2012 Preliminary Results March 2013
Good underlying progress despite subdued markets... Growth Revenue increase despite challenges Flight Support down 4% Aftermarket Services up 6% Performance Structural cost reduction, operational improvement continues Benefit disguised by weak de-icing Cash generation Strong cash conversion, dividend increase and investment capacity Value creative investment Positive progress in Flight Support and Aftermarket Services …good momentum into 2013 .. 1
Financial Review Mark Hoad Group Finance Director 2
2012 Financial Highlights 1% revenue growth ex fuel price increases despite soft markets Underlying OP of $195.4m impacted by de-icing Adjusted EPS unchanged with sustainable reduction in effective tax rate Good cash conversion with free cash flow of $121.2m Net debt to EBITDA 1.6x ROIC of 10.0% reflects fall in OP Full year dividend increased by 5% 3
2012 Income Statement Continued revenue growth $m 2012 2011 Change Revenue 2,178.9 2,136.7 2% Reduction in underlying OP resulting in 20 basis point reduction in margin Revenue (fuel adjusted 1 ) 2,152.0 1% 2,178.9 Operating profit 2 195.4 198.9 (2)% Net interest increase reflects cost of the long-term financing structure Margin % 2 9.0% 9.3% (30bps) Margin % 2 (fuel adjusted 1 ) 9.0% 9.2% (20bps) Effective tax rate 14.9% Net interest (32.4) (28.7) (13)% Adjusted EPS unchanged Profit before tax 2 163.0 170.2 (4)% Full year dividend increased by 5% EPS 2 29.0¢ 29.0¢ - to 14.65¢ Dividend 13.94¢ 5% 14.65¢ Constant fuel price (1) Pre exceptional items (2) 4
Flight Support Organic revenue decline of 4% Revenue Bridge ($m) 1% related to de-icing 33 15 2% due to exit from Miami & Tampa (51) (5) 1,340 1,330 1,322 Remaining reduction of 1% versus market declines of 1-4% Underlying operating profit $112.5m Lack of high margin de-icing Exit from Miami and Tampa 2011 FX Fuel 2011 Acqs/ Organic 2012 Restated Disposals Benefit of operational improvement and $2m from finance synergy project Operating Profit Bridge ($m) Margin of 8.5% down 80bps on 3 like-for-like basis (2011: 9.3%) 125 (1) 124 (12) (2) 113 Cash conversion 104% (2011: 152%) Divisional ROIC 9.4% (2011: 10.6%) 2011 FX 2011 Acqs/ Organic Cost 2012 Restated Disposals Increase 5
Aftermarket Services Revenue increase of 6% Revenue Bridge ($m) Organic increase of 3% 28 24 Full year contribution from 857 807 (2 ) 805 fuel measurement business Underlying operating profit $100.5m Improved mix-related drop-through in H2 as anticipated 2011 FX 2011 Acqs Organic 2012 Like-for-Like Margin up 40bps to 11.7% (2011: 11.3%) Cash conversion 93% (2011: 98%) Operating Profit Bridge ($m) Divisional ROIC 11.2% (2011: 10.7%) 9 - 3 100 (3) 91 91 2011 FX 2011 Like Acqs Organic Cost 2012 for Like Increase 6
Exceptional Items Structural cost improvement projects $m P&L Cash Finance synergy project largely complete Structural projects 13.4 10.5 ─ $2m benefit in 2012 Acquisition costs 6.6 6.6 ─ Incremental $2m benefit in 2013 Amortisation of acquired 7.6 - Basingstoke footprint rationalisation complete intangibles ─ $4m capex avoided Restructuring & other 3.6 5.1 ─ $1m annualised savings Total 32.7 20.7 Acquisition costs Four acquisitions completed in 2012 Substantial activity in relation to opportunities which did not meet value creation criteria Amortisation of acquired intangibles Restructuring & other exceptionals 7
Cash Flow / Debt Free cash flow $121.2m $m 2012 2011 Underlying EBITDA 255.9 260.5 Capital expenditure investment in growth Working capital movement (12.8) (12.2) projects and lease extensions Net capital expenditure (55.4) (29.3) (2011 capex net of $14.6m of disposals) Net interest and tax paid (36.3) (13.0) Exceptional items (20.7) (4.5) Net interest and tax paid in 2011 All other movements (9.5) (15.7) benefitted from $35m refund Free Cash Flow 121.2 185.8 91% cash conversion in middle of Dividends (67.9) (63.7) target range as expected Equity issue 1.8 141.9 Acquisitions and disposals (35.5) (125.8) Leverage marginally below lower end of Other (32.4) (49.0) target range Net cash flow (12.8) 89.2 Net Debt 416.4 403.6 Net Debt to EBITDA 1.6x 1.5x 8
Other Financial Matters Exceptional items Amortisation of acquired intangibles $8m 2013 restructuring costs $5m ─ Completion of finance synergy project ─ Slough site closure ─ Divisional re-organisation Cross currency swaps € 50m and $75m settled in 2012 at cash cost of $10.9m $125m swaps with a mark-to-market loss of $21.8m due to mature in H1 2013 Tax P&L effective rate in mid to high teens On-going cash tax c80% of P&L charge Pensions New accounting standard (IAS19) effective 1 January 2013 On comparable basis, 2012 underlying operating profit reduced by $2.7m, adjusted EPS by 1.1 cents 2012 triennial valuation due for completion in H1 9
Performance and strategy update Simon Pryce Group Chief Executive 10
Further progress in Flight Support given short term challenges Signature Flight Support ASIG Outperformance, unique and enhanced Significant headwinds network Good renewal and new business conversion Lease extensions at 10 key locations rates, technical service extension Commercial initiatives delivering Satisfactory underlying operational performance Strong performance across a range of key PLH/Dryden acquisition exceeding operational metrics expectations …reduced headwinds into 2013 .. 11
A strong Aftermarket Services performance... Engine Repair & Overhaul Legacy Support APPH Expanded authorisations/ Cheltenham capacity Strong H2 service capabilities being filled Order book growth and Strengthened relationships Dedicated electronics new contracts with B&GA platform OEMs facility completed Reduced APPH footprint Continued focus on Additional licences and Continued focus on operational effectiveness new licensors operational improvement Enhanced repair portfolio Good order pipeline and high quote conversion rate …well positioned into 2013 .. 12
Good strategic growth investments Acquisitions $35m invested ─ PLH/Dryden ($27m) ─ Omaha FBO ($3m) ─ Sun Aircraft Services ($3m) ─ Consolidated Turbine Support ($2m) Good progress on organic growth projects Dedicated NetJets facility at Palm Beach New FBO at Chicago O’Hare New growth projects Newark FBO Luton development San Jose Signature success in RFP ...solid pipeline of further opportunity.. 13
Markets, Potential and Outlook Simon Pryce Group Chief Executive 14
Update on BBA Aviation’s major markets B&GA Annual turbo jet hours flown Flat over the last three years 5,000 7.3% CAGR No structural change per FAA 4,500 4.0% CAGR to Improved medium-term indicators return to peak 4,000 Planning for relatively flat market in 2013 3,500 Potential impact of sequestration unclear 3,000 Significant medium/long-term potential 2,500 2,000 Commercial 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Commercial GDP+ growth Flying hours Back to peak flying hours Outsourcing B&GA historic and forecast deliveries Legacy/ military 2,000 Demands of aging fleet outweighs any reduction 1,500 in defence spend 1,000 500 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Source: 2005-2012 GAMA Turboprop Jet 2013-2020 Teal Group Forecast ...planning for broadly stable markets in 2013.. 15
The continuing BBA Aviation opportunity… Performance Operating Profit 2007-2012 ($m) Sustainable management actions, improved operational gearing 211 (7) Further improvement opportunities (9) 71 195 195 (88) Organisation evolution 17 Cash generation $800m in free cash flow in last 5 years Cash conversion supporting progressive dividend and significant investment capacity 2007 Fx De-icing Normalised Market Acqs / Mgmt 2012 Value creative investment 2007 decline* Disposals actions Organic inc MIA** Acquisitions * B&GA and Commercial market decline 2007-2012 at standard 25% drop through ** First year contribution from acquisitions Growth Recovery and through cycle structural growth ... driving superior long term returns.. 16
O utlook for 2013… Performance Additional benefit from 2012 improvement actions and structural cost reduction Further opportunities supported by organisational evolution Cash generation Strong cash conversion Progressive dividend Investment capacity Value creative investment Solid 2012 progress Solid pipeline into 2013 Growth Reduced headwinds Anticipating broadly flat markets …underlying momentum, good progress .. 17
Q&A 18
Appendix 19
Artist rendering - Luton 20
Artist rendering - Luton 21
Artist rendering – San Jose 22
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