TIDMGMAA
RNS Number : 0251C
Gama Aviation PLC
08 June 2023
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.
8 June 2023
Gama Aviation Plc (AIM: GMAA)
("Gama", "the Company" or "the Group")
Audited results for the year ended 31 December 2022
Significantly improved performance delivered across core
business lines
Gama Aviation Plc, the business aviation services company, is
pleased to announce its audited results for the year ended 31
December 2022. The Company will hold its Annual General Meeting
("AGM") on 30 June 2023 at 10.00 a.m. at the offices of the
Company, 1st Floor, 25 Templer Avenue, Farnborough, Hampshire GU14
6FE. A copy of the notice of the AGM, which was sent to the
shareholders on 7 June 2023 by post and/or email, is available on
the Company's website: www.gamaaviation.com . A copy of the Annual
Report and Financial Statements will be available shortly on the
Company's website at
https://www.gamaaviation.com/investors/reports-and-presentations/
and will also be sent to the shareholders.
Financial summary
Adjusted(1) $m Statutory $m
----------------- -----------------
Dec-22 Dec-21(3) Dec-22 Dec-21(3)
----------------------- ------ --------- ------ ---------
Revenue 285.6 235.9 285.6 235.9
----------------------- ------ --------- ------ ---------
Gross Profit(3) 55.1 41.5 55.0 41.5
----------------------- ------ --------- ------ ---------
Gross Profit %(3) 19.3 % 17.6% 19.3 % 17.6%
----------------------- ------ --------- ------ ---------
EBITDA(4) 22.9 11.8 19.1 10.1
----------------------- ------ --------- ------ ---------
EBIT 8.8 (4.3) 0.4 (7.3)
----------------------- ------ --------- ------ ---------
Loss for the year (1.4) (6.3) (8.6) (8.8)
----------------------- ------ --------- ------ ---------
Loss per share (cents) (2.6) (8.7) (13.9) (12.7)
----------------------- ------ --------- ------ ---------
(1) The Adjusted Performance Measures (APMs) are defined in Note
15 to the financial statements and reconciled to the nearest
International Financial Reporting Standards (IFRS) measure. APMs
include Adjusted Gross Profit, Adjusted EBIT and Net Debt.
(2) To aid comparability, a further version of the 2021 results
has also been calculated on a constant currency basis using a
constant foreign exchange rate of $1.24 to GBP1, being the
cumulative average USD/GBP exchange rate for 2022, instead of the
reported exchange rate of $1.38 to GBP1 for 2021. On a constant
currency basis 2021 Revenue is $224.5. Gross Profit is $39.1m,
Gross Profit percentage is 17.4%, and Adjusted EBIT is a loss of
$4.3m. Refer to Note 15 of the notes to the financial statements
for further details.
(3) Depreciation charges of $3.2m in the prior year relating to
aircraft and refurbishment, and leasehold property improvements
have been reviewed and reclassified from administrative expenses to
cost of sales to be consistent with the current year presentation
and to show depreciation of assets used in the delivery of revenues
in cost of sales. There has been no change in loss for the year in
respect of the prior year.
(4) EBITDA represents earnings before interest, tax,
depreciation, and amortisation. Adjusted EBITDA is Statutory EBITDA
before adjusting items.
Financial highlights
-- Revenue up 21% (27% at constant currency (2) ) to $285.6m (2021: $235.9m)
-- Gross Profit up 33% (41% at constant currency (2) ) to $55.1m (2021(3) : $41.5m)
-- Gross Profit Margin up by 1.7ppts (up 2.7ppts at constant
currency) at 19.3% (2021(3) : 17.6%)
-- Adjusted EBITDA profit up $11.1m to $22.9m (2021: $11.8m)
-- Adjusted EBIT profit up $13.1m to $8.8m (2021: $4.3m loss)
-- Net cash inflow from operating activities of $31.4m (2021:
$5.2m cash inflow). Improvement of $26.2m with $7.7m improvement in
EBIT and $14.7m positive contribution from working capital
-- Group cash balances were $22.4m (2021: $10.2m) of cash and
$9.0m of the Group's US $15.0m revolving credit facilities (RCF)
(2021: $12.1m of Group $50m revolving credit facilities) was
undrawn as of 31 December 2022
-- Net debt, inclusive of $52.7m (2021: $48.0m) of lease
obligations, decreased to $66.4m (2021: $104.9m).
-- As at 7 June 2023 cash balances were $12.5m.
-- The Board of Directors does not recommend a dividend to be paid.
Strategic highlights
-- Significant growth and improved profitability in the Group's
US Business Aviation maintenance and repair operations ("MRO")
business, Jet East
-- The award of a seven-year five aircraft Wales Air Ambulance
Charity contract, finalised in February 2023, represents a
significant contract win for the group's Special Mission Strategic
Business Unit ("SBU") in line with its organic growth plans
-- The award of a five-year, multi aircraft, North Sea offshore
contract to Bond Helicopters, the Group's newly created joint
venture with Peter Bond to specifically target niche opportunities
within the UK offshore energy market
-- Continued investment in strategically important airport
infrastructure with the acquisition of a hangar in Statesville,
North Carolina, to provide additional capacity and fuel further
organic growth of our US MRO business
-- Successful restructuring of the Group's debt facility
allowing for the timely and full repayment of legacy expiring
facilities.
-- Continued programme of optimisation of the Group's core lines of business.
Outlook
The significant progress the Group has made over the last two
years in delivering strong growth and improved profitability is
very encouraging. The Board remains confident that progress could
be sustained through the coming year. However, we remain
understandably circumspect in our outlook for 2023 given the
backdrop of high inflation, high interest rates and the
uncertainties that come from a protracted conflict in Europe.
Notwithstanding this, the Group remains firmly focused on the
execution of our strategy, capturing organic growth opportunities
through its SBUs and continuing to optimise the operational
performance of the business and is well positioned for continued
success.
Commenting on the full year results, Marwan Khalek, Chief
Executive said:
"Our 2022 results showed the continued improvement that the
Group is making in revenue and EBITDA performance in its core
markets. It is particularly pleasing to see the transformative
effect the addition of Jet East has had to our US MRO business and
how the additional focus we've placed on the Special Mission sector
will deliver future financial performance through the capture of
attractive multi-year contracts.
Despite the progress we have made there remains more work to do
in what is likely to become an increasingly challenging
environment. However, I am firmly of the belief that given our
strategic direction, the commitment and dedication of our people
and the actions we are taking to improve our performance, we will
continue to build positive momentum in 2023."
-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
Overview
I am very pleased to report that the Group delivered a
much-improved performance underpinned by our focus of the growth
strategy and optimisation initiatives. It is particularly
encouraging to see the significant improvement in the financial
performance of core lines of business such as Business Aviation's
US MRO, the FBOs and our Charter offer as well as improvements in
Special Mission's capture rate of new, long-term, contracts.
These financial performance improvements are a consequence of
our continued strategic focus on organic growth opportunities,
combined with a programme of 'Fix & Optimise' initiatives
within the Strategic Business Units ("SBU's") to ensure the
organisation remains resilient to external factors.
This improved financial performance provided a platform from
which the Group has been able to restructure its debt facilities
and secure the funding it needed, discharging its maturing legacy
credit facilities in full, in a timely manner. This was achieved
through a combination of a new targeted RCF and loan facility to
support the execution of the US MRO strategic plan and aircraft
specific related financing; allowing us to unlock the value of our
aircraft assets to raise the necessary funding. This was achieved
despite the significant tightening of the worldwide debt markets
experienced from Q4 2022.
Continued organic investment in our SBU's remains a strategic
priority. During 2022, investments were made in myairops (the
Group's leading SaaS aircraft and airport operations software
product) and strategically important airport infrastructures. These
include our hangar development projects in Sharjah and Jersey and
the acquisition of facilities in Statesville, North Carolina which
will provide additional capacity and capability for our FBO
business and our US MRO business respectively. Whilst the
absorption of cash into these investments is not reflected with
immediate improvement in profitability, they are the seed
investments necessary to deliver future organic growth in revenues,
and profitability, in line with our strategic objectives.
As a service business, strong performances cannot be achieved
without our people. The Board and I recognise our peoples'
resilience and unwavering support as we have navigated the last
three years of uncertainty. As we enter a new fiscal era of higher
interest rates and inflation, we recognise new pressures on cost of
living and in turn wage inflation. We will act to support our
people, doing so responsibly to protect the quality of our service
delivery and the interests of shareholders. Additionally, we will
continue to provide all employees with appropriate support such as
those we deliver through our innovative and industry leading 'We
care' programme.
Similarly, within wider society we continue to make progress
with the Group's Social Value commitments particularly in areas
such as Women in Aviation, the Armed Forces Covenant, and the
Scottish Business Pledge. However, in all areas of social value,
the Board recognises that we are on a journey and have much still
to do in partnership with our clients and suppliers.
SBU Performance
Business Aviation
The solid growth in our Business Aviation SBU continues to be
driven largely by the strong US market (the world's largest
business aviation market by volume and value) resulting in strong
growth and significant improvement in the financial performance of
our US MRO business, which we operate under the Jet East brand. The
purchase of a hangar in Statesville, North Carolina, which became
operation in April 2023, will provide additional maintenance
capacity for our network positively enhancing both growth prospects
and business mix.
The same market dynamics that are serving Jet East well, have
negatively influenced our Aircraft Management line of business in
the UK Europe and the Middle East where many business jet owners
have capitalised on robust pre-owned aircraft values in the US and
the strong US dollar and have sold aircraft assets. This has
resulted in a fall in aircraft ownership amongst our customer base
and a subsequent reduction in the Group's activities in this
business line over the period.
That said, both Charter and the FBO lines of business have
performed well. The FBO business particularly benefited from
increased flight volumes into Jersey, Glasgow, and Sharjah, with
Sharjah being enhanced by the World Cup hosted by Qatar.
Outside of the US, the rest of the world ("ROW") MRO business
had a mixed year and was hindered by a delayed start to the
maintenance operations of a major fleet client. A reorganisation of
this line of business occurred in Q4 2022, with a greater focus
being placed on business development and capture in 2023.
Special Mission
The Special Mission SBU achieved two notable contract awards in
Q4, 2022.
The contracts are strategically valuable, one extending the
Group's coverage of the UK Air Ambulance market and the other
allowing market entry into the offshore energy market. The latter,
which is operated through Bond helicopters, our strategic join
venture partnership with Peter Bond, provides the Group with
considerable future opportunity particularly when considering other
transportation contracts, future decommissioning work and the
potential offered by offshore wind.
With a focus on organic growth within its four defined market
sectors, a stable leadership team, a strong track record in
delivery and a visible pipeline, the SBU is firmly focused on
optimising the delivery of its contracts, and the conversion of new
opportunities.
Technology & Outsource (T&O)
The T&O SBU continues to make progress with its suite of
aviation focused, enterprise resource planning software products.
Activity in the US, the world's largest business aviation market by
volume and value, continues to drive sales activity for the
software as a service (SaaS) product.
Aside of the SaaS services, the SBU continues to provide a
variety of specialist outsource services to the military, airlines,
lessors, and business aviation operators. T&O's FlyerTech brand
is seeing increased transaction volume in the helicopter, business
jet and airline sectors.
Financial Performance
Revenue growth has been principally driven by the Business
Aviation SBU and more specifically the US MRO line of business
which includes t he impact of the first full year effect of the
acquisition of Jet East. Likewise, t he improvement in gross profit
arose principally due to Business Aviation's revenue
performance.
Most pleasingly, improvements in revenue and gross profit have
translated into a much-improved Adjusted EBITDA and EBIT
performance reflecting our continuing and increasing focus on
optimising business delivery.
Outlook
The significant progress the Group has made over the last two
years in delivering strong growth and improved profitability is
very encouraging. The Board remains confident that progress could
be sustained through the coming year. However, we remain
understandably circumspect in our outlook for 2023 given the
backdrop of high inflation, high interest rates and the
uncertainties that come from a protracted conflict in Europe.
Notwithstanding this, the Group remains firmly focused on the
execution of our strategy, capturing organic growth opportunities
through its SBUs and continuing to optimise the operational
performance of the business and is well positioned for continued
success.
Marwan Khalek
Chief Executive Officer
7 June 2023
GROUP OPERATIONAL PERFORMANCE REVIEW
Revenue
Adjusted (1, 2) Statutory
$'000 2022 2021 2022 2021
------------------------- -------- ------- ------- -------
Business Aviation 224,300 170,146 224,300 170,146
Special Mission 55,503 56,716 55,503 56,716
Technology & Outsourcing 5,214 5,297 5,214 5,297
Branding fees 625 3,750 625 3,750
------------------------- -------- ------- ------- -------
Total 285,642 235,909 285,642 235,909
------------------------- -------- ------- ------- -------
Gross profit(3)
Adjusted (2) Statutory
$'000 2022 2021(3) 2022 2021(3)
Business Aviation(3) 37,318 19,100 37,157 19,100
Special Mission(3) 13,753 14,481 13,753 14,481
Technology & Outsourcing 3,452 4,204 3,452 4,204
Branding fees 625 3,750 625 3,750
------------------------- ------ ------- ------ -------
Total 55,148 41,535 54,987 41,535
------------------------- ------ ------- ------ -------
EBIT
Adjusted
(1, 2) Statutory
$'000 2022 2021 2022 2021
------------------------- -------- ------- --------- --------
Business Aviation (8) (8,764) (7,094) (12,392)
Special Mission 5,439 4,546 5,357 4,534
Technology & Outsourcing (914) 47 (1,191) (289)
Branding fees 625 3,691 625 3,691
Associates - (1,491) - -
Corporate (2) 3,665 (2,303) 2,675 (2,796)
------------------------- -------- ------- --------- --------
Total 8,807 (4,274) 372 (7,252)
------------------------- -------- ------- --------- --------
(1) APMs are defined in Note 15 to the financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted Gross
Profit, Adjusted EBIT and Net Debt.
(2) Corporate activities generated a credit during the year
reflecting gain on sale of helicopters, foreign exchange gains on
working capital, partially offset by corporate costs not allocated
to SBU's.
(3) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation and to
show depreciation of assets used in the delivery of revenues in
cost of sales. This has resulted in a reduction of $3,196,000 in
gross profit and is attributable to Business Aviation ($602,000)
and Special Mission ($2,594,000).
The SBU performance is 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
Fixed Based Operations (FBO). The management of our
strategically positioned fixed base operations at airports in the
UK, Channel Islands and Middle East
Maintenance (MRO). The delivery of comprehensive maintenance and
repair operations 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. Therefore, Business
Aviation MRO US has been presented separately from Business
Aviation excluding MRO US.
BA MRO US(1) BA excluding MRO US Total
------------ ---------------------------- -------------------------------------- --------------------------------------
Constant Constant
Constant Constant currency Constant currency
currency currency growth currency growth
$'000 2022 2021(2) growth(2) 2022 2021(2) 2021 (4) (4) 2022 2021(2) 2021 (4) (4)
------------ ------- ------- ---------- ------- ------- --------- --------- ------- ------- --------- ---------
Revenue 118,250 79,250 49% 106,050 90,896 85,668 24% 224,300 170,146 164,918 36%
------------ ------- ------- ---------- ------- ------- --------- --------- ------- ------- --------- ---------
Gross profit
(23) 25,894 9,035 186% 11,424 10,065 9,634 19% 37,318 19,100 18,669 100%
------------ ------- ------- ---------- ------- ------- --------- --------- ------- ------- --------- ---------
Gross profit
%(2) 22% 11% - 11% 11% 11% - 17% 11% 11% -
------------ ------- ------- ---------- ------- ------- --------- --------- ------- ------- --------- ---------
Adjusted
EBIT(3) 1,332 (7,971) - (1,340) (793) (676) - (8) (8,764) (8,647) -
------------ ------- ------- ---------- ------- ------- --------- --------- ------- ------- --------- ---------
(1) The Jet East business operations were merged with those of
the Group's US MRO operations immediately following the acquisition
on 15 January 2021. It is therefore not possible to assess and/or
segregate the actual impact of the acquisition on the combined
financial performance.
(2) Depreciation charges of $602,000 in the prior year relating
to aircraft and refurbishment, and leasehold property improvements
have been reclassified from administrative expenses to cost of
sales to conform with the current year presentation. This has
resulted in a reduction of $602,000 in gross profit and is
attributable to BA excluding MRO US.
(3) APMs are defined in Note 15 to the financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted Gross
Profit, Adjusted EBIT and Net debt. APMs also include organic and
constant currency Revenue, Gross Profit and Adjusted EBIT.
(4) To aid comparability 2021 results have been calculated on a constant currency basis.
Overall, the Business Aviation SBU grew its revenues by 36% on a
constant currency basis to $224.3m. Gross profit was up 100% on a
constant currency basis to $37.3m.
The US market continued to benefit from an increase in aircraft
activity leading to continued strong demand for base and line
maintenance services. Furthermore, organic investment in the
development of the base maintenance facilities, contributed to
revenue growth of 49% in the BA MRO US business line. In addition,
gross profit was much improved on the prior year, up 186% to $25.9m
(2021: $9.0m) reflecting the aforementioned investment and market
conditions, together with a full year of trading following the
acquisition of Jet East in 2021.
Outside the US, revenues increased by 24% to $106.1m and gross
profit improved by 19% to $11.4m, both on a constant currency
basis.
The rest of the world Charter and the FBO lines of business both
performed well. 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. The FBO business particularly
benefited from increased flight volume into Jersey and Sharjah,
with Sharjah being enhanced by the World Cup in Qatar.
The rest of the world MRO business has had a mixed year and was
hindered by a delayed start to the maintenance operations of a
major UK fleet client. A reorganisation of this line of business
occurred in Q4 2022, with a greater focus being placed on business
development in 2023. MRO demand and activity at our Bournemouth and
other non-US bases, which are predominantly targeted at base
maintenance, remained steady.
The SBU's airport infrastructure development projects in Jersey
and Sharjah remain a priority for the Group, however, volatility in
the financial markets during the latter half of 2022, has required
the Board to take a more cautious approach to these
investments.
Adjusted EBIT for the SBU grew by $8.8m to a break-even level
(2021: $8.8m loss). The US business improved from a negative
adjusted EBIT of $8.0m in 2021 to a positive $1.3m in 2022
reflecting the improved gross profit levels noted above of $16.9m,
partially offset by higher overheads of $7.6m reflecting investment
in capability for increased activity levels. Adjusted EBIT for BA
excluding MRO US fell from a negative $0.8m in 2021 to a negative
$1.3m in 2022 as improved gross profits noted above of $1.5m, were
more than offset by higher overheads of $1.9m largely due to higher
recharges from the Special Mission SBU ($1.1m).
$'000 BA MRO US BA excluding MRO US Total
--------------------------------------------------------- ----------------- --------------------- -----------------
2022 2021 2022 2021 2022 2021
--------------------------------------------------------- ------- -------- ---------- --------- ------- --------
Adjusted EBIT 1,332 (7,971) (1,340) (793) (8) (8,764)
--------------------------------------------------------- ------- -------- ---------- --------- ------- --------
Exceptional items - transaction costs 258 (558) 126 - 384 (558)
Exceptional items - integration and business
re-organisation costs (265) (413) - 1,901 (265) 1,488
Exceptional items - other items - - - 79 - 79
Exceptional items - Impairment of right-of-use assets - - - (1,911) - (1,911)
Exceptional items - Impairment of goodwill (787) - - - (787) -
Exceptional items - Impairment of property, plant and
equipment (124) - - - (124) -
Exceptional items - Impairment of assets under
construction - - (2,516) - (2,516) -
Exceptional items-onerous contract provision - - (900) - (900) -
Long-term incentive plan (1,821) (1,821) - - (1,821) (1,821)
Share-based payments (197) 58 (17) (52) (214) 6
Amortisation (738) (710) (105) (201) (843) (911)
--------------------------------------------------------- ------- -------- ---------- --------- ------- --------
EBIT (2,342) (11,415) (4,752) (977) (7,094) (12,392)
--------------------------------------------------------- ------- -------- ---------- --------- ------- --------
EBIT improved from a loss of $12.4m in 2021 to a loss of $7.1m
in 2022. In addition to the movements discussed above, there was a
$2.5m impairment of assets under construction that 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 ($2.1m) and impairment of development costs in
Jersey ($0.4m).
The non-cash impairment of goodwill ($0.8m) and the impairment
of property, plant and equipment ($0.1m) relate to the impairment
of the goodwill and leasehold improvements respectively, associated
with the closure of the paint and interior completion operations at
Fort Lauderdale Executive Airport.
The amortisation of acquired intangibles of $0.8m and the $1.8m
charge for the long-term incentive plan relate to the acquisition
of Jet East in the prior year.
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 in Scotland, Jersey, and Guernsey as well
as the circa 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
Constant currency
$'000 2022 2021(1) 2021 (3) Constant currency growth(3)
----------------- ------ -------- ------------------ ----------------------------
Revenue 55,503 56,716 51,037 9%
----------------- ------ -------- ------------------ ----------------------------
Gross profit 13,753 14,481 12,772 8%
----------------- ------ -------- ------------------ ----------------------------
Gross profit % 25% 26% 25%
----------------- ------ -------- ------------------ ----------------------------
Adjusted EBIT(2) 5,438 4,546 4,096 32%
----------------- ------ -------- ------------------ ----------------------------
(1) Depreciation charges of $2,594,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation. This
has resulted in a reduction of $2,594,000 in gross profit.
(2) APMs are defined in Note 15 of the notes to the financial
statements and reconciled to the nearest IFRS measure. APMs include
Adjusted Gross Profit, Adjusted EBIT and Net Debt. APMs also
include organic and constant currency Revenue, Gross Profit and
Adjusted EBIT.
(3) To aid comparability 2021 results have been calculated on a constant currency basis.
Special Mission has delivered 9% revenue growth on a constant
currency basis, reflecting strong demand for services on its core
contracts and result of the fix and optimise agenda.
Gross profit has improved year on year reflecting the improved
revenue generation noted above, partially offset by inflationary
cost pressures and foreign exchange movements. Gross profit margins
have remained consistent at 25% on a constant currency basis.
Adjusted EBIT improved to $5.4m (2021: $4.5m) reflecting the
impact of internal cost allocations.
$'000 2022 2021
--------------------- ----- -----
Adjusted EBIT 5,439 4,546
--------------------- ----- -----
Share-based payments (10) (12)
--------------------- ----- -----
Amortisation (72) -
--------------------- ----- -----
EBIT 5,357 4,534
--------------------- ----- -----
EBIT increased from a profit of $4.5m in 2021 to $5.3m in 2022.
In addition to the movements discussed above, EBIT includes
amortisation charges in respect of acquired customer relations.
TECHNOLOGY & OUTSOURCING
The Technology & Outsourcing SBU is focused on the delivery
of advisory, technology and outsource services to aviation
customers who seek to gain a decisive advantage using real and near
real time intelligence. The Technology & Outsourcing SBU
comprises four lines of business which trade as Gama Aviation, and
two further brands, FlyerTech and myairops(R) .
Software and data services via myairops (R) . myairops(R) has
developed a suite of business aviation products deployed as
"Software as a Service" (SaaS) and mobile app solutions for flight
and aircraft management, maintenance tracking, ground o perations
and crew scheduling and operations.
Maintenance management and advisory services. Comprehensive
range of services from full Continuing Airworthiness Management and
Airworthiness Review Certificates through to supplying the software
for an organisation to manage the through-the-life maintenance of
its aircraft.
Ground operations. Providing third party trip support services,
including flight planning and the arrangement of services such as
permits, slots and fuel, to aircraft operators who are seeking to
outsource their flight operations tasks.
Constant currency Constant currency growth(3)
$'000s 2022 2021(1) 2021 (3)
----------------- ----- ------- ------------------ ----------------------------
Revenue 5,214 5,297 4,834 8%
----------------- ----- ------- ------------------ ----------------------------
Gross profit 3,452 4,204 3,901 (12%)
----------------- ----- ------- ------------------ ----------------------------
Gross profit % 66% 79% 80% -
----------------- ----- ------- ------------------ ----------------------------
Adjusted EBIT(2) (914) 47 121 -
----------------- ----- ------- ------------------ ----------------------------
(1) Depreciation charges of $2,594,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation and to
show depreciation of assets used in the delivery of revenues in
cost of sales. This has resulted in a reduction of $2,594,000 in
gross profit.
(2) APMs are defined in Note 15 to the financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted Gross
Profit, Adjusted EBIT and Net Debt. APMs also include organic and
constant currency Revenue, Gross Profit and Adjusted EBIT.
(3) To aid comparability 2021 results have been calculated on a
constant currency basis.
Technology and Outsourcing revenue increased on a constant
currency basis by 8% reflecting a shift in the long-term strategy
in sales and marketing to North America and is concentrating on
raising awareness within the US and Canadian markets. Gross profit
decreased by $0.4m on a constant currency basis due to a $0.4m
increase in direct payroll related costs. Adjusted EBIT decreased
by $1.0m to a loss of $0.9m (2021: $0m) due to the decline in gross
profit, foreign exchange and an increase in overheads.
$'000 2022 2021
--------------------- ------- -----
Adjusted EBIT (914) 47
--------------------- ------- -----
Share-based payments (17) (47)
Amortisation (260) (289)
--------------------- ------- -----
EBIT (1,191) (289)
--------------------- ------- -----
EBIT fell from a loss of $0.3m in 2021 to a loss of $1.2m in
2022. In addition to the movements discussed above, EBIT included
lower amortisation charges in respect of acquired intangible assets
and lower share-based payment charges.
ASSOCIATE INVESTMENTS
CASL
------------------
$'000 2022 2021
----------------------------------------- --------- -------
Adjusted EBIT(1) - (1,491)
----------------------------------------- --------- -------
Adjustments:
Exceptional items - Impairment reversal - 1,491
EBIT - -
----------------------------------------- --------- -------
(1.) APMs are defined in Note 15 to the financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted Gross
Profit, Adjusted EBIT and Net Debt. APMs also include organic and
constant currency Revenue, Gross Profit and Adjusted EBIT.
The Group's investment in China Aircraft Services Limited
("CASL") was reclassified as "held for sale" effective the end of
May 2021 following a Board decision on the receipt of a $2.0m offer
for its 20% shareholding in CASL. Since reclassification the asset
was held at the fair value of $2.0m, until it was sold with full
and final cash settlement of $2.0m received on 31 December 2021.
Prior to reclassification as "held for sale", CASL suffered
substantial losses due to vastly reduced commercial aviation
volumes at Hong Kong airport, impacted by the COVID-19 pandemic. In
2021, the Group's share of these losses amounted to $1.5m at the
Adjusted EBIT level.
Following the sale of the Group's equity interest in CASL, an
impairment reversal equivalent to the Group's share of losses of
$1.5m was recognised in 2021.
Overall, all non-core associate investments have been sold and
result in associate statutory EBIT showing a $nil result in both
2022 and 2021.
BRANDING FEES
Total
-----------
$'000 2022 2021
------------- ---- -----
Revenue 625 3,750
------------- ---- -----
Gross profit 625 3,750
------------- ---- -----
GP % 100% 100%
------------- ---- -----
EBIT 625 3,691
------------- ---- -----
Revenue and gross profit from branding fees ended on 2 March
2022. Branding fees EBIT decreased from $3.7m in 2021 to $0.6m in
2022. The current year includes two months of branding fees,
whereas the prior year includes twelve months' of branding
fees.
FINANCE REVIEW
We report a significant improvement in the Group's reported
results, with an improvement in Revenue and Adjusted EBIT, a
significant positive movement in working capital and the successful
refinancing of debt facilities previously held with HSBC. The
facilities with HSBC comprised a $50m RCF and GBP20m term loan and
were replaced by new facilities with Great Rock Capital in the US
in December 2022 and with Close Brothers Aviation and Marine in the
UK in March 2023. The Company also completed the sale and
lease-back of three helicopters with LCI in September 2022. During
2023, management has continued to work to optimise the Company's
capital structure via further sale and leaseback and asset sale
activities so as to further improve the Group's capital structure
and to assist its liquidity requirements and to finance its
development projects.
Performance
Revenue
The Group reported an increase in revenue of 21%, which came
principally from the Business Aviation MRO US operation in its
second year as part of the Group, having been acquired in January
2021. We have an experienced management team in the Business
Aviation MRO US operation and a significant contract with a major
private jet provider. The Group made an investment in October 2022
in a new facility in Statesville, North Carolina, which will widen
services and support more growth. Our Business Aviation Rest of the
World ("ROW") operation also reported increased revenues at $106.1m
(2021: $90.9m).
EBITDA
The Group delivered an improvement in EBITDA to $19.1m (2021:
$10.1m). The improved profitability came principally from growth in
our Business Aviation MRO US acquisition. This business was loss
making in 2021 and made an EBITDA profit of $4.3m in 2022.
Management executed the strategic plan resulting in improved
performance and effectively completed the integration programme.
The operation absorbed closure costs of $1.6m for its Florida
executive jet centre.
Business Aviation excluding MRO US delivered an EBITDA loss of
$1.7m in very difficult trading conditions. We experienced a
decline in demand for aircraft management services, offset by
significant growth in charter and FBO activities.
The Special Mission contracts business delivered EBITDA of $8.4m
(2021: $7.6m). Technology & Outsourcing held EBITDA profits in
line with 2021, as investments were made to support growth
prospects in future years.
The Group also benefitted from $3.1m of foreign exchange gains
and a $1.7m gain on the sale of three helicopters, which also
improved EBIT.
Adjusted EBIT
On the back of improved trading the Group reported Adjusted EBIT
of $8.8m, which is a return to profit since before the Covid-19
pandemic. This reflects the integration of the Business Aviation
MRO US acquisition and the effect of recurring revenue from the
Special Mission contracts.
Adjusting items
The Board refinanced its bank debt as the three-year term on its
two HSBC facilities were expiring in November 2022 and January
2023. The refinancing resulted in advisory fees and transaction
fees of $0.7m. Conditions for refinancing in 2022 were challenging
with rising interest rates and bank caution to new lending. Other
significant adjusting items represent accrued costs for equity
incentive plans, amortisation of intangible assets and impairment
of goodwill and assets under course of construction.
Financial summary
Adjusted(1) $m Statutory $m
2022 2021(2) 2022 2021(2)
Revenue 285.6 235.9 285.6 235.9
----------------------------------------- ------ -------- ------ -------
Gross profit 55.1 41.5 55.0 41.5
----------------------------------------- ------ -------- ------ -------
Gross profit % 19.3% 17.6% 19.3% 17.6%
----------------------------------------- ------ -------- ------ -------
EBITDA(3) 22.9 11.8 19.1 10.1
----------------------------------------- ------ -------- ------ -------
EBIT 8.8 (4.3) 0.4 (7.3)
----------------------------------------- ------ -------- ------ -------
Loss for the year (1.4) (6.3) (8.6) (8.8)
----------------------------------------- ------ -------- ------ -------
Basic and diluted loss per share (cents) (2.6) (8.7) (13.9) (12.7)
----------------------------------------- ------ -------- ------ -------
(1) APMs are defined in Note 15 to the financial statements and
reconciled to the nearest IFRS measure. APMs include Adjusted Gross
Profit, Adjusted EBIT and Net Debt. APMs also include organic and
constant currency Revenue, Gross Profit and Adjusted EBIT.
(2) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation and to
show depreciation of assets used in the delivery of revenues in
cost of sales. This has resulted in a reduction of $3,196,000 in
gross profit and is attributable to Business Aviation ($602,000)
and Special Mission ($2,594,000).
(3) EBITDA represents earnings before interest, tax,
depreciation and amortisation. Adjusted EBITDA is Statutory EBITDA
before adjusting items.
Revenue and gross profit bridges
Revenue $m Gross profit(1) $m
--------------------------------------------------------------- ----------- ------------------
Revenue and gross profit - 2021 235.9 41.5
Impact of foreign exchange movements (11.4) (2.4)
--------------------------------------------------------------- ----------- ------------------
Rebased revenue and gross profit - 2021 at 2022 exchange rates 224.5 39.1
Impact of organic growth (1.5) (2.8)
--------------------------------------------------------------- ----------- ------------------
Rebased revenue and gross profit 223.0 36.3
Business Aviation MRO US 37.4 16.4
Business Aviation excluding MRO US 20.4 1.8
Special Mission 4.4 1.0
Technology & Outsourcing 0.4 (0.5)
Revenue and gross profit - 2022 285.6 55.0
--------------------------------------------------------------- ----------- ------------------
(1) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation. This
has resulted in a reduction of $3,196,000 in gross profit and is
attributable to BA excluding MRO US ($602,000) and Special Mission
($2,594,000).
Business Aviation MRO US growth reflects the continued expansion
of the Business Aviation's US maintenance operations on the back of
the acquisition of Jet East and revenue growth from new facilities
and from legacy US maintenance operations. Business Aviation
excluding MRO US benefits from a significant improvement in FBO
activity levels and increased charter activity which is partially
offset by underperformance in aircraft management.
Special Mission growth includes the impact of increased flying
hours and the related costs rechargeable to customers across major
contracts.
Impairments
As previously reported, the Group has a 25-year ground lease and
had commenced the development of a Business Aviation Centre (BAC)
at Sharjah International airport in the UAE. With the project
having been placed on hold in 2020 pending a review of the impact
of the pandemic on its viability, the Group had a cumulative
impairment charge of $13.1m in its financial statements at the
start of the financial year. This increased by a further $2.1m
during the year reflecting further expenditure on this asset.
Following its decision to recommence the development of the BAC,
the Company is in the process of securing the necessary funding for
the project. Whilst the Group is in discussions with investors
regarding funding, the Board considers that it would be
inappropriate to reverse these impairments until profits can be
forecast with greater certainty.
The Board remains confident that the Group is making progress in
securing the necessary funding, at which time all these
impairments, may reverse.
Expenditure of $0.4m incurred during the year on the Jersey FBO
project has been impaired. Whilst the Group is in discussions with
investors to secure the necessary funding for the project, the
Board considers that it is appropriate to recognise an impairment
loss in respect of this expenditure until profits can be forecast
with greater certainty.
Finally, an impairment loss against leasehold improvements of
$0.1m and against goodwill of $0.8m has been recognised associated
with the closure of the paint and interior completion operations at
Fort Lauderdale Executive Airport.
Other than the above and following a diligent review of the
carrying value of investments, the Board does not believe there is
any need for any other impairments.
Finance expense
Net finance expense was $9.8m (2021: $3.5m). Foreign currency
translation movements resulted in a net loss of $5.9m (2021:
$0.4m).
Taxation
There is a statutory taxation credit for the year of $0.9m
(2021: credit of $2.0m), which reflects the recognition of an
increased deferred tax asset in the current year based on projected
future taxable profits in a five-year Strategic Plan. The adjusted
taxation charge for the year is $0.4m (2021: credit of $1.5m);
refer to Note 13 for further details.
Earnings per share (EPS)
Shares in issue increased to 64.0m (2021: 63.7m) following the
issue of shares in the year. The average share price for the year
ended 31 December 2022 was 59.4 pence, which is marginally higher
than the exercise price of some outstanding options; however, the
effect of including these shares would reduce the loss per share
and adjusted loss per share and therefore no dilutive earnings per
share is shown. Basic Statutory EPS reflects a loss per share of
13.9 cents (2021: 12.7 cents).
Dividend
The Board does not recommend a dividend for 2022 (2021: nil
pence per share). The Board intends to restore the Company's
distributable reserves when practicable.
Net debt and cash flow movements
The Group has reported a significant increase in the net cash
inflow from operating activities of $31.4m (2021: $5.2m). This
reflects improved trading as seen in the EBITDA of $19.1m (2021:
$10.1m) and better working capital with a positive inflow of $14.7m
compared with an outflow in 2021 of $2.8m.
The proceeds from the sale and leaseback of three helicopters of
$27.0m and the utilisation of $11.0m of new credit facilities in
the US were used to pay down the RCF during the year and,
subsequently, a term loan in January 2023, both debt items with
HSBC.
Liquidity
The Group liquidity comprises $ 22.4 m (2021: $10.2m) of cash
and $ 9.0 m of its $ 15.0 m RCF with Great Rock Capital was undrawn
as at 31 December 2022.
Net debt, inclusive of $ 52.7 m (2021: $48.0m) of lease
obligations, decreased to $66.4m (2021: $104.9m), largely due to
the $31.4m net cash inflow from operating activities .
Financing
The Company paid back its bank debt as the three-year term on
its two HSBC facilities was expiring in November 2022 and January
2023.
Sale and lease back transaction
On 27 September 2022, the Group completed the sale and leaseback
of its helicopter assets resulting in a cash inflow of $27.0m and a
gain on disposal of $1.7m.
Credit facilities
During 2022, the Group benefitted from two credit facilities
provided by HSBC, a $50m RCF and a GBP20m term loan. The HSBC RCF
matured on 14 November 2022 and the outstanding balance of $32m was
repaid in full utilising t he proceeds of $27m from the sale and
leaseback of three helicopters, together with cash at hand.
On 30 December 2022, new credit facilities were secured by the
Group's wholly owned US operating subsidiary, Gama Aviation
(Engineering) Inc. ("GAEI"), from a US lender Great Rock Capital
LLC. The $25.0m facilities are for a term of four years and
comprise a combination of a RCF and up to $6.5m of term loans. A
total of $20.0m was available immediately, with a further $5.0m
available contingent on future trading performance. The facilities
are subject to customary financial covenants.
$11.0m of the facility was drawn down to repay GAEI's
intercompany loan from the Company. The balance of the facility is
available to fund the investment capital expenditure and other
working capital requirements of the US business in the execution of
the Group's organic growth strategy in the US.
On 25 January 2023, the Group repaid its GBP20m term loan from
HSBC (which had a maturity date of 31 January 2023) in full
utilising t he $11.0m received from the repayment of the Company's
intercompany loan with GAEI, together with cash at hand .
On 3 March 2023, the Group received GBP9.4m ($11.1m) from Close
Brothers Aviation and Marine by way of a loan secured by a mortgage
over the Group's owned aircraft. The loan will be used to fund the
investment capital expenditure and other working capital
requirements of the non-US business.
During 2023, management has continued to work to optimise the
Company's capital structure via further sale and leaseback and
asset sale activities to ensure that the group is fully capitalised
to meet its liquidity requirements and to finance its development
projects.
Collection of receivables
Following the litigation update provided in the Company's 2021
Annual Report and 2022 Interim release, the Group continues to
pursue the recovery of its long-standing trade receivables through
enforcement actions both in the UK and in other jurisdictions. The
Group has made progress through court proceedings in the UK, which
has resulted in material collections in 2023. It remains the
Board's expectation that other than the provisions already made
against these claims, no further provisions will be required.
Gama Aviation Plc
Consolidated income statement
For the year ended 31 December 2022
Year ended 2022 Year ended 2021(2)
----------------------------------- --------------------------------
Adjusted Adjusting Adjusted
Statutory Adjusting Statutory
result items(1) result(1) result items(1) result(1)
Note $'000 $'000 $'000 $'000 $'000 $'000
Continuing operations:
Revenue 5 285,642 - 285,642 235,909 - 235,909
Cost of sales(2) (230,655) 161 (230,494) (194,374) - (194,374)
--------------------------- ---- ---------- ---------- ----------- --------- --------- ----------
Gross profit 54,987 161 55,148 41,535 - 41,535
Administrative expenses(2) (59,568) 8,400 (51,168) (50,413) 6,095 (44,318)
Other operating income 6 4,953 (126) 4,827 1,626 (1,626) -
--------------------------- ---- ---------- ---------- ----------- --------- --------- ----------
Operating profit
/ (loss) 372 8,435 8,807 (7,252) 4,469 (2,783)
Share of results of
associates 23 - - - (1,491) - (1,491)
Reversal of impairment
of equity accounted
investments 23 - - - 1,491 (1,491) -
Earnings before interest
and taxation 7 372 8,435 8,807 (7,252) 2,978 (4,274)
Finance income 11 108 - 108 617 - 617
Finance expense 12 (9,945) 75 (9,870) (4,110) - (4,110)
--------------------------- ---- ---------- ---------- ----------- --------- --------- ----------
Loss before taxation (9,465) 8,510 (955) (10,745) 2,978 (7,767)
Taxation 13 885 (1,297) (412) 1,980 (471) 1,509
--------------------------- ---- ---------- ---------- ----------- --------- --------- ----------
Loss for the year (8,580) 7,213 (1,367) (8,765) 2,507 (6,258)
Attributable to:
Owners of the Company (8,859) 7,211 (1,648) (8,062) 2,507 (5,555)
Non-controlling interests 38 279 2 281 (703) - (703)
(8,580) 7,213 (1,367) (8,765) 2,507 (6,258)
Earnings per share
(EPS) attributable
to the equity holders
of the parent (cents)
Basic 17 (13.9) 11.3 (2.6) (12.7) 4.0 (8.7)
Diluted 17 (13.9) 11.3 (2.6) (12.7) 4.0 (8.7)
--------------------------- ---- ---------- ---------- ----------- --------- --------- ----------
(1) APMs are defined in Note 15 of the notes to the financial
statements and reconciled to the nearest IFRS measure.
(2) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation and to
show depreciation of assets used in the delivery of revenues in
cost of sales. There has been no change in operating loss or loss
for the year in respect of the prior year.
Gama Aviation Plc
Consolidated statement of comprehensive income
For the year ended 31 December 2022
Year ended 2022 Year ended 2021
Note $'000 $'000
------------------------------------------------------------------ ---- --------------- ---------------
Loss for the year (8,580) (8,765)
Items that may be reclassified subsequently to profit or loss:
Foreign exchange differences on translation of foreign operations (5,158) (307)
Other comprehensive loss for the year, net of income tax (5,158) (307)
Total comprehensive loss for the year (13,738) (9,072)
------------------------------------------------------------------ ---- --------------- ---------------
Total comprehensive loss is attributable to:
Owners of the Company (14,017) (8,369)
Non-controlling interest 38 279 (703)
------------------------------------------------------------------ ---- --------------- ---------------
(13,738) (9,072)
------------------------------------------------------------------ ---- --------------- ---------------
Gama Aviation Plc
Consolidated balance sheet
As at 31 December 2022
---------------------------------------------------------------------------------
Note 2022 2021
$'000 $'000
-------------------------------------- ---- --------- ------------------------
Non-current assets
Goodwill 18 19,176 22,236
Other intangible assets 19 13,170 15,654
-------------------------------------- ---- --------- ------------------------
Total intangible assets 32,346 37,890
Property, plant and equipment 21 21,794 53,489
Right-of-use assets 22 38,194 36,383
Trade and other receivables 25 1,413 291
Deferred tax asset 35 6,100 3,918
-------------------------------------- ---- --------- ------------------------
Total non-current assets 99,847 131,971
-------------------------------------- ---- --------- ------------------------
Current assets
Inventories 24 7,278 8,915
Trade and other receivables 25 58,271 63,808
Current tax receivable 28 - 27
Cash and cash equivalents 26 22,406 10,243
-------------------------------------- ---- --------- ------------------------
Total current assets 87,955 82,993
-------------------------------------- ---- --------- ------------------------
Total assets 187,802 214,964
-------------------------------------- ---- --------- ------------------------
Current liabilities
Trade and other payables 27 (46,770) (39,342)
Current tax liabilities 28 (533) (574)
Obligations under leases 30 (11,053) (7,970)
Provisions 33 (2,250) (772)
Borrowings 31 (31,225) (40,175)
Deferred revenue 34 (9,214) (8,880)
Other financial liabilities 32 (335) (290)
-------------------------------------- ---- --------- ------------------------
Total current liabilities (101,380) (98,003)
-------------------------------------- ---- --------- ------------------------
Total assets less current liabilities 86,422 116,961
-------------------------------------- ---- --------- ------------------------
Non-current liabilities
Borrowings 31 (4,883) (26,979)
Deferred revenue 34 - (2)
Provisions 33 (885) (348)
Obligations under leases 30 (41,628) (40,032)
Trade and other payables 27 (3,663) (1,821)
Deferred tax liabilities 35 (1,206) -
Other financial liabilities 32 - (256)
Total non-current liabilities (52,265) (69,438)
-------------------------------------- ---- --------- ------------------------
Total liabilities (153,645) (167,441)
-------------------------------------- ---- --------- ------------------------
Net assets 34,157 47,523
-------------------------------------- ---- --------- ------------------------
Shareholders' equity
Share capital 36 958 954
Share premium 36 63,712 63,502
Other reserves 36 34,987 34,997
Foreign exchange reserve (29,880) (24,722)
Accumulated losses (35,992) (27,301)
--------------------------- -------- --------
Total shareholders' equity 33,785 47,430
Non-controlling interest 38 372 93
--------------------------- -------- --------
Total equity 34,157 47,523
--------------------------- -------- --------
The financial statements were approved by the Board of Directors
and authorised for issue on 7 June 2023 and are signed on their
behalf by:
Michael Williamson
Director
Gama Aviation Plc
Consolidated statement of changes in equity
For the year ended 31 December 2022
Foreign
Share Other exchange Total Non-
Share Accumulated shareholders' 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
year - - - - (8,062) (8,062) (703) (8,765)
Other
comprehensive
expenditure - - - (307) - (307) - (307)
-------------- -------- --------- ---------- ---------- --------------- --------------- ------------- --------
Total
comprehensive
loss for the
year - - - (307) (8,062) (8,369) (703) (9,072)
Shares issued
in the
year 1 29 - - - 30 - 30
Cost of
share-based
payments
(Note 40) - - 244 - - 244 - 244
Transfer for
lapsed
options - - (607) - 607 - - -
-------------- -------- --------- ---------- ---------- --------------- --------------- ------------- --------
Balance at 31
December
2021 954 63,502 34,997 (24,722) (27,301) 47,430 93 47,523
Loss for the
year - - - - (8,859) (8,859) 279 (8,580)
Other
comprehensive
expenditure - - - (5,158) - (5,158) - (5,158)
-------------- -------- --------- ---------- ---------- --------------- --------------- ------------- --------
Total
comprehensive
loss for the
year - - - (5,158) (8,859) (14,017) 279 (13,738)
Shares issued
in the
year 4 210 - - - 214 - 214
Cost of
share-based
payments
(Note 40) - - 158 - - 158 - 158
Transfer for
lapsed
options - - (168) - 168 - - -
-------------- -------- --------- ---------- ---------- --------------- --------------- ------------- --------
Balance at 31
December
2022 958 63,712 34,987 (29,880) (35,992) 33,785 372 34,157
-------------- -------- --------- ---------- ---------- --------------- --------------- ------------- --------
Gama Aviation Plc
Consolidated cash flow statement
For the year ended 31 December 2022
Year ended 2022 Year ended 2021
Note $'000 $'000
------------------------------------------------------------------- ---- ---------------- ---------------
Cash flows from operating activities
Loss for the year (8,580) (8,765)
Adjustments for:
Tax credit 13 (885) (1,980)
Finance income 11 (108) (617)
Finance costs 12 9,945 4,110
Amortisation of intangible assets 19 3,396 3,355
Depreciation of property, plant and equipment 21 5,870 6,441
Depreciation of right-of-use assets 22 6,001 7,524
Impairment of goodwill 18 787 -
Impairment of property, plant and equipment 21 2,640 -
Impairment of right-of-use assets 22 - 1,911
Lease credit recognised 10 - (110)
Loss/(profit) on derecognition of leases 10 - (1,626)
(Gain)/loss on disposal of property, plant and equipment 21 (1,741) 6
Share of loss of associates 23 - 1,491
Reversal of impairment of equity accounted investment in associate 23 - (1,491)
Forgiveness of PPP loan 31 (1,000) -
Share-based payments 40 372 257
------------------------------------------------------------------- ---- ---------------- ---------------
Operating cash inflow before movements in working capital 16,697 10,506
Unrealised foreign exchange movements (2,107) (656)
Decrease/(increase) in gross inventories 1,063 (1,567)
Increase in inventory obsolescence 65 18
Decrease in gross receivables 2,083 6,229
Decrease in loss allowance for receivables (299) (1,255)
Increase/(decrease) in payables and deferred consideration 11,615 (19)
Increase/(decrease) in deferred revenue 1,190 (4,847)
Increase/(decrease) in provisions 1,164 (685)
------------------------------------------------------------------- ---- ---------------- ---------------
Working capital movements 14,774 (2,782)
------------------------------------------------------------------- ---- ---------------- ---------------
Cash generated by operations 31,471 7,724
Tax paid on operating activities (96) (3,289)
Tax refunds received - 790
------------------------------------------------------------------- ---- ---------------- ---------------
Net cash generated by operating activities 31,375 5,225
------------------------------------------------------------------- ---- ---------------- ---------------
Year ended 2022 Year ended 2021
Note $'000 $'000
------------------------------------------------------- ---- --------------------- ---------------
Cash flows from investing activities
Purchases of property, plant and equipment (4,011) (3,379)
Purchases of intangibles (1,829) (2,604)
Proceeds on disposal of property, plant and equipment 21 27,079 -
Proceeds on disposal of assets held for sale 23 - 2,000
Interest received - 1,061
Acquisition of business, net of cash acquired - (8,146)
------------------------------------------------------- ---- --------------------- ---------------
Net cash received/(used) in investing activities 21,239 (11,068)
------------------------------------------------------- ---- --------------------- ---------------
Cash flows from financing activities
Lease payments (11,832) (9,567)
Interest paid (1,272) (709)
Proceeds from borrowings, net of loan arrangement fees 31 18,690 22,574
Repayment of borrowings 31 (46,525) (12,361)
Lease payment received 91 -
Interest paid 70 -
Net cash used in financing activities (40,778) (63)
------------------------------------------------------- ---- --------------------- ---------------
Net increase/(decrease) in cash and cash equivalents 11,836 (5,906)
Cash and cash equivalents at the beginning of year 10,243 16,136
Effect of foreign exchange rates 327 13
------------------------------------------------------- ---- --------------------- ---------------
Cash and cash equivalents at the end of year 26 22,406 10,243
------------------------------------------------------- ---- --------------------- ---------------
Notes to the financial statements
For the year ended 31 December 2022
1. General information
Gama Aviation Plc (the "Company") is a public limited company
(company number 07264678) whose shares are listed on the
Alternative Investment Market (AIM) of the London Stock Exchange
under the ticker symbol GMAA and is incorporated and domiciled in
England in the United Kingdom. The address of the registered office
is 1(st) Floor, 25 Templer Avenue, Farnborough, Hampshire, England,
GU14 6FE.
The Company, together with its subsidiaries and other related
undertakings (the "Group"), is involved in the provision of
aviation services, including aviation design, maintenance,
operational management, charter, software and facilities
expertise.
2. Subsidiaries and other related undertakings
Details of the Company's subsidiaries and other related
undertakings held directly or indirectly at 31 December 2022 are as
follows:
Proportion Proportion
of voting of voting
Place of and ownership and ownership
incorporation interest interest
Name and operation 2022 2021 Nature of business Registered address
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Airops Software England and
Limited(1) Wales 100% 100% Aviation software Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
England and
Aravco Limited(1) Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
England and Airworthiness
FlyerTech Limited(1) Wales 100% 100% management Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation (Asset England and
2) Limited(1) Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
(Engineering) England and Aviation design
Limited(1) Wales 100% 100% and engineering Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation (UK) England and
Limited(1) Wales 100% 100% Aviation management Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama (Engineering) England and
Limited(1) Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
England and
Gama Group Limited Wales 100% 100% Holding company Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Support
Services England and
Limited(1) Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Hangar 8 Management England and
Limited Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
International
JetClub England and
Limited Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Ronaldson Airmotive England and
Limited(1) Wales 100% 100% Dormant Head Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
(Beauport)
Limited(1) Jersey 100% 100% Aviation management Jersey Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation Aviation design
(Engineering) and engineering
Jersey Limited(1) Jersey 100% 100% and FBO Jersey Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
SAIF Free Zone, SAIF Suite Z-21,
Gama Aviation United Arab P.O. Box 122389,
FZC(1,2) Emirates 49% 49% Aviation management Sharjah, UAE
-------------------- --------------------- -------------- -------------- ------------------- --------------------
SAIF Office
Q1-09-067/C,
Gama Group Mena United Arab P.O. Box 122464,
FZE Emirates 100% 100% Holding company Sharjah, UAE
-------------------- --------------------- -------------- -------------- ------------------- --------------------
SAIF Lounge P.O.
United Arab Box 121954, Sharjah,
Gama Holdings FZC Emirates 100% 100% Dormant UAE
-------------------- --------------------- -------------- -------------- ------------------- --------------------
SAIF Desk
Gama Support Aviation design Q1-05-123/B,
Services United Arab and engineering P.O. Box 122553,
FZE(1) Emirates 100% 100% and FBO Sharjah, UAE
-------------------- --------------------- -------------- -------------- ------------------- --------------------
2428 Res Co-work
03 Level 24,
Al Sila Tower,
Abu Dhabi Global
Market Square,
Gama Aviation SPV United Arab Al Maryah Island,
Limited (Plc)(1) Emirates 100% 100% Aviation management Abu Dhabi, UAE
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
(Engineering) Aviation design
Inc.(1) Delaware, USA 100% 100% and engineering Delaware Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
(Management)
Inc.(1) Delaware, USA 100% 100% Non-trading Delaware Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Group Inc. Delaware, USA 100% 100% Holding company Delaware Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Aviation design
Jet East Aviation Pennsylvania, and engineering
Corporation, LLC(1) USA 100% 100% and FBO Trenton Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
Engineering Aviation design
(HK) Limited(1) Hong Kong 100% 100% and engineering Hong Kong Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation
Hutchison
Holdings Limited(1) Hong Kong 100% 100% Holding company Hong Kong Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Aviation (HK)
Limited(1) Hong Kong 100% 100% Aviation management Hong Kong Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Gama Group (Asia)
Limited Hong Kong 100% 100% Holding company Hong Kong Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
151 Monument
Star-Gate Aviation Road, Aston Manor
(Proprietary) Holder of South 1619
Limited South Africa 100% 100% African AOC South Africa
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Applicant of
Hangar 8 Nigeria Nigerian
Limited(3) Nigeria 100% 100% AOC (8)
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Maples Corporate
Services Limited,
PO Box 309, Ugland
Gama Aviation House, Grand
(Cayman) Cayman, KY1-1104,
SEZC Cayman Islands 100% 100% Aviation Management Cayman Islands
-------------------- --------------------- -------------- -------------- ------------------- --------------------
ul. Komitetu
Obrony Robotnikow
62, 2(nd) Floor,
02-146 Warsaw,
FlyerTech Europe Airworthiness Poland, NIP:
Sp. Z.o.o. Poland 100% 100% management 7831827059
-------------------- --------------------- -------------- -------------- ------------------- --------------------
GB Aviation Holdings Joint venture -
LLC(6) Delaware, USA 50% 50% non-trading Delaware Office
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Room 250, 2(nd)
Floor, Building
Gama Aviation 1, No. 56,
Hutchison Zhaoquanying
Technical Service Section, Changjin
(Beijing) Road, Shunyi
Limited(1) China 100% 100% Non-trading District, Beijing
-------------------- --------------------- -------------- -------------- ------------------- --------------------
Compass House,
Lypiatt Road,
Bond Helicopters England and Joint venture - Cheltenham, England,
Limited(1,7) Wales 50% - non-trading GL50 2QJ
-------------------- --------------------- -------------- -------------- ------------------- --------------------
(1) Indicates indirect holding.
(2) Gama Aviation Plc holds a 49% shareholding in Gama Aviation
FZC. The results of Gama Aviation FZC are fully consolidated within
the financial statements because Gama Aviation Plc is exposed to
variable returns from its involvement and has the ability to affect
the returns through its power over these companies. Refer to Note
38 for further details.
(3) Gama Aviation Plc holds 11% of the share capital in Hangar 8
Nigeria Limited, a company established in Lagos, Nigeria. Whilst
the Group does not have legal control of this entity, the Directors
and officers comprise only management from the Group who have the
ability to adopt, amend and control the operating and financial
policies of the entity. Local regulations prevent the Group holding
a legally controlling shareholding and therefore 89% of the share
capital is held on behalf of the Group by Tinubu Investment Company
Limited. Accordingly, the entity has been treated as a wholly owned
subsidiary in these financial statements.
(6) GB Aviation Holdings LLC is the entity jointly held with Signature Aviation plc.
(7) Bond Helicopters Limited is the entity jointly held with Peter Bond.
(8) The registered office address of this company is available
upon request at the Company's Head Office at the above address.
The addresses for the specified offices are:
Head Office: 1(st) Floor 25 Templer Avenue, Farnborough,
Hampshire, England, GU14 6FE
Jersey Office: Beauport House, L'Avenue De La Commune, St Peter,
Jersey, JE3 7BY
Delaware Office: Corporation Service Company, 251 Little Falls
Drive, Wilmington, Delaware 19808, USA
Trenton Office: 18 West Piper Ave, Trenton, New Jersey 08628,
USA
Hong Kong Office: 7(th) Floor, 81 South Perimeter Road, Hong
Kong International Airport, Lantau, Hong Kong
During the year ended 31 December 2022, the Company disposed of
the following undertakings held directly or indirectly at 31
December 2021:
Name Place of Proportion Proportion Method of Registered address
incorporation of voting of voting disposal
and operation and ownership and ownership
interest interest
2022 2021
------------------- --------------- -------------- -------------- --------- ---------------------------
Gama International Kingdom of - nil(2) Sold 6646 Abi Haitham
Saudi Arabia(1) Saudi Arabia Al Ansari, al Madina
Square Center -
Office 2 & 3, Muhammadiyah
District, Jeddah
23624-3270, KSA
------------------- --------------- -------------- -------------- --------- ---------------------------
Lynk Aero
LLC(1) Ohio, USA - 100% Dissolved Trenton Office
------------------- --------------- -------------- -------------- --------- ---------------------------
(1) Indicates indirect holding.
(2) No non-controlling interest was recognised as the Group had
the full beneficial interest.
3. Accounting policies
Basis of preparation
The Consolidated Financial Statements of the Group have been
prepared in accordance with UK adopted International Accounting
Standards, in conformity with the requirements of the Companies Act
2006.
The Consolidated Financial Statements have been prepared on a
going concern basis and under the historical cost convention,
except as disclosed in the accounting policies below.
The financial statements are presented in United States Dollars
(USD), rounded to the nearest thousand (USD000) unless otherwise
stated.
Climate Change
In preparing the Consolidated Financial Statements the Group has
informally considered the impact of climate change, particularly in
the context of the disclosures included in our Corporate Social
Responsibility report. These considerations did not have a material
impact on the financial reporting judgements and estimates,
consistent with the assessment that climate change is not expected
to have a significant impact on the Group's going concern
assessment.
Going concern
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 annual
financial statements to 31 December 2024. The Directors have also
considered the outlook for the business beyond 31 December 2024
based upon its updated 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 recovery of legacy debtor balances,
-- The planned sale and/or sale and lease back of Group assets
-- The GBP20.0m HSBC Term Loan which was repaid on 25 January 2023,
-- The $5.0m Great Rock Capital Term Loan and a delayed $1.5m
Delayed Term which is currently undrawn.
-- The Revolving Credit Facility ("RCF") of up to initially
$15.0m with the potential to increase to $20m (the amount available
to be drawn down is subject to various restrictions both in value
and use outside the US) from Great Rock Capital of which $9.0m was
undrawn as of 31 December 2022 and $7.2m was undrawn as of 30 April
2023.
-- The GBP9.4m ($11.1m) loan from Close Brothers that completed
on 3 March 2023, and which is secured on owned aircraft,
-- Cash of $22.5m as of 31 December 2022 and $6.1m as of 30 April 2023.
The credit facilities with Great Rock Capital are held in the
Company's US subsidiary and are subject to financial covenants and
expire in December 2026.
The RCF is settled and drawn down on a cyclical basis and has
been presented in current liabilities.
The term loan with Great Rock Capital falls due for repayment
over twelve months from the reporting date and has been presented
in non-current liabilities.
The key assumptions in the Board approved base case projections
relate to revenue, profit performance and working capital cash
flows. Additionally, the detailed cashflow projections consider
planned future events within 2023 and 2024, including the
Directors' assessment of:
-- The likelihood of recovery of legacy debtor balances and
-- The likelihood of completing the planned sale and/or sale and
lease back of Group assets
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.
The severe but plausible downside scenario assumes the
following:
-- EBITDA is 20% lower than the Board approved base case projections
-- Working capital outflows are 25% higher than the Board
approved base case projections
-- Funding costs will be 2% higher than current rates
-- Corporation tax rates will be 5% higher than current rates
In both the base case scenario and the severe but plausible
downside scenario, the Directors are satisfied that the Group has
sufficient headroom and potential further mitigation to ensure that
the Group will remain solvent and able to pay its debts as they
fall due during a period of at least 12 months from the date of
approval of these annual financial statements.
Accordingly, after making appropriate enquiries and considering
the uncertainties described above, the Directors have, at the time
of approving these annual financial statements, a reasonable
expectation that the Group has adequate resources to continue in
operational existence for the foreseeable future and, consequently,
consider that it is appropriate to adopt the going concern basis in
preparing these annual financial statements.
However, certain assumptions within the cash flow forecasts
relating to receipt of legacy debtor balances , and the planned
sale and/or sale and lease back of Group assets which have not been
concluded at the time of approving the financial statements and
there is a risk that these events may not be completed in the time
scales planned as they are not fully under the control of the
Group. Consequently, there is a material uncertainty that may cast
significant doubt about the Group's ability to continue as a going
concern.
If one or more of these events do not occur, the Directors
anticipate undertaking additional fundraising and asset realisation
alongside cost and cash savings to ensure that the Group is able to
meet its liabilities as they fall due.
The financial statements do not include any adjustments that
would result if the Group were unable to continue as a going
concern.
Changes in accounting policies and practices
In the preparation of these Consolidated Financial Statements,
the Group followed the same accounting policies and methods of
computation as compared to those applied in the previous period,
except for:
-- the reclassification of depreciation charges relating to
aircraft and refurbishment, and leasehold property improvements
from administrative expenses to cost of sales, and
-- the adoption of new standards and interpretations and
revision of the existing standards noted below.
New and amended standards adopted by the Group in 2022
The following amendments to existing standards and
interpretations were effective in the year ended 31 December 2022,
but were either not applicable or did not have a material impact on
the Group:
-- Amendments to IAS 16 Property, Plant and Equipment
-- Amendments to IAS 37 Provisions, Contingent Liabilities and Contingent Assets
-- Amendments to IFRS 3 Business Combinations
-- Annual Improvements to IFRS Standards 2018-2020 Cycle - minor
amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41
New and amended standards not applied
The following standards and interpretations in issue are not yet
effective for the Group and have not been adopted by the Group:
Effective dates (1)
----------------------------------------------------------------------------------------------- ---------------------
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current 1 January 2023
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure
of Accounting Policies 1 January 2023
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition
of Accounting Estimates 1 January 2023
Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising
from a Single Transaction 1 January 2023
IFRS 17 Insurance Contracts 1 January 2023
Amendments to IFRS 17 Insurance Contracts 1 January 2023
Amendments to IAS 1 Presentation of Financial Statements: Non-current Liabilities with
Covenants 1 January 2024
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback 1 January 2024
----------------------------------------------------------------------------------------------- ---------------------
(1) The effective dates stated above are those given in the
original IASB/IFRIC standards and interpretations. As the Group
prepares its financial statements in accordance with International
Accounting Standards, in conformity with the requirements of the
Companies Act 2006, the application of new standards and
interpretations will be subject to there having been endorsed for
use in the UK. In the majority of cases this will result in an
effective date consistent with that given in the original standard
or interpretation, but the need for endorsement restricts the
Group's discretion to early adopt standards.
The Directors do not expect the adoption of these standards and
interpretations to have a material impact on the Consolidated
financial statements.
Significant accounting policies
The principal accounting policies adopted in the preparation of
these Consolidated Financial Statements are set out below.
Basis of consolidation
The Consolidated Financial Statements incorporate the financial
statements of the Company and the subsidiaries controlled by the
Company for the years ended 31 December 2022 and 31 December 2021.
The Group controls an investee if, and only if, the Gro up has all
of the following:
-- Power over the investee (i.e. existing rights that give it
the current ability to direct the relevant activities of the
investee)
-- Exposure, or rights, to variable returns from its involvement with the investee, and
-- The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting
rights result in control. To support this presumption and when the
Group has less than a majority of the voting or similar rights of
an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee,
including:
-- The contractual arrangement with the other vote holders of the investee
-- Rights arising from other contractual arrangements
-- The Group's voting rights and potential voting rights
The Group re-assesses whether or not it controls an investee if
facts and circumstances indicate that there are changes to one or
more of the three elements of control. Consolidation of a
subsidiary begins when the Group obtains control over the
subsidiary and ceases when the Group loses control of the
subsidiary. Assets, liabilities, income and expenses of a
subsidiary acquired or disposed of during the period are included
in the Consolidated Financial Statements from the date the Group
gains control until the date the Group ceases to control the
subsidiary.
Subsidiaries
Subsidiaries are entities controlled by the Group. The financial
statements of subsidiaries are included in the Consolidated
Financial Statements from the date on which control commences until
the date on which control ceases.
The subsidiary financial statements are prepared for the same
reporting period as the Parent Company and are based on consistent
accounting policies. All intra-group balances and transactions,
including unrealised profit arising from them are eliminated in
full.
A change in the ownership interest of a subsidiary, without loss
of control, is accounted for as an equity transaction. If the Group
loses control of a subsidiary it:
-- Derecognises the assets (including goodwill) and liabilities of the subsidiary,
-- Derecognises the carrying amount of any non-controlling interest,
-- Derecognises the cumulative translation differences recorded in equity,
-- Recognises the fair value of the consideration received,
-- Recognises the fair value of any investment retained,
-- Recognises any surplus or deficit in profit or loss, and
-- Recognises the parent's share of any components previously
recognised in other comprehensive income, to profit or loss or
retained earnings, as appropriate.
Business combinations
Business combinations are accounted for using the acquisition
method. The cost of any acquisition is measured as the aggregate of
the consideration transferred, measured at acquisition date fair
value, and the amount of any non-controlling interest in the
acquiree. For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquirer's identifiable net assets.
Acquisition costs incurred are expensed and included within
adjusting items.
When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
circumstances, and pertinent conditions as at the acquisition date.
This includes the separation of embedded derivatives in host
contracts by the acquiree.
Goodwill is initially recognised at cost, being the excess of
the aggregate of the consideration transferred and the amount
recognised for non-controlling interest, over the net identifiable
assets acquired and liabilities assumed. If this consideration is
lower than the fair value of the net assets of the subsidiary
acquired, the difference is recognised in profit or loss.
After initial recognition, goodwill is measured at cost less any
accumulated impairment losses. For impairment testing, goodwill
acquired in a business combination is, from the acquisition date,
allocated to each of the Group's cash-generating units ("CGUs")
that are expected to benefit from the combination, irrespective of
whether assets or liabilities of the acquisition are assigned to
those units.
Where goodwill forms part of a CGU, and part of the operation
within that unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount of the
operation when determining the gain or loss on disposal of the
operation. Goodwill disposed of in this circumstance is measured
based on the relative values of the operation disposed of and the
portion of the CGU retained.
Associates
Where the Group has the power to participate in (but not
control) the financial and operating policy decisions of another
entity, it is classified as an associate. Associates are initially
recognised in the Consolidated Balance Sheet at cost. Subsequently,
associates are accounted for using the equity method, where the
Group's share of post-acquisition profits and losses and other
comprehensive income is recognised in the Consolidated Income
Statement and Consolidated Statement of Comprehensive Income
(except for losses in excess of the Group's investment in the
associate, unless there is an obligation to make good those
losses).
Profits and losses arising on transactions between the Group and
its associates are recognised only to the extent of unrelated
investors' interest s in the associate. The Group's share in the
associate's profits and losses resulting from these transactions is
eliminated against the carrying value if the associate.
Any premium paid for an associate above the fair value of the
Group's share of the identifiable assets, liabilities and
contingent liabilities acquired, is capitalised and included in the
carrying amount of the associate. Where there is objective evidence
that the investment in an associate has been impaired, the carrying
amount of the investment is tested for impairment in the same way
as other non-financial assets.
Joint ventures
A joint venture is a type of joint arrangement whereby the
parties that have joint control of the arrangement have rights to
the net assets of the joint venture. Joint control is the
contractually agreed sharing of control of an arrangement, which
exists only when decisions about the relevant activities require
the unanimous consent of the parties sharing control.
The considerations made in determining joint control is similar
to those necessary to determine control over subsidiaries.
The Group's investments in its joint ventures are initially
recognised in the Consolidated Balance Sheet at cost. Subsequently,
joint ventures are accounted for using the equity method, where the
Group's share of post-acquisition profits and losses and other
comprehensive income is recognised in the Consolidated Income
Statement and Consolidated Statement of Comprehensive Income
(except for losses in excess of the Group's investment in the joint
venture, unless there is an obligation to make good those
losses).
Revenue from contracts with customers
The Group recognises revenue from the following major
sources:
-- Business Aviation:
o Managed aircraft contracts and specific air services
o Charter services
o Maintenance of aircraft
o Fixed base operations
-- Special Mission:
o Mission solutions and expertise with aviation assets
-- Technology & Outsourcing (T&O):
o Airworthiness services
o Software solutions
-- Branding fees
Revenue is measured based on the fair value of the consideration
received or receivable, taking into account contractually-defined
terms of payment in relation to when the performance obligation is
met, and excludes amounts collected on behalf of third parties.
The transaction price represents the price to which the Group
expects to be entitled, consistent with contractually defined
terms, in return for delivering goods and/or services to its
customers. Revenue from contracts with customers is recognised when
the Group transfers control of a product or service to a customer
or when it meets the performance obligations specified or implied
in the contract.
Managed aircraft contracts and specific air services
Services provided by the Group under managed aircraft contracts
include flight training, cost management, flight planning and
scheduling, crew management, maintenance oversight and regulatory
compliance. Services under managed aircraft contracts fall into one
or more of the following contract components:
-- Pre-delivery services and services prior to aircraft's entry into service
-- Management services
-- Variable fees based on flying hours and related rechargeable costs
These services are distinct services as the customer can benefit
from each service on its own and the Group's promise to provide the
service is separately identifiable from other promises in the
contract. The three contract components are therefore deemed to be
separate performance obligations.
Revenue for the provision of pre-delivery services and services
prior to aircraft's entry into service are recognised at a point in
time when control of the services has transferred to the customer,
being at the point the services have been performed. Payment for
the provision of pre-delivery services and services prior to
aircraft's entry into service are not due from the customer until
the activities are complete.
Revenue relating to management services are recognised over time
on a straight-line basis over the term of the contract, as the
customer simultaneously receives and consumes the benefits provided
by the Group.
Payment for management services is mostly in the form of
quarterly or monthly advance payments from customers. A contract
liability is recognised for revenue relating to management services
at the time of receipt of the funds from the customer. The contract
liability represents the Group's obligation for services still to
be performed.
Revenue relating to variable flying hours revenue is recognised
monthly at a point in time based upon actual flight information and
other relevant information held on the internal billing system.
Payment for revenue related to variable flying hours is not due
from the customer until the activities are complete.
Rechargeable costs are recognised gross, as revenue and related
cost of sales, at a point in time based upon either actual
rechargeable costs or estimated costs to be recharged. Payment for
revenue arising from rechargeable costs is not due from the
customer until the activities are complete.
The Group has considered whether it is acting as agent or
principal in the context of its managed aircraft contracts and has
concluded that it is the principal in relation to the entirety of
these contracts. Rechargeable costs are recognised gross because
the Group controls the services before they are transferred to
customers and they are linked to wider management services.
Charter services
The Group provides both managed fleet and sub-contracted charter
services. Revenue relating to charter services is recognised over
time based on the stage of completion of the service. The stage of
completion is determined as the proportion of the total duration of
the charter that has elapsed at the end of the reporting period.
Payment for charter services is not due from the customer until the
charter services are complete. Consequently, a contract asset is
recognised over the period in which the charter services are
performed, representing the Group's right to consideration for the
services performed to date.
The Group has considered whether it is acting as agent or
principal in the context of its sub-contracted charter services and
has concluded that it is the principal.
Maintenance of aircraft
The Group provides both base and line maintenance services. Base
maintenance relates to the planned maintenance that is required by
the aircraft manufacturer or component supplier. This work is
complex, highly regulated and location specific. Line maintenance
covers irregular maintenance activities, component failure or
simple wear and tear. Both types of services are provided on a fee
or contract basis.
Revenue relating to maintenance services is recognised over time
based on the stage of completion of the contract. The stage of
completion is determined as the proportion of the total labour
hours expected to perform the service that have been expended at
the end of the reporting period. Payment for higher value base
maintenance services is mostly in the form of stage payments from
customers. To the extent that the value of the stage payment
exceeds the revenue recognised at the end of the reporting period
based on the stage of completion, a contract liability is
recognised. The contract liability represents the Group's
obligation for services still to be performed.
As part of the maintenance activities, the Group sells parts to
customers. Revenue from the sale of parts is recognised at a point
in time when control of the goods has transferred to the customer,
being at the point the goods are delivered to the customer.
Fixed base operation
The Group provides fixed base operation activities in the US,
Jersey, the UK, and the Middle East. These activities include
hangar parking, apron parking, provision of fuel, and handling
activities.
Revenue for the provision of fuel is recognised at a point in
time when control of the goods has transferred to the customer,
being at the point the goods are delivered to the customer. Revenue
for all other fixed base operation activities is recognised over
time as the service is provided.
Mission solutions and expertise with aviation assets
Revenue includes fixed contract fees and variable fees such as
revenue earned with reference to flying hours or other support
services. In addition, t he Group undertakes certain equipment
design and modification activities for some customers.
Revenue relating to fixed contract fees are recognised over time
on a straight-line basis over the term of the contract. Payment for
fixed contract fees is mostly in the form of annual or quarterly
advance payments from customers. A contract liability is recognised
for revenue relating to fixed contract fees at the time of receipt
of the funds from the customer. The contract liability represents
the Group's obligation for services still to be performed.
Revenue relating to variable fees is recognised over time based
on the stage of completion of the contract. The stage of completion
is determined as the proportion of the total hours expected to
perform the service that have been expended at the end of the
reporting period. Payment for variable fees is not due from the
customer until the activities are complete. Consequently, a
contract asset is recognised over the period in which the
activities are performed, representing the Group's right to
consideration for the services performed to date.
Revenue relating to equipment design and modification activities
is recognised over time based on the stage of completion of the
related design and modification work. The stage of completion is
determined as the proportion of the total labour hours expected to
perform the service that have been expended at the end of the
reporting period. Payment for equipment design and modification
activities are not due from the customer until the activities are
complete. Consequently, a contract asset is recognised over the
period in which the activities are performed, representing the
Group's right to consideration for the services performed to
date.
Payment for some higher value equipment design and modification
activities is in the form of stage payments from customers. To the
extent that the value of the stage payment exceeds the revenue
recognised at the end of the reporting period based on the stage of
completion, a contract liability is recognised. The contract
liability represents the Group's obligation for services still to
be performed.
Airworthiness services
The Group provides continuing airworthiness management and
airworthiness review certification services for business aviation,
military, and commercial airline operators. Revenue from these
activities includes fixed contract fees and variable fees, such as
revenue earned with reference to ad-hoc services.
Revenue relating to fixed contract fees are recognised over time
on a straight-line basis over the term of the contract. Payment for
fixed contract fees is mostly in the form of monthly advance
payments from customers. A contract liability is recognised for
revenue relating to fixed contract fees at the time of receipt of
the funds from the customer. The contract liability represents the
Group's obligation for services still to be performed.
Revenue relating to variable fees is recognised over time based
on the stage of completion of the contract. The stage of completion
is determined as the proportion of the total hours expected to
perform the service that have been expended at the end of the
reporting period. Payment for variable fees is not due from the
customer until the activities are complete. Consequently, a
contract asset is recognised over the period in which the
activities are performed, representing the Group's right to
consideration for the services performed to date.
Software solutions
The Group has developed a suite of business aviation products
deployed as "Software as a Service" and mobile application
solutions for flight and aircraft management, maintenance tracking,
ground o perations and crew scheduling and operations.
Revenue relating to the use of these software products are
recognised over time on a straight-line basis over the term of the
contract. Payment for use of the software products is mostly in the
form of annual or monthly advance payments from customers. A
contract liability is recognised for revenue relating to the use of
the software products at the time of receipt of the funds from the
customer. The contract liability represents the Group's obligation
for services still to be performed.
Branding fees
The Group received a branding fee from Gama Aviation LLC for the
continued use of the Gama Aviation Signature brand. Revenue
relating to the branding fee is recognised over time (as the
customer simultaneously receives and consumes the benefits provided
by the Group) on a straight-line basis over the remaining term of
the contract.
Payment for use of the brand was received in March 2020. A
contract liability was recognised for revenue relating to the use
of the brand at the time of receipt of the funds. The remaining
balance of the contract liability was fully derecognised in
February 2022.
Government grants
Government grants are not recognised until there is reasonable
assurance that the Group will comply with the conditions attaching
to them and that the grants will be received.
Government grants are recognised in profit or loss on a
systematic basis over the periods in which the Group recognises as
expenses the related costs for which the grants are intended to
compensate. Specifically, government grants whose primary condition
is that the Group should purchase, construct or otherwise acquire
non-current assets (including property, plant and equipment) are
recognised as deferred income in the Consolidated Balance Sheet and
transferred to profit or loss on a systematic and rational basis
over the useful lives of the related assets.
Government grants that are receivable as compensation for
expenses or losses already incurred or for the purpose of giving
immediate financial support to the Group with no future related
costs are recognised in profit or loss in the period in which they
become receivable.
The benefit of a government loan at a below-market rate of
interest is treated as a government grant, measured as the
difference between proceeds received and the fair value of the loan
based on prevailing market interest rates.
Foreign currencies
The individual financial statements of each Group company are
presented in the currency of the primary economic environment in
which it operates (its functional currency). For the purpose of the
Consolidated Financial Statements, the results and financial
position of each Group company are reported in US Dollars, which is
the presentation currency for the Consolidated Financial
Statements.
In preparing the financial statements of the individual
entities, transactions in currencies other than the entity's
functional currency (foreign currencies) are recorded at the rates
of exchange prevailing at the dates of the transactions. At each
balance sheet date, monetary assets and liabilities that are
denominated in foreign currencies are retranslated at the rates
prevailing at that date.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rates as at
the dates of the initial transactions. Non-monetary items measured
at fair value in a foreign currency are translated using the
exchange rates at the date when the fair value was determined. All
resulting differences are taken to the Consolidated Income
Statement. Foreign currency fluctuations on monetary items that are
financing in nature, being foreign currency borrowings, are
presented in finance income or expenses. All other foreign currency
fluctuations on monetary items are presented within earnings before
interest and taxation.
For the purpose of presenting Consolidated Financial Statements,
the assets and liabilities of the Group's foreign operations are
expressed in US Dollars using the exchange rates prevailing at the
end of the reporting period. Income and expense items are
translated at the average exchange rates for the period. Exchange
differences arising, if any, are classified as other comprehensive
income and transferred to the Group's translation reserve.
Goodwill and fair value adjustments arising on the acquisition
of a foreign operation are treated as assets and liabilities of the
foreign operation and translated at the closing rate.
Supplier volume rebates
The Group has supplier contracts for the provision of certain
services, which attract volume rebates, the credit for which is
initially recognised centrally and together with other central
income and expenses allocated to the respective divisions as
appropriate. The anticipated rebate receivable is accrued
throughout the year based on the agreement terms.
Retirement benefit costs
Payments to defined contribution retirement benefit plans are
recognised as an expense when employees have rendered the service
entitling them to the contributions. Payments made to state-managed
retirement benefit plans are accounted for as payments to defined
contribution plans where the Group's obligations under the plans
are equivalent to those arising in a defined contribution
retirement benefit plan.
Short-term and other long-term employee benefits
A liability is recognised for benefits accruing to employees in
respect of wages and salaries, annual leave and sick leave in the
period the related service is rendered at the undiscounted amount
of the benefits expected to be paid in exchange for that
service.
Liabilities recognised in respect of short-term employee
benefits are measured at the undiscounted amount of the benefits
expected to be paid in exchange for the related service.
Liabilities recognised in respect of other long-term employee
benefits are measured at the present value of the estimated future
cash outflows expected to be made by the Group in respect of
services provided by employees up to the reporting date.
Leases
The Group as lessee
The Group assesses whether a contract is, or contains, a lease
at inception of the contract. The Group recognises a right-of-use
asset and a corresponding lease liability with respect to all lease
arrangements in which it is the lessee, except for short-term
leases (defined as leases with a lease term of 12 months or less)
and leases of low value assets (determined to be those with an
initial discounted total obligation of less than $5,000). For these
leases, the Group recognises the lease payments as an operating
expense on a straight-line basis over the term of the lease unless
another systematic basis is more representative of the time pattern
in which economic benefits from the leased assets are consumed.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the commencement date,
discounted by using the rate implicit in the lease. If that rate
cannot be readily determined, the Group uses its incremental
borrowing rate.
The incremental borrowing rate depends on the term, currency and
start date of the lease and is determined based on a series of
inputs including: the risk-free rate based on government bond
rates; a country-specific risk adjustment; a credit risk adjustment
based on bond yields; and an entity-specific adjustment when the
risk profile of the entity that enters into the lease is different
to that of the Group and the lease does not benefit from a
guarantee from the Group.
Lease payments included in the measurement of the lease
liability comprise:
-- Fixed lease payments (including in-substance fixed payments),
less any lease incentives receivable,
-- Variable lease payments that depend on an index or rate,
initially measured using the index or rate at the commencement
date,
-- The amount expected to be payable by the lessee under residual value guarantees,
-- The exercise price of purchase options, if the lessee is
reasonably certain to exercise the options,
-- Payments of penalties for terminating the lease, if the lease
term reflects the exercise of an option to terminate the lease
The lease liability is presented as a separate line in the
consolidated statement of financial position.
The lease liability is subsequently measured by increasing the
carrying amount to reflect interest on the lease liability (using
the effective interest method) and by reducing the carrying amount
to reflect the lease payments made.
The Group remeasures the lease liability (and makes a
corresponding adjustment to the related right-of-use asset)
whenever:
-- The lease term has changed or there is a significant event or
change in circumstances resulting in a change in the assessment of
exercise of a purchase option, in which case the lease liability is
remeasured by discounting the revised lease payments using a
revised discount rate,
-- The lease payments change due to changes in an index or rate
or a change in expected payment under a guaranteed residual value,
in which cases the lease liability is remeasured by discounting the
revised lease payments using an unchanged discount rate (unless the
lease payments change is due to a change in a floating interest
rate, in which case a revised discount rate is used),
-- A lease contract is modified and the lease modification is
not accounted for as a separate lease, in which case the lease
liability is remeasured based on the lease term of the modified
lease by discounting the revised lease payments using a revised
discount rate at the effective date of the modification.
The right-of-use assets comprise the initial measurement of the
corresponding lease liability, lease payments made at or before the
commencement day, less any lease incentives received and any
initial direct costs. They are subsequently measured at cost less
accumulated depreciation and impairment losses.
Whenever the Group incurs an obligation for costs to dismantle
and remove a leased asset, restore the site on which it is located
or restore the underlying asset to the condition required by the
terms and conditions of the lease, a provision is recognised and
measured under IAS 37. To the extent that the costs relate to a
right-of-use asset, the costs are included in the related
right-of-use asset, unless those costs are incurred to produce
inventories.
Right-of-use assets are depreciated over the shorter period of
lease term and useful life of the right-of-use asset. If a lease
transfers ownership of the underlying asset or the cost of the
right-of-use asset reflects that the Group expects to exercise a
purchase option, the related right-of-use asset is depreciated over
the useful life of the underlying asset. The depreciation starts at
the commencement date of the lease.
The right-of-use assets are presented as a separate line in the
Consolidated Balance Sheet.
The Group applies IAS 36 to determine whether a right-of-use
asset is impaired and accounts for any identified impairment loss
as described in the "Impairment of property, plant and equipment
and intangible assets excluding goodwill" policy.
Variable rents that do not depend on an index or rate are not
included in the measurement the lease liability and the
right-of-use asset. The related payments are recognised as an
expense in the period in which the event or condition that triggers
those payments occurs and are included in the line "Administrative
expenses" in profit or loss (see Note 10).
As a practical expedient, IFRS 16 permits a lessee not to
separate non-lease components, and instead account for any lease
and associated non-lease components as a single arrangement. The
Group has not used this practical expedient. For contracts that
contain a lease component and one or more additional lease or
non-lease components, the Group allocates the consideration in the
contract to each lease component on the basis of the relative
stand-alone price of the lease component and the aggregate
stand-alone price of the non-lease components.
Rent free concessions granted during the COVID-19 pandemic have
been credited to the income statement in the year they were
granted, with a resulting reduction in the lease obligation.
The Group as lessor
The Group enters into lease agreements as a lessor for some of
its property included within its right-of-use assets.
Leases for which the Group is a lessor are classified as finance
or operating leases. Whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee,
the contract is classified as a finance lease. All other leases are
classified as operating leases.
When the Group is an intermediate lessor, it accounts for the
head lease and the sub-lease as two separate contracts. The
sub-lease is classified as a finance or operating lease by
reference to the right-of-use asset arising from the head
lease.
Rental income from operating leases is recognised on a
straight-line basis over the term of the relevant lease. Initial
direct costs incurred in negotiating and arranging an operating
lease are added to the carrying amount of the leased asset and
recognised on a straight-line basis over the lease term.
Amounts due from lessees under finance leases are recognised as
receivables at the amount of the Group's net investment in the
leases. Finance lease income is allocated to accounting periods to
reflect a constant periodic rate of return on the Group's net
investment outstanding in respect of the leases.
Subsequent to initial recognition, the Group regularly reviews
the estimated unguaranteed residual value and applies the
impairment requirements of IFRS 9, recognising an allowance for
expected credit losses on the lease receivables.
Finance lease income is calculated with reference to the gross
carrying amount of the lease receivables, except for
credit-impaired financial assets for which interest income is
calculated with reference to their amortised cost (i.e. after a
deduction of the loss allowance).
When a contract includes both lease and non-lease components,
the Group applies IFRS 15 to allocate the consideration under the
contract to each component.
Finance income
Finance income is recognised as interest accrues using the
effective interest method. The effective rate is the rate that
exactly discounts estimated future cash receipts through the
expected life of the financial instrument to its net carrying
amount.
Finance income also includes foreign currency exchange gains on
the retranslation of loans.
Taxation
The income tax expense represents the sum of the tax currently
payable and deferred tax.
Current tax
The tax currently payable is based on taxable profits or losses
for the year. Taxable profit or loss differs from net profit or
loss as reported in the Consolidated Income Statement because it
excludes items of income or expense that are taxable or deductible
in other years and it further excludes items that are never taxable
or deductible. The Group's liability for current tax is calculated
using tax rates and laws that have been enacted or substantively
enacted by the end of the reporting period.
Deferred tax
Deferred tax is the tax expected to be payable or recoverable on
differences between the carrying amounts of assets and liabilities
in the financial statements and the corresponding tax bases used in
the computation of taxable profit and is accounted for using the
balance sheet liability method. Deferred tax liabilities are
generally recognised for all taxable temporary differences and
deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which
deductible temporary differences can be utilised. Such assets and
liabilities are not recognised if the temporary difference arises
from the initial recognition (other than in a business combination)
of other assets and liabilities in a transaction that affects
neither the taxable profit nor the accounting profit. In addition,
a deferred tax liability is not recognised if the temporary
difference arises from the initial recognition of goodwill.
Deferred tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries and associates,
and interests in joint ventures, except where the Group can control
the reversal of the temporary difference and it is probable that
the temporary difference will not reverse in the foreseeable
future. Deferred tax assets arising from deductible temporary
differences associated with such investments and interests are only
recognised to the extent that it is probable that there will be
sufficient taxable profits against which to utilise the benefits of
the temporary differences and they are expected to reverse in the
foreseeable future.
The carrying amount of deferred tax assets is reviewed at each
reporting date and reduced to the extent that it is no longer
probable that sufficient taxable profits will be available to allow
all or part of the asset to be recovered.
Deferred tax is calculated at the tax rates that are expected to
apply in the period when the liability is settled, or the asset is
realised based on tax laws and rates that have been enacted or
substantively enacted at the reporting date.
The measurement of deferred tax liabilities and assets reflects
the tax consequences that would follow from the manner in which the
Group expects, at the end of the reporting period, to recover or
settle the carrying amount of its assets and liabilities.
Deferred tax assets and liabilities are offset when there is a
legally enforceable right to set off current tax assets against
current tax liabilities and when they relate to income taxes levied
by the same taxation authority and the Group intends to settle its
current tax assets and liabilities on a net basis.
Current tax and deferred tax for the year
Current and deferred tax are recognised in profit or loss,
except when they relate to items that are recognised in other
comprehensive income or directly in equity, in which case the
current and deferred tax are also recognised in other comprehensive
income or directly in equity respectively. Where current tax or
deferred tax arises from the initial accounting for a business
combination, the tax effect is included in the accounting for the
business combination.
Use of alternative performance measures (APMs)
The performance of the Group is assessed and discussed on an
"adjusted" basis, using a variety of APMs, including Adjusted Gross
Profit, Adjusted Earnings Before Interest, Taxation, Depreciation
and Amortisation (EBITDA), Adjusted Earnings Before Interest and
Tax (EBIT), Organic Revenue Growth and Net debt. The term
"Adjusted" refers to the relevant measure being reported for
continuing operations before "Adjusting items".
"Adjusting items" are the income statement items that are
excluded from the Statutory results. Adjusting items include
exceptional items, amortisation of acquired intangibles,
equity-settled share-based payment charges, other long-term
employee benefits, and tax related to Adjusting items. These items
are defined and explained in more detail as follows:
Exceptional items
Exceptional items are items of income or expenditure that are
not considered to reflect in-year operational performance of the
continuing business. These are recorded in accordance with the
policy set out below:
-- Transaction costs - arising on acquisitions, disposals, and debt refinancing,
-- Integration and business re-organisation - legal and
professional fees and non-recurring operating costs arising from
significant acquisition integration or business re-organisation
activities. Non-recurring operating costs means those costs that
are related to a specific integration or re-organisation event that
will not be repeated because they are unique to the event and which
are not expected to follow a consistent level of expense from one
accounting period to the next,
-- Litigation - legal costs (which may be incurred in more than
one accounting period) are treated as exceptional if they relate to
specific commercial legal events that are not in the normal course
of trading activity in respect of one-off or related series of
cases and are not expected to follow a consistent level of expense
from one accounting period to the next,
-- Impairment - arising from significant losses identified from impairment reviews,
-- Other items - other non-recurring items that are non-trading in nature.
Amortisation of acquired intangible assets
Exclusion of amortisation of acquired intangibles accounted for
under IFRS 3 from the Group's results assists with the
comparability of the Group's profitability with peer companies. In
addition, charges for amortisation of acquired intangibles arise
from the purchase consideration of separate acquisitions. These
acquisitions are portfolio investment decisions that took place at
different times over several years, and so the associated
amortisation does not reflect current operational performance.
Equity-settled share-based payments
The Group treats share-based payments as an Adjusting item
because share-based payments are a significant non-cash charge
driven by a valuation model that references Gama's share price and
each new share award is subject to volatility when it is measured
at the grant date.
Other long-term employee benefits
Other long-term employee benefits agreed as part of the Jet East
acquisition and contractually linked to ongoing employment as well
as business performance are accrued over the period in which the
related services are received and are recorded as an Adjusting
item.
Tax related to Adjusting items
The elements of the overall Group tax charge relating to the
above Adjusting items are also treated as Adjusting. These elements
of the tax charge are calculated with reference to the specific tax
treatment of each individual Adjusting item, taking into account
its tax deductibility, the tax jurisdiction concerned, and any
previously recognised tax assets or liabilities.
The Directors believe that adjusted profit and earnings per
share measures provide additional and more consistent measures of
underlying performance to shareholders by removing certain trading
and non-trading items that are either not closely related to the
Group's operating cash flows or non-recurring in nature. These and
other APMs are used by the Directors for internal performance
analysis and incentive compensation arrangements for employees. The
term "Adjusted" is not defined under IFRS and may therefore not be
comparable with similarly titled measures reported by other
companies. They are not intended to be a substitute for, or
superior to, GAAP measures. Where applicable, segmental measures
are calculated in accordance with Group measures.
The Group's Consolidated Income Statement and segmental analysis
separately identify trading results before Adjusting items. The
Directors believe that presentation of the Group's results in this
way is relevant to an understanding of the Group's financial
performance, as Adjusting items are identified by virtue of their
size, nature or incidence. This presentation is consistent with the
way that financial performance is measured by management and
reported to the Board and assists in providing a meaningful
analysis of the trading results of the Group. In determining
whether an event or transaction is treated as an Adjusting item,
management consider quantitative as well as qualitative factors
such as the frequency or predictability of occurrence.
Segmental reporting
An operating segment is a distinguishable component of the Group
that is engaged in business activities from which it may earn
revenues and incur expenses, and whose operating results are
reviewed regularly by the Chief Operating Decision Maker (the Group
Chief Executive) to make decisions about resources to be allocated
to the segment and assess its performance, and for which discrete
financial information is available.
Reportable segments are operating segments that either meet the
thresholds and conditions set out in IFRS 8 or are considered by
the Board to be appropriately designated as reportable segments
under IFRS 8.
Goodwill
Goodwill is initially recognised as an asset at cost and is
subsequently measured at cost less any accumulated impairment
losses. Goodwill is reviewed for impairment at annually or more
frequently if there is an indication of impairment. Any impairment
is recognised immediately in the income statement and is not
subsequently reversed.
For the purpose of impairment testing, goodwill is allocated to
each of the Group's cash-generating units ("CGUs) expected to
benefit from the synergies of the combination, irrespective of
whether other assets or liabilities of the Group are assigned to
those units.
Impairment of goodwill is determined by assessing the
recoverable amount of the CGU to which the goodwill relates. If the
recoverable amount of the CGU is less than the carrying value of
the CGU to which the goodwill has been allocated, an impairment
loss is recognised. The impairment loss is allocated first to
reduce the carrying value of any goodwill allocated to the CGU and
then to the other assets of the CGU pro-rata on the basis of the
carrying value of each asset in the CGU. An impairment loss
recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary, the attributable amount of goodwill
is included in the determination of the profit or loss on
disposal.
Other intangible assets
Intangible assets with finite useful lives that are acquired
separately are carried at cost less accumulated amortisation and
accumulated impairment losses. Amortisation is recognised on a
straight-line basis over their estimated useful lives. The
estimated useful life and amortisation method are reviewed at the
end of each reporting period, with the effect of any changes in
estimate being accounted for on a prospective basis.
Intangible assets acquired in a business combination and
recognised separately from goodwill are recognised initially at
their fair value at the acquisition date (which is regarded as
their cost).
Subsequent to initial recognition, intangible assets acquired in
a business combination are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.
Expenditure on research activities is recognised as an expense
in the period in which it is incurred.
Internally generated intangible assets arising from development
(or from the development phase of an internal
project) is recognised if, and only if, all of the following
conditions have been demonstrated:
-- The technical feasibility of completing the intangible asset
so that it will be available for use or sale,
-- The intention to complete the intangible asset and use or sell it,
-- The ability to use or sell the intangible asset,
-- How the intangible asset will generate probable future economic benefits,
-- The availability of adequate technical, financial and other
resources to complete the development and to use or sell the
intangible asset,
-- The ability to measure reliably the expenditure attributable
to the intangible asset during its development.
The amount initially recognised for internally generated
intangible assets is the sum of the expenditure incurred from the
date when the intangible asset first meets the recognition criteria
listed above. Where no internally generated intangible asset can be
recognised, development expenditure is recognised in profit or loss
in the period in which it is incurred.
Subsequent to initial recognition, internally generated
intangible assets are reported at cost less accumulated
amortisation and accumulated impairment losses, on the same basis
as intangible assets that are acquired separately.
Costs associated with the configuration and customisation of
Software as a Service arrangements are capitalised as intangible
assets only where control of the software exists.
The Group has no indefinite life intangible assets.
A summary of the amortisation policies applied to the Group's
other intangible assets is as follows:
-- Licences 10% per annum, straight line method
-- Brands 20% per annum, straight line method
-- Customer relations 10% per annum, straight line method
-- Computer software 20%-33% per annum, or life of licence if
shorter, straight-line method
-- The life of each internally generated intangible asset is assessed individually.
The amortisation of internally generated software commences at
the start of the year following.
The useful life of intangible assets is reviewed at each
reporting date and, if expectations differ from previous estimates,
the change is accounted for as a change in an accounting
estimate.
An intangible asset is derecognised on disposal, or when no
future economic benefits are expected from use or disposal. Gains
or losses arising from derecognition of an intangible asset,
measured as the difference between the net disposal proceeds and
the carrying amount of the asset, are recognised in profit or loss
when the asset is derecognised.
Property, plant and equipment
Property, plant and equipment are stated at cost less
accumulated depreciation and any recognised impairment loss.
Assets under construction for production, supply, or
administrative purposes, or for purposes not yet determined, are
carried at cost, less any recognised impairment loss. Cost includes
professional fees and, for qualifying assets, borrowing costs
capitalised in accordance with the Group's accounting policy.
Depreciation of these assets commences when the assets are ready
for their intended use.
Depreciation is recognised to write-off the cost of assets less
their residual values over their useful lives, using the
straight-line method, on the following bases:
-- Helicopters 5% per annum and 25% residual value (on the
original cost)
-- Leasehold improvements Life of lease and no residual value
-- Aircraft and refurbishments The higher of 20 years less the
age of aircraft at purchase, and 5 years (20% per annum). A 25%
residual value (on the original cost) is in place where engines are
on an engine maintenance programme as this is considered to support
a residual value
-- Furniture, fixtures and equipment 20% to 33% per annum and no residual value
-- Motor vehicles 20% per annum and no residual value
The estimated useful lives, residual values and depreciation
method are reviewed at the end of each reporting period, with the
effect of any changes in estimate accounted for on a prospective
basis.
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to arise
from the continued use of the asset. The gain or loss arising on
the disposal or retirement of an asset is determined as the
difference between the sales proceeds and the carrying amount of
the asset and is recognised in the Consolidated Income
Statement.
Impairment of property, plant and equipment and intangible
assets excluding goodwill
At each reporting date, the Group reviews the carrying amounts
of its property, plant and equipment and intangible assets to
determine whether there is any indication that those assets have
suffered an impairment loss. If any such indication exists, the
recoverable amount of the asset is estimated to determine the
extent of the impairment loss (if any). Where the asset does not
generate cash flows that are independent from other assets, the
Group estimates the recoverable amount of the cash-generating unit
to which the asset belongs. When a reasonable and consistent basis
of allocation can be identified, corporate assets are also
allocated to individual cash-generating units, or otherwise they
are allocated to the smallest group of cash-generating units for
which a reasonable and consistent allocation basis can be
identified.
Intangible assets with an indefinite useful life are tested for
impairment at least annually and whenever there is an indication at
the end of a reporting period that the asset may be impaired.
Recoverable amount is the higher of fair value less costs of
disposal and value in use. In assessing value in use, the estimated
future cash flows are discounted to their present value using a
post-tax discount rate that reflects current market assessments of
the time value of money and the risks specific to the asset for
which the estimates of future cash flows have not been adjusted. As
most rates which are observable in the market, including inputs
into the weighted average cost of capital formula, are on a
post-tax basis, a post-tax discount rate is used to discount
estimated future cash flows.
If the recoverable amount of an asset (or cash-generating unit)
is estimated to be less than its carrying amount, the carrying
amount of the asset (or cash-generating unit) is reduced to its
recoverable amount. An impairment loss is recognised immediately in
profit or loss.
Where an impairment loss subsequently reverses, the carrying
amount of the asset (or cash-generating unit) is increased to the
revised estimate of its recoverable amount, but only to the extent
that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been
recognised for the asset (or cash-generating unit) in prior years.
A reversal of an impairment loss is recognised immediately in
profit or loss to the extent that it eliminates part or all of the
impairment loss which has been recognised for the asset in prior
years.
Inventories
Inventories are stated at the lower of cost and net realisable
value. Cost comprises direct materials and, where applicable,
direct labour costs and those overheads that have been incurred in
bringing the inventories to their present location and condition.
Cost for each class of inventory is determined as follows:
-- Raw materials and consumables: purchase cost calculated using the first-in-first-out basis
-- Work in progress: cost of direct materials and labour
Net realisable value represents the estimated selling price in
the ordinary course of business, less all estimated costs of
completion and costs to be incurred in marketing, selling and
distribution. In addition, the Company provides for inventories on
a sliding scale over the preceding eight years. As a result,
inventory older than eight years is written off in full.
In line with industry practice, the Group recognises rotable
stock as inventory. Rotable stock are inventory items that can be
repeatedly and economically restored to their fully serviced
condition, in which already-repaired equipment is exchanged for
defective equipment, which in turn is repaired and kept for future
exchange. These items have extensive life expectancy through
repetitive overhaul process. The cost associated with refurbishing
rotable stock is recognised in inventory.
Cash and cash equivalents
The Group's cash and cash equivalents in the Consolidated
Balance Sheet comprise cash on hand, cash at bank, and short-term,
highly liquid investments with original maturity of three months or
less that are readily convertible to a known amount of cash and
which are subject to an insignificant risk of changes in value.
For the purposes of the Consolidated Cash Flow Statement, cash
and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts which are
repayable on demand and form an integral part of the Group's cash
management.
Assets and liabilities classified as held for sale
Assets (and disposal groups) and liabilities classified as held
for sale are measured at the lower of carrying amount and fair
value less costs to sell. Costs to sell are the incremental costs
directly attributable to the sale, excluding finance costs and
income tax expense.
Assets, liabilities, and disposal groups are classified as held
for sale if it is highly probably that their carrying value will be
recovered through a sale transaction rather than through continuing
use. This condition is regarded as met only when the sale is highly
probable, and the asset (or disposal group) is available for
immediate sale in its present condition. Management must be
committed to the sale which should be expected to qualify for
recognition as a completed sale within one year from the date of
classification.
When the Group is committed to a sale plan involving loss of
control of a subsidiary, all of the assets and liabilities of that
subsidiary are classified as held for sale when the criteria
described above are met, regardless of whether the Group will
retain a non-controlling interest in its former subsidiary after
the sale.
When the Group is committed to a sale plan involving disposal of
an investment in an associate or, a portion of an investment in an
associate, the investment, or the portion of the investment in the
associate, that will be disposed of is classified as held for sale
when the criteria described above are met. The Group then ceases to
apply the equity method in relation to the portion that is
classified as held for sale. Any retained portion of an investment
in an associate that has not been classified as held for sale
continues to be accounted for using the equity method.
Property, plant and equipment, and intangible assets are not
depreciated or amortised once classified as held
for sale.
Provisions and contingent liabilities
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it
is probable that the Group will be required to settle that
obligation and a reliable estimate can be made of the amount of the
obligation.
The amount recognised as a provision is the best estimate of the
consideration required to settle the present obligation at the
reporting date, taking into account the risks and uncertainties
surrounding the obligation. Where a provision is measured using the
cash flows estimated to settle the present obligation, its carrying
amount is the present value of those cash flows when the effect of
the time value of money is material.
When some or all of the economic benefits required to settle a
provision are expected to be recovered from a third party, a
receivable is recognised as an asset if it is virtually certain
that reimbursement will be received, and the amount of the
receivable can be measured reliably.
A contingent liability is disclosed where the existence of the
obligation will only be confirmed by future events, or where the
amount of the obligation cannot be measured reliably.
From time to time the Group receives claims and threats of
claims against it. Appropriate disclosures are made except where
the Board concludes that the likelihood of any such claim being
successful is remote, immaterial or where disclosure would be
prejudicial. Appropriate provisions are made unless the Board
concludes that the claims are not likely to have a material impact
on the Group's financial position.
Financial instruments
Financial assets and financial liabilities are recognised in the
Group's balance sheet when the Group becomes a party to the
contractual provisions of the instrument.
Financial assets and financial liabilities are initially
measured at fair value, except for trade receivables that do not
have a significant financing component which are measured at
transaction price. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities (other than financial assets and financial liabilities
at fair value through profit or loss) are added to or deducted from
the fair value of the financial assets or financial liabilities, as
appropriate, on initial recognition. Transaction costs directly
attributable to the acquisition of financial assets or financial
liabilities at fair value through profit or loss are recognised
immediately in profit or loss.
Financial assets
All regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. Regular way
purchases or sales are purchases or sales of financial assets that
require delivery of assets within the time frame established by
regulation or convention in the marketplace.
All recognised financial assets are measured subsequently in
their entirety at either amortised cost or fair value, depending on
the classification of the financial assets.
Trade and other receivables
Trade and other receivables are initially recognised at fair
value, which is generally the same as invoiced amount, and
subsequently measured at amortised cost, or their recoverable
amount. Trade receivables are predominantly short-term and so the
effects of the time-value of money are not considered material.
Where there are sub-participation arrangements,
sub-participation proceeds are offset against the financial asset
provided that the sub-participation meets all pass-through
conditions, namely, there is no recourse to the transferor, and the
transferor does not retain any significant risks and rewards of
ownership of the financial asset.
Impairment of financial assets
The impairment model applies to the Group's financial assets
that are debt instruments measured at amortised costs as well as
the Group's lease receivables, contract assets and issued financial
guarantee contracts. The Group applies the simplified approach for
measuring expected credit losses for its trade receivables, accrued
income and contracts assets as permitted by IFRS 9.
Expected credit losses are calculated based on the historical
credit loss experience and adjusted for forward looking factors
specific to the receivables and economic environment.
The amount of expected credit losses is updated at each
reporting date.
Derecognition of financial assets
The Group derecognises a financial asset only when the
contractual rights to the cash flows from the asset expire, or when
it transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity. If the
Group neither transfers nor retains substantially all the risks and
rewards of ownership and continues to control the transferred
asset, the Group recognises its retained interest in the asset and
an associated liability for amounts it may have to pay. If the
Group retains substantially all the risks and rewards of ownership
of a transferred financial asset, the Group continues to recognise
the financial asset and also recognises a collateralised borrowing
for the proceeds received.
On derecognition of a financial asset measured at amortised
cost, the difference between the asset's carrying amount and the
sum of the consideration received and receivable is recognised in
profit or loss.
Financial liabilities and equity
Debt and equity instruments are classified as either financial
liabilities or as equity in accordance with the substance of the
contractual arrangement and the definitions of a financial
liability and an equity instrument.
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Group are recognised
at the proceeds received, net of direct issue costs.
Financial liabilities
All financial liabilities are measured subsequently at amortised
cost using the effective interest method or at fair value through
profit or loss.
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
through the expected life of the financial liability, or, where
appropriate, a shorter period.
Borrowings and other financial liabilities, including loans, are
initially measured at fair value, net of transaction costs.
Deferred consideration is recognised at amortised cost at
acquisition date within the cost of investment, with a
corresponding entry to other financial liabilities. Changes to the
value of the financial liability resulting from the unwinding of
discount at each subsequent reporting date are recognised in the
Consolidated Income Statement.
Derecognition of financial liabilities
The Group derecognises financial liabilities when, and only
when, the Group's obligations are discharged, cancelled, or have
expired. The difference between the carrying amount of the
financial liability derecognised and the consideration paid and
payable is recognised in profit or loss.
Share-based payments
Equity-settled share-based payments to employees and others
providing similar services are measured at the fair value of the
equity instruments at the grant date. The fair value excludes the
effect of non-market-based vesting conditions.
The fair value determined at the grant date of the
equity-settled share-based payments is expensed on a straight-line
basis over the vesting period, based on the Group's estimate of the
number of equity instruments that will eventually vest. At each
reporting date, the Group revises its estimate of the number of
equity instruments expected to vest as a result of the effect of
non-market-based vesting conditions. The impact of the revision of
the original estimates, if any, is recognised in profit or loss
such that the cumulative expense reflects the revised estimate,
with a corresponding adjustment to reserves.
Equity-settled share-based payment transactions with parties
other than employees are measured at the fair value of the goods or
services received, except where that fair value cannot be estimated
reliably, in which case they are measured at the fair value of the
equity instruments granted, measured at the date the entity obtains
the goods or the counterparty renders the service.
Where the terms of an equity-settled transaction award are
modified, the minimum expense recognised is the expense as if the
terms had not been modified if the original terms of the award are
met. An additional expense is recognised for any modification that
increases the total fair value of the share-based payment
transaction or is otherwise beneficial to the employee as measured
at the date of modification.
Where an equity-settled award is cancelled, it is treated as if
it vested on the date of cancellation, and any expense not yet
recognised for the award is recognised immediately. This includes
any award where non-vesting conditions within the control of either
the Group or the employee are not met. However, if a new award is
substituted for the cancelled award and designated as a replacement
award on the date that it is granted, the cost based on the
original award terms continues to be recognised over the original
vesting period and an expense is recognised over the remainder of
the new vesting period for the incremental fair value of any
modification.
The financial effect of awards by the Parent Company of options
over its equity shares to employees of subsidiary undertakings is
recognised by the Parent Company in its individual financial
statements as an increase in its investment in subsidiaries with a
credit to equity equivalent to the IFRS 2 cost in subsidiary
undertakings. The subsidiary, in turn, recognises the IFRS 2 cost
in its income statement with a credit to equity to reflect the
deemed capital contribution from the Parent Company.
For cash-settled share-based payments, a liability is recognised
for the goods or services acquired, measured initially at the fair
value of the liability. At each reporting date until the liability
is settled, and at the date of settlement, the fair value of the
liability is remeasured, with any changes in fair value recognised
in profit or loss for the year.
4. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group's accounting policies, which are
described in Note 3, the Directors are required to make judgements
(other than those involving estimations) that have a significant
impact on the amounts recognised and to make estimates and
assumptions about the carrying amounts of assets and liabilities
that are not readily apparent from other sources. The estimates and
associated assumptions are based on historical experience and other
factors, including anticipated future events and market conditions,
that are relevant and available when the Consolidated Financial
Statements were prepared. Uncertainty about these assumptions and
estimates could result in outcomes that require a material
adjustment to the carrying amount of assets or liabilities affected
in future periods.
The estimates and underlying assumptions are reviewed on an
ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects
only that period, or in the period of the revision and future
periods if the revision affects both current and future
periods.
Critical judgements in applying the Group's accounting
policies
The following are the critical judgements, apart from those
involving estimations (which are dealt with separately below), that
the Directors have made in the process of applying the Group's
accounting policies and that have the most significant effect on
the amounts recognised in the financial statements:
Sharjah Business Aviation Centre
In June 2017, the Group entered into a non-cancellable Build
Operate & Transfer Agreement and a Concession Agreement with
Sharjah Airport Authority under which it is committed to construct
a Business Aviation Centre ("BAC") at Sharjah Airport. The
agreement runs from June 2017 until June 2052 following the
exercise of the ten-year extension option during the prior
year.
As of 31 December 2021, assets under construction ($4,609,000)
and right-of-use assets associated with this project ($8,329,000)
were fully impaired. The impairment initially arose due to
uncertainties arising in part from the COVID-19 pandemic, and
subsequently due to the uncertainty about securing funding to
continue the project.
During the current year, additional expenditure of $2,103,000 on
the project has also been impaired. This is based on the Directors'
judgement that whilst the Group is in advanced discussions with
investors regarding the funding of this project, the Board
considers that it would be inappropriate to reverse impairments
relating to the BAC project until the profits associated with this
project can be forecast with greater certainty.
Should the full funding for the project be contractually
secured, then the Directors currently anticipate that some or all
these impairments will be reversed.
Paycheck Protection Program qualifying expenditure
In 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. On 12 May 2020, funds of $5,753,000 were received and
initially recognised as borrowings in current liabilities.
Subsequently in 2020, the Group considered $4,753,000 of these
funds to be eligible for forgiveness within the terms of the PPP
and were therefore recognised as income against the related
expenses in the income statement, reducing the amount of
potentially repayable borrowings to $1,000,000 as of 31 December
2020.
On 19 May 2022, the Group received confirmation that the full
balance of the original loan, including the $1,000,000, was to be
forgiven and was therefore no longer repayable. The balance of
$1,000,000 has been derecognised during the year with the
associated credit being recognised against employment costs within
cost of sales and administrative expenses in the Consolidated
Income Statement, consistent with the treatment adopted for other
such pandemic-related support.
Assessment of lease term under sale and leaseback
transaction
On 27 September 2022, the Group completed the sale and leaseback
of its helicopter assets. Under the terms of this arrangement the
Group was obligated to deliver three helicopters in exchange for
consideration from the counterparty. Having reviewed the terms of
this agreement, management has concluded that they meet to five
steps revenue recognition requirements defined by IFRS15.
Accordingly, these transactions have been recognised as sales in
the financial statements for the year ended 31 December 2022.
Following the sale of the helicopters the Company entered into a
lease agreement with the same counterparty. These lease agreements
contain a First Extension Option and a Second Extension Option,
whereby the Group can extend the term of the lease by 84 months and
36 months, respectively.
In assessing whether the Group is reasonably certain, at the
lease commencement date, to exercise an option to extend the lease,
the Group has considered the following factors and circumstances
that create an economic incentive for the Group to exercise the
option to extend the lease:
(a) contractual terms and conditions for the optional periods
compared with market rates, including:
(i) the amount of payments for the lease in the optional period;
(ii) the amount of any variable payments for the lease or other contingent payments;
(iii) the terms and conditions of the options that are
exercisable after the initial optional periods;
(b) significant leasehold improvements undertaken (or expected
to be undertaken) over the term of the contract that are expected
to have significant economic benefit for the Group when the option
to extend the lease becomes exercisable;
(c) costs relating to the termination of the lease, including
the costs of identifying another underlying asset suitable for the
Group's needs and the costs associated with returning the
helicopters in a contractually specified condition or to a
contractually specified location;
(d) the importance of the helicopters to the Group's operations;
and
(e) conditionality associated with exercising the option and the
likelihood that those conditions will exist.
The term "reasonably certain" is not defined in IFRS, but it is
considered a high probability (i.e., almost certain).
Having considered the above factors and circumstances, the
Directors have concluded that, at the lease commencement date, it
is not reasonably certain that the Group will exercise either the
First Extension Option or the Second Extension Option to extend the
lease. Consequently, the initial lease term has been assessed as 28
months.
Classification of items of cost or income as exceptional
items
Exceptional items are items of income or expenditure that are
not considered to reflect in-year operational performance of the
continuing business. Classification of costs and income as
exceptional items requires judgement as the Group's view of what
qualifies as an exceptional item may differ from similar judgements
made by others. Exceptional items are treated as Adjusting items to
enable more relevant and reliable financial information to be
presented. Note 14 describes the exceptional items that have been
recorded in the Consolidated Income Statement.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources
of estimation uncertainty at the reporting period, that may have a
significant risk of causing a materially different outcome to the
carrying amounts of assets and liabilities within the next
financial year, are discussed below.
Impairment of property, plant and equipment and intangible
assets excluding goodwill
Where there are indicators of impairment, or on an annual basis,
management performs an impairment test. Recoverable amounts for a
CGU is the higher of value-in-use and fair value less cost of
disposal.
Value-in-use is calculated using a discounted cash flow model
from cash flow projections based on the Group's 2023 updated
Strategic Plan approved by the Board of Directors in January
2023.
In measuring value-in-use, management have:
-- Based cash flow projections on reasonable and supportable
assumptions that represent management's best estimate of the range
of economic conditions that will exist over the remaining useful
life of goodwill, intangible assets, property, plant and equipment,
and right-of-use assets
-- Based cash flow projections on the Group's 2023 updated
Strategic Plan approved by the Board of Directors in January 2023.
These forecasts cover a period of four years.
-- Estimated cash flow projections beyond the period the period
of four years by extrapolating the projections based on the
forecasts using an estimate of long-term growth rates for
subsequent years. This rate reflects the average of the long --
term growth rate for the countries in which the CGU operates.
In estimating cash flow projections for each CGU, management
have used the "single most likely cash flow" approach to estimate
the cash flows associated with a range of economic conditions that
may exist over the next four years. The "single most likely cash
flow" approach differs from the "expected cash flow" approach in
that it does not use all expectations about possible cash
flows.
In estimating the single most likely cash flow for each CGU,
management have used the cash flow forecasts contained in the
Group's four-year plan approved by the Board of Directors as the
base case scenario.
Several other reasonably plausible scenarios have been
considered but have not been adjusted for. Instead, the impact of
these scenarios has been evaluated through the sensitivity
analysis.
Estimated future cash flows reflect assumptions that are
consistent with the way the discount rate is determined.
Consequently, estimates of future cash flows include income tax
receipts or payments as the discount rate is determined on a post
-- tax basis.
The discount rate for each CGU is estimated from the Group's
weighted average cost of capital using the Capital Asset Pricing
Model, after considering the risk-free rate, beta, equity market
risk premium, country risk premium, small stock premium, pre-tax
cost of debt, tax rates, and the debt to capital ratio applicable
to the CGU.
The terminal value for each CGU has been estimated by applying
the Gordon Growth formula to the forecasted cash flows using the
respective discount rate and long-term growth rate.
The recoverable amount is most sensitive to the discount rate,
the expected future cash inflows, and the growth rate used for
extrapolation purposes.
The carrying amount of each CGU is determined on a basis
consistent with the way the recoverable amount of the CGU is
determined. Consequently, the carrying amount of each CGU includes
goodwill allocated to each CGU at inception, other intangible
assets (including deferred tax related to the uplift to fair value
recognised on acquisition), property, plant and equipment,
right-of-use assets, working capital balances, corporate income
taxes, obligations under leases, and corporate assets allocated to
each CGU.
The key assumptions and estimates used to determine the
recoverable amount for different CGUs, together with sensitivities,
are disclosed in Note 20.
Valuation of inventories
In measuring the net realisable value of inventory, the Group
uses reasonable and supportable forward-looking information, which
is based on assumptions regarding the change in customer demand or
obsolescence of certain inventory lines.
Inventory valuation is sensitive to management's assessment of
obsolescence of certain line items. The significant estimation
uncertainty arises from the wide range and nature of inventory
held, each with different demand and opportunity to utilise. Whilst
no specific inventory line has material estimation uncertainty in
its valuation, there is risk across all lines in aggregation.
An analysis of the inventories and inventory obsolescence
allowance is provided in Note 24.
Calculation of expected credit loss allowance
When measuring expected credit loss, the Group uses reasonable
and supportable forward-looking information, which is based on
assumptions for the future movement of different economic drivers
and how these drivers will affect each other.
Probability of default constitutes a key input in measuring
expected credit loss. Probability of default is an estimate of the
likelihood of default over a given time horizon, the calculation of
which includes historical data including experience of recovering
overdue amounts, assumptions and expectations of future
conditions.
An analysis of the amounts receivable for the sale of services,
together with sensitivities, is provided in Note 25.
Other long-term employee benefits
The acquisition of Jet East included a long-term incentive plan
accounted for under IAS 19 with the value of payments linked to the
continuing employment of executives of Jet East as well as business
performance and the level of indebtedness of the combined Business
Aviation MRO US business at that time.
The long-term incentive plan is accounted for as remuneration
for post-acquisition services and is not part of the business
combination. The period over which the services are received is
three years.
Management has undertaken a review of anticipated future
performance of the Business Aviation MRO US business and based on
that review has estimated the charge for the year ended 2022 and
the associated provision at the balance sheet date.
An analysis of other long-term employee benefits, together with
sensitivities, is provided in Note 27.
Taxation
Recoverability of the Group's deferred tax assets, including
timing, applicable corporate income tax rates and availability of
future taxable profits against which deferred tax assets could be
utilised, is the most critical estimate which may have a material
impact on the financial statements.
The estimation uncertainty arises because the Group operates in
a complex national and international tax environment. The areas of
uncertainty can include, inter alia, transfer pricing arrangements
relating to the Group's operating activities and the deductibility
of management recharges.
Further uncertainties exist with respect to the interpretation
of complex tax regulations, changes in tax laws, and the amount and
timing of future taxable income available against which deferred
tax assets could be utilised. The carrying value of tax assets and
liabilities could therefore be impacted by changes in tax
legislation and availability of future taxable profits for which
the impact can be significant.
5. Revenue
An analysis of the Group's revenue is as follows:
Year ended 2022 Year ended 2021
$'000 $'000
----------------------------------- ---------------- ---------------
Sale of business aviation services 285,017 232,159
Branding fees 625 3,750
----------------------------------- ---------------- ---------------
Statutory revenue 285,642 235,909
----------------------------------- ---------------- ---------------
Year ended 2022 Year ended
2021
----------------------------------
$'000 $'000
---------------------------------- ---------------- -----------
BA MRO US 81,423 78,904
BA excluding MRO US 82,855 61,536
Special Mission 3,743 9,163
Revenue recognised at a point in
time 168,021 149,603
---------------------------------- ---------------- -----------
BA MRO US 36,826 346
BA excluding MRO US 23,197 29,360
Special Mission 51,759 47,553
T&O (1) 5,214 5,297
Branding fee 625 3,750
---------------------------------- ---------------- -----------
Revenue recognised over time 117,621 86,306
Statutory revenue 285,642 235,909
---------------------------------- ---------------- -----------
1. Prior year T&O revenue has been reclassified as
recognised over time following review of nature of services
provided.
Revenue recognised over time relates to the following operating
divisions:
-- Special Mission has contract revenue for the maintenance of
aircraft and provision of air ambulance services of $87,465,000 to
be earned over the next four years, with $50,636,000 (2021:
$47,553,000) of revenue having been recognised in the year
-- Business Aviation MRO US earned revenue of $100,647 ,000
during the year in relation to maintenance contracts
-- Within Technology & Outsourcing, myairops(R) recognised
contract revenue of $1,722,000 (2021: $1,414,000) during the year
in relation to the provision of software services, with $798,000
due over the next three years
Revenue totalling $80,091,000 (2021: $48,760,000), which is
greater than 10% of Group revenue, has been recognised in 2022 in
respect of a single customer and is included within the Business
Aviation MRO US reporting segment. Revenue received at a point in
time was $29,909,000 and revenue received over time was
$255,733,000.
The Group has not separately disclosed revenue by destination
country because this is not tracked internally and because
management track revenue by SBU.
6. Other operating income
Year ended 2022 Year ended 2021
$'000 $'000
------------------------------------------------------------ ---------------- ---------------
Foreign currency translation on trading monetary items 3,086 -
Gain on disposal of subsidiary (Note 14) 126 -
Gain on disposal of property, plant and equipment (Note 21) 1,741 -
Profit on derecognition of leases (Note 30) - 1,626
------------------------------------------------------------ ---------------- ---------------
Total other operating income 4,953 1,626
------------------------------------------------------------ ---------------- ---------------
7. Earnings before interest and taxation
Earnings before interest and taxation has been arrived at after
charging/(crediting):
Year ended 2022 Year ended 2021
$'000 $'000
(1)
----------------------------------------------------------------------------------- ---------------- ---------------
Amortisation of intangibles in administrative expenses ( Note 19 ) 3,396 3,355
Depreciation of property, plant and equipment in administrative expenses(1) (Note
21) 3,171 3,245
Depreciation of property, plant and equipment in cost of sales(1) (Note 21) 2,699 3,196
Depreciation of right-of-use assets in administrative expenses (Note 22) 666 1,017
Depreciation of right-of-use assets in cost of sales (Note 22) 5,335 6,507
Net foreign exchange gain on trading monetary items ( 3,086) (407)
(Gain)/loss on disposal of property, plant and equipment (Note 21) (1,741) 6
Impairment of goodwill (Note 18) 787 -
Impairment of property, plant and equipment (Note 21) 2,640 -
Impairment of right-of-use assets (Note 22) - 1,911
Reversal of impairment of equity accounted investments (Note 23) - (1,491)
Cost of inventories recognised as an expense 19,306 16,071
Change in provision for inventory obsolescence (503) (404)
Staff costs (Note 8) 110,324 102,256
Impairment losses recognised on trade receivables (Note 25) 278 42
Recovery of previously impaired trade receivables (Note 25) ( 53) (63)
Auditors' remuneration (Note 9) 1,102 1,598
(1) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation.
8. Staff costs
The average monthly number of employees (including Executive
Directors) was:
Year ended Year ended
2022 2021
Number Number
------------------------------ ---------- ----------
Operations and administration 435 440
Pilots and cabin crew 149 131
Aircraft engineering 647 556
------------------------------ ---------- ----------
1,231 1,127
------------------------------ ---------- ----------
Their aggregate remuneration comprised:
Year ended 2022 Year ended 2021
$'000 $'000
---------------------------------------------- ---------------- ---------------
Wages and salaries 96,384 91,184
Social security costs 8,857 5,894
Equity-settled share-based payments (Note 40) 372 257
Other long-term employee benefits (Note 27) 1,821 1,821
Pension costs 2,890 3,100
---------------------------------------------- ---------------- ---------------
110,324 102,256
---------------------------------------------- ---------------- ---------------
Aggregate remuneration is stated after netting off government
grants received including $nil (2021: $41,000) under the UK
Furlough scheme. No adjustment has been made for the US Paycheck
Protection Program as this is a loan rather than a direct payment
of salaries. Details of this are available in note 31.
Details of Directors' remuneration are given in the Remuneration
Report. The share-based payment costs relating to these Directors
amounted to $65,000 (2021: $150,000). No share option transactions
were approved during the year. Details of prior year share awards
are included in note 40.
Retirement benefit schemes
The Group operates defined contribution retirement benefit
schemes for all qualifying employees. The assets of the schemes are
held separately from those of the Group in funds under the control
of independent trustees. As at 31 December 2022, contributions of
$273,000 (2021: $257,000) due in respect of the current reporting
period had not been paid over to the schemes. Details of the other
long-term employee benefits accrual, relating to the Jet East
long-term incentive plan, are contained in note 27.
9. Auditor's remuneration
Year ended 2022 Year ended 2021
$'000 $'000
-------------------------------------------------------- ---------------- ---------------
Audit of the Group's and Company's financial statements 765 770
Audit of the financial statements of subsidiaries 337 828
1,102 1,598
-------------------------------------------------------- ---------------- ---------------
The 2022 charges include $229,000 of charges relating to the
close out of the 2021 audit, by the previous auditors (PwC).
10. Leases
Amounts recognised in income statement
The consolidated income statement shows the following amounts
relating to leases:
Year ended 2022 Year ended 2021
$'000 $'000
---------------------------------------------------------------- ---------------- ---------------
Depreciation charge of right-of-use assets
Leasehold property 5,417 7,381
Fixtures, fittings and equipment 52 17
Aircraft 426 -
Vehicles 106 126
---------------------------------------------------------------- ---------------- ---------------
Total depreciation charge of right-of-use-assets 6,001 7,524
---------------------------------------------------------------- ---------------- ---------------
Interest expense (included in finance cost) 2,543 2,624
Expenses relating to short-term leases of twelve months or less 1,617 1,370
Impairment of right-of-use assets - 1,911
Loss/(profit) on derecognition of leases 37 (1,626)
Rent free credit(1) - (110)
---------------------------------------------------------------- ---------------- ---------------
(1) The rent free credit arose on the Sharjah lease as the
landlord gave the Group COVID-19 related concessions. No other
concessions have been received by the Group.
An impairment loss of $1,911,000 was recognised in 2021 in
relation to the right-of-use asset at Sharjah Airport as the lease
was extended in 2021 but funding for the project has not yet been
finalised.
11. Finance income
Year ended 2022 Year ended 2021
$'000 $'000
------------------------------------------- ---------------- ---------------
Discounting on finance lease receivables 17 -
Foreign currency translation on borrowings - 56
Interest income on financial assets 91 561
Total finance income 108 617
------------------------------------------- ---------------- ---------------
In the current year, interest income on financial assets
includes $74,000 of interest received on the recovery of previously
written-off receivables, and $17,000 of interest due from late
customer payments.
In the prior year, interest income on financial assets includes
$432,000 of interest due to late customer payments, $92,000 in
respect of deferred consideration relating to the disposal of the
US Air Associate, and $37,000 of other interest on other financial
assets.
12. Finance expense
Year ended 2022 Year ended 2021
$'000 $'000
------------------------------------------------------ ---------------- ---------------
Foreign currency translation on intercompany balances 2,306 441
Foreign currency translation on borrowings 3,604 -
Interest on borrowings before capitalised interest 1,308 791
Discounting on provisions (Note 33) 16 17
Discounting on deferred consideration (Note 32) 14 13
Interest on lease liabilities (Note 30) 2,543 2,624
Amortisation of loan arrangement fees 151 180
Other similar charges payable 3 44
------------------------------------------------------ ---------------- ---------------
Total finance costs 9,945 4,110
------------------------------------------------------ ---------------- ---------------
13. Taxation
Year ended 2022 Year ended 2021
$'000 $'000
--------------------------------------- ------------------------------ ------------------------------
Statutory Adjusting Adjusted Statutory Adjusting Adjusted
result items result result items result
--------------------------------------- --------- --------- -------- --------- --------- --------
Corporation tax:
Current tax charge:
Current year charge/(credit) 154 - 154 4,292 (3,891) 401
Adjustment in respect of
prior years (63) - (63) 75 - 75
--------------------------------------- --------- --------- -------- --------- --------- --------
Current tax charge/(credit) 91 - 91 4,367 (3,891) 476
Deferred tax charge:
Current year charge/(credit) (556) 1,099 543 (6,105) 4,362 (1,743)
Adjustment in respect of
prior years (420) 198 (222) (242) - (242)
--------------------------------------- --------- --------- -------- --------- --------- --------
Deferred tax (credit)/charge
(Note 35) (976) 1,297 321 (6,347) 4,362 (1,985)
Total tax (credit)/charge for the year (885) 1,297 412 (1,980) 471 (1,509)
--------------------------------------- --------- --------- -------- --------- --------- --------
The tax charge for the year, based on the tax rate in the United
Kingdom, can be reconciled to the loss per the income statement as
follows:
Year ended 2022 Year ended 2021
$'000 $'000
--------------------------------------- ------------------------------ -------------------- --------
Statutory Adjusting Adjusted Statutory Adjusting Adjusted
result items(3) result result items(3) result
--------------------------------------- --------- --------- -------- --------- --------- --------
Loss before tax (9,465) 8,510 (955) (10,745) 2,978 (7,767)
--------------------------------------- --------- --------- -------- --------- --------- --------
Tax at the corporation
tax rate of 19% (2021:
19%) (1,798) 1,617 (181) (2,042) 566 (1,476)
Effects of:
Other expenses not deductible/income
not taxable 356 (86) 270 275 (60) 215
Profits exempt from tax
in overseas jurisdiction (290) (83) (373) (228) - (228)
Non-deductible - impairment
of acquired intangibles - - - (4) 4 -
Non-deductible - (reversal)/impairment
of equity accounted investments - - - (246) 246 -
Non-deductible - share
of losses of CASL in
adjusted result - - - 246 - 246
Non-deductible - share-based
payments (55) - (55) 45 (45) -
Fines for late filings(2) - - - 328 - 328
Adjustment in respect
of prior years (481) 199 (282) (167) - (167)
Effect of tax rates in
different jurisdictions 463 (471) (8) (143) (137) (280)
Effects of change in
tax rate(1) (181) 180 (1) - - -
Tax losses in the year
not recognised in deferred 1,101 (59) 1,042 (44) (103) (147)
Total tax (credit)/charge
for the year (885) 1,297 412 (1,980) 471 (1,509)
--------------------------------------- --------- --------- -------- --------- --------- --------
(1) The UK Finance Act 2021 enacted a change in the UK
corporation tax rate from 19% to 25% from 1 April 2023.
(2) Fines have been levied by some US states in the prior year
because of management's decision to change the timing of payments
of the 2020 US tax, which included the profit on the disposal of
the US Air Associate (see Note 23.). Prior to the early receipt of
the deferred consideration from Wheels Up in 2021, an election had
been made to pay taxes in instalments. Once funds had been
received, the election was changed to pay immediately, which
triggered punitive late payment charges. In the current year the US
states have provided relief for these fines. Management considers
the penalty in the prior year to be tax-geared and have therefore
presented it within the total tax charge for the year.
(3) The Adjusting items reflects the tax effect of Adjusting
items disclosed within the Adjusted Items column of the
consolidated income statement and explained in further detail in
Note 14.
The adjustment in respect of prior years comprises $422,000
relating to US deferred tax balances partially offset by a $38,000
current tax credit for property taxation in Jersey, the offset of
deferred tax assets against the $8 9,000 UK deferred tax
liability.
In the prior year, the adjustments in respect of prior years
comprise a $75,000 current tax charge for property taxation in
Jersey, a $184,000 deferred tax credit relating to the
implementation of IFRS 16 in the US, and the offset of deferred tax
assets against the $57,000 UK deferred tax liability.
14. Adjusting items
The Adjusted result has been arrived at after the following
Adjusting items:
Year ended 2022 Year ended 2021
$'000 $'000
----------------------------------------------------------------- ---------------- ---------------
Exceptional items:
- Transaction income (384) -
- Transaction costs 654 558
- Integration
and business re-organisation costs 264 140
- Lease derecognition (Note 30) - (1,626)
- Legal costs 207 287
- Other prior year items - (79)
- Onerous contract provision (Note 33) 900 -
- Impairment of assets under construction (Note 21) 2,516 -
- Impairment of property, plant and equipment (Note 21)(1) 124 -
- Impairment of right-of-use assets (Note 22) - 1,911
- Impairment of goodwill (Note 18) 787 -
Total exceptional items 5,068 1,191
Other Adjusting items:
Equity-settled share-based payments expense (Note 40) 372 257
Other long-term employee benefits expense (Note 27) 1,821 1,821
Amortisation of acquired intangible assets (Note 19) 1,174 1,200
Reversal of impairment of equity accounted investments (Note 23) - (1,491)
Adjusting items in loss before interest and taxation 8,435 2,978
Exchange differences on forgiveness of loans 75 -
Adjusting items in loss before interest and taxation 8,510 2,978
----------------------------------------------------------------- ---------------- ---------------
Tax related to Adjusting items (Note 13) (1,297) (471)
----------------------------------------------------------------- ---------------- ---------------
Adjusting items in loss for the year 7,213 2,507
----------------------------------------------------------------- ---------------- ---------------
Transaction income
Transaction income during the year comprises $258,000 (2021:
costs of $558,000) in relation to the acquisition of Jet East and
$126,000 (2021: $nil) in relation to the gain on disposal of Gama
International Saudi Arabia.
Transaction costs
Transaction costs during the prior year of $558,000 relate to
the acquisition of Jet East. Transaction costs during the year of
$654,000 (2021: $nil) relate to corporate activity of the
Group.
Integration and business re-organisation costs
Integration and business re-organisation costs include severance
costs of $227,000 (2021: $416,000) in relation to the acquisition
of Jet East and a loss of $37,000 (2021: $nil) relating to the
early termination of the Fort Lauderdale Executive Airport lease.
Prior year figure also includes a net provision release of $276,000
relating to direct closure costs at the Fairoaks facility.
Lease derecognition
In the prior year, the credit of $1,626,000 relates to the
release of the Fairoaks lease obligation.
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, mainly relating to the Group's collection of trade
receivables acquired as part of the Hangar 8 reverse
acquisition.
Other prior year items
In the prior year, other items comprise a credit of $63,000
relating to funds received from an overdue debtor against whom a
litigation case has been pursued, a credit for $16,000 received for
consultancy services for Sharjah Airport previously treated as an
exceptional item.
Onerous contract provision
The provision for onerous relates to potential penalty payments
under certain long-term arrangements.
Impairment of assets under construction
The impairment loss in the current year 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 ($2,103,000) and impairment of development costs
in Jersey ($413,000).
The impairment loss in the prior year 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.
Impairment of property, plant and equipment
The impairment loss relates to the impairment of leasehold
improvements associated with the closure of the paint and interior
completion operations at Fort Lauderdale Executive Airport.
Impairment of right-of-use assets
The impairment loss in the prior year relates to the impairment
of the additional right-of-use asset recognised following the
10-year extension to the term of the ground lease in respect of the
Business Aviation Centre at Sharjah International Airport in the
UAE.
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.
Equity-settled share-based payments
Equity-settled share-based payment charges of $372,000 (2021:
$257,000). See Note 40 for further details.
Other long-term employee benefits
The other long-term employee benefits remuneration charge of
1,821,000 (2021: $1,821,000) 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 acquired intangible assets
Amortisation charges in respect of acquired intangible assets of
$1,174,000 (2021: $1,200,000). See Note 19 for further details.
Reversal of impairment of equity-accounted investment
In the prior year, a $1,491,000 reversal of prior period
impairment charges was recognised to ensure that the recoverable
value of the China Aircraft services Limited asset remained at the
$2,000k consideration received on its sale in December 2021.
Exchange differences on forgiveness of loans
This comprises $75,000 of foreign exchange losses arising on
forgiveness of intercompany loans and the impairment of
intercompany loans.
Tax related to Adjusting items
The tax on Adjusting items reflects the deferred tax on
deductible items before any non-recognition of deferred tax.
15. Adjusted performance measures
Organic and constant currency growth
Organic and constant currency growth in Revenue, Gross Profit
and EBIT is a measure which seeks to reflect the performance of the
Group that will contribute to long-term sustainable growth. As
such, organic and constant currency growth excludes the impact of
acquisitions or disposals, and the effect of foreign exchange
movements. Constant currency growth has been calculated using a
constant foreign exchange rate of $1.2379 to GBP1, being the
cumulative average USD-GBP exchange rate for 2022, which has been
used to restate Revenue, Gross Profit and Adjusted EBIT for 2021. A
reconciliation to Revenue, Gross Profit and Adjusted EBIT, the most
directly comparable IFRS measures, which are used to calculate
organic and constant growth, is set out below.
The prior year has been adjusted to include full year results of
acquired businesses and no results for disposed businesses where
the results include only part-year results in either current or
prior periods. For 2021 this comprises the results of Jet East
acquired on 15 January 2021, whilst Gama Aviation Saudi Arabia was
disposed of during March 2022, China Aircraft Services Limited was
disposed of on 31 December 2021, and Gama Aviation SA was disposed
of during 2021. The Jet East business has been fully integrated
into the US operations.
Year ended 2021 ($'000)
Rebase Rebase Rebase
Rebase for Rebase for Rebased Rebase for Rebased
for organic Rebased Gross for organic Gross Adjusted for organic Adjusted
Revenue FX growth Revenue Profit(1) FX growth Profit EBIT FX growth EBIT
BA MRO
US 79,250 - 1,590 80,840 9,035 - 346 9,381 (7,971) - 92 (7,879)
BA
excluding
MRO
US(1) 90,896 (5,228) (2) 85,666 10,065 (431) 32 9,666 (793) 117 38 (638)
Special
Mission(1) 56,716 (5,679) - 51,037 14,481 (1,709) - 12,772 4,546 (450) - 4,096
T&O 5,297 (463) - 4,834 4,204 (303) - 3,901 47 74 - 121
Branding
fee 3,750 - (3,125) 625 3,750 - (3,125) 625 3,691 - (3,076) 615
Associates - - - - - - - - (1,491) - 1,491 -
Corporate - - - - - - - - (2,303) 138 (132) (2,297)
----------- --------- --------- -------- -------- ----------- -------- -------- -------- --------- ------- -------- ---------
Adjusted
Result 235,909 (11,370) (1,537) 223,002 41,535 (2,443) (2,747) 36,345 (4,274) (121) (1,587) (5,982)
----------- --------- --------- -------- -------- ----------- -------- -------- -------- --------- ------- -------- ---------
(1) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation. This
has resulted in a reduction of $3,196,000 in gross profit and is
attributable to BA excluding MRO US ($602,000) and Special Mission
($2,594,000).
Net Debt
A reconciliation of the IFRS financial statement line items that
represent the Net Debt APM is tabulated below.
2022 2021
$'000 $'000
------------------------- -------- ---------
Cash 22,406 10,243
Borrowings (36,108) (67,154)
------------------------- -------- ---------
Net debt pre IFRS 16 (13,702) (56,911)
Obligations under leases (52,681) (48,002)
------------------------- -------- ---------
Net debt (66,383) (104,913)
------------------------- -------- ---------
16. Segment information
The Group has three global strategic business units, being
Business Aviation, Special Mission, and Technology &
Outsourcing. The IFRS 8 operating segments within these global
strategic business units are Business Aviation MRO US, Business
Aviation excluding MRO US, Special Mission, Technology &
Outsourcing, Associates, Corporate, and Branding fees. Corporate
consists of income and expenses incurred by non-trading Group
entities.
Each revenue generating operating segment is managed separately,
as each of these segments requires different marketing approaches.
All inter-segment transfers, including the recharge of centrally
incurred costs from Corporate to other operating segments, are
carried out at arm's length prices. The measure of revenue and
gross profit reported to the Chief Operating Decision Maker to
assess the performance is based on external revenue and gross
profit for each operating segment and excludes intra-group revenues
and gross profit.
The measure of earnings before interest and taxation ("EBIT")
reported to the Chief Operating Decision Maker to assess the
performance is based on operating profit and share of results of
associates for each operating segment and excludes intra-group
profits.
The Chief Operating Decision Maker 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.
Reconciliation of segmental to overall Group performance is
tabulated below:
Year ended 2022 Year ended 2021
$'000 $'000
Gross Statutory Adjusted Adjusted EBIT Gross Statutory Adjusted Adjusted EBIT
Revenue Profit EBIT EBIT pre-IFRS 16 Revenue Profit(1) EBIT EBIT pre-IFRS 16
BA MRO US 118,250 25,894 (2,342) 1,332 633 79,250 9,035 (11,415) (7,971) (8,599)
BA excluding MRO US (1) 106,050 11,424 (4,752) (1,340) (1,896) 90,896 10,065 (977) (793) (1,741)
Special Mission (1) 55,503 13,753 5,357 5,439 3,277 56,716 14,481 4,534 4,546 4,179
T&O 5,214 3,452 (1,191) (914) (922) 5,297 4,204 (289) 47 41
Branding fee 625 625 625 625 625 3,750 3,750 3,691 3,691 3,691
Associates - - - - - - - - (1,491) (1,491)
Corporate - - 2,675 3,665 2,999 - - (2,796) (2,303) (2,229)
----------------------- -------- ------- ---------- -------- ---------------- --------- ---------- ---------- --------- ----------------
Adjusted Result 285,642 55,148 372 8,807 4,716 235,909 41,535 (7,252) (4,274) (6,149)
----------------------- -------- ------- ---------- -------- ---------------- --------- ---------- ---------- --------- ----------------
Adjusting items (Note
14) - (161) - (8,435) (8,435) - - - (2,978) (2,978)
Application of IFRS 16
(Note 30 ) - - - - 4,091 - - - - 1,875
----------------------- -------- ------- ---------- -------- ---------------- --------- ---------- ---------- --------- ----------------
Statutory Result 285,642 54,987 372 372 372 235,909 41,535 (7,252) (7,252) (7,252)
----------------------- -------- ------- ---------- -------- ---------------- --------- ---------- ---------- --------- ----------------
(1) Depreciation charges of $3,196,000 in the prior year
relating to aircraft and refurbishment, and leasehold property
improvements have been reclassified from administrative expenses to
cost of sales to conform with the current year presentation. This
has resulted in a reduction of $3,196,000 in gross profit for the
prior year and is attributable to BA excluding MRO US ($602,000)
and Special Mission ($2,594,000).
Geographic location of non-current assets
The geographic location of non-current assets is as follows:
Year ended 2022 Year ended 2021
$'000 $'000
------------------- ---------------- ---------------
Non-current assets
US 25,077 23,413
Europe 68,563 104,438
Asia 14 58
Middle East 93 144
93,747 128,053
------------------- ---------------- ---------------
Non-current assets for this purpose consist of goodwill, other
intangible assets, property, plant and equipment, right-of-use
assets, and trade and other receivables.
17. Earnings per share
The calculation of earnings per share ("EPS") is based on the
earnings attributable to the ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Year ended 2022 Year ended 2021
$'000 $'000
------------------------------------------------------------ ---------------- ---------------
Numerator
Statutory earnings:
Loss attributable to ordinary equity holders of the parent (8,859) (8,062)
------------------------------------------------------------ ---------------- ---------------
Adjusted earnings:
Loss attributable to ordinary equity holders of the parent (1,648) (5,555)
------------------------------------------------------------ ---------------- ---------------
Denominator
Weighted average number of shares used in basic EPS 63,964,745 63,660,183
Effect of dilutive share options - -
------------------------------------------------------------ ---------------- ---------------
Weighted average number of shares used in diluted EPS 63,964,745 63,660,183
------------------------------------------------------------ ---------------- ---------------
Earnings per share (cents)
Statutory earnings per share
Basic (13.9) (12.7)
Diluted (13.9) (12.7)
Adjusted earnings per share
Basic (2.6) (8.7)
Diluted (2.6) (8.7)
------------------------------------------------------------ ---------------- ---------------
Year ended 2022 Year ended 2021
Reconciliation of basic to diluted ordinary shares '000 '000
--------------------------------------------------- --------------- ---------------
Issued ordinary shares at 1 January 63,686,279 63,636,279
Effect of issuance of shares 164,247 23,904
Effect of vesting of share options 130,000 -
Effect of forfeiture of share options (15,781) -
--------------------------------------------------- --------------- ---------------
Basis weighted average number of ordinary shares 63,964,745 63,660,183
Effect of share options - -
--------------------------------------------------- --------------- ---------------
Diluted weighted average number of ordinary shares 63,964,745 63,660,183
--------------------------------------------------- --------------- ---------------
The average share price for the year ended 31 December 2022 was
59.4 pence, which is higher than the exercise price of the s hare
options granted under the 2021 Company Share Option Plan, the 2021
Additional Share Options Plan, and the 2021 Long-Term Incentive
Plan. However, the effect of including these shares would reduce
the loss per share and adjusted loss per share, and therefore no
dilutive effect is shown.
The weighted average number of shares used in basic EPS has not
been reduced by any shares held by the employee benefit trust.
Refer to Note 36 for further details on the employee benefit
trust.
There have no material transactions involving the Group's
ordinary shares between the reporting date and the date of
authorisation of these financial statements.
18. Goodwill
$'000
------------------------------ -------
Cost
At 1 January 2021 48,034
Exchange differences (520)
------------------------------ -------
At 31 December 2021 47,514
Exchange differences (4,417)
At 31 December 2022 43,097
------------------------------ -------
Accumulated impairment losses
At 1 January 2021 25,544
Exchange differences (266)
------------------------------ -------
At 31 December 2021 25,278
Impairment loss 787
Exchange differences (2,144)
At 31 December 2022 23,921
------------------------------ -------
Carrying amount
At 31 December 2022 19,176
------------------------------ -------
At 31 December 2021 22,236
------------------------------ -------
The impairment loss of $787,000 relates to the goodwill
associated with the paint and interior completion operation at Fort
Lauderdale Executive Airport that was closed during the year-ended
31 December 2022.
The recoverable amount of goodwill is allocated to the following
cash-generating units (CGUs):
2022 2021
$'000 $'000
----------------------------------- ------- ------
Carrying amount
Business Aviation MRO US - 787
Business Aviation excluding MRO US 7,191 8,043
Special Mission 9,941 11,119
Technology & Outsourcing 2,044 2,287
19,176 22,236
----------------------------------- ------- ------
Impairment review
Goodwill, together with other non-current assets, is assessed
for impairment in Note 20.
19. Other intangible assets
Licences
and brands Customer relations Computer software Total
$'000 $'000 $'000 $'000
----------------------------------------------- ----------- ------------------ ----------------- -------
Cost
At 1 January 2021 - 15,869 10,272 26,141
Additions - - 2,604 2,604
Recognised on acquisition 1,181 5,021 - 6,202
Foreign exchange differences - (52) (170) (222)
----------------------------------------------- ----------- ------------------ ----------------- -------
At 31 December 2021 1,181 20,838 12,706 34,725
Additions - - 1,974 1,974
Foreign exchange differences - (463) (1,399) (1,862)
At 31 December 2022 1,181 20,375 13,281 34,837
----------------------------------------------- ----------- ------------------ ----------------- -------
Amortisation and accumulated impairment losses
At 1 January 2021 - 13,597 2,215 15,812
Amortisation 227 973 2,155 3,355
Foreign exchange differences - (28) (68) (96)
----------------------------------------------- ----------- ------------------ ----------------- -------
At 31 December 2021 227 14,542 4,302 19,071
Amortisation 236 938 2,222 3,396
Foreign exchange differences - (288) (512) (800)
At 31 December 2022 463 15,192 6,012 21,667
----------------------------------------------- ----------- ------------------ ----------------- -------
Carrying amount
At 31 December 2022 718 5,183 7,269 13,170
----------------------------------------------- ----------- ------------------ ----------------- -------
At 31 December 2021 954 6,296 8,404 15,654
----------------------------------------------- ----------- ------------------ ----------------- -------
Licences and brands relate to brands arising from the Jet East
acquisition.
The carrying amount of customer relationships relate to:
-- Business Aviation MRO US: $4,036,000 (2021: $4,538,000),
-- Business Aviation excluding MRO US: $525,000 (2021: $780k),
-- Technology & Outsourcing: $622,000 (2021: $978,000).
Computer software costs comprise purchased software, such as
operational and financial systems and the costs of configuration
and customisation of Software as a Service arrangements where
control of the software exists.
Other intangible assets with a definite useful life are
amortised on a straight-line basis as follows:
-- Brands are amortised over 5 years, with 3 years remaining,
-- Customer relations are amortised over 10 years, with between 2 and 8 years remaining,
-- Computer software is amortised over 3-5 years.
Impairment review
In the current year there is an indication that other intangible
assets may be impaired.
Other intangible assets do not generate cash inflows from
continuing use that are largely independent of those from other
assets or groups of assets. Consequently, recoverable amount for
these assets is determined for the CGU to which they belong.
Other intangible assets, together with other non-current assets,
are assessed for impairment in Note 20.
20. Impairment of non-current assets
In the current year there is an indication that the Group's
non-current assets, including goodwill, may be impaired.
Goodwill acquired in a business combination is allocated to each
of the CGUs that are expected to benefit from the synergies of the
combination based on the ownership of intellectual property. This
represents the lowest level within the Group at which goodwill is
monitored for internal management purposes.
Other intangible assets and other non-current assets do not
generate cash inflows from continuing use that are largely
independent of those from other assets or groups of assets.
Consequently, recoverable amount for these assets is determined for
the CGU to which they belong.
Cash-generating units
For impairment testing, the carrying value of goodwill, other
intangible assets, property, plant and equipment, and right-of-use
assets have been allocated to the Group's CGUs as follows:
Business Aviation
Business Aviation excluding Special Technology &
MRO US MRO US Mission Outsourcing Corporate Total
31 December 2022 $'000 $'000 $'000 $'000 $'000 $'000
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
Goodwill - 7,191 9,941 2,044 - 19,176
Other intangible
assets 4,754 295 268 7,267 586 13,170
Property, plant and
equipment 4,507 9,899 7,059 12 317 21,794
Right-of-use assets 15,200 12,275 10,117 87 515 38,194
Allocation of
Corporate assets 222 319 136 275 (952) -
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
Value-in-use headroom 102,098 2,673 41,536 -
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
Business Aviation
Business Aviation excluding Special Technology &
MRO US MRO US Mission Outsourcing Corporate Total
31 December 2021 $'000 $'000 $'000 $'000 $'000 $'000
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
Goodwill 787 8,043 11,119 2,287 - 22,236
Other intangible
assets 5,492 200 552 8,455 955 15,654
Property, plant and
equipment 5,276 5,374 42,067 38 734 53,489
Right-of-use assets 11,617 13,187 11,270 189 120 36,383
Allocation of
Corporate assets 1,332 976 511 76 (2,895) -
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
Value-in-use headroom 34,857 51,790 11,358 31,226
--------------------- -------------------- -------------------- -------- --------------------- ---------- ------
The carrying amount of each CGU includes goodwill allocated to
each CGU at inception, other intangible assets (including deferred
tax related to the uplift to fair value recognised on acquisition),
property, plant and equipment, right-of-use assets, working capital
balances, corporate income taxes, obligations under leases, and
corporate assets allocated to each CGU.
Key assumptions used in the value-in-use calculations
The key assumptions and estimates used in the value-in-use
calculations are as follows:
-- Cash flow projections are based on the most recent financial
forecasts, being the Group's 2023 updated Strategic Plan approved
by the Board of Directors in January 2023. These forecasts cover a
period of four years.
-- The Group also considered the impact of Climate Change in
determining operating assumptions applicable to the forecast cash
flows.
-- The discount rate reflects the current market assessment of
the risks specific to each CGU and is estimated from the weighted
average cost of capital using the Capital Asset Pricing Model,
after considering the risk-free rate, equity market risk, beta,
country risk, small stock premium, pre-tax cost of debt, tax rates,
and the debt to capital ratio applicable to each CGU.
-- The terminal value for each CGU is estimated by applying the
Gordon Growth formula to the forecast cash flows using the
respective discount rate and long-term growth rate. The long-term
growth rate reflects the average of the long -- term growth rate
for the countries in which the CGU operates.
The values assigned to the key assumptions represent
management's assessment of future trends in the industry and have
been based on historical data from both external and internal
sources.
Impairment review outcome
Business Aviation MRO US
The Business Aviation MRO US CGU represents maintenance and
repair operations in the United States.
The recoverable amount of the Business Aviation MRO US CGU was
determined based on its value-in-use using discounted cash flow
projections from the Group's four-year internal forecasts approved
by the Board of Directors. At 31 December 2022, the recoverable
amount of the Business Aviation MRO US CGU is $127.2m (2021:
$61.0m).
The post-tax discount rate applied to the cash flow projections
is 11.1% (2021: 15.8%) and cash flows beyond the four-year period
are extrapolated using a 1.3% (2021: 2.7%) growth rate. The
equivalent pre-tax discount rate would be 13.7% (2021: 16.2%).
The recoverable amount calculated indicates very significant
headroom over the carrying value. There are no reasonably possible
changes in the key assumptions that will result in an
impairment.
Business Aviation excluding MRO US
The Business Aviation excluding MRO US CGU represents services
provided to our private and corporate clients to safely enable
their private jet travel requirements.
The recoverable amount of the Business Aviation excluding MRO US
CGU was determined based on its value-in-use using discounted cash
flow projections from the Group's four-year internal forecasts
approved by the Board of Directors. At 31 December 2022, the
recoverable amount of the Business Aviation excluding MRO US CGU is
$4.1m (2021: $79.6m). The reduction in the years reflects
managements revised expectation of lower anticipated cash flows
from these operations during the strategic horizon combined with
lower long term growth assumptions.
The post-tax discount rate applied to the cash flow projections
is 12.0% (2021: 10.9%) and cash flows beyond the four-year period
are extrapolated using a 1.6% (2021: 2.3%) growth rate. The
equivalent pre-tax discount rate would be 14.9% (2021: 11.4%).
Reasonably possible changes in key assumptions could cause the
carrying amount to exceed the recoverable amount for the BA ROW
CGU. The following sensitivity analysis shows the impact on the
headroom of different post-tax discount rates and EBITDA delivery
in the cash flow projections used in the impairment review
model.
USD'000
EBITDA deviation compared to projections
-----------------------------------------------------------------------------------------------------------------
-10.0% -5.0% 0.0% 5.0% 10.0%
------ --------------------- --------------------- --------------------- --------------------- ---------------------
11.0% 1,320 2,570 3,819 5,069 6,318
----------
11.5% 869 2,042 3,215 4,388 5,561
12.0% 466 1,570 2,673 3,777 4,881
12.5% 102 1,143 2,185 3,226 4,268
Post-tax
discount
rate 13.0% (227) 758 1,742 2,727 3,711
---------- ------ --------------------- --------------------- --------------------- --------------------- ---------------------
Special Mission
The Special Mission CGU represents services provided to
governments and corporations which rely on aviation assets to
perform a specialised, often time critical, mission.
The recoverable amount of the Special Mission CGU was determined
based on its value-in-use using discounted cash flow projections
from the Group's four-year internal forecasts approved by the Board
of Directors. At 31 December 2022, the recoverable amount of the
Special Mission CGU is $55.1m (2021: $76.9m).
The post-tax discount rate applied to the cash flow projections
is 11.3% (2021: 9.8%) and cash flows beyond the four-year period
are extrapolated using a 0.8% (2021: 2.3%) growth rate. The
equivalent pre-tax discount rate would be 14.7% (2021: 9.8%).
The recoverable amount calculated indicates significant headroom
over the carrying value. There are no reasonably possible changes
in the key assumptions that will result in an impairment.
Technology & Outsourcing
The Technology & Outsourcing CGU represents advisory,
technology, and outsourcing services to aviation clients who seek
to gain a decisive advantage using real and near real time
intelligence.
The recoverable amount of the Technology & Outsourcing CGU
was determined based on its fair value less cost of disposal. At 31
December 2022, the recoverable amount of the Technology &
Outsourcing CGU is $9.3m (2021: $42.3m).
21. Property, plant and equipment
Leasehold Aircraft and Fixtures, Motor Asset under
Helicopters improvement refurbishments fittings and vehicles construction Total
$'000 $'000 $'000 equipment $'000 $'000 $'000 $'000
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
Cost
At 1 January 2021 29,088 17,918 12,161 11,861 2,773 4,609 78,410
Additions - 1,230 627 1,463 50 - 3,370
Acquisitions - 683 - 1,384 493 - 2,560
Disposals - (33) - (206) (94) - (333)
Reclassification(1) 117 - (117) - - - -
Exchange differences (342) (187) (153) (77) (2) - (761)
At 31 December 2021 28,863 19,611 12,518 14,425 3,220 4,609 83,246
Additions - 155 - 2,172 348 2,516 5,191
Disposals (23,025) - - (96) (126) - (23,247)
Exchange differences (5,838) (1,718) (1,328) (677) (29) - (9,590)
At 31 December 2022 - 18,048 11,190 15,824 3,413 7,125 55,600
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
Accumulated depreciation
and impairment
At 1 January 2021 722 5,728 3,254 7,598 1,830 4,609 23,741
Charge for the year 1,243 1,136 1,348 2,160 554 - 6,441
Disposals - (30) - (155) (83) - (268)
Reclassification(1) - (25) - 25 - - -
Exchange differences (33) 3 (64) (62) (1) - (157)
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
At 31 December 2021 1,932 6,812 4,538 9,566 2,300 4,609 29,757
Charge for the year 840 1,122 1,342 2,097 469 - 5,870
Disposals (2,272) - - (75) (116) - (2,463)
Impairment - 124 - - - 2,516 2,640
Reclassification(1) - (29) - 29 - - -
Exchange differences (500) (539) (516) (427) (16) - (1,998)
At 31 December 2022 - 7,490 5,364 11,190 2,637 7,125 33,806
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
Carrying amount
At 31 December 2022 - 10,558 5,826 4,634 776 - 21,794
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
At 31 December 2021 26,931 12,799 7,980 4,859 920 - 53,489
-------------------- ----------- ------------ --------------- --------------- --------- -------------- --------
(1) Reclassifications relate to corrections in the
categorisation of property, plant and equipment.
No borrowing costs were capitalised during the current and prior
year.
On 27 September 2022, the Group completed the sale and leaseback
of its helicopter assets resulting in cash proceeds of $27.0m and a
gain on disposal of $1.7m. The cash proceeds of $27.0m included
$4.2m of additional financing raised in the transaction.
The assets under construction relate to the investment in the
Sharjah Business Aviation Centre ("BAC") project and the Jersey
Fixed Based Operations ("FBO") project.
The Sharjah BAC project was fully impaired in the beginning of
the financial year and additional expenditure of $2,103,000, which
was incurred on the project during the current year, has also been
impaired. The impairment initially arose due to uncertainties
arising in part from the COVID-19 pandemic, and subsequently due to
the uncertainty about securing funding to continue the project.
Expenditure of $413,000 incurred during the year on the Jersey
FBO project has been impaired due to the uncertainty about securing
the necessary funding for the project.
Total impairment costs of assets under construction of $
2,516,000 (2021: $nil) were recognised in the year.
Impairment review
In the current year there is an indication that the other
classes of property, plant and equipment may be impaired.
The other classes of property, plant and equipment do not
generate cash inflows from continuing use that are largely
independent of those from other assets or groups of assets.
Consequently, recoverable amount for these assets is determined for
the CGU to which they belong.
Property, plant and equipment, together with other non-current
assets, is assessed for impairment in Note 20.
22. Right-of-use assets
Leasehold property Fixtures, fittings and equipment Aircraft Vehicles Total
$'000 $'000 $'000 $'000 $'000
----------------------------------- ------------------ -------------------------------- -------- -------- -------
Cost
At 1 January 2021 56,438 16 - 317 56,771
Additions 7,265 123 - 164 7,552
Disposals (2,862) (10) - (161) (3,033)
Acquisition 3,387 7 - - 3,394
Exchange differences (385) - - (1) (386)
----------------------------------- ------------------ -------------------------------- -------- -------- -------
At 31 December 2021 63,843 136 - 319 64,298
Additions 8,056 224 3,341 198 11,819
Disposals (9,205) (5) - (101) (9,311)
Exchange differences (3,484) (8) 403 (15) (3,104)
----------------------------------- ------------------ -------------------------------- -------- -------- -------
At 31 December 2022 59,210 347 3,744 401 63,702
----------------------------------- ------------------ -------------------------------- -------- -------- -------
Accumulated depreciation and
impairment
At 1 January 2021 21,188 11 - 157 21,356
Charge for the year 7,381 17 - 126 7,524
Impairment 1,911 - - - 1,911
Disposals (2,603) (10) - (161) (2,774)
Exchange differences (101) - - (1) (102)
----------------------------------- ------------------ -------------------------------- -------- -------- -------
At 31 December 2021 27,776 18 - 121 27,915
Charge for the year - admin
expenses 638 25 - 3 666
Charge for the year - cost of sales 4,779 27 426 103 5,335
Disposals (7,374) (5) - (73) (7,452)
Exchange differences (937) (2) (11) (6) (956)
----------------------------------- ------------------ -------------------------------- -------- -------- -------
At 31 December 2022 24,882 63 415 148 25,508
----------------------------------- ------------------ -------------------------------- -------- -------- -------
Carrying amount
At 31 December 2022 34,328 284 3,329 253 38,194
----------------------------------- ------------------ -------------------------------- -------- -------- -------
At 31 December 2021 36,067 118 - 198 36,383
----------------------------------- ------------------ -------------------------------- -------- -------- -------
The aircraft additions during the current year relate to the
sale-and-leaseback transaction involving the Group's helicopters
which is further described in Note 21 to the financial
statements.
Impairment review
In the current year there is an indication that right-of-use
assets may be impaired.
Right-of-use assets do not generate cash inflows from continuing
use that are largely independent of those from other assets or
groups of assets. Consequently, recoverable amount for these assets
is determined for the CGU to which they belong.
Right-of-use assets, together with other non-current assets, are
assessed for impairment in Note 20.
23. Investments accounted for using the equity method
Gama Aviation LLC
On 2 March 2020, the Group announced the sale of its US Air
Associate, Gama Aviation LLC (doing business as "Gama Aviation
Signature") to Wheels Up Partners Holdings LLC ("Wheels Up"). Gama
Aviation Signature was owned 49% by GB Aviation Holdings LLC, a
joint venture between the Group and Signature Aviation plc, with
the remaining 51% held by the Group's US partners.
As part of the transaction, GB Aviation Holdings LLC licensed
the continued use of the Gama Aviation Signature brand for up to
two years, for which $7.5m of consideration has been allocated and
is being recognised as revenue over the two-year period. In 2022,
$625,000 (2021: $3,750,000) has been recognised as revenue for this
licensing component.
Included within deferred revenue (in current liabilities) as of
31 December 2021, is licensing and other trading related
considerations of $625,000.
China Aircraft Services Limited
In 2021, the share of results from the equity accounted
investment in China Aircraft Services Limited represents the period
ended 31 May 2021, this being the date the Board accepted in
principle an offer of $2m for its 20% shareholding, and
subsequently recognised the asset as held for sale at fair value.
Adjusting items includes an impairment reversal, recognised in line
with IAS 36, to the extent of the Group's share of losses of $1.5m
such that the carrying amount of the investment directly before the
sale was held at $2m. On 31 December 2021, the sale of the
investment was agreed and $2m cash consideration was received in
full. Consequently, assets held for sale as of 31 December 2021
were $nil.
The investments' values are as follows:
China Aircraft Services Limited
----------------------------------
2022 2021
$'000 $'000
----------------------- ---------------- ----------------
At 1 January - 2,000
Share of net loss - (1,491)
Reversal of impairment - 1,491
Disposal of investment - (2,000)
----------------------- ---------------- ----------------
At 31 December - -
----------------------- ---------------- ----------------
The results of the equity accounted investments are as
follows:
China Aircraft Services Limited
---------------------------------------------------------------------------------------------
2022 2021
$'000 $'000
---------------------------------------------------------- ---------------- ----------------
Revenue - 8,524
Expenditure - (16,079)
Loss before tax - (7,555)
Income tax credit - 99
---------------------------------------------------------- ---------------- ----------------
Loss after tax - (7,456)
---------------------------------------------------------- ---------------- ----------------
Statutory result: Group's share of net loss - (1,491)
Statutory result: Share of results from equity accounting - (1,491)
Adjusted result: Share of results from equity accounting - (1,491)
---------------------------------------------------------- ---------------- ----------------
Reversal of impairment of equity accounted investments - 1,491
---------------------------------------------------------- ---------------- ----------------
The reversal of impairment was recognised based on a recoverable
amount, (the higher of the fair value less costs to sell and the
value in use) which in this case was determined based on the fair
value less cost to sell.
24. Inventories
2022 2021
$'000 $'000
------------------------------ ------- -------
Raw materials and consumables 12,667 14,807
Work in progress 4 4
Provision for obsolescence (5,393) (5,896)
------------------------------ ------- -------
7,278 8,915
------------------------------ ------- -------
The Directors consider that the carrying value of inventories is
approximately equal to their fair value.
Estimation uncertainty
The key source of estimation uncertainty at the reporting date,
that may have a significant risk of causing a materially different
outcome to the carrying amounts of inventories within the next
financial year, relates to a change in the net realisable value due
to change in customer demand or obsolescence of certain inventory
lines. The Company provides for inventories on a sliding scale over
the preceding eight years. As a result, inventory older than eight
years is written off in full. At 31 December 2022, the Board
considers its assessment of net realisable value to be appropriate
based on best information available. If the provision rates applied
to inventory aged between one and seven years increased by 10ppts,
the loss for the year would increase by $435,000.
25. Trade and other receivables
2022 2021
$'000 $'000
-------------------------------------------- ------- -------
Financial assets
Amounts receivable for the sale of services 35,987 40,559
Loss allowance for expected credit losses (4,045) (5,682)
-------------------------------------------- ------- -------
31,942 34,877
Accrued income(1) 21,320 18,953
Loss allowance for expected credit losses (595) (500)
-------------------------------------------- ------- -------
20,725 18,453
Financial lease receivable 916 -
-------------------------------------------- ------- -------
Total financial assets 53,583 53,330
-------------------------------------------- ------- -------
Non-financial assets
Prepayments(1) 4,056 3,667
Other debtors 2,045 7,102
-------------------------------------------- ------- -------
Total non-financial assets 6,101 10,769
-------------------------------------------- ------- -------
Total trade and other receivables 59,684 64,099
-------------------------------------------- ------- -------
Current 58,271 63,808
Non-current 1,413 291
-------------------------------------------- ------- -------
Total trade and other receivables 59,684 64,099
-------------------------------------------- ------- -------
(1) Includes contract assets which are described in further detail below.
The Directors consider that the carrying amount of trade and
other receivables is approximately equal to their
fair value.
Amounts receivable for the sale of services
Amounts receivable for the sale of services are non-interest
bearing and are generally on credit terms usual for the markets in
which the Group operates. Where appropriate, the Group assesses the
potential customer's credit quality and requests payments on
account, as a means of mitigating the risk of financial loss from
defaults.
In the Business Aviation excluding MRO US SBU, the Group
commonly obtains security in the form of contractual lien, parent
company guarantee or a bank guarantee to support the trade
receivables arising from aircraft management agreements. A similar
contractual right of lien is contained within the General Terms and
Conditions for MRO services and is also commonly contained within
the terms and conditions of individual MRO services proposals where
stage payments for higher value work programmes are the norm. Where
considered appropriate, a requirement for full up-front payment is
imposed.
Additionally, in the US, liens can be filed to protect past due
unpaid balances.
At the year end, trade receivables within the Business Aviation
excluding MRO US SBU that are secured by contractual liens total $
5,712,000 (2021: $4,339,000).
In the prior year, interest of $432,000 was charged on a late
customer payment in the Middle East.
Amounts receivable for the sale of services include amounts
which are past due at the reporting date but against which the
Group has not recognised a specific loss allowance for expected
credit losses because there has not been a significant change in
credit quality and the amounts are still considered
recoverable.
Ageing of amounts receivable for the sale of services, net of
loss allowance for expected credit losses
2022 2021
$'000 $'000
---------------------- ------- -------
Not yet due 14,228 11,062
Less than 30 days 7,358 10,558
30-60 days 2,165 2,558
61-90 days 2,269 2,236
91-120 days 438 2,565
Greater than 120 days 5,484 5,898
---------------------- ------- -------
Total 31,942 34,877
---------------------- ------- -------
Loss allowance for expected credit losses
As there is no significant financing component to amounts
receivable for the sale of services, the Group has elected to apply
the IFRS 9 simplified approach to measuring expected credit losses,
using a lifetime expected credit loss provision for amounts
receivable for the sale of services, contract assets and accrued
income. In arriving at the loss allowance for expected credit
losses, the gross receivable amount is analysed according to risk
and including a consideration of any credit insurance in place. In
determining the recoverability of a trade receivable, the Group
considers any change in the credit quality of the trade receivable
from the date credit was initially granted up to the reporting
date. The loss rates applied to each ageing bracket also reference
historical credit loss experience, as well as current and future
expected economic conditions.
No loss allowance for expected credit losses is recognised in
respect of other debtors.
The Group carries an expected credit loss allowance of $
4,640,000 (2021: $6,182,000), which relates to amounts receivable
for the sale of services and accrued income.
Ageing of impairments on amounts receivable for the sale of
services
2022 2021
$'000 $'000
---------------------- ------- -------
Not yet due 107 97
Less than 30 days 58 29
30-60 days 6 8
61-90 days 31 11
91-120 days 3 6
Greater than 120 days 4,435 6,031
---------------------- ------- -------
Total 4,640 6,182
---------------------- ------- -------
Movement in the loss allowance for expected credit losses
2022 2021
$'000 $'000
--------------------------------------------------- ------- -------
At 1 January 6,182 7,454
Impairment losses recognised in income statement 278 -
Impairment reversal recognised in income statement (53) (21)
Recovery of previously written-off receivables (1,015) -
Amounts written off as uncollectible (390) (1,197)
Foreign exchange translation gains and losses (362) (54)
--------------------------------------------------- ------- -------
At 31 December 4,640 6,182
--------------------------------------------------- ------- -------
The $1,015,000 (2021: $nil) recovery of previously written-off
receivables in the current year relates to the recovery of amounts
written-off in Business Aviation excluding MRO US ($1,013,000) and
Technology & Outsourcing ($2,000).
The $390,000 (2021: $1,197,000) write-off in the current year
relates to the settlement of overdue receivables in Business
Aviation MRO US ($238,000), Business Aviation excluding MRO US
($139,000), and Technology & Outsourcing ($13,000).
Sensitivity analysis on loss allowance for expected credit
losses
The estimate of the loss allowance may vary from the actual
amounts recovered if an individual becomes unable to pay or able to
pay. If a portion of the impaired receivable balance for the sale
of services was recovered there may be material credit to the
income statement. Similarly, if the unimpaired receivable balance
over 120 days of $5,484,000 was unable to be recovered, there may
be a material charge to the income statement. However, as noted
above, there are liens over the aircraft relating to certain
unimpaired receivables over 120 days. If all remaining gross
receivable balances relating to the sale of services were impaired
by an additional 1% of the gross receivables balance, the loss
allowance for expected credit losses would be increased by $
358,000 .
Accrued income
Accrued income is expected to be billed within the next twelve
months, together with contract assets of $ 5,099,000 (2021:
$2,327,000) comprising:
-- Costs associated with a Fleet Maintenance programme in the UK
on a long-term contract, contract assets of $ 798,000 (2021:
$269,000)
-- Contract assets arising from design and modification projects
of $ 1,634,000 (2021: $993,000) in the UK.
-- Cost associated with commencement of Helicopter Emergency
Medical Services (HEMS) on behalf of the Scottish Ambulance Service
on 1 June 2020 using its fleet of three Airbus H145 helicopters of
$588,000 (2021: $1,065,000).
-- Costs incurred to start up a maintenance contract at Luton
Airport of $2,079,000 (2021: $Nil)
Financial lease receivable
The Group sub-leases a proportion of its hangar and office
facility at the Trenton-Mercer airport in New Jersey, USA. The
Group has designated the sub-lease as a finance lease because the
sub-lease is for the whole of the remaining term of the head
lease.
The table below sets out the maturity analysis of the financial
lease receivables:
2022 2021
$'000 $'000
--------------------------------------------- ------- -------
Less than one year 306 -
One to two years 636 -
Two to three years 54 -
--------------------------------------------- ------- -------
Total undiscounted lease payments receivable 996 -
Unearned finance income (80) -
--------------------------------------------- ------- -------
Net investment in the lease 916 -
--------------------------------------------- ------- -------
No operating profit or loss is made on the sub-lease of this
facility.
26. Cash and cash equivalents
For the purposes of the Consolidated Cash Flow Statement, cash
and cash equivalents include cash on hand and in banks, net of
outstanding bank overdrafts. Cash and cash equivalents at the end
of the financial year as shown in the Consolidated Cash Flow
Statement can be reconciled to the related items in the
Consolidated Balance Sheet as follows:
2022 2021
$'000 $'000
--------------------------------------------------------- ------- -------
Cash and bank balances in the Consolidated Balance Sheet 22,406 10,243
--------------------------------------------------------- ------- -------
Cash and cash equivalents are denominated in the following
currencies:
2022 2021
$'000 $'000
---------------------------- ------- -------
United States Dollar 19,449 6,136
Sterling 2,622 3,863
Euro 130 132
United Arab Emirates Dirham 192 68
Other currencies 13 44
22,406 10,243
---------------------------- ------- -------
27. Trade and other payables
2022 2021
$'000 $'000
------------------------------------------ ------- -------
Financial liabilities
Trade and other payables 15,118 15,470
Accruals 17,492 15,482
32,610 30,952
Non-financial liabilities
Other long-term employee benefits accrual 3,642 1,821
Other taxation and social security 5,750 1,591
Income received in advance 8,431 6,799
------------------------------------------ ------- -------
17,823 10,211
Total trade and other payables 50,433 41,163
------------------------------------------ ------- -------
Current 46,770 39,342
Non-current 3,663 1,821
------------------------------- ------ ------
Total trade and other payables 50,433 41,163
------------------------------- ------ ------
Trade payables
Trade payables and accruals principally comprise amounts
outstanding for trade purchases and ongoing costs. Trade and other
payables are non-interest bearing and are generally on credit terms
usual for the markets in which the Group operates. The Group has
financial risk management policies in place that target settlement
within agreed credit terms.
The Directors consider that the carrying amount of trade
payables is approximately equal to their fair value.
Other long-term employee benefits accrual
Other long-term employee benefits accrual relates to the Jet
East long-term incentive plan, accounted for in accordance with IAS
19, 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 business. A remuneration
charge of $1,821,000 (2021: $1,821,000) has been recognised within
Adjusting items. The period over which the services are received is
three years and the incentive plan is estimated to result in a
future cash outflow of $6,024,000(2021: $6,024,000) after this
three-year period.
Awards associated with the long-term incentive plan are linked
with business performance and the level of indebtedness of the
combined Business Aviation MRO US business. The long-term incentive
plan is accounted for as remuneration for post-acquisition services
and is not part of the business combination.
Income received in advance
Income received in advance relates to advance payments for
operating expenses incurred by the Group on managed aircraft prior
to these expenses being billed to the customer. The outstanding
performance obligations are expected to be fulfilled within the
next twelve months. Income received in advance represents a
contract liability. See Note 34 for other contract liabilities.
Estimation uncertainty
A key source of estimation uncertainty at the reporting date,
that may have a significant risk of causing a materially different
outcome relate to the carrying amounts of the other long-term
employee benefit accrual and the associated remuneration charge
within the next financial year. This is dependent on future
business performance Business performance in Business Aviation MRO
US and is calculated as a multiple of EBITDA plus cash and cash
equivalents and less borrowings. The Directors consider that the
carrying amount of the other long-term employee benefit accrual as
of 31 December 2022 of $3,642,000 (2021: $1,821,000) approximates
the present value of the service cost.
28. Current tax payable
2022 2021
$'000 $'000
------------------------------------------------------------------------- ------- -------
Tax prepayments as of 1 January 27 1,280
Current tax liability as of 1 January (574) (15)
------------------------------------------------------------------------- ------- -------
Net current tax (liability)/prepayment as of 1 January (547) 1,265
Tax credit/(charge) relating to prior periods 63 (75)
Current tax expense (154) (4,292)
Fines included in tax expense but recognised in trade and other payables - 328
Payments during the year 66 3,104
Refunds received during the year - (792)
Other taxes 21 (95)
Foreign exchange differences 18 10
------------------------------------------------------------------------- ------- -------
Net current tax liability as of 31 December (533) (547)
------------------------------------------------------------------------- ------- -------
Analysed as:
Tax prepayments as of 31 December - 27
Current tax liability as of 31 December (533) (574)
------------------------------------------------------------------------- ------- -------
Net current tax liability as of 31 December (533) (547)
------------------------------------------------------------------------- ------- -------
29. Indirect tax payable
2022 2021
$'000 $'000
-------------------------------------- ------- -------
Value added tax 4,991 (122)
Sales taxes (111) (20)
Italian luxury taxes 112 120
Net indirect tax payable/(receivable) 4,992 (22)
-------------------------------------- ------- -------
30. Obligations under leases
Leasehold Fixtures, fittings
property and equipment Aircraft Vehicles Total
$'000 $'000 $'000 $'000 $'000
------------------------------- --------- ------------------ -------- -------- -------
At 1 January 2021 45,899 3 - 237 46,139
Additions 7,265 123 - 164 7,552
Acquisitions 3,387 7 - - 3,394
Finance expense 2,614 3 - 7 2,624
Modifications and disposals (1,885) - - - (1,885)
Lease payments (9,447) (19) - (107) (9,573)
Rent free credit (110) - - - (110)
Exchange differences and other (144) - - 5 (139)
------------------------------- --------- ------------------ -------- -------- -------
At 31 December 2021 47,579 117 - 306 48,002
Additions 4,662 224 7,894 198 12,978
Finance expense 2,400 12 113 18 2,543
Modifications and disposals (810) - - - (810)
Lease payments (6,874) (64) (1,377) (123) (8,438)
Exchange differences and other (2,441) (3) 984 (134) (1,594)
At 31 December 2022 44,516 286 7,614 265 52,681
------------------------------- --------- ------------------ -------- -------- -------
Following the surrender of the lease at Fairoaks Airport in
2021, a $1,626,000 profit has been recognised in the prior year in
derecognition of remaining lease liabilities. This amount has been
recognised within other income.
The aircraft additions during the current year relate to the
sale-and-leaseback transaction involving the Group's helicopters
which is further described in Note 21 to the financial
statements.
2022 2021
$'000 $'000
----------------------------------------------------------------------------- ------- ------
Maturity analysis - contractual undiscounted cash flows:
Less than one year 10,787 8,101
One to five years 23,368 22,307
More than five years 53,035 56,760
----------------------------------------------------------------------------- ------- ------
Total undiscounted lease liabilities at 31 December 87,190 87,168
----------------------------------------------------------------------------- ------- ------
Lease liabilities included in the consolidated balance sheet at 31 December:
Current 11,053 7,970
Non-current 41,628 40,032
----------------------------------------------------------------------------- ------- ------
Total lease liabilities at 31 December 52,681 48,002
----------------------------------------------------------------------------- ------- ------
Average incremental borrowing rates applied across the Group
were:
2022 2021
% %
--------------------------------- ----- ----
Leasehold property 5.8 5.7
Vehicles 4.9 4.9
Aircraft 5.5 -
Fixtures, fittings and equipment 6.1 6.8
--------------------------------- ----- ----
Property leases with a remaining lease term of more than ten
years have been adjusted to reflect the additional security
afforded by the leased asset on the cost of borrowing. An asset
specific adjustment of 0.69% has been applied to the rates of these
leases.
In June 2017, the Group entered into a non-cancellable
Build-Operate-Transfer and Service Concession agreement with
Sharjah Airport Authority under which the Group is committed to
construct a BAC at Sharjah Airport. The agreement runs from June
2017 until June 2052 following the exercise of the ten-year
extension option during the prior year. The lease liability has
been discounted at an incremental borrowing rate of 7.3% (2021:
7.3%). The Sharjah BAC includes a $9,885,000 (2021: $9,850,000)
obligation under leases at 31 December 2022 following the
formalisation of the ten year lease extension.
2022 2021
31. Borrowings $'000 $'000
------------------------------------------------- -------- ------
Secured borrowings at amortised cost
34,818
Bank borrowings 34,818 64,739
Unsecured borrowing at amortised cost
Repayable element of Paycheck Protection Program - 1,000
Other loans 1,290 1, 415
Total borrowings 36,108 67,154
------------------------------------------------- -------- ------
Repayable element of Paycheck Protection Program - 1,000
Bank borrowings 30,811 37,760
Other loans 414 1, 415
------------------------------------------------- -------- ------
Amount due for settlement within 12 months 31,225 40,175
------------------------------------------------- -------- ------
Bank borrowings 4,007 26,979
Other loans 876 -
------------------------------------------------- -------- ------
Amount due for settlement after 12 months 4,883 26,979
------------------------------------------------- -------- ------
Long-term Short-term Total
Changes in borrowings are tabulated below: $'000 $'000 $'000
--------- ----------
At 1 January 2021 52,197 1,000 53,197
Cash flows:
Repayments (9,573) (2,788) (12,361)
Proceeds - 22,574 22,574
Non-cash:
Acquisition - 4,202 4,202
Foreign currency translation on borrowings in profit or loss (24) - (24)
Exchange differences (531) (83) (614)
Arrangement fee movement 180 - 180
Reclassification (15,270) 15,270 -
----------------------------------------------------------------------- --------- ---------- --------
At 31 December 2021 26,979 40,175 67,154
Cash flows:
Repayments - (46,525) (46,525)
Proceeds 4,313 14,377 18,690
Non-cash:
Foreign currency translation on borrowings in profit or loss (Note 12) - 3,604 3,604
Exchange differences - (5,965) (5,965)
Forgiveness of Paycheck Protection Program loan - (1,000) (1,000)
Arrangement fee movement - 150 150
Reclassification (26,409) 26,409 -
At 31 December 2022 4,883 31,225 36,108
----------------------------------------------------------------------- --------- ---------- --------
Analysis of borrowings by currency:
Sterling US Dollars Total
$'000 $'000 $'000
------------------------------------------------- -------- ---------- ------
31 December 2022
Repayable element of Paycheck Protection Program - - -
Bank borrowings 24,110 10,708 34,818
Other loans - 1,290 1,290
------------------------------------------------- -------- ---------- ------
24,110 11,998 36,108
------------------------------------------------- -------- ---------- ------
31 December 2021
Repayable element of Paycheck Protection Program - 1,000 1,000
Bank borrowings 49,739 15,000 64,739
Other loans - 1, 415 1,415
------------------------------------------------- -------- ---------- ------
49,739 17,415 67,154
------------------------------------------------- -------- ---------- ------
Repayable element of Paycheck Protection Program
During 2020, the Group received funds under the Paycheck
Protection Program 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. As of 31 December 2021, the Group considered $1m of the
funds received to be potentially repayable and recognised this
amount as borrowings in current liabilities. On 19 May 2022, the
Group received confirmation that the full balance of the original
loan, including the $1m, was to be forgiven and was therefore no
longer repayable. The balance of $1m has been derecognised during
the year with the associated credit being recognised against
employment costs within cost of sales and administrative expenses
in the Consolidated Income Statement, consistent with the treatment
adopted for other such pandemic-related support.
Bank borrowings
On 31 December 2021, the Group had facilities agreements for a
GBP20m term loan and a $50m revolving credit facility ("RCF")
secured with HSBC. Bank borrowings of $64.7m as of 31 December 2021
comprised drawdowns under both the HSBC term loan and RCF.
A letter of awareness had been provided by CK Hutchison Holdings
Limited ("CKHH"), which has an indirect shareholding of 29.8% in
the Group, to HSBC that CKHH's current 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. On consideration, the Board concluded that the
loan advanced by HSBC materially represented a market value arm's
length transaction and therefore no adjustment has been made for
any differential between the fair value and the nominal value of
this loan.
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
advised the Group that it will not provide such support beyond the
expiry dates of the current HSBC facilities.
On 14 November 2022, the HSBC RCF matured and was repaid in
full.
On 28 December 2022, the Group secured a new credit facility
with Great Rock Capital Partners Management LLC ("Great Rock"). The
facility totals $25m and comprises a term loan of $6.5m and a RCF
of $18.5m. $20m of this facility was available immediately, with a
further $5m available contingent on future trading performance.
On 28 December, the Group drew down $5m under the term loan and
$6m under the RCF.
Bank borrowings of $34.8m as of 31 December 2022 comprised
drawdowns under the HSBC term loan and drawdowns under both the
Great Rock term loan and RCF.
Drawn
(Local Drawn
Facility currency) (Presentation currency)
2022 Interest Maturity '000 '000 $'000
------------------------------ ------------- ----------------- ----------- ------------ -------------------------
HSBC RCF See below 14 November 2022 - - -
HSBC Term loan See below 31 January 2023 GBP 20,000 GBP 20,000 24,124
Great Rock RCF SOFR + 6.25% 28 December 2026 USD 15,000 USD 6,000 6,000
Great Rock Term loan SOFR + 6.75% 28 December 2026 USD 5,000 USD 5,000 5,000
------------------------------ ------------- ----------------- ----------- ------------ -------------------------
Bank borrowing before arrangement fees 35,124
Capitalised loan arrangement fees (306)
------------------------------------------------------------------------------------------- -------------------------
Bank borrowings 34,818
------------------------------------------------------------------------------------------- -------------------------
Drawn
(Local Drawn
Facility currency) (Presentation currency)
2021 Interest Maturity '000 '000 $'000
----------------------------- -------------- ----------------- ----------- ------------ -------------------------
HSBC RCF SONIA + 0.94% 14 November 2022 USD 50,000 GBP 17,000 22,932
USD 15,000 15,000
--------------------------------------------------------------------------------------- -------------------------
HSBC Term loan SONIA + 1.12% 31 January 2023 GBP 20,000 GBP 20,000 26,979
----------------------------- -------------- ----------------- ----------- ------------ -------------------------
Bank borrowing before arrangement fees 64,911
Capitalised loan arrangement fees (172)
------------------------------------------------------------------------------------------- -------------------------
Bank borrowings 64,739
------------------------------------------------------------------------------------------- -------------------------
The HSBC term loan, Great Rock term loan, and Great Rock RCF are
subject to customary banking security arrangements.
The Great Rock term loan is repayable in 47 monthly instalments
from February 2023 to December 2026, with the residual balance
repayable on 28 December 2026.
Interest rates in respect of the Great Rock term loan and RCF
are subject to reductions if certain performance conditions are
met.
Other loans
Other loans as of 31 December 2022 comprise:
-- A $1m unsecured loan with the Group's primary customer in the
US that bears no interest and is repayable in 60 monthly
instalments from January 2023 to December 2027.
-- Other unsecured loans totalling $0.3m repayable during 2023.
32. Other financial liabilities
2022 2021
$'000 $'000
---------------------------------------------------------------------------------------- ------- -------
Deferred consideration recognised on acquisition, adjusted for discounting 533 533
Reduction in deferred consideration recognised on acquisition, adjusted for discounting (212) -
Unwind of discount on deferred consideration 14 13
335 546
---------------------------------------------------------------------------------------- ------- -------
Due within one year 335 290
Due after more than one year - 256
---------------------------------------------------------------------------------------- ------- -------
335 546
---------------------------------------------------------------------------------------- ------- -------
On the acquisition of Jet East Aviation Corporation LLC, the
fair value of deferred consideration was estimated at $533,000. The
value has decreased to $335,000 as of 31 December 2022 (2021:
$546,000) following an adjustment of $212,000 to the amount
recognised on acquisition. The adjustment of $212,000 represents
legal costs agreed to be borne by the seller. The remaining
movement of $14,000 represents cumulative unwinding of discount,
which has been recognised as finance expenses in the Consolidated
Income Statement.
33. Provisions for liabilities
Onerous Employees' Obligations
contract end of associated
Closure provisions Dilapidations service Integration with
provision $000 provision provision provision construction Total
$'000 $'000 $'000 $'000 projects $'000
---------------- -------------- -------------- -------------- ------------- -------------- ------------- ------
At 1 January
2022 9 - 315 738 58 - 1,120
(Credit)/charge
to the income
statement
during the year (9) 900 - 214 155 863 2,123
Utilised during
the year - - - (50) (41) - (91)
Foreign exchange - - (33) - - - (33)
Discounting
(Note 12) - - 16 - - 16
At 31 December
2022 - 900 298 902 172 863 3,135
---------------- -------------- -------------- -------------- ------------- -------------- ------------- ------
2022 2021
$'000 $'000
------------ ------- ------
Current 2,250 772
Non-current 885 348
Total 3,135 1,120
------------ ------- ------
The closure provision at 31 December 2021 related to the
reduction of business activities in Saudi Arabia.
The provision for onerous contracts relates to potential penalty
payments under certain long-term arrangements.
The dilapidations provision relates to leases entered into
during 2020.
Provision for employees' end of service indemnity relates to
operations in the UAE ($802,000) and the US ($100,000). The
provision in relation to the UAE operations is made in accordance
with the UAE labour laws and is based on current remuneration and
cumulative years of service at the reporting date.
The integration provision relates to severance costs following
the acquisition of Jet East during the prior year. This is expected
to be paid in 2023.
The obligations associated with construction projects relates to
obligations associated with the construction of the Sharjah
hangar.
34. Deferred revenue
2022 2021
$'000 $'000
----------------- ------- -------
Deferred revenue 9,214 8,882
Current 9,214 8,880
Non-current - 2
----------------- ------- -------
Total 9,214 8,882
----------------- ------- -------
The deferred revenue arises in respect of management fees,
maintenance contracts and SaaS contracts invoiced in advance, all
of which are expected to be settled in the next twelve months.
Deferred revenue also arises on licensing revenue connected to the
disposal of the US Air Associate, with $nil (2021: $625,000)
recognised as current. Deferred revenue represents a contract
liability.
Contract liabilities
Deferred revenue of $9,214,000 (2021: $8,882,000) is a contract
liability and as is income received in advance, as shown in Note
27, of $8,431,000 (2021: $6,799,000). Total contract liabilities
are $17,645,000 (2021: $15,681,000).
35. Deferred tax
The following are the major deferred tax liabilities and assets
recognised by the Group and movements thereon during the current
and prior reporting period.
Fixed asset Deferred consideration on
Acquired and other US Air Associate temporary
intangibles temporary differences differences Tax losses Total
$'000 $'000 $'000 $'000 $'000
----------------------------- ------------ ---------------------- ---------------------------- ---------- -------
(Liabilities)/assets at 1
January 2021 (57) (118) (2,986) 1,052 (2,109)
Acquisitions (1,736) 1,418 - - (318)
Credit/(charge) in year (
Note 13) 203 (1,261) 3,147 4,258 6,347
Exchange differences - (2) - - (2)
----------------------------- ------------ ---------------------- ---------------------------- ---------- -------
(Liabilities)/assets at 31
December 2021 (1,590) 37 161 5,310 3,918
Credit/(charge) in year (
Note 13 ) 384 590 (161) 163 976
(Liabilities)/assets at 31
December 2022 (1,206) 627 - 5,473 4,894
----------------------------- ------------ ---------------------- ---------------------------- ---------- -------
Acquired intangibles represent the value of the deferred tax
liability which arises on the fair value of acquired intangibles.
The liability is valued at the tax rate applicable to the
jurisdiction where the intangibles are located.
Deferred tax assets and liabilities are offset where the Group
has a legally enforceable right to do so. The following is the
analysis of the deferred tax balances for financial reporting
purposes:
2022 2021
$'000 $'000
------------------------------------------------ ------- -------
Deferred tax asset due after more than one year 6,100 3,918
Deferred tax liability (1,206) -
------------------------------------------------ ------- -------
Net deferred tax asset 4,894 3,918
------------------------------------------------ ------- -------
Estimation uncertainty
The Group has recognised deferred tax assets on both timing
differences and on taxable losses. In recognising these assets,
management have reviewed the future expected profitability of the
business in each tax jurisdiction and the ability to utilise
existing taxable losses.
The Group has the following tax losses, which are subject to
relevant regulatory review and approval as applicable to the
relevant jurisdiction:
2022 2021 2022 2021 2022 2021
Recognised Recognised Unrecognised Unrecognised Total Total
$'000 $'000 $'000 $'000 $'000 $'000
----------- ----------- ----------- ------------- ------------- ------ ------
UK 2,124 2,222 26,863 27,059 28,987 29,281
US federal 18,466 16,806 16,240 - 34,706 16,806
US state 17,444 20,418 - - 17,444 20,418
Poland - - 262 75 262 75
HK - - 5,684 5,139 5,684 5,139
----------- ----------- ----------- ------------- ------------- ------ ------
Tax losses 38,034 39,446 49,049 32,273 87,083 71,719
----------- ----------- ----------- ------------- ------------- ------ ------
The above losses represent the following value at tax rates
applicable at the balance sheet date:
2022 2021 2022 2021 2022 2021
Recognised Recognised Unrecognised Unrecognised Total Total
$'000 $'000 $'000 $'000 $'000 $'000
------------------------------------ ----------- ----------- ------------- ------------- ------ ------
UK 531 555 6,716 6,765 7,247 7,320
US 4,942 4,755 3,410 - 8,352 4,755
Poland - - 50 14 50 14
HK - - 938 848 938 848
------------------------------------ ----------- ----------- ------------- ------------- ------ ------
Potential tax benefit of tax losses 5,473 5,310 11,114 7,627 16,587 12,937
------------------------------------ ----------- ----------- ------------- ------------- ------ ------
Losses in the UK carried forward indefinitely. Tax losses in
Poland can be carried forward for 5 years. Carry forward of losses
in the US are subject to local state level rules.
A deferred tax asset in respect of tax losses has been
recognised in the UK to the extent that it offsets deferred tax
liabilities in other UK entities. A deferred tax asset has not been
recognised in respect of the remaining UK tax losses due to
uncertainty with regards to timing and amount of future taxable
profits against which the tax losses could be utilised.
In the US, management have concluded that, based on forecast
future cash flows, the losses, including those relating to
unwinding of the asset on the Jet East acquisition, are recoverable
against expected future taxable income.
In Poland the entity is a start-up and until the business is
established, future profits are uncertain hence the asset has not
been recognised.
In Hong Kong, management have not recognised deferred tax assets
on losses as the current business is not operating.
36. Issued capital and reserves
Number GBP'000 $'000
--------------------------------------------------- ---------- ------- -----
Ordinary shares: authorised, issued and fully paid
--------------------------------------------------- ---------- ------- -----
At 1 January 2021 63,636,279 636 953
Shares issued 50,000 1 1
--------------------------------------------------- ---------- ------- -----
At 31 December 2021 63,686,279 637 954
Shares issued 275,000 3 4
At 31 December 2022 63,961,279 640 958
--------------------------------------------------- ---------- ------- -----
The Company has one class of ordinary shares with a nominal
value of GBP0.01 and no right to fixed income.
$'000
Share premium
At 1 January 2021 63,473
Shares issued 29
At 31 December 2021 63,502
Shares issued 210
At 31 December 2022 63,712
Share premium represents the amount subscribed for share capital
in excess of its nominal value, net of historic placement fees of
$1,987,000 (2021: $1,987,000).
Reverse takeover Share-based payment
Merger relief reserve reserve Other reserve reserve Total
Other reserves $'000 $'000 $'000 $'000 $'000
At 1 January 2021 108,595 (95,828) 20,336 2,257 35,360
Share-based payment
expense (Note 40) - - - 244 244
Transfer for lapsed
options - - - (607) (607)
At 31 December 2021 108,595 (95,828) 20,336 1,894 34,997
Share-based payment
expense (Note 40) - - - 158 158
Transfer for lapsed
options - - - (168) (168)
At 31 December 2022 108,595 (95,828) 20,336 1,884 34,987
The merger relief reserve represents differences between the
fair value of the consideration transferred and the nominal value
of the shares. The merger relief reserve arose in 2015 due to
reverse takeover. The reserve was increased in 2016 following the
acquisition of Aviation Beauport Limited, when shares were included
as part of the consideration.
The reverse takeover reserve represents the balance of the
amount attributable to equity after adjusting the accounting
acquirer's capital to reflect the capital structure of the legal
parent in a reverse takeover.
Other reserve is the result of the application of merger
accounting to reflect the combination of the results of Gama
Aviation (Holdings) Jersey Limited with those of Gama Holding FZC,
following the share for share exchange transacted on 16 December
2014.
The share-based payment reserve represents the credit to equity
to recognise the value of equity-settled share-based payments.
Refer to Note 40 for further details of these plans. Following the
lapse of options during the year under the ASOP, CSOP, and LTIP
plans, $168,000 (2021: $607,000) was transferred from other
reserves to accumulated losses.
There is an employee benefit trust that is affiliated with the
Group. However, the Group does not have control of this trust and,
as a result, the trust is not consolidated. Consequently, no own
share reserve is recognised. At the end of the reporting period,
the employee benefit trust held 219,310 (2021: 219,310) shares. The
fair value of these shares at 31 December 2022 was $155,000 (2021:
$131,000).
37. Distributions made and proposed
The Company did not pay an ordinary dividend during the year
(2021: $nil) to shareholders.
The Board does not recommend a dividend for 2022 (2021:
$nil).
38. Non-controlling interest
$'000
-----
At 1 January 2021 795
Total comprehensive loss attributable to minority interests (702)
-----
At 31 December 2021 93
Total comprehensive income attributable to minority interests 279
-----
At 31 December 2022 372
-----
The non-controlling interest in the current and prior year
relates to a 49% shareholding in Gama Aviation FZC, which is
consolidated as the Company is exposed to variable returns from its
involvement and can affect the returns through its power over this
company. In addition, the Group has a call option on the remaining
shareholding. There is an 80% profit sharing ratio attributable to
the Group. As a result, a 20% non--controlling interest has been
recognised in the current and prior year.
Set out below is summarised financial information for Gama
Aviation FZC, before intercompany eliminations:
2022 2021
$'000 $'000
Current assets 9,045 14,454
Current liabilities (7,195) (14,022)
Net current assets 1,850 432
Non-current assets 25 32
Net assets 1,875 464
Accumulated non-controlling interest 372 93
2022 2021
$'000 $'000
Revenue 28,050 28,081
Profit/(loss) for the year 1,396 (3,514)
Other comprehensive income - -
Total comprehensive income 1,396 (3,514)
39. Related party transactions
Balances and transactions between the Company and its
subsidiaries, which are related parties, have been eliminated on
consolidation and are not disclosed in this note. Transactions
between the Group and its associates are disclosed below.
The Company and its subsidiaries have a policy requiring full
disclosure to, and pre-approval by, the Board of transactions
contemplated with related parties.
List of related parties, including associates
The following list is presented in accordance with the
objectives of IAS 24 Related Party Disclosures and all
relationships are disclosed according to their substance rather
than their legal form:
-- Mr M A Khalek - has significant influence over the Company
through his position as Chief Executive Officer and his ownership
interest >20%
-- EBAA - is the European trade association in which Mr M A
Khalek serves on the Board of Governors
-- Air Arabia/Felix Trading Company LLC - Felix Trading Company
LLC ("Felix") has a significant ownership interest in Gama Aviation
FZE, which is controlled by the Group (see Note 2). The principals
of Felix also have significant ownership interest in Air Arabia,
which is a client of the Group.
-- Mr Canning Fok - is an Executive Director of CK Hutchison
Holdings which has an indirect shareholding of 29.6% in the
Company
Associates
-- GB Aviation Holdings LLC - is a joint venture in which the
Group owns a 50% membership interest; and
-- China Aircraft Services Limited - was an associate in which
the Group owned a 20% equity interest prior to sale in 2021.
Trading transactions
During the year, Group companies entered into the following
transactions with related parties who are not members of the
Group:
The following amounts were outstanding at the balance sheet date
for related parties at that date:
Sale of services Purchase of services
2022 2021 2022 2021
$'000 $'000 $'000 $'000
EBACE - - 11 14
China Aircraft Services Limited - 564 - 1,377
Air Arabia/Felix Trading Company LLC 181 198 175 158
Mr Canning Fok 1,585 1,275 - -
Mr M Khalek 25 37 - -
The following amounts were outstanding at the balance sheet date
for related parties at that date:
Amounts owed by Amounts owed to
related parties related parties
2022 2021 2022 2021
$'000 $'000 $'000 $'000
-------- -------- --------
EBACE - - - -
Air Arabia/Felix Trading Company LLC 154 198 129 127
Mr Canning Fok - 12 - 101
Mr M Khalek - - - -
Material transactions with related parties
During the year, within the Business Aviation SBU, sales of
services of $1,585,000 (2021: $1,275,000) were made to Mr Canning
Fok.
Remuneration of key management personnel
The remuneration of the Executive Directors of the Group, who
are also the key management personnel of the Group, are set out
below in aggregate for each of the categories specified in IAS 24
Related Party Disclosures. As all the key management personnel are
remunerated in Pounds Sterling, the disclosure has been presented
in that currency.
2022 2021
GBP'000 GBP'000
----------------------------- -------- --------
Short-term employee benefits 1,224 1,229
Post-employment benefits 136 168
----------------------------- -------- --------
Total 1,125 1,397
----------------------------- -------- --------
Ultimate controlling party
The Company's ordinary shares are publicly traded on the AIM of
the London Stock Exchange. There is no single controlling
party.
40. Share-based compensation
Equity-settled share option schemes
Share options are awarded to employees under three plans:
-- Gama Aviation Plc Company Share Option Plan 2018 (CSOP)
-- Gama Aviation Plc Additional Share Option Plan 2018 (ASOP)
-- Gama Aviation Plc Long-Term Incentive Plan 2021 (LTIP)
The plans are designed to provide long-term incentives for
employees to deliver long-term shareholder returns. Participation
in the plan is at the Board's discretion, and no individual has a
contractual right to participate in the plan or to receive any
guaranteed benefits.
Performance conditions may be specified under any of the
schemes. No options granted to date under the CSOP and ASOP have
performance conditions. Under the LTIP, the number of options which
vest are subject to a performance condition based on the Company's
average share price over the 30 days following release of the
Company's results for the year ending 31 December 2023. However,
these conditions may be varied or waived.
Options are granted under the plans for no consideration and
carry no dividend or voting rights.
The normal vesting period for all schemes is three years,
however, options over 155,000 shares were granted to Directors on
29 March 2021 and these vested immediately (the "Director ASOP
Awards").
Under the CSOP and ASOP, the exercise price of options is
calculated based on the weighted average price at which the
Company's shares are traded on the Alternative Investment Market of
the London Stock Exchange during the week up to and including the
date of the grant. Under the LTIP, the exercise price is 1.0
pence.
When exercised, each option is convertible into one ordinary
share at the exercise price.
If options remain unexercised after a period of ten years from
the grant date, the options expire. If an employee leaves
employment of the Group due to injury, ill health, disability,
retirement, redundancy or where the employee's employer ceases to
be part of the Group, a proportion (being the proportion of the
original shares granted that relate to the period after leaving and
prior to vesting) of options are forfeited 90 days after leaving,
with the remaining options being forfeited six months after
leaving. Options are forfeited 90 days after leaving if the
employee leaves the Group before the options vest for any other
reason.
Set out below are summaries of options granted under the
plans:
2022 2021
Average exercise price Average exercise price
per share option Number of options per share option Number of options
(pence) '000 (pence) '000
-----------------------
At 1 January 34.6 4,017 165.3 3,301
Granted during the year - - 29.1 4,136
Exercised during the
year(1) - - 1.0 (25)
Surrendered during the
year - - 164.9 (2,276)
Forfeited during the year 25.4 (936) 135.4 (1,119)
-----------------------
At 31 December 37.4 3,081 34.6 4,017
-----------------------
Vested and exercisable at
31 December 97.6 194 87.9 226
-----------------------
(1) The weighted average share price at the date of exercise of
options exercised during the year was nil pence (2021: 40.5
pence)
On 29 March 2021, options over a total of 2,276,000 shares
previously granted to Directors and other employees were agreed to
be surrendered by those employees (the "Surrendered Awards"). In
their place, the Company agreed to grant options over a total of
1,138,000 shares, at 68.8 pence, to Directors and other employees
(the "Replacement Awards").
No options expired during 2022 (2021: none).
Share options outstanding at the end of the year have the
following expiry dates and exercise prices:
Share options 31 December Share options 31 December
Exercise price 2022 2021
Grant date Expiry date (pence) '000 '000
-------------- --------------------------
9 August 2016 8 August 2026 155.0 - -
22 June 2018 21 June 2028 205.5 23 33
22 June 2018 21 June 2028 205.5 43 63
17 June 2019 16 June 2029 91.5 58 86
26 March 2021 25 March 2031 39.0 705 965
29 March 2021 28 March 2031 68.8 983 1,046
29 March 2021 28 March 2031 1.0 1,199 1,694
29 March 2021 28 March 2031 1.0 70 130
-------------- --------------------------
TOTAL 3,081 4,017
--------------------------
Weighted average remaining contractual life
of options outstanding at end of period 8.15 years 9.14 years
--------------------------
The estimated fair values of the awards under the CSOP and ASOP
have been established using a Black Scholes model. This model uses
various inputs, including expected dividends, expected share price
volatility and the expected period to exercise.
The estimated fair values of the awards under the LTIP have been
established using a Monte Carlo model. This model uses various
inputs, including expected dividends, expected share price
volatility and the expected period to exercise, and the likelihood
of the market-based performance condition being met at the grant
date.
The Replacement Awards have been accounted for under
modification accounting, whereby the original fair value expense
for the Surrendered Awards has continued to be recognised over the
original vesting period and an additional incremental expense has
been recognised over the vesting period of the Replacement
Awards.
No options were granted during the year ended 31 December 2022
(2021: 4,136,000).
Shares issued to Director
On 19 January 2021, Daniel Ruback, an Executive Director of the
Company, was issued a total of 25,000 ordinary shares of 1 penny
each in the capital of the Company at nil cost, in accordance with
the terms of his Service Agreement. The shares had a grant date
fair value of 44.5 pence based on the open market price at that
date.
Expenses arising from equity-settled share-based payment
transactions
The compensation expense recognised in relation to the awards is
based on the fair value of the awards at the grant date.
Total expenses arising from share-based payment transactions
recognised during the year as part of employee benefit expense were
as follows:
2022 2021
$'000 $'000
----------------------------------------------------------------------- ------- -------
Options issued under equity-settled share employee option schemes plan 158 244
Shares issued to Director - 13
Shares issued to former employees 214 -
372 257
----------------------------------------------------------------------- ------- -------
41. Financial instruments and risk management
Financial assets and liabilities as defined by IFRS 9 and their
estimated fair values are as follows:
Financial
assets at Financial Book Fair
amortised liabilities value value
cost at amortised cost total total
At 31 December 2022 $'000 $'000 $'000 $'000
Financial assets
Cash and cash equivalents (Note 26) 22,406 - 22,406 22,406
Trade and other receivables (Note 25) 53,583 - 53,583 53,583
Financial liabilities
Trade and other payables (Note 27) - (32,610) (32,610) (32,610)
Borrowing (Note 31) - (36,108) (36,108) (36,108)
Lease obligation (Note 30) - (52,681) (52,681) (52,681)
Net financial assets/(liabilities) 75,989 (121,399) (45,410) (45,410)
Financial
Financial liabilities
assets at at Book Fair
amortised amortised value value
cost cost total total
At 31 December 2021 $'000 $'000 $'000 $'000
--------------------------------------
Financial assets
Cash and cash equivalents (Note 26) 10,243 - 10,243 10,243
Trade and other receivables (Note 25) 53,330 - 53,330 53,330
Financial liabilities
Trade and other payables (Note 27) - (30,952) (30,952) (30,952)
Borrowings (Note 31) - (67,154) (67,154) (67,154)
Lease obligation (Note 30) - (48,002) (48,002) (48,002)
--------------------------------------
Net financial assets/(liabilities) 63,573 (146,108) (82,535) (82,535)
--------------------------------------
The fair value of cash and cash equivalents, trade and other
receivables, and trade and other payables approximate their
carrying amounts due to the short-term maturities of these
instruments. The fair value of lease obligations is calculated
using the incremental borrowing rate.
Financial risk management objectives
The Group is exposed to financial risks in respect of:
-- Capital risk;
-- Foreign currency;
-- Interest rates;
-- Liquidity risk; and
-- Credit risk
A description of each risk, together with the policy for
managing risk, is given below.
41.1 Capital risk management
The Group manages its capital to ensure that the Company and its
subsidiaries will be able to continue as going concerns while
maximising the return to stakeholders through the optimisation of
the debt and equity balances.
The capital structure of the Group consists of debt, which
includes the borrowings disclosed in Note 31 and various
obligations under leases disclosed in Note 30, cash and cash
equivalents and equity (comprising issued capital, reserves and
accumulated profit as disclosed in the consolidated statement of
changes in equity.
The Board of Directors reviews the capital structure on a
regular basis. As part of this review, the Board of Directors
considers the cost of capital and the risks associated with each
class of capital, against the purpose for which the capital is
intended.
A combination of leases and borrowing are taken out to fund
assets utilised by the Group. Borrowings are also secured to
support the ongoing operations and future growth of the Group.
41.2 Market risk
Market risk is the risk that the fair value of future cash flows
of a financial instrument will fluctuate because of changes in
market prices. The Group's activities expose it primarily to the
financial risks of changes in foreign currency exchange rates and
interest rates.
There has been no change to the Group's exposure to market risks
or the way these risks are managed and measured.
41.2.1 Foreign currency risk management
The Group undertakes transactions denominated in foreign
currencies and is consequently exposed to exchange rate
fluctuations, in particular, to Sterling and Euro exchange rate
fluctuations. The Group seeks to reduce foreign exchange exposures
arising from transactions in various currencies through a policy of
matching, as far as possible, receipts and payments across the
Group in each individual currency.
The table below summarises the foreign exchange exposure on the
net monetary position of entities against their respective
functional currency, expressed in each entity's presentational
currency. These currencies have been considered as they are the
most significant denominations of the Group.
GBP USD EUR AED(2) HKD Other Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
At 31 December 2022
Borrowings
Entities with functional currency USD - (11,998) - - - - (11,998)
Entities with functional currency GBP (24,110) - - - - - (24,110)
Entities with functional currency PLN(3) - - - - - - -
Total borrowings (24,110) (11,998) - - - - (36,108)
Obligations under leases
Entities with functional currency USD - (14,011) - (9,885) - - (23,896)
Entities with functional currency GBP (28,774) - - - - - (28,774)
Entities with functional currency PLN - - - - - (11) (11)
Total obligations under leases (28,774) (14,011) - (9,885) - (11) (52,681)
Cash
Entities with functional currency USD - 18,141 64 191 4 - 18,400
Entities with functional currency GBP 2,621 1,309 66 1 - 4 4,001
Entities with functional currency PLN - - - - - 5 5
Total cash 2,621 19,450 130 192 4 9 22,406
Net trade financial assets(1)
Entities with functional currency USD (32) 13,631 25 (731) - (63) 12,830
Entities with functional currency GBP 2,520 6,252 (559) - - (19) 8,194
Entities with functional currency PLN - - - - - (51) (51)
Total net trade financial assets 2,488 19,883 (534) (731) - (133) 20,973
Net exposure
Net monetary in USD entities (32) - 89 (10,425) 4 (63) (10,427)
Net monetary in GBP entities - 2,803 (493) 1 - (15) 2,296
Net monetary in PLN entities - - - - - - -
Total net exposure (32) 2,803 (404) (10,424) 4 (78) (8,131)
At 31 December 2021
Net monetary in USD entities (181) - 100 (731) (12) (42) (866)
Net monetary in GBP entities - (9,428) 1,887 1 - (19) (7,559)
(181) (9,428) 1,987 (730) (12) (61) (8,425)
(1) Net trade financial assets per Note 25 of $53,583,000 and
financial liabilities per Note 27 of $32,610,000
(2) United Arab Emirates Dirham
(3) Polish Zloty
Foreign currency sensitivity analysis
The following table details the Group's sensitivity to a 10%
change in the relevant foreign currencies. This percentage has been
determined based on the average market volatility in exchange rates
in the previous 24 months. The sensitivity analysis includes only
outstanding foreign currency denominated monetary items and adjusts
their translation at the reporting date for a 10% change in foreign
currency:
GBP USD EUR AED HKD Other Total
$'000 $'000 $'000 $'000 $'000 $'000 $'000
------------------------
At 31 December 2022
Total effect on
profit/(loss) of
depreciation in
foreign currency
exchange rates 3 (280) 40 1,043 -- 8 814
At 31 December 2021
Total effect on
profit/(loss) of
depreciation in
foreign currency
exchange rates 18 943 (199) 73 1 6 842
------------------------
41.2.2 Interest rate risk management
The Group is exposed to interest rate risk as its bank
borrowings are subject to variable interest rates based on SOFR and
SONIA, as per the HSBC and Great Rock credit facility
agreements.
The Group recognises that movements in interest rates might
affect the amounts recorded in its profit and loss for the year.
Therefore, the Group has assessed:
-- Reasonably possible changes in interest rates at the end of the reporting period; and
-- The effects on profit or loss if such changes in interest rates were to occur.
Interest rate sensitivity analysis
The sensitivity analysis below has been based on the exposure to
interest rates for non-derivative instruments at the reporting
date. For floating rate liabilities, the analysis is prepared based
on the average liability held by the Group over the year. A 1%
increase or decrease in interest rates represents management's
assessment of the reasonably possible changes in interest rates at
the reporting date.
If interest rates had been 1% higher and all other variables
were held constant, the Group's loss for the year ended 31 December
2022 would increase by $498,000 (2021: $647,000). The Company's
sensitivity to interest rates has increased during the current year
due to the increase in the value of loans held.
The Group's cash balances are held in current bank accounts and
earn immaterial levels of interest. The Board of Directors has
concluded that any changes in the SOFR and SONIA rates will have an
immaterial impact on interest income earned on the Group's cash
balances. No interest rate sensitivity has therefore been included
in relation to the Group's cash balances.
41.3 Liquidity risk management
Liquidity risk is the risk that the Group will not be able to
meet its financial obligations as they fall due.
Ultimate responsibility for liquidity risk management rests with
the Board of Directors. The Group manages liquidity risk by
maintaining adequate reserves and banking facilities, by
continuously monitoring forecast and actual cash flows, and by
matching the maturity profiles of financial assets and liabilities
wherever possible. There has been no change to the Group's exposure
to liquidity risk or the way these risks are managed and measured
during the year. Further details are provided in the Strategic
Report.
The maturity profile of the financial liabilities is summarised
below. The table has been drawn up based on the undiscounted cash
flows of financial liabilities based on the earliest date on which
the Group can be required to pay.
Weighted
average
effective After
interest Less than more than
rate 1 year 2-5 years 5 years Total
% $'000 $'000 $'000 $'000
At 31 December 2022
Trade and other payables (Note 27) n/a 32,131 - - 32,131
Lease liabilities (Note 30) (1) 10,787 23,368 53,035 87,190
Bank borrowings (Note 31) 3.0% 31,225 4,883 - 36,108
At 31 December 2021
Trade and other payables (Note 27) n/a 30,952 - - 30,952
Lease liabilities (Note 30) (1) 8,101 22,307 56,760 87,168
Bank borrowings (Note 31) 1.1% 40,175 26,979 - 67,154
(1) Refer to Note 30, which provides the incremental borrowing rate for each category of lease
41.4 Credit risk management
Credit risk refers to the risk that a counterparty will default
on its contractual obligations resulting in financial loss to the
Group. The Group is exposed to credit risk from its operating
activities (primarily from trade receivables) and from its
financing activities, including cash balances with banks (see Note
26), and other financial instruments.
Amounts receivable for sale of services
Customer credit risk is managed by each business unit subject to
the Group's established policy, procedures, and controls relating
to customer credit risk management. The Group endeavours to only
deal with creditworthy counterparties and requests payments on
account, where appropriate, as a means of mitigating the risk of
financial loss from defaults. Outstanding customer receivables and
the Group's exposure to credit risk is regularly monitored.
Assets receivable for sale of services consist of many
customers, coming from diverse backgrounds and geographical areas.
Ongoing review of the financial condition of the counterparty and
ageing of financial assets is performed. Further details are in
Note 25.
The carrying amount of financial assets recorded in the
financial statements at the reporting date represents the Group's
maximum exposure to credit risk. There has been no change to the
way credit risks are managed and measured during the year.
42. Commitments for capital expenditure
In June 2017, a subsidiary of the Group, Gama Support Services
FZE, entered into a Build Operate & Transfer Agreement and a
Concession Agreement with Sharjah Airport Authority under which it
is committed to construct a Business Aviation Centre at Sharjah
Airport. As of 31 December 2022, the Group had contracted
commitments of $585,000 (2021: $nil) in relation to phase 1 of the
Business Aviation Centre. These have been accrued for and
subsequently impaired in the 31 December 2022 financial
statements.
The Group had no other outstanding contracted commitments as of
31 December 2022 (2021: $nil).
43. Contingent liabilities
The Company has very recently received a letter before action in
respect of a possible legal claim against it for alleged damages in
the sum of circa GBP2.3m. At this very early stage, the Board has
insufficient information to properly assess the merits or likely
quantum of such potential claim. Accordingly, there is considerable
uncertainty as to the amount or timing of any associated economic
outflow or whether there will be any such outflow
44. Events after the balance sheet date
The following events occurred after the reporting date:
Repayment of HSBC GBP20m Term Loan
On 25 January 2023, the Group repaid its GBP20m Term Loan with
HSBC in full. Consequently, all the Group's obligations in respect
of the Term Loan have been fully discharged and the associated
securities have been released. This event is a non-adjusting
event.
Award of major contract by Wales Air Ambulance Charity
On 22 February 2023, the Group announced that it had been
awarded a seven-year contract by the Wales Air Ambulance Charity
for the provision of Helicopter Medical Emergency Services. The
contract, which commences on 1 January 2024, is expected to deliver
overall revenues of approximately GBP65m over its seven-year term,
with margins consistent with those derived from the Group's other
Special Mission activities.
This event is a non-adjusting event.
New loan from Close Brothers Aviation and Marine
On 3 March 2023, the Group received a loan of GBP9.4m ($11.1m)
from Close Brothers Aviation and Marine. The loan is secured by a
mortgage over the Group's owned aircraft.
Receipt of long-standing accounts receivable balances
On 31 March 2023, the Group received $2.1m cash, followed by a
further $0.8m on 5 June 2023 in settlement of part of long-standing
account receivable balances. The expected credit loss allowance as
of 31 December 2022 is not impacted by these part settlements.
These are non-adjusting events.
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END
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(END) Dow Jones Newswires
June 08, 2023 02:00 ET (06:00 GMT)
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