Signature Aviation 2019 Interim Results Signature Aviation 2020 Interim Results 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 our 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 Uniquely challenging: proactive response 1 & recovering markets
Signature Aviation 2020 Interim Results COVID-19 Proactive Leadership Safeguarding Employees and 1 Customers Stepping Up Employee 2 Engagement 3 Taking Control of Our Liquidity 4 Protecting Our Revenue EPIC brand ambassador on his recovery tour 5 Aggressively Managing Our Costs Planning and Executing the 6 Recovery 2
Signature Aviation 2020 Interim Results Strategic Execution Maintained • Acquisition of Geneva and Signature Strategic Flight Plan Sion FBOs from TAG Grow customer value through • Sustainability - Net Zero by expanded network and offerings 2050 Recognised as Optimal environmentally and resource • Disciplined value creation socially responsible and simple Growth leaders in our reliable communities processes Operational Environmental efficiency & process and social Value improvement creation Customer Employee experience experience Deliver a Company personalised where everyone experience right, the wants to work first time and every time and thrive 3
Signature Aviation 2019 Interim Results Performance Review David Crook Group Finance Director
Signature Aviation 2020 Interim Results Continuing Group Revenue – impacted by COVID-19 Continuing Group Revenue ($m) Organic Revenue 1,140.4 (2.4) 11.4 4.1 1,006.3 (77.9) (50.0) (7.9) 702.7 (242.0) (73.0) 1 1 H1 2019 FX Signature EPIC Disposals Leap Year Like Acquisitions Signature EPIC H1 2020 Constant Constant for Like Fuel Price Fuel Price Organic revenue • Signature 1 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.$100m, largely unaffected by COVID-19 • EPIC down 40.3% due to COVID-19 Note 1: Signature FBO and TECHNICAir. 5
Signature Aviation 2020 Interim Results Continuing Group operating profit – drop through Continuing Group Operating Profit 2 ($m) Organic Drop Through 1.0 158.2 1.0 158.1 (0.2) (0.9) 8.8 63.1 (98.7) (6.1) H1 2019 FX Disposals Leap Year Like Acquisitions Signature EPIC Centre H1 2020 for Like Operating profit 2 • Decisive management action taken on costs as flight activity reduced significantly • Signature 1 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 Note 1: Signature FBO and TECHNICAir. Note 2: Underlying operating profit (pre exceptional and other items) 6
Signature Aviation 2020 Interim Results Continuing Group Underlying Income Statement Continuing Group Underlying Income Statement • Operating profit reflects COVID-19 impact on $m H1 2020 H1 2019 2 Change flight activity in Signature & EPIC Signature 79.4 177.4 (55.2)% • Central costs actions implemented in EPIC (3.2) 2.9 (210.3)% response to COVID-19 Central costs (7.4) (14.8) 50.0% • Support costs to be taken out post Ontic TSA and ERO disposal Support costs (5.7) (7.3) 21.9% Operating profit 1 63.1 158.2 (60.1)% • Reduced interest expense due to lower net debt and lower interest rates Interest (64.4) (72.8) 11.5% • EPS down from 6.5c to 0.2c Tax 2.8 (18.1) 115.5% • Free cash flow per share of 3.3c Profit after tax 1.5 67.3 (97.8)% Continuing EPS 0.2c 6.5c (96.9)% • Prudent decision to continue suspension of dividend payments Adjusted FCF per 3.3c 10.0c (67.0)% share 3 Dividend 0.00c 4.20c (100)% 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) 7
Signature Aviation 2020 Interim Results Continuing Group –Free Cash Flow • Continuing Group delivers $27.2m free cash Continuing Group flow (ex exceptionals) $m H1 2020 H1 2019 2 • Operational working capital outflow offset by Underlying EBITDA 1 143.3 237.7 CARES Act deferred income Working capital movement (42.7) (9.0) • Flexed capex deployment with continued Deferred income 45.1 - investment in growth capital Net working capital 2.4 (9.0) • Reduced interest costs driven by lower net Capex (33.7) (33.7) debt and lower interest rates Net Interest paid (25.9) (36.8) • Cash taxes reduced taxable earnings IFRS 16 interest (36.0) (34.1) • Exceptional cash flows primarily reflect the Tax paid (1.3) (22.8) settlement and associated costs on Exceptionals (26.2) (1.5) previously disposed businesses All other movements (21.6) (17.8) Free cash flow 1.0 82.0 Exceptionals 26.2 1.5 Free cash flow (ex 27.2 83.5 exceptionals) Note 1: Underlying EBITDA before exceptional and other items and net interest paid Note 2: Restated due to Ontic disposal 8
Signature Aviation 2020 Interim Results Discontinued ERO • Underlying operating profit $21.0m Revenue Bridge ($m) • Reduced engine volumes 265.4 264.2 260.4 • Unfavourable mix of engine types and (1.2) associated workscopes (3.8) • Free cash outflow (pre exceptionals) of $25.7m in H1 H1 2019 FX Like Organic H1 2020 Reconciliation of pre and post for Like discontinued operations reporting Operating Profit 1 ($m) Operating profit 1 24.9 24.7 $m H1 2020 H1 2019 (0.2) ERO pre discontinued ops 4.2 6.7 21.0 Add back: Support costs 5.7 5.4 Add back: depreciation & 11.1 12.8 (3.7) amortisation suspension H1 2019 FX Like Organic H1 2020 ERO discontinued ops 21.0 24.9 for Like Note 1: Underlying operating profit pre exceptional and other items 9
Signature Aviation 2020 Interim Results Exceptional and other items – largely non-cash Continuing operations (Signature) Exceptional and other items • Amortisation of acquired intangibles: $m H1 2020 P&L H1 2020 Cash $(36.6)m (non-cash) Continuing ops • Restructuring expenses of $(8.2)m Amortisation (36.6) • Closure and impairment of Paris LBG T3 Impairment (4.8) • Gain on disposal of GAMA JV of $1.9m Restructuring costs/other (8.2) (1.5) GAMA JV gain 1.9 Discontinued ops Discontinued operations (Ontic & ERO) Ontic gain 5.2 1.3 • Final gain on Ontic disposal $5.2m ERO costs (1.5) (1.5) • ERO disposal process costs of $(1.5)m Previously disposed (2.7) (24.7) businesses Previously disposed businesses • $24.7m cash settlement and associated costs on previously disposed businesses 10
Signature Aviation 2020 Interim Results Leverage on a bank covenant basis Covenant basis Leverage • Leverage increased to 3.1x $m June 2020 Dec 2019 • Leverage on a covenant basis includes Net debt (covenant basis) (1,017.4) (1,005.7) the Ontic EBITDA for July to October Net debt to EBITDA, 3.1x 2.2x 2019 (leverage ex Ontic 3.5x) covenant basis • Net debt at June 2020 benefits from a Covenant 4.25x 4.25x net $45m of CARES Act grant funding (2,218.5) 1 (2,250.7) 1 Net debt reported, under • Minimum $150m liquidity covenant IFRS 16 replacing net debt/EBITDA and interest cover covenants for Dec 2020 & Jun 2021 Note 1: Including IRFS 16 liabilities classified as held for sale 11
Signature Aviation 2020 Interim Results Liquidity on a bank covenant basis Liquidity • Total headroom of $520m $m June 2020 Dec 2019 • Headroom of $370m above minimum Undrawn RCF 321.0 400.0 liquidity covenant Cash & cash equivalents 145.0 122.4 • Includes $55m CARES Act cash at CARES Act cash 54.9 - 30 June Total headroom 520.9 522.4 Minimum liquidity covenant (150.0) - Headroom to min liquidity 370.9 - Note 1: Including IRFS 16 liabilities classified as held for sale 12
Signature Aviation 2020 Interim Results Technical guidance for FY20 Capital Expenditure Cash flow & leverage • Targeting c.60% of originally guided • Final tranche of CARES Act funding of $110m for FY20 $20m received in July Interest costs • Expect to prepay the CARES Act promissory note of $18.6m in full, by • Cash interest (excluding IFRS 16 year end interest) c.$50m • $63m tax on gain from Ontic disposal CARES Act grant paid in July • $56m grant funding available to flex • TAG Aviation FBO acquisition payroll costs during H2 completed in July • $45m from deferred income at 30 June • ERO H1 working capital outflow c.$30m and a further $11m in grants received expected to largely unwind in H2 in July • Ontic EBITDA fully unwound for FY20 leverage on a covenant basis 13
Signature Aviation 2019 Interim Results Signature Aviation Mark Johnstone Group Chief Executive Officer
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