Download - Interim Results 7 December 2005
Interim Results 2005
Interim ResultsInterim Results7 December 20057 December 2005
2 Interim Results 2005
Robert SpeirsChairman
3 Interim Results 2005
Highlights
Strong set of results for 6 months ended 31 October 2005 Increased operating profits* at continuing UK Bus, despite
ongoing cost pressures Growth in operating margins in North American bus Revenue growth at South West Trains, despite London
terrorist attacks Interim dividend up 10% to 1.1p per share (2004: 1.0p) Disposal of New Zealand in November 2005 for NZ$250.5m
* References to the operating profit (or operating margin) of a particular business throughout this presentation mean operating profit (or operating margin) before intangible asset amortisation, exceptional items and restructuring costs.
4 Interim Results 2005
Martin GriffithsFinance Director
5 Interim Results 2005
Financial Highlights
Revenue+ from continuing businesses up 7.8%
- £786.2m (2004: £729.1m)
- Up 7.1% at constant exchange rates
Operating profit pre intangibles and exceptionals £82.7m (2004: £80.7m)
EBITDA (pre exceptionals and JVs) up 3.9% at £112.5m
Adjusted EPS up 28.6% to 5.4p
+ excluding acquisition of Glenvale and disposed operations
6 Interim Results 2005
Revenue
- continuing operations, excluding Glenvale
Total operating profit*
- pre intangibles & exceptionals
Profit before tax
- pre intangibles & exceptionals
Net cash from operating activities
Adjusted earnings per share
Dividend per share
October 2005£m
October2004£m
793.0
786.2
69.5
82.7
54.9
72.1
106.2
5.4p
1.1p
735.7
729.1
74.1
80.7
59.3
70.6
128.8
4.2p
1.0p
Financial Summary
* After restructuring costs of £0.7m (2004: £0.3m)
7 Interim Results 2005
EBITDA
UK Bus - excluding Glenvale- Glenvale
North AmericaNew ZealandRailGroup overheads & restructuring costsEBITDA from Group companies before exceptionalsVirgin Rail GroupOther joint ventures and associatesTotal EBITDA before exceptionals
October2005£m
October2004£m
62.2(0.5)23.5
6.027.0(5.7)
112.54.5
Nil117.0
61.5 Nil
21.75.9
23.8(4.6)
108.34.1
(0.2)112.2
8 Interim Results 2005
Net cash inflow from operating activitiesNet interest paidTaxationNet cash from operating activitiesNet capital expenditure including new hire purchase financeAcquisitions of businesses and other investments Sale of businesses and other investmentsToken sales and redemptionsForeign exchangeReduction in net debt before cashflows with shareholdersRepurchase of ‘B’ sharesEquity dividendsOther share capital movementsReduction in net debtOpening net debtClosing net debt
October 2005£m
132.7(12.5)(14.0)106.2(42.0)(13.9)
4.6(3.6)
(11.1)40.2
(13.9)(24.6)
4.05.7
(214.6)(208.9)
Movement in Net Debt
9 Interim Results 2005
UK Bus Trading Results
Revenue growth 10.5% to £387.9m (2004: £351.1m)
revenue growth 8.5%, excluding acquisition of Glenvale
Strong contribution from London companies
revenue growth 9.7%
Underlying passenger growth of 1.5% outside London
revenue growth 8.1%, excluding acquisition of Glenvale
Operating margin 10.8% (2004: 11.5%), excluding acquisition of Glenvale
10 Interim Results 2005
UK Bus Revenue Development
2004 Revenue
Glenvale
Passenger volumes
Tender wins/ contract amendments
Fare increases
megabus.com
2005 Revenue
n/a
n/a
5.8%
3.5%
0.4%
9.7%
London
£m %
249.9
6.8
3.7
3.0
12.0
1.5
276.9
2.7%
1.5%
1.2%
4.8%
0.6%
10.8%
351.1
6.8
3.7
8.9
15.5
1.9
387.9
1.9%
1.1%
2.5%
4.4%
0.5%
10.5%
Outwith London
£m %
UK Bus
£m %
101.2
Nil
Nil
5.9
3.5
0.4
111.0
11 Interim Results 2005
North America Trading Results
Revenue £130.8m (2004: £123.6m)
11.0% increase in US$ revenue from continuing operations Operating margin up from 11.8% to 12.0%
Operating profit £15.7m (2004: £14.6m)
US$28.3m (2004: US$26.5m)
excellent revenue growth
strict cost control
overhead reduction: consolidation of US regions
12 Interim Results 2005
Scheduled service/Line run/CommuterCharterSightseeing & TourSchool Bus & ContractTotal
October 2005
US$m
October2004
US$m
89.055.755.035.7
235.4
82.450.647.631.5
212.1
% Growth
8.0%10.1%15.5%13.3%11.0%
North America Continuing Revenue Breakdown
By Product
13 Interim Results 2005
New Zealand Trading Results
Revenue £28.7m (2004: £26.2m)
Underlying revenue similar to last year (excluding currency movements)
Operating profit £3.5m (2004: £3.9m)
- NZ$9.1m (2004: NZ$10.9m)
Operating margin 12.2% (2004: 14.9%)
Disposal completed at NZ$250.5m enterprise value
14 Interim Results 2005
Rail Trading Results
Rail Subsidiaries
Revenue £245.6m (2004: £234.8m), up 4.6%
Operating profit £24.4m (2004: £22.5m)
Passenger volumes up 0.8% at SWT, adversely affected by terrorist attacks
Revenue and profit share to SRA £27.8m (2004: £20.5m)
15 Interim Results 2005
Virgin Rail Group
Share of profit after tax £4.5m (2004: £4.1m)
New long-term commercial arrangements on West Coast – discussions with DfT ongoing
CrossCountry – current franchise terminates on 10 November 2007
Share of operating profit includes £29.8m for additional subsidy claims
16 Interim Results 2005
Taxation
Pre intangibles and exceptionals*Exceptional itemsIntangible asset amortisationResult for the period*
Cash tax paid (net)
Pre-tax£m
Tax£m
74.5(4.0)
(13.2)57.3
(16.5)1.71.1
(13.7)
14.0
%
22.1%42.5%
8.3%23.9%
October 2005
* Adjusted for our share of VRG’s tax, classified within operating profit under IFRS
17 Interim Results 2005
Balance Sheet & Financing
Net debt+ £208.9m (2004: £214.6m)
EBITDA*/Interest cover 11.0 times
Further debt reduction from New Zealand disposal
Progressive dividend policy
+ UK GAAP definition* Before exceptional items
18 Interim Results 2005
Brian SouterChief Executive
19 Interim Results 2005
Group StrategyQuality operations driving strong results
Excellent operational
performance
Strong financial results
Bus operator of the Year Train operator of the Year South West Trains punctuality now over 90% Improved punctuality at Virgin Rail Group UK Bus reliability 99.3%
Adjusted EPS up 28.6% Revenue from continuing operations up 7.8% Absorbing increased fuel costs UK Bus margins bucking peer group trend Dividend up 10.0%
↓
20 Interim Results 2005
Group Strategy – UK Bus Kickstart wins
– Stagecoach schemes secured £8.1m of DfT funding for 2005/06 out of total awards budget of £19.9m
Organic growth in Southern companies Business Development opportunities
– megabus.com/Citylink joint venture in Scotland
– megabus.com
21 Interim Results 2005
Group StrategyUK Bus Passenger Growth
Passenger growth by operating company – excluding London
October 2005 v October 2004
Overall passenger growth 1.5%
3% +
0-3%
<0%
22 Interim Results 2005
Group Strategy – Rail
Good results and management credentials
Awaiting DfT decisions on Greater Western and Thameslink/Great Northern
Strong and experienced bid team focused on South Western franchise
Renegotiation of West Coast Mainline franchise
New franchise opportunities in next 18 months
– East Midlands
– West Midlands
– CrossCountry
23 Interim Results 2005
Group Strategy – North America
Revenue and margin growth– Contract wins in Canada– Strong leisure bounce-back continues
• Charter: revenue up 10.1%• Sightseeing & tour: revenue up 15.5%
– Steady growth in line run and contract• Underpins North American business• Park and ride in New York
24 Interim Results 2005
Current Trading and Outlook
Current trading in line with our expectations Continued focus on organic growth and bolt-on
acquisitions Good potential for further growth
Interim Results 2005
Interim ResultsInterim Results7 December 20057 December 2005
26 Interim Results 2005
Appendices
27 Interim Results 2005
North America Revenue Development
2004 Revenue
Impact of disposals and other movements on discontinued turnover
US$/C$ currency impact
Underlying growth
2005 Revenue
DiscontinuedUS$m
TotalUS$m
12.0
(12.0)
Nil
Nil
Nil
ContinuingUS$m
212.1
Nil
2.9
20.4
235.4
224.1
(12.0)
2.9
20.4
235.4
28 Interim Results 2005
Rail Revenue Development
2004 Revenue
SWT Passenger volumes
SWT Fares/yield
SWT Other
Island Line/Supertram
2005 Revenue
£m %
234.8
1.9
10.0
(1.3)
0.2
245.6
0.8%
4.3%
(0.6)%
0.1%
4.6%
29 Interim Results 2005
Finance charges ratios
Finance charges (net)
EBITDA pre-exceptionals
EBITDA pre-exceptionals/finance charges
October2005£m
October2004£m
10.6
117.0
11.0 times
10.1
112.2
11.1 times
30 Interim Results 2005
Gross debt & related derivativesInterest bearing cash balances
Non-utilisation/commitment feesAmortisation of bond issue costs/bank chargesInsurance letters of creditDiscount on insurance provisionsOther
Finance charges
£m
AnnualEffective rate
%
11.3(2.7)8.60.50.20.41.5
(0.6)10.6
6.2%4.6%
Finance Charges
Average balance*
£m
363.0118.0
*Average of month end debt and cash balances
31 Interim Results 2005
Fuel Hedging
% of Group fuel hedged/capped at present
Average hedge price US$/barrel
Average US$/£ rate
Average unhedged crude price US$/barrel
Crude oil fuel costs of continuing businesses (total volume times crude price)
Total fuel cost(includes cap premiums/diesel margin/tax/delivery)
Forecast2005/06
89%
US$48
1.75
US$60
£52m
£91m
Forecast2006/07
15%
US$57
1.75
US$57
£60m
£99m
Continuing bus divisions use 1.8m barrels of fuel a year (276m litres)Each US$10 per barrel movement in crude oil price impacts variable fuel costs by approximately US$18m if no hedging in place
Actual2004/05
97%
US$35
1.85
US$50
£35m
£72m
32 Interim Results 2005
Fuel Usage and Impact of Crude Price
UK Bus
North America
Annual Usagelitres
Annual Usage
Barrels (m)
200m
76m
276m
1.30
0.45
1.75
US$ variablecosts based
on $57a barrel
$80m
$25m
$105m
33 Interim Results 2005
5.7 Nil Nil Nil
5.7
34.14.43.33.0
44.8
(2.4)(0.2)(0.2)
Nil
(2.8)
31.74.23.13.0
42.0
28.44.43.33.0
39.1
Capital Expenditure
UK BusNorth AmericaNew ZealandRail
Capex on new hire purchase
£m
Impact ofcapex onnet debt
£m
Disposalproceeds*
£mNet£m
Cash spent on
capex £m
*Excludes proceeds from selling businesses
Note: No new vehicles were acquired by UK Bus during the six months on operating leases (2004:capital value of £23.5m).
34 Interim Results 2005
Exchange Rates
US$NZ$C$
Closing rate Average rate
1.83232.67842.2350
1.81312.79852.4114
October 2004
Closing rate Average rate
1.77032.52952.0881
1.79892.57062.1836
October 2005
Interim Results 2005
Interim ResultsInterim Results7 December 20057 December 2005