Virgin Australia Holdings Limited · ASX:VGN
Virgin Australia — H1 FY2018 Earnings Presentation
25 slides from Virgin Australia's earnings presentation, Feb 28, 2018
Slide 1: H1 FY18 Results Presentation
H1 F Y 1 8 R E S U LT S P R E S E N TAT I O N 28 FEBRUARY 2018
Slide 2: Group Highlights
2 H1 FY18 results presentation GROUP HIGHLIGHTS DELIVERS STRONGEST H1 UNDERLYING PROFIT RESULT IN 10 YEARS 1 Underlying Profit / (Loss) Before Tax1,2, Cash generated from operating activities, $m Financial Leverage2 $m Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 13 Dec 14 Dec 15 Dec 16 Dec 17 Dec 13 Dec
Slide 3: Key Financial Results
3 H1 FY18 results presentation K E Y F I N A N C I A L R E S U LT S Measure H1 FY18 H1 FY17 CHANGE Underlying Profit Before Tax1 $102.5m $42.3m $60.2m Best result in 10 years Statutory Profit / (Loss) After Tax $4.4m $(21.5)m $25.9m Cash generated from operating $270.6m $143.5m $127.1m Second Best r
Slide 4: Virgin Australia Domestic
4 H1 FY18 results presentation VIRGIN AUSTRALIA DOMESTIC STRONG SEGMENT EBIT GROWTH AND OPERATING MARGINS DELIVERED Virgin Australia Domestic performance Improved VA Domestic Segment EBIT($m) Measure H1 FY18 H1 FY17 CHANGE Segment EBIT ($m) 153.1 80.0 73.1 +91.4% Segment EBIT Margin 8.2% 4.5% 3.7pts
Slide 5: Virgin Australia Domestic Delivers Record Unit Revenue
5 H1 FY18 results presentation VIRGIN AUSTRALIA DOMESTIC DELIVERS RECORD UNIT REVENUE H1 VA Domestic RASK and Yield (on an earned revenue basis) (cents) Yield Record RASK and Yield results1: • Achieved highest ever RASK for the first half of RASK a financial year • Achieved highest ever Yield for th
Slide 6: Virgin Australia International
6 H1 FY18 results presentation V I R G I N A U S T R A L I A I N T E R N AT I O N A L PROFITABLE DESPITE BALI VOLCANO AND INVESTMENT IN HONG KONG LAUNCH Virgin Australia International performance VA International Segment EBIT($m) Measure H1 FY18 H1 FY17 CHANGE Segment EBIT ($m) 1.4 0.8 0.6 +75.0% Se
Slide 7: Tigerair Australia
7 H1 FY18 results presentation TIGERAIR AUSTRALIA IMPACTED BY UNSCHEDULED BALI EXIT IN 2017 Tigerair Australia performance Performance impacted by unscheduled Measure H1 FY18 H1 FY17 CHANGE exit from Bali: • Surplus aircraft temporarily deployed on the Segment EBIT ($m) (6.7) 6.2 (12.9) domestic net
Slide 8: Velocity Frequent Flyer
8 H1 FY18 results presentation V E L O C I T Y F R E Q U E N T F LY E R CHALLENGING FIRST HALF Velocity performance Velocity members (m) Measure H1 FY18 H1 FY17 CHANGE Revenue ($m) 191.3 176.4 14.9 Segment EBIT ($m) 56.2 66.0 (9.8) Segment EBIT Margin 29.4% 37.4% (8.0)pts 8.6 8.0 • Overall performan
Slide 9: Recognition from Our Customers and Industry
9 H1 FY18 results presentation RECOGNITION FROM OUR CUSTOMERS AND INDUSTRY • Best Airline in Australia/Pacific • Best Airline Staff in Australia/Pacific • Ranked 13th in World’s Top 20 Airlines • Best Business Class – second consecutive year • Ranked #4 overall in Top Ten Airlines • Best Domestic Ai
Slide 10: Virgin Australia Group Focus: Delivering Results
10 H1 FY18 results presentation VIRGIN AUSTRALIA GROUP FOCUS DELIVERING RESULTS On track • Includes $405m of debt repayments, including $92m of accelerated debt repayments, cash generated Strengthening from operating activities up $127.1m balance sheet • Financial Leverage1 down 4.4% to 4.3x Consoli
Slide 11: Outlook
11 H1 FY18 results presentation OUTLOOK Based on the Group’s recent positive performance trajectory, current market conditions and fuel headwinds net of foreign exchange for the second half, we expect the Group’s underlying performance for the second half of the 2018 financial year to improve compar
Slide 12: Unmarketable Parcel Facility
12 H1 FY18 results presentation UNMARKETABLE PARCEL FACILITY Today, the Board also announced the implementation of an opt-out buy-back facility for unmarketable parcels of shares – this applies to shareholdings that are valued at less than $500.
Slide 13: Supplementary Financial Slides
13 H1 FY18 results presentation S U P P L E M E N TA R Y FINANCIAL SLIDES
Slide 14: Group Financial Performance Summary
14 H1 FY18 results presentation GROUP FINANCIAL PERFORMANCE SUMMARY H1 FY18 H1 FY17 $m $m Revenue and income 2,791.0 2,633.7 Statutory Profit / (Loss) after tax 4.4 (21.5) Income tax expense/(benefit) 4.0 (25.4) Statutory Profit / (Loss) before tax 8.4 (46.9) Add back Onerous contract expenses (from
Slide 15: Cashflow
15 H1 FY18 results presentation CASHFLOW • $127.1m improvement in cash generated from operating Cash flow statement activities, driven by improved earnings, and successful H1 FY18 H1 FY17 implementation of the Better Business Program $m $m Cash generated from operating activities 270.6 143.5 • 70% r
Slide 16: Strong Operating Cash Inflows and Reduced Non-Aircraft Capex
16 H1 FY18 results presentation STRONG OPERATING CASH INFLOWS AND REDUCED NON-AIRCRAFT CAPEX Pre-Debt Financing Cashflows (excl. equity distributions) – H1FY17 to H1FY18 ($m) • Significantly improved free cash flow performance pre +$208m aircraft transactions 50 46.7 39.4 • Significant improvement i
Slide 17: Balance Sheet and Liquidity
17 H1 FY18 results presentation BALANCE SHEET AND LIQUIDITY Balance sheet Dec 17 Dec 16 • Strong total and unrestricted cash balance $m $m Cash and cash equivalents 1,216.3 1,595.8 • 13% reduction in total interest bearing liabilities – Total assets 6,354.0 6,701.4 business continues drive towards r
Slide 18: Debt Further Reduced and Leverage Metrics Continue to Improve
18 H1 FY18 results presentation DEBT FURTHER REDUCED AND LEVERAGE METRICS CONTINUE TO IMPROVE Financial Leverage (as at 31 Dec)1 Total Debt, $m 3,012.8 -13.2% -54% 9.4x 2,765.6 2,522.4 2,401.9 7.3x 2,150.6 6.8x 1,747.5 1,770.4 1,782.6 1,783.9 5.7x 5.7x 1,707.1 4.9x 4.8x 4.7x 4.5x 4.3x Dec-08 Dec-09
Slide 19: Funding Strategy
19 H1 FY18 results presentation FUNDING STRATEGY Funding strategy is designed to maximise financial flexibility and balance sheet strength • Diverse sources of funding – unsecured, secured and lease market • Target Financial Leverage2 consistent with a BB credit rating • Flexibility to manage debt v
Slide 20: Hedging Update
20 H1 FY18 results presentation HEDGING UPDATE H2 FY18 hedging update • The Group is highly hedged against adverse movements in fuel prices and FX rates for the remainder of FY18 • Hedging includes positive offsets against expectations of H2 FY18 higher fuel prices in H2 FY18, whilst maintaining Hed
Slide 21: Virgin Australia Group – Operating Fleet
21 H1 FY18 results presentation VIRGIN AUSTRALIA GROUP – OPERATING FLEET As at 31 As at 31 December 2017 As at 30 June As at 30 June Group operating fleet1 December 2017 2017 2016 Leased Owned B737-700/800 81 38 43 77 75 E190 1 1 - 7 16 A330 6 6 - 6 6 B777 5 1 4 5 5 ATR72-500/600 8 8 - 13 14 Mainlin
Slide 22: Virgin Australia Group – Driving Growth / Aircraft Utilisation
22 H1 FY18 results presentation VIRGIN AUSTRALIA GROUP – DRIVING GROWTH / AIRCRAFT UTILISATION 31 Dec 2017 31 Dec 2016 31 Dec 2015 31 Dec 2014 31 Dec 2013 Group Operating Fleet1 134 145 159 154 149 ASKs / Group Operating Fleet Units (yoy growth) 8.4% 2.7% 8.3% 3.8% Na Revenue Per Tail (yoy growth) 1
Slide 23: Disclaimers, Definitions and ASIC Guidance
23 H1 FY18 results presentation DISCLAIMERS, DEFINITIONS AND ASIC GUIDANCE 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 Virgin Australia Holdings Limited Interim
Slide 24: Disclaimers, Definitions and ASIC Guidance (continued)
24 H1 FY18 results presentation DISCLAIMERS, DEFINITIONS AND ASIC GUIDANCE Definitions (continued) Segment EBIT Margin: is a non-statutory measure derived from Underlying Earnings Before Interest & Tax (as defined above) divided by total segment revenue. RASK: is a non-statutory measure derived from
Slide 25: Disclaimers, Definitions and ASIC Guidance (continued)
25 H1 FY18 results presentation DISCLAIMERS, DEFINITIONS AND ASIC GUIDANCE 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’, ‘
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