Signature Aviation 2019 Interim Results Signature Aviation 2019 Final Results Mark Johnstone (CEO) David Crook (FD)
Signature Aviation 2019 Final Results 2019 – Transformational Year • Ontic disposal • $1bn of capital returned to shareholders • Restructured debt at lower cost with longer maturity • Portfolio refocused – rebranded Signature Aviation 1
Signature Aviation 2019 Final Results Signature Aviation – improved outperformance • Signature outperformed the flat US B&GA market • Revenue management actions taken improved H2 outperformance to 100 bps • IAM Jet Centre acquisition of 5 sole source locations in August 2019 • Continued investment in employee engagement and customer experience • Continued strong cash generation from Signature business 2
Signature Aviation 2019 Final Results Signature Aviation – a sustainable future • Strategic partnership with Uber Elevate • Leading industry to improve availability of Sustainable Aviation Fuel (SAF) • Ongoing focus on reducing our own carbon footprint 3
Signature Aviation 2019 Interim Results Performance Review David Crook Group Finance Director
Signature Aviation 2019 Final Results Signature: FBO outperforms by 90 bps Operating profit 1 Organic revenue growth • Signature FBO up 1.1% • Cost initiatives offsetting labour cost impacts in H2 for Signature FBO • FAA US B&GA movement growth of 0.2% • Initial contribution from IAM Jet Centre • Outperformance 100 bps in H2 acquisition $1m • TECHNICAir TM rationalised and right-sized down $4m ($1m disposal and $3m organic decline) • EPIC up $5m, includes full year effect of acquisition of $3m plus $2m organic growth Signature Operating Profit 1 ($m) 43.6 361.0 3.9 320.6 318.2 (1.4) - (1.0) (3.6) (1.1) 2018 FX Fuel Disposals 2018 Like IAM & EPIC Signature EPIC/ IFRS 16 2019 for Like acquisitions FBO TECHNICAir Note 1: Underlying operating profit (pre exceptional and other items) 5
Signature Aviation 2019 Final Results Signature Aviation central costs Underlying central costs Underlying operating profit • Reduced through cost discipline and FX 2019 1 ($m) 2018 • Full integration of corporate functions Signature 361.0 320.6 into Signature is underway Central costs pre IFRS 16 (26.7) (28.3) Central costs IFRS 16 0.8 - Central costs (25.9) (28.3) Signature Aviation 335.1 292.3 Note 1: Underlying operating profit pre IFRS 16 (pre exceptional and other items) 6
Signature Aviation 2019 Final Results Signature – free cash flow – a core strength Signature Signature only • Highly cash generative business ($m) 2019 2018 ($212m ex fuel supply working capital 1 Underlying EBITDA 348.7 346.2 one-off and exceptionals) • Direct fuel supply strategy with refiners Working capital movement (41.2) 26.8 results in one time working capital Capex (66.3) (70.5) impact of $69m Net Interest paid (65.2) (57.4) • Negative working capital operating Tax paid (41.4) (26.9) model Exceptional (13.7) (11.5) • Flexible capex deployment All other movements 8.2 (1.5) • Longer term financing in place to better Free cash flow 129.1 205.2 match long lease terms Distributable free cash 212.0 216.7 • Cash tax rate remains low at 14% flow (ex fuel supply one - off & exceptionals) Note 1: Underlying EBITDA before exceptional and other items and net interest paid, presented on a pre IFRS 16 basis 7
Signature Aviation 2019 Final Results Support costs • CVC are paying for Ontic support costs Discontinued operations: Support costs during TSA period (commenced ($m) 2019 2018 Change November 2019) • $11m of support costs relating to the Ontic support costs (2.9) (3.6) (19.4)% discontinued ERO business ERO support costs (11.4) (10.7) 6.5% • ERO support costs will be taken out post completion/TSA Note 1: Underlying operating profit pre IFRS 16 (pre exceptional and other items) 8
Signature Aviation 2019 Final Results Continuing Group underlying income statement Continuing operations (Signature) Operating profit 1 • IFRS 16 adds $44m to operating profit 2018 2 ($m) 2019 Change • Operating profit ex IFRS 16 flat 291.6 4 Signature Aviation 335.1 - compared to 2018 Support costs (14.3) (14.3) - • EPS impacted by IFRS 16 and low Continuing 320.8 277.3 - effective tax rate operations • Free cash flow per share is a more Continuing operations 276.4 277.3 (0.3)% appropriate measure for Signature pre IFRS16 • Dividend increased by 5% Continuing EPS post 16.3c - - IFRS 16 Continuing EPS pre 18.2c 16.3c 11.7% IFRS 16 Adjusted FCF per 25.0c 25.8c (3.1)% share 3 Dividend 14.77c 14.07c 5.0% 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 based on number of shares post consolidation (838.5 million) Note 4: Includes $0.7m loss relating to ERO Middle East 9
Signature Aviation 2019 Final Results Total Group underlying income statement Discontinued operations (Ontic & ERO) Operating profit 1 • Ontic delivered operating profit of $67m for 2018 2 ($m) 2019 Change the ten months of ownership Continuing 320.8 277.3 - • Increase in ERO operating profit to $53m operations reflects the IFRS 16 impact of $12m and suspension of depreciation and Discontinued ops 120.3 97.9 amortisation Total Group 441.1 375.2 • On a non held for sale, pre IFRS 16 basis Total Group EPS post 25.6c - - the underlying operating profit of ERO is IFRS 16 $18m (see appendices for further detail) Total Group EPS pre 26.9c 23.3c 15.5% • EPS impacted by IFRS 16 and low IFRS 16 effective tax rate Note 1: Underlying operating profit pre exceptional and other items Note 2: Restated for reclassification of Ontic as Discontinued 10
Signature Aviation 2019 Final Results Exceptional and other items – largely non-cash Continuing operations (Signature) Exceptional and other items • Amortisation of acquired intangibles: 2019 2019 2020 $73.8m (non-cash) ($m) P&L Cash Cash • Restructuring expenses of $5.6m Continuing ops Discontinued operations (Ontic & ERO) Amortisation (73.8) • Ontic amortisation of $12.5m Restructuring costs (5.6) (3.8) (1.8) • $724m gain on disposal of Ontic Discontinued ops • ERO disposal process costs of $3m Ontic amortisation (12.5) • ERO impairment $125m to reflect fair Ontic gain 724.0 value less costs to sell (non-cash) ERO costs (2.8) (2.6) (0.2) • ERO fair value less cost to sell $178m ERO impairment (124.7) Previously disposed businesses Previously disposed (36.5) (10.0) (23.7) businesses • $36m on previously disposed GAMA impairment (12.5) businesses USPP make-whole (25.4) (25.5) Other ERO fair value less costs to sell $178m • $12m impairment of charter management JV 11
Signature Aviation 2019 Final Results Leverage Covenant basis Leverage • Leverage down at 2.2x ($m) 2019 2018 • Leverage on a covenant basis includes Net debt (Pre IFRS 16) (1,008.3) (1,332.2) the Ontic EBITDA for 10 months Net debt to EBITDA, 2.2x 2.8x • Funded progressive dividend payments covenant basis & acquisitions Covenant 4.25x 3.50x • Covenants reset, providing 2x Headroom 2.05x 0.70x headroom (2,250.7) 1 Net debt reported, under Target leverage IFRS 16 • Target range of 2.5x-3.0x on a covenant basis will be maintained IFRS 16 basis (reported) • $1.2 bn lease liabilities now on Balance Sheet 1 Note 1: Including IRFS 16 liabilities classified as held for sale 12
Signature Aviation 2019 Final Results Guidance FY20 All guidance excludes any potential impact of COVID-19 • Indemnification settlement on Central costs previously disposed business of $23m • c.$27m Group underlying central costs paid January 2020 Support costs • IFRS 16 no impact • c.$11m ERO annual support costs Tax • ERO support costs to be eliminated post • Underlying effective tax rate c25%, disposal/TSA period • Ontic support costs fully funded by CVC, • Cash tax rate c14% (excludes tax eliminate post TSA period payment on Ontic disposal) Capital expenditure (continuing group) Interest • $100m to $110m (incl. timing impact from • Interest expense $145m ($65m excl. FY19) IFRS 16) • Cash interest $65m Cash • Ontic disposal tax payment of c.$85m expected to be paid in April 2020 13
Signature Aviation 2019 Interim Results Signature Aviation Mark Johnstone Group Chief Executive Officer
Signature Aviation 2019 Final Results 2019 B&GA market performance Market • US B&GA movements grew 0.2% in 2019 • Continued volatility month to month Market characteristics • Continuing global market uncertainty • Geopolitics unchanged • Segmental performance unchanged 15
Signature Aviation 2019 Final Results US market by segment – YoY movements 14% 12% 10% 8% 6% % change 4% 2% 0% -2% -4% -6% Q1 2016 Q2 2016 Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 General Aviation Charter Fractional Total SFS Market Real GDP FAA 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 operations, and scheduled regional airline within SFS Market 16
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