TIDMGMAA

RNS Number : 8297M

Gama Aviation PLC

24 September 2021

The information contained within this announcement is deemed to constitute inside information as stipulated under Article 7 of the Market Abuse Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of the European Union (Withdrawal) Act 2018. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

Date: 24 September 2021

Gama Aviation Plc (AIM: GMAA)

("Gama", "the Company" or "the Group")

Unaudited interim results for six months to 30 June 2021

Results continue to be impacted by COVID-19; the Group's liquidity remains strong

Highlights (2020 comparatives restated(1) )

-- Results continue to be impacted by COVID-19 but Group's liquidity remains strong with $14.2m (FY 2020: $ 16.1m) cash and $17.2m (FY 2020: $24.7m) of its $50m revolving credit facilities (RCF) undrawn as at 30 June 2021

-- On 20 July 2021, the Company received $15.2m in cash from Wheels Up Partners Holdings LLC ("Wheels Up"), which is being used to support the on-going organic investment needs of the Company

   --      As at 17 September 2021 cash balances were $17.7m and $22.3m of the RCF is undrawn 

-- Net Debt, inclusive of $52.1m (FY 2020: $52.6m) of obligations under leases, increased to $100.6m (FY 2020: $89.7m) largely resulting from the Jet East Aviation Corporation LLC ("Jet East") acquisition

-- Excluding the Group's $1.5m share of associate losses, Adjusted EBIT is stable with a loss of $0.4m (H1 2020: loss of $0.4m)

-- Statutory loss of $1.4m (H1 2020: loss of $4.6m) includes a net profit on Adjusting items of $2.0m profit (H1 2020: profit of $0.2m), refer to Note 4 of the notes to the financial statements for further details

-- Significant expansion of the Group's US maintenance operations via the acquisition of Jet East with integration progressing as planned

-- Millville Service Hub base maintenance facility successfully started operations on 1 July 2021

Financial Summary

 
                            Adjusted(2) $m         Statutory $m 
-----------------------  --------------------  -------------------- 
                                       Jun-20                Jun-20 
                         Jun-21   Restated(1)  Jun-21   Restated(1) 
-----------------------  ------  ------------  ------  ------------ 
Revenue                   106.4          93.7   106.4         109.2 
Gross profit               22.4          16.5    22.4          32.0 
Gross profit %            21.0%         17.6%   21.0%         29.3% 
EBIT                      (1.9)         (2.4)     0.2           3.8 
Loss for the period       (3.4)         (4.8)   (1.4)         (4.6) 
Loss per share (cents)    (4.4)         (7.5)   (1.3)         (7.2) 
-----------------------  ------  ------------  ------  ------------ 
 

(1) Restatements are detailed in Note 2 of the notes to the financial statements. The impact of the restatement to Adjusted Gross Profit and Adjusted EBIT is $0.2m to H1 2020 and expected to be c$0.5m on FY 2020. In addition, there was a $3.1m increase to FY 2020 obligations under leases and net debt

(2) The Alternative Performance Measures (APMs) are defined in Note 4 of the notes to the financial statements and reconciled to the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs also include organic and constant currency Revenue, Gross Profit and Adjusted EBIT

Outlook

Despite the challenges posed by the pandemic on the aviation sector we continue to evolve and strengthen our robust and resilient business to address the impact on the Group's performance and ensuring the long-term stability of the Group whilst remaining poised for renewed growth post pandemic.

Commenting on the half year results, Marwan Khalek, Chief Executive said:

"Our H1 2021 results reflect the continuing impact of COVID-19 on the Group. Notwithstanding the $1.5m share of losses from the Group's 20% associate investment in CASL, the Group has delivered a near breakeven performance and continues to generate positive operating cashflows despite the challenging pandemic. This provides further evidence of the robustness and resilience of our proven business model and the continuing focus on controlling costs, enhancing revenues and preserving cash. With a strong liquidity position, the Group is well placed to weather the remainder of this crisis and is very well positioned to recapture the growth opportunities that will accompany the emerging recovery in the private aviation market from the easing of lockdown measures and travel restrictions."

-S-

For more information and persons responsible for arranging the release of this announcement on behalf of the Company contact:

   Gama Aviation Plc                                       +44 (0) 1252 553029 

Marwan Khalek, Chief Executive Officer

Daniel Ruback, Chief Financial Officer

   Camarco                                                      +44 (0) 20 3757 4992 

Ginny Pulbrook

Geoffrey Pelham-Lane

   WH Ireland                                                   +44 (0) 207 220 1666 

James Joyce

Ben Good

Gama Aviation - Notes to Editors

Founded in 1983 with the simple purpose of providing aviation services that equip its customers with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA) is a highly valued global partner to blue chip corporations, government agencies, healthcare trusts and private individuals.

The Group has three global divisions: Business Aviation (Aircraft Management, Charter, FBO & Maintenance), Special Mission (Air Ambulance & Rescue, National Security & Policing, Infrastructure & Survey, Energy & Offshore); and Technology & Outsourcing (Flight Operations, FBO, CAM software, Flight Planning, CAM & ARC services)

As announced on 2nd September 2021, these results will continue to report the operational and financial segmental performance in the Air, Ground and Global Services divisional format. The Company has made significant progress in transitioning its current year reporting to reflect the recent realignment of the business along its Strategic Business Units, with efforts now focused on representing the prior year comparative performance on the same basis.

More details can be found at: http://www.gamaaviation.com/

Chief Executive Officer's Report

In what remains an extremely challenging economic environment for the aviation sector, our business, operational and financial performance continue to be severely impacted by the coronavirus pandemic.

The Group has nevertheless again delivered a credible performance. This has been delivered by the proactive measures we put in place to safeguard and protect our business and evolution thereof, underpinned by the robustness of our business model and the resilience of our operating platform.

More crucially, this is also as a result of the incredible perseverance of our people whose dedication, commitment and effort has ensured that our bases across the world remained operational throughout, delivering services in support of our clients' essential missions. I remain extremely proud and humbled by the manner in which every one of our people has responded to this unprecedented, unique and extremely prolonged challenge and would like to formally thank them.

Our continued focus on controlling cost, enhancing revenues and preserving cash has helped us safeguard the stability and financial performance of the business, which is again reflected in the healthy liquidity position that the Group has maintained throughout this crisis.

Despite the welcome easing of lockdown measures, our transition back to normality is a cautious one and we continue to operate strictly in accordance with the protective measures advised by the World Health Organization and by national governments. Our overriding priority is the safety and security of our global workforce and of our clients. Above all, w e remain vigilant to the economic, social and human effects of this lingering pandemic and we will continue to take the necessary and proportionate actions to safeguard the interests of our shareholders, our clients and our people.

The acquisition of Jet East in January clearly demonstrates our commitment to and focus on growing our business in the strategically important US MRO market. The integration is going well and I am confident that the acquisition will help us deliver our strategic objectives in the largest MRO market in the world.

H1/21 Financial Performance

Adjusted revenues on an organic and constant currency basis fell by 12% to $87.0m for the period (H1 2020, $98.9m). On a reported basis, adjusted revenues were up 14% to $106.4m (H1 2020, $93.7m) due to a favourable impact of foreign exchange movements, the acquisition of Jet East and the new air ambulance service contracts for the Government of Jersey and the States of Guernsey.

Despite the reduced revenues, Adjusted Gross Profit margins on an organic and constant currency basis were up 5.1 ppts to 22.6% (H1 2020: 17.5%). On a reported basis, adjusted Gross Profit margins were up 3.4 ppts to 21.0% (H1 2020, 17.6%). In absolute terms, Adjusted Gross Profits were up $5.9m to $22.4m (H1 2020, $16.5m). The improvement in gross profit was almost entirely offset by $1.8m of additional depreciation and amortisation, $4.9m of additional administrative expenses and a $0.8m reduction in the impairment of financial assets. Group overhead is higher due to $2.8m of overhead assumed on acquisition of Jet East, $1.0m of government support benefitting the prior half, and a $1.1m adverse impact of foreign exchange in the current half.

The Adjusted EBIT loss of $1.9m for the period includes a $1.5m share of associate losses relating to our 20% equity

investment holding in CASL. The loss has no cash impact to the Group. Notwithstanding this share of associate losses, the Group has delivered a modest adjusted EBIT loss of $0.4m (H1 2020: loss of $0.4m) from performance of its core operations and activities over which it exercises management and operational control.

The Group generated a net cash inflow from operating activities in the period of $8.4m (H1 2020: $21.8m) which helped fund investment capital expenditure and small levels of essential maintenance capital expenditure, whilst maintaining a strong liquidity position. As at 30 June 2021 the Group had $14.2m (FY 2020: $16.1m) of cash and $17.2m (FY 2020: $24.7m) of its $50m revolving credit facilities undrawn.

Sale of US Air Associate

The accounting treatment applied to the sale of US Air Associate is detailed further in Note 7 of notes to the financial statements.

The strategic rationale for the sale was compelling; it enabled the Group to monetise, at an attractive value, its investment in an associate over which it exercised no control, and which had grown increasingly dependent on a major customer who had an interest in purchasing the business. Additionally, this sale now enables the Group to focus its efforts and resources on driving and growing its US (home to the world's largest business aviation fleet) maintenance business, which is wholly owned by the Group. This was also complemented by the strategically important acquisition of Jet East in January 2021.

Acquisition of Jet East

Jet East was acquired on 15 January 2021 from East Coast Aviation, LLC, as a direct consequence of the Group's new strategy and focus on the US business aviation sector. The acquisition has substantially enhanced the Group's US maintenance footprint, capturing further market share in the world's most valuable business aviation market with circa 15,000 active business aviation aircraft. The accounting treatment applied is detailed in Note 14 of notes to the financial statements.

The enlarged business provides unparalleled coast-to-coast coverage and capability, supplying a range of maintenance services at high traffic business aviation gateway airports that include, amongst others, the cities of New York, Boston, Philadelphia, Cleveland, Cincinnati, Dallas, Miami, Las Vegas, Los Angeles and Denver. This coverage has attracted scale operators whose business models are dependent on maintaining high levels of aircraft availability across the US.

Investments

The Board continues to closely monitor the carrying values of certain investments in view of the prevailing pandemic

and the uncertainty surrounding the pace and timing of any eventual recovery.

Sharjah

In view of the pandemic related delays in the construction of the Sharjah Business Aviation Centre (BAC), the

Board impaired the "assets under construction" in the prior half and in the 2020 Annual Report. In addition, in the 2020 Annual Report the right-of-use asset associated with this project was also impaired.

While an extension to the lease and the project was formalised in the period, uncertainties related to the project remain and the extended lease term is not reasonably certain. Should the uncertainties on the project resolve, there may be a ten-year longer lease term and prospect for a reversal of some of the impairment charges previously taken on this project. Refer to Note 12 of the notes to the financial statements for further details.

Management continues to work diligently to maximise value from this investment, despite the historic impairment charges.

Fairoaks

As communicated in the 2020 Annual Report, the Group was released from the remainder of a lease at Fairoaks airport. Following the termination of the lease, net credits of $2.1m were recognised in exceptionals. Refer to Note 4 of the notes to the financial statements for further details.

CASL

The Board continues to closely monitor the carrying values of certain investments in view of the prevailing pandemic

and the uncertainty surrounding the pace and timing of any eventual recovery. At the end of May 2021, the Board accepted in principle a $2.0m sale offer subject to satisfactory legal review and as a result has presented CASL as held for sale thereafter. Adjusted EBIT in the first half of 2021 includes the Group's share of CASL losses of $1.5m until the end of May 2021. In addition, within adjusting items, there is an impairment reversal to the extent of the Group's share of CASL losses of $1.5m such that the carrying amount of the investment in CASL as at June 2021 remains at $2.0m. As a consequence of CASL being presented as held for sale, and reflected at the amount of the sale offer, further losses are not anticipated.

Full details of these are provided in Note 4 of the notes to the financial statements. Notwithstanding these positions, management continues to work diligently to maximise value from these investments.

Strategy

The Group has pivoted to a strategy that focuses upon the delivery of highly valued services within the Business Aviation, Special Mission and Technology & Outsource markets where the Group has full operational control and has an established competitive advantage.

While implementing the new strategy, the Group continues to work diligently to enhance revenue opportunities, focusing on sustainable and profitable engagements that rely on the Group's robust and resilient core business model.

Outlook

Despite the challenges posed by the pandemic on the aviation sector we continue to evolve and strengthen our robust and resilient business to address the impact on the Group's performance and ensuring the long-term stability of the Group whilst remaining poised for renewed growth post pandemic.

Marwan Khalek

Chief Executive Officer

Group Operational Performance

Revenue

$'000

 
                              Adjusted           Statutory 
-------------------------  ---------------  ------------------ 
                              2021    2020      2021      2020 
-------------------------  -------  ------  --------  -------- 
Air Division                49,413  50,501    49,413    66,001 
Ground Division             55,252  41,461    55,252    41,461 
Global Services Division     1,747   1,768     1,747     1,768 
-------------------------  -------  ------  --------  -------- 
Total                      106,412  93,730   106,412   109,230 
-------------------------  -------  ------  --------  -------- 
 

Gross Profit

$'000

 
                              Adjusted         Statutory 
-------------------------  --------------  ---------------- 
                             2021   2020*     2021    2020* 
-------------------------  ------  ------  -------  ------- 
Air Division                7,380   5,287    7,380   20,787 
Ground Division            13,389   9,769   13,389    9,769 
Global Services Division    1,619   1,405    1,619    1,405 
-------------------------  ------  ------  -------  ------- 
Total                      22,388  16,461   22,388   31,961 
-------------------------  ------  ------  -------  ------- 
 

EBIT

$'000

 
                               Adjusted            Statutory 
-------------------------  -----------------  ------------------ 
                               2021    2020*      2021     2020* 
-------------------------  --------  -------  --------  -------- 
Air Division                  2,172    1,516     2,122    16,897 
Ground Division                 125      419       924   (4,021) 
Global Services Division      (324)      (6)     (497)     (160) 
Associates                  (1,491)  (1,957)         -   (5,567) 
Central Costs              ( 2,352)  (2,366)   (2,388)   (3,390) 
-------------------------  --------  -------  --------  -------- 
Total                       (1,870)  (2,394)       161     3,759 
-------------------------  --------  -------  --------  -------- 
 

* Restatements are detailed in Note 2 of the notes to the financial statements.

The above Group results are explained in detail below.

Air Division

The Air Division supports customers using business aviation as an integral part of their mission, including corporations and public services such as air ambulance and aerial survey. It provides aircraft management, crewing, charter services, airworthiness and engineering oversight both to single aircraft operations and fleets, and delivers substantial special mission contracts for complex, time critical services. Going forward, the capabilities and resources from the Air Division now form core elements of the Special Mission, Business Aviation and Technology & Outsourcing business units.

Adjusted

$'000

 
                      US             Europe         Middle East         Asia             Total 
                --------------                    ---------------  --------------  ---------------- 
                  2021    2020     2021     2020     2021    2021    2021    2020     2021     2020 
--------------  ------  ------  -------  -------  -------  ------  ------  ------  -------  ------- 
 Revenue         1,875   1,875   31,306   31,284   13,425   8,574   2,807   8,768   49,413   50,501 
 Gross Profit    1,875   1,875    4,598    2,062      693     731     214     619    7,380    5,287 
 GP %             100%    100%      15%       7%       5%      9%      8%      7%      15%      10% 
                    1, 
 EBIT              857   1,854      521    (127)     (23)    (36)   (183)   (175)    2,172    1,516 
--------------  ------  ------  -------  -------  -------  ------  ------  ------  -------  ------- 
 

The Air Division revenues fell on an adjusted basis by 2% to $49.4m (H1 2020: $50.5m). On an organic basis, the fall was 13% after rebasing for the favourable impact of foreign exchange of $3.1m and $2.6m for the impact of the new air ambulance service contracts for the Government of Jersey and the Government of Guernsey, as shown in Note 4 of the notes to the financial statements. Reduced recharges as a result of fewer managed aircraft and lower flying activity due to the COVID-19 pandemic were the primary driver for revenue reductions in Asia (down 68%), whereas higher recharges relating to maintenance events increased revenues in the Middle East (up 57%), and recharges in Europe remained stable. The size of the managed aircraft fleet was two lower in Asia following regional challenges, three lower in the Middle East due to the exit from Saudi Arabia and remained stable in Europe compared to the prior half.

Gross profit in the US includes $1.875m (H1 2020: $1.875m) of branding fees. Europe gross profits benefitted by $1.3m from the insourcing of the rotary provision of the helicopter emergency medical services (HEMS) for the Scottish Ambulance Service (SAS), which successfully commenced towards the end of the prior half on 1st June 2020 at which point the depreciation, now in overhead, commenced. Europe gross profit also benefitted from a 20% increase in SAS flying hours, the new air ambulance service contracts for the Government of Jersey and the Government of Guernsey ($0.2m), a favourable impact of foreign exchange ($0.2m), a commission on sale of an aircraft ($0.4m), and a negative contribution from leasing aircraft in 2020 which did not recur ($0.2m). The changes in recharge revenues had minimal effect on profits, but pandemic-related reductions in revenues from management fees did flow through to gross profit in Asia and Middle East, where there were fewer managed aircraft.

The Air Division Adjusted EBIT improved by $0.7m to $2.2m (H1 2020: $1.5m). In Europe, higher gross profit offset by $1.3m additional depreciation following the investment in rotary and fixed wing aircraft, and higher overhead, in part due to the prior half benefitting from UK furlough support. Adjusted EBIT remained stable in the US. Reduced activity in Asia led to Gross profit shortfalls and there was a reduced loss allowance for doubtful debtors of $0.2m (H1 2020: $0.5m).

In May the Group secured a one-year extension to the existing Scottish Ambulance Service special mission contract which now runs through to 31 May 2024.

Adjustments

$'000

 
                               US           Europe       Middle East       Asia           Total 
                        ---------------  ------------  --------------  ------------  -------------- 
                          2021     2020   2021   2020    2021    2020   2021   2020   2021     2020 
----------------------  ------  -------  -----  -----  ------  ------  -----  -----  -----  ------- 
 Exceptional items       ( 24)        -     15      -       7       -    (8)      -   (10)        - 
 Amortisation                -        -   (40)   (60)       -       -      -   (59)   (40)    (119) 
 Accelerated branding 
  fees                       -   15,500      -      -       -       -      -      -      -   15,500 
 Total adjustments        (24)   15,500   (25)   (60)       7       -    (8)   (59)   (50)   15,381 
----------------------  ------  -------  -----  -----  ------  ------  -----  -----  -----  ------- 
 

Statutory

$'000

 
                     US         Europe     Middle East            Asia            Total 
        ---------------  -------------  --------------  --------------  --------------- 
          2021     2020   2021    2020    2021    2020    2021    2020    2021     2020 
------  ------  -------  -----  ------  ------  ------  ------  ------  ------  ------- 
 EBIT    1,833   17,354    496   (187)    (16)    (36)   (191)   (234)   2,122   16,897 
------  ------  -------  -----  ------  ------  ------  ------  ------  ------  ------- 
 

Air Division Statutory EBIT decreased from $16.9m in 2020 to $2.1m in 2021 due to $15.5m of accelerated branding fees on the disposal of the US Air associate being reflected in the prior half, which did not recur in H1 2021. Exceptional items in US Air comprise ongoing litigation on a legacy trade receivable which is fully provided for. Exceptional items in other regions relate to revised shared based payment charges and income following forfeitures, grants and re-issues in the current half. Amortisation of the remaining acquired intangibles continues in line with policy in Europe, while in Asia following the impairment of the remaining acquired intangibles at the end of 2020, there is no further amortisation.

Ground Division

The Ground Division provides support to the business aviation, air ambulance, law enforcement and military sectors, deploying a service mix that is designed to deliver new capability and maintain availability of the aircraft to the operator. With an extensive network and increasingly rare independence from manufacturer ownership, the Division maintains all the necessary approvals to maintain aircraft from Gulfstream, Dassault Falcon, Bombardier, Embraer and Textron, providing heavy, ad-hoc and emergency maintenance as well as modifications and refurbishments.

Adjusted

$'000

 
                        US              Europe         Middle East       Asia            Total 
                -----------------  ----------------  --------------  ------------  ---------------- 
                    2021    2020*     2021     2020    2021    2020   2021   2020     2021    2020* 
--------------  --------  -------  -------  -------  ------  ------  -----  -----  -------  ------- 
 Revenue          35,296   20,578   16,576   18,490   2,682   1,476    698    917   55,252   41,461 
 Gross Profit      5,272    4,172    6,862    4,844   1,091     262    164    491   13,389    9,769 
 GP %                15%      21%      41%      26%     41%     18%    23%    54%      24%      24% 
 EBIT            (1,494)      915    1,118     (41)     544   (442)   (43)   (13)      125      419 
--------------  --------  -------  -------  -------  ------  ------  -----  -----  -------  ------- 
 

* Restatements are detailed in Note 2 of the notes to the financial statements.

The Ground Division revenues increased on an adjusted basis 33% to $55.3m (H1 2020: $41.5m). On an organic and constant currency basis, there was a decrease of 11% after rebasing for the impact of foreign exchange of $1.9m and the acquisition of Jet East which contributed $16.8m to revenue, as shown in Note 4 of the notes to the financial statements. All regions experienced reductions in revenue on an organic basis except Middle East where there was strong growth in Sharjah FBO activity ($0.7m) and strong growth in parking and hangarage ($0.6m). In Europe, lower revenue due to reduced demand for services following the continued onset of the COVID-19 pandemic from the second quarter of 2020 onwards, which was partially offset by growth at the Jersey FBO and growth in base maintenance, which is not driven by flying activity, and where maintenance hours at the core Bournemouth facility grew by 16% over the prior half. In the US, where the majority of current business relates to line maintenance which depends on flying activity, the fall in revenue on an organic basis of $2.1m, or 10%, and was materially driven by the COVID-19 pandemic, with maintenance hours 7% lower than the prior half.

Adjusted EBIT fell by $0.3m to $0.1m (H1 2020: $0.4m), due largely to US ($2.4m down to a loss of $1.5m) and partially offset by Middle East ($1.0m up to a profit of $0.5m) and Europe ($1.2m up to $1.1m profit). In US, gross profit includes $2.4m from the acquisition of Jet East, and a $1.3m reduction in organic gross profit of $2.9m, which was impacted by $2.8m of assumed PPP loan forgiveness in the prior half and reduced maintenance hours as well as investment in capacity ahead of anticipated increases in activity. US Adjusted EBIT was $2.4m lower due to lower gross profit referred to above, $1.0m of assumed PPP loan forgiveness in the prior half in overhead and partially offset by a reduced loss allowance for doubtful debtors of $0.2m credit (H1 2020: $0.2m charge). In the Middle East, strong FBO activity, strong parking and hangarage, lower depreciation following the impairment of the right of use assets at year-end, and government support via rent relief were all partially offset by a modest reduction in MRO, and resulted in a net $1.0m improvement in Adjusted EBIT. In Europe, gross profit benefitted from a favourable impact of foreign exchange ($0.5m), an improvement in activity at Jersey FBO ($0.2m) and a reduction in the write downs of inventories in cost of sales ($0.7m). Overhead in Europe, was higher due to an adverse impact of foreign exchange ($0.5m), and the prior half benefitting from UK furlough support. Asia's Adjusted EBIT remained stable with gross profit shortfalls offset by reduced overheads.

Adjustments

$'000

 
                            US            Europe        Middle East        Asia            Total 
                     ---------------  -------------  ----------------  ------------  ---------------- 
                         2021   2020    2021   2020   2021       2020   2021   2020    2021      2020 
-------------------  --------  -----  ------  -----  -----  ---------  -----  -----  ------  -------- 
 Exceptional 
  items                 (987)      -   2,191      -    (4)          -      -      -   1,200         - 
 Amortisation           (417)      -       -      -      -          -      -      -   (417)         - 
 Impairment 
  charge                    -      -       -      -     16    (4,440)      -      -      16   (4,440) 
 Total adjustments    (1,404)      -   2,191      -     12    (4,440)      -      -     799   (4,440) 
-------------------  --------  -----  ------  -----  -----  ---------  -----  -----  ------  -------- 
 

Statutory

$'000

 
               US            Europe       Middle East        Asia           Total 
        ---------------  -------------  ---------------  ------------  --------------- 
            2021   2020    2021   2020   2021      2020   2021   2020   2021      2020 
------  --------  -----  ------  -----  -----  --------  -----  -----  -----  -------- 
 EBIT    (2,898)    915   3,309   (41)    556   (4,882)   (43)   (13)    924   (4,021) 
------  --------  -----  ------  -----  -----  --------  -----  -----  -----  -------- 
 

Ground division Statutory EBIT improved by $4.9m to a profit of $0.9m in 2021. In addition to the decrease in Adjusted EBIT, the impairment of assets under the course of construction at Sharjah airport of $4.4m in H1 2020 did not recur. The amortisation of Jet East acquired intangibles of $0.4m commenced in the current half. In addition, exceptional items in the period included $0.5m of Jet East transaction costs, $0.5m of Jet East severance costs, $2.1m income upon release of lease obligations at Fairoaks airport as well as a $0.1m credit for shared based payments arrangements in the current half.

Global Services Division

The Global Services Division comprises two businesses, FlyerTech and myairops (R) . FlyerTech provides continuing airworthiness management (CAM) and airworthiness review certification (ARC) services for business aviation and commercial airline operators. myairops (R) has developed a suite of business aviation products deployed as "Software as a Service" (SaaS) and mobile app solutions for business aviation operators, flight support companies, FBOs and regional airports.

Adjusted

$'000

 
                     Total 
                -------------- 
                  2021    2020 
--------------  ------  ------ 
 Revenue         1,747   1,768 
 Gross Profit    1,619   1,405 
 GP %              93%     79% 
 EBIT            (324)     (6) 
--------------  ------  ------ 
 

The Global Services Divisions revenues stable on an adjusted basis at $1.7m (H1 2020: $1.8m) On a constant currency basis, revenue was 10% lower and gross profit was 5% lower after rebasing for the favourable impact of foreign exchange of $0.2m and $0.1m respectively, as shown in Note 4 of the notes to the financial statements. FlyerTech traded broadly in line with prior half, with a modest reduction in revenue due to fewer Airworthiness projects than the prior half as a result of the ongoing pandemic. myairops (R) was also broadly in line with prior half, with a modest reduction in revenue due to COVID effects, with many prospective customers deferring expenditure.

Adjusted EBIT fell to $0.3m (H1 2020: $nil) with $0.2m of additional amortisation of the product development related to product launches.

Adjustments

$'000

 
                          Total 
                     -------------- 
                       2021    2020 
-------------------  ------  ------ 
 Exceptional items     (21)       - 
 Amortisation         (152)   (154) 
 Total adjustments    (173)   (154) 
-------------------  ------  ------ 
 

Statutory

$'000

 
             Total 
        -------------- 
          2021    2020 
------  ------  ------ 
 EBIT    (497)   (160) 
------  ------  ------ 
 

Adjustments to EBIT relate to amortisation of acquired Customer Relationship intangibles of $0.2m (H1 2020: $0.2m). Overall, Global Services Division Statutory EBIT fell $0.3m to a loss of $0.5m in the first half.

Associates

Adjusted

$'000

 
          US Air       China Aircraft 
         Associate     Services Limited        Total 
       ------------  -------------------  ---------------- 
        2021   2020       2021      2020     2021     2020 
-----  -----  -----  ---------  --------  -------  ------- 
EBIT       -     78    (1,491)   (2,035)  (1,491)  (1,957) 
-----  -----  -----  ---------  --------  -------  ------- 
 

As reported in our 2020 Annual Report and Accounts, the US Air associate was sold on 2 March 2020, see Note 7 of the notes to the financial statements for further details. The $0.1m of Adjusted EBIT in the prior period represents the Group's share of results from the US Air associate prior to disposal.

The Group's investment in CASL has been reclassified as "held for sale" effective end of May 2021 following a Board decision on the $2m offer for its 20% shareholding in CASL. Since reclassification the asset has been held at the fair value of $2m. Prior to reclassification as "held for sale", CASL suffered substantial losses, the Group's share of which amounted to $1.5m of Adjusted EBIT due to vastly reduced commercial aviation volumes at Hong Kong airport, impacted by COVID-19.

Adjustments

$'000

 
                                                  US Air       China Aircraft 
                                                 Associate     Services Limited        Total 
                                               ------------  -------------------  --------------- 
                                                2021   2020     2021        2020   2021      2020 
---------------------------------------------  -----  -----  -------  ----------  -----  -------- 
Impairment charge / (reversal)                     -      -    1,491    (10,633)  1,491  (10,633) 
Profit on disposal of interest in associates       -  7,023        -           -      -     7,023 
---------------------------------------------  -----  -----  -------  ----------  -----  -------- 
Total adjustments                                  -  7,023    1,491    (10,633)  1,491   (3,610) 
---------------------------------------------  -----  -----  -------  ----------  -----  -------- 
 

Statutory

$'000

 
          US Air       China Aircraft 
         Associate     Services Limited       Total 
       ------------  -------------------  -------------- 
        2020   2021    2021         2020  2021      2020 
-----  -----  -----  ------  -----------  ----  -------- 
EBIT       -  7,101       -     (12,668)     -   (5,567) 
-----  -----  -----  ------  -----------  ----  -------- 
 

In the prior half, the disposal of the US Air Associate resulted in a profit before taxation on disposal of the Group's equity interest of $7.0m.

In the prior half impairment charges of $10.6m were made against the equity accounted investment in CASL, reflecting the Group's assessment of its recoverable amount, driven by its significant decline in performance and outlook caused by the COVID-19 pandemic, and impairments of non-current assets in CASL. The assessment of the recoverable amount remains at $2.0m, which represents an offer for the Groups 20% shareholding in CASL and as a result an impairment reversal to the extent of the Group's share of losses of $1.5m has been recognised in the current half.

Overall, associate statutory EBIT increased from a loss of $5.6m in 2020 to nil in 2021.

Financial Review

 
                           Adjusted(1) $m       Statutory $m 
-----------------------  ------------------  ------------------ 
                                     Jun-20              Jun-20 
                         Jun-21   Restated*  Jun-21   Restated* 
-----------------------  ------  ----------  ------  ---------- 
Revenue                   106.4        93.7   106.4       109.2 
Gross profit               22.4        16.5    22.4        32.0 
Gross profit %            21.0%       17.6%   21.0%       29.3% 
EBIT                      (1.9)       (2.4)     0.2         3.8 
Loss for the period       (3.4)       (4.8)   (1.4)       (4.6) 
Loss per share (cents)    (4.4)       (7.5)   (1.3)       (7.2) 
-----------------------  ------  ----------  ------  ---------- 
 

(1) The Alternative Performance Measures (APMs) are defined in Note 4 of the notes to the financial statements and reconciled to the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. APMs also include organic and constant currency Revenue, Gross Profit and Adjusted EBIT

* Restatements are detailed in Note 2 of the notes to the financial statements.

Adjusted Revenue Bridge

$m

 
Revenue - 2020                                     93.7 
Impact of foreign exchange movements                5.2 
Rebased revenue -2020 at 2021 exchange rate        98.9 
Acquisition of JetEast                             16.8 
New air ambulance service contracts for Jersey 
 & Guernsey                                         2.6 
Air Division                                      (6.9) 
Ground Division                                   (4.8) 
Global Services Division                          (0.2) 
Revenue - 2021                                    106.4 
------------------------------------------------  ----- 
 
   --       Acquisition of Jet East contributed $16.8m of revenue and integration well underway 

-- New air ambulance service contracts for Jersey & Guernsey were acquired on 18 July 2020 and resulted in incremental revenues

-- Air Division had reduced recharge costs due to reduced flying hours as a result of the ongoing COVID-19 pandemic

-- All Ground regions experienced reductions in revenue on an organic and constant currency basis except Middle East where there was strong growth in Sharjah FBO activity ($0.7m) and strong growth in parking and hangarage ($0.6m)

   --      Modest reduction in Global Services revenue due to COVID effects 

Adjusted EBIT Bridge $m

 
Adjusted EBIT - 2020                         (2.4) 
-------------------------------------------  ----- 
Gross Profit                                   5.9 
Share of loss from associates                  0.5 
Increase in other administrative expenses:   (4.9) 
Increase in depreciation and amortisation    (1.8) 
Decrease in impairment of financial assets     0.8 
Adjusted EBIT - 2021                         (1.9) 
-------------------------------------------  ----- 
 

-- Gross Profit increased in all Divisions, with the exception of Asia Air & Ground, a very modest reduction on Middle East Air and US Air being flat

   --      The Group's share of losses from associates are down $0.5m 

-- Other administrative expenses increased as a result of the acquisition of Jet East ($2.8m) together with increased investment in capacity in US Ground, reduced government support received ($1.4m) and partially offset by cost control measures

-- Increased depreciation of $0.4m on acquisition of Jet East and in Europe Air, $1.3m additional depreciation following the investment in rotary and fixed wing aircraft for air ambulance services

-- Asia Air loss allowance for doubtful debtors reduced $0.3m to $0.2m (H1 2020: $0.5m) and US Ground loss allowance reduced $0.4m to a $0.2m credit (H1 2020: $0.2m charge)

Investment in CASL

In the prior half and again in the 2020 Annual Report, the Board concluded that the value of the Group's 20% equity interest in its Asia associate, CASL, has been adversely impacted by significantly reduced levels of commercial aviation activity at Hong Kong airport. This resulted in a $10.6m impairment as an exceptional item in the first half of 2020 in respect of the CASL investment. In the 2020 Annual Report the Board concluded that the recoverable amount of CASL was $2m based on a credible offer another CASL shareholder received for their 20% shareholding in CASL. Accordingly, the carrying amount of the investment was reflected at $2m.

In May 2021, the Group also received a similar offer for its 20% shareholding in CASL. At the end of May 2021, the Board accepted in principle the offer subject to satisfactory legal review and as result has presented CASL as held for sale thereafter. Adjusted EBIT in the first half of 2021 includes the Group's share of CASL losses of $1.5m until the end of May 2021. In addition, within adjusting items, there is an impairment reversal to the extent of the Group's share of CASL losses of $1.5m such that the carrying amount of the investment in CASL remains at $2m.

Statutory EBIT Bridge

$m

 
Statutory EBIT - 2020                             3.8 
---------------------------------------------  ------ 
Items impacting Adjusted EBIT                     0.5 
 
Exceptional items 
- Integration and business recognition costs      1.7 
- Litigation costs                                0.1 
- Transaction costs                             (0.2) 
 
Adjusting items 
- Share based payments                            0.6 
- Accelerated branding fees                    (15.5) 
- Impairment of assets under construction         4.4 
- Impairment of CASL                             12.1 
- Profit on disposal                            (7.0) 
- Depreciation and amortisation                 (0.3) 
Statutory EBIT - 2021                             0.2 
---------------------------------------------  ------ 
 

-- Integration and business re-organisation costs in the period benefitted from $2.1m income upon release of lease obligation at Fairoaks airport, partially offset by $0.5m of Jet East severance costs associated with integration

   --      Litigation costs on legacy matters $0.1m lower 
   --      Increased transaction cost of $0.2m relating to Jet East acquisition 

-- $0.6m of reduced shared based payment charges following forfeitures, leavers and re-issues in the current half

-- $15.5m of accelerated branding fees have been recognised in the prior period as an adjusting item following the disposal of the US Air Associate and the settlement of existing contractual arrangements (see Note 7 for further details on the disposal)

-- $1.5m impairment reversal of charges previous recognised in relation to CASL. Impairment charges in the prior half in relation to Sharjah ($4.4m) and CASL ($10.6m) did not recur.

-- $7.0m profit before taxation on disposal of the US Air Associate (see Note 7 for further details on the disposal).

   --      Amortisation of acquired intangibles increased by $0.3m due to the acquisition of Jet East 

Finance expenses

Net finance expense of $1.6m (H1 2020: $2.0m), include $0.1m (H1 2020: $0.4m) of finance income arising from financial assets related to the disposal of the US Air Associate. As a result of early settlement of the deferred consideration on 20th July 2021 (refer to Note 19 for more details), and the timing of the disposal in 2020, finance income was lower in the current half.

Taxation

There is a statutory taxation credit for the period of $0.1m (H1 2020: charge of $6.3m), which reflects a significant decrease due to a $6.2m charge associated with the US Air Associate disposal in the prior half. The adjusted taxation for the period is $0.1m credit (H1 2020: charge of $0.4m). An increased deferred tax asset for additional losses incurred has not been recognised due to the uncertainty of future available taxable profits to utilise the losses.

EPS

Shares in issue increased by 25,000 from 31 December 2020. The average share price for the six months ended was higher than the exercise price of outstanding options, however given the loss per share there is no dilutive effect, and as a result no diluted earnings per share is presented. Basic Statutory EPS reflects a decreased loss per share of 1.3 cents (H1 2020: 7.2c).

Net debt and cash flow movements

 
                                                                                 Jun-21  Jun-20 
                                                                                     $m      $m 
------------------------------------------------------------------------------  -------  ------ 
Adjusted EBIT(1)                                                                  (1.9)   (2.4) 
Add: Adjusted depreciation & amortisation in cost of sales (Note 6)                 3.2     7.4 
Add: Adjusted depreciation & amortisation in administrative expenses (Note 6)       4.7     2.9 
------------------------------------------------------------------------------  -------  ------ 
Adjusted EBITDA(1)                                                                  6.0     7.9 
Less: Loan forgiveness (Note 13)                                                      -   (3.8) 
Add: Share of losses of associates                                                  1.5     2.0 
------------------------------------------------------------------------------  -------  ------ 
Adjusted EBITDA after excluding non-cash items(1)                                   7.5     6.1 
 
Working capital: 
Add: Working capital                                                              (0.5)     0.8 
Add: Capital portion of promissory note on disposal of US Air Associate             2.5       - 
Add: Accelerated branding fee not recognised in Adjusted EBIT                         -    15.5 
Add: Exceptional items                                                            (0.9)   (0.6) 
------------------------------------------------------------------------------  -------  ------ 
Working capital                                                                     1.1    15.7 
 
Cash generated by operations (Note 6)                                               8.6    21.8 
Add: Tax (Note 6)                                                                 (0.2)       - 
Net cash inflow on operating activities                                             8.4    21.8 
 
Capital expenditure                                                             ( 3.0 )  (23.0) 
Lease payments                                                                  ( 4.8 )   (5.0) 
Net interest received/(paid)                                                        0.4   (0.6) 
Proceeds on disposal of US Air Associate, net of transaction costs                    -     9.7 
Proceeds from borrowings                                                           12.0    30.4 
Repayment of borrowings                                                         ( 7.5 )  (23.4) 
Acquisition of Jet East                                                           (7.6)       - 
Net cash used in investing and financing activities                              (10.5)  (11.9) 
 
Increase / (decrease) in cash                                                     (2.1)     9.9 
Cash at the beginning of the period                                                16.1     8.5 
Effect of foreign exchange rates                                                    0.2   (0.3) 
------------------------------------------------------------------------------  -------  ------ 
Cash at the end of the period*                                                     14.2    18.1 
------------------------------------------------------------------------------  -------  ------ 
Borrowings                                                                       (62.7)  (46.7) 
Obligation under leases                                                          (52.1)  (59.3) 
------------------------------------------------------------------------------  -------  ------ 
Net (debt)                                                                      (100.6)  (87.9) 
------------------------------------------------------------------------------  -------  ------ 
 

(1) The Alternative Performance Measures (APMs) are defined in Note 4 of the notes to the financial statements and reconciled to the nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted EBIT and Net debt. In reconciling from Adjusted EBIT to the net cash flow operating activities, Adjusted EBITDA and Adjusted EBITDA excluding non-cash items are shown to aid understanding

   --      The reduction in the net cash inflow on operating activities has been driven by: 

o $1.9m of lower Adjusted EBITDA $6.0m (H1 2020: $7.9m), offset by $3.3m of reduced non-cash items relating to loan forgiveness in the prior period and associates

o $0.3m of additional spend on exceptional items, primarily related to Jet East

o $15.5m of accelerated branding fees in the prior period not recognised within Adjusted EBIT but within working capital. All remaining accelerated branding fees were received after the reporting date, refer to Note 19

o $2.5m capital portion of promissory note on disposal of US Air Associate received in the period

o Reduction in the positive contribution from underlying working capital, which is in part due to reduced government support in the period

-- Capital expenditure includes $1.3m of internally developed software arising from myairops software development and $1.6m tangible capex, of which $1.0m is in US Ground for base maintenance expansion to fulfil demand from one of the world's largest private jet operator's

-- Lease payments reduced by $0.2m on the prior period due to timing of aircraft lease payments as well as the addition of Jet East lease payment of $0.4m

-- Net interest received includes $0.4m on the second instalment of the $20.0m US Air Associate promissory note

-- Proceeds from borrowings include $10m drawn on the RCF to fund the acquisition of Jet East. Remaining proceeds on borrowings of $2m and the repayment of $7.5m to manage surplus cash

   --      Net Debt increased by $12.7m to $100.6m (FY 2020: $87.9m) 

Litigation

Following the litigation update provided in the Company's 2020 Annual Report, the Company continues to pursue the recovery of its long-standing trade receivables both through enforcement actions in the UK and in other jurisdictions. The Company has made progress through court proceedings in the UK. It remains the Board's expectation that other than the provisions already made by the Company against these claims, no further provisions will be required.

Daniel Ruback

Chief Financial Officer

Responsibility Statements

Each director confirms that to the best of their knowledge:

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

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

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

The basis of preparation of the consolidated financial statements is shown in Note 1 and Note 2, and related party transactions are shown in Note 15. The principal risks and uncertainties for the remaining six months of the year remain the same as set out in the Group's recently published statutory financial statements for the year ended 31 December 2020 and shown below.

The directors consider the principal risks to the business are:

/ Health and safety risks from poor operational performance or an air accident which damages the Group's reputation

/ Increasing regulatory burden and maintaining oversight on existing approvals that may result with a non-compliance

/ Changes in political and economic climate that make air transport less attractive such as the ongoing COVID-19 pandemic

/ Reliance on key individuals and attrition of key staff that disrupt business activities

/ Increasing concentration and reliance on a small number of key customers

/ Cyber threat and information security

/ Liquidity and cash resources to support future growth of the business

Signed on behalf of the Board,

Marwan Khalek

Chief Executive Officer

Gama Aviation Plc

Consolidated income statement

For the period ended 30 June 2021

 
                                                                           Period ended 30 June 2020 
                                         Period ended 30 June 2021                         Restated* 
-------------------------  ---------------------------------------  -------------------------------- 
                                                          Adjusted  Statutory               Adjusted 
                           Statutory result  Adjustments    result     result  Adjustments    result 
                                      $'000        $'000     $'000      $'000        $'000     $'000 
-------------------------  ----------------  -----------  --------  ---------  -----------  -------- 
Revenue                             106,412            -   106,412    109,230     (15,500)    93,730 
Cost of sales                      (84,024)            -  (84,024)   (77,269)            -  (77,269) 
-------------------------  ----------------  -----------  --------  ---------  -----------  -------- 
Gross profit                         22,388            -    22,388     31,961     (15,500)    16,461 
- administrative 
 expenses                          (16,918)      (1,133)  (18,051)   (14,188)        1,024  (13,164) 
- depreciation 
 and amortisation                   (5,320)          609   (4,711)    (3,191)          273   (2,918) 
- impairment gain/(loss)                 16         (16)         -    (4,440)        4,440         - 
- impairment of 
 financial assets                       (5)            -       (5)      (816)            -     (816) 
Total administrative 
 expenses                          (22,227)        (540)  (22,767)   (22,635)        5,737  (16,898) 
Operating profit/(loss)                 161        (540)     (379)      9,326      (9,763)     (437) 
Share of results 
 from equity 
 accounted investments              (1,491)            -   (1,491)    (1,957)            -   (1,957) 
(Reversal of)/impairment 
 of equity accounted 
 investments                          1,491      (1,491)         -   (10,633)       10,633         - 
Profit on disposal 
 of interest in 
 associates (note 
 7)                                       -            -         -      7,023      (7,023)         - 
Earnings before 
 interest and taxation                  161      (2,031)   (1,870)      3,759      (6,153)   (2,394) 
Finance income                          127            -       127        407            -       407 
Finance expense                     (1,765)            -   (1,765)    (2,423)            -   (2,423) 
Profit/(loss) before 
 tax                                (1,477)      (2,031)   (3,508)      1,743      (6,153)   (4,410) 
Taxation (note 
 17)                                     63           80       143    (6,302)        5,945     (357) 
(Loss)/profit after 
 tax                                (1,414)      (1,951)   (3,365)    (4,559)        (208)   (4,767) 
Attributable to: 
Owners of the Company                 (828)      (1,951)   (2,779)    (4,588)        (208)   (4,796) 
Non-controlling 
 interests                            (586)            -     (586)         29            -        29 
-------------------------  ----------------  -----------  --------  ---------  -----------  -------- 
 

* Restatements are detailed in Note 2

Earnings per share attributable to the equity holders of the parent

 
Basic and diluted 
 (cents)            (1.3)c  (3.1)c  (4.4)c  (7.2)c  (0.3)c  (7.5)c 
 

Gama Aviation Plc

Consolidated statement of comprehensive income

For the period ended 30 June 2021

 
                                                        Period       Period 
                                                      ended 30     ended 30 
                                                          June    June 2020 
                                                          2021    Restated* 
                                                         $'000        $'000 
--------------------------------------------------  ----------  ----------- 
Loss for the period                                    (1,414)      (4,559) 
Items that may be reclassified to profit or loss: 
Exchange differences on translation of foreign 
 operations                                                121      (1,106) 
--------------------------------------------------  ----------  ----------- 
Total comprehensive loss for the period                (1,293)      (5,665) 
--------------------------------------------------  ----------  ----------- 
 
Total comprehensive loss is attributable to: 
Owners of the Company                                    (707)      (5,694) 
Non-controlling interest                                 (586)           29 
--------------------------------------------------  ----------  ----------- 
                                                       (1,293)      (5,665) 
--------------------------------------------------  ----------  ----------- 
 

*Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated balance sheet

As at 30 June 2021 and 31 December 2020

 
                                                                 2020 
                                                     2021   Restated* 
                                                    $'000       $'000 
----------------------------------------------  ---------  ---------- 
Non-current assets 
Goodwill (note 9)                                  25,129      22,490 
Other intangible assets (note 10)                  16,378      10,329 
----------------------------------------------  ---------  ---------- 
Total intangible assets                            41,507      32,819 
Property, plant and equipment (note 11)            56,889      54,974 
Right-of-use assets (note 12)                      41,035      40,525 
Investments accounted for using equity method           -       2,000 
Trade and other receivables                           290      13,030 
Total non-current assets                          139,721     143,348 
----------------------------------------------  ---------  ---------- 
 
Current assets 
Assets held for sale (note 8)                       2,000           - 
Inventories                                         6,700       5,978 
Trade and other receivables                        71,898      48,674 
Current tax receivable                              1,516       1,280 
Cash and cash equivalents                          14,180      16,136 
----------------------------------------------  ---------  ---------- 
                                                   96,294      72,068 
----------------------------------------------  ---------  ---------- 
Total assets                                      236,015     215,416 
----------------------------------------------  ---------  ---------- 
 
Current liabilities 
Trade and other payables                         (43,911)    (40,074) 
Current tax liabilities                           (2,985)        (15) 
Obligations under leases (note 12)                (4,130)     (5,848) 
Provisions                                          (764)       (679) 
Borrowings (note 13)                              (2,560)     (1,000) 
Deferred revenue                                 (20,566)    (12,676) 
----------------------------------------------  ---------  ---------- 
                                                ( 74,916)    (60,292) 
----------------------------------------------  ---------  ---------- 
 
Net current assets                                 21,378      11,776 
----------------------------------------------  ---------  ---------- 
 
Non-current liabilities 
Borrowings (note 13)                             (60,144)    (52,197) 
Deferred revenue                                    (177)       (691) 
Obligations under leases (note 12)               (47,947)    (46,772) 
Provisions                                          (337)       (818) 
Deferred tax liabilities (note 17)                  (783)     (2,109) 
Deferred consideration (note 14)                    (642)           - 
                                                (110,030)   (102,587) 
----------------------------------------------  ---------  ---------- 
Total liabilities                               (184,946)   (162,879) 
----------------------------------------------  ---------  ---------- 
Net assets                                         51,069      52,537 
----------------------------------------------  ---------  ---------- 
 

* Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated balance sheet (continued)

As at 30 June 2021 and 31 December 2020

 
                                             2020 
                                 2021   Restated* 
                                $'000       $'000 
---------------------------  --------  ---------- 
Shareholders' equity 
Share capital                     954         953 
Share premium                  63,488      63,473 
Foreign exchange reserve     (26,772)    (26,893) 
Other reserves                 35,169      35,360 
Accumulated loss             (21,980)    (21,152) 
---------------------------  --------  ---------- 
Total shareholders' equity     50,859      51,741 
Non-controlling interest          210         796 
---------------------------  --------  ---------- 
Total equity                   51,069      52,537 
---------------------------  --------  ---------- 
 

*Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated statement of changes in equity

For the period ended 30 June 2021

 
                                                  Foreign                             Total 
                    Share     Share      Other   exchange       Accumulated   shareholders'   Non-controlling      Total 
                  capital   premium   reserves    reserve   profit/(losses)          equity          interest     equity 
                    $'000     $'000      $'000      $'000             $'000           $'000             $'000      $'000 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 Balance 
  at 31 
  December 
  2019                953    63,473     34,798   (29,179)           (5,062)          64,983               751     65,734 
 Restatement*           -         -          -          -             (604)           (604)                 -      (604) 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 Balance 
  at 31 
  December 
  2019 restated       953    63,473     34,798   (29,179)           (5,666)          64,379               751     65,130 
 Loss for 
  the period 
  restated*             -         -          -          -           (4,588)         (4,588)                29    (4,559) 
 Other 
  comprehensive 
  income                -         -          -    (1,106)                 -         (1,106)                 -    (1,106) 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 Total 
  comprehensive 
  loss for 
  the period 
  restated*             -         -          -    (1,106)           (4,588)         (5,694)                29    (5,665) 
 Cost of 
  share-based 
  payments              -         -        407          -                 -             407                 -        407 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 Balance 
  at 30 June 
  2020 
  restated*           953    63,473     35,205   (30,285)          (10,254)          59,092               780     59,872 
 Loss for 
  the period 
  restated*             -         -          -          -          (10,898)        (10,898)                16   (10,882) 
 Other 
  comprehensive 
  income                -         -          -      3,392                 -           3,392                 -      3,392 
 Total 
  comprehensive 
  loss for 
  the period 
  restated*             -         -          -      3,392          (10,898)         (7,506)                16    (7,490) 
 Cost of 
  share-based 
  payments              -         -        155          -                 -             155                 -        155 
 Balance 
  at 31 
  December 
  2020 
  restated*           953    63,473     35,360   (26,893)          (21,152)          51,741               796     52,537 
 Loss for 
  the period            -         -          -          -             (828)           (828)             (586)    (1,414) 
 Other 
  comprehensive 
  income                -         -          -        121                 -             121                 -        121 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 Total 
  comprehensive 
  loss for 
  the period            -         -          -        121             (828)           (707)             (586)    (1,293) 
 Share issue            1        15          -          -                 -              16                 -         16 
 Credit for 
  share-based 
  payments              -         -      (191)          -                 -           (191)                 -      (191) 
 Balance 
  at 30 June 
  2021                954    63,488     35,169   (26,772)          (21,980)          50,859               210     51,069 
---------------  --------  --------  ---------  ---------  ----------------  --------------  ----------------  --------- 
 

* Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated cash flow statement

 
                                                               Period 
                                                             ended 30     Period 
                                                                 June      ended 
                                                                         30 June 
                                                                 2021       2020 
                                                                $'000      $'000 
----------------------------------------------------------  ---------  --------- 
Net cash inflow on operating activities (note 6)                8,370     21,808 
----------------------------------------------------------  ---------  --------- 
 
Cash flows from investing activities 
Purchases of property, plant and equipment (note 11)          (1,619)   (21,678) 
Purchases of intangibles (note 10)                            (1,338)    (1,262) 
Acquisition of subsidiary, net of cash acquired (note 14)     (7,636)          - 
Proceeds from disposal of assets held for sale (note 7)             -      9,699 
----------------------------------------------------------  ---------  --------- 
Net cash used in investing activities                        (10,593)   (13,241) 
----------------------------------------------------------  ---------  --------- 
 
Cash flows from financing activities 
Interest paid                                                    (29)      (573) 
Interest received                                                 376          - 
Lease payments (note 12)                                      (4,759)    (5,037) 
Proceeds from borrowings                                       12,000     30,405 
Repayment of borrowings                                       (7,499)   (23,426) 
Net cash from financing activities                                 89      1,369 
----------------------------------------------------------  ---------  --------- 
 
Net (decrease)/increase in cash and cash equivalents          (2,134)      9,936 
Cash and cash equivalents at the beginning of the period       16,136      8,463 
Effect of foreign exchange rates                                  178      (311) 
----------------------------------------------------------  ---------  --------- 
Cash and cash equivalents at the end of the period             14,180     18,088 
----------------------------------------------------------  ---------  --------- 
 

Notes to the interim financial statements

For the period ended 30 June 2021

   1.   Corporate information and basis of preparation 

Gama Aviation Plc is a public company limited by shares, incorporated in the United Kingdom. The address of the registered office is 1st Floor, 25 Templer Avenue, Farnborough, Hampshire, England, GU14 6FE. The Company's shares are publicly traded on the AIM market of the London Stock Exchange.

The financial information for the period end 30 June 2021 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. Following the Group's recent Annual General Meeting (AGM), the Group's statutory financial statements for the year ended 31 December 2020 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 of the Companies Act 2006. The interim results are unaudited.

These unaudited interim consolidated financial statements (the interim financial statements) are for the six months ended 30 June 2021. They have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2020.

   2.   Accounting policies 

The accounting policies set out in the Group's statutory financial statements for the year ended 31 December 2020 have been applied in the preparation of the interim financial statements. The Directors consider that the Group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

During the prior period there was the adoption of IAS 20, Accounting for Government Grants and Disclosure of Government Assistance.

In the period to 30 June 2020 the Group received a forgivable loan under the US government Coronavirus Aid, Relief, and Economic Security Act (CARES Act). Under IAS 20 a forgivable loan from government is treated as a government grant when there is reasonable assurance that the entity will meet the terms for forgiveness of the loan. The Group has adopted the income approach where government grants should be recognised in profit or loss on a systematic basis over the periods in which the entity recognises as expenses the related costs for which the grant is intended to compensate.

$5,753,000 was received on 12 May 2020 and is recognised as borrowings in current liabilities. During the period to 30 June 2020 $3,778,000 has been offset against what the company has deemed to be qualifying expenditure reducing the amount of borrowings at the period end to $1,972,000. The utilisation of the grant is reflected against the related expenses in cost of sales ($2,778,000) and administrative expenses ($1,000,000).

Restatements

The 2020 figures have been restated to reflect errors in the IFRS 16 calculations due to the omission of indexation in some of the contracts and an amendment, including extension, to a contract made in late 2019.

This impacts the H1 2020 financial statements as follows:

 
 Consolidated income statement: 
                                        As previously   Restatement   Restated 
                                             reported 
-------------------------------------  --------------  ------------  --------- 
 Revenue                                      109,230             -    109,230 
 Cost of sales                               (77,038)         (231)   (77,269) 
-------------------------------------  --------------  ------------  --------- 
 Gross profit                                  32,192         (231)     31,961 
 Administrative expenses                     (22,635)             -   (22,635) 
-------------------------------------  --------------  ------------  --------- 
 Operating profit                               9,557         (231)      9,326 
 EBIT                                           3,990         (231)      3,759 
 Finance income                                   407             -        407 
 Finance expense                              (2,246)         (177)    (2,423) 
-------------------------------------  --------------  ------------  --------- 
 Profit before tax                              2,151         (408)      1,743 
 Tax                                          (6,302)             -    (6,302) 
-------------------------------------  --------------  ------------  --------- 
 Loss after tax                               (4,151)         (408)    (4,559) 
-------------------------------------  --------------  ------------  --------- 
 Attributable to owners                       (4,180)         (408)    (4,588) 
-------------------------------------  --------------  ------------  --------- 
 
 Consolidated balance sheet: 
 Right of use assets                           38,022         2,503     40,525 
 Trade and other receivables                   49,359         (685)     48,674 
 Obligations under leases                    (49,492)       (3,128)   (52,620) 
-------------------------------------  --------------  ------------  --------- 
 Net assets                                    53,847       (1,310)     52,537 
 
 Accumulated profit and loss reserve 
  at 31 December 2019                         (5,062)         (604)    (5,666) 
 Loss attributable to owners H1 2020          (4,180)         (408)    (4,588) 
 Loss attributable to owners H2 2020         (10,600)         (298)   (10,898) 
-------------------------------------  --------------  ------------  --------- 
 Accumulated profit and loss reserve 
  at 31 December 2020                        (19,842)       (1,310)   (21,152) 
-------------------------------------  --------------  ------------  --------- 
 

The restatement impacts the US Ground segment as follows:

 
                                As previously   Restatement   Restated 
                                     reported 
-----------------------------  --------------  ------------  --------- 
 Gross profit                           4,403         (231)      4,172 
 Statutory and Adjusted EBIT            1,146         (231)        915 
-----------------------------  --------------  ------------  --------- 
 
   3.   Segment information 

Reportable segments are operating segments that either meet the thresholds and conditions set out in IFRS 8 for separate reporting or are considered by the Board to be appropriately aggregated into reportable segments under IFRS 8.

The Group has eleven reportable segments (Air Division - four regional operating segments; Ground Division - four regional operating segments; Global Services Division - comprising two operating segments combined as one reportable segment; the Associates Division - two operating segments combined as one reportable segment; and Central Costs), which are defined by markets rather than product type. Each segment includes businesses with similar operating and marketing characteristics. The operating segments that have been aggregated into reportable segments have similar economic characteristics or provide similar services. None of these four operating segments meet the quantitative thresholds to report separately under IFRS 8.

These segments are consistent with the internal reporting reviewed each month by the Group Chief Executive Officer who acts as the Chief Operating Decision Maker ("CODM").

As announced on 2(nd) September 2021, these results will continue to report the operational and financial segmental performance in the Air, Ground and Global Services divisional format. The Company has made significant progress in transitioning its current year reporting to reflect the recent realignment of the business along its Strategic Business Units, with efforts now focused on representing the prior year comparative performance on the same basis.

A reconciliation of divisional to overall Group performance is tabulated below:

 
                        For the period ended 30 June 2021                  For the period ended 30 June 2020 
                                                                                       Restated* 
--------------  -------------------------------------------------  ------------------------------------------------ 
                                  Adjusted   Statutory   Adjusted   Adjusted        Adjusted   Statutory   Adjusted 
                   Revenue    Gross profit        EBIT       EBIT    Revenue    Gross profit        EBIT       EBIT 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 US Air              1,875           1,875       1,833      1,857      1,875           1,875      17,354      1,854 
 Europe 
  Air               31,306           4,598         496        521     31,284           2,062       (187)      (127) 
 Middle 
  East Air          13,425             693        (16)       (23)      8,574             731        (36)       (36) 
 Asia Air            2,807             214       (191)      (183)      8,768             619       (234)      (175) 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 Air Division       49,413           7,380       2,122      2,172     50,501           5,287      16,897      1,516 
 US Ground          35,296           5,272     (2,898)    (1,494)     20,578           4,172         915        915 
 Europe 
  Ground            16,576           6,862       3,309      1,118     18,490           4,844        (41)       (41) 
 Middle 
  East Ground        2,682           1,091         556        544      1,476             262     (4,882)      (442) 
   Asia Ground         698             164        (43)       (43)        917             491        (13)       (13) 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 Ground 
  Division          55,252          13,389         924        125     41,461           9,769     (4,021)        419 
 Global 
  Services           1,747           1,619       (497)      (324)      1,768           1,405       (160)        (6) 
 Associates              -               -           -    (1,491)          -               -     (5,567)    (1,957) 
 Central 
  Costs                  -               -     (2,388)    (2,352)          -               -     (3,390)    (2,366) 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 Adjusted 
  Result           106,412          22,388         161    (1,870)     93,730          16,461       3,759    (2,394) 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 Adjusting 
  items                  -               -           -      2,031     15,500          15,500           -      6,153 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 Statutory 
  result           106,412          22,388         161        161    109,230          31,961      3, 759      3,759 
--------------  ----------  --------------  ----------  ---------  ---------  --------------  ----------  --------- 
 
   4.   Alternative performance measures 

The Adjusted result has been arrived at after the following Adjusting items:

 
                                                      Period ended    Period ended 
                                                      30 June 2021    30 June 2020 
                                                             $'000           $'000 
--------------------------------------------------  --------------  -------------- 
 Exceptional items: 
 Transaction costs                                             503             296 
 Integration and business re-organisation                  (1,637)             (3) 
 Legal costs                                                   193             324 
 Total exceptional items                                     (942)             617 
--------------------------------------------------  --------------  -------------- 
 Share-based payments (credit)/expense                       (191)             407 
 Amortisation of intangible assets                             609             273 
 (Release of impairment)/impairment of assets 
  under construction                                          (16)           4,440 
 (Release of impairment)/impairment of investment 
  in associate                                             (1,491)          10,633 
 Accelerated branding fees                                       -        (15,500) 
 Profit on disposal of interest in associates                    -         (7,023) 
 Adjusting items in EBIT                                   (2,031)         (6,153) 
--------------------------------------------------  --------------  -------------- 
 Tax related to adjusting items                                 80           5,945 
--------------------------------------------------  --------------  -------------- 
 Adjusting items in profit                                 (1,951)           (208) 
--------------------------------------------------  --------------  -------------- 
 

Transaction costs

Costs in the current year relate to the acquisition of Jet East. Transaction costs in the prior year of $296,000 relate to prospective acquisitions.

Integration and business re-organisation costs

Integration and business re-organisation costs include:

-- Relating to Fairoaks, following settlement of the lease, net credits of $2,140,000 relating to the remaining lease liability and reduced provision for unavoidable costs of closure.

   --      Jet East integration related severance costs of $483,000 
   --      Other minor charges relating to earlier re-organisations 

Legal costs

Legal costs in the current and prior year principally relate to professional fees in relation to ongoing litigation in respect of legacy cases going back many years.

Share-based payment

The current year credit arises due to the resignation of Directors and the forfeiting of share options offsetting the regular charge for other options awarded.

Amortisation of intangible assets

Acquisition related intangible amortisation relates to acquired intangible assets (customer lists and brands) recognised as part of the accounting for business combinations $609,000 (H1 2020: $273,000).

Impairment

Impairments comprise:

-- A reversal of previous impairment of $1,491,000 to offset the loss from the equity accounted investment in CASL until the end of May 2021 at which point the investment has been classified as held for sale. In 2020 an impairment charge of $10,633,000 was recognised to reduce the carrying amount of $13,046,000 to its then recoverable amount of $2,413,000.

-- A reversal of previous impairment of $16,000 relating to a credit note received on cost previously incurred and included in the impaired assets under construction. In 2020 an impairment charge of $4,440,000 was recognised to reduce the Business Aviation Centre ("BAC") at Sharjah Airport to its recoverable amount following uncertainties related to the ongoing COVID-19 pandemic.

Accelerated branding fees and profit on disposal of interest in associates

See Note 7 for further details on the profit on disposal in the prior period.

Tax related to adjusting items

Tax on adjusting items equates to a current tax charge for $195,000 comprising a charge relating to the net integration credits offset by credits for the legal costs. This is offset by $79,000 deferred tax on the amortisation of the acquired intangibles.

In the prior year, on disposal of the US Air Associate there was a corporation taxation charge of $7,721,000 as a result of the full tax liability associated with the US Air Associate disposal being expected to be settled in 2020. A deferred taxation credit of $1,462,000 was recognised on deferred revenue related to the disposal. In addition, a $314,000 tax credit was recognised in relation to integration costs and other adjusting items.

Organic and constant currency growth

Organic and constant currency growth in Revenue, Gross Profit and EBIT is a measure which seeks to reflect the performance of the Group that will contribute to long-term sustainable growth. As such, organic and constant currency growth excludes the impact of acquisitions or disposals, and foreign exchange movements. Constant currency growth has been calculated using a constant foreign exchange rate of $1.39 to GBP1, being the cumulative average USD-GBP exchange rate for the first half of 2021 instead of the reported exchange rate of $1.26 to GBP1 for the first half of 2020. A reconciliation from organic and constant currency growth in Revenue, Gross Profit and EBIT to the most directly comparable IFRS measures is set out below.

Results of acquired and disposed businesses are excluded where the results include only part-year results in either current or prior periods. In the current year this comprises the results of Jet East acquired on 15 January 2021, whilst the Jersey and Guernsey Air Ambulance business was acquired on 18 July 2020.

 
                              For the period ended 2021               For the period ended 2020 
-----------------  ----------------------------------------------  ------------------------------ 
                                    Rebase 
                               for organic    Rebased   % Organic   Adjusted    Rebase    Rebased 
                    Revenue         growth    revenue      growth    Revenue    for FX    revenue 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 US Air               1,875              -      1,875           -      1,875         -      1,875 
 Europe Air          31,306        (2,640)     28,666       (17%)     31,284     3,148     34,432 
 Middle East 
  Air                13,425              -     13,425         57%      8,574         -      8,574 
 Asia Air             2,807              -      2,807       (68%)      8,768         -      8,768 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 Air Division        49,413        (2,640)     46,773       (13%)     50,501     3,148     53,649 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 US Ground           35,296       (16,796)     18,500       (10%)     20,578         -     20,578 
 Europe Ground       16,576              -     16,576       (19%)     18,490     1,861     20,351 
 Middle East 
  Ground              2,682              -      2,682         82%      1,476         -      1,476 
 Asia Ground            698              -        698       (24%)        917         -        917 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 Ground Division     55,252       (16,796)     38,456       (11%)     41,461     1,861     43,322 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 Global Services      1,747              -      1,747       (10%)      1,768       178      1,946 
 Total              106,412       (19,436)     86,976       (12%)     93,730     5,187     98,917 
-----------------  --------  -------------  ---------  ----------  ---------  --------  --------- 
 
 
                             For the period ended 2021                 For the period ended 2020 
-----------------  ---------------------------------------------  ----------------------------------- 
                                    Rebase   Rebased               Adjusted 
                      Gross    for organic     Gross   % Organic      Gross    Rebase         Rebased 
                     profit         growth    profit      growth     profit    for FX    Gross profit 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 US Air               1,875              -     1,875           -      1,875         -           1,875 
 Europe Air           4,598          (334)     4,264         88%      2,062       208           2,270 
 Middle East 
  Air                   693              -       693        (5%)        731         -             731 
 Asia Air               214              -       214       (65%)        619         -             619 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 Air Division         7,380          (334)     7,046         28%      5,287       208           5,495 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 US Ground            5,272        (2,372)     2,900       (30%)      4,172         -           4,172 
 Europe Ground        6,863              -     6,863         29%      4,844       487           5,331 
 Middle East 
  Ground              1,091              -     1,091        316%        262         -             262 
 Asia Ground            164              -       164       (67%)        491         -             491 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 Ground Division     13,389        (2,372)    11,017          7%      9,769       487          10,256 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 Global Services      1,619              -     1,619          5%      1,405       141           1,546 
 Total               22,388        (2,706)    19,682         14%     16,461       836          17,297 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 
 Gross Profit 
  %                   21.0%           1.6%     22.6%        5.1%      17.6%    (0.1%)           17.5% 
-----------------  --------  -------------  --------  ----------  ---------  --------  -------------- 
 
 
                        For the period ended 2021          For the period ended 2020 
-----------------  ----------------------------------  -------------------------------- 
                               Rebase for     Rebased 
                    Adjusted      organic    adjusted   Adjusted   Rebase for   Rebased 
                        EBIT       growth        EBIT       EBIT           FX      EBIT 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 US Air                1,857            -       1,857      1,854            -     1,854 
 Europe Air              521        (334)         187      (127)         (13)     (140) 
 Middle East 
  Air                   (23)            -        (23)       (36)            -      (36) 
 Asia Air              (183)            -       (183)      (175)            -     (175) 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 Air Division          2,172        (334)       1,838      1,516         (13)     1,503 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 US Ground           (1,494)          469     (1,025)        915            -       915 
 Europe Ground         1,118            -       1,118       (41)          (4)      (45) 
 Middle East 
  Ground                 544            -         544      (442)            -     (442) 
 Asia Ground            (43)            -        (43)       (13)            -      (13) 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 Ground Division         125          469         594        419          (4)     (415) 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 Global Services       (324)            -       (324)        (6)          (1)       (7) 
 Associates          (1,491)            -     (1,491)    (1,957)            -   (1,957) 
 Central costs       (2,352)            -     (2,352)    (2,366)        (249)   (2,615) 
 Total               (1,870)          135     (1,735)    (2,394)        (267)   (2,661) 
-----------------  ---------  -----------  ----------  ---------  -----------  -------- 
 

Net Debt

A reconciliation of the IFRS financial statement line items that represent the Net Debt APM is tabulated below.

 
                                Jun-21     Dec-20 
                                 $'000      $'000 
--------------------------  ----------  --------- 
 Cash                           14,180     16,136 
 Borrowings                   (62,704)   (53,197) 
--------------------------  ----------  --------- 
 Net Debt pre IFRS 16         (48,524)   (37,061) 
 Obligations under leases     (52,077)   (52,620) 
--------------------------  ----------  --------- 
 Net Debt                    (100,601)   (89,681) 
--------------------------  ----------  --------- 
 
   5.   Earnings per share ("EPS") 

The calculation of earnings per share is based on the earnings attributable to the ordinary shareholders divided by the

weighted average number of shares in issue during the period.

 
                                                                   Jun-20 
Earnings $'000                                         Jun-21   Restated* 
-------------------------------------------------  ----------  ---------- 
Numerator 
 Loss attributable to ordinary equity holders of 
 the parent for basic earnings:                         (828)     (4,588) 
Adjusting items                                       (1,951)       (208) 
Profit attributable to ordinary shareholders for 
 Adjusted earnings                                    (2,779)     (4,796) 
 
Denominator 
Weighted average number of shares used in basic 
 and diluted EPS                                   63,658,655  63,636,279 
 
Earnings per share (cents) 
Statutory - Basic and diluted                           (1.3)       (7.2) 
Adjusted - Basic and diluted                            (4.4)       (7.5) 
-------------------------------------------------  ----------  ---------- 
 

* Restatements are detailed in Note 2.

Whilst the average share price for the six months ended was higher than the exercise price of some outstanding options, there is no dilutive effect as their effect would be anti-dilutive.

   6.   Net cash generated by operating activities 
 
                                                                    Jun-20 
                                                       Jun-20    Restated* 
                                                        $'000        $'000 
---------------------------------------------------  --------  ----------- 
 (Loss)/profit before tax                             (1,477)        1,743 
 Adjustments for: 
 Finance income                                         (127)        (407) 
 Finance costs                                          1,765        2,423 
 Depreciation - wholly owned assets                     3,232        1,793 
 Depreciation - ROU assets in admin expense               397          327 
 Depreciation - ROU assets in COS                       3,194        7,358 
 Amortisation of acquired intangible assets               609          273 
 Amortisation of other intangible assets                1,082          798 
 Impairment (reversal)/loss                                 -        4,440 
 Utilisation of PPP Loan                                    -      (3,778) 
 Non-cash lease settlement                            (1,801)            - 
 Share of loss of associates                            1,491        1,957 
 (Reversal of)/ impairment of equity accounted 
  investments                                         (1,491)       10,633 
 Profit on disposal of interest in associates               -      (7,023) 
 Share based payment (credit)/expense                   (191)          407 
---------------------------------------------------  --------  ----------- 
 Operating cash inflow before movements in working 
  capital                                               6,683       20,944 
 Unrealised foreign exchange movements                (1,410)        (589) 
 Decrease/(increase) in inventories                       730         (11) 
 (Increase)/decrease in receivables                   (3,485)        4,442 
 Non-cash doubtful debt provision expense                   5          816 
 Decrease in payables                                   (844)     (15,831) 
 Increase in deferred revenue                           7,275       11,763 
 Decrease/(increase) in provisions                      (410)          292 
---------------------------------------------------  --------  ----------- 
 Cash generated by operations                           8,544       21,826 
 Taxes paid                                             (174)         (18) 
---------------------------------------------------  --------  ----------- 
 Net cash flows from operating activities               8,370       21,808 
---------------------------------------------------  --------  ----------- 
 

*Restatements are detailed in Note 2.

   7.   Disposal of assets held for sale 

On 2 March 2020 the Group announced the sale of its US Air associate, Gama Aviation LLC (doing business as "Gama Aviation Signature") to Wheels Up Partners Holdings LLC ("Wheels Up"). Gama Aviation Signature was owned 49% by GB Aviation Holdings LLC, a joint venture between the Group and Signature Aviation Plc, with the remaining 51% held by the Group's US partners.

Gama Aviation received consideration of $33,000,000, comprising $10,000,000 in return for its 24.5% equity interest and $23,000,000 for licencing and other trading related considerations. $13,000,000 of the consideration was received in cash at closing, with the remaining $20,000,000 to be paid in cash, with interest of $2,774,000, in eight equal six-month instalments over the next four years.

The $20.0m of deferred consideration i s recognised as a financial asset and is measured at amortised cost. The effective interest rate of this financial asset is 6.0%, which results in the recognition of finance income of $403k in the income statement for the 6 months ending 30 June 2020.

As a result of early settlement of the deferred consideration on 20(th) July 2021 ( refer to Note 19 for more details) finance income recognised in the 6 months ending 30 June 2021 reduced to $90,000 and the remaining balance of deferred consideration has been shown in current assets.

Included within trade & other receivables is deferred consideration of $15,248,000 (FY 2020: $18,034,000), with $15,248,000 (FY 2020: $5,004,000) in current asset and nil (FY 2020: $13,030,000) in non-current assets. Included within deferred revenue is licencing and other trading related considerations of $2,500,000 (FY 2020: $4,375,000), with $2,500,000 (FY 2020: $3,750,000) in current liabilities and nil (FY 2020: $625,000) in non-current liabilities.

As part of the transaction, GB Aviation Holdings LLC has licensed the continued use of the Gama Aviation Signature brand for up to two years, for which $7 ,500,000 of consideration has been allocated and will be recognised as revenue over the two-year period. Post disposal, $1,875,000 (H1 2020: $1,250,000) has been recognised as revenue for this licencing component, in line with the $3,750,000 annual licence fee prior to disposal. In addition, an accelerated branding fee of $15,500,000 has been recognised in adjusting items in the prior half.

 
                                                                        Period 
                                                                         ended 
                                                                       June 30 
                                                                          2020 
                                                                         $'000 
-------------------------------------------------------------------  --------- 
Cash received                                                           13,000 
Fair value of deferred consideration                                    20,000 
-------------------------------------------------------------------  --------- 
Total discounted consideration receivable at the transaction 
 date                                                                   33,000 
Less: Branding fees and other trading related considerations            23,000 
-------------------------------------------------------------------  --------- 
Gross proceeds on disposal                                              10,000 
Add: Closing working capital, cash and indebtedness adjustments            591 
Less: Transaction costs                                                  (892) 
-------------------------------------------------------------------  --------- 
Proceeds on disposal of assets held for sale, net of transaction 
 costs                                                                   9,699 
 
Assets held for sale at 31 December 2019                                 2,598 
Share of profit of equity accounted investments prior to disposal*          78 
-------------------------------------------------------------------  --------- 
Carrying amount of net assets sold                                       2,676 
 
Gain on sale before taxation                                             7,023 
-------------------------------------------------------------------  --------- 
 

*The equity accounting of Gama Aviation LLC was not discontinued after Gama Aviation LLC was held for sale at 31 December 2019 and prior to disposal on 2 March 2020. Had this been the case there would have been a $78,000 increase in share of losses of associates and a $78,000 increase in the profit on disposal of interest in associates. The impact of this reclassification, which has no impact on the statutory loss for the year, is considered immaterial.

   8.   China Aircraft Services Limited 

The Group's investment in CASL has been reclassified as "held for sale" effective end of May 2021 following a Board decision on the $2,000,000 offer for its 20% shareholding in CASL. Since reclassification the asset has been held at fair value.

   9.   Goodwill 
 
                                                                       $'000 
-------------------------------  ------------------------------------------- 
 Cost 
 At 31 December 2020                                                  48,034 
 Acquisitions                                                          2,321 
 Exchange differences                                                    652 
-------------------------------  ------------------------------------------- 
 At 30 June 2021                                                      51,007 
 
 Accumulated impairment losses 
 At 31 December 2020                                                  25,544 
 Exchange differences                                                    333 
-------------------------------  ------------------------------------------- 
 At 30 June 2021                                                      25,878 
 

Carrying amount

 
 At 30 June 2020        25,129 
---------------------  ------- 
 At 31 December 2020    22,490 
 

The recoverable amount of goodwill is allocated to the following cash generating units ("CGUs"):

 
                               Jun-2021                              Dec-2020 
                                  $'000                                 $'000 
 US: Ground                       3,108                                   787 
 Europe: Ground                  20,767                                20,467 
 Global Services: FlyerTech       1,254                                 1,236 
----------------------------  ---------  ------------------------------------ 
                                 25,129                                22,490 
----------------------------  ---------  ------------------------------------ 
 

As a result of the ongoing COVID-19 pandemic in the first half of 2021, the Group considered whether there were indicators of impairment. No market indicators of impairment were identified but some internal indicators of impairment were noted.

Considering the sensitivity to changes in assumptions from the impairment review performed in the 2020 Annual Report and noting that there are no current market indicators of impairment, the Group considers that the recoverable amount of all CGUs exceed the carrying amount, and as a result no impairment has been recognised.

10. Other Intangible assets

 
                                                       Customer 
                                       Brands     relationships           Computer software                      Total 
                                        $'000             $'000                       $'000                      $'000 
---------------  ----------------------------  ----------------  --------------------------  ------------------------- 
 Cost 
 At 31 December 
  2020                                      -            15,869                      10,272                     26,141 
 Acquisitions                           1,181             5,021                           -                      6,202 
 Additions                                  -                 -                       1,338                      1,338 
 Foreign 
  exchange 
  differences                               -                 5                         147                        152 
---------------  ----------------------------  ----------------  --------------------------  ------------------------- 
 At 30 June 
  2021                                  1,181            20,895                      11,757                     33,833 
 
 Amortisation 
 and 
 accumulated 
 impairment 
 losses 
 At 31 December 
  2020                                      -            13,597                       2,215                     15,812 
 Charge for the 
  period 
  -through 
  adjusting 
  items                                   109               500                           -                        609 
 Charge for the 
  period - 
  through 
  adjusted 
  result                                    -                 -                       1,082                      1,082 
 FX                                         -              (78)                          30                       (48) 
---------------  ----------------------------  ----------------  --------------------------  ------------------------- 
 At 30 June 
  2021                                    109            14,019                       3,327                     17,455 
 
 
 Carrying 
 Amount 
 At 30 June 
  2021                                  1,072             6,876                       8,430                     16,378 
---------------  ----------------------------  ----------------  --------------------------  ------------------------- 
 At 31 December 
  2020                                      -             2,272                       8,057                     10,329 
 

Customer relationship assets are amortised over their useful economic lives estimated to be ten years. During the period ending 30 June 2021 there were additions of $5,021,000 to customer relationships resulting from the acquisition of Jet East.

The Brand acquisition of $1,181,000 relates to Jet East and is being amortised over the estimated useful economic life of five years.

Computer software costs comprise internally developed software costs arising in the Group's myairops business as well as purchased software, such as operational and financial systems. All costs are amortised over their useful economic lives estimated to be between three and five years. The carrying value of internally developed software within this balance is $7,356,000 (FY 2020: $6,729,000).

11. Property, plant and equipment

 
 
                                                         Aircraft        Fixtures, 
                                       Leasehold              and         fittings 
                     Helicopters    improvements   refurbishments    and equipment   Motor vehicles    Total 
                           $'000           $'000            $'000            $'000            $'000    $'000 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 Cost 
 At 31 December 
  2020                    29,088          18,259           12,161           11,861            2,773   74,142 
 Acquisitions                  -             682                -            1,385              493    2,560 
 Additions                   119             819              167              647               23    1,775 
 Disposals                     -            (31)                -            (121)                -    (152) 
 Foreign 
  Exchange 
  Difference                 426             230              178               85                4      923 
 At 30 June 
  2021                    29,633          19,959           12,506           13,857            3,293   79,248 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 
 
 Accumulated 
  Depreciation 
  & impairment 
 At 31 December 
  2020                       722           5,764            3,254            7,598            1,830   19,168 
 Charge for 
  the period                 627             628              677            1,011              289    3,232 
 Disposals                     -            (31)                -            (120)                -    (151) 
 Foreign 
  Exchange 
  Difference                  12               6               46               43                3      110 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 At 30 June 
  2020                     1,361           6,367            3,977            8,532            2,122   22,359 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 
 
 Carrying amount 
 At 30 June 
  2021                    28,272          13,592            8,529            5,325            1,171   56,889 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 At 31 December 
  2020                    28,366          12,495            8,907            4,263              943   54,974 
----------------  --------------  --------------  ---------------  ---------------  ---------------  ------- 
 
 

Additions of $1,775,000 include $156,000 related to capital trade payables and as result the cash flow statement shows purchases of property, plant and equipment of $1,619,000.

12. Obligations under leases

The Group leases many assets including property, aircraft, vehicles, fixtures, fittings and equipment. Information about leases for which the Group is a lessee is presented below.

 
 
 
                             Leasehold property   Fixtures, fittings 
                                      Restated*        and equipment     Vehicles    Total 
 Right-of-use assets                      $'000                $'000        $'000    $'000 
--------------------------  -------------------  -------------------  -----------  ------- 
 Cost 
 At 31 December 2020                     60,299                   74          213   60,586 
 Acquisitions                             3,565                   97            -    3,662 
 Additions                                  301                    -            -      301 
 Foreign Exchange 
  Difference                                480                    1            3      484 
 At 30 June 2021                         64,645                  172          216   65,033 
--------------------------  -------------------  -------------------  -----------  ------- 
 
 
 Accumulated Depreciation 
 At 31 December 2020                     19,836                   69          156   20,061 
 Charge for the period 
  - cost of sales                         3,194                    -            -    3,194 
 Charge for the period 
  -administrative costs                     364                    4           29      397 
 Foreign Exchange 
  Difference                                331                    1           14      346 
--------------------------  -------------------  -------------------  -----------  ------- 
 At 30 June 2021                         23,725                   74          199   23,998 
--------------------------  -------------------  -------------------  -----------  ------- 
 
 Carrying amount 
--------------------------  -------------------  -------------------  -----------  ------- 
 At 30 June 2021                         40,920                   98           17   41,035 
--------------------------  -------------------  -------------------  -----------  ------- 
 At 31 December 2020                     40,463                    5           57   40,525 
--------------------------  -------------------  -------------------  -----------  ------- 
 
 
 
 
                                             Fixtures, fittings 
                        Leasehold property        and equipment     Vehicles     Total 
 Obligations under 
  leases                             $'000                $'000        $'000     $'000 
---------------------  -------------------  -------------------  -----------  -------- 
 
 At 31 December 2020                52,553                    5           62    52,620 
 Acquisitions                        3,565                   97            -     3,662 
 Additions                             301                    -            -       301 
 Finance expense                     1,426                    -            1     1,427 
 Lease payments                    (4,719)                    -         (40)   (4,759) 
 Rent free credit                    (110)                    -            -     (110) 
 Derecognition                     (1,676)                    -            -   (1,676) 
 Provision unwinding                     5                    -            -         5 
 Foreign Exchange 
  Difference                           606                    -            1       607 
 At 30 June 2021                    51,951                  102           24    52,077 
---------------------  -------------------  -------------------  -----------  -------- 
 
 At 30 June 2021 
---------------------  -------------------  -------------------  -----------  -------- 
 Current                             4,004                  102           24     4,130 
 Non-current                        47,947                    -            -    47,947 
---------------------  -------------------  -------------------  -----------  -------- 
 Total                              51,951                  102           24    52,077 
---------------------  -------------------  -------------------  -----------  -------- 
 

Additions relate to two property leases;

   --      The extension of the lease by FlyerTech 
   --      A property lease for the FlyerTech business in Poland 

In June 2017 the Group entered into a non-cancellable Build-Operate-Transfer and Service Concession agreement with Sharjah Airport Authority under which the Group is committed to construct a Business Aviation Centre ("BAC") at Sharjah Airport. The agreement runs from June 2017 until June 2042 with a ten-year extension option to June 2052.

While the extension to the lease and project was formalised in the period, uncertainties related to the project remain and the extended lease term is not reasonably certain. Should the uncertainties on the project resolve, there may be a ten-year longer lease term and prospect for a reversal of some of the impairment charges previously taken on this project. The right-of-use assets require the use of estimates related to future profitability and the cash-generating ability of the project. The estimates used may differ from the actual outcome. The Board continues to closely monitor the investment in view of the prevailing pandemic and uncertainness surrounding the pace and timing of any eventual recovery.

The lease liability has been discounted at an incremental borrowing rate of 7.3% (FY 2020 7.3%) and on an expected lease term of 25 years (FY 2020: 25 years). The Sharjah BAC includes a nil (FY 2020: nil) right-of-use asset and $7,447,000 (FY 2020: $7,441,000) obligation under leases at 30 June 2021.

13. Borrowings

 
                                               June-2021                          Dec-2020 
                                                   $'000                             $'000 
--------------------------------------------  ----------  -------------------------------- 
 Secured borrowing at amortised cost 
 Other loans                                       1,560                                 - 
 Bank borrowings                                  60,144                            52,197 
 Paycheck Protection Program Loan                  1,000                             1,000 
--------------------------------------------  ----------  -------------------------------- 
                                                  62,704                            53,197 
--------------------------------------------  ----------  -------------------------------- 
 
 Total borrowings 
 Other loans                                       1,560                                 - 
 Bank borrowings                                       -                                 - 
 Payment Protection Program Loan                   1,000                             1,000 
--------------------------------------------  ----------  -------------------------------- 
 Amount due for settlement within 12 months        2,560                             1,000 
--------------------------------------------  ----------  -------------------------------- 
 Other loans                                           -                                 - 
 Bank borrowings                                  60,144                            52,197 
--------------------------------------------  ----------  -------------------------------- 
 Amount due for settlement after 12 months        60,144                            53,197 
--------------------------------------------  ----------  -------------------------------- 
 

In 2020 the Group received $5,753,000 under the Paycheck Protection Program (PPP) in the form of a loan arrangement from Citibank guaranteed by the US government. $4,753,000 of these funds were considered by the Company to be eligible for forgiveness within the terms of the PPP leaving remaining borrowings at the end of 2020 of $1,000,000. Confirmation of partial loan forgiveness is expected by the end of the year.

At 30 June 2021

 
                                                                           Drawn (presentation 
                                                Facility                             currency) 
                                                            Drawn (local 
                   Interest       Maturity          '000       currency)                 $'000 
-----------  --------------  -------------  ------------  --------------  -------------------- 
                               14 November 
 RCF           LIBOR +0.94%           2022    USD 50,000      USD 12,000                12,000 
                                                              GBP 15,000                20,774 
                                31 January 
 Term loan     LIBOR +1.12%           2023    GBP 20,000      GBP 20,000                27,698 
-----------  --------------  -------------  ------------  --------------  -------------------- 
 Bank borrowings before arrangement fees                                                60,472 
 Capitalised loan arrangement fees                                                       (328) 
------------------------------------------------------------------------  -------------------- 
 Bank borrowings                                                                        60,144 
------------------------------------------------------------------------  -------------------- 
 

At 31 December 2020

 
                                                                           Drawn (presentation 
                                                Facility                             currency) 
                                                            Drawn (local 
                   Interest       Maturity          '000       currency)                 $'000 
-----------  --------------  -------------  ------------  --------------  -------------------- 
                               14 November 
 RCF           LIBOR +0.94%           2022    USD 50,000      GBP 18,500                25,251 
                                31 January 
 Term loan     LIBOR +1.12%           2023    GBP 20,000      GBP 20,000                27,298 
-----------  --------------  -------------  ------------  --------------  -------------------- 
 Bank borrowings before arrangement fees                                                52,549 
 Capitalised loan arrangement fees                                                       (352) 
------------------------------------------------------------------------  -------------------- 
 Bank borrowings                                                                        52,197 
------------------------------------------------------------------------  -------------------- 
 

14. Acquisition

As announced on 15 January 2021, the Group acquired 100% of the issued share capital of Jet East from East Coast Aviation, LLC which will significantly expand its existing US aircraft maintenance operations.

The acquisition of Jet East has been transacted by the Group's wholly owned US subsidiary Gama Aviation Engineering Inc (GAEI) for $7,700,000 in cash, with a further $1,000,000 in deferred cash payable over two years and the assumption of Jet East debt. The transaction has been entirely funded from the Group's existing resources.

Details of the purchase consideration, the net assets acquired, and goodwill are as follows:

 
                           $'000 
 Cash paid                 7,700 
 Deferred consideration      642 
------------------------  ------ 
 Total consideration       8,342 
------------------------  ------ 
 

Deferred consideration of $1,000,000 has been discounted at 2.5% to a present value of consideration.

A post-closing consideration adjustment of $311,000 for net assets acquired has been recognised as part of the total consideration shown above.

A provisional calculation of purchase price accounting has been performed. The purchase price accounting will be finalised once all facts and circumstances at acquisition date are established but within the twelve month measurement period permitted under IFRS 3 Business Combinations. Recognised amounts of identifiable assets acquired and liabilities assumed are as follows:

 
                                                $'000 
-------------------------------------------  -------- 
 Property, plant and equipment                  2,560 
 Right-of-use assets                            3,662 
 Trade and other receivables non-current          289 
 Inventories                                    1,165 
 Trade and other receivables current            5,361 
 Cash and cash equivalents                         64 
 Trade and other payables                     (3,682) 
 Intangible assets - Brand                      1,181 
 Intangible assets - Customer relationship      5,021 
 Deferred tax liability                       (1,736) 
 Goodwill                                       2,321 
 Enterprise value                              16,206 
 Borrowings                                   (4,202) 
 Obligations under leases                     (3,662) 
-------------------------------------------  -------- 
 Total consideration                            8,342 
-------------------------------------------  -------- 
 

The acquisition of Jet East includes an equity incentive plan with contingent consideration payments contractually linked to the continuing employment of executives of the JetEast as well as business performance of the combined US Ground business. For the equity incentive plan to result in future consideration payments, business performance must exceed a Board approved projection, the acquisition case. Executives can earn up to a maximum of 9% ownership in the US Ground equity subject to business performance in the 2023 financial year and the level of indebtedness of the combined US Ground business at that time. There are put and call arrangements after this time which, subject to business performance, will result in potential future consideration payments between 2024 and 2028.The equity incentive plan is accounted for as remuneration for post-acquisition services and is not part of the business combination.

The significant unobservable inputs used in the fair value measurements are forecast future profit in the 2023 financial year and the level of indebtedness of the combined US Ground business at that time.

Forecasts are inherently a key source of estimated uncertainty, that may cause a materially different outcome to the carrying amount of liabilities or remuneration charges associated with the equity incentive plan.

No remuneration charge or liability related to the equity incentive plan has been recognised because the projections currently used don't exceed the acquisition case and long-term re-forecasting of the combined US Ground business is still being developed given the recent nature of the acquisition.

15. Related party transactions

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

 
                                              Sale of services    Purchase of services 
                                             ------------------  ---------------------- 
                                                 2021      2020        2021        2020 
                                                $'000     $'000       $'000       $'000 
-------------------------------------------  --------  --------  ----------  ---------- 
Gama Aviation LLC (other trading balances)      1,510     3,715          55         245 
Gama Aviation LLC (branding fee)*                   -       625           -           - 
China Aircraft Services Limited                   526       766           -           - 
Air Arabia/Felix Trading Company LLC              180        25          75          75 
Mr Canning Fok                                  1,076       923           -           - 
M Khalek                                            1         1           -           - 
-------------------------------------------  --------  --------  ----------  ---------- 
 
   *     In the current year branding fees are for the two months prior to disposal. 

The following amounts were outstanding at the balance sheet date:

 
                                   Amounts owed by     Amounts owed to 
                                    related parties     related parties 
                                  ------------------  ------------------ 
                                       2021     2020       2021     2020 
                                      $'000    $'000      $'000    $'000 
--------------------------------  ---------  -------  ---------  ------- 
China Aircraft Services Limited       1,433      970      1,750    1,046 
Gama Aviation LLC                       221       23         12       17 
Air Arabia                              234      204        100      182 
Mr Canning Fok                           30      138          -        - 
GB Aviation Holdings LLC                 40       40          -        - 
--------------------------------  ---------  -------  ---------  ------- 
 

16. Dividends

The Directors do not propose a dividend to be paid for the six months to 30 June 2021 (H1 2020: nil).

17. Taxation

 
                                                                                    Period ended 30 June 2020 
                                                  Period ended 30 June 2021                         Restated* 
-----------------------------------------  --------------------------------  -------------------------------- 
                                           Statutory               Adjusted  Statutory               Adjusted 
                                              result  Adjustments    result     result  Adjustments    result 
                                               $'000        $'000     $'000      $'000        $'000     $'000 
-----------------------------------------  ---------  -----------  --------  ---------  -----------  -------- 
Corporation tax: 
    Current year charge/(credit)                  13        (159)     (146)      8,078      (7,721)       357 
    Adjustment in respect of prior years           3            -         3          -            -         - 
Deferred tax: 
    Current year charge/(credit)                (79)           79         -    (1,776)        1,776         - 
Total tax charge/(credit) for the period        (63)         (80)     (143)      6,302      (5,945)       357 
-----------------------------------------  ---------  -----------  --------  ---------  -----------  -------- 
 

The following are the major deferred tax liabilities and assets recognised by the Group and movements thereon during the current period.

 
                                                                       Deferred 
                                                                  consideration 
                                                   Fixed asset        on US air 
                                 Non-deductible      and other        associate 
                                       acquired      temporary        temporary 
                                    intangibles    differences      differences   Tax losses     Total 
                                          $'000          $'000            $'000        $'000     $'000 
------------------------------  ---------------  -------------  ---------------  -----------  -------- 
 At 1 January 2021                         (57)          (118)          (2,986)        1,052   (2,109) 
 Acquisitions                           (1,736)              -                -            -   (1,736) 
 Transfer to current taxation                 -              -            2,986            -     2,986 
 Credit/(charge) in year                     79              -                -            -        79 
 Exchange differences                       (3)              -                -            -       (3) 
------------------------------  ---------------  -------------  ---------------  -----------  -------- 
 At 30 June 2021                        (1,717)          (118)                -        1,052     (783) 
------------------------------  ---------------  -------------  ---------------  -----------  -------- 
 

The deferred tax liability for the deferred consideration on the disposal of the US Air Associate has been transferred to current tax following receipt of final consideration in July 2021. No further deferred tax assets that arose during the period have been recognised.

18. Share-based payments

On 19 January 2021, Daniel Ruback, an Executive Director of the Company, was issued a total of 25,000 ordinary shares of 1 penny each in the capital of the Company ("Ordinary Shares") at nil cost, in accordance with the terms of his Service Agreement.

In March 2021 the Company announced the following transactions in relation to its shares:

-- The Company granted options over a total of 1,025,000 Shares, at 39.0p, to Directors and other employees on 26 March 2021. These options vest in 3 years and have no performance conditions.

-- Options over a total of 2,276,000 Shares previously granted to Directors and other employees were agreed to be surrendered by those employees on 29 March 2021.

-- The Company agreed to grant options over a total of 1,138,000 Shares, at 68.8p, to Directors and other employees on 29 March 2021. These options vest in 3 years and have no performance conditions.

-- The Company agreed to grant options over a total of 1,817,805 Shares, at 1p, to Directors and other employees on 29 March 2021. These options vest in 2024 and are subject to a performance condition based on the Company's average share price over the 30 days following release of the Company's results for the year ending 31 December 2023.

-- The Company granted options over a total of 155,000 Shares, at 1p, to Directors on 29 March 2021. These options vest immediately and have no performance conditions. Of these, an option for 25,000 Shares was granted to Neil Medley in fulfilment of the final tranche of sign on shares due under his employment contract.

Details of the options outstanding during the period are:

 
                        Number 
                          '000 
-------------------   -------- 
 At 1 January 2021       3,301 
 Granted                 4,136 
 Surrendered           (2,276) 
 Forfeited               (664) 
--------------------  -------- 
 At 30 June 2021         4,497 
--------------------  -------- 
 

Some of the new options granted were replacements for options surrendered, these have been accounted for as a modification of the original equity instruments. Under modification accounting, the original fair value expense for the Cancelled Awards has continued to be recognised over the original vesting period, with an additional incremental expense over the vesting period of the Replacement Awards.

The estimated fair value of the options granted in 2021 at the time of issue was $615,000, plus an incremental fair value for replacement options of $32,000.

In the current half a credit of $191,000 (H1 2020: charge of $407,000) has been recognised for shared-based payments. The current year credit arises due to the resignation of Directors and the forfeiting of share options offsetting the regular charge for other options awarded.

19. Post balance sheet event

On 14th July 2021, Wheels Up listed on the New York Stock Exchange triggering a mandatory prepayment provision under the terms of the Note. On 20th July 2021, the Company received $15,250,000 in cash from Wheels Up, representing the full prepayment amount due to the Company under the Note.

This event has been treated as an adjusting event and as a result the remaining balance due under the Note has been presented in full, in current trade and other receivables. In addition, the interest income for the period ended 30 June 2021 has been adjusted for the contractual adjustments related to the full prepayment. The deferred tax liability has been reflected as current taxation due within one year reflecting the expected timing of the tax payment triggered by the cash receipt.

The $15,250,000 cash received will be used to settle the residual corporation tax liabilities associated with the Transaction, to support the on-going organic investment needs of the Company, and to supplement the Company's working capital reserves.

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END

IR DKNBQOBKDKCB

(END) Dow Jones Newswires

September 24, 2021 02:00 ET (06:00 GMT)

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