Management at BBA Aviation (BBA) has now spent nearly two years talking about how the acquisition of Landmark Aviation would fundamentally change the business, and with good reason. The upscaling of operations is illustrated by changes to the capital structure, with the target leverage range increased to between 2.5 and 3 times cash profits. Analysts at Barclays estimate that at the present multiple of 2.6 times – with up to $300m (£217m) in free cash flow – the new structure should free up around $150m for investment.
Group finance director David Crooke said there are “clear investment opportunities” within both its business divisions. Any project would have to meet the 12 per cent forecast return on invested capital before it was taken on. Flight support, the larger of the two, saw organic revenue growth of 3.8 per cent, slightly above the market average. In aftermarket services, organic underlying operating profit was up by a third thanks in part to new licences for its Ontic business.
Analysts at Barclays expect EPS of 25.63¢ in 2018, up from 23.32¢ in 2017.
| BBA AVIATION (BBA) | ||||
| ORD PRICE: | 333p | MARKET VALUE: | £3.43bn | |
| TOUCH: | 332-333p | 12-MONTH HIGH: | 370p | LOW: 290p |
| DIVIDEND YIELD: | 2.9% | PE RATIO: | 40 | |
| NET ASSET VALUE: | 187¢* | NET DEBT: | 60% | |
| Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (¢) |
| 2013** | 2.22 | 145 | 20.5 | 10.9 |
| 2014** | 2.29 | 152 | 17.4 | 11.5 |
| 2015 (restated) | 1.71 | 77 | 9.8 | 12.2 |
| 2016 | 2.15 | -82 | -9.6 | 12.8 |
| 2017 | 2.37 | 176 | 11.6 | 13.4 |
| % change | +10 | - | - | +5 |
| Ex-div: | 12 Apr | |||
| Payment: | 25 May | |||
| *Includes intangibe assets of $2.43bn, or 236¢ a share | ||||
| **Adjusted for 2015 six-for-five rights issue at 133p £1=$1.38 | ||||
