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
84 — Consolidated Financial Statements
Going Concern
The Group’s business activities together with the factors likely to af ect
its future development, performance and position are set out in the
Directors’ Report on pages 3 to 84. The f nancial position of the Group,
its cash fows and liquidity position are described on pages 64 and 65. In
addition, note 17 of the Consolidated Financial Statements include the
Group’s objectives, policies and processes for managing its capital; its
fnancial risk management objectives; details of its f nancial instruments
and hedging activities; and its exposure to credit risk and liquidity risk.
The Group has $1,075 million of banking facilities of which
$606 million was drawn across them at 31 December 2010. These facilities
are subject to cross default. Further details relating to these facilities are
provided in note 16 to the Consolidated Financial Statements. The
primary $900 million facility does not expire until September 2012. The
$175 million facility is due to expire in August 2011 but the Directors
expect the Group to have sufcient headroom without replacing this
facility. The Group’s banking facilities are subject to two main f nancial
covenants: maximum net debt to underlying EBITDA of 3.5 times and
minimum net interest cover of 3.0 times EBITDA. The Directors expect the
Group to comply with these covenants for the foreseeable future.
The Group’s forecasts and projections taking account of
reasonably possible changes in trading performance show that the
Group should be able to operate within the level of its current facilities.
The principal risks and uncertainties afecting the forecasts and
projections, to which the Group is exposed, relate to the number of
hours of fying activity, principally in B&GA, but also to a lesser extent in
commercial and military aviation. Flying hours largely dictate the drivers
of revenue, namely fuel volumes in Signature, aircraft movements in
ASIG, engine overhaul cycles in ERO and demand for components in
Legacy Support and APPH. Further details of these risks and
uncertainties are provided on page 17.
The directors have carried out a critical review of the Group’s 2011
budget and medium-term plans, with due regard for the risks and
uncertainties to which the Group is exposed and the impact that these
could have on trading performance. The key assumptions used in
constructing the budget were that:
— Signature, ASIG and ERO continue their gradual recovery in 2011
and beyond;
— Legacy Support remains stable with modest revenue growth and
operational improvements; and
— APPH will be relatively stable in 2011 with no further weakening
followed by a gradual recovery, commencing during 2012.
The directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence for
the foreseeable future. Thus they continue to adopt the going concern
basis of accounting in preparing the annual f nancial statements.
Statement of Directors’ Responsibilities
The directors are responsible for preparing the Annual Report, Directors’
Remuneration Report and the fnancial statements in accordance with
applicable law and regulations.
Company law requires the directors to prepare f nancial
statements for each fnancial year. The directors are required by the IAS
Regulation to prepare the Group fnancial statements under
International Financial Reporting Standards (IFRSs) as adopted by the
European Union. The Group fnancial statements are also required by
law to be properly prepared in accordance with the Companies Act
2006 and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that IFRS f nancial
statements present fairly for each fnancial year the Company’s f nancial
position, f nancial performance and cash f ows. This requires the faithful
representation of the efects of transactions, other events and conditions
in accordance with the defnitions and recognition criteria for assets,
liabilities, income and expenses set out in the International Accounting
Standards Board’s “Framework for the preparation and presentation of
fnancial statements”. In virtually all circumstances, a fair presentation will
be achieved by compliance with all applicable International Financial
Reporting Standards. However, directors are also required to:
— properly select and apply accounting policies;
— present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable
information;
— provide additional disclosures when compliance with the specif c
requirements in IFRSs are insufcient to enable users to understand
the impact of particular transactions, other events and conditions on
the entity’s fnancial position and fnancial performance; and
— make an assessment of the Company’s ability to continue as a
going concern.
The directors have elected to prepare the parent company f nancial
statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and
applicable law). The parent company fnancial statements are required
by law to give a true and fair view of the state of afairs of the Company.
In preparing these fnancial statements, the directors are required to:
— select suitable accounting policies and then apply them consistently;
— make judgements and estimates that are reasonable and prudent;
— state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and explained
in the fnancial statements; and
— prepare the fnancial statements on the going concern basis
unless it is inappropriate to presume that the Company will continue
in business.
The directors are responsible for keeping proper accounting records
that disclose with reasonable accuracy at any time the f nancial position
of the Company and enable them to ensure that the parent company
fnancial statements comply with the Companies Act 2006. They are also
responsible for safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection of fraud and
other irregularities.
The directors are responsible for the maintenance and integrity of
the corporate and fnancial information included on the Company’s
website. Legislation in the United Kingdom governing the preparation
and dissemination of f nancial statements may difer from legislation in
other jurisdictions.
A procedure is in place to enable the directors to provide the
confrmation regarding audit information required under s418 of the
Companies Act 2006. This confrmation is set out on page 67 of the
Directors’ Report – Additional Disclosures.
The directors confrm that to the best of their knowledge:
(a) the fnancial statements, prepared in accordance with the
applicable set of accounting standards, give a true and fair view of
the assets, liabilities, fnancial position and proft or loss of the
Group and the undertakings included in the consolidation taken
as a whole; and
(b) the Directors’ Report includes a fair review of the development
and performance of the business and the position of the
Company and the undertakings included in the consolidation
taken as a whole, together with a description of the principal risks
and uncertainties that they face.
Signed on behalf of the Board
Simon Pryce Mark Hoad
Group Chief Executive Group Finance Director
1 March 2011 1 March 2011