2016 Interim Results August 2016 BBA Aviation transformed in H1 - PowerPoint PPT Presentation

2016 Interim Results August 2016

BBA Aviation transformed in H1 2016… Operating profit 1 Revenue by key markets The enlarged Signature Military Aftermarket Flight  Landmark Aviation as anticipated 5% Services Support Commercial 7% 93% 7%  Extended global leadership B&GA  Extended customer proposition 88% Aftermarket Services  Ontic delivering Note: H1 2016. All figures are reported on a continuing operations basis 1. Underlying operating profits (pre exceptional and other items)  ERO restructuring progressing, Enhanced Signature leadership position performance unsatisfactory Enlarged Atlantic Jet Signature Aviation Million Air Aviation Total locations 200 * 64 29 21 North America 136 64 27 7 24 14 1 Sole source locations 62** 38 ‡ Top 50 US airports 27 10 5 Locations comprise licenses, JVs and fully owned entities and correct as at time of announcement * 154 of 200 locations are wholly owned ** 58 of the 62 are wholly owned locations ‡ Adjusted for overlap locations within the top 50 of the respective category shown (i.e. where two FBOs on one airport, we count as one location) …materially enhanced prospects 1

Landmark Aviation integration process ahead of plan Integration progressing well  Organisation design and management in place  Re-branding complete  Operations, customer service and safety training on track  Systems conversion in progress, 30 bases now live  Procurement RFPs broadly complete Actions delivering the vast majority of cost savings now complete Further network benefits to come …materially reduced execution risk 2

Modest growth in US B&GA flying continues… US Market Segments Markets broadly flat  US B&GA departures +0.2% Flight Hours Months TTM Y-on-Y of Growth  European B&GA movements down -0.8% Large Cabin Jets +2% 72 months  Commercial aviation movements Midsize Cabin Jets - Aircraft >10yrs old - 5% 55 months 1.2% in NA and 4.6% in Europe - Aircraft <10yrs old + 2% 74 months  Military market stable Small Cabin Jets +0.5% 37 months TOTAL +1% 68 months Decline in key engine repair segments  Legacy mid cabin  Oil and gas rotorcraft Source: FAA, OAG …Signature continuing to outperform 3

Strong overall performance… Continuing Operating profit 1 Signature performing well Aftermarket Flight Services Support 7%  Strong growth in enlarged Signature 93%  Continued market outperformance Aftermarket Services weaker  Ontic (Legacy Support) delivered ahead of plan, strong pipeline  ERO weak performance, progress on restructuring but challenging outlook, $185m non-cash impairment Discontinued Good year on year underlying operational and financial performance ASIG reclassified as held for sale discontinued  $129m non-cash impairment 1. H1 2016 underlying operating profits (pre exceptional and other items) on a continuing basis …leverage down and dividend up 4

Performance Review Mike Powell Group Finance Director 5

Delivery and momentum Flight Support (93% of continuing operations): Signature strong, Landmark delivering  Integration going well  New locations delivering as expected  Synergies on track and high confidence in delivery  Existing Signature continues to outperform with good drop-through Aftermarket Services (7% of continuing operations): weak result  Ontic on track, ahead of forecast for H1  Continued low volumes and margins in ERO; restructuring continues Group  ASIG disposal process proceeding, now shown as “held for sale”  Cash generation driving de-leverage to 3.2x 1  Dividend increased by 5% All figures are reported on a continuing operations basis unless stated Existing Signature refers to Signature excluding former Landmark bases 1. Covenant basis …driven by Signature, underpinned by Ontic 6

Changes to usual presentation of results Used to be… Now… Continuing Operations Discontinued Operations  Flight Support  Flight Support: ─ Signature and ASIG ─ Signature (existing/new  Flight Support: ASIG locations, synergies) ─ Profit after tax, gross of central support costs  Aftermarket Services  Aftermarket Services ─ Balance sheet ─ ERO and Ontic ─ ERO and Ontic treatment: collapsed into two lines, assets  Central costs and liabilities held for ─ Central costs sale ─ Central costs that support  Central costs ASIG 7

Strong performance from Flight Support 1 93% of continuing operations New reporting shows Signature standalone for H1 H1 Operating profit 2 ($m) Change 2016 2015 the first time Existing Signature 79.2 75.4 5.0% Increased scale of FBO business feeding through HK one-off - 5.2 - to operating margin Landmark Continuing 45.5 - - -  Existing Signature organic revenue up 3.6% FBOs sold 7.9 - - - Synergies 8.7 Landmark Aviation delivering as anticipated Total Signature 141.3 80.6 75.5%  Synergies of $8.7m ahead of plan Other 0.3 (3.7) New Signature Flight Support divisional ROIC Total Flight Support 141.6 76.8 84.4% 12.3% (H1 2015: 14.3%, FY 2015: 15.4%) Operating margin 3 20.8% 15.8% 500bps Notes: HK one-off refers to the 2015 reclassification of our investment in the Hong Kong Business Aviation Centre as an associate rather than a financial investment, which realised an accounting profit of $5.2 million 1. Flight Support continuing operations represents Existing Signature plus Landmark Aviation plus those elements of ASIG not included in discontinued operations (primarily the impact of our ASIG Singapore operations in 2015, now terminated) 2. Figures refer to actual underlying operating profit (pre exceptional and other items) 3. Underlying operating margin 8

Existing Signature: excellent profit progression Strong growth in existing business Revenue Bridge ($m)  Network benefits continuing to drive market outperformance 477.9 15.3 439.0 Organic revenue up 3.6% (adjusted for fuel, FX) (3.6) 2.0 421.7 (52.6)  US B&GA movements +0.2% 2015 H1 FX Fuel 2015 H1 Acq's Organic 2016 H1 Underlying operating profit growth 5.8% 1 Like for like  Good operating leverage Acquisitions refers to four FBOs acquired in Italy Operating Profit 2 ($m) 80.6 80.1 4.3 79.2 (0.5) (5.2) (0.0) 2015 H1 FX 2015 H1 Hong Kong Acq's Organic 2016 H1 1. Excluding the 2015 reclassification of our investment in the Hong Kong Business Aviation Like for like Centre as an associate rather than a financial investment, which realised an accounting profit of $5.2 million 2. Underlying operating profit (pre exceptional and other items) All figures are reported on a continuing operations basis …driven by robust operational delivery 9

Landmark Aviation integration progress Acquisition assumptions validated Synergy progression Operating margins in line with expectations $40m  H1 operating profit margin 19% excluding associate profit 1 and synergies $35m Synergies ahead of schedule $30m  $8.7m synergies in H1 $25m Cost reduction  Will accelerate into H2: active annualised run rate of actions $28m $20m undertaken represent $28m  High degree of confidence in $35m target run rate run rate in 2017 $15m starting January 2017 $10m Costs to deliver Integration plans on track  $16m booked in H1 out of total $25m this year $5m ─ Significant proportion labour  Full year cash spend to deliver integration: $19m $0m H1 2016 2017 run rate capex, $25m operating costs ─ On track; low cash out in H1 Realised H1 actions annualised To do 1. Earnings from six disposed FBOs and aircraft management and charter business accounted as associate undertakings …delivering on acquisition objectives 10

Aftermarket Services: mixed performance 7% of continuing operations Revenue down 14% Revenue Bridge ($m)  Weak H1 performance in ERO as trading 396.4 4.9 conditions remain challenging 391.2 (5.1) 340.1  Ontic ahead of plan (56.1) Operating profit 1 down 56%  Depressed volumes in ERO’s market sub - 2015 H1 FX 2015 Acq's Organic 2016 H1 segments, reduced workscopes and competitive Like for like pricing, OEM actions, reduced engine trading Organic includes $29.4m engine trading revenue recognised in previous year  Ontic robust Operating Profit 1 ($m) ERO footprint rationalisation programme progressing well and on track 1.9  Cost reduction benefits continue in H2 25.2 24.4 (0.7) Ontic strong order book for H2 11.1 (15.3) Good acquisitions pipeline for Ontic Divisional ROIC 6.5% (H1 2015: 10.8%, 2015: 8.4%) 2015 H1 FX 2015 Acq's Organic 2016 H1 Like for like 1. Underlying operating profit (pre exceptional and other items) All figures are reported on a continuing operations basis …with good result and outlook from Ontic 11