BBA Aviation PLC Annual Financial Report (7959S)

TIDMBBA

RNS Number : 7959S

BBA Aviation PLC

21 March 2016

Date of notification: 21 March 2016

BBA Aviation plc (the "Company")

Annual Financial Report and Notice of AGM

Further to the release of the Company's Final Results announcement on 3 March 2016, the Company announces that it has today published its Annual Financial Report 2015 ("Annual Report 2015").

The Company also announces that it has today posted to shareholders notice of an Annual General Meeting to be held at 10.30am on Friday 6 May 2016 at the Royal Aeronautical Society, No. 4 Hamilton Place, London W1J 7BQ.

The Annual Report 2015 can be viewed at or downloaded from the Company's website at:

http://www.bbaaviation.com/investors/reports.aspx

The Notice of Annual General Meeting 2016 can be viewed at or downloaded from the Company's website at: http://www.bbaaviation.com/investors/shareholder-information/agm-(annual-general-meeting).aspx

Copies of the documents listed below have also been submitted to the National Storage Mechanism located at www.morningstar.co.uk/UK/NSM:

   --     Annual Report 2015 
   --     Chairman's Letter and Notice of Annual General Meeting 
   --     Annual General Meeting Proxy Card 

-- Notice of Availability of BBA Aviation plc Annual Report 2015 and Notice of Annual General Meeting

At the Annual General Meeting due to be held on 6 May 2016 it is proposed that the Company seek, inter alia, general authority from ordinary shareholders for the Company to make market purchases of up to 14.99 per cent of the Company's existing issued ordinary share capital. This renews the authority granted by shareholders at the Annual General Meeting held on 8 May 2015. Any ordinary shares purchased under the authority may be cancelled or held in treasury.

The Company's Final Results announcement released on 3 March 2016 contained the responsibility statement of the directors on the Annual Report 2015 and details of significant events occurring during the period. For the purposes of compliance with DTR 6.3.5 set out below is the statement of principal risks and uncertainties which is set out in the Annual Report 2015 and the text of note 25 to the consolidated financial statements in the Annual Report 2015 concerning related party transactions.

"Our Risks

We are committed to effective risk management which supports the achievement of our strategic objectives.

Our risk management process is designed to improve the likelihood of delivering our business objectives, protect the interests of our shareholders and key stakeholders and enhance the quality of our decision making. It also assists in the safeguarding of our assets, including people, finances, property and reputation. We are committed to conducting business in accordance with all applicable laws and regulations and in a manner that is consistent with our values.

BBA Aviation's risk mitigation strategy and risk appetite are matters that are overseen by the Board, with the support of the Audit and Risk Committee, which manages the processes that underpin risk assessment and our systems of internal control.

Risk Governance Structure

The Board

Responsible for our system of corporate governance, strategy, policy, risk management and financial performance.

Accountability for monitoring

Audit and Risk Committee

Responsible for reviewing and approving the adequacy and effectiveness of our risk management and internal controls.

Audit function

Reviews and reports on the system of internal control.

Chief Risk Officer

Reports on key risks and risk mitigation.

Executive Committee

Delegated with Board authority to review risks and take appropriate action.

Business Divisions

Responsible for identifying, assessing and managing risks within their businesses.

Company Risk Map (Risk Register)

& Divisional Risk Maps

Management teams in business units review risks through self-assessment methodology and develop risk registers which together with risk maps that are developed from the risk registers, are submitted to the Executive Committee and the Audit and Risk Committee on a bi-annual basis.

Responsibility for implementing

How we manage risk across BBA Aviation

The Board has established a framework for assessing risk in the context of likelihood and impact in financial and reputational terms. Each Group-level risk is assessed against this framework and the Board re-assesses its risk appetite on a bi-annual basis when Risk Maps are presented to the Audit and Risk Committee.

Group policies, standards and internal controls, together with our values and our focus on safety, underpin our approach to risk management. We are committed to being a responsible values-led business and our leaders are responsible for embedding this into BBA Aviation's culture, our decision-making and how we work.

Our employees are accountable for working to established standards and for identifying and escalating encountered risks so that they can be appropriately managed. The Group has comprehensive training programmes to ensure that employees are appropriately trained in BBA Aviation's ethics policies.

Risk Management Process

The key features of our risk management process are set out below:

Board, Executive, Committee Review

Progress is monitored at global, divisional and business levels and risks assessed on an ongoing basis as part of the business and risk management process.

Business Objectives

Our business objectives are established on a 5-year basis and drive our annual objectives.

Strategic Plan Development & Update

Our strategy informs the setting of shorter-term objectives across the business and is widely communicated.

Portfolio and Investment Decisions

Portfolio and investment decisions are made based on risk appetite to obtaining our business objectives.

Bi-Annual Risk Assessment Process

Annual Key & Emerging Strategic Risks Identification

Strategic Risk Mitigation

Ongoing Key Risk Monitoring

The bi-annual risk assessment process looks forward three years to create BBA Aviation's risk profile. These key Group level risks are input into the scenario modelling for the viability statement, which is explained further on page 105 [of the Annual Report].

Progress in 2015

In 2015 we appointed a Chief Risk Officer to drive improvement in our risk management process and integrate it more effectively with our strategic planning and operational management processes. We have updated our Risk Management Framework and more closely aligned our Risk Management and Internal Audit functions. The risk assessment process drives the internal audit scope, and the Chief Risk Officer and Head of Internal Audit attend Audit and Risk Committee meetings to provide regular updates.

We have changed the Internal Audit approach from one based on substantive testing to a risk and controls based approach. All audit findings are reported in terms of risk and impact, which is aligned with BBA Aviation's Risk Model.

We strengthened our project management capability on major projects including in our preparation for completion of the Landmark Aviation acquisition. We prepared for this by employing a specialist integration management consultancy to guide us through the integration planning process to ensure that we deliver an effective integration of Landmark Aviation into the BBA Aviation Group and deliver the targeted synergies from the deal.

We have further developed our approach to third party vetting to ensure that we are informed as to the identity and affairs of our business partners before entering into business relationships with them. We are investing in a leading-edge third party risk management platform to move the due diligence process from manual processing to an online data collection platform, automating research and analysis. This reduces administrative tasks, enabling us to focus on third party risk mitigation and working more closely with our business partners.

The acquisition of Landmark Aviation completed on 5 February 2016. We have undertaken a risk management workshop with representative Landmark Aviation senior managers to understand the risk profile of the Landmark Aviation business and assess its impact on BBA Aviation's business.

Principal Risks

We have identified ten principal risks and uncertainties facing BBA Aviation which are considered by the Board to be material to the development, performance, position or future prospects of the Group. These risks, mitigations and changes during the year are summarised in the table below. They are not set out in priority order.

 
                                                                                                                                          Change 
                                                                                                                                          during 
 Objective     Risks                                                        Mitigation action/Control                                     year 
============  ===========================================================  ============================================================  ============= 
 Growth        Structural changes                                                                                                         Increased 
                in the global                                                *    Active monitoring of lead economic indicators.          exposure 
                economic environment                                                                                                      to early 
                or cycle fluctuations:                                                                                                    cycle 
                 *    drive down B&GA and commercial flying, and military    *    Strong financial controls to monitor financial          business 
                      expenditure.                                                performance and provide a basis for corrective action   as a result 

March 21, 2016 11:49 ET (15:49 GMT)

                our effective                                                                                                             ("BEPS") 
                tax rate and our                                              *    Continuous monitoring of changes to tax legislation,   project 
                cash tax liabilities.                                              taking advice where appropriate from reputable         led by the 
                                                                                   professional advisers.                                 OECD 
                                                                                                                                          is likely to 
                                                                                                                                          accelerate 
                                                                                                                                          the 
                                                                                                                                          pace of 
                                                                                                                                          legislative 
                                                                                                                                          change in 
                                                                                                                                          the 
                                                                                                                                          countries in 
                                                                                                                                          which the 
                                                                                                                                          Group 
                                                                                                                                          operates." 
============  ===========================================================  ============================================================  ============= 
 

"Related party transactions

Transactions between the Company and its subsidiaries, which are related parties, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are detailed below.

Compensation of key management personnel

Key management are the directors and members of the Executive Committee. The remuneration of directors and other members of key management during the year was as follows:

 
                                 Restated 
                           2015      2014 
                             $m        $m 
-------------------------  ----  -------- 
Short-term benefits         8.6       8.8 
-------------------------  ----  -------- 
Post-employment benefits    0.6       0.9 
-------------------------  ----  -------- 
Share-based payments        0.9       1.7 
-------------------------  ----  -------- 
                           10.1      11.4 
-------------------------  ----  -------- 
 

Post-employment benefits include contributions of $0.6 million (2014: $0.6 million) in relation to defined contribution schemes.

The remuneration of directors and key executives is determined by the Remuneration Committee having regard to the performance of individuals and market trends. The directors' remuneration is disclosed in the Directors' Remuneration Report on pages 79 to 104.

Share-based payments of $0.9 million (2014: $1.7 million) disclosed in the above table exclude the portion of the annual bonus subject to compulsory deferral, which will be expensed over the vesting period in accordance with IFRS 2: Share-based payment. The 2015 annual bonus subject to compulsory deferral is $nil million (2014: $1.2 million).

Other related party transactions

During the year, Group companies entered into the following transactions with related parties which are not members of the Group:

 
                                                          Amounts owed        Amounts owed 
                                                                    by                  to 
               Sales of goods    Purchase of goods     related parties     related parties 
-----------  ----------------  -------------------  ------------------  ------------------ 
                2015     2014      2015       2014      2015      2014      2015      2014 
                  $m       $m        $m         $m        $m        $m        $m        $m 
-----------  -------  -------  --------  ---------  --------  --------  --------  -------- 
Associates       8.5     16.9     355.5      530.2       0.3       1.5      52.1      46.1 
-----------  -------  -------  --------  ---------  --------  --------  --------  -------- 
 

Purchases of goods principally relates to the purchase of aviation fuel. Purchases were made at market price discounted to reflect the quantity of goods purchased. The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received.

At the balance sheet date, Group companies had loan receivables from an associated undertaking of $2.6 million (2014: $2.5 million). The loans are unsecured and will be settled in cash, and were made on terms which reflect the relationships between the parties.

The Group operates various pension and other post-retirement benefit schemes for its employees. Details are set out in note 18."

The financial information set out in the Company's Final Results announcement of 3 March 2016 does not constitute the Company's statutory accounts for the year ended 31 December 2015. Statutory accounts for 2015 will be delivered to the Registrar of Companies in due course.

This announcement should be read in conjunction with, and is not a substitute for, reading the full Annual Report 2015.

This information is provided by RNS

The company news service from the London Stock Exchange

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March 21, 2016 11:49 ET (15:49 GMT)