Half Yearly Report

2013 Interim Financial Report

Results for the half year ended

30 June 2013

For further information please contact:

Simon Pryce, Group Chief Executive (020) 7514 3999

Mark Hoad, Group Finance Director

BBA AVIATION PLC

David Allchurch / Christian Cowley (020) 7353 4200

TULCHAN COMMUNICATIONS

A video interview with Simon Pryce, CEO 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 

INTERIM FINANCIAL REPORT FOR PERIOD ENDED 30 JUNE 2013

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

(2) Restatement for new IAS19 standard as set out in Note 1 to the condensed consolidated half yearly financial statements

(3) Basic earnings per share

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

(5) Return on invested capital for full year 2012

(6) 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

Overview

·; Strong results against broadly flat markets: underlying operating profit up 6%, profit before tax up 14%

·; Continued operational improvement supporting margin progression

·; Adjusted earnings per share up 22%

·; Positive progress on acquisitions and new licences with $56.3 million committed year to date

·; Interim dividend increased by 5% to 4.40¢

Operational highlights

Flight Support (57% of Group EBIT)

·; Organic revenue increase of 3%, operating profits up 9% with good margin progress

·; Signature: further network expansion and continued market outperformance

·; ASIG: improved de-icing and increased focus on enhancing service quality

Aftermarket Services (43% of Group EBIT)

·; Organic revenue decrease of 1%, operating profit growth of 2%

·; ERO: first half revenue reduction against a strong comparator, new authorisations and facilities well established

·; Legacy Support: strong organic revenue increase, limited impact of sequestration

·; APPH: strong sales growth, benefitting from operational initiatives

Continued strategic progress

·; Further Flight Support network expansion: three acquisitions including Jet Systems FBO at Westchester County Airport for $38.5 million, Signature entry in to Singapore, new Signature Select TM locations

·; Organic capital expenditure expansion projects progressing well and to plan

·; Additional Legacy Support licences signed

·; Effective transition to two division structure

Simon Pryce, BBA Aviation Chief Executive Officer, commented:

"BBA Aviation has delivered a strong first half performance, with good profit growth despite broadly flat markets and further strategic progress in both Flight Support and Aftermarket Services.

In the current lower growth environment, we continue to identify and deliver operational improvements across the Group and create value from our strong pipeline of opportunities for organic investment and consolidation in our fragmented markets. We continue to anticipate making good progress in 2013 with clear upside for our businesses once we enter a period of greater business confidence and accelerated structural growth."

BBA Aviation plc - Interim Financial Report, 6 August 2013

INTERIM FINANCIAL REPORT 2013

Overview

BBA Aviation had a strong first half in 2013, outperforming its key markets with operational improvements continuing to drive advances in the underlying performance of both divisions. The Group also made good strategic progress with network expansion in Flight Support and new licences and business wins in Aftermarket Services.

Group revenue increased 2% to $1,114.4 million (2012: $1,094.2 million). Acquisitions contributed$19.5 million in revenue, which was partially offset by lower fuel prices that reduced reported revenue by$10.8 million. On an organic basis (excluding the impact of fuel prices, acquisitions and disposals) Group revenue increased by 2%.

Underlying operating profit increased by 6% to $94.0 million (2012: $88.5 million), in part due to a return to more normal levels of de-icing activity. Group underlying operating margin increased to 8.4% (2012: 8.1%) and on a fuel price adjusted basis improved by 20 basis points to 8.4% (2012 constant fuel price: 8.2%).

The previously announced reorganisation of the Group from five businesses into two divisions is progressing well. Both management teams are now established and the Group is beginning to access cross business opportunities through sharing best practice, standardising processes and practices and optimising management and support structures.

Net interest expense declined by $4.2 million to $15.6 million (2012: $19.8 million) due to a reduction in the blended average interest rate, as a result of closing out interest rate swaps in the prior period. With increased EBITDA and reduced interest expense, interest cover increased to 8.0x (2012: 6.0x), and underlying profit before tax increased by 14% to $78.4 million (2012: $68.7 million).

The underlying tax rate of 15.2% (2012: 21.0%) was in line with our expectations and the 2012 full year rate. With the increase in underlying profit before tax and reduction in tax rate compared with the first half of 2012, adjusted earnings per share increased by 22% to 13.9 ¢ (2012: 11.4¢).

Profit before tax increased to $63.2 million (2012: $55.4 million). Exceptional items totalled $15.2 million (2012: $13.3 million) including $4.9 million of restructuring expenses related to the costs of the transition to the two divisional structure as well as a couple of smaller site closures. $5.3 million of M&A related costs were incurred in the first half of the year. We continue to pursue value creative investment and acquisition opportunities. Total acquisition and licence commitments to date amount to $56.3 million, with a good pipeline of further prospects. Non-cash amortisation of acquired intangibles totalled $4.6 million (2012: $3.9 million). Unadjusted earnings per share increased by 19% to 11.4¢ (2012: 9.6¢).

Free cash flow increased to $42.9 million (2012: $21.8 million) as a result of increased profits, a lower working capital outflow and reduced interest payments. Gross capital expenditure amounted to $36.8 million(2012: $28.5 million) with large items including FBO projects at Palm Beach, Luton and Newark together with the purchase of rental engines in ERO.

Net debt increased to $450.1 million (2012 year-end: $416.4 million) with a net cash outflow of $34.4 million including a $50.1 million dividend payment as well as the $28.6 million cash cost associated with closing out the final remaining cross-currency swaps as indicated in the Interim Management Statement in May. Total spend on acquisitions and licences completed during the period amounted to $5.3 million. At the end of the period net debt to EBITDA was 1.7x (2012 year-end: 1.6x; H1 2012: 1.7x).

Return on invested capital increased by 20 basis points to 10.0% (2012 full year: 9.8%).

Business Review

Flight Support

Our Flight Support division provides specialist on-airport services including refuelling and ground handling to the business & general aviation market through our Signature Flight Support brand and to the commercial aviation market through our ASIG brand.

† Operating margins at constant fuel prices

Revenue in Flight Support increased by 3% to $689.8 million (2012: $668.3 million) against the backdrop of flat or weaker end markets. The PLH Aviation Services and Dryden Air Services acquisition in Canada contributed an additional $13.3 million of revenue. Following the weak comparator in the first half of 2012,de-icing activity returned to more normal levels. These increases were partially offset by lower fuel prices that reduced revenue by $10.8 million. On an organic basis Flight Support revenue increased by 3%.

Underlying operating profit in Flight Support increased to $58.6 million (2012: $53.7 million). Operating margins at constant fuel prices increased by 30 basis points to 8.5% (2012: 8.2%).

Operating cash flow for the division increased to $61.4 million with cash conversion of 110% (2012: 64%). Return on invested capital improved by 40 basis points to 9.7%.

Signature's reported revenue remained broadly flat at $484.7 million (2012: $488.6 million). Adjusting for lower fuel prices, organic revenue growth was 2%, representing an outperformance relative to its markets with North American B&GA movements for the period flat while European B&GA movements contracted by 3%.

Signature Flight Support continued its network expansion on multiple fronts including two acquisitions, entry in to Singapore, the addition of a new Signature SelectTM location, as well as the previously announced success at Mineta San Jose International Airport where Signature has been awarded a 50 year FBO lease.

It is announced today that Signature has strengthened its leading position at Westchester County Airport, NY through the acquisition of Jet Systems, the site's second largest operator for a cash consideration of$38.5 million on a cash and debt free basis. Westchester County Airport is the second busiest business aviation location in the US. The acquisition is expected to be earnings enhancing in the first full year and meet BBA Aviation's return on invested capital target by the end of the second year of ownership. The acquisition is subject to customary approvals and is expected to complete by the end of 2013.

In June Signature Flight Support also agreed to purchase a 75% share of Starlink Aviation Inc's FBO in Montréal, Quebec, Canada, formerly part of the Signature SelectTM network, for a consideration of $3 million, representing the first acquisition of a Signature SelectTM location.

In July, Signature launched operations at Singapore's Changi International Airport where it provides supervisory services for ground handling and fuel coordination. This location will mark Signature's second location in Asia along with their investment in the Hong Kong Business Aviation Center at Chep Lap Kok/Hong Kong International Airport.

During the period, American Aero at Fort Worth Meacham International Airport, Texas joined the Signature SelectTM network and Signature has recently signed an agreement with Sonoma Jet Center at Sonoma County Airport, California to become its latest Signature SelectTM location.

Signature's previously announced construction projects associated with lease extensions in Luton, UK and in Newark Liberty International Airport are progressing as planned. Meanwhile, the dedicated NetJets private terminal at Palm Beach International Airport is expected to be completed ahead of schedule in the second half of the year.

Signature continued to drive improvements in its key operational metrics including safety and quality of service. The customer experience score improved for the fourth consecutive year to a world-class 85%. Participants in Signature's TailWinsTM loyalty programme, aimed at pilots, schedulers, dispatchers and flight departments, increased from 11,900 to 13,000 and the Signature StatusTM programme, focused on rewarding crew and passengers, now has over 200 platinum member aircraft.

ASIG's headline revenue increased 14% to $205.1 million (2012: $179.7 million), supported by improvedde-icing activity, the contribution from the Canadian acquisition and net contract wins. On an organic basis ASIG's revenue grew by 7% mainly due to de-icing.

Commercial market conditions continued to be challenging in North America with commercial aircraft movements down 1% during the first half of 2013 as airlines further consolidated operations. A similar trend was seen in Europe, where commercial aircraft movements were down 4%. ASIG continues to focus on achieving scale and operational effectiveness and there have also been a number of changes to the ASIG leadership team to reinvigorate their focus on safety and service performance, ensuring that they maintain service differentiation and are the lowest total cost quality service provider in their selected markets.

ASIG has now completed the previously announced acquisition of gategroup's cabin cleaning, de-icing, and aircraft exterior washing business at London Heathrow and de-icing and aircraft exterior washing business at Heathrow, London Gatwick and Dublin for an aggregate consideration of $4.3 million. ASIG's Canadian acquisition is performing well and is on track to meet the Group's ROIC target in the first full year of ownership.

Aftermarket Services

Our Aftermarket Services division is focused on the repair and overhaul of engines through our ERO businesses, the support of maturing aerospace platforms through our Legacy Support business and the manufacture and service of landing gear and hydraulic sub-systems through our APPH business.

In Aftermarket Services, revenue was broadly unchanged at $424.6 million (2012: $425.9 million) with strong organic growth in Legacy Support and APPH offset by reduced activity in ERO. There was a $5.4 million revenue contribution from the Consolidated Turbine Services Inc acquisition completed in H1 2012, and organic revenue decreased by 1%.

Underlying operating profits of $45.1 million increased by 2% (2012: $44.4 million) and operating margins increased slightly to 10.6% (2012: 10.4%).

Operating cash flow for the division was $13.5 million (2012: $25.2 million) with cash conversion of 36% (2012: 68%). The reduction in cash conversion was largely driven by a working capital outflow relating to payment for parts which are expected to turn out of inventory in the second half of the year.

Return on invested capital improved by 10 basis points to 11.2% (2012 full year: 11.1%).

In Engine Repair and Overhaul ("ERO"), revenue was $308.5 million (2012: $326.1 million), with a 7% organic revenue reduction. This was against a particularly strong H1 2012 comparator and as a result of reduced activity that was in part associated with some disruption in Q2 as ERO implemented a sales organisation restructuring. We have begun to see the benefits of this reorganisation and anticipate this accelerating into the second half. ERO continues to focus on operational efficiency as well as improving support to its customers and expanding its global field support through its F1RST SUPPORT™ network.

ERO's authorisation for Honeywell HTF7000 field repairs via the acquisition of Consolidated Turbine Services resulted in a steady inflow of field repair work on Bombardier Challenger 300 and Gulfstream G280 business jets. The authorisation from Rolls-Royce CorporateCare™ for Mobile Repair Support service on the BR710 turbofan engine secured in 2012 is now fully supported with a team of field service technicians and tooling to service Gulfstream G550 and Bombardier Global Express aircraft globally. In the first quarter of 2013, ERO added the Honeywell RE220 auxiliary power unit (APU) authorisation further strengthening its field service portfolio for Gulfstream and Bombardier long-range aircraft.

In late May, ERO's Singapore Regional Turbine Centre (RTC) completed its first engine Major Periodic Inspection (MPI) and received its second engine for MPI service in June. The Singapore RTC is the only Honeywell authorised facility in the region and also houses a F1RST SUPPORT™ centre.

Revenue in Legacy Support increased by 14% to $79.6 million (2012: $70.1 million), all of which was organic. Sales were driven by higher than expected deliveries of landing gear shock strut assemblies for the AH-64 Apache and EA-6B Prowler, Airbus A320 fuel computer upgrades, and accelerated deliveries of the LANTIRN environmental control units for the F-15.

In June 2013, Legacy Support invested $8.4 million in a licensing agreement with Curtiss-Wright Controls to produce current monitors, current sensors, fault sensors, control units, torque meters, and various indicators for the CH-47 Chinook, AH-64 Apache, F-15, MD500, B747-400, B747-8, B757, and B767 aircraft.

In the first half of 2013, Legacy Support successfully transferred the product lines and staff from its facility in Slough, UK to its Cheltenham, UK facility. A regional base was also established in Singapore, co-located with ERO's regional turbine centre, to provide component and accessory spares and MRO services in-region.

Operational improvements to deliver significant orders for military aircraft ahead of schedule helped deliver the 14% H1 organic revenue increase but have driven a slight decrease in Legacy's order book of 8% since the end of 2012.

As anticipated, the overall impact of sequestration has been limited. Whilst the number of order enquiries declined during the period, the conversion rate of enquiries into executed orders has increased.

APPH's revenue increased by 23% to $36.5 million (2012: $29.7 million) through increased sales across its OE, MRO and spares segments.

In May APPH was selected, following a competitive tender process, to supply landing gear assemblies for the Embraer KC-390 military transport aircraft. The Brazilian Airforce is the launch customer for this programme and has placed an order for 28 aircraft. Embraer also has letters of intent with a further five airforce customers for export orders. Sales are expected to increase to $4 million per annum when full production commences in 2016.

APPH continues to benefit from the success of the operational initiatives implemented over the last two years, including the closure of the Basingstoke facility in 2012 and sees further opportunities to drive additional improvements across all areas of the business.

Unallocated central costs were broadly unchanged at $9.7 million (2012: $9.6 million).

Net debt increased to $450.1 million (2012 year-end: $416.4 million) with a net cash outflow of $34.4 million including a $50.1 million dividend payment as well as the $28.6 million cash cost associated with closing out the final remaining cross-currency swaps as indicated in the Interim Management Statement in May. There was a favourable foreign exchange movement of $0.7 million.

At the end of the period $500 million of the total borrowing commitments of $1,050 million remained undrawn and net debt to EBITDA was 1.7x (2012 year-end: 1.6x; 2012: 1.7x). Interest cover increased to 8.0x(2012: 6.0x) as a result of the increase in EBITDA and reduction in net interest expense.

Pensions

The combined accounting deficit for the UK and US pension schemes decreased to $61.4 million(2012 year-end: $66.3 million), principally as a result of asset gains, together with deficit contribution payments.

The 2012 triennial valuation of the UK defined benefit pension scheme was completed during the period, resulting in a funding deficit of £30 million ($46 million). BBA Aviation has agreed to make deficit contribution payments to the UK scheme of $7.3 million during 2013 as originally planned, increasing to $10.5 million per annum from 2014 to 2016 and $2.6 million in 2017. The Company will continue to pay scheme expenses on an as incurred basis. The next triennial valuation is due to be undertaken in 2015.

A revised pensions accounting standard, IAS 19, is effective from 1 January 2013. Prior year comparative figures have been restated to reflect this change. The impact of the restatement is set out in Note 1 to the condensed consolidated half yearly financial statements.

Dividend

The Board is declaring an increased interim dividend of 4.40¢ (2012: 4.20¢) up 5% reflecting the Board's progressive dividend policy.

Outlook

"BBA Aviation has delivered a strong first half performance, with good profit growth despite broadly flat markets and further strategic progress in both Flight Support and in Aftermarket Services.

In the current lower growth environment, we continue to identify and deliver operational improvements across the Group and create value from our strong pipeline of opportunities for organic investment and consolidation in our fragmented markets. We continue to anticipate making good progress in 2013 with clear upside for our businesses once we enter a period of greater business confidence and accelerated structural growth."

Going Concern

The Directors have carried out a review of the Group's trading outlook and borrowing facilities (as outlined above), 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 Directors confirm that to the best of their knowledge:

(a) the condensed consolidated set of financial statements has been prepared in accordance with IAS 34 "Interim Financial Reporting";

(b) the interim financial report includes a fair review of the information required by DTR 4.2.7R (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and,

(c) the interim financial report includes a fair review of the information required by DTR 4.2.8R (disclosure of related parties' transactions and changes therein).

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 Mark Hoad

Group Chief Executive Group Finance Director

5 August 2013 5 August 2013

This interim financial report 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 interim financial report has been drawn up and presented in accordance with and in reliance on applicable English company law and the liabilities of the directors in connection with this report shall be subject to the limitations and restrictions provided by such law.

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

Unaudited condensed consolidated income statement

1 Before exceptional items. Exceptional items are items which are material or are non-recurring in nature, costs relating to acquisitions, and the amortisation of acquired intangible assets, together with related tax items, (note 3).

2 IAS19: Employee Benefits (Revised) (IAS 19R) is effective for financial reporting periods beginning 1 January 2013 with retrospective application required. The results for the six months ended 30 June 2012 and the year ended 31 December 2012 have been restated for the impact of applying IAS 19R and more detail is set out in note 1 to these condensed consolidated half yearly financial statements.

Unaudited condensed consolidated statement of comprehensive income

1 IAS19: Employee Benefits (Revised) (IAS 19R) is effective for financial reporting periods beginning 1 January 2013 with retrospective application required. The results for the six months ended 30 June 2012 and the year ended 31 December 2012 have been restated for the impact of applying IAS 19R and more detail is set out in note 1 to these condensed consolidated half yearly financial statements.

Unaudited condensed consolidated balance sheet

Unaudited condensed consolidated cash flow statement

Unaudited condensed consolidated statement of changes in equity

Notes to the condensed consolidated half yearly financial statements

1 Basis of preparation

The unaudited condensed consolidated financial statements of BBA Aviation plc, for the six months ended 30 June 2013 have been prepared in accordance with the Disclosure and Transparency Rules of the UK's Financial Conduct Authority and International Accounting Standard IAS 34: Interim Financial Reporting (IAS 34) which permits the presentation of the financial information on a condensed basis. These condensed consolidated half yearly financial statements do not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006, and therefore should be read in conjunction with the Group's Annual Report for the year ended 31 December 2012.

The Group's annual financial statements for the year ended 31 December have been reported upon by the Group's auditor and delivered to the Registrar of Companies. 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 statements under section 498(2) or 498(3) of the Companies Act 2006.

Except as described below, these condensed consolidated half yearly 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 2012, which were prepared in accordance with International Financial Reporting Standards (IFRS) endorsed for use in the European Union, the Companies Act 2006, and comply with Article 4 of the EU IAS Regulation.

Going concern

The directors are satisfied that, at the time of approving the interim financial statements, it is appropriate to continue to adopt the going concern basis of accounting. Further information is given on page 7 of the interim statement.

New reporting requirements

Amendments to IAS 1: Presentation of Financial Statements are applicable for financial reporting periods commencing 1 January 2013 and require items within other comprehensive income that may be classified to the income statement to be grouped together. This amendment relates to disclosure only and has no impact on the reported results or balance sheet of the Group.

IAS19: Employee Benefits (Revised) (IAS 19R) is effective for financial reporting periods beginning 1 January 2013 with retrospective application required. The principal impact of IAS 19R is that the concepts of expected return on assets and interest expense on the defined benefit obligation as separate components of the defined benefit cost have been replaced by a single concept such that interest is now calculated on the net defined benefit deficit. This calculation uses the discount rate previously used to measure defined benefit pension liabilities after allowance for any asset ceilings and additional liability under IFRIC 14: The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction (IFRIC 14). In addition, plan administration expenses, previously deducted from the expected return on scheme assets, are now included within operating profit. As a result of these amendments, the comparative financial information in the income statement and statement of comprehensive income for the six months ended 30 June 2012 and the year ended 31 December 2012 has been restated. The impact on the income statement for the six months ended 30 June 2012 is to reduce operating profit by $1.7m (31 December 2012: $2.7m), increase finance costs by $1.3m (31 December 2012: $2.5m) and reduce actuarial losses in the statement of comprehensive income for the six months ended 30 June 2012 by $3.0m (31 December 2012: $5.2m). The pension deficit has remained unchanged and so the balance sheet has not been restated.

IFRS 13: Fair Value Measurement (IFRS 13) is applicable for financial reporting periods beginning 1 January 2013. It aims to improve consistency and comparability in fair value measurements and related disclosures by providing a precise definition of fair value and a single source of related disclosure requirements for use across other IFRSs. The standard has clarified the method for measuring fair value to incorporate credit adjustments for the company in addition to credit adjustments for counterparties. The requirements do not extend the use of fair value accounting. As a result of the implementation of IFRS 13, IAS 34 requires additional financial instrument disclosures which have been included in the condensed consolidated half yearly financial statements.

2 Segmental analysis

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, Legacy Support and APPH.

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, manufacture and support engines and aerospace components, sub-systems and systems. Sales between segments are immaterial.

There has been no change to the Group's reportable segments since the last annual report.

2 Segmental analysis - continued

2 Capital additions represent cash expenditures during the period.

2 Segmental analysis - continued

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

3 Exceptional items

In the six months ended 30 June 2013, exceptional items amounting to a charge of $15.2 million (30 June 2012: $13.3 million; 31 December 2012: $32.7 million) are included within operating profit, and include restructuring expenses of $4.9 million (30 June 2012: $8.4 million; 31 December 2012: $17.0 million); amortisation of intangible assets arising on acquisition and valued in accordance with IFRS 3 of $4.6 million (30 June 2012: $3.9 million; 31 December 2012: $7.6 million) included within administrative expenses; $5.3 million (30 June 2012: $1.0 million; 31 December 2012: $6.6 million) of acquisition costs and $0.4 million of environmental costs in relation to previously disposed businesses (30 June 2012: $nil; 31 December 2012: $1.5 million) included within other operating expenses.

The restructuring expenses for the period of $4.9 million includes $2.1 million in respect of reorganisation of management into two operating divisions, $0.7 million investment in efficiency projects and $2.1 million in respect of resizing manufacturing capacity. For the six months ended 30 June 2012 restructuring expenses of $8.4 million related principally to the closure of the APPH Basingstoke facility. Restructuring expenses of $17.0 million incurred during the year ended 31 December 2012 comprised $8.6 million in respect of re-sizing manufacturing capacity, $3.6 million for management reorganisation and $4.8 million investment in efficiency projects.

4 Income tax

Corporation tax for the interim period is charged at an effective rate of 15.2% (30 June 2012: 21.0% (restated); 31 December 2012: 15.4% (restated)) on underlying profit before tax, representing the best estimate of the weighted average annual corporation tax expected for the full financial year.

The total income tax expense for the six months ended 30 June 2013 includes a tax credit of $2.8 million (30 June 2012: $4.6 million; 31 December 2012: $9.5 million) relating to exceptional items.

5 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.

6 Equity dividends on ordinary shares

The 2013 interim dividend of 4.40 cents per share (2012: 4.20 cents per share; $20.2 million in total) was approved by the Board of Directors on 5 August 2013 and will be paid on 1 November 2013 to ordinary shareholders registered on20 September 2013. Shareholders will receive their dividends in sterling unless they complete and submit to the Company's registrars by 5.30pm on 7 October 2013 an election form stating their wish to receive their dividends in US dollars. The sterling dividend will be converted at a prevailing exchange rate on 8 October 2013 and this exchange rate will be announced on 9 October 2013.

7 Cash and cash equivalents and borrowings

The carrying value of cash and cash equivalents of $126.0 million (30 June 2012: $149.7 million; 31 December 2012: $151.1 million) approximates to their fair value.

The Group's fixed rate debt (including borrowings and finance lease obligations) adjusted for interest rate hedging had a carrying value at 30 June 2013 of $252.0 million (30 June 2012: $252.9 million; 31 December 2012: $252.0 million). The fair value of these borrowings (adjusted for interest rate hedging) at 30 June 2013 was $256.3 million (June 2012: $264.3 million; 31 December 2012: $262.5 million).

The carrying value at 30 June 2013 of the Group's floating interest rate borrowings adjusted for interest rate hedging was $334.5 million (30 June 2012: $367.4 million; 31 December 2012: $342.7 million). The carrying value of these items approximates to their fair value.

At 30 June 2013, the Group had a $750 million multicurrency revolving credit facility dated 21 April 2011 with a split maturity, of which $250 million is due to expire in April 2014, and $500 million of which is due to expire in April 2016. As at 30 June 2013, the Group had available $500.0 million (30 June 2012: $477.5 million; 31 December 2012: $500.0 million) of undrawn facilities.

In addition, the Group has issued $300 million of US private placement ("USPP") senior notes dated 18 May 2011 with maturities of 7, 10 and 12 years. Within the Group's definition of net debt the USPP is included at its face value of $300 million. This is $10.4 million lower than its carrying value (30 June 2012; $26.8 million; 31 December 2012: $27.2 million).

8 Financial instruments

Categories of financial instruments

The carrying values of the financial instruments of the Group are analysed below:

a Foreign exchange contracts disclosed as fair value through profit and loss are not designated in a formal hedging relationship and are used to hedge foreign currency flows through the BBA Aviation plc company bank accounts to ensure that the Group is not exposed to foreign exchange risk through the management of its international cash management structure.

b Derivative instruments held in fair value hedges are designated in formal hedging relationships and are used to hedge the change in fair value of fixed rate US dollar borrowings.

c Recoveries from third parties in respect of environmental and other liabilities totalling $6.5m (30 June 2012: $20.5m; 31 December 2012: $21.2m) are included within trade and receivables.

d The carrying value of trade and other receivables, and other payables approximates their fair value.

8 Financial instruments (continued)

Derivative financial instruments

The fair values and notional amounts of derivative financial instruments are shown below. The fair value on initial recognition is the transaction price unless part of the consideration given or received is for something other than the instrument itself. The fair value of derivative financial instruments is subsequently calculated using discounted cash flow techniques or other appropriate pricing models. All valuation techniques take into account assumptions based upon available market data at the balance sheet date. The notional amounts are based on the contractual gross amounts at the balance sheet date.

The fair values of the derivative financial instruments are categorised within Level 2 of the fair value hierarchy on the basis that their fair value has been calculated using inputs that are observable in active markets which are related to the individual asset or liability. The Group does not have any derivative financial instruments which would be categorised as either level 1 or 3 of the fair value hierarchy.

Adjustments relating to the credit risk of BBA Aviation plc and its counterparties, as defined within IFRS 13, are immaterial in the current period and prior periods.

9 Cash flow from operating activities

*Purchase of intangible assets excludes $2.1 million (30 June 2012 $nil; 31 December 2012: $0.4 million) paid in respect of Ontic licences since the directors believe these payments are more akin to acquisitions, and are therefore outside of the Group's definition of free cash flow. These amounts are included within purchase of intangibles on the face of the cash flow statement.

10 Acquisitions

On 21 June 2013, the Group acquired, for a cash consideration of $3.2m, substantially all the assets of Fernley Heathrow Limited, an aircraft cabin cleaning, de-icing and aircraft exterior washing business based at London Heathrow Airport and London Gatwick Airport. On 2 July 2013, the Group announced the purchase, for a cash consideration of $1.1 million, of substantially all the assets of Fernley Ireland Ltd, a de-icing business based at Dublin airport. Due to the timing of these acquisitions, the fair values acquired will be presented in the financial statements for the year ending 31 December 2013.

11 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.

During the period, group companies entered into the following transactions with related parties who are not members of the Group:

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.

In addition, at the balance sheet date, Group companies had loan receivables from an associated undertaking of $2.7 million (30 June 2012: $2.5 million; 31 December 2012: $2.9 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 12.

12 Retirement obligations

The 2012 triennial valuation of the UK defined benefit pension scheme was completed during the period, resulting in a funding deficit of £30 million ($46 million). BBA Aviation has agreed to make deficit contribution payments to the UK scheme of $7.3 million during 2013 as originally planned, increasing to $10.5 million per annum from 2014 to 2016 and $2.6 million in 2017. The Company will continue to pay scheme expenses on an as incurred basis. The next triennial valuation is due to be undertaken in 2015.

The defined benefit obligation at 30 June 2013 for the UK Income and Protection Plan is estimated based on the latest triennial valuation, with assumptions updated to reflect market conditions at 30 June 2013 where appropriate. The defined benefit plan assets have been updated to reflect their market value as at 30 June 2013. 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.

As at 30 June 2013, the IAS 19 valuations of the UK and US schemes indicate a net deficit of $55.6 million (30 June 2012: $41.0 million; 31 December 2012: $66.3 million), which when combined with the minimum funding liability recognised in accordance with IFRIC 14, of $5.8 million (30 June 2012: $12.8 million; 31 December 2012: $nil) gives a combined liability recognised on the balance sheet of $61.4 million (30 June 2012: $53.8 million; 31 December 2012: $66.3 million).

13 Share capital

Ordinary share capital as at 30 June 2013 amounted to $251.8 million, (30 June 2012 $251.4 million; 31 December 2012: $251.5 million). During the period the Group issued 0.6 million (30 June 2012: 2.6 million; 31 December 2012: 2.9 million) of ordinary shares to satisfy options exercised and the vesting of share awards under the Group's various share schemes. The consideration for shares issued in respect of share options was $0.3 million (30 June 2012: $1.3 million;31 December 2012: $1.8 million).

The number of shares in issue as at 30 June 2013 were 480.3 million (30 June 2012: 479.5 million; 31 December 2012: 479.7 million).

14 Risks and uncertainties

There are a number of potential risks and uncertainties which could have a material impact on the Group's performance over the remaining six months of the financial year and could cause actual results to differ materially from expected and historical results. The directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2012. A detailed explanation of the risks and how these risks are mitigated can be found on page 17 of the 2012 annual report which is available at www.bbaaviation.com. The risks and uncertainties are summarised below:

·; General economic downturn leading to a reduction in revenues and profits as a result of reduced B&GA and commercial flying and military expenditure.

·; Catastrophic global event (terrorism, weather) with a material impact on global air travel leading to a reduction in revenues and profits as a result of reduced B&GA and commercial flying.

·; Legislative changes causing a material increase to the cost of BG&A flight relative to alternatives leading to a reduction in revenues and profits as a result of a reduction in B&GA flying hours.

·; Ability to attract and retain high quality and capable people resulting in a loss of key personnel, lack of internal successors to key management roles, and short to medium term disruption to the business.

·; Potential liabilities from defects in services and products resulting in adverse reputational impact with associated deterioration in customer relationships and a loss of earnings from liability claims.

·; Intentional or inadvertent non-compliance with adverse reputational impact exposure to potential litigation or criminal proceedings.

·; Potential collapse of the Euro or exit of a Euro zone member from the Euro resulting in significant economic downturn in the Euro zone affecting revenues and profits, and the threat to solvency of Euro zone banks, impacting access to cash deposits or ability to draw committed facilities.

·; Environmental exposures resulting in a loss of earnings from the cost to remediate or from potential litigation, the potential for the loss of licence to operate, or greater than expected liabilities associated with historical operations.

Independent Review Report to BBA Aviation PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated cash flow statement, consolidated statement of changes in equity and related notes 1 to 14. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, "Interim Financial Reporting," as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2013 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Deloitte LLP

Chartered Accountants and Statutory Auditor

London, United Kingdom

5 August 2013