BBA Group Annual Report 2004 - BBA Aviation

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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
Page 1 and 2: BBA GROUP ANNUAL REPORT 2004
Page 3 and 4: AT THE HEART OF OUR BUSINESS IS THE
Page 5 and 6: AVIATION Business Aviation £255m S
Page 7 and 8: Operating profit † £140.2m Turno
Page 9 and 10: Roberto Quarta Chairman 7
Page 11 and 12: Roy McGlone Group Chief Executive 9
Page 13 and 14: AVIATION £800m MATERIALS TECHNOLOG
Page 15 and 16: another 6 new airport locations in
Page 17 and 18: situation and better balance the en
Page 19 and 20: In Healthcare, we experienced bette
Page 21: We will continue to look for assets
Page 25 and 26: The continued weakness of the US do
Page 27 and 28: OUR PORTFOLIO THE FOLLOWING SECTION
Page 29 and 30: BBA operates in the Americas, Europ
Page 31 and 32: SIGNATURE As the leading provider o
Page 33 and 34: ASIG Our ramp side services are vit
Page 35 and 36: APPH Thousands of aircraft, hundred
Page 37 and 38: BBA FIBERWEB BBA Fiberweb facilitie
Page 39 and 40: Board of Directors 38 Directors‘
Page 41 and 42: BOARD OF DIRECTORS 1 2 3 4 5 6 7 8
Page 43 and 44: DIRECTORS’ REPORT Substantial sha
Page 45 and 46: DIRECTORS’ CORPORATE GOVERNANCE R
Page 47 and 48: 6. Information and Professional Dev
Page 49 and 50: Auditor Independence and Audit Effe
Page 51 and 52: DIRECTORS’ REMUNERATION REPORT Th
Page 53 and 54: TSR ranking in Proportion of shares
Page 55 and 56: Table 1 - Emoluments and fees (audi
Page 57 and 58: d. Pension UK The executive directo
Page 59 and 60: INDEPENDENT AUDITORS’ REPORT Inde
Page 61 and 62: GROUP AND COMPANY BALANCE SHEETS GR
Page 63 and 64: RECONCILIATION OF MOVEMENT IN GROUP
Page 65 and 66: Scrip Dividends The option to recei
Page 67 and 68: 2004 2003 Continuing Discontinued T
Page 69 and 70: 2004 2003 2004 2003 pence pence 5 D
Page 71 and 72: Group Company Land and Plant and La
Page 73 and 74:
Group Company 2004 2003 2004 2003 1
Page 75 and 76:
Group Company 2004 2003 2004 2003 1
Page 77 and 78:
17 DERIVATIVES AND OTHER FINANCIAL
Page 79 and 80:
17 DERIVATIVES AND OTHER FINANCIAL
Page 81 and 82:
19 CAPITAL AND RESERVES - continued
Page 83 and 84:
19 CAPITAL AND RESERVES - continued
Page 85 and 86:
23 PENSIONS AND OTHER POST-RETIREME
Page 87 and 88:
23 PENSIONS AND OTHER POST-RETIREME
Page 89 and 90:
FIVE YEAR SUMMARY Profit and loss a
Page 91 and 92:
SHAREHOLDER INFORMATION ANALYSIS OF
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