Final Results

2014 Final Results

Results for the year ended

31 December 2014

FINAL RESULTS FOR PERIOD ENDED 31 DECEMBER 2014

(1) Before exceptional and other items (as defined in the financial statements)

(2) Underlying EBITDA is calculated as underlying operating profit before depreciation and amortisation charged through underlying operating profit

(3) Underlying operating profit return on average invested capital including goodwill and intangibles amortised or written off to reserves

(4) Cash generated by operations, plus dividends from associates, less tax, net interest and net capital expenditure

These definitions as outlined above are consistently applied throughout this results announcement

Highlights

Markets: US B&GA continues to show good growth

· US business & general aviation movements up 4%

· European business & general aviation movements down 1%

· Commercial aviation movements down 2% in North America and up 3% in Europe

Flight Support (59% of Group OP): Strong performance driven by Signature

· Organic revenue growth of 8%; underlying operating profit increase of 14%

· Signature: continued delivery and market outperformance

· ASIG: outperforming key markets, overall performance impacted by start-up costs

· Outlook: further good growth driven by Signature with improvements in ASIG offsetting loss of JFK contract

Aftermarket Services (41% of Group OP): Good performance by Legacy offset by market challenges in ERO

· Organic revenue decline of 4%; underlying operating profit decline of 12%

· ERO: weaker than anticipated markets with footprint rationalisation on track

· Legacy: better than anticipated performance against a very strong prior year comparator

· Outlook: Legacy remains solid, ERO stabilised with overall benefits of footprint rationalisation offsetting on-going market weakness

Growth and value creation

· Flight Support expansion: eight new Signature FBOs and nine new Signature SelectTM locations

· Aftermarket Services portfolio growth: major rotorcraft authorisations awarded supporting expansion into new territories, Legacy Support licences successfully adopted

· Substantial 2014 investments progressing well and supporting future growth

· Continued strong pipeline of value creative opportunities

· The Board is pausing the share repurchase programme (which is 62% complete as at 4 March 2015)

Simon Pryce, BBA Aviation Chief Executive Officer, commented:

 "2014 was another year of progress for BBA Aviation. Flight Support delivered strongly, offsetting a softer than anticipated performance in Aftermarket Services. Signature Flight Support and Legacy Support performed well ahead of expectations, with softer markets and start-up costs and short-term operating challenges impacting performance in ASIG and Engine Repair & Overhaul.

The Group also continued to make good strategic progress, with significant extensions to both the Flight Support network and the Aftermarket Services portfolio. The Group continues to realise the benefits of the significant growth investments made in recent years, the full impact of which will not be seen until 2016 and 2017.

In Flight Support, we anticipate continued strong momentum in Signature, supported by a sustained recovery in business & general aviation flying hours, as well as improvements in ASIG that should offset the loss of ASIG's JFK contract. In Aftermarket Services, Legacy Support's outlook remains solid. Engine Repair & Overhaul has now stabilised with the overall benefits of the footprint rationalisation programme offsetting continuing market weakness in the older mid-cabin engine segment. In addition, our overall performance will be supported by further incremental contributions from the substantial investments made across the Group in recent years. The Board therefore expects further good growth in 2015."

For further information please contact:

Mike Powell, Group Finance Director (020) 7514 3999

Jemma Spalton, Head of Communications & Investor Relations

BBA AVIATION PLC

David Allchurch / Martha Walsh (020) 7353 4200

TULCHAN COMMUNICATIONS

A video interview with management is now available on www.bbaaviation.com and www.cantos.com

A live audio webcast of the analyst presentation will be available from 09:00 today on www.bbaaviation.com and www.cantos.com 

BBA Aviation plc - Final Results, 4 March 2015

FINAL RESULTS 2014

Overview

BBA Aviation made further progress in 2014. Flight Support delivered a robust performance, ahead of its key markets, driven by strong delivery in Signature Flight Support (Signature). In Aftermarket Services, a stronger than anticipated performance in Legacy Support was offset by market pressures in Engine Repair & Overhaul (ERO). The Group continues to make good strategic progress with significant network expansion in Flight Support and new authorisations and licences in Aftermarket Services.

Group revenue increased by 3% to $2,289.8 million (2013: $2,218.6 million). This included a $82.4 million revenue contribution from acquisitions and a $16.4 million increase from foreign exchange movements. These were offset by the disposal of APPH which reduced revenue by $72.1 million, and lower fuel prices which reduced reported revenue by a further $28.5 million. On an organic basis (excluding the impact of foreign exchange, fuel prices, acquisitions and disposals), Group revenue increased by 3%.

Underlying operating profit was $201.2 million (2013: $200.1 million) including a $13.1 million contribution from acquisitions, partly offset by the $7.2 million impact of the APPH disposal. On an organic basis, operating profit declined by 3%. Flight Support organic profit growth was strongly driven by Signature where good profit drop-through was offset by operational challenges and start-up costs in ASIG. Aftermarket Services operating profit fell as the robust performance in Legacy Support was more than offset by weaker than anticipated markets and some short-term throughput issues associated with the footprint rationalisation in ERO.

Group underlying operating profit margin reduced to 8.8% (2013 constant fuel price: 9.1%).

Net interest expense declined by $0.8 million to $28.8 million (2013: $29.6 million), principally due to a reduction in the blended average interest rate, offsetting the impact of higher net debt. Interest cover increased to 9.3x (2013: 8.8x) and the net debt to EBITDA ratio increased to 2.3x (2013: 1.8x) reflecting the significant growth investment in the year.

Underlying profit before tax increased by 1% to $172.4 million (2013: $170.5 million).

The underlying tax rate increased to 16.0% (2013: 14.5%), reflecting the greater proportion of the Group's pre-tax profits arising in higher marginal tax jurisdictions. With the increase in underlying profit before tax and the reduced average number of shares, due to the repurchase programme that started in March 2014, adjusted earnings per share were up 1% to 30.7¢ (2013: 30.5¢).

Statutory profit before tax increased by 5% to $152.4 million (2013: $145.2 million).

Underlying profit is stated before a $17.7 million gain (2013: $7.6 million loss). This gain comprised the $27.1 million exceptional profit following the disposal of APPH and the assets disposed of as part of the Skytanking acquisition, and the $20.5 million in relation to the previously announced settlement with the IRS in relation to the 2006 to 2010 tax years. These were partially offset by the following: $16.4 million in relation to the settlement with the US Department of Justice; $11.1 million of non-cash amortisation of acquired intangibles (2013: $9.0 million); $13.8 million of restructuring expenses (2013: $6.1 million) largely related to the ERO footprint rationalisation and ASIG's restructuring in response to challenging trading and operational conditions; and $5.8 million of M&A related costs (2013: $8.7 million). There was a $17.2 million tax credit related to these items, resulting in the $17.7 million gain.

As a result, statutory profit after tax grew $24.4 million to $162.5 million.

Unadjusted earnings per share increased by 19% to 34.5¢ (2013: 28.9¢).

The Group's ability to generate strong cash flows remains unchanged; however, the operating cash flow performance in the year was lower than normal due to significant capital investment totalling $116.4 million (2013: $78.0 million). This investment was associated with key expansion projects at Luton, San Jose and other FBO development projects, ERO's Pratt & Whitney rotorcraft authorisations, as well as the ongoing footprint rationalisation. As anticipated, working capital outperformance at the end of 2013 reversed during the year to $(16.3) million from $21.7 million in 2013.

As a consequence, free cash inflow reduced by $95.3 million to $51.2 million (2013: $146.5 million), with the $20.5 million inflow from the IRS settlement partially offsetting the payments in relation to the settlement with the US Department of Justice and the $33.7 million tax payment associated with the agreed settlement with HMRC.

Other cash flow items include the $74.2 million dividend payment, $71.7 million of share repurchases, and the $125.3 million net proceeds associated with the disposal of APPH and disposals associated with the Skytanking acquisition. Further investment was made on acquisitions and licences completed during the year which amounted to $161.2 million (2013: $86.1 million).

With a continued strong pipeline of value creative opportunities the Board is therefore pausing the share repurchase programme that was announced on 5 March 2014.

Return on invested capital reduced by 60 basis points to 9.4% (2013: 10.0%), reflecting the substantial investments made during the year which are expected to generate superior returns over the longer-term.

Business Review

Flight Support

Our Flight Support division provides specialist on-airport services, including refuelling and ground handling to the business & general aviation (B&GA) market through Signature Flight Support and to the commercial aviation market through ASIG.

* Excluding the impact of foreign exchange, fuel prices, acquisitions and disposals.

† Operating margins at constant fuel prices.

Revenue in Flight Support increased by 12% to $1,536.3 million (2013: $1,375.9 million), of which acquisitions contributed $75.6 million. The net impact of lower fuel prices, foreign exchange movements and disposals reduced revenue by $21.2 million. On an organic basis, revenue increased by 8%, which was largely driven by Signature's continued market outperformance, as well as the start-up of ASIG's operations at London Heathrow Terminal 2 and Singapore Changi International Airport.

Underlying operating profit in Flight Support increased by 14% to $132.7 million (2013: $116.3 million), including a $10.7 million contribution from acquisitions. This operating profit growth was driven by good operating leverage in Signature, offset partly by the investment in recent lease extensions and major development projects which are not yet generating revenue, as well as the start-up costs associated with ASIG's new operations at Heathrow and Singapore. On an organic basis, operating profit increased by 5% and operating margins were in line with prior year at 8.6%, after adjusting for fuel prices.

Operating cash flow for the division was $116.4 million reflecting the $41.8 million investment in the large FBO development projects and ASIG's investment in its new operations at London Heathrow and Singapore Changi. Return on invested capital increased to 9.9% (2013: 9.7%).

Signature Flight Support(Signature) delivered another strong performance in 2014 outpacing its key markets and further growing its network of locations as it realised the benefits of the significant investments made in recent years.

Signature's headline revenue increased by 11% to $1,075.8 million (2013: $968.4 million). Adjusting for lower fuel prices, organic revenue increased by 8%, representing a material outperformance relative to its markets with US B&GA movements up 4% and European B&GA movements down 1% during the year.

Signature's strong overall performance and good operating leverage was partially impacted by increased lease costs following a number of significant lease renewals and major development projects which are not yet generating revenue.

During 2014, Signature continued its network expansion having completed or signed agreements to add eight new FBOs to its network and nine Signature SelectTM locations. There is now a total of 125 FBOs in the network globally, with 77 of these in North America.

The acquisitions of FBOs at Westchester County Airport and Biggin Hill successfully completed in the first half of the year and the acquisitions of FBOs at Detroit, Manchester-Boston, Scottsdale, Antigua, St Kitts and Nevis all completed in the second half of the year.

Signature SelectTM added nine new locations during 2014. Three of those locations: Barcelona, Turks and Caicos and Sonoma, completed during the year, with the further six locations expected to complete during the course of 2015.

Signature continued its progress at securing lease extensions across its network, with the average remaining lease life of Signature's locations in the USA remaining at 18 years. In total, Signature has secured 17 lease extensions over the last 4 years.

Signature's ongoing development projects at Mineta San Jose International Airport and London Luton Airport are progressing well. The San Jose FBO is expected to be operational by the beginning of 2016, and at Luton the new hangar became operational in the first half of 2014 with the new FBO and increased ramp expected to be completed by the end of 2016.

ASIG's revenue increased by 13% to $460.5 million (2013: $407.5 million) with commercial aircraft movements down 2% in North America and up 3% in Europe. Adjusting for the impact of acquisitions and disposals, ASIG's organic revenue grew by 8%, of which 6% was related to the start-up of ASIG's operations at London Heathrow's new Terminal 2.

ASIG's overall performance in 2014 was adversely impacted by start-up costs associated with ASIG's new operations at London Heathrow, which have begun to abate in 2015, and at Singapore Changi where operations remain challenging, as well as ongoing labour and health cost inflation in North America which will take time to pass on to the customer.

ASIG continues to experience pricing pressure in certain markets and, as previously announced, towards the end of 2014 ASIG was notified that it had lost the Terminal One Group Association, LP (TOGA) ground handling contract at John F. Kennedy International Airport from early 2015, which had been expected to contribute approximately $36 million of revenue in 2015.

During the course of the year ASIG enhanced its position as the world's leading independent refueller following the completion of the Skytanking acquisition in April, and extended its position in the military refuelling market. The acquisition continues to perform well and further consolidates ASIG's position as a leading provider of commercial fuel handling services in the US.

Aftermarket Services

Our Aftermarket Services division is focused on the repair and overhaul of engines through our Engine Repair and Overhaul (ERO) businesses and the support of maturing aerospace platforms through our Legacy Support business.

* Excluding the impact of foreign exchange, acquisitions and disposals.

In Aftermarket Services, revenue decreased by 11% to $753.5 million (2013: $842.7 million). This was impacted by the APPH disposal that reduced revenue by $72.1 million and volume and pricing pressure in ERO. This was partly offset by a stronger than anticipated performance in Legacy Support and a $6.8 million revenue contribution from acquisitions. On an organic basis, revenue declined by 4%.

Underlying operating profit of $89.6 million decreased by 12% (2013: $101.3 million), including a $2.4 million contribution from acquisitions and the $7.2 million reduction from the APPH disposal. On an organic basis, operating profit was down 9% with operating margins at 11.9% (2013: 12.0%) driven by the impact of volume and pricing pressure in ERO, which more than offset the benefit of the footprint rationalisation.

Operating cash flow of $16.3 million for the division reflects ERO's significant investment in new rotorcraft authorisations ($25.8 million), which are expected to benefit profits in 2016, an outflow of working capital ($20.9 million) associated with short-term throughput inefficiencies resulting from the footprint rationalisation programme, and the cash payments in relation to the settlement of the US Department of Justice investigation ($15.3 million).

Return on invested capital decreased by 90 basis points to 10.4% (2013: 11.3%), reflecting the growth investment and operating profit decline.

In Engine Repair and Overhaul (ERO), revenue was $583.4 million (2013: $597.8 million), representing a 3% organic revenue decline. This revenue reduction was primarily driven by lower volumes, particularly on older mid-cabin engines, with the recovery in B&GA movements taking longer than anticipated to have a meaningful benefit. Associated with these softer market conditions, ERO also experienced increased pricing pressure on two of ERO's key engine platforms: Tay and TFE731.

In 2014 ERO began a significant footprint rationalisation process. As part of this process, ERO completed a new repair and overhaul facility at Dallas Love Field Airport, Texas, to support the large PT6A market, and relocated some of its other engine programmes to its existing Heritage Park facility in Dallas. In October, ERO broke ground for the development of the new engine repair and test facility at Dallas-Fort Worth International Airport. The facility will expand ERO's test capabilities for larger thrust engines, as well as establish a rotorcraft centre of excellence. While good progress has been made on the footprint rationalisation programme, which delivered a net $4 million in 2014 of the anticipated $10m of annualised savings, weaker than anticipated market conditions mean there is limited further benefit now expected in 2015.

During the year ERO was awarded several strategically important authorisations for rotorcraft engine maintenance, repair and overhaul. In February, Rolls-Royce appointed ERO as authorised maintenance, repair and overhaul centres for the RR300 engine, in both Europe and North America. In April, ERO was awarded a North American designated overhaul facility appointment for the Pratt & Whitney Canada PW200 and PW210 engines and the Middle East appointment for the same engines, as well as the PT6C and PT6T. To support these new Pratt & Whitney Canada authorisations in the Middle East, ERO has established a repair and overhaul facility in Abu Dhabi. ERO now has authorisations to support over 65% of the rotorcraft fleet in service and is establishing itself as a global market leader in the rapidly growing rotorcraft market. The benefits of these investments are expected to be seen in 2016 given the anticipated profile of the volume ramp-up.

Towards the end of 2014 ERO's Dallas Airmotive business reached a settlement with the US Department of Justice (DOJ) in an investigation relating to payments in South America by agents and employees of the business from 2008 to 2012. The Company took an exceptional charge of $16.4 million in the fourth quarter of 2014 related to this matter. Ethical and legal compliance are core values of BBA Aviation and we sincerely regret that our high standards of conduct were breached. We continually look for ways to strengthen our compliance and control programmes to ensure we uphold these standards, which are fundamental to the way we operate.

Revenue in Legacy Support declined by 2% to $165.5 million (2013: $168.2 million), the majority of which was organic. This represented a better than anticipated performance following the strong 2013 comparator as a result of the completion of two substantial contracts that year.

During 2014 Legacy successfully signed four new licences: two with Curtiss-Wright for electro-mechanical, hydraulic and pneumatic valves and actuators; one with Rolls-Royce to produce and support Dart engine components; and one with Kidde Graviner to produce fire suppression and detection equipment. The licences with Rolls-Royce and Kidde Graviner have been successfully transitioned and the adoption of the two new licences with Curtiss-Wright have been completed with revenue contributions from January 2015.

Legacy continued efforts to expand its organic sales reach globally by signing agency agreements in certain of its key markets: Indonesia, India and South Korea. Further, Legacy signed and expanded several parts distribution agreements to increase its channels to market and provide superior customer service. In the second half of the year, Legacy benefited from its strategic decision to begin offering serviceable parts to the market, allowing customers more flexibility in their buying decisions.

Legacy's facilities expanded their certifications in 2014. The Singapore facility achieved CAAS certification and its Cheltenham UK facility achieved FAA Part 145 certification, which will allow both facilities to serve a wider customer base.

Unallocated central costs before exceptionals were $3.6 million higher at $21.1 million (2013: $17.5 million), reflecting the IT infrastructure investment as well as share-based payment accruals.

Net debt increased to $619.2 million (2013: $478.5 million) with a net movement of $132.9 million and an unfavourable foreign exchange movement of $7.8 million. The net cash outflow included the $74.2 million dividend payment and $71.7 million of share repurchases.

During the year the Group refinanced its bank facilities, signing a new 5-year $650 million multi-currency revolving credit facility and reducing the remaining tranche B of the 2011 facility to $200 million which matures in April 2016, giving total bank facilities of $850 million. In addition, the Group successfully completed a $200 million issue of US private placement loan notes with maturities of 7,10 and 12 years and coupons of between 3.7% and 4.2%. The senior notes have a weighted average maturity of 9.8 years and a weighted average coupon of 4.0%. The proceeds were used to repay drawings under the Group's existing bank facilities and half of the proceeds were swapped from fixed into variable rates.

At the end of the period $580 million of the total $1,350 million of borrowing commitments remained undrawn and net debt to EBITDA was 2.3x (2013: 1.8x). Interest cover based on EBITDA increased to 9.3x (2013: 8.8x).

Pensions

As announced in March 2014, following the disposal of APPH, agreement was reached with the Trustee of the UK defined benefit plan to apportion the Section 75 debt and at the same time to agree to an asset backed funding scheme to replace the schedule of deficit contributions. This scheme, which was finalised in late March 2014, gives rise to payments to the plan over 20 years with payments suspended when the deficit level of the UK scheme reaches a certain threshold to avoid overfunding.

Consequently in 2014 the Group made payments of $10.1 million to the UK plan (2013: $11.7 million). Total payments in 2015 will be approximately $12.7 million and thereafter will fall to approximately $6.3 million per annum for a further 18 years.

The total accounting deficit for the UK and US pension schemes has increased in the year by $28.2 million to $62.2 million, principally as a result of increased liabilities due to the fall in bond yields. However, the total reported pension obligation on the balance sheet has benefited from the removal of the requirement for the Company to recognise an IFRIC 14 minimum funding liability. This change is due to an amendment to the Company's UK pension scheme rules, which was negotiated by the Company during the second half of the year. This change has reduced the UK pension liability by $23.6 million compared to the previous year-end. Consequently the overall pension obligation has increased by $4.6 million to $62.2 million (2013: $57.6 million).

The 2012 triennial valuation of the UK defined benefit pension scheme was completed during the period, resulting in a funding deficit of £30.4 million ($47.4 million). The Company will continue to pay scheme expenses on an as incurred basis. The next triennial valuation is due to be undertaken in 2015.

Dividend

The Board is proposing a final dividend of 11.58 cents per share (2013: 11.00 cents per share), taking the full year dividend to 16.20 cents per share (2013: 15.40 cents per share). This is a 5% increase and reflects the Board's progressive dividend policy and continuing confidence in the Group's medium-term growth prospects.

Outlook

In Flight Support, we anticipate continued strong momentum in Signature, supported by a sustained recovery in business & general aviation flying hours, as well as improvements in ASIG that should offset the loss of ASIG's JFK contract. In Aftermarket Services, Legacy Support's outlook remains solid. Engine Repair & Overhaul has now stabilised with the overall benefits of the footprint rationalisation programme offsetting continuing market weakness in the older mid-cabin engine segment. In addition, our overall performance will be supported by further incremental contributions from the substantial investments made across the Group in recent years. The Board therefore expects further good growth in 2015.

Going Concern

The Directors have carried out a review of the Group's trading outlook and borrowing facilities, with due regard to the risks and uncertainties to which the Group is exposed, the uncertain economic climate and the impact that this could have on trading performance. Based on this review, the Directors believe that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly, the financial statements have been prepared on a going concern basis.

Directors' Responsibilities

The responsibility statement below has been prepared in connection with the Company's full annual report for the year ending 31 December 2014. Certain parts of the annual report are not included within this announcement.

We confirm that to the best of our knowledge:

· the financial statements, prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company and the undertakings included in the consolidation taken as a whole; and

· the management report, which is incorporated into the Directors' Report, includes a fair review of the development and performance of the business and the position of the Company and the undertakings included in the consolidation taken as a whole, together with a description of the principal risks and uncertainties they face.

Signed on behalf of the Board,

Simon Pryce Mike Powell

Group Chief Executive Group Finance Director

3 March 2015 3 March 2015

This final results announcement contains forward-looking statements including, without limitation, statements relating to: future demand and markets of the Group's products and services; research and development relating to new products and services; liquidity and capital; and implementation of restructuring plans and efficiencies. These forward-looking statements involve risks and uncertainties because they relate to events and depend on circumstances that will or may occur in the future. Accordingly, actual results may differ materially from those set out in the forward-looking statements as a result of a variety of factors including, without limitation: changes in interest and exchange rates, commodity prices and other economic conditions; negotiations with customers relating to renewal of contracts and future volumes and prices; events affecting international security, including global health issues and terrorism; changes in regulatory environment; and the outcome of litigation. The Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

This report is available in electronic format from the Company's website www.bbaaviation.com

Consolidated income statement

1 Underlying profit is stated before exceptional and other items. Exceptional and other items are defined in note 3

Consolidated statement of comprehensive income

Consolidated balance sheet

Consolidated cash flow statement

1 Purchase of intangible assets includes $22.6 million (2013: $11.8 million) paid in relation to Ontic licences.

2 Cash and cash equivalents includes $nil million (2013: $2.9million) included within assets classified as held for sale

3 Net debt includes $nil million (2013: $2.9 million) of cash and cash equivalents and $nil million (2013: $2.5million) of borrowings included within net assets classified as held for sale. Within the Group's definition of net debt the US private placement is included at its face value of $500 million (2013:$300 million) reflecting the fact that the liabilities will be in place until maturity. This is $13.3 million (2013; $6.1 million) lower than its carrying value.

4 Purchase of shares includes the share purchases for the $125 million share buy back scheme, shares purchased for the EBT and shares purchased from employees to settle their tax liabilities as part of the share scheme.

Consolidated statement of changes in equity

Notes to the financial statements

1 Basis of preparation

The consolidated financial statements of BBA Aviation plc, for the year ended 31 December 2014 have been prepared in accordance with International Financial Reporting Standards (IFRS) endorsed for use in the European Union and the Companies Act 2006 applicable to companies reporting under IFRS. They have also been prepared in accordance with IFRS as issued by the International Accounting Standards Board.

The financial information for the year ended 31 December 2014 contained in this preliminary announcement was approved by a duly appointed and authorised committee of the Board of Directors on 3 March 2015. The announcement does not constitute statutory accounts of the Company within the meaning of section 435 of the Companies Act 2006, but is derived from those accounts.

Statutory accounts for the year ended 31 December 2013 have been delivered to the Registrar of Companies. Statutory accounts for the year ended 31 December 2014 will be delivered to the Registrar of Companies following the Company's Annual General meeting.

The Group's annual financial statements for the year ended 31 December 2014 have been reported upon by the Group's auditor. The report of the auditor was unqualified, did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and did not contain a statement under section 498(2) or 498(3) of the Companies Act 2006.

Except as described below, these consolidated financial statements have been prepared in accordance with the accounting policies, presentation and methods of calculation as set out in the Group's consolidated financial statements for the year ended 31 December 2014.

New reporting requirements

A number of EU - endorsed standards and amendments to existing standards and interpretations, which are described below, are effective for annual periods beginning on or after 1 January 2014 and have been applied in preparing the Consolidated Financial Statements of the Group. There is no impact on the Group consolidated financial statements from applying these standards.

IFRS 10: Consolidated Financial Statements (IFRS 10), IFRS 11: Joint Arrangements (IFRS 11), IFRS 12: Disclosure of Interests in Other Entities (IFRS 12) and amendments to IAS 27: Consolidated and Separate Financial Statements (IAS 27) and IAS 28: Investments in Associates (IAS 28) are effective for financial reporting periods beginning on or after 1 January 2014. The amendments to IAS 27 and IAS 28 have been made to align them with IFRS 10, IFRS 11 and IFRS 12.

IFRS 10 defines the principle of control which is the basis for determining which entities are consolidated in the Group's financial statements. The standard also sets out the accounting requirements for the preparation of consolidated financial statements. The Group has reviewed the relationship of its subsidiary entities with their respective parent company. No changes to the accounting for those entities within the consolidation were required.

IFRS 11 requires parties to a joint arrangement to focus on their rights and obligations rather than its legal form in determining whether the arrangement is a joint operation or a joint venture. A joint operator accounts for its share of assets, liabilities and corresponding revenues and expenses arising from the arrangement, whereas a joint venture accounts for an investment in an arrangement using the equity method. No changes to the accounting for those entities within the consolidation were required.

IFRS 12 sets out the disclosure requirements for all forms of interests in other entities, including joint arrangements and associates. The additional disclosures aim to enable users to evaluate the nature of, and risks associated with, the Group's interest in associates and joint arrangements, and the effects of those entities on the Group's financial position, financial performance and cash flows. IFRS 12 relates to disclosures only and has no impact on the reported results or balance sheet of the Group.

Operating Profit

Operating profit is stated after charging exceptional items and after the share of results of associates and joint ventures but before investment income and finance costs. Exceptional and other items are items which are material or non-recurring in nature, and also include costs relating to acquisitions, disposals and the amortisation of acquired intangibles. Underlying operating profit is the Group's key non-GAAP measure and directors consider that this gives a useful indication of underlying performance. It is calculated as operating profit before exceptional and other items.

Presentational reclassifications

There has been a re-classification between cost of sales and administrative expenses in the prior year to improve consistency of treatment within cost of sales.

Notes to the financial statements (continued)

2 Segmental information

IFRS 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the Chief Executive to allocate resources to the segments and to assess their performance.

The Group provides information to the Chief Executive on the basis of components that are substantially similar within the segments in the following aspects:

· the nature of the long-term financial performance;

· the nature of the products and services;

· the nature of the production processes;

· the type of class of customer for the products and services; and

· the nature of the regulatory environment.

Based on the above, the primary reportable segments of the Group have been deemed to be Flight Support, which comprises Signature Flight Support and ASIG, and Aftermarket Services, which comprises Engine Repair and Overhaul and Legacy Support.

The businesses within the Flight Support segment provide re-fuelling, ground handling and other services to the business, general and commercial aviation markets. The businesses within the Aftermarket Services segment maintain, and support engines and aerospace components, sub-systems and systems. Sales between segments are immaterial.

1 Segmental results includes $2.4 million profit of associates and joint ventures within Flight Support

Notes to the financial statements (continued)

2 Segmental information (continued)

 1 Segmental results includes $1.4 million profit of associates and joint ventures within Flight Support

1 Capital additions represent cash expenditures in the year

An analysis of the Group's revenues for the year is as follows:

Notes to the financial statements (continued)

3 Exceptional and other items

Underlying profit is shown before exceptional and other items on the face of the income statement because the directors consider that this gives a useful indication of underlying performance and better visibility of key performance indicators.

Net cash flows from exceptional items was an inflow of $115.1 million (2013: out flow of $17.6 million)

Towards the end of 2014 ERO's Dallas Airmotive business reached a settlement with the US Department of Justice (DOJ) in an investigation relating to payments in South America by agents and employees of the business from 2008 to 2012. The Company took an exceptional charge of $16.4 million in the fourth quarter of 2014 related to this matter.

Notes to the financial statements (continued)

4 Number of employees

5 Income tax

UK income tax is calculated at 21.5% (2013: 23.25%) of the estimated assessable profit for the year. Taxation for other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions. The $17.6 million tax credit in respect of prior years' includes a current tax credit of $20.5 million in respect of amounts refunded from the US tax authorities following settlement in relation to prior tax periods.

Tax credited/(expensed) to other comprehensive income and equity is as follows:

Notes to the financial statements (continued)

6 Earnings per share

The calculation of the basic and diluted earnings per share is based on the following data:

Adjusted earnings per share is shown calculated as earnings before exceptional items because the directors consider that this gives a useful indication of underlying performance.

Notes to the financial statements (continued)

7 Cash flow from operating activities

1 Purchase of intangible assets excludes $22.6 million (2013: $11.8 million) paid in relation to Ontic licences since the directors believe these payments are more akin to expenditure in relation to acquisitions, and are therefore outside of the Group's definition of free cash flow. These amounts are included within purchase of intangible assets on the face of the cash flow statement.

Notes to the financial statements (continued)

8 Acquisitions

During the period the Group made the following acquisitions:

On 26 February 2014, the Group acquired the FBO assets of the Jets facility at London Biggin Hill Airport for $0.7 million.

On 15 April 2014, the Group acquired the assets of Skytanking USA Inc for a cash consideration of $18.5 million.

On 1 May 2014, the Group acquired the assets and associated leasehold interests of Jet Systems at Westchester for a cash consideration of $38.5 million.

On 25 July 2014, the Group acquired the assets of Metroflight Services Inc at Detroit for a cash consideration of $6.0million and deferred consideration of $0.6m.

On 1 August 2014, the Group acquired 100% of the interests in Ross Scottsdale LLC at Scottsdale airport for a cash consideration of $55.6million

On 14 August 2014, the Group acquired the trade and assets of FBO 2000 at Antigua for a cash consideration of $5.8million

On 3 December 2014, the Group acquired the FBO assets of Wiggins Airways Inc at Manchester for a cash consideration of $16.5million

The fair value of the net assets acquired and goodwill arising on these acquisitions are set out below:

Due to the proximity of the acquisitions to the year end the fair values set out above are provisional and are subject to amendment on finalisation of the fair value exercises. In addition to the above fair values a decrease to goodwill of $0.4m was made in respect of prior year Flight Support acquisitions and are the result of completing the final fair value exercises on this acquisitions.

Notes to the financial statements (continued)

8. Acquisitions (continued)

Costs of $5.8 million include the directly attributable costs of acquisition of $3.8 million and costs relating to disposals and aborted acquisitions totalling $1.6 million are included within the exceptional other operating expenses.

In the period since acquisition, the operations acquired have contributed $45.3 million and $6.4 million to revenue and operating profit respectively. If the acquisitions had occurred on the first day of the financial year, the total revenue and operating profit from these acquisitions is estimated to be $81.6 million and $14.2 million respectively.

9 Disposals

On 3 February 2014, the Group disposed of its 100% shareholdings in APPH Limited (APPH UK) and APPH Wichita Inc (Wichita), part of the Aftermarket Services segment, to Héroux-Devtek for cash proceeds of $128.0 million. During the year the Group also closed its APPH Houston operations. The net gain of $26.8 million from these transactions is included within exceptional items in the consolidated income statement and is analysed as follows:

On 15 April 2014, ASIG sold its 50% share of joint venture operations with Skytanking at Munich and Vienna airports, together with its airport fuel operations at Linz and Klagenfurt airports in Austria on 16 April 2014, to Skytanking for $3.3 million. The net gain on disposal was $0.3 million. The cash proceeds received, net cash and cash equivalents disposed of and disposal costs paid resulted in a cash inflow of $3.1 million.

10 Retirement obligations

The actuarial valuation of the UK Income and Protection Plan (the "IPP") as at 31 March 2012 indicated a funding deficit of £30.4 million ($47.4 million). As agreed with the Trustees of the IPP, BBA made deficit contribution payments to the IPP of £4.7 million ($7.4 million) during 2013 as originally planned, plus £2.4 million ($4.0 million) in the first half of 2014. The Company pays £1.2 million per annum to meet the costs of running the IPP. The next triennial valuation is due to be undertaken during 2015.

During the first half of 2014, the Group agreed a new long-term funding package with the Trustee of the IPP, following the sale of APPH Limited. This new funding package replaced the deficit contributions agreed with the Trustee as part of the 2012 triennial valuation of the IPP. As part of this funding package, an Asset-Backed Funding (ABF) structure was put in place, which entitles the Trustee to receive payments of £2.7 million each year until 2034. In addition, the Group made an additional payment of £4.2 million in January 2015.

The IAS 19R defined benefit obligation at 31 December 2014 for the IPP is estimated based on the latest triennial

valuation, with assumptions updated to reflect market conditions at 31 December 2014 where appropriate. The

defined benefit plan assets have been updated to reflect their market value as at 31 December 2014.The Group's foreign retirement obligations relate to a number of funded final salary defined benefit pension arrangements in North America. Pension costs are calculated by independent qualified actuaries, using the projected unit method and assumptions appropriate to the arrangements in place. 

The total accounting deficit for the UK and US pension schemes has increased in the year by $28.2 million to $62.2 million, principally as a result of increased liabilities due to the fall in bond yields. However, the total reported pension obligation on the balance sheet has benefited from the removal of the requirement for the Company to recognise an IFRIC 14 minimum funding liability. This change is due to an amendment to the Company's UK pension scheme rules, which was negotiated by the Company during the second half of the year. This change has reduced the UK pension liability by $23.6 million compared to the previous year-end. Consequently the overall pension obligation has increased by $4.6 million to $62.2 million (2013: $57.6 million).

Notes to the financial statements (continued)

11 Dividends

The directors propose that a final dividend of 11.58c per share will be paid to shareholders on 22 May 2015. The proposed dividend is payable to all shareholders on the register of members at the close of business on 10 April 2015. This dividend is subject to approval by shareholders at the Annual General Meeting and in accordance with IAS 10: Events after the Reporting Period has not been included as a liability in these financial statements.

12 Event after the balance sheet date

There are no disclosable events after the balance sheet date.