# BBA Aviation plc First half performance ahead of expectations

- Link: https://www.directorstalkinterviews.com/bba-aviation-plc-first-half-performance-ahead-of-expectations/412789368
- Published: 2019-08-05T07:38:31+01:00
- Author: Amilia Stone

**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

**Highlights**^(**1**)

 * 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.”

^(_1 _)_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 _

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