable that future economic benefits will arise and that the costs incurred will ultimately be recoverable. This assessment includes:

·      Continued Board support for the Expansion programme.

·      The legal and regulatory framework supporting expansion.

·      The underlying business case and long-term passenger demand forecasts.

·      Climate change and planning-related risks.

·      The availability of funding and an appropriate regulatory framework.

During the period, the UK Government completed its review of the Airports National Policy Statement ('ANPS') and launched a consultation on a revised Heathrow Expansion National Policy Statement ('HENPS'). The ANPS remains in force pending Parliamentary approval of any revised policy statement. In parallel, the CAA continued consultations on the recovery of early expansion costs and the broader regulatory framework for expansion. The outcomes of these processes remain uncertain and are considered as part of management's assessment.

Management continues to conclude that completion of the Expansion programme remains probable and that expansion-related costs remain recoverable. Accordingly, no impairment has been recognised during the period. This conclusion is consistent with that reached as at 31 December 2025.

Should future developments indicate that completion of the Expansion programme is no longer probable, or that recovery of expansion-related costs is no longer expected, an impairment assessment would be required and could result in a material impairment charge.

Impairment indicators

Management also assesses assets under construction for indicators of impairment, including obsolescence, changes in project scope and regulatory developments. No indicators requiring impairment were identified during the period and no impairment charge has been recognised.

7. Investment properties

Valuation	£m
1 January 2025 (audited)	2,667
Additions	4
Transfer from property, plant and equipment	32
Investment property fair value movements(1)	(93)
31 December 2025 (audited)	2,610
Additions	1
Transfer to property, plant and equipment	(1)
Investment property fair value movements(1)	328
30 June 2026 (unaudited)	2,938

(1)    Fair value gains for the six months ended 30 June 2026 were primarily driven by the revaluation of the investment property portfolio, reflecting updated market evidence, improved trading performance and revised assumptions. Further details are provided below. Fair value losses for the year ended 31 December 2025 were primarily due to the revaluation of a multi-storey car park.

The fair value of the Group's investment property portfolio increased by £328 million during the period to £2,938 million (31 December 2025: decreased by £93 million in the year to £2,610 million). The valuation was performed by the Group's independent external valuer, using valuation techniques and assumptions consistent with IFRS 13 fair value measurement principles. There was no change in accounting policy during the period.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

7. Investment properties continued

Portfolio by asset class

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m	Movement £m
Car parks
Car parks	1,377	1,278	99
Airport operations
Hangars and maintenance bases	500	448	52
Lounges	129	106	23
Commercial land and buildings
Car hire	210	85	125
Residential	109	113	(4)
Advertising	43	49	(6)
Others(1)	570	531	39
Total	2,938	2,610	328

(1)    Others include non-operational land of £220 million (31 December 2025: 2025: £226 million), industrial sites of £115 million (31 December 2025: 2025: £116 million), other ground leases of £82 million (31 December 2025: 2025: £60 million), and other individually immaterial investment property sites.

The increase in fair value primarily reflects updated market evidence, stronger underlying trading performance and revisions to key valuation assumptions, including yields, discount rates and income projections.

The most significant increases arose in:

·      Car parks, increase due to revised revenue allocation assumptions and changes in future revenue expectations.

·      Hangars and maintenance bases, mainly due to a reduction in yields, reflecting current market conditions.

·      Lounges, primarily reflecting lower yields aligned to market benchmarks for comparable retail and leisure assets, and the benefit of a new letting in the Terminal 4 lounge, resulting in higher valuations.

·      Car hire properties, primarily reflecting revised valuation assumptions regarding the long-term sustainability of income streams, including the application of a perpetuity yield assumption rather than a limited income period followed by reversion to land value. This revised assessment reflects the current view of the assets' long-term income-generating potential, supported by their long history of stable income generation and continued occupancy, resulting in higher valuations across the portfolio.

·      Other investment properties, increased by reflecting revised market rent and current-use assumptions. These increases were partially offset by reductions in the value of certain residential, advertising and development land assets.

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, Savills UK Limited, who are independent and have appropriate recognised qualifications and experience in the categories and location of our investment properties being valued.

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 90% (31 December 2025: 89%) 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 period.

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 operating costs.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

7. Investment properties continued

The investment property asset class balance as at 30 June 2026 consists of 47% (31 December 2025: 49%) car parks, 21% (31 December 2025: 21%) airport operations and 32% (31 December 2025: 30%) commercial land and buildings. Level 2 to 3 is split according to the following percentiles respectively: 62% (31 December 2025: 59%) and 38% (31 December 2025: 41%).

8. Borrowings

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Current
Secured
Heathrow Funding Limited bonds:
4.221% £155 million due 2026	155	155
0.450% CHF210 million due 2026	196	196
6.750% £700 million due 2026	699	699
1.800% CHF165 million due 2027	154	-
Total Heathrow Funding Limited bonds	1,204	1,050
Heathrow Airport Limited debt:
Term notes due 2026	100	100
Total current (excluding interest payable)	1,304	1,150
Interest payable - external	235	194
Interest payable - owed to group undertakings	47	50
Total current	1,586	1,394
Non-current Secured
Heathrow Funding Limited bonds:
1.800% CHF165 million due 2027	-	154
2.650% NOK1,000 million due 2027	73	71
2.694% C$650 million due 2027	345	352
3.400% C$400 million due 2028	212	216
2.625% £350 million due 2028	349	349
7.075% £200 million due 2028	199	199
4.150% A$175 million due 2028	88	84
2.750% £450 million due 2029	448	447
2.500% NOK1,000 million due 2029	67	65
1.500% €750 million due 2030	607	614
3.782% C$400 million due 2030	211	215
1.125% €500 million due 2030	428	433
3.661% C$500 million due 2031	265	270
6.450% £900 million due 2031	879	890
Zero-coupon €50 million due January 2032	78	78
6.000% £350 million due 2032(1)	347	347
1.366%+RPI £75 million due 2032	123	121
Zero-coupon €50 million due April 2032	77	76
1.875% €500 million due 2032	430	435
0.101%+RPI £182 million due 2032	256	252
1.5225% CHF220 million due 2032(1)	204	205
3.726% C$625 million due 2033	335	342
4.500% €650 million due 2033(1)	571	581
1.875% €650 million due 2034	479	480
4.171% £50 million due 2034	50	50

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

8. Borrowings continued

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Zero-coupon €50 million due 2034	61	61
5.625% £400 million due 2034	395	-
1.6497% CHF205 million due 2034	189	-
0.347%+RPI £75 million due 2035	106	105
4.645% C$600 million due 2035	320	-
3.8750% €600 million due 2036(1)	511	517
0.337%+RPI £75 million due 2036	106	105
1.061%+RPI £180 million due 2036	287	283
4.900% C$600 million due 2037	320	324
4.375% €500 million due 2037	429	-
3.460% £105 million due 2038	105	105
0.419%+RPI £51 million due 2038	72	71
1.382%+RPI £50 million due 2039	82	81
Zero-coupon €86 million due 2039	86	87
3.334%+RPI £460 million due 2039	894	881
0.800% JPY10,000 million due 2039	33	36
1.238%+RPI £100 million due 2040	161	159
0.362%+RPI £75 million due 2041	106	105
5.875% £750 million due 2041	741	740
3.500% A$125 million due 2041	65	62
6.250% £300 million due 2042	294	296
2.926% £55 million due 2043	54	54
4.625% £750 million due 2046	743	743
4.702% £60 million due 2047	60	60
1.372%+RPI £75 million due 2049	123	121
2.750% £400 million due 2049	393	393
6.070% £70 million due 2056	70	70
6.070% £70 million due 2057	70	70
0.147%+RPI £160 million due 2058	223	218
Total bonds	14,220	13,073
Heathrow Airport Limited debt:
Class A3 term loan due 2029	200	200
Class B1 term loan due 2032	50	50
Term notes due up to 2054(2)	1,700	1,700
Total debt	1,950	1,950
Unsecured
Debenture payable to Heathrow Finance plc due 2036	2,491	2,610
Total non-current	18,661	17,633
Total borrowings (excluding interest payable)	19,965	18,783

(1)    The Group has issued a number of sustainability-linked bonds. Further details on the Sustainability Performance Targets can be found in our Sustainability-Linked Bond Framework at the Heathrow Investor Centre website.

(2)    Includes £20 million (31 December 2025: £20 million) in US private placements which is a green bond issuance.

As at 30 June 2026, the carrying value of non-current borrowings due after more than 5 years was £12,598 million (31 December 2025: £11,544 million), comprising £10,928 million (31 December 2025: £9,874 million) of bonds and £1,670 million (31 December 2025: £1,670 million) in bank facilities, excluding lease liabilities.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

8. Borrowings continued

Impact of fair value hedge adjustments

The nominal value of debt designated in a fair value hedge relationship was £999 million, €2,175 million, C$1,320 million, CHF 415 million, A$175 million, JPY 10,000 million and NOK 2,000 million (31 December 2025: £999 million, €2,050 million, C$720 million, CHF 210 million, A$175 million, JPY 10,000 million and NOK 2,000 million). Where debt qualifies for fair value hedge accounting, hedged item adjustments have been applied as follows:

	Unaudited 30 June 2026		Audited 31 December 2025
	Nominal(1) £m	Fair value adjustment(2) £m	Nominal(1) £m	Fair value adjustment(2) £m
GBP denominated debt	999	(4)	999	(18)
Euro denominated debt(3)	1,790	95	1,682	100
CAD denominated debt(3)	724	(6)	399	-
CHF denominated debt(3)	353	2	160	1
Other currencies debt	342	29	342	26
	4,208	116	3,582	109

(1)    Nominal values are based on initial designation FX rates.

(2)    Fair value adjustment is comprised of fair value gain of £119 million (31 December 2025: £112 million) on continuing hedges and £3 million loss (31 December 2025: £3 million) on discontinued hedges, which no longer meet the criteria for hedge accounting.

(3)    During the six-months ended 30 June 2026, fair value hedges of £nil (year ended 31 December 2025: £266 million) matured and there were new designations totalling £626 million (year ended 31 December 2025: £1,130 million).

9. Derivative financial instruments

Unaudited 30 June 2026	Notional  £m	Assets  £m	Liabilities  £m	Total  £m
Current
Foreign exchange contracts	78	-	(1)	(1)
Interest rate swaps	1,683	1	(49)	(48)
Cross-currency swaps	297	55	-	55
Index-linked swaps	250	-	(53)	(53)
	2,308	56	(103)	(47)
Non-current
Foreign exchange contracts	16	-	-	-
Interest rate swaps	5,745	550	(283)	267
Cross-currency swaps	6,545	128	(230)	(102)
Index-linked swaps	4,727	222	(603)	(381)
	17,033	900	(1,116)	(216)
Total	19,341	956	(1,219)	(263)

Audited 31 December 2025	Notional  £m	Assets  £m	Liabilities  £m	Total  £m
Current
Foreign exchange contracts	84	-	-	-
Interest rate swaps	2,205	-	(104)	(104)
Cross-currency swaps	161	34	-	34
Index-linked swaps	200	-	(45)	(45)
	2,650	34	(149)	(115)
Non-current
Foreign exchange contracts	23	-	-	-
Interest rate swaps	5,673	520	(311)	209
Cross-currency swaps	5,731	164	(208)	(44)
Index-linked swaps	4,777	283	(462)	(179)
	16,204	967	(981)	(14)
Total	18,854	1,001	(1,130)	(129)

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

9. Derivative financial instruments continued

As at 30 June 2026, total non-current notional value of derivative financial instruments due in greater than 5 years was £9,422 million (31 December 2025: £8,575 million), comprising £1,559 million (31 December 2025: £1,909 million) of index-linked swaps, £4,151 million (31 December 2025: £3,492 million) of cross-currency swaps, and £3,712 million (31 December 2025: £3,174 million) of interest rate swaps.

Interest rate swaps

Interest rate swaps are maintained by the Group and designated as hedges, where they qualify against variability in interest cash flows on current and future floating or fixed rate borrowings. The gains and losses deferred in equity on the cash flow hedges will be continuously released to the income statement over the period of the hedged risk. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised or no longer meets the Group's risk management objective. The cumulative gains and losses deferred in equity relating to the discontinued cash flow hedge relationships will be continuously released to the income statement over the period of the hedged risk.

Losses deferred in other comprehensive income, gross of tax, as at 30 June 2026 of £89 million (six months ended 30 June 2025: £109 million; 31 December 2025: £99 million) related to the discontinued cash flow hedges. During the six-months ended 30 June 2026, £10 million (six months ended 30 June 2025: £10 million; 31 December 2025: £20 million) was recycled from the frozen hedging reserve to the income statement.

Of the losses deferred in the hedging reserve, £18 million (six months ended 30 June 2025: £20 million; 31 December 2025: £20 million) is expected to be released in less than one year, £13 million (six months ended 30 June 2025: £18 million; 31 December 2025: £15 million) between one and two years, £33 million (six months ended 30 June 2025: £38 million; 31 December 2025: £35 million) between two and five years and £25 million (six months ended 30 June 2025: £33 million; 31 December 2025: £29 million) over five years.

Cross-currency swaps

Cross-currency swaps have been entered into by the Group to hedge currency risk on interest and principal payments on its foreign currency-denominated bond issues. The gains and losses deferred in equity on certain swaps in cash flow hedge relationships will be continuously released to the income statement over the period to maturity of the hedged bonds.

The gains deferred as at 30 June 2026 are £130 million (six months ended 30 June 2025: £142 million; 31 December 2025: £92 million), of which £36 million (six months ended 30 June 2025: £34 million; 31 December 2025: £26 million) are expected to be released in less than one year, £25 million (six months ended 30 June 2025: £30 million; 31 December 2025: £23 million) between one and two years, £52 million (six months ended 30 June 2025: £55 million; 31 December 2025: £37 million) between two and five years and £17 million (six months ended 30 June 2025: £23 million; 31 December 2025: £6 million) over five years.

Index-linked swaps

Index-linked swaps have been entered into in order to economically hedge RPI linked revenue and the Regulatory Asset Base ('RAB') but are not designated in a hedge relationship.

Foreign exchange contracts

Foreign exchange contracts are used to manage exposures relating to future capital expenditure. Hedge accounting is not sought for these derivatives.

Fair value estimation

Financial instruments that are measured in the statement of financial position at fair value are classified by the following fair value measurement hierarchy:

·      Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

·      Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).

·      Level 3 - inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

As at 30 June 2026 and 31 December 2025, all fair value estimates on derivative financial instruments are included in level 2.

The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. A market is regarded as active if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis. The quoted market price used for financial assets held by the Group is the current bid price. These instruments are included in level 1.

The fair value of financial instruments that are not traded in an active market (such as derivatives) is determined by using valuation techniques. These valuation techniques maximise the use of observable market data where it is available. If all significant inputs required to fair value an instrument are observable, the instrument is included in level 2.

If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3.

Specific valuation techniques and inputs used to value financial instruments include:

·      Quoted market prices or dealer quotes for similar instruments.

·      Applicable market-quoted swap yield curves adjusted for relevant basis and credit default spreads.

·      The recovery rate and associated reduction in credit risk of super senior ranking derivatives (interest rate and index-linked swaps).

·      The fair value of derivatives and certain financial instruments are calculated as the present value of the estimated future cash flows based on observable market inputs such as RPI and credit default swap curves.

·      Other techniques, such as discounted cash flow analysis, are used to determine fair value for the remaining financial instruments.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

9. Derivative financial instruments continued

At the restructuring date or initial date of recognition of index-linked swaps, the fair value of these instruments, as indicated by their fair value immediately prior to the restructuring or at initial recognition, cannot be supported by observable inputs alone. These fair values are supported by unobservable factors including the counterparty's credit, capital, funding and trading charges. Differences are deferred on the statement of financial position in compliance with IFRS 9.

As at 30 June 2026, £119 million (31 December 2025: £130 million) remained capitalised and £11 million (31 December 2025: £24 million) had been recognised in the income statement.

On a semi-annual basis, the Group reviews any material changes to the valuation techniques and market data inputs used. The potential impact to the fair value hierarchy is assessed if it is deemed a transfer. Significant transfers between levels are considered effective at the end of the reporting period. During the period there were no transfers between the levels in the fair value hierarchy.

The tables below present the Group's assets (other than investment properties) and liabilities that are measured at fair value as at 30 June 2026 and 31 December 2025:

Unaudited 30 June 2026	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Assets
Assets at fair value through income statement	-	778	-	778
Derivatives qualifying for hedge accounting	-	178	-	178
Total assets	-	956	-	956
Liabilities
Liabilities at fair value through income statement	-	(1,001)	-	(1,001)
Derivatives qualifying for hedge accounting	-	(218)	-	(218)
Total liabilities	-	(1,219)	-	(1,219)

Audited 31 December 2025	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Assets
Assets at fair value through income statement	-	821	-	821
Derivatives qualifying for hedge accounting	-	180	-	180
Total assets	-	1,001	-	1,001
Liabilities
Liabilities at fair value through income statement	-	(935)	-	(935)
Derivatives qualifying for hedge accounting	-	(195)	-	(195)
Total liabilities	-	(1,130)	-	(1,130)

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

10. Retirement benefit obligations

Amounts arising from pensions related liabilities in the Group's financial statements

The following tables identify the amounts in the Group's financial statements arising from its pension related liabilities.

Income statement - pension and other pension related liabilities costs

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Employment costs:
Defined contribution schemes	14	12
BAA Pension Scheme	5	5
BAA Pension Scheme - past service credit	-	(2)
	19	15
Finance charge:
BAA Pension Scheme	(1)	2
Other pension and post-retirement liabilities	1	1
Total pension charge	19	18

Other comprehensive income - gain/(loss) on pension and other pension related liabilities

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
BAA Pension Scheme gain/(loss)	105	(36)
Actuarial gain/(loss) recognised before tax	105	(36)
Tax (charge)/credit on actuarial gain/(loss)	(26)	9
Actuarial gain/(loss) recognised after tax	79	(27)

Statement of financial position - net defined benefit pension surplus/(deficit) and other pension related liabilities

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Fair value of plan assets	2,518	2,490
Benefit obligation	(2,397)	(2,474)
Surplus in BAA Pension Scheme	121	16
Unfunded pension obligations	(18)	(19)
Post-retirement medical benefits	(1)	(1)
Deficit in other pension related liabilities	(19)	(20)
Net surplus/(deficit) in pension schemes	102	(4)
Group share of net surplus/(deficit) in pension schemes	102	(4)

There are no reimbursement rights included within scheme assets which require separate disclosure.

(a) BAA Pension Scheme

The BAA Pension Scheme is a funded defined benefit scheme with both open and closed sections. The Scheme closed to employees joining the Group after 15 June 2008. The Scheme's assets are held separately from the assets of the HAHL Group and are administered by the trustee.

The value placed on the Scheme's obligations as at 30 June 2026 is based on the full actuarial valuation carried out as at 30 September 2024. This has been updated as at 30 June 2026 by ISIO Group Limited to take account of changes in economic and demographic assumptions, in accordance with IAS 19R. The Scheme assets are stated at their bid value as at 30 June 2026. As required by IAS 19R, the Group recognises re-measurements as they occur in the statement of comprehensive income.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

10. Retirement benefit obligations continued

(a) BAA Pension Scheme continued

Analysis of fair value of plan assets

	Unaudited 30 June 2026			Audited 31 December 2025
	Quoted(1)	Unquoted	Total	Quoted(1)	Unquoted	Total
Fair value of plan assets	£m	£m	£m	£m	£m	£m
Equity	64	473	537	86	413	499
Bonds	301	167	468	257	167	424
Cash	-	106	106	-	24	24
Liability driven investment	-	698	698	-	831	831
Buy in	-	360	360	-	374	374
Multi-strategy funds	-	349	349	-	338	338
Total fair value of plan assets	365	2,153	2,518	343	2,147	2,490

(1)         Quoted assets have prices in active markets in which transactions for the asset take place with sufficient frequency and volume to provide pricing information on an ongoing basis.

As at 30 June 2026, the largest single category of investment was a liability driven investment ('LDI') mandate, with a value of £698 million, being 28% of the asset holding (31 December 2025: £831 million, 33%).

LDI holdings are portfolios of bonds, repurchase agreements, interest rate and inflation derivatives which are intended to protect the Scheme from movements in interest rates and inflation, so that the fair value of this element of the portfolio moves in the same way as the fair value of Scheme's obligations.

Analysis of financial assumptions

The financial assumptions used to calculate Scheme assets and liabilities under IAS 19R were:

	Unaudited 30 June 2026 %	Audited 31 December 2025 %
Rate of increase in pensionable salaries	1.90	1.90
Increase to deferred benefits during deferment	2.85	2.75
Increase to pensions in payment:
Open section	3.05	2.95
Closed section	3.25	3.15
Discount rate	5.85	5.45
Inflation assumption	3.25	3.15

In 2024, the Virgin Media judgment created uncertainty for some defined benefit pension schemes regarding the validity of certain historic scheme amendments and the measurement of related pension obligations.

In April 2026, the Pension Schemes Act 2026 received Royal Assent and introduced a mechanism enabling affected schemes to obtain retrospective actuarial confirmation in relation to such amendments. The process of assessing the implications is on-going and is expected to continue into 2027. Management is not currently aware of any impact on the Group's pension scheme with respect to the current reporting date, and the defined benefit obligation continues to be measured based on the benefits currently being administered.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

11. Cash generated from operations

Reconciliation of profit before tax to cash generated from operations	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit before tax	447	203
Adjustments for:
Net finance costs	447	364
Depreciation	299	291
Amortisation of intangibles	28	26
Amortisation of right of use assets	22	21
Fair value (gain)/loss on investment properties	(328)	54
Working capital changes:
(Increase)/decrease in trade and other receivables	(22)	7
Increase in inventories	(1)	(1)
Decrease in trade and other payables	(11)	(97)
Difference between pension charge and cash contributions	(1)	(5)
Cash generated from operations	880	863

12. Commitments and Contingent liabilities

Commitments for property, plant and equipment

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Contracted for, but not accrued:
Asset management and compliance	300	353
Carbon and sustainability	21	21
Commercial proposition	37	64
Improve efficiency and service	29	43
Terminal 2 baggage system	288	337
Next generation security	40	98
Modernising Heathrow	9	13
Expanding Heathrow	22	12
	746	941

Contingent liabilities

The Group is subject to various claims, disputes and regulatory matters arising in the ordinary course of business.

At the reporting date, the Group is engaged with HMRC in a matter relating to the indirect tax treatment of certain elements of its regulated aeronautical charges.

Due to the uncertainties involved in the matter relating to the amount or timing together with any possibility of reimbursement, there is no assurance that the outcome of the matter will not be material for the Group results. However, based on the information currently available, together with internal and external legal advice obtained, management has concluded that it is not probable that an outflow of economic benefits will be required to settle any obligation arising from this matter. Accordingly, no provision has been recognised, and the matter has been disclosed as a contingent liability.

The ultimate outcome cannot presently be determined with certainty and may differ from management's current assessment.

As at 31 December 2025, the Group had no external contingent liabilities.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

13. Related party transactions

During the six-month period, the Group entered into the following transactions with related parties:

Purchase of goods and services from related parties	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Ferrovial Construction (UK) Limited	-	50
Heathrow Enterprises Limited	-	1
Heathrow Finance plc(1)	71	74
LHR Airports Limited	11	11
	82	136

(1)    Interest on the debenture payable to Heathrow Finance plc.

Sales to related parties	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Harrods International Limited	6	5
Qatar Airways Limited	22	33
LHR Airports Limited(1)	-	1
Riyadh Air	2	-
	30	39

(1)        Interest on the loan receivable from LHR Airports Limited.

Balances outstanding with related parties	Unaudited 30 June 2026		Audited 31 December 2025
	Amounts owed by related parties £m	Amounts owed to related parties £m	Amounts owed by related parties £m	Amounts owed to related parties £m
Qatar Airways Limited	2	-	2	-
Heathrow Finance plc	-	2,538	-	2,660
Riyadh Air	-	-	2	-
	2	2,538	4	2,660

The related parties outlined above are related through ownership by the same parties. The transactions relate primarily to construction projects, loans, interest payable, concession fees and aeronautical revenue, and are conducted on an arm's length basis.

14. Subsequent events

There are no further subsequent events to disclose.

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

15. Reconciliation of our Alternative Performance Measures ('APMs') - Unaudited

Alternative Performance Measures ('APMs')

The Group presents its results in accordance with UK-adopted International Accounting Standards. Management also produces Alternative Performance Measures ('APMs') which are other financial measures not defined by IFRS. Management relies on these APMs for decision-making and for evaluating the Group's performance. Below we provide an explanation of each APM.

EBITDA

EBITDA is profit or loss before interest (net finance costs), taxation, depreciation and amortisation. EBITDA is a useful indicator as it is widely used by investors, analysts and rating agencies to assess operating performance.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit for the period	318	141
Tax charge	129	62
Net finance costs	447	364
Operating profit	894	567
Depreciation and amortisation	349	338
EBITDA	1,243	905

Adjusted EBITDA

Adjusted EBITDA is profit or loss before interest (net finance costs), taxation, depreciation, amortisation, fair value gains and losses on investment properties and exceptional items (if any). Fair value gains and losses on investment properties are excluded as they can vary significantly from one year to the next due to market perceptions of the value of the property and the accounting method used to calculate the fair value. These are excluded due to their size and the fact that they are not representative of a normal trading year. Adjusted EBITDA is an approximation of pre-tax operating cash flow and reflects cash generation before changes in working capital and investment. The APM assists investors to value the business (valuation using multiples) and rating agencies and creditors to gauge levels of leverage by comparing adjusted EBITDA with net debt.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit for the period	318	141
Tax charge	129	62
Net finance costs	447	364
Operating profit	894	567
Depreciation and amortisation	349	338
Fair value (gain)/loss on investment properties	(328)	54
Adjusted EBITDA	915	959

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Cash generated from operations	880	863
Increase/(decrease) in trade and other receivables	22	(7)
Increase in inventories	1	1
Decrease in trade and other payables	11	97
Difference between pension charge and cash contributions	1	5
Adjusted EBITDA	915	959

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

15. Reconciliation of our Alternative Performance Measures ('APMs') - Unaudited continued

Adjusted operating profit

Adjusted operating profit or loss shows operating results excluding fair value gains and losses on investment properties and exceptional items (if any). These are excluded as they can vary significantly from one year to the next due to market perceptions of the value of the property and the accounting method used to calculate the fair value. The adjusted measure is used to assess underlying performance of the trading business.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Operating profit(1)	894	567
Fair value (gain)/loss on investment properties	(328)	54
Adjusted operating profit	566	621

(1)    Operating profit is presented on the Group income statement; it is not defined per IFRS, however it is a generally accepted profit measure.

Net finance costs before certain re-measurements

Net finance costs before certain re-measurements exclude fair value gains and losses on financial instruments. Excluding fair value gains and losses can be useful to investors and financial analysts when assessing the Group's underlying profitability, as measured by adjusted EBITDA, because they can vary significantly from one year to the next. A significant portion of the fair value gains and losses on financial instruments occur due to the business entering into arrangements to hedge against future inflation. As these contracts do not meet hedge criteria under IFRS 9, fair value gains and losses create significant volatility in our IFRS income statement.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Finance income	30	45
Finance costs	(477)	(409)
Net finance costs after certain re-measurements	(447)	(364)
Fair value gain arising on re-measurement of financial instruments	(4)	(136)
Net finance costs before certain re-measurements	(451)	(500)

Adjusted profit before tax

Adjusted profit or loss before tax excludes fair value gains and losses on investment properties and financial instruments and exceptional items (if any). Excluding these can be useful to investors and financial analysts when assessing the Group's underlying profitability, because they can vary significantly from one year to the next.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit before tax	447	203
Fair value (gain)/loss on investment properties	(328)	54
Fair value gain arising on re-measurement of financial instruments	(4)	(136)
Adjusted profit before tax	115	121

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

15. Reconciliation of our Alternative Performance Measures ('APMs') - Unaudited continued

Adjusted profit after tax

Adjusted profit or loss after tax excludes fair value gains and losses on investment properties and financial instruments, exceptional items (if any) and the associated tax. Excluding these can be useful to investors and financial analysts when assessing the Group's underlying profitability, because they can vary significantly from one year to the next.

	Unaudited Six months ended 30 June 2026 £m	Unaudited Six months ended 30 June 2025 £m
Profit for the period	318	141
Fair value (gain)/loss on investment properties	(328)	54
Fair value gain arising on re-measurement of financial instruments	(4)	(136)
Tax charge on fair value gain or loss on investment properties and re-measurement of financial instruments	83	21
Adjusted profit after tax	69	80

Heathrow (SP) Limited consolidated nominal net debt

Consolidated nominal net debt is a measure of financial position used by our creditors when assessing covenant compliance.

Nominal net debt is short- and long-term debt less qualifying cash and cash equivalents and term deposits. It is an important measure as it is used as a metric in assessing covenant compliance for the Group. 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, capitalised borrowing costs and intra-group loans.

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Total financing liabilities(1)	(20,917)	(19,567)
Cash and cash equivalents and term deposits	1,928	1,117
Net derivative liabilities	263	129
Index-linked swap accretion(2)	(576)	(501)
Impact of cross-currency interest rate swaps(3)	(158)	(73)
Bond issuance costs and zero-coupon accruals(4)	9	9
IFRS 16 lease liability relating to pre-existing leases(5)	328	326
Debenture payable to Heathrow Finance plc	2,491	2,610
Interest payable	282	244
Consolidated nominal net debt	(16,350)	(15,706)

(1)         Total financial liabilities comprise net derivative financial instruments, borrowings and lease liabilities.

(2)        Index-linked swap accretion is included in nominal net debt; amounts are reported within derivative financial instruments on the Group's statement of financial position.

(3)        Where bonds are issued in currencies other than GBP, the Group has entered into foreign currency swaps to fix the GBP cash outflows on redemption. The impact of these swaps is reflected in nominal net debt.

(4)        Capitalised bond issue costs and zero-coupon accruals are excluded from nominal net debt.

(5)        The lease liability relating to leases that existed at the point of transition to IFRS 16 (1 January 2019) is excluded from nominal net debt. All new leases entered into post-transition are included.

Regulatory Asset Base ('RAB')

The regulatory asset base is a regulatory construct, based on predetermined principles not based on IFRS. By investing efficiently in the Airport, we add to the RAB over time. The RAB is an important measure as it represents the invested capital on which Heathrow are authorised to earn a cash return and is used in the financial ratios used to assess covenant compliance as detailed in the financial review. It is used in key financial ratios and in our regulatory financial statements.

	Unaudited 30 June 2026 £m	Audited 31 December 2025 £m
Regulatory Asset Base ('RAB')	21,662	21,263

Notes to the condensed consolidated financial statements for the six months ended 30 June 2026

15. Reconciliation of our Alternative Performance Measures ('APMs') - Unaudited continued

Regulatory gearing ratio

The regulatory gearing ratio is consolidated nominal net debt to the RAB. It is a financial indicator used by investors, financial analysts, rating agencies, creditors and other parties to ascertain a company's debt position in regulated industries.

	Unaudited 30 June 2026	Audited 31 December 2025
Total net debt to RAB at Heathrow (SP) Limited	0.755	0.739
Senior net debt to RAB at Heathrow (SP) Limited	0.630	0.631