Upload
others
View
1
Download
0
Embed Size (px)
Citation preview
2 0 1 7 F I N A N C I A L Y EA R R ES U LTS P R ES E N TAT I O N A u g u s t 1 0 , 2 0 1 7
2
2 0 1 7 F I N A N C I A L Y E A R G R O U P O U T C O M E S
Positive Free Cash Flow1 generation • Positive result of $34m, a $126m improvement on FY16 • First positive Free Cash Flow reported result since FY12
FY17 performance impacted by several factors1
• Subdued domestic trading conditions • Impact of fleet simplification
Q4 FY17 performance improved, improvement expected to continue
• Group underlying performance improved by $38m in Q4 FY17 compared to Q4 FY16
• Based on current market conditions, positive momentum expected to continue
• Q1 FY18 underlying performance expected to improve on Q1 FY17
Better Business program: implementation ahead of schedule
• 1 year into a 3 year program • Ahead of implementation schedule at the end of year 1
• Annualised net free cash flow savings target by the end of FY19 increased from $300m to $350m
Improved debt and cash outcomes1
• Maintained strong cash balance of $1.4Bn • Net Debt1 reduction of $839m, with $260m in accelerated
repayments • Financial Leverage1 of 4.5x, in line with FY17 target – lowest
leverage since FY122
Award winning business3
• Best Airline Staff in Australia/Pacific – won 5th time in 6 years • Best Airline in Australia/Pacific • Best Domestic Airline
Note 1: Underlying Profit / (Loss) Before Tax, Free Cash Flow, Financial Leverage and Net Debt are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22. Note 2: As at 30 June. Note 3: Best Airline & Best Airline Staff awarded at the World Airline Awards , Best Domestic Airline awarded at the National Travel Industry Awards
X
3
K E Y F I N A N C I A L R E S U L T S
FY17 FY16 Change
Statutory Profit / (Loss) after tax $(185.8)m $(224.7)m $38.9m
Underlying Profit / (Loss) Before Tax1 $(3.7)m $41.0m $(44.7)m
Free Cash Flow1 $34.3m $(92.1)m $126.4m
Financial Leverage1 4.5x 5.2x (14.1%)
Total cash $1,396.1m $1,123.8m $272.3m
Net Debt1 $1,037.2m $1,876.2m $(839.0)m
Group revenue $5,047.3m $5,021.0m $26.3m
Note 1: Underlying Profit / (Loss) Before Tax, Free Cash Flow, Financial Leverage and Net Debt are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22
4
Free Cash Flow1, $m
P O S I T I V E F R E E C A S H F L O W 1
34.3
(92.1)
(282.1)
(117.2)
FY17 FY16 FY15 FY14
Total cash, $m
1,396.1
1,123.81,028.5
783.8
FY16 FY15
21.2%
FY17 FY14
CAGR
Note 1: Free Cash Flow is a non-statutory measure used by Management and VAH’s Board to assess financial performance and is defined on slides 20,21 & 22 . CAGR means Compound Annual Growth Rate.
First positive Free Cash Flow1 reported result since FY12
$316
5
Net Debt1, $m
D E B T M E T R I C S I M P R O V I N G
Financial Leverage1
Significant improvements in Financial Leverage1 over the period
4.5x5.2x
5.9x
7.5x(40%)
FY17 FY16 FY15 FY14
1,037.2
1,876.21,733.7
1,166.9
FY17 FY16 FY15 FY14
Best Financial Leverage1 result for 30 June since 2012, Net Debt1 reduction of $839m, positive trajectory expected to continue
Note 1: Net Debt and Financial Leverage are non-statutory measures used by Management and VAH’s Board to assess financial performance and is defined on slides 20,21 & 22
$839
6
B E T T E R B U S I N E S S P R O G R A M
Better Business program implementation ahead of schedule at end of year 1, end of FY19 annualised net free cash flow savings target increased from $300m to $350m
Annualised net free cash flow savings by end of FY19, $m
300350
Revised FY19 Target Original FY19 Target
Fleet simplification
• ~5% reduction in operating fleet with capacity maintained through improved fleet utilisation
• 10 E190s sold, E190 operations on track to cease by end of 2017
• ATR operations reduced, identification of up to 8 ATRs to be removed from fleet
Network / capacity optimisation
• Optimisation of domestic and international flight network
• Exit loss-making routes , including Abu Dhabi
Operating efficiencies
• Additional fuel saving initiatives implemented
• Rightsizing of corporate organisation
Maintenance and engineering
• Efficiencies realised in maintenance including installation of carbon brakes and onshoring of maintenance services
7
Domestic performance
V I R G I N A U S T R A L I A D O M E S T I C
Quarter 4 – Improved Underlying EBIT ($m)1
Note 1: Underlying EBIT, Underlying EBIT Margin, RASK, Yield and ASK are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22
FY17 FY16 Change
Underlying EBIT1 ($m)
92.9 162.0 (69.1)
Underlying EBIT Margin1 2.7% 4.7% (2.0pts)
RASK1 (0.2%)
Yield1 (1.5%)
ASKs1 (0.1%)
Sectors flown (5.9%)
Revenue passengers
1.0%
27.3
19.4
Q4 FY17 Q4 FY16
Virgin Australia Domestic performance improved in Q4 with subdued trading conditions impacting overall FY17 Underlying EBIT1 performance
8
International performance
V I R G I N A U S T R A L I A I N T E R N A T I O N A L - P R O F I T A B L E
Driven by improvement strategy
• Virgin Australia International profitable with ~$50m underlying EBIT improvement
• Actions driving positive result include:
Removal of Abu Dhabi
New award winning product in business class
• FY17 result impacted by some Hong Kong launch costs
• Further actions in FY17 include:
Alliance with HNA aviation companies
Launch of MEL – LAX flying
Completion of work for the July launch of MEL – HKG flying
Note 1: Underlying EBIT, Underlying EBIT Margin, RASK, Yield and ASK are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22
FY17 FY16 Change
Underlying EBIT1 ($m)
0.5 (48.8) 49.3
Underlying EBIT Margin1 0.1% (4.8%) 4.9pts
RASK1 1.4%
Yield1 2.1%
ASKs1 (5.4%)
Revenue passengers
(6.1%)
International improvement strategy drove profitable performance
9
Tigerair Australia performance (Domestic and International)
T I G E R A I R A U S T R A L I A – D O M E S T I C O P E R A T I O N S P R O F I T A B L E
Note 1: Underlying EBIT, Underlying EBIT Margin, RASK, Yield and ASK are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22
FY17 FY16 Change
Underlying EBIT1 ($m)
(24.3) 2.2 (26.5)
Underlying EBIT Margin1 (4.5%) 0.5% (5.0pts)
RASK1 3.6%
Yield1 0.1%
ASKs1 10.2%
Revenue passengers
10.7%
Tigerair Australia overall underlying EBIT1 performance impacted by Bali operations
10
Velocity performance
V E L O C I T Y – S E C O N D H A L F P E R F O R M A N C E I M P R O V E M E N T
Velocity members (m)
Note 1: Underlying EBIT and Underlying EBIT Margin are non-statutory measures used by Management and VAH’s Board as measures to assess financial performance and are defined on slides 20,21 & 22
FY17 FY16 Change
Revenue ($m) 371.0 327.6 43.4
Underlying EBIT1 ($m)
142.8 139.7 3.1
Underlying EBIT Margin1 38.5% 42.6% (4.1pts)
Velocity investing in information technology, new partnerships and resources for future growth and development
4.45.3
6.3
8.0
Jun-16 Jun-15 Jun-14 Jun-17
82%
Velocity investing in information technology, new partnerships and internal resources for future growth
11
V E L O C I T Y : D I V E R S E P A R T N E R S H I P P O R T F O L I O
A broad set of points earn and redemption partners with over 400 brands
A broad set of earn and redemption partners with over 400 brands
Airline
Financial services
Retail
12
V I R G I N A U S T R A L I A G R O U P F O C U S
• Continue strong momentum on the Better Business program – ahead of schedule for year 1, with year 3 target increased
• Consolidate established position in the Australian domestic market – managing capacity in response to demand
• Leverage international opportunities including Asia and North America growth markets – to be delivered through existing fleet
• Leverage Velocity investment to drive further growth
• Continue positive trajectory on cash, debt reduction and leverage improvement
Support future earnings growth and deliver long term value to all shareholders
13
O U T L O O K
Given underlying performance improvements in the fourth quarter of the 2017 financial year and based on current market conditions, we expect the positive
momentum seen in the fourth quarter to continue and that underlying performance for the first quarter of the 2018 financial year will improve
compared to the first quarter of the 2017 financial year.
The Group also expects the Better Business program to continue to track ahead of schedule in implementation and expects further balance sheet improvements
to be delivered1
Note 1: Please refer to the “Forward Looking Statements” section on slide 22 when considering this information. All forward projections on this page are at the Underlying Performance level, which is defined on slide s 20,21 & 22.
14
S U P P L E M E N TA RY F I N A N C I A L S L I D ES
15
G R O U P F I N A N C I A L S U M M A R Y
FY17 $m
FY16 $m
Revenue and income 5,047.3 5,021.0
Statutory (loss) after tax (185.8) (224.7)
Add back Income tax benefit (103.8) (201.9)
Statutory (loss) before tax (289.6) (426.6)
Add back Impairment losses on assets classified as held for sale 7.8 107.3
Impairment losses on other assets 65.9 118.1
Onerous contract expenses 29.6 100.2
Business and capital restructure and transaction costs1 141.9 114.9
Restructuring sub-total 245.2 440.5
Share of net (profits) of equity-accounted investee (2.1) (0.7)
Hedging and financial instruments loss1 42.8 27.8
Underlying Profit / (Loss) Before Tax1 (3.7) 41.0
Underlying Performance1 impacted by subdued trading conditions
Note 1: Business and capital restructure and transaction costs, Hedging and financial instruments, Underlying Profit /(Loss) Before Tax and Underlying Performance are non-statutory measures used by Management and VAH’s Board to assess financial performance and are defined on slides 20,21 & 22
16
• $77.1m or 17% improvement in cash generated from operating activities driven by improved EBITDA cash conversion from 92% in FY16 to 111% in FY17
• Includes entitlement offer of $852m and top-up placement to HNA of $89m
• Reduced net investing cash flows supporting positive free cash flow generation
C A S H F L O W
Cash flow statement
Better Business Program and capital management post transformation driving free cash performance
FY17 $m
FY16 $m
Cash generated from operating activities
525.9 448.8 17%
Transformation & net finance costs (252.0) (250.3) 1%
Net cash from operating activities 273.9 198.5 38%
Net cash used in investing activities (331.6) (389.0) (15)%
Net proceeds from share issue 931.4 151.9 Na
Net borrowings (541.9) 162.2 Na
Net cash from financing activities 338.2 263.2 28%
Net cash inflow/(outflow) incl impact of FX
272.3 95.3 186%
Free Cash Flow1 34.3 (92.1) Na
Note 1: Free Cash Flow is a non-statutory measure used by Management and VAH’s Board to assess financial performance and is defined on slides 20,21 & 22.
17
• Highest reported 30 June cash balance of $1,396.1m, up $272.3m
• Unrestricted cash balance increased from $728.9m to $985.8m
• Financial Leverage1 improved by 14.1% from 5.2x to 4.5x
• Improving debt maturity profile and accelerating total debt reduction - weighted-average years to maturity increased from 2.7 years in FY16 to 3.1 years in FY17
• Delivery of first Boeing 737MAX aircraft deferred until the final quarter of the 2019 calendar year
• $58m of undrawn standby facilities in place
B A L A N C E S H E E T A N D L I Q U I D I T Y
Balance sheet
Realising positive results from balance sheet optimisation initiatives
FY17 $m
FY16 $m
Cash and cash equivalents 1,396.1 1,123.8
Total assets 6,355.8 6,040.8
Current interest-bearing liabilities 280.9 875.8
Non-current interest-bearing liabilities 2,152.4 2,124.2
Interest-bearing liabilities 2,433.3 3,000.0
Total liabilities 4,782.0 5,142.0
Total equity 1,573.8 898.8
Unrestricted cash balance 985.8 728.9
Note 1: Financial Leverage is a non-statutory measure used by Management and VAH’s Board to assess financial performance and is defined on slides 20,21 & 22.
18
• The Group is highly hedged against adverse movements in fuel prices and FX rates in FY18 whilst maintaining reasonable participation in favourable movements.
H E D G I N G U P D A T E
FY18 hedging update
Benefit of lower fuel prices realised in FY17 partially offset by movements in exchange rates
Note 1: Please refer to the “Forward Looking Statements” section on slide 22 when considering this information.
FY181
Hedge Position
Fuel (AUD Brent/bbl) 83%
FX (AUD/USD) 100%
19
V I R G I N A U S T R A L I A G R O U P O P E R A T I N G F L E E T
Benefit of lower fuel prices realised in FY16 partially offset by movements in exchange rates
Note 1: Excludes aircraft that have been removed from operational service.
Operational fleet size reduced by ~5% on prior year whilst maintaining market share
Group operating fleet1 As at 30 June 2017
As at 30 June 2017 As at 30 June 2016 Leased Owned
B737-700/800 77 38 39 75
E190 7 7 - 16
A330 6 6 - 6
B777 5 1 4 5
ATR72-500/600 13 13 - 14
Mainline fleet 108 65 43 116
F100 14 2 12 14
A320 (Charter & Tigerair) 16 15 1 16
B737-800 (Tigerair) 3 - 3 3
Virgin Australia Group 141 82 59 149
20
D I S C L A I M E R S , D E F I N I T I O N S A N D A S I C G U I D A N C E
Benefit of lower fuel prices realised in FY16 partially offset by movements in exchange rates
Disclaimer
The non-IFRS information has not been audited or reviewed by KPMG.
This presentation has not been audited or reviewed by KPMG; however, IFRS data has been derived from the unaudited annual consolidated financial statements that are in the process of being audited by KPMG.
Definitions
Underlying Profit / (Loss) Before Tax: is a non-statutory measure that represents statutory (loss) before tax excluding the impact of impairment losses on assets classified as held for sale, impairment losses on other assets, onerous contract expenses, business and capital restructure and transaction costs (as defined below), share of net profits of equity-accounted investee and the impact of hedging and financial instruments (as defined below). This is a measure used by Management and Board of Virgin Australia Holdings Limited (VAH) to assess the financial performance of VAH.
Underlying Performance: is a non-statutory measure that refers to earnings or returns calculated based on Underlying Profit / (Loss) Before Tax (as defined above).
Business and capital restructure and transaction costs: is a non-statutory measure that includes business and capital restructure and transaction costs.
Hedging and financial instruments: is a non-statutory measure that includes the following items outlined in Note 2 of the VAH Preliminary Final Report. For the year ended 30 June 2017: time value movement on cash flow hedges (loss of $43.5m), unrealised ineffectiveness on cash flow hedges and non-designated derivatives (gain of $0.7m). For the year ended 30 June 2016, this item includes: time value movement on cash flow hedges (loss of $28.5m) and unrealised ineffectiveness on cash flow hedges and non-designated derivatives (gain of $0.7m).
Underlying Earnings Before Interest, Tax, Depreciation, Amortisation and Aircraft Rentals (EBITDAR): is a non-statutory measure per Note 2 of the VAH Preliminary Final Report for the year ended 30 June 2017. It is used by Management and VAH’s Board as a measure to assess the financial performance of VAH and its individual segments. It is defined as Underlying Profit / (Loss) Before Tax (as defined above) excluding the impact of depreciation, amortisation, aircraft rentals and net finance costs.
Underlying Earnings Before Interest & Tax or Underlying EBIT: is a non-statutory measure per Note 2 of the VAH Preliminary Final Report for the year ended 30 June 2017. It is used by Management and VAH’s Board as a measure to assess the financial performance of VAH and its individual segments. It is defined as Underlying Profit / (Loss) Before Tax (as defined above) excluding the impact of net finance costs.
21
D I S C L A I M E R S , D E F I N I T I O N S A N D A S I C G U I D A N C E
Definitions (continued)
Underlying Earnings Before Interest & Tax Margin or Underlying EBIT Margin: is a non-statutory measure derived from Underlying Earnings Before Interest & Tax (as defined above) divided by total segment revenue.
Free Cash Flow: is a non-statutory measure derived from cash generated from operating activities (excluding finance costs and finance income) less cash payments for business restructuring expenses less net cash used in investing activities less equity distributions paid to non-controlling interests.
RASK: is a non-statutory measure derived from segment revenue normalised for Cargo operations on a consistent basis divided by Available Seat Kilometres (defined below) of the regular passenger transport business.
Yield: is a non-statutory measure derived from segment revenue normalised for Cargo operations on a consistent basis divided by Revenue Passenger Kilometres (defined below) of the regular passenger transport business.
ASK or Available Seat Kilometre: Available Seat Kilometres or ASKs is a non-statutory measure derived from total number of seats available for passengers multiplied by the number of kilometres flown on Virgin Australia or Tigerair Australia operated flights.
RPK or Revenue Passenger Kilometre: Revenue Passenger Kilometre is a non-statutory measure derived from number of paying passengers multiplied by the number of kilometres flown on Virgin Australia or Tigerair Australia operated flights.
Financial Leverage: is a non-statutory measure and is defined as the ratio of Adjusted Net Debt (as defined below) to EBITDAR (as defined above).
Adjusted Net Debt: is a non-statutory measure derived from Net Debt (as defined below) adding 7 times annual aircraft rentals.
Net Debt: is a non-statutory measure derived from interest bearing liabilities less cash and cash equivalents.
22
D I S C L A I M E R S , D E F I N I T I O N S A N D A S I C G U I D A N C E
Benefit of lower fuel prices realised in FY16 partially offset by movements in exchange rates
Definitions (continued)
Forward Looking Statements: This document contains certain forward looking statements. Forward looking statements can generally be identified by the use of words such as ‘project’, ‘foresee’, ‘plan’, ‘expect’, ‘aim’, ‘potential’, ‘goal’, ‘target’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘could’, ‘should’, ‘will’ or similar expressions. Indications of, and guidance on, future earnings and financial position and performance are also forward looking statements. Forward looking statements, opinions and estimates provided in this document involve a number of risks, assumptions and contingencies, many of which are beyond the Virgin Australia Group’s control and which are subject to change without notice, as are statements about market and industry trends, which are based on interpretations of current market conditions. It is believed that the expectations reflected in these forward looking statements, opinions and estimates are reasonable, but there can be no assurance that actual outcomes will not differ materially from these statements. Such forward looking statements, opinions and estimates are provided as a general guide only, should not be relied on as an indication or guarantee of future performance and speak only as of the date of this announcement. You should not place undue reliance on forward looking statements.
No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness, likelihood of achievement or reasonableness of any of the information, forward looking statements, opinions and estimates contained in this document. To the maximum extent permitted by law, none of the Virgin Australia Group, its directors, employees or agents, nor any other person accepts any liability for any loss arising from the use of the information contained in this document. Except as required by law and ASX Listing Rules, the Virgin Australia Group has no obligation to update publicly or otherwise revise any forward looking statement, opinion or estimate as a result of new information, future events or other factors.
Nothing contained in this presentation constitutes investment, legal, tax or other advice. You should make your own assessment and take independent professional advice in relation to the information contained in this document and any action taken on the basis of that information.
ASIC guidance
In December 2011 ASIC issued Regulatory Guide 230. In order to comply with this Guide, Virgin Australia Holdings Limited is required to make a clear statement about whether information disclosed in documents other than the Virgin Australia Holdings Limited Preliminary Final Report for the year ended 30 June 2017 has been audited or reviewed in accordance with Australian Auditing Standards.
The non-IFRS information has not been audited or reviewed by KPMG. This presentation has not been audited or reviewed by KPMG; however, IFRS data has been derived from the unaudited annual consolidated financial statements that are in the process of being audited by KPMG.