TIDMBBA
RNS Number : 1836T
BBA Aviation PLC
13 November 2019
13 November 2019
BBA Aviation trading update
BBA Aviation plc ("BBA" or the "Group"), a market-leading
provider of global aviation support services, announces a trading
update for the period 1 January to 31 October 2019, unless
otherwise stated.
Mark Johnstone, BBA Aviation CEO commented "The US B&GA
market has grown in line with our expectations in the third quarter
and our Signature outperformance has been consistent with the first
half. Business confidence and flying hours continue to be impacted
by global economic uncertainty. In line with our strategic growth
plans we have continued to invest to strengthen our market leading
network and recently added five sole source Caribbean
locations.
I am pleased that we have completed the disposal of Ontic and
have commenced the process to return $835 million to shareholders.
This will enable enhanced focus on the Company's market leading
Signature business, which the Board believes to be a significant
source of future shareholder value creation. This focused aviation
services business will be renamed Signature Aviation plc on 25
November."
Group performance
Overall, for the Group, we expect 2019 FY underlying performance
to be in line with current expectations, which are based on the
Signature and Ontic businesses, albeit Ontic will only be included
for the ten months to 31 October.
Total revenue for Signature and Ontic increased by 10.1%
year-on-year for the ten months to 31 October, this represents year
on year growth of 8.3% in Signature, reflecting the EPIC
acquisition which became part of the Group from 1 July 2018, and
year on year revenue growth of 31.8% in Ontic.
Signature performance
FAA market data for Q3 2019 showed marginal growth in US
B&GA movements of 0.5% and the month on month volatility, noted
in the first half, has continued. Signature FBO has continued to
outperform the US B&GA market during this period by 50 basis
points, with Q3 organic revenue growth of 1.0%. This reflects
continued steady market outperformance broadly consistent with the
first half, as we anticipated. Overall, in the year to September
2019, the US B&GA market has seen movements growth of 0.4%. No
US B&GA market movement data is yet available for the month of
October, however Signature's FBO organic revenue growth was 1.0%
for the four months ended 31 October 2019.
We reiterate our expectations for the second half US B&GA
market being broadly consistent with the first half, with growth of
around 0.3% and Signature continuing to outperform the US B&GA
market at broadly the same level as the first half.
We continue to invest for future growth in support of the
execution of our strategic growth plan and have recently completed
the acquisition of the IAM Jet Centre, which comprises five sole
source locations in the Caribbean. In October we sold our San Juan
FBO in Puerto Rico and closed our Sloulin Field FBO following
closure of the airport, as previously announced.
Following the disposal of Ontic, Signature will represent our
only continuing business segment for reporting purposes going
forward.
Discontinued operations
The Ontic business will be treated as a discontinued operation
in the financial statements for the year to 31 December 2019. Ontic
contributed revenues of around $218m for the ten months to 31
October 2019 and the business continued to perform well, ahead of
the disposal completion.
Our ERO business has performed in line with our expectations in
the period to 31 October 2019 and the disposal process is ongoing.
A further announcement will be made in due course.
Ontic disposal and shareholder return
On 1 November we announced that we had completed on the disposal
of Ontic to CVC Fund Vll and have commenced the process to return
net proceeds of $835m, towards the upper end of our guidance range,
to shareholders via a special dividend. The Board has approved a
return to shareholders of 80.71 cents per existing ordinary share,
equivalent to approximately 21% of the ordinary share price at
close of business on 31 October 2019. The special dividend will be
paid on 13 December 2019 to shareholders who are on the register at
the close of business on 22 November 2019 and will be paid in
sterling unless shareholders elect to receive it in US dollars by
6pm on 22 November 2019. In order to maintain the comparability of
the Group's share price and per-share metrics before and after the
special dividend, the Group plans to undertake a share
consolidation, subject to shareholder approval. The share
consolidation proposes to replace every 5 existing ordinary shares
with 4 new ordinary shares.
Signature's free cash generative characteristics underpins its
ability to sustain its progressive dividend policy with the
potential for ongoing returns of capital, surplus to the investment
requirements of the Signature business, while maintaining a strong
balance sheet within the target leverage range on a covenant basis.
The progressive dividend policy is based on a dividend per share
basis and the directors intend to continue following this policy
once the proposed share consolidation has been completed, with the
dividend per share for the new ordinary shares being progressive
relative to the dividend per share for the existing ordinary
shares. The Board expects the next payment under this policy to be
the final dividend in respect of the 2019 financial year. The
policy applies to the annual ordinary dividend and excludes the
special dividend of 80.71 cents per share.
Refinancing
In late October we were pleased to issue $650 million senior
unsecured notes due 2028 at 4.00%. The Group has used the proceeds
from the offering to prepay existing debt under the 2019 Term Loan
Facility and together with some of the Ontic proceeds has prepaid
the Facility C Term Loan, which was due to be repaid in September
2020.
Signature Aviation plc
As previously announced, the Board has elected to change the
Company's name to "Signature Aviation plc" which will better align
it with the Company's most significant brand in its core market. In
addition, it will create a stronger and clearer connection of the
brand to shareholders and other stakeholders.
It is intended that the change of name will come into effect on
or around 25 November 2019. The intended effective date of the
change of name has been chosen to align as closely as possible with
the start of trading of the new ordinary shares, post the share
consolidation.
Notes:
The Group will publish its preliminary results for the year
ending 31 December 2019 on 3 March 2020.
Enquiries:
BBA Aviation plc
David Crook, Group Finance Director
Kate Moy, Head of Investor Relations and Communications
(020) 7514 3999
Tulchan Communications
David Allchurch
(020) 7353 4200
Information on BBA Aviation plc
BBA Aviation plc is a market leading, global aviation support
and aftermarket services provider, primarily focused on servicing
the Business and General Aviation (B&GA) market. We support our
customers through our principal business Signature and Global
Engine Services/Engine Repair and Overhaul (ERO).
Signature, including Signature FBO, TECHNICAir(TM) and EPIC
Fuels, provides premium, full-service flight and home base support
including refuelling, ground handling and MRO services through the
world's largest fixed base operation (FBO) network for B&GA
users with around 200 locations covering key destinations in North
America, Europe, South America, Caribbean, Africa and Asia. EPIC
Fuels is a provider of aviation fuels, supplies and services
operating at more than 200 locations.
On 1 March 2018 BBA Aviation announced that it was conducting a
strategic review of the ERO business and, at the end of May 2018,
management committed to a plan to sell substantially all of the
business and the relevant assets and liabilities were classified as
held for sale. The sale process is ongoing.
For more information, please visit www.bbaaviation.com
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END
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