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
ACSGMGMFDLLGRZM
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