BBA Aviation enabling flight; expanding horizons Interim Results

Transcription

1 enabling flight; expanding horizons

2 A good first half performance Highlights Continuing underlying operating profit up 29% Group ROIC up 60bps from year end to 10.7% FCF of $56.6m, with net debt/ebitda reducing to 2.9x Disposal of ASIG completed for $202m in January 2017 Signature Focused on optimising network performance and delivering benefits of unique network to all customers Network contract negotiations progressing well and completed with largest customers Aftermarket Services Ontic continues to perform well, with good contribution from GE legacy avionics portfolio and licences acquired in 2016 Strong pipeline of growth opportunities ERO operating performance stable following slight improvement in H H Aftermarket Services 14% H Aftermarket Services 7% Continuing operating profit 1 $174.9m Continuing operating profit 1 $135.6m Flight Support 86% Flight Support 93% demonstrating the enhanced BBA Aviation value proposition Note 1: Underlying operating profit (pre exceptional and other items) 1

3 Signature network performing well Stronger growth in B&GA flying US B&GA departures +3% in H European B&GA departures +6% Signature organic growth +3% Short term negative impact on fuel volumes relative to market Underlying OP margin +1.7% pts 1 to 20% Largest customer contracts now signed Negotiations underpinned by rigorous analysis of customer movements and requirements Successful outcome demonstrates strength and relevance of Signature network Negotiations with broader customer base well under way Signature FBO at Boeing Field, Seattle continued confidence in ability of enlarged network to capture value Note 1: adjusting for constant fuel prices and disposals 2

4 Performance Review David Crook Group Finance Director 3

5 Strong first half operating profit growth Flight Support (86% of continuing OP 1 ): Strong drop through Organic underlying operating profit 2 growth of 12% Aftermarket Services (14% of continuing OP 1 ): Ontic performed well; 2016 acquisitions delivering as expected Ontic has a strong pipeline of opportunities ERO s slight H operating improvement sustained in H Discontinued operations ASIG sold in January 2017 Basic adjusted EPS (continuing) Up 33% to 11.4c Dividend Interim dividend increased by 5% to 3.81c Net debt Further deleveraging to 2.9x Operating profit 1 ($m) H H Change Flight Support (continuing) % Aftermarket Services % Total central costs (11.9) (17.1) (30)% Group continuing % Discontinued (0.2) 14.0 Basic adjusted EPS (continuing) 11.4c 8.6c 33% Dividend per share 3.81c 3.63c 5% H FY 2016 Change Net debt (1,256.3) (1,335.3) (79.0) Net debt/ebitda (covenant) 2.9x 3.1x (0.2)x Net debt/ebitda (reported) 2.9x 3.2x (0.3)x driven by Signature, underpinned by Ontic Note 1: Underlying operating profit (pre exceptional and other items) Note 2: Organic underlying operating profit is adjusted for fuel price, FX, disposals and acquisitions 4

6 Flight Support 86% of continuing operating profit 1 Revenue growth of 11% (fuel and FX adjusted) 3% organic revenue growth Landmark contribution for January 2017 shown under acquisitions Strong operating profit growth Organic underlying operating profit growth 2 of 12%, representing strong drop through Operating margins up 1.7% points at constant fuel price and excluding disposals Continue to enhance the Signature network New facility opened at Boeing Field, Seattle Strategic lease extension at Dulles International, Washington Divisional ROIC 11.4% (FY 2016: 11.2%) Revenue ($m) Operating Profit ($m) (6.3) (0.9) (8.0) H FX Fuel H like for like Acq's Organic H H FX Disposals H like for like Acq's Organic H Note 1: Underlying operating profit (pre exceptional and other items) Note 2: Organic underlying operating profit is adjusted for fuel price, FX, disposals and acquisitions 5

7 Aftermarket Services 14% of continuing operating profit 1 Revenue up 1% Strong growth at Ontic from 2016 acquisitions and core business 4% organic revenue decline, driven by ERO Trading conditions for ERO remain challenging Operating profit more than doubled Ontic acquisition of GE Aviation legacy avionics portfolio delivering as expected Ontic also benefiting from other licences added in 2016 ERO stable following slight operating performance improvement in H ERO footprint rationalisation nearing completion Divisional ROIC 10.2% (FY 2016: 6.9%) Revenue ($m) (6.3) H FX H like for like Operating Profit ($m) 11.1 (0.9) (12.3) Acq's Organic H H FX H like for like Acq's Organic H Note 1: Underlying operating profit (pre exceptional and other items) 6

8 Underlying Group Income Statement Continuing operations ($m) H H Change Revenue 1, , % Revenue (fuel adjusted) 1, , % Operating profit % Margin % 15.3% 13.3% 2.0% pts Margin % (fuel adjusted) 15.3% 12.6% 2.7% pts Net interest (31.4) (30.1) 4% Profit before tax % Profit after tax % Continuing, adjusted basic EPS 11.4c 8.6c 33% Total Group ($m) H H Change ROIC 10.7% 10.1%* 60bps Basic adjusted EPS 11.4c 9.8c 16% Dividend 3.81c 3.63c 5% *Return on invested capital for FY 2016 Continuing operations by segment ($m) H H Change Flight Support % Aftermarket Services % Central costs (11.9) (17.1) (30)% Operating profit % 7

9 Exceptional and other items Main exceptional and other items (before tax) Continuing Restructuring expenses ($5.3m): ERO and Centre Amortisation of acquired intangibles ($46.7m) Discontinued Disposal of ASIG ($31.9m) 8

10 2017 lnterim Results Continuing group exhibits strong cash flow characteristics Strong cash generation through EBITDA growth of continuing operations Working capital outflow of $65m, due primarily to reversal of 2016 year end outperformance and ASIG outflow prior to disposal Capex tracking as anticipated Cash tax payments include settlement of ASIG tax on disposal Exceptional cash costs relating to ERO and Centre restructuring ASIG disposal and Ontic GE acquisition in H1 17 cash flow Leverage 2.9x supporting further value creation $m H H Underlying EBITDA Continuing Discontinued (0.2) 16.7 Underlying EBITDA Working capital movement (65.1) 9.3 Capex (38.2) (49.6) Net Interest paid (28.8) (29.5) Tax paid (18.8) (7.0) Exceptional and other items (6.1) (41.7) All other movements (4.2) 14.9 Free cash flow Dividends (91.5) (87.2) Issue of shares 0.1 Acquisitions & licences (61.3) (2,092.0) Disposals Other + FX (5.3) 7.5 Change in net debt 79.0 (1,893.5) Net debt (1,256.3) (1,335.3)* Net debt to EBITDA, covenant 2.9x 3.1x* Net debt to EBITDA, reported 2.9x 3.2x* * 2016 Full Year figures Note 1: Underlying operating profit before depreciation and amortisation 9

11 Other financial matters and technical guidance FY17 Central costs ~$20m Group central costs in FY17 ~$5m ASIG central costs in FY17 All ASIG costs eliminated by 2018, ~$10m exceptional cost to achieve Capital expenditure FY17 capex $ m Tax Tax rate c.19%, cash tax rate c.12% Interest ~$60m interest charges in 2017 Capital structure and allocation review under way and expected to conclude by end of the year ERO footprint rationalisation Sale of ERO Forest Park facilities progressing, sale planned in H2 10

12 BBA Aviation going forward Wayne Edmunds Interim Group Chief Executive 11

13 BBA Aviation well placed High quality business Market leadership, barriers to entry Integration benefit Ontic acquisitions contributing; ERO stabilised Enhanced growth prospects Network strength and opportunity Further expansion Ontic pipeline and potential Attractive financial characteristics Strong cash generation Capital structure and allocation for accelerated value creation 12

14 Questions 13

15 Appendix 14

16 Signature s market leading position Network relevance Network scale 69 % Network Signature Atlantic Aviation Million Air Jet Aviation Total locations % 20% North America % 5 % 6 % 5 % 1 % Sole source locations Signature Flight Support Atlantic Jet Aviation Addressable market as measured by fuel burn, source: ARG/US Top 200 locations according to FAA departures Million Air TAC Air Ross Sheltair Cutter Top 50 US airports Locations comprise licenses, JVs and fully owned entities and correct as at time of announcement Adjusted for overlap locations within the top 50 of the respective category shown (i.e. where two FBOs on one airport, we count as one location) Source: FAA, OAG 15

17 Revenue split * and organic growth Flight Support 70% Organic 3% Aftermarket Services 30% Organic (4)% Flight Support RoW 10% Organic 6% Flight Support NA 90% Organic 3% ERO 73% Organic (7)% Ontic 27% Organic 9% Revenue ($m) N. America RoW Total Flight Support Engine Repair & Overhaul Ontic ,145.5 * Total external revenue for continuing operations 16

18 Depreciation and Amortisation H Continuing Underlying Exceptional Statutory OP (52.0) Depreciation Amortisation EBITDA (5.3) Discontinued Underlying Exceptional Statutory OP (0.2) (0.2) Depreciation Amortisation EBITDA (0.2) (0.2) Total Underlying Exceptional Statutory OP (52.0) Depreciation Amortisation EBITDA (5.3) Extract from cash flow 2016 Operating profit Operating profit from discontinued operations (0.2) Share of profit from associates and joint ventures (1.7) Profit from operations Depreciation of property, plant and equipment 35.5 Amortisation of intangible assets

19 Adjusted earnings per share Discontinued Continuing Total Adjusted earnings A (0.2) Underlying DT Adjusted earnings for cash EPS B (0.2) IFRS weighted average number of shares C 1, , , , , ,026.3 Adjusted EPS A/C 1.2c 11.4c 8.6c 11.4c 9.8c Growth 32.6% 16.3% Cash EPS B/C 1.3c 14.3c 9.5c 14.3c 10.8c Growth 50.5% 32.4% 18

20 Disclaimer This presentation contains forward looking statements including, without limitation, statements relating to: future demand and markets of the Group s products and services; research and development relating to new products and services; liquidity and capital; and implementation of restructuring plans and efficiencies. These forward looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Accordingly, actual results may differ materially from those set out in the forward looking statements as a result of a variety of factors including, without limitation: changes in interest and exchange rates, commodity prices and other economic conditions; negotiations with customers relating to renewal of contracts and future volumes and prices; events affecting international security, including global health issues and terrorism; changes in regulatory environment; and the outcome of litigation. The Company undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. 19