Virgin Australia Holdings Limited · ASX:VGN
Virgin Australia — FY2017 Earnings Presentation
23 slides from Virgin Australia's earnings presentation, Aug 10, 2017
Slide 1: 2017 Financial Year Results Presentation
2 0 1 7 F I N A N C I A L Y E A R R E S U LT S P R E S E N TAT I O N August 10, 2017
Slide 2: 2017 Financial Year Group Outcomes
2017 FINANCIAL YEAR GROUP OUTCOMES • Positive result of $34m, a $126m improvement on FY16 Positive Free Cash Flow1 generation • First positive Free Cash Flow reported result since FY12 FY17 performance impacted by • Subdued domestic trading conditions X several factors1 • Impact of fleet simplific
Slide 3: Key Financial Results
KEY FINANCIAL RESULTS 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 $1,037.2
Slide 4: Positive Free Cash Flow
POSITIVE FREE CASH FLOW1 First positive Free Cash Flow1 reported result since FY12 Free Cash Flow1, $m Total cash, $m 34.3 CAGR 21.2% 1,396.1 1,123.8 1,028.5 (92.1) (117.2) 783.8 $316 (282.1) FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Note 1: Free Cash Flow is a non-statutory measure used by Management
Slide 5: Debt Metrics Improving
DEBT METRICS IMPROVING Best Financial Leverage1 result for 30 June since 2012, Net Debt1 reduction of $839m, positive trajectory expected to continue Net Debt1, $m Financial Leverage1 1,876.2 7.5x 1,733.7 (40%) $839 5.9x 5.2x 1,166.9 4.5x 1,037.2 FY14 FY15 FY16 FY17 FY14 FY15 FY16 FY17 Significant i
Slide 6: Better Business Program
BETTER BUSINESS PROGRAM 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, $m • ~5% reduction in operating fleet with capacity maintain
Slide 7: Virgin Australia Domestic
VIRGIN AUSTRALIA DOMESTIC Virgin Australia Domestic performance improved in Q4 with subdued trading conditions impacting overall FY17 Underlying EBIT1 performance Domestic performance Quarter 4 – Improved Underlying EBIT ($m)1 FY17 FY16 Change Underlying EBIT1 92.9 162.0 (69.1) ($m) Underlying EBIT
Slide 8: Virgin Australia International - Profitable
VIRGIN AUSTRALIA INTERNATIONAL - PROFITABLE International improvement strategy drove profitable performance International performance Driven by improvement strategy FY17 FY16 Change • Virgin Australia International profitable with ~$50m underlying EBIT improvement Underlying EBIT1 0.5 (48.8) 49.3 •
Slide 9: Tigerair Australia – Domestic Operations Profitable
TIGERAIR AUSTRALIA – DOMESTIC OPERATIONS PROFITABLE Tigerair Australia overall underlying EBIT1 performance impacted by Bali operations Tigerair Australia performance (Domestic and International) FY17 FY16 Change Underlying EBIT1 (24.3) 2.2 (26.5) ($m) Underlying EBIT (4.5%) 0.5% (5.0pts) Margin1 RA
Slide 10: Velocity – Second Half Performance Improvement
VELOCITY – SECOND HALF PERFORMANCE IMPROVEMENT Velocity investing in information technology, new partnerships and internal resources for future growth Velocity performance Velocity members (m) FY17 FY16 Change 82% Revenue ($m) 371.0 327.6 43.4 Underlying 8.0 142.8 139.7 3.1 6.3 EBIT1 ($m) 5.3 4.4 Un
Slide 11: Velocity: Diverse Partnership Portfolio
VELOCITY: DIVERSE PARTNERSHIP PORTFOLIO A broad set of earn and redemption partners with over 400 brands Airline Financial services Retail A broad set of points earn and redemption partners with over 400 brands 11
Slide 12: Virgin Australia Group Focus
VIRGIN AUSTRALIA GROUP FOCUS • 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 in
Slide 13: Outlook
OUTLOOK 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 impr
Slide 14: Supplementary Financial Slides
S U P P L E M E N TA R Y F I N A N C I A L SLIDES 14
Slide 15: Group Financial Summary
GROUP FINANCIAL SUMMARY FY17 FY16 $m $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 o
Slide 16: Cash Flow
CASH FLOW • $77.1m or 17% improvement in cash Cash flow statement generated from operating activities FY17 FY16 driven by improved EBITDA cash $m $m conversion from 92% in FY16 to 111% in Cash generated from operating 525.9 448.8 17% FY17 activities Transformation & net finance costs (252.0) (250.3)
Slide 17: Balance Sheet and Liquidity
BALANCE SHEET AND LIQUIDITY • Highest reported 30 June cash balance of Balance sheet $1,396.1m, up $272.3m • Unrestricted cash balance increased from FY17 FY16 $m $m $728.9m to $985.8m 1,396.1 1,123.8 • Financial Leverage1 improved by 14.1% Cash and cash equivalents from 5.2x to 4.5x 6,355.8 6,040.8
Slide 18: Hedging Update
HEDGING UPDATE • The Group is highly hedged against FY18 hedging update adverse movements in fuel prices and FX rates in FY18 whilst maintaining reasonable participation in favourable movements. FY181 Hedge Position Fuel (AUD Brent/bbl) 83% FX (AUD/USD) 100% Benefit of lower fuel prices realised in
Slide 19: Virgin Australia Group Operating Fleet
VIRGIN AUSTRALIA GROUP OPERATING FLEET As at 30 June As at 30 June 2017 As at 30 June Group operating fleet1 2017 Leased Owned 2016 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
Slide 20: Disclaimers, Definitions and ASIC Guidance
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 unaudited annual consolidated financial statements that are in the process
Slide 21: Disclaimers, Definitions and ASIC Guidance
DISCLAIMERS, DEFINITIONS AND ASIC GUIDANCE 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 n
Slide 22: Disclaimers, Definitions and ASIC Guidance
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’, ‘expect’, ‘aim’, ‘potential’, ‘go
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