Half Year Results. For six months ended 30 June July 2018

Transcription

1 Half Year Results Fr six mnths ended 30 June July 2018

2 Cautinary statement This Review is intended t fcus n matters which are relevant t the interests f sharehlders in the Cmpany. The purpse f the Review is t assist sharehlders in assessing the strategies adpted and perfrmance delivered by the Cmpany and the ptential fr thse strategies t succeed. It shuld nt be relied upn by any ther party r fr any ther purpse. Frward lking statements are made in gd faith, based n a number f assumptins cncerning future events and infrmatin available t Directrs at the time f their apprval f this reprt. These frward lking statements shuld be treated with cautin due t the inherent uncertainties underlying any such frward lking infrmatin. The user f these accunts shuld nt rely unduly n these frward lking statements, which are nt a guarantee f perfrmance and which are subject t a number f uncertainties and ther facts, many f which are utside f the Cmpany s cntrl and culd cause actual events t differ materially frm thse in these statements. N guarantee can be given f future results, levels f activity, perfrmance r achievements Nrmalised perating prfit, margin and EPS data, as referenced in this reprt, can be fund n the face f the Grup Incme Statement in the first clumn. Nrmalised prfit is defined as being statutry prfit befre intangible amrtisatin fr acquired businesses, US tax refrm, prfit fr the year frm discntinued peratins and cnsequent UK restructuring. The Bard believes that this gives a mre cmparable year-n-year indicatin f the perating perfrmance f the Grup and allws the users f the financial statements t understand management s key perfrmance measures. Unless therwise nted, all references t prfit measures thrughut this review are fr cntinuing peratins fr bth the current and prir reprting perid. Further details f discntinued peratins can be fund in nte 7 t the financial statements. Underlying revenue cmpares the current year with the prir year n a cnsistent basis, after adjusting fr the impact f currency. Cnstant currency basis cmpares current year's results with the prir year's results translated at the current year's exchange rates. The Bard believes that this gives a better cmparisn f the underlying perfrmance f the Grup. Fr a full list f definitins, please refer t nte 17 f the financial statements. 2

3 2018 Half year key highlights Cntinuing t deliver strng financial results Strng revenue grwth Recrd prfits Cnverted t cash Reinvested and returned Revenue up 6.4% at cnstant FX Rbust rganic grwth bsted by blt-n acquisitins Recrd H1 statutry PBT f 80.1m (up 24.0%) Nrmalised PBT up 18.0% at cnstant FX Generated 85m f free cash Gearing stable at 2.3x Invested in 7 blt-n acquisitins Acquisitins delivering returns f at least 15% Grwth in all cre divisins Operating margin 9.8%, up 30bps Upgrading FCF guidance t 170m ROCE increased t 12.2% EPS up 15.4% 10% increase in interim dividend 3

4 2018 Financial highlights Strng start t the year Cntinuing peratins m Change Change in Cnstant FX Revenue 1, , % +6.4% Grup nrmalised perating prfit % +9.8% Grup nrmalised PBT % +18.0% Nrmalised EPS 15.0p 13.0p +15.4% Statutry m Change Grup statutry perating prfit % Grup statutry PBT % Grup PAT frm cntinuing peratins % Statutry EPS 12.1p 10.9p +11.0% Free cash flw 85.2m 82.4m + 2.8m Net debt 922.1m 873.3m m Gearing 2.3x 2.3x - Interim dividend 4.69p 4.26p +10.1% 4

5 Revenue Strng grwth frm bth rganic & recent acquisitins m 52 1, ,135 1,208 HY 2017 Revenue FX HY 2017 at cnstant FX Organic grwth Acquisitins HY 2018 Revenue Strng revenue increase, up 6.4% in cnstant currency Organic grwth bsted by acquisitins in Nrth America & ALSA Adverse impact frm currency, with strnger versus the US $ 5

6 Operating prfit Strng cnstant currency grwth m (4) (28) 13 9 (3) (1) HY 2017 FX HY 2017 at cnstant FX Grwth Acquisitins Prperty Cst inflatin Cst efficiencies Fuel Weather Other HY 2018 Operating prfit up 9.8% n a cnstant currency basis Rbust rganic grwth bsted by acquisitins, with strng grwth delivered acrss all cre divisins Cst efficiencies & lwer fuel csts largely ffsetting cst inflatin 4m adverse n FX, with the strengthening f versus the US $ 3m impact frm weather, predminantly in the US 6

7 Divisinal summary Strng grwth acrss all cre businesses Revenue (YOY change*) Operating prfit HY 2018 Change Op prfit margin 38m ALSA 48.6m 3.4m 12.3% 274m 348m ALSA +7.0% Nrth America +9.7% Nrth America $76.6m $6.1m 10.2% 548m UK +0.8% German Rail (1.3)% UK 31.6m 5.6m 11.5% Other (11.4)m (2.6)m Grup 118.7m 7.1m 9.8% *Year-n-year change shwn in cnstant currency 7

8 Incme statement Duble digit reprted grwth m H H Change Operating prfit % Share f results f assciates & JVs 0.3 (3.9) 4.2m Net finance csts (18.3) (18.8) 0.5m Prfit befre tax % Tax (ETR 22%) (22.4) (21.4) ( 1.0m) Prfit after tax % EPS 15.0p 13.0p +15.4% PBT up 18.0% in cnstant currency, up 13.3% n a reprted basis (statutry prfit up 24.0%) Finance csts dwn 0.5m, reflecting lwer csts f funding with the issuance f the Flating Rate Nte 2017 Prir year write dwn f investment in minrity stake in Deutsche Turing Grup Effective tax rate has fallen t 22%, in line with previus guidance 15.4% EPS grwth 8

9 Superir cash and returns Investing fr future grwth & delivering returns t sharehlders m H H FY 2017 EBITDA Wrking capital (22.2) Maintenance capex (59.1) (76.9) (165.2) Pensin deficit payments (3.7) (1.4) (5.0) Operatinal cash flw Tax/interest/ther (18.4) (36.7) (65.2) Free cash flw Wrking capital utflw reflects the timing f wrking capital receipts in H1 expect a wrking capital inflw in H2 Prir year inflw reflecting catch up revenue in Germany Maintenance capex weighted t H2 nw expect full year net capex f arund 160m Interest lwer reflecting prir year duble cupn payments with expiry f bnd in 2017 Increasing FCF guidance t 170m 9

10 Superir cash and returns Investing fr future grwth & delivering returns t sharehlders m H H FY 2017 Cash flw available fr grwth & dividends Net grwth capital expenditure (4.2) (3.0) (13.2) Net inflw frm discntinued peratins Acquisitins (58.9) (52.9) (101.5) Dividends (47.3) (42.9) (64.7) Other, including frex (10.2) (8.8) (4.4) Net funds flw (34.2) 4.7 (9.9) Net debt (922.1) (873.3) (887.9) Grwth capex weighted t the secnd half Dispsal f c2c delivered an inflw f 30m in prir year 58.9m net expenditure n acquisitins 10

11 Grwth Acquisitins in acquisitins in the first half f the year Cmbined ttal cnsideratin f 112m: 22m paid in H1 2018, 65m deferred cnsideratin Targeting businesses that cmplement &/r have the ability t expand/grw ur psitin in new markets 4 in Nrth America: 2 charter schl bus businesses in Flrida A schl bus business in NY state A mtr cach & charter business in New Jersey 3 in Spain: 1 business that prvides services t the grwing cruise market 1 urban & reginal transprt cmpany in Madrid 1 regular & urban bus business in Galicia Cntinue t evaluate a strng pipeline f further pprtunities, applying ur disciplined apprach 11

12 Balance sheet Gearing maintained at 2.3x, interest cver increased Gearing Ratis HY 2018 Dec 2017 Cvenant Net debt/ebitda 2.3x 2.3x <3.5x Interest cver 10.5x 10.2x >3.5x Ratings Grade Outlk Mdys Baa3 Psitive Fitch BBB- Stable Gearing maintained at 2.3x n net debt f 922m Wrking capital utflw, higher acquisitin spend & deferred cnsideratin n acquisitins made in 2017 Remain cmmitted t a rbust financial strategy: Prudent gearing plicy: apprximately 2-2.5x EBITDA Dividend cvered by at least 2x Grup earnings Strng cmmitment t Investment Grade debt rating Prudent risk planning fuel mstly hedged t 2019 & pensin deficit plan in place 12

13 Balance sheet Increased liquidity & interest savings Strng debt maturity prfile RCF 19 Drawn Drawn RCF Bnd FRN m cash & cmmitted headrm* Funding ut t 2023 (average 3.8 years) Bank facilities extended t 2023 with tw additinal ne year extensin ptins *Available cash and undrawn cmmitted facilities at 30 June

14 Guidance 2018 Net capital expenditure at lwer end f guidance at 1.1x depreciatin c. 160m Free cash flw guidance increased t 170m Effective nrmalised tax rate c. 22%, nrmalised cash tax rate <15% Lwer fuel csts c. 20m Dividend cver f at least 2.0x Grup nrmalised earnings 14

15 Our strategy is wrking: a differentiated business Intrductin Our strategy cntinues t cnsistently deliver: a recrd perfrmance & grwing returns Organic grwth & new acquisitins cmplemented by expansin in t interesting new adjacent markets Benefit f technlgy investment & acquisitins cntinues Strng cmmercial passenger grwth Acceleratin f safety technlgy rll ut Increasingly diversified earnings streams & new platfrms fr grwth Managing ur risks, grwing ur cre, expanding ur reach 15

16 Nrth America Disciplined bidding seasn price rises abve wage inflatin Much strnger price increases achieved fr 2018/19 schl year Average price increase f 6.6% n cntracts up fr renewal & 3.7% acrss whle prtfli Retentin rate f 90% verall Attractive pprtunities in 2 asset efficient markets Enrlment in Charter Schls (m) Anticipate wage inflatin arund 3.4% in 2019 Disciplined bid seasn: psitive fr prfit & margin utlk First year f Transit renewals: successful renewal f 15 cntracts including ne f ur largest. Nw a $300m revenue business NEX charter revenue ($m) DriveCam is reducing ur csts & ur risks Acquisitins delivering strng returns & new grwth pprtunities e 16

17 ALSA Strng track recrd fr grwth & with new markets expansin Acquisitins in reginal markets with upcming cncessin renewals where ALSA has lw expsure (Cal Pita) Strng grwth in ur new markets m m Key 50m 3 year CAGR = 18.2% e Cncessins: prcess n hld little impact in 2019 New market expansin, diversifying earnings 3 acquisitins in H1 including entry int the services market fr cruises Rabat urban bus cntract win: ur 5 th & largest cntract in Mrcc Expanding ski transfers & sightseeing turs Ancillary revenues grwing strngly Last mile services & multimdal Ancilliary revenues 19

18 UK Cach: RMS & targeted marketing campaigns delivering strng grwth % Grwth in cre revenue, pax & yield Targeted marketing campaigns n key events, thrugh ur enhanced RMS capabilities Strng grwth in cre revenue & passenger jurneys RMS helped drive a 2.9% imprvement in seat utilisatin in H1 9% 11% 14% 11% Cre revenues up 5.2% in H1, passenger jurneys up 6.0% 4% 5% 3% 5% 6% Recrd passenger numbers ver Easter & bth May Bank Hlidays Easter May BH Spring BH Yield Pax Revenue 18

19 UK Bus: Cntactless & m-tickets seeing strng penetratin % f passenger jurneys thrugh digital channels % Cntactless & capping fully rlled ut in West Midlands Revenue per mile +3% Cmmercial passenger grwth +1.3% in West Midlands; return t grwth in Dundee Cntinue t wrk clsely with TfWM & Mayr n pririties, including cngestin & clean air Sale & leaseback f Dundee dept Greater cnvenience fr custmer 19

20 Delivering ur strategy Outlk Full year expectatins: a psitive utlk Psitive utlk fr Spanish cncessin renewals with greater emphasis n quality: n impact expected in 2018, minimal in 2019 Nrth America disciplined schl bid seasn, with price increases abve wage inflatin Cntinuing recvery in the UK, with accelerating cmmercial grwth Interim dividend up 10% - third time in fur years Cash generatin remains strng, with guidance lifted Cntinuing strng pipeline f pprtunities, including further diversificatin Outlk fr 2019 is psitive 20

21 Q&A

22 Appendix 22

23 Nrth America Anther recrd half year with disciplined schl bidding seasn Delivering peratinal excellence Generating superir cash & returns Disciplined bid seasn fr 2018/19 Average price increase f arund 3.7% acrss prtfli and 6.6% n ur cntracts up fr bid & renewal Cntract retentin 93% n cntracts up fr renewal Acquisitins f A&S & A1A prvide entry int new grwing market segment f Charter Schls Gd grwth in charter revenues, up 19% Revenue $753.2m $686.6m Op prfit $76.6m $70.5m Margin 10.2% 10.3% Creating new business pprtunities 4 acquisitins in H1, grwing ur psitin in schl bus & charter, and entering the Charter Schls market Strng pipeline Risk Driver wage pressure expected t be 3.4% in 2018/19 Increased maintenance csts t return unused buses t service Revenue: +9.7% in cnstant currency, with gd rganic grwth tgether with blt-n acquisitins Prfit: +8.7% - margin remains abve 10%. Strng returns frm acquisitins tgether with rganic grwth slightly ffset by cst pressures frm driver wages, a lwer number f perating days & adverse weather 23

24 ALSA Anther recrd half year with strng rganic grwth Delivering peratinal excellence Generating superir cash & returns 3m mre passengers this year, with strng perfrmances in Regular & Urban Mrcc & Switzerland delivering strng perfrmances Cncessin renewal prcess starts up with greater emphasis n quality Rabat urban bus award ur largest cntract in Mrcc Mrcc generating 100m annualised revenues in 2019 Last mile services thrugh ALSACab & Uber/Mve JV Revenue 395.7m 369.9m Op prfit 48.6m 45.2m Margin 12.3% 12.2% Creating new business pprtunities 3 acquisitins: 1 business prviding entry int the cruise market, 1 reginal & urban business in Galicia & 1 urban bus business in Madrid Risk Further cmpetitin frm rail Intercity cncessin renewal Revenue: +7.0% - strng grwth in reginal & urban, Switzerland & Mrcc tgether with acquisitins in Spain & Switzerland in 2017/18 Prfit: +7.5% - Margin up 10bps reflecting underlying grwth in Spain & Switzerland, tgether with lwer fuel csts, cst efficiencies & the benefit f acquisitins made in 2017/2018, mre than ffsetting cst inflatin 24

25 UK Strng recvery cntinues with further acceleratin in grwth Delivering peratinal excellence Generating superir cash & returns Strng recvery in Cach - RMS & targeted marketing campaigns reaping increased yields, passenger jurneys & revenue Quicker than anticipated recvery frm terrrism Grwing high margin ancillary sales - bking fees & seat reservatins Cntactless & m-ticketing in Bus driving sales t stickier & less price elastic channels, helping t drive passenger & revenue grwth Building ur B2B business, including new 4m p.a. cntract with JLR Revenue 273.6m 271.3m Op prfit 31.6m 26.0m Margin 11.5% 9.6% Creating new business pprtunities Added 25+ new cmmercial partners New airprt rutes & express services Birmingham Clean Air Zne 2020 Risk Advanced fare discunting in rail Cncessin incme Revenue: +0.8% - strng recvery in cre cach revenues, up 5.2% & cmmercial bus revenues up 0.8%, partially ffset by lwer revenues frm festivals, internatinal services & exiting lss making businesses Prfit: Up 21.5% - margin up 190 bps, reflecting revenue grwth, cntinuing cst efficiencies, lwer fuel csts, prperty dispsal gains f 3m & exit frm lss making businesses 25

26 German Rail Psitive underlying perfrmance Delivering peratinal excellence Generating superir cash & returns Underlying revenue grwth f 5.6% Stabilised prfit stream Prgressing with RRX mbilisatin with driver training & recruitment underway Revenue 43.7m 44.3m Op prfit 1.3m 2.0m Margin 2.9% 4.5% Creating new business pprtunities Pipeline f German rail pprtunities Lking t submit further bids ver next 12 mnths Lking at ther internatinal rail pprtunities Risk Failure t win bids in Germany at acceptable rates Mbilisatin n new cntracts Revenue: Dwn 1.3% - underlying revenue perfrmance psitive but impacted by the catch up revenues in 2017 pst the clarificatin f the revenue sharing psitin Prfit: Dwn 0.7m with 2017 prfit bsted by revenue sharing clarificatin & catch up frm Margin stabilised. 26

27 H cnstant currency revenue grwth ALSA Revenue Vlume Yield Spain 5% 2% 3% Mrcc 9% 2% 7% Other 28% Ttal 7% Nrth America 10% UK Bus 1% Bus Cmmercial 1% 1% 0% Cach underlying revenue 3% 3% 0% Cach Cre NE netwrk 5% 6% (1)% Ttal 1% German Rail 6% 4% 2% 27

28 ALSA perating prfit bridge ALSA Revenue HY 2018 Cst Cst H Grwth Acquisitins Fuel Other H inflatin efficiencies 28

29 Nrth America perating prfit bridge Nrth America Revenue HY 2018 $5m $13m ($18m) $6m $4m ($4m) $71m $77m H Grwth Acquisitins Cst Cst Fuel Weather H inflatin* efficiencies *Cst inflatin includes $10m f driver wages 29

30 UK perating prfit bridge UK Revenue HY m 2m 2m ( 7m) 6m 32m 26m H Grwth/ new rutes Prperty sale Cst inflatin Cst efficiencies Fuel H

31 Risk management Fuel risk largely fixed until 2019 Fuel hedging % hedged* 100% 80% 57% 8% Price per litre 34.4p 35.0p 33.6p 34.4p Significant fuel savings expected & secured fr 2018 * Of addressable vlume (c.235 millin litres) 31

32 Freign currency effects Effect f fluctuatins n prfit and debt Effect f a 1% weakening f USD EUR Operating prfit ( m) EBITDA ( m) Debt (4.0) (3.6) Translatinal impact frm mvements in USD, EUR, CAD Hedging achieved by matching lcal currency debt t EBITDA H1 average rates versus USD EUR

33 Risk management Pensin deficit plan in place thrugh t 2020 Pensins m (IAS19) (2) (75) (95) (70) Assets Liabilities Surplus/(Defict ) H m Surplus /(Deficit) H Surplus /(Deficit) 31 Dec 2017 Prfit /(charge) H Prfit /(charge) H UK Bus (115.8) (133.8) (2.1) (2.0) UK Grup (0.2) - 33

34 Natinal Express Grup PLC