BBA Aviation enabling flight; expanding horizons/media/Files/S/... · BBA Aviation 2016: continued...
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BBA Aviation – enabling flight; expanding horizons2016 Final Results
BBA Aviation
2016 – a transformational year
Major expansion of Signature
‒ Acquired Landmark
‒ Unique global network of >200 FBOs
Focused the Group
‒ Value added, IP protected, strong ROIC / cash flow
‒ Merged aircraft management and charter business
‒ Grown Ontic
‒ ASIG disposal
Successfully integrated Landmark Aviation
‒ Cost synergies quicker and greater than anticipated
‒ Extended opportunity for outperformance
…enhanced underlying quality, growth and opportunity for value creation
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2010 2011 2012 2013 2014 2015 Now
Signature global network expansion
Historical1 Today2
Total operating profit
$181.5m
Total operating profit
$302.6m
01Note 1: Based on 2015 financial informationNote 2: Based on 2016 financial information
2016 Final Results
Aftermarket Services28%
Flight Support72%
Aftermarket Services12%
Flight Support88%
BBA Aviation
Modest growth in US B&GA flying continues
US Market Segments
…Signature continuing to outperform
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Low market growth
‒ US B&GA departures +1%
‒ European B&GA movements +2%
‒ Military market stable
Continued decline in key engine repair segment
‒ Legacy mid cabin
Source: FAA, OAG
Flight hours TTM Y-on-Y
Months of growth /
decline
Large Cabin Jets +5% 79 months
Midsize Cabin Jets- Aircraft >10yrs old- Aircraft <10yrs old
- 5%+ 2%
61 months80 months
Small Cabin Jets - 1% 6 months
Total Market +1% 80 months
2016 Final Results
BBA Aviation
Strong business performance
Continuing
Signature performing well
‒ Continued outperformance; new locations delivering; integration complete
‒ Further network expansion
‒ Large development projects successfully completed
‒ Created one of the largest aircraft charter and management businesses
Aftermarket Services mixed
‒ Ontic good performance, new licences contributing
‒ Significant Ontic portfolio growth
‒ ERO footprint rationalisation programme on track; improving performance in weak markets
…delivering further good growth
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Discontinued
ASIG
‒ Further operational improvements and new business wins
‒ Business in good shape, sold in January 2017
2016 Final Results
BBA Aviation
Performance ReviewMike Powell Group Finance Director
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2016 Final Results
BBA Aviation
2016: continued excellent delivery
…driven by Signature, underpinned by Ontic
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Flight Support (88% of continuing OP1):
‒ Existing Signature continued outperformance with good drop-through
‒ New locations delivering as expected; integration successfully completed;
‒ Synergies faster and greater than anticipated
Aftermarket Services (12% of continuing OP1):
‒ Ontic good performance, H2 revenue uptick
‒ ERO slight H2 improvement
Discontinued operations
‒ ASIG successfully sold for $202 million in January 2017
Continued strong cash flow
‒ Further deleveraging
2016 Final Results
Operating profit1 ($m) 20162015
restatedChange
Flight Support (continuing)
294.0 154.4 90%
Aftermarket Services 42.0 59.6 (30)%
Central costs (continuing) (14.8) (16.1) 8%
Central costs (ASIG) (18.6) (16.4) (13)%
Total central costs (33.4) (32.5) (3)%
Group continuing 302.6 181.5 67%
Discontinued 27.5 20.5 34%
Group total 330.1 202.0 63%
Basic adjusted EPS (continuing)
19.4c 18.0c 8%
Cash EPS (continuing) 22.1c 18.6c 19%
Dividend per share 12.75c 12.15c 5%
Net debt (1,335.3) 456.5Net debt to EBITDA, covenant 3.1x 2.3xNet debt to EBITDA, reported 3.2x 2.3x
Note 1: Underlying operating profit (pre exceptional and other items)
BBA Aviation
Flight Support: strong performance88% of continuing OP1
Strong revenue growth
‒ Signature good organic growth of 5%; further outperformance
‒ Significant contribution from Landmark
Organic operating profit growth of 72%
‒ Extended customer service offering through new locations and new services supporting good operating leverage
Landmark Aviation delivering as anticipated
‒ $21.9m synergies delivered in 2016
6 FBOs successfully sold
One of the largest aircraft charter and management fleets
Divisional ROIC 11.2% (FY 2015: 15.3%)
2016 Final Results
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Operating Profit1 ($m)
Revenue Bridge ($m)
Note 1: Underlying operating profit (pre exceptional and other items)Note 2: Adjusted for two one-off items in 2015: the reclassification of our investment in the Hong Kong Business Aviation Centre as an associate and the trading losses from ASIG’s operations at Singapore Changi Airport
931.6
(11.4)(56.9)
863.3
545.9 40.0
(6.0)
1,443.2
2015 FX Fuel 2015Like-
for-like
Acq's Organic Prior Yearone-offs (HK /
Singapore)
2016
154.4
(1.8) -152.6
110.5 21.9 10.1
(1.2)294.0
2015 FX Fuel 2015Like-
for-like
Acq's Syne-rgies
Organic Prior Yearone-offs (HK/ Singapore)
2016
BBA Aviation
Landmark Aviation progress
Successful integration of 62 new FBOs
Operating margins in line with expectations
Cost synergies delivered ahead of schedule
‒ Annualised cost savings of $39m from 20171
~$42m total integration costs
‒ $24.9m of one off expenses (shown as exceptional)
‒ $17m of capital expenditure
Synergies and Landmark contribution will no longer be reported separately
…delivering on acquisition objectives
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2016 Final Results
Cleveland Burke Lakefront Airport
BBA Aviation
Aftermarket Services: mixed performance
Revenue down 9.5%1
‒ Ontic delivering uptick in revenues in H2
‒ Depressed volumes in ERO, challenging trading conditions
Operating profit2 down 30%
‒ Ontic good operational performance – now >85% of division
‒ Good contributions from new Ontic licences
‒ ERO performance reflecting market conditions, reduced workscopes,
competitive pricing, OEM actions, reduced engine trading, leading to
$184.4m impairment
ERO footprint rationalisation programme stabilising business
‒ Cost reduction benefiting H2 performance
Divisional ROIC 6.9% (2015: 8.2%)
…with good result and outlook from Ontic
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Operating Profit2 ($m)
Revenue Bridge ($m)
Note 1: Comparator includes $39.7 million of engine tradingNote 2: Underlying operating profit (pre exceptional and other items)
Organic includes $(39.7)m engine trading revenue recognised in previous year
2016 Final Results
59.6
(3.1)56.5
4.3
(18.8)42.0
2015 FX 2015Like-
for-like
Acq's Organic 2016
782.4
(16.5)765.9
12.8
(72.8)705.9
2015 FX 2015Like-
for-like
Acq's Organic 2016
$(39.7)m engine trading
BBA Aviation
Revenue Bridge ($m)
415.8
(13.3) (2.3)
400.2
16.6 416.8
2015 FX Fuel 2015Like-…
Underlying 2016
Discontinued ASIG operations
‒ Successful disposal for $202m completed in January 2017, net proceeds of ~$170m
‒ Good underlying financial and operational performance
‒ $7.1m benefit from suspension of depreciation
‒ Assets written down by $109.1m, in anticipation of sale
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Operating Profit1 ($m)
2016 Final Results
20.5 0.1
-
20.6
11.2
(4.3)
27.5
2015 FX Fuel 2015Like-
for-like
Underlying Panama 2015 gainon purchase
2016
Note 1: Underlying operating profit (pre exceptional and other items)
BBA Aviation
Underlying Group Income Statement
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Continuing operations ($m) 2016 2015 Change
Revenue 2149.1 1714.0 25%
Revenue (fuel adjusted) 2149.1 1657.1 30%
Operating profit 302.6 181.5 67%
Margin % 14.1% 10.6%
Margin % (fuel adjusted) 14.1% 11.0%
Net interest (63.9) (31.8) 101%
Profit before tax 238.7 149.7 60%
Profit after tax 199.2 128.9 63%
Continuing, adjusted EPS 19.4c 18.0c 8%
Continuing operations by segment ($m)
2016 2015 Change
Flight Support 294.0 154.4 90%
Aftermarket Services 42.0 59.6 (30)%
Central costs (continuing) (14.8) (16.1) 8%
Central costs (ASIG) (18.6) (16.4) (13)%
Total central costs (33.4) (32.5) (3)%
Operating profit 302.6 181.5 67%
Total Group($m)
2016 2015 Change
ROIC 10.1% 11.0% (90)bps
Adjusted EPS 21.1 20.1 5%
Adjusted EPS (continuing) 19.4 18.0 8%
Dividend 12.75 12.15 5%
Discontinued operations ($m) 2016 2015 Change
Operating profit 27.5 20.5 34%
Profit after tax 17.9 15.4 16%
2016 Final Results
BBA Aviation
Exceptional and other items
Main exceptional and other items (before tax)
Continuing
‒ Restructuring expenses: ERO $9.9m
‒ Landmark Aviation integration costs $24.9m
‒ Amortisation of acquired intangibles: $98.6m
‒ ERO impairment $184.4m
Discontinued
‒ ASIG write down in anticipation of sale $109.1m
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2016 Final Results
BBA Aviation
$m 2016 2015Underlying operating profit 1
Depreciation & amortisation
330.1
84.6
202.0
71.1
Underlying EBITDA2 414.7 273.1
Working capital movement 51.5 (21.7)
Capex (102.4) (90.7)
Net Interest paid (61.9) (29.4)
Tax paid (15.8) (5.0)
Exceptional and other items (63.5) (28.6)
All other movements 1.5 (9.3)
Free cash flow 224.1 88.4
Dividends (124.3) (76.6)
Issue of shares 0.3 1,117.5
Acquisitions & licences (2,108.8) (32.9)
Disposals 186.6 -
Other + FX 30.3 (20.6)
Change in net debt (1,791.8) 1,075.8
Net debt (1,335.3) 456.5
Net debt to EBITDA, covenant 3.1x 2.3x
Net debt to EBITDA, reported 3.2x 2.3x
Enhanced and continuing strong cash generation
‒ Strong cash generative ability enhanced by Landmark Aviation acquisition
‒ Working capital inflow due to improved processes and timing of payments, ~$20m to reverse in 2017
‒ Cash tax lower than income statement tax as anticipated; will continue.
‒ Exceptional cash costs relating to Landmark Aviation, ERO restructuring and ASIG disposal
‒ Net cash proceeds of $186.6m from disposal of 6 FBOs
‒ ASIG disposal and Ontic GE acquisition in 2017 cash flow
‒ Leverage 3.1x on covenant basis
…supporting further value creation
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2016 Final Results
Note 1: Underlying operating profit (pre exceptional and other items)Note 2: Underlying operating profit before depreciation and amortisation
BBA Aviation
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, ~$8-10m exceptional cost to achieve
Capital expenditure
‒ FY17 capex $100-120m
ERO footprint rationalisation
‒ Sale of ERO Forest Park facilities progressing,sale planned in H2
Tax
‒ Tax rate c19%, cash tax rate 12%
Interest
‒ ~$60m interest charges in 2017
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Pensions
‒ UK DB scheme closed: $1.5m charge
‒ Total pensions valuation net deficit $82.8m (2015: $40.1m) due to lower UK corporate bond yields
‒ Revised payment schedule agreed with trustees:£3m for 5 years, £2.7m for following 14 years
2016 Final Results
BBA Aviation
BBA Aviation going forward
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Simon PryceGroup Chief Executive
2016 Final Results
BBA Aviation
Increased exposure to B&GA market
Indicator Details
ShortTerm
Aircraft utilisation
‒ B&GA flying hours continued growth
Corporate confidence
‒ B&GA flying closely correlated to corporate confidence
‒ SME confidence measures continue to improve
MediumTerm
Fleet growth
‒ Global B&GA fleet continues to expand
‒ Forecast fleet growth of 3-4% CAGR through 2025
‒ % of second hand fleet for sale and pricing stable
Fleet dynamics
‒ Larger aircraft are an increasing proportion of the fleet, up from 22% to 28% (2005-2016)
‒ Higher average age of fleet
LongTerm
GDP ‒ Through-cycle growth in excess of GDP
‒ External forecasts of 2.5% flight hours growth p.a.
…continued outperformance
2016 Final Results
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Source: GAMA and US Bureau of Economic AnalysisNote: 2004 the GAMA survey coverage expanded for turbine airplanes and rotorcraft, accounting for part
of the increase in hours flown
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20000
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Bu
sin
ess
Je
t Fl
igh
t H
ou
rs (
00
0s)
US
GD
P (
$b
n)
Business Jet Flight Hours (Thousands) GDP (Billions in 2009 Dollars)
US B&GA Flight Hours and GDP
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
Jan
-08
Jun
-08
No
v-0
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Ap
r-0
9
Sep
-09
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-10
Jul-
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-11
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-11
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-12
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g-1
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-13
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-13
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v-1
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Ap
r-1
4
Sep
-14
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-15
Jul-
15
Dec
-15
May
-16
Oct
-16
US B&GA Aircraft Movements and US Small Business Confidence
YOY 12 month rolling change in B&GA aircraft movements
% YOY change in Small Business Confidence
BBA Aviation
BBA Aviation well placed…
…for accelerated value creation
2016 Final Results
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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
‒ Portfolio optimisation
Attractive financial characteristics‒ Strong cash generation
‒ Capital structure and allocation
BBA Aviation
Questions
2016 Final Results
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BBA Aviation
Appendix
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2016 Final Results
BBA Aviation
Revenue split1 and organic growth2
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Flight Support 72%
Organic 4%
Signature 77%
Organic 5%
ASIG 23%
Organic (57)%
Signature N. America 89%
Organic 5%
Signature RoW 11%
Organic (2)%
AftermarketServices 28%
Organic (10)%
Ontic 23%
Organic (3)%
ERO 77%
Organic (11)%
Revenue2 ($m) N. America RoW Total
Signature Flight Support 1,274.3 164.0 1,438.3
ASIG 305.8 115.9 421.7
Engine Repair & Overhaul 459.0 82.4 541.4
Ontic 108.9 55.6 164.5
2,148.0 417.9 2,565.9
Note 1: Total revenue for continuing and discontinued operations Note 2: Organic growth representing continuing operations only
2016 Final Results
BBA Aviation
76.9
(0.4) -
76.5
53.4 8.7 4.2
(1.2)
141.6
2015H1
FX Fuel 2015 H1Like-
for-like
Acquisitions Syne-rgies
ExistingSignatureorganic
Prior Yearone-offs (HK/ Singapore)
2016H1
77.5
(1.4) -
76.1
57.1
13.2 5.9 152.4
2015 H2 FX Fuel 2015 H2Like-
for-like
Acquisitions Syne-rgies
ExistingSignatureorganic
2016 H2
445.8 (7.7) (4.3)
433.8
304.7 24.1 762.6
2015H2
FX Fuel 2015 H2Like-
for-like
Acquisitions ExistingSignatureorganic
2016H2
Flight Support – H1 and H2 bridges
2016 Final Results
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H2 Revenue ($m)
H2 Operating Profit1 ($m)H1 Operating Profit1 ($m)
H1 Revenue ($m)
485.8 (3.7)
(52.6)429.5
241.2 15.9
(6.0)680.6
2015 H1 FX Fuel 2015 H1Like-
for-like
Acquisitions ExistingSignatureorganic
Prior Yearone-offs
(HK /Singapore)
2016 H1Organic (incl. SFS & ASIG)
Organic (incl. SFS & ASIG)
Organic (incl. SFS & ASIG)
Organic (incl. SFS & ASIG)
Note 1: Underlying operating profit (pre exceptional and other items)
BBA Aviation
34.4
(2.4)
32.1 2.4
(3.5)
30.9
2015 H2 FX 2015 H2Like-
for-like
Acquisitions Organic 2016 H2
386.0
(11.4)
374.6 7.9
(16.7)
365.8
2015H2
FX 2015 H2Like-
for-like
Acquisitions Organic 2016H2
$(10.3)m engine trading
25.2 (0.7)
24.4 1.9
(15.3)11.1
2015H1
FX 2015 h1Like-
for-like
Acquisitions Organic 2016H1
396.4
(5.1)
391.3 4.9
(56.1)
340.1
2015 H1 FX 2015 H1Like-
for-like
Acquisitions Organic 2016 H1
$(29.4)m engine trading
Aftermarket Services – H1 and H2 bridges
2016 Final Results
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H2 Revenue ($m)
H2 Operating Profit1 ($m)H1 Operating Profit1 ($m)
H1 Revenue ($m)
Organic includes $(10.3)m engine trading revenue recognised in previous year Organic includes $(29.4)m engine trading revenue recognised in previous year
Note 1: Underlying operating profit (pre exceptional and other items)
BBA Aviation
Depreciation and Amortisation 2016
2016 Final Results
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TotalUnderlying Exceptional Statutory
OP 330.1 (137.2) 192.9
Depreciation 69.7 - 69.7
Amortisation 14.9 99.3 114.2
EBITDA 414.7 (37.9) 376.8
DiscontinuedUnderlying Exceptional Statutory
OP 27.5 (0.7) 26.8
Depreciation 2.7 - 2.7
Amortisation - 0.7 0.7
EBITDA 30.2 - 30.2
ContinuingUnderlying Exceptional Statutory
OP 302.6 (136.5) 166.1
Depreciation 67.0 - 67.0
Amortisation 14.9 98.6 113.5
EBITDA 384.5 (37.9) 346.6
Extract from cash flow2016
Operating profit 166.1
Operating profit from discontinued operations 26.8
Share of profit from associates and joint ventures (13.4)
Profit from operations 179.5
Depreciation of property, plant and equipment 69.7
Amortisation of intangible assets 114.2
BBA Aviation
Adjusted earnings per share
2016 Final Results
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Discontinued Continuing Total
2016 2015 2016 2015 2016 2015
Adjusted earnings A 18.3 15.0 198.8 129.4 217.1 144.4
Underlying DT 7.9 5.5 27.7 4.3 35.6 9.8
Adjusted earnings on current tax B 26.2 20.5 226.5 133.7 252.7 154.2
IFRS weighted average number of shares C 1,026.6 718.6 1,026.6 718.6 1,026.6 718.6
Underlying EPS A/C 1.7c 2.1c 19.4c 18.0c 21.1c 20.1c
Growth (19.0)% 7.8% 5.0%
Cash EPS B/C 2.5c 2.9c 22.1c 18.6c 24.6c 21.5c
Growth (13.8)% 18.8% 14.4%
BBA Aviation
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.
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2016 Final Results