Annual Report 2010 in PDF - BBA Aviation

Financial statements Notes to the Consolidated Financial Statements – continued
85 Independent Auditor’s
Report to the Members of
BBA Aviation plc in Respect
of the Consolidated
24. Acquisition and disposal of businesses
On 10 June 2010, the Group acquired 100% of the issued share capital of SAS Ground Services UK Limited. The acquisition was undertaken as it is
Financial Statements
expected to be earnings enhancing and aligns with ASIG’s strategic plans. The total initial cash consideration for the business amounted to
86 Consolidated Income
Statement
£2.5m, with a maximum deferred cash consideration of £0.2m. The directors performed an exercise to establish the fair value of the assets and
liabilities of the acquisition. The net assets acquired and the gain arising on the acquisition are as set below:
87 Consolidated Statement of
Comprehensive Income
2010
Book
88 Consolidated Balance Sheet
value
£m
89 Consolidated Cash Flow
Statement Intangible assets – 1.0
90 Consolidated Statement of Property, plant and equipment 1.8 1.4
Changes in Equity
Receivables 3.2 3.5
91
95
Accounting Policies of
the Group
Notes to the Consolidated
Payables
Taxation
(1.9)
(0.3)
(2.1)
(0.3)
Financial Statements Net assets 2.8 3.5
126 Independent Auditor’s Goodwill (0.8)
Report to the Members of
BBA Aviation plc in Respect Total
of the Parent Company
Financial Statements
consideration 2.7
127 Company Balance sheet Satisfied by:
128 Accounting Policies of Cash 2.5
the Company Deferred consideration 0.2
129 Notes to the Company
Net cash consideration for 2010 2.7
Financial Statements
134 Principal Subsidiary
Undertakings Net cash outflow arising on acquisition:
135 Five Year Summary Cash consideration 2.5
136 Shareholder Information Directly attributable costs 0.5
3.0
124 — Consolidated Financial Statements
In the period from acquisition to 31 December 2010, the revenue from the acquisition was £10.6 million and would have been approximately
£18.9 million if the acquisition had completed on 1 January 2010. Contribution to proft for the period was £1.4 million.
The net assets exceeded the total consideration by £0.8 million which primarily represents a discount for the risk associated in generating
future proftability from existing customer contracts.
On 10 September 2010, the Group purchased the remaining 9% of the shares of Athens Aviation Services for a consideration of
€0.8 million (£0.6 million).
Two businesses were disposed of in the prior period. On 17 March 2009, a small propeller repair and overhaul facility based in Portsmouth,
England, was disposed of for a consideration of £0.4 million and incurred a loss on disposal of £1.5 million. On 21 August 2009, an FBO based in
Indianapolis, Indiana, was also disposed of for a consideration of £3.3 million and which made a proft on disposal of £1.1 million.
25. Contingent liabilities
The Group is party to legal proceedings and claims which arise in the normal course of business, including specifc product liability and
environmental claims. Any liabilities are likely to be mitigated by legal defences, insurance, reserves and third party indemnities.
Additionally, the Group has previously owned businesses that manufactured products containing asbestos. No BBA company has
manufactured or sold any products or materials containing asbestos for many years. A small number of former BBA companies have been named
as defendants to asbestos-related claims. When these companies were sold, BBA retained certain obligations to indemnify the purchasers
against such claims. Notwithstanding such indemnity arrangements, the costs incurred by BBA in dealing with claims made against these former
BBA companies have been immaterial to BBA. During the period 1989 to 31 December 2010, BBA’s aggregate costs of defending and disposing of
all asbestos-related claims, net of insurance coverage, were approximately £7.6 million. BBA maintains a portfolio of insurance coverage in respect
of the majority of such claims, including legal defence costs and liability cover. State operated compensation programmes have also provided
coverage. On the basis of its past claims experience, BBA does not anticipate any material increase in the cost to it of resolving such claims.
Whilst the outcome of these claims are, by their nature, uncertain, the directors do not currently anticipate that the outcome of the
proceedings and claims set out above either individually, or in aggregate, will materially exceed the insurance coverage or amounts provided as
shown in note 18, and are not expected to have a material adverse efect upon the Group’s f nancial position.
2010
Fair
value
£m