On 5 August 2016, Virgin released its full year results to the market
A link to the announcement is available here. Please note the company has previously provided an update on its full year results in prior announcements. The key points from the full year results announcement are summarised below:
- Revenue was up 5.7% to $5.02bn. Group underlying EBIT improved 220% to $210.6m, while the airline was able to deliver an underlying profit before tax of $41m, an improvement from the $49.1m underlying loss in FY15. Virgin was able to improve its yield (a measure of revenue generated to passenger kilometres travelled) by 2.7% over the year which was a key contributing factor to the improved performance
- All business segments showed improved earnings. Virgin’s domestic business performed strongly, with EBIT up $50.9m to $162.0m in FY16. The international business delivered an EBIT loss of $48.8m, which was a $20.1m improvement on FY15. Tigerair’s performance also improved, moving to profitability with a $2.2m EBIT for the financial year which was $39.3m better than FY15. The Velocity loyalty program continued to perform strongly, with underlying EBIT up $58.5m to $139.7m
- Virgin’s delivered an increased statutory loss after tax, from a $69.5m loss in FY15 to a $224.7m loss in FY16. The statutory loss included $440.5m of restructuring costs including impairment losses on assets as well as transaction costs
- Financial leverage (defined as net debt adjusted for operating lease rentals to EBITDAR) improved to 5.2x from 5.9x at 30 June 2015 (and 7.5x as at 30 June 2014). While financial leverage remains high, it is expected to decrease to 4.1x on a pro-forma basis after taking into account repayment of the shareholder loan using proceeds from Virgin’s most recent equity placement. The company is targeting financial leverage of 4.0x to 4.5x for FY17
- Cash generated from operating activities (before transformation and finance costs) was up $57.5m to $448.8m. Virgin noted that 2H16 cashflow generated from operating activities was up 36% from the prior corresponding half year. Virgin’s unrestricted cash balance was largely unchanged at $728.9m
The Virgin US dollar bond is currently indicatively offered at a yield to worst of 6.67%.
Please contact your FIIG representative for further information on the Virgin US dollar bond. Available to wholesale investors at a minimum face value of USD10,000.
Director – Infrastructure and Fixed Income Research.
Alen joined FIIG Securities in May 2014 and is responsible for covering the infrastructure/PPP, resources, airlines and property sectors.