TIDMGMAA
RNS Number : 8297M
Gama Aviation PLC
24 September 2021
The information contained within this announcement is deemed to
constitute inside information as stipulated under Article 7 of the
Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
Date: 24 September 2021
Gama Aviation Plc (AIM: GMAA)
("Gama", "the Company" or "the Group")
Unaudited interim results for six months to 30 June 2021
Results continue to be impacted by COVID-19; the Group's
liquidity remains strong
Highlights (2020 comparatives restated(1) )
-- Results continue to be impacted by COVID-19 but Group's
liquidity remains strong with $14.2m (FY 2020: $ 16.1m) cash and
$17.2m (FY 2020: $24.7m) of its $50m revolving credit facilities
(RCF) undrawn as at 30 June 2021
-- On 20 July 2021, the Company received $15.2m in cash from
Wheels Up Partners Holdings LLC ("Wheels Up"), which is being used
to support the on-going organic investment needs of the Company
-- As at 17 September 2021 cash balances were $17.7m and $22.3m of the RCF is undrawn
-- Net Debt, inclusive of $52.1m (FY 2020: $52.6m) of
obligations under leases, increased to $100.6m (FY 2020: $89.7m)
largely resulting from the Jet East Aviation Corporation LLC ("Jet
East") acquisition
-- Excluding the Group's $1.5m share of associate losses,
Adjusted EBIT is stable with a loss of $0.4m (H1 2020: loss of
$0.4m)
-- Statutory loss of $1.4m (H1 2020: loss of $4.6m) includes a
net profit on Adjusting items of $2.0m profit (H1 2020: profit of
$0.2m), refer to Note 4 of the notes to the financial statements
for further details
-- Significant expansion of the Group's US maintenance
operations via the acquisition of Jet East with integration
progressing as planned
-- Millville Service Hub base maintenance facility successfully
started operations on 1 July 2021
Financial Summary
Adjusted(2) $m Statutory $m
----------------------- -------------------- --------------------
Jun-20 Jun-20
Jun-21 Restated(1) Jun-21 Restated(1)
----------------------- ------ ------------ ------ ------------
Revenue 106.4 93.7 106.4 109.2
Gross profit 22.4 16.5 22.4 32.0
Gross profit % 21.0% 17.6% 21.0% 29.3%
EBIT (1.9) (2.4) 0.2 3.8
Loss for the period (3.4) (4.8) (1.4) (4.6)
Loss per share (cents) (4.4) (7.5) (1.3) (7.2)
----------------------- ------ ------------ ------ ------------
(1) Restatements are detailed in Note 2 of the notes to the
financial statements. The impact of the restatement to Adjusted
Gross Profit and Adjusted EBIT is $0.2m to H1 2020 and expected to
be c$0.5m on FY 2020. In addition, there was a $3.1m increase to FY
2020 obligations under leases and net debt
(2) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the financial statements and reconciled to
the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted
Gross Profit, Adjusted EBIT and Net debt. APMs also include organic
and constant currency Revenue, Gross Profit and Adjusted EBIT
Outlook
Despite the challenges posed by the pandemic on the aviation
sector we continue to evolve and strengthen our robust and
resilient business to address the impact on the Group's performance
and ensuring the long-term stability of the Group whilst remaining
poised for renewed growth post pandemic.
Commenting on the half year results, Marwan Khalek, Chief
Executive said:
"Our H1 2021 results reflect the continuing impact of COVID-19
on the Group. Notwithstanding the $1.5m share of losses from the
Group's 20% associate investment in CASL, the Group has delivered a
near breakeven performance and continues to generate positive
operating cashflows despite the challenging pandemic. This provides
further evidence of the robustness and resilience of our proven
business model and the continuing focus on controlling costs,
enhancing revenues and preserving cash. With a strong liquidity
position, the Group is well placed to weather the remainder of this
crisis and is very well positioned to recapture the growth
opportunities that will accompany the emerging recovery in the
private aviation market from the easing of lockdown measures and
travel restrictions."
-S-
For more information and persons responsible for arranging the
release of this announcement on behalf of the Company contact:
Gama Aviation Plc +44 (0) 1252 553029
Marwan Khalek, Chief Executive Officer
Daniel Ruback, Chief Financial Officer
Camarco +44 (0) 20 3757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
WH Ireland +44 (0) 207 220 1666
James Joyce
Ben Good
Gama Aviation - Notes to Editors
Founded in 1983 with the simple purpose of providing aviation
services that equip its customers with decisive advantage, Gama
Aviation Plc (LSE AIM: GMAA) is a highly valued global partner to
blue chip corporations, government agencies, healthcare trusts and
private individuals.
The Group has three global divisions: Business Aviation
(Aircraft Management, Charter, FBO & Maintenance), Special
Mission (Air Ambulance & Rescue, National Security &
Policing, Infrastructure & Survey, Energy & Offshore); and
Technology & Outsourcing (Flight Operations, FBO, CAM software,
Flight Planning, CAM & ARC services)
As announced on 2nd September 2021, these results will continue
to report the operational and financial segmental performance in
the Air, Ground and Global Services divisional format. The Company
has made significant progress in transitioning its current year
reporting to reflect the recent realignment of the business along
its Strategic Business Units, with efforts now focused on
representing the prior year comparative performance on the same
basis.
More details can be found at: http://www.gamaaviation.com/
Chief Executive Officer's Report
In what remains an extremely challenging economic environment
for the aviation sector, our business, operational and financial
performance continue to be severely impacted by the coronavirus
pandemic.
The Group has nevertheless again delivered a credible
performance. This has been delivered by the proactive measures we
put in place to safeguard and protect our business and evolution
thereof, underpinned by the robustness of our business model and
the resilience of our operating platform.
More crucially, this is also as a result of the incredible
perseverance of our people whose dedication, commitment and effort
has ensured that our bases across the world remained operational
throughout, delivering services in support of our clients'
essential missions. I remain extremely proud and humbled by the
manner in which every one of our people has responded to this
unprecedented, unique and extremely prolonged challenge and would
like to formally thank them.
Our continued focus on controlling cost, enhancing revenues and
preserving cash has helped us safeguard the stability and financial
performance of the business, which is again reflected in the
healthy liquidity position that the Group has maintained throughout
this crisis.
Despite the welcome easing of lockdown measures, our transition
back to normality is a cautious one and we continue to operate
strictly in accordance with the protective measures advised by the
World Health Organization and by national governments. Our
overriding priority is the safety and security of our global
workforce and of our clients. Above all, w e remain vigilant to the
economic, social and human effects of this lingering pandemic and
we will continue to take the necessary and proportionate actions to
safeguard the interests of our shareholders, our clients and our
people.
The acquisition of Jet East in January clearly demonstrates our
commitment to and focus on growing our business in the
strategically important US MRO market. The integration is going
well and I am confident that the acquisition will help us deliver
our strategic objectives in the largest MRO market in the
world.
H1/21 Financial Performance
Adjusted revenues on an organic and constant currency basis fell
by 12% to $87.0m for the period (H1 2020, $98.9m). On a reported
basis, adjusted revenues were up 14% to $106.4m (H1 2020, $93.7m)
due to a favourable impact of foreign exchange movements, the
acquisition of Jet East and the new air ambulance service contracts
for the Government of Jersey and the States of Guernsey.
Despite the reduced revenues, Adjusted Gross Profit margins on
an organic and constant currency basis were up 5.1 ppts to 22.6%
(H1 2020: 17.5%). On a reported basis, adjusted Gross Profit
margins were up 3.4 ppts to 21.0% (H1 2020, 17.6%). In absolute
terms, Adjusted Gross Profits were up $5.9m to $22.4m (H1 2020,
$16.5m). The improvement in gross profit was almost entirely offset
by $1.8m of additional depreciation and amortisation, $4.9m of
additional administrative expenses and a $0.8m reduction in the
impairment of financial assets. Group overhead is higher due to
$2.8m of overhead assumed on acquisition of Jet East, $1.0m of
government support benefitting the prior half, and a $1.1m adverse
impact of foreign exchange in the current half.
The Adjusted EBIT loss of $1.9m for the period includes a $1.5m
share of associate losses relating to our 20% equity
investment holding in CASL. The loss has no cash impact to the
Group. Notwithstanding this share of associate losses, the Group
has delivered a modest adjusted EBIT loss of $0.4m (H1 2020: loss
of $0.4m) from performance of its core operations and activities
over which it exercises management and operational control.
The Group generated a net cash inflow from operating activities
in the period of $8.4m (H1 2020: $21.8m) which helped fund
investment capital expenditure and small levels of essential
maintenance capital expenditure, whilst maintaining a strong
liquidity position. As at 30 June 2021 the Group had $14.2m (FY
2020: $16.1m) of cash and $17.2m (FY 2020: $24.7m) of its $50m
revolving credit facilities undrawn.
Sale of US Air Associate
The accounting treatment applied to the sale of US Air Associate
is detailed further in Note 7 of notes to the financial
statements.
The strategic rationale for the sale was compelling; it enabled
the Group to monetise, at an attractive value, its investment in an
associate over which it exercised no control, and which had grown
increasingly dependent on a major customer who had an interest in
purchasing the business. Additionally, this sale now enables the
Group to focus its efforts and resources on driving and growing its
US (home to the world's largest business aviation fleet)
maintenance business, which is wholly owned by the Group. This was
also complemented by the strategically important acquisition of Jet
East in January 2021.
Acquisition of Jet East
Jet East was acquired on 15 January 2021 from East Coast
Aviation, LLC, as a direct consequence of the Group's new strategy
and focus on the US business aviation sector. The acquisition has
substantially enhanced the Group's US maintenance footprint,
capturing further market share in the world's most valuable
business aviation market with circa 15,000 active business aviation
aircraft. The accounting treatment applied is detailed in Note 14
of notes to the financial statements.
The enlarged business provides unparalleled coast-to-coast
coverage and capability, supplying a range of maintenance services
at high traffic business aviation gateway airports that include,
amongst others, the cities of New York, Boston, Philadelphia,
Cleveland, Cincinnati, Dallas, Miami, Las Vegas, Los Angeles and
Denver. This coverage has attracted scale operators whose business
models are dependent on maintaining high levels of aircraft
availability across the US.
Investments
The Board continues to closely monitor the carrying values of
certain investments in view of the prevailing pandemic
and the uncertainty surrounding the pace and timing of any
eventual recovery.
Sharjah
In view of the pandemic related delays in the construction of
the Sharjah Business Aviation Centre (BAC), the
Board impaired the "assets under construction" in the prior half
and in the 2020 Annual Report. In addition, in the 2020 Annual
Report the right-of-use asset associated with this project was also
impaired.
While an extension to the lease and the project was formalised
in the period, uncertainties related to the project remain and the
extended lease term is not reasonably certain. Should the
uncertainties on the project resolve, there may be a ten-year
longer lease term and prospect for a reversal of some of the
impairment charges previously taken on this project. Refer to Note
12 of the notes to the financial statements for further
details.
Management continues to work diligently to maximise value from
this investment, despite the historic impairment charges.
Fairoaks
As communicated in the 2020 Annual Report, the Group was
released from the remainder of a lease at Fairoaks airport.
Following the termination of the lease, net credits of $2.1m were
recognised in exceptionals. Refer to Note 4 of the notes to the
financial statements for further details.
CASL
The Board continues to closely monitor the carrying values of
certain investments in view of the prevailing pandemic
and the uncertainty surrounding the pace and timing of any
eventual recovery. At the end of May 2021, the Board accepted in
principle a $2.0m sale offer subject to satisfactory legal review
and as a result has presented CASL as held for sale thereafter.
Adjusted EBIT in the first half of 2021 includes the Group's share
of CASL losses of $1.5m until the end of May 2021. In addition,
within adjusting items, there is an impairment reversal to the
extent of the Group's share of CASL losses of $1.5m such that the
carrying amount of the investment in CASL as at June 2021 remains
at $2.0m. As a consequence of CASL being presented as held for
sale, and reflected at the amount of the sale offer, further losses
are not anticipated.
Full details of these are provided in Note 4 of the notes to the
financial statements. Notwithstanding these positions, management
continues to work diligently to maximise value from these
investments.
Strategy
The Group has pivoted to a strategy that focuses upon the
delivery of highly valued services within the Business Aviation,
Special Mission and Technology & Outsource markets where the
Group has full operational control and has an established
competitive advantage.
While implementing the new strategy, the Group continues to work
diligently to enhance revenue opportunities, focusing on
sustainable and profitable engagements that rely on the Group's
robust and resilient core business model.
Outlook
Despite the challenges posed by the pandemic on the aviation
sector we continue to evolve and strengthen our robust and
resilient business to address the impact on the Group's performance
and ensuring the long-term stability of the Group whilst remaining
poised for renewed growth post pandemic.
Marwan Khalek
Chief Executive Officer
Group Operational Performance
Revenue
$'000
Adjusted Statutory
------------------------- --------------- ------------------
2021 2020 2021 2020
------------------------- ------- ------ -------- --------
Air Division 49,413 50,501 49,413 66,001
Ground Division 55,252 41,461 55,252 41,461
Global Services Division 1,747 1,768 1,747 1,768
------------------------- ------- ------ -------- --------
Total 106,412 93,730 106,412 109,230
------------------------- ------- ------ -------- --------
Gross Profit
$'000
Adjusted Statutory
------------------------- -------------- ----------------
2021 2020* 2021 2020*
------------------------- ------ ------ ------- -------
Air Division 7,380 5,287 7,380 20,787
Ground Division 13,389 9,769 13,389 9,769
Global Services Division 1,619 1,405 1,619 1,405
------------------------- ------ ------ ------- -------
Total 22,388 16,461 22,388 31,961
------------------------- ------ ------ ------- -------
EBIT
$'000
Adjusted Statutory
------------------------- ----------------- ------------------
2021 2020* 2021 2020*
------------------------- -------- ------- -------- --------
Air Division 2,172 1,516 2,122 16,897
Ground Division 125 419 924 (4,021)
Global Services Division (324) (6) (497) (160)
Associates (1,491) (1,957) - (5,567)
Central Costs ( 2,352) (2,366) (2,388) (3,390)
------------------------- -------- ------- -------- --------
Total (1,870) (2,394) 161 3,759
------------------------- -------- ------- -------- --------
* Restatements are detailed in Note 2 of the notes to the
financial statements.
The above Group results are explained in detail below.
Air Division
The Air Division supports customers using business aviation as
an integral part of their mission, including corporations and
public services such as air ambulance and aerial survey. It
provides aircraft management, crewing, charter services,
airworthiness and engineering oversight both to single aircraft
operations and fleets, and delivers substantial special mission
contracts for complex, time critical services. Going forward, the
capabilities and resources from the Air Division now form core
elements of the Special Mission, Business Aviation and Technology
& Outsourcing business units.
Adjusted
$'000
US Europe Middle East Asia Total
-------------- --------------- -------------- ----------------
2021 2020 2021 2020 2021 2021 2021 2020 2021 2020
-------------- ------ ------ ------- ------- ------- ------ ------ ------ ------- -------
Revenue 1,875 1,875 31,306 31,284 13,425 8,574 2,807 8,768 49,413 50,501
Gross Profit 1,875 1,875 4,598 2,062 693 731 214 619 7,380 5,287
GP % 100% 100% 15% 7% 5% 9% 8% 7% 15% 10%
1,
EBIT 857 1,854 521 (127) (23) (36) (183) (175) 2,172 1,516
-------------- ------ ------ ------- ------- ------- ------ ------ ------ ------- -------
The Air Division revenues fell on an adjusted basis by 2% to
$49.4m (H1 2020: $50.5m). On an organic basis, the fall was 13%
after rebasing for the favourable impact of foreign exchange of
$3.1m and $2.6m for the impact of the new air ambulance service
contracts for the Government of Jersey and the Government of
Guernsey, as shown in Note 4 of the notes to the financial
statements. Reduced recharges as a result of fewer managed aircraft
and lower flying activity due to the COVID-19 pandemic were the
primary driver for revenue reductions in Asia (down 68%), whereas
higher recharges relating to maintenance events increased revenues
in the Middle East (up 57%), and recharges in Europe remained
stable. The size of the managed aircraft fleet was two lower in
Asia following regional challenges, three lower in the Middle East
due to the exit from Saudi Arabia and remained stable in Europe
compared to the prior half.
Gross profit in the US includes $1.875m (H1 2020: $1.875m) of
branding fees. Europe gross profits benefitted by $1.3m from the
insourcing of the rotary provision of the helicopter emergency
medical services (HEMS) for the Scottish Ambulance Service (SAS),
which successfully commenced towards the end of the prior half on
1st June 2020 at which point the depreciation, now in overhead,
commenced. Europe gross profit also benefitted from a 20% increase
in SAS flying hours, the new air ambulance service contracts for
the Government of Jersey and the Government of Guernsey ($0.2m), a
favourable impact of foreign exchange ($0.2m), a commission on sale
of an aircraft ($0.4m), and a negative contribution from leasing
aircraft in 2020 which did not recur ($0.2m). The changes in
recharge revenues had minimal effect on profits, but
pandemic-related reductions in revenues from management fees did
flow through to gross profit in Asia and Middle East, where there
were fewer managed aircraft.
The Air Division Adjusted EBIT improved by $0.7m to $2.2m (H1
2020: $1.5m). In Europe, higher gross profit offset by $1.3m
additional depreciation following the investment in rotary and
fixed wing aircraft, and higher overhead, in part due to the prior
half benefitting from UK furlough support. Adjusted EBIT remained
stable in the US. Reduced activity in Asia led to Gross profit
shortfalls and there was a reduced loss allowance for doubtful
debtors of $0.2m (H1 2020: $0.5m).
In May the Group secured a one-year extension to the existing
Scottish Ambulance Service special mission contract which now runs
through to 31 May 2024.
Adjustments
$'000
US Europe Middle East Asia Total
--------------- ------------ -------------- ------------ --------------
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
---------------------- ------ ------- ----- ----- ------ ------ ----- ----- ----- -------
Exceptional items ( 24) - 15 - 7 - (8) - (10) -
Amortisation - - (40) (60) - - - (59) (40) (119)
Accelerated branding
fees - 15,500 - - - - - - - 15,500
Total adjustments (24) 15,500 (25) (60) 7 - (8) (59) (50) 15,381
---------------------- ------ ------- ----- ----- ------ ------ ----- ----- ----- -------
Statutory
$'000
US Europe Middle East Asia Total
--------------- ------------- -------------- -------------- ---------------
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
------ ------ ------- ----- ------ ------ ------ ------ ------ ------ -------
EBIT 1,833 17,354 496 (187) (16) (36) (191) (234) 2,122 16,897
------ ------ ------- ----- ------ ------ ------ ------ ------ ------ -------
Air Division Statutory EBIT decreased from $16.9m in 2020 to
$2.1m in 2021 due to $15.5m of accelerated branding fees on the
disposal of the US Air associate being reflected in the prior half,
which did not recur in H1 2021. Exceptional items in US Air
comprise ongoing litigation on a legacy trade receivable which is
fully provided for. Exceptional items in other regions relate to
revised shared based payment charges and income following
forfeitures, grants and re-issues in the current half. Amortisation
of the remaining acquired intangibles continues in line with policy
in Europe, while in Asia following the impairment of the remaining
acquired intangibles at the end of 2020, there is no further
amortisation.
Ground Division
The Ground Division provides support to the business aviation,
air ambulance, law enforcement and military sectors, deploying a
service mix that is designed to deliver new capability and maintain
availability of the aircraft to the operator. With an extensive
network and increasingly rare independence from manufacturer
ownership, the Division maintains all the necessary approvals to
maintain aircraft from Gulfstream, Dassault Falcon, Bombardier,
Embraer and Textron, providing heavy, ad-hoc and emergency
maintenance as well as modifications and refurbishments.
Adjusted
$'000
US Europe Middle East Asia Total
----------------- ---------------- -------------- ------------ ----------------
2021 2020* 2021 2020 2021 2020 2021 2020 2021 2020*
-------------- -------- ------- ------- ------- ------ ------ ----- ----- ------- -------
Revenue 35,296 20,578 16,576 18,490 2,682 1,476 698 917 55,252 41,461
Gross Profit 5,272 4,172 6,862 4,844 1,091 262 164 491 13,389 9,769
GP % 15% 21% 41% 26% 41% 18% 23% 54% 24% 24%
EBIT (1,494) 915 1,118 (41) 544 (442) (43) (13) 125 419
-------------- -------- ------- ------- ------- ------ ------ ----- ----- ------- -------
* Restatements are detailed in Note 2 of the notes to the
financial statements.
The Ground Division revenues increased on an adjusted basis 33%
to $55.3m (H1 2020: $41.5m). On an organic and constant currency
basis, there was a decrease of 11% after rebasing for the impact of
foreign exchange of $1.9m and the acquisition of Jet East which
contributed $16.8m to revenue, as shown in Note 4 of the notes to
the financial statements. All regions experienced reductions in
revenue on an organic basis except Middle East where there was
strong growth in Sharjah FBO activity ($0.7m) and strong growth in
parking and hangarage ($0.6m). In Europe, lower revenue due to
reduced demand for services following the continued onset of the
COVID-19 pandemic from the second quarter of 2020 onwards, which
was partially offset by growth at the Jersey FBO and growth in base
maintenance, which is not driven by flying activity, and where
maintenance hours at the core Bournemouth facility grew by 16% over
the prior half. In the US, where the majority of current business
relates to line maintenance which depends on flying activity, the
fall in revenue on an organic basis of $2.1m, or 10%, and was
materially driven by the COVID-19 pandemic, with maintenance hours
7% lower than the prior half.
Adjusted EBIT fell by $0.3m to $0.1m (H1 2020: $0.4m), due
largely to US ($2.4m down to a loss of $1.5m) and partially offset
by Middle East ($1.0m up to a profit of $0.5m) and Europe ($1.2m up
to $1.1m profit). In US, gross profit includes $2.4m from the
acquisition of Jet East, and a $1.3m reduction in organic gross
profit of $2.9m, which was impacted by $2.8m of assumed PPP loan
forgiveness in the prior half and reduced maintenance hours as well
as investment in capacity ahead of anticipated increases in
activity. US Adjusted EBIT was $2.4m lower due to lower gross
profit referred to above, $1.0m of assumed PPP loan forgiveness in
the prior half in overhead and partially offset by a reduced loss
allowance for doubtful debtors of $0.2m credit (H1 2020: $0.2m
charge). In the Middle East, strong FBO activity, strong parking
and hangarage, lower depreciation following the impairment of the
right of use assets at year-end, and government support via rent
relief were all partially offset by a modest reduction in MRO, and
resulted in a net $1.0m improvement in Adjusted EBIT. In Europe,
gross profit benefitted from a favourable impact of foreign
exchange ($0.5m), an improvement in activity at Jersey FBO ($0.2m)
and a reduction in the write downs of inventories in cost of sales
($0.7m). Overhead in Europe, was higher due to an adverse impact of
foreign exchange ($0.5m), and the prior half benefitting from UK
furlough support. Asia's Adjusted EBIT remained stable with gross
profit shortfalls offset by reduced overheads.
Adjustments
$'000
US Europe Middle East Asia Total
--------------- ------------- ---------------- ------------ ----------------
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
------------------- -------- ----- ------ ----- ----- --------- ----- ----- ------ --------
Exceptional
items (987) - 2,191 - (4) - - - 1,200 -
Amortisation (417) - - - - - - - (417) -
Impairment
charge - - - - 16 (4,440) - - 16 (4,440)
Total adjustments (1,404) - 2,191 - 12 (4,440) - - 799 (4,440)
------------------- -------- ----- ------ ----- ----- --------- ----- ----- ------ --------
Statutory
$'000
US Europe Middle East Asia Total
--------------- ------------- --------------- ------------ ---------------
2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
------ -------- ----- ------ ----- ----- -------- ----- ----- ----- --------
EBIT (2,898) 915 3,309 (41) 556 (4,882) (43) (13) 924 (4,021)
------ -------- ----- ------ ----- ----- -------- ----- ----- ----- --------
Ground division Statutory EBIT improved by $4.9m to a profit of
$0.9m in 2021. In addition to the decrease in Adjusted EBIT, the
impairment of assets under the course of construction at Sharjah
airport of $4.4m in H1 2020 did not recur. The amortisation of Jet
East acquired intangibles of $0.4m commenced in the current half.
In addition, exceptional items in the period included $0.5m of Jet
East transaction costs, $0.5m of Jet East severance costs, $2.1m
income upon release of lease obligations at Fairoaks airport as
well as a $0.1m credit for shared based payments arrangements in
the current half.
Global Services Division
The Global Services Division comprises two businesses, FlyerTech
and myairops (R) . FlyerTech provides continuing airworthiness
management (CAM) and airworthiness review certification (ARC)
services for business aviation and commercial airline operators.
myairops (R) has developed a suite of business aviation products
deployed as "Software as a Service" (SaaS) and mobile app solutions
for business aviation operators, flight support companies, FBOs and
regional airports.
Adjusted
$'000
Total
--------------
2021 2020
-------------- ------ ------
Revenue 1,747 1,768
Gross Profit 1,619 1,405
GP % 93% 79%
EBIT (324) (6)
-------------- ------ ------
The Global Services Divisions revenues stable on an adjusted
basis at $1.7m (H1 2020: $1.8m) On a constant currency basis,
revenue was 10% lower and gross profit was 5% lower after rebasing
for the favourable impact of foreign exchange of $0.2m and $0.1m
respectively, as shown in Note 4 of the notes to the financial
statements. FlyerTech traded broadly in line with prior half, with
a modest reduction in revenue due to fewer Airworthiness projects
than the prior half as a result of the ongoing pandemic. myairops
(R) was also broadly in line with prior half, with a modest
reduction in revenue due to COVID effects, with many prospective
customers deferring expenditure.
Adjusted EBIT fell to $0.3m (H1 2020: $nil) with $0.2m of
additional amortisation of the product development related to
product launches.
Adjustments
$'000
Total
--------------
2021 2020
------------------- ------ ------
Exceptional items (21) -
Amortisation (152) (154)
Total adjustments (173) (154)
------------------- ------ ------
Statutory
$'000
Total
--------------
2021 2020
------ ------ ------
EBIT (497) (160)
------ ------ ------
Adjustments to EBIT relate to amortisation of acquired Customer
Relationship intangibles of $0.2m (H1 2020: $0.2m). Overall, Global
Services Division Statutory EBIT fell $0.3m to a loss of $0.5m in
the first half.
Associates
Adjusted
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- ----------------
2021 2020 2021 2020 2021 2020
----- ----- ----- --------- -------- ------- -------
EBIT - 78 (1,491) (2,035) (1,491) (1,957)
----- ----- ----- --------- -------- ------- -------
As reported in our 2020 Annual Report and Accounts, the US Air
associate was sold on 2 March 2020, see Note 7 of the notes to the
financial statements for further details. The $0.1m of Adjusted
EBIT in the prior period represents the Group's share of results
from the US Air associate prior to disposal.
The Group's investment in CASL has been reclassified as "held
for sale" effective end of May 2021 following a Board decision on
the $2m offer for its 20% shareholding in CASL. Since
reclassification the asset has been held at the fair value of $2m.
Prior to reclassification as "held for sale", CASL suffered
substantial losses, the Group's share of which amounted to $1.5m of
Adjusted EBIT due to vastly reduced commercial aviation volumes at
Hong Kong airport, impacted by COVID-19.
Adjustments
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- ---------------
2021 2020 2021 2020 2021 2020
--------------------------------------------- ----- ----- ------- ---------- ----- --------
Impairment charge / (reversal) - - 1,491 (10,633) 1,491 (10,633)
Profit on disposal of interest in associates - 7,023 - - - 7,023
--------------------------------------------- ----- ----- ------- ---------- ----- --------
Total adjustments - 7,023 1,491 (10,633) 1,491 (3,610)
--------------------------------------------- ----- ----- ------- ---------- ----- --------
Statutory
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- --------------
2020 2021 2021 2020 2021 2020
----- ----- ----- ------ ----------- ---- --------
EBIT - 7,101 - (12,668) - (5,567)
----- ----- ----- ------ ----------- ---- --------
In the prior half, the disposal of the US Air Associate resulted
in a profit before taxation on disposal of the Group's equity
interest of $7.0m.
In the prior half impairment charges of $10.6m were made against
the equity accounted investment in CASL, reflecting the Group's
assessment of its recoverable amount, driven by its significant
decline in performance and outlook caused by the COVID-19 pandemic,
and impairments of non-current assets in CASL. The assessment of
the recoverable amount remains at $2.0m, which represents an offer
for the Groups 20% shareholding in CASL and as a result an
impairment reversal to the extent of the Group's share of losses of
$1.5m has been recognised in the current half.
Overall, associate statutory EBIT increased from a loss of $5.6m
in 2020 to nil in 2021.
Financial Review
Adjusted(1) $m Statutory $m
----------------------- ------------------ ------------------
Jun-20 Jun-20
Jun-21 Restated* Jun-21 Restated*
----------------------- ------ ---------- ------ ----------
Revenue 106.4 93.7 106.4 109.2
Gross profit 22.4 16.5 22.4 32.0
Gross profit % 21.0% 17.6% 21.0% 29.3%
EBIT (1.9) (2.4) 0.2 3.8
Loss for the period (3.4) (4.8) (1.4) (4.6)
Loss per share (cents) (4.4) (7.5) (1.3) (7.2)
----------------------- ------ ---------- ------ ----------
(1) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the financial statements and reconciled to
the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted
Gross Profit, Adjusted EBIT and Net debt. APMs also include organic
and constant currency Revenue, Gross Profit and Adjusted EBIT
* Restatements are detailed in Note 2 of the notes to the
financial statements.
Adjusted Revenue Bridge
$m
Revenue - 2020 93.7
Impact of foreign exchange movements 5.2
Rebased revenue -2020 at 2021 exchange rate 98.9
Acquisition of JetEast 16.8
New air ambulance service contracts for Jersey
& Guernsey 2.6
Air Division (6.9)
Ground Division (4.8)
Global Services Division (0.2)
Revenue - 2021 106.4
------------------------------------------------ -----
-- Acquisition of Jet East contributed $16.8m of revenue and integration well underway
-- New air ambulance service contracts for Jersey & Guernsey
were acquired on 18 July 2020 and resulted in incremental
revenues
-- Air Division had reduced recharge costs due to reduced flying
hours as a result of the ongoing COVID-19 pandemic
-- All Ground regions experienced reductions in revenue on an
organic and constant currency basis except Middle East where there
was strong growth in Sharjah FBO activity ($0.7m) and strong growth
in parking and hangarage ($0.6m)
-- Modest reduction in Global Services revenue due to COVID effects
Adjusted EBIT Bridge $m
Adjusted EBIT - 2020 (2.4)
------------------------------------------- -----
Gross Profit 5.9
Share of loss from associates 0.5
Increase in other administrative expenses: (4.9)
Increase in depreciation and amortisation (1.8)
Decrease in impairment of financial assets 0.8
Adjusted EBIT - 2021 (1.9)
------------------------------------------- -----
-- Gross Profit increased in all Divisions, with the exception
of Asia Air & Ground, a very modest reduction on Middle East
Air and US Air being flat
-- The Group's share of losses from associates are down $0.5m
-- Other administrative expenses increased as a result of the
acquisition of Jet East ($2.8m) together with increased investment
in capacity in US Ground, reduced government support received
($1.4m) and partially offset by cost control measures
-- Increased depreciation of $0.4m on acquisition of Jet East
and in Europe Air, $1.3m additional depreciation following the
investment in rotary and fixed wing aircraft for air ambulance
services
-- Asia Air loss allowance for doubtful debtors reduced $0.3m to
$0.2m (H1 2020: $0.5m) and US Ground loss allowance reduced $0.4m
to a $0.2m credit (H1 2020: $0.2m charge)
Investment in CASL
In the prior half and again in the 2020 Annual Report, the Board
concluded that the value of the Group's 20% equity interest in its
Asia associate, CASL, has been adversely impacted by significantly
reduced levels of commercial aviation activity at Hong Kong
airport. This resulted in a $10.6m impairment as an exceptional
item in the first half of 2020 in respect of the CASL investment.
In the 2020 Annual Report the Board concluded that the recoverable
amount of CASL was $2m based on a credible offer another CASL
shareholder received for their 20% shareholding in CASL.
Accordingly, the carrying amount of the investment was reflected at
$2m.
In May 2021, the Group also received a similar offer for its 20%
shareholding in CASL. At the end of May 2021, the Board accepted in
principle the offer subject to satisfactory legal review and as
result has presented CASL as held for sale thereafter. Adjusted
EBIT in the first half of 2021 includes the Group's share of CASL
losses of $1.5m until the end of May 2021. In addition, within
adjusting items, there is an impairment reversal to the extent of
the Group's share of CASL losses of $1.5m such that the carrying
amount of the investment in CASL remains at $2m.
Statutory EBIT Bridge
$m
Statutory EBIT - 2020 3.8
--------------------------------------------- ------
Items impacting Adjusted EBIT 0.5
Exceptional items
- Integration and business recognition costs 1.7
- Litigation costs 0.1
- Transaction costs (0.2)
Adjusting items
- Share based payments 0.6
- Accelerated branding fees (15.5)
- Impairment of assets under construction 4.4
- Impairment of CASL 12.1
- Profit on disposal (7.0)
- Depreciation and amortisation (0.3)
Statutory EBIT - 2021 0.2
--------------------------------------------- ------
-- Integration and business re-organisation costs in the period
benefitted from $2.1m income upon release of lease obligation at
Fairoaks airport, partially offset by $0.5m of Jet East severance
costs associated with integration
-- Litigation costs on legacy matters $0.1m lower
-- Increased transaction cost of $0.2m relating to Jet East acquisition
-- $0.6m of reduced shared based payment charges following
forfeitures, leavers and re-issues in the current half
-- $15.5m of accelerated branding fees have been recognised in
the prior period as an adjusting item following the disposal of the
US Air Associate and the settlement of existing contractual
arrangements (see Note 7 for further details on the disposal)
-- $1.5m impairment reversal of charges previous recognised in
relation to CASL. Impairment charges in the prior half in relation
to Sharjah ($4.4m) and CASL ($10.6m) did not recur.
-- $7.0m profit before taxation on disposal of the US Air
Associate (see Note 7 for further details on the disposal).
-- Amortisation of acquired intangibles increased by $0.3m due to the acquisition of Jet East
Finance expenses
Net finance expense of $1.6m (H1 2020: $2.0m), include $0.1m (H1
2020: $0.4m) of finance income arising from financial assets
related to the disposal of the US Air Associate. As a result of
early settlement of the deferred consideration on 20th July 2021
(refer to Note 19 for more details), and the timing of the disposal
in 2020, finance income was lower in the current half.
Taxation
There is a statutory taxation credit for the period of $0.1m (H1
2020: charge of $6.3m), which reflects a significant decrease due
to a $6.2m charge associated with the US Air Associate disposal in
the prior half. The adjusted taxation for the period is $0.1m
credit (H1 2020: charge of $0.4m). An increased deferred tax asset
for additional losses incurred has not been recognised due to the
uncertainty of future available taxable profits to utilise the
losses.
EPS
Shares in issue increased by 25,000 from 31 December 2020. The
average share price for the six months ended was higher than the
exercise price of outstanding options, however given the loss per
share there is no dilutive effect, and as a result no diluted
earnings per share is presented. Basic Statutory EPS reflects a
decreased loss per share of 1.3 cents (H1 2020: 7.2c).
Net debt and cash flow movements
Jun-21 Jun-20
$m $m
------------------------------------------------------------------------------ ------- ------
Adjusted EBIT(1) (1.9) (2.4)
Add: Adjusted depreciation & amortisation in cost of sales (Note 6) 3.2 7.4
Add: Adjusted depreciation & amortisation in administrative expenses (Note 6) 4.7 2.9
------------------------------------------------------------------------------ ------- ------
Adjusted EBITDA(1) 6.0 7.9
Less: Loan forgiveness (Note 13) - (3.8)
Add: Share of losses of associates 1.5 2.0
------------------------------------------------------------------------------ ------- ------
Adjusted EBITDA after excluding non-cash items(1) 7.5 6.1
Working capital:
Add: Working capital (0.5) 0.8
Add: Capital portion of promissory note on disposal of US Air Associate 2.5 -
Add: Accelerated branding fee not recognised in Adjusted EBIT - 15.5
Add: Exceptional items (0.9) (0.6)
------------------------------------------------------------------------------ ------- ------
Working capital 1.1 15.7
Cash generated by operations (Note 6) 8.6 21.8
Add: Tax (Note 6) (0.2) -
Net cash inflow on operating activities 8.4 21.8
Capital expenditure ( 3.0 ) (23.0)
Lease payments ( 4.8 ) (5.0)
Net interest received/(paid) 0.4 (0.6)
Proceeds on disposal of US Air Associate, net of transaction costs - 9.7
Proceeds from borrowings 12.0 30.4
Repayment of borrowings ( 7.5 ) (23.4)
Acquisition of Jet East (7.6) -
Net cash used in investing and financing activities (10.5) (11.9)
Increase / (decrease) in cash (2.1) 9.9
Cash at the beginning of the period 16.1 8.5
Effect of foreign exchange rates 0.2 (0.3)
------------------------------------------------------------------------------ ------- ------
Cash at the end of the period* 14.2 18.1
------------------------------------------------------------------------------ ------- ------
Borrowings (62.7) (46.7)
Obligation under leases (52.1) (59.3)
------------------------------------------------------------------------------ ------- ------
Net (debt) (100.6) (87.9)
------------------------------------------------------------------------------ ------- ------
(1) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the financial statements and reconciled to
the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted
Gross Profit, Adjusted EBIT and Net debt. In reconciling from
Adjusted EBIT to the net cash flow operating activities, Adjusted
EBITDA and Adjusted EBITDA excluding non-cash items are shown to
aid understanding
-- The reduction in the net cash inflow on operating activities has been driven by:
o $1.9m of lower Adjusted EBITDA $6.0m (H1 2020: $7.9m), offset
by $3.3m of reduced non-cash items relating to loan forgiveness in
the prior period and associates
o $0.3m of additional spend on exceptional items, primarily
related to Jet East
o $15.5m of accelerated branding fees in the prior period not
recognised within Adjusted EBIT but within working capital. All
remaining accelerated branding fees were received after the
reporting date, refer to Note 19
o $2.5m capital portion of promissory note on disposal of US Air
Associate received in the period
o Reduction in the positive contribution from underlying working
capital, which is in part due to reduced government support in the
period
-- Capital expenditure includes $1.3m of internally developed
software arising from myairops software development and $1.6m
tangible capex, of which $1.0m is in US Ground for base maintenance
expansion to fulfil demand from one of the world's largest private
jet operator's
-- Lease payments reduced by $0.2m on the prior period due to
timing of aircraft lease payments as well as the addition of Jet
East lease payment of $0.4m
-- Net interest received includes $0.4m on the second instalment
of the $20.0m US Air Associate promissory note
-- Proceeds from borrowings include $10m drawn on the RCF to
fund the acquisition of Jet East. Remaining proceeds on borrowings
of $2m and the repayment of $7.5m to manage surplus cash
-- Net Debt increased by $12.7m to $100.6m (FY 2020: $87.9m)
Litigation
Following the litigation update provided in the Company's 2020
Annual Report, the Company continues to pursue the recovery of its
long-standing trade receivables both through enforcement actions in
the UK and in other jurisdictions. The Company has made progress
through court proceedings in the UK. It remains the Board's
expectation that other than the provisions already made by the
Company against these claims, no further provisions will be
required.
Daniel Ruback
Chief Financial Officer
Responsibility Statements
Each director confirms 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 basis of preparation of the consolidated financial
statements is shown in Note 1 and Note 2, and related party
transactions are shown in Note 15. The principal risks and
uncertainties for the remaining six months of the year remain the
same as set out in the Group's recently published statutory
financial statements for the year ended 31 December 2020 and shown
below.
The directors consider the principal risks to the business
are:
/ Health and safety risks from poor operational performance or
an air accident which damages the Group's reputation
/ Increasing regulatory burden and maintaining oversight on
existing approvals that may result with a non-compliance
/ Changes in political and economic climate that make air
transport less attractive such as the ongoing COVID-19 pandemic
/ Reliance on key individuals and attrition of key staff that
disrupt business activities
/ Increasing concentration and reliance on a small number of key
customers
/ Cyber threat and information security
/ Liquidity and cash resources to support future growth of the
business
Signed on behalf of the Board,
Marwan Khalek
Chief Executive Officer
Gama Aviation Plc
Consolidated income statement
For the period ended 30 June 2021
Period ended 30 June 2020
Period ended 30 June 2021 Restated*
------------------------- --------------------------------------- --------------------------------
Adjusted Statutory Adjusted
Statutory result Adjustments result result Adjustments result
$'000 $'000 $'000 $'000 $'000 $'000
------------------------- ---------------- ----------- -------- --------- ----------- --------
Revenue 106,412 - 106,412 109,230 (15,500) 93,730
Cost of sales (84,024) - (84,024) (77,269) - (77,269)
------------------------- ---------------- ----------- -------- --------- ----------- --------
Gross profit 22,388 - 22,388 31,961 (15,500) 16,461
- administrative
expenses (16,918) (1,133) (18,051) (14,188) 1,024 (13,164)
- depreciation
and amortisation (5,320) 609 (4,711) (3,191) 273 (2,918)
- impairment gain/(loss) 16 (16) - (4,440) 4,440 -
- impairment of
financial assets (5) - (5) (816) - (816)
Total administrative
expenses (22,227) (540) (22,767) (22,635) 5,737 (16,898)
Operating profit/(loss) 161 (540) (379) 9,326 (9,763) (437)
Share of results
from equity
accounted investments (1,491) - (1,491) (1,957) - (1,957)
(Reversal of)/impairment
of equity accounted
investments 1,491 (1,491) - (10,633) 10,633 -
Profit on disposal
of interest in
associates (note
7) - - - 7,023 (7,023) -
Earnings before
interest and taxation 161 (2,031) (1,870) 3,759 (6,153) (2,394)
Finance income 127 - 127 407 - 407
Finance expense (1,765) - (1,765) (2,423) - (2,423)
Profit/(loss) before
tax (1,477) (2,031) (3,508) 1,743 (6,153) (4,410)
Taxation (note
17) 63 80 143 (6,302) 5,945 (357)
(Loss)/profit after
tax (1,414) (1,951) (3,365) (4,559) (208) (4,767)
Attributable to:
Owners of the Company (828) (1,951) (2,779) (4,588) (208) (4,796)
Non-controlling
interests (586) - (586) 29 - 29
------------------------- ---------------- ----------- -------- --------- ----------- --------
* Restatements are detailed in Note 2
Earnings per share attributable to the equity holders of the
parent
Basic and diluted
(cents) (1.3)c (3.1)c (4.4)c (7.2)c (0.3)c (7.5)c
Gama Aviation Plc
Consolidated statement of comprehensive income
For the period ended 30 June 2021
Period Period
ended 30 ended 30
June June 2020
2021 Restated*
$'000 $'000
-------------------------------------------------- ---------- -----------
Loss for the period (1,414) (4,559)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign
operations 121 (1,106)
-------------------------------------------------- ---------- -----------
Total comprehensive loss for the period (1,293) (5,665)
-------------------------------------------------- ---------- -----------
Total comprehensive loss is attributable to:
Owners of the Company (707) (5,694)
Non-controlling interest (586) 29
-------------------------------------------------- ---------- -----------
(1,293) (5,665)
-------------------------------------------------- ---------- -----------
*Restatements are detailed in Note 2.
Gama Aviation Plc
Consolidated balance sheet
As at 30 June 2021 and 31 December 2020
2020
2021 Restated*
$'000 $'000
---------------------------------------------- --------- ----------
Non-current assets
Goodwill (note 9) 25,129 22,490
Other intangible assets (note 10) 16,378 10,329
---------------------------------------------- --------- ----------
Total intangible assets 41,507 32,819
Property, plant and equipment (note 11) 56,889 54,974
Right-of-use assets (note 12) 41,035 40,525
Investments accounted for using equity method - 2,000
Trade and other receivables 290 13,030
Total non-current assets 139,721 143,348
---------------------------------------------- --------- ----------
Current assets
Assets held for sale (note 8) 2,000 -
Inventories 6,700 5,978
Trade and other receivables 71,898 48,674
Current tax receivable 1,516 1,280
Cash and cash equivalents 14,180 16,136
---------------------------------------------- --------- ----------
96,294 72,068
---------------------------------------------- --------- ----------
Total assets 236,015 215,416
---------------------------------------------- --------- ----------
Current liabilities
Trade and other payables (43,911) (40,074)
Current tax liabilities (2,985) (15)
Obligations under leases (note 12) (4,130) (5,848)
Provisions (764) (679)
Borrowings (note 13) (2,560) (1,000)
Deferred revenue (20,566) (12,676)
---------------------------------------------- --------- ----------
( 74,916) (60,292)
---------------------------------------------- --------- ----------
Net current assets 21,378 11,776
---------------------------------------------- --------- ----------
Non-current liabilities
Borrowings (note 13) (60,144) (52,197)
Deferred revenue (177) (691)
Obligations under leases (note 12) (47,947) (46,772)
Provisions (337) (818)
Deferred tax liabilities (note 17) (783) (2,109)
Deferred consideration (note 14) (642) -
(110,030) (102,587)
---------------------------------------------- --------- ----------
Total liabilities (184,946) (162,879)
---------------------------------------------- --------- ----------
Net assets 51,069 52,537
---------------------------------------------- --------- ----------
* Restatements are detailed in Note 2.
Gama Aviation Plc
Consolidated balance sheet (continued)
As at 30 June 2021 and 31 December 2020
2020
2021 Restated*
$'000 $'000
--------------------------- -------- ----------
Shareholders' equity
Share capital 954 953
Share premium 63,488 63,473
Foreign exchange reserve (26,772) (26,893)
Other reserves 35,169 35,360
Accumulated loss (21,980) (21,152)
--------------------------- -------- ----------
Total shareholders' equity 50,859 51,741
Non-controlling interest 210 796
--------------------------- -------- ----------
Total equity 51,069 52,537
--------------------------- -------- ----------
*Restatements are detailed in Note 2.
Gama Aviation Plc
Consolidated statement of changes in equity
For the period ended 30 June 2021
Foreign Total
Share Share Other exchange Accumulated shareholders' Non-controlling Total
capital premium reserves reserve profit/(losses) equity interest equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
Balance
at 31
December
2019 953 63,473 34,798 (29,179) (5,062) 64,983 751 65,734
Restatement* - - - - (604) (604) - (604)
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
Balance
at 31
December
2019 restated 953 63,473 34,798 (29,179) (5,666) 64,379 751 65,130
Loss for
the period
restated* - - - - (4,588) (4,588) 29 (4,559)
Other
comprehensive
income - - - (1,106) - (1,106) - (1,106)
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
Total
comprehensive
loss for
the period
restated* - - - (1,106) (4,588) (5,694) 29 (5,665)
Cost of
share-based
payments - - 407 - - 407 - 407
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
Balance
at 30 June
2020
restated* 953 63,473 35,205 (30,285) (10,254) 59,092 780 59,872
Loss for
the period
restated* - - - - (10,898) (10,898) 16 (10,882)
Other
comprehensive
income - - - 3,392 - 3,392 - 3,392
Total
comprehensive
loss for
the period
restated* - - - 3,392 (10,898) (7,506) 16 (7,490)
Cost of
share-based
payments - - 155 - - 155 - 155
Balance
at 31
December
2020
restated* 953 63,473 35,360 (26,893) (21,152) 51,741 796 52,537
Loss for
the period - - - - (828) (828) (586) (1,414)
Other
comprehensive
income - - - 121 - 121 - 121
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
Total
comprehensive
loss for
the period - - - 121 (828) (707) (586) (1,293)
Share issue 1 15 - - - 16 - 16
Credit for
share-based
payments - - (191) - - (191) - (191)
Balance
at 30 June
2021 954 63,488 35,169 (26,772) (21,980) 50,859 210 51,069
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- ---------
* Restatements are detailed in Note 2.
Gama Aviation Plc
Consolidated cash flow statement
Period
ended 30 Period
June ended
30 June
2021 2020
$'000 $'000
---------------------------------------------------------- --------- ---------
Net cash inflow on operating activities (note 6) 8,370 21,808
---------------------------------------------------------- --------- ---------
Cash flows from investing activities
Purchases of property, plant and equipment (note 11) (1,619) (21,678)
Purchases of intangibles (note 10) (1,338) (1,262)
Acquisition of subsidiary, net of cash acquired (note 14) (7,636) -
Proceeds from disposal of assets held for sale (note 7) - 9,699
---------------------------------------------------------- --------- ---------
Net cash used in investing activities (10,593) (13,241)
---------------------------------------------------------- --------- ---------
Cash flows from financing activities
Interest paid (29) (573)
Interest received 376 -
Lease payments (note 12) (4,759) (5,037)
Proceeds from borrowings 12,000 30,405
Repayment of borrowings (7,499) (23,426)
Net cash from financing activities 89 1,369
---------------------------------------------------------- --------- ---------
Net (decrease)/increase in cash and cash equivalents (2,134) 9,936
Cash and cash equivalents at the beginning of the period 16,136 8,463
Effect of foreign exchange rates 178 (311)
---------------------------------------------------------- --------- ---------
Cash and cash equivalents at the end of the period 14,180 18,088
---------------------------------------------------------- --------- ---------
Notes to the interim financial statements
For the period ended 30 June 2021
1. Corporate information and basis of preparation
Gama Aviation Plc is a public company limited by shares,
incorporated in the United Kingdom. The address of the registered
office is 1st Floor, 25 Templer Avenue, Farnborough, Hampshire,
England, GU14 6FE. The Company's shares are publicly traded on the
AIM market of the London Stock Exchange.
The financial information for the period end 30 June 2021 set
out in this interim report does not constitute statutory accounts
as defined in section 434 of the Companies Act 2006. Following the
Group's recent Annual General Meeting (AGM), the Group's statutory
financial statements for the year ended 31 December 2020 have been
filed with the Registrar of Companies. The auditor's report on
those financial statements was unqualified and did not contain
statements under Section 498 of the Companies Act 2006. The interim
results are unaudited.
These unaudited interim consolidated financial statements (the
interim financial statements) are for the six months ended 30 June
2021. They have been prepared in accordance with IAS 34 "Interim
Financial Reporting". They do not include all the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 31 December 2020.
2. Accounting policies
The accounting policies set out in the Group's statutory
financial statements for the year ended 31 December 2020 have been
applied in the preparation of the interim financial statements. The
Directors consider that the Group has adequate resources to remain
in operation for the foreseeable future and have therefore
continued to adopt the going concern basis in preparing the interim
financial statements.
During the prior period there was the adoption of IAS 20,
Accounting for Government Grants and Disclosure of Government
Assistance.
In the period to 30 June 2020 the Group received a forgivable
loan under the US government Coronavirus Aid, Relief, and Economic
Security Act (CARES Act). Under IAS 20 a forgivable loan from
government is treated as a government grant when there is
reasonable assurance that the entity will meet the terms for
forgiveness of the loan. The Group has adopted the income approach
where government grants should be recognised in profit or loss on a
systematic basis over the periods in which the entity recognises as
expenses the related costs for which the grant is intended to
compensate.
$5,753,000 was received on 12 May 2020 and is recognised as
borrowings in current liabilities. During the period to 30 June
2020 $3,778,000 has been offset against what the company has deemed
to be qualifying expenditure reducing the amount of borrowings at
the period end to $1,972,000. The utilisation of the grant is
reflected against the related expenses in cost of sales
($2,778,000) and administrative expenses ($1,000,000).
Restatements
The 2020 figures have been restated to reflect errors in the
IFRS 16 calculations due to the omission of indexation in some of
the contracts and an amendment, including extension, to a contract
made in late 2019.
This impacts the H1 2020 financial statements as follows:
Consolidated income statement:
As previously Restatement Restated
reported
------------------------------------- -------------- ------------ ---------
Revenue 109,230 - 109,230
Cost of sales (77,038) (231) (77,269)
------------------------------------- -------------- ------------ ---------
Gross profit 32,192 (231) 31,961
Administrative expenses (22,635) - (22,635)
------------------------------------- -------------- ------------ ---------
Operating profit 9,557 (231) 9,326
EBIT 3,990 (231) 3,759
Finance income 407 - 407
Finance expense (2,246) (177) (2,423)
------------------------------------- -------------- ------------ ---------
Profit before tax 2,151 (408) 1,743
Tax (6,302) - (6,302)
------------------------------------- -------------- ------------ ---------
Loss after tax (4,151) (408) (4,559)
------------------------------------- -------------- ------------ ---------
Attributable to owners (4,180) (408) (4,588)
------------------------------------- -------------- ------------ ---------
Consolidated balance sheet:
Right of use assets 38,022 2,503 40,525
Trade and other receivables 49,359 (685) 48,674
Obligations under leases (49,492) (3,128) (52,620)
------------------------------------- -------------- ------------ ---------
Net assets 53,847 (1,310) 52,537
Accumulated profit and loss reserve
at 31 December 2019 (5,062) (604) (5,666)
Loss attributable to owners H1 2020 (4,180) (408) (4,588)
Loss attributable to owners H2 2020 (10,600) (298) (10,898)
------------------------------------- -------------- ------------ ---------
Accumulated profit and loss reserve
at 31 December 2020 (19,842) (1,310) (21,152)
------------------------------------- -------------- ------------ ---------
The restatement impacts the US Ground segment as follows:
As previously Restatement Restated
reported
----------------------------- -------------- ------------ ---------
Gross profit 4,403 (231) 4,172
Statutory and Adjusted EBIT 1,146 (231) 915
----------------------------- -------------- ------------ ---------
3. Segment information
Reportable segments are operating segments that either meet the
thresholds and conditions set out in IFRS 8 for separate reporting
or are considered by the Board to be appropriately aggregated into
reportable segments under IFRS 8.
The Group has eleven reportable segments (Air Division - four
regional operating segments; Ground Division - four regional
operating segments; Global Services Division - comprising two
operating segments combined as one reportable segment; the
Associates Division - two operating segments combined as one
reportable segment; and Central Costs), which are defined by
markets rather than product type. Each segment includes businesses
with similar operating and marketing characteristics. The operating
segments that have been aggregated into reportable segments have
similar economic characteristics or provide similar services. None
of these four operating segments meet the quantitative thresholds
to report separately under IFRS 8.
These segments are consistent with the internal reporting
reviewed each month by the Group Chief Executive Officer who acts
as the Chief Operating Decision Maker ("CODM").
As announced on 2(nd) September 2021, these results will
continue to report the operational and financial segmental
performance in the Air, Ground and Global Services divisional
format. The Company has made significant progress in transitioning
its current year reporting to reflect the recent realignment of the
business along its Strategic Business Units, with efforts now
focused on representing the prior year comparative performance on
the same basis.
A reconciliation of divisional to overall Group performance is
tabulated below:
For the period ended 30 June 2021 For the period ended 30 June 2020
Restated*
-------------- ------------------------------------------------- ------------------------------------------------
Adjusted Statutory Adjusted Adjusted Adjusted Statutory Adjusted
Revenue Gross profit EBIT EBIT Revenue Gross profit EBIT EBIT
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
US Air 1,875 1,875 1,833 1,857 1,875 1,875 17,354 1,854
Europe
Air 31,306 4,598 496 521 31,284 2,062 (187) (127)
Middle
East Air 13,425 693 (16) (23) 8,574 731 (36) (36)
Asia Air 2,807 214 (191) (183) 8,768 619 (234) (175)
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
Air Division 49,413 7,380 2,122 2,172 50,501 5,287 16,897 1,516
US Ground 35,296 5,272 (2,898) (1,494) 20,578 4,172 915 915
Europe
Ground 16,576 6,862 3,309 1,118 18,490 4,844 (41) (41)
Middle
East Ground 2,682 1,091 556 544 1,476 262 (4,882) (442)
Asia Ground 698 164 (43) (43) 917 491 (13) (13)
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
Ground
Division 55,252 13,389 924 125 41,461 9,769 (4,021) 419
Global
Services 1,747 1,619 (497) (324) 1,768 1,405 (160) (6)
Associates - - - (1,491) - - (5,567) (1,957)
Central
Costs - - (2,388) (2,352) - - (3,390) (2,366)
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
Adjusted
Result 106,412 22,388 161 (1,870) 93,730 16,461 3,759 (2,394)
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
Adjusting
items - - - 2,031 15,500 15,500 - 6,153
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
Statutory
result 106,412 22,388 161 161 109,230 31,961 3, 759 3,759
-------------- ---------- -------------- ---------- --------- --------- -------------- ---------- ---------
4. Alternative performance measures
The Adjusted result has been arrived at after the following
Adjusting items:
Period ended Period ended
30 June 2021 30 June 2020
$'000 $'000
-------------------------------------------------- -------------- --------------
Exceptional items:
Transaction costs 503 296
Integration and business re-organisation (1,637) (3)
Legal costs 193 324
Total exceptional items (942) 617
-------------------------------------------------- -------------- --------------
Share-based payments (credit)/expense (191) 407
Amortisation of intangible assets 609 273
(Release of impairment)/impairment of assets
under construction (16) 4,440
(Release of impairment)/impairment of investment
in associate (1,491) 10,633
Accelerated branding fees - (15,500)
Profit on disposal of interest in associates - (7,023)
Adjusting items in EBIT (2,031) (6,153)
-------------------------------------------------- -------------- --------------
Tax related to adjusting items 80 5,945
-------------------------------------------------- -------------- --------------
Adjusting items in profit (1,951) (208)
-------------------------------------------------- -------------- --------------
Transaction costs
Costs in the current year relate to the acquisition of Jet East.
Transaction costs in the prior year of $296,000 relate to
prospective acquisitions.
Integration and business re-organisation costs
Integration and business re-organisation costs include:
-- Relating to Fairoaks, following settlement of the lease, net
credits of $2,140,000 relating to the remaining lease liability and
reduced provision for unavoidable costs of closure.
-- Jet East integration related severance costs of $483,000
-- Other minor charges relating to earlier re-organisations
Legal costs
Legal costs in the current and prior year principally relate to
professional fees in relation to ongoing litigation in respect of
legacy cases going back many years.
Share-based payment
The current year credit arises due to the resignation of
Directors and the forfeiting of share options offsetting the
regular charge for other options awarded.
Amortisation of intangible assets
Acquisition related intangible amortisation relates to acquired
intangible assets (customer lists and brands) recognised as part of
the accounting for business combinations $609,000 (H1 2020:
$273,000).
Impairment
Impairments comprise:
-- A reversal of previous impairment of $1,491,000 to offset the
loss from the equity accounted investment in CASL until the end of
May 2021 at which point the investment has been classified as held
for sale. In 2020 an impairment charge of $10,633,000 was
recognised to reduce the carrying amount of $13,046,000 to its then
recoverable amount of $2,413,000.
-- A reversal of previous impairment of $16,000 relating to a
credit note received on cost previously incurred and included in
the impaired assets under construction. In 2020 an impairment
charge of $4,440,000 was recognised to reduce the Business Aviation
Centre ("BAC") at Sharjah Airport to its recoverable amount
following uncertainties related to the ongoing COVID-19
pandemic.
Accelerated branding fees and profit on disposal of interest in
associates
See Note 7 for further details on the profit on disposal in the
prior period.
Tax related to adjusting items
Tax on adjusting items equates to a current tax charge for
$195,000 comprising a charge relating to the net integration
credits offset by credits for the legal costs. This is offset by
$79,000 deferred tax on the amortisation of the acquired
intangibles.
In the prior year, on disposal of the US Air Associate there was
a corporation taxation charge of $7,721,000 as a result of the full
tax liability associated with the US Air Associate disposal being
expected to be settled in 2020. A deferred taxation credit of
$1,462,000 was recognised on deferred revenue related to the
disposal. In addition, a $314,000 tax credit was recognised in
relation to integration costs and other adjusting items.
Organic and constant currency growth
Organic and constant currency growth in Revenue, Gross Profit
and EBIT is a measure which seeks to reflect the performance of the
Group that will contribute to long-term sustainable growth. As
such, organic and constant currency growth excludes the impact of
acquisitions or disposals, and foreign exchange movements. Constant
currency growth has been calculated using a constant foreign
exchange rate of $1.39 to GBP1, being the cumulative average
USD-GBP exchange rate for the first half of 2021 instead of the
reported exchange rate of $1.26 to GBP1 for the first half of 2020.
A reconciliation from organic and constant currency growth in
Revenue, Gross Profit and EBIT to the most directly comparable IFRS
measures is set out below.
Results of acquired and disposed businesses are excluded where
the results include only part-year results in either current or
prior periods. In the current year this comprises the results of
Jet East acquired on 15 January 2021, whilst the Jersey and
Guernsey Air Ambulance business was acquired on 18 July 2020.
For the period ended 2021 For the period ended 2020
----------------- ---------------------------------------------- ------------------------------
Rebase
for organic Rebased % Organic Adjusted Rebase Rebased
Revenue growth revenue growth Revenue for FX revenue
----------------- -------- ------------- --------- ---------- --------- -------- ---------
US Air 1,875 - 1,875 - 1,875 - 1,875
Europe Air 31,306 (2,640) 28,666 (17%) 31,284 3,148 34,432
Middle East
Air 13,425 - 13,425 57% 8,574 - 8,574
Asia Air 2,807 - 2,807 (68%) 8,768 - 8,768
----------------- -------- ------------- --------- ---------- --------- -------- ---------
Air Division 49,413 (2,640) 46,773 (13%) 50,501 3,148 53,649
----------------- -------- ------------- --------- ---------- --------- -------- ---------
US Ground 35,296 (16,796) 18,500 (10%) 20,578 - 20,578
Europe Ground 16,576 - 16,576 (19%) 18,490 1,861 20,351
Middle East
Ground 2,682 - 2,682 82% 1,476 - 1,476
Asia Ground 698 - 698 (24%) 917 - 917
----------------- -------- ------------- --------- ---------- --------- -------- ---------
Ground Division 55,252 (16,796) 38,456 (11%) 41,461 1,861 43,322
----------------- -------- ------------- --------- ---------- --------- -------- ---------
Global Services 1,747 - 1,747 (10%) 1,768 178 1,946
Total 106,412 (19,436) 86,976 (12%) 93,730 5,187 98,917
----------------- -------- ------------- --------- ---------- --------- -------- ---------
For the period ended 2021 For the period ended 2020
----------------- --------------------------------------------- -----------------------------------
Rebase Rebased Adjusted
Gross for organic Gross % Organic Gross Rebase Rebased
profit growth profit growth profit for FX Gross profit
----------------- -------- ------------- -------- ---------- --------- -------- --------------
US Air 1,875 - 1,875 - 1,875 - 1,875
Europe Air 4,598 (334) 4,264 88% 2,062 208 2,270
Middle East
Air 693 - 693 (5%) 731 - 731
Asia Air 214 - 214 (65%) 619 - 619
----------------- -------- ------------- -------- ---------- --------- -------- --------------
Air Division 7,380 (334) 7,046 28% 5,287 208 5,495
----------------- -------- ------------- -------- ---------- --------- -------- --------------
US Ground 5,272 (2,372) 2,900 (30%) 4,172 - 4,172
Europe Ground 6,863 - 6,863 29% 4,844 487 5,331
Middle East
Ground 1,091 - 1,091 316% 262 - 262
Asia Ground 164 - 164 (67%) 491 - 491
----------------- -------- ------------- -------- ---------- --------- -------- --------------
Ground Division 13,389 (2,372) 11,017 7% 9,769 487 10,256
----------------- -------- ------------- -------- ---------- --------- -------- --------------
Global Services 1,619 - 1,619 5% 1,405 141 1,546
Total 22,388 (2,706) 19,682 14% 16,461 836 17,297
----------------- -------- ------------- -------- ---------- --------- -------- --------------
Gross Profit
% 21.0% 1.6% 22.6% 5.1% 17.6% (0.1%) 17.5%
----------------- -------- ------------- -------- ---------- --------- -------- --------------
For the period ended 2021 For the period ended 2020
----------------- ---------------------------------- --------------------------------
Rebase for Rebased
Adjusted organic adjusted Adjusted Rebase for Rebased
EBIT growth EBIT EBIT FX EBIT
----------------- --------- ----------- ---------- --------- ----------- --------
US Air 1,857 - 1,857 1,854 - 1,854
Europe Air 521 (334) 187 (127) (13) (140)
Middle East
Air (23) - (23) (36) - (36)
Asia Air (183) - (183) (175) - (175)
----------------- --------- ----------- ---------- --------- ----------- --------
Air Division 2,172 (334) 1,838 1,516 (13) 1,503
----------------- --------- ----------- ---------- --------- ----------- --------
US Ground (1,494) 469 (1,025) 915 - 915
Europe Ground 1,118 - 1,118 (41) (4) (45)
Middle East
Ground 544 - 544 (442) - (442)
Asia Ground (43) - (43) (13) - (13)
----------------- --------- ----------- ---------- --------- ----------- --------
Ground Division 125 469 594 419 (4) (415)
----------------- --------- ----------- ---------- --------- ----------- --------
Global Services (324) - (324) (6) (1) (7)
Associates (1,491) - (1,491) (1,957) - (1,957)
Central costs (2,352) - (2,352) (2,366) (249) (2,615)
Total (1,870) 135 (1,735) (2,394) (267) (2,661)
----------------- --------- ----------- ---------- --------- ----------- --------
Net Debt
A reconciliation of the IFRS financial statement line items that
represent the Net Debt APM is tabulated below.
Jun-21 Dec-20
$'000 $'000
-------------------------- ---------- ---------
Cash 14,180 16,136
Borrowings (62,704) (53,197)
-------------------------- ---------- ---------
Net Debt pre IFRS 16 (48,524) (37,061)
Obligations under leases (52,077) (52,620)
-------------------------- ---------- ---------
Net Debt (100,601) (89,681)
-------------------------- ---------- ---------
5. Earnings per share ("EPS")
The calculation of earnings per share is based on the earnings
attributable to the ordinary shareholders divided by the
weighted average number of shares in issue during the
period.
Jun-20
Earnings $'000 Jun-21 Restated*
------------------------------------------------- ---------- ----------
Numerator
Loss attributable to ordinary equity holders of
the parent for basic earnings: (828) (4,588)
Adjusting items (1,951) (208)
Profit attributable to ordinary shareholders for
Adjusted earnings (2,779) (4,796)
Denominator
Weighted average number of shares used in basic
and diluted EPS 63,658,655 63,636,279
Earnings per share (cents)
Statutory - Basic and diluted (1.3) (7.2)
Adjusted - Basic and diluted (4.4) (7.5)
------------------------------------------------- ---------- ----------
* Restatements are detailed in Note 2.
Whilst the average share price for the six months ended was
higher than the exercise price of some outstanding options, there
is no dilutive effect as their effect would be anti-dilutive.
6. Net cash generated by operating activities
Jun-20
Jun-20 Restated*
$'000 $'000
--------------------------------------------------- -------- -----------
(Loss)/profit before tax (1,477) 1,743
Adjustments for:
Finance income (127) (407)
Finance costs 1,765 2,423
Depreciation - wholly owned assets 3,232 1,793
Depreciation - ROU assets in admin expense 397 327
Depreciation - ROU assets in COS 3,194 7,358
Amortisation of acquired intangible assets 609 273
Amortisation of other intangible assets 1,082 798
Impairment (reversal)/loss - 4,440
Utilisation of PPP Loan - (3,778)
Non-cash lease settlement (1,801) -
Share of loss of associates 1,491 1,957
(Reversal of)/ impairment of equity accounted
investments (1,491) 10,633
Profit on disposal of interest in associates - (7,023)
Share based payment (credit)/expense (191) 407
--------------------------------------------------- -------- -----------
Operating cash inflow before movements in working
capital 6,683 20,944
Unrealised foreign exchange movements (1,410) (589)
Decrease/(increase) in inventories 730 (11)
(Increase)/decrease in receivables (3,485) 4,442
Non-cash doubtful debt provision expense 5 816
Decrease in payables (844) (15,831)
Increase in deferred revenue 7,275 11,763
Decrease/(increase) in provisions (410) 292
--------------------------------------------------- -------- -----------
Cash generated by operations 8,544 21,826
Taxes paid (174) (18)
--------------------------------------------------- -------- -----------
Net cash flows from operating activities 8,370 21,808
--------------------------------------------------- -------- -----------
*Restatements are detailed in Note 2.
7. Disposal of assets held for sale
On 2 March 2020 the Group announced the sale of its US Air
associate, Gama Aviation LLC (doing business as "Gama Aviation
Signature") to Wheels Up Partners Holdings LLC ("Wheels Up"). Gama
Aviation Signature was owned 49% by GB Aviation Holdings LLC, a
joint venture between the Group and Signature Aviation Plc, with
the remaining 51% held by the Group's US partners.
Gama Aviation received consideration of $33,000,000, comprising
$10,000,000 in return for its 24.5% equity interest and $23,000,000
for licencing and other trading related considerations. $13,000,000
of the consideration was received in cash at closing, with the
remaining $20,000,000 to be paid in cash, with interest of
$2,774,000, in eight equal six-month instalments over the next four
years.
The $20.0m of deferred consideration i s recognised as a
financial asset and is measured at amortised cost. The effective
interest rate of this financial asset is 6.0%, which results in the
recognition of finance income of $403k in the income statement for
the 6 months ending 30 June 2020.
As a result of early settlement of the deferred consideration on
20(th) July 2021 ( refer to Note 19 for more details) finance
income recognised in the 6 months ending 30 June 2021 reduced to
$90,000 and the remaining balance of deferred consideration has
been shown in current assets.
Included within trade & other receivables is deferred
consideration of $15,248,000 (FY 2020: $18,034,000), with
$15,248,000 (FY 2020: $5,004,000) in current asset and nil (FY
2020: $13,030,000) in non-current assets. Included within deferred
revenue is licencing and other trading related considerations of
$2,500,000 (FY 2020: $4,375,000), with $2,500,000 (FY 2020:
$3,750,000) in current liabilities and nil (FY 2020: $625,000) in
non-current liabilities.
As part of the transaction, GB Aviation Holdings LLC has
licensed the continued use of the Gama Aviation Signature brand for
up to two years, for which $7 ,500,000 of consideration has been
allocated and will be recognised as revenue over the two-year
period. Post disposal, $1,875,000 (H1 2020: $1,250,000) has been
recognised as revenue for this licencing component, in line with
the $3,750,000 annual licence fee prior to disposal. In addition,
an accelerated branding fee of $15,500,000 has been recognised in
adjusting items in the prior half.
Period
ended
June 30
2020
$'000
------------------------------------------------------------------- ---------
Cash received 13,000
Fair value of deferred consideration 20,000
------------------------------------------------------------------- ---------
Total discounted consideration receivable at the transaction
date 33,000
Less: Branding fees and other trading related considerations 23,000
------------------------------------------------------------------- ---------
Gross proceeds on disposal 10,000
Add: Closing working capital, cash and indebtedness adjustments 591
Less: Transaction costs (892)
------------------------------------------------------------------- ---------
Proceeds on disposal of assets held for sale, net of transaction
costs 9,699
Assets held for sale at 31 December 2019 2,598
Share of profit of equity accounted investments prior to disposal* 78
------------------------------------------------------------------- ---------
Carrying amount of net assets sold 2,676
Gain on sale before taxation 7,023
------------------------------------------------------------------- ---------
*The equity accounting of Gama Aviation LLC was not discontinued
after Gama Aviation LLC was held for sale at 31 December 2019 and
prior to disposal on 2 March 2020. Had this been the case there
would have been a $78,000 increase in share of losses of associates
and a $78,000 increase in the profit on disposal of interest in
associates. The impact of this reclassification, which has no
impact on the statutory loss for the year, is considered
immaterial.
8. China Aircraft Services Limited
The Group's investment in CASL has been reclassified as "held
for sale" effective end of May 2021 following a Board decision on
the $2,000,000 offer for its 20% shareholding in CASL. Since
reclassification the asset has been held at fair value.
9. Goodwill
$'000
------------------------------- -------------------------------------------
Cost
At 31 December 2020 48,034
Acquisitions 2,321
Exchange differences 652
------------------------------- -------------------------------------------
At 30 June 2021 51,007
Accumulated impairment losses
At 31 December 2020 25,544
Exchange differences 333
------------------------------- -------------------------------------------
At 30 June 2021 25,878
Carrying amount
At 30 June 2020 25,129
--------------------- -------
At 31 December 2020 22,490
The recoverable amount of goodwill is allocated to the following
cash generating units ("CGUs"):
Jun-2021 Dec-2020
$'000 $'000
US: Ground 3,108 787
Europe: Ground 20,767 20,467
Global Services: FlyerTech 1,254 1,236
---------------------------- --------- ------------------------------------
25,129 22,490
---------------------------- --------- ------------------------------------
As a result of the ongoing COVID-19 pandemic in the first half
of 2021, the Group considered whether there were indicators of
impairment. No market indicators of impairment were identified but
some internal indicators of impairment were noted.
Considering the sensitivity to changes in assumptions from the
impairment review performed in the 2020 Annual Report and noting
that there are no current market indicators of impairment, the
Group considers that the recoverable amount of all CGUs exceed the
carrying amount, and as a result no impairment has been
recognised.
10. Other Intangible assets
Customer
Brands relationships Computer software Total
$'000 $'000 $'000 $'000
--------------- ---------------------------- ---------------- -------------------------- -------------------------
Cost
At 31 December
2020 - 15,869 10,272 26,141
Acquisitions 1,181 5,021 - 6,202
Additions - - 1,338 1,338
Foreign
exchange
differences - 5 147 152
--------------- ---------------------------- ---------------- -------------------------- -------------------------
At 30 June
2021 1,181 20,895 11,757 33,833
Amortisation
and
accumulated
impairment
losses
At 31 December
2020 - 13,597 2,215 15,812
Charge for the
period
-through
adjusting
items 109 500 - 609
Charge for the
period -
through
adjusted
result - - 1,082 1,082
FX - (78) 30 (48)
--------------- ---------------------------- ---------------- -------------------------- -------------------------
At 30 June
2021 109 14,019 3,327 17,455
Carrying
Amount
At 30 June
2021 1,072 6,876 8,430 16,378
--------------- ---------------------------- ---------------- -------------------------- -------------------------
At 31 December
2020 - 2,272 8,057 10,329
Customer relationship assets are amortised over their useful
economic lives estimated to be ten years. During the period ending
30 June 2021 there were additions of $5,021,000 to customer
relationships resulting from the acquisition of Jet East.
The Brand acquisition of $1,181,000 relates to Jet East and is
being amortised over the estimated useful economic life of five
years.
Computer software costs comprise internally developed software
costs arising in the Group's myairops business as well as purchased
software, such as operational and financial systems. All costs are
amortised over their useful economic lives estimated to be between
three and five years. The carrying value of internally developed
software within this balance is $7,356,000 (FY 2020:
$6,729,000).
11. Property, plant and equipment
Aircraft Fixtures,
Leasehold and fittings
Helicopters improvements refurbishments and equipment Motor vehicles Total
$'000 $'000 $'000 $'000 $'000 $'000
---------------- -------------- -------------- --------------- --------------- --------------- -------
Cost
At 31 December
2020 29,088 18,259 12,161 11,861 2,773 74,142
Acquisitions - 682 - 1,385 493 2,560
Additions 119 819 167 647 23 1,775
Disposals - (31) - (121) - (152)
Foreign
Exchange
Difference 426 230 178 85 4 923
At 30 June
2021 29,633 19,959 12,506 13,857 3,293 79,248
---------------- -------------- -------------- --------------- --------------- --------------- -------
Accumulated
Depreciation
& impairment
At 31 December
2020 722 5,764 3,254 7,598 1,830 19,168
Charge for
the period 627 628 677 1,011 289 3,232
Disposals - (31) - (120) - (151)
Foreign
Exchange
Difference 12 6 46 43 3 110
---------------- -------------- -------------- --------------- --------------- --------------- -------
At 30 June
2020 1,361 6,367 3,977 8,532 2,122 22,359
---------------- -------------- -------------- --------------- --------------- --------------- -------
Carrying amount
At 30 June
2021 28,272 13,592 8,529 5,325 1,171 56,889
---------------- -------------- -------------- --------------- --------------- --------------- -------
At 31 December
2020 28,366 12,495 8,907 4,263 943 54,974
---------------- -------------- -------------- --------------- --------------- --------------- -------
Additions of $1,775,000 include $156,000 related to capital
trade payables and as result the cash flow statement shows
purchases of property, plant and equipment of $1,619,000.
12. Obligations under leases
The Group leases many assets including property, aircraft,
vehicles, fixtures, fittings and equipment. Information about
leases for which the Group is a lessee is presented below.
Leasehold property Fixtures, fittings
Restated* and equipment Vehicles Total
Right-of-use assets $'000 $'000 $'000 $'000
-------------------------- ------------------- ------------------- ----------- -------
Cost
At 31 December 2020 60,299 74 213 60,586
Acquisitions 3,565 97 - 3,662
Additions 301 - - 301
Foreign Exchange
Difference 480 1 3 484
At 30 June 2021 64,645 172 216 65,033
-------------------------- ------------------- ------------------- ----------- -------
Accumulated Depreciation
At 31 December 2020 19,836 69 156 20,061
Charge for the period
- cost of sales 3,194 - - 3,194
Charge for the period
-administrative costs 364 4 29 397
Foreign Exchange
Difference 331 1 14 346
-------------------------- ------------------- ------------------- ----------- -------
At 30 June 2021 23,725 74 199 23,998
-------------------------- ------------------- ------------------- ----------- -------
Carrying amount
-------------------------- ------------------- ------------------- ----------- -------
At 30 June 2021 40,920 98 17 41,035
-------------------------- ------------------- ------------------- ----------- -------
At 31 December 2020 40,463 5 57 40,525
-------------------------- ------------------- ------------------- ----------- -------
Fixtures, fittings
Leasehold property and equipment Vehicles Total
Obligations under
leases $'000 $'000 $'000 $'000
--------------------- ------------------- ------------------- ----------- --------
At 31 December 2020 52,553 5 62 52,620
Acquisitions 3,565 97 - 3,662
Additions 301 - - 301
Finance expense 1,426 - 1 1,427
Lease payments (4,719) - (40) (4,759)
Rent free credit (110) - - (110)
Derecognition (1,676) - - (1,676)
Provision unwinding 5 - - 5
Foreign Exchange
Difference 606 - 1 607
At 30 June 2021 51,951 102 24 52,077
--------------------- ------------------- ------------------- ----------- --------
At 30 June 2021
--------------------- ------------------- ------------------- ----------- --------
Current 4,004 102 24 4,130
Non-current 47,947 - - 47,947
--------------------- ------------------- ------------------- ----------- --------
Total 51,951 102 24 52,077
--------------------- ------------------- ------------------- ----------- --------
Additions relate to two property leases;
-- The extension of the lease by FlyerTech
-- A property lease for the FlyerTech business in Poland
In June 2017 the Group entered into a non-cancellable
Build-Operate-Transfer and Service Concession agreement with
Sharjah Airport Authority under which the Group is committed to
construct a Business Aviation Centre ("BAC") at Sharjah Airport.
The agreement runs from June 2017 until June 2042 with a ten-year
extension option to June 2052.
While the extension to the lease and project was formalised in
the period, uncertainties related to the project remain and the
extended lease term is not reasonably certain. Should the
uncertainties on the project resolve, there may be a ten-year
longer lease term and prospect for a reversal of some of the
impairment charges previously taken on this project. The
right-of-use assets require the use of estimates related to future
profitability and the cash-generating ability of the project. The
estimates used may differ from the actual outcome. The Board
continues to closely monitor the investment in view of the
prevailing pandemic and uncertainness surrounding the pace and
timing of any eventual recovery.
The lease liability has been discounted at an incremental
borrowing rate of 7.3% (FY 2020 7.3%) and on an expected lease term
of 25 years (FY 2020: 25 years). The Sharjah BAC includes a nil (FY
2020: nil) right-of-use asset and $7,447,000 (FY 2020: $7,441,000)
obligation under leases at 30 June 2021.
13. Borrowings
June-2021 Dec-2020
$'000 $'000
-------------------------------------------- ---------- --------------------------------
Secured borrowing at amortised cost
Other loans 1,560 -
Bank borrowings 60,144 52,197
Paycheck Protection Program Loan 1,000 1,000
-------------------------------------------- ---------- --------------------------------
62,704 53,197
-------------------------------------------- ---------- --------------------------------
Total borrowings
Other loans 1,560 -
Bank borrowings - -
Payment Protection Program Loan 1,000 1,000
-------------------------------------------- ---------- --------------------------------
Amount due for settlement within 12 months 2,560 1,000
-------------------------------------------- ---------- --------------------------------
Other loans - -
Bank borrowings 60,144 52,197
-------------------------------------------- ---------- --------------------------------
Amount due for settlement after 12 months 60,144 53,197
-------------------------------------------- ---------- --------------------------------
In 2020 the Group received $5,753,000 under the Paycheck
Protection Program (PPP) in the form of a loan arrangement from
Citibank guaranteed by the US government. $4,753,000 of these funds
were considered by the Company to be eligible for forgiveness
within the terms of the PPP leaving remaining borrowings at the end
of 2020 of $1,000,000. Confirmation of partial loan forgiveness is
expected by the end of the year.
At 30 June 2021
Drawn (presentation
Facility currency)
Drawn (local
Interest Maturity '000 currency) $'000
----------- -------------- ------------- ------------ -------------- --------------------
14 November
RCF LIBOR +0.94% 2022 USD 50,000 USD 12,000 12,000
GBP 15,000 20,774
31 January
Term loan LIBOR +1.12% 2023 GBP 20,000 GBP 20,000 27,698
----------- -------------- ------------- ------------ -------------- --------------------
Bank borrowings before arrangement fees 60,472
Capitalised loan arrangement fees (328)
------------------------------------------------------------------------ --------------------
Bank borrowings 60,144
------------------------------------------------------------------------ --------------------
At 31 December 2020
Drawn (presentation
Facility currency)
Drawn (local
Interest Maturity '000 currency) $'000
----------- -------------- ------------- ------------ -------------- --------------------
14 November
RCF LIBOR +0.94% 2022 USD 50,000 GBP 18,500 25,251
31 January
Term loan LIBOR +1.12% 2023 GBP 20,000 GBP 20,000 27,298
----------- -------------- ------------- ------------ -------------- --------------------
Bank borrowings before arrangement fees 52,549
Capitalised loan arrangement fees (352)
------------------------------------------------------------------------ --------------------
Bank borrowings 52,197
------------------------------------------------------------------------ --------------------
14. Acquisition
As announced on 15 January 2021, the Group acquired 100% of the
issued share capital of Jet East from East Coast Aviation, LLC
which will significantly expand its existing US aircraft
maintenance operations.
The acquisition of Jet East has been transacted by the Group's
wholly owned US subsidiary Gama Aviation Engineering Inc (GAEI) for
$7,700,000 in cash, with a further $1,000,000 in deferred cash
payable over two years and the assumption of Jet East debt. The
transaction has been entirely funded from the Group's existing
resources.
Details of the purchase consideration, the net assets acquired,
and goodwill are as follows:
$'000
Cash paid 7,700
Deferred consideration 642
------------------------ ------
Total consideration 8,342
------------------------ ------
Deferred consideration of $1,000,000 has been discounted at 2.5%
to a present value of consideration.
A post-closing consideration adjustment of $311,000 for net
assets acquired has been recognised as part of the total
consideration shown above.
A provisional calculation of purchase price accounting has been
performed. The purchase price accounting will be finalised once all
facts and circumstances at acquisition date are established but
within the twelve month measurement period permitted under IFRS 3
Business Combinations. Recognised amounts of identifiable assets
acquired and liabilities assumed are as follows:
$'000
------------------------------------------- --------
Property, plant and equipment 2,560
Right-of-use assets 3,662
Trade and other receivables non-current 289
Inventories 1,165
Trade and other receivables current 5,361
Cash and cash equivalents 64
Trade and other payables (3,682)
Intangible assets - Brand 1,181
Intangible assets - Customer relationship 5,021
Deferred tax liability (1,736)
Goodwill 2,321
Enterprise value 16,206
Borrowings (4,202)
Obligations under leases (3,662)
------------------------------------------- --------
Total consideration 8,342
------------------------------------------- --------
The acquisition of Jet East includes an equity incentive plan
with contingent consideration payments contractually linked to the
continuing employment of executives of the JetEast as well as
business performance of the combined US Ground business. For the
equity incentive plan to result in future consideration payments,
business performance must exceed a Board approved projection, the
acquisition case. Executives can earn up to a maximum of 9%
ownership in the US Ground equity subject to business performance
in the 2023 financial year and the level of indebtedness of the
combined US Ground business at that time. There are put and call
arrangements after this time which, subject to business
performance, will result in potential future consideration payments
between 2024 and 2028.The equity incentive plan is accounted for as
remuneration for post-acquisition services and is not part of the
business combination.
The significant unobservable inputs used in the fair value
measurements are forecast future profit in the 2023 financial year
and the level of indebtedness of the combined US Ground business at
that time.
Forecasts are inherently a key source of estimated uncertainty,
that may cause a materially different outcome to the carrying
amount of liabilities or remuneration charges associated with the
equity incentive plan.
No remuneration charge or liability related to the equity
incentive plan has been recognised because the projections
currently used don't exceed the acquisition case and long-term
re-forecasting of the combined US Ground business is still being
developed given the recent nature of the acquisition.
15. Related party transactions
During the year, Group companies entered into the following
transactions with related parties who are not members of the
Group:
Sale of services Purchase of services
------------------ ----------------------
2021 2020 2021 2020
$'000 $'000 $'000 $'000
------------------------------------------- -------- -------- ---------- ----------
Gama Aviation LLC (other trading balances) 1,510 3,715 55 245
Gama Aviation LLC (branding fee)* - 625 - -
China Aircraft Services Limited 526 766 - -
Air Arabia/Felix Trading Company LLC 180 25 75 75
Mr Canning Fok 1,076 923 - -
M Khalek 1 1 - -
------------------------------------------- -------- -------- ---------- ----------
* In the current year branding fees are for the two months prior to disposal.
The following amounts were outstanding at the balance sheet
date:
Amounts owed by Amounts owed to
related parties related parties
------------------ ------------------
2021 2020 2021 2020
$'000 $'000 $'000 $'000
-------------------------------- --------- ------- --------- -------
China Aircraft Services Limited 1,433 970 1,750 1,046
Gama Aviation LLC 221 23 12 17
Air Arabia 234 204 100 182
Mr Canning Fok 30 138 - -
GB Aviation Holdings LLC 40 40 - -
-------------------------------- --------- ------- --------- -------
16. Dividends
The Directors do not propose a dividend to be paid for the six
months to 30 June 2021 (H1 2020: nil).
17. Taxation
Period ended 30 June 2020
Period ended 30 June 2021 Restated*
----------------------------------------- -------------------------------- --------------------------------
Statutory Adjusted Statutory Adjusted
result Adjustments result result Adjustments result
$'000 $'000 $'000 $'000 $'000 $'000
----------------------------------------- --------- ----------- -------- --------- ----------- --------
Corporation tax:
Current year charge/(credit) 13 (159) (146) 8,078 (7,721) 357
Adjustment in respect of prior years 3 - 3 - - -
Deferred tax:
Current year charge/(credit) (79) 79 - (1,776) 1,776 -
Total tax charge/(credit) for the period (63) (80) (143) 6,302 (5,945) 357
----------------------------------------- --------- ----------- -------- --------- ----------- --------
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
period.
Deferred
consideration
Fixed asset on US air
Non-deductible and other associate
acquired temporary temporary
intangibles differences differences Tax losses Total
$'000 $'000 $'000 $'000 $'000
------------------------------ --------------- ------------- --------------- ----------- --------
At 1 January 2021 (57) (118) (2,986) 1,052 (2,109)
Acquisitions (1,736) - - - (1,736)
Transfer to current taxation - - 2,986 - 2,986
Credit/(charge) in year 79 - - - 79
Exchange differences (3) - - - (3)
------------------------------ --------------- ------------- --------------- ----------- --------
At 30 June 2021 (1,717) (118) - 1,052 (783)
------------------------------ --------------- ------------- --------------- ----------- --------
The deferred tax liability for the deferred consideration on the
disposal of the US Air Associate has been transferred to current
tax following receipt of final consideration in July 2021. No
further deferred tax assets that arose during the period have been
recognised.
18. Share-based payments
On 19 January 2021, Daniel Ruback, an Executive Director of the
Company, was issued a total of 25,000 ordinary shares of 1 penny
each in the capital of the Company ("Ordinary Shares") at nil cost,
in accordance with the terms of his Service Agreement.
In March 2021 the Company announced the following transactions
in relation to its shares:
-- The Company granted options over a total of 1,025,000 Shares,
at 39.0p, to Directors and other employees on 26 March 2021. These
options vest in 3 years and have no performance conditions.
-- Options over a total of 2,276,000 Shares previously granted
to Directors and other employees were agreed to be surrendered by
those employees on 29 March 2021.
-- The Company agreed to grant options over a total of 1,138,000
Shares, at 68.8p, to Directors and other employees on 29 March
2021. These options vest in 3 years and have no performance
conditions.
-- The Company agreed to grant options over a total of 1,817,805
Shares, at 1p, to Directors and other employees on 29 March 2021.
These options vest in 2024 and are subject to a performance
condition based on the Company's average share price over the 30
days following release of the Company's results for the year ending
31 December 2023.
-- The Company granted options over a total of 155,000 Shares,
at 1p, to Directors on 29 March 2021. These options vest
immediately and have no performance conditions. Of these, an option
for 25,000 Shares was granted to Neil Medley in fulfilment of the
final tranche of sign on shares due under his employment
contract.
Details of the options outstanding during the period are:
Number
'000
------------------- --------
At 1 January 2021 3,301
Granted 4,136
Surrendered (2,276)
Forfeited (664)
-------------------- --------
At 30 June 2021 4,497
-------------------- --------
Some of the new options granted were replacements for options
surrendered, these have been accounted for as a modification of the
original equity instruments. Under modification accounting, the
original fair value expense for the Cancelled Awards has continued
to be recognised over the original vesting period, with an
additional incremental expense over the vesting period of the
Replacement Awards.
The estimated fair value of the options granted in 2021 at the
time of issue was $615,000, plus an incremental fair value for
replacement options of $32,000.
In the current half a credit of $191,000 (H1 2020: charge of
$407,000) has been recognised for shared-based payments. The
current year credit arises due to the resignation of Directors and
the forfeiting of share options offsetting the regular charge for
other options awarded.
19. Post balance sheet event
On 14th July 2021, Wheels Up listed on the New York Stock
Exchange triggering a mandatory prepayment provision under the
terms of the Note. On 20th July 2021, the Company received
$15,250,000 in cash from Wheels Up, representing the full
prepayment amount due to the Company under the Note.
This event has been treated as an adjusting event and as a
result the remaining balance due under the Note has been presented
in full, in current trade and other receivables. In addition, the
interest income for the period ended 30 June 2021 has been adjusted
for the contractual adjustments related to the full prepayment. The
deferred tax liability has been reflected as current taxation due
within one year reflecting the expected timing of the tax payment
triggered by the cash receipt.
The $15,250,000 cash received will be used to settle the
residual corporation tax liabilities associated with the
Transaction, to support the on-going organic investment needs of
the Company, and to supplement the Company's working capital
reserves.
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END
IR DKNBQOBKDKCB
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September 24, 2021 02:00 ET (06:00 GMT)
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