REG - Gama Aviation PLC - Interim results for the 6 months to 30 June 2022
28/09/2022 07:00
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RNS Number : 9160A Gama Aviation PLC 28 September 2022
The information contained within this announcement is deemed to constitute
inside information as stipulated under Article 7 of the Market Abuse
Regulations (EU) No. 596/2014 as it forms part of UK domestic law by virtue of
the European Union (Withdrawal) Act 2018. Upon the publication of this
announcement, this inside information is now considered to be in the public
domain.
28 September 2022
Gama Aviation Plc (AIM: GMAA)
("Gama", "the Company" or "the Group")
Unaudited interim results for the six months to 30 June 2022
Strategic focus and strong revenue growth underpins a solid financial
performance
Gama Aviation Plc, the business aviation services company, is pleased to
announce its unaudited results for the six months to 30 June 2022.
Financial Summary
Adjusted(1) $m Statutory $m
Jun-22 Jun-21 Jun-22 Jun-21
Unaudited Unaudited Unaudited Unaudited
Restated(2) Restated(2)
Revenue 139.3 107.3 139.3 107.3
Gross profit 29.5 22.3 29.5 22.3
Gross profit % 21.2% 20.8% 21.2% 20.8%
EBITDA(3) 9.2 4.9 6.3 6.1
EBIT 1.8 (2.7) (1.7) (2.1)
Loss for the period (0.8) (3.4) (3.8) (2.8)
Basic and diluted loss per share (cents) (1.6) (4.4) (6.4) (3.6)
(1)The Alternative Performance Measures (APMs) are defined in Note 4 of the
notes to the financial statements and reconciled to the nearest IFRS measure.
APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted EBIT and Net
debt. APMs also include organic and constant currency Revenue, Gross Profit
and Adjusted EBIT
(2) Restatements, resulting largely from the apportionment of previously
disclosed full year restatements, are detailed in Note 2 of the notes to the
interim financial statements
(3) Statutory EBITDA represents earnings before interest, tax, depreciation,
and amortisation. Adjusted EBITDA is Statutory EBITDA after Adjusting Items.
Adjusted EBITDA and Statutory EBITDA provide management and investors with
useful additional information about the Group's performance and profitability
Financial Highlights
· Strong revenue growth of 30% (34% at constant currency(4)) to
$139.3m (H1 2021: $107.3m)
· Gross profit up 32% (39% at constant currency(4)) to $29.5m (H1
2021: $22.3m)
· Gross profit margin up by 0.4 percentage points ('ppt') (up 0.6
ppts at constant currency(4)) at 21.2% (H1 2021: 20.8%)
· Adjusted earnings before interest and tax ('Adjusted EBIT') up by
$4.5m to a $1.8m profit (H1 2021: $2.7m loss)
(4) To aid comparability 2021 results have been calculated on a constant
currency basis. See note 4 for more details.
· The Adjusted EBIT profit includes $1.4m of foreign exchange gains
(H1 2021: $44k), a $1.0m release of a provision in respect of COVID-19
government support programs, branding fees of $0.6m (H1 2021: $1.9m), and a
$1.0m operating loss (H1 2021: $0.1m loss) associated with the closure of the
Group's paint facilities at Fort Lauderdale
· Net cash inflow from operating activities of $15.5m (H1 2021:
$8.4m)
· Strong liquidity as at 30 June 2022 with $11.4m (FY 2021: $10.2m)
of cash and $20.5m (FY 2021: $12.1m) of its $50m revolving credit facilities
('RCF') undrawn at 30 June 2022
· Net debt, inclusive of $42.7m (FY 2021: $48.0m) of lease
obligations, decreased by $18.5m to $86.4m (FY 2021: $104.9m). Net bank debt
decreased by $13.2m to $43.7m (FY 2021: $56.9m)
· On 27 September 2022, the Group completed the sale and lease back
of its helicopter assets, resulting in a cash inflow of $27m and reducing net
bank debt to $13.3m
· As at 27 September 2022, cash balances were $39.1m in addition to
RCF headroom of $19.0m
· Discussions remain ongoing in respect of securing new credit
facilities required to meet the Group's funding needs and the Directors are
confident that a positive outcome will be reached in due course.
Outlook
The Group remains focused on the execution of its growth strategy in line with
its five-year strategic plan, which has underpinned the improved financial
performance in the first half of the year. Whilst the recovery in activity and
revenue growth is expected to continue through the second half of the year,
margins are likely to be impacted by inflationary cost pressures and supply
chain challenges. As a result of these factors, together with the continued
global economic and energy instability, the Board maintains its cautious
approach to the remainder of the year.
However, with continued focus on operational improvements and the delivery of
the Group's growth strategy, the Board expects the full year results to be in
line with management expectations and believes the Group remains well placed
for the future.
Commenting on the half year results, Marwan Khalek, Chief Executive said:
"I am very pleased to report strong revenue growth and a solid financial
performance for the first half of 2022, despite the ongoing macro-economic
challenges. This improvement is underpinned by the Group's focused growth
strategy and the continued operational improvements made across the business,
demonstrating the continued resilience of the Group's business model."
-ENDS-
For more information and persons responsible for arranging the release of this
announcement on behalf of the Company contact:
Gama Aviation Plc
+44 (0) 1252 553029
Marwan Khalek, Chief Executive Officer
Michael Williamson, Chief Financial Officer
Camarco
+44 (0) 20 3757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
WH Ireland
+44 (0) 20 7220 1666
James Joyce
Ben Good
Gama Aviation - Notes to Editors
Founded in 1983 with the simple purpose of providing aviation services that
equip its customers with decisive advantage, Gama Aviation Plc (LSE AIM: GMAA)
is a highly valued global partner to blue chip corporations, government
agencies, healthcare trusts and private individuals.
The Group has three global divisions: Business Aviation (Aircraft Management,
Charter, FBO & Maintenance), Special Mission (Air Ambulance & Rescue,
National Security & Policing, Infrastructure & Survey, Energy &
Offshore); and Technology & Outsourcing (Flight Operations, FBO, CAM
software, Flight Planning, CAM & ARC services).
More details can be found at: http://www.gamaaviation.com/
(http://www.gamaaviation.com/)
Chief Executive Officer's Statement
Introduction
The Group has performed well during the period, delivering strong growth in
revenue and gross profit, resulting in a modest Adjusted EBIT profit. This
return to profitability marks a significant milestone in our efforts to
improve financial performance and restore shareholder value through the
focused execution of the Group's growth strategy and the continued
improvements to the business.
For this to have been delivered against the backdrop of an uncertain economic
environment and significant cost inflation challenges, demonstrates the
resilience of the Group and the robustness of its business model. As a
service business, this is also only possible through the enormous commitment,
dedication and energy of our people and their desire to deliver a decisive
advantage to the Group's clients.
Strategic Business Unit Update
Business Aviation
The Business Aviation SBU delivered a strong performance in Aircraft
Management, Charter, MRO and Fixed Based Operations ('FBO'). Of particular
note are the results reported from the US MRO business, Jet East, as the
world's largest business aviation market continued to show high levels of
flight activity. Organic investments in Millville (MIV) and Las Vegas (LAS)
are starting to contribute positively, validating the business case, while the
closure of the poorly performing Fort Lauderdale (FXE) base will assist future
efficiencies.
Outside of the US, Aircraft Management saw strong growth resulting from
increased aircraft utilisation by the Group's clients, whilst the charter
business reported robust revenues, which were driven by increases in demand
both in respect of in-fleet charter as well as charter brokerage.
The Group's investment in airport infrastructure continues with the
development of a second hanger in Jersey, which will more than double the
hangarage at that site, which is progressing to plan. The development of a
state-of-the-art Business Aviation Centre in Sharjah, UAE has recommenced,
having been paused during the COVID-19 pandemic. However, the funding for the
remaining development of these facilities is still under negotiation and
updates will be provided as appropriate.
Special Mission
The Special Mission SBU continues to perform strongly in the delivery of its
long-term government contracts of which three have been recently extended. The
Special Mission SBU enjoys a robust sales pipeline with high levels of
visibility and is pursuing new multi-year contracts in the Air Ambulance, Law
enforcement and Energy sectors. Competition remains strong for these
contracts, however, the SBU is well placed to convert key opportunities.
Technology & Outsourcing ('T&O')
The T&O SBU continues to add contracts in the US and Europe through a
focussed sales and marketing programme. The US is seeing the strongest growth
especially for the Software & Data Services capabilities delivered via the
myairops® brand. However, growth momentum has been impacted by the strong
competition for suitably qualified and experienced talent within the
technology sector and the greater staff mobility afforded by the growth of
hybrid and home working. This has been acknowledged by management and the
necessary actions are in place to address the challenge and ensuring that the
SBU maintains its focus on retention and acquisition of talent which is
critical to its continued growth. The management team are currently taking
steps to increase the on-boarding capacity required to meet the demand of the
growing North American market. The business is also undertaking to establish
additional sales channels for its trip support services.
H1 2022 Financial Performance
Through the focused delivery of its growth strategy, the Group grew its
revenues strongly for the six-month period to $139.3m (H1 2021: $107.3m), an
increase of 30% on the prior year (34% at constant currency(1)). This growth
was principally driven by the Business Aviation SBU, following the gradual
easing of travel restrictions imposed in response to the COVID-19 pandemic. A
significant proportion ($20.3m) was derived from Jet East, the Group's US MRO,
following the strong recovery in flight activity in the world's largest
market. The Group also benefitted from a strong performance from the Special
Mission SBU, where the full period effect of prior-period contract wins came
into effect.
As a result of the strong revenue growth and the continued focus on
operational improvements, the Group delivered a gross profit of $29.5m for the
period (H1 2021: $22.3m), up 32%, (39% at constant currency(1)). Gross profit
margins were up by 40 ppts (up by 60 ppts at constant currency(1)) to 21.2%
(H1 2021: 20.8%).
Consequently, the Group delivered an Adjusted EBIT profit for the half year of
$1.8m (H1 2021: a $2.7m loss). The Adjusted EBIT profit includes $1.4m of
foreign exchange gains (H1 2021: $44k), a $1.0m release of a provision in
respect of COVID-19 government support programs, branding fees of $0.6m (H1
2021: $1.9m), and a $1.0m operating loss (H1 2021: $0.1m loss) associated with
the closure of the Group's paint facilities at Fort Lauderdale.
The Group generated a net cash inflow from operating activities of $15.5m (H1
2021: $8.4m). This inflow was primarily utilised for $3.3m of capital
expenditure in respect of computer software and property, plant and equipment,
the net repayment of $7.0m of borrowings and $3.8m for lease payments.
As at 30 June 2022, the Group had $11.4m (FY 2021: $10.2m) of cash and $20.5m
(FY2021: $12.1m) of its $50m revolving credit facility undrawn.
Credit Facilities
Further to the disclosures provided in the 2021 Annual Report and Accounts
('ARA'), the Group is progressing towards securing the new funding and credit
facilities required to replace its RCF of $50m and term loan of £20m
(together the 'current facilities'), which mature on 14 November 2022 and
31 January 2023, respectively.
The Board is pleased to report that on 27 September 2022 the Group completed
the sale and lease back of its helicopter assets resulting in a cash inflow of
$27m. This, together with cash at hand, will be used to repay the RCF (of
which $31m is currently drawn) upon its maturity.
The Board has determined that, going forward, credit facilities totalling $40m
would be sufficient to meet the liquidity and working capital needs of the
Group and does not now expect that it will require a replacement facility for
its current term loan.
The Board has consulted extensively with its advisors, and with their active
support, discussions remain ongoing in respect of securing new credit
facilities required to meet the Group's funding needs. The Board is therefore
confident that, although there can be no certainty, a positive outcome will be
reached prior to 31 January 2023, when the existing facilities expire. A
further update will be provided when binding terms are secured.
Outlook
The Group remains focused on the execution of its growth strategy in line with
its five-year strategic plan, which has underpinned the improved financial
performance in the first half of the year. Whilst the recovery in activity and
revenue growth is expected to continue through the second half of the year,
margins are likely to be impacted by inflationary cost pressures and supply
chain challenges. As a result of these factors, together with the continued
global economic and energy instability, the Board maintains its cautious
approach to the remainder of the year.
However, with continued focus on operational improvements and the delivery of
the Group's growth strategy, the Board expects the full year results to be in
line with management expectations and believes the Group remains well placed
for the future.
Marwan Khalek
Chief Executive Officer
(1 ) To aid comparability 2021 results have been
calculated on a constant currency basis. See note 4 for more details.
Group Operational Performance Review
Revenue(1)
$'000
H1 2021
H1 2022 Unaudited
Unaudited Restated(2)
Business Aviation 108,792 76,516
Special Mission 27,245 25,918
Technology & Outsourcing 2,639 2,969
Branding Fees 625 1,875
Total 139,301 107,278
(1) There are no Adjusting Items that impact Revenue
(2) Restatements are detailed in Note 2 of the notes to the interim financial
statements
Gross Profit(1)
$'000
H1 2021
H1 2022 Unaudited
Unaudited Restated(2)
Business Aviation 17,366 10,010
Special Mission 9,608 8,311
Technology & Outsourcing 1,910 2,148
Branding Fees 625 1,875
Total 29,509 22,344
(1) There are no Adjusting Items that impact Gross Profit
(2) Restatements are detailed in Note 2 of the notes to the interim financial
statements
EBIT
$'000
Adjusted Statutory
H1 2021 H1 2021
H1 2022 Unaudited H1 2022 Unaudited
Unaudited Restated(1) Unaudited Restated(1)
Business Aviation (797) (4,363) (3,807) (4,736)
Special Mission 2,302 1,416 2,260 1,366
Technology & Outsourcing (493) (75) (636) (259)
Branding Fees 625 1,866 625 1,866
Associates − (1,491) − −
Central Costs 137 (74) (130) (326)
Total 1,774 (2,721) (1,688) (2,089)
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
The above Group results are explained in detail below.
Business Aviation
Business Aviation is focused on the delivery of the following lines of
business to clients principally in the top three regional business aviation
markets: the US, Europe, and the Middle East.
/ Management. The operational management of an aircraft (or fleet), and its
crew, that the owner wishes to place on one of the Group's air operating
certificates ("AOCs")
/ Charter. The sale of available flight hours on aircraft to charter brokers
or to direct clients worldwide
/ FBO. The management of our strategically positioned fixed base operations at
airports in the UK, Channel Islands and Middle East
/ MRO. The delivery of comprehensive maintenance, repair and modification
solutions that support business aviation aircraft operators and owners.
Business Aviation MRO in the US has a dedicated management team and is
separately reviewed by the Group Chief Executive Officer who acts as the Chief
Operating Decision Maker ('CODM'). Therefore, Business Aviation MRO US has
been presented separately from Business Aviation excluding MRO US which falls
under a separate management team and is separately reviewed by the CODM.
Unaudited Adjusted EBIT
$'000
BA MRO US BA excluding MRO US Total
H1 2022 Restated(1) Constant currency growth(2) H1 2022 Restated(1) Rebased Constant currency growth(2) H1 2022 Restated(1) Rebased Constant currency growth(2)
H1 2021 H1 2021 H1 2021 H1 2021 H1 2021
Revenue 55,473 35,174 58% 53,319 41,342 40,037 33% 108,792 76,516 75,211 45%
Gross profit 12,085 4,943 144% 5,281 5,067 4,876 8% 17,366 10,010 9,819 77%
Gross profit % 21.8% 14.1% 9.9% 12.3% 12.2% 16.0% 13.1% 13.1%
Adjusted EBIT(2) (66) (2,765) (731) (1,598) (797) (4,363)
(1) Restatements are detailed in Note 2 of the notes to the interim
financial statements
(2) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and reconciled to the
nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit,
Adjusted EBIT and Net debt. APMs also include organic and constant currency
Revenue, Gross Profit and Adjusted EBIT
Overall, the Business Aviation SBU grew its revenues by 45% on a constant
currency basis to $108.8m. Gross profit was up 77% on a constant currency
basis to $17.4m.
The US market continued to benefit from an increase in aircraft activity
leading to continued strong demand for base and line maintenance services.
Additionally, the recent organic investment in the development of the base
maintenance facilities, contributed to significant revenue growth in the BA
MRO US business line. Gross profit was much improved on the prior year, up
144% to $12.1m (H1 2021: $4.9m). The one-off positive impact to gross profit
arising from the $1.0m release of the provision in respect of the COVID-19
government support program during the period was largely offset by the
negative impact of the $0.8m loss (H1 2021: $0.1m profit) from the poorly
performing Fort Lauderdale (FXE) paint facility (which the Group is in the
process of closing down).
Outside the US, aircraft management continued to see increased aircraft
utilisation as the effects of the COVID-19 pandemic recede. This increased
activity translated to some additional revenue but had a disproportionately
smaller impact on gross profits due to the pass-through nature of some of
these revenues, hence the reduction in the gross profit margin against the
prior period.
Charter saw strong growth in demand resulting in increased activity and
revenues, both in respect of in-fleet charter as well as charter brokerage,
but margins remained under pressure due to competition.
Increased aircraft movements at our Sharjah and Jersey FBOs resulted in strong
growth in revenues and gross profits during the first half of 2022.
Adjusted EBIT improved by $3.6m to an Adjusted EBIT loss of $0.8m (H1 2021:
$4.4m loss).
USD'000s BA MRO US BA excluding MRO US Total
H1 2022 Restated(1) H1 2022 Restated(1) H1 2022 Restated(1)
H1 2021 H1 2021 H1 2021
Adjusted EBIT(1) (66) (2,765) (731) (1,598) (797) (4,363)
Exceptional items - transaction costs − (503) − − − (503)
Exceptional items - integration and business re-organisation costs (244) (483) − 1,946 (244) 1,463
Exceptional items - other items − (24) − − − (24)
Exceptional items - deferred consideration adjustment 243 − − − 243 −
Exceptional items - profit on disposal of entity − − 126 − 126 −
Exceptional items - impairment of goodwill (787) − − − (787) −
Exceptional items - impairment of assets under construction − − (749) 16 (749) 16
Long-term employee incentive plan (956) (911) − − (956) (911)
Share-based payments (201) − (18) 4 (219) 4
Amortisation (368) (340) (56) (78) (424) (418)
EBIT (2,379) (5,026) (1,428) 290 (3,807) (4,736)
( )
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
Exceptional items include: -
· $244k relating to costs of integrating Jet East into Business
Aviation
· $243k release of the performance related deferred consideration
relating to the US acquisition
· $126k gain on the sale of Gama International Saudi Arabia
· $787k impairment of goodwill associated with the closure of the
paint and interior completion operations at FXE
· $749k impairment charge for assets under construction at Sharjah
Business Aviation Centre
Other tabulated items include: -
· The Jet East long-term incentive scheme $956k in relation to
senior executives agreed at the time of purchase
· $201k charge for share-based payments in relation to Business
Aviation US
· $368k relating to the amortisation of the Jet East intangibles -
brand ($118k) and customer relations ($250k)
Following the acquisition of Jet East in 2021, the business continued to incur
integration costs, amortisation of acquired intangibles and a $1.0m charge for
the long-term incentive plan. The prior period included $1.9m income upon
release of lease and other related obligations at Fairoaks Airport, which had
no equivalent right-of-use asset due to a historic impairment.
Special Mission
The Special Mission SBU provides the mission expertise to assist governments
and businesses in exploiting a variety of aviation assets (principally fixed
wing and helicopters) within the following sectors:
/ Air Ambulance & Rescue. The delivery of fixed wing and rotary mission
solutions to the governments of Scotland, Jersey and Guernsey as well as the
approximately 21 helicopter air ambulance charities operating within the UK
/ National Security & Law Enforcement. Providing "intelligence as a
service" aviation platforms to the UK government to protect the national
interest
/ Infrastructure & Survey. The monitoring of critical national
infrastructure for the purposes of failure monitoring, environmental controls,
mapping or other such studies
USD'000s H1 2022 Restated(1) Rebased(2) Constant currency growth(3)
H1 2021 H1 2021
Revenue 27,245 25,918 24,335 12%
Gross profit 9,608 8,311 7,803 23%
Gross profit % 35.3% 32.1% 32.1%
Adjusted EBIT(2) 2,302 1,416
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
(2) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
(3) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and reconciled to the
nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit,
Adjusted EBIT and Net debt. APMs also include organic and constant currency
Revenue, Gross Profit and Adjusted EBIT
Special Mission has delivered 12% revenue growth on a constant currency basis
in the first half, reflecting strong demand for services on its core
contracts. Gross profit has increased by 23% on a constant currency basis with
a gross profit % of 35.3% (H1 2021: 32.1%). It has benefitted from incremental
work with core and ad-hoc customers. Both revenue and gross profit have
increased as a result of the fix and optimise agenda.
Adjusted EBIT increased by $0.9m to $2.3m (H1 2021: $1.4m) due to the growth
in gross profit referred to above.
USD'000s H1 2022 Restated(1)
H1 2021
Adjusted EBIT(2) 2,302 1,416
Share-based payments (5) (10)
Amortisation (37) (40)
EBIT 2,260 1,366
(1) Restatements are detailed in Note 2 of the notes to the interim
financial statements
(2) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and reconciled to the
nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit,
Adjusted EBIT and Net debt. APMs also include organic and constant currency
Revenue, Gross Profit and Adjusted EBIT
In addition to the movements discussed above, EBIT includes share-based
payment charges and amortisation relating to the intangibles acquired as part
of the Jersey and Guernsey Air Ambulance business in 2020.
Technology & Outsourcing
T&O comprises of four lines of business which trades as Gama Aviation, but
with a further two brands, FlyerTech and myairops®. The lines of business are
Software & Data Services, Ground Operations, Part-M Services and
Maintenance Management & Advisory Services. The business unit provides
Continuing Airworthiness Management ('CAM') and airworthiness review
certification (ARC) and surveying services for business aviation, military,
and commercial airline operators. myairops® has developed a suite of business
aviation products deployed as "Software as a Service" (SaaS) and mobile app
solutions for aviation operators and charter brokers, flight support
companies, FBOs and regional airports. The Ground Operations line of business
provides trip support services which includes flight planning and the
arrangement of services such as permits, slots and fuel. These services are
provided to business and commercial aviation customers.
USD'000s H1 2022 Restated(1) Rebased(2) Constant currency growth(3)
H1 2021 H1 2021
Revenue 2,639 2,969 2,796 (6)%
Gross profit 1,910 2,148 2,016 (5)%
Gross profit % 72.4% 72.3% 72.1%
Adjusted EBIT(2) (493) (75)
(1) Restatements are detailed in Note 2 of the notes to the
interim financial statements
(2) To aid comparability 2021 results have been calculated on a
constant currency basis. See note 4 for more details.
(3) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and reconciled to the
nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit,
Adjusted EBIT and Net debt. APMs also include organic and constant currency
Revenue, Gross Profit and Adjusted EBIT
Technology and Outsourcing revenue decreased on a constant currency basis by
6% due to a reduction in the scope of its supply of military airworthiness
reviews. The period saw a reduction in some of the customer base with
reductions in fleet sizes in Europe, and a move to the EASA regulations. In
response T&O has shifted its long-term strategy in sales and marketing to
North America and is concentrating on raising awareness of its capability
within the US and Canadian markets. Furthermore, it has invested into EASA
operations in Poland where it holds a Part-CAMO approval in addition to
existing 2-Reg, Bahrain, Burmuda, Cayman, Oman and UK approvals. Losses
increased due to the sales and marketing investment in the SBU.
USD'000s H1 2022 Restated(1)
H1 2021
Adjusted EBIT(2) (493) (75)
Share-based payments (7) (32)
Amortisation (136) (152)
EBIT (636) (259)
(1) Restatements are detailed in Note 2 of the notes to the interim
financial statements
(2) The Alternative Performance Measures (APMs) are defined in
Note 4 of the notes to the interim financial statements and reconciled to the
nearest IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit,
Adjusted EBIT and Net debt. APMs also include organic and constant currency
Revenue, Gross Profit and Adjusted EBIT
Adjustments to EBIT relate to share-based payments and amortisation of
acquired customer relationship intangibles, which decreased due to the impact
of foreign exchange.
Branding Fees
The US branding fee arrangement ended on 2 March 2022, with $625k (H1 2021:
$1,875k) being recognised in revenue and gross profit, and $625k (H1 2021:
$1,866k) recognised in EBIT.
Associates
The Group disposed of its holding in China Aircraft Services Limited in
December 2021. Prior to this the Group reported an Adjusted EBIT loss of
$1,491k offset by a reversal of impairment of $1,491k, netting to $nil on a
statutory EBIT basis. The remaining associate investment does not trade; hence
no results are reported for 2022.
Financial Review
Adjusted(1) $m Statutory $m
Jun-22 Jun-21 Jun-22 Jun-21
Unaudited Unaudited Unaudited Unaudited
Restated(2) Restated(2)
Revenue 139.3 107.3 139.3 107.3
Gross profit 29.5 22.3 29.5 22.3
Gross profit % 21.2% 20.8% 21.2% 20.8%
EBITDA(3) 9.2 4.9 6.3 6.1
EBIT 1.8 (2.7) (1.7) (2.1)
Loss for the period (0.8) (3.4) (3.8) (2.8)
Basic and diluted loss per share (cents) (1.6) (4.4) (6.4) (3.6)
(1)The Alternative Performance Measures (APMs) are defined in Note 4 of the
notes to the interim financial statements and reconciled to the nearest IFRS
measure. APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted EBIT
and Net debt. APMs also include organic and constant currency Revenue, Gross
Profit and Adjusted EBIT
(2) Restatements are detailed in Note 2 of the notes to the interim financial
statements
(3) Statutory EBITDA represents earnings before interest, tax, depreciation,
and amortisation. Adjusted EBITDA is Statutory EBITDA after Adjusting Items.
Adjusted EBITDA and Statutory EBITDA provide management and investors with
useful additional information about the Group's performance and profitability
Revenue and Gross Profit Bridges
$m
Unaudited
Revenue Gross Profit
2021 restated(1) 107.3 22.3
Impact of foreign exchange movements (3.1) (0.8)
Rebased Revenue and Gross Profit − 2021 at 2022 exchange rate 104.2 21.5
Business Aviation 33.6 7.5
Special Mission 2.9 1.8
Technology & Outsourcing (0.2) (0.1)
Branding Fee (1.2) (1.2)
2022 139.3 29.5
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
· Business Aviation reported strong revenue growth, up 45%
period-on-period on a constant currency basis, on the back of strong demand
for services, particularly in the US, as a result of the integration of the
previously acquired Jet East business
· Charter also demonstrated strong revenue growth along with the
Aircraft Management line of business
· Outside of the US, revenue growth was also strong across most
areas
· Special Mission revenue was up by 12% on a constant currency
basis representing the impact of increased flying hours, together with other
incremental work
· Technology and Outsourcing revenue was down 6% on a constant
currency basis following a disappointing first half performance from Ground
Operations and other outsourced operations, together down $0.5m. This was
partly offset by increased revenue in myairops(®) and FlyerTech, together up
$0.3m
· Gross profit in Business Aviation was up by 77% on a constant
currency basis, largely due to the integration of the previously acquired Jet
East business with its higher gross profit margin
· Gross profit in Special Mission was up by 23% on a constant
currency basis and benefitted from tight cost control across the multi-faceted
contracts
· Technology and Outsourcing gross profit was down 5% on a constant
currency basis due to increased product development, amortisation charges and
continued expenses in the European expansion of FlyerTech
Unaudited Adjusted EBIT Bridge
$m
Adjusted EBIT - 2021 restated(1) (2.7)
Impact of foreign exchange movements (0.1)
Rebased EBIT - 2021 at 2022 exchange rate (2.8)
Increase in gross profit 8.0
Share of results of associates 1.5
Increase in other administrative expenses (4.2)
Increase in depreciation and amortisation (0.7)
Adjusted EBIT - 2022 1.8
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
· Gross profit increased in the two largest SBUs Business Aviation
($7.5m on a constant currency basis) and Special Mission ($1.8m on a constant
currency basis)
· Administrative expenses increased as a result of the acquisition
of Jet East, investment in capacity in US operations, and reduced government
support, all partially offset by cost efficiency measures
· Increased depreciation and amortisation following the acquisition
of Jet East
Unaudited Statutory EBIT Bridge
$m
Statutory EBIT - 2021 restated(1) (2.1)
Improvement in gross profit 7.2
Increase in administrative expenses (2.9)
Increase in depreciation and amortisation (0.8)
Increase in impairment losses (1.5)
Change in other income (1.6)
Statutory EBIT - 2022 (1.7)
(2.1)
Improvement in gross profit
7.2
Increase in administrative expenses
(2.9)
Increase in depreciation and amortisation
(0.8)
Increase in impairment losses
(1.5)
Change in other income
(1.6)
Statutory EBIT - 2022
(1.7)
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
Finance expenses
Net finance expense of $2.3m (H1 2021: $1.5m), includes interest on loans and
foreign exchange losses on debt.
Taxation
There is a statutory taxation credit for the period of $0.2m (H1 2021: $0.7m
credit). The adjusted taxation for the period is a $0.4m charge (H1 2021:
$0.1m credit).
EPS
Shares in issue increased by 275,000 from 27 May 2022 to 63,961,279 as at 30
June 2022. The average share price for the six months ended 30 June 2022 was
higher than the exercise price of outstanding options, however, given the loss
per share, there is no dilutive effect and as a result no diluted earnings per
share is presented. Basic Statutory EPS was a loss per share of 6.4 cents (H1
2021: loss of 3.6 cents).
Net debt and cash flow movements
Jun-22 Jun-21
Unaudited Unaudited
$m $m
Statutory EBIT restated(1) (1.7) (2.1)
Add: Depreciation and amortisation (Note 6) 8.0 8.2
Statutory EBITDA(2) 6.3 6.1
Less: Release of provision (Note 12) (1.0) −
Add: Impairments (Note 6) 1.7 −
Add: Loss on disposal of property, plant and equipment (Note 6) 0.1 −
Add: Share based payment expense (Note 6) 0.3 0.1
Less: Unrealised foreign exchange movement (Note 6) (2.2) (1.0)
Less: Non-cash lease settlement (Note 6) − (1.6)
Statutory EBITDA(2) after excluding non-cash items 5.2 3.6
Add: Working capital 10.4 2.5
Add: Capital portion of promissory note on disposal of US Air Associate − 2.5
Working capital 10.4 5.0
Cash generated by operations (Note 6) 15.6 8.6
Less: Tax paid (Note 6) (0.1) (0.2)
Net cash inflow from operating activities 15.5 8.4
Capital expenditure (3.3) (3.0)
Lease payments (3.8) (4.8)
Net interest (paid)/received (0.4) 0.4
Proceeds from borrowings 6.0 12.0
Repayment of borrowings (13.0) (7.5)
Acquisition of Jet East - (7.6)
Net cash used in investing and financing activities (14.5) (10.5)
Increase/(decrease) in cash 1.0 (2.1)
Cash at the beginning of the period 10.2 16.1
Effect of foreign exchange rates 0.2 0.2
Cash at the end of the period 11.4 14.2
Borrowings (55.1) (62.7)
Obligation under leases (42.7) (52.1)
Net debt (86.4) (100.6)
(1) Restatements are detailed in Note 2 of the notes to the interim
financial statements
(2) The Alternative Performance Measures (APMs) are defined in Note 4
of the notes to the interim financial statements and reconciled to the nearest
IFRS measure. APMs include Adjusted Revenue, Adjusted Gross Profit, Adjusted
EBIT and Net debt. In reconciling from Statutory EBIT to the net cash flow
from operating activities, Statutory EBITDA and Statutory EBITDA excluding
non-cash items are shown to aid understanding
· The increase in the net cash inflow on operating activities of
$7.1m to $15.5m has been driven by:
o $1.6m of higher EBITDA after excluding non-cash items
o $5.4m of increased cashflow through improved management of working capital
· Capital expenditure includes $1.0m of internally developed
software arising from myairops(©) software development and $2.3m of tangible
capital expenditure, of which $1.0m is in US Ground for base maintenance
expansion to fulfil demand from one of the world's largest private jet
operators
· Lease payments reduced by $1.0m on the prior period
· Net repayment on the revolving credit facility was $7.0m (H1
2021: $4.5m drawdown)
· Net debt decreased by $14.2m to $86.4m (H1 2021: $100.6m)
Litigation
Following the litigation update provided in the 2021 Annual Report, the Group
continues to pursue the recovery of its long-standing trade receivables,
primarily through enforcement actions in the UK. The Group has made
considerable progress through court proceedings in the UK in successfully
recovering trade receivables. It remains the Board's expectation that other
than the provisions already made against these claims, no further provisions
will be required.
Interim Dividend
The Directors do not propose that an interim dividend be paid for the six
months to 30 June 2022 (H1 2021: $nil).
Michael Williamson
Chief Financial Officer
Responsibility Statements
Each directors confirms that to the best of their knowledge:
a) the condensed consolidated set of interim financial statements has been
prepared in accordance with IAS 34 "Interim Financial Reporting";
b) the interim financial report includes a fair review of the information
required by DTR 4.2.7R (indication of important events during the first six
months and description of principal risks and uncertainties for the remaining
six months of the year); and,
c) the interim financial report includes a fair review of the information
required by DTR 4.2.8R (disclosure of related parties' transactions and
changes therein).
The basis of preparation of the consolidated interim financial statements is
shown in Note 2, and related party transactions are shown in Note 13. The
principal risks and uncertainties for the remainder of the year are unchanged
from those set out in the Group's recently published statutory financial
statements for the year ended 31 December 2021 and shown below.
The directors consider the principal risks to the business are:
/ Liquidity and cash resources to support and sustain future growth of the
business
/ Health and safety risks from poor operational performance or an air accident
which damages the Group's reputation
/ Increasing regulatory burden and maintaining oversight on existing approvals
that may result with a non-compliance
/ Changes in political and economic climate that make air transport less
attractive such as the ongoing COVID-19 pandemic
/ Reliance on key individuals and attrition of key staff that disrupt business
activities
/ Increasing concentration and reliance on a small number of key customers
/ Cyber threat and information security
Signed on behalf of the Board,
Marwan Khalek
Chief Executive Officer
Gama Aviation Plc
Consolidated income statement
For the period ended 30 June 2022
Period ended 30 June 2022 Period ended 30 June 2021
Unaudited Unaudited
Restated(1)
Statutory result Adjustments Adjusted result Statutory result Adjustments Adjusted
$'000
$'000
$'000
$'000
$'000
result
$'000
Continuing operations:
Revenue 139,301 − 139,301 107,278 - 107,278
Cost of sales (109,792) − (109,792) (84,934) - (84,934)
Gross profit 29,509 − 29,509 22,344 - 22,344
Administrative expenses (23,152) 1,328 (21,824) (20,303) 1,892 (18,411)
Depreciation and amortisation (6,509) 598 (5,911) (5,767) 609 (5,158)
(Impairment)/reversal of impairment of assets under construction (749) 749 − 16 (16) -
Impairment of goodwill (787) 787 − − − -
Impairment of financial assets − − − (5) - (5)
Total administrative expenses (31,197) 3,462 (27,735) (26,059) 2,485 (23,574)
Other income − − − 1,626 (1,626) −
Operating (loss)/profit (1,688) 3,462 1,774 (2,089) 859 (1,230)
Share of results from equity − − − (1,491) - (1,491)
accounted investments
Reversal of impairment of equity accounted investments − − − 1,491 (1,491) -
Earnings before interest and taxation (1,688) 3,462 1,774 (2,089) (632) (2,721)
Finance income 1,783 − 1,783 127 - 127
Finance expense (4,133) − (4,133) (1,591) - (1,591)
(Loss)/profit before tax (4,038) 3,462 (576) (3,553) (632) (4,185)
Taxation credit/(charge) (note 15) 194 (449) (255) 705 120 825
(Loss)/profit for the period (3,844) 3,013 (831) (2,848) (512) (3,360)
Attributable to:
Owners of the Company (4,061) 3,013 (1,048) (2,262) (512) (2,774)
Non-controlling interests 217 − 217 (586) - (586)
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
Earnings per share attributable to the equity holders of the parent
Basic and diluted (cents) (6.4) 4.8 (1.6) (3.6) (0.8) (4.4)
Gama Aviation Plc
Consolidated statement of comprehensive income
For the period ended 30 June 2022
Period Period
ended 30 June
ended 30 June 2021
2022
Unaudited
Unaudited
$'000 Restated(1)
$'000
Loss for the period (3,844) (2,848)
Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations (4,996) 121
Total comprehensive loss for the period (8,840) (2,727)
Total comprehensive loss is attributable to:
Owners of the Company (9,057) (2,141)
Non-controlling interest 217 (586)
(8,840) (2,727)
(1)Restatements are detailed in Note 2 of the notes to the interim financial
statements
Gama Aviation Plc
Consolidated balance sheet
As at 30 June 2022 and 31 December 2021
30 June 2022 31 December 2021
Unaudited Audited
$'000
$'000
Non-current assets
Goodwill (note 8) 19,336 22,236
Other intangible assets (note 9) 13,913 15,654
Total intangible assets 33,249 37,890
Property, plant and equipment (note 10) 46,922 53,489
Right-of-use assets (note 11) 30,613 36,383
Trade and other receivables 107 291
Deferred tax asset (note 15) 4,176 3,918
Total non-current assets 115,067 131,971
Current assets
Inventories 7,783 8,915
Trade and other receivables 59,914 63,808
Current tax receivable − 27
Cash and cash equivalents 11,419 10,243
79,116 82,993
Total assets 194,183 214,964
Current liabilities
Trade and other payables (37,731) (39,342)
Current tax liabilities (544) (574)
Obligations under leases (note 11) (8,180) (7,970)
Provisions (695) (772)
Borrowings (note 12) (55,101) (40,175)
Deferred revenue (15,009) (8,880)
Deferred consideration (168) (290)
(117,428) (98,003)
Total assets less current liabilities 76,755 116,961
Non-current liabilities
Borrowings (note 12) − (26,979)
Deferred revenue − (2)
Obligations under leases (note 11) (34,494) (40,032)
Provisions (281) (348)
Trade and other payables (2,823) (1,821)
Deferred consideration (168) (256)
(37,766) (69,438)
Total liabilities (155,194) (167,441)
Net assets 38,989 47,523
Gama Aviation Plc
Consolidated balance sheet (continued)
As at 30 June 2022 and 31 December 2021
30 June 2022 31 December 2021
Unaudited Audited
$'000
$'000
Shareholders' equity
Share capital 958 954
Share premium 63,713 63,502
Foreign exchange reserve (29,718) (24,722)
Other reserves 35,058 34,997
Accumulated loss (31,332) (27,301)
Total shareholders' equity 38,679 47,430
Non-controlling interest 310 93
Total equity 38,989 47,523
Gama Aviation Plc
Consolidated statement of changes in equity
For the period ended 30 June 2022
Share capital Share premium Other reserves Foreign exchange reserve Accumulated profit/(losses) Total shareholders' equity Non-controlling interest Total equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Balance at 1 January 2021 953 63,473 35,360 (24,415) (19,846) 55,525 796 56,321
Loss for the period restated(1) - - - - (2,262) (2,262) (586) (2,848)
Other comprehensive income - - - 121 - 121 - 121
Shares issued in period 1 15 - - - 16 - 16
Cost of share-based payments - - 122 - - 122 - 122
Transfer for lapsed options − − (313) − 313 − − −
Balance at 30 June 2021 restated(1) 954 63,488 35,169 (24,294) (21,795) 53,522 210 53,732
Loss for the period restated(1) - - - - (5,800) (5,800) (117) (5,917)
Other comprehensive income - - - (428) - (428) - (428)
Total comprehensive loss for the period restated(1) - - - (428) (5,800) (6,228) (117) (6,345)
Shares issued in period - 14 - - - 14 - 14
Cost of share-based payments - - 122 - - 122 - 122
Transfer for lapsed options - - (294) - 294 - - -
Balance at 31 December 2021 restated(1) 954 63,502 34,997 (24,722) (27,301) 47,430 93 47,523
Loss for the period - - - - (4,061) (4,061) 217 (3,844)
Other comprehensive income - - - (4,996) - (4,996) - (4,996)
Total comprehensive loss for the period - - - (4,996) (4,061) (9,057) 217 (8,840)
Share issue 4 211 - - - 215 - 215
Cost of share-based payments - - 91 - - 91 - 91
Transfer for lapsed options - - (30) - 30 - - -
Balance at 30 June 2022 958 63,713 35,058 (29,718) (31,332) 38,679 310 38,989
(1)Restatements are detailed in Note 2 of the notes to the interim financial
statements
Gama Aviation Plc
Consolidated cash flow statement
For the period ended 30 June 2022
Period
ended 30 June Period ended
2022 30 June 2021
Unaudited Unaudited
$'000 $'000
Net cash inflow from operating activities (note 6) 15,533 8,370
Cash flows from investing activities
Purchases of property, plant and equipment (note 10) (2,289) (1,619)
Purchases of intangibles (note 9) (996) (1,338)
Acquisition of subsidiary, net of cash acquired − (7,636)
Net cash used in investing activities (3,285) (10,593)
Cash flows from financing activities
Interest paid (430) (29)
Interest received − 376
Lease payments (note 11) (3,782) (4,759)
Proceeds from borrowings 6,000 12,000
Repayment of borrowings (13,003) (7,499)
Net cash (used in)/from financing activities (11,215) 89
Net increase/(decrease) in cash and cash equivalents 1,033 (2,134)
Cash and cash equivalents at the beginning of the period 10,243 16,136
Effect of foreign exchange rates 143 178
Cash and cash equivalents at the end of the period 11,419 14,180
Notes to the interim financial statements
For the period ended 30 June 2022
1. Corporate information
Gama Aviation Plc is a public company limited by shares, incorporated in the
United Kingdom. The address of the registered office is 1st Floor, 25 Templer
Avenue, Farnborough, Hampshire, England, GU14 6FE. The Company's shares are
publicly traded on the AIM market of the London Stock Exchange.
2. Accounting policies
Basis of preparation
These unaudited interim consolidated financial statements (the 'interim
financial statements') are for the six months ended 30 June 2022. They have
been prepared in accordance with IAS 34 Interim Financial Reporting. They do
not include all the information required for full annual financial statements
and should be read in conjunction with the consolidated financial statements
of the Group for the year ended 31 December 2021.
The accounting policies set out in the Group's statutory financial statements
for the year ended 31 December 2021 have been applied in the preparation of
the interim financial statements. The Directors consider that the Group has
adequate resources to remain in operation for the foreseeable future and have
therefore continued to adopt the going concern basis in preparing the interim
financial statements.
Going concern
The Group disclosed in the 2021 Annual Report and Accounts (the 'ARA') that it
was progressing towards securing the new funding and credit facilities
required to replace its RCF and Term Loan (together the 'current facilities'),
which mature on 14 November 2022 and 31 January 2023, respectively, and had
received indicative terms from HSBC for new facilities, which it was
negotiating. Those terms included a condition whereby, CK Hutchison Holdings
Limited ('CKHH') would be required to continue to support the new facilities
by providing a Letter of Awareness ('LoA') in similar form to the one that
supports the current facilities.
On 20 April 2022, the Board received an updated letter confirming that CKHH
had no current intention to withdraw the current letter of awareness before
the facilities are due for renewal; and that CKHH currently had no intention
not to facilitate renewal of the Group's facilities with HSBC through a
comparable arrangement, provided the Group continued to meet its ongoing
reporting obligations and such other conditions as may be agreed between the
parties.
In August 2022, CKHH notified the Board that while it would continue to
provide support (in the form of the existing LoA) for the current facilities
until they are due for renewal, CKHH believes that it is more appropriate for
the Group to secure facilities on a standalone basis rather than relying on
the unilateral support of one minority shareholder. Consequently, it has
advised the Group that it will not provide such support beyond expiry dates of
the current facilities.
As a result, management is actively seeking to source, and is progressing
towards, securing the new funding and credit facilities required to replace
the current facilities).
On 27 September 2022 the Group completed the sale and lease back of its
helicopter assets resulting in a cash inflow of $27m. This, together with cash
at hand, will be used to repay the RCF (of which $31m is currently drawn) upon
its maturity.
The Board has determined that, going forward, credit facilities totalling $40m
would be sufficient to meet the liquidity and working capital needs of the
Group and does not now expect that it will require a replacement facility for
its current term loan.
The Board has consulted extensively with its advisors, and with their active
support, discussions remain ongoing in respect of securing new credit
facilities required to meet the Group's funding needs. The Board is therefore
confident that, although there can be no certainty, a positive outcome will be
reached prior to 31 January 2023, when the existing facilities expire. A
further update will be provided when binding terms are secured.
To support their assessment of Going Concern, the Directors have performed a
detailed analysis of cash flow projections for the Group covering the period
from the date of approval of the interim financial statements to 31 December
2023. The Directors have also considered the outlook for the business beyond
31 December 2023 based upon its five-year strategic plan.
The analysis takes account of the following amongst other relevant
considerations:
· Working capital levels and the conversion of profits into cash
flows;
· The $50.0m committed RCF, of which $20.5m was undrawn at 30 June
2022, and a £20.0m Term Loan;
· Cash at 30 June 2022 of $11.4m and cash at 27 September 2022 of
$39.1m;
· The Board has determined that, going forward, credit facilities
totalling $40m, rather than the current $50m RCF, will be sufficient to meet
the liquidity and working capital needs of the Group;
· The Board now does not expect that it will require a replacement
facility for its £20m current Term Loan; and
· The Group completed the sale and lease back of its helicopter assets
on 27 September 2022, resulting in a cash inflow of $27m.
The existing borrowing facilities have no covenants, with the RCF being
settled and drawn down on a cyclical basis. Both the RCF and the Term Loan
fall due for repayment within twelve months of the reporting date and have
therefore been presented in current liabilities.
The key assumptions in the Board approved base case projections relate to
revenue performance and working capital cash flows and the Directors have
included what they consider to be a cautious level of revenue performance and
working capital. Additionally, the detailed cashflow projections take into
account planned future events within 2022 and 2023, including the Directors'
assessment of the likelihood of securing the new credit facilities.
The Board is aware that from the planned repayment of the RCF on or prior to
maturity on 14 November 2022, until drawdown against the new $40m credit
facilities (currently expected to be secured by 31 January 2023), cash
headroom is likely to run at significantly lower levels than in the past year.
Management have been actively managing and conserving cash for some time and,
based on past and expected performance, they and the Directors are satisfied
that the Group has sufficient headroom and potential further mitigation to
ensure the Group will remain solvent and able to pay its debts as they fall
due during this period.
The Directors have also considered a severe but plausible downside scenario
that takes account of the rapid increase in inflation that the western world
is experiencing and assumes that this will principally be felt from the start
of 2023, due to the longevity of supply contracts, although some impacts will
undoubtedly be felt in the latter part of 2022.
The severe but plausible downside scenario assumes the following:
· Funding costs will increase by 4% over that originally offered by
HSBC, as no LoA will be available, and new credit facilities will be more
expensive;
· Inflationary impacts to the cost of sales are assumed to be
passed on in the main, but there will be some impact on gross profit;
· Gross profit margins will reduce by 2%
· Overhead costs will increase by 2% overall;
· There will be a requirement to increase provisions for bad debts
by 15%;
· No available potential management actions have been taken to
preserve cash flow, although in practice these will be taken as soon as a
material adverse divergence from forecast is noted.
The base and severe but plausible downside scenarios have also been tested for
resilience in respect of the recent fall in the value of GBP relative to the
USD, and of the potential for consequent further increases in interest rates.
In both the base case scenario and the severe but plausible downside scenario,
provided new credit facilities of $40m are secured, the Group will have
adequate resources to continue in operational existence for the foreseeable
future.
Therefore, after making appropriate enquiries and considering the
uncertainties described above, the Directors have, at the time of approving
the interim financial statements, a reasonable expectation that the Group has
adequate resources to continue in operational existence for the foreseeable
future and, as a consequence, consider that it is appropriate to adopt the
going concern basis in preparing these interim financial statements.
However, despite the Directors being confident that the Group will secure the
new credit facilities necessary to meet its funding needs by the year end, as
the new borrowing facilities have not been concluded at the time of approving
the interim financial statements there is a risk that, if these facilities
were not secured at the proposed levels, the Group may not be able to meet its
liabilities as they fall due.
As a result, there is a material uncertainty that may cast significant doubt
about the Group's ability to continue as a going concern. The interim
financial statements do not include any adjustments that would result if the
Group was unable to continue as a going concern.
Restatements
The results for H1 2021 have been restated to reflect certain adjustments that
were included in the results for the full year ended 31 December 2021 and
which related to H1 2021, including:
· During 2021 a detailed review was conducted of Group leases.
New information came to light from this review indicating that errors had been
made on the implementation of IFRS 16 (1 January 2019) and in subsequent
recognition relating to the treatment of a number of initial lease obligations
at implementation (impacting subsequent impairments), contractual rental
increases, computational errors on foreign exchange, identification of
lease-related payments and the length of lease used for right-of-use assets
and liabilities and related leasehold improvements.
· Management has reviewed estimates made at the 2021 year-end and
believe that a small number of them would be better reflected as adjustments
to H1 2021.
· The treatment of vested options for leavers, which were
previously credited to the profit and loss account for H1 2021, has been
brought into line with the treatment adopted for the 2021 year-end with the
credit taken as a reserve transfer.
The impact of these adjustments (including the tax) on the H1 2021 financial
statements as follows:
Consolidated income statement:
As previously reported IFRS16 Management revisions Share-based payments Restated
USD'000s
Revenue 106,412 − 866 − 107,278
Cost of sales (84,024) 400 (1,310) − (84,934)
Gross profit 22,388 400 (444) − 22,344
Administrative expenses (22,227) (2,194) (1,325) (313) (26,059)
Other income - adjusting item − 1,626 − − 1,626
Operating profit/(loss) 161 (168) (1,769) (313) (2,089)
Adjusted EBIT (1,870) 7 (858) − (2,721)
EBIT 161 (168) (1,769) (313) (2,089)
Finance income 127 − − − 127
Finance expense (1,765) 174 − − (1,591)
Loss before tax (1,477) 6 (1,769) (313) (3,553)
Tax 63 − 642 − 705
Loss for the period (1,414) 6 (1,127) (313) (2,848)
Attributable to owners (828) 6 (1,127) (313) (2,262)
Consolidated cash flow statement:
As previously reported IFRS16 Management revisions Share-based payments Restated
USD'000s
Loss before tax (1,477) 6 (1,769) (313) (3,553)
Adjustments for:
Finance costs 1,765 174 − − 1,939
Depreciation of property, plant and equipment 3,232 − 52 − 3,284
Depreciation of right-of-use assets in administrative expenses 397 395 − − 792
Depreciation of right-of-use assets in cost of sales 3,194 (751) − − 2,443
Non-cash lease settlement (1,801) 175 − − (1,626)
Share-based payments (191) − − 313 122
Operating cash inflow before movements in working capital 5,119 (1) (1,717) − 3,401
(Decrease)/increase in payables (844) − 1,717 − 873
Cash generated by operations 4,275 (1) − − 4,274
3. Segment information
Reportable segments are operating segments that either meet the thresholds and
conditions set out in IFRS 8 for separate reporting or are considered by the
Board to be appropriately aggregated into reportable segments under IFRS 8.
The results were reviewed by the Group Chief Executive Officer, who acts as
the Chief Operating Decision Maker (CODM) in the new SBU structure. The CODM
reviews monthly internal reporting on a pre-IFRS 16 basis at the operating
segment level. The impact on application of IFRS 16 is reviewed separately
ahead of statutory reporting.
The Group has three SBUs: Business Aviation (Aircraft Management, Charter, FBO
& Maintenance), Special Mission (Air Ambulance & Rescue, National
Security & Policing, Infrastructure & Survey, Energy & Offshore);
and Technology & Outsourcing (Flight Operations, FBO, CAM software, Flight
Planning, CAM & ARC services). The Group believes this will provide a
direct line of sight for shareholders such that each SBU's activities in each
market, its investment requirements and its performance can be more easily
assessed and understood.
The IFRS 8 operating segments within these global divisions are Special
Mission, Business Aviation MRO US, Business Aviation excluding MRO US,
Technology & Outsourcing, Associates, Corporate and Branding Fees. The
operating segments, except T&O, met the quantitative thresholds to report
separately under IFRS 8; however, T&O is presented separately as it is of
strategic importance.
A reconciliation of segmental to overall Group performance is tabulated below:
For the period ended 30 June 2022 For the period ended 30 June 2021 Restated(1)
USD'000s Gross profit EBIT Adjusted EBIT Adjusted EBIT pre-IFRS 16 Gross profit EBIT Adjusted EBIT Adjusted EBIT pre-IFRS 16
Revenue Revenue
BA MRO US 55,473 12,085 (2,379) (66) (202) 35,174 4,943 (5,026) (2,765) (2,930)
BA excluding MRO US (731) 290 (1,598) (1,638)
53,319 5,281 (1,428) (1,007) 41,342 5,067
Business Aviation 108,792 17,366 (3,807) (797) (1,209) 76,516 10,010 (4,736) (4,363) (4,568)
Special Mission 27,245 9,608 2,260 2,302 1,683 25,918 8,311 1,366 1,416 746
T&O 2,639 1,910 (636) (493) (519) 2,969 2,148 (259) (75) (83)
Branding fee 625 625 625 625 625 1,875 1,875 1,866 1,866 1,866
Associates − − − − − − − − (1,491) (1,491)
Corporate − − (130) 137 202 − − (326) (74) (123)
Adjusted Result 139,301 29,509 (1,688) 1,774 782 107,278 22,344 (2,089) (2,721) (3,653)
Adjusting items − − − (3,462) (3,462) − − − 632 632
Application of IFRS16 − − − − 992 − − − − 932
Statutory result 139,301 29,509 (1,688) (1,688) (1,688) 107,278 22,344 (2,089) (2,089) (2,089)
(1) Restatements are detailed in Note 2 to the notes to the interim financial
statements
4. Alternative performance measures
The Adjusted result has been arrived at after the following Adjusting items:
Period ended 30 June 2022 Period ended
30 June 2021
Restated(1)
$'000 $'000
Exceptional items:
Transaction costs − 503
Integration and business re-organisation 342 163
Other income − (1,626)
Legal costs 93 193
Impairment of goodwill 787 −
Impairment of assets under construction 749 (16)
Total exceptional items 1,971 (783)
Share-based payments expense 306 122
Long-term employee benefits expense 956 911
Amortisation of intangible assets 598 609
Release of impairment of investment in associate − (1,491)
Deferred consideration adjustment (243) −
Profit on disposal of subsidiary (126) −
Adjusting items in EBIT 3,462 (632)
Tax related to adjusting items (449) 120
Adjusting items in profit 3,013 (512)
(1) Restatements are detailed in Note 2 to the notes to the interim financial
statements
Transaction costs
Costs in the prior period relate to the acquisition of Jet East.
Integration and business re-organisation costs
Integration and business re-organisation costs of $342k include:
· Jet East integration related severance costs of $244k (H1 2021:
$483k)
· Costs associated with Group reorganisation of $98k (H1 2021:
$nil)
· In the prior year the $163k of net costs related to Jet East
severance costs ($483k above), offset in part by net credits of $320k relating
to a reduction in the cost of closure provision for Fairoaks.
Other income
The prior period includes $1,626k credit for the derecognition of the Fairoaks
lease release.
Legal costs
Legal costs in the current and prior year principally relate to professional
fees in relation to ongoing litigation in respect of legacy cases going back
many years, which are now being successfully closed out.
Impairment of goodwill
The impairment loss relates to the impairment of the goodwill associated with
the closure of the paint and interior completion operations at Fort Lauderdale
Executive Airport.
Impairment of assets under construction
The impairment loss relates to the impairment of further development costs
incurred during the period in respect of the Business Aviation Centre at
Sharjah International Airport in the UAE.
Share-based payments
The prior year credit relates to the forfeit of Directors' share options which
offset the regular charge for other options.
Other long-term employee benefits
Other long-term employee benefits remuneration charge of $956k (H1 2021:
$911kl) relates to an incentive plan with payments contractually linked to the
continuing employment of executives of Jet East as well as the business
performance of the combined Business Aviation MRO US.
Amortisation of intangible assets
Acquisition related intangible amortisation relates to acquired intangible
assets (customer relationships and brands) recognised as part of the
accounting for business combinations $598k (H1 2021: $609k).
Profit on disposal of subsidiary
The profit on disposal arose as a result of the disposal of the interest in
Gama Aviation Saudi Arabia.
Tax related to adjusting items
The tax credit related to adjusting items was $449k (H1 2021: $120k charge).
Organic and constant currency growth
Organic and constant currency growth in Revenue, Gross Profit and EBIT is a
measure which seeks to reflect the performance of the Group that will
contribute to long-term sustainable growth. This growth excludes the impact of
acquisitions or disposals, and foreign exchange movements. Constant currency
growth has been calculated using a constant foreign exchange rate of $1.30 to
£1, being the cumulative average USD-GBP exchange rate for H1 2022, (H1 2021:
$1.39 to £1). Results of acquired and disposed businesses are excluded where
the results include only part-year results in either current or prior periods.
No adjustment has been made in this respect.
A reconciliation from organic and constant currency growth in Revenue to the
most directly comparable IFRS measures is set out below.
For the period ended 30 June 2022 For the period ended 30 June 2021
Revenue % Constant currency growth Revenue Rebase for FX Rebased Revenue
$'000 $'000 $'000 $'000
BA MRO US 55,473 58% 35,174 − 35,174
BA excluding MRO US 53,319 33% 41,342 (1,305) 40,037
Business Aviation 108,792 45% 76,516 (1,305) 75,211
Special Mission 27,245 12% 25,918 (1,583) 24,335
T&O 2,639 (6%) 2,969 (173) 2,796
Branding Fee 625 (67%) 1,875 − 1,875
Total 139,301 34% 107,278 (3,061) 104,217
A reconciliation from organic and constant currency growth in Gross Profit to
the most directly comparable IFRS measures is set out below.
For the period ended 30 June 2022 For the period ended 30 June 2021
Gross Profit % Constant currency growth Gross Profit Rebase for FX Rebased Gross Profit
$'000 $'000 $'000 $'000
BA MRO US 12,085 166% 4,943 − 4,943
BA excluding MRO US 5,281 (2%) 5,067 (191) 4,876
Business Aviation 17,366 81% 10,010 (191) 9,819
Special Mission 9,608 23% 8,311 (508) 7,803
T&O 1,910 (5%) 2,148 (132) 2,016
Branding Fee 625 (67%) 1,875 − 1,875
Total 29,509 39% 22,344 (831) 21,513
Gross Profit Margin 21.2% 20.8% 20.6%
Net Debt
A reconciliation of the IFRS financial statement line items that represent the
Net Debt APM is tabulated below.
30 June 2022 31 December 2021
$'000 $'000
Cash 11,419 10,243
Borrowings (55,101) (67,154)
Net Debt before IFRS 16 obligations under leases (43,682) (56,911)
Obligations under leases (42,674) (48,002)
Net Debt (86,356) (104,913)
5. Earnings per share ('EPS')
The calculation of earnings per share is based on the earnings attributable to
the ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Period ended 30 June 2022 Period ended 30 June 2021
Restated(1)
Numerator (4,061) (2,262)
Earnings $'000
Loss on continuing operations attributable to ordinary equity holders of the
parent for basic earnings
Adjusting items 3,013 (512)
Loss on continuing operations attributable to ordinary shareholders for (1,048) (2,774)
Adjusted earnings
Denominator
Weighted average number of shares used in basic and diluted EPS 63,739,456 63,658,655
Loss per share on continuing operations (cents)
Statutory - Basic and diluted (6.4) (3.6)
Adjusted - Basic and diluted (1.6) (4.4)
(1) Restatements are detailed in Note 2 of the notes to the interim financial
statements
Whilst the average share price for the six months ended 30 June 2022 was
higher than the exercise price of some outstanding options, there is no
dilutive effect as their effect would be anti-dilutive.
6. Net cash generated by operating activities
Period ended 30 June 2022 Period ended 30 June 2021
Restated(1)
$'000 $'000
Loss before tax (4,038) (3,553)
Adjustments for:
Finance income (1,783) (127)
Finance costs 4,132 1,591
Depreciation - wholly owned assets 3,166 3,284
Depreciation - ROU assets in admin expense 338 792
Depreciation - ROU assets in cost of sales 2,722 2,443
Amortisation of acquired intangible assets 598 609
Amortisation of other intangible assets 1,163 1,082
Impairment of goodwill 787 -
Impairment of right-of-use assets 37 -
Impairment/(reversal of impairment) of assets under construction 749 (16)
Impairment of leasehold improvements 124 -
Loss on disposal of property, plant & equipment 65 -
Non-cash lease settlement - (1,626)
Share of loss of associates - 1,491
Reversal of impairment of equity-accounted investments - (1,491)
Release of provision in respect of COVID-19 government support program (1,000) -
Share based payment expense 306 122
Operating cash inflow before movements in working capital 7,366 4,601
Unrealised foreign exchange movements (2,214) (1,045)
Decrease in inventories 666 730
Decrease/(increase) in receivables 1,131 (3,485)
Non-cash doubtful debt provision expense 108 5
Increase in payables 1,270 873
Increase in deferred revenue 7,369 7,275
Decrease in provisions (133) (410)
Cash generated by operations 15,563 8,544
Taxes paid (30) (174)
Net cash flows from operating activities 15,533 8,370
(1) Restatements are detailed in Note 2 to the notes to the interim financial
statements
7. Disposal of subsidiaries and investments
In March 2022 the Group's agreement, giving it control over Gama International
Saudi Arabia, was terminated. As a result, the Group received $120k in cash. A
$126k profit on disposal has been recognised following working capital
adjustments.
In the six-month period to 30 June 2022, the Group has recognised the
following items in relation to its sale of its US Air associate, Gama Aviation
LLC, in March 2020:
· Branding fees of $625k (H1 2021: $1,875k) relating to the licence
for the continued use of the Gama Aviation Signature brand for up to two
years. This agreement ended on 2 March 2022.
· Finance income of $nil (H1 2021: $90k) on deferred consideration
8. Goodwill
$'000
Cost
At 31 December 2021 47,514
Exchange differences (4,336)
At 30 June 2022 43,178
Accumulated impairment losses
At 31 December 2021 25,278
Impairment loss 787
Exchange differences (2,223)
At 30 June 2022 23,842
Carrying amount
At 30 June 2022 19,336
At 31 December 2021 22,236
The recoverable amount of goodwill is allocated to the following cash
generating units ('CGUs'):
30 Jun 2022 31 December 2021
$'000
$'000
Business Aviation MRO US - 787
Business Aviation excluding MRO US 7,652 8,043
Special Mission 10,578 11,119
Technology & Outsourcing 1,106 2,287
19,336 22,236
As a result of the then ongoing COVID-19 pandemic, the Group carried out an
extensive exercise to determine whether at the 2021 year-end there were any
indicators of impairment across the asset base. As a result of that exercise,
the Group considered that the recoverable amount of all CGUs exceeded the
carrying amounts, and no additional impairment of the goodwill carrying value
was required.
A review was carried out on the goodwill carrying values at the 2022 half year
and, again, the results indicated that the recoverable amount of all CGUs
exceeded the carrying amounts, and, apart from the impairment recognised in in
relation to the discontinued operation FXE, no additional impairment of the
goodwill carrying values have been made.
9. Other intangible assets
Brands Customer relationships Computer software Total
$'000 $'000 $'000 $'000
Cost
At 31 December 2021 1,181 20,838 12,706 34,725
Additions - - 996 996
Foreign exchange differences − (430) (1,316) (1,746)
At 30 June 2022 1,181 20,408 12,386 33,975
Amortisation and accumulated impairment losses
At 31 December 2021 227 14,542 4,302 19,071
Amortisation 118 480 1,163 1,761
Foreign exchange differences - (272) (498) (770)
At 30 June 2022 345 14,750 4,967 20,062
Carrying Amount
At 30 June 2022 836 5,658 7,419 13,913
At 31 December 2021 954 6,296 8,404 15,654
Brands of $1,181k relate to the purchase of Jet East in 2021 and is being
amortised over the estimated useful economic life of five years.
Customer relationship assets are amortised over their useful economic lives,
which are estimated to be ten years. During the period ending 30 June 2022,
there were no additions. The foreign exchange differences of $430k arise from
the weakening of the pound against the dollar in relation to sterling
denominated intangibles.
Computer software costs comprise internally developed software costs arising
in the Group's myairops(©) business, as well as purchased software, such as
operational and financial systems. All costs are amortised over their useful
economic lives, which are estimated to be between three and five years. The
carrying value of internally developed software within this balance is $6,673k
(FY 2021: $7,450k).
10. Property, plant and equipment
Leasehold improvements Aircraft and refurbishments Fixtures, fittings and equipment Motor vehicles Assets in the course of construction Total
Helicopters
$'000 $'000 $'000 $'000 $'000 $'000 $'000
Cost
At 31 December 2021 19,611 12,518 14,425 3,220 4,609 83,246
28,863
Additions − 106 − 1,295 139 749 2,289
Disposals − − − (146) − − (146)
Foreign exchange difference (2,847) (1,669) (1,235) (621) (27) − (6,399)
At 30 June 2022 18,048 11,283 14,953 3,332 5,358 78,990
26,016
Accumulated depreciation and impairment
At 31 December 2021 1,932 6,812 4,538 9,566 2,300 4,609 29,757
Depreciation charge for the period 204 600 1,089 1,032 241 3,166
-
Impairment charge for the period - 124 - - - 873
749
Disposals - - - (81) - - (81)
Foreign exchange difference (516) (537) (394) (19) - (1,647)
(181)
At 30 June 2022 1,955 7,020 5,090 10,123 2,522 5,358 32,068
Carrying amount
At 30 June 2022 24,061 11,028 6,193 4,830 810 − 46,922
At 31 December 2021 12,799 7,980 4,859 920 - 53,489
26,931
11. Obligations under leases
The Group leases many assets including property, aircraft, vehicles, fixtures,
fittings and equipment. Information about leases for which the Group is a
lessee is presented below.
Leasehold property Fixtures, fittings and equipment Total
Vehicles
Right-of-use assets $'000 $'000 $'000 $'000
Cost
At 31 December 2021 63,843 136 319 64,298
Additions 97 235 202 534
Disposals (7,693) − (23) (7,716)
Foreign exchange difference (3,265) (16) (22) (3,303)
At 30 June 2022 52,982 355 476 53,813
Accumulated depreciation
At 31 December 2021 27,776 18 121 27,915
Charge for the period - cost of sales 2,664 2 56 2,722
Charge for the period -administrative costs 307 15 16 338
Disposals (6,891) − (23) (6,914)
Impairment 37 − − 37
Foreign exchange difference (885) (1) (12) (898)
At 30 June 2022 23,008 34 158 23,200
Carrying amount
At 30 June 2022 29,974 321 318 30,613
At 31 December 2021 36,067 118 198 36,383
Leasehold property Fixtures, fittings and equipment Total
Vehicles
Obligations under leases $'000 $'000 $'000 $'000
At 31 December 2021 47,579 117 306 48,002
Additions 97 235 202 534
Finance expense 1,241 4 9 1,254
Lease payments (3,710) (28) (44) (3,782)
Derecognition (852) - - (852)
Foreign exchange difference (2,442) (13) (27) (2,482)
At 30 June 2022 41,913 315 446 42,674
At 30 June 2022
Current 8,001 68 111 8,180
Non-current 33,912 247 335 34,494
Total 41,913 315 446 42,674
Lease obligation additions relate to:
· $235k for Group photocopier leases;
· $202k for new vans used for transportation of equipment in the UK
· $97k for a new office lease at Bedford, Massachusetts
In June 2017, the Group entered into a 25-year non-cancellable
Build-Operate-Transfer and Service Concession agreement with Sharjah Airport
Authority under which the Group is committed to construct a Business Aviation
Centre ('BAC') at Sharjah Airport. The agreement now runs from June 2017 until
June 2052 following the exercise of the ten-year extension option during the
year.
The lease liability has been discounted at an incremental borrowing rate of
7.3% (FY 2021: 7.3%) and on an expected lease term of 35 years (FY 2021: 35
years). The Sharjah BAC includes a $nil (FY 2021: $nil) right-of-use asset and
$9,802k (FY 2021: $9,850k) obligation under leases at 30 June 2022.
12. Borrowings
30 June 2022 31 December 2021
$'000
$'000
Secured borrowing at amortised cost
Other loans 1,345 1,415
Bank borrowings 53,756 64,739
Paycheck Protection Program loan − 1,000
55,101 67,154
Total borrowings
Other loans 1,345 1,415
Bank borrowings 53,756 37,760
Payment Protection Program loan − 1,000
Amount due for settlement within 12 months 55,101 40,175
Other loans - -
Bank borrowings − 26,979
Amount due for settlement after 12 months − 26,979
During 2020, the Group received funds under the Paycheck Protection Program
('PPP') in the form of a loan arrangement from Citibank guaranteed by the US
Government, which was specifically intended to help businesses maintain their
US workforce during the COVID-19 pandemic. The Group made the application in
good faith and in the belief that the PPP loan request was necessary and
otherwise in accordance with the then applicable rules, to support its ongoing
operations given the economic uncertainty caused by the pandemic. $5,753k
funds were received on 12 May 2020 and were initially recognised as borrowings
in current liabilities. $4,753k of these funds are considered by the Company
to be eligible for forgiveness within the terms of the PPP and were therefore
recognised in 2020 as income against the related expenses in the income
statement, reducing the amount of borrowings at the period end to a repayable
element of $1,000k. Confirmation of the full loan forgiveness was received on
19 May 2022 and therefore the repayable element of $1,000k loan is now
considered not to be repayable.
On other unsecured loans of $1,345k (FY 2021: $1,415k), interest accrued at an
average of 5.4% during H1 2022 (FY 2021: 6.6%).
The other principal features of the Group's bank borrowings are as follows:
· Bank borrowings at 30 June 2022 of $53.8m (FY 2021: $64.7m) comprise
drawdowns from a $50.0m RCF and a £20.0m Term Loan (the "Loan"). These
facilities are subject to customary banking security arrangements
· The RCF, which is presented in current liabilities, is settled
and drawn down on a cyclical basis. The facility matures on 14 November 2022
· At 30 June 2022, $20.5m (FY 2021: $12.1m) of the $50m RCF
facility was undrawn
· The Loan, which is presented in current liabilities, matures on 31
January 2023
· A letter of awareness has been provided by CK Hutchison Holdings
Ltd ("CKHH"), which has an indirect shareholding of 29.8% in the Group, to
HSBC that CKHH's intention, while any amount is outstanding under the
facility, is not to reduce its shareholding in the Group below 25.0% without
consent from the lender or discharge of the facility. No legal implications
are imposed on CKHH.
· In August 2022, CKHH notified the Board that, while it would
continue to provide support (in the form of the existing letter of awareness)
for the current facilities until they are due for renewal, CKHH believes that
it is more appropriate for the Group to secure facilities on a standalone
basis, rather than relying on the unilateral support of one minority
shareholder. Consequently, it has advised the Group that it will not provide
such support beyond the expiry dates of the current facilities.
At 30 June 2022
Maturity Facility Drawn (local currency) Drawn (presentation currency)
'000 '000 $'000
RCF 14 November 2022 USD 50,000 GBP 7,000 8,511
USD 21,000 21,000
Term loan 31 January 2023 GBP 20,000 GBP 20,000 24,318
Bank borrowings before arrangement fees 53,829
Capitalised loan arrangement fees (73)
Bank borrowings 53,756
At 31 December 2021
Maturity Facility Drawn (local currency) Drawn (presentation currency)
'000 '000 $'000
RCF 14 November 2022 USD 50,000 GBP 17,000 22,932
USD 15,000 15,000
Term loan 31 January 2023 GBP 20,000 GBP 20,000 26,979
Bank borrowings before arrangement fees 64,911
Capitalised loan arrangement fees (172)
Bank borrowings 64,739
13. Related party transactions
During the period, Group companies entered into the following transactions
with related parties who are not members of the Group:
Sale of services Purchase of services
H1 2022 H1 2021 H1 2022 H1 2021
$'000 $'000 $'000 $'000
Gama Aviation LLC (other trading balances)* − 1,510 - 55
China Aircraft Services Limited − 526 - −
Air Arabia/Felix Trading Company LLC 107 180 137 75
BBGA Ltd − − 14 −
Mr Canning Fok 7 1,076 - -
M Khalek 5 1 - -
*Gama Aviation LLC - was an associate in which GB Aviation Holdings LLC owned
a 49% interest before disposal in March 2020
The following amounts were outstanding at the balance sheet date:
Amounts owed by Amounts owed to
related parties
related parties
H1 2022 H1 2021 H1 2022 H1 2021
$'000
$'000
$'000 $'000
China Aircraft Services Limited − 1,433 − 1,750
Gama Aviation LLC* − 221 − 12
Air Arabia 158 234 125 100
Mr Canning Fok − 30 67 −
M Khalek 6 − − −
GB Aviation Holdings LLC − 40 − −
*Gama Aviation LLC - was an associate in which GB Aviation Holdings LLC owned
a 49% interest before disposal in March 2020
14. Dividends
The Directors do not propose that an interim dividend be paid for the six
months to 30 June 2022 (H1 2021: $nil).
15. Taxation
Period ended 30 June 2022 Period ended 30 June 2021 Restated(1)
Statutory result Adjustments Adjusted result Statutory result Adjustments Adjusted
$'000
$'000
$'000
$'000
$'000
result
$'000
Corporation tax:
Current year charge 64 - 64 13 − 13
Adjustment in respect of prior years - - - 3 − 3
Deferred tax:
Current year (credit)/charge (258) 449 191 (721) (120) (841)
Total tax (credit)/charge for the period (194) 449 255 (705) (120) (825)
(1) Restatements are detailed in Note 2 to the notes to the interim financial
statements
The following are the major deferred tax liabilities and assets recognised by
the Group and movements thereon during the current period.
Non-deductible Fixed asset Deferred Tax losses Total
acquired and other consideration $'000 $'000
intangibles temporary on US air
$'000 differences associate
$'000 temporary
differences
$'000
At 1 January 2022 (1,590) 36 161 5,310 3,917
Credit/(charge) in year 334 (167) (161) 253 259
At 30 June 2022 (1,256) (131) - 5,563 4,176
16. Share-based payments
There were no share options awarded in the six-month period ended 30 June
2022.
Details of the options outstanding during the period are:
Number
'000
At 1 January 2022 4,017
Forfeited (76)
At 30 June 2022 3,941
In the current half year, a charge of $306k (Restated H1 2021: $122k) has been
recognised for shared based payments.
17. Subsequent events
In August 2022, CKHH notified the Board that while it would continue to
provide support (in the form of the existing LoA) for the current facilities
until they are due for renewal, CKHH believes that it is more appropriate for
the Group to secure facilities on a standalone basis rather than relying on
the unilateral support of one minority shareholder. Consequently, it has
advised the Group that it will not provide such support beyond expiry dates of
the current facilities.
As a result, management is actively seeking to source, and is progressing
towards, securing the new funding and credit facilities required to replace
the current facilities.
On 27 September 2022 the Group completed the sale and lease back of its
helicopter assets resulting in a cash inflow of $27m. This, together with cash
at hand, will be used to repay the RCF (of which $31m is currently drawn) upon
its maturity.
The Board has determined that, going forward, credit facilities totalling $40m
would be sufficient to meet the liquidity and working capital needs of the
Group and does not now expect that it will require a replacement facility for
its current term loan.
The Board has consulted extensively with its advisors, and with their active
support, discussions remain ongoing in respect of securing new credit
facilities required to meet the Group's funding needs. The Board is therefore
confident that, although there can be no certainty, a positive outcome will be
reached prior to 31 January 2023, when the existing facilities expire. A
further update will be provided when binding terms are secured.
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