BBA Group Annual Report 2004 - BBA Aviation

BBA GROUP
ANNUAL REPORT 2004

PAGE CONTENTS
2 Group Structure
4 Financial Highlights
6 Chairman‘s Statement
8 Chief Executive’s Review
12 Aviation
16 Materials Technology
19 Looking Forward
20 Financial Review
25 Our Portfolio
38 Board of Directors
40 Directors‘ Report
42 Corporate Social Responsibility
43 Directors‘ Corporate
Governance Report
49 Directors‘ Remuneration Report
57 Independent Auditors‘ Report
58 Group Profit and Loss Account
59 Group and Company Balance Sheets
60 Group Cash Flow Statement
61 Reconciliation of Movement
in Group Shareholders’ Funds
61 Group Statement of Total Recognised
Gains and Losses
62 Accounting Policies
64 Notes on Financial Statements
86 Principal Subsidiary and
Associated Undertakings
87 Five Year Summary
88 Summary Financial Information
89 Shareholder Information

AT THE
HEART OF OUR BUSINESS
IS THE ABILITY TO REMAIN
FOCUSED

2 BBA GROUP GROUP
ANNUAL REPORT
2004 STRUCTURE
AVIATION £800m
MATERIALS £572m
TECHNOLOGY
We are a world leader in aviation services,
focusing on five market segments.
These are: flight support for business and
commercial aviation; turbine engine overhaul;
the supply of engine parts; the design,
manufacture and overhaul of aircraft
hydraulics and landing gear; together with
airport services and pilot training.
We provide specialty nonwoven fabrics and
composites into three different markets:
Industrial, Consumer Care and Healthcare.
Our materials are used in a huge range of
products for end applications as diverse as
babycare, medical, wipes, construction and
filtration.

AVIATION
Business
Aviation
£255m
Speciality
Parts
£19m
Commercial
Aviation
£164m
Systems
£72m
Engineer
Repair &
Overhaul
£290m
THIS YEAR
GROUP REVENUES
Aviation
£800m
Ma t erials
Techno l ogy
£572m
Healthcare
£280m
MATERIALS TECHNOLOGY
Industrial &
Consumer
Care
£273m
Becorit
£19m
3

4 BBA GROUP FINANCIAL
ANNUAL REPORT
2004 HIGHLIGHTS
£m (other than percentages and per share amounts in pence) 2004 2003 change
Turnover
Total 1,375.0 1,330.6 3%
Continuing operations 1,371.6 1,319.7 4%
Operating profit (before goodwill amortisation and exceptional items)
Total 139.9 144.7 (3)%
Continuing operations 140.2 147.2 (5)%
Discontinued operations (0.3) (2.5)
Statutory operating profit 82.1 70.1 17%
Operating margin (before goodwill amortisation and exceptional items)
Total 10.2% 10.9%
Continuing operations 10.2% 11.2%
Net interest (12.1) (16.7)
Profit before tax,
goodwill amortisation and exceptional items 127.8 128.0 –%
Exceptional items (net) (33.6) (24.7)
Goodwill amortisation (20.8) (48.1)
Profit before tax 73.4 55.2 33%
Earnings per ordinary share
Basic
Total:
Before goodwill amortisation and exceptional items 19.9p 19.7p 1%
Unadjusted 10.2p 5.5p 85%
Continuing operations*:
Before goodwill amortisation and exceptional items 20.0p 20.1p –%
Diluted
Total:
Before goodwill amortisation and exceptional items 19.7p 19.6p 1%
Unadjusted 10.1p 5.5p 84%
Continuing operations:
Before goodwill amortisation and exceptional items 19.8p 20.0p (1)%
Dividends per ordinary share 11.3p 10.8p 5%
Net cash inflow from operating activities 145.4 185.0 (22)%
Free cash flow** 60.0 87.2 (31)%
Net debt 511.6 459.5
Gearing (net debt to shareholders’ funds) 78% 68%
Interest cover*** 11.6x 8.8x
* basic earnings per share on continuing operations is calculated on a pro-forma basis using basic earnings per share on total operations
adjusted to exclude the after-tax impact of operating profit from discontinued operations for each year.
** cash flow from operating activities plus dividends from associates, less tax, interest, preference dividends and net capital expenditure.
*** operating profit(as defined above) divided by the net interest charge.
† before goodwill amortisation and exceptional items.

Operating profit †
£140.2m
Turnover
£1,371.6m
Earnings per
ordinary share*
20.0p
5

6 BBA GROUP CHAIRMAN’S
ANNUAL REPORT
2004 STATEMENT
The recovery experienced in the second half of 2003 continued
into 2004 with demand strong in both our businesses.
Clearly, we have been affected by the weaker US dollar on
our translated US profits. Excluding that impact, our earnings
grew at 5 per cent. Since 2001 our underlying profit before tax,
in US dollar terms, have grown by 33 per cent, demonstrating
the good inherent growth characteristics of our businesses.
Financial Results
In 2004, reported turnover for the Group on continuing
operations was at £1.37 billion, £52 million higher than in
2003, after an adverse currency translation impact of £96
million. On a constant currency basis, turnover increased
by 12 per cent.
Underlying pre-tax profits at £128 million were £2 million
less than last year after a negative currency impact of £8
million and higher raw material input prices of £8 million.
Statutory profit before tax was £73 million
(2003: £55 million).
Adjusted earnings per share (before goodwill
amortisation and exceptional items) were 19.9 pence
(2003: 19.7 pence).
Acquisitions
During the year, the Group continued to enhance its
geographic presence and market position with nine strategic
acquisitions for a total investment of £98 million covering
each of our business sectors. As most of these occurred in
the second half of the year, the benefits of their contribution
to the Group will be seen primarily in 2005.
Dividends
Following the interim dividend of 3.35 pence paid on
5 November 2004, the Board is recommending a final dividend
of 7.95 pence (2003: 7.6 pence) payable on 20 May 2005 to
shareholders on the register at 15 April 2005. This will make
total dividends for 2004 of 11.3 pence (2003: 10.8 pence).
Board and People
Irv Yoskowitz stepped down in March after nine years as a
non-executive director and there were no other changes at
Board level during 2004. The Group has appointed Michael
Harper to the Board as a non-executive director with effect
from 23 February 2005. He is currently Chief Executive of
Kidde plc. On the same date we also announced that Ross
McMillan was stepping down from the Board after nearly
four years with the Group. We thank him for his contribution
to the business over this time.
As always our success as a Group is dependent on the
efforts and quality of all our people. The Board would like
to thank everyone who works for the Group for their valued
contribution to our progress.
Corporate Governance
BBA has always supported the key principles underlying good
corporate governance. I am pleased to be able to say that the
Company is substantially compliant with the new Combined
Code which applied to BBA for the first time during the year.
Corporate Social Responsibility
We believe that a positive attitude to social responsibility
is essential and during the year we undertook a number
of initiatives to broaden the reach of corporate social
responsibility within BBA. This included the issue of an
enhanced policy on CSR and Business Ethics together with
awareness communications and training. During the year
we published on our website our third Annual CSR report
and we are pleased that overall the Group continues to
report improved performance.
Outlook
Both of our businesses grew sales appreciably in 2004, albeit
that earnings were held back by currency translation and
raw material price increases. Nevertheless, we have continued
to invest in new businesses, strategic acquisitions and
productivity initiatives.
Looking to the future, we are clearly dependent, to some
extent, on currencies and material price inputs, but our
underlying businesses continue to grow and strengthen.
We expect this trend to continue as we go forward.

Roberto Quarta Chairman
7

8 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
AS A GROUP WE HAVE THE ABILITY TO REMAIN
FOCUSED. 2004 HAS PROVIDED A STABLE
ENVIRONMENT FOR BBA TO BUILD FURTHER.
HOW?
1 In Aviation we further increased our market
share through strategic acquisitions in
Europe, new business wins and investment.
2 Despite high raw material costs, we have
achieved good growth in Materials Technology
through further acquisitions and product
launches that have led to major contract wins.
As we look forward our strategy continues to be
focused on growth primarily in Aviation Services
where we see good opportunities to increase
revenues.

Roy McGlone Group Chief Executive
9

10 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
Trading Background
2004 saw strong growth in revenues for both of our businesses.
In particular, the first half showed a significant improvement
over 2003. From an external point of view, demand in our
markets was good. Underlying profit before tax however was
held back by the translation impact of the weakening US dollar
and raw material prices – in some areas they reached a 20 year
high. Underlying profit before tax for the year overall was similar
to those in 2003, although on a constant currency basis it
showed an increase of 5 per cent. It is interesting to note that
in US dollar terms our underlying profit before tax has grown
by 33 per cent since 2001.
We continued to generate strong free cash flows after
investing £61.7 million in capital across the Group and after
absorbing the cost of a significant restructuring programme
in our engine repair and overhaul division.
We also continued our record of investing in value-adding
acquisitions, principally in our Aviation division. Last year we
acquired in total nine new companies, increasing and enhancing
our service and product offering across the world. These
acquisitions are expected to contribute some £120 million
of sales in 2005 (9 per cent of our 2004 total).

AVIATION
£800m
MATERIALS
TECHNOLOGY
£572m
GROUP
REVENUES
(CONTINUING OPERATIONS)
£1,372m
11

12 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
AVIATION REVENUES AT
CONSTANT CURRENCY
01 02 03 04
Aviation
After the strong recovery we saw in the first half of 2004,
demand continued at good levels in the second half. For the
year, overall sales (at constant currency) increased 9 per cent to
£800 million, on a continuing basis, with operating profits (before
goodwill amortisation and exceptional items) increasing
8 per cent to £80 million.
Signature Flight Support continued to experience good
growth with sales at £255.4 million up 10 per cent on 2003.
Organic sales growth, excluding acquisition activity, was 8 per
cent. We continued to improve and expand our existing locations,
adding ramp space in Luton and Paris, and completing new FBO
facilities at Toulon and Jacksonville. Perhaps more importantly,
the year saw a significant increase in Signature’s international
network of bases, particularly in Europe. We acquired a presence
in Athens, Crete, Heathrow, Shannon, and with the Execair
acquisition, a further 10 locations in Europe, including Dublin,
Edinburgh, Glasgow, Birmingham and Charleroi. Collectively,
in 2004 we have grown our European network from 5 to 19 FBOs.
With the addition of New Orleans in November, we now have
67 locations in the Signature network. We are not only the largest
provider of FBO services but also the only truly global provider.
At ASIG, our commercial aviation airport service provider,
sales increased some 6 per cent on 2003 to £164 million.
Here again, we enhanced our geographic presence with the
acquisition of Airport Group International (AGI). This added

another 6 new airport locations in the United States and
strengthened our market position in a further 8. With the
acquisition and integration of AGI now complete, ASIG’s
worldwide network numbers 71 locations, including 46 of the
world’s top 100 airports. The December acquisition of Boker
Aeroclean, an aircraft cleaning company based at London
Heathrow Airport, complements ASIG’s fuelling operations and
positions the company to strengthen and expand its business
with major carriers throughout Europe.
In 2004, ASIG also implemented a number of creative
programmes, including structured pre-pay agreements,
to better manage risk and solidify long-term business
relationships with its major airline customers.
The contract to be the alternative provider of fuelling
services on the new airport in Bangkok is proceeding through
the start-up process and is expected to begin operations in the
fourth quarter of 2005.
Our aircraft engine repair and overhaul business,
headquartered in Dallas, saw sales increase 4 per cent to £290
million (at constant currency). Premier Turbines, acquired in
2003, continues to perform well, with excellent growth in TFE731
inputs during the year. The TFE731 is one of the most popular
engines in the business aviation fleet and growth prospects
remain strong. Dallas Airmotive secured significant new
aftermarket engine support agreements with major airframe
OEM’s Cessna and Raytheon. These collectively produced over
SALES INCREASE
OF 6% TO £164M
AWARDED
A 5 YEAR,
$7M PER ANNUM
CONTRACT WITH
THE US ARMY
ASIG
DALLAS AIRMOTIVE
13

14 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
NEW BUSINESS WINS
PRATT & WHITNEY
CANADA FOR THE
PW300 AND PW500
ENGINES.
30 engine inputs in 2004 and are expected to continue to grow
in 2005. Dallas Airmotive also added resources to improve its
ability to successfully pursue select military engine programme
opportunities and was awarded a 5 year, $7 million per annum
US Army contract for the overhaul of aviation ground power units.
During 2004 we were delighted to win full authorisations
from Pratt & Whitney Canada for their PW300 and PW500 model
engines. These engines are in the early stages of their product
life cycle and power a wide range of current and new generation
business and fractional programme aircraft including: PW300 –
Citation Sovereign, Falcon 2000EX, Gulfstream 200, Hawker
1000, Hawker Horizon and Learjet 60; PW500 – Citation Bravo,
Citation Encore and Citation Excel. There are approximately
2,800 PW300/PW500 engines currently in service. Start-up of
these programmes will be effective from early 2005 and we
expect good growth in volumes over the next three years.
Late in 2004 we completed a major restructuring programme
with the closure of our repair and overhaul facility in Millville,
New Jersey, and the successful transfer of business programmes
and production operations to other BBA facilities in the United
States. The financial benefits of these actions will come through
in 2005.
H+S Aviation in the UK was adversely impacted by the
weaker US dollar on revenues and the demise of the Dart engine
programme. A number of actions have been taken to remedy the

situation and better balance the engine programme portfolio,
including the recent addition of Pratt & Whitney Canada
authorisation to provide overhaul support for the JT15D model
engine in Europe.
Our speciality parts businesses, ITS and Barrett, again
experienced a strong year in 2004, both benefiting from the
continuing improvement in the pre-owned aircraft market which
creates increased demand for serviceable engines and parts to
support models such as the PT6, JT15D, TFE731 and Spey.
In APPH, our hydraulics and landing gear business, original
equipment demand was strong, offset by patchy demand for
spare parts. During the year contracts were finalised for Airbus
A320, NH90 helicopter and repair and overhaul of Hawk landing
gears for Canada and Malaysia.
Finally, at Oxford Airport, UK, in the second half of the year
we saw a marked improvement in our pilot training business,
as demand from the airlines returned. The airport itself has
seen higher levels of business aviation activity and we have
invested in more ramp and hangar space to further this
growth in 2005.
In summary, 2004 was another busy year for Aviation,
with improving market conditions and significant activity in
acquisitions, contract wins and productivity initiatives to
strengthen our market positions and promote future growth.
15

16 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
MATERIALS TECHNOLOGY
REVENUES AT
CONSTANT CURRENCY
01 02 03 04
Materials Technology
Our Materials Technology division saw significant sales growth
in 2004, up 16 per cent on the prior year (at constant currency).
Of this increase, around 7 per cent was organically driven, and
the majority of the balance due to two acquisitions, one made
in 2003 and the other in September 2004. Despite the increase
in sales, operating profits (before goodwill amortisation and
exceptional items) at £60 million were held back by a continued and
unprecedented increase in raw material input costs, particularly
polypropylene, which rose by 45 per cent during the year to
levels not seen for 20 years.
Net cash inflow from operating activities at £70 million was
again very strong, and we anticipate this to continue.
In Industrial and Consumer Care products, Europe saw
Tecnofibra in Milan, acquired in 2003, performing well, and
strong demand for roofing products helped Berlin increase sales.
In September, we acquired Tenotex for € 62 million (£42 million).
Tenotex, with plants located in Alicante, Spain and Milan, Italy,
is a provider of specialty nonwoven products for consumer wipes
and a range of industrial and hygiene markets. North American
Industrial and Consumer Care saw strong demand for Reemay
products (fabric conditioner and filtration) and the new wipes line
in Bethune, South Carolina, commissioned in the second half of
2003, has moved to near full capacity. In addition, several new
product launches towards the end of the year (Big Buff, Keeta ®
,
Resolution ®
) will add new sales in 2005.

In Healthcare, we experienced better utilisation in each of the
three major geographic areas. In Europe the new line in Peine,
Germany, commissioned last year, approached full-loading
during the year. Sweden saw higher demand from a number of
large customers and the S-Tex line in Alsace, France, won new
orders which will increase output in 2005 from that plant.
Our successful joint venture, Finotech in Germany,
experienced another strong year, though slightly down on the
exceptional level of 2003. In 2005, we expect Finotech’s profits to
be lower as the venture transitions into a new product range
focusing on printed films. North American demand was also up
in most plants, particularly Simpsonville (South Carolina),
Mexico and Green Bay (Wisconsin) due to increased market
penetration in our healthcare business. In Asia-Pacific, our
airlaid Femcare line in Tianjin, China, experienced a sales
increase of 14 per cent to near full capacity and our joint venture
in Thailand, CNC International, saw increased demand for its
baby care and medical products. During the year we took action
to close our loss-making Japanese sales office.
Becorit, our rail friction business in Germany, saw sales flat
at £19 million, and operating profits (before goodwill amortisation
and exceptional items) remained at satisfactory levels.
With acquisitions made in the last two years, new contracts,
new product launches and investments, we have increased the
Industrial and Consumer Care portion of our business from
40 per cent two years ago to 48 per cent of total Materials
17
MATERIALS TECHNOLOGY
BY GEOGRAPHY
EUROPE
44%
8%
REST OF
WORLD
NORTH
AMERICA
48%

18 BBA GROUP CHIEF
ANNUAL REPORT
2004 EXECUTIVE’S
REVIEW
Technology sales. With the growth of Europe and Asia-Pacific, we
have a good balance geographically, with 48 per cent sales in
North America, 44 per cent Europe and 8 per cent
Asia-Pacific/Rest of World.
Looking at 2005, we expect another year of strong demand,
the full year benefit of the Tenotex acquisition and again, good
cash flows. The outlook for raw material prices remains uncertain;
we will require a general reduction in worldwide commodity
prices to provide a benefit to our Materials Technology earnings.
Until that happens, we will continue to implement price increases
across our product range, and work to drive through further
productivity and process development programmes.
Strategy
Our strategy continues to be focused on growth primarily in the
Aviation Services market. We have shown over recent years that
there are plenty of opportunities to increase revenues – our
underlying markets have long term growth prospects and there
are assets available to acquire to supplement this market
growth. As we saw in 2004, we can grow through increasing
our geographic presence. In both businesses we have expanded
in North America and Europe. We already have a significant
presence in China and Asia-Pacific in Materials Technology and,
as the business and commercial aviation market continues to
build momentum in this region, we aim to establish ourselves
as a major player in Aviation Services commensurate with our
position elsewhere in the world.

We will continue to look for assets which consolidate and
improve our market positions and returns in geographic regions
in which we already operate. Furthermore, there may be markets
in which we do not currently participate but which fit with our
existing competencies.
Our Aviation revenues at constant currencies have grown
26 per cent in the last three years and in Materials Technology
27 per cent over the same period. Our cash flows and balance
sheet give us the opportunity to continue to expand and that is
what we intend to do, provided, of course, that our investments
fit with our strategic criteria and provide financial returns that
will add to the value of the Group overall.
Looking Forward
2004 was a year of good progress in top-line revenue growth
in both divisions. We continued to improve the market positions
of both Aviation and Materials Technology through investment
in new business, acquisitions and productivity, all of which will
benefit 2005.
We expect demand to continue to be robust and free cash
flow should see an improvement over 2004. We also expect to
see further corporate development activity, particularly in the
Aviation area. The future direction of the US dollar is difficult
to predict and the outlook for raw material prices is unclear.
However, with the actions we have taken and continue to take,
we expect to make good progress in 2005.
19

20 BBA GROUP FINANCIAL
ANNUAL REPORT
2004 REVIEW
GROUP PRE TAX
EARNINGS AT
CONSTANT CURRENCY
01 02 03 04
Summary
In 2004 the Group produced underlying pre-tax profits of £128
million which were slightly lower than in 2003 (£130.5 million)
and adjusted earnings per share were 19.9 pence, 1 per cent
higher than the prior year. We continue to be impacted by the
weakening of the average dollar exchange rate against sterling,
which depreciated by 12 per cent during the period, reducing our
underlying pre-tax profits by some £8 million. In our Materials
Technology division significant increases in raw material costs
impacted underlying pre-tax profits by circa £8 million. Despite
these issues, in constant currency terms, underlying pre-tax
profits advanced by 5 per cent. Our free cash flow, at £60 million,
continues to be strong, and we invested £98 million in acquisitions
for both of our businesses.
Our preparations for the implementation of International
Accounting Standards during 2005 are proceeding according
to plan.

Turnover and Operating Profit* Exchange Rates
Turnover from continuing operations for the year increased by A significant proportion of BBA’s earnings 58 per cent are
4 per cent to £1,372 million (2003: £1,320 million). Movements generated in US dollars and the movements in dollar rates
in exchange rates adversely impacted the translated value since 2001 are shown in the table below:
of the turnover of our overseas subsidiaries by £95 million
compared to the prior year and reduced our growth rate by Dollar Rates 2001 2002 2003 2004
8 per cent. Acquisitions made during the year contributed 1.44 1.50 1.64 1.83
turnover of £25 million.
Operating profits* of continuing operations reduced to The significant weakening of the US dollar against sterling
£140 million (2003: £147 million) but, exclusive of exchange has had a material impact on the translated value of our
rate movements, increased by 2 per cent despite the underlying pre-tax profits as can be seen below:
significant impact of the increase in raw material costs in
our Materials Technology division. The raw material price (PBT) 2001 2002 2003 2004
increase was the main contributor to the reduction in USD 176.5 204.0 212.2 234.4
operating margins* from 11.2 per cent to 10.2 per cent. GBP 122.6 136.0 129.4 128.1
In the Aviation division turnover, from continuing
operations was broadly unchanged at £800 million (2003: In dollar terms, our underlying pre-tax profits have
£793 million), although exclusive of the impact of exchange increased by 33 per cent since 2001 although in sterling
rates turnover increased by 9 per cent of which 2 per cent the growth is more limited.
relates to acquisitions. Operating profits* reduced slightly
to £80.6 million (2003: £81.3 million) but were £6.0 million Exceptional Items
higher at the same exchange rates (2003 restated to Operating exceptional items amounted to £25.7 million
£74.3 million). Acquisitions contributed £3.4 million of the (2003: £12.7 million) and can be analysed as follows:
increase. Operating margins* at 10.1 per cent were similar
to the prior year. Millville closure £14.8 million
Materials Technology turnover from continuing operations Snow Filtration relocation £2.4 million
increased strongly to £572 million (2003: £527 million) and Aborted acquisitions £3.0 million
exclusive of the impact of exchange rates was 16 per cent Acquisition integrations £1.9 million
higher than the prior year, of which 2.6 per cent related to Other £3.6 million
acquisitions. Operating profits* reduced by £6.3 million to Total costs £25.7 million
£59.6 million inclusive of an exchange rate impact of some
£3.4 million. Significantly, increased raw material costs Of these total costs, approximately £8 million related to
impacted profits by approximately £8 million after recovery asset write-offs and were not therefore cash items in 2004.
of cost increases through contracted and uncontracted price Non-operating exceptional items amounted to
increases. The increase in raw material costs was the main £7.9 million (2003: £12.0 million) and principally related
cause of a reduction in operating margins* from 12.5 per to the disposal of Precision Avionics, Inc. in our Aviation
cent to 10.4 per cent. Division as well as the closure of our Fiberweb distribution
*before goodwill amortisation and exceptional items
business in Japan.
21

22 BBA GROUP FINANCIAL
ANNUAL REPORT
2004 REVIEW
Acquisitions and Disposals broken down between UK schemes £33 million and
The Group acquired 9 businesses during the year for a total overseas schemes £23 million. Following an actuarial
consideration of £98 million. In Fiberweb we continued to valuation of the UK schemes in 2004, the Board has agreed
invest in the European wipes market with the acquisition to make a special contribution of £10 million spread over two
of Tenotex, which is based in Spain and Italy and further years to reduce the deficit, after which the situation will be
consolidates our position in this growing sector. In Aviation reviewed again. The overseas deficit includes unfunded
we made a number of acquisitions to expand the Signature schemes valued at £11.3 million.
network, particularly in Europe, and we also acquired
businesses for ASIG, our commercial aviation handling Cash Flow and Debt
operation. These businesses, which are detailed in the The Group produced another year of good free cash flows:
Directors’ report, are expected to contribute £120 million of 2004 2003
turnover in 2005 and will generate operating margins of more Cash Flow from Operating Activities 145.4 185.0
than 10 per cent. The fair market value of the acquisitions Dividends from Associates 0.9 2.7
was £17.4 million, debt acquired £7.4 million, and the Capital Expenditure (incl. intangibles) (61.7) (75.0)
resulting goodwill was £73.2 million. Sale of Fixed Assets 5.7 5.2
The Group disposed of the assets of Precision Avionics, Interest and Preference Dividends (17.3) (20.5)
Inc. and closed a Fiberweb distribution business in Japan. Taxation (13.0) (10.2)
Tax and Dividends
Free Cash Flow 60.0 87.2
The effective tax rate was 27 per cent of the profit before The overall performance was lower than in 2003 due in
goodwill amortisation and all exceptional items (2003: particular to the additional cash costs of closing the Millville
27 per cent). facility and a build up of inventory in the US Engine Repair
The Board is recommending a final dividend of 7.95 and Overhaul business of £12 million which should unwind
pence bringing the dividend for the year to 11.3 pence during 2005.
(2003: 10.8 pence), an increase of 5 per cent. The dividend Capital expenditure reduced to £62 million (2003:
is covered 1.7 times by adjusted basic earnings per share £75 million) and was 0.8 times depreciation (2003: 1.0 times).
(2003: 1.9 times). The increase in the dividend reflects the Of the £62 million spent during the year £25 million related
Board’s confidence in the Group’s outlook and the expectation to Materials Technology (2003: £47 million) and £37 million
of continued strong free cash flows in the future. to Aviation (2003: £28 million).
The movement in net debt is shown on the table below:
Pensions 2004 2003
The overall value of our scheme assets has grown to Opening Net Debt (459.5) (495.7)
£435 million (2003: £419 million), whilst liabilities have also Free Cash Flow 60.0 87.2
risen to £505 million (2003: £474 million) before a deferred Ordinary Dividends (49.4) (32.5)
tax asset of £14 million. This has resulted in a net deficit of Acquisitions and Disposals (100.3) (43.1)
£56 million at the end of the year compared to £36 million at Issue of Ordinary Shares 1.2 0.2
the end of 2003. The increase in the deficit mostly reflected Own Shares Purchased – (44.6)
increasing liabilities due to a reduction in the discount rate New Finance Leases – (1.6)
applied to future liabilities which is derived from bond yields Exchange Rate Movements 36.4 70.6
as well as the reduction in the associated deferred tax asset Closing Net Debt (511.6) (459.5)
due to the Group’s tax position in the UK. The deficit can be

The continued weakness of the US dollar against sterling has
had a significant impact on the translated value of our dollar
debt which accounts for £35 million of the overall exchange
movement of £36 million shown above. A significant proportion
of our debt is held in US dollars as a hedge against our US
dollar assets. A profile by currency is shown in the table below.
(DEBT)/CASH PROFILE BY CURRENCY 2004 2003
Sterling 314 417
US Dollars (586) (684)
Euros (204) (158)
Others (36) (35)
Total (512) (460)
At the start of the year the Group had two syndicated facilities
for £550 million and £300 million, which were due to expire
in 2005 and 2007 respectively. During the year the Group took
advantage of a strong banking market for borrowers and
refinanced both of these facilities on 5-year terms. We
also took the opportunity to increase the overall amount to
£950 million from £850 million and improved terms both in
relation to covenants and pricing. This new facility will ensure
that we continue to have the headroom and flexibility to
capitalise on investment opportunities as they arise.
The Group policy with respect to cash deposits is to only
have deposits with pre-approved banks with credit ratings
of A1/P1 and with limits on the amount deposited with each
institution dependent on their credit rating. Deposits are
generally for short-term maturity (less than three months).
Financial Risk Management and Treasury Policies
The main financial risks of the Group relate to funding and
liquidity, interest rate fluctuations and currency exposures.
The management of these risks is performed by a central
Treasury department that reports directly to me and operates
according to objectives, policies and authorities approved by
the Board. The overall policy objective is to use financial
instruments to manage financial risks arising from the
underlying business activities and therefore the Group does
not undertake speculative transactions for which there is
no underlying financial exposure.
Funding and liquidity: The Group’s operations are
financed by a combination of retained profits, equity and
borrowings. Borrowings are generally raised at Group level
from banks and then lent on to operating subsidiaries on
commercial terms. The Group maintains sufficient available
committed borrowing facilities to meet any forecasted
funding requirements. At the end of 2004 the Group had
committed bank facilities of £985 million of which £350
million was undrawn. In addition, the Group maintains
uncommitted facilities for daily working capital fluctuation
purposes. At the end of 2004 the undrawn amount of these
uncommitted facilities totalled £26 million.
Interest rate risk management: The interest rate exposure
arising from the Group’s borrowing and deposit activity is
managed by using a combination of fixed and variable rate debt
instruments and interest rate swaps. The Group’s policy with
respect to interest rate is to fix portions of debt for varying
periods based upon our debt maturity profile and an assessment
of interest rate trends. At the end of 2004 approximately 37 per
cent of the Group’s borrowings were fixed at weighted average
interest rates of 4.3 per cent for varying terms up to three years.
Currency risk management: The Group’s policy is to
hedge all significant transactional currency exposures
through the use of forward currency contracts. It is also the
Group’s policy to hedge overseas capital employed, including
recognised goodwill, between 50 and 85 per cent by means
of currency loans and currency swaps.
International Accounting Standards
During 2004, the Group finalised the restatement of its
transition balance sheet from UK GAAP to comply with
current International Accounting Standards (IFRS). In order
to guarantee the completeness of this exercise, the Group’s
internal finance manual was rewritten to revise the
accounting policies to be used by all Group entities to comply
with IFRS. Presentations and seminars were held with key
finance personnel across the Group in which the major
impacts of the changes were discussed and agreed. The final
step in the process was for all entities to re-submit their
2003 balance sheets using the revised finance manual.
23

24 BBA GROUP FINANCIAL
ANNUAL REPORT
2004 REVIEW
This process was completed in December 2004 and the results
and accompanying notes are shown in the table below.
The areas affected are broadly those described in last
year’s Annual Report but the following points should be noted:
Financial Assets & Liabilities: Due to the continuing debate
around the final contents of IAS 39 and its acceptance by the
EU, it is not mandatory for the Group to include all financial
assets & liabilities on its transition Balance Sheet but
instead to do so at 1 January 2005. It is the Group’s intention
to achieve hedge accounting for those transactions which
are entered into for that purpose. To this end, the necessary
documentation of all hedges has been put in place as at
31 December 2004.
The 2005 Income Statement could be impacted by
potential ineffectiveness of hedges, particularly cash flow
hedges that are entered into based on forecast data. These
forecasts will be reviewed regularly and the effect is not
expected to be material to the Group’s earnings.
IFRS RECONCILIATION (£M)
Compound Financial Instruments: The annual preference
dividend on the Group’s 6.75 per cent cumulative redeemable
preference shares will be shown as part of Finance costs
under IFRS rather than dividends under current UK GAAP.
This will affect the 2005 and possibly 2006 Income Statement.
Business Combinations: IFRS 3 requires the Group to
identify certain intangible assets on the acquisition of a
business which would, under UK GAAP, have been included
within goodwill, and attribute a value to these assets, such
as brands or customer lists. These assets will then be
depreciated over their useful economic lives. The impact on
Group earnings of this standard is currently being evaluated
for acquisitions made during 2004.
The first set of IFRS accounts to be produced by the Group
will be the Interim Financial Statements to 30 June 2005. In
order to have the necessary comparative figures for inclusion
within these accounts, another re-submission process will
take place during the second quarter of 2005, which will
require all Group entities to restate their Income Statements
and Balance Sheets for both June and December 2004.
Note 31 DEC 2003
Shareholders’ Funds – UK GAAP 680.6
Preference Shares (1) (50.9)
Pensions (2) (27.6)
Dividends (3) 34.3
Taxation (4) 4.9
Share Options (5) (0.5)
Shareholders’ Funds – IFRS 640.8
(1) IAS 32 Financial Instruments: Disclosure and Presentation
This standard requires that the Group splits its 6.75 per cent Cumulative Redeemable Convertible Preference Shares into their debt and equity elements. The carrying values of both
components were determined on the basis of the circumstances and conditions existing when the instrument was issued (1988). The debt element of the instrument at any point in time
represents the expected future cash flows discounted at the discount rate appropriate at the date the instrument was issued. This adjustment resulted in an increase in Group net debt,
and thus reduction in net assets, of £50.9m.
(2) IAS 19 Employee Benefits
This standard states that the Group may recognise either the full net liability of its defined benefit schemes in the Balance Sheet or the proportion of this liability which is outside a 10 per
cent corridor in relation to the schemes’ assets or liabilities. The Group has decided to adopt the first approach which is identical to the approach proposed under the UK GAAP standard
FRS 17. This option avoided the need to determine the cumulative actuarial gains and losses from the inception of each pension plan and splitting this between recognised and
unrecognised gains and losses at each subsequent balance sheet date. The adoption of this standard has resulted in a reduction in net assets of £27.6m.
(3) IAS 10 Events After the Balance Sheet Date
Any proposed final dividends are no longer allowed to be recognised on the Balance Sheet until they have been declared which, for the Group, is at the AGM, usually in April or May of the
following year. They therefore represent non-adjusting events after the balance sheet date. This adjustment resulted in an increase in net assets of £34.3m at the transition date.
(4) IAS 12 Income Taxes
A deferred tax asset is required to be booked relating to the temporary difference between tax generated goodwill with no book value and goodwill written off to reserves prior to FRS10
(£10.5m). This is partially offset by the recognition of a deferred tax liability on temporary differences on fixed assets which were non qualifying items under UK GAAP £(5.6)m.
(5) IFRS 2 Share Based Payments
This standard states that the Group must recognise a charge in the Income Statement for the fair value of outstanding share options and share appreciation rights (SARS), including SAYE
schemes granted after 7 November 2002. The charge has been calculated using an appropriate share option valuation model and will be charged over the appropriate periods and
adjusted to reflect actual and expected levels of vesting. Under UK GAAP there is no similar charge in the Profit & Loss Account.

OUR PORTFOLIO
THE FOLLOWING
SECTION GIVES AN INSIGHT
INTO BBA’S OPERATIONS
WORLDWIDE

BBA WORLDWIDE
The Group built its aviation and nonwovens
businesses by consolidating fragmented markets.
The divisions are now global businesses and
world leaders in their fields.
BUSINESS AVIATION COMMERCIAL AVIATION ENGINE REPAIR SYSTEMS AND
SERVICES SERVICES AND OVERHAUL HYDRAULICS
Accelerated geographic The world’s leading New PW300/500 engine Contract wins for Airbus
expansion in 2004 resulting independent fueller and authorisations and other A320, NH90 helicopter and
in 43 US FBO’s, 19 European fourth largest ground contract wins this year Hawk to promote continuing
locations and 5 in the rest of handler. expected to add significant growth in our hydraulics and
the world. revenues. landing gear business.
INDUSTRIAL AND HEALTHCARE
CONSUMER CARE
A key partner with our many
customers in the diverse
worldwide industrial and
consumer care markets.
Improved plant utilisation
worldwide.

BBA operates in the Americas, Europe
and the Far East. It operates in over
70 cities worldwide in aviation.
BUSINESS AVIATION COMMERCIAL AVIATION ENGINE REPAIR PILOT TRAINING AND INDUSTRIAL AND HEALTHCARE
SERVICES
Unrivalled business aviation
services network in
67 worldwide locations.
SERVICES
Operating in 70 locations
including 46 of the world’s
top 100 airports.
AND OVERHAUL
The world’s leading business
jet engine repair and
overhaul provider, operating
AIRPORT SERVICES
Improvement in market
conditions benefited pilot
training business at Oxford
CONSUMER CARE
Acquired Tenotex with plants
in Italy and Spain producing
specialty products for a
in 13 US and UK locations. Airport, UK. Increased range of markets to
business aviation activity complement our portfolio.
prompted investment in
ramp and hangar space.
The world’s leading
supplier of engineered
products to Fiberweb’s
healthcare market.

SIGNATURE
Expansion of new and existing facilities
saw Signature’s European network grow
significantly this year, with the number of
FBO’s increasing from 5 to 19.

SIGNATURE
As the leading provider of FBO’s, our portfolio
services and supports nearly one million aircraft
movements per year.

ASIG
ASIG operates in 46 of the world’s top 100 airports
offering a full range of ground handling, fuelling,
cargo and ancillary services in 71 cities
throughout North America, Europe and Asia.

ASIG
Our ramp side services are vital to the smooth
running of aircraft schedules – maintaining a
critical balance between safety, time and
cost for the world’s major carriers.

DALLAS AIRMOTIVE
Significant aftermarket engine support
programmes ensure the overhaul of some 2,800
commercial and business engines per year.

APPH
Thousands of aircraft, hundreds of airlines and
dozens of air forces throughout the world rely on
our expertise and high product quality in
hydraulics and landing gear.

BBA FIBERWEB
Our customers from across the world have a
long-term partner able to innovate and develop
new products and processes that
are key to their success.

BBA FIBERWEB
BBA Fiberweb facilities in the US, Europe and
Asia-Pacific deliver quality products at a
competitive price, with lines producing
up to 400 metres per minute.

BBA FIBERWEB
As one of the world’s leading nonwovens
businesses, we provide products to markets
ranging from aerospace to agriculture and
babycare to medical.

Board of Directors 38
Directors‘ Report 40
Corporate Social Responsibility 42
Directors‘ Corporate Governance Report 43
Directors‘ Remuneration Report 49
Independent Auditors‘ Report 57
Group Profit and Loss Account 58
Group and Company Balance Sheets 59
Group Cash Flow Statement 60
Reconciliation of Movement 61
in Group Shareholders’ Funds
Group Statement of Total Recognised 61
Gains and Losses
Accounting Policies 62
Notes on Financial Statements 64
Principal Subsidiary and 86
Associated Undertakings
Five Year Summary 87
Summary Financial Information 88
Shareholder Information 89
BBA GROUP
ANNUAL REPORT
2004
37

BOARD OF DIRECTORS
1. ROBERTO QUARTA (55)
Non-executive Director, Chairman
He was appointed Chairman in March 2001. He is a
principal in Clayton, Dubilier & Rice, a private equity
firm. From 1993 until March 2001 he was Group
Chief Executive of BBA Group plc. He is the chairman
of Italtel SpA, non-executive director of Equant NV
and a Trustee of the College of the Holy Cross.
4. BRUCE VAN ALLEN (49)
President and CEO,
BBA Aviation Services
He was appointed to the Board in May 2002.
He joined Signature in 1993 and held various
posts since that date, including most recently as
CEO of BBA Aviation North America.
7. JOHN ROQUES (66)
Non-executive Director,
Chairman, Audit Committee
He was appointed to the Board in January 1999.
He is Chairman of Portman Building Society, a
non-executive director of Premier Farnell plc and
HHG plc. He was formerly a partner at Deloitte &
Touche, retiring in 1999 as Senior Partner.
BBA GROUP
ANNUAL REPORT
2004
38
2. ROY MCGLONE (51)
Group Chief Executive
He was appointed Group Chief Executive with effect
from March 2001. He joined the Board in October
1995 as Group Finance Director. A chartered
accountant, he qualified with Price Waterhouse and
subsequently held positions with Meggitt plc and
BICC plc. In September 2002 he was appointed as
a non-executive director and chairman of the Audit
Committee of Aggreko plc.
5. MICHAEL HARPER (60)
Non-executive Director
He was appointed to the Board on 23 February 2005.
An engineer by training he joined Kidde Group plc
in 1984 following a career with Vickers plc. He joined
the Board of Williams plc in 1999 and on the demerger
in 2000 he became Chief Executive of Kidde. He is
also a non-executive director of UMECO plc, Ricardo
plc and Vitec Group plc.
8. DAVID ROUGH (54)
Non-executive Director,
Senior Independent Director
He was appointed to the Board in March 1998.
He is also a non-executive director of Emap plc,
Land Securities plc, Mithras Trust, Xstrata Group plc
and Brown, Shipley & Co. Ltd. For ten years, until
December 2001, he was Group Director, Investments
at Legal & General plc.
3. ANDREW WOOD (53)
Group Finance Director
He was appointed to the Board as Group Finance
Director in January 2001. A chartered management
accountant, he was formerly Group Finance Director
of Racal Electronics plc.
6. BOB PHILLIPS (66)
Non-executive Director
He was appointed to the Board in May 2000.
He is a managing director of The Clarecastle Group,
a New York marketing firm. He was a board director
of Unilever plc and Chairman of Unilever’s North
American Committee, from which positions he
retired in May 2000.
9. RICHARD STILLWELL (55)
Non-executive Director,
Chairman, Remuneration Committee
He was appointed to the Board in March 1998.
A practising barrister, he is also a non-executive
Director of Penna Consulting plc. Until August
2000, he was Executive Vice-President Industrial
Specialties at Imperial Chemical Industries plc,
where he had held various posts since 1974.

BOARD OF
DIRECTORS
1 2 3
4 5 6
7 8 9
EXECUTIVE
MANAGEMENT
COMMITTEE
ROY MCGLONE ANDREW WOOD BRUCE VAN ALLEN
Group Chief Executive Group Finance Director President and CEO,
BBA Aviation Services
SARAH SHAW GREGORY MURRER DAVID STANTON
Group Secretary General Counsel – Americas Corporate Development Director
BBA GROUP
ANNUAL REPORT
2004
39

DIRECTORS’ REPORT
The directors present their report together with the audited financial
statements of the Group for the year ended 31 December 2004.
Principal activities and business review
BBA Group plc is an international group of Aviation and Materials
Technology businesses. A review of the development of the business of
the Group during the year is set out on pages 8 to 19 which is included
as part of this report.
Group results and dividends
The results for the year are shown in the Group profit and loss account
on page 58.
The directors recommend the payment of a final ordinary share
dividend for 2004 of 7.95p net per share on 20 May 2005 to shareholders
on the register at the close of business on 15 April 2005, which together
with the interim dividend paid on 5 November 2004 makes a total of
11.3p net per ordinary share for the year (2003: 10.8p).
The amounts of the ordinary share dividend payments for 2004,
the 6.75 per cent cumulative redeemable convertible preference share
dividends and the 5 per cent cumulative preference share dividends are
shown in note 5 to the financial statements.
Acquisitions and disposals
1. Acquisitions
1.1 On 7 May 2004, the Group purchased the assets of the FBO
at Cecil Field airport in Jacksonville, Florida, from AirKaman Cecil Inc,
for an immediate cash consideration of $13.9 million (£7.6 million) and
a deferred cash consideration of $0.7 million (£0.4 million).
1.2 On 12 August 2004, the Group purchased Execair, a fixed base
operations network, from John Menzies plc for a cash consideration
of £11.8 million.
1.3 On 14 September 2004, the Group purchased 51% of the shares
of Athens Aviation Services from Evangelos and John Stergiopoulos for
a consideration of #1.6 million (£1.1 million).
1.4 On 27 September 2004, the Group purchased the entire issued
share capital of Tenotex SpA and Tenotex Nonwovens SA from Nopco
S.A., Dalby Industries Holdings S.A. and others for a cash and debt
free consideration of £62 million (£41.6 million).
BBA GROUP
ANNUAL REPORT
2004
40
1.5 On 26 October 2004, the Group purchased the entire issued
share capital of Executive Aircraft Services Limited from Securicor
ADI Group Limited for a consideration of £4.5 million.
1.6 On 27 October 2004, the Group acquired all of the limited liability
interests of AGI (US) Holdings LLC, a fuelling services and airport
services network, for $23 million (£12.6 million).
1.7 On 7 December 2004, the Group purchased the entire issued
share capital of Boker Aeroclean Limited from Charles William
Manfred Boker, Brigitte Boker and Sylvia Boker for a consideration
of £11.5 million.
1.8 On 7 December 2004, the Group purchased the entire share
capital of FBO Limited and FBO Cork Limited and 85% of the shares
of FBO Shannon Limited from Michael Anthony Ryan, Denis Ryan and
James Ryan for a consideration of £2.6 million.
2. Disposals
2.1 On 13 August 2004, the Group disposed of the assets of Precision
Avionics Inc. to Precision Avionics Group, Inc., for an immediate cash
consideration of $2.5 million (£1.3 million) and a deferred cash
consideration of $1.6 million (£1.0 million).
The consideration relating to the various acquisitions and disposals
stated above reflects exchange rates at the date of announcement of
the relevant transaction.
Change in share capital
Changes in share capital are shown in note 19 to the financial statements.
The Company was given authority to purchase up to 14.99 per cent
of its existing ordinary share capital at the 2004 Annual General
Meeting and Class Meeting of the 6.75 per cent convertible preference
shareholders. The authority will expire at the conclusion of the Annual
General Meeting in April 2005 unless renewed. Accordingly, a special
resolution will be proposed at the forthcoming Annual General
Meeting. The Company was also given authority to purchase up to
14.99 per cent of its 6.75 per cent cumulative redeemable convertible
preference shares at the 2004 Annual General Meeting. This authority
will also be proposed for renewal at the 2005 Annual General Meeting.
Details of the resolutions renewing these authorities are included
with the Notice of Annual General Meeting enclosed with this Report.
The Company did not purchase any of its ordinary or 6.75 per cent
cumulative redeemable convertible preference shares during the year.

DIRECTORS’ REPORT
Substantial shareholdings
The Company has been notified under section 198 of the Companies
Act 1985 (as amended) of the following interests, which represented
3 per cent or more of the existing issued ordinary share capital of the
Company as at 23 February 2005:
Number %
Standard Life Group 32,988,556 7.30
Aviva plc 27,213,068 6.03
AEGON UK plc 16,671,422 3.69
Legal & General Group plc 15,282,138 3.38
Research and development
The Group continues to devote considerable effort and resources to
research and development of new processes and products. Costs are
charged against income as incurred.
Market value of land and buildings
The directors are of the opinion that the market values of the Group’s
properties are not substantially different from the values included in
the Group’s financial statements.
Board of directors
The current directors of the Company at the date of this report appear
on pages 38 and 39 all of whom held office throughout the financial
year under review.
Directors’ interests in shares
Directors’ interests in shares and share options are contained in the
Directors’ Remuneration Report.
Suppliers payment policy
The Company and Group’s policy is to settle terms of payment with
suppliers when agreeing the terms of each transaction, to ensure that
suppliers are made aware of the terms of payment and to abide by the
terms of the payment.
People and the environment
Set out on page 42 is the Directors’ Report on Corporate Social
Responsibility which is included as part of this report.
Resolutions at the Annual General Meeting
The Company's Annual General Meeting will be held on 28 April 2005.
Accompanying this report is the Notice of the Annual General Meeting,
which sets out the resolutions to be considered and approved at the
meeting. These are explained in a letter from the Chairman which
accompanies the Notice.
Charitable and political donations
Group donations to charities worldwide were £182,000 (2003: £147,000)
with UK charities receiving £15,000 (2003: £20,000).
No donations were made to any political party in either year.
Auditors
A resolution to re-appoint Deloitte & Touche LLP as auditors of the
Company will be proposed at the Annual General Meeting.
Approved by the Board on 23 February 2005 and signed on its behalf by:
SMF Shaw
Group Secretary
BBA GROUP
ANNUAL REPORT
2004
41

CORPORATE
SOCIAL RESPONSIBILITY
Our Group CSR Steering Committee undertook a number of important
initiatives during 2004 to broaden the reach of Corporate Social
Responsibility (CSR) within BBA’s family of businesses and their
employees. These initiatives included increasing the visibility of
CSR principles within BBA’s business operations through awareness
communications and training, and the development and promotion of
Group-wide policies that encourage responsible business and social
conduct. We also examined metrics to measure the Group’s
performance against various CSR performance standards and
prepared questionnaires for our major suppliers regarding their own
CSR practices. The Steering Committee also guided the development
of BBA’s 2003 Annual CSR Report, the text of which can be found on the
BBA Group web site. The Steering Committee regularly reports on its
activities to Richard Stillwell, a member of the BBA Group Board of
Directors who oversees CSR within the Group.
The Group’s Executive Committee also embraced important CSR
initiatives during 2004. Specifically, in May the Executive Committee
reviewed and approved for release guidance notes on Product/Process
Stewardship and Supply Chain Management. These notes, which are
being implemented through the Group’s HS&E management function,
emphasise responsibility in the creation, marketing and sales of our
products and services while encouraging our suppliers to employ
sound environmental practices. It is intended that the practices
detailed in these guidance notes will become embedded in the way
BBA Group companies conduct business.
During 2004 the Group issued its Corporate Social Responsibility
and Code of Business Ethics, consolidating CSR into a single
comprehensive directive to all members of Group management.
As an integral part of the mandatory practices of our management,
this policy embraces social and ethical principles that promote the
BBA GROUP
ANNUAL REPORT
2004
42
best interests of BBA employees as well as those of all persons who
affect or are affected by our businesses. As a complement to this
Policy, the Group also issued its Disclosure of Unethical Conduct
Policy, encouraging all employees to report any conduct that may
be incompatible with any Group policy.
Health and safety remain integral components of the Group’s
overall CSR strategy. During 2004 we recognised that Recordable
Incident Rate (RIR) data gathered from each of our businesses reflects
the frequency, but not the severity of workplace accidents. Although
our businesses have shown significant improvements in their RIR
performance, a single severe accident can result in lengthy employee
absences as well as direct and indirect costs to the affected business.
The Group now tracks accident severity alongside monthly RIR data.
This information allows a sharper focus on our root-cause analysis
and return-to-work programmes.
We are engaged in a continuing effort to improve the
environmental performance of all of our businesses. This is not just
a matter of legal and regulatory compliance. It is a social obligation to
the communities in which we work. All of our businesses must commit
to annual environmental improvement objectives that move beyond
compliance. Performance against these goals is scrutinised by our
Group HS&E Managers. Performance results are reported to the
Group’s senior management.
In November, BBA Group submitted its response to Business
in the Community’s (BitC) 2004 Corporate Responsibility Index. The
Index has been expanded by BitC to measure corporate performance
on a number of CSR issues. The Group’s response reflects material
improvements in its performance over prior years. We look forward to
the announcement of BitC’s survey results in early 2005 as a significant
measure of the Group’s progress in this important topic.

DIRECTORS’ CORPORATE
GOVERNANCE REPORT
This section on corporate governance contains information on
the following :
1. Compliance
2. The Board’s Role
3. The Board and Independence
4. Chairman and Group Chief Executive
5. Board Appointments
6. Information and Professional Development
7. Performance Evaluation
8. Board Committees
9. Audit and Accountability
(a) Financial reporting
(b) Audit Committee
(c) Systems of Internal Control
10. Shareholder Relations
1. Compliance
The Board is committed to ensuring high standards of corporate
governance are maintained at BBA. This is the first complete financial
year in which BBA has been subject to the revised Combined Code
issued in July 2003.
The Company applies the principles of corporate governance
set out in Section 1 of the Combined Code through its own behaviour,
by monitoring corporate governance best practice and by adopting
appropriate recommendations of relevant bodies.
The directors can confirm compliance throughout the year
with the provisions set out in Section 1 of the Combined Code except
that bonuses and benefits in kind of certain executive directors are
historically pensionable. This is explained further in the Directors’
Remuneration Report on page 49.
The auditors’ report concerning the Company’s compliance with
the Combined Code appears on page 57.
2. The Board’s Role
The Board recognises its collective responsibility for the success of the
Company. Its role includes providing effective leadership and setting
the Group’s strategic aims. It assesses business opportunities and
seeks to ensure that appropriate controls are in place to assess and
manage risk. It is responsible for reviewing management’s performance
and oversees senior level succession planning within the Group. The
Board is responsible for setting the Company’s values and standards,
ensuring the Company’s obligations to its shareholders are met.
The full Board met on seven occasions during 2004 and these
meetings were attended by all the directors, except that Bob Phillips
and David Rough were absent from one meeting due to conflicting
commitments. These meetings concentrate on strategy, financial and
business performance. Additional meetings are called as required to
deal with specific matters. The agenda is set by the Chairman in
consultation with the Group Chief Executive, the Group Finance
Director and the Group Secretary.
The Board has a formal schedule of matters reserved to it for decision
including approval of matters such as :
• strategy and objectives
• Group policies
• annual budgets
• dividends
• acquisitions and disposals of businesses
• expenditure over a certain limit
• financial results
• appointments to the Board.
Matters outside the scope of this formal schedule are decided by
management in accordance with delegated authorities approved by the
Board and Audit Committee.
The Board’s policies and procedures are set out in a Directors’
File which is provided to all directors on appointment and which is
routinely updated.
3. The Board and Independence
The current Board comprises three executive and six non-executive
directors who contribute a wide range of complementary skills and
experience. A short biography of each current director is set out on
pages 38 to 39. Biographical details of directors who also served
during the year are as follows: Irv Yoskowitz was a senior partner at
Global Technology Partners LLC, a senior counsel at the law firm of
Crowell & Moring, a non-executive director of SIRVA, Inc and Equant
N.V. Ross McMillan joined BBA in June 2001 as Chief Executive of
the Materials Technology Division and was appointed to the Board in
September 2002. He previously held posts at INEOS Acrylics Inc. and ICI.
The Board is headed by Roberto Quarta, who has been Chairman
since March 2001. He has reported no changes to his significant
commitments during the year.
The Group Chief Executive is Roy McGlone. The Board’s Senior
Independent Director is David Rough. He is available to shareholders if
they have concerns that normal channels of contact with the Chairman
or Group Chief Executive would not resolve.
During the year, the Board renewed the appointments of
Roberto Quarta, Richard Stillwell and David Rough, each for a term of
three years with effect from I March 2004. The re-appointments were
fully reviewed in the light of the Board’s performance evaluation and
additional discussions were held with each member of the Board.
During the year there was one change to the composition of the Board,
namely the retirement of Irv Yoskowitz on 1 March 2004 as non-executive
director, a position he had held for nine years.
With effect from 11 January 2005, John Roques’ appointment
as a non-executive director was renewed for a further period of three
years. His re-appointment was fully reviewed in the light of the Board’s
performance evaluation and additional Board discussion took place.
With effect from 23 February 2005, Michael Harper was appointed a
non-executive director of the Board for a period of three years. He will
be seeking election at the forthcoming AGM. We also announced that
BBA GROUP
ANNUAL REPORT
2004
43

DIRECTORS’ CORPORATE
GOVERNANCE REPORT
Ross McMillan resigned from the Board with effect from 23 February
2005. John Roques, David Rough and Bruce Van Allen retire by rotation
and intend to seek re-appointment at the forthcoming AGM.
The Board believes that John Roques and David Rough should
be re-elected by shareholders as non-executive directors because
each continues to be effective and demonstrates commitment to his
role. The Board believes that each director will continue to do so.
The Board has determined that all its non-executive directors
are independent in character and judgment. As specified in the revised
Combined Code, such assessment is not required for a serving Chairman.
However, the Board believes that its Chairman, Roberto Quarta,
should be considered independent although he was Group Chief
Executive of the Company for a number of years until 2001. The Board
considers that there are substantial benefits to having a Chairman who
is familiar with the business and that the Chairman has, throughout his
period of office, demonstrated his independence.
During the year, the Chairman held a meeting at which only the
non-executive directors were present. In addition, the non-executive
directors met the Senior Independent Director without the Chairman
present. There are several other opportunities during the year when
discussions between various directors may be arranged or take
place informally.
Executive directors must obtain the prior consent of the Board
before accepting a non-executive directorship in any other company.
Executive directors may retain the fees from any such directorship.
As stated on page 38, Roy McGlone is a non-executive director of
Aggreko plc and during 2004 he was paid £30,350 in fees.
4. Chairman and Group Chief Executive
There is a clear division of responsibilities between the Chairman and
the Group Chief Executive and this is reinforced by a written statement
of the division of responsibilities approved by the Board. The Chairman,
a non-executive director, is primarily responsible for leading the Board
and ensuring its effectiveness. He is responsible for setting the Board
agenda and ensuring the directors receive information in an accurate,
clear and timely manner. He is responsible for promoting effective
decision-making, ensuring the performance of the Board, its
committees and individual directors are evaluated on an annual basis
and that appropriate Board training and development occurs. The
Group Chief Executive is responsible for the development and
implementation of Board strategy and policy, the running of the
Group’s business, ensuring that the business activities are effectively
communicated and promoted within and outside the business and for
building positive relationships with the Company's stakeholders.
BBA GROUP
ANNUAL REPORT
2004
44
5. Board Appointments
The Board acknowledges its responsibility for planned and progressive
refreshing of the Board. It believes that the necessary arrangements to
manage succession issues promptly and effectively are in place. There
is a formal and transparent procedure for the appointment of new
directors to the Board, the prime responsibility for which is delegated
to the Nomination Committee. The appointment process is initiated by
the Board and a selection procedure established to identify suitable
external search consultants for the vacancy. The process will differ in
its detail depending on whether the appointment is for an executive or
non-executive position, but the essentials will remain the same.
Following the appointment of a suitable external consultant, details
of the role and capabilities required for the appointment will be
prepared. The consultant then draws up a list of potential candidates
and a shortlist is created through consultation amongst Committee
members. The Board as a whole is also regularly updated as to the
status of the appointment process. Meetings as appropriate are
arranged with Committee members and the Committee aims to ensure
that each Board member is given the opportunity to meet the final
candidates. The Nomination Committee will then meet to finalise a
recommendation to the Board regarding the appointment. This process
was followed during 2004 for the appointment of Michael Harper as a
non-executive director which is referred to in paragraph 3 above.
The Board has a written framework for the induction of new
directors. This includes site visits, meetings with senior management
and advisers and the provision of corporate documentation. A personal
induction programme is prepared for each new director tailored to the
experience and needs of the individual. Major shareholders will be
offered the opportunity of meeting new directors.
Appointments of non-executive directors are made by the Board
for an initial term of three years. This term is subject to the usual
regulatory provisions and continued satisfactory performance of duties
following the Board's annual performance evaluation. Re-appointment
for a further term is not automatic but may be made by mutual
agreement. In addition, it is the Company’s practice that all directors
are subject to re-election at least every three years.
The fees of the non-executive directors, including the Chairman,
are determined by the Board as a whole on the recommendation of the
Group Chief Executive. No director is involved in deciding his own
remuneration or fees. Letters of appointment for the non-executive
directors are available to review on request.

6. Information and Professional Development
The Chairman takes responsibility for ensuring the directors receive
accurate, timely and clear information with Board and Committee
papers being circulated in advance of the meeting. The Board and its
Committees are kept informed of corporate governance developments
as they arise and receive appropriate briefings. For example, the
Remuneration Committee arranges an annual market review from its
independent external advisers whilst the Audit Committee is routinely
briefed on accounting and technical matters by senior management
and the external auditors.
In addition to formal Board meetings, the Chairman maintains
regular contact with the Group Chief Executive and other directors to
discuss specific issues. Senior management from the Group’s
Divisions present to the Board on a regular basis and opportunities
exist during the year for informal contact. Board site visits are
arranged, collectively and individually, and non-executive directors
are free to meet members of the senior management team.
The Board believes that, given the experience and skills of its
current directors, the identification of individual development needs
is best left to the individual director’s discretion. If any such needs
became evident through the annual performance evaluation, the
director would be encouraged to pursue the necessary development.
The Company will provide the necessary resources for developing and
updating the directors’ knowledge and skills.
All directors have access to the advice and services of the Group
Secretary and the Board has established a procedure whereby directors
wishing to do so in furtherance of their duties may take independent
professional advice at the Company’s expense.
The Company arranges appropriate insurance cover in respect
of legal actions against its directors.
7. Performance Evaluation
The Board held its first performance evaluation in 2003 and reported
the outcome in its last shareholders’ report. The actions agreed
following the evaluation have been implemented to the Board’s
satisfaction. During 2004, the Board carried out its second annual
performance evaluation. The procedure established for the first
evaluation worked well and a similar process was therefore adopted
for 2004. The Board intends to carry out this evaluation annually.
The evaluation was conducted internally on a confidential basis
and was led by the Senior Independent Director in conjunction with the
Chairman. As in 2003, the main body of the evaluation centred on a
review of the conduct of, and processes for, Board and Committee
meetings, corporate governance issues, overall performance and an
assessment of the contribution of individual directors. This year the
Board decided to add as a particular focus information provided to the
Board and its Committees, including strategic, financial, operational,
corporate governance and CSR information.
The Senior Independent Director reported the Board and Committee
evaluation outcomes to the Board, whilst directors were individually
briefed regarding their own performance. Overall, the Board was
satisfied with its performance and that of its Committees. Individual
director’s performance was also agreed to be acceptable with each
actively contributing to the effective performance of the Board and
its Committees.
Overall, directors were satisfied with the level and quality of
information provided to them, with certain adjustments being made to
reflect individual comments. Specific actions with which management
has been tasked from this year’s evaluation include improvements in
presentations made to the directors.
8. Board Committees
The Board operates a Remuneration Committee, a Nomination
Committee and an Audit Committee. Written terms of reference for
each Committee are available on request.
(a) Remuneration Committee
Composition
During 2004, the Remuneration Committee comprised the following
independent non-executive directors: Richard Stillwell, Chairman,
Bob Phillips, David Rough, John Roques and Irv Yoskowitz (retired
1 March 2004). These directors were in place at the time of determining
remuneration for the year ended 31 December 2004. During 2004, the
Remuneration Committee met on three occasions and meetings were
attended by all Committee members, except that Bob Phillips and
David Rough were unable to attend one meeting. The Chairman and
the executive directors may attend these meetings by invitation.
Role
The Committee has two principal functions: first, making recommendations
to the Board on the framework and broad policy on executive directors’
remuneration; and second, determining on behalf of the Board the
specific remuneration package for each of the executive directors,
including pension rights and any compensation payments.
The Remuneration Committee is also responsible for developing
and monitoring a compensation framework for senior executives in
conjunction with the Group Chief Executive. The detailed implementation
of this framework, except as regards the executive directors, is the
responsibility of the Group Chief Executive.
Further details of the work of the Remuneration Committee
appear in the Directors’ Remuneration Report.
(b) Nomination Committee
Composition
The Nomination Committee comprises three non-executive directors
and two executive directors as follows: Roberto Quarta, Chairman,
Roy McGlone, David Rough, Andrew Wood and Richard Stillwell. Other
directors may attend by invitation.
BBA GROUP
ANNUAL REPORT
2004
45

DIRECTORS’ CORPORATE
GOVERNANCE REPORT
Role
The Nomination Committee meets as required. During 2004 the
Committee or its sub-committee met on five occasions and meetings
were attended by all Committee members. This was supplemented
with individual briefings and meetings as required. The principal role
of the Committee is to make recommendations to the Board on the
appointment of the Company’s executive and non-executive directors.
It is responsible for identifying and nominating candidates to fill Board
vacancies. In making appointments, the Committee evaluates the
balance of skills, knowledge and experience on the Board and in the
light of this evaluation considers the capabilities required for the role
and, in the case of a non-executive appointment, the time available to
fulfil the role. Use is made of independent recruitment consultants and
the final appointment rests with the full Board. More information on
the role of the Nomination Committee is set out in ‘Board
Appointments’ above.
Details regarding the Audit Committee are set out in paragraph
9(b) below.
9. Audit and Accountability
(a) Financial Reporting
Directors’ responsibilities for the preparation of
financial statements
The directors are required to prepare financial statements for each
financial year which give a true and fair view of the state of affairs of
the Company and the Group as at the end of the financial year and of
the profit or loss of the Group for that period.
After making enquiries, the directors have a reasonable
expectation that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future. For this
reason, they continue to adopt the going concern basis in preparing the
financial statements. In preparing the financial statements the
directors are required to:
• select suitable accounting policies and then apply them consistently;
• make judgements and estimates that are reasonable and prudent;
and
• state whether applicable accounting standards have been followed,
subject to any material departures disclosed and explained in the
financial statements.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time the
financial position of the Company and the Group, and enable them to
ensure that the financial statements comply with the Companies Act
1985. They are also responsible for the system of internal control and
for safeguarding the assets of the Company and the Group, and hence
for taking reasonable steps for the prevention and detection of fraud
and other irregularities.
BBA GROUP
ANNUAL REPORT
2004
46
Going Concern
In compliance with corporate governance requirements, the directors
consider that after a critical review of the Group’s 2004 budget and
medium-term plans the Company and the Group have adequate
resources to continue in operational existence for the foreseeable
future. Accordingly, the financial statements have been prepared
on a going concern basis.
(b) Audit Committee
Composition
During 2004, the Audit Committee comprised the five independent
non-executive directors as follows: John Roques, Chairman,
Bob Phillips, Richard Stillwell, David Rough and Irv Yoskowitz (retired
1 March 2004).
The Chairman has relevant and recent financial experience and
a professional accountancy qualification as required by the Smith
Guidance. In addition the other Committee members all have
experience of corporate financial matters.
During 2004, the Audit Committee met on four occasions,
generally coinciding with key dates in the financial reporting and audit
cycle. There was full attendance by all the Committee members except
that Bob Phillips and David Rough were unable to attend one meeting.
The external auditors and Head of Group Internal Audit regularly
attend these meetings. The Chairman, Group Chief Executive, Group
Finance Director and Group Financial Controller also generally join at
least part of Audit Committee meetings by invitation. The Committee
Chairman may call a meeting at the request of any director or the
Company’s external auditors.
Role
The Committee may consider any matter that might have a financial
impact on the Group. However, its primary role is: first, reviewing the
scope and results of the external audit and the internal audit work
programme; and second, reviewing the annual and interim reports
before they are presented to the Board. In addition, the Committee
reviews the work of the Risk Committee as described and assesses
compliance with the directors’ responsibility statement. The Committee
also reviews the Group’s Disclosure of Unethical Conduct Policy
under which staff may, in confidence, raise concerns about possible
improprieties in matters of financial reporting or other matters.
The Committee is responsible for making recommendations to
the Board regarding the remuneration and appointment of its external
auditors. It is the policy of the Audit Committee to review such
appointment at least every five years. It discharges its responsibilities
through the review of written reports circulated in advance of meetings
and by discussing these reports and any other matters with the
relevant auditors and management. At least once a year the Audit
Committee holds a confidential session without management present
with each of the external auditors and the Head of Group Internal Audit.

Auditor Independence and Audit Effectiveness
Central to the Audit Committee’s work is the review and monitoring of
the external auditors’ independence and objectivity and the effectiveness
of the audit process. During the year the Audit Committee carried out a
formal audit service assessment including a review of audit plans, the
qualifications, expertise, resources, effectiveness and independence
of the external auditors. The Audit Committee has also carried out a
detailed performance evaluation and believes that it has satisfied the
requirements of the Combined Code and the Smith best practice
guidelines. The Audit Committee has confirmed that during the year
it had formal and transparent arrangements for considering financial
reporting and internal control principles and maintaining an appropriate
relationship with the external auditors.
A key safeguard to ensure auditor objectivity and independence
is the Committee’s policy on the provision of non-audit services by
its external auditors. This policy is reviewed annually. It prohibits the
Group’s external auditors from carrying out certain additional services
for the Group including bookkeeping, internal audit, valuations,
actuarial services and financial systems design and implementation.
Services which the external auditors may be permitted to carry out
include assurance services such as reporting accountant work and
tax services. The Committee is satisfied that the majority of the tax
services supplied by Deloitte & Touche LLP are compliance-related
and represent a small proportion of Group tax fees.
As a matter of principle, the Group’s policy is not to use the
external auditors for acquisition and due diligence work. However, where
the Group considers it appropriate or conflicts arise, suppliers other
than the preferred supplier may be asked to tender. Only in exceptional
and unusual circumstances will this include the external auditors.
The Committee Chairman is required to pre-approve certain
permitted services, which may exceed set financial limits. Non-audit
fees paid or due to the external auditors are regularly reviewed by
the Committee.
The Committee is satisfied that the non-audit services currently
provided by its external auditors Deloitte & Touche LLP does not impair
their independence or objectivity.
(c) Systems of Internal Control
Overall responsibility for the Group’s system of internal control and for
reviewing its effectiveness rests with the directors. Management is
accountable to the directors for monitoring this system and for providing
assurance to the directors that it has done so. The system of internal
control is essentially an ongoing process embedded in the Group’s
businesses for identifying, evaluating and managing the significant
risks faced by the Group, including social, environmental and ethical
risks. The Group considers that it has adequate information to identify
and assess significant risks and opportunities affecting its long and
short-term value.
This process has been in place for the year ended 31 December 2004
and up to 23 February 2005 and the directors can therefore confirm that
they have reviewed the effectiveness in accordance with the internal
control requirements of the Combined Code throughout that period.
The Group’s internal system of control is reviewed annually by
the directors and accords with the Turnbull Guidance. The system is
designed to manage rather than eliminate the risk of failure to achieve
business objectives. It can provide reasonable but not absolute
assurance against material misstatement or loss, to the extent that is
appropriate, taking account of costs and benefits.
The key features of the Group’s internal control system are
listed below.
1. The Risk Committee, chaired by the Group Finance Director
and comprising senior executives, meets at least twice a year to review
and analyse how business risks are being managed. These reviews
assess the following categories of risk:
• business
• financial
• compliance
• operational and other including health, safety and environmental.
Central to this process is a detailed written self-assessment of
risks by company and division, which is reviewed by the internal audit
department. Functional risk assessments are also carried out by the
responsible executive. If significant control issues arise between
meetings, these can be brought to the attention of senior executives at
regularly scheduled meetings of the Executive Management Committee.
The outcome of the work of the Risk Committee is reported to the Audit
Committee, which in turn reviews the effectiveness of the Group’s
system of internal control on behalf of the Board. The Audit Committee
receives a report at least twice a year from the Group Finance Director
detailing the work undertaken by the Risk Committee. Based on these
reviews, the Board recommends action to be taken by the Group at
both divisional and company levels to mitigate identified risks and
seize opportunities that may add value to the Group.
2. An organisation structure is in place at both head office and
divisional level which clearly defines responsibilities for operational,
accounting, taxation, treasury, legal, company secretarial and
insurance functions.
3. An internal audit function undertakes a programme of reviews
aligned to the risks existing in the Group’s businesses of controls, risks
and business processes. The role of internal audit is defined in a ‘Group
Internal Audit Charter’ and this includes its terms of reference, the
standards which it adheres to, the scope and coverage of its work and
its reporting processes. The Audit Committee receives a report from
internal audit at least four times a year which includes opinions on the
adequacy and effectiveness of controls by site, a summary of key issues,
work schedules and details of any action required. In accordance with
recent revisions to the Combined Code, the Audit Committee regularly
monitors and reviews the effectiveness of internal audit utilising
outside specialists and self-assessment techniques.
BBA GROUP
ANNUAL REPORT
2004
47

DIRECTORS’ CORPORATE
GOVERNANCE REPORT
4. A Group Finance Manual details accounting policies, financial
controls and reporting procedures applicable to all reporting units.
During 2004 this manual was reviewed and updated to ensure that
during 2005 Group accounting policies align with the latest International
Accounting Standards and International Financial Reporting Standards.
5. An annual budgeting exercise is carried out to set targets for
each of the Group’s reporting units.
6. Detailed management accounts are submitted monthly to
management which measure actual performance against budget,
together with forecasts of sales, profits and operating cash for the next
three months and to the end of the year. A monthly report is provided to
the Board highlighting key issues and summarising the detailed
financial information provided by the operating units.
7. Capital expenditure is controlled by means of budgets,
authorisation levels requiring the approval of major projects by the
Group directors and by post-investment appraisals.
8. Defined procedures are laid down for investments, currency and
commodity hedging, granting of guarantees and use of treasury products.
9. A detailed matrix defines the levels of authority for the Group’s
senior executives and their direct reports in relation to acquisitions,
capital expenditure, commercial and employee contracts and treasury
matters. This matrix is authorised by the Audit Committee on behalf of
the Board and is reviewed on an annual basis. Compliance with the
authority matrix is reviewed as part of the internal audit process.
10. All significant acquisitions and disposals of companies or
businesses are approved by the Board.
11. A Group policies manual sets out policies and procedures
regarding the following: business ethics, business gifts and gratuities,
equal opportunities, competition law, legal policy, external
communications and share dealing. A bi-annual review of compliance
with such policies by Group companies is carried out and the results
communicated to the Risk Committee and the Board. Senior executives
are also required to confirm annual compliance with certain policies.
These Group policies are complemented by divisional and company-led
initiatives, including community policies. These policies were
supplemented in 2004 by the introduction of a ‘Disclosure of Unethical
Conduct’ policy which includes a 24 hour ‘hotline’ available to all
employees which is supported by a formal investigation protocol and
regular reporting to the Audit Committee.
12. A Group Health, Safety and Environmental Manual details
policies, standards and procedures which are applicable throughout
the Group. Further details are set out on page 42 under ‘Corporate
Social Responsibility’ and on our website. Annual self-assessments
are carried out at company level against Group standards. A monthly
report is prepared and circulated to the Executive Management
Committee on environmental and safety matters within all Group
companies from the internal Group HSE function and external
BBA GROUP
ANNUAL REPORT
2004
48
specialists. In addition to a formal annual review, the Board receives
regular reports on HSE matters. Senior managers’ performance and
related financial incentives are tied in part to their success against
selected annual HSE improvement objectives.
10. Shareholder Relations
The Board as a whole is routinely kept up to date on corporate governance
developments and the views of BBA’s major shareholders. This is
achieved through regular meetings during the year between the Group
Chief Executive, the Group Finance Director and major shareholders,
which are then reported to the Board as a whole. The Board also
receives formal written reports from its brokers regarding the views of
its principal shareholders following its preliminary and interim results
announcements and at other times as appropriate. During 2004 major
shareholders were invited to meet with the Chairman and Senior
Independent Director to discuss concerns they might have regarding
the Company's corporate governance practices. No such concerns
were identified at that time or have been communicated subsequently.
All non-executive directors have been offered the opportunity
to attend meetings with major shareholders. The Board considers
that its non-executive directors, including its Senior Independent
Director, David Rough, have a good level of understanding of the
issues and concerns of major shareholders, as required by the revised
Combined Code.
A programme of meetings with institutional shareholders, fund
managers and analysts takes place each year. The directors seek to
encourage a continuing dialogue. The Company maintains contact as
required with its principal shareholders about directors’ remuneration
in the same way as for other matters. The Company’s AGM is used as
an opportunity to communicate with private investors. It is intended
that notice of the AGM and related papers are sent to shareholders at
least 20 working days before the meeting. Roberto Quarta, as
Chairman of the Board and Nomination Committee, John Roques as
Chairman of the Audit Committee, and Richard Stillwell as Chairman
of the Remuneration Committee will answer questions, as appropriate,
at the AGM. The Senior Independent Director, David Rough will also be
available. Shareholders are given the opportunity of voting separately
on each proposal. The Company counts all proxy votes cast in respect
of the AGM and makes available the voting figures (for and against and
abstentions) on each resolution.
Approved by the Board on 23 February 2005 and signed on its behalf by:
SMF Shaw
Group Secretary

DIRECTORS’ REMUNERATION REPORT
This report covers the remuneration policy for directors and includes
specific disclosures relating to directors’ emoluments, their shares and
other interests. This remuneration report is being put to shareholders
at the forthcoming annual general meeting for an advisory vote.
Throughout 2004 the Company complied with the provisions of
the July 2003 Combined Code (the “Code”) annexed to the Listing Rules
of the UK Listing Authority, except in respect of the historical
pensionability of bonuses and benefits in kind, which is referred to in
paragraph 3d below. This report includes information which is
required to be audited and this information is stated as such in the
relevant table.
1. REMUNERATION COMMITTEE
Although the Board considers itself ultimately responsible for both the
framework and the cost of executive remuneration, it has delegated
prime responsibility for executive remuneration to the Remuneration
Committee.
The Remuneration Committee is a Committee of the Board
consisting exclusively of independent non-executive directors, details
of which are set out on page 45. It is responsible for determining
executive directors’ remuneration and reviewing proposals in respect
of other senior executives. The Committee also determines targets for
performance related share schemes operated by the Company and
oversees any major changes in employee benefit structures
throughout the Group. Further details of the work of the Remuneration
Committee are set out on page 45.
Inbucon Consulting, an independent remuneration consulting
firm, is consulted by the Remuneration Committee and management in
respect of executive remuneration and share schemes. Inbucon
Consulting provides no other services to the Company other than the
calculation of total shareholder return for the 2004 Share Plan. During
the year management also consulted Mellon, an independent human
resource consulting firm, in respect of its executive bonus schemes.
In carrying out its responsibilities, the Remuneration Committee
is independently advised by Sean O’Hare, Head of Executive
Compensation at KPMG LLP.
The Committee also consults with the Chairman (who is not a
member of the Remuneration Committee), the Group Chief Executive
and the Group Secretary in connection with its work.
2. REMUNERATION POLICY
The Group’s remuneration policy is to ensure that executive directors’
remuneration properly reflects their duties and responsibilities and is
sufficient to attract, retain and motivate high calibre senior
management collectively capable of delivering the goals of the
Company. The Committee recognises the need to remain competitive
in the different geographic areas in which the Company operates.
Furthermore, the Committee aims to ensure that incentive schemes
are in line with best practice and promote the interests of
shareholders. Executive directors’ remuneration is reviewed at least
annually whilst the Committee reviews its remuneration policy on
an ongoing basis.
The main components of executive directors’ remuneration are set out below.
The Committee believes that the executive directors’ remuneration packages
contain a suitable balance of directly performance related remuneration
which links both the short-term financial performance of the Group and the
long-term shareholder return with the executive’s total remuneration.
a. Salary and Service Contract
The policy of the Committee is to provide salaries that are positioned
between the median and upper quartile when compared to salary data.
While salary is reviewed by reference to market conditions, financial and
individual performance, the Committee would not regard this element
of remuneration as directly performance related. In addition to basic
salary, Executive directors receive traditional benefits in kind, principally
a company car or car allowance and private medical insurance.
The policy of the Committee is to make new executive director
appointments with a rolling service agreement which can be
terminated by the Company on giving 12 months’ notice.
b. Bonus
Annual cash bonuses for executive directors and senior management
are based on financial performance and personal objectives which are
set annually. Currently, approximately 75 per cent of the maximum
bonus is based on financial objectives. More details of the bonus
arrangements are set out below.
c. Long-Term Incentives
The Remuneration Committee believes that a significant element of
executive directors’ remuneration should be linked to performance
related long-term incentives. The Company’s schemes have been
developed to reflect market practice and provide long-term
management focus and motivation. The Committee has also
recognised the need for flexibility in this area to allow them to respond
to changing market practices and different geographic norms.
As part of its strategy to align shareholders’ and directors’
interests, the Remuneration Committee will expect all executive
directors to build and maintain a holding of shares with a value at least
equal to their base salary.
d. Pension Provision
Pension provision for the executive directors varies and reflects
differing UK and US practice. Further details are set out on page 55.
The Company is reviewing the implications of the proposed
changes to UK pension legislation. The Remuneration Committee will
be developing its policy in this area during 2005 and will include details
in next year’s report.
3. POLICY IMPLEMENTATION: DIRECTORS’ REMUNERATION
a. Salary and Service Contracts
Base salaries are reviewed annually by reference to comparator
groups selected on the basis of comparable size, geographic spread
and business focus. Individual salary decisions take into account
personal contribution, business performance and the level of pay
awards elsewhere in the Group.
BBA GROUP
ANNUAL REPORT
2004
49

DIRECTORS’ REMUNERATION REPORT
Each executive director who served during the year has a 12 month
notice period under his contract of employment.
R V McGlone contract dated 21 February 1996
A R Wood contract dated 13 February 2001
B Van Allen contract dated 1 June 2000
R H McMillan contract dated 1 June 2001
In the event of early termination, the Remuneration Committee will, within
legal constraints, determine the approach to be taken according to the
circumstances of each individual case, taking account of the departing
director’s obligation to mitigate his loss. In certain circumstances, and
except for termination for non-performance, the executive directors
may receive compensation upon early termination of a contract which
could amount to up to one year’s remuneration based on basic salary,
bonus, benefits in kind and pension rights during the notice period.
Mr McGlone and Mr Van Allen are required to give 12 months’
notice and the other executive directors 6 months’ notice of termination
of their service agreements.
Table 1 (page 53) sets out details of the executive directors’ salary and
non-executive directors’ fees.
b. Bonus
Bonus payments made in respect of 2004 for Mr McGlone and Mr Wood
were calculated on the basis of the Group’s adjusted earnings per share,
Group free cash flow and the achievement of measurable personal
objectives. Mr Van Allen’s and Mr McMillan’s bonuses reflect their
operational responsibility for the Aviation Services and Materials
Technology businesses respectively. Their bonus arrangements for 2004
were based on the achievement of budgeted operating profit, return on
net operating assets, operating cashflow for the relevant division,
together with Group adjusted earnings per share and the achievement of
measurable personal objectives. For all executive directors, appropriate
performance targets and personal objectives were approved by the
Committee at the start of the financial year for which the bonus was
payable. The performance measures were chosen by the Committee
because each measure was a factor over which the individual had a direct
impact and each of the measures are collectively good indicators of
corporate performance that should link to long-term shareholder reward.
The bonus was expressed as a percentage of salary and the
potential payout ranged from zero to a maximum of 65 per cent of salary.
In a year where budgeted financial targets are met this would typically
result in a payment of 27.5 per cent of basic salary. Approximately
75 per cent of the bonus is based on financial objectives, the remainder
on measurable personal objectives. The Committee retains discretion
to reflect exceptional circumstances by varying bonuses. Bonus
payments for 2005 are intended to be calculated on a similar basis to
2004, except that for executive directors with operational responsibility
return on net operating assets will be removed as one of the financial
elements so as to give greater clarity in the financial targets.
BBA GROUP
ANNUAL REPORT
2004
50
Table 1 (page 53) includes details of annual bonus payments made
in respect of 2004.
c. Share Scheme Incentives
In April 2004, shareholders approved the BBA Group 2004 Long-Term
Incentive Plan which replaces the previous BBA Group Long-Term
Incentive Plan and the BBA Group 1994 Executive Share Option
Scheme. Details of these plans are set out below.
BBA Group 2004 Long-Term Incentive Plan
The BBA Group 2004 Long-Term Incentive Plan (the ‘2004 Plan’) allows
the awards of options, conditional shares and matching shares. The
maximum number of options which an executive may be granted in any
year is limited to three times basic salary, or four times basic salary if
the Remuneration Committee determines that an executive will not
receive a conditional share award in that year. Conditional awards of
shares are limited to one times the executive’s basic salary or two
times basic salary if the Remuneration Committee determines that the
executive will not be granted options in that year. For awards to be
made in 2005, the maximum number of shares in respect of which an
executive may be made a matching award will be limited to 50 per cent
of the number of shares purchased by the executive using his or her
net bonus. Each executive may purchase shares to a value not
exceeding his or her gross annual bonus, subject to a minimum of
25 per cent of net amount. The Plan rules also permit matching on
a net to gross basis.
The Remuneration Committee is satisfied that the maximum
award levels are not excessive and are in line with current market
practice. When making awards, the Remuneration Committee will take
prevailing remuneration practice into account.
Options granted in 2005 under the 2004 Plan will be subject to
the following performance conditions, which will be measured from the
financial year ending just prior to the grant over a three year period:
Average EPS growth Proportion of options
above inflation exercisable
7% or more per annum 100%
3 to 7% per annum Pro rata between 33% and 100%
3% per annum 33%
Less than 3% per annum Nil
Options will lapse if performance conditions are not satisfied and there
will be no retesting. In line with performance conditions under earlier
Company share option schemes, the earnings per share calculation
will be verified by the external auditors.
Conditional shares will vest and be released to executives at the
end of a three year period if the Company’s total shareholder return
against a comparator group of companies consisting of all of the FTSE
350 listed companies in the transport, chemicals and aerospace and
defence sectors is met. Awards made in 2005 will be subject to the
following performance conditions:

TSR ranking in Proportion of shares vesting
comparator group
Upper quartile 100%
Median to upper quartile Pro rata between 25% and 100%
Median 25%
Below Median Nil
If median position is not achieved, the whole award will lapse and there
will be no retesting. In line with performance conditions under previous
conditional awards, total shareholder return will be calculated by an
independent remuneration consulting firm. The vesting of matching
awards is not dependent on performance conditions.
The Committee believes that the two performance measures
chosen for its incentive schemes – adjusted earnings per share growth
and comparative total shareholder return – each represent a
reasonable long-term indication of the financial success of the
Company. They are also measures that are acceptable to the majority
of the investors in the Company. It is the current intention of the
Committee that its schemes retain these measures.
No awards were made under the 2004 Plan during the year.
BBA Group 1997 Long-Term Incentive Plan
The BBA Group Long-Term Incentive Plan, approved by shareholders in
1997, was replaced by the 2004 Plan during 2004. There are no
outstanding awards under this Long-Term Incentive Plan. Contingent
awards of restricted shares were made with further awards of matched
shares being made pro rata to investment shares acquired by
participants using their annual bonus. The interest in shares awarded
could only vest if the Company’s targeted total shareholder return
measured over a period of three years was achieved. Above that
minimum, the interest would vest in whole or in part depending on the
level of achievement of the performance conditions.
For awards made in 2001, the Company’s TSR was measured
against a comparator group of selected companies within the FTSE 350
with a market capitalisation of between approximately £600 million and
£10 billion, excluding certain sectors. In addition, adjusted earnings per
share had to exceed the rate of inflation by 3 per cent per annum. The
vesting of restricted shares was nil below the median, 15 per cent at the
median, 100 per cent at the upper quartile and 118 per cent at the top
20th percentile. Vesting of matched shares is nil below the median,
15 per cent at the median and 100 per cent at the upper quartile.
Awards made in 2001 resulted in a nil vesting in March 2004
as the Company’s TSR ranking was below the median at the end of the
performance period. As a result no restricted shares were released to
the relevant directors. The comparator group in respect of the 2001
award at the end of the vesting period is set out at the top of this page.
Comparator Group 2001
Aggregate Industries Electrocomponents Next
Aggreko Excel Novar
Amersham First Choice Holidays Pace Micro Technology
Associated British Ports First Group Peninsular & Oriental Diversified
Atkins (WS) FKI Pilkington
Avis Europe GKN Premier Farnell
BAA GUS Rank Group
BBA Group Hammerson Regus
BHP Billiton Hanson Rentokil Initial
BOC Group Hays Rexam
Boots Group Hilton Group RMC Group
BPB IMI Rolls-Royce Group
British Airways Imperial Chemical Industries Scottish & Southern Energy
British Energy International Power Scottish Power
British Land Invensys Securicor
Brown (N) Group JJB Sports Serco Group
BTG Johnson Matthey Signet Group
Bunzl Kingfisher Slough Estates
Canary Wharf Group Land Securities Smith & Nephew
Capita Group Liberty International Smith (WH)
Carphone Warehouse Group Lonmin Smiths Group
Centrica Marks & Spencer Group SSL International
Chelsfied Matalan Stagecoach Group
Cobham Millenium & Copthorne Hotels Tomkins
Cookson Group Morgan Crucible Travis Perkins
De la Rue My Travel Group Viridian Group
Dixons Group National Express Wolseley
Easyjet National Grid Transco
BBA GROUP
ANNUAL REPORT
2004
51

DIRECTORS’ REMUNERATION REPORT
Share Option Schemes
All executive options recently awarded by the Company have been
made under the BBA Group 1994 Executive Share Option Scheme,
which expired in April 2004. All outstanding options granted under
the scheme are subject to performance conditions.
Between 1997 and 2000, the executive directors did not receive
options under the Company’s executive share option schemes.
Executive directors were granted options under the scheme between
2001 and 2004 when shareholder approved amendments facilitated
grants of a combination of options and awards under the 1997 Long-
Term Incentive Plan.
Under the 1994 Executive Share Option Scheme, in any financial
year a participant could be granted options with an exercise price not
exceeding two times annual earnings. Such options are only exercisable
if the growth in the Company’s earnings per share, as adjusted, for any
period of three consecutive years is at least 9 per cent and is greater
than the growth in inflation.
Super options granted under the 1994 executive share option plan
are only exercisable if the growth in the Company’s earnings per share,
as adjusted, for any period of five consecutive years is greater than the
growth in earnings per share, as adjusted, achieved during the same five
year period by at least three-quarters of those companies which
Performance Charts
The charts below show the Company’s total shareholder return over
the last five financial years compared with the equivalent information
for the FTSE 350 Transport sector which the Committee considers to
be a suitable broad-based equity market index of which the Company
is a constituent. Graph 1 shows the annual change in total shareholder
return for the Company and the index, while Graph 2 shows the
cumulative change in total shareholder return from January 2000.
ANNUALISED TOTAL SHAREHOLDER RETURN: BBA GROUP vs TRANSPORT SECTOR
00 01
02 03 04
05
BBA FTSE 350 TRANSPORT
%
RETURN SHAREHOLDER TOTAL
constitute the FTSE 100 index at the end of the five year period. No super CUMULATIVE TOTAL SHAREHOLDER RETURN: BBA GROUP vs TRANSPORT SECTOR
options have been granted since 1997 and the 2001 amendments to the
1994 scheme removed the facility to grant such options.
Performance conditions in respect of options granted in 1999,
2000 and 2001 were not satisfied and did not become exercisable at the
end of their respective initial performance periods.
The Committee selected earnings per share as the performance
measure for the share option scheme as it is accepted as being a
good indicator of long-term corporate performance. Options have
an inherent share price performance measure, being the condition
0
-10
-20
-30
-40
-50
-60
-70
00 01 02 03 04 05
that before any reward is given the share price must increase.
Executive directors may be eligible to participate in the BBA Group
1994 Savings-Related Share Option Scheme, which is open to all eligible
UK employees. Options are granted under three or five year SAYE
contracts at a 20 per cent discount to the stock market price at the offer
date. The maximum overall employee contribution is £250 per month.
BBA FTSE 350 TRANSPORT
BBA GROUP
ANNUAL REPORT
2004
52
TOTAL SHAREHOLDER RETURN %
50
40
30
20
10
0
-10
-20
-30
-40

Table 1 – Emoluments and fees (audited)
Basic salary
allowances Other Benefits Annual Total Total
and fees emoluments in kind bonus 2004 2003
£000 £000 £000 £000 £000 £000
R Quarta 158 – 1 – 159 147
R V McGlone 462 72* 5 149 688 698
A R Wood 298 – 1 96 395 380
B Van Allen 270 97 † 13 91 471 486
R H McMillan 251 – 13 56 320 350
R M Phillips 30 – – – 30 28
D J S Roques 37 – – – 37 33
D Rough 34 – – – 34 28
R N Stillwell 37 – – – 37 33
I B Yoskowitz 5 ‡ – – – 5 28
Total 1,582 169 33 392 2,176 2,211
* During the year Mr McGlone elected to receive a proportion of his entitlement under the FURBS arrangements as salary (£71,831).
† Special award agreed in November 2000 whilst Mr Van Allen was CEO of BBA Aviation North America under which a bonus of £96,917 was payable provided he remained
in employment as at 1 October 2004.
‡ To date of retirement 1 March 2004.
Table 2
Directors’ interests in share Ordinary 25p shares
capital (includes interests 1 Jan 2004 31 Dec 2004
held by a director’s spouse) Beneficial Beneficial
R Quarta 38,020 38,020
R V McGlone 118,621 118,621
A R Wood 10,539 15,671
B Van Allen 20,574 20,574
R H McMillan – –
R M Phillips 3,000 3,000
D J S Roques 13,000 13,000
D Rough 22,226 22,226
R N Stillwell 5,000 5,000
I B Yoskowitz 25,709 25,709*
*To date of retirement 1 March 2004
Table 3 – Long-Term Incentive Plan Awards (audited)
Shares
1 Jan
2004
Lapsed
during
the year
R V McGlone Restricted 244,506 244,506 07.03.01 07.03.04 –
A R Wood Restricted 122,778 122,778 07.03.01 07.03.04 –
B Van Allen Restricted 95,416 95,416 07.03.01 07.03.04 –
Notes
1. The performance conditions in respect of the 2001 award of Restricted and Matched shares were not satisfied and no vesting occurred at the end of the three-year
performance period. The awards made to participants lapsed.
2. No awards were made during the year under the Long-Term Incentive Plan. No awards were made to Mr McMillan under the Long-Term Incentive Plan.
3. The Company has accounted for awards in accordance with the provisions of UITF Abstract 17 employee share schemes. An employee trust was established which held
shares awarded under the Long-Term Incentive Plan. As at 31 December 2004, there were 2,137,111 shares at a market value of £6.1 million held in the trust.
Award
date
Lapse
date
31 Dec
2004
BBA GROUP
ANNUAL REPORT
2004
53

DIRECTORS’ REMUNERATION REPORT
Table 4 – Options to acquire ordinary shares (audited)
Exercised/ Exercise
Granted lapsed price per
1 Jan during the during 31 Dec share Exercisable Expiry
2004 year the year 2004 pence from date
R V McGlone
Executive Share Option Schemes
Ordinary options 388,600 – – 388,600 205.90 01.10.04 01.10.11
185,750 – – 185,750 288.20 25.03.05 25.03.12
846,013 – – 846,013 153.00 13.03.06 13.03.13
– 422,200 – 422,200 275.25 01.03.07 01.03.14
Super options 29,000 – – 29,000 290.00 09.10.00 09.10.05
89,600 – – 89,600 323.33 11.04.01 11.04.06
A R Wood
1,538,963 422,200 – 1,961,163
Executive Share Option Schemes
Ordinary options 221,000
107,400
552,131
–
880,531
Savings Related
Share Option Scheme
B Van Allen
Executive Share Option Schemes
Ordinary options
4,635
36,000*
23,000*
198,300*
94,350
585,686
–
937,336
R H McMillan
Executive Share Option Schemes
Ordinary options 198,300*
85,200
504,825
–
788,325
R Quarta
Executive Share Option Schemes
Ordinary options
Super options
*Granted under BBA Group 1995 Executive Share Appreciation Rights Plan
179,800
280,500
460,300
–
–
–
271,000
271,000
–
–
–
–
–
–
225,300
225,300
–
–
–
208,600
208,600
–
–
–
–
–
4,635
–
–
–
–
–
–
–
–
–
–
– 179,800
– 280,500
– 460,300
221,000
107,400
552,131
271,000
1,151,531
–
36,000
23,000
198,300
94,350
585,686
225,300
1,162,636
198,300
85,200
504,825
208,600
996,925
–
–
–
205.90
288.20
153.00
275.25
209.00
341.33
422.00
205.90
288.20
153.00
275.25
205.90
288.20
153.00
275.25
323.33
323.33
01.10.04
25.03.05
13.03.06
01.03.07
01.06.04
21.04.00
10.03.01
01.10.04
25.03.05
13.03.06
01.03.07
01.10.04
25.03.05
13.03.06
01.03.07
11.04.99
11.04.01
01.10.11
25.03.12
13.03.13
01.03.14
01.12.04
21.04.07
10.03.08
01.10.11
25.03.12
13.03.13
01.03.14
01.10.11
25.03.12
13.03.13
01.03.14
31.12.04
31.12.04
Notes
1. BBA Group plc Ordinary 25p Shares: Mid-market price on 31 December 2004 was 285.75p. Mid-market price for 2004 was in the range 247p to 291.5p.
2. Mr Wood exercised options under the savings related share option scheme on 16 June 2004 following the maturity of the savings contract. The mid-market price of a BBA
Group plc ordinary 25p share on 16 June 2004 was 253.5p. Mr Wood retained his shares on exercise.
3. There were no changes in the directors’ options to acquire ordinary shares between 31 December 2004 and 23 February 2005.
4. Options granted under the 1994 executive share option plan are only exercisable if the growth in the Company’s earnings per share, as adjusted, for any period of three
consecutive years is at least 9 per cent and is greater than the growth in inflation.
5. Super options granted under the 1994 executive share option plan are only exercisable if the growth in the Company’s earnings per share, as adjusted, for any period of five
consecutive years is greater than the growth in earnings per share, as adjusted, achieved during the same five year period by at least three quarters of those companies
which constitute the FTSE 100 index at the end of the five year period.
BBA GROUP
ANNUAL REPORT
2004
54

d. Pension
UK
The executive directors participate in the Company’s UK defined
benefit plans. For Mr McGlone, who joined the plan prior to April 2000,
pensionable earnings are basic salary plus an average of three years’
annual bonus together with the taxable value of benefits in kind.
As from April 2000, the bonus element of pensionable earnings for
existing directors such as Mr McGlone was capped at 45 per cent of
salary. Pensionable earnings for Mr Wood and other new participants
comprise basic salary only. It is the Committee’s policy that the bonus
of any new director joining the Company’s UK pension plans from April
2000 will not be pensionable.
Under the Defined Benefit Scheme Rules, the normal retirement
age is 62. In the case of death before retirement, a contingent widow’s
pension equal to two thirds of the member’s prospective pension is
payable. Other dependents’ pensions may also be paid. The Scheme
Rules guarantee pension increases in retirement by RPI up to 5 per cent.
Further discretionary increases are possible if RPI is above 5 per cent.
Mr McGlone and Mr Wood are restricted in the level of benefits
they can earn under the Group’s pension plan by the state defined
earnings cap (£102,000 for the tax year 2004/2005). The Company
therefore provides a funded unapproved retirement benefits scheme
(‘FURBS’) at its discretion for these directors. The Company’s FURBS
are closely related to the contribution the Company makes to the
approved defined benefits scheme less expenses and any special
funding. The rate of contribution for both Mr McGlone and Mr Wood
was 36% per annum of pensionable earnings in excess of the earnings
cap, although Mr McGlone has elected to receive a proportion of his
entitlement as salary (see Table 1).
Table 5 (audited) – Defined Contribution Scheme
Company Contributions
2003 2004
£000 £000
UK Directors
R V McGlone 138 108
A R Wood 64 66
Table 6 (audited) – Defined Benefit Schemes
US
Mr McMillan and Mr Van Allen are participants in the Group’s Senior
Executive Pension Plan for North America (‘SEPP’). Under the Plan,
at age 62, they are entitled to receive a lump sum retirement benefit.
The Plan also provides for a reduced benefit in the event of early
retirement. That benefit is based upon a five-year averaging of
compensation, including bonus, less amounts received under
certain other employer pension plans which include 401k plans.
From 1 January 2004 the Company funded the SEPP.
In the case of death before retirement, the accrued benefit
reverts to the participant’s widow, and is paid in a lump sum. At the
Company’s discretion, a reduced early retirement benefit is available
once the participant’s age plus credited service exceeds 59. Increases
in pension are not guaranteed under the Plan.
Mr McMillan and Mr Van Allen also participate in the Group’s
401k plan. Details of the contributions made to the 401k plan are set
out in Table 7 below.
Mr Quarta, whilst an executive director, participated in a United
States executive retirement plan. He retains benefits which accrued
whilst he was an executive director. The main features of this plan
included a normal retirement age of 60, no individual contributions
and an annual benefit upon retirement equivalent to 50 per cent of the
average of his highest three years’ compensation, inclusive of bonus
and taxable benefits in kind less amounts received under certain other
employer pension plans.
Table 7 (audited) – Defined Contribution Scheme
Company Contributions
2003 2004
£000 £000
US Directors
B Van Allen 5 4
R H McMillan 5 4
Transfer
value of real Increase
Accrued Transfer Real increase in in transfer Accrued Transfer
Director’s age Director’s pension at value at increase Increase in pension (less values less pension at value at
at 31 Dec contribution 31 Dec 31 Dec in accrued accrued director’s director’s 31 Dec 31 Dec
2004 during year 2003* 2003 pension pension contributions) contributions 2004* 2004
£000 £000 £000 £000 £000 £000 £000 £000 £000
UK Directors
R V McGlone 51 5 27 238 4 4 34 113 31 356
A R Wood 53 5 10 97 4 4 38 68 14 171
*The pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year.
BBA GROUP
ANNUAL REPORT
2004
55

DIRECTORS’ REMUNERATION REPORT
Table 8 (audited) – Defined Benefit Schemes
Transfer
value of real Increase
Accrued Transfer Real increase in in transfer Accrued Transfer
Director’s age Director’s pension at value at increase Increase in pension (less values less pension at value at
at 31 Dec contribution 31 Dec 31 Dec in accrued accrued director’s director’s 31 Dec 31 Dec
2004 during year 2003* 2003 pension pension contributions) contributions 2004* 2004
£000 £000 £000 £000 £000 £000 £000 £000 £000
US Directors
B Van Allen 49 7 191 191 166 172 159 165 363 363
R H McMillan 54 8 118 118 78 81 70 73 199 199
R Quarta 55 – 174 1,920 – – –
*The pension entitlement shown is that which would be paid annually on retirement based on service to the end of the year.
Accrued pension amounts shown for Mr McMillan and Mr Van Allen are lump sums.
Non-Executive Directors’ Remuneration
The non-executive directors each have a letter of appointment which is
available on request. No compensation would be payable for the early
termination of the appointment of any non-executive director.
The level of fees is determined by the Board as a whole on the
recommendation of the Group Chief Executive using independent
market surveys. Fees are in line with current market practice of
comparable organisations. During the year the annual base fee for
non-executive directors increased to £30,000 and the annual supplement
payable to the chairman of the Audit Committee and the Remuneration
Committee increased to £7,500. It was also agreed that the Senior
Independent Director should receive an annual supplement of £5,000.
These increases reflect the increased commitments and demands
placed upon each of the non-executive directors in performing their
duties on the Board and its principal committees.
Details of the non-executive directors’ fees for 2004 are set out
in Table 1 (page 53).
At 23 February 2005, the unexpired terms of the non-executive
directors were as follows:
R Quarta 24 months D J S Roques 35 months
J M Harper 36 months D Rough 24 months
R M Phillips 14 months R N Stillwell 24 months
I B Yoskowitz retired from the Board on 1 March 2004.
BBA GROUP
ANNUAL REPORT
2004
56
136
174
2,056
The non-executive directors do not participate in the Company’s share
option schemes, long-term incentive plan or pension arrangements.
As disclosed in this report Mr Quarta retains an entitlement to a
pension which accrued whilst he was an executive director. Mr Quarta’s
rights to exercise certain share options granted whilst he was an
executive director lapsed on 31 December 2004.
Approved by the Board on 23 February 2005 and signed on its behalf by:
Richard Stillwell, Chairman,
Remuneration Committee

INDEPENDENT AUDITORS’ REPORT
Independent auditors’ report to the members of BBA Group plc
We have audited the financial statements of BBA Group plc for the year
ended 31 December 2004 which comprise the profit and loss account,
the Group and Company balance sheets, the cash flow statement, the
statement of total recognised gains and losses, the reconciliation of
movements in shareholders’ funds, the statement of accounting
policies and the related notes 1 to 25. These financial statements have
been prepared under the accounting policies set out therein. We have
also audited the information in the part of the directors’ remuneration
report that is described as having been audited.
This report is made solely to the Company's members, as
a body, in accordance with section 235 of the Companies Act 1985.
Our audit work has been undertaken so that we might state to the
Company’s members those matters we are required to state to them
in an auditors’ report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for
our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
As described in the statement of directors’ responsibilities,
the Company’s directors are responsible for the preparation of the
financial statements in accordance with applicable United Kingdom
law and accounting standards. They are also responsible for the
preparation of the other information contained in the annual report
including the directors’ remuneration report. Our responsibility
is to audit the financial statements and the part of the directors’
remuneration report described as having been audited in accordance
with relevant United Kingdom legal and regulatory requirements and
auditing standards.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the directors’ remuneration report
described as having been audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you if, in
our opinion, the directors’ report is not consistent with the financial
statements, if the Company has not kept proper accounting records, if
we have not received all the information and explanations we require
for our audit, or if information specified by law regarding directors’
remuneration and transactions with the Company and other members
of the Group is not disclosed.
We review whether the corporate governance statement reflects
the Company's compliance with the nine provisions of the July 2003
FRC Combined Code specified for our review by the Listing Rules of
the Financial Services Authority, and we report if it does not. We are
not required to consider whether the Board's statements on internal
control cover all risks and controls, or form an opinion on the
effectiveness of the Group's corporate governance procedures or
its risk and control procedures.
We read the directors’ report and the other information contained
in the annual report for the above year as described in the contents
section including the unaudited part of the directors’ remuneration
report and consider the implications for our report if we become aware
of any apparent misstatements or material inconsistencies with the
financial statements.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom auditing
standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and
disclosures in the financial statements and the part of the directors’
remuneration report described as having been audited. It also includes
an assessment of the significant estimates and judgements made by
the directors in the preparation of the financial statements and of
whether the accounting policies are appropriate to the circumstances
of the Company and the Group, consistently applied and adequately
disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in order
to provide us with sufficient evidence to give reasonable assurance that
the financial statements and the part of the directors’ remuneration
report described as having been audited are free from material
misstatement, whether caused by fraud or other irregularity or error.
In forming our opinion, we also evaluated the overall adequacy of the
presentation of information in the financial statements and the part of
the directors’ remuneration report described as having been audited.
Opinion
In our opinion the financial statements give a true and fair view of the
state of affairs of the Company and the Group as at 31 December 2004
and of the profit of the Group for the year then ended and the financial
statements and the part of the directors’ remuneration report described
as having been audited have been properly prepared in accordance
with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditors
London
23 February 2005
BBA GROUP
ANNUAL REPORT
2004
57

GROUP PROFIT
AND LOSS ACCOUNT
Before
goodwill Goodwill
amortisation amortisation
& exceptional & exceptional 2004 2003
items items Total Total
For the year ended 31 December 2004 Notes £m £m £m £m
Turnover
Continuing operations 1,347.0 – 1,347.0 1,319.7
Acquisitions 24.6 – 24.6 –
1,371.6 – 1,371.6 1,319.7
Discontinued operations 3.4 – 3.4 10.9
Turnover 1 1,375.0 – 1,375.0 1,330.6
Cost of sales 2 (1,090.1) – (1,090.1) (1,047.0)
Gross profit 2 284.9 – 284.9 283.6
Net operating expenses 2 (156.3) (46.5) (202.8) (213.5)
Operating profit
Continuing operations 125.5 (46.5) 79.0 72.8
Acquisitions 3.4 – 3.4 –
128.9 (46.5) 82.4 72.8
Discontinued operations (0.3) – (0.3) (2.7)
Group operating profit 128.6 (46.5) 82.1 70.1
Share of operating profit of associates 11.3 – 11.3 13.8
Total operating profit (including associates) 139.9 (46.5) 93.4 83.9
Loss on sale of businesses 2 – (7.9) (7.9) (12.0)
Profit on ordinary activities before interest and taxation 139.9 (54.4) 85.5 71.9
Net interest 3 (12.1) – (12.1) (16.7)
Profit on ordinary activities before taxation 127.8 (54.4) 73.4 55.2
Taxation on profit on ordinary activities 4 (34.5) 10.9 (23.6) (26.4)
Profit on ordinary activities after taxation 93.3 (43.5) 49.8 28.8
Equity minority interests (0.1) – (0.1) –
Profit for the financial year 93.2 (43.5) 49.7 28.8
Dividends on non-equity shares 5 (3.8) – (3.8) (3.8)
Profit for the financial year attributable to ordinary shareholders 89.4 (43.5) 45.9 25.0
Dividends on equity shares 5 (51.0) – (51.0) (48.7)
Retained loss for the financial year transferred to reserves 19 38.4 (43.5) (5.1) (23.7)
Earnings per ordinary share
Basic:
Total businesses:
Before goodwill amortisation and exceptional items 6 19.9p 19.7p
Unadjusted 6 10.2p 5.5p
Diluted:
Total businesses:
Before goodwill amortisation and exceptional items 6 19.7p 19.6p
Unadjusted 6 10.1p 5.5p
Dividends
Dividends per ordinary share
– paid 3.35p 3.20p
– proposed 7.95p 7.60p
5 11.30p 10.80p
The statement of the movements on reserves is set out in note 19 to the financial statements.
The accompanying notes are an integral part of this profit and loss account.
BBA GROUP
ANNUAL REPORT
2004
58

GROUP AND COMPANY
BALANCE SHEETS
GROUP COMPANY
2004 2003 2004 2003
At 31 December 2004 Notes £m £m £m £m
Fixed assets
Intangible assets 9 364.1 324.2 – –
Tangible assets 10
Land and buildings 261.5 281.6 0.4 0.4
Plant and machinery 463.0 487.8 3.7 4.2
Investments 11 33.4 26.6 1,549.9 1,548.9
1,122.0 1,120.2 1,554.0 1,553.5
Current assets
Stocks 12 219.3 195.3 – –
Debtors due after one year 13 18.8 52.4 – 40.4
Debtors due within one year 13 341.7 269.0 1,259.6 1,481.8
Cash at bank and in hand 15 134.0 154.7 18.5 24.3
713.8 671.4 1,278.1 1,546.5
Current liabilities
Creditors: amounts falling due within one year
Borrowings and finance leases 14 (50.6) (53.2) (3.0) (0.1)
Others 14 (344.4) (324.8) (1,511.8) (1,783.5)
Net current assets/(liabilities) 318.8 293.4 (236.7) (237.1)
Total assets less current liabilities 1,440.8 1,413.6 1,317.3 1,316.4
Long-term liabilities
Creditors: amounts falling due after more than one year
Borrowings and finance leases 15 (657.0) (614.4) (602.8) (548.7)
Others 16 (2.7) (2.7) – –
Provisions for liabilities and charges 18 (122.0) (115.9) – 2.6
Total net assets 659.1 680.6 714.5 770.3
Capital and reserves
Called up share capital 19 169.0 169.1 169.0 169.1
Share premium account 19 285.3 285.0 285.3 285.0
Revaluation reserve 19 3.9 3.9 3.5 3.5
Other 19 7.1 5.5 239.2 237.6
Profit and loss account 19 193.8 217.1 17.5 75.1
Shareholders’ funds
Shareholders’ funds 659.1 680.6 714.5 770.3
Equity 602.9 624.3 658.3 714.0
Non-equity 19 56.2 56.3 56.2 56.3
659.1 680.6 714.5 770.3
These financial statements were approved by the Board of Directors on 23 February 2005 and signed on its behalf by
R Quarta Chairman A R Wood Group Finance Director.
In accordance with the exemptions permitted by s230 of the Companies Act 1985, the profit and loss account of the Company
has not been presented. The loss for the financial year in the accounts of the Company, after dividends from subsidiary
undertakings, amounted to £2.2m (2003: £27.0m).
The accompanying notes are an integral part of these balance sheets.
BBA GROUP
ANNUAL REPORT
2004
59

GROUP CASH
FLOW STATEMENT
2004 2003
For the year ended 31 December 2004 Notes £m £m £m £m
Operations
Net cash inflow from operating activities 20
Continuing operations 143.9 173.2
Acquisitions 2.9 6.6
146.8 179.8
Discontinued operations (1.4) 5.2
145.4 185.0
Dividends from joint ventures and associates
Dividends from associates 0.9 2.7
Returns on investments and servicing of finance
Interest received
Interest paid
Preference dividends paid
Interest element of finance leases
Net cash outflow from returns on investments and servicing of finance (17.3) (20.5)
Taxation
UK corporation tax paid – –
Overseas tax paid (13.0) (10.2)
Total tax paid (13.0) (10.2)
Capital expenditure
Purchase of tangible fixed assets (56.5) (75.0)
Purchase of intangible assets (5.2) –
Sale of tangible fixed assets 5.7 5.2
Net cash outflow from capital expenditure (56.0) (69.8)
Acquisitions and disposals
Purchase of subsidiary undertakings and businesses 21 (90.6) (51.3)
Net cash acquired 21 5.2 0.8
Investment in associated undertakings (0.8) (2.3)
Sale of businesses 22 0.2 1.5
Cash (paid)/received from acquisitions and disposals in prior years (1.7) 8.2
Net cash outflow from acquisitions and disposals (87.7) (43.1)
Equity dividends
Equity dividends paid (49.4) (32.5)
Net cash (outflow)/inflow before management of liquid resources and financing
Management of liquid resources and financing
(77.1)
11.6
Net proceeds from issue of ordinary shares
1.2
0.2
Own shares purchased for cancellation -
–
(44.6)
Increase in borrowings and finance leases
20 55.7
91.0
Decrease in Other Liquid assets
20 7.6
4.8
Decrease/(increase) in short-term deposits
20 9.5
(23.3)
Net cash inflow from management of liquid resources and financing
Movement in cash
74.0
28.1
(Decrease)/increase in cash
Reconciliation of net cash flow to changes in net debt
(3.1)
39.7
(Decrease)/increase in cash in year 20 (3.1) 39.7
Increase in borrowings and finance leases 20 (55.7) (91.0)
Decrease in Other Liquid assets 20 (7.6) (4.8)
(Decrease)/increase in short-term deposits 20 (9.5) 23.3
New finance leases 20 – (0.7)
Finance leases acquired with acquisitions 20 (1.9) (0.9)
Borrowings acquired with acquisitions 20 (10.7) –
Exchange adjustments 20 36.4 70.6
Movement in net debt in year (52.1) 36.2
Net debt at beginning of year (459.5) (495.7)
Net debt at end of year
The accompanying notes are an integral part of this cash flow statement.
15 (511.6) (459.5)
BBA GROUP
ANNUAL REPORT
2004
60
30.4
(42.5)
(3.8)
(1.4)
27.5
(42.0)
(3.8)
(2.2)

RECONCILIATION OF MOVEMENT
IN GROUP SHAREHOLDERS' FUNDS
GROUP
2004 2003
For the year ended 31 December 2004 £m £m
Profit for the financial year 49.7 28.8
Dividends (54.8) (52.5)
(5.1) (23.7)
Exchange differences on translation (net) (17.6) (13.3)
Own shares purchased for cancellation – (44.6)
ESOP Shares 1.0 –
Shares issued 0.2 16.4
Net decrease in shareholders’ funds for the year (21.5) (65.2)
Shareholders’ funds at beginning of year as previously reported 680.6 745.8
Shareholders’ funds at end of year 659.1 680.6
GROUP STATEMENT OF TOTAL
RECOGNISED GAINS AND LOSSES
GROUP
2004 2003
For the year ended 31 December 2004 £m £m
Profit for the financial year 49.7 28.8
Exchange difference on retranslation of net assets of subsidiary undertakings (56.2) (75.0)
Exchange difference on foreign currency borrowings 38.6 61.7
Total recognised gains for the year since the last annual report 32.1 15.5
There are no material differences between the results as disclosed in the profit and loss account and the results on an unmodified
historical cost basis.
The accompanying notes are an integral part of this statement of total recognised gains and losses.
BBA GROUP
ANNUAL REPORT
2004
61

ACCOUNTING POLICIES
Accounting Policies
The principal Group accounting policies are set out below and have
been applied consistently throughout the current and preceding year
with the exception of turnover arising from engine repair & overhauls
(see “Turnover” below). The impact of this policy change is immaterial
in the context of the Group’s turnover and operating profit in both the
current and prior year.
Basis of Accounting
The financial statements have been prepared using the historical cost
convention adjusted for the revaluation of certain fixed assets and in
accordance with applicable United Kingdom accounting standards.
Certain amounts included in the Group balance sheet at
31 December 2003 have been reclassified to provide a more
appropriate presentation as follows:
1. Tangible fixed assets (2004: £1.1m, 2003: £0.9m) and debtors
(2004: £10.7m, 2003: £7.2m) have been reclassified as licences.
2. Foreign currency assets previously reported in borrowings
(2004: £62.0m, 2003: £53.4m) have been reclassified as other debtors.
Basis of Consolidation
The Group profit and loss account, balance sheet and cash flow
statement incorporate the financial statements of all subsidiary
undertakings for the year ended 31 December under the acquisition
method of accounting.
The results of subsidiary undertakings acquired or sold are
consolidated for the periods from or to the date on which control
passed. Goodwill on acquisitions, being the excess of the fair value of
the consideration for new interests over the fair value of net assets
acquired, is capitalised and written off on a straight line basis over its
useful economic life, with a maximum life of 20 years. Provision is
made for any impairment. Goodwill arising on acquisitions in the year
ended 31 December 1997 and earlier periods was written off to
reserves in accordance with the accounting standards then in force.
As permitted by current accounting standards, the goodwill previously
written off to reserves has not been reinstated in the balance sheet.
On disposal of a previously acquired business, the attributable amount
of goodwill previously written off to reserves is included in determining
the profit or loss on disposal.
Associated undertakings are those investments other than
subsidiary undertakings where the Group exercises a significant
influence, typically through representation on the Board of Directors.
The consolidated financial statements include the Group’s share
of the post-acquisition reserves of all such companies.
Investments
In the Company’s financial statements, investments in subsidiary
and associated undertakings are stated at cost less provision for
impairment. In the Group’s financial statements, investments in
associated undertakings are stated at cost plus the Group’s share of
post-acquisition reserves less provision for impairment. Other fixed
asset investments are stated at cost less provision for impairment.
BBA GROUP
ANNUAL REPORT
2004
62
Treasury
Transactions in foreign currencies are recorded at the rate of exchange
at the date of the transaction unless matched by a forward contract.
Monetary assets and liabilities denominated in foreign currencies at
the balance sheet date are reported at the rates of exchange prevailing
at that date or, if appropriate, at the forward contract rate. Any gain or
loss arising from a change in exchange rates subsequent to the date of
the transaction is included as an exchange gain or loss in the profit and
loss account.
The results and cash flows of overseas operations are translated
at the average rates of exchange during the period and their balance
sheets at the rates ruling at the balance sheet date. Exchange
differences arising on translation of the opening net assets and results
of overseas operations and on foreign currency borrowings or other
currency instruments, to the extent that they hedge the Group’s
investment in such operations, are dealt with through reserves.
For an interest rate swap to be treated as a hedge the
instrument must be related to actual assets or liabilities or a probable
commitment and must change the nature of the interest rate by
converting a fixed rate to a variable rate or vice versa. Interest
differentials under these swaps are recognised by adjusting net
interest payable over the periods of the contracts.
Turnover
Turnover comprises the invoiced value of sales for goods supplied and
services provided by the Group excluding intercompany transactions,
sales by associated undertakings and sales taxes.
Within the engine overhauls business, turnover and associated
profit are recognised on a percentage completion basis once the terms
of the contract have been agreed with the customer and the ultimate
profitability of the contract can be determined with reasonable certainty.
The change has been adopted to more accurately reflect the right to
consideration. All current contracts are reviewed each period to ensure
that there are no indications of a reduction in expected profitability.
In our pilot training business, turnover is recognised evenly over
the duration of each course.
Research and Development
Research and development expenditure is charged against income in
the year in which it is incurred.
Pensions and other Post-Retirement Benefits
The costs of pension plans and other post-retirement benefits are
charged to the profit and loss account so as to spread the costs over
employees’ working lives within the Group. The contribution levels
are determined by valuations undertaken by independent qualified
actuaries. In certain overseas subsidiary undertakings, to comply
with local legislation and to obtain taxation advantages, provision is
made for the total actuarial liability less the current surrender value
of the supporting investment. The FRS17 transitional disclosures have
been provided.

Scrip Dividends
The option to receive dividends in the form of ordinary shares was
replaced by a Dividend Reinvestment Programme in the second half
of 2003. Prior to this change, ordinary dividends in lieu of which
shareholders elected to receive ordinary shares were credited
to reserves and the nominal value of such ordinary shares was
capitalised out of the share premium account.
Tangible Fixed Assets
Plant and machinery, with the exception of tooling and motor vehicles,
was professionally valued at 31 December 1988 on an existing use
basis. Additions after that date are stated in the balance sheet at cost.
Land and buildings are stated at cost or valuation (performed in 1988).
Other tangible fixed assets are stated in the balance sheet at cost.
Depreciation is provided on the cost or valuation of tangible fixed
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 office equipment are categorised
within Plant and Machinery in Note 10 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.
Finance costs which are directly attributable to the construction
of major tangible fixed assets are capitalised as part of those assets.
The commencement of capitalisation begins when both finance 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.
Leases
Where assets are financed by lease agreements that give rights
similar to ownership (finance leases), the assets are treated as if
they had been purchased and the leasing commitments are shown as
obligations to the lessors. The capitalisation values of the assets are
written off on a straight line basis over the shorter of the periods
of the leases or the useful lives of the assets concerned. The capital
elements of future lease obligations are recorded as liabilities, while
the interest elements are charged to the profit and loss account over
the period of the leases to produce a constant rate of charge on the
balance of capital payments outstanding.
For all other leases (operating leases) the rental payments are
charged to the profit and loss account on a straight line basis over the
lives of the leases.
Stocks
Stocks are stated at the lower of cost and net realisable value.
Cost comprises the cost of raw materials and an appropriate
proportion of labour and overheads in the case of work in progress
and finished goods. Provision is made for slow moving or obsolete
stock as appropriate.
Taxation
The charge for taxation is based on the profit for the year and takes
into account taxation deferred due to timing differences between the
treatment of certain items for taxation and accounting purposes.
Deferred tax is provided in full on all liabilities. In accordance with FRS 19,
deferred tax assets are recognised to the extent it is regarded that it is
more likely than not that they will be recovered. Deferred tax assets
and liabilities have not been discounted.
Deferred tax is not provided on timing differences arising from
the sale or revaluation of fixed assets unless, at the balance sheet date,
a binding commitment to sell the asset has been entered into and it is
unlikely that any gain will qualify for rollover relief.
BBA GROUP
ANNUAL REPORT
2004
63

NOTES ON FINANCIAL STATEMENTS
Operating
profit before
goodwill
amortisation &
exceptional Goodwill Exceptional Total Average
Turnover Turnover restructuring amortisation restructuring operating Net number
by destination by origin costs & write-downs costs profit assets of employees
1 SEGMENTAL INFORMATION £m £m £m £m £m £m £m 000's
By Market
2004
Materials Technology 572.1 59.6 (5.8) (4.9) 48.9 638.5 3.1
Aviation 799.5 80.6 (15.0) (20.8) 44.8 701.7 9.5
Continuing operations 1,371.6 140.2 (20.8) (25.7) 93.7 1,340.2 12.6
Discontinued 3.4 (0.3) – – (0.3) 6.6 –
Total 1,375.0 139.9 (20.8) (25.7) 93.4 1,346.8 12.6
Net non-operating liabilities (162.9)
Restructuring and discontinued operations provisions (net) (13.2)
Net borrowings (511.6)
659.1
2003
Materials Technology 526.6 65.8 (5.4) (9.2) 51.2 623.6 3.1
Aviation 793.1 81.4 (42.5) (3.5) 35.4 679.5 9.6
Continuing operations 1,319.7 147.2 (47.9) (12.7) 86.6 1,303.1 12.7
Discontinued 10.9 (2.5) (0.2) – (2.7) 7.1 –
Total 1,330.6 144.7 (48.1) (12.7) 83.9 1,310.2 12.7
Net non-operating liabilities (154.7)
Restructuring and discontinued operations provisions (net) (15.4)
Net borrowings (459.5)
680.6
By Geography
2004
United Kingdom 129.0 217.8 14.3 (2.5) (3.3) 8.5 157.2
Mainland Europe 259.3 238.5 34.8 (1.2) (1.6) 32.0 273.5
North America 906.3 871.0 86.8 (16.9) (20.8) 49.1 824.7
Rest of World 77.0 44.3 4.3 (0.2) – 4.1 84.8
Continuing operations 1,371.6 1,371.6 140.2 (20.8) (25.7) 93.7 1,340.2
Discontinued 3.4 3.4 (0.3) – – (0.3) 6.6
Total 1,375.0 1,375.0 139.9 (20.8) (25.7) 93.4 1,346.8
2003
United Kingdom 114.6 216.7 16.8 (29.6) (0.6) (13.4) 124.2
Mainland Europe 216.6 194.7 33.5 (0.4) (2.2) 30.9 215.7
North America 911.7 868.0 93.1 (17.8) (9.8) 65.5 871.3
Rest of World 76.8 40.3 3.8 (0.1) (0.1) 3.6 91.9
Continuing operations 1,319.7 1,319.7 147.2 (47.9) (12.7) 86.6 1,303.1
Discontinued 10.9 10.9 (2.5) (0.2) – (2.7) 7.1
Total 1,330.6 1,330.6 144.7 (48.1) (12.7) 83.9 1,310.2
Total operating profit includes the results of associated companies. The Group interest expense is managed centrally and is not attributable
to individual markets or geographical areas.
Included within the goodwill amortisation and write-downs is a charge of £nil (2003: £25.9m) relating to our pilot training business.
BBA GROUP
ANNUAL REPORT
2004
64

2004 2003
Continuing Discontinued Total Continuing Discontinued Total
2 PROFIT AND LOSS £m £m £m £m £m £m
Turnover 1,371.6 3.4 1,375.0 1,319.7 10.9 1,330.6
Cost of sales (1,087.6) (2.5) (1,090.1) (1,036.4) (10.6) (1,047.0)
Gross profit 284.0 0.9 284.9 283.3 0.3 283.6
Distribution costs (64.0) (0.3) (64.3) (58.5) (0.6) (59.1)
Administrative expenses:
– goodwill amortisation (20.8) – (20.8) (47.9) (0.2) (48.1)
– exceptional costs (25.7) – (25.7) (12.7) – (12.7)
– other administrative expenses (95.0) (0.9) (95.9) (93.6) (2.6) (96.2)
Total administrative expenses (141.5) (0.9) (142.4) (154.2) (2.8) (157.0)
Other operating income (net) 3.9 – 3.9 2.2 0.4 2.6
Net operating expenses (including exceptional costs) (201.6) (1.2) (202.8) (210.5) (3.0) (213.5)
Group operating profit 82.4 (0.3) 82.1 72.8 (2.7) 70.1
Share of operating profit of associates 11.3 – 11.3 13.8 – 13.8
Total operating profit (including associates) 93.7 (0.3) 93.4 86.6 (2.7) 83.9
Operating profit before goodwill amortisation and
exceptional costs 140.2 (0.3) 139.9 147.2 (2.5) 144.7
Discontinued activities include the results of Precision Avionics Inc. and our Fiberweb office in Japan, sold or discontinued in 2004. The loss on
sale or termination of these businesses was £7.9m.
Exceptional costs include the closure of our engine repair and overhaul facility in Millville, New Jersey, further restructuring costs in our
Nonwovens businesses in North America and the costs of aborted acquisitions during the year. For further details of exceptional costs, please
see the Financial Review section of this Annual Report.
2004 2003
£m £m
Profit on ordinary activities before taxation is arrived at after charging:
Audit fees 1.6 1.6
Research and development 11.9 9.4
Operating leases:
Hire of plant and machinery 10.6 11.1
Lease rentals of land and buildings 22.8 22.4
Goodwill amortisation 20.8 48.1
Depreciation of tangible fixed assets:
Owned 62.3 63.4
Leased 11.3 12.4
Fees paid to Deloitte for non-audit services comprise £0.6m (2003: £nil) for further assurance services and £0.3m (2003: £0.6m) in respect of
taxation advisory services.
2004 2003
3 NET INTEREST £m £m
Interest payable and similar charges:
On bank loans and overdrafts 41.6 40.7
On finance leases 1.4 2.2
On all other borrowings 0.9 0.6
43.9 43.5
Interest receivable (31.1) (25.6)
Interest capitalised (0.7) (1.2)
12.1 16.7
Interest has been capitalised using capitalisation rates in the range 2.2% to 5.1% per annum.
BBA GROUP
ANNUAL REPORT
2004
65

NOTES ON FINANCIAL STATEMENTS
2004 2003
4 TAXATION £m £m
United Kingdom
Corporation tax 2.0 2.3
Double tax relief (1.9) (1.8)
Deferred taxation – (1.4)
Adjustments in respect of prior years 2.6 –
Overseas
2.7 (0.9)
Current tax charge 7.8 7.1
Deferred taxation 9.1 15.5
Associates and joint ventures
16.9 22.6
Current tax charge 4.0 4.7
4.0 4.7
Total taxation charge 23.6 26.4
Included in the total taxation charge is taxation attributable to the following items:
Restructuring costs (5.8) (4.1)
Loss on sale of businesses (2.1) (1.6)
Goodwill amortisation (3.0) (2.7)
Capitalised interest 0.1 0.3
(10.8) (8.1)
Corporation tax at 30% (2003: 30%) has been charged on the United Kingdom profits and taxation on overseas profits has been
charged at the rates appropriate to each country.
Factors affecting the current tax charge: 2004 2003
£m £m
Profit on ordinary activities before taxation 73.4 55.2
Tax at standard rate of corporation tax in UK of 30% (2003: 30%) 22.0 16.6
Permanent differences (8.1) 2.1
Capital allowances in excess of depreciation (6.7) (8.0)
Other, including tax rate differences and other timing differences 4.7 1.6
Current tax charge for the year 11.9 12.3
Deferred Taxation
2004
£m
Group
2003
£m
2004
£m
Company
2003
£m
Recognised in provisions for liabilities and charges:
Arising from accelerated capital allowances (80.5) (68.3) – 2.3
Other timing differences 3.8 1.1 – 0.3
Total deferred taxation (note 18) (76.7) (67.2) – 2.6
Deferred taxation is calculated using a United Kingdom corporation tax rate of 30% (2003: 30%) and the rates appropriate to each
overseas company.
There are net deferred tax assets of £15.7m (2003: £15.3m) which have not been recognised on the basis that their future
economic benefit is uncertain.
BBA GROUP
ANNUAL REPORT
2004
66

2004 2003
2004 2003 pence pence
5 DIVIDENDS £m £m per share per share
Equity shares
Ordinary shares
Interim paid on 5 November 2004 15.1 14.4 3.35 3.20
Proposed final payable on 20 May 2005 35.9 34.3 7.95 7.60
51.0 48.7 11.30 10.80
Non-equity shares
5% Cumulative preference shares paid – –
6.75% Cumulative redeemable convertible preference shares paid 3.8 3.8
54.8 52.5
2004 2003
6 EARNINGS PER ORDINARY SHARE £m £m
Earnings
Basic:
Basic earnings attributable to ordinary shareholders 45.9 25.0
Goodwill amortisation and exceptional items (net of tax) 43.5 64.4
Basic earnings before goodwill amortisation and exceptional items 89.4 89.4
Diluted:
Basic earnings attributable to ordinary shareholders 45.9 25.0
Preference dividends – –
Diluted earnings attributable to ordinary shareholders 45.9 25.0
Goodwill amortisation and exceptional items (net of tax) 43.5 64.4
Diluted earnings before goodwill amortisation and exceptional items 89.4 89.4
Number of shares
Weighted average number of 25p ordinary shares:
For basic earnings per share 449.0 453.1
Exercise of share options 4.6 2.7
For diluted earnings per share 453.6 455.8
Earnings per share
Basic:
Basic earnings before goodwill amortisation and exceptional items 19.9p 19.7p
On unadjusted basic earnings attributable to ordinary shareholders 10.2p 5.5p
Diluted:
Diluted earnings before goodwill amortisation and exceptional items 19.7p 19.6p
On unadjusted diluted earnings attributable to ordinary shareholders 10.1p 5.5p
Adjusted earnings per share is shown calculated on earnings before goodwill amortisation and exceptional items because the
directors consider that this gives a better indication of underlying performance. In calculating the diluted earnings per share for
2004, the effects of the convertible shares have been omitted, as they are currently anti-dilutive.
The trustees of the ESOP Trust have waived the right to a dividend during the current and prior year.
BBA GROUP
ANNUAL REPORT
2004
67

NOTES ON FINANCIAL STATEMENTS
Group
2004 2003
7 EMPLOYEES number number
Average monthly number (including Executive Directors)
By market
Materials Technology 3,093 3,116
Aviation 9,527 9,556
12,620 12,672
By region
United Kingdom 1,738 1,799
Mainland Europe 1,249 1,164
North America 9,281 9,368
Rest of World 352 341
12,620 12,672
£m £m
Employment costs (including directors)
Wages and salaries 288.4 299.6
Social security costs 37.9 36.8
Pension costs 12.2 11.6
338.5 348.0
8 DIRECTORS
Emoluments and interests
Details of Directors’ emoluments and interests are provided within the Directors’ Report on Remuneration on pages 49 to 56.
Group
Goodwill Goodwill Licences Licences
2004 2003 2004 2003
9 INTANGIBLE ASSETS £m £m £m £m
Cost
Beginning of year 420.6 422.2 11.3 10.6
Exchange adjustments (22.4) (33.1) (1.2) (1.1)
Acquisitions 73.2 35.5 – –
Additions – – 5.2 1.8
Provided on closure of businesses – (3.0) – –
Disposals (1.3) (1.1) – –
Acquisitions in prior years 2.2 0.1 – –
End of year 472.3 420.6 15.3 11.3
Accumulated amortisation
Beginning of year (104.5) (62.4) (3.2) (2.7)
Exchange adjustments 4.9 5.3 0.5 0.3
Provided during the year (20.8) (48.1) (0.8) (0.8)
Provided on closure of businesses – 0.6 – –
Disposals 0.4 0.1 – –
End of year (120.0) (104.5) (3.5) (3.2)
Net book value end of year 352.3 316.1 11.8 8.1
BBA GROUP
ANNUAL REPORT
2004
68

Group Company
Land and Plant and Land and Plant and
buildings machinery buildings machinery
10 TANGIBLE FIXED ASSETS £m £m £m £m
Cost or valuation
Beginning of year 378.9 770.3 0.5 5.4
Exchange adjustments (20.8) (29.3) – –
Transfers to stock – (4.9)
Acquisition of businesses 7.4 15.3 – –
Additions 10.9 46.3 – 0.1
Disposals (8.4) (10.6) – –
Asset write downs (0.1) (14.6) – (0.2)
End of year 367.9 772.5 0.5 5.3
At cost
366.9 765.6 0.5 5.3
At valuation 1988
1.0 6.9
–
–
367.9 772.5 0.5 5.3
Accumulated depreciation
Beginning of year
Exchange adjustments
Provided during the year
Disposals
Asset write downs
End of year
Net book value end of year
Owned assets
Leased assets
97.3
(5.8)
16.5
(1.6)
–
106.4
282.5
(11.4)
57.1
(9.7)
(9.0)
309.5
0.1
–
0.1
–
–
0.2
1.2
–
0.4
–
–
1.6
84.5 435.6 0.1 3.7
177.0 27.4 0.3
–
261.5 463.0 0.4 3.7
Interest capitalised in the year, net of tax relief, included in the cost of tangible fixed assets amounts to £0.6m (2003: £1.2m) for the Group
and £nil (2003: £nil) for the Company.
2004
£m
Group Company
2003 2004 2003
£m £m £m
Land and buildings
Freehold 84.5 90.9 0.1 0.1
Long leasehold 3.7 3.7 – –
Short leasehold 173.3 187.0 0.3 0.3
261.5 281.6 0.4 0.4
Value of land included above not subject to depreciation 17.5 15.9 – –
Capital commitments
Capital expenditure contracted for but not provided for 5.6 3.2 – –
5.6 3.2 – –
BBA GROUP
ANNUAL REPORT
2004
69

NOTES ON FINANCIAL STATEMENTS
Group Company
2004 2003 2004 2003
11 FIXED ASSET INVESTMENTS £m £m £m £m
Subsidiary undertakings
Cost of shares
Beginning of year 1,486.8 1,486.8
Additions 1.0 –
End of year 1,487.8 1,486.8
Provisions
Beginning of year (54.3) (28.4)
Provided during year – (25.9)
End of year (54.3) (54.3)
Net book value end of year 1,433.5 1,432.5
Loans to subsidiary undertakings
Beginning of year 116.4 116.4
Additions – –
End of year 116.4 116.4
Associated undertakings
Cost of shares and accumulated reserves
Beginning of year 26.6 18.4 – –
Exchange adjustments 0.2 1.6 – –
Additions 1.0 2.3 – –
Write-downs (0.5) – – –
Retained profit 6.1 4.3 – –
Net book value end of year 33.4 26.6 – –
Total
Fixed asset investments 33.4 26.6 1,549.9 1,548.9
The names and interests in major subsidiary and associated undertakings are shown on page 86. Details of acquisitions of
subsidiary undertakings are given in note 21. None of the investments in associated undertakings are listed on a recognised
exchange. The net book value of associated undertakings at 31 December 2004 comprises cost of £14.6m (2003: £13.9m) and
accumulated reserves of £18.8m (2003: £12.7m). Retained profit from associated undertakings of £6.1m (2003: £4.3m) represents
the Group's share of operating profit of £11.3m (2003: £13.8m) less taxation and interest of £4.3m (2003: £6.8m) and dividends of
£0.9m (2003: £2.7m).
12 STOCKS
2004
£m
Group
2003
£m
2004
£m
Company
2003
£m
Raw materials 104.4 84.5 – –
Work in progress 35.5 32.4 – –
Finished goods 79.4 78.4 – –
219.3 195.3 – –
There is no material difference between the balance sheet value of stocks and their replacement cost.
BBA GROUP
ANNUAL REPORT
2004
70

Group Company
2004 2003 2004 2003
13 DEBTORS £m £m £m £m
Trade debtors 202.2 184.8 – –
Amounts owed by subsidiary undertakings – – 1,171.1 1,447.1
Taxation recoverable 4.8 0.6 – –
Other debtors, prepayments and accrued income 134.7 83.6 88.5 34.7
Debtors due within one year 341.7 269.0 1,259.6 1,481.8
Amounts owed by joint ventures and associates 3.0 3.3 – –
Other debtors due after one year 15.8 49.1 – 40.4
Debtors due after one year 18.8 52.4 – 40.4
360.5 321.4 1,259.6 1,522.2
14 CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR
Borrowings (note 15)
Loans other than from banks
Bank loans and overdrafts
Obligations under finance leases
Others
Trade creditors
Amounts owed to subsidiary undertakings
Corporate tax – United Kingdom
– Overseas
Other taxation and social security
Other creditors
Accruals and deferred income
Ordinary dividends
Preference dividends
2004
£m
0.7
47.1
2.8
50.6
130.8
–
8.7
46.1
7.1
54.6
60.9
35.9
0.3
Group
2003
£m
1.0
43.4
8.8
53.2
117.3
–
8.4
45.1
7.8
48.6
63.0
34.3
0.3
2004
£m
–
3.0
–
3.0
–
1,449.3
8.4
–
0.1
3.7
14.1
35.9
0.3
Company
2003
£m
–
0.1
–
0.1
–
1,725.2
8.4
–
0.1
8.2
7.0
34.3
0.3
344.4 324.8 1,511.8 1,783.5
BBA GROUP
ANNUAL REPORT
2004
71

NOTES ON FINANCIAL STATEMENTS
Group Company
2004 2003 2004 2003
15 BORROWINGS £m £m £m £m
Borrowings summary
Long-term loans
Repayable after five years 0.2 0.9 – –
Medium-term loans
Repayable between one and two years 6.7 479.4 – 511.3
Repayable between two and five years 613.7 87.7 602.8 37.4
Finance leases
Repayable after five years 25.4 36.3 – –
Repayable between one and two years 2.8 3.2 – –
Repayable between two and five years 8.2 6.9 – –
657.0 614.4 602.8 548.7
Short-term
Overdrafts, borrowings and finance leases repayable within one year 50.6 53.2 3.0 0.1
Total borrowings and finance leases 707.6 667.6 605.8 548.8
Cash at bank and in hand (134.0) (154.7) (18.5) (24.3)
Other liquid assets within other debtors (62.0) (53.4) (62.0) (53.4)
Net borrowings and finance leases 511.6 459.5 525.3 471.1
Of the borrowings repayable after five years the following are:
Wholly repayable after five years – – – –
Instalments falling due after five years 0.2 0.9 – –
Borrowings analysis:
Secured
Currencies other than sterling
Mortgage loans repayable over periods varying from one to
two years and at interest rates from 3.25% to 6.0% 2.2 0.8 – –
Finance leases 39.2 55.2 – –
41.4 56.0 – –
Unsecured
Bank loans and overdrafts
Sterling 128.2 64.7 105.6 50.0
US dollar 396.2 440.7 380.3 408.0
Euro 119.4 84.4 97.9 69.2
Canadian dollar 21.8 21.8 21.8 21.6
Other currencies 0.6 – 0.2 –
Total borrowings and finance leases 707.6 667.6 605.8 548.8
Cash at bank and in hand (134.0) (154.7) (18.5) (24.3)
Other liquid assets within other debtors (62.0) (53.4) (62.0) (53.4)
Net borrowings and finance leases 511.6 459.5 525.3 471.1
The interest rates on unsecured loans range from 2.4% to 5.75% per annum and repayments are due at varying dates up to 2010.
BBA GROUP
ANNUAL REPORT
2004
72

Group Company
2004 2003 2004 2003
15 BORROWINGS – continued £m £m £m £m
Leasing commitments
Finance leases
Rentals net of interest due:
Within one year 2.8 8.8 – –
One to two years 2.8 3.2 – –
Two to five years 8.2 6.9 – –
After five years 25.4 36.3 – –
Obligations under finance leases 39.2 55.2 – –
The interest rates on loans due after five years are based mainly on 6 month US dollar interest rates and are due to be repaid at
various dates between 2014 to 2023.
Operating leases
Annual commitments under non-cancellable operating leases expiring:
Plant and machinery
Within one year 3.1 2.5 – –
One to five years 5.7 3.4 – –
After five years 0.6 1.5 – –
9.4 7.4 – –
Included in Group commitments after five years is £nil (2003: £nil) which is guaranteed by the Company.
Land and buildings
Within one year 3.3 3.3 0.2 0.2
One to five years 4.1 4.2 1.2 1.2
After five years 15.3 16.2 0.4 0.6
22.7 23.7 1.8 2.0
Included in Group commitments after five years is £11.3m (2003: £11.0m) which is guaranteed by the Company.
Facilities
Unutilised facilities were available to the Group as follows:
Medium and long-term 347.3 301.3
Overdraft, short-term and trade bill discounting 28.8 28.3
Total unutilised facilities 376.1 329.6
The loan facilities are contractually committed by banks and other institutions; the overdraft facilities are provided by several banks
and are repayable on demand.
Contingent liabilities
Guarantees of subsidiary undertakings’ overdrafts
or loans and other guarantees 7.1 3.4 56.3 81.4
Foreign currency contracts
At 31 December 2004, the Group had £347.1m (2003: £361.5m) of forward contracts to buy/sell foreign currency.
16 CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR
2004
£m
Group
2003
£m
2004
£m
Company
2003
£m
Borrowings (note 15)
Loans other than from banks 4.5 1.6 – –
Bank loans 616.1 566.4 602.8 509.2
Obligations under finance leases 36.4 46.4 – –
657.0 614.4 602.8 509.2
Others
Other creditors 2.7 2.7 – –
659.7 617.1 602.8 509.2
BBA GROUP
ANNUAL REPORT
2004
73

NOTES ON FINANCIAL STATEMENTS
17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS
Page 23 of the Group Finance Director’s Review provides an explanation of the role that financial instruments have had during the year in creating
or changing the risks the Group faces in its activities. The explanation summarises the objectives and policies for holding or issuing financial
instruments and similar contracts, and the strategies for achieving those objectives that have been followed during the year. The numerical
disclosures in this note deal with financial assets and liabilities as defined in Financial Reporting Standard 13 - Derivatives and Other Financial
Instruments: Disclosures (FRS 13). For this purpose non-equity shares issued by the Company are dealt with in the disclosures in the same way
as the Group’s financial liabilities but separately disclosed. Certain financial assets such as investments in subsidiary and associated companies
are also excluded from the scope of these disclosures. As permitted by FRS 13, short-term debtors and creditors have been excluded from the
disclosures, other than the currency disclosures.
Interest rate profile
After taking into account interest rate swaps and currency swaps entered into by the Group, the interest rate profile of the Group’s financial
liabilities at 31 December 2004 was as follows:
Floating
Fixed rate rate Total
£m £m £m
Sterling – 128.2 128.2
US Dollar 306.4 335.9 642.3
Euro 73.6 151.5 225.1
Other – 44.9 44.9
Financial liabilities excluding non-equity capital
Non-equity capital:
Cumulative preference shares
Cumulative redeemable convertible preference shares
Total financial liabilities
Of which:
Total borrowings
Notional value of derivative financial instruments
Non-equity capital
Total financial liabilities
The profile at 31 December 2003 for comparison purposes was as follows:
380.0
0.2
56.0
436.2
Fixed rate
£m
660.5
–
–
660.5
Floating
rate
£m
1,040.5
0.2
56.0
1,096.7
707.6
332.9
56.2
1,096.7
Sterling – 64.9 64.9
US Dollar 384.3 357.7 742.0
Euro 75.2 116.8 192.0
Other – 45.3 45.3
Financial liabilities excluding non-equity capital 459.5 584.7 1,044.2
Non-equity capital:
Cumulative preference shares 0.2 – 0.2
Cumulative redeemable convertible preference shares 56.1 – 56.1
Total financial liabilities 515.8 584.7 1,100.5
Of which:
Total borrowings
Notional value of derivative financial instruments
Non-equity capital
Total financial liabilities 1,100.5
BBA GROUP
ANNUAL REPORT
2004
74
Total
£m
667.6
376.6
56.3

17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS – continued
Further analysis of the interest rate profile at 31 December is as follows:
US Dollar
Euro
Total borrowings
Non-equity
capital:
Cumulative
preference shares
Cumulative
redeemable convertible preference shares
2004 2003
Fixed rate Fixed rate
weighted weighted
average average
Weighted period for Weighted period for
average which rate average which rate
interest rate is fixed interest rate is fixed
% Years % Years
4.3 3.3 4.2 2.4
3.5 0.4 4.0 2.2
4.3 3.1 4.1 2.4
5.0 – 5.0 –
6.8 – 6.8 –
6.8 – 6.8 –
The interest rate on floating rate financial liabilities is linked to sterling LIBOR in the case of sterling liabilities and the relevant currency LIBOR
for currency denominated liabilities. Further details of interest rates on long-term borrowings are given in note 15.
Floating Total
Fixed rate rate 2004 2003
£m £m £m £m
The Group held the following financial assets:
Sterling 73.4 369.3 442.7 481.5
US Dollar – 56.3 56.3 58.9
Euro – 20.7 20.7 33.7
Other – 9.2 9.2 10.6
Vendor notes and other debtors due outside one year – 18.8 18.8 52.4
Total financial assets 73.4 474.3 547.7 637.1
Of which:
Cash at bank and short-term deposits
Notional value of derivative financial instruments
Vendor notes and other debtors due outside one year
134.0
394.9
18.8
Total financial assets 547.7 637.1
The fixed rate on the sterling assets is in relation to interest rate swaps with a weighted average interest rate of 4.1% (2003: 4.1%), which are due
to mature during the second half of 2005.
Cash at bank and short-term deposits earn interest determined with reference to the relevant money market deposit rates. Vendor notes
relate to disposals made in previous years and earn interest determined with reference to the relevant LIBOR.
Currency exposures
The extent to which the Group’s operating entities hold monetary assets and liabilities in currencies other than in their local currency has been
reviewed. Taking into account the impact of forward currency contracts and other derivative instruments, the Group had no material profit and
loss exposure to foreign exchange gains and losses on monetary assets and liabilities denominated in foreign currencies as at 31 December 2004.
Gains and losses on hedges
The Group enters into forward currency contracts to eliminate the currency exposures that arise on sales denominated in foreign currencies
immediately those sales are transacted. It also uses interest rate swaps and currency swaps to manage its interest rate profile and translation
exposures. Gains and losses on hedges are not recognised until the exposure that is being hedged is itself recognised.
154.7
430.0
52.4
BBA GROUP
ANNUAL REPORT
2004
75

NOTES ON FINANCIAL STATEMENTS
17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS – continued
The table below sets out unrecognised gains and losses in respect of hedges at the beginning and end of the year:
Net losses on hedges at 1 January 2004
£m
(13.2)
Net losses arising in previous years included in 2004 results 8.1
Net losses arising in previous years and not included in 2004 results (5.1)
Net gains arising in 2004 and not included in 2004 results 6.9
Net gains on hedges at 31 December 2004
Of which:
1.8
Net losses expected to be recognised in 2005 or after (0.6)
Net gains expected to be recognised in 2006 or after 2.4
1.8
Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities at 31 December was as follows:
2004 2003
£m £m
In one year or less 50.6 53.2
In more than one year but not more than two years 9.5 482.6
In more than two years but not more than five years 621.9 94.6
In more than five years 25.6 37.2
707.6 667.6
Borrowing facilities
The Group had undrawn committed facilities at 31 December, in respect of which all conditions precedent have been met, as follows:
2004 2003
£m £m
Expiring in one year or less 2.1 2.5
Expiring in more than one year but not more than two years – 38.8
Expiring in more than two years 347.3 262.6
349.4 303.9
Fair values
Set out below is a comparison by category of book values and fair values of the Group's financial assets and liabilities at 31 December:
2004 2003
Book value Fair value Book value Fair value
£m £m £m £m
Primary financial instruments held or issued to finance the Group’s operations:
Short-term financial liabilities and current proportion of long-term borrowings (50.6) (50.6) (53.2) (53.2)
Long-term borrowings (657.0) (657.5) (614.4) (615.1)
Non-equity capital (56.2) (91.1) (56.3) (80.1)
Cash deposits 134.0 134.0 154.7 154.7
Vendor notes and other debtors due outside one year
Derivative financial instruments held to manage the interest rate and currency profile:
18.8 18.8 52.4 52.4
Interest rate swaps – (6.4) – (19.5)
Currency swaps 62.0 62.0 53.4 53.4
Forward foreign currency contracts – 8.2 – 6.5
Commodity swap – – – 0.5
BBA GROUP
ANNUAL REPORT
2004
76

17 DERIVATIVES AND OTHER FINANCIAL INSTRUMENTS – continued
The fair value of the non-equity capital, interest rate swaps, currency swaps and forward foreign currency contracts have been determined by
reference to prices available from the markets on which the instruments involved are traded. All the other fair values shown above have been
calculated by discounting cash flows at prevailing interest rates.
The interest rates on currency swaps are based upon short-term floating rates and therefore the difference between the book value and
fair value is immaterial.
Exchange
Beginning rate Acquisitions/ Charged Transferred Utilised End
of year adjustments (disposals) in year from creditors in year of year
18 PROVISIONS FOR LIABILITIES AND CHARGES £m £m £m £m £m £m £m
Group
Overseas pension funds 7.9 (0.3) – – – (0.9) 6.7
Restructuring provisions 2.3 (0.2) – 1.9 0.5 (2.2) 2.3
Discontinued operations 26.4 (0.1) – 0.5 – (2.6) 24.2
Post-retirement benefits 12.1 (0.8) – 0.8 – – 12.1
Deferred taxation 67.2 (2.5) 0.3 11.7 – – 76.7
115.9 (3.9) 0.3 14.9 0.5 (5.7) 122.0
The pension and post-retirement benefit provisions arise from unfunded pension and other post-retirement benefit obligations to former
employees and are expected to be payable over the remaining average service lives of employees.
The charges to the provision for discontinued operations relate principally to the closure of our repair and overhaul facility at Millville, USA.
The spend represents costs relating to prior year disposals. The provision of £24.2m is partially offset by expected recoveries from third parties of
£13.3m (2003: £13.3m), which are included within debtors due after one year in note 13. It is expected that the majority of this expenditure will not
be incurred within the next five years.
19 CAPITAL AND RESERVES
Share capital
Number of shares
Ordinary 25p shares
5% Cumulative preference £1 shares
6.75% Cumulative redeemable convertible preference £1 shares
Company
Allotted, called
up
and fully paid
2004 2003
millions millions
451.3
0.2
56.0
451.1
0.2
56.1
2004
millions
600.0
0.2
95.0
Company
Authorised
2003
millions
Nominal value of shares £m £m £m £m
Equity shares
Ordinary 25p shares
Non-equity shares
5% Cumulative preference £1 shares
6.75% Cumulative redeemable convertible preference £1 shares
112.8
0.2
56.0
56.2
169.0
112.8
0.2
56.1
56.3
169.1
150.0
0.2
95.0
95.2
245.2
600.0
0.2
95.0
150.0
0.2
95.0
95.2
245.2
BBA GROUP
ANNUAL REPORT
2004
77

NOTES ON FINANCIAL STATEMENTS
19 CAPITAL AND RESERVES – continued
Issue of share capital
On 7 June 2004, the Company issued 55,691 ordinary 25p shares following the exercise of conversion rights on 31 May 2004 by
holders of 97,277 6.75% cumulative redeemable preference £1 shares. During the year a total of 121,316 ordinary 25p shares were
issued under the BBA Group share option schemes. The consideration for shares issued in respect of share options was £0.2m.
During the year a total of 475,788 ordinary shares were released from the BBA Group Employee Share Trust to satisfy the exercise of
options under the BBA Group 1994 Savings-Related Share Option Scheme. The consideration for shares issued in respect of share
options was £1.0m.
Group
2004
£m
Company
2004
£m
Reserves attributable to equity interests
Share premium account
Beginning of year 285.0 285.0
Premium on shares issued 0.3 0.3
End of year 285.3 285.3
Revaluation reserve
Beginning and end of year 3.9 3.5
Other
Merger reserve
Beginning and end of year – 99.3
Capital reserve
Beginning and end of year 14.5 147.3
ESOP Trust
Beginning of year (9.0) (9.0)
Released to satisfy share options exercised 1.6 1.6
End of year (7.4) (7.4)
Total other 7.1 239.2
Profit and loss account
Beginning of year 217.1 75.1
Exchange adjustments (17.6) –
Loss on release of ESOP shares (0.6) (0.6)
Retained loss for the financial year (5.1) (57.0)
End of year 193.8 17.5
The cumulative amount of goodwill written off against the Group’s reserves in respect of acquisitions made prior to 31 December
1997, net of goodwill relating to disposals, as at 31 December 2004 is £262.1m (2003: £262.1m). During 2004, the Company received
£0.2m on the issue of shares in respect of the exercise of share options awarded under the various share option plans. Employees
paid £0.2m to the Group for the issue of these shares.
The ESOP Trust represents shares of the Company held under an Employee Share Trust and comprise 2,137,111 ordinary
25p shares (2003: 2,648,619 shares). The future use of these shares is yet to be determined.
BBA GROUP
ANNUAL REPORT
2004
78

19 CAPITAL AND RESERVES – continued
Share Option Schemes
1 The BBA Group 1994 Executive Share Option Scheme:
Granted Acquisition price Outstanding
in year pence per share at 31.12.04 Dates exercisable
1.1 Ordinary Options
UK Executives 323.33 19,023 1999 to 2006
341.33 68,000 2000 to 2007
422.00 170,100 2001 to 2008
416.00 166,800 2002 to 2009
370.50 198,800 2003 to 2010
357.50 135,000 2003 to 2010
270.00 314,889 2004 to 2011
205.90 1,141,850 2004 to 2011
2,214,462
Overseas Executives 323.33 19,700 1999 to 2006
341.33 51,667 2000 to 2007
422.00 158,843 2001 to 2008
416.00 171,064 2002 to 2009
370.50 187,800 2003 to 2010
357.50 127,500 2003 to 2010
270.00 323,300 2004 to 2011
205.90 353,850 2004 to 2011
1,393,724
All Executives 288.20 3,204,200 2005 to 2012
209.35 139,200 2005 to 2012
153.00 8,515,855 2006 to 2013
260.00 264,000 2006 to 2013
4,235,900 275.25 4,121,300 2007 to 2014
16,244,555
Ordinary Options were exercised during the year in respect of 108,500 ordinary 25p shares for a consideration of £202,375.80.
1.2 Super Options
UK Executives 290.00 29,000 2000 to 2005
Overseas Executives 323.33 89,600 2001 to 2006
118,600
No Super Options were granted or exercised during the year under review.
BBA GROUP
ANNUAL REPORT
2004
79

NOTES ON FINANCIAL STATEMENTS
19 CAPITAL AND RESERVES – continued
2 The BBA Group Share Appreciation Rights Plan (US)
Acquisition price
pence per share
Outstanding
at 31.12.04 Dates exercisable
Ordinary options 323.33 29,600 1999 to 2006
341.33 197,000 2000 to 2007
422.00 253,600 2001 to 2008
485.00 45,500 2002 to 2009
416.00 309,600 2002 to 2009
370.50 526,700 2003 to 2010
357.50 332,500 2003 to 2010
270.00 968,800 2004 to 2011
205.90 1,471,550 2004 to 2011
Super options 323.33
341.33
422.00
No Share Appreciation Rights were granted or exercised during the year under review.
3 The BBA Group Incentive Share Option Plan (US)
Ordinary options
Acquisition price
pence per share
343.00
428.00
425.00
No incentive share options were granted or exercised during the year under review.
27,000
30,610
32,054
4,224,514
Outstanding
at 31.12.04
17,833
14,257
14,536
46,626
2001 to 2006
2002 to 2007
2003 to 2008
Dates exercisable
2000 to 2007
2001 to 2008
2002 to 2009
4 The BBA Group 1994 Savings-Related Share Option Scheme:
4.1 Options were exercised during the year in respect of 488,604 ordinary 25p shares for a consideration of £1,021,238.72.
4.2 The following options were outstanding at 31 December 2004:
Acquisition price Outstanding
pence per share at 31.12.04 Dates exercisable
375 33,300 2004 to 2005
209 1,483 2005
209 609,876 2006
213 313,254 2006 to 2007
213 253,097 2008 to 2009
1,211,010
Rights of non-equity interests
5% Cumulative preference £1 shares:
i. entitle holders, in priority to holders of all other classes of shares, to a fixed cumulative preferential dividend at a rate of 5.0% per
annum per share payable half yearly in equal amounts on 1 February and 1 August.
ii. on a return of capital on a winding up, or otherwise, will carry the right to repayment of capital together with a premium of 12.5p
per share and a sum equal to any arrears or deficiency of dividend; this right is in priority to the rights of the convertible preference
and ordinary shareholders;
iii. carry the right to attend and vote at a general meeting of the Company only if, at the date of the notice convening the meeting,
payment of the dividend to which they are entitled is six months or more in arrears, or if a resolution is to be considered at the
meeting for winding-up the Company or reducing its share capital or sanctioning the sale of the undertakings of the Company
or varying or abrogating any of the special rights attaching to them.
BBA GROUP
ANNUAL REPORT
2004
80

19 CAPITAL AND RESERVES – continued
6.75% Cumulative redeemable convertible preference £1 shares:
i. entitle holders (subject to the prior rights of the 5% cumulative preference £1 shares) to a fixed cumulative preference dividend
at a rate of 6.75% per annum per share, payable half yearly in equal amounts on 31 May and 30 November;
ii. carry the right to be converted into ordinary shares at the option of the holder on 31 May 2005 at the rate of 57.25 ordinary shares
for every £100 nominal of convertible preference shares;
iii. will be redeemed by the Company on 31 May 2006 at par (if not previously converted or redeemed) and any arrears of dividend will
be paid;
iv. on a return of capital on a winding up, or otherwise, will carry the right to repayment of capital and payment of accrued dividends
in priority to ordinary shares but after the 5% cumulative preference £1 shares;
v. carry the right to attend and vote at a general meeting of the Company only if, at the date of the notice convening the meeting,
payment of the dividend to which they are entitled is six months or more in arrears, or if a resolution is to be considered at the
meeting for winding-up the Company, or for modifying or abrogating any special rights attaching to them.
2004
GROUP
2003
20 RECONCILIATION OF OPERATING PROFIT TO OPERATING CASH FLOWS £m £m
Operations
Operating profit (after goodwill amortisation and exceptional restructuring costs) 82.1 70.1
Depreciation 73.6 75.8
Goodwill amortisation 20.8 48.1
Profit on sale of tangible fixed assets – (0.1)
Increase in stocks (28.5) (0.7)
Increase in debtors (12.4) (8.4)
Increase/ (decrease) in creditors 2.5 (3.5)
(Decrease) / increase in restructuring provisions (0.3) 1.6
(Decrease) / increase in overseas pension funds and post-retirement benefit provisions (0.1) 1.3
Non-cash element of exceptional restructuring costs 7.7 0.8
Net cash inflow from operating activities
Net cash (outflow) / inflow from discontinued activities included above
Net cash outflow from exceptional restructuring costs included above
Beginning
of year
£m
Cash flow
£m
Acquisitions
& disposals
£m
145.4
(1.4)
(16.9)
Exchange
adjustments
£m
185.0
5.2
(10.0)
End
of year
£m
Analysis of net debt
Cash 111.8 (8.3) 5.2 (8.1) 100.6
Term deposits 42.9 (9.5) – – 33.4
Debts due within one year (44.4) (2.1) (1.7) 0.4 (47.8)
Debts due after one year (568.0) (69.2) (9.0) 25.6 (620.6)
Liquid resources held within other debtors 53.4 (7.6) – 16.2 62.0
Finance leases (55.2) 15.5 (1.9) 2.3 (39.2)
(459.5) (81.1) (7.4) 36.4 (511.6)
Cash at bank and in hand as disclosed on the Group Balance Sheet is the sum of cash and term deposits included within the analysis
of net debt above.
BBA GROUP
ANNUAL REPORT
2004
81

NOTES ON FINANCIAL STATEMENTS
21 ACQUISITION OF SUBSIDIARY UNDERTAKINGS
The Group made a number of acquisitions during the year which are detailed in the Directors' Report on page 40. The directors have
performed an exercise to establish the provisional fair value of the assets and liabilities of these acquisitions. The goodwill arising on
these acquisitions was £73.2m. Adjustments Provisional
to align fair
Book accounting value to
Value Revaluations policies BBA Group
£m £m £m £m
Tangible fixed assets 23.9 (0.2) (1.0) 22.7
Investments 0.3 – – 0.3
Stocks 3.6 – – 3.6
Debtors 23.2 – (0.3) 22.9
Creditors (17.9) (4.5) (0.2) (22.6)
Taxation (2.1) – – (2.1)
Net borrowings (7.4) – – (7.4)
Net assets/(liabilities) 23.6 (4.7) (1.5) 17.4
Goodwill 73.2
Cash consideration 90.6
The acquisitions noted above contributed £2.9m to the Group’s net operating cash flows, paid £0.1m in respect of net returns on
investment and servicing of finance, paid £nil in respect of taxation, paid £1.7m in respect of capital expenditure and utilised £nil for
investing activities.
22 DISPOSALS OF SUBSIDIARY UNDERTAKINGS AND BUSINESSES
Total
Assets disposed of £m
Tangible fixed assets 0.4
Stocks 4.2
Debtors 0.7
Creditors (0.2)
Goodwill 1.0
Net assets sold 6.1
Loss on disposal
Discontinued operations (4.9)
Consideration (net of costs paid) 1.2
Satisfied by
Disposal costs (1.1)
Deferred consideration 1.0
Cash consideration 1.3
1.2
Cash flow
Net cash inflow from disposal of subsidiary undertakings and businesses
Cash consideration (net of costs paid) 0.2
0.2
Amounts included in the cash flow in respect of companies and businesses sold during the year
These companies contributed £nil to the Group's net operating cash flows, £nil in respect of investments and servicing of finance,
£nil in respect of taxation and spent £nil on capital expenditure.
The turnover of companies and businesses sold during the year was £2.2m (2003: £4.0m). These companies made a
contribution to operating profit of £nil (2003: £nil).
BBA GROUP
ANNUAL REPORT
2004
82

23 PENSIONS AND OTHER POST-RETIREMENT BENEFITS
The Group operates a number of plans worldwide. The main plans, which cover the majority of employees, are of the funded defined benefit type.
The normal pension cost for the Group, including early retirement costs, was £12.2m (2003: £11.6m) of which £8.8m (2003: £7.5m) was in respect
of foreign schemes. This includes £5.8m (2003: £5.9m) relating to defined contribution schemes. The pension costs are assessed in accordance
with the advice of independent qualified actuaries, where practicable, using a variety of methods and assumptions and otherwise, in respect of
certain foreign schemes, in accordance with local regulations.
The Group’s main UK pension commitments are contained within a defined benefit scheme with assets held in a separate trustee
administered fund. Contributions to the scheme are made and the pension cost is assessed using the projected unit method. The latest actuarial
valuation of the scheme was as at 31 March 2004. The principal assumptions used in the valuation of the liabilities were an average investment
return of 6.7% per annum before retirement and 4.9% after retirement, pay inflation of 4.4% (after promotional increases) per annum and pension
increases of 2.8% per annum. The market value of the assets of the scheme at the date of the actuarial valuation was £370.5m. The actuarial
value of the scheme assets represented 91% of the liabilities for benefits that had accrued to members, after allowing for expected future
increases in earnings, but excluding the costs of early retirement which are dealt with on a pay as you go basis. The excess of liabilities over
assets will be spread over the average remaining service lives of employees to ensure that the scheme liabilities are met as they fall due.
The Group's foreign pension schemes mainly relate to a number of funded defined benefit pension arrangements in North America.
Pension costs have been calculated by independent qualified actuaries, using the projected unit method and assumptions appropriate to the
arrangements in place. The principal assumptions used for the main schemes in North America were that the discount rate used to determine
the pension liabilities was 6.0% per annum, and that future salary increases will be 3.75% per annum.
The total market value of the assets of the North American defined benefit pension schemes as at 31 December 2004 was £52.3m (2003:
£50.1m). The aggregate value of the schemes' assets represented 64% of the liabilities for benefits that had accrued to members (2003: 63%).
Included in the balance sheet (note 18) is a provision of £6.7m (2003: £7.9m) in relation to overseas pension schemes.
The Group also operates a plan in North America which principally covers healthcare and life assurance benefits for its retirees. The
costs of these other post-retirement benefits are assessed by independent qualified actuaries and accounted for on an accruals basis. The main
assumptions used to determine these costs were a discount rate of 6.0% per annum, and an allowance for the inflation in healthcare costs of
2.7% per annum.
In accordance with FRS 17, and subject to materiality, the latest actuarial valuations of the group's defined benefit pension schemes
and healthcare plan have been reviewed and updated as at 31 December 2004. The following weighted average financial assumptions have
been adopted:
United Kingdom North America Rest of World
p.a. (%) 2004 2003 2002 2004 2003 2002 2004 2003 2002
Discount rate 5.3 5.5 5.6 6.0 6.2 6.7 5.2 5.7 5.5
General pay increases 4.4 4.3 4.0 3.7 3.7 4.1 2.0 3.7 3.7
Inflation assumptions 2.9 2.8 2.3 2.7 2.7 3.0 1.0 2.0 2.0
Pension increases 2.7 2.7 2.4 – – – 1.0 1.5 1.5
BBA GROUP
ANNUAL REPORT
2004
83

NOTES ON FINANCIAL STATEMENTS
23 PENSIONS AND OTHER POST-RETIREMENT BENEFITS – continued
The fair value of the assets and liabilities of the schemes and the expected return on assets at each balance sheet date were:
United Kingdom North America Rest of World Total
£m 2004 2003 2002 2004 2003 2002 2004 2003 2002 2004 2003 2002
Assets
Equities 119.2 130.6 108.3 25.1 21.4 25.6 0.3 0.2 0.2 144.6 152.2 134.1
Bonds 205.9 192.1 189.3 9.5 16.5 22.8 0.1 0.1 0.1 215.5 208.7 212.2
Property 36.1 33.7 32.1 – – – – – – 36.1 33.7 32.1
Insurance Policies 7.9 8.8 8.7 17.7 12.2 0.5 – – - 25.6 21.0 9.2
Cash 12.8 3.7 3.7 – – – – – - 12.8 3.7 3.7
Total market values of scheme assets 381.9 368.9 342.1 52.3 50.1 48.9 0.4 0.3 0.3 434.6 419.3 391.3
Present value of scheme liabilities 415.3 388.0 353.6 82.0 79.4 74.0 7.2 6.7 4.9 504.5 474.1 432.5
Deficit in the schemes (33.4) (19.1) (11.5) (29.7) (29.3) (25.1) (6.8) (6.4) (4.6) (69.9) (54.8) (41.2)
Related deferred tax asset – 5.7 3.4 11.9 11.7 10.0 2.0 1.9 1.4 13.9 19.3 14.8
Net pensions liabilities (33.4) (13.4) (8.1) (17.8) (17.6) (15.1) (4.8) (4.5) (3.2) (56.0) (35.5) (26.4)
The funding policy for the United Kingdom and majority of the North American Schemes is reviewed on a systematic basis in consultation with the
independent scheme actuary in order to ensure that the funding contributions from sponsoring employers are appropriate to meet the liabilities
of the schemes over the long term.
Long Term Expected Return on Assets (%) United Kingdom North America
2004 2003 2002 2004 2003 2002
Equities 8.5 8.8 8.5 8.5 9.0 9.0
Bonds 4.7 5.0 4.8 5.5 5.7 6.2
Property 5.5 5.8 5.5 – – N/A
Insurance Policies 5.3 5.5 5.6 3.0 3.2 N/A
Cash 4.5 4.0 4.0 – – N/A
United Kingdom North America Rest of World Total
£m 2004 2003 2004 2003 2004 2003 2004 2003
Operating Charge
Current service cost (5.7) (5.0) (1.5) (1.4) (0.2) (0.2) (7.4) (6.6)
Curtailments/settlements – – 2.0 – – – 2.0 –
Past service cost (0.1) (0.1) – – – – (0.1) (0.1)
Total operating charge (5.8) (5.1) 0.5 (1.4) (0.2) (0.2) (5.5) (6.7)
Net Finance Charges
Expected return on schemes' assets 23.2 20.5 3.3 3.6 – – 26.5 24.1
Interest on pension schemes' liabilities (21.0) (19.4) (5.0) (5.0) (0.3) (0.3) (26.3) (24.7)
Net return 2.2 1.1 (1.7) (1.4) (0.3) (0.3) 0.2 (0.6)
Actuarial Gain/(loss)
Actual return less expected return on assets 5.4 20.1 1.1 3.1 0.1 – 6.6 23.2
Experience gains and losses on liabilities (9.0) – (1.6) (2.3) – (1.6) (10.6) (3.9)
Currency translation adjustment – – 2.1 2.7 – 0.1 2.1 2.8
Changes in assumptions (11.6) (28.5) (3.1) (6.5) – 0.1 (14.7) (34.9)
Actuarial loss (15.2) (8.4) (1.5) (3.0) 0.1 (1.4) (16.6) (12.8)
Movement in Schemes' deficit during the year
At 1 January (19.1) (11.5) (29.3) (25.1) (6.4) (4.6) (54.8) (41.2)
Current service cost (5.7) (5.0) (1.5) (1.4) (0.2) (0.2) (7.4) (6.6)
Contributions 4.5 4.8 2.3 1.6 – 0.1 6.8 6.5
Curtailments/settlements – – 2.0 – – – 2.0 –
Past service costs (0.1) (0.1) – – – – (0.1) (0.1)
Net finance income/(expense) 2.2 1.1 (1.7) (1.4) (0.3) (0.3) 0.2 (0.6)
Actuarial (loss)/gain (15.2) (8.4) (1.5) (5.7) 0.1 (1.5) (16.6) (15.6)
Currency translation adjustment – – – 2.7 – 0.1 – 2.8
At 31 December (33.4) (19.1) (29.7) (29.3) (6.8) (6.4) (69.9) (54.8)
BBA GROUP
ANNUAL REPORT
2004
84

23 PENSIONS AND OTHER POST-RETIREMENT BENEFITS – continued
£m
History of Experience Gains and Losses
Difference between the expected and actual return on schemes' assets
Amount (£m)
Percentage of schemes assets
Experience gains and (losses) on scheme liabilities
Amount (£m)
Percentage of schemes liabilities
Actuarial (loss)/gain in statement of total recognised gains and losses
Amount (£m)
Percentage of schemes liabilities
United Kingdom
2004 2003
5.4 20.1
1% 5%
(9.0)
2%
(15.2)
4%
–
0%
(8.4)
2%
North America
2004 2003
1.1 3.1
2% 6%
(1.6)
2%
(1.5)
2%
(2.3)
3%
(3.0)
4%
Rest of World
2004 2003
0.1 –
25% 0%
–
0%
0.1
1%
(1.6)
24%
(1.4)
21%
SSAP24
(as adopted)
2004 2003
Total
2004 2003
6.6 23.2
2% 6%
(10.6)
2%
(16.6)
3%
(3.9)
1%
(12.8)
3%
Under FRS17
(for information
only)
2004 2003
Group Net Assets and Profit and Loss Account Reserves (£m)
Net assets excluding pension scheme assets/(liabilities) 677.9 700.6 677.9 700.6
Net pension scheme liabilities (net of deferred tax) (18.8) (20.0) (56.0) (35.5)
Net assets including pension scheme 659.1 680.6 621.9 665.1
Profit and loss reserve excluding pension scheme assets
212.6 237.1 212.6 237.1
Net pension scheme liabilities (net of deferred tax)
(18.8) (20.0) (56.0) (35.5)
Profit and loss reserve including pension scheme assets/(liabilities) 193.8 217.1 156.6 201.6
24 CONTINGENT LIABILITIES
The Group is party to legal proceedings and claims which arise in the normal course of business, including specific product liability and
environmental claims in BBA Nonwovens North America and BBA Aviation respectively. 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 2004, BBA's costs of defending and disposing of all asbestos
related claims, net of insurance coverage, were approximately £3.2m. 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.
The directors do not currently anticipate that the outcome of the proceedings and claims set out above either individually, or in aggregate,
will have a material adverse effect upon the Group’s financial position.
25 RELATED PARTY TRANSACTIONS
During the year a subsidiary provided services to a company controlled by a person who is a close family member of Roberto Quarta, a director
of BBA Group plc. These were provided in the ordinary course of business and on an arms’ length basis and amounted to £12,572 (2003: £5,318).
At 31 December 2004 £538 remained unpaid (2003: £5,318).
BBA GROUP
ANNUAL REPORT
2004
85

PRINCIPAL SUBSIDIARY AND
ASSOCIATED UNDERTAKINGS
The following is a list of the principal subsidiary and associated undertakings of the Group each of which is wholly-owned unless otherwise stated.
A complete list of subsidiary and associated undertakings is filed with the Company’s Annual Return.
Country of incorporation Country of incorporation
MATERIALS TECHNOLOGY and principal operation AVIATION and principal operation
Bidim Ltda
Brazil APPH Limited United Kingdom
BBA Nonwovens Canada Limited
Canada APPH Aviation Services Limited United Kingdom
BBA (China) Airlaid Company Limited
China ASIG Limited United Kingdom
Fiberweb France S.A.
France Boker Aeroclean Limited United Kingdom
BBA Nonwovens Berlin GmbH
Germany H+S Aviation Limited* United Kingdom
Corovin GmbH
Germany Oxford Aviation Services Limited United Kingdom
Linotec Development GmbH
Germany Signature Flight Support London Luton Limited United Kingdom
BBA Nonwovens Asia Pacific Limited
Hong Kong Signature Flight Support Heathrow Limited United Kingdom
BBA Fiberweb Italia SpA
Italy Signature Flight Support UK Regions Limited United Kingdom
Korma SpA
Italy Aircraft Service International Group, Incorporated USA
Tecnofibra SpA
Italy Barrett Turbine Engine Company USA
Tenotex SpA
Italy Dallas Airmotive Incorporated USA
BBA Nonwovens Mexico S.A. de C.V.
Mexico Signature Flight Support Corporation USA
Tenotex Nonwovens S.A.
Spain Signature Flight Support Paris S.A. France
BBA Nonwovens Sweden AB
Sweden
Terram Limited*
United Kingdom
BBA Nonwovens Simpsonville Incorporated
USA
BBA Nonwovens Washougal Incorporated
USA
Reemay Incorporated
USA
Becorit GmbH
Germany
ASSOCIATES
% owned
Finotech Verbundstoffe GmbH 40 Germany
CNC International Co. Limited 50 Thailand
*shares held by BBA Group plc
BBA GROUP
ANNUAL REPORT
2004
86

FIVE YEAR SUMMARY
Profit and loss account
Turnover
Operating profit before goodwill amortisation and exceptional items
Goodwill amortisation and write-downs
Exceptional restructuring costs
Interest (net)
Profit before non-operating exceptionals and taxation
Non-operating exceptional items
Profit before taxation
Taxation
Profit after taxation
Minority interests
Profit for the financial year
Preference dividends
Profit attributable to ordinary shareholders
Ordinary dividends
Transferred to reserves
Earnings per share
Basic:
Before goodwill amortisation and exceptional items
Unadjusted
Diluted:
Before goodwill amortisation and exceptional items
Unadjusted
Dividends
Dividends per ordinary share
2004 2003 2002 2001 2000
£m £m £m £m £m
1,375.0
139.9
(20.8)
(25.7)
(12.1)
81.3
(7.9)
73.4
(23.6)
49.8
(0.1)
49.7
(3.8)
45.9
(51.0)
(5.1)
19.9p
10.2p
19.7p
10.1p
11.3p
1,330.6
144.7
(48.1)
(12.7)
(16.7)
67.2
(12.0)
55.2
(26.4)
28.8
–
28.8
(3.8)
25.0
(48.7)
(23.7)
19.7p
5.5p
19.6p
5.5p
10.8p
1,381.4
155.0
(22.7)
(15.4)
(21.6)
95.3
(33.9)
61.4
(21.5)
39.9
–
39.9
(3.8)
36.1
(48.5)
(12.4)
20.4p
7.9p
20.4p
7.9p
10.5p
1,367.3
151.5
(19.0)
(46.4)
(30.0)
56.1
(21.5)
34.6
(19.6)
15.0
(0.1)
14.9
(3.8)
11.1
(46.2)
(35.1)
18.1p
2.5p
18.0p
2.5p
10.1p
1,563.8
200.7
(13.1)
(7.8)
(30.2)
149.6
137.3
286.9
(59.2)
227.7
(0.2)
227.5
(4.1)
223.4
(45.0)
178.4
Balance sheet
Employment of capital
Fixed assets
1,122.0 1,120.2 1,199.3 1,256.1 1,049.6
Net current assets
318.8 293.4 177.2 112.1 332.9
Total assets less current liabilities 1,440.5 1,413.6 1,376.5 1,368.2 1,382.5
Creditors due after more than one year (659.7) (617.1) (529.9) (495.0) (527.0)
Provisions for liabilities and charges (122.0) (115.9) (100.8) (103.0) (69.3)
Capital employed
659.1 680.6 745.8 770.2 786.2
Called up share capital 169.0 169.1 171.9 170.8 168.5
Reserves 490.1 511.5 573.9 598.8 615.4
Shareholders’ funds 659.1 680.6 745.8 769.6 783.9
Minority interests – – – 0.6 2.3
659.1 680.6 745.8 770.2 786.2
Capital expenditure 56.9 75.0 85.9 98.3 177.6
Number of employees, end of year 13,674 12,311 12,837 13,246 11,026
28.1p
50.7p
26.7p
47.5p
10.1p
BBA GROUP
ANNUAL REPORT
2004
87

SUMMARY FINANCIAL INFORMATION
2004 2003
€ m €m
Profit and loss account
Turnover 2,021.3 1,929.4
Operating profit before goodwill amortisation and exceptional items 205.7 209.8
Goodwill amortisation and write-downs (30.6) (69.7)
Exceptional restructuring costs (37.8) (18.4)
Interest (net) (17.8) (24.2)
Profit before non-operating exceptionals and taxation 119.5 97.5
Non-operating exceptional items (11.6) (17.4)
Profit before taxation 107.9 80.1
Taxation (34.7) (38.3)
Profit after taxation 73.2 41.8
Preference dividends (5.6) (5.5)
Profit attributable to ordinary shareholders 67.6 36.3
Ordinary dividends (75.0) (70.6)
Transferred to reserves
Earnings per share
Basic:
(7.4) (34.3)
Before goodwill amortisation and exceptional items 29.3c 28.6c
Unadjusted
Diluted:
15.0c 8.0c
Before goodwill amortisation and exceptional items 29.0c 28.4c
Unadjusted
Dividends
14.8c 8.0c
Dividends per ordinary share 16.6c 15.7c
Balance sheet
Employment of capital
Fixed assets 1,582.0 1,591.6
Net current assets 449.5 373.4
Total assets less current liabilities 2,031.5 1,965.0
Creditors due after more than one year (930.2) (826.0)
Provisions for liabilities and charges (172.0) (165.7)
929.3 973.3
Capital employed
Called up share capital 238.3 241.8
Reserves 691.0 731.5
Shareholders’ funds 929.3 973.3
Capital expenditure 83.6 108.8
Number of employees, end of year 13,674 12,311
The unaudited summary financial information above has been presented in Euros for illustrative purposes only using an average
exchange rate for the profit and loss account and cashflow information of €1.47 to the pound (2003: €1.45) and the rate in effect at
year end for the balance sheet of €1.41 (2003: €1.43). This translation should not be construed as a representation that the pound
sterling amounts actually represent, or could be converted at, the rates indicated.
BBA GROUP
ANNUAL REPORT
2004
88

SHAREHOLDER INFORMATION
ANALYSIS OF Number of % of Number of % of
SHAREHOLDINGS shareholders total shares share capital
Size of holding
Ordinary shareholdings at
31 December 2004
1 – 1,000 2,208 41.26 894,405 0.20
1,001 – 5,000 2,008 37.52 4,525,212 1.00
5,001 – 10,000 336 6.28 2,368,975 0.53
10,001 – 50,000 340 6.35 7,796,002 1.73
50,001 – 100,000 107 2.00 7,664,403 1.70
100,001 – upwards 353 6.60 428,022,339 94.85
5,352 100.00 451,271,336 100.00
Holders
Individuals 3,727 69.64 11,545,656 2.56
Insurance companies 2 0.04 1,300,367 0.29
Pension funds 39 0.73 3,734,410 0.83
Nominee and other
companies 1,522 28.44 433,139,295 95.98
Others 62 1.16 1,551,608 0.34
5,352 100.00 451,271,336 100.00
OTHER
Dividend Reinvestment Plan
The Company offers a Dividend Reinvestment Plan, giving ordinary
shareholders the option to buy shares in lieu of a cash dividend.
Please contact the Company’s registrars for further details.
Low cost share dealing service
An ‘execution only’ postal share dealing service is available through the
Company’s stockbroker for the purchase and sale of BBA Group plc
shares. Information is available from Cazenove & Co Limited, 20
Moorgate, London EC2R 6DA. Telephone: 020 7155 5155 (direct line).
Individual Savings Accounts
The Company offers a Maxi Individual Savings Account (ISA) through
Barclays Stockbrokers Limited for BBA shares and other qualifying
shares and cash. In the tax year ending 5 April 2005, the annual
subscription allowance is £7,000 of which a maximum of £3,000 can
be held as cash. In the tax year beginning 6 April 2005, the annual
subscription allowance will be £7,000 of which a maximum of £3,000
can be held in cash.
To register and receive an information pack, please
call 0845 6013000. Calls are charged at local rates; you can only use
this number if you are calling from the UK. For clients' security, calls
may be recorded and randomly monitored.
Barclays Stockbrokers is the group name for the business of:
Barclays Stockbrokers Limited, a member of the London Stock
Exchange and OFEX, Registered No 1986161; Barclays Sharedealing,
Registered No 2092410; Barclays Bank Trust Company Limited,
Registered No 920880. All companies are authorised and regulated
by the Financial Services Authority.
KEY DATES Date payable
Financial calendar
Dividend and interest payments
Ordinary shares:
final 2004 20 May
interim 2005 4 November
6.75% cumulative redeemable
convertible preference shares 31 May and 30 November
5% cumulative preference shares 1 February and 1 August
Date announced
Announcement of Group results
Half year result September
Annual results February
Report and accounts Posted March
Conversion of 6.75% cumulative redeemable
convertible preference shares
Conversion period 4 May to 31 May 2005
Conversion date 31 May
Share price information
The price of the Company’s shares is available from the Financial
Times Cityline Service:
BBA Group ordinary shares – telephone: 090 6843 1778
BBA Group 6.75% cumulative redeemable convertible preference
shares – telephone: 090 6843 5114
Calls within the UK are charged at 50p per minute.
Registered office:
20 Balderton Street, London W1K 6TL
Telephone: 020 7514 3999 Fax: 020 7408 2318
http://www.bbagroup.com
Company number: 53688
Company registrar:
Capita Registrars, Northern House, Woodsome Park, Fenay Bridge,
Huddersfield HD8 0LA
Telephone: 0870 162 3131
e-mail shareholder.services@capitaregistrars.com
http://www.capitaregistrars.com
Please contact the registrars directly if you wish to advise a change of
name, address, dividend mandate or wish to participate in the Dividend
Reinvestment Plan.
You can access general shareholder information and personal
shareholding details from our registrars’ website. You will require your
unique holder code, which can be found on your share certificate or
dividend tax voucher.
BBA GROUP
ANNUAL REPORT
2004
89

BBA GROUP PLC REGISTERED OFFICE DESIGNED AND PRODUCED BY SAS
20 BALDERTON STREET LONDON W1K 6TL PHOTOGRAPHY BY BENEDICT REDGROVE
TEL +44(0)20 7514 3999 FAX +44(0)20 7408 2318
BOARD PHOTOGRAPHY BY CHRIS MOYSE
COMPANY NUMBER 53688 WWW.BBAGROUP.COM
PRINTED BY ST IVES WESTERHAM PRESS