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BBA Aviation plc First half performance ahead of expectations

BBA Aviation plc (LON:BBA) today announced its unaudited results for the half year ended 30 June 2019.

A video with Mark Johnstone, Group Chief Executive, and David Crook, Group Finance Director, is now available on www.bbaaviation.com 

A live audio webcast of the analyst presentation will be available from 08:30 today on www.bbaaviation.com

Highlights1

  • Total Group underlying operating profit, on a pre IFRS 16 basis, grew 5.3% to $190.0 million (H1 2018: $180.5 million); Signature FBO network outperformed the US B&GA market
  • Proposed sale of Ontic to CVC for $1,365 million announced on 30 July 2019
  • Continuing operations: 

o  Signature

– Organic revenue up 0.4% (Signature FBO up 1.0%) with new commercial initiatives contributing to outperformance against a strong prior year comparative

– US B&GA market growth of 0.3% in the six months to June 2019

– Underlying Signature FBO operating profit on a pre-IFRS 16 basis reduced 2.6% to $156.4 million (H1 2018: $160.5 million) in a flat H1 US B&GA market with reduced heavy jet traffic in our network

– EPIC acquisition delivered $2.9 million operating profit for six months as expected, with card and network fuel benefits to come from H2 19 onwards

o  Ontic

– Underlying operating profit growth on a pre IFRS 16 basis increased to $31.7 million (H1 2018: $24.5 million), driven by good organic growth and the Firstmark acquisition

– Further licence signed with Meggitt in the period

– Firstmark acquisition integrating well and proceeding to plan

  • Discontinued operations: 

o  Engine Repair and Overhaul (ERO) delivered underlying operating profit performance of $18.8 million on a pre IFRS 16 basis (H1 2018: $13.4 million) through robust trading with the benefit of depreciation and amortisation suspension

  • Group statutory operating profit is up 21.7% at $156.0 million (H1 2018: $128.2 million) due to the adoption of IFRS 16 on 1 January 2019
  • Total Group free cashflow up 12.8% to $129.2 m (H1 2018: $114.5 million) highlighting inherently strong free cash flow generation
  • Leverage stable at 2.8x net debt/underlying EBITDA on a covenant basis, well within our target range of 2.5-3.0x, reflecting continued strong free cash flow generation funding Ontic licence investment in the period and our progressive dividend
  • Total Group ROIC on a pre IFRS 16 basis is flat at 11.4% (Dec 2018: 11.4%)
  • Underlying Total Group adjusted basic EPS (pre IFRS 16) decreased by 3% to 11.3¢ (2018: 11.7¢). Total Group basic EPS (pre IFRS 16) decreased by 43.1% to 3.7¢ (2018: 6.5¢) reflecting higher exceptional and other item charges
  • Interim dividend increased by 5% to 4.2¢ reflecting continued confidence in the Group’s future growth prospects and free cash generation.

Mark Johnstone, BBA Aviation Group Chief Executive, commented:

“The first half of 2019 has been broadly in line with our expectations for BBA Aviation, with a solid Signature performance, in a flat B&GA market. Our Ontic legacy business has delivered a strong performance.

We are pleased to have advanced our new commercial initiatives in Signature including a successful fuel RFP and increasing the EPIC fuel card penetration within the Signature owned network.

Ontic’s first half performance was ahead of expectations, with strong organic growth driven primarily by our GE licence portfolios. Ontic continues to see a strong pipeline of licence opportunities and we invested $23.6 million during the period.

On 30 July we were delighted to announce the proposed sale of Ontic to CVC for a consideration of $1,365 million which represents a compelling transaction multiple which we believe fully recognises the strategic value and strong growth track record for the business.

Looking forward, Signature is focused on maintaining its level of performance against the US B&GA market in the second half. Post the proposed disposals, BBA Aviation will be focused on the cash generative Signature business which will enable us to maintain our progressive dividend policy, coupled with the prospect of returns to shareholders as we maintain our target leverage range. The Board is confident of delivering market outperformance through our Signature strategic growth initiatives.”

Underlying results represent alternative performance measures (APM), see APM section in note 19 outlining all such measures. Where applicable and for comparability these are presented on a pre IFRS 16 basis