Gama Aviation Regulatory News (GMAA)

RNS Number : 1622K

Gama Aviation PLC

19 September 2016

 

19 September 2016

 

Gama Aviation Plc (AIM: GMAA)

Interim results for the six months to 30 June 2016

Gama Aviation Plc ("Gama Aviation"), one of the world's largest business aviation service providers, is pleased to announce its unaudited interim results for the six months to 30 June 2016.

 

Financial Highlights

In order to aid the understanding and scale of Gama Aviation Plc's overall group and business performance, Total Group Revenue and Total Group Gross Profit shown below include 100% of the results of Gama Aviation's associate in the US ("US Air") and of its joint venture in Hong Kong. Adjusted EBITDA, Adjusted Profit Before Tax and Adjusted Earnings Per Share, however, are presented on a statutory basis, which only includes Gama's share of each business.

USD millions (unless otherwise stated)	June 2016	June 2015	Change	Constant Currency1 Change
Group Revenue
US	116.0	82.4	40.8%	n/a
Europe	74.2	88.9	(16.5%)	(10.6%)
MENA	10.8	11.9	(9.2%)	n/a
Asia	8.5	1.4	>100%	n/a
Other	0.3	0.7	(57.1%)	n/a
Total Group Revenue	209.8	185.3	13.2%	16.3%
Total Group Gross Profit	27.9	30.3	(7.9%)	(5%)
Total Group Gross Profit Margin	13.3%	16.3%	(3.0ppt)	(3.0ppt)
Adjusted EBITDA2	7.5	8.2	(8.5%)	0.0%
Adjusted Profit before tax3	9.6	5.9	62.7%	(7.8%)
Adjusted EPS4 (c)	19.7	12.5	57.6%	(20.4%)
1 - Change calculated at a constant foreign exchange rate of $1.5 to £1, being the rate that represented the average at the beginning of the financial period. 2 - Adjusted EBITDA is arrived at by taking operating profit before depreciation, amortisation, and exceptional items. 3 - Adjusted Profit before tax is arrived at before exceptional items and amortisation. 4 - Earnings used in the Adjusted EPS calculation are the profits attributable to ordinary shareholders adjusted for exceptional items and amortisation.

 

Solid performance

· H1 2016 results benefitted from geographic diversity; strong US performance offsetting weaker European market conditions

· Adjusted EBITDA of US$7.5m (2015: $8.2m) and $8.0m on a constant currency basis (2015: US$8.0m), in line with 13 July trading update guidance of not less than $7.5m

· Total Group Gross Profit margin down 3.0ppts principally due to business mix. With the growth in Air revenues, particularly in US Air, a greater proportion of the group's gross profits have been derived from the relatively lower margin Air services.

· Adjusted PBT and Adjusted EPS benefitted from a material foreign exchange credit of US$4.6m in H1 (2015: $0.1m)

· Adjusted EPS reduction on a constant currency basis principally due to a provisional tax charge of $1m (2015: $nil)

· Aircraft under management up 10% to 153 (2015: 139)

 

 

Outlook: Stronger second half performance expected with full year broadly in line with management expectations

· Strong US trading performance expected to continue in H2

· EU Air benefitting from cost reductions implemented during the period

· EU Ground traditionally stronger H2 supported by longer term contracts within a challenging European market

· Further progress expected in MENA with a promising contract pipeline

· The Board expects a stronger second half performance and full year results to be broadly in line with management expectations

Strategic ambition to double the scale of the business

· Strong organic growth potential across the group's services and geographies

· Recent acquisitions being successfully integrated

· Further acquisition opportunities identified in fragmented global market place

· Growth strategy in place to double the scale of the business over the next two years

 

Marwan Khalek, Chief Executive Officer commented:

"The fundamental strength of our business, which is underpinned by contracted revenues and geographical diversity, together with the proven industry experience of our management team and the expertise and commitment of our staff, have ensured that once again we have delivered a solid performance, despite the challenging conditions that we continue to experience in our European market. This illustrates the resilience of our business model.

Our growth strategy is on track. Organic growth will continue apace through the expansion of services and geographies and we have a clearly defined path to continue our acquisitive growth in a highly fragmented global business aviation services sector. Our strategic goal is to double the scale of the business over the next two years."

 

The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.

 

For further information please visit www.gamaaviation.com or contact:

Gama Aviation Plc +44 (0) 1252 553000

Marwan Khalek, Chief Executive Officer

Kevin Godley, Chief Financial Officer

Camarco +44 (0) 20 3757 4992

Ginny Pulbrook

Geoffrey Pelham-Lane

Jefferies International +44 (0) 207 029 8000

Simon Hardy

Harry Nicholas

 

Gama Aviation - Notes to Editors

Gama Aviation (GMAA) is a multi-disciplinary global aviation services company that specialises in providing support for individuals, corporations and government agencies. Following the reverse takeover by Hanger 8 in January 2015, Gama Aviation is now one of the top three global players in a highly fragmented market, with a fleet of 153 aircraft. Gama operates across Europe, the US, the Middle East, Asia and Africa.

Gama's services can be split into two broad areas: Air and Ground. The Air Operations include aircraft management, special mission and charters, with Ground Services covering maintenance services, Fixed Base Operator (FBO) operations and modification services.

http://www.gamaaviation.com/

 

 

Business Review

 

US Business

USD thousands	June 2016		June 2015		Change
	Air	Ground	Air	Ground	Air	Ground
Total Group Revenue	109,805	6,180	76,217	6,170	44.1%	0.2%
Total Group Gross Profit	9,034	2,718	6,642	2,626	36.0%	3.5%
Gross Profit %	8.2%	44.0%	8.7%	42.6%	(0.5ppt)	1.4ppt
Total Group Adjusted EBITDA1	2,583	999	1,547	1,351	67.0%	(26.1%)
Adjusted EBITDA %	2.4%	16.2%	2.0%	21.9%	0.4ppt	(5.7ppt)
1 - excludes intra group branding fees as described in the basis of preparation within the financial revenue section

 

The US operations have continued to perform strongly in H1 delivering increased revenues and gross profits compared to the same period in 2015.

 

Air

US Air performed particularly strongly, achieving Total Group Revenues of $109.8m (2015: $76.2m) and Total Group Gross Profit of $9.0m (2015: $6.6m) to deliver organic growth of 44% and 36% respectively. The strength of this performance reflects a high contract win rate in our core management business, resulting in a number of significant contract additions during the period; in addition, the growth in our aircraft under management from our Wheels Up contract continued to progress well. US Air had 105 aircraft under management as at June 2016, up from 78 in June 2015, an increase of 35% and up from 93 in December 2015, an increase of 13%.

Tender activity within our core management business remains high. Subject to the successful outcome of these tenders, together with the contracted growth under the Wheels Up contract, a further 30 aircraft, at a minimum, are expected to be added to the fleet between now and the end of 2018.

US Air Total Group Adjusted EBITDA was $2.6m (2015: $1.5m), an increase of 67.0%, with the Adjusted EBITDA margin of 2.4% (2015: 2.0%). The Adjusted EBITDA margin has been depressed as a result of up-front investment, principally in infrastructure and IT systems, to support the current and expected rapid growth in aircraft numbers.. With these costs now expensed and these infrastructure projects nearing completion, the US Air Adjusted EBITDA margins are expected to increase towards the business model target of 5.0% over the next two years.

 

Ground

US Ground delivered a solid financial performance during the period whilst materially expanding its operational capabilities . Three new bases were added in Bedford, White Plains and Chicago, taking the total number of bases to nine. This network of hubs provides US Ground with national coverage supported by its mobile units, which now total 30, with a further 10 being added during the period. US Ground can now service its customers' line maintenance requirements on a national basis. The benefits of this expanded capability is expected to be reflected in US Ground's performance during H2 2016 and beyond.

 

US Business Outlook

The outlook for the US business is positive in H2 2016 for both US Air and US Ground, with further contracted aircraft arriving in H2, the benefits of scale in US Air beginning to materialise, and a full contribution from the commencement of new line maintenance bases.

 

 

European Business

Europe is the only division in the group that is affected by any material foreign exchange movements, primarily between UK GBP to USD. The commentary below is based on constant currency performance unless otherwise stated.

USD thousands							Constant Currency Change
	June 2016		June 2015		Change
	Air	Ground	Air	Ground	Air	Ground	Air	Ground
Total Group Revenue	55,630	18,601	69,994	18,867	(20.5%)	(1.4%)	(15.2%)	6.7%
Total Group Gross Profit	4,209	9,930	7,519	11,474	(44.0%)	(13.5%)	(41.9%)	(7.5%)
Gross Profit %	7.6%	53.4%	10.7%	60.8%	(3.1ppt)	(7.4ppt)	(3.4ppt)	(8.0ppt)
Total Group Adjusted EBITDA	946	4,039	1,166	6,698	(18.9%)	(39.7%)	11.7%	(34.2%)
Adjusted EBITDA %	1.7%	21.7%	1.7%	35.4%	0.0ppt	(13.8ppt)	0.5ppt	(13.6ppt)

 

Europe has delivered a satisfactory performance in H1, given the challenging trading conditions. This is due to three factors: the bedding-in of optimisation initiatives started at the tail end of last year; the decisive actions by management to right-size the operational infrastructure of the business during the period; and the stability provided by Gama Aviation's longer term contracts.

 

Air

Europe Air experienced a challenging period with Total Group Revenue and Total Group Gross Profit declining by 15.2% and 41.9% respectively. These declines were the result of the decision to terminate a number of underperforming legacy contracts, particularly those operated in Africa but serviced from Europe. Whilst some of these contracts delivered relatively good Gross Profit margins they also consumed a disproportionate amount of management time and overhead as well as presenting an unattractive credit risk profile.

Consequently, and despite the decline in Revenue and Gross Profit, Europe Air Total Group Adjusted EBITDA was up by 11.7%, which represents a 0.5ppt improvement in margin. By improving the quality of the revenue stream, whilst taking early and decisive actions to reduce costs, Europe Air is back on a path of delivering a steady improvement in EBITDA margins towards the business model target of 5% as revenues recover and grow again.

 

Ground

Europe Ground Total Group Revenues increased by 6.7% whilst Total Group Gross Profits decreased by 7.5% with the Gross Profit margin down 8.0ppts. The revenue growth results from new business wins at our Farnborough and Fairoaks maintenance facilities. Whilst the decline in the Gross Profit margin reflected a particularly strong performance in the comparative period due to some ad-hoc high margin design work, the margins in the current period have returned to more typical, sustainable levels of around 50%.

Europe Ground's business performance has typically been significantly weighted towards H2. 2016 is expected to demonstrate a similar profile, underpinned by longer term government contracts. In these more challenging markets, the timing of discretionary spend on modifications, improvements and refurbishments works has been harder to predict with a tendency for such projects to be deferred or put on hold pending an improvement in sentiment and confidence. Such uncertainty is expected to persist through H2.

 

European acquisitions

The acquisitions of Aviation Beauport within Europe Ground and Flyertech Limited in Europe Air are being integrated successfully. Revenue synergies are beginning to be generated from these acquisitions and further benefit is expected during H2.

 

European business outlook

Whilst market conditions remain challenging for both Air and Ground in Europe, especially in discretionary maintenance, performance in H2 is expected to benefit from the stability of longer term contracts in Ground and the cost reductions and improvement initiatives in Air supporting a significant increase in H2 performance. This is consistent with prior years.

 

 

Middle East business

 

USD thousands	June 2016		June 2015		Change
	Air	Ground	Air	Ground	Air	Ground
Total Group Revenue	8,889	1,945	10,473	1,390	(15.1%)	40.0%
Total Group Gross Profit	715	773	957	543	(25.3%)	42.4%
Gross Profit %	8.0%	39.7%	9.1%	39.1%	(1.1ppt)	0.6ppt
Total Group Adjusted EBITDA	(19)	67	(229)	(313)	91.7%	121.4%
Adjusted EBITDA %	(0.2%)	3.4%	(2.2%)	(22.5%)	2.0ppt	25.9ppt

 

Middle East performed well in H1 achieving break even at the Adjusted EBITDA level (2015, ($0.5m loss). Middle East Air has a number of promising managed aircraft tenders under way and the Middle East Ground business continues to generate a positive EBITDA contribution with new parking and hangarage contracts expected to contribute in H2.

 

Asia business

USD thousands	June 2016	June 2015	Change
	Air	Air	Air
Total Group Revenue	8,539	1,426	498.8%
Total Group Gross Profit	223	152	46.7%
Gross Profit %	2.6%	10.7%	(8.1ppt)
Total Group Adjusted EBITDA	-	(171)	100%
Adjusted EBITDA %	-	(12.0%)	-

 

The Air division within the Asia business continues to grow albeit from a start-up position. The June 2016 revenue had the benefit of a full 6 months' trading versus only one month's trading in the prior year. As expected in the start-up phase of this business, the gross profits will fluctuate. There remains a promising pipeline of managed aircraft deals with the intention to establish Ground services in the future. The business is expected to steadily build towards making a positive contribution to the Group.

 

 

The Fleet

The aircraft fleet increased 10% in the period to 153 as at 30 June 2016 (2015: 139). The fleet comprises aircraft types from all the major manufacturers with a bias toward larger, more capable aircraft. The scale of the global fleet size has a positive influence on contract value and ancillary service volumes such as fuel, training and insurance; allowing for increased leverage during negotiations with suppliers.

We continue to review the managed aircraft contracts across the globe for contract quality within the group exiting those contracts that no longer represent the appropriate level of commercial value, replacing them with customers where we can deliver the margin as a result of enhanced service offerings.

 

Group Outlook: Stronger second half performance expected with full year broadly in line with management expectations

Further growth is expected in US and Middle East in H2. Whilst in Europe, despite challenging market conditions especially in discretionary modifications and improvements, the stability of longer term contracts in Ground and the cost reductions in Air are expected to support a typically stronger H2 performance. Accordingly, the Board expects the full year to be broadly in line with its expectations.

 

Strategic Goal: doubling the scale of the business over the next two years

The Global Business Aviation Services market remains highly fragmented thus creating a significant and tangible consolidation opportunities. The company will continue to seek to capitalise on these opportunities and management has set a clear strategic goal to double the scale of the business over the next 2 years.

It will do so by continuing its dual track strategy of organic and acquisitive growth. Organic growth will continue to be delivered through the expansion of services and geographies. Acquisitive growth will be delivered through the acquisition of strategic targets in a clearly defined matrix. Gama Aviation's leading market position, its presence, its scale, its core competencies, its reputation and its healthy balance sheet together provide a strong operational and financial platform to execute on this strategy, and deliver its strategic objectives.

 

 

Financial Review

 

Basis of presentation of financials

In order to aid understanding of Gama Aviation's overall group and business performance, the financial highlights and the analysis by region are shown on a Total Group basis (for revenue, gross profit and Adjusted EBITDA) and therefore reflect 100% of the performance of associates. Gama Aviation typically receives a fee in return for allowing its associates the use of the Gama Aviation brand. Accordingly, such branding fees are excluded from the EBITDA on this Total Group basis but are recognised within Gama Aviation's statutory adjusted EBITDA.

Under IFRS statutory accounting rules, the trading results of associates cannot be consolidated into Gama Aviation Plc's statutory group revenue, gross profit or adjusted EBITDA and are instead shown as a single line on the profit and loss account as a net share of its equity investment.

 

Revenue and Gross Profit

Total group revenue on a constant currency basis was up 16.3% to $213.4 (2015: $183.4m), yielding a gross profit of $28.5m (2015: $30.1m), a decrease of 5%. This margin drop is a reflection of the increasing proportion of lower margin US Air revenue as a percentage of the total group revenue outstripping the growth in revenues in the higher margin Ground business.

Statutory revenue has decreased by 11.7% to $101.6m (2015: $115.1m). This reduction is primarily as a result of the ending of certain underperforming contracts in the EU Air division.

	Statutory	Associates & JVs	Total Group	Constant Currency effect	Total Group @ Constant Currency
Group Revenue (USD'000)	101,606	108,153	209,759	3,607	213,366

 

Adjusted EBITDA

Adjusted EBITDA generated on a constant currency basis was flat at $8.0m (2015: $8.0m).

 

	Statutory	Constant Currency effect	Statutory @ Constant Currency	Branding Fee adjustment	Total Group @ Constant Currency
Group Adjusted EBITDA (USD'000)	7,529	509	8,038	(439)	7,599

 

Adjusted EBITDA is stated before exceptional costs of $1.3m, details of which are included in note 3, discontinued operations of $0.1m, which are the operating losses incurred on the group's owned aircraft that are deployed on ad-hoc charter only and also before depreciation and amortisation of approximately $1.9m (2015: $2.0m).

 

The Branding Fee adjustment results from the variance between the branding fees paid to the group by its associates and the associates' independent performance on a standalone basis excluding branding fees.

 

Depreciation and Amortisation

Depreciation for the period was $1.1m (2015: $1.0m). Amortisation for the period was $0.8m (2015: $1.0m)

 

PBT and EPS

The Adjusted PBT and Adjusted EPS both benefitted from a material foreign exchange credit of $4.6m in H1 (2015: $0.1m). EPS includes a provisional tax charge of $1.0m (2015: $nil).

 

Taxation

We expect a tax rate of between 10-15% for FY 2016 with a number of brought forward losses in the Europe and US regions.

 

Forex

Within our global services business, we operate and manage geographically mobile assets. As a result, Gama Aviation is exposed to a number of currencies. With the exception of the EU, the rest of the regions trade in USD which is the same as our Group reporting currency.

The material currency exposure for Gama Aviation is within our EU operations in UK GBP to USD. Gama Aviation experiences both realized and unrealized trading gains/losses on these exchange rate movements. These impact our EBITDA. As the Pound weakens against the dollar, the UK businesses suffer both trading and translational losses.

However, Gama Aviation presently has a natural hedge within PBT. The intercompany loan structure within the group works in the opposite direction. As the UK GBP weakens against the USD, the group experiences foreign exchange gains within finance income.

Given the volatility of the GBP to USD exchange rates in the days before the H1 reporting date, Gama Aviation experienced sizeable losses within its Adjusted EBITDA and material gains within its finance income.

The use of the constant currency reporting helps to illustrate the underlying performance of the business in the absence of these foreign exchange movements.

An independent foreign exchange review has been carried out on the Gama Aviation business identifying a few small improvements that can be made and these are being put in place. The review concluded that Gama Aviation is managing its foreign exchange exposure in an appropriate way given the size of the business.

 

Cash

Cash increased by $1m to $9.5m, (Dec 2015: $8.5m).

Operating cash inflow before movements in working capital increased 86% to $4.9m (June 2015: $2.6) and the working capital movement improved by 28.0% to ($5.9m), (2015 ($8.2m)). The Group is actively engaged in improving its working capital management.

Net Debt as at 30 June was ($13m) (June 2015: $0.2m) (Dec 15: ($9m)) as the Group drew on some debt to fund the recent acquisitions in March and June.

Net Debt to Adjusted EBITDA was 1.8x as at 30 June (June 2015: $nil).

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 

		Six months	Six months
		ended	ended
		30 June	30 June
		2016	2015
		(unaudited)	(unaudited)
	Note	$'000	$'000
Continuing operations
Revenue		101,606	115,129
Cost of sales		(79,847)	(89,566)
Gross Profit		21,759	25,563
Gross profit percentage		21%	22%
Administrative expenses		(17,456)	(24,792)
Adjusted EBITDA		7,529	8,225
Exceptional items	3	(1,281)	(5,466)
Depreciation and amortisation		(1,945)	(1,988)
Operating profit		4,303	771
Finance income		4,535	146
Finance costs		(860)	(1,199)
Share of equity accounted investments		(492)	(283)
Profit/(loss) before tax from continuing operations		7,486	(565)
Taxation	4	(1,002)	-
Profit/(loss) from continuing operations		6,484	(565)
Discontinued operations
Loss after tax for the period from discontinued operations		(105)	(499)
Profit/(loss) for the period		6,379	(1,064)
Attributable to:
Owners of the company		6,483	(1,044)
Non-Controlling interest		(104)	(20)
		6,379	(1,064)
Items that may be reclassified to profit and loss:
Exchange gains arising on translation of foreign operations		(10,201)	148
		(3,822)	(916)
Non-controlling interest		104	20
Loss and total comprehensive income for the period attributable to the owners of the Company		(3,718)	(896)
Earnings per share attributable to the equity holders of the parent
- basic (cents)	6	14.8c	(2.4c)
- diluted (cents)		14.8c	(2.4c)
- Adjusted basic (cents)		19.7c	12.5c
- Adjusted diluted (cents)		19.7c	12.5c

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

		30 June	30 June
	Note	2016	2015
		(unaudited)	(unaudited)
		$'000	$'000
Non-current assets
Goodwill		39,014	37,460
Intangible assets		8,319	11,411
Total Intangible assets		47,333	48,871
Property, plant and equipment		16,820	15,349
Deferred tax asset		3,361	460
		67,514	64,680
Current assets
Assets held for sale		3,126	3,599
Inventories		8,072	9,585
Trade and other receivables		50,491	76,502
Cash and cash equivalents		9,458	11,961
		71,147	101,647
Current liabilities
Trade and other payables		(44,755)	(80,107)
Obligations under finance leases		(1,609)	(1,541)
Provisions		(2,332)	(1,168)
Borrowings		(15,046)	(2,781)
Deferred revenue		(11,383)	(20,661)
		(75,125)	(106,258)
Net current liabilities		(3,978)	(4,611)
Non-current liabilities
Obligations under finance leases		(5,112)	(6,657)
Borrowings		(1,004)	(1,165)
Deferred tax liability		(1,425)	(1,642)
		(7,541)	(9,464)
Net assets		55,995	50,605
Capital and reserves attributable to equity holders of the company
Share capital		684	670
Share premium		-	35,458
Merger relief reserve		136,996	132,847
Reverse acquisition reserve		(95,828)	(95,828)
Other reserve		20,209	20,209
Foreign exchange reserve		(15,290)	(912)
Retained earnings		8,637	(41,918)
		55,408	50,526
Non-controlling interest		587	79
Total surplus		55,995	50,605

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS

 

		Six months	Six months
		ended	ended
		30 June	30 June
		2016	2015
	Note	(unaudited)	(unaudited)
		$'000	$'000
Profit/(loss) before tax from continuing operations		7,486	(565)
Loss before tax from discontinued operations		(105)	(499)
Profit/(loss) before tax		7,381	(1,064)
Adjustments for:
Finance income		(4,653)	(146)
Finance costs		860	1,199
Depreciation and amortisation		1,967	1,988
Loss on disposal of property, plant and equipment		-	371
Unrealised foreign exchange movements		(1,172)	(9)
Share of equity accounted investments		492	283
Operating cash inflow before movements in working capital		4,875	2,622
Increase in inventories		(714)	(4,648)
(Increase)/decrease in trade and other receivables		(482)	6,888
Decrease in trade and other payables		(10,789)	(11,746)
Increase in deferred revenue		6,048	1,296
Cash expended by operations		(1,062)	(5,588)
Interest received		26	146
Interest paid		(860)	(1,198)
Income taxes paid		-	(902)
Net cash flows from operating activities		(1,896)	(7,542)
Cash flows from Investing activities
Purchases of property, plant and equipment		(930)	(568)
Proceeds on disposal of property plant and equipment		-	1,564
Purchase of subsidiary, net of cash acquired		(2,529)	3,213
Net cash used in investing activities		(3,459)	4,209
Financing activities
Repayment of obligations under finance leases		(797)	(720)
Increase/(decrease) in borrowings		7,153	(15,679)
Issue of ordinary shares, net of issue costs		-	26,708
Net cash from financing activities		6,356	10,309
Net increase in cash and cash equivalents		1,001	6,976
Cash and cash equivalents at beginning of year		8,457	4,985
Cash and cash equivalents at end of year		9,548	11,961

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (unaudited)

 

 

 

			Merger	Reverse		Foreign		Non-
	Share	Share	relief	acquisition	Other	exchange	Retained	controlling
	capital	premium	reserve	reserve	reserve	reserve	earnings	interest	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 January 2016	670	35,458	132,847	(95,858)	20,209	(5,089)	(33,304)	691	55,654
Issue of shares	14	-	4,149	-	-	-	-	-	4,163
Cancellation of share premium account	-	(35,458)	-	-	-	-	35,458	-	-
Transactions with owners	14	(35,458)	4,149	-	-	-	35,458	-	4,163
Profit for the period	-	-	-	-	-	-	6,483	(104)	6,379
Foreign exchange	-	-	-	-	-	(10,201)	-	-	(10,201)
Total comprehensive income	-	-	-	-	-	(10,201)	6,483	(104)	(3,822)
At 30 June 2016	684	-	136,996	(95,828)	20,209	(15,290)	8,637	587	55,995

 

 

 

 

 

 

 

 

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY (unaudited) - continued

 

 

			Merger	Reverse		Foreign		Non-
	Share	Share	relief	acquisition	Other	exchange	Retained	controlling
	capital	premium	reserve	reserve	reserve	reserve	earnings	interest	Total
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
At 1 January 2015	426	8,846	-	(9,272)	20,209	(1,060)	(40,874)	99	(21,626)
Issue of shares	244	26,612	-	-	-	-	-	-	26,856
Reverse merger transaction	-	-	132,847	(86,556)	-	-	-	-	46,291
Transactions with owners	670	35,458	132,847	(95,828)	20,209	(1,060)	(40,874)	99	51,521
Loss for the period	-	-	-	-	-	-	(1,044)	(20)	(1,064)
Foreign exchange	-	-	-	-	-	148	-	-	148
Total comprehensive income	-	-	-	-	-	148	(1,044)	(20)	916
At 30 June 2015	670	35,458	132,847	(95,828)	20,209	(912)	(41,918)	79	50,605

 

 

  

 

The accompanying notes are an integral part of this interim financial information.

 

NOTES TO THE CONDENSED CONSOLIDATED INTERIM STATEMENTS

 

1. Basis of preparation

Gama Aviation Plc, formerly Hangar8 Plc, (the "Company") is a company domiciled in England. The basis of preparation of this financial information is consistent with the basis that will be adopted for the full year accounts which will be prepared in accordance with IFRS as adopted by the European Union.

While the financial figures included in this half-yearly report have been computed in accordance with IFRS applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

This interim financial information has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board and the financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

2. Accounting policies

The condensed consolidated interim financial information has been prepared using accounting policies consistent with those set out in the historical financial document within the admission document except as set out below. These accounting policies have been applied consistently to all periods presented in this Financial Information.

 

Critical accounting estimates & judgements and principal risks & uncertainties

There have been no changes to any of the Group's critical accounting estimates and judgements of its principal financial risks with the exception of the accounting estimates and judgements on the fair value of intangibles under IFRS 3.

 

Going concern

The Directors are of the opinion that as at 30 June 2016, the Group and Company's liquidity and capital resources are adequate to deliver the current strategic objectives and business plan and that both the Group and the Company remain a going concern.

 

3. Exceptional Items and discontinued operations

Operating profit is stated after exceptional items and before discontinued activities.

Exceptional items relate to the transaction costs incurred in the current period of $0.5m (2015: $3.5m) and integration and business re-organisation costs of $0.8m (2015: $2m).

The Discontinued activities relate to the losses generated by the owned aircraft within the group that are held for sale as part of the group strategy to exit the business model of owned aircraft that are deployed solely for the purposes of ad-hoc charter.

 

4. Taxation

The tax charge for the half year is calculated on the basis of the estimated full year effective tax rate and therefore an estimated corporation tax charge for the period of $1.0m (2015: $Nil).

 

 

 

 

5. Segmental Analysis

Six months ended 30 June 2016 (unaudited) - total group1 and constant currency2
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	109,805	6,180	58,130	19,692	8,889	1,945	8,539	186	213,366
Gross Profit	9,034	2,718	4,375	10,391	715	773	223	293	28,522
Gross Profit %	8.2%	44.0%	7.5%	52.8%	8.0%	39.7%	2.6%	157.5%	13.4%
EBITDA3	2,583	999	1,275	4,305	(19)	67	-	(1,611)	7,599
EBITDA3 %	2.4%	16.2%	2.2%	21.9%	(0.2%)	3.4%	-	(866.1%)	3.6%

 

Six months ended 30 June 2015 (unaudited) - total group1 and constant currency2
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	76,217	6,170	68,553	18,462	10,473	1,390	1,426	737	183,428
Gross Profit	6,642	2,626	7,524	11,228	957	543	152	341	30,013
Gross Profit %	8.7%	42.6%	11.0%	60.8%	9.1%	39.1%	10.7%	46.3%	16.4%
EBITDA3	1,547	1,351	1,141	6,544	(229)	(313)	(171)	(2,200)	7,670
EBITDA3 %	2.0%	21.9%	1.7%	35.4%	(2.2%)	(22.5%)	(12.0%)	(298.5%)	4.2%

 

Six months ended 30 June 2016 (unaudited) - total group1
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	109,805	6,180	55,630	18,601	8,889	1,945	8,539	170	209,759
Gross Profit	9,034	2,718	4,209	9,930	715	773	223	282	27,884
Gross Profit %	8.2%	44.0%	7.6%	53.4%	8.0%	39.7%	2.6%	166.0%	13.3%
EBITDA3	2,583	999	946	4,039	(19)	67	-	(1,525)	7,090
EBITDA3 %	2.4%	16.2%	1.7%	21.7%	(0.2%)	3.4%	-	(897.4%)	3.4%

 

Six months ended 30 June 2015 (unaudited) - total group1
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	76,217	6,170	69,994	18,867	10,473	1,390	1,426	737	185,274
Gross Profit	6,642	2,626	7,519	11,474	957	543	152	341	30,254
Gross Profit %	8.7%	42.6%	10.7%	60.8%	9.1%	39.1%	10.7%	46.3%	16.3%
EBITDA3	1,547	1,351	1,166	6,698	(229)	(313)	(171)	(2,200)	7,849
EBITDA3 %	2.0%	21.9%	1.7%	35.5%	(2.2%)	(22.5%)	(12.0%)	(298.5%)	4.2%

 

Six months ended 30 June 2016 (unaudited) - statutory
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	3,937	11,925	55,726	18,972	8,889	1,945	-	212	101,606
Gross Profit	2,968	2,718	4,209	9,930	715	773	-	446	21,759
Gross Profit %	75.4%	22.8%	7.6%	52.3%	8.0%	39.7%	-	210.4%	21.4%
EBITDA3	3,022	999	946	4,039	(19)	67	-	(1,525)	7,529
EBITDA3 %	76.8%	8.4%	1.7%	21.3%	(0.2%)	3.4%	-	(719.3%)	7.4%
Six months ended 30 June 2015 (unaudited) - statutory
	US		Europe		MENA		Asia	Other	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	3,876	9,681	70,118	18,867	10,473	1,390	-	724	115,129
Gross Profit	2,116	2,626	7,519	11,474	957	543	-	328	25,563
Gross Profit %	54.6%	27.1%	10.7%	60.8%	9.1%	39.1%	-	45.3%	22.2%
EBITDA3	1,923	1,351	1,166	6,698	(229)	(313)	(171)	(2,200)	8,225
EBITDA3 %	49.6%	14%	1.7%	35.5%	(2.2%)	(22.5%)	-	(303.9%)	7.1%

 

1 - Including 100% of the results of Gama Aviation's Associate in the US and Joint Venture in Hong Kong.

2 - Calculated at a constant foreign exchange rate of $1.5 to £1.

3 - Adjusted EBITDA is arrived at by taking operating profit before depreciation, amortisation, and exceptional items.

6. Earnings per share ("EPS")

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.

	Six months		Six months
	ended		ended
	30 June		30 June
	2015		2015
	(unaudited)		(unaudited)
	$'000		$'000
Profit/(loss) attributable to ordinary shareholders	6,483		(1,044)
Add amortisation	815		955
Add exceptional items	1,281		5,466
Adjusted Earnings	8,579		5,377
Denominator
Weighted average number of shares used in basic EPS	43,661,109		42,994,442
Weighted average number of shares used in diluted EPS	43,661,109		42,994,442
Basic earnings per share - cents	14.8c		(2.4c)
Diluted earnings per share - cents	14.8c		(2.4c)
Adjusted Basic earnings per share - cents	19.7c		12.5c
Adjusted Diluted earnings per share - cents	19.7c		12.5c

 

 

 

7. Acquisition

On 1 March 2016, Gama Aviation Engineering Limited (a subsidiary of Gama Aviation Plc) acquired Aviation Beauport Limited; a privately owned Jersey based business offering a range of business aviation services, including aircraft charter, FBO services (handling, parking and hangarage services) as well as having four aircraft currently under management.

Goodwill of $3,063,000 and identifiable intangible assets of $1,517,000 arose on acquisition. The following table summarises the consideration paid for Aviation Beauport Limited, the provisional fair value of the assets acquired and the liabilities assumed at the acquisition date.

 

Consideration at 1 March 2016
								$'000
Equity instruments (1,000,000 ordinary shares)								4,163
Cash								3,308
Total consideration transferred								7,771
Recognised amounts of identifiable assets acquired and liabilities assumed - provisional
Property, Plant and Equipment								2,967
Inventories								5
Trade and other receivables								401
Trade and other payables								(465)
Deferred revenue								(797)
Goodwill								3,063
Licences								14
Brand								153
Customer relationships								1,350
								6,691
Cash								1,080
Total								7,771

 

The fair value of the acquired identifiable assets of $1,517,000 (including Licenses, Brands, and Customer relationships) is provisional pending receipt of the final valuations for those assets.

 

8. Copies of the interim statement

 

Further copies will be available from the Company's registered office at the Business Aviation Centre, Farnborough Airport, Hampshire, GU14 6XA, and from the Company's website: www.gamaaviation.com

This information is provided by RNS

The company news service from the London Stock Exchange