BBA Aviation plc 2014 Final Results Results for the year ended 31 - PDF document

BBA Aviation plc 2014 Final Results Results for the year ended 31 December 2014 1

FINAL RESULTS FOR PERIOD ENDED 31 DECEMBER 2014 Results in brief ($m) Underlying results 1 Statutory results 2014 2013 % Change 2014 2013 % Change Revenue 2,289.8 2,218.6 3% 2,289.8 2,218.6 3% EBITDA² 267.2 261.6 2% 231.2 239.9 (4)% Operating profit 201.2 200.1 1% 154.1 169.4 (9)% Profit before tax 172.4 170.5 1% 152.4 145.2 5% 144.8 162.5 Profit after tax 145.7 (1)% 138.1 18% Basic earnings per share 30.7¢ 30.5¢ 1% 34.5¢ 28.9¢ 19% Return on invested capital 3 9.4% 10.0% Free cash flow 4 51.2 146.5 (65)% Net debt (2013: year-end) 619.2 478.5 Dividend per share 16.2¢ 15.4¢ 5% (1) Before exceptional and other items (as defined in the financial statements) (2) Underlying EBITDA is calculated as underlying operating profit before depreciation and amortisation charged through underlying operating profit (3) Underlying operating profit return on average invested capital including goodwill and intangibles amortised or written off to reserves (4) Cash generated by operations, plus dividends from associates, less tax, net interest and net capital expenditure These definitions as outlined above are consistently applied throughout this results announcement Highlights Markets: US B&GA continues to show good growth  US business & general aviation movements up 4%  European business & general aviation movements down 1%  Commercial aviation movements down 2% in North America and up 3% in Europe Flight Support (59% of Group OP): Strong performance driven by Signature  Organic revenue growth of 8%; underlying operating profit increase of 14%  Signature: continued delivery and market outperformance  ASIG: outperforming key markets, overall performance impacted by start-up costs  Outlook: further good growth driven by Signature with improvements in ASIG offsetting loss of JFK contract Aftermarket Services (41% of Group OP): Good performance by Legacy offset by market challenges in ERO  Organic revenue decline of 4%; underlying operating profit decline of 12%  ERO: weaker than anticipated markets with footprint rationalisation on track  Legacy: better than anticipated performance against a very strong prior year comparator  Outlook: Legacy remains solid, ERO stabilised with overall benefits of footprint rationalisation offsetting on-going market weakness Growth and value creation  Flight Support expansion: eight new Signature FBOs and nine new Signature Select TM locations  Aftermarket Services portfolio growth: major rotorcraft authorisations awarded supporting expansion into new territories, Legacy Support licences successfully adopted  Substantial 2014 investments progressing well and supporting future growth  Continued strong pipeline of value creative opportunities  The Board is pausing the share repurchase programme (which is 62% complete as at 4 March 2015) Simon Pryce, BBA Aviation Chief Executive Officer, commented: “2014 was another year of progress for BBA Aviation. Flight Support delivered strongly, offsetting a softer than anticipated performance in Aftermarket Services. Signature Flight Support and Legacy Support performed well ahead of expectations, with softer markets and start-up costs and short-term operating challenges impacting performance in ASIG and Engine Repair & Overhaul. 2

The Group also continued to make good strategic progress, with significant extensions to both the Flight Support network and the Aftermarket Services portfolio. The Group continues to realise the benefits of the significant growth investments made in recent years, the full impact of which will not be seen until 2016 and 2017. In Flight Support, we anticipate continued strong momentum in Signature, supported by a sustained recovery in business & general aviation flying hours, as well as improvements in ASIG that should offset the loss of ASIG’s JFK contract. In Aftermarket Services, Legacy Support’s outlook remains solid. Engine Repair & Overhaul has now stabilised with the overall benefits of the footprint rationalisation programme offsetting continuing market weakness in the older mid-cabin engine segment. In addition, our overall performance will be supported by further incremental contributions from the substantial investments made across the Group in recent years. The Board therefore expects further good growth in 2015. ” For further information please contact: Mike Powell, Group Finance Director (020) 7514 3999 Jemma Spalton, Head of Communications & Investor Relations BBA AVIATION PLC David Allchurch / Martha Walsh (020) 7353 4200 TULCHAN COMMUNICATIONS A video interview with management is now available on www.bbaaviation.com and www.cantos.com A live audio webcast of the analyst presentation will be available from 09:00 today on www.bbaaviation.com and www.cantos.com 3

BBA Aviation plc – Final Results, 4 March 2015 FINAL RESULTS 2014 Overview BBA Aviation made further progress in 2014. Flight Support delivered a robust performance, ahead of its key markets, driven by strong delivery in Signature Flight Support (Signature). In Aftermarket Services, a stronger than anticipated performance in Legacy Support was offset by market pressures in Engine Repair & Overhaul (ERO). The Group continues to make good strategic progress with significant network expansion in Flight Support and new authorisations and licences in Aftermarket Services. Group revenue increased by 3% to $2,289.8 million (2013: $2,218.6 million). This included a $82.4 million revenue contribution from acquisitions and a $16.4 million increase from foreign exchange movements. These were offset by the disposal of APPH which reduced revenue by $72.1 million, and lower fuel prices which reduced reported revenue by a further $28.5 million. On an organic basis (excluding the impact of foreign exchange, fuel prices, acquisitions and disposals), Group revenue increased by 3%. Underlying operating profit was $201.2 million (2013: $200.1 million) including a $13.1 million contribution from acquisitions, partly offset by the $7.2 million impact of the APPH disposal. On an organic basis, operating profit declined by 3%. Flight Support organic profit growth was strongly driven by Signature where good profit drop-through was offset by operational challenges and start-up costs in ASIG. Aftermarket Services operating profit fell as the robust performance in Legacy Support was more than offset by weaker than anticipated markets and some short-term throughput issues associated with the footprint rationalisation in ERO. Group underlying operating profit margin reduced to 8.8% (2013 constant fuel price: 9.1%). Net interest expense declined by $0.8 million to $28.8 million (2013: $29.6 million), principally due to a reduction in the blended average interest rate, offsetting the impact of higher net debt. Interest cover increased to 9.3x (2013: 8.8x) and the net debt to EBITDA ratio increased to 2.3x (2013: 1.8x) reflecting the significant growth investment in the year. Underlying profit before tax increased by 1% to $172.4 million (2013: $170.5 million). The underlying tax rate increased to 16.0% (2013: 14.5%), reflecting the greater proportion of the Group’s pre -tax profits arising in higher marginal tax jurisdictions. With the increase in underlying profit before tax and the reduced average number of shares, due to the repurchase programme that started in March 2014, adjusted earnings per share were up 1% to 30.7¢ (2013: 30.5¢). Statutory profit before tax increased by 5% to $152.4 million (2013: $145.2 million). Underlying profit is stated before a $17.7 million gain (2013: $7.6 million loss). This gain comprised the $27.1 million exceptional profit following the disposal of APPH and the assets disposed of as part of the Skytanking acquisition, and the $20.5 million in relation to the previously announced settlement with the IRS in relation to the 2006 to 2010 tax years. These were partially offset by the following: $16.4 million in relation to the settlement with the US Department of Justice; $11.1 million of non-cash amortisation of acquired intangibles (2013: $9.0 million); $13.8 million of restructuring expenses (2013: $6.1 million) largely related to the ERO footprint rationalisation and ASIG’s restruc turing in response to challenging trading and operational conditions; and $5.8 million of M&A related costs (2013: $8.7 million). There was a $17.2 million tax credit related to these items, resulting in the $17.7 million gain. As a result, statutory profit after tax grew $24.4 million to $162.5 million. Unadjusted earnings per share increased by 19% to 34.5¢ (2013: 28.9¢). The Group ’s ability to generate strong cash flows remains unchanged; however, the operating cash flow performance in the year was lower than normal due to significant capital investment totalling $116.4 million (2013: $78.0 million). This investment was associated with key expansion projects at Luton, San Jose and other FBO development projects , ERO’s Pratt & Whitney rotorcraft authorisations, as well as 4