1 April 2020
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Signature Aviation plc (the "Company")
Annual Financial Report�and Notice of AGM
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Further to the release of the Company's Final Results announcement on 3 March 2020, the Company announces that�it has today published its Annual Financial Report 2019 ("Annual�Report�2019").
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The Company also announces that it has today posted to shareholders notice of an Annual General Meeting to be held at 9.00am on Friday 15 May 2020 at the Company's registered office, 105 Wigmore Street (3rd Floor), London W1U 1QY.
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The�Annual�Report�2019�can be viewed at or downloaded from the Company's website at:
http://www.signatureaviation.com/investors�
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The Notice of Annual General Meeting 2020�can be�viewed at or�downloaded from the Company's�website at: http://www.signatureaviation.com/investors/board-and-corporate-governance/agm
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Copies of the documents listed below have also been submitted to the National Storage Mechanism located at www.morningstar.co.uk/uk/nsm:
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����� Annual Report 2019
����� Chairman's Letter and Notice of Annual General Meeting
����� Notice of Availability of Signature Aviation plc Annual Report 2019 and Notice of Annual General Meeting
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In light of the coronavirus (COVID-19) pandemic, special arrangements have been made for the AGM and these are set out in the notice of meeting.�� Any changes to the AGM arrangements that may be required will be announced to the market and on the Company's website.�
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At the Annual General Meeting due to be held on 15 May 2020 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 10 May 2019.� Any ordinary shares purchased under the authority may be cancelled or held in treasury.
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The Company's Final Results announcement released on 3 March 2020 contained the responsibility statement�of the directors on the Annual Report 2019 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 2019 and the text of note 28 to the consolidated financial statements in the Annual�Report 2019 concerning related party transactions.�
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"Risk management
We are committed to effective risk management to support delivery of our strategic objectives.
How we manage risk across Signature Aviation
Our risk management process is designed to support the business in meeting its strategic 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.
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We are committed to conducting business in accordance with all applicable laws and regulations and in a manner that is consistent with our Values.
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Signature Aviation's risk appetite and risk mitigation strategy are matters that are overseen by the Board, with the support of the Audit and Risk Committee, which reviews and considers the effectiveness of the processes that underpin risk assessment and our systems of internal control.
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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 all Audit and Risk Committee meetings to provide regular updates and discuss any proposed changes to the plan.
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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 the Group risk map is presented to the Audit and Risk Committee.
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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 Signature Aviation's culture, our decision making and how we work.
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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 Signature Aviation's ethics policies.
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The bi-annual risk assessment process looks forward three years to create Signature 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 51 [of the Annual Report].
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Emerging risk
In addition to the assessment of the Group's risk landscape over a three-year period, management has also considered emerging risk over a longer time horizon with a particular focus on climate change. Three key themes have been identified in relation to emerging climate change risk and a comprehensive review is ongoing into the current state and future strategy of the Group in relation to environmental matters.
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Environmental consciousness impacting behaviour - increasing political and public pressure over the impact of flying, including B&GA travel, on the environment and the longer-term impact of customer behaviours in seeking mitigation strategies or alternative sources of�travel.
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Regulations and taxes - the potential for increasing government regulation including programmes to reduce carbon emissions, increasing�taxes on jet fuel, and actions taken against higher carbon emitting industries.
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Capital investment - in responding to changes in flight technology such as the introduction of emerging electric aircraft technology and electric vertical take-off and landing vehicles (eVTOLs) capital investment may be needed to meet new customer demand.
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Progress in 2019
We continue to evolve our risk management process to provide practical and timely insight into the risks the business is facing. Our risk registers have been extended to:
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�� More clearly align the risks specifically to the strategic objectives of Signature Aviation; and
�� Include a deep dive into climate change risk, identifying how this could impact our business now, and in the future, as emerging risk.
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The risk process has also been brought into the quarterly business and functional operations reviews to ensure continued focus in the context of business performance and strategy.
We continue to improve the rigour of our data collection and financial analysis to support the impact evaluation of our key risks. This information is input to the scenario modelling that underpins the Viability Statement (see page 51 of the Annual Report).
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Brexit
The UK left the EU on 31 January 2020 and we continue to monitor the impact of Brexit on the business through the 11 month transition period.
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Any risk that we face concerns any changes to the open skies arrangement that may impact B&GA travel, and a slow-down in customs processes that may lead to delays in the cross-border flow of fuel, materials and engines, both for Signature Aviation, our suppliers and their upstream supply chains, and customers shipping engines to ERO for repair and overhaul. Having considered these risks and in the context of the Group's flight operations and supply chains being largely outside Europe, we continue to see only limited potential risk.
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Principal risks
We have identified 13 principal risks and uncertainties facing Signature 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 directional changes during the year are summarised in the table below. They are not set out in priority order.
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Changes in 2019
The Competitive environment risk has been broadened to include the actions of airport authorities as well as competitors, and the Ethics risk has been broadened to include non-adherence to legal competition regulations. A new principal risk has been introduced for Major safety or environmental incident or site closure resulting from factors including safety, pandemics, natural disasters, flood risks or other external actions.
| Risk | Description and potential impact | Mitigation action/Control |
| Economy � � Risk owner: | Structural changes in the global economic environment, or cycle fluctuations that drive down B&GA, commercial and military flying. | �� Active monitoring of lead economic indicators. �� Strong financial controls to monitor financial performance and provide a basis for corrective action when required. �� Low fixed costs allow cost base to be flexed to meet demand. |
| Terrorist activity � � Risk owner: | Global terrorist events either in-flight, at or near major airports materially impacting global air travel. | �� Airport and internal access security processes, vetting of potential staff members in recruitment process. �� Low fixed costs allow cost base to be flexed to enable corrective action to be taken. |
| Legislative changes � ? Risk owner: | Legislative changes, for example causing material increase to cost of B&GA flight relative to alternatives such as commercial flying, road or rail travel. Further legislative matters include the introduction of General Data Protection Regulation (GDPR) and the California Consumer Privacy Act. | �� Active participation in all relevant industry bodies. �� Ongoing monitoring of all US and EMEA political activity which may impact B&GA activity. �� Internal policies including Data Protection and supporting training ensure GDPR and California Consumer Privacy Act requirements are understood. |
| Competitive environment � ? Risk owner: | Ongoing competitor activity to replicate market position of Signature network on the field, coupled with the actions of airports on potential changes of FBO requirements. | �� Active monitoring of competitor activity. �� Continuous engagement with airport authorities. �� Strong financial controls to monitor financial performance. |
| People � � Risk owner: | Ability to attract and retain high-quality and capable people at senior and mid-management levels. | �� Succession planning process embedded with review at Signature Leadership Team and Board level annually. �� Remuneration structure designed to reward superior performance and promote retention. �� Proactive employee development and key talent retention processes. |
| Products and services � Risk owner: | Potential liabilities from defects in services and products and associated warranty claims. | �� Standard operating procedures with routine root cause analysis of all incidents. �� Liability insurance. |
| Cyber security � � Risk owner: | 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. �� Cyber insurance added to insurance programme in 2019. |
| Ethics � ?? Risk owner: | Intentional or inadvertent non-compliance with company values and legislation, both within Signature Aviation and with trading partners, including non-adherence to legal competition requirements. | �� Clear values statement and ethical policies, including specific competition law matters. �� Semi-annual compliance certification by all senior management. �� Rigorous third party vetting processes. �� Robust internal control environment and regular review by internal and external audit. |
| Environment � � Risk owner: | 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. |
| Banking covenants � � Risk owner: | Non-compliance with banking covenants, including those caused by a tighter regulatory environment around sanctions compliance, which is a key condition of our banking covenants. | �� Strong treasury management controls concerning liquidity management. �� Rigorous third party vetting processes, which include compliance with sanctions regulations. |
| Tax � � Risk owner: | Changes in tax regulation in both the USA and | �� Timely compliance with all international tax requirements. �� Continuous monitoring of changes to tax legislation, taking advice where appropriate from reputable professional advisers. |
| Supply chain disruption � ? Risk owner: | Potential fuel supply chain disruption, half of which is now through the EPIC business and delay in delivery or lack of availability of parts from multi-tiered supply chains operating across multiple countries. | �� Regular business reviews with major suppliers that address horizontal supply chain issues. �� Mitigate single sources of supply where able or incorporate supply agreements that provide protection against loss and interruption. |
| Major safety or environmental incident � ? Risk owner: | Major incident or site closure resulting from factors including safety, pandemics, natural disasters, flood risks or other external actions. | �� Internal and external regulatory monitoring for all health and safety regulations at all sites. �� Business continuity plans in all locations, with a programme of regular testing led by the Business Continuity Management Council. � |
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 Signature Leadership Team. The remuneration of directors and other members of key management during the year was as follows:
| | 2019 $m | 2018 $m |
| Short-term benefits | 10.5 | 8.0 |
| Post-employment benefits | 0.7 | 0.7 |
| Share-based payments | 2.8 | 1.1 |
| | 14.0 | 9.8 |
Post-employment benefits include contributions of $0.7 million (2018: $0.7 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 66-93 [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:
| | Sales of goods | Purchase of goods | Amounts owed by | Amounts owed to | ||||
| | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 | 2019 | 2018 |
| Associates | 151.2 | 14.4 | 673.1 | 738.8 | 26.4 | 0.6 | 23.3 | 82.1 |
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Purchases of goods principally relates to the purchase of aviation fuel including excise taxes. 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 associates and joint ventures of $26.4 million (2018: $0.6 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."
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The financial information�set out in the Company's Final Results announcement of 3 March 2020 does not constitute the Company's statutory accounts for the year ended 31 December 2019.� Statutory accounts for 2019 will be delivered to the Registrar of Companies in due course.
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This announcement should be read in conjunction with, and�is not a substitute for, reading the�full�Annual�Report�2019.