BBA Aviation PLC Annual Financial Report and Notice of AGM (1696I)

TIDMBBA

RNS Number : 1696I

BBA Aviation PLC

19 March 2018

Date of notification: 19 March 2018

BBA Aviation plc (the "Company")

Annual Financial Report and Notice of AGM

Further to the release of the Company's Final Results announcement on 1 March 2018, the Company announces that it has today published its Annual Financial Report 2017 ("Annual Report 2017").

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 11 May 2018 at the Royal Aeronautical Society, No. 4 Hamilton Place, London W1J 7BQ.

The Annual Report 2017 can be viewed at or downloaded from the Company's website at:

http://www.bbaaviation.com/investors

The Notice of Annual General Meeting 2018 can be viewed at or downloaded from the Company's website at: http://www.bbaaviation.com/investors/board-and-corporate-governance/agm

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 2017 
   --     Chairman's Letter and Notice of Annual General Meeting 
   --     Annual General Meeting Proxy Card 

-- Notice of Availability of BBA Aviation plc Annual Report 2017 and Notice of Annual General Meeting

At the Annual General Meeting due to be held on 11 May 2018 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 5 May 2017. Any ordinary shares purchased under the authority may be cancelled or held in treasury.

The Company's Final Results announcement released on 1 March 2018 contained the responsibility statement of the directors on the Annual Report 2017 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 2017 and the text of note 26 to the consolidated financial statements in the Annual Report 2017 concerning related party transactions.

"Managing Our Risks

We are committed to effective risk management to support delivery 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 through the awareness of risk-assessed outcomes. 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.

Risk Governance Structure

The Board

Responsible for our system of Corporate Governance and overseeing execution of our strategy; risk management and policy; 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 Management Committee

Responsible for setting strategic direction, executing strategic decisions and implementing an effective corporate risk management system.

Business Units

Responsible for identifying, assessing and managing risks within their business subject to Group risk appetite.

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 Management Committee and the Audit and Risk Committee on a bi-annual basis.

Responsibility for implementing

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.

The risk assessment process drives the Internal Audit scope, which is agreed in February each year by the Audit and Risk Committee. The Chief Risk Officer and Head of Internal Audit attend Audit and Risk Committee meetings to provide regular updates and discuss any proposed changes to the plan.

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 risk within the Group is assessed against this framework and the Board reassesses 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 Management Committee Review

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

Business Objectives

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

Strategic Plan Development & Update

Our strategy informs the setting of shorter-term goals across the Group and is widely communicated.

Execution of the Strategic Plan

Portfolio and investment decisions are made based on resource constraints and risk/reward profiles against our strategic objectives.

Monitor Key Risk Status

Bi-Annual Key and Emerging Risk Assessment Process

Strategic Risk Mitigation

Ongoing Key Risk Mitigation

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 85 [of the Annual Report].

Progress in 2017

We continue to adopt a risk and controls-based approach and have improved our reporting to provide practical insight in executive summaries to enable senior management to understand issues quickly. All audit findings are reported in terms of risk and impact, which is aligned with BBA Aviation's Risk Model, and a structured follow-up process operates driven by action dates agreed collaboratively between Internal Audit and BBA Aviation's management and overseen by executive management.

A key area of improvement in 2017 was in the area of Business Continuity Management (BCM).

A new sub-Committee of the Executive Management Committee was established to provide guidance and leadership to ensure that BBA Aviation's businesses are suitably protected from a BCM perspective. This includes ensuring compliance with the Group's BCM Policy and providing support and expertise, both within Committee members' respective operations and across the Group. The Committee consists of BCM co-ordinators from each business unit and the key global functions.

The Committee meets for bi-annual reviews and strategy planning, monthly conference calls, and is the internal business driver for the BCM testing programme. Knowledge, learning and experiences are shared within the Group to deliver continuous improvement in BCM practice.

Case Study - response to Hurricanes Harvey, Irma and Maria

For a 30-day period in August and September 2017, 17 Signature Flight Support locations in the United States and the Caribbean were directly impacted by three Category 4 and 5 hurricanes: Harvey, Irma and Maria. Systematic planning and implementation was the key to employee safety, successful recovery and the fast re-opening of locations, confirming that, while not every risk can be controlled or prevented, identifying and understanding risk enables the turning of a high-risk situation into a manageable event.

A robust and effective hurricane plan had been in train before the start of the 2017 hurricane season when Signature locations undertook their annual pre-hurricane review. Then, as the hurricanes developed, they were tracked to ensure that all locations potentially in their paths were alert and prepared. Signature executive leadership had plans in place to monitor and manage the crisis while ensuring the ongoing business of the rest of the network was not disrupted.

Three to four days ahead of anticipated landfall, Signature's Hurricane Response Plan & Checklist was initiated, and daily status calls commenced. The Response Plan & Checklist is a detailed step by step guide to ready the entire FBO complex for the coming storm. Fuel supplies are checked and verified; customers are notified to re-locate their aircraft; Ground Support Equipment is prepared and staged; any aircraft remaining on the ground are secured as much as possible; buildings and grounds are battened down; all administration and supplies are confirmed; and emergency equipment such as generators and satellite phones are deployed.

At the corporate offices in Orlando a review was undertaken to ensure that all required financial matters, including payroll, were dealt with in advance. Communication was maintained throughout the storm period and continued until all employees, facilities and equipment were confirmed safe. Insurance adjusters were quickly dispatched to the affected locations and teams were mobilised to provide assistance to employees and to those facilities needing additional expertise and/or personnel.

While 17 locations were directly impacted, only three were seriously affected and Signature was able to move very quickly to re-open its FBOs, using social media to keep customers informed of progress. Post-event reviews were undertaken to identify learnings, and these have been fed into BBA Aviation's Business Continuity and Crisis Management Plans to further improve resilience in the future.

Principal Risks

We have identified 12 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 on page 23 [of the Annual Report]. They are not set out in priority order.

 
 Objective      Risks                                                      Mitigation action/Control 
=============  =========================================================  ============================================================= 
                Structural changes                                        - Active monitoring of lead 
                in the global economic                                     economic indicators. 
                environment, or cycle                                       *    Strong financial controls to monitor financial 
                fluctuations:                                                    performance and provide a basis for corrective action 
                 *    drive down B&GA and commercial flying and military         when required. 
                      expenditure. 
 
                                                                            *    Low fixed costs allow cost base to be flexed to meet 
                 *    cause market weakness in the ERO sector.                   demand. 
=============  =========================================================  ============================================================= 
                Global terrorist 
                 events either in-flight,                                   *    Airport and internal access security processes, 
                 at or near major                                                vetting of potential staff members in recruitment 
                 airports materially                                             process. 
                 impacting global 
                 air travel. 
                                                                            *    Low fixed costs allow cost base to be flexed to 
                                                                                 enable corrective action to be taken. 
               =========================================================  ============================================================= 
                Legislative changes 
                 causing material                                            *    Active participation in all relevant industry bodies. 
                 increase to cost 
                 of B&GA flight relative 
                 to alternatives such                                        *    Ongoing monitoring of all US and EMEA political 
                 as commercial flying,                                            activity which may impact B&GA activity. 
                 road or rail travel. 
 
                                                                             *    Low fixed costs allow cost base to be flexed to meet 
                                                                                  demand. 
               =========================================================  ============================================================= 
                Ongoing competitor 
                 activity to replicate                                        *    Active monitoring of competitor activity. 
                 market position of 
                 Signature network. 
                                                                              *    Strong financial controls to monitor financial 
 Growth                                                                            performance. 
=============  =========================================================  ============================================================= 
                Ability to attract 
                 and retain high-quality                                      *    Succession planning process embedded with review at 
                 and capable people                                                Executive Management Committee and Board level 
                 at senior and                                                     annually. 
                 mid-management levels. 
 
                                                                              *    Remuneration structure designed to reward superior 
                                                                                   performance and promote retention. 
 
 
                                                                              *    Proactive employee development and key talent 
                                                                                   retention processes. 
=============  =========================================================  ============================================================= 
                Potential liabilities 
                 from defects in services                                    *    Standard operating procedures with routine root cause 
                 and products.                                                    analysis of all incidents. 
 
 
                                                                             *    Liability insurance. 
               =========================================================  ============================================================= 
                Impact of a successful 
                 cyber attack.                                                *    Operation of a specialist Information Security team. 
 
 
                                                                              *    Continual refreshment of firewalls and endpoint 
                                                                                   protection, laptop encryption, mobile device 
                                                                                   management, intrusion protection, password policy, 
                                                                                   vulnerability and penetration testing, identity and 
                                                                                   security event management. 
               =========================================================  ============================================================= 
                Intentional or inadvertent 
                 non-compliance with                                          *    Clear values statement and ethical policies. 
                 company values and 
                 legislation, both 
                 within BBA Aviation                                          *    Semi-annual compliance certification by all senior 
                 and with trading                                                  management. 
                 partners. 
 
                                                                              *    Rigorous third party vetting processes. 
 
 
                                                                              *    Robust internal control environment and regular 
                                                                                   review by internal and external audit. 
               =========================================================  ============================================================= 
                Environmental exposures. 
                                                                              *    Strong procedural controls and physical containment 
                                                                                   when working with fuel or other hazardous chemicals. 
 
 
                                                                              *    Active management of known environmental matters to 
                                                                                   minimise costs to resolve. 
 
 
                                                                              *    Environmental insurance where appropriate. 
               =========================================================  ============================================================= 
                Non-compliance with 
                 banking covenants                                            *    Strong treasury management controls concerning 
                 caused by a tighter                                               liquidity management. 
                 regulatory environment 
                 around sanctions 
                 compliance, which                                            *    Rigorous third party vetting processes, which 
 Performance     is a key condition                                                includes the compliance with sanctions regulations. 
 Optimisation    of our banking covenants. 
=============  =========================================================  ============================================================= 
 
                  Ability to effectively                                     *    Strategic Governance Committee established to monitor 

                  manage key resources                                            delivery of Project Portfolio Roadmap and escalate 
                  and dependencies                                                issues to the Executive Management Committee 
                  across major projects. 
 
                                                                             *    Project Management Framework operates to ensure 
                                                                                  effective governance 
=============  =========================================================  ============================================================= 
                Changes in tax regulation 
  Value          in both the USA and                                          *    Timely compliance with all international tax 
  Creative       EMEA could impact                                                 requirements. 
  Investment     our effective tax 
                 rate and our cash 
                 tax liabilities.                                             *    Continuous monitoring of changes to tax legislation, 
                                                                                   taking advice where appropriate from reputable 
                                                                                   professional advisers. 
=============  =========================================================  ============================================================= 
 

"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:

 
                                                                                              2017                      2016 
                                                                                                $m                        $m 
 ----------------------------------------------------------  -------------------------------------  ------------------------ 
 Short-term benefits                                                                           8.8                       7.7 
 -----------------------------------------------------------             -------------------------  ------------------------ 
             Post-employment benefits                                                          0.4                       0.5 
             ----------------------------------------------------------  -------------------------  ------------------------ 
 Share-based payments                                                                          2.0                       2.7 
 -----------------------------------------------------------             -------------------------  ------------------------ 
                                                                                              11.2                      10.9 
-----------  ----------------------------------------------------------  -------------------------  ------------------------  ---------- 
 
                                                                                                        Post-employment benefits include 
                                                                                                        contributions of $0.4 million 
                                                                                                        (2016: $0.5 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 
                                                                                                        56-84 
                                                                                                        [of the Annual Report]. 
 
                                                                                                        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 by Amounts owed to 
                                                                                                        Sales of goods Purchase of goods 
                                                                                                        related parties related parties 
======================================================================================================================================== 
                                                                                        Restated 
                                                                         2017 2016 2017 2016 2017 2016 2017 2016 
                                                                                 $m $m $m $m $m $m $m $m 
======================================================================================================================================== 
 Associates 14.4 5.7 610.5 359.4 2.0 1.5 64.7 46.8 
---------------------------------------------------------------------------------------------------------------------------------------- 
 
 

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. Prior year purchases of goods have been restated to include fuel purchases previously omitted in the US.

At the balance sheet date, Group companies had loan receivables from associates and joint ventures of $2.0 million (2016: $2.2 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 19."

The financial information set out in the Company's Final Results announcement of 1 March 2018 does not constitute the Company's statutory accounts for the year ended 31 December 2017. Statutory accounts for 2017 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 2017.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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March 19, 2018 10:39 ET (14:39 GMT)