Annual Report 2010 in PDF - BBA Aviation

Financial statements
85 Independent Auditor’s
Report to the Members of
BBA Aviation plc in Respect
of the Consolidated
Financial Statements
86 Consolidated Income
Statement
87 Consolidated Statement of
Comprehensive Income
88 Consolidated Balance Sheet
89 Consolidated Cash Flow
Statement
90 Consolidated Statement of
Changes in Equity
91 Accounting Policies of
the Group
95 Notes to the Consolidated
Financial Statements
126 Independent Auditor’s
Report to the Members of
BBA Aviation plc in Respect
of the Parent Company
Financial Statements
127 Company Balance sheet
128 Accounting Policies of
the Company
129 Notes to the Company
Financial Statements
134 Principal Subsidiary
Undertakings
135 Five Year Summary
136 Shareholder Information
128 — Company Financial Statements
Accounting Policies
Basis of Accounting
The separate fnancial statements of the Company are presented as required by the Companies Act 2006.
The fnancial statements have been prepared using the historical cost convention adjusted for the revaluation of certain fxed assets and in
accordance with applicable United Kingdom accounting standards and law.
The fnancial statements have been prepared on a going concern basis in accordance with the rationale set out in the directors’ statement
of going concern on page 84 of the Directors’ Report.
The principal accounting policies are set out below. They have all been applied consistently throughout the year and preceding year.
The Company has taken advantage of the exemption contained in FRS 1 “Cash Flow Statements” and has not produced a cash fow statement.
The Company has taken advantage of the exemption contained in FRS 8 “Related Party Transactions” and has not reported transactions
with fellow Group undertakings.
Investments
In the Company’s fnancial statements, investments in subsidiary and associated undertakings are stated at cost less provision for impairment.
Treasury
Transactions in foreign currencies are translated into Sterling at the rate of exchange at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are recorded at the rates of exchange prevailing at that date. Any gain or loss arising
from a change in exchange rates subsequent to the date of transaction is recognised in the proft and loss account.
Derivative fnancial instruments utilised by the Group comprise interest rates swaps, cross-currency swaps and foreign exchange contracts.
All such instruments are used for hedging purposes to manage the risk profle of an underlying exposure of the Group in line with the Group’s risk
management policies. All derivative instruments are recorded on the balance sheet at fair value. Recognition of gains or losses on derivative
instruments depends on whether the instrument is designated as a hedge and the type of exposure it is designed to hedge.
The efective portion of gains or losses on cash fow hedges are deferred in equity until the impact from the hedged item is recognised in
the proft and loss account. The inefective portion of such gains and losses is recognised in the proft and loss account immediately.
Gains or losses on the qualifying part of net investment hedges are recognised in equity together with the gains and losses on the
underlying net investment. The inefective portion of such gains and losses is recognised in the proft and loss account immediately.
Changes in the fair value of the derivative fnancial instruments that do not qualify for hedge accounting are recognised in the proft and
loss account as they arise.
Pensions and other Post-Retirement Benefits
The Company provides pension arrangements to a small number of full time employees through the Company’s defned beneft scheme. It is
not possible to identify the share of underlying assets and liabilities in this scheme which is attributable to the Company on a consistent
and reasonable basis. Therefore the Company has applied the provisions in FRS17 “Retirement Benefts” to account for the scheme as if it was a
def ned contribution scheme.
The costs of pension plans and other post-retirement benefts are charged to the proft and loss account so as to spread the costs
over employees’ working lives within the Company. The contribution levels are determined by valuations undertaken by independent
qualif ed actuaries.
Share-Based Payments
The Company operates a number of cash and equity-settled share-based compensation plans. The fair value of the compensation is recognised
in the proft and loss account as an expense. The total amount to be expensed over the vesting period is determined by reference to the fair value
of the options granted and calculated using the valuation technique most appropriate to each type of award. These include Black-Scholes
calculations and Monte Carlo simulations. For cash-settled options, the fair value of the option is revisited at each balance sheet date. For both
cash and equity-settled options, the Company revises its estimates of the number of options that are expected to become exercisable at each
balance sheet date.
Tangible Fixed Assets
Plant and machinery are stated in the balance sheet at cost. Land and buildings are stated at cost. Other tangible fxed assets are stated in the
balance sheet at cost. Depreciation is provided on the cost of tangible fxed assets less estimated residual value and is calculated on a straight-line
basis over the following estimated useful lives of the assets:
Land not depreciated
Buildings 40 years maximum
Plant and machinery (including essential commissioning costs) 3 – 18 years
Tooling, vehicles, computer and ofce equipment are categorised within plant and machinery in note 3 of the accounts.
The revaluation reserve consists of the surpluses on the revaluation of land and buildings to their market value for existing use and on the
revaluation of plant and machinery to net current replacement cost. The Directors are not aware of any material change to the value of these
assets since the last revaluation.