Annual Report 2010 in PDF - BBA Aviation

Property, Plant and Equipment
Property, plant and equipment is stated in the balance sheet at cost
less accumualted depreciation and provision for impairments.
Depreciation is provided on the cost of property, plant and equipment
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.
Finance costs which are directly attributable to the construction
of major items of property, plant and equipment are capitalised as part
of those assets. The commencement of capitalisation begins when
both fnance costs and expenditures for the asset are being incurred
and activities that are necessary to get the asset ready for use are in
progress. Capitalisation ceases when substantially all the activities that
are necessary to get the asset ready for use are complete.
Impairment of Assets
At each balance sheet date, the Group reviews the carrying value of its
tangible and intangible assets to determine whether there is any
indication that those assets have sufered an impairment loss. If any
such indication exists, the recoverable amount of the asset is
estimated in order to determine the extent of the impairment loss.
Where the asset does not generate cash fows that are independent
from other assets, the Group estimates the recoverable amount of the
cash-generating unit to which the asset belongs. An intangible asset
with an indefnite life is tested for impairment annually and whenever
there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell
and value in use. In assessing value in use, the estimated future cash
fows are discounted to their present value using a pre-tax discount
rate that refects current market assessments of the time value of
money and the risks specifc to the asset for which the estimates of
future cash fows have not been adjusted.
If the recoverable amount of an asset or cash-generating unit is
estimated to be less than its carrying amount, the carrying amount of
the asset or cash-generating unit is reduced to its recoverable amount.
An impairment loss is recognised immediately.
Where an impairment loss subsequently reverses, the carrying
amount of the asset or cash-generating unit is increased to the revised
estimate of its recoverable amount, but so that the increased carrying
amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset or
cash-generating unit in prior years. A reversal of an impairment loss is
recognised as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment
loss is treated as a revaluation increase.
Intangible Assets
Licences are shown at amortised cost. Amortisation provided on the
cost of licences is calculated on a straight-line basis over the useful life
of the licences. Where a licence has an indefnite life, the licence is not
amortised until such time as the remaining life of the associated
platform is estimated to be twenty years at which point amortisation
commences over the remaining useful life of the licence.
Where computer software is not an integral part of a related item of
computer hardware, the software is treated as an intangible asset.
Computer software is capitalised on the basis of the costs incurred to
acquire and bring to use the specifc software. Amortisation is
provided on the cost of software and is calculated on a straight-line
basis over the useful life of the software.
The Group makes an assessment of the fair value of intangible
assets arising on acquisitions. An intangible asset will be recognised as
long as the asset is separable or arises from contractual or other legal
rights, and its fair value can be measured reliably. Amortisation is
provided on the fair value of the asset and is calculated on a straightline
basis over its useful life.
Provisions
Provisions are recognised when the Group has a present obligation
(legal or constructive) as a result of a past event, it is probable that the
Group will be required to settle that obligation and a reliable estimate
can be made of the amount of the obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the balance
sheet date, taking into account the risks and uncertainties surrounding
the obligation. Where a provision is measured using the cash fows
estimated to settle the present obligation, its carrying amount is the
present value of those cash fows.
When some or all of the economic benef ts required to settle a
provision are expected to be recovered from a third party, a receivable
is recognised as an asset if it is virtually certain that reimbursement will
be received on settlement of a related provision and the amount of
the receivable can be measured reliably.
Restructuring
A restructuring provision is recognised when the Group has
developed a detailed formal plan for the restructuring and has raised
a valid expectation in those afected that it will carry out the
restructuring by starting to implement the plan or announcing its
main features to those afected by it. The measurement of a
restructuring provision includes only the direct expenditures arising
from the restructuring, which are those amounts that are both
necessarily entailed by the restructuring and not associated with the
ongoing activities of the entity.
Onerous contracts
Present obligations arising under onerous contracts are recognised
and measured as provisions. An onerous contract is considered to exist
where the Group has a contract under which the unavoidable costs of
meeting the obligations under the contract exceed the economic
benefts expected to be received under it.
Share-Based Payments
The Group operates a number of cash and equity-settled share-based
compensation plans. The fair value of the compensation is recognised
in the income statement 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 cashsettled
options, the fair value of the option is revisited at each balance
sheet date. For both cash and equity-settled options, the Group
revises its estimates of the number of options that are expected to
become exercisable at each balance sheet date.
Consolidated Financial Statements — 93