2012 Preliminary Results March 2013 Good underlying progress - PowerPoint PPT Presentation

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