BBA Aviation plc 2012 Interim Financial Report Results for the half year ended 30 June 2012 For further information please contact: Simon Pryce, Group Chief Executive (020) 7514 3999 Mark Hoad, Group Finance Director BBA AVIATION PLC David Allchurch / Christian Cowley (020) 7353 4200 TULCHAN COMMUNICATIONS A video interview with Simon Pryce, CEO and Mark Hoad, FD 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
INTERIM FINANCIAL REPORT FOR PERIOD ENDED 30 JUNE 2012 Results in brief ($m) Underlying results 1 Statutory results 2012 2011 % Change 2012 2011 % Change Revenue 1,094.2 1,062.9 3% 1,094.2 1,062.9 3% EBITDA 120.6 126.8 (5)% 111.2 125.2 (11)% Operating profit 90.2 96.5 (7)% 76.9 91.5 (16)% Profit before tax 71.7 84.6 (15)% 58.4 79.6 (27)% Earnings per share 2 12.0¢ 14.4¢ (17)% 10.2¢ 13.7¢ (26)% 4 Return on invested capital³ 9.9% 10.6% Free cash flow 5 21.8 5.7 282% Net debt (2011: year-end) 443.9 403.6 Dividend per share 4.20¢ 3.99¢ 5% (1) Before exceptional items (as defined in the financial statements). (2) Basic earnings per share. (3) Underlying operating profit return on average invested capital including goodwill and intangibles amortised or written off to reserves. (4) Return on invested capital for full year 2011. (5) 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 interim financial report. Overview A challenging first half with soft markets: US B&GA market down 1%; commercial aviation market down 3% Strong growth in Aftermarket Services and Systems Improved efficiencies driving operational progress Interim dividend increased by 5% to 4.20¢ Operational highlights Flight Support (55% of Group EBIT) Organic revenue decline 7%, 2% decline ex de-icing and FBO exits De-icing impact on operating profit accentuated by a strong prior year comparator Signature: further network expansion ASIG: expanded service offering, effective labour flexing Aftermarket Services and Systems (45% of Group EBIT) Strong organic growth of 11% ERO: continued strong demand for engine overhaul services, extension of field service capability Legacy Support: successful integration of fuel measurement business, order book increased by 12% APPH: operational improvements being delivered, successful start-up to the AW159 programme Continued strategic progress Further strategic progress: expansion of Signature network and two new Signature Select locations; ASIG C$27m acquisition of PLH Aviation Services and Dryden Air Services announced today; further Aftermarket authorisations secured Strong pipeline of consolidation opportunities with significant investment capacity available to deploy, maintaining strict value discipline Simon Pryce, BBA Aviation Chief Executive Officer, commented: “In soft markets, BBA Aviation made further operational progress in the first half of 2012. Flight Support performed well given North American and European market weakness and an unusually poor de-icing season and Aftermarket delivered another six months of strong growth. The Group generated good cash flow and made positive strategic progress. Consistent with the subdued macroeconomic backdrop, we do not now anticipate any material improvement in markets in the second half, however with fewer headwinds and continued operational improvements we expect to make progress in the second half of the year and beyond. Our acquisition pipeline remains strong and the medium-term indicators continue to support the exciting growth potential in our markets which, together with the underlying strengths of BBA Aviation’s businesses give us continued confidence in our ability to generate superior through-cycle returns.” 2
BBA Aviation plc – Interim Financial Report, 7 August 2012 INTERIM FINANCIAL REPORT 2012 Overview BBA Aviation delivered further good operational and strategic progress, despite our major markets showing a modest reduction in activity, continuing the trend we saw in the first quarter. Group revenue increased by 3% to $1,094.2m (2011: $1,062.9m), or 2% excluding fuel price inflation. On an organic basis (excluding the impact of fuel prices, acquisitions and disposals) Group revenue declined by 1%. The revenue impact of higher fuel prices amounted to $12.6m. Net of disposals, acquisitions contributed $30.8m of additional revenue. Underlying operating profits declined by 7% to $90.2m, principally as a result of limited de-icing activity against a particularly strong prior year comparator. The reported Group operating margin at 8.2% (2011: 9.1%) was affected accordingly. Adjusting for higher fuel prices, underlying margins were 8.2% (2011: 9.0%). The net interest expense increased to $18.5m (2011: $11.9m) as a result of the cost of the new long-term debt facilities put in place in 2011, together with the one-off acceleration of $2m of cost into the first half due to closing out interest rate swaps as part of ongoing treasury management. Interest expense is expected to reduce in the second half accordingly. Interest cover stands at 6.5x (2011: 10.6x). Underlying profit before tax decreased by 15% to $71.7m (2011: $84.6m). The effective underlying tax rate of 20.1% (2011: 21.7%) was lower than our expectations due to favourable developments in our tax positions. Adjusted earnings per share were 12.0¢ (2011: 14.4¢) reflecting the reduction in underlying profit before tax together with the increased number of shares in issue compared to the prior period. Profit before tax decreased by 27% to $58.4m (2011: $79.6m) with an increase in exceptional items to $13.3m (2011: $5.0m) relating to the closure of APPH’s Basingstoke facility and costs associated with the ongoing project to drive cross-business synergies by standardising the finance function processes across the Group. These projects are progressing to plan and support the continued operational improvement across the Group with full run-rate benefits accruing from 2013. Non-cash amortisation of acquired intangibles was $3.9m (2011: $3.4m). Unadjusted earnings per share were 10.2¢ (2011: 13.7¢). Free cash flow was $21.8m (2011: $5.7m) with a more normal first half working capital outflow than that experienced in 2011. The free cash flow included $8.5m of payments associated with the establishment of the Legacy fuel measurement business in Cheltenham. Gross capital expenditure increased as planned to $28.5m (2011: $13.9m) and included the aforementioned opening of the Cheltenham facility and the relocation of Signature’s FBO at Chicago O’Hare International Airport. Tax payments reduced slightly to $3.6m (2011: $6.0m). Total spend on acquisitions in the first half amounted to $5.3m pre-costs, including the $3.4m acquisition of the FBO in Omaha, Nebraska and ERO’s $1.9m acquisition of Consolidated Turbine Support, Inc as outlined below. A further C$27m (US$27m) has been committed since the period end on ASIG’s agreement to acquire the trade and assets of PLH Aviation Services and Dryden Air Services which enhances our commercial services operation and provides access to the attractive Canadian market. There was a net cash outflow of $41.9m after paying dividends of $47.7m. Net debt increased to $443.9m (2011 year-end : $403.6m). Our balance sheet remains strong with net debt to EBITDA at 1.7x (2011 year- end: 1.5x; June 2011: 1.9x). The Group’s focus on capital employed continued with absolute invested capital in the base business broadly unchanged but there was a reduction in return on invested capital to 9.9% (2011 full year: 10.6%). 3
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