Signature Aviation 2020 Interim Results Mark Johnstone (CEO) David - - PowerPoint PPT Presentation

Signature Aviation 2019 Interim Results

2020 Interim Results

Signature Aviation

Mark Johnstone (CEO) David Crook (FD)

Signature Aviation 2020 Interim Results

Summary

• Signature’s US market has recovered

strongly to be down 19% in August, from a low of 77% down in April

• We have remained open throughout
• ur network serving our local

communities

• Decisive management action on cost

and capital expenditure

• Market recovery to 81% vs 2019. North

East region market slower to recover

• Positive free cash generation from

Signature business during pandemic

1

Uniquely challenging: proactive response & recovering markets

Signature Aviation 2020 Interim Results

COVID-19 Proactive Leadership

2

EPIC brand ambassador on his recovery tour

Safeguarding Employees and Customers Stepping Up Employee Engagement Taking Control of Our Liquidity Protecting Our Revenue Aggressively Managing Our Costs Planning and Executing the Recovery

1 2 3 4 5 6

Signature Aviation 2020 Interim Results

Strategic Execution Maintained

• Acquisition of Geneva and

Sion FBOs from TAG

• Sustainability - Net Zero by

2050

• Disciplined value creation

3

Signature Strategic Flight Plan

Grow customer value through expanded network and offerings Optimal resource and simple reliable processes Company where everyone wants to work and thrive Deliver a personalised experience right, the first time and every time Recognised as environmentally and socially responsible leaders in our communities Growth Operational efficiency & process improvement Environmental and social Customer experience Employee experience

Value creation

Signature Aviation 2019 Interim Results

Performance Review

David Crook Group Finance Director

Signature Aviation 2020 Interim Results

Continuing Group Revenue ($m) Organic revenue

• Signature1 down 29.3% due to COVID-19
• FAA US B&GA movements declined 29.6%
• Market outperformance in Q1 but Q2 impacted by our regional and plane mix
• Resilience in property management revenue of c.$100m, largely unaffected by COVID-19
• EPIC down 40.3% due to COVID-19

Continuing Group Revenue – impacted by COVID-19

Note 1: Signature FBO and TECHNICAir.

1,140.4 (2.4) (77.9) (50.0) (7.9) 4.1 1,006.3 11.4 (242.0) (73.0) 702.7

H1 2019 FX Signature Constant Fuel Price EPIC Constant Fuel Price Disposals Leap Year Like for Like Acquisitions Signature EPIC H1 2020

Organic Revenue

1 1

5

Signature Aviation 2020 Interim Results

Operating profit2

• Decisive management action taken on costs as flight activity reduced significantly
• Signature1 drop-through (40.8)% impacted by labour flexing
• IAM Jet Centre acquisition $1m
• EPIC impacted by lower volume & fuel price reductions
• Actions implemented to reduce central costs

Continuing Group operating profit – drop through

6

Note 1: Signature FBO and TECHNICAir. Note 2: Underlying operating profit (pre exceptional and other items)

Continuing Group Operating Profit2 ($m)

158.2 (0.2) (0.9) 1.0 158.1 1.0 (98.7) (6.1) 8.8 63.1 H1 2019 FX Disposals Leap Year Like for Like Acquisitions Signature EPIC Centre H1 2020

Organic Drop Through

Signature Aviation 2020 Interim Results

Underlying Income Statement $m H1 2020 H1 20192 Change Signature 79.4 177.4 (55.2)% EPIC (3.2) 2.9 (210.3)% Central costs (7.4) (14.8) 50.0% Support costs (5.7) (7.3) 21.9% Operating profit1 63.1 158.2 (60.1)% Interest (64.4) (72.8) 11.5% Tax 2.8 (18.1) 115.5% Profit after tax 1.5 67.3 (97.8)% Continuing EPS 0.2c 6.5c (96.9)% Adjusted FCF per share3 3.3c 10.0c (67.0)% Dividend 0.00c 4.20c (100)%

Continuing Group Underlying Income Statement

Continuing Group

• Operating profit reflects COVID-19 impact on

flight activity in Signature & EPIC

• Central costs actions implemented in

response to COVID-19

• Support costs to be taken out post Ontic TSA

and ERO disposal

• Reduced interest expense due to lower net

debt and lower interest rates

• EPS down from 6.5c to 0.2c
• Free cash flow per share of 3.3c
• Prudent decision to continue suspension of

dividend payments

7

Note 1: Underlying operating profit pre exceptional and other items Note 2: Restated for reclassification of Ontic as Discontinued Note 3: Adjusted free cash flow per share HY19 based on number of shares post consolidation (838.5 million)

Signature Aviation 2020 Interim Results

Continuing Group –Free Cash Flow

• Continuing Group delivers $27.2m free cash

flow (ex exceptionals)

• Operational working capital outflow offset by

CARES Act deferred income

• Flexed capex deployment with continued

investment in growth capital

• Reduced interest costs driven by lower net

debt and lower interest rates

• Cash taxes reduced taxable earnings
• Exceptional cash flows primarily reflect the

settlement and associated costs on previously disposed businesses

8

Note 1: Underlying EBITDA before exceptional and other items and net interest paid Note 2: Restated due to Ontic disposal

Continuing Group $m H1 2020 H1 20192 Underlying EBITDA1 143.3 237.7 Working capital movement (42.7) (9.0) Deferred income 45.1

• Net working capital

2.4 (9.0) Capex (33.7) (33.7) Net Interest paid (25.9) (36.8) IFRS 16 interest (36.0) (34.1) Tax paid (1.3) (22.8) Exceptionals (26.2) (1.5) All other movements (21.6) (17.8) Free cash flow 1.0 82.0 Exceptionals 26.2 1.5 Free cash flow (ex exceptionals) 27.2 83.5

Signature Aviation 2020 Interim Results

Discontinued ERO

• Underlying operating profit $21.0m
• Reduced engine volumes
• Unfavourable mix of engine types and

associated workscopes

• Free cash outflow (pre exceptionals) of

$25.7m in H1

9

Reconciliation of pre and post discontinued operations reporting

Note 1: Underlying operating profit pre exceptional and other items

265.4 (1.2) 264.2 (3.8) 260.4 H1 2019 FX Like for Like Organic H1 2020

Operating profit1 $m H1 2020 H1 2019 ERO pre discontinued ops 4.2 6.7 Add back: Support costs 5.7 5.4 Add back: depreciation & amortisation suspension 11.1 12.8 ERO discontinued ops 21.0 24.9

24.9 (0.2) 24.7 (3.7) 21.0 H1 2019 FX Like for Like Organic H1 2020

Revenue Bridge ($m) Operating Profit1 ($m)

Signature Aviation 2020 Interim Results

Exceptional and other items – largely non-cash

Continuing operations (Signature)

• Amortisation of acquired intangibles:

$(36.6)m (non-cash)

• Restructuring expenses of $(8.2)m
• Closure and impairment of Paris LBG T3
• Gain on disposal of GAMA JV of $1.9m

Discontinued operations (Ontic & ERO)

• Final gain on Ontic disposal $5.2m
• ERO disposal process costs of $(1.5)m

Previously disposed businesses

• $24.7m cash settlement and associated

costs on previously disposed businesses

10

Exceptional and other items $m H1 2020 P&L H1 2020 Cash Continuing ops Amortisation (36.6) Impairment (4.8) Restructuring costs/other (8.2) (1.5) GAMA JV gain 1.9 Discontinued ops Ontic gain 5.2 1.3 ERO costs (1.5) (1.5) Previously disposed businesses (2.7) (24.7)

Signature Aviation 2020 Interim Results

Covenant basis

• Leverage increased to 3.1x
• Leverage on a covenant basis includes

the Ontic EBITDA for July to October 2019 (leverage ex Ontic 3.5x)

• Net debt at June 2020 benefits from a

net $45m of CARES Act grant funding

• Minimum $150m liquidity covenant

replacing net debt/EBITDA and interest cover covenants for Dec 2020 & Jun 2021

Leverage on a bank covenant basis

Note 1: Including IRFS 16 liabilities classified as held for sale

Leverage $m June 2020 Dec 2019 Net debt (covenant basis) (1,017.4) (1,005.7) Net debt to EBITDA, covenant basis 3.1x 2.2x Covenant 4.25x 4.25x Net debt reported, under IFRS 16 (2,218.5)1 (2,250.7)1

11

Signature Aviation 2020 Interim Results

Liquidity

• Total headroom of $520m
• Headroom of $370m above minimum

liquidity covenant

• Includes $55m CARES Act cash at

30 June

Liquidity on a bank covenant basis

Note 1: Including IRFS 16 liabilities classified as held for sale

$m June 2020 Dec 2019 Undrawn RCF 321.0 400.0 Cash & cash equivalents 145.0 122.4 CARES Act cash 54.9

• Total headroom

520.9 522.4 Minimum liquidity covenant (150.0)

• Headroom to min liquidity

370.9

• 12

Signature Aviation 2020 Interim Results

Capital Expenditure

• Targeting c.60% of originally guided

$110m for FY20 Interest costs

• Cash interest (excluding IFRS 16

interest) c.$50m CARES Act grant

• $56m grant funding available to flex

payroll costs during H2

• $45m from deferred income at 30 June

and a further $11m in grants received in July

Technical guidance for FY20

13

Cash flow & leverage

• Final tranche of CARES Act funding of

$20m received in July

• Expect to prepay the CARES Act

promissory note of $18.6m in full, by year end

• $63m tax on gain from Ontic disposal

paid in July

• TAG Aviation FBO acquisition

completed in July

• ERO H1 working capital outflow c.$30m

expected to largely unwind in H2

• Ontic EBITDA fully unwound for FY20

leverage on a covenant basis

Signature Aviation 2019 Interim Results

Signature Aviation

Mark Johnstone Group Chief Executive Officer

Signature Aviation 2020 Interim Results

H1 2020 B&GA market performance

B&GA Market

• US B&GA movements contracted 29.6% in

H1 2020

• Q1 2020 movements down 8.9%
• Q2 2020 movements down 49.4%
• European market down 35.0% in H1 2020

US Market characteristics

• Charter segment leading recovery phase
• Weaker North East market recovery
• Fewer international flights
• Fewer business flights
• Larger jets flying less
• Signature weighting in NE region
• South East and West markets stronger

15

Signature Aviation 2020 Interim Results

Recovery mix by aircraft size

16

Argus US market operations by aircraft type – Jet 3,500 3,000 2,500 2,000 1,500 1,000 500 Operations 1 Jan 15 Jan 29 Jan 12 Feb 26 Feb 11 Mar 25 Mar 8 Apr 22 Apr 6 May 20 May 3 Jun 17 Jun 1 Jul 15 Jul 29 Jul 12 Aug 26 Aug Mid-size Cabin Jet Large Cabin Jet Small Cabin Jet

Large cabin jet recovery to come

Signature Aviation 2020 Interim Results

Regional US recovery in July 2020

1

17

West coast Location % change Van Nuys (8) Mid US Location % change Omaha (18) North east Location % change Teterboro (56) South east Location % change West Palm Beach 36 Recreational Location % change Bozeman 48

Note 1: FAA movements data for July 2020 vs July 2019

North east region opportunity

Signature Aviation 2020 Interim Results

US market by segment – YoY movements

18

Note 1: Q3 market data updated through August 2020 Note 2: GDP data update through Q2 Sources: GDP: The Federal Reserve Bank of St. Louis; FAA: FAA Report for Business Jets; SFS Market and FAA Segments: ARG/US business jet and turboprop excluding transport, aircraft used for cargo

• perations, and scheduled regional airline within SFS Market

2013 Q2 2018 Q1 2020 Q1 2013 Q3 2019 Q1 2013 Q1 2013 Q4 2020 Q3 2014 Q1 2016 Q2 2014 Q2 2014 Q4 2020 Q2 2015 Q1 2015 Q2 2019 Q4 2015 Q3 2018 Q3 2015 Q4 2016 Q1 2018 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2019 Q2 2018 Q4 2019 Q3 2014 Q3 Charter P135 P91 Real GDP Fractional P91k Total SFS Market

• 60
• 20
• 10

10

• 50
• 40
• 30

% change 20

Charter sector leading the recovery

Signature Aviation 2020 Interim Results

Signature Strategic Flight Plan

19

Growth Operational efficiency and process improvement Environmental and social Customer experience Employee experience

Value creation

Grow customer value through expanded network and offerings Optimal resource and simple reliable processes Company where everyone wants to work and thrive Deliver a personalised experience right, the first time and every time Recognised as environmentally and socially responsible leaders in our communities

Signature Aviation 2020 Interim Results

Growth

Network growth

• Acquisition of TAG Geneva and Sion FBOs
• Italy minority stake acquired
• Paris Le Bourget T3 & Corpus Christi exited
• New FBO at Atlanta opened

Non-fuel revenue growth

• New hangar at Baton Rouge
• Fuel card growth
• New services such as Elite

20

Sion FBO acquired as part of the TAG Aviation acquisition

Grow customer value through expanded network and offerings

Signature Aviation 2020 Interim Results

Employee experience

Engagement

• Local engagement plans and support have

been critically important during COVID-19 Diversity & Inclusion

• Steering committee goals reset

Training

• Class of 2020 Manager in Training

graduated Signature Aviation Hardship Fund

• $155,000 distributed as at end of August

21

Social distancing at Fayetteville

Company where everyone wants to work and thrive

Signature Aviation 2020 Interim Results

Environmental and Social

Baseline environmental footprint established

• Will reduce our Scope 1 & 2 emissions by

29% by 2025

• Reduce emissions by 50% by 2030

Solar

• Solar power generation passed 1m KWh

per month

• A further 30 locations under review for the

next two years Sustainable Aviation Fuel (SAF)

• Product launch across the network in H2 2020

Accreditations

• New LEED build projects at Atlanta and

Bedford

22

Newly constructed Atlanta FBO

Recognised as environmentally and socially responsible leaders in our communities

Commitment to net zero by 2050

Signature Aviation

• US B&GA is a long-term structural growth market correlated with GDP

through cycle

• Signature’s unique network is ideally placed as a platform for growth

both in fuel and non-fuel revenues

• This cash generation allows us to continue to invest in, and fortify our

network, our customer offering, our people and our sustainable future

• Signature is a highly cash generative business generating underlying

free cash flows of over $200m in 2019

• We have demonstrated the robustness of our business model through

the unprecedented COVID-19 pandemic

23

Group outlook

1 2 3 4

Encouraged by flight activity recovery Board will review the suspension

• f dividend payments when

appropriate Performance expected to strengthen further, over the second half Cost base now aligned with current flight activity. We have demonstrated

• ur ability to flex costs in response

to changing demand

24

Solar panels at Bradley

Signature Aviation 2019 Interim Results

2020 Interim Results

Questions

Signature Aviation 2019 Interim Results

Appendix

2020 Interim Results

Signature Aviation 2020 Interim Results

Cash flow $m Continuing Group Disc Ops H1 2020 H1 2019 Underlying EBITDA1 143.3 21.0 164.3 300.7 Working capital movement (42.7) (32.2) (74.9) (2.4) Deferred income 45.1

• 45.1
• Net working capital

2.4 (32.2) (29.8) (2.4) Capex (33.7) (3.7) (37.4) (41.1) Net Interest paid (25.9) (0.3) (26.2) (38.4) IFRS 16 interest (36.0) (1.8) (37.8) (36.3) Tax paid (1.3) (0.2) (1.5) (23.0) Exceptional (26.2) (0.2) (26.4) (1.8) All other movements (21.6) (8.5) (30.1) (28.5) Free cash flow 1.0 (25.9) (24.9) 129.2 Exceptionals 26.2 0.2 26.4 1.8 Free cash flow (excl exceptionals) 27.2 (25.7) 1.5 131.0

Total Group Cashflow

Continuing Group

• Free cash flow of $27.2m

(ex exceptionals)

• Operational working capital outflow offset

by CARES Act deferred income

• Flexed capex deployment
• Finance costs improved through reduced

net debt and lower interest rates

• Cash taxes reflect lower taxable earnings
• Exceptional cash flows primarily reflect

the settlement and associated costs on previously disposed businesses Discontinuing operations

• Working capital outflow expected to

largely unwind in H2

27

Note 1: Underlying operating profit before depreciation and amortisation on a pre IFRS 16 basis

Signature Aviation 2020 Interim Results

Depreciation and Amortisation H1 2020

28

Extract from cash flow

2020 Operating profit 15.6 Operating profit from discontinued operations 21.0 Share of profit from associates and joint ventures (1.7) Profit from operations 34.9 Depreciation of property, plant and equipment 34.3 Depreciation of right of use assets 42.2 Amortisation of intangible assets 40.3

Total

Underlying Exceptional Statutory OP 84.1 (47.5) 36.6 Depreciation 34.3

• 34.3

IFRS 16 depreciation 42.2

• 42.2

Amortisation 3.7 36.6 40.3 EBITDA 164.3 (10.9) 153.4

Discontinued

Underlying Exceptional Statutory OP 21.0

• 21.0

Depreciation1

• IFRS 16

depreciation

• Amortisation1
• EBITDA

21.0

• 21.0

Continuing

Underlying Exceptional Statutory OP 63.1 (47.5) 15.6 Depreciation 34.3

• 34.3

IFRS 16 depreciation 42.2

• 42.2

Amortisation 3.7 36.6 40.3 EBITDA 143.3 (10.9) 132.4

Signature Aviation 2020 Interim Results

Signature flight path

29

Organic Growth Core revenue source optimisation Non-fuel revenue growth New services and asset utilisation 1 2 3 4

Pricing optimisation Credit card Uber Elevate

Drop through

>50% >50% >50% Advertising

(1-2 yrs) (2-4 yrs) (2-5 yrs)

Underlying operating profit ($M)

~10 7-14 5-10 Elite

Signature Aviation 2019 Interim Results

Disclaimer

2020 Interim Results

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, in tax rates or tax legislation, 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; the introduction or variation of tariffs or duties; 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.