TIDMGMAA
RNS Number : 5169A
Gama Aviation PLC
30 September 2020
Date: 30 September 2020
Gama Aviation Plc (AIM: GMAA)
("Gama", "the Company" or "the Group")
Unaudited interim results for six months to 30 June 2020
H1 results impacted by COVID-19, as expected; improved cash
position
Financial Highlights (post IFRS 16 basis, 2019 comparatives
restated)
-- Adjusted Revenue $93.7m (H1 2019: $121.8m), down 23%, at constant currency down 22%.
-- Adjusted Gross Profit $16.7m (H1 2019: $23.1m), down 28%, at constant currency down 27%.
-- Adjusted Gross Profit Margin 17.8% (H1 2019: 19.0%), down
1.2ppts, at constant currency down 1.2ppts.
-- Adjusted EBIT loss of $2.2m (H1 2019: profit of $5.2m), down
141%, at constant currency down 142%.
-- Adjusting items of $0.2m profit (H1 2019: loss of $4.2m), up
105% largely due to disposal accounting of the US Air Associate
partially offset by impairments and net of taxation.
-- Net Debt, inclusive of obligations under leases, decreased to
$87.9m from $98.0m at 31 December 2019.
Financial Summary
Adjusted(1) $m Statutory $m
--------------------------- -------------------- --------------------
Jun-19 Jun-19
Jun-20 Restated(2) Jun-20 Restated(2)
--------------------------- ------ ------------ ------ ------------
Revenue 93.7 121.8 109.2 121.8
Gross Profit 16.7 23.1 32.2 23.1
Gross Profit % 17.8% 19.0% 29.5% 19.0%
EBIT (2.2) 5.2 4.0 0.5
(Loss)/ Profit Before Tax (4.0) 3.2 2.2 (1.6)
(Loss)/ Profit After Tax (4.4) 2.3 (4.2) (2.0)
Earnings per share (cents) (6.9) 3.7 (6.6) (2.9)
--------------------------- ------ ------------ ------ ------------
(1) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted EBIT
as well as organic and constant currency Revenue, Gross Profit and
Adjusted EBIT.
(2) The results for 2019 have been restated for the interim
effect of restatement items identified in the 2019 full-year
results. Restatements are detailed in Note 2 of the notes to the
financial statements.
-- Financial performance across the Group during the period
reflects the impact of the global pandemic on the aviation
sector.
-- Group supported during the pandemic by US Government Paycheck
Protection Program loan of $5.75m, of which $3.8m loan forgiveness
has been reflected within Adjusted EBIT in the first half of
2020.
-- On 2(nd) March 2020 the Group announced the sale of the US
Air associate, for total consideration of $33m.
-- Group's liquidity remains strong with $18.1m cash and $29.9m
of its $50m revolving credit facilities undrawn as at 30 June
2020.
Operational Highlights:
-- Multiple new major contracts won and commenced in special
missions and technology & outsourcing:
o In the Global Services Division, myairops secured a $2.5m
Software as a Service contract in March, with one of the world's
largest business aviation operators.
o Together with Atkins, Gama was reappointed in May to continue
delivering Military Airworthiness Reviews (MARs) to the RAF's HQ
Command and the British Army's Joint Helicopter Command.
o Gama commenced all Helicopter Emergency Medical Services
(HEMS) on behalf of for the Scottish Ambulance Service on 1 June
2020 using its fleet of three Airbus H145 helicopters.
o Since period end, the Group was awarded two contracts to
provide air ambulance services to Guernsey and Jersey, for an
initial 5 years from July 2020 with options to extend by up to 5
years.
-- Air Division profitability stable supported by reduced start-up funding in the Middle East.
o Ground Division's profitability impacted by a pandemic-related
reduction in FBO and MRO revenues and an absence of the one-off
gains that benefitted the prior year comparator in Europe.
o China Aircraft Services Limited (CASL) suffered substantial
losses due to vastly reduced commercial aviation volumes at Hong
Kong airport, impacted by COVID-19 resulting in the Group taking
$2.0m of losses in respect of its 20% holding during the
period.
Current trading & outlook
-- Q3 trading to end September was stable and in line with management expectations.
-- Encouraging pipeline for special missions contracts and
improved demand levels at the Bournemouth UK facility for jet and
turboprop engineering activities.
-- Recognising the uncertainty inherent in the ongoing pandemic,
underlying performance in the second half is expected to be broadly
similar to the first half, however results will be impacted by
reduced government support.
-- Continued focus on cash generation and conservation with
c$30m RCF undrawn and cash of c$18m as at 28 September 2020.
Commenting on the half year results, Marwan Khalek, Chief
Executive said:
"Over the years we have strategically evolved resilience into
our business and robustness into our business model to ensure that
we can overcome the challenges of an inevitable periodic downturn.
This pandemic and the significantly detrimental economic
consequences that flow from it will continue to test us.
The H1/20 results we are announcing today show that the Group is
fairing relatively well in this very difficult business and
operating environment. Notwithstanding the share of associate
investment loss of $2.0m, the Group has delivered a near breakeven
Adjusted EBIT performance from its core operations and the
activities where it can exercise full management and operation
control. The Group has also preserved its healthy liquidity
position throughout this crisis. We have, however, recognised the
potential consequences of these challenging times in considering
the future prospects for our investments and have also re-assessed
the allocation of income from the sale of the US Air Associate and
the carrying value of other investments.
The Group's ability to deliver such a performance, both in terms
of profits and cash generation, in the most challenging market,
economic and operating environment it has ever faced is reflective
of the prompt actions of management, the support and confidence of
our clients and the dedication and commitment of our people, of
whom I am very proud.
I am also very pleased that, despite the challenges and focus on
the pandemic and its impact, we have continued to drive our
business forward with pleasing and long term contract wins in the
special mission division and sizeable maintenance inputs into our
Bournemouth maintenance facility.
I have no doubt that our resilience will continue to be severely
tested by this evolving pandemic and the resulting uncertainty that
it generates. However, I believe that with good control of the cost
base and a healthy liquidity, the Group is well placed to navigate
through this crisis and emerge stronger."
-S-
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
For further information please visit www.gamaaviation.com or
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
Jefferies International +44 (0) 20 7029 8000
Simon Hardy
Will Soutar
Gama Aviation - Notes to Editors
Gama Aviation Plc (AIM:GMAA) is a global business aviation
services group that specialises in providing support for
individuals, corporations and government agencies; allowing them to
deliver on the promises they make.
The Group's services are split into two core divisions: Air and
Ground. Air services include aircraft management, special mission
support and charter. Ground services cover aircraft maintenance
services, aircraft modification design and installation, and Fixed
Base Operations (FBO). Other products and services are included in
the Global Services Division.
More details can be found at: http://www.gamaaviation.com/
Chief Executive Officer's Report
The onset and rapid global spread of the COVID-19 pandemic since
the start of 2020 and the resulting global economic crisis has
understandably overshadowed and impacted every aspect of our
business, operational and financial performance during the first
half of 2020.
We took prompt, decisive and pro-active action to protect and
safeguard our business. Our first and over-riding priority was and
remains the safety and security of our global workforce and our
clients. By continuing to operate under the enhanced preventative
and protective measures advised by the World Health Organization
and by National Governments all our divisions have remained
operational throughout the period delivering services in support of
our clients' missions across all our operational bases and
geographies.
I am very proud of how our people and our teams across the world
have responded to and dealt with the challenges presented to us by
this pandemic. By maintaining business continuity across our
operation, we have been able to support our clients throughout this
period, particularly for those providing critical services such as
NHS Scotland, the Ministry of Defence and other key industries.
Our other priority is to safeguard the financial performance and
stability of our business and we acted swiftly and decisively by
immediately implementing a raft of measures to reduce costs and
preserve cash as reported in our announcement of 25(th) March 2020.
The sale of our US Air Associate, Gama Aviation LLC, on March 2(nd)
, represented good value and proved very timely. We have also
re-assessed the prospects for Group investments not fully under our
control, given the level of uncertainty remaining in those markets.
Further details are provided in this report and in the finance
review.
These results, delivered during a period of significant
disruption and uncertainty, demonstrate the effectiveness of the
actions and measures we have taken as well as the resilience of our
business and robustness of our business model. We continue to
monitor the development and on-going impact of this pandemic on a
daily basis and we will continue to take the necessary and
proportionate actions to safeguard our business both in respect of
its current performance and future prospects.
Alongside our focused effort to mitigate the impact of the
pandemic on our business, we have also maintained the necessary and
appropriate focus on continuing to grow the business and implement
our strategy. The period saw the successful launch of our rotary
services to the Scottish Ambulance Service following a major
transition programme involving three new aircraft and the
construction of a new operating base. We are also very pleased to
have won other special mission contracts such as the Jersey and
Guernsey air ambulance services and the renewal of our contract
providing critical airworthiness review services to the MoD in
partnership with Atkins. The transitions in Scotland and the
Channel Islands were delivered on time and operating as planned, a
significant achievement in current environment which showcases the
skills expertise and dedication of our people.
Our new CFO Daniel Ruback is continuing his diligent and
detailed efforts to strengthen our finance function by continuous
improvement process for people, system and processes. Much work
remains to be done but I am confident we are on the right path in
this critical area that has previously held back and impacted our
financial performance.
H1/20 Financial Performance
Adjusted revenues were down by 23% to $93.7m for the period (H1
2019, $121.8m) due to the fall in activity resulting from the
pandemic and associated lockdowns. Despite this drop in revenues,
Adjusted Gross Profit margins were modestly impacted, down 1.2 ppts
to 17.8% (H1 2019, 19.0%), reflecting both the effectiveness of the
operational cost reduction measures as well the reality of the
trading environment and was coupled with the appropriate use of
government support initiatives. However, in absolute terms,
Adjusted Gross Profits were down $6.4m to $16.7m (H1 2019,
$23.1m).
Initiatives to streamline and reduce the overhead cost structure
of the Group at both divisional and central level were already
underway pre the pandemic and these, with the additional pandemic
related cost saving measures, have helped ensure that Adjusted EBIT
was not more adversely affected, despite significant increases in
adjusted depreciation and amortisation of intangibles in the
period.
The Adjusted EBIT loss of $2.2m for the period includes a $2.0m
share of associate losses relating to our 20% equity investment
holding in China Aircraft Services Limited (CASL), the loss has no
cash impact to the Group. CASL provides maintenance and ramp
services to airline customers at Hong Kong airport where its
revenues have been very severely impacted by the significant drop
in movements at the airport. Notwithstanding this share of
associate losses, the Group has delivered a near breakeven Adjusted
EBIT performance from 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 $21.8m (2019: $2.2m) which helped fund investment
capital expenditure and other relatively small levels of
maintenance capital expenditure whilst maintaining a strong
liquidity position. As at 30(th) June 2020 the Group had $18.1m of
cash and $29.9m of its $50m revolving credit facilities
undrawn.
Sale of US Air Associate
On 2(nd) March 2020 the Group announced the sale of its US Air
associate, Gama Aviation LLC, in which the Group had a 24.5% equity
interest, for a total consideration of $33m. The finance review
section and Note 7 provide detailed commentary on the final
accounting treatment that we have applied to the sale proceeds and
the reasons for the differences from our original judgment. The
economic substance of the transaction remains unchanged.
The strategic rationale was to enable the Group to monetise, at
an attractive value, its investment in an associate over which it
exercises no control, and which had grown increasingly dependent on
a major customer who had an interest in purchasing the business.
This sale will allow the Group to focus its US activities on its
100% owned Ground Division which is capable of continuing to
deliver significant growth.
Impairment of Investments
The Board has undertaken a review of the carrying values of
certain investments with a view to determine the level of
impairments that may be necessary with COVID-19 uncertainties
prevailing globally.
As stated above and as is evident from the financial statements,
the performance of CASL (the Groups' Hong Kong based associate) has
been very severely impacted by the pandemic. With revenues running
at some 85% below pre pandemic levels, CASL has suffered
significant losses during the first half of 2020 resulting in the
Group recognising a $2m share of associate loss in its interim
results. Despite the cost saving measures implemented by CASL
management, losses will continue through the remainder of 2020 and
into 2021, and a return to profitability is not expected until
there is a significant upturn in activity. Given the continuing
uncertainty surrounding the pandemic and the timing of any eventual
recovery, the Board has decided to take an impairment write-down in
the carrying value of its investment in CASL.
Similarly, the Board has also decided to impair the 'asset under
construction' carrying value of its investment in the Sharjah
Business Aviation Center project.
Given the one-off and non-recurring nature of these impairment
costs, they have been treated as adjusting items. It is however the
intention of management to work closely with CASL management, and
our partners in Sharjah, to maximise value from these
investments.
Strategy
In our FY19 results announced on July 31(st) , 2020 we notified
the market that we are conducting a strategic review of the
business to ensure that, going forward, we are focused on the
things that we do best. This review is progressing well and has
identified the following primary areas of market focus:
-- Special Missions, building on the Group's proven strength in
delivering high availability aviation services for defence, law
enforcement, healthcare and critical infrastructure.
-- Business Aviation, involving the global delivery of the
Group's core offerings of aircraft management, charter and
engineering to high value customers, with clear priority placed on
key markets, especially the United States.
-- Technology and Outsourcing, where the Group will leverage its
investment in the myairops software platform, FlyerTech and its
industry-leading capabilities in core aviation managed service
components to offer compelling outsource solutions.
The review will of course take into account the evolving impact
of the pandemic and we will make further announcements in due
course, including any changes to our future segmental
reporting.
Outlook
The Q3 trading to end September was stable and in line with
management expectations. We are encouraged by our development of a
strong pipeline for special mission opportunities and improved
demand levels at the Bournemouth UK facility for jet and turboprop
engineering activities.
Recognising the uncertainty inherent in the ongoing pandemic,
underlying performance in the second half is expected to be broadly
similar to the first half, however results will be impacted by
reduced government support as the US PPP scheme ends, and UK and
other schemes are reduced.
The Group is expected to maintain its healthy liquidity
position. As at 28 September 2020, the Group has cash of c$18m and
c$30m RCF borrowing facilities undrawn.
Marwan Khalek
Chief Executive Officer
Group Operational Performance
Revenue
$'000
Adjusted Statutory
------------------------- --------------- ------------------
2020 2019 2020 2019
------------------------- ------ ------- -------- --------
Air Division 50,501 65,398 66,001 65,398
------------------------- ------ ------- -------- --------
Ground Division 41,461 54,879 41,461 54,879
------------------------- ------ ------- -------- --------
Global Services Division 1,768 1,508 1,768 1,508
------------------------- ------ ------- -------- --------
Total 93,730 121,785 109,230 121,785
------------------------- ------ ------- -------- --------
Gross Profit
$'000
Adjusted Statutory
------------------------- -------------- ----------------
2020 2019* 2020 2019*
------------------------- ------ ------ ------- -------
Air Division 5,287 5,559 20,787 5,559
------------------------- ------ ------ ------- -------
Ground Division 10,000 16,509 10,000 16,509
------------------------- ------ ------ ------- -------
Global Services Division 1,405 1,081 1,405 1,081
------------------------- ------ ------ ------- -------
Total 16,692 23,149 32,192 23,149
------------------------- ------ ------ ------- -------
EBIT
$'000
Adjusted Statutory
------------------------- ---------------- ------------------
2020 2019* 2020 2019*
------------------------- ------- ------- -------- --------
Air Division 1,516 1,197 16,897 979
------------------------- ------- ------- -------- --------
Ground Division 650 6,764 (3,790) 3,943
------------------------- ------- ------- -------- --------
Global Services Division (6) 219 (160) 93
------------------------- ------- ------- -------- --------
Associates Division (1,957) 252 (5,567) 252
------------------------- ------- ------- -------- --------
Central Costs (2,366) (3,217) (3,390) (4,778)
------------------------- ------- ------- -------- --------
Total (2,163) 5,215 3,990 489
------------------------- ------- ------- -------- --------
* The results for 2019 have been restated for the interim effect
of restatement items identified in the 2019 full-year results.
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.
Adjusted
$'000
US Europe Middle East Asia Total
-------------- --------------- ----------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
-------------- ------ ------ ------- ------- ------ ------ ------ ------- ------- -------
Revenue 1,875 1,875 31,284 46,314 8,574 7,030 8,768 10,179 50,501 65,398
Gross Profit 1,875 1,875 2,062 2,336 731 746 619 602 5,287 5,559
GP % 100% 100% 7% 5% 9% 11% 7% 6% 10% 8%
EBIT 1,854 1,815 (127) (100) (36) (601) (175) 83 1,516 1,197
------ ------
EBIT % 99% 97% 0% 0% 0% (9%) (2%) 1% 3% 2%
-------------- ------ ------ ------- ------- ------ ------ ------ ------- ------- -------
The Air Division revenues fell on reported basis by 23% to
$50.5m (2019: $65.4m). On a constant currency basis, the fall was
21% after rebasing for the impact of foreign exchange of $1.2m, as
shown in Note 4 of the notes to the financial statements. Reduced
recharges as a result of lower flying activity due to the COVID-19
pandemic was the primary driver for revenue reductions in both
Europe (down 31% ) and Asia (down 14%), whereas higher recharges
relating to maintenance boosted revenues in the Middle East (up
22%). The changes in recharge revenues had no effect on profits,
but smaller pandemic-related reductions in revenues from management
fees, charter sales and flight planning services did flow through
to gross profits. The size of the global managed aircraft fleet
increased by one in the first half of 2020 compared to the prior
half comparative period.
Total Air Division Adjusted EBIT improved by $0.3m to $1.5m
(2019: $1.2m), with the above gross profit shortfalls compensated
for by overhead reductions. Adjusted EBIT remained stable in the US
and Europe. The Middle East improved due to reduced levels of
funding of the start-up business in Saudi Arabia. Cost control in
Asia was offset by $0.5m of loss allowances for doubtful
debtors.
The in-sourcing by Europe Air of the helicopter emergency
medical services (HEMS) for the Scottish Ambulance Service
progressed according to plan, leading to the successful go-live of
this operation on 1st June 2020. Additionally, in July the Group
was awarded new special mission contracts to provide fixed wing air
ambulance services to the governments of Guernsey and Jersey for an
initial term of 5 years plus options to extend by up to 5
years.
Adjustments to EBIT
$'000
US Europe Middle East Asia Total
--------------- ------------- -------------- ------------- ---------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
---------------------- ------- ------ ----- ------ ------ ------ ----- ------ ------- ------
Exceptional items - - - (105) - - - - - (105)
Amortisation - - (60) (54) - - (59) (59) (119) (113)
Accelerated branding
fees 15,500 - - - - - - - 15,500 -
Total adjustments 15,500 - (60) (159) - - (59) (59) 15,381 (218)
---------------------- ------- ------ ----- ------ ------ ------ ----- ------ ------- ------
Statutory
$'000
US Europe Middle East Asia Total
--------------- -------------- -------------- -------------- ---------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
-------- ------- ------ ------ ------ ------ ------ ------ ------ ------- ------
EBIT 17,354 1,815 (187) (259) (36) (601) (234) 24 16,897 979
EBIT % 100% 97% (1%) (1%) 0% (9%) (3%) 0% 25% 1%
-------- ------- ------ ------ ------ ------ ------ ------ ------ ------- ------
*The results for 2019 have been restated for the interim effect
of restatement items identified in the 2019 full-year results.
Restatements are detailed in Note 2 of the notes to the financial
statements.
Air Division Statutory EBIT increased from $1.0m in 2019 to
$16.9m in 2020 due to accelerated branding fees on the disposal of
the US Air associate, see Note 7 for further details on the
disposal. Exceptional items did not recur in the current period and
amortisation of the remaining acquired intangibles continues in
line with policy.
Ground Division
The Ground Division provides global 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 for the operator. With a
global network and increasingly rare independence from manufacturer
ownership, the Division has 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
---------------- ---------------- -------------- ------------- ----------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
-------------- ------- ------- ------- ------- ------ ------ ----- ------ ------- -------
Revenue 20,578 24,296 18,490 27,321 1,476 2,266 917 996 41,461 54,879
Gross Profit 4,403 3,748 4,844 11,359 262 963 491 439 10,000 16,509
GP % 21% 15% 26% 42% 18% 42% 54% 44% 24% 30%
EBIT 1,146 653 (41) 6,203 (442) 71 (13) (163) 650 6,764
------ ------
EBIT % 6% 3% (0%) 23% (30%) 3% (1%) (16%) 2% 12%
-------------- ------- ------- ------- ------- ------ ------ ----- ------ ------- -------
The Ground Division revenues fell on reported basis by 24% to
$41.5m (2019: $54.9m). On a constant currency basis, the fall was
23% after rebasing for the impact of foreign exchange of $0.7m, as
shown in Note 4 of the notes to the financial statements. All
divisions experienced reductions in revenue: Europe by 31%, Middle
East by 35%, US by 15% and Asia by 8%. In Europe, the fall in
revenue is $8.8m, or $8.1m on a constant currency basis, with
significant variances due to the prior year comparative benefitting
from one-off equipment sales of $5.5m, closure of the loss-making
Fairoaks maintenance business, and reduced demand for FBO, MRO and
design services following the start of the COVID-19 pandemic. In
the US, the fall in revenue of $3.7m was materially driven by the
COVID-19 pandemic however the impact was partially offset by growth
in the Florida Paint-Shop of $1.1m to $1.8m (2019: $0.7m). In the
Middle East, revenue fell due to lower FBO movements, lower parking
from planes being grounded elsewhere, and a knock-on effect of
reduced activity on MRO revenues. Asia also experienced a
COVID-related reduction in maintenance revenues of $0.1m to $0.9m
(2019: $1.0m).
Adjusted EBIT fell by $6.1m to $0.7m, due to Europe ($6.2m down,
on a constant currency basis $6.0m down) and Middle East (down
$0.5m to a loss of $0.4m), partially offset by US ($0.5m up to
$1.1m) and Asia ($0.2m reduction in losses). In Europe, Gross
Profit in the prior period benefited compared to the current period
by $2.9m from one-off equipment sales and cost credits which
dropped down into Adjusted EBIT, and 2020 was impacted by the
COVID-related services revenue reductions. In the Middle East,
reduced FBO activity resulted in an Adjusted EBIT loss with fixed
cost savings unable to offset gross profit shortfalls. Despite the
impact of COVID-19 on revenues and a $0.2m increase in doubtful
debts provisions, Adjusted EBIT in the US improved as a result of
reduced losses in the first half of 2020 from the Florida
Paint-Shop and was supported by PPP loan forgiveness of $3.8m.
Asia's Adjusted EBIT improved by $0.2m to a breakeven position
(2019: $0.2m loss) due to a combination of improved mix within
gross profit plus reduced overheads.
Adjustments to EBIT
$'000
US Europe Middle East Asia Total
-------------- --------------- ------------------ ------------- ------------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
------------------- ------ ------ ----- -------- ---------- ------ ----- ------ -------- --------
Exceptional items - - - (1,364) - - - - - (1,364)
Amortisation - (228) - (96) - - - - - (324)
Impairment charge - - - (1,133) (4,440) - - - (4,440) (1,133)
Total adjustments - (228) - (2,593) (4,440) - - - (4,440) (2,821)
------------------- ------ ------ ----- -------- ---------- ------ ----- ------ -------- --------
Statutory
$'000
US Europe Middle East Asia Total
-------------- ------------- ---------------- ------------- ----------------
2020 2019* 2020 2019* 2020 2019* 2020 2019* 2020 2019*
-------- ------ ------ ----- ------ -------- ------ ----- ------ -------- ------
EBIT 1,146 425 (41) 3,610 (4,882) 71 (13) (163) (3,790) 3,943
EBIT % 6% 2% (1%) 13% (331%) 3% (1%) (16%) (9%) 7%
-------- ------ ------ ----- ------ -------- ------ ----- ------ -------- ------
*The results for 2019 have been restated for the interim effect
of restatement items identified in the 2019 full-year results.
Restatements are detailed in Note 2 of the notes to the financial
statements.
Ground division Statutory EBIT fell from a profit of $3.9m in
2019 to a loss of $3.8m in 2020 as a result of the impairment of
assets under the course of construction at Sharjah airport of $4.4m
in addition to the fall in Adjusted EBIT. Exceptional items did not
recur in the current period.
Global Services Division
The Global Services Division comprises two businesses, FlyerTech
and myairops. FlyerTech provides continuing airworthiness
management (CAM) and airworthiness review certification (ARC)
services for business aviation and commercial airline operators.
myairops 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
-------------------
2020 2019
Restated*
-------------- ------ -----------
Revenue 1,768 1,508
Gross Profit 1,405 1,081
GP % 79% 72%
EBIT (6) 219
--------------
EBIT % (0%) 15%
-------------- ------ -----------
The Global Services Divisions grew revenues by 17% to $1.8m
(2019: $1.5m) however EBIT fell to nil (2019: $0.2m). Growth in
revenue and gross profit was driven by performance in myairops
following the launch of three new products and associated product
sales including a $2.5m three-year contract with a large business
aviation operator. Associated with the product launches,
amortisation of the product development commenced, impacting
Adjusted EBIT in the first half by $0.5m. FlyerTech traded broadly
in line with prior half, with a modest reduction in revenue offset
by enhanced margin performance.
Adjustments to EBIT
$'000
Total
--------------
2020 2019
------------------- ------ ------
Amortisation (154) (126)
Total adjustments (154) (126)
------------------- ------ ------
Statutory
$'000
Total
-------------------
2020 2019
Restated*
-------- ------ -----------
EBIT (160) 93
EBIT % (9%) 6%
-------- ------ -----------
*Restated to show the impact of IFRS 16 within Adjusted EBIT,
divisionally for year on year comparability. Refer to Note 2 of the
notes to the interim financial statements.
Adjustments to EBIT relate to amortisation of acquired Customer
Relationship intangibles of $0.2m (2019: $0.1m). Overall, Global
Services Division Statutory EBIT fell to a loss of $0.2m in the
first half from a profit of $0.1m in 2019.
Associate Investments
Adjusted
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- -------------
2020 2019 2020 2019 2020 2019
----- ----- ----- ----------- ------ ------- ----
EBIT 78 29 (2,035) 223 (1,957) 252
----- ----- ----- ----------- ------ ------- ----
The US Air associate was sold on 2 March 2020, see Note 7 of the
notes to the interim financial statements for further details. The
$78k of Adjusted EBIT represents the Group's share of results from
the US Air associate prior to disposal.
China Aircraft Services Limited (CASL) suffered substantial
losses of $2.0m due to vastly reduced commercial aviation volumes
at Hong Kong airport, impacted by COVID-19.
Adjustments to EBIT
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- --------------
2020 2019 2020 2019 2020 2019
--------------------------------------------- ------ ---- ------------ ----- -------- ----
Impairment charge - - (10,633) - (10,633) -
--------------------------------------------- ------ ---- ------------ ----- -------- ----
Profit on disposal of interest in associates 7,023 - - - 7,023 -
--------------------------------------------- ------ ---- ------------ ----- -------- ----
Total adjustments 7,023 - (10,633) - (3,610) -
--------------------------------------------- ------ ---- ------------ ----- -------- ----
Statutory
$'000
US Air China Aircraft
Associate Services Limited Total
------------ ------------------- -------------
2020 2019 2020 2019 2020 2019
----- ------ ---- ------------ ----- ------- ----
EBIT 7,101 29 (12,668) 223 (5,567) 252
----- ------ ---- ------------ ----- ------- ----
In view of the ongoing COVID-19 pandemic and the related
uncertainties, an impairment charge of $10.6m (2019: nil) has been
made against the equity accounted investment in CASL, see Note 4
for further details. The disposal of the US Air Associate resulted
in a profit before taxation on disposal of the Group's equity
interest of $7.0m. Overall, associate Statutory EBIT decreased from
a profit of $0.3m in 2019 to a loss of $5.6m in 2020.
Financial Review
Adjusted(1) $m Statutory $m
--------------------------- -------------------- --------------------
Jun-19 Jun-19
Jun-20 Restated(2) Jun-20 Restated(2)
--------------------------- ------ ------------ ------ ------------
Revenue 93.7 121.8 109.2 121.8
Gross Profit 16.7 23.1 32.2 23.1
Gross Profit % 17.8% 19.0% 29.5% 19.0%
EBIT (2.2) 5.2 4.0 0.5
(Loss)/ Profit Before Tax (4.0) 3.2 2.2 (1.6)
(Loss)/ Profit After Tax (4.4) 2.3 (4.2) (2.0)
Earnings per share (cents) (6.9) 3.7 (6.6) (2.9)
--------------------------- ------ ------------ ------ ------------
(1) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted EBIT
as well as organic and constant currency Revenue, Gross Profit and
Adjusted EBIT.
(2) The results for 2019 have been restated for the interim
effect of restatement items identified in the 2019 full-year
results. Restatements are detailed in Note 2 of the notes to the
financial statements.
Adjusted Revenue Bridge
$m
Revenue - 2019 121.8
------------------------------------- ------
Impact of foreign exchange movement (1.9)
Revenue - 2019 at 2020 exchange rate 119.9
Air Division (13.7)
Ground Division (12.8)
Global Services Division 0.3
------------------------------------- ------
Revenue - 2020 93.7
------------------------------------- ------
-- The Air Division had reduced recharges of costs due to
reduced flying hours as a result of the ongoing COVID-19
pandemic.
-- Ground Division revenue reduced primarily in Europe (a
reduction of $8.8m) with the prior year benefiting from one-off
equipment sales of $5.5m whilst in the US aircraft maintenance was
materially impacted by the ongoing COVID-19 pandemic with a $3.7m
reduction in US Ground revenues.
Adjusted EBIT Bridge $m
Adjusted EBIT - 2019 (restated)* 5.2
------------------------------------------- -----
Impact of foreign exchange movement (0.1)
Adjusted EBIT - 2019 at 2020 exchange rate 5.1
Gross Profit (6.1)
Share of loss from associates (2.3)
Decrease in administrative expenses: 1.1
Adjusted EBIT - 2020 (2.2)
------------------------------------------- -----
* The results for 2019 have been restated for the interim effect
of restatement items identified in the 2019 full-year results.
Restatements are detailed in Note 2 of the notes to the financial
statements.
-- Reduced Gross Profit driven by Europe Ground reductions
partially offset by gross profit growth in US Ground and the Air
Division.
-- China Aircraft Services Limited (CASL) suffered substantial
losses of $2.0m due to vastly reduced commercial aviation volumes
at Hong Kong airport, impacted by COVID-19.
Disposal of US Air Associate
On 2(nd) March 2020 the Group disposed of its shareholding in
its US Air associate for a total consideration of $33m, of which
$13m cash was received at closing with the balance due to be
received, with interest, at six monthly intervals over the
following four years. Following on from the judgement communicated
at the time of announcing the disposal, Note 35 to the Group's 2019
Annual Report and Accounts stated that this transaction was
expected to be accretive to underlying earnings to FY2020 and
FY2021 as well as resulting in a one-off profit on disposal of the
Group's equity interest. The Board has now concluded, after
consultation with the Group's external auditors PwC, that it is
more appropriate only to recognise in Adjusted EBIT for 2020 and
2021 the pre-existing level of branding fee of $3.75m per year
(total $7.5m), and to treat the remaining $15.5m relating to
accelerated branding fees and other trading items as an adjusting
revenue item in the 2020 first half results given its material
one-off and non-recurring nature. Adjusted EBIT will continue to
reflect branding fee for a two year period. Given the nature of the
agreement and the continuing operational and financial
uncertainties resulting from the COVID-19 pandemic it is now
extremely difficult to assess whether or not the transaction will
be accretive to earnings in FY20 and FY21. Notwithstanding the
above, the economic substance and the cashflows of the transaction
remain unchanged. Refer to Note 7 for further details on the
disposal.
Impairments of Investment
The COVID-19 pandemic has also required the Board to consider
whether other investment focused assets show signs of impairment.
The Board has concluded that the value of the Group's 20% equity
interest in its Asia associate, China Aircraft Services Limited,
has been adversely impacted by significantly reduced levels of
commercial aviation activity at Hong Kong airport. Accordingly, the
Group has taken a $10.6m impairment as an exceptional item in the
first half of 2020 in respect of this investment. Similarly, the
Group's $4.4m asset under construction, representing investment at
Sharjah in the Middle East Ground division, has been impaired in
full as an exceptional item, due to uncertainties regarding the
recoverability of the initial project development costs incurred to
date.
The Board considers that treating all three material amounts as
exceptional items presents the most fair, balanced and
understandable view of the accounting consequences for
shareholders.
Statutory EBIT Bridge
$m
Statutory EBIT - 2019 (restated)* 0.5
------------------------------------------------- ------
Items impacting Adjusted EBIT (7.4)
Adjusting items: 10.9
- Accelerated branding fees 15.5
- Impairment of assets under construction (4.4)
- Impairment of CASL (10.6)
- prior year impairment of Fairoaks right-of-use
asset 1.1
- Profit on disposal 7.0
- Depreciation and amortisation 0.3
- Integration and business recognition costs 0.9
- Litigation costs 1.4
- Transaction costs (0.2)
- Other (0.1)
Statutory EBIT - 2020 4.0
------------------------------------------------- ------
*The results for 2019 have been restated for the interim effect
of restatement items identified in the 2019 full-year results.
Restatements are detailed in Note 2 of the notes to the financial
statements.
-- $15.5m of accelerated branding fees have been recognised in
adjusting items following the disposal of the US Air Associate and
the settlement of existing contractual arrangements (see Note 7 for
further details on the disposal).
-- Impacted by the ongoing COVID-19 pandemic, impairment charges
relate to $4.4m in relation to Sharjah and $10.6m in relation to
CASL. The prior period included an impairment of the right-of-use
asset associated with the Fairoaks lease.
-- $7.0m profit before taxation on disposal of the US Air
Associate (see Note 7 for further details on the disposal).
-- Adjusting items only include amortisation of acquired
intangibles. The prior period included amortisation of internally
generated intangibles.
-- Integration and business re-organisation costs at Fairoaks
and Bournemouth did not recur in the first half of 2020.
-- Significant reduction on litigation costs following progress on legacy matters.
-- Increased transaction cost of $0.2m relating to potential acquisition opportunities.
Interest
Net finance cost of $1.8m (2019: $2.0m), include $0.4m (2019:
nil) of finance income on deferred consideration following the
disposal of the US Air Associate.
Taxation
There is an adjusted taxation charge for the period of $0.4m
(2019: charge of $0.9m) arising from profits in the US where the
group has an effective tax rate of 28%. An increased deferred tax
asset for additional losses incurred in other jurisdictions has not
been recognised due to the uncertainty of future available taxable
profits to utilise the losses.
On disposal of the US Air Associate there was a corporation
taxation charge of $7.7m, which is included within the Corporation
tax liability at 30 June 2020. In addition, a deferred taxation
credit of $1.5m has been recognised on deferred revenue on the
disposal, and this will be charged to deferred tax in future
periods as the revenue is recognised. There is a statutory taxation
charge for the period of $6.3m (2019: charge of $0.4m), which
reflects a significant increase as a result of the US Air Associate
disposal.
EPS
Shares in issue remain unchanged and the average share price for
the six months ended was lower than the exercise price of
outstanding options and therefore there is no dilutive effect for
diluted earnings per share. Basic Statutory EPS reflects an
increase loss per share of 6.6 cents (2019: 2.9c).
Net debt and cash flow movements
Jun-19
Jun-20 Restated*
$m $m
------------------------------------------------------------------- ------ ----------
Net cash inflow on operating activities 21.8 2.2
Capital expenditure (23.0) (14.4)
Lease payments (5.0) (5.7)
Interest paid (0.6) (0.6)
Proceeds on disposal of US Air Associate, net of transaction costs 9.7 -
Proceeds from borrowings 30.4 15.1
Repayment of borrowings (23.4) -
Acquisition of Florida Paint-Shop - (1.4)
Net cash used in investing and financing activities (11.9) (7.0)
Increase / (decrease) in cash 9.9 (4.8)
Cash at the beginning of the period 8.5 10.0
Effect of foreign exchange rates (0.3) (3.2)
------------------------------------------------------------------- ------ ----------
Cash at the end of the period* 18.1 2.0
------------------------------------------------------------------- ------ ----------
Borrowings (46.7) (24.6)
Obligation under leases (59.3) (58.3)
------------------------------------------------------------------- ------ ----------
Net (debt) (87.9) (80.9)
------------------------------------------------------------------- ------ ----------
*Restatements are detailed in Note 2 of the notes to the
financial statements.
**Net (debt) at 30 June 2019 excluded obligations under leases
that weren't covenant defined. For comparability, Net (debt) with
all Obligations under leases is shown above and reconciled in
further detail in Note 4.
-- The improvement in the net cash inflow on operating
activities has been driven by general improvements in working
capital and;
o $3.3m US Air Associate consideration, which was in addition to
the $9.7m for the disposal of the investment, relating to trading
related matters (see Note 7 for further details on the
disposal)
o As part of COVID-19 support in the UK, VAT payment of $4.0m
have been deferred
o Net receipts on long term contracts in the first half of the
year were $5.4m higher than the prior half of the year
-- Capital expenditure includes the purchase, for $18.3m of two
new helicopters by Europe Air as part of the helicopter emergency
medical services which went live on 1(st) June 2020, leasehold
property improvements of $1.7m, Fixtures & Fittings of $1.4m
and internally developed software arising from myairops software
development of $1.3m.
-- Lease payments reduced by $0.7m on the prior period due to
timing of aircraft lease payments.
-- $9.7m proceeds on disposal of the US Air Associate, net of
transaction costs. Refer to Note 7 for further details on the
disposal.
-- Proceeds from borrowings include $24.7m in relation to the
GBP20m Term loan for Helicopters and $5.7m from a Payment
Protection Program Loan. $23.4m repayment of revolving credit
facility borrowings as a result of financing the Helicopters via
the Term loan.
Litigation
Following the litigation update provided in the Company's 2019
Annual Report, the Company continues to pursue the recovery of its
long-standing trade receivables that amount to approximately $3m
both through enforcement actions in the UK and in other
jurisdictions. Since the announcement of 2019 Annual Report, 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.
Responsibility Statements
The Directors confirm that to the best of their knowledge:
a) the condensed consolidated set of financial statements has
been prepared in accordance with IAS 34 "Interim Financial
Reporting";
b) the interim financial report includes a fair review of the
information required by DTR 4.2.7R (indication of important events
during the first six months and description of principal risks and
uncertainties for the remaining six months of the year); and,
c) the interim financial report includes a fair review of the
information required by DTR 4.2.8R (disclosure of related parties'
transactions and changes therein).
The basis of preparation of the consolidated financial
statements is shown in Note 1 and Note 2, and related party
transactions are shown in Note 13. 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 2019 and shown
below.
The directors consider the principal risks to the business
are:
/ Poor operational performance or air accident damaging the
Group's reputation.
/ Changes in economic climate that make air transport less
attractive such as the ongoing COVID-19 pandemic.
/ Following the UK departure from the EU any changes to the open
skies arrangement that may impact air travel, and a slow-down in
customs processes that may lead to delays in the cross-border flow
of fuel, materials and engines, both for Gama Aviation, our
suppliers and their upstream supply chains, and customers shipping
engines for repair and overhaul.
/ Increasing regulatory burden and costs of compliance.
/ Foreign exchange risk.
Signed on behalf of the Board,
Marwan Khalek
Chief Executive Officer
Gama Aviation Plc
Consolidated income statement
For the period ended 30 June 2020
Period ended 30 June 2020 Period ended 30 June 2019 Restated*
-------------------------------- ---------------------------------------
Statutory Adjusted Statutory Adjusted
result Adjustments result result Adjustments result
$'000 $'000 $'000 $'000 $'000 $'000
------------------------------------------- --------- ----------- -------- ------------ ------------- ----------
Revenue 109,230 (15,500) 93,730 121,785 - 121,785
Cost of sales (77,038) - (77,038) (98,636) - (98,636)
------------------------------------------- --------- ----------- -------- ------------ ------------- ----------
Gross profit 32,192 (15,500) 16,692 23,149 - 23,149
- administrative expenses (14,188) 1,024 (13,164) (18,733) 3,032 (15,701)
- depreciation and amortisation (3,191) 273 (2,918) (3,434) 1,694 (1,740)
- impairment loss (4,440) 4,440 - - - -
- impairment of financial assets (816) - (816) (745) - (745)
Total administrative expenses (22,635) 5,737 (16,898) (22,912) 4,726 (18,186)
Operating profit/(loss) 9,557 (9,763) (206) 237 4,726 4,963
Share of results from equity
accounted investments (12,590) 10,633 (1,957) 252 - 252
Profit on disposal of interest in
associates (note 7) 7,023 (7,023) _ - - -
Earnings before interest and taxation 3,990 (6,153) (2,163) 489 4,726 5,215
Finance income 407 - 407 - - -
Finance expense (2,246) - (2,246) (2,049) - (2,049)
Profit/(loss) before tax 2,151 (6,153) (4,002) (1,560) 4,726 3,166
Taxation (6,302) 5,945 (357) (412) (493) (905)
(Loss)/profit after tax (4,151) (208) (4,359) (1,972) 4,233 2,261
Attributable to:
Owners of the Company (4,180) (208) (4,388) (1,854) 4,233 2,379
Non-controlling interests 29 0 29 (118) - (118)
* Restatements are detailed in Note 2.
Earnings per share attributable to the equity holders of the
parent
Basic and diluted (cents) (6.6)c (0.3)c (6.9)c (2.9)c 6.6c 3.7c
Gama Aviation Plc
Consolidated statement of comprehensive income
For the period ended 30 June 2020
Period Period
ended 30
June ended
30 June
2020 2019 Restated*
$'000 $'000
-------------------------------------------------- ---------- ----------------
Loss for the period (4,151) (1,972)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign
operations (1,106) (1,660)
Total comprehensive loss for the period (5,257) (3,632)
-------------------------------------------------- ---------- ----------------
Total comprehensive loss is attributable to:
Owners of the Company (5,286) (3,514)
Non-controlling interest 29 (118)
-------------------------------------------------- ---------- ----------------
(5,257) (3,632)
-------------------------------------------------- ---------- ----------------
Gama Aviation Plc
Consolidated balance sheet
As at 30 June 2020 and 31 December 2019
2019
2020 Restated*
$'000 $'000
---------------------------------------------- --------- ----------
Non-current assets
Goodwill (note 8) 20,395 21,750
Other intangible assets (note 9) 9,903 10,148
---------------------------------------------- --------- ----------
Total intangible assets 30,298 31,898
Property, plant and equipment (note 10) 48,390 35,324
Right-of-use assets (note 11) 49,236 52,315
Investments accounted for using equity method 2,413 15,112
Trade and other receivables 20,040 4,392
Deferred tax asset 3,774 2,252
---------------------------------------------- --------- ----------
Total Non-current assets 154,151 141,293
---------------------------------------------- --------- ----------
Current assets
Assets held for sale (note 7) - 2,598
Inventories 7,282 7,271
Trade and other receivables 52,261 73,167
Current tax receivable 338 338
Cash and cash equivalents 18,088 8,463
---------------------------------------------- --------- ----------
77,969 91,837
---------------------------------------------- --------- ----------
Total assets 232,120 233,130
---------------------------------------------- --------- ----------
Current liabilities
Trade and other payables (35,765) (51,596)
Current tax liabilities (8,099) -
Obligations under leases (note 11) (15,328) (16,366)
Provisions (513) (521)
Borrowings (note 12) (46,689) (45,615)
Deferred revenue (12,130) (2,867)
(118,524) (116,965)
---------------------------------------------- --------- ----------
Total assets less current liabilities 113,596 116,165
---------------------------------------------- --------- ----------
Non-current liabilities
Borrowings (note 12) - (627)
Deferred revenue (7,053) (4,553)
Obligations under leases (note 11) (44,012) (43,838)
Provisions (894) (594)
Deferred tax liabilities (753) (819)
(52,712) (50,431)
---------------------------------------------- --------- ----------
Total liabilities (171,236) (167,396)
---------------------------------------------- --------- ----------
Net assets 60,884 65,734
---------------------------------------------- --------- ----------
* Restatements are detailed in Note 2.
Gama Aviation Plc
Consolidated balance sheet (continued)
As at 30 June 2020 and 31 December 2019
2019
2020 Restated*
$'000 $'000
--------------------------- -------- ----------
Shareholders' equity
Share capital 953 953
Share premium 63,473 63,473
Other reserves 35,205 34,798
Foreign exchange reserve (30,285) (29,179)
Accumulated loss (9,242) (5,062)
--------------------------- -------- ----------
Total shareholders' equity 60,104 64,983
Non-controlling interest 780 751
--------------------------- -------- ----------
Total equity 60,884 65,734
--------------------------- -------- ----------
Gama Aviation Plc
Consolidated statement of changes in equity
For the period ended 30 June 2020
Foreign
Share Share Other exchange Accumulated Total 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
2018, as
restated** 953 63,473 33,937 (28,055) 8,112 78,420 656 79,076
Loss for
the period,
as reported - - - - (2,128) (2,128) (118) (2,246)
Restatement* - - - - 274 274 - 274
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
Loss for
the period,
as restated - - - - (1,854) (1,854) (118) (1,972)
Other
comprehensive
income,
as reported - - - (1,660) - (1,660) - (1,660)
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
Total
comprehensive
loss for
the period - - - (1,660) (1,854) (3,514) (118) (3,632)
Cost of
share-based
payments - - 336 - - 336 - 336
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
Balance
at 30 June
2019 953 63,473 34,273 (29,715) 6,258 75,242 538 75,780
Loss for
the period - - - - (9,700) (9,700) 213 (9,487)
Other
comprehensive
income - - - 536 - 536 - 536
Total
comprehensive
loss for
the period - - - 536 (9,700) (9,164) 213 (8,951)
Cost of
share-based
payments - - 525 - - 525 - 525
Dividend
paid (1,620) (1,620) - (1,620)
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
Balance
at 31
December
2019 953 63,473 34,798 (29,179) (5,062) 64,983 751 65,734
Profit for
the period - - - - (4,180) (4,180) 29 (4,151)
Other
comprehensive
income - - - (1,106) - (1,106) - (1,106)
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
Total
comprehensive
loss for
the period - - - (1,106) (4,180) (5,286) 29 (5,257)
Cost of
share-based
payments - - 407 - - 407 - 407
Balance
at 30 June
2020 953 63,473 35,205 (30,285) (9,242) 60,104 780 60,884
--------------- ---------------------- -------------------------------- -------------------------------- -------------------------------- -------------------------------- ----------------------------------- ----------------------------------- --------------------------------
* Restatements are detailed in Note 2.
** Balance at 31 December 2018 as restated in the 2019 audited annual report.
Gama Aviation Plc
Consolidated cash flow statement
For the period ended 30 June 2020
Period
ended 30 Period
June ended
30 June
2020 2019 Restated*
$'000 $'000
--------------------------------------------------------- --------- -----------------
Net cash inflow on operating activities (note 6) 21,808 2,207
--------------------------------------------------------- --------- -----------------
Cash flows from investing activities
Purchases of property, plant and equipment (note 10) (21,678) (12,792)
Purchases of intangibles (note 9) (1,262) (1,656)
Acquisition of subsidiary, net of cash acquired - (1,365)
Proceeds from disposal of assets held for sale (note 7) 9,699 -
--------------------------------------------------------- --------- -----------------
Net cash used in investing activities (13,241) (15,813)
--------------------------------------------------------- --------- -----------------
Cash flows from financing activities
Interest paid (573) (608)
Lease payments (note 11) (5,037) (5,672)
Proceeds from borrowings 30,405 15,107
Repayment of borrowings (23,426) -
Net cash from financing activities 1,369 8,827
--------------------------------------------------------- --------- -----------------
Net increase/(decrease) in cash and cash equivalents 9,936 (4,779)
Cash and cash equivalents at the beginning of the period 8,463 10,020
Effect of foreign exchange rates (311) (3,205)
--------------------------------------------------------- --------- -----------------
Cash and cash equivalents at the end of the period 18,088 2,036
--------------------------------------------------------- --------- -----------------
* Restatements are detailed in Note 2.
Notes to the interim financial statements
For the period ended 30 June 2020
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 has changed from "Business Aviation Centre, Farnborough
Airport, Hampshire, GU14 6XA" to "1st Floor, 25 Templer Avenue,
Farnborough, Hampshire, England, GU14 6FE" in the first half of
2020. 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 2020 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 2019 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 interim consolidated financial statements (the interim
financial statements) are for the six months ended 30 June 2020.
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 2019.
2. Accounting policies
The accounting policies set out in the Group's statutory
financial statements for the year ended 31 December 2019 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 period there has been 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.
$5,750k was received on 12 May 2020 and is recognised as
borrowings in current liabilities. During the period to 30 June
2020 $3,778k has been offset against what the company has deemed to
be qualifying expenditure reducing the amount of borrowings at the
period end to $1,970k. The utilisation of the grant is reflected
against the related expenses in cost of sales and administrative
expenses.
Restatements
The comparatives have been restated for several items following
the restatements made to 2018 in the 2019 financial statements. The
impact of restatements on the interim financial statements, where
items included in the income statement or statement of cash flows
for the six month comparative period ended 30 June 2019 or items
presented in the statement of financial position as at 31 December
2019 have been restated, are detailed below:
i. Interest paid of $608k has been restated from operating cash
flows to financing cash flows. This is a change in accounting
policy to be consistent with the treatment of interest on lease
obligations in 2019. The impact of foreign currency movements on
borrowings and intercompany loans, which was restated from
administrative expenses to finance cost in the 2019 financial
statements was not material in the six months ended 30 June 2019,
and as a result has not been restated.
ii. The impact of IFRS 16 in the prior year was a credit of
$870k to Statutory and Adjusted EBIT of which the credit to gross
profit was $582k. The presentation of the impact of IFRS 16 was
aggregated into one line item in the prior year and in the current
year this has been disaggregated across the respective divisions
for year on year comparability. In addition, on the statement of
cash flows, lease payments of $5,672k, which were included within
operating activities, have been reclassified into financing
activities.
iii. Following the disposal of the US Air associate (see Note
7), the presentation of the current tax payable and receivable is
material at 30 June 2020 and has been presented separately on the
face of balance sheet. As a result, balance sheet reclassifications
on current tax receivable ($338k increase),Trade and other
receivables ($338k decrease), current tax liabilities ($9k
increase) and Trade and other payables ($9k decrease) have been
reflected to the balance sheet at 31 December 2019.
v. Tax on Adjusting Items has been restated from nil to $493k,
with no impact on the statutory tax charge.
vi. Following a review of mapping to financial statement line
items in the prior year, an income statement reclassification
between administrative expenses ($920k decrease) and cost of sales
($920k increase) has been reflected.
vii. As communicated in the 2019 financial statements, full year
2018 was restated for errors on accruing for administrative
expenses, resulting in a charge to administrative expenses of $274k
and an equivalent increase in accruals. These costs were accrued in
the six months ending 30 June 2019 and as a result administrative
expenses and retained earnings have been restated by an equivalent
amount. The reported statutory loss for the six months ending 30
June 2019 of $2,246k has been restated by $274k to $1,972k.
3. Segment information
The Group has eleven reportable segments (Air Division - four
regional businesses; Ground Division - four regional businesses;
Global Services Division - two businesses combined as one
reportable segment; the Associates Division - two businesses; and
Central Costs), which are defined by markets rather than product
type. Each segment includes businesses with similar operating and
marketing characteristics. These segments are consistent with the
internal reporting reviewed each month by the Group Chief
Executive. Segment information is contained in full in the
operational performance review and has not been reproduced here.
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.
Reconciliation of divisional to overall Group performance is
tabulated below:
2020 2019
--------------------------------------------------------------------- --------------------------
Adjusted Adjusted Statutory Adjusted Revenue Gross Statutory Adjusted
Revenue Gross EBIT EBIT profit EBIT EBIT
profit (Restated*) (Restated*) (Restated*)
------------- --------- ----------- ---------- --------- -------- ------------ ------------ ------------
US Air 1,875 1,875 17,354 1,854 1,875 1,875 1,815 1,815
Europe
Air 31,284 2,062 (187) (127) 46,314 2,336 (259) (100)
Middle
East Air 8,574 731 (36) (36) 7,030 746 (601) (601)
Asia Air 8,768 619 (234) (175) 10,179 602 24 83
------------- --------- ----------- ---------- --------- -------- ------------ ------------ ------------
Air Division 50,501 5,287 16,897 1,516 65,398 5,559 979 1,197
US Ground 20,578 4,403 1,146 1,146 24,296 3,748 425 653
Europe
Ground 18,490 4,844 (41) (41) 27,321 11,359 3,610 6,203
Middle
East Ground 1,476 262 (4,882) (442) 2,266 963 71 71
Asia Ground 917 491 (13) (13) 996 439 (163) (163)
------------- --------- ----------- ---------- --------- -------- ------------ ------------ ------------
Ground
Division 41,461 10,000 (3,790) 650 54,879 16,509 3,943 6,764
Global
Services 1,768 1,405 (160) (6) 1,508 1,081 93 219
Associates - - (5,567) (1,957) - - 252 252
Central
Costs - - (3,390) (2,366) - - (4,778) (3,217)
Adjusted
Result 93,730 16,692 3,990 (2,163) 121,785 23,149 489 5,215
------------- --------- ----------- ---------- --------- -------- ------------ ------------ ------------
Adjusting
items - - - 6,153 - - - (4,726)
Statutory
result 93,730 16,692 3,990 3,990 121,785 23,149 489 489
------------- --------- ----------- ---------- --------- -------- ------------ ------------ ------------
*Restatements are detailed in Note 2 of the notes to the interim
financial statements.
4. Alternative performance measures
The Adjusted result has been arrived at after the following
Adjusting items:
Period ended
Period ended 30 June 2019
30 June 2020 Restated*
$'000 $'000
---------------------------------------------- -------------- ----------------------
Exceptional items
Transaction costs 296 100
Integration and business re-organisation (3) 906
Legal costs 324 1,690
Total exceptional items 617 2,696
---------------------------------------------- -------------- ----------------------
Share-based payments expense 407 336
Amortisation of intangible assets 273 561
Impairment of right-of-use assets - 1,133
Impairment of assets under construction 4,440 -
Impairment of investment in associate 10,633 -
Accelerated branding fees (15,500) -
Profit on disposal of interest in associates (7,023) -
Adjusting items in EBIT (6,153) 4,726
---------------------------------------------- -------------- ----------------------
Tax related to adjusting items 5,945 (493)
---------------------------------------------- -------------- ----------------------
Adjusting items in profit (208) 4,233
---------------------------------------------- -------------- ----------------------
Transaction costs
Transaction costs in the current year of $296k relate to
prospective acquisitions. In the prior year, $100k was incurred in
relation to aborted acquisitions.
Integration and business re-organisation costs
Integration and business re-organisation costs include:
-- Fairoaks direct closure costs of nil (2019: $684k);
-- Non-recurring expenditure related to property and facility
re-organisation at Bournemouth and Farnborough of nil (2019:
$222k)
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 $273k (2019: $375k) and
amortisation arising on internally generated intangible assets,
such as setting up new bases of operations in the US Ground
business nil (2019: $186k).
Legal costs
Legal cost 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.
Impairment
Impairments comprise:
-- An impairment charge of $10,633k has been recognised to
reduce the equity accounted investment in CASL from the carrying
amount of $13,046k to its recoverable amount of $2,413k. (2019:
nil).
-- An impairment charge of $4,440k has been recognised to reduce
the Business Aviation Centre ("BAC") at Sharjah Airport to its
recoverable amount following uncertainties related to the ongoing
COVID-19 pandemic (2019: nil).
-- Fairoaks impairment of the right-of-use asset associated with
the lease of nil (2019: $1,113k).
Accelerated branding fees and profit on disposal of interest in
associates
See Note 7 for further details on the profit on disposal.
Tax related to adjusting items
On disposal of the US Air Associate there was a corporation
taxation charge of $7,721k, which is included within the
Corporation tax liability at 30 June 2020. In addition, a deferred
taxation credit of $1,462k has been recognised on deferred revenue
on the disposal, and this will be charged to deferred tax in future
periods as the revenue is recognised.
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 $1.26 to GBP1, being the cumulative average
USD-GBP exchange rate for the first half of 2020 instead of the
reported exchange rate of $1.29 to GBP1 for the first half of 2019.
A reconciliation from the growth in reported revenue, gross profit
and EBIT the most directly comparable IFRS measures, to the organic
and constant currency growth 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 prior year, the paint and interior business
acquired on 10 January 2019 ("Paint-Shop") was excluded in
calculating organic growth. In the current year, the Paint-Shop is
in all material respects comparable half on half and not adjusted
for the purpose of organic growth. The US Air associate was sold on
2 March 2020 resulting in $78k of Adjusted EBIT in the current half
prior to disposal and $29k Adjusted EBIT in the prior half, which
in all material respects is comparable half on half and not
adjusted for the purpose of organic growth.
2020 2019
---------------- ----------- ----------- ------------------------------------------
% Constant Revenue, Rebased
Adjusted currency as Rebase for comparative
Revenue growth restated* FX revenue
---------------- ----------- ----------- ------------ ----------- ---------------
US Air 1,875 - 1,875 - 1,875
Europe Air 31,284 (31%) 46,314 (1,176) 45,138
Middle East Air 8,574 22% 7,030 - 7,030
Asia Air 8,768 (14%) 10,179 - 10,179
Air 50,501 (21%) 65,398 (1,176) 64,222
US Ground 20,578 (15%) 24,296 - 24,296
Europe Ground 18,490 (31%) 27,321 (694) 26,627
Middle East
Ground 1,476 (35%) 2,266 - 2,266
Asia Ground 917 (8%) 996 - 996
---------------- ------- -------------- ------------- ----------- ---------------
Ground 41,461 (23%) 54,879 (694) 54,185
Global Services 1,768 20% 1,508 (38) 1,470
Total 93,730 (22%) 121,785 (1,908) 119,877
---------------- ------- -------------- ------------- ----------- ---------------
2020 2019
--------------- ------------------------------ ---------------------------------------
Gross
% Constant Profit, Rebased
Adjusted currency as Rebase for comparative
Gross Profit growth restated* FX Gross Profit
--------------- --------------- ------------- ---------- ----------- --------------
US Air 1,875 - 1,875 - 1,875
Europe Air 2,062 (9%) 2,336 (60) 2,276
Middle East
Air 731 (2%) 746 - 746
Asia Air 619 3% 602 - 602
Air 5,287 (4%) 5,559 (60) 5,499
US Ground 4,403 17% 3,748 - 3,748
Europe Ground 4,844 (56%) 11,359 (271) 11,088
Middle East
Ground 262 (73%) 963 - 963
Asia Ground 491 12% 439 - 439
--------------- ---------- ------------- --------------- ----------- --------------
Ground 10,000 (38%) 16,509 (271) 16,238
Global
Services 1,405 33% 1,081 (27) 1,054
Total 16,692 (27%) 23,149 (358) 22,791
--------------- ---------- ------------- --------------- ----------- --------------
2020 2019
------------ --------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------------------------------------
% Constant
Adjusted currency Adjusted Rebase for Rebased comparative
EBIT growth EBIT as restated* FX Adjusted EBIT
------------ ---------------------------------------- --------------------------------------- ---------------------------------------- -------------------------------------- ----------------------------------------
US Air 1,854 2% 1,815 - 1,815
Europe Air (127) 36% (100) 3 (97)
Middle East
Air (36) 94% (601) - (601)
Asia Air (175) (311%) 83 - 83
Air 1,516 26% 1,197 3 1,200
US Ground 1,146 75% 653 - 653
Europe
Ground (41) (99%) 6,203 (158) 6,045
Middle East
Ground (442) (722%) 71 - 71
Asia Ground (13) (92%) (163) - (163)
------------ ---------------------------------------- --------------------------------------- ---------------------------------------- -------------------------------------- ----------------------------------------
Ground 650 (90%) 6,764 (158) 6,606
Associates (1,957) (876%) 252 - 252
Central
costs (2,366) 25% (3,217) 82 (3,135)
Global
Services (6) (103%) 219 (6) 213
Total (2,163) (142%) 5,215 (79) 5,136
------------ ---------------------------------------- --------------------------------------- ---------------------------------------- -------------------------------------- ----------------------------------------
Net Debt
A reconciliation of the IFRS financial statement line items that
represent the Net Debt APM is tabulated below.
Jun-20 Dec-19
$'000 $'000
-------------------------- ----------- ---------
Cash 18,088 8,463
Borrowings (46,689) (46,242)
-------------------------- ----------- ---------
Net Debt pre IFRS 16 (28,601) (37,779)
Obligations under leases (59,340) (60,204)
-------------------------- ----------- ---------
Net Debt (87,941) (97,983)
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-19
Earnings $m Jun-20 Restated*
------------------------------------------------- ---------- ----------
Numerator
Loss attributable to ordinary equity holders of
the parent for basic earnings: (4,180) (1,854)
Adjusting items (208) 4,233
Profit attributable to ordinary shareholders for
Adjusted earnings (4,388) 2,379
Denominator
Weighted average number of shares used in basic
and diluted EPS 63,636,279 63,636,279
Earnings per share (cents)
Statutory - Basic and diluted (6.6) (2.9)
Adjusted - Basic and diluted (6.9) 3.7
------------------------------------------------- ---------- ----------
The average share price for the six months ended was lower than
the exercise price of outstanding options and therefore there is no
dilutive effect.
6. Net cash generated by operating activities
Jun-20 Jun-19
$'000 $'000
--------------------------------------------------- ----------------------- --------------------
Profit/ (loss) before tax 2,151 (1,560)
Adjustments for:
Finance income (407) -
Finance costs 2,246 2,049
Depreciation - wholly owned assets 1,793 1,572
Depreciation - ROU assets in admin expense 327 -
Depreciation - ROU assets in COS 7,127 5,456
Amortisation of acquired intangible assets 273 561
Amortisation of other intangible assets 798 168
Impairment of right-of-use assets - 1,133
Impairment loss 4,440 -
Utilisation of PPP Loan (3,778) -
Share of loss/(profit) of associates 12,590 (252)
Profit on disposal of interest in associates (7,023) -
Share based payment expense 407 336
--------------------------------------------------- ----------------------- --------------------
Operating cash inflow before movements in working
capital 20,944 9,463
Unrealised foreign exchange movements (589) (323)
Increase in inventories (11) (3,232)
Decrease/(increase) in receivables 4,442 (6,203)
Non-cash doubtful debt provision expense 816 745
Decrease in payables (15,831) (7,867)
Increase in deferred revenue 11,763 10,257
Increase in provisions 292 -
--------------------------------------------------- ----------------------- --------------------
Cash generated by operations 21,826 2,840
Taxes paid (18) (633)
Net cash flows from operating activities 21,808 2,207
--------------------------------------------------- ----------------------- --------------------
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 $33.0m, comprising
$10.0m in return for its 24.5% equity interest and $23.0m for
licencing and other trading related considerations. $13.0m of the
consideration was received in cash at closing, with the remaining
$20.0m to be paid in cash, with interest of $2,774k, 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.
Included within trade & other receivables at 30 June 2020 is
deferred consideration of $20,403k, with $4,755k in current asset
and $15,648k in non-current assets. Included within deferred
revenue at 30 June 2020 is licencing and other trading related
considerations of $6,250k, with $3,750k in current liabilities and
$2,500k 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 $7.5m of consideration has been
allocated and will be recognised as revenue over the two year
period. Post disposal, $1.25m has been recognised as revenue for
this licencing component in the first half of 2020, in line with
the $3.75m annual licence fee prior to disposal. In addition, an
accelerated branding fee of $15.5m has been recognised in adjusting
items.
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
------------------------------------------------------------------ ---------
Following on from the judgement communicated at the time of
announcing the disposal, Note 35 to the Group's 2019 Annual Report
and Accounts stated that this transaction was expected to be
accretive to underlying earnings to FY2020 and FY2021 as well as
resulting in a one-off profit on disposal of the Group's equity
interest. The Board has now concluded, after consultation with the
Group's external auditors PwC, that it is more appropriate only to
recognise in Adjusted EBIT for 2020 and 2021 the pre-existing level
of branding fee of $3.75m per year (total $7.5m), and to treat the
remaining $15.5m relating to accelerated branding fees and other
trading items as an adjusting revenue item in the 2020 first half
results given its material one-off and non-recurring nature.
Adjusted EBIT will continue to reflect branding fee for a two year
period. Given the nature of the agreement and the continuing
operational and financial uncertainties resulting from the COVID-19
pandemic it is now extremely difficult to assess whether or not the
transaction will be accretive to earnings in FY20 and FY21.
Notwithstanding the above, the economic substance and the cashflows
of the transaction remain unchanged. Refer to Note 7 for further
details on the disposal.
8. Goodwill
$'000
------------------------------- ---------------------------------------------
Cost
At 31 December 2019 46,520
Exchange differences (2,590)
------------------------------- ---------------------------------------------
At 30 June 2020 43,930
Accumulated impairment losses
At 31 December 2019 (24,770)
Exchange differences 1,235
------------------------------- ---------------------------------------------
At 30 June 2020 (23,535)
Carrying amount
At 30 June 2020 20,395
--------------------- -------
At 31 December 2019 21,750
The recoverable amount of goodwill is allocated to the following
cash generating units ("CGUs"):
Jun-2020 Dec-2019
$'000 $'000
US: Ground 787 787
Europe: Ground 19,608 20,963
---------------- ---------------------------------------------- ------------------------------------
20,395 21,750
---------------- ---------------------------------------------- ------------------------------------
As a result of the ongoing COVID-19 pandemic in first half of
2020, the Group performed an impairment review to determine whether
recoverable amounts of the two CGUs above exceeded the carrying
amount.
Considering the sensitivity to changes in assumptions and noting
that the recoverable amount of all CGUs exceed the carrying amount,
no impairment has been recognised.
9. Intangible fixed assets
Commence Part 145 Licence Customer Computer
operations approvals and brands relationships software Total
$'000 $'000 $'000 $'000 $'000 $'000
-------------- ------------------------------- ------------------------------- -------------------------------- -------------------------------- -------------------------------- -----------------------------
Cost
At 1 January
2020 1,481 3,442 1,605 15,479 7,334 29,341
Additions - - - - 1,262 1,262
Write off (1,481) (3,442) - - - (4,923)
Foreign
exchange
differences - - (4) (40) (515) (559)
-------------- ------------------------------- ------------------------------- -------------------------------- -------------------------------- -------------------------------- -----------------------------
At 30 June
2020 - - 1,601 15,439 8,081 25,121
Amortisation
and
accumulated
impairment
losses
At 1 January
2020 (1,481) (3,442) (1,549) (12,204) (517) (19,193)
Charge
through
adjusting
items - - (118) (155) - (273)
Charge
through
adjusted
result - - - - (798) (798)
Write off 1,481 3,442 - - - 4,923
FX - - 113 (88) 98 123
-------------- ------------------------------- ------------------------------- -------------------------------- -------------------------------- -------------------------------- -----------------------------
At 30 June
2020 - - (1,554) (12,447) (1,217) (15,218)
Carrying
Amount
At 30 June
2020 - - 47 2,992 6,864 9,903
-------------- ------------------------------- ------------------------------- -------------------------------- -------------------------------- -------------------------------- -----------------------------
At 31
December
2019 - - 56 3,275 6,817 10,148
Customer relationship assets are amortised over their useful
economic lives estimated to be ten years.
Licences and brands (which include protected intellectual
property) are amortised over their useful economic lives
estimated
to be ten years. There are no individually material items within
this balance.
Commence operations and part 145 approvals are legacy intangible
balances comprising internally generated costs which are fully
amortised and have been written-off in the current period.
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 $5,550k (31 December 2019:
$5,310k).
10. Property, plant and equipment
Fixtures,
Aircraft fittings
Leasehold hull and and Motor Asset under
property refurbishments equipment vehicles Helicopters construction Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------- ------------------ --------------- ------------ ---------- ------------- ------------- ---------
Cost
Balance at
1 January
2020 15,302 9,142 9,516 2,735 - 12,914 49,609
Additions 1,659 - 1,384 19 18,343 273 21,678
Capitalised
interest - - - - 176 - 176
Transfer - - - - 8,194 (8,194) -
Foreign
Exchange
Difference 352 (858) 1,293 (36) (446) (553) (248)
At 30 June
2020 17,313 8,284 12,193 2,718 26,267 4,440 71,215
-------------- ------------------ --------------- ------------ ---------- ------------- ------------- ---------
Accumulated
Depreciation
& impairment
Balance at
1 January
2020 (5,077) (2,252) (5,571) (1,385) - - (14,285)
Charge for
the year (462) (239) (770) (248) (74) - (1,793)
Impairment - - - - - (4,440) (4,440)
Foreign
Exchange
Difference (761) 206 (1,784) 32 - - (2,307)
-------------- ------------------ --------------- ------------ ---------- ------------- ------------- ---------
At 30 June
2020 (6,300) (2,285) (8,125) (1,601) (74) (4,440) (22,825)
-------------- ------------------ --------------- ------------ ---------- ------------- ------------- ---------
Carrying amount
At 30
June
2020 11,013 5,999 4,068 1,117 26,193 - 48,390
---------- ----------------- -------------------------------- -------------------- -------------- ------------------ ----------------------- --------------------
At 31
December
2019 10,225 6,890 3,945 1,350 - 12,914 35,324
Helicopters
As previously reported deployment of the helicopters occurred on
1st June 2020 in support of a long-term contract. As a result,
helicopters have been transferred from assets under construction
into the helicopters asset class within property, plant and
equipment. They have been brought into use and depreciated from 1
June 2020.
11. 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.
Fixtures,
Leasehold fittings
property Aircraft and equipment Vehicles Total
Right-of-use $'000
assets $'000 $'000 $'000 $'000
-------------------------- ---------- ---------- --------------- ----------- ----------
Cost
Balance at 1
January 2020 51,596 19,118 72 205 70,991
Additions 6,727 - - - 6,727
Foreign Exchange
Difference (2,077) (1,245) (4) (13) (3,339)
At 30 June 2020 56,246 17,873 68 192 74,379
-------------------------- ---------- ---------- --------------- ----------- ----------
Accumulated Depreciation
Balance at 1
January 2020 (8,270) (10,285) (46) (75) (18,676)
Charge for the
year-admin (290) - (16) (21) (327)
Charge for the
year-cost of
sales (2,638) (4,469) - (20) (7,127)
Foreign Exchange
Difference 173 805 2 7 987
-------------------------- ---------- ---------- --------------- ----------- ----------
At 30 June 2020 (11,025) (13,949) (60) (109) (25,143)
-------------------------- ---------- ---------- --------------- ----------- ----------
Carrying amount
-------------------------- ---------- ---------- --------------- ----------- ----------
At 30 June 2020 45,221 3,924 8 83 49,236
-------------------------- ---------- ---------- --------------- ----------- ----------
At 31 December
2019 43,326 8,833 26 130 52,315
-------------------------- ---------- ---------- --------------- ----------- ----------
Fixtures,
Leasehold fittings
property Aircraft and equipment Vehicles Total
Obligations
under leases $'000 $'000 $'000 $'000 $'000
------------------- ---------- --------- --------------- ----------- --------
Cost
Balance at 1
January 2020 47,817 12,228 20 139 60,204
Additions 6,727 - - - 6,727
Finance expense 1,250 124 - 2 1,376
Lease payments (3,056) (1,972) (3) (6) (5,037)
Foreign Exchange
Difference (2,342) (1,577) 34 (45) (3,930)
At 30 June 2020 50,396 8,803 51 90 59,340
------------------- ---------- --------- --------------- ----------- --------
At 30 June 2020
------------------- ---------- --------- --------------- ----------- --------
Accruals for
lease payments 1,376 4,739 44 - 6,159
Lease liabilities 5,648 3,451 5 65 9,169
------------------- ---------- --------- --------------- ----------- --------
Current 7,024 8,190 49 65 15,328
Non-current 43,372 613 2 25 44,012
------------------- ---------- --------- --------------- ----------- --------
Total 50,396 8,803 51 90 59,340
------------------- ---------- --------- --------------- ----------- --------
Additions relate to two new property leases;
-- A land lease at Inverness airport which commenced on 1
January 2020, for a 23 year lease term. Construction of a helipad,
office building and hangar building at the airport has commenced to
service the Group's SAS contract.
-- The Group entered into an additional property lease which
serves as the new UK headquarters.
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. The 10-year extension has not been
formalised at the date of signing the financial statements. The
lease term for IFRS 16 accounting purposes has not included the
10-year extension because the option to extend is not reasonably
certain. The lease liability has been discounted at an incremental
borrowing rate of 7.3%. The Sharjah BAC includes a $7,209k
right-of-use asset and $7,636k obligation under leases at 30 June
2020.
12. Borrowings
Dec-2019
June-2020 Restated*
$'000 $'000
-------------------------------------------- ----------------------- --------------------------------
Secured borrowing at amortised cost
Other loans 112 1,475
Bank borrowings 44,605 44,767
Paycheck Protection Program Loan 1,972 -
-------------------------------------------- ----------------------- --------------------------------
46,689 46,242
-------------------------------------------- ----------------------- --------------------------------
Total borrowings
Other loans 112 848
Bank borrowings 44,605 44,767
Payment Protection Program Loan 1,972 -
-------------------------------------------- ----------------------- --------------------------------
Amount due for settlement within 12 months 46,689 45,615
-------------------------------------------- ----------------------- --------------------------------
Other loans - 627
Amount due for settlement after 12 months - 627
-------------------------------------------- ----------------------- --------------------------------
* Restatements are detailed in Note 2.
The Paycheck Protection Program (PPP) loan is a loan arrangement
from Citi bank guaranteed by the US government for COVID-19
support. $5,750k funds were received on 12 May 2020 and during the
period to 30 June 2020 $3,778k has been used against what the
company has deemed to be qualifying expenditure reducing the amount
of borrowings at the period end to $1,972k. The loan is forgivable
if used for payroll costs and other qualifying expenditure within a
24-week period from the date funds were received. Any amounts
unused or that do not meet the definition of qualifying expenditure
within the 24-week period will need to be repaid along with any
incurred interest which accrues from the date the funds are
received. The loan matures on 8(th) May 2022 and has been presented
as current on the basis that settlement, via forgiveness, is
expected within 12 months from the balance sheet date.
13. Related party transactions
China Aircraft Services Limited
China Aircraft Services Limited (CASL) is an associate in which
the Group owns a 20% equity interest. As at 30 June 2020 there were
amounts owed to CASL of $2,340k (2019: $3,344k) and amounts due of
$1,248k (2019: $4,224k).
Merritt Property LLC
As reported in the 2018 Annual Report, in January 2017 the Group
entered into a Termination Agreement (the "Agreement") with Gama
Aviation LLC. The Agreement brought the previous branding agreement
between the Group and Gama Aviation LLC to a close at the same time
as the Group entered into a new branding agreement with GB Aviation
Holdings LLC. The Termination Agreement made provision for a final
payment from Merritt Property LLC (which was a 39% owner of Gama
Aviation LLC at the time) to the Group of $1.0m in lieu of branding
fees forgone. On 2 March 2020, the Group received cash
consideration of $1m to settle the full amount due.
14. Dividends
The Directors do not propose a dividend to be paid for the six
months to 30 June 2020 (30 June 2019: nil).
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END
IR SEWEDUESSEFU
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September 30, 2020 02:00 ET (06:00 GMT)
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