28th Feb 2006 07:03
BBA Group PLC28 February 2006 BBA Group PLC 2005 Preliminary Results Results for the Full Year Ended 31st December 2005 BBA Group plc Tuesday, 28th February 2006 UNAUDITED PRELIMINARY RESULTS FOR YEAR ENDED 31st DECEMBER 2005 Financial highlights • Sales from continuing operations up 10% to £1,511 million (2004: £1,374 million) o Aviation up 9% to £892 million (5% excluding impact of fuel price increases) o Fiberweb up 12% to £619 million (8% excluding impact of higher raw material costs)• Underlying operating profit* from continuing operations up 2% to £130 million (2004: £127 million) o Aviation up 9% to £94 million, underlying operating margins maintained at 10.6% after absorbing impact of higher fuel prices which reduced margins by 0.5 percentage points o Fiberweb down 10% to £44 million after absorbing the impact of higher raw material costs of £12 million• Operating profit from continuing operations £81 million (2004: £98 million)• Underlying profit before tax down 6% to £108 million (2004: £115 million)• Profit for the period up 11% to £75 million (2004: £68 million)• Adjusted earnings per share (continuing operations) of 17.9p (2004:18.3p)• Basic earnings per share (continuing and discontinued operations) of 15.9p (2004: 14.3p)• Free cash flow** £86 million (2004: £60 million), strong second half performance• Final dividend increased by 4.4% to 8.3p (2004: 7.95p) bringing dividend for the year to 11.8p (2004: 11.3p) Separation of FiberwebOn the 2nd November 2005, BBA announced that it was exploring the separation ofFiberweb, its non-wovens business, through demerger or sale. Having received anumber of expressions of interest regarding a possible sale of Fiberweb, theBoard is keeping this option open whilst now giving priority to preparing forthe demerger of Fiberweb. Board Change and SuccessionBBA Group announces that Roy McGlone has stepped down as Group CEO by mutualagreement. Michael Harper, a non-executive Director of BBA Group since Februarylast year and the former Chief Executive of Kidde Group, has agreed to beinterim CEO until a permanent replacement is appointed. Roberto Quarta, Chairman, said: "We thank Roy for his contribution over 10years, first as Finance Director and then, from 2001, as Chief Executive. He hasled the company successfully through some difficult times. However BBA isundergoing significant change. Both the Board and Roy believe it is the righttime for Roy to step down as CEO of the company as it separates Fiberweb andconcentrates on aviation services. Michael will lead the separation processbefore handing over to a long term successor." Roberto Quarta, Chairman since 2001, will delay his planned retirement from thecompany until BBA separates Fiberweb and appoints a permanent CEO. He will besucceeded as Chairman by Michael Harper. AcquisitionsBBA Group announces the $65 million cash acquisition of Ontic Engineering &Manufacturing, a leading global provider of parts, accessories and repair andoverhaul services for the aviation industry. Ontic joins BBA Aviation ServicesGroup's component repair, overhaul and distribution business. BBA also announcesthe acquisition of a new Signature location at La Quinta in California for £5million. Commenting on today's announcements, Michael Harper, BBA Group Chief Executive,said:"The Board continues to believe that BBA's Aviation business and Fiberweb wouldbe better placed to pursue their individual strategies and operationaldevelopment as individual entities. Having received a number of expressions ofinterest regarding a possible sale of Fiberweb, the Board is keeping this optionopen whilst now giving priority to preparing for the demerger of Fiberweb. Both the Aviation and Fiberweb businesses are expected to continue to makeprogress during 2006. They are highly cash generative with good market positionsglobally and in a fragmented market there are many opportunities for the Groupto explore. Today's announcement of the acquisitions of Ontic and La Quinta area good example of these opportunities." *Continuing operations before restructuring costs and other non-recurring items(see below).**See definitions below. Preliminary Results BBA Group PLC, the international aviation services company, announces itspreliminary results for the twelve months ended 31st December 2005. FINANCIAL HIGHLIGHTS (unaudited)£m (other than percentages and per share amounts in pence) 2005 2004 (6)REVENUE 1,510.8 1,373.8UNDERLYING OPERATING PROFIT (1) 129.6 127.1UNDERLYING OPERATING MARGIN (1) 8.6% 9.3%OPERATING PROFIT FROM CONTINUING OPERATIONS(Statutory) 81.3 98.5NET INTEREST (21.4) (11.9)UNDERLYING PROFIT BEFORE TAX (2) 108.2 115.2PROFIT FOR THE PERIOD FROM CONTINUING OPERATIONS(Statutory) 51.9 64.3PROFIT FOR THE PERIOD (Statutory) 75.3 67.9ADJUSTED EARNINGS PER SHARE (Continuing operations)(4) 17.9p 18.3pBASIC EARNINGS PER SHARE (Continuing anddiscontinued operations) 15.9p 14.3pDIVIDENDS PER ORDINARY SHARE 11.8p 11.3pFREE CASH FLOW (3) 86.3 60.0NET DEBT (527.1) (511.6)NET DEBT TO EBITDA (5) 2.6X 2.5X (1) Underlying operating profit being operating profit from continuing operations of £81.3m (2004: £98.5m) before restructuring costs and other non-recurring items of £(48.3)m (2004: £(28.6)m). This measure of earnings is shown because the directors consider that it gives a better indication of underlying performance.(2) Underlying operating profit less net interest.(3) Cash generated by operations of £183.7m (2004: £145.4m) plus dividends from associates of £0.4m (2004: £0.9m) less tax of £9.7m (2004: £13.0m), interest of £16.2m (2004: £13.5m), preference dividends of £1.9m (2004: £3.8m) and net capital expenditure of £70.0m (2004: £56.0m).(4) Basic earnings per share of 15.9p (2004: 14.3p) adjusted to exclude the after-tax impact of restructuring costs, other non-recurring items and profit on disposal after tax of 2.4p (2004: 5.4p) and profit after tax from discontinued operations of (0.4)p (2004: (1.4)p).(5) Operating profit (as defined in (1) above) before depreciation of £75.4m (2004:£74.5m).(6) Prior year comparatives have been restated to reflect the transition to IFRS Exchange rates used in the preparation of these results US$ - Average $1.82 (2004:$1.83), Spot $1.72 (2004: $1.92); Euro - Average €1.46 (2004: €1.47), Spot €1.46(2004: €1.41). These definitions as outlined above and on page 1, are consistently appliedthroughout this preliminary announcement. For further information please contact: Michael Harper, Chief Executive (020) 7514 3990 Andrew Wood, Finance Director (020) 7514 3950 BBA GROUP PLC Mike Smith or Lucie Anne Brailsford (020) 7404 5959 BRUNSWICK BBA Group PLC - Preliminary Results, 28th February 2006 SEPARATION OF FIBERWEBOn the 2nd November 2005, BBA announced that it was exploring the separation ofFiberweb, its non-wovens business, through demerger or sale. Having received anumber of expressions of interest regarding a possible sale of Fiberweb, theBoard is keeping this option open whilst now giving priority to preparing forthe demerger of Fiberweb. BOARD CHANGE AND SUCCESSIONBBA Group announces that Roy McGlone has stepped down as Group CEO by mutualagreement. Michael Harper, a non-executive Director of BBA Group since Februarylast year and the former Chief Executive of Kidde Group, has agreed to beinterim CEO until a permanent replacement is appointed. Roberto Quarta, Chairman since 2001, will delay his planned retirement from thecompany until BBA separates Fiberweb and appoints a permanent CEO. He will besucceeded as Chairman by Michael Harper. ACQUISITION OF ONTICBBA Group today announces the acquisition of Ontic Engineering & Manufacturing,a leading global provider of parts, accessories and repair and overhaul servicesfor the aviation industry, for $65 million in cash. Ontic focuses exclusively on developing product licensing agreements withoriginal equipment manufacturers (OEMs). Through these agreements it takes onfull aftermarket supply and support responsibility for particular products orservices. Companies with which it has agreements include Honeywell, Hamilton Sundstrand,Goodrich, Woodward, Eaton, Moog, HR Textron and Parker Hannifin. The company'sportfolio includes more than 3,500 top-level parts and assemblies used on a widerange of military, business and commercial aircraft. Annual turnover is around$30 million with very attractive margins. Ontic joins BBA Aviation Services Group's growing component repair, overhaul anddistribution business which also includes International Turbine Service (ITS)Barrett Turbine Engine Company and International Governor Service (IGS). PRELIMINARY RESULTS 2005Revenue for continuing operations increased by 10% to £1,510.8 million (2004:£1,373.8 million) with the effect of higher raw material and aviation fuel costsaccounting for some 4% of the growth. Underlying operating profits increased by2% to £129.6 million after absorbing additional raw materials costs in Fiberwebof £12 million. Underlying operating margins reduced to 8.6% (2004: 9.3%) due inparticular to the increased raw material costs in Fiberweb and higher fuel costsin our Aviation businesses, which together reduced margins by just over 1percentage point. Operating profits from continuing operations were £81.3million (2004: £98.5 million), after recording restructuring and non-recurringitems as described in note 8 to the preliminary statement. The Group produced underlying profit before tax for continuing operations of£108.2 million (2004: £115.2 million) with higher interest costs (principallydue to US$ interest rates) which increased from £11.9 million in 2004 to £21.4million in 2005. This was the main reason for the reduction in headlineearnings. Adjusted earnings per share were 17.9 pence (2004 18.3 pence). For thefirst time in many years movement in exchange rates had little impact on thecomparison with the prior period with the average dollar rate ending the year at$1.82 (2004: $1.83) and the euro was €1.46 (2004: €1.47). Total profit for theperiod was £75.3 million (£67.9 million) with unadjusted earnings per share of15.9 pence, up 11 % on the prior period. Our free cash flow at £86.3 million recovered strongly in the second half of theyear as anticipated and was some 44 % higher than the prior period (2004: £60.0million). The improvement against the prior period reflected a working capitalinflow of £14.2 million (2004: outflow £38.4 million), partially offset byhigher capital expenditure of £73.3 million (2004: £61.7 million). We invested£28.0 million in acquisitions during the year to expand our business aviationnetwork and to add to our parts distribution portfolio. Aviation Airport ServicesSales grew by 23% to £514.4 million driven in part by increased fuel prices.Underlying operating profits increased to £60.0 million from £50.1 million inthe prior year, an increase of 20%. Operating margins were slightly lower at11.7% (2004: 11.9%) impacted by increased fuel prices, which reduced underlyingmargins by 0.8%. Operating profits and margins were also impacted in the secondhalf by a charge of £2.0 million in respect of a bad debt reserve for NorthwestAirlines at ASIG, which went into Chapter 11 in September 2005, and by thesettlement of a legal claim during the second half of the year. In Signature (Business Aviation) we have continued to experience strong growthfrom the fractional operators with fuel volumes up almost 10% and in ASIG(Commercial Aviation) aircraft departures increased by 5.4%. We expect marketconditions to remain strong in 2006 with growing demand for business aviationaircraft and continued growth in the Commercial market where we expect tobenefit from the increasing trend in the major carriers to outsource non-coreservices. We acquired four new Signature locations in the year and today we are announcinga further expansion of our network in the US with the acquisition of a newlocation at La Quinta in California for £4.9 million. Our base at WashingtonReagan was reopened to business aviation traffic in October following itsclosure after September 11th 2001. We have made progress on our claim forcompensation from the US government with the appropriation bill approved by thepresident in December 2005 and we now expect to receive a compensation paymentduring 2006. In ASIG we have secured a new baggage handling contract with Disney World worth$40 million over 5 years. We have also won a number of cargo handling contractson the west coast of the USA worth over $5 million per annum and have 6 newfuelling locations for United Airlines worth $5 million per annum. Our TechnicalServices operations are being expanded and provide an increasing amount ofGround Support Equipment maintenance for Northwest Airlines at a number oflocations. The Boker Aeroclean acquisition made at the end of 2004 has beenfully integrated and the addition of Coronet Aviation Services in September hasgiven us a good initial position in executive lounge services at LondonHeathrow. Operating margins at ASIG remain above 8%. Maintenance, Repair and OverhaulSales reduced by 6% to £377.1 million (2004: 401.6 million) although on anunderlying basis sales were flat compared to the prior period. Underlyingoperating profits were £34.4 million (2004: £36.6 million) and operating marginswere unchanged at 9.1% (2004: 9.1 %). As we enter 2006 we expect marketconditions to improve and we are confident that results should show animprovement over 2005. In Engine Repair, the market for Rolls Royce Spey/Tay engine overhauls becamemore competitive which was mostly offset by improving demand for Honeywell TFE731. The new PW300/500 authorisations started to generate revenue in the secondhalf of the year and an authorisation for Pratt and Whitney JT15D was securedfor H&S, our business based in the UK. The Millville closure was completed, withall the operations transferred to our other two production facilities in theUSA. Our parts distribution businesses had a good year with strong demand in mostsectors. IGS which was acquired in June is now fully integrated and isperforming to expectations. APPH our Landing Gear and Hydraulics business saw OEM demand increase with theupturn in the Aerospace cycle. On the 1st January 2006 APPH acquired ArnoniAviation based in Houston Texas for an initial consideration of £2.8 millionwith additional deferred consideration of up to £1.1 million subject toperformance. Arnoni specialises in the manufacture, overhaul and repair ofcomponents for the Hawker 125 series of aircraft and has annual sales of circa£7 million. At Oxford Airport, training demand improved and the airport experiencedincreasing levels of business jet activity. We are planning to invest toincrease hangar capacity and improve the runway. Becorit, our rail braking business in Germany, continues to performsatisfactorily with profits broadly unchanged compared to the prior period. FiberwebFiberweb revenue increased 12% to £619.3 million, of which 4% was due to theimpact of higher raw material costs being passed on to customers. Underlyingoperating profits fell by £4.8 million to £43.8 million (2004: £48.6 million -restated for the disposal of Finotech) and underlying operating margins were7.1% (2004: 8.8%). Significantly increased raw material costs, net of recoverythrough price increases, reduced underlying profits by approximately £12 millioncompared to the prior period. Following high raw material costs at the start of the year there was somereduction by the half year and at the time of our interim announcement there wasan expectation that prices could ease further through to the year end. In theevent, the dual impact of rapidly rising oil prices and hurricane damage to thepetrochemicals capacity on the US Gulf coast, led to tight supply conditions andrecord prices during the fourth quarter. Since the end of 2005, prices haveeased somewhat although the outlook for the rest of the year remains uncertain.We continue to focus on a wide range of productivity initiatives to optimiseyields and improve recycling. A new management team was appointed in the summer and has revalidated thestrategy for this division. Whilst the overall strategy remains unchanged,priorities have been clarified and implementation accelerated. The emphasis willbe on growth in the Industrial sector and the priority for Hygiene will be toreduce costs, become more efficient and add value by close cooperation with ourlongstanding customers to improve product design. To support this strategycapital expenditure increased to £32.8 million in 2005 (2004: £25.3 million) andis expected to rise to approximately £50 million in 2006. In North America the closure of our Toronto site and the reconditioning andrelocation of two production lines to Mexico and Berlin is on schedule to becompleted in the summer of 2006. Full year savings are expected to be in theregion of £5 million with cash pay back expected within 3 years. The Mexicansite at Queretaro will enable Fiberweb to consolidate and expand in the Americasregion, and the resulting 40% capacity increase in Berlin will allow Fiberweb toexploit further rapid growth in construction markets in Eastern Europe. In the Industrial business, significant progress has been made in acceleratingnew product development. During 2005, Fiberweb housewrap sales grew by 20%, thesixth straight year of volume and value growth. The launches of products capableof protecting property by withstanding hurricane-force winds have generatedsignificant interest in coastal areas of the US. In pool and spa filtration,where Fiberweb is the market leader, the launch of a biocide impregnated filterresulted from a real focus on the needs and concerns of the consumer. Furthersales and marketing investment has been initiated in Brazil to accelerate thegrowth of industrial products in South America, and developing growth plans forindustrial segments in Europe and Asia are priorities for 2006. In the Hygiene business the focus has been on cost reduction and improvingcustomer relationships. The authorisation of a major new spunbond line inSweden, expected to be commissioned in early 2007, will increase quality andproductivity in the European market. A number of collaborative developmentprogrammes with customers have demonstrated that product development continuesto be a core strength and differentiator. Fiberweb is continuing to progress a number of initiatives to expand itsposition in Asia and the Middle East and growth in these areas remains astrategic priority in the short to medium term. Financial resultsTurnover from continuing operations at £1,510.8 million was 10% higher than theprior year (2004: £1,373.8 million) with the effect of higher raw material costsand aviation fuel prices accounting for some 4% of the growth. Adjusted earnings per share on a continuing basis was 17.9p (2004: 18.3p). Basicearnings per share (continuing and discontinued operations) was 15.9p (2004:14.3p). Underlying operating profits increased by 2% to £129.6 million after absorbingadditional raw materials costs in Fiberweb of £12 million. Operating marginsreduced to 8.6% (2004: 9.3%) due in particular to the increased raw materialcosts in Fiberweb and higher fuel costs in our Aviation businesses, whichtogether reduced margins by just over 1 percentage point. Earnings before interest, taxation, depreciation, amortisation and exceptionalitems (EBITDA) were £205.0 million (2004: £201.6 million). During the period, the Group disposed of its 40% interest in Finotech, anon-wovens joint venture in Germany. In the prior period, the Group closed aloss-making Fiberweb distribution business in Japan. Before their closure ordisposal these operations produced profit after tax of £1.9 million (2004: £6.4million), which have been classified as discontinued operations. The net profitassociated with the disposals and closures amounted to a profit of £21.5 million(Finotech profit £23.7 million) compared to a loss of £2.8 million in the priorperiod. Restructuring costs and other non-recurring items amounted to £48.3 million(2004: £28.6 million) and details will be found in note 8 to the preliminarystatement. Inclusive of tax on these items and the profit made on the disposalof Finotech and other discontinued businesses, total exceptional items amountedto £11.1 million (2004: £24.5 million). The net interest charge of £21.4 million (2004: £11.9 million) included an IFRSreclassification of £2.3 million in respect of the preference dividend, whichwas not included in the prior period due to the transition arrangements of IAS32/39. The conversion of the preference shares to ordinary shares was completed inJune 2005. The increase in the charge compared to the prior year, exclusive ofIFRS adjustments, principally reflects higher average dollar interest rates.Interest cover was 6.1 times but 6.8 times excluding the impact of thenon-recurring preference dividend adjustment (2004: 10.7 times). Underlying profit before tax at £108.2 million was 6% lower than the prior yearof £115.2 million although the comparison with the prior period is impacted bythe charge in the current year of £2.3 million relating to the IAS32/39adjustments, which accounts for 2% of the reduction compared with the prioryear. Total Profit for the period was £75.3 million (2004: £67.9 million) includingthe profit on disposal of businesses of £21.5 million (2004: loss £2.8 million). The effective tax rate was 22% (2004: 25%) of the underlying profit before tax.The reduction in the rate reflects the release of a provision for a potentialtax exposure in the UK, which was no longer required as the matter was clearedwith the tax authorities during the year. The Group produced positive free cash flow of £86.3 million (2004: £60.0million). The increase from the prior year principally reflects a significantlyimproved working capital position (2005: inflow £14.2 million, 2004: outflow£38.4 million). Capital expenditure increased to £73.3 million (2004: £61.7 million) andrepresents 1.0 times depreciation (2004: 0.8 times). Aviation expenditureamounted to £40.5 million (2004: £36.4 million) and Fiberweb £32.8 million(2004: £25.3 million). For 2006 we expect capital expenditure to increase to 1.2times depreciation. Net debt was £527.1 million (2004: £511.6 million) due to the impact of exchangerates on the translation of our dollar debt which added £76.6 million and a netcash inflow of £61.1 million in the period. DividendThe Board recommends a final dividend of 8.3 pence (2004: 7.95 pence), bringingthe total dividend for the year to 11.8 pence (2004: 11.3 pence). The dividendreflects the Board's confidence in the Group's outlook and its ability todeliver strong free cash flows in the future. OutlookBoth the Aviation and Fiberweb businesses are expected to continue to makeprogress during 2006, and are highly cash generative with good market positionsglobally. Having received a number of expressions of interest regarding apossible sale of Fiberweb, the Board is keeping this option open whilst nowgiving priority to preparing for the demerger of Fiberweb. A furtherannouncement will be made in due course. Roberto Quarta, ChairmanMichael Harper, Chief Executive28th February 2006 Group income statement (unaudited) for the year ended 31 December 2005 Underlying Note i 2005 2004 Total Total £m £m £m £m ---------- -------------------- ------- ------- ------- --- ------ ------- ------- ------- Continuing operations Revenue Revenue 1,510.8 - 1,510.8 1,373.8 Cost of sales (1,218.2) (15.9) (1,234.1) (1,089.6) -------------------- ------- ------- ------- --- ------ Gross profit 292.6 (15.9) 276.7 284.2 Net Distribution costs (65.7) - (65.7) (64.0) operating Administrative costs expenses (102.1) (3.2) (105.3) (97.6) Other operating income 4.4 3.1 7.5 5.6 Share of profit of associates 1.0 - 1.0 0.9 Other operating expenses (0.6) (6.2) (6.8) (3.0) Restructuring costs - (24.8) (24.8) (22.7) Loss on disposal of businesses - (1.3) (1.3) (4.9) -------------------- ------- ------- ------- --- ------ Operating Operating profit from profit continuing operations 129.6 (48.3) 81.3 98.5 Investment income 35.8 - 35.8 31.3 Finance costs (57.2) - (57.2) (43.2) -------------------- ------- ------- ------- --- ------ Profit before tax 108.2 (48.3) 59.9 86.6 Tax (23.7) 15.7 (8.0) (22.3) -------------------- ------- ------- ------- --- ------ Profit for the period from continuing operations 84.5 (32.6) 51.9 64.3 Discontinued Profit after tax from operations discontinued operations 1.9 - 1.9 6.4 Profit/(loss) on - 21.5 21.5 (2.8) disposal after tax ------- ------- ------- --- ------ -------------------- Profit for the period 86.4 (11.1) 75.3 67.9 -------------------- ------- ------- ------- --- ------ Attributable to: Equity holders of the parent 86.2 (11.1) 75.1 67.8 Minority interest 0.2 - 0.2 0.1 -------------------- ------- ------- ------- --- ------ 86.4 (11.1) 75.3 67.9 -------------------- ------- ------- ------- --- ------ Earnings per From continuing and discontinuedordinary share operations Basic 15.9p 14.3p -------------------- ------- ------- ------- --- ------ Diluted 15.8p 14.0p -------------------- ------- ------- ------- --- ------ From continuing operations Basic 11.0p 13.5p -------------------- ------- ------- ------- --- ------ Diluted 10.9p 13.2p -------------------- ------- ------- ------- --- ------ Note i: Restructuring costs and non-recurring items as set out in Note 8. Group balance sheet (unaudited) at 31 December 2005 2005 2004 £m £m-------------- --------------------- ------- -------Non-current assets Intangible assets Goodwill 429.8 370.4 Licenses & software 22.3 23.1 Other intangible assets 2.2 2.6 Property, plant & equipment 746.4 713.2 Investments in associates 18.4 33.4 Trade and other receivables 14.2 18.8 --------------------- ------- ------- 1,233.3 1,161.5 --------------------- ------- ------- Current assets Inventories 234.2 219.3 Trade and other receivables 294.2 336.9 Cash and cash equivalents 174.9 134.0 Tax recoverable 2.8 4.8 --------------------- ------- ------- 706.1 695.0 --------------------- ------- ------- Total assets 1,939.4 1,856.5 --------------------- ------- ------- Current liabilities Trade and other payables (278.3) (253.7) Tax liabilities (53.9) (54.8) Obligations under finance leases (4.3) (2.8) Bank overdrafts and loans (44.0) (47.8) Provisions (7.0) (2.3) --------------------- ------- ------- (387.5) (361.4) --------------------- ------- ------- Net current assets 318.6 333.6 Non-current liabilities Bank loans (585.2) (620.6) Other payables due after one year (43.1) (6.5) Retirement benefit obligations (64.6) (69.9) Obligations under finance leases (38.1) (36.4) Deferred tax liabilities (59.5) (66.2) Provisions (25.3) (24.2) --------------------- ------- ------- (815.8) (823.8) --------------------- ------- ------- Total liabilities (1,203.3) (1,185.2) --------------------- ------- ------- Net assets 736.1 671.3 --------------------- ------- ------- Equity Share capital 121.6 169.0 Share premium account 340.2 285.3 Revaluation reserve 3.9 3.9 Treasury shares (0.6) (7.4) Capital reserve 15.8 15.2 Hedging and translation reserves (1.5) (19.8) Retained earnings 256.7 225.1 --------------------- ------- ------- Total equity 736.1 671.3 Equity attributable to: Ordinary shareholders 735.8 615.0 Preference shareholders - 56.2 Minority interest 0.3 0.1 --------------------- ------- ------- Total equity 736.1 671.3 --------------------- ------- ------- Group cash flow statement (unaudited) for the year ended 31 December 2005 2005 2004 £m £m------------- ------------------------ ------ ------Operations Net cash inflow from operating activities 174.0 132.4 Investingactivities Dividends from associates 0.4 0.9 Purchase of property, plant and equipment (72.6) (56.5) Purchase of intangible assets (0.7) (5.2) Proceeds from disposal of property, plant and equipment 3.3 5.7 Acquisition of subsidiaries (28.0) (85.4) Proceeds from disposal of subsidiaries and associates 46.7 0.2 Investments in associates - (0.8) Deferred consideration on prior year acquistions (0.9) (1.7) ------------------------ ------ ------ Net cash outflow from investing activities (51.8) (142.8) ------------------------ ------ ------ Financingactivities Interest received 36.4 30.4 Interest paid (50.6) (42.5) Interest element of finance leases paid (2.0) (1.4) Preference dividends paid (1.9) (3.8) Dividends paid (53.0) (49.4) Proceeds from issue of ordinary shares 7.7 0.2 Proceeds from sale of treasury shares 5.6 1.0 Increase/(decrease) in loans (79.7) 67.4 Increase/(decrease) in finance leases (2.8) (15.5) Increase/(decrease) in overdrafts (5.5) 3.8 Decrease/(increase) in other liquid assets 58.7 7.6 ------------------------ ------ ------ Net cash outflow from financing activities (87.1) (2.2) ------------------------ ------ ------ Cash and cashequivalents Cash and cash equivalents at beginning of year 134.0 154.7 Exchange adjustments 5.8 (8.1) Increase/(decrease) in cash and cash equivalents 35.1 (12.6) ------------------------ ------ ------ Cash and cash equivalents at end of year 174.9 134.0 ------------------------ ------ ------ Net debt Net debt at beginning of year (511.6) (459.5) Increase/(decrease) in cash and cash equivalents 35.1 (12.6) (Increase)/decrease in loans 79.7 (67.4) (Increase)/decrease in finance leases 2.8 15.5 (Increase)/decrease in overdrafts 5.5 (3.8) Increase/(decrease) in other liquid assets (58.7) (7.6) Bank loans acquired - (10.7) Finance leases acquired (3.3) (1.9) Exchange adjustments (76.6) 36.4 ------------------------ ------ ------ Net debt at end of year (527.1) (511.6) ------------------------ ------ ------ Group statement of recognised income and expense (unaudited) for the year ended 31 December 2005 2005 2004 £m £m------------------------------ ------ ---- ------ Exchange difference on translation of foreign operations 98.7 (58.3)Gains/(losses) on net asset hedges (79.5) 38.6Fair value movements in foreign exchange cash flow hedges (6.1) -Fair value movements in interest rate cash flow hedges 9.3 -Fair value movements in commodity contract cash flow hedges (3.4)Actuarial gains/(losses) on defined benefit pension schemes (0.6) (15.7)------------------------------ ------ ---- ------Net income recognised directly in equity 18.4 (35.4)------------------------------ ------ ---- ------ Conversion of preference shares 17.9 -Transfer to profit or loss from equity on cash flow hedges (2.5) -Tax on items transferred from equity 10.4 (0.7)Profit for the period 75.3 67.9------------------------------ ------ ---- ------Total recognised income and expense for the period 119.5 31.8------------------------------ ------ ---- ------ Fair value of foreign exchange cash flow hedges onadoption of IAS39 8.2 -Fair value of interest rate swaps on adoption of IAS39 (6.4) -Reduction in net assets on initial adoption of IAS32 (17.2) ------------------------------- ------ ---- ------Change of accounting policy on adoption of IAS32/39 (15.4) ------------------------------- ------ ---- ------ Reconciliation of movements in total shareholders' equity (unaudited) for the year ended 31 December 2005 2005 2004 £m £m------------------------------ ------ ---- ------ Total recognised income and expense for the period 119.5 31.8Equity dividends paid (53.0) (49.4)Preference dividends paid - (3.8)Equity movement in capital reserve 0.6 0.3Movement in treasury shares 5.6 1.0Issue of shares 7.7 0.2------------------------------ ------ ---- ------Net movement in total shareholders' equity for the period 80.4 (19.9)Change of accounting policy on adoption of IAS32/39 (15.6) -Total shareholders' equity at beginning of period 671.3 691.2------------------------------ ------ ---- ------Total shareholders' equity at end of period 736.1 671.3------------------------------ ------ ---- ------ Notes to the financial statements (unaudited) 1. Segmental Information Business Segments Maintenance, Airport Repair & Total Materials Unallocated Services Overhaul Aviation Technology corporate Total £m £m £m £m £m £m------ ------------- ------- -------- -------- ------- ------- ------2005Externalrevenue 514.4 377.1 891.5 619.3 - 1,510.8Underlyingoperatingprofit 60.0 34.4 94.4 43.8 (8.6) 129.6Underlyingoperatingmargin 11.7% 9.1% 10.6% 7.1% - 8.6%----------------- ------- -------- -------- ------- ------- ------ Other information----------------- ------- -------- -------- ------- ------- ------Capitaladditions 26.6 19.4 46.0 33.9 0.2 80.1Depreciationandamortisation 17.7 12.1 29.8 45.4 0.2 75.4Impairmentlossesrecognised inprofit or loss - - - 11.5 - 11.5----------------- ------- -------- -------- ------- ------- ------ Balance sheetAssets:Segment assets 540.2 424.9 965.1 761.4 194.5 1,921.0Interests inassociates 1.1 - 1.1 4.3 13.0 18.4 ------- -------- -------- ------- ------- ------Consolidatedtotal assets 1,939.4 ------- -------- -------- ------- ------- ------ Liabilities:Segmentliabilities (143.7) (69.8) (213.5) (201.6) (788.2) (1,203.3) ------- -------- -------- ------- ------- ------ (1,203.3) ------- -------- -------- ------- ------- ------ 2004Externalrevenue 419.3 401.6 820.9 552.9 - 1,373.8 Underlyingoperatingprofit 50.1 36.6 86.7 48.6 (8.2) 127.1Underlyingoperatingmargin 11.9% 9.1% 10.6% 8.8% - 9.3%----------------- ------- -------- -------- ------- ------- ------ Other informationCapitaladditions 17.2 22.5 39.7 22.6 0.1 62.4Depreciationandamortisation 17.8 12.6 30.4 43.9 0.2 74.5Impairment losses recognised in profit or loss - - - - - ------------------ ------- -------- -------- ------- ------- ------ Balance sheetAssets:Segment assets 462.4 421.0 883.4 758.4 175.4 1,817.2Interests inassociates 0.9 0.4 1.3 3.4 11.2 15.9Discontinuedoperations 23.4 ------- -------- -------- ------- ------- ------Consolidatedtotal assets 1,856.5 ------- -------- -------- ------- ------- ------ Liabilities:Segmentliabilities (96.9) (92.6) (189.5) (201.5) (793.5) (1,184.5)Discontinuedoperations (0.7) ------- -------- -------- ------- ------- ------ (1,185.2) ------- -------- -------- ------- ------- ------ Notes to the financial statements (unaudited) Geographical Segments Revenue from continuing Capital operations additions Assets2005United Kingdom 217.6 14.9 366.5Mainland Europe 287.0 11.3 336.0North America 954.9 47.4 1,151.7Rest of World 51.3 6.5 85.2----------------- -------- ------- -------- ---- --------- ---------Total 1,510.8 80.1 1,939.4------ ------------- -------- ------- -------- ---- --------- --------- 2004United Kingdom 217.8 8.0 418.9Mainland Europe 238.5 9.9 357.6North America 873.2 42.7 1,006.9Rest of World 44.3 1.8 73.1----------------- -------- ------- -------- ---- --------- ---------Total 1,373.8 62.4 1,856.5------ ------------- -------- ------- -------- ---- --------- --------- Notes to the financial statements (unaudited) (continued) 2. Basis of preparation The financial information set out above does not constitute a full set of theGroup's statutory financial statements for 2005 or 2004 under section 240 of theCompanies Act 1985 but has been computed in accordance with IFRS. Statutoryaccounts for 2004, together with an unqualified audit report, have been filedwith the Registrar of Companies, and those for 2005 will be delivered to theRegistrar following the Company's annual general meeting. The unaudited results for the year ended 31 December 2005 have been prepared inaccordance with International Financial Reporting Standards (IFRSs) for thefirst time, following a regulation adopted by the European Parliament. The BBAaccounting policies under IFRS are as reported in Appendix 6 to the IFRSRestatement document reported to the London Stock Exchange on 28 July 2005,which is also available on the Company's website www.bbagroup.com. The transition date for the application of IFRS is 1 January 2004. Thecomparative figures for 31 December 2004 have been restated to reflect thetransition to IFRS. The accounting policies applied in determining thecomparative financial information for the year ended 31 December 2004 areconsistent with those applied in the year ended 31 December 2005, with theexception of IAS 39 'Financial Instruments: Recognition and Measurements' andIAS 32 'Financial Instruments: Disclosure and Presentation' which are applicablefor the 2005 financial year-end with a transition date of 1 January 2005 andaccordingly no restatement of prior period comparatives has been made. 2005 2004 3. Capital expenditure £m £m Capital expenditure (cash basis) 73.3 61.7 -------- -------- Capital expenditure to depreciation - times 1.0 0.8 -------- -------- 4. Number of employees Thousands Thousands As at 31 December 14.1 13.7 -------- -------- 5. Earnings per share Continuing Continuing and operations discontinued operations 2005 2004 2005 2004 Earnings £m £m £m £m Basic: Basic earnings attributable to ordinary shareholders 51.7 60.4 75.1 64.0 Restructuring costs and non-recurring items 48.3 28.6 48.3 28.6 (Profit)/loss after tax on disposal (discontinued operations) - - (21.5) 2.8 Tax on restructuring costs and non-recurring items (15.7) (6.9) (15.7) (6.9) ------- ------- ------- -------- Adjusted earnings 84.3 82.1 86.2 88.5 ------- ------- ------- -------- Diluted: Diluted earnings attributable to ordinary shareholders 51.7 64.2 75.1 67.8 Restructuring costs and non-recurring items 48.3 28.6 48.3 28.6 (Profit)/loss after tax on disposal (discontinued operations) - - (21.5) 2.8 Tax on restructuring costs and non-recurring items (15.7) (6.9) (15.7) (6.9) ------- ------- ------- -------- Adjusted diluted earnings 84.3 85.9 86.2 92.3 ------- ------- ------- -------- Millions Millions Millions Millions Average number of 25p ordinary shares: Basic 471.0 449.0 471.0 449.0 ------- ------- ------- -------- Diluted 475.8 485.0 475.8 485.0 ------- ------- ------- -------- Earnings per share: Basic: Adjusted 17.9p 18.3p 18.3p 19.7p ------- ------- --- ------- -------- Unadjusted 11.0p 13.5p 15.9p 14.3p ------- ------- --- ------- -------- Diluted: Adjusted 17.7p 17.7p 18.1p 19.0p ------- ------- --- ------- -------- Unadjusted 10.9p 13.2p 15.8p 14.0p ------- ------- --- ------- -------- Notes to the financial statements (unaudited) (continued) 2005 2004 6. Taxation £m £m Continuing operations Current tax 18.6 8.1 Adjustment in respect of (6.4) - prior years - current tax Deferred tax (4.2) 11.6 Adjustment in respect of prior years - deferred tax - 2.6 ------- ------- 8.0 22.3 ------- ------- 7. Cash flow from operating activities £m £m Operating profit from continuing operations 81.3 103.6 Operating profit from discontinued operations 1.9 8.5 Share of profit from associates (2.8) (9.6) ------- ------- Profit from operations 80.4 102.5 Depreciation of property, plant & equipment 71.4 70.1 Amortisation of intangible assets 4.0 3.6 Profit on sale of property, plant & equipment (0.2) - Increase/(decrease) in provisions 1.8 (0.4) Additional pension scheme contributions (7.6) - Other non-cash items 19.8 8.0 ------- ------- Operating cash flows before movement in working capital 169.6 183.8 Decrease/(increase) in working capital 14.1 (38.4) ------- ------- Cash generated by operations 183.7 145.4 Income taxes paid (9.7) (13.0) ------- ------- Net cash inflow from operating activities 174.0 132.4 ------- ------- 8. Restructuring costs and other non-recurring items Restructuring costs and other non-recurring items included within statutoryoperating profit amounted to £48.3 million (2004: £28.6 million). The main itemsincluded within this are: - Non-recurring cost of sales £(15.9) million (2004: £nil): A £4.4 million writeoff of old WIP balances following the introduction of a new computer system andclosure of Millville; and a £11.5 million impairment charge in relation to asmall number of assets within the Fiberweb North America Hygiene business. - Non-recurring administrative expenses £(3.2) million (2004: £nil): Thisrelates to the write-down of a receivable due from BBA Diagnostics following theGroup's decision to exit the joint venture. - Non-recurring other operating income £3.1 million (2004: £2.0 million):Primarily relates to a curtailment gain on a post-retirement medical benefitscheme, following the amendment of member benefits. - Non-recurring other operating expenses £(6.2) million (2004: £(3.0) million):Mainly includes costs of £4.3 million incurred to date in relation to theseparation of Fiberweb ; and £1.5 million relating to the settlement of legalproceedings relating to the fuel farm operations of ASIG in Miami (Theproceedings involved the period from 1996 to the spring of 2003. ASIG wasacquired by BBA in July 2001). - Restructuring costs £(24.8) million (2004: £(22.7) million): Includes costs ofthe closure of the Fiberweb Toronto facility; the completion of the closure ofthe Millville facility; the closure of a manufacturing site in the UK LandingGear business; the completion of the integration of AGI (acquired in October2004); and a further rationalisation in Fiberweb USA and Sweden. - Loss on disposal of businesses £(1.3) million (2004: £(4.9) million): Thisrelates to the loss on disposal of CSE Parts, a small aviation parts supplierbased at Oxford Airport. Net of tax and the £21.5 million net gain on disposal of discontinued business,total restructuring costs and other non-recurring items included within profitfor the period amounted to £(11.1) million (2004: £(24.5) million). Notes to the financial statements (unaudited) (continued) 9. Acquisitions and disposals On 30 June 2005, the Group purchased International Governor Services Inc. for animmediate cash consideration of $18.0 million (£10.0 million) and a deferredcontingent cash consideration of up to $10.0 million (£5.6 million). In 2005, the Group acquired FBOs at Heathrow, Cape Town, Le Bourget, Long Beachand Oxnard, California. The total consideration for these acquisitions was £16.8million. On 15 September 2005 the Group purchased Coronet Aviation Services Ltd for animmediate cash consideration of £1.0 million. On 30 June 2005, the Group disposed of its 40% minority interest in FinotechGmbH for an immediate cash consideration of $76.0 million (£42.6 million) and adeferred cash consideration of $6.0 million (£3.4 million). The entireconsideration was received during the second half of 2005. The profit ondisposal of Finotech amounted to £23.7 million. 10. Dividends Subject to shareholder approval, the final dividend will be paid on 22 May 2006to ordinary shareholders on the register at the close of business on 18 April2006. Shareholders are being offered the opportunity of buying additional sharesin lieu of a cash dividend under the existing BBA Dividend Re-investment Plan(DRIP). This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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