Half Year Results. For six months ended 30 June 2015

Transcription

1 Half Year Results Fr six mnths ended 30 June July 2015

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. Unless therwise stated, all prfit, margin and EPS data refer t nrmalised results, which can be fund n the face f the Grup Incme Statement in the first clumn. The definitin f nrmalised prfit is as fllws: IFRS result excluding charges fr intangible asset amrtisatin, exceptinal items (nil in 2015), lss n dispsal f a business and tax relief theren. The Bard believes that the nrmalised result gives a better indicatin f the underlying perfrmance f the Grup. 2

3 H Key highlights Delivering peratinal excellence Generating superir cash & returns Creating new business pprtunities Grwth in revenue and prfit (in cnstant currency) acrss all ur businesses except Rail Excellent start t the c2c franchise Cst efficiencies being delivered as planned Review f dividend plicy reflecting lng-term rail earnings and cash flw RRX win brings ttal German rail cntracted revenues appraching 3bn Successful mbilisatin in Bahrain prviding platfrm fr further grwth in the regin Successful bid seasn in Nrth America Shrtlisted fr East Anglia franchise Increased ROCE and remain n target t generate 100m f FCF fr

4 First half 2015: Prfit up even after increased premium charges m H H Restated* Revenue Nrmalised perating prfit (befre bid csts) Bid csts (3.9) (14.2) Operating prfit Net finance csts (23.1) (24.2) Assciates Prfit befre tax Basic EPS 10.2p 7.8p Interim dividend 3.685p 3.35p * H results restated t adjust fr impact f rail and Middle East bid csts previusly treated as exceptinal csts 4

5 H Restated results n exceptinal csts in 2015 H results restated t adjust fr change in treatment f Rail and Middle East bid csts 14.2m f bid csts in H nw included in restated perating results Full year 2014 restated fr 25.5m f bid csts H bid csts 10.3m lwer year n year Bid csts m m H H FY 2014 Rail Other Ttal bid csts Restated rail prfit & central csts m m H H1 2014* FY 2014* Rail p. prfit 0.6 (6.5) (10.1) Central csts (7.0) (8.1) (17.1) * H results restated t adjust fr the impact f rail & Middle East bid csts previusly treated as exceptinal csts 5

6 Revenue Gd rganic grwth delivered m 1 25 (3) 940 (3) H Revenue FX H Cnstant Currency Grwth Weather Operating Days H Revenue 2.5% underlying revenue increase Small adverse impact frm currency, with $ strength ffsetting weakness in the Operating days impact t reverse in secnd half 6

7 Operating prfit Prfit grwth in all divisins in cnstant currency Revenue (YOY change*) Operating prfit H **H m Spain & Mrcc 40.5m 38.4m 132m 141m 242m Spain & Mrcc 3% Nrth America 1% UK Bus +3% UK Cach +1% Nrth America $59.8m $57.5m UK Bus 17.1m 15.3m UK Cach 10.0m 9.3m 363m Rail +10% Rail 0.6m (6.5)m German cach - (1.4)m Centre (7.0)m (8.1)m Grup 89.6m 75.3m * Underlying year-n-year change shwn in cnstant currency **H results restated t adjust fr impact f rail and Middle East bid csts previusly treated as exceptinal csts 7

8 Nrmalised perating prfit Grwth & cst efficiencies ffset higher premiums m 12 (1) 1 3 (6) 8 (12) 90 (1) (14) H FX 2014 Bid csts Restated Lwer bid csts 2015 Underlying Grwth Operating days Weather Fuel Cst inflatin Cst Franchise efficiencies premium H H perating prfit adjusted fr Rail & Middle East bid csts Grwth, cst efficiencies and lwer fuel csts ffsetting higher rail premium charges Tight cntrl f csts Small benefit frm adverse weather cnditins in m impact frm lwer perating days will reverse in H2 full year impact neutral N exceptinal csts f restructuring/ratinalisatin (H1 2014: 13.5m) 8

9 Superir cash and returns On target t generate 100m FCF fr 2015 m H H1 2014* EBITDA Wrking capital Maintenance capex (75.0) (25.3) Pensin deficit (4.9) (3.8) Operating cashflw Tax/interest/ther (35.1) (38.0) Free cash flw Operating cash flw Operating Prfit % Spain & Mrcc 98% Nrth America 87% UK Bus 28% UK Cach 147% Rail N/A Grup 69% As previusly guided fr 2015 and nwards, full year net capital expenditure returning t mre nrmal levels f 1.1x t 1.2x depreciatin Higher prprtin f capital expenditure in the first half targeting c. 120m fr 2015 Free cash flw f 27m in first half; n target t generate 100m fr the full year * H results restated t adjust fr the impact f rail & Middle East bid csts previusly treated as exceptinal csts 9

10 Superir cash and returns Fcus n investing fr future grwth m H H1 2014* FY 2014* Free cash flw UK rail franchise exit utflw - (0.9) (1.6) Exceptinal cash (5.8) (9.2) (19.2) Cash flw available fr grwth & dividends Net grwth capital expenditure (20.7) (7.3) (7.3) Acquisitins & dispsals (22.2) (6.0) (5.9) Dividends (35.5) (34.5) (51.6) Other, including frex Net funds flw (50.0) Net funds utflw after increased grwth capital expenditure f 21m and 22m spent n acquisitins On target t deliver 100m FCF fr the full year *Results restated t adjust fr impact f rail & Middle East bid csts previusly treated as exceptinal csts 10

11 Grwth Grwth capital expenditure & M&A Grwth capital expenditure Acquisitins Delivers enhanced prfits Significant increase in spend in H t 20.7m (H1 2014: 7.3m) Investment in new c2c franchise including intrductin f WiFi & refurbishment f trains; mbilisatin csts fr RME 120 new buses t supprt rll-ut f new cntract in Tangier Revenue management systems in UK Cach 2 businesses acquired - cmbined cash cnsideratin f 22m at 6x EBITDA Flmsbee schl bus business in upstate New Yrk 100 buses Red Hk transit shuttle service in state f NY 60 buses Cntinuing t evaluate further pprtunities Targeting ttal grwth capex f c. 35m fr 2015 (2014: 7.3m) ROCE increased by 120 bps t 11.9% 11

12 Balance sheet remains flexible Net debt reduced ver 12 mnths t 714m Gearing Ratis H H Cvenant Ratings Grade Outlk Net debt/ebitda 2.4x 2.5x <3.5x Interest cver 6.5x 6.0x >3.5x Mdy s Baa3 Stable Fitch BBB- Stable Debt maturity prfile Drawn Available* Net debt reduced by 15m ver last 12 mnths t 714m Rbust financial strategy: Prudent gearing plicy: 2-2.5x EBITDA Dividend cvered 2x by Grup earnings Strng cmmitment t IG debt rating; reaffirmatin f ratings in Q2 Strng risk planning fuel mstly hedged t 2017 & pensin deficit plan in place 459m cash & cmmitted headrm 350m bnd maturity due Jan 2017 refinancing in 2016; currently evaluating refinancing ptins * Available cash and undrawn cmmitted facilities at 30 June

13 Guidance 2015 Net capital expenditure f 1.1x t 1.2x depreciatin 2015 target c. 120m Free cash flw generatin f 100m Effective tax rate f c.20% Full year incremental premium charges f 29m Bid csts f c. 10m in 2015; bid csts fr 2016 likely t rise in light f UK rail pprtunities Target dividend cver c.2.0x Grup earnings 13

14 Rail - UK Excellent start ahead f bid plan Delivering peratinal excellence Price leading fares and new marketing apprach driving vlume Strng grwth in bth peak and ff-peak travel Off-peak demand up 12% with strng prmtinal campaigns and new prducts Weekend grwth up 27% Mre effective marketing ROI imprved Generating superir cash & returns 2015 *2014 Revenue 82.0m 74.5m Op prfit pre bid cst 2.2m 5.4m Bid csts (1.6)m (11.9)m Op prfit 0.6m (6.5)m Margin 0.7% N/A Creating new business pprtunities Shrtlisted fr EA Evaluating further pprtunities New timetable fr c2c in Dec 2015 Risk Delivering the bid line premiums in the UK Failure t win bids in Germany * Restated t adjust fr rail bid csts previusly treated as exceptinal items Revenue: +10% supprted by passenger grwth f 6% Prfit: 7.1m higher despite significantly higher premium charges, partially ffset by lwer bid csts 14

15 Rail - Germany Building scale with mre t cme Firmly established in Germany Building scale cntracted revenues f 2.6bn Wn 2 cntracts fr RRX; bth cntracts prfitable in 1 st year; cmbined revenues f 1bn Nuremberg curt decisin late summer German rail revenues secured thrugh t 2033 Nrmal rail margins f 3-5% anticipated Pre-qualified fr a further 2 franchises Active pipeline wrth c. 4bn f revenues Mbilisatin f RME franchise n plan ahead f December 2015 start-up New pht required German rail revenue prfile ver next 10 years m CAGR 11.5% ver 10 years Small perating lss in Year 1 f RME building t typical rail margins in fllwing years

16 UK Bus Investment in services delivering clear prgress Delivering peratinal excellence Rbust revenue grwth: cmmercial revenue +3% Launched all 83 partnership cmmitments fr TBT3* Majr fleet upgrade driving passenger vlumes 8% increase n Platinum bus rutes Cntinued rll-ut f industry leading multi peratr smartcards & launch f new PAYG smartcard Generating superir cash & returns Revenue 141.4m 137.7m Op prfit 17.1m 15.3m Margin 12.1% 11.1% Creating new business pprtunities Bus Alliance with Centr & West Midlands ITA Midland Metr extensin pens in H Risk Pssible reductin in BSOG Cncessin incme under pressure Revenue: +3% driven by cmmercial revenues, cncessinary revenues flat Prfit: Revenue grwth and cst efficiencies H2 cncessin revenues t decline - 3m annualised impact * Transfrming Bus Travel agreement with Centr 16

17 UK Cach Leveraging ur enhanced CRM capabilities Delivering peratinal excellence Enhanced marketing activity driving revenue grwth CRM driving 60% incremental grwth n targeted campaigns Launching strng summer campaigns building n success f Easter and spring Recrd weekend fr Glastnbury RM increasing yields & cach ccupancy (up 3.7%) Generating superir cash & returns Revenue 132.2m 130.5m Op prfit 10.0m 9.3m Margin 7.6% 7.1% Creating new business pprtunities Cntract wins; BA, Stansted, UWL & RBS O seas retail expansin Enhanced presence n Trainline app Risk Advanced ticket discunting in rail Gvernment plicy (BSOG) Revenue: Strng cre grwth f 2.4%, partially ffset by the timing f cntract revenues, picking up in H2 Prfit: +8% with grwth in margin, netwrk ptimisatin and back ffice cnslidatin delivering cst efficiencies 17

18 Nrth America Psitive bid seasn & imprving market Delivering peratinal excellence Strng bid seasn fr 2015/16 Strng cntract retentin 99% fr renewals (excluding up r ut cntracts) Average price increase +2.8% acrss prtfli, ver 5% n ur re-bid cntracts On-ging exit frm pr perfrming cntracts, winning new business n higher margin Generating superir cash & returns 2015 *2014 Revenue $553.2m $547.7m Op prfit $59.8m $57.5m Margin 10.8% 10.5% Creating new business pprtunities 1 transit & 1 schl bus acquisitin - cmbined cash cnsideratin f 22m at 6x EBITDA Risk Healthcare csts Wage pressure * Cnstant currency at 2015 FX rates Revenue: +1% in cnstant currency, with exit frm up r ut cntracts ffsetting price increases and cntract wins Prfit: Margin up 30bps - exit frm lwer margin business & higher prices ffset by wage pressures, CAD and less perating days 18

19 Spain and Mrcc Strng grwth in Mrcc & RM in Intercity Delivering peratinal excellence Spain up 3% - encuraging prgress with revenue management; grwth in bth revenue & passenger numbers n intercity rutes Mrcc up 13% Upscaling f peratins in Tangier & further grwth in Agadir & Marrakech Furth cntract fr bus in Mrcc - Khuribga Generating superir cash & returns Revenue 330.2m 319.3m Op prfit 40.5m 38.4m Margin 12.3% 12.0% Creating new business pprtunities Further rll-ut f RM t Cmmuter & Reginal Evaluating pprtunities in newly liberalising markets eg. Prtugal Risk Further cmpetitin frm rail Intercity cncessin renewal Revenue: +3% - strng grwth in Mrcc with Spain shwing imprving perfrmance thrugh RM Prfit: Mrcc, lwer fuel csts & cst efficiencies Cncessin renewal prcess further delayed 19

20 Spain RM driving revenue & passenger grwth in H1 9 main crridrs perfrmance (data belw includes all flws) +5% +1% +1% +1% +2% +8% +7% +9% +5% +2% +2% +4% 0% 0% -1% 0% -1% -3% -5% -4% -4% -4% -4% -4% -6% -7% -7% -7% -9% -10% -11% -10% Jan Feb Mar-Apr May Jun Jul Aug Sep Oct Nv Dec Jan Feb Mar-Apr May Jun Revenue Passengers Befre recvery actins After recvery actins H1 Revenue up 4%, Passengers up 7% 9 cmpeted crridrs - 161m annual revenue with RM applied t arund 77% f annual revenue RM intrduced in June 2014 t address declines in revenue and patrnage Actin taken n arund 200 flws within 9 crridrs Steady imprvement seen pst-actin with grwth in bth revenue and passenger vlumes in H RM t be rlled ut t Cmmuter and Reginal 20

21 Middle East Successful mbilisatin prviding a stepping stne Delivering peratinal excellence Successful mbilisatin f first phase in Bahrain 70 vehicles in service with a further 70 in phase 2 Serving 35 rutes 1.7m passengers already transprted Learnings frm Bahrain t be applied t future mbilisatins in the regin Creating new business pprtunities Submitted a JV bid t perate bus services in Makkah, Saudi Arabia Further pprtunities being evaluated Active pipeline f c. 0.8bn revenues 21

22 Delivering ur strategy Further significant prgress t cme Delivering peratinal excellence Generating superir cash & returns Creating new business pprtunities 2015 Margin prgress acrss the business (excluding Rail) N exceptinals Strng grwth in prfit with statutry prfit mre than dubling Cntinued cash generatin n target t generate 100m FCF in 2015 Lwer fuel csts and ptentially lwer bnd interest csts Strng pipeline f pprtunities acrss the business Interim dividend up 10% 22

23 Appendix

24 H underlying revenue grwth Spain Yield Vlume Revenue Netwrk Efficiency* LFL grwth Transprt Spain 2% 1% 3% 2% 1% Transprt Mrcc 1% 12% 13% 21% (8)% Nn-passenger 1% Ttal 1 3% Nrth America 1 1% UK Bus Cmmercial 3% - 3% - 3% Cncessin - Ttal 3% UK Cach Cre NE netwrk 1% 1% 2% 1% 1% Other (2)% Ttal 1% c2c 4% 6% 10% * (Decrease) / increase in mileage perated 1 Cnstant currency 24

25 UK Bus perating prfit bridge Bus - m Revenue % 1% 2% (2) 17 74% 15 H Organic Cst Cst Fuel H grwth inflatin efficiencies Passenger Cncessin Cntract Other 25

26 UK Cach perating prfit bridge Cach - m Revenue % 7% 9 (2) 10 83% H Grwth/ new rutes Cst inflatin Cst efficiencies H Passenger Other Cntract 26

27 Spain and Mrcc perating prfit bridge Spain and Mrcc - m Revenue % 3% 39 29% 61% (3) H Grwth Cst Cst Fuel H inflatin efficiencies Passenger Cncessin Cntract Other 27

28 Nrth America perating prfit bridge Nrth America - $m Revenue 2015 (1) 2 (1) (5) % H CAD fx Like Grwth Operating Cst Cst Fuel Weather H fr like days inflatin efficiencies Cntract 28

29 Pipeline f pprtunities remains exciting Target market UK Rail Nrth America German Rail Middle East 8.5bn franchised 150-1,000m each 7-15 year life $8bn Transit $24bn Schl Bus Cntracts $5-100m 3-5 year life 6bn reginal DB main peratr Pr-cmpetitin m each Selected gegraphy Bus, cach & rail Liberalisatin trend New public transprt mdels Revenue risk Yes/ Pssible underpin Cntracted/ Sme risk Grss cst/ Net cst mix Mix Attractiveness*: Revenue grwth Margin Capital req d ROCE 3 year target pprtunity H L L H Transit H L L H Schl Bus 4.5bn annual revenues $0.5bn 4bn ttal cntract revenues H M H M L L L H H L L H 3bn ttal cntract revenues Active pipeline 4 cntracts 2bn annual revenues East Anglia bid underway 100+ cntracts $0.4bn 3 Transit wins, 10+ Schl Bus wins 5+ cntracts 0.2bn annual revenues RRX secured 4 pprtunities 0.8bn ttal cntract revenues In evaluatin n ther key pprtunities * H High; M- Medium; L- Lw 29

30 Risk management Fuel risk largely fixed until 2017 Fuel Hedging % hedged* 100% 100% 88% 22% Price per litre 44p 42p 41p 34p Future year-n-year savings lcked in (2014: 49p) * Of addressable vlume (c240 millin litres) 30

31 Risk management Pensin deficit plan in place thrugh 2017 Pensins m (IAS19) (19) (30) (12) (12) H Assets Liabilities Members Share Surplus/(Deficit) m Surplus /(Deficit) H Surplus /(Deficit) 31 Dec 2014 Prfit /(charge) H Prfit /(charge) H UK Bus (51.1) (50.6) (2.7) (2.1) UK Cach Rail (1.3) (1.3) Other (2.0) (1.9) (0.1) - 31

32 Natinal Express Grup PLC