Annual Report 2010 in PDF - BBA Aviation

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Business Review Our Marketplace BBA Aviation provides aviation support and aftermarket services across three key markets – business and general aviation, commercial and military. 10 — Directors’ Report Business and General Aviation The Business and General Aviation (B&GA) market accounts for approximately two thirds of our revenue. In Signature, we principally focus on business jets but in our Aftermarket Services and Systems business as well as jets we also support turbo prop powered fxed-wing aircraft and civil helicopters. Worldwide there are more than 16,000 jets, 12,000 turbo props and some 17,000 civil helicopters in operation. Following a period of unprecedented growth in deliveries of turbine powered B&GA aircraft and in the utilisation of the B&GA f eet up to 2008, in 2009 and 2010 there was a sharp reduction in business jet and turboprop deliveries, and in B&GA fying hours. Original equipment manufacturers (OEMs) saw substantial cancellations of orders for new jets and, at the same time, the inventories of used business jets increased to historically high levels while prices for these jets tumbled. Since our business model is based on supporting the in-service feet of aircraft, for the most part we have not been directly afected by the reduction in new aircraft deliveries as even at the current low level of new jet deliveries, the overall feet continues to grow. Whilst we are not afected by the reduction in delivery of new aircraft, we were afected by the reduction in fying hours. Having reached a peak in 2007, over the course of 2008 and 2009 US fight activity fell by more than 30%, reaching a low point in the second quarter of 2009 before showing sequential improvement and eventually returning to growth for the f rst time in the fourth quarter of 2009. Cyclical recovery continued into 2010 with every month showing growth over the same month in the previous year. For 2010 as a whole the North American B&GA market grew by 10%. At the end of 2010 the market remained 21% below the 2007 peak. Industry forecasters now expect recovery in new aircraft sales to begin in 2012 with a return to pre-recession levels by 2016, with approximately 10,000 new business jets expected to be delivered during 2011-19. This is one of the indicators that supports our confdence in the growth of this market over the long term.
Worldwide Business Jet and Turboprop Deliveries 2006 2007 2008 2009 2010 Turboprop 412 459 535 441 363 Turbojet 863 1,117 1,298 855 740 Total 1,275 1,576 1,833 1,296 1,103 Source: GAMA Excludes Airbus ACJ and Boeing BBJ The geographic expansion of the B&GA market is expected to continue as forecasts predict some 40–45% of deliveries in the next fve years to be outside the traditional North American Market. Makers of long range jets, notably Gulfstream and Bombardier, are preparing to answer the needs of the emerging markets with the arrival of the new Gulfstream 650 during 2012 and the Bombardier Global 7000 and 8000 which are due in 2016/17. However, North America and Europe will continue to be the predominant users of B&GA aircraft for the foreseeable future, accounting today for some 80% of all aircraft in operation and a greater proportion of fying hours. Worldwide Fixed Wing Turbine Powered Business Aircraft 2010 2009 Jets Turboprops Total % % North America 11,922 8,316 20,238 70% 72% Europe 2,355 1,013 3,368 12% 11% South America 859 1,473 2,332 8% 7% Asia 769 565 1,334 5% 4% Africa 355 684 1,039 3% 4% Australia/Oceania 159 367 526 2% 2% Total 16,419 12,418 28,837 100% 100% Source: JetNet The underlying drivers for B&GA usage remain strong. B&GA is a key efciency and productivity tool. Travel via commercial airlines continue to be subject to long delay and inefciency from security protocols, crowded airport terminals and limited routing options. The security, privacy and fexibility of B&GA travel continues to be attractive to both individuals and corporations where time is a valued commodity. Business models for the usage and ownership of B&GA aircraft continue to be developed, making B&GA ever more af ordable and accessible. The prevalence of these fundamental growth drivers further supports the continued structural growth of the industry, coupled with the ongoing cyclical recovery of B&GA fying hours. Directors’ Report — 11
Page 1 and 2: Annual Report 2010
Page 3 and 4: Directors’ Report 2 Overview 2 Gr
Page 5 and 6: Group Structure Revenue by business
Page 7 and 8: Revenue Revenue increased by 4% on
Page 9 and 10: Corporate Governance The Board beli
Page 11: Michael Harper (66) Chairman Simon
Page 15 and 16: Commercial Aviation Our commercial
Page 17 and 18: Each of the fve businesses has a cl
Page 19 and 20: Principal Risks and Risk Potential
Page 21 and 22: Return on Invested Capital (ROIC) M
Page 23 and 24: Proft before tax increased by 42% t
Page 25 and 26: Financial Summary 2010 2009 Inc/(de
Page 27 and 28: ASIG United States of America, Cari
Page 29 and 30: Directors’ Report — 27
Page 31 and 32: Revenue 2010 2009 Inc/(dec) 20091 I
Page 34 and 35: ASIG Focused on growth 32 — Direc
Page 36 and 37: Key Facts ASIG is a world leading i
Page 38: London Heathrow: the A380 is a doub
Page 41 and 42: Financial Summary 2010 2009 Inc/(de
Page 43 and 44: Legacy Support United States of Ame
Page 45 and 46: Directors’ Report — 43
Page 47 and 48: Revenue 2010 2009 Inc/(dec) 20091 I
Page 50 and 51: Legacy Support Flexible resources m
Page 52 and 53: Key Facts Legacy Support is a leadi
Page 54 and 55: Houston, Texas: a Legacy Support st
Page 56 and 57: APPH Delivering continuous improvem
Page 58 and 59: Key Facts APPH has a niche focus an
Page 60: Runcorn, UK: a Jas39 Gripen nose la
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CSR leadership Group-wide Providing
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The Group also launched its new par
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A signifcant proportion of our debt
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Suppliers Payment Policy Substantia
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The Board has a formal schedule of
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a. Remuneration Committee Compositi
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Guidance on Audit Committees. The A
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Directors’ Remuneration Report I
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The following chart shows the balan
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d. Longer-term performance incentiv
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Annualised total shareholder return
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e. Pension: policy and implementati
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Independent Auditor’s Report to t
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Consolidated Statement of Comprehen
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Consolidated Cash Flow Statement Op
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Accounting Policies Basis of Accoun
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Property, Plant and Equipment Prope
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Notes to the Consolidated Financial
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2. Proft for the year Proft for the
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5. Dividends On 21 May 2010, the 20
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8. Intangible assets - continued Th
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10. Investments in associates Cost
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13. Trade and other payables Amount
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16. Bank overdraft and loans - cont
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17. Derivative fnancial instruments
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19. Pensions and other post-retirem
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19. Pensions and other post-retirem
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21. Share capital and reserves Allo
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21. Share capital and reserves - co
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23. Cash fow from operating activit
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26. Related party transactions Tran
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Company Balance Sheet 2010 2009 Not
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Leases Where assets are f nanced by
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6. Creditors: amounts falling due w
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10. Capital and reserves Details of
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Five Year Summary 2010 2009 2008 20
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This Annual Report is addressed sol
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