Mobico Group Plc · LSE:MCG
Mobico — National Express Group — H1 2002 Earnings Presentation
40 slides from Mobico's earnings presentation, Sep 17, 2002
Slide 1: For the six months ended 30 June 2002
For the six months ended 30 June 2002 17 September 2002 1
Slide 2: William Rollason, Finance Director
WILLIAM ROLLASON Finance Director
Slide 3: Half year highlights
• UK bus maintains strong margins • Increased contribution and margins from US student bus operation • Patronage growth in UK Rail remains soft particularly on London and South East services • Australia tram/train negotiations continue with Victorian Government 3
Slide 4: Turnover and profit headline results
• Turnover up 5.2% to £1,238.7m (2001: £1,177.1m) • Normalised operating profit of £49m (2001: £77.9m) • Normalised profit before tax of £37.2 million (2001: £60.5m) • Normalised diluted EPS of 20.8p (2001: 33.7p restated) • EBITDA interest cover of 8.8 times (2001: 6.4 times) • Interim dividend inc
Slide 5: Capex, cash flow, net debt and gearing
• Capital expenditure of £58m (2001: £59.4m) • Underlying tax rate of 20.9% (2001: 21.5%) • Tax rate post FRS19 of 23.0% (2001: 21.5% restated) • Operating cash flow of £105.7m (2001: £82.4m) before net payment to the SRA of £35.1m • Reduction in net debt at 30 June to £321.5m (2001: £370.4m) • Gear
Slide 6: Profit and loss account, 6 months to 30 June 2002
Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2002 30 June 2001 31 Dec 2001 (Restated) (Restated) £m £m £m Turnover 1,238.7 1,177.1 2,464.2 Normalised operating profit 49.0 77.9 157.8 Share of loss of associates (2.6) (1.1) (1.9) Normalised profit before interest 46.4 76.8 155.
Slide 7: Turnover by division
Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2002 30 June 2001 31 Dec 2001 £m £m £m Buses 102.0 103.1 208.3 Trains - Turnover 416.7 413.0 - Grant 311.1 259.6 727.8 672.6 1,458.2 Coaches 84.2 85.4 181.3 North America Student Bus 114.9 109.6 Public Transit 96.5 92.9 211.4 202.5
Slide 8: Divisional operating profit
DIVISIONAL OPERATING PROFIT Before goodwill and exceptionals Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2002 30 June 2001 31 Dec 2001 £m £m £m Buses 23.8 26.5 52.8 Trains 4.1 20.3 40.6 Coaches 2.0 1.9 10.6 North America - Student bus 19.2 17.8 29.4 - Public transit 0.3 4.2 9
Slide 9: Balance sheet at 30 June
Unaudited Unaudited Audited At 30 June At 30 June At 31 Dec 2002 2001 2001 (Restated) (Restated) £m £m £m Goodwill 472.6 530.9 508.3 Fixed assets 529.5 513.0 512.8 Investments 23.0 27.3 26.4 1,025.1 1,071.2 1,047.5 Working capital (239.6) (216.9) (210.9) Net borrowings (321.5) (370.4) (315.0) Provis
Slide 10: Cash flow statement
Unaudited Unaudited Audited 6 months to 6 months to Year to 30 June 2002 30 June 2001 31 Dec 2001 £m £m £m Net cash inflow before SRA payment 105.7 82.4 185.5 SRA payment (35.1) - - Net cash inflow from operations 70.6 82.4 185.5 Net capital expenditure (58.0) (59.4) (92.0) Net cash after capex and
Slide 11: EBITDA and cash flow by division
Buses Trains Coaches Total UK N America Australia Total £m £m £m £m £m £m £m Operating profit/(loss) before exceptionals 23.8 4.1 2.0 29.9 19.5 (0.4) 49.0 Depreciation 5.7 8.9 2.3 16.9 11.2 6.8 34.9 EBITDA 29.5 13.0 4.3 46.8 30.7 6.4 83.9 Working capital movement (14.4) 0.6 0.9 (12.9) 15.4 20.0 22.5
Slide 12: Major projects and net capital expenditure
Major Projects 6 months to 6 months to Year to 30 June 2002 30 June 2001 31 Dec 2001 £m £m £m Buses 90 new buses 13.5 10.4 - (1) Trains Car park and station 8.7 6.4 18.7 enhancements Coaches Manchester coach station 1.7 6.6 7.8 N America New buses 14.2 17.4 31.6 Australia Rail infrastructure and bus
Slide 13: Accounting changes: deferred tax and UITF34
• FRS 19 – “Deferred Tax” Ø Half year deferred tax charge of £0.8m – increases the total tax charge to £6.4m Ø Goodwill amortisation increased by £0.1m to £22m Ø Basic EPS reduced by 0.1p to 6.2p Ø Net assets reduced by £12.7m to £401m • UITF34 – “Pre-contract costs” Ø £0.7m exceptional charge 13
Slide 14: Ray O'Toole, Chief Operating Officer
RAY O’TOOLE Chief Operating Officer
Slide 15: Australia trains and trams
• Turnover of £84.9m (2001: £78.5m) • Operating loss of £2.3m (2001: £3.2m profit) Ø February interim settlement Ø Grant reduction Ø Revenue protection Ø Insurance 15
Slide 16: M>Train, M>Tram and V/Line operations
• M>Train Ø Commenced introduction of 62 new trains Ø Refurbishment programme Ø Punctuality and reliability improved to 97.4% • M>Tram Ø Commenced introduction of 59 new trams Ø Punctuality and reliability stable Ø Refurbishment programme Ø Superstops • V/Line Ø 29 new trains on order 16
Slide 17: Revenue protection
Revenue Protection • 130 new authorised revenue protection officers – total now 240 • New initiatives Ø Three major fares blitzes Ø High profile media campaign Ø Full Government support • Revenue fraud reduced • New ticketing system 17
Slide 18: Victoria Government interim settlement
• Victoria Government interim settlement Ø February 2002 £16.5m payment (A$45.9m) • M>Tram and M>Train negotiations continue • V/Line - new four year contract renegotiation commenced 18
Slide 19: Australia buses
• Turnover of £28.4m (2001: £28.2m) • Operating profit of £1.9m (2001: £2.9m) • Patronage Ø Down in Sydney Ø Up in Melbourne and Perth • Integration of Glenorie Bus in Sydney • Major depot refurbishment • 29 new buses introduced • Action to address passenger decline in Sydney 19
Slide 20: UK bus
• Turnover of £102m (2001: £103.1m) Ø Sale of Bronckaers • Operating profit of £23.8m (2001: £26.5m) • Strong margins maintained • Cost pressures • Patronage impacted by Birmingham construction work • 90 new low floor buses bringing total to over 1,000 20
Slide 21: UK bus approach: fares, frequency, new vehicles
• Low and simple fares • High service frequency • Investment in new vehicles • Strong commitment to Quality Partnerships 21
Slide 22: Quality Partnerships
• Six Quality Partnerships delivered covering 5% of the network patronage delivering an average annual growth of over 15% • Working with Local and Central Government • Two major Quality Partnerships to commence 2002 Ø Birmingham Outer Circle Route and Hagley Road § 150 buses § 32 million passenger j
Slide 23: Coach
• Turnover of £84.2m (2001: £85.4m) • Operating profit of £2m (2001: £1.9m) • Key routes review continues • Continued growth of on-line sales • New Manchester coach station opened costing £3m • AirLinks recovery post September 11 23
Slide 24: UK rail
• Turnover of £727.8m (2001: £672.6m) • Operating profit of £4.1m (2001: £20.3m) • ScotRail industrial action cost £7m in the period • Rail patronage flat • Reduction in franchise grants • Compensation payments reduced year-on-year 24
Slide 25: UK rail operating issues
• Decline in leisure and discretionary traffic • Network reliability Ø Routine maintenance Ø Speed restrictions Ø WCML upgrade • Industrial relations unrest • Driver shortages and introduction of new trains 25
Slide 26: UK rail turnover and profit by market sector
Turnover Operating profit/(loss) 2002 2001 2002 2001 £m £m £m £m London and the South East 246.2 249.0 5.6 34.4 Long Distance/Intercity 67.7 58.8 5.1 4.9 Regional Services 395.4 345.2 (5.7) (20.2) Other 18.5 19.6 (0.9) 1.2 Total 727.8 672.6 4.1 20.3 26
Slide 27: UK rail operating profit bridge
Operating Profit before exceptional items £m Six months to June 2001 20.3 Net subsidy 39.7 Railtrack & performance (36.0) Rolling stock charges (20.0) Insurance (7.0) Industrial action (7.4) Revenue/Other 14.5 Six months to June 2002 4.1 27
Slide 28: Passenger journeys by market sector
London and the South East Long Distance 70 315 5 40 NX 68 312 NX 4.8 38 Passenger Journeys (millions) Passenger journeys (millions) 4.6 66 309 36 ATOC 4.4 ATOC 64 306 34 4.2 62 303 32 4 60 300 3.8 30 2000 2001 2002 2000 2001 2002 Regional Services 65 110 62 107 Passenger journeys (millions) ATOC NX
Slide 29: Train operating companies, expiry and factors
Market Sector TOC Expiry Factors London and the South c2c May 2011 • c2c new train leasing charges East Gatwick May 2011 • September 11 effect • BA “Future Size and Shape” Silverlink Oct 2004 • Infrastructure issues Wagn March 2004 • Infrastructure issues • Driver shortages Long MML April 2008 • Bus
Slide 30: Franchise extension and bid discussions
• Central Trains - Two year extension to 2006 under discussion with Centro and SRA • ScotRail - Under discussion with Scottish Executive • Silverlink - Under discussion with SRA • Wales and Borders - Final bid to be submitted by Winter 2002 for commencement Winter 2003 • Wessex - Consultation paper
Slide 31: North America student bus
• Turnover £114.9m (2001: £109.6m) • Operating profit £19.2m (2001: £17.8m) • Margins improved to 16.7% (2001: 16.2%) • New contracts Ø 250 new buses Ø Now in 20 states and two Canadian provinces Ø 94% contract retention • Acquisition of Stock Transportation for £74.3m ($C170m) Ø Based in Ontario, C
Slide 32: North American school bus market
• North American market operates 500,000 buses transporting over 25 million students per day • Canadian market accounts for 40,000 buses and transports 2.5 million students per day • Private operators accounts for 75% of operations • Over 1,400 private operators - 1,300 with less than 50 buses • Lar
Slide 33: North America public transit
• Turnover of £96.5m (2001: £92.9m) • Operating profit of £0.3m (2001: £4.2m) • Las Vegas strike £1.7m in period now resolved • Initiatives to reduce costs • Insurance costs up by £5m 33
Slide 34: Outlook
• Bus - Started well • UK rail - Addressing issues - Patronage remains flat across network - On-going discussions with SRA • Coach - Good peak season - Continued growth in on-line sales • Australia - Conclude tram and train negotiations by end of year - Sydney bus market difficult • North America -
Slide 35: Appendices
For the six months ended 30 June 2002 Appendices 35
Slide 36: Rail subsidy receivable by year
London & Regional Total the South East Services £m £m £m 2002 77.9 580.1 658.0 2003 61.1 616.8 677.9 2004 36.2 159.6 195.8 2005 19.2 - 19.2 2006 18.4 - 18.4 • Figures include the effect of the revised subsidy receivable from the SRA • Figures for 2002 onwards are stated before the effect of Clause 1
Slide 37: Rail subsidy bridge to June 2002
6 months to Decrease Clause 18.1 SRA 6 months to 30 June 2001 in subsidy payment 30 June 2002 £m £m £m £m £m London & South East 28.9 (6.1) 17.1 3.4 43.3 Regional Services 230.7 (10.0) (5.3) 52.4 267.8 259.6 (16.1) 11.8 55.8 311.1 37
Slide 38: Subsidy profile by year
Year Subsidy Increase/(decrease) £m £m 2002 45.0 (11.0) 2003 38.3 (6.7) 2004 40.2 1.9 2005 47.1 6.9 2006 50.0 2.9 2007 47.4 (2.6) 2008 42.2 (5.2) 2009 30.5 (11.7) 38
Slide 39: Fuel hedges
• Fuel hedges in place at equivalent of $21.50 per barrel against: Ø 60% of our 2003 fuel usage Ø 30% of our 2004 fuel usage 39
Slide 40: For the six months ended 30 June 2002
For the six months ended 30 June 2002 40
National Express Group — H1 2002 Earnings Presentation on 6ix