TIDMGMAA
RNS Number : 9160A
Gama Aviation PLC
28 September 2022
The information contained within this announcement is deemed to
constitute inside information as stipulated under Article 7 of the
Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK
domestic law by virtue of the European Union (Withdrawal) Act 2018.
Upon the publication of this announcement, this inside information
is now considered to be in the public domain.
28 September 2022
Gama Aviation Plc (AIM: GMAA)
("Gama", "the Company" or "the Group")
Unaudited interim results for the six months to 30 June 2022
Strategic focus and strong revenue growth underpins a solid
financial performance
Gama Aviation Plc, the business aviation services company, is
pleased to announce its unaudited results for the six months to 30
June 2022.
Financial Summary
Adjusted(1) $m Statutory $m
--------------------------- ------------------------ ------------------------
Jun-21 Jun-21
Jun-22 Unaudited Jun-22 Unaudited
Unaudited Restated(2) Unaudited Restated(2)
--------------------------- ---------- ------------ ---------- ------------
Revenue 139.3 107.3 139.3 107.3
Gross profit 29.5 22.3 29.5 22.3
Gross profit % 21.2% 20.8% 21.2% 20.8%
EBITDA(3) 9.2 4.9 6.3 6.1
EBIT 1.8 (2.7) (1.7) (2.1)
Loss for the period (0.8) (3.4) (3.8) (2.8)
Basic and diluted loss per
share (cents) (1.6) (4.4) (6.4) (3.6)
--------------------------- ---------- ------------ ---------- ------------
(1) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the financial statements and reconciled to
the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted
Gross Profit, Adjusted EBIT and Net debt. APMs also include organic
and constant currency Revenue, Gross Profit and Adjusted EBIT
(2) Restatements, resulting largely from the apportionment of
previously disclosed full year restatements, are detailed in Note 2
of the notes to the interim financial statements
(3) Statutory EBITDA represents earnings before interest, tax,
depreciation, and amortisation. Adjusted EBITDA is Statutory EBITDA
after Adjusting Items. Adjusted EBITDA and Statutory EBITDA provide
management and investors with useful additional information about
the Group's performance and profitability
Financial Highlights
-- Strong revenue growth of 30% (34% at constant currency (4) ) to $139.3m (H1 2021: $107.3m)
-- Gross profit up 32% (39% at constant currency (4) ) to $29.5m (H1 2021: $22.3m)
-- Gross profit margin up by 0.4 percentage points ('ppt') (up
0.6 ppts at constant currency(4) ) at 21.2% (H1 2021: 20.8%)
-- Adjusted earnings before interest and tax ('Adjusted EBIT')
up by $4.5m to a $1.8m profit (H1 2021: $2.7m loss)
(4) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
-- The Adjusted EBIT profit includes $1.4m of foreign exchange
gains (H1 2021: $44k), a $1.0m release of a provision in respect of
COVID-19 government support programs, branding fees of $0.6m (H1
2021: $1.9m), and a $1.0m operating loss (H1 2021: $0.1m loss)
associated with the closure of the Group's paint facilities at Fort
Lauderdale
-- Net cash inflow from operating activities of $15.5m (H1 2021: $8.4m)
-- Strong liquidity as at 30 June 2022 with $11.4m (FY 2021:
$10.2m) of cash and $20.5m (FY 2021: $12.1m) of its $50m revolving
credit facilities ('RCF') undrawn at 30 June 2022
-- Net debt, inclusive of $42.7m (FY 2021: $48.0m) of lease
obligations, decreased by $18.5m to $86.4m (FY 2021: $104.9m). Net
bank debt decreased by $13.2m to $43.7m (FY 2021: $56.9m)
-- On 27 September 2022, the Group completed the sale and lease
back of its helicopter assets, resulting in a cash inflow of $27m
and reducing net bank debt to $13.3m
-- As at 27 September 2022, cash balances were $39.1m in addition to RCF headroom of $19.0m
-- Discussions remain ongoing in respect of securing new credit
facilities required to meet the Group's funding needs and the
Directors are confident that a positive outcome will be reached in
due course.
Outlook
The Group remains focused on the execution of its growth
strategy in line with its five-year strategic plan, which has
underpinned the improved financial performance in the first half of
the year. Whilst the recovery in activity and revenue growth is
expected to continue through the second half of the year, margins
are likely to be impacted by inflationary cost pressures and supply
chain challenges. As a result of these factors, together with the
continued global economic and energy instability, the Board
maintains its cautious approach to the remainder of the year.
However, with continued focus on operational improvements and
the delivery of the Group's growth strategy, the Board expects the
full year results to be in line with management expectations and
believes the Group remains well placed for the future.
Commenting on the half year results, Marwan Khalek, Chief
Executive said:
"I am very pleased to report strong revenue growth and a solid
financial performance for the first half of 2022, despite the
ongoing macro-economic challenges. This improvement is underpinned
by the Group's focused growth strategy and the continued
operational improvements made across the business, demonstrating
the continued resilience of the Group's business model."
-S-
For more information and persons responsible for arranging the
release of this announcement on behalf of the Company contact:
Gama Aviation Plc +44 (0) 1252 553029
Marwan Khalek, Chief Executive Officer
Michael Williamson, Chief Financial Officer
Camarco +44 (0) 20 3757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
WH Ireland +44 (0) 20 7220 1666
James Joyce
Ben Good
Gama Aviation - Notes to Editors
Founded in 1983 with the simple purpose of providing aviation
services that equip its customers with decisive advantage, Gama
Aviation Plc (LSE AIM: GMAA) is a highly valued global partner to
blue chip corporations, government agencies, healthcare trusts and
private individuals.
The Group has three global divisions: Business Aviation
(Aircraft Management, Charter, FBO & Maintenance), Special
Mission (Air Ambulance & Rescue, National Security &
Policing, Infrastructure & Survey, Energy & Offshore); and
Technology & Outsourcing (Flight Operations, FBO, CAM software,
Flight Planning, CAM & ARC services).
More details can be found at: http://www.gamaaviation.com/
Chief Executive Officer's Statement
Introduction
The Group has performed well during the period, delivering
strong growth in revenue and gross profit, resulting in a modest
Adjusted EBIT profit. This return to profitability marks a
significant milestone in our efforts to improve financial
performance and restore shareholder value through the focused
execution of the Group's growth strategy and the continued
improvements to the business.
For this to have been delivered against the backdrop of an
uncertain economic environment and significant cost inflation
challenges, demonstrates the resilience of the Group and the
robustness of its business model. As a service business, this is
also only possible through the enormous commitment, dedication and
energy of our people and their desire to deliver a decisive
advantage to the Group's clients.
Strategic Business Unit Update
Business Aviation
The Business Aviation SBU delivered a strong performance in
Aircraft Management, Charter, MRO and Fixed Based Operations
('FBO'). Of particular note are the results reported from the US
MRO business, Jet East, as the world's largest business aviation
market continued to show high levels of flight activity. Organic
investments in Millville (MIV) and Las Vegas (LAS) are starting to
contribute positively, validating the business case, while the
closure of the poorly performing Fort Lauderdale (FXE) base will
assist future efficiencies.
Outside of the US, Aircraft Management saw strong growth
resulting from increased aircraft utilisation by the Group's
clients, whilst the charter business reported robust revenues,
which were driven by increases in demand both in respect of
in-fleet charter as well as charter brokerage.
The Group's investment in airport infrastructure continues with
the development of a second hanger in Jersey, which will more than
double the hangarage at that site, which is progressing to plan.
The development of a state-of-the-art Business Aviation Centre in
Sharjah, UAE has recommenced, having been paused during the
COVID-19 pandemic. However, the funding for the remaining
development of these facilities is still under negotiation and
updates will be provided as appropriate.
Special Mission
The Special Mission SBU continues to perform strongly in the
delivery of its long-term government contracts of which three have
been recently extended. The Special Mission SBU enjoys a robust
sales pipeline with high levels of visibility and is pursuing new
multi-year contracts in the Air Ambulance, Law enforcement and
Energy sectors. Competition remains strong for these contracts,
however, the SBU is well placed to convert key opportunities.
Technology & Outsourcing ('T&O')
The T&O SBU continues to add contracts in the US and Europe
through a focussed sales and marketing programme. The US is seeing
the strongest growth especially for the Software & Data
Services capabilities delivered via the myairops(R) brand. However,
growth momentum has been impacted by the strong competition for
suitably qualified and experienced talent within the technology
sector and the greater staff mobility afforded by the growth of
hybrid and home working. This has been acknowledged by management
and the necessary actions are in place to address the challenge and
ensuring that the SBU maintains its focus on retention and
acquisition of talent which is critical to its continued growth.
The management team are currently taking steps to increase the
on-boarding capacity required to meet the demand of the growing
North American market. The business is also undertaking to
establish additional sales channels for its trip support
services.
H1 2022 Financial Performance
Through the focused delivery of its growth strategy, the Group
grew its revenues strongly for the six-month period to $139.3m (H1
2021: $107.3m), an increase of 30% on the prior year (34% at
constant currency(1) ). This growth was principally driven by the
Business Aviation SBU, following the gradual easing of travel
restrictions imposed in response to the COVID-19 pandemic. A
significant proportion ($20.3m) was derived from Jet East, the
Group's US MRO, following the strong recovery in flight activity in
the world's largest market. The Group also benefitted from a strong
performance from the Special Mission SBU, where the full period
effect of prior-period contract wins came into effect.
As a result of the strong revenue growth and the continued focus
on operational improvements, the Group delivered a gross profit of
$29.5m for the period (H1 2021: $22.3m), up 32%, (39% at constant
currency (1) ). Gross profit margins were up by 40 ppts (up by 60
ppts at constant currency (1) ) to 21.2% (H1 2021: 20.8%).
Consequently, the Group delivered an Adjusted EBIT profit for
the half year of $1.8m (H1 2021: a $2.7m loss). The Adjusted EBIT
profit includes $1.4m of foreign exchange gains (H1 2021: $44k), a
$1.0m release of a provision in respect of COVID-19 government
support programs, branding fees of $0.6m (H1 2021: $1.9m), and a
$1.0m operating loss (H1 2021: $0.1m loss) associated with the
closure of the Group's paint facilities at Fort Lauderdale.
The Group generated a net cash inflow from operating activities
of $15.5m (H1 2021: $8.4m). This inflow was primarily utilised for
$3.3m of capital expenditure in respect of computer software and
property, plant and equipment, the net repayment of $7.0m of
borrowings and $3.8m for lease payments.
As at 30 June 2022, the Group had $11.4m (FY 2021: $10.2m) of
cash and $20.5m (FY2021: $12.1m) of its $50m revolving credit
facility undrawn.
Credit Facilities
Further to the disclosures provided in the 2021 Annual Report
and Accounts ('ARA'), the Group is progressing towards securing the
new funding and credit facilities required to replace its RCF of
$50m and term loan of GBP20m (together the 'current facilities'),
which mature on 14 November 2022 and 31 January 2023,
respectively.
The Board is pleased to report that on 27 September 2022 the
Group completed the sale and lease back of its helicopter assets
resulting in a cash inflow of $27m. This, together with cash at
hand, will be used to repay the RCF (of which $31m is currently
drawn) upon its maturity.
The Board has determined that, going forward, credit facilities
totalling $40m would be sufficient to meet the liquidity and
working capital needs of the Group and does not now expect that it
will require a replacement facility for its current term loan.
The Board has consulted extensively with its advisors, and with
their active support, discussions remain ongoing in respect of
securing new credit facilities required to meet the Group's funding
needs. The Board is therefore confident that, although there can be
no certainty, a positive outcome will be reached prior to 31
January 2023, when the existing facilities expire. A further update
will be provided when binding terms are secured .
Outlook
The Group remains focused on the execution of its growth
strategy in line with its five-year strategic plan, which has
underpinned the improved financial performance in the first half of
the year. Whilst the recovery in activity and revenue growth is
expected to continue through the second half of the year, margins
are likely to be impacted by inflationary cost pressures and supply
chain challenges. As a result of these factors, together with the
continued global economic and energy instability, the Board
maintains its cautious approach to the remainder of the year.
However, with continued focus on operational improvements and
the delivery of the Group's growth strategy, the Board expects the
full year results to be in line with management expectations and
believes the Group remains well placed for the future.
Marwan Khalek
Chief Executive Officer
(1) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
Group Operational Performance Review
Revenue(1)
$'000
H1 2021
H1 2022 Unaudited
Unaudited Restated(2)
------------------------- ------------ -------------
Business Aviation 108,792 76,516
Special Mission 27,245 25,918
Technology & Outsourcing 2,639 2,969
Branding Fees 625 1,875
--------------------------- ------------ -------------
Total 139,301 107,278
--------------------------- ------------ -------------
(1) There are no Adjusting Items that impact Revenue
(2) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Gross Profit(1)
$'000
H1 2021
H1 2022 Unaudited
Unaudited Restated(2)
------------------------- ------------ -------------
Business Aviation 17,366 10,010
Special Mission 9,608 8,311
Technology & Outsourcing 1,910 2,148
Branding Fees 625 1,875
Total 29,509 22,344
--------------------------- ------------ -------------
(1) There are no Adjusting Items that impact Gross Profit
(2) Restatements are detailed in Note 2 of the notes to the
interim financial statements
EBIT
$'000
Adjusted Statutory
------------------------- ------------------------- ---------------------------
H1 2021 H1 2021
H1 2022 Unaudited H1 2022 Unaudited
Unaudited Restated(1) Unaudited Restated(1)
------------------------- ----------- ------------ ------------ -------------
Business Aviation (797) (4,363) (3,807) (4,736)
Special Mission 2,302 1,416 2,260 1,366
Technology & Outsourcing (493) (75) (636) (259)
Branding Fees 625 1,866 625 1,866
Associates - (1,491) - -
Central Costs 137 (74) (130) (326)
------------------------- ----------- ------------ ------------ -------------
Total 1,774 (2,721) (1,688) (2,089)
------------------------- ----------- ------------ ------------ -------------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
The above Group results are explained in detail below.
Business Aviation
Business Aviation is focused on the delivery of the following
lines of business to clients principally in the top three regional
business aviation markets: the US, Europe, and the Middle East.
/ Management. The operational management of an aircraft (or
fleet), and its crew, that the owner wishes to place on one of the
Group's air operating certificates ("AOCs")
/ Charter. The sale of available flight hours on aircraft to
charter brokers or to direct clients worldwide
/ FBO. The management of our strategically positioned fixed base
operations at airports in the UK, Channel Islands and Middle
East
/ MRO. The delivery of comprehensive maintenance, repair and
modification solutions that support business aviation aircraft
operators and owners.
Business Aviation MRO in the US has a dedicated management team
and is separately reviewed by the Group Chief Executive Officer who
acts as the Chief Operating Decision Maker ('CODM'). Therefore,
Business Aviation MRO US has been presented separately from
Business Aviation excluding MRO US which falls under a separate
management team and is separately reviewed by the CODM.
Unaudited Adjusted EBIT
$'000
BA MRO US BA excluding MRO US Total
--------- ------------------------------- ------ --------------------------------- ------------------------------------------
Constant Constant Constant
H1 Restated(1) currency H1 Restated(1) Rebased currency Restated(1) Rebased currency
2022 H1 2021 growth(2) 2022 H1 2021 H1 2021 growth(2) H1 2022 H1 2021 H1 2021 growth(2)
--------- ------ ----------- ---------- ------ ----------- -------- ---------- ------- ----------- -------- ----------
Revenue 55,473 35,174 58% 53,319 41,342 40,037 33% 108,792 76,516 75,211 45%
--------- ------ ----------- ---------- ------ ----------- -------- ---------- ------- ----------- -------- ----------
Gross
profit 12,085 4,943 144% 5,281 5,067 4,876 8% 17,366 10,010 9,819 77%
--------- ------ ----------- ---------- ------ ----------- -------- ---------- ------- ----------- -------- ----------
Gross
profit % 21.8% 14.1% 9.9% 12.3% 12.2% 16.0% 13.1% 13.1%
--------- ------ ----------- ---------- ------ ----------- -------- ---------- ------- ----------- -------- ----------
Adjusted
EBIT(2) (66) (2,765) (731) (1,598) (797) (4,363)
--------- ------ ----------- ---------- ------ ----------- -------- ---------- ------- ----------- -------- ----------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
Overall, the Business Aviation SBU grew its revenues by 45% on a
constant currency basis to $108.8m. Gross profit was up 77% on a
constant currency basis to $17.4m.
The US market continued to benefit from an increase in aircraft
activity leading to continued strong demand for base and line
maintenance services. Additionally, the recent organic investment
in the development of the base maintenance facilities, contributed
to significant revenue growth in the BA MRO US business line. Gross
profit was much improved on the prior year, up 144% to $12.1m (H1
2021: $4.9m). The one-off positive impact to gross profit arising
from the $1.0m release of the provision in respect of the COVID-19
government support program during the period was largely offset by
the negative impact of the $0.8m loss (H1 2021: $0.1m profit) from
the poorly performing Fort Lauderdale (FXE) paint facility (which
the Group is in the process of closing down).
Outside the US, aircraft management continued to see increased
aircraft utilisation as the effects of the COVID-19 pandemic
recede. This increased activity translated to some additional
revenue but had a disproportionately smaller impact on gross
profits due to the pass-through nature of some of these revenues,
hence the reduction in the gross profit margin against the prior
period.
Charter saw strong growth in demand resulting in increased
activity and revenues, both in respect of in-fleet charter as well
as charter brokerage, but margins remained under pressure due to
competition.
Increased aircraft movements at our Sharjah and Jersey FBOs
resulted in strong growth in revenues and gross profits during the
first half of 2022.
Adjusted EBIT improved by $3.6m to an Adjusted EBIT loss of
$0.8m (H1 2021: $4.4m loss).
USD'000s BA MRO US BA excluding MRO US Total
--------------------------------------------------- -------------------- --------------------- --------------------
Restated(1) Restated(1) Restated(1)
H1 2022 H1 2021 H1 2022 H1 2021 H1 2022 H1 2021
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Adjusted EBIT(1) (66) (2,765) (731) (1,598) (797) (4,363)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - transaction costs - (503) - - - (503)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - integration and business
re-organisation costs (244) (483) - 1,946 (244) 1,463
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - other items - (24) - - - (24)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - deferred consideration
adjustment 243 - - - 243 -
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - profit on disposal of entity - - 126 - 126 -
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - impairment of goodwill (787) - - - (787) -
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Exceptional items - impairment of assets under
construction - - (749) 16 (749) 16
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Long-term employee incentive plan (956) (911) - - (956) (911)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Share-based payments (201) - (18) 4 (219) 4
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
Amortisation (368) (340) (56) (78) (424) (418)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
EBIT (2,379) (5,026) (1,428) 290 (3,807) (4,736)
--------------------------------------------------- ------- ----------- -------- ----------- ------- -----------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Exceptional items include: -
-- $244k relating to costs of integrating Jet East into Business Aviation
-- $243k release of the performance related deferred
consideration relating to the US acquisition
-- $126k gain on the sale of Gama International Saudi Arabia
-- $787k impairment of goodwill associated with the closure of
the paint and interior completion operations at FXE
-- $749k impairment charge for assets under construction at Sharjah Business Aviation Centre
Other tabulated items include: -
-- The Jet East long-term incentive scheme $956k in relation to
senior executives agreed at the time of purchase
-- $201k charge for share-based payments in relation to Business Aviation US
-- $368k relating to the amortisation of the Jet East
intangibles - brand ($118k) and customer relations ($250k)
Following the acquisition of Jet East in 2021, the business
continued to incur integration costs, amortisation of acquired
intangibles and a $1.0m charge for the long-term incentive plan.
The prior period included $1.9m income upon release of lease and
other related obligations at Fairoaks Airport, which had no
equivalent right-of-use asset due to a historic impairment.
Special Mission
The Special Mission SBU provides the mission expertise to assist
governments and businesses in exploiting a variety of aviation
assets (principally fixed wing and helicopters) within the
following sectors:
/ Air Ambulance & Rescue. The delivery of fixed wing and
rotary mission solutions to the governments of Scotland, Jersey and
Guernsey as well as the approximately 21 helicopter air ambulance
charities operating within the UK
/ National Security & Law Enforcement. Providing
"intelligence as a service" aviation platforms to the UK government
to protect the national interest
/ Infrastructure & Survey. The monitoring of critical
national infrastructure for the purposes of failure monitoring,
environmental controls, mapping or other such studies
Restated(1) Rebased(2) Constant currency growth(3)
USD'000s H1 2022 H1 2021 H1 2021
----------------- ------- ----------- ----------- ----------------------------
Revenue 27,245 25,918 24,335 12%
----------------- ------- ----------- ----------- ----------------------------
Gross profit 9,608 8,311 7,803 23%
----------------- ------- ----------- ----------- ----------------------------
Gross profit % 35.3% 32.1% 32.1%
----------------- ------- ----------- ----------- ----------------------------
Adjusted EBIT(2) 2,302 1,416
----------------- ------- ----------- ----------- ----------------------------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
(3) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
Special Mission has delivered 12% revenue growth on a constant
currency basis in the first half, reflecting strong demand for
services on its core contracts. Gross profit has increased by 23%
on a constant currency basis with a gross profit % of 35.3% (H1
2021: 32.1%). It has benefitted from incremental work with core and
ad-hoc customers. Both revenue and gross profit have increased as a
result of the fix and optimise agenda.
Adjusted EBIT increased by $0.9m to $2.3m (H1 2021: $1.4m) due
to the growth in gross profit referred to above.
Restated(1)
USD'000s H1 2022 H1 2021
--------------------- ------- -----------
Adjusted EBIT(2) 2,302 1,416
--------------------- ------- -----------
Share-based payments (5) (10)
--------------------- ------- -----------
Amortisation (37) (40)
--------------------- ------- -----------
EBIT 2,260 1,366
--------------------- ------- -----------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
In addition to the movements discussed above, EBIT includes
share-based payment charges and amortisation relating to the
intangibles acquired as part of the Jersey and Guernsey Air
Ambulance business in 2020.
Technology & Outsourcing
T&O comprises of four lines of business which trades as Gama
Aviation, but with a further two brands, FlyerTech and myairops(R).
The lines of business are Software & Data Services, Ground
Operations, Part-M Services and Maintenance Management &
Advisory Services. The business unit provides Continuing
Airworthiness Management ('CAM') and airworthiness review
certification (ARC) and surveying services for business aviation,
military, and commercial airline operators. myairops(R) has
developed a suite of business aviation products deployed as
"Software as a Service" (SaaS) and mobile app solutions for
aviation operators and charter brokers, flight support companies,
FBOs and regional airports. The Ground Operations line of business
provides trip support services which includes flight planning and
the arrangement of services such as permits, slots and fuel. These
services are provided to business and commercial aviation
customers.
Restated(1) Rebased(2) Constant currency growth(3)
USD'000s H1 2022 H1 2021 H1 2021
----------------- ------- ----------- ----------- ----------------------------
Revenue 2,639 2,969 2,796 (6)%
----------------- ------- ----------- ----------- ----------------------------
Gross profit 1,910 2,148 2,016 (5)%
----------------- ------- ----------- ----------- ----------------------------
Gross profit % 72.4% 72.3% 72.1%
----------------- ------- ----------- ----------- ----------------------------
Adjusted EBIT(2) (493) (75)
----------------- ------- ----------- ----------- ----------------------------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
(3) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
Technology and Outsourcing revenue decreased on a constant
currency basis by 6% due to a reduction in the scope of its supply
of military airworthiness reviews. The period saw a reduction in
some of the customer base with reductions in fleet sizes in Europe,
and a move to the EASA regulations. In response T&O has shifted
its long-term strategy in sales and marketing to North America and
is concentrating on raising awareness of its capability within the
US and Canadian markets. Furthermore, it has invested into EASA
operations in Poland where it holds a Part-CAMO approval in
addition to existing 2-Reg, Bahrain, Burmuda, Cayman, Oman and UK
approvals. Losses increased due to the sales and marketing
investment in the SBU.
Restated(1)
USD'000s H1 2022 H1 2021
--------------------- ------- -----------
Adjusted EBIT(2) (493) (75)
--------------------- ------- -----------
Share-based payments (7) (32)
--------------------- ------- -----------
Amortisation (136) (152)
--------------------- ------- -----------
EBIT (636) (259)
--------------------- ------- -----------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
Adjustments to EBIT relate to share-based payments and
amortisation of acquired customer relationship intangibles, which
decreased due to the impact of foreign exchange.
Branding Fees
The US branding fee arrangement ended on 2 March 2022, with
$625k (H1 2021: $1,875k) being recognised in revenue and gross
profit, and $625k (H1 2021: $1,866k) recognised in EBIT.
Associates
The Group disposed of its holding in China Aircraft Services
Limited in December 2021. Prior to this the Group reported an
Adjusted EBIT loss of $1,491k offset by a reversal of impairment of
$1,491k, netting to $nil on a statutory EBIT basis. The remaining
associate investment does not trade; hence no results are reported
for 2022.
Financial Review
Adjusted(1) $m Statutory $m
--------------------------- ------------------------ ------------------------
Jun-21 Jun-21
Jun-22 Unaudited Jun-22 Unaudited
Unaudited Restated(2) Unaudited Restated(2)
--------------------------- ---------- ------------ ---------- ------------
Revenue 139.3 107.3 139.3 107.3
Gross profit 29.5 22.3 29.5 22.3
Gross profit % 21.2% 20.8% 21.2% 20.8%
EBITDA(3) 9.2 4.9 6.3 6.1
EBIT 1.8 (2.7) (1.7) (2.1)
Loss for the period (0.8) (3.4) (3.8) (2.8)
Basic and diluted loss per
share (cents) (1.6) (4.4) (6.4) (3.6)
--------------------------- ---------- ------------ ---------- ------------
(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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs
also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
(2) Restatements are detailed in Note 2 of the notes to the
interim financial statements
(3) Statutory EBITDA represents earnings before interest, tax,
depreciation, and amortisation. Adjusted EBITDA is Statutory EBITDA
after Adjusting Items. Adjusted EBITDA and Statutory EBITDA provide
management and investors with useful additional information about
the Group's performance and profitability
Revenue and Gross Profit Bridges
$m
Unaudited
Revenue Gross Profit
2021 restated(1) 107.3 22.3
Impact of foreign exchange movements (3.1) (0.8)
Rebased Revenue and Gross Profit - 2021 at 2022
exchange rate 104.2 21.5
Business Aviation 33.6 7.5
Special Mission 2.9 1.8
Technology & Outsourcing (0.2) (0.1)
Branding Fee (1.2) (1.2)
2022 139.3 29.5
----------------------------------------------- ------- -------------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
-- Business Aviation reported strong revenue growth, up 45%
period-on-period on a constant currency basis, on the back of
strong demand for services, particularly in the US, as a result of
the integration of the previously acquired Jet East business
-- Charter also demonstrated strong revenue growth along with
the Aircraft Management line of business
-- Outside of the US, revenue growth was also strong across most areas
-- Special Mission revenue was up by 12% on a constant currency
basis representing the impact of increased flying hours, together
with other incremental work
-- Technology and Outsourcing revenue was down 6% on a constant
currency basis following a disappointing first half performance
from Ground Operations and other outsourced operations, together
down $0.5m. This was partly offset by increased revenue in myairops
(R) and FlyerTech, together up $0.3m
-- Gross profit in Business Aviation was up by 77% on a constant
currency basis, largely due to the integration of the previously
acquired Jet East business with its higher gross profit margin
-- Gross profit in Special Mission was up by 23% on a constant
currency basis and benefitted from tight cost control across the
multi-faceted contracts
-- Technology and Outsourcing gross profit was down 5% on a
constant currency basis due to increased product development,
amortisation charges and continued expenses in the European
expansion of FlyerTech
Unaudited Adjusted EBIT Bridge
$m
Adjusted EBIT - 2021 restated(1) (2.7)
Impact of foreign exchange movements (0.1)
------------------------------------------ -----
Rebased EBIT - 2021 at 2022 exchange rate (2.8)
Increase in gross profit 8.0
Share of results of associates 1.5
Increase in other administrative expenses (4.2)
Increase in depreciation and amortisation (0.7)
Adjusted EBIT - 2022 1.8
------------------------------------------ -----
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
-- Gross profit increased in the two largest SBUs Business
Aviation ($7.5m on a constant currency basis) and Special Mission
($1.8m on a constant currency basis)
-- Administrative expenses increased as a result of the
acquisition of Jet East, investment in capacity in US operations,
and reduced government support, all partially offset by cost
efficiency measures
-- Increased depreciation and amortisation following the acquisition of Jet East
Unaudited Statutory EBIT Bridge
$m
Statutory EBIT - 2021 restated(1) (2.1)
Improvement in gross profit 7.2
Increase in administrative expenses (2.9)
Increase in depreciation and amortisation (0.8)
Increase in impairment losses (1.5)
Change in other income (1.6)
Statutory EBIT - 2022 (1.7)
------------------------------------------ -------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Finance expenses
Net finance expense of $2.3m (H1 2021: $1.5m), includes interest
on loans and foreign exchange losses on debt.
Taxation
There is a statutory taxation credit for the period of $0.2m (H1
2021: $0.7m credit). The adjusted taxation for the period is a
$0.4m charge (H1 2021: $0.1m credit).
EPS
Shares in issue increased by 275,000 from 27 May 2022 to
63,961,279 as at 30 June 2022. The average share price for the six
months ended 30 June 2022 was higher than the exercise price of
outstanding options, however, given the loss per share, there is no
dilutive effect and as a result no diluted earnings per share is
presented. Basic Statutory EPS was a loss per share of 6.4 cents
(H1 2021: loss of 3.6 cents).
Net debt and cash flow movements
Jun-22 Jun-21
Unaudited Unaudited
$m $m
------------------------------------------------------- ---------- -----------
Statutory EBIT restated(1) (1.7) (2.1)
Add: Depreciation and amortisation (Note 6) 8.0 8.2
Statutory EBITDA(2) 6.3 6.1
Less: Release of provision (Note 12) (1.0) -
Add: Impairments (Note 6) 1.7 -
Add: Loss on disposal of property, plant and equipment
(Note 6) 0.1 -
Add: Share based payment expense (Note 6) 0.3 0.1
Less: Unrealised foreign exchange movement (Note
6) (2.2) (1.0)
Less: Non-cash lease settlement (Note 6) - (1.6)
------------------------------------------------------- ---------- -----------
Statutory EBITDA(2) after excluding non-cash items 5.2 3.6
Add: Working capital 10.4 2.5
Add: Capital portion of promissory note on disposal
of US Air Associate - 2.5
Working capital 10.4 5.0
Cash generated by operations (Note 6) 15.6 8.6
Less: Tax paid (Note 6) (0.1) (0.2)
Net cash inflow from operating activities 15.5 8.4
Capital expenditure (3.3) (3.0)
Lease payments (3.8) (4.8)
Net interest (paid)/received (0.4) 0.4
Proceeds from borrowings 6.0 12.0
Repayment of borrowings (13.0) ( 7.5 )
Acquisition of Jet East - (7.6)
Net cash used in investing and financing activities (14.5) (10.5)
Increase/(decrease) in cash 1.0 (2.1)
Cash at the beginning of the period 10.2 16.1
Effect of foreign exchange rates 0.2 0.2
------------------------------------------------------- ---------- -----------
Cash at the end of the period 11.4 14.2
Borrowings (55.1) (62.7)
Obligation under leases (42.7) (52.1)
------------------------------------------------------- ---------- -----------
Net debt (86.4) (100.6)
------------------------------------------------------- ---------- -----------
(1) Restatements are detailed in Note 2 of the notes to the interim financial statements
(2) 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
Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. In
reconciling from Statutory EBIT to the net cash flow from operating
activities, Statutory EBITDA and Statutory EBITDA excluding
non-cash items are shown to aid understanding
-- The increase in the net cash inflow on operating activities
of $7.1m to $15.5m has been driven by:
o $1.6m of higher EBITDA after excluding non-cash items
o $5.4m of increased cashflow through improved management of
working capital
-- Capital expenditure includes $1.0m of internally developed
software arising from myairops(c) software development and $2.3m of
tangible capital expenditure, of which $1.0m is in US Ground for
base maintenance expansion to fulfil demand from one of the world's
largest private jet operators
-- Lease payments reduced by $1.0m on the prior period
-- Net repayment on the revolving credit facility was $7.0m (H1 2021: $4.5m drawdown)
-- Net debt decreased by $14.2m to $86.4m (H1 2021: $100.6m)
Litigation
Following the litigation update provided in the 2021 Annual
Report, the Group continues to pursue the recovery of its
long-standing trade receivables, primarily through enforcement
actions in the UK. The Group has made considerable progress through
court proceedings in the UK in successfully recovering trade
receivables. It remains the Board's expectation that other than the
provisions already made against these claims, no further provisions
will be required.
Interim Dividend
The Directors do not propose that an interim dividend be paid
for the six months to 30 June 2022 (H1 2021: $nil).
Michael Williamson
Chief Financial Officer
Responsibility Statements
Each directors confirms that to the best of their knowledge:
a) the condensed consolidated set of interim 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 interim financial
statements is shown in Note 2, and related party transactions are
shown in Note 13. The principal risks and uncertainties for the
remainder of the year are unchanged from those set out in the
Group's recently published statutory financial statements for the
year ended 31 December 2021 and shown below.
The directors consider the principal risks to the business
are:
/ Liquidity and cash resources to support and sustain future
growth of the business
/ Health and safety risks from poor operational performance or
an air accident which damages the Group's reputation
/ Increasing regulatory burden and maintaining oversight on
existing approvals that may result with a non-compliance
/ Changes in political and economic climate that make air
transport less attractive such as the ongoing COVID-19 pandemic
/ Reliance on key individuals and attrition of key staff that
disrupt business activities
/ Increasing concentration and reliance on a small number of key
customers
/ Cyber threat and information security
Signed on behalf of the Board,
Marwan Khalek
Chief Executive Officer
Gama Aviation Plc
Consolidated income statement
For the period ended 30 June 2022
Period ended 30 June 2021
Period ended 30 June 2022 Unaudited
Unaudited Restated(1)
--------------------------------- --------------------------------- --------------------------------
Statutory Adjusted Statutory Adjusted
result Adjustments result result Adjustments result
$'000 $'000 $'000 $'000 $'000 $'000
--------------------------------- --------- ----------- --------- --------- ----------- --------
Continuing operations:
--------------------------------- --------- ----------- --------- --------- ----------- --------
Revenue 139,301 - 139,301 107,278 - 107,278
Cost of sales (109,792) - (109,792) (84,934) - (84,934)
--------------------------------- --------- ----------- --------- --------- ----------- --------
Gross profit 29,509 - 29,509 22,344 - 22,344
Administrative expenses (23,152) 1,328 (21,824) (20,303) 1,892 (18,411)
Depreciation and amortisation (6,509) 598 (5,911) (5,767) 609 (5,158)
(Impairment)/reversal
of impairment of assets
under construction (749) 749 - 16 (16) -
Impairment of goodwill (787) 787 - - - -
Impairment of financial
assets - - - (5) - (5)
--------------------------------- --------- ----------- --------- --------- ----------- --------
Total administrative
expenses (31,197) 3,462 (27,735) (26,059) 2,485 (23,574)
Other income - - - 1,626 (1,626) -
Operating (loss)/profit (1,688) 3,462 1,774 (2,089) 859 (1,230)
Share of results from
equity
accounted investments - - - (1,491) - (1,491)
Reversal of impairment
of equity accounted investments - - - 1,491 (1,491) -
Earnings before interest
and taxation (1,688) 3,462 1,774 (2,089) (632) (2,721)
Finance income 1,783 - 1,783 127 - 127
Finance expense (4,133) - (4,133) (1,591) - (1,591)
(Loss)/profit before
tax (4,038) 3,462 (576) (3,553) (632) (4,185)
Taxation credit/(charge)
(note 15) 194 (449) (255) 705 120 825
--------------------------------- --------- ----------- --------- --------- ----------- --------
(Loss)/profit for the
period (3,844) 3,013 (831) (2,848) (512) (3,360)
Attributable to:
Owners of the Company (4,061) 3,013 (1,048) (2,262) (512) (2,774)
Non-controlling interests 217 - 217 (586) - (586)
--------------------------------- --------- ----------- --------- --------- ----------- --------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Earnings per share attributable to the equity holders of the
parent
Basic and diluted (cents) (6.4) 4.8 (1.6) (3.6) (0.8) (4.4)
Gama Aviation Plc
Consolidated statement of comprehensive income
For the period ended 30 June 2022
Period Period
ended 30 ended 30
June June 2021
2022 Unaudited
Unaudited Restated(1)
$'000 $'000
-------------------------------------------------- ---------- ------------
Loss for the period (3,844) (2,848)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign
operations (4,996) 121
-------------------------------------------------- ---------- ------------
Total comprehensive loss for the period (8,840) (2,727)
-------------------------------------------------- ---------- ------------
Total comprehensive loss is attributable to:
Owners of the Company (9,057) (2,141)
Non-controlling interest 217 (586)
-------------------------------------------------- ---------- ------------
(8,840) (2,727)
-------------------------------------------------- ---------- ------------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Gama Aviation Plc
Consolidated balance sheet
As at 30 June 2022 and 31 December 2021
31 December
30 June 2022 2021
Unaudited Audited
$'000 $'000
---------------------------------------- ------------ -----------
Non-current assets
Goodwill (note 8) 19,336 22,236
Other intangible assets (note 9) 13,913 15,654
---------------------------------------- ------------ -----------
Total intangible assets 33,249 37,890
Property, plant and equipment (note 10) 46,922 53,489
Right-of-use assets (note 11) 30,613 36,383
Trade and other receivables 107 291
Deferred tax asset (note 15) 4,176 3,918
Total non-current assets 115,067 131,971
---------------------------------------- ------------ -----------
Current assets
Inventories 7,783 8,915
Trade and other receivables 59,914 63,808
Current tax receivable - 27
Cash and cash equivalents 11,419 10,243
---------------------------------------- ------------ -----------
79,116 82,993
---------------------------------------- ------------ -----------
Total assets 194,183 214,964
---------------------------------------- ------------ -----------
Current liabilities
Trade and other payables (37,731) (39,342)
Current tax liabilities (544) (574)
Obligations under leases (note 11) (8,180) (7,970)
Provisions (695) (772)
Borrowings (note 12) (55,101) (40,175)
Deferred revenue (15,009) (8,880)
Deferred consideration (168) (290)
---------------------------------------- ------------ -----------
(117,428) (98,003)
---------------------------------------- ------------ -----------
Total assets less current liabilities 76,755 116,961
---------------------------------------- ------------ -----------
Non-current liabilities
Borrowings (note 12) - (26,979)
Deferred revenue - (2)
Obligations under leases (note 11) (34,494) (40,032)
Provisions (281) (348)
Trade and other payables (2,823) (1,821)
Deferred consideration (168) (256)
(37,766) (69,438)
---------------------------------------- ------------ -----------
Total liabilities (155,194) (167,441)
---------------------------------------- ------------ -----------
Net assets 38,989 47,523
---------------------------------------- ------------ -----------
Gama Aviation Plc
Consolidated balance sheet (continued)
As at 30 June 2022 and 31 December 2021
30 June 2022 31 December 2021
Unaudited Audited
$'000 $'000
--------------------------- ------------ ----------------
Shareholders' equity
Share capital 958 954
Share premium 63,713 63,502
Foreign exchange reserve (29,718) (24,722)
Other reserves 35,058 34,997
Accumulated loss (31,332) (27,301)
--------------------------- ------------ ----------------
Total shareholders' equity 38,679 47,430
Non-controlling interest 310 93
--------------------------- ------------ ----------------
Total equity 38,989 47,523
--------------------------- ------------ ----------------
Gama Aviation Plc
Consolidated statement of changes in equity
For the period ended 30 June 2022
Foreign Total
Share Share Other exchange Accumulated shareholders' Non-controlling Total
capital premium reserves reserve profit/(losses) equity interest equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- --------
Balance
at 1 January
2021 953 63,473 35,360 (24,415) (19,846) 55,525 796 56,321
Loss for
the period
restated(1) - - - - (2,262) (2,262) (586) (2,848)
Other
comprehensive
income - - - 121 - 121 - 121
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- --------
Shares issued
in period 1 15 - - - 16 - 16
Cost of
share-based
payments - - 122 - - 122 - 122
Transfer
for lapsed
options - - (313) - 313 - - -
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- --------
Balance
at 30 June
2021 restated
(1) 954 63,488 35,169 (24,294) (21,795) 53,522 210 53,732
Loss for
the period
restated(1) - - - - (5,800) (5,800) (117) (5,917)
Other
comprehensive
income - - - (428) - (428) - (428)
Total
comprehensive
loss for
the period
restated
(1) - - - (428) (5,800) (6,228) (117) (6,345)
Shares issued
in period - 14 - - - 14 - 14
Cost of
share-based
payments - - 122 - - 122 - 122
Transfer
for lapsed
options - - (294) - 294 - - -
Balance
at 31
December
2021 restated
(1) 954 63,502 34,997 (24,722) (27,301) 47,430 93 47,523
Loss for
the period - - - - (4,061) (4,061) 217 (3,844)
Other
comprehensive
income - - - (4,996) - (4,996) - (4,996)
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- --------
Total
comprehensive
loss for
the period - - - (4,996) (4,061) (9,057) 217 (8,840)
Share issue 4 211 - - - 215 - 215
Cost of
share-based
payments - - 91 - - 91 - 91
Transfer
for lapsed
options - - (30) - 30 - - -
Balance
at 30 June
2022 958 63,713 35,058 (29,718) (31,332) 38,679 310 38,989
--------------- -------- -------- --------- --------- ---------------- -------------- ---------------- --------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Gama Aviation Plc
Consolidated cash flow statement
For the period ended 30 June 2022
Period Period
ended 30 ended
June 30 June
2022 2021
Unaudited Unaudited
$'000 $'000
--------------------------------------------------------- ---------- -----------
Net cash inflow from operating activities (note 6) 15,533 8,370
--------------------------------------------------------- ---------- -----------
Cash flows from investing activities
Purchases of property, plant and equipment (note 10) (2,289) (1,619)
Purchases of intangibles (note 9) (996) (1,338)
Acquisition of subsidiary, net of cash acquired - (7,636)
Net cash used in investing activities (3,285) (10,593)
--------------------------------------------------------- ---------- -----------
Cash flows from financing activities
Interest paid (430) (29)
Interest received - 376
Lease payments (note 11) (3,782) (4,759)
Proceeds from borrowings 6,000 12,000
Repayment of borrowings (13,003) (7,499)
Net cash (used in)/from financing activities (11,215) 89
--------------------------------------------------------- ---------- -----------
Net increase/(decrease) in cash and cash equivalents 1,033 (2,134)
Cash and cash equivalents at the beginning of the period 10,243 16,136
Effect of foreign exchange rates 143 178
--------------------------------------------------------- ---------- -----------
Cash and cash equivalents at the end of the period 11,419 14,180
--------------------------------------------------------- ---------- -----------
Notes to the interim financial statements
For the period ended 30 June 2022
1. Corporate information
Gama Aviation Plc is a public company limited by shares,
incorporated in the United Kingdom. The address of the registered
office is 1st Floor, 25 Templer Avenue, Farnborough, Hampshire,
England, GU14 6FE. The Company's shares are publicly traded on the
AIM market of the London Stock Exchange.
2. Accounting policies
Basis of preparation
These unaudited interim consolidated financial statements (the
'interim financial statements') are for the six months ended 30
June 2022. 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 2021.
The accounting policies set out in the Group's statutory
financial statements for the year ended 31 December 2021 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.
Going concern
The Group disclosed in the 2021 Annual Report and Accounts (the
'ARA') that it was progressing towards securing the new funding and
credit facilities required to replace its RCF and Term Loan
(together the 'current facilities'), which mature on 14 November
2022 and 31 January 2023, respectively, and had received indicative
terms from HSBC for new facilities, which it was negotiating. Those
terms included a condition whereby, CK Hutchison Holdings Limited
(' CKHH') would be required to continue to support the new
facilities by providing a Letter of Awareness ('LoA') in similar
form to the one that supports the current facilities.
On 20 April 2022, the Board received an updated letter
confirming that CKHH had no current intention to withdraw the
current letter of awareness before the facilities are due for
renewal; and that CKHH currently had no intention not to facilitate
renewal of the Group's facilities with HSBC through a comparable
arrangement, provided the Group continued to meet its ongoing
reporting obligations and such other conditions as may be agreed
between the parties.
In August 2022, CK HH notified the Board that while it would
continue to provide support (in the form of the existing LoA) for
the current facilities until they are due for renewal, CKHH
believes that it is more appropriate for the Group to secure
facilities on a standalone basis rather than relying on the
unilateral support of one minority shareholder. Consequently, it
has advised the Group that it will not provide such support beyond
expiry dates of the current facilities.
As a result, management is actively seeking to source, and is
progressing towards, securing the new funding and credit facilities
required to replace the current facilities).
On 27 September 2022 the Group completed the sale and lease back
of its helicopter assets resulting in a cash inflow of $27m. This,
together with cash at hand, will be used to repay the RCF (of which
$31m is currently drawn) upon its maturity.
The Board has determined that, going forward, credit facilities
totalling $40m would be sufficient to meet the liquidity and
working capital needs of the Group and does not now expect that it
will require a replacement facility for its current term loan.
The Board has consulted extensively with its advisors, and with
their active support, discussions remain ongoing in respect of
securing new credit facilities required to meet the Group's funding
needs. The Board is therefore confident that, although there can be
no certainty, a positive outcome will be reached prior to 31
January 2023, when the existing facilities expire. A further update
will be provided when binding terms are secured .
To support their assessment of Going Concern, the Directors have
performed a detailed analysis of cash flow projections for the
Group covering the period from the date of approval of the interim
financial statements to 31 December 2023. The Directors have also
considered the outlook for the business beyond 31 December 2023
based upon its five-year strategic plan.
The analysis takes account of the following amongst other
relevant considerations:
-- Working capital levels and the conversion of profits into cash flows;
-- The $50.0m committed RCF, of which $20.5m was undrawn at 30
June 2022, and a GBP20.0m Term Loan;
-- Cash at 30 June 2022 of $11.4m and cash at 27 September 2022 of $39.1m;
-- The Board has determined that, going forward, credit
facilities totalling $40m, rather than the current $50m RCF, will
be sufficient to meet the liquidity and working capital needs of
the Group;
-- The Board now does not expect that it will require a
replacement facility for its GBP20m current Term Loan; and
-- The Group completed the sale and lease back of its helicopter
assets on 27 September 2022, resulting in a cash inflow of
$27m.
The existing borrowing facilities have no covenants, with the
RCF being settled and drawn down on a cyclical basis. Both the RCF
and the Term Loan fall due for repayment within twelve months of
the reporting date and have therefore been presented in current
liabilities.
The key assumptions in the Board approved base case projections
relate to revenue performance and working capital cash flows and
the Directors have included what they consider to be a cautious
level of revenue performance and working capital. Additionally, the
detailed cashflow projections take into account planned future
events within 2022 and 2023, including the Directors' assessment of
the likelihood of securing the new credit facilities.
The Board is aware that from the planned repayment of the RCF on
or prior to maturity on 14 November 2022, until drawdown against
the new $40m credit facilities (currently expected to be secured by
31 January 2023), cash headroom is likely to run at significantly
lower levels than in the past year. Management have been actively
managing and conserving cash for some time and, based on past and
expected performance, they and the Directors are satisfied that the
Group has sufficient headroom and potential further mitigation to
ensure the Group will remain solvent and able to pay its debts as
they fall due during this period.
The Directors have also considered a severe but plausible
downside scenario that takes account of the rapid increase in
inflation that the western world is experiencing and assumes that
this will principally be felt from the start of 2023, due to the
longevity of supply contracts, although some impacts will
undoubtedly be felt in the latter part of 2022.
The severe but plausible downside scenario assumes the
following:
-- Funding costs will increase by 4% over that originally
offered by HSBC, as no LoA will be available, and new credit
facilities will be more expensive;
-- Inflationary impacts to the cost of sales are assumed to be
passed on in the main, but there will be some impact on gross
profit;
-- Gross profit margins will reduce by 2%
-- Overhead costs will increase by 2% overall;
-- There will be a requirement to increase provisions for bad debts by 15%;
-- No available potential management actions have been taken to
preserve cash flow, although in practice these will be taken as
soon as a material adverse divergence from forecast is noted.
The base and severe but plausible downside scenarios have also
been tested for resilience in respect of the recent fall in the
value of GBP relative to the USD, and of the potential for
consequent further increases in interest rates. In both the base
case scenario and the severe but plausible downside scenario,
provided new credit facilities of $40m are secured, the Group will
have adequate resources to continue in operational existence for
the foreseeable future.
Therefore, after making appropriate enquiries and considering
the uncertainties described above, the Directors have, at the time
of approving the interim financial statements, a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and, as a
consequence, consider that it is appropriate to adopt the going
concern basis in preparing these interim financial statements.
However, despite the Directors being confident that the Group
will secure the new credit facilities necessary to meet its funding
needs by the year end, as the new borrowing facilities have not
been concluded at the time of approving the interim financial
statements there is a risk that, if these facilities were not
secured at the proposed levels, the Group may not be able to meet
its liabilities as they fall due.
As a result, there is a material uncertainty that may cast
significant doubt about the Group's ability to continue as a going
concern. The interim financial statements do not include any
adjustments that would result if the Group was unable to continue
as a going concern.
Restatements
The results for H1 2021 have been restated to reflect certain
adjustments that were included in the results for the full year
ended 31 December 2021 and which related to H1 2021, including:
-- During 2021 a detailed review was conducted of Group leases.
New information came to light from this review indicating that
errors had been made on the implementation of IFRS 16 (1 January
2019) and in subsequent recognition relating to the treatment of a
number of initial lease obligations at implementation (impacting
subsequent impairments), contractual rental increases,
computational errors on foreign exchange, identification of
lease-related payments and the length of lease used for
right-of-use assets and liabilities and related leasehold
improvements.
-- Management has reviewed estimates made at the 2021 year-end
and believe that a small number of them would be better reflected
as adjustments to H1 2021.
-- The treatment of vested options for leavers, which were
previously credited to the profit and loss account for H1 2021, has
been brought into line with the treatment adopted for the 2021
year-end with the credit taken as a reserve transfer.
The impact of these adjustments (including the tax) on the H1
2021 financial statements as follows:
Consolidated income statement :
As previously IFRS16 Management Share-based Restated
USD'000s reported revisions payments
-------------------------- -------------- -------- ----------- ------------ ---------
Revenue 106,412 - 866 - 107,278
Cost of sales (84,024) 400 (1,310) - (84,934)
-------------------------- -------------- -------- ----------- ------------ ---------
Gross profit 22,388 400 (444) - 22,344
Administrative expenses (22,227) (2,194) (1,325) (313) (26,059)
Other income - adjusting
item - 1,626 - - 1,626
-------------------------- -------------- -------- ----------- ------------ ---------
Operating profit/(loss) 161 (168) (1,769) (313) (2,089)
Adjusted EBIT (1,870) 7 (858) - (2,721)
EBIT 161 (168) (1,769) (313) (2,089)
Finance income 127 - - - 127
Finance expense (1,765) 174 - - (1,591)
-------------------------- -------------- -------- ----------- ------------ ---------
Loss before tax (1,477) 6 (1,769) (313) (3,553)
Tax 63 - 642 - 705
-------------------------- -------------- -------- ----------- ------------ ---------
Loss for the period (1,414) 6 (1,127) (313) (2,848)
-------------------------- -------------- -------- ----------- ------------ ---------
Attributable to owners (828) 6 (1,127) (313) (2,262)
-------------------------- -------------- -------- ----------- ------------ ---------
Consolidated cash flow statement:
As previously IFRS16 Management Share-based Restated
USD'000s reported revisions payments
--------------------------------- -------------- ------- ----------- ------------ ---------
Loss before tax (1,477) 6 (1,769) (313) (3,553)
Adjustments for:
Finance costs 1,765 174 - - 1,939
Depreciation of property,
plant and equipment 3,232 - 52 - 3,284
Depreciation of right-of-use
assets in administrative
expenses 397 395 - - 792
Depreciation of right-of-use
assets in cost of sales 3,194 (751) - - 2,443
Non-cash lease settlement (1,801) 175 - - (1,626)
Share-based payments (191) - - 313 122
--------------------------------- -------------- ------- ----------- ------------ ---------
Operating cash inflow before
movements in working capital 5,119 (1) (1,717) - 3,401
(Decrease)/increase in payables (844) - 1,717 - 873
--------------------------------- -------------- ------- ----------- ------------ ---------
Cash generated by operations 4,275 (1) - - 4,274
--------------------------------- -------------- ------- ----------- ------------ ---------
3. Segment information
Reportable segments are operating segments that either meet the
thresholds and conditions set out in IFRS 8 for separate reporting
or are considered by the Board to be appropriately aggregated into
reportable segments under IFRS 8.
The results were reviewed by the Group Chief Executive Officer,
who acts as the Chief Operating Decision Maker (CODM) in the new
SBU structure. The CODM reviews monthly internal reporting on a
pre-IFRS 16 basis at the operating segment level. The impact on
application of IFRS 16 is reviewed separately ahead of statutory
reporting.
The Group has three SBUs: Business Aviation (Aircraft
Management, Charter, FBO & Maintenance), Special Mission (Air
Ambulance & Rescue, National Security & Policing,
Infrastructure & Survey, Energy & Offshore); and Technology
& Outsourcing (Flight Operations, FBO, CAM software, Flight
Planning, CAM & ARC services). The Group believes this will
provide a direct line of sight for shareholders such that each
SBU's activities in each market, its investment requirements and
its performance can be more easily assessed and understood.
The IFRS 8 operating segments within these global divisions are
Special Mission, Business Aviation MRO US, Business Aviation
excluding MRO US, Technology & Outsourcing, Associates,
Corporate and Branding Fees. The operating segments, except
T&O, met the quantitative thresholds to report separately under
IFRS 8; however, T&O is presented separately as it is of
strategic importance.
A reconciliation of segmental to overall Group performance is
tabulated below:
For the period ended 30 June 2022 For the period ended 30 June 2021
Restated(1)
Adjusted Adjusted
EBIT EBIT
Gross Adjusted pre-IFRS Gross Adjusted pre-IFRS
USD'000s Revenue profit EBIT EBIT 16 Revenue profit EBIT EBIT 16
------------- --------- -------- ---------- --------- ---------- --------- -------- -------- --------- ----------
BA MRO US 55,473 12,085 (2,379) (66) (202) 35,174 4,943 (5,026) (2,765) (2,930)
BA excluding
MRO US 53,319 5,281 (1,428) (731) (1,007) 41,342 5,067 290 (1,598) (1,638)
------------- --------- -------- ---------- --------- ---------- --------- -------- -------- --------- ----------
Business
Aviation 108,792 17,366 (3,807) (797) (1,209) 76,516 10,010 (4,736) (4,363) (4,568)
Special
Mission 27,245 9,608 2,260 2,302 1,683 25,918 8,311 1,366 1,416 746
T&O 2,639 1,910 (636) (493) (519) 2,969 2,148 (259) (75) (83)
Branding
fee 625 625 625 625 625 1,875 1,875 1,866 1,866 1,866
Associates - - - - - - - - (1,491) (1,491)
Corporate - - (130) 137 202 - - (326) (74) (123)
------------- --------- -------- ---------- --------- ---------- --------- -------- -------- --------- ----------
Adjusted
Result 139,301 29,509 (1,688) 1,774 782 107,278 22,344 (2,089) (2,721) (3,653)
Adjusting
items - - - (3,462) (3,462) - - - 632 632
Application
of IFRS16 - - - - 992 - - - - 932
------------- --------- -------- ---------- --------- ---------- --------- -------- -------- --------- ----------
Statutory
result 139,301 29,509 (1,688) (1,688) (1,688) 107,278 22,344 (2,089) (2,089) (2,089)
------------- --------- -------- ---------- --------- ---------- --------- -------- -------- --------- ----------
(1) Restatements are detailed in Note 2 to 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 2021
30 June 2022 Restated(1)
$'000 $'000
------------------------------------------ -------------- --------------
Exceptional items:
Transaction costs - 503
Integration and business re-organisation 342 163
Other income - (1,626)
Legal costs 93 193
Impairment of goodwill 787 -
Impairment of assets under construction 749 (16)
------------------------------------------ -------------- --------------
Total exceptional items 1,971 (783)
Share-based payments expense 306 122
Long-term employee benefits expense 956 911
Amortisation of intangible assets 598 609
Release of impairment of investment in
associate - (1,491)
Deferred consideration adjustment (243) -
Profit on disposal of subsidiary (126) -
------------------------------------------ -------------- --------------
Adjusting items in EBIT 3,462 (632)
Tax related to adjusting items (449) 120
------------------------------------------ -------------- --------------
Adjusting items in profit 3,013 (512)
------------------------------------------ -------------- --------------
(1) Restatements are detailed in Note 2 to the notes to the
interim financial statements
Transaction costs
Costs in the prior period relate to the acquisition of Jet
East.
Integration and business re-organisation costs
Integration and business re-organisation costs of $342k
include:
-- Jet East integration related severance costs of $244k (H1 2021: $483k)
-- Costs associated with Group reorganisation of $98k (H1 2021: $nil)
-- In the prior year the $163k of net costs related to Jet East
severance costs ($483k above), offset in part by net credits of
$320k relating to a reduction in the cost of closure provision for
Fairoaks.
Other income
The prior period includes $1,626k credit for the derecognition
of the Fairoaks lease release.
Legal costs
Legal costs in the current and prior year principally relate to
professional fees in relation to ongoing litigation in respect of
legacy cases going back many years, which are now being
successfully closed out.
Impairment of goodwill
The impairment loss relates to the impairment of the goodwill
associated with the closure of the paint and interior completion
operations at Fort Lauderdale Executive Airport.
Impairment of assets under construction
The impairment loss relates to the impairment of further
development costs incurred during the period in respect of the
Business Aviation Centre at Sharjah International Airport in the
UAE.
Share-based payments
The prior year credit relates to the forfeit of Directors' share
options which offset the regular charge for other options.
Other long-term employee benefits
Other long-term employee benefits remuneration charge of $956k
(H1 2021: $911kl) relates to an incentive plan with payments
contractually linked to the continuing employment of executives of
Jet East as well as the business performance of the combined
Business Aviation MRO US.
Amortisation of intangible assets
Acquisition related intangible amortisation relates to acquired
intangible assets (customer relationships and brands) recognised as
part of the accounting for business combinations $598k (H1 2021:
$609k).
Profit on disposal of subsidiary
The profit on disposal arose as a result of the disposal of the
interest in Gama Aviation Saudi Arabia.
Tax related to adjusting items
The tax credit related to adjusting items was $449k (H1 2021:
$120k charge).
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. This
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 $1.30 to GBP1,
being the cumulative average USD-GBP exchange rate for H1 2022, (H1
2021: $1.39 to GBP1). Results of acquired and disposed businesses
are excluded where the results include only part-year results in
either current or prior periods. No adjustment has been made in
this respect.
A reconciliation from organic and constant currency growth in
Revenue to the most directly comparable IFRS measures is set out
below.
For the period ended For the period ended 30 June
30 June 2022 2021
------------------- ----------------------- ---------------------------------------
% Constant Rebase for
Revenue currency Revenue FX Rebased Revenue
$'000 growth $'000 $'000 $'000
------------------- --------- ------------ -------- ----------- ----------------
BA MRO US 55,473 58% 35,174 - 35,174
BA excluding
MRO US 53,319 33% 41,342 (1,305) 40,037
------------------- --------- ------------ -------- ----------- ----------------
Business Aviation 108,792 45% 76,516 (1,305) 75,211
Special Mission 27,245 12% 25,918 (1,583) 24,335
T&O 2,639 (6%) 2,969 (173) 2,796
Branding Fee 625 (67%) 1,875 - 1,875
Total 139,301 34% 107,278 (3,061) 104,217
------------------- --------- ------------ -------- ----------- ----------------
A reconciliation from organic and constant currency growth in
Gross Profit to the most directly comparable IFRS measures is set
out below.
For the period ended For the period ended 30 June
30 June 2022 2021
------------------- -------------------------- ------------------------------------------
% Constant Rebase for Rebased Gross
Gross Profit currency Gross Profit FX Profit
$'000 growth $'000 $'000 $'000
------------------- ------------- ----------- ------------- ----------- --------------
BA MRO US 12,085 166% 4,943 - 4,943
BA excluding
MRO US 5,281 (2%) 5,067 (191) 4,876
------------------- ------------- ----------- ------------- ----------- --------------
Business Aviation 17,366 81% 10,010 (191) 9,819
Special Mission 9,608 23% 8,311 (508) 7,803
T&O 1,910 (5%) 2,148 (132) 2,016
Branding Fee 625 (67%) 1,875 - 1,875
Total 29,509 39% 22,344 (831) 21,513
------------------- ------------- ----------- ------------- ----------- --------------
Gross Profit
Margin 21.2% 20.8% 20.6%
------------------- ------------- ----------- ------------- ----------- --------------
Net Debt
A reconciliation of the IFRS financial statement line items that
represent the Net Debt APM is tabulated below.
30 June 2022 31 December 2021
$'000 $'000
------------------------------------- ------------- -----------------
Cash 11,419 10,243
Borrowings (55,101) (67,154)
------------------------------------- ------------- -----------------
Net Debt before IFRS 16 obligations
under leases (43,682) (56,911)
Obligations under leases (42,674) (48,002)
------------------------------------- ------------- -----------------
Net Debt (86,356) (104,913)
------------------------------------- ------------- -----------------
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.
Period ended
Period 30 June
ended 30 2021
June 2022 Restated(1)
-------------------------------------------------------- ---------- ------------
Numerator
Earnings $'000
Loss on continuing operations attributable to ordinary
equity holders of the parent for basic earnings (4,061) (2,262)
Adjusting items 3,013 (512)
Loss on continuing operations attributable to ordinary
shareholders for Adjusted earnings (1,048) (2,774)
Denominator
Weighted average number of shares used in basic and
diluted EPS 63,739,456 63,658,655
Loss per share on continuing operations (cents)
Statutory - Basic and diluted (6.4) (3.6)
Adjusted - Basic and diluted (1.6) (4.4)
-------------------------------------------------------- ---------- ------------
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
Whilst the average share price for the six months ended 30 June
2022 was higher than the exercise price of some outstanding
options, there is no dilutive effect as their effect would be
anti-dilutive.
6. Net cash generated by operating activities
Period ended
Period ended 30 June 2021
30 June 2022 Restated(1)
$'000 $'000
-------------------------------------------------------- ---------------------- ---------------------
Loss before tax (4,038) (3,553)
Adjustments for:
Finance income (1,783) (127)
Finance costs 4,132 1,591
Depreciation - wholly owned assets 3,166 3,284
Depreciation - ROU assets in admin expense 338 792
Depreciation - ROU assets in cost of sales 2,722 2,443
Amortisation of acquired intangible assets 598 609
Amortisation of other intangible assets 1,163 1,082
Impairment of goodwill 787 -
Impairment of right-of-use assets 37 -
Impairment/(reversal of impairment) of assets
under construction 749 (16)
Impairment of leasehold improvements 124 -
Loss on disposal of property, plant & equipment 65 -
Non-cash lease settlement - (1,626)
Share of loss of associates - 1,491
Reversal of impairment of equity-accounted investments - (1,491)
Release of provision in respect of COVID-19 government
support program (1,000) -
Share based payment expense 306 122
-------------------------------------------------------- ---------------------- ---------------------
Operating cash inflow before movements in working
capital 7,366 4,601
Unrealised foreign exchange movements (2,214) (1,045)
Decrease in inventories 666 730
Decrease/(increase) in receivables 1,131 (3,485)
Non-cash doubtful debt provision expense 108 5
Increase in payables 1,270 873
Increase in deferred revenue 7,369 7,275
Decrease in provisions (133) (410)
-------------------------------------------------------- ---------------------- ---------------------
Cash generated by operations 15,563 8,544
Taxes paid (30) (174)
-------------------------------------------------------- ---------------------- ---------------------
Net cash flows from operating activities 15,533 8,370
-------------------------------------------------------- ---------------------- ---------------------
(1) Restatements are detailed in Note 2 to the notes to the
interim financial statements
7. Disposal of subsidiaries and investments
In March 2022 the Group's agreement, giving it control over Gama
International Saudi Arabia, was terminated. As a result, the Group
received $120k in cash. A $126k profit on disposal has been
recognised following working capital adjustments.
In the six-month period to 30 June 2022, the Group has
recognised the following items in relation to its sale of its US
Air associate, Gama Aviation LLC, in March 2020:
-- Branding fees of $625k (H1 2021: $1,875k) relating to the
licence for the continued use of the Gama Aviation Signature brand
for up to two years. This agreement ended on 2 March 2022.
-- Finance income of $nil (H1 2021: $90k) on deferred consideration
8. Goodwill
$'000
------------------------------- ------------
Cost
At 31 December 2021 47,514
Exchange differences (4,336)
------------------------------- ------------
At 30 June 2022 43,178
Accumulated impairment losses
At 31 December 2021 25,278
Impairment loss 787
Exchange differences (2,223)
------------------------------- ------------
At 30 June 2022 23,842
Carrying amount
At 30 June 2022 19,336
--------------------- -------
At 31 December 2021 22,236
The recoverable amount of goodwill is allocated to the following
cash generating units ('CGUs'):
31 December
30 Jun 2022 2021
$'000 $'000
------------------------------------ ------------- ------------
Business Aviation MRO US - 787
Business Aviation excluding MRO US 7,652 8,043
Special Mission 10,578 11,119
Technology & Outsourcing 1,106 2,287
------------------------------------ ------------- ------------
19,336 22,236
------------------------------------ ------------- ------------
As a result of the then ongoing COVID-19 pandemic, the Group
carried out an extensive exercise to determine whether at the 2021
year-end there were any indicators of impairment across the asset
base. As a result of that exercise, the Group considered that the
recoverable amount of all CGUs exceeded the carrying amounts, and
no additional impairment of the goodwill carrying value was
required.
A review was carried out on the goodwill carrying values at the
2022 half year and, again, the results indicated that the
recoverable amount of all CGUs exceeded the carrying amounts, and,
apart from the impairment recognised in in relation to the
discontinued operation FXE, no additional impairment of the
goodwill carrying values have been made.
9. Other intangible assets
Brands Customer relationships Computer software Total
$'000 $'000 $'000 $'000
------------------------- ------- ------------------------ ------------------------- -------------------------
Cost
At 31 December
2021 1,181 20,838 12,706 34,725
Additions - - 996 996
Foreign exchange
differences - (430) (1,316) (1,746)
------------------------- ------- ------------------------ ------------------------- -------------------------
At 30 June 2022 1,181 20,408 12,386 33,975
Amortisation and
accumulated impairment
losses
At 31 December
2021 227 14,542 4,302 19,071
Amortisation 118 480 1,163 1,761
Foreign exchange
differences - (272) (498) (770)
------------------------- ------- ------------------------ ------------------------- -------------------------
At 30 June 2022 345 14,750 4,967 20,062
Carrying Amount
At 30 June 2022 836 5,658 7,419 13,913
------------------------- ------- ------------------------ ------------------------- -------------------------
At 31 December
2021 954 6,296 8,404 15,654
Brands of $1,181k relate to the purchase of Jet East in 2021 and
is being amortised over the estimated useful economic life of five
years.
Customer relationship assets are amortised over their useful
economic lives, which are estimated to be ten years. During the
period ending 30 June 2022, there were no additions. The foreign
exchange differences of $430k arise from the weakening of the pound
against the dollar in relation to sterling denominated
intangibles.
Computer software costs comprise internally developed software
costs arising in the Group's myairops(c) business, as well as
purchased software, such as operational and financial systems. All
costs are amortised over their useful economic lives, which are
estimated to be between three and five years. The carrying value of
internally developed software within this balance is $6,673k (FY
2021: $7,450k).
10. Property, plant and equipment
Assets
Fixtures, in the
Aircraft fittings course
Helicopters Leasehold and and Motor of
improvements refurbishments equipment vehicles construction Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
Cost
At 31
December
2021 28,863 19,611 12,518 14,425 3,220 4,609 83,246
Additions - 106 - 1,295 139 749 2,289
Disposals - - - (146) - - (146)
Foreign
exchange
difference (2,847) (1,669) (1,235) (621) (27) - (6,399)
At 30 June
2022 26,016 18,048 11,283 14,953 3,332 5,358 78,990
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
Accumulated
depreciation
and
impairment
At 31
December
2021 1,932 6,812 4,538 9,566 2,300 4,609 29,757
Depreciation
charge for
the period 204 600 1,089 1,032 241 - 3,166
Impairment
charge for
the period - 124 - - - 749 873
Disposals - - - (81) - - (81)
Foreign
exchange
difference (181) (516) (537) (394) (19) - (1,647)
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
At 30 June
2022 1,955 7,020 5,090 10,123 2,522 5,358 32,068
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
Carrying
amount
At 30 June
2022 24,061 11,028 6,193 4,830 810 - 46,922
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
At 31
December
2021 26,931 12,799 7,980 4,859 920 - 53,489
-------------- ------------- ------------- --------------- ---------- --------- ------------- --------
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 and
property equipment Vehicles Total
Right-of-use assets $'000 $'000 $'000 $'000
-------------------------- ---------- -------------- ----------- --------
Cost
At 31 December 2021 63,843 136 319 64,298
Additions 97 235 202 534
Disposals (7,693) - (23) (7,716)
Foreign exchange
difference (3,265) (16) (22) (3,303)
At 30 June 2022 52,982 355 476 53,813
-------------------------- ---------- -------------- ----------- --------
Accumulated depreciation
At 31 December 2021 27,776 18 121 27,915
Charge for the period
- cost of sales 2,664 2 56 2,722
Charge for the period
-administrative costs 307 15 16 338
Disposals (6,891) - (23) (6,914)
Impairment 37 - - 37
Foreign exchange
difference (885) (1) (12) (898)
-------------------------- ---------- -------------- ----------- --------
At 30 June 2022 23,008 34 158 23,200
-------------------------- ---------- -------------- ----------- --------
Carrying amount
-------------------------- ---------- -------------- ----------- --------
At 30 June 2022 29,974 321 318 30,613
-------------------------- ---------- -------------- ----------- --------
At 31 December 2021 36,067 118 198 36,383
-------------------------- ---------- -------------- ----------- --------
Fixtures,
Leasehold fittings and
property equipment Vehicles Total
Obligations under $'000
leases $'000 $'000 $'000
-------------------------- ---------- -------------- ----------- --------
At 31 December 2021 47,579 117 306 48,002
Additions 97 235 202 534
Finance expense 1,241 4 9 1,254
Lease payments (3,710) (28) (44) (3,782)
Derecognition (852) - - (852)
Foreign exchange
difference (2,442) (13) (27) (2,482)
At 30 June 2022 41,913 315 446 42,674
-------------------------- ---------- -------------- ----------- --------
At 30 June 2022
-------------------------- ---------- -------------- ----------- --------
Current 8,001 68 111 8,180
Non-current 33,912 247 335 34,494
-------------------------- ---------- -------------- ----------- --------
Total 41,913 315 446 42,674
-------------------------- ---------- -------------- ----------- --------
Lease obligation additions relate to:
-- $235k for Group photocopier leases;
-- $202k for new vans used for transportation of equipment in the UK
-- $97k for a new office lease at Bedford, Massachusetts
In June 2017, the Group entered into a 25-year 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 now runs from June 2017 until June 2052 following the
exercise of the ten-year extension option during the year.
The lease liability has been discounted at an incremental
borrowing rate of 7.3% (FY 2021: 7.3%) and on an expected lease
term of 35 years (FY 2021: 35 years). The Sharjah BAC includes a
$nil (FY 2021: $nil) right-of-use asset and $9,802k (FY 2021:
$9,850k) obligation under leases at 30 June 2022.
12. Borrowings
31 December
30 June 2022 2021
$'000 $'000
-------------------------------------------- -------------- ----------------------------
Secured borrowing at amortised cost
Other loans 1,345 1,415
Bank borrowings 53,756 64,739
Paycheck Protection Program loan - 1,000
-------------------------------------------- -------------- ----------------------------
55,101 67,154
-------------------------------------------- -------------- ----------------------------
Total borrowings
Other loans 1,345 1,415
Bank borrowings 53,756 37,760
Payment Protection Program loan - 1,000
-------------------------------------------- -------------- ----------------------------
Amount due for settlement within 12 months 55,101 40,175
-------------------------------------------- -------------- ----------------------------
Other loans - -
Bank borrowings - 26,979
-------------------------------------------- -------------- ----------------------------
Amount due for settlement after 12 months - 26,979
-------------------------------------------- -------------- ----------------------------
During 2020, the Group received funds under the Paycheck
Protection Program ('PPP') in the form of a loan arrangement from
Citibank guaranteed by the US Government, which was specifically
intended to help businesses maintain their US workforce during the
COVID-19 pandemic. The Group made the application in good faith and
in the belief that the PPP loan request was necessary and otherwise
in accordance with the then applicable rules, to support its
ongoing operations given the economic uncertainty caused by the
pandemic. $5,753k funds were received on 12 May 2020 and were
initially recognised as borrowings in current liabilities. $4,753k
of these funds are considered by the Company to be eligible for
forgiveness within the terms of the PPP and were therefore
recognised in 2020 as income against the related expenses in the
income statement, reducing the amount of borrowings at the period
end to a repayable element of $1,000k. Confirmation of the full
loan forgiveness was received on 19 May 2022 and therefore the
repayable element of $1,000k loan is now considered not to be
repayable.
On other unsecured loans of $1,345k (FY 2021: $1,415k), interest
accrued at an average of 5.4% during H1 2022 (FY 2021: 6.6%).
The other principal features of the Group's bank borrowings are
as follows:
-- Bank borrowings at 30 June 2022 of $53.8m (FY 2021: $64.7m)
comprise drawdowns from a $50.0m RCF and a GBP20.0m Term Loan (the
"Loan"). These facilities are subject to customary banking security
arrangements
-- The RCF, which is presented in current liabilities, is
settled and drawn down on a cyclical basis. The facility matures on
14 November 2022
-- At 30 June 2022, $20.5m (FY 2021: $12.1m) of the $50m RCF facility was undrawn
-- The Loan, which is presented in current liabilities, matures on 31 January 2023
-- A letter of awareness has been provided by CK Hutchison
Holdings Ltd ("CKHH"), which has an indirect shareholding of 29.8%
in the Group, to HSBC that CKHH's intention, while any amount is
outstanding under the facility, is not to reduce its shareholding
in the Group below 25.0% without consent from the lender or
discharge of the facility. No legal implications are imposed on
CKHH.
-- In August 2022, CKHH notified the Board that, while it would
continue to provide support (in the form of the existing letter of
awareness) for the current facilities until they are due for
renewal, CKHH believes that it is more appropriate for the Group to
secure facilities on a standalone basis, rather than relying on the
unilateral support of one minority shareholder. Consequently, it
has advised the Group that it will not provide such support beyond
the expiry dates of the current facilities.
At 30 June 2022
Drawn
Drawn (local (presentation
Facility currency) currency)
Maturity '000 '000 $'000
----------- ---- ------------- ------------ --------------- ---------------
14 November
RCF 2022 USD 50,000 GBP 7,000 8,511
USD 21,000 21,000
31 January
Term loan 2023 GBP 20,000 GBP 20,000 24,318
----------------- ------------- ------------ -------------- ---------------
Bank borrowings before arrangement fees 53,829
Capitalised loan arrangement fees (73)
--------------------------------------------------------------- ---------------
Bank borrowings 53,756
--------------------------------------------------------------- ---------------
At 31 December 2021
Drawn
Drawn (local (presentation
Facility currency) currency)
Maturity '000 '000 $'000
----------- ---- ------------- ------------ --------------- ---------------
14 November
RCF 2022 USD 50,000 GBP 17,000 22,932
USD 15,000 15,000
31 January
Term loan 2023 GBP 20,000 GBP 20,000 26,979
----------------- ------------- ------------ -------------- ---------------
Bank borrowings before arrangement fees 64,911
Capitalised loan arrangement fees (172)
--------------------------------------------------------------- ---------------
Bank borrowings 64,739
--------------------------------------------------------------- ---------------
13. Related party transactions
During the period, Group companies entered into the following
transactions with related parties who are not members of the
Group:
Sale of services Purchase of services
------------------ ----------------------
H1 2022 H1 2021 H1 2022 H1 2021
$'000 $'000 $'000 $'000
-------------------------------------------- --------- ------- ----------- ---------
Gama Aviation LLC (other trading balances)* - 1,510 - 55
China Aircraft Services Limited - 526 - -
Air Arabia/Felix Trading Company LLC 107 180 137 75
BBGA Ltd - - 14 -
Mr Canning Fok 7 1,076 - -
M Khalek 5 1 - -
-------------------------------------------- --------- ------- ----------- ---------
* Gama Aviation LLC - was an associate in which GB Aviation
Holdings LLC owned a 49% interest before disposal in March 2020
The following amounts were outstanding at the balance sheet
date:
Amounts owed by Amounts owed to
related parties related parties
------------------ ------------------
H1 2022 H1 2021 H1 2022 H1 2021
$'000 $'000 $'000 $'000
-------------------------------- --------- ------- --------- -------
China Aircraft Services Limited - 1,433 - 1,750
Gama Aviation LLC* - 221 - 12
Air Arabia 158 234 125 100
Mr Canning Fok - 30 67 -
M Khalek 6 - - -
GB Aviation Holdings LLC - 40 - -
-------------------------------- --------- ------- --------- -------
* Gama Aviation LLC - was an associate in which GB Aviation
Holdings LLC owned a 49% interest before disposal in March 2020
14. Dividends
The Directors do not propose that an interim dividend be paid
for the six months to 30 June 2022 (H1 2021: $nil).
15. Taxation
Period ended 30 June 2021
Period ended 30 June 2022 Restated(1)
----------------------------------------- -------------------------------- --------------------------------
Statutory Adjusted Statutory Adjusted
result Adjustments result result Adjustments result
$'000 $'000 $'000 $'000 $'000 $'000
----------------------------------------- --------- ----------- -------- --------- ----------- --------
Corporation tax:
Current year charge 64 - 64 13 - 13
Adjustment in respect of prior years - - - 3 - 3
Deferred tax:
Current year (credit)/charge (258) 449 191 (721) (120) (841)
Total tax (credit)/charge for the period (194) 449 255 (705) (120) (825)
----------------------------------------- --------- ----------- -------- --------- ----------- --------
(1) Restatements are detailed in Note 2 to the notes to the
interim financial statements
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
period.
Deferred
consideration
Fixed asset on US air
Non-deductible and other associate
acquired temporary temporary
intangibles differences differences Tax losses Total
$'000 $'000 $'000 $'000 $'000
------------------------- --------------- ------------- --------------- ----------- -------
At 1 January 2022 (1,590) 36 161 5,310 3,917
Credit/(charge) in year 334 (167) (161) 253 259
At 30 June 2022 (1,256) (131) - 5,563 4,176
------------------------- --------------- ------------- --------------- ----------- -------
16. Share-based payments
There were no share options awarded in the six-month period
ended 30 June 2022.
Details of the options outstanding during the period are:
Number
'000
------------------- -------
At 1 January 2022 4,017
Forfeited (76)
-------------------- -------
At 30 June 2022 3,941
-------------------- -------
In the current half year, a charge of $306k (Restated H1 2021:
$122k) has been recognised for shared based payments.
17. Subsequent events
In August 2022, CKHH notified the Board that while it would
continue to provide support (in the form of the existing LoA) for
the current facilities until they are due for renewal, CKHH
believes that it is more appropriate for the Group to secure
facilities on a standalone basis rather than relying on the
unilateral support of one minority shareholder. Consequently, it
has advised the Group that it will not provide such support beyond
expiry dates of the current facilities.
As a result, management is actively seeking to source, and is
progressing towards, securing the new funding and credit facilities
required to replace the current facilities.
On 27 September 2022 the Group completed the sale and lease back
of its helicopter assets resulting in a cash inflow of $27m. This,
together with cash at hand, will be used to repay the RCF (of which
$31m is currently drawn) upon its maturity.
The Board has determined that, going forward, credit facilities
totalling $40m would be sufficient to meet the liquidity and
working capital needs of the Group and does not now expect that it
will require a replacement facility for its current term loan.
The Board has consulted extensively with its advisors, and with
their active support, discussions remain ongoing in respect of
securing new credit facilities required to meet the Group's funding
needs. The Board is therefore confident that, although there can be
no certainty, a positive outcome will be reached prior to 31
January 2023, when the existing facilities expire. A further update
will be provided when binding terms are secured .
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END
IR FDLLLLKLLBBB
(END) Dow Jones Newswires
September 28, 2022 02:02 ET (06:02 GMT)
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