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Avios Group (AGL) Limited - audit planning meeting

4 October 2018

1. Business update

 Financial results YTD and full year forecast

 Planned merger of ATRP and BAEC

 CFS implementation

2. 2018 accounting assessments

 New or renewed partner contracts

 2018 Jaywing update

 Observations and actions for 2018 (see attached)

3. 2018 audit plan

 Group reporting scope (See attached)

 Key focus areas for statutory audit

i. Revenue recognition

ii. Deferred revenue valuation

iii. IT system migration

iv. Recognition of expenses

 Co-ordination with Internal Audit

 Timetable (See attached)

4. Management enquiries

5. AOB

 Pre-approvals for non-audit services

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Observations and actions

Jaywing URR model

 Update on proposed change in Jaywing methodology (April 2018)

 Confirm it will remain a weighted average allocation approach
 How is the proposed merger of ATRP into BAEC going to be factored in?
 Historic issued points shouldn’t be changed
 Allocation of redemptions in prior years, should be changed
 Reconciliation of database information to Jaywing models per scheme at date of data
provision to Jaywing (including resolution of ATRP difference)

IFRS 15 model
 December 2017 position to reflect breakage rates per Jaywing models (no change to IFRS
15 deferred revenue)
 Track prior years (‘back-book’) separately from current year with update made if required
based on October 2018 Jaywing model for back-book
 Valuation of new or renewed contracts in the year
 BA / Iberia - correct management fee calculation to remove “onerous” contracts
 Avios checks / reviews to be implemented to mitigate risk of errors in spreadsheets including
extent of linked files. Password protection to be added

Financial reporting

 Process for month end revenue accrual for brand and marketing revenue (based on %
allocation per contract)
 Correction of ABI report relating to number of points due to discounting
 Quarterly reconciliation between database and balance sheet per scheme
 Reconciliation of databases and communication to finance
 Intercompany classification of booked to depart accrued costs
 Presentation of non-air partner revenue on a net basis in monthly reporting
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Group reporting scope

- Revenue

- Deferred revenue

- Flight prepayment

- Intercompany balances

- Cash

- Tax payables

- Goodwill impairment

- New standards
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Timetable

Area Detail Proposed Progress

Date(s)
Half Year  Audit Fieldwork 12/7/18-13/7/18
Review  Half year audit close meeting 17/7/18

2018 Audit  Meeting to discuss the 2018 audit 4/10/18

Planning
ICFR: AGL  Walkthroughs and control testing W/C 20/09/18
 New system field work W/C 5/11/18
 IAG to hand over work to EY for review 23/11/18
 Interim close and IAG reliance meeting 3/12/18

Final Audit:  Planning meeting 3/12/18

AGL  Deliverables schedule from EY 3/12/18
 Fieldwork 28/1/19 – 8/2/19
 Audit close meeting 7/2/19
 Reporting to group 8/2/19

Financial  Draft financial statements to EY 15/2/19

Statements:  EY review and send back stats to AGL 22/2/19
AGL  Going concern documentation to EY 25/2/19
 Final EY approval 11/3/19
 Letter of representation from EY 11/3/19
 Close meeting with EY 13/3/19
 Distribution of financial statements to 18/3/19
the Board
 Board approval of financial statements
27/3/19

Final Audit: SA  Deliverables schedule from EY 3/12/18

 Draft accounts to EY 15/02/19
 Fieldwork and stats 18/2/19 – 22/2/19
 Final EY approval 12/3/19
 Audit close meeting and stats approval 13/3/19
 Signing of the financial statements 27/3/19

ATOL – Year-  CAA reporting engagement letter 9/10/18

end  Draft ATOL returns to EY 15/2/19
submissions  Audit samples requested from EY 20/2/19
 Field work 18/2/19 – 22/2/19
 Close meeting – all documents 13/3/19
complete
 Review of complete documents against 27/3/19
final signed stats
 Submission 30/3/19