Gama Aviation Regulatory News (GMAA)

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Hangar 8 plc ("Hangar8" or "the Company")

Proposed acquisition of Gama Aviation Holdings (Jersey) Limited andProposed placing to raise £17.15 million for the Company and £5.8 million for certain vendors

Hangar8, one of Europe's largest operators of privately owned passenger jet aircraft, is pleased to announce the proposed acquisition by way of a reverse takeover of the entire issued share capital of Gama Aviation Holdings (Jersey) Limited ("Gama Aviation"), a privately owned global business aviation services group that focuses on air and ground operations (the "Acquisition"), and a conditional placing undertaken by Cantor Fitzgerald Europe of 6,125,379 new Ordinary Shares of 1p each in the Company ("Ordinary Shares") to raise £17.15 million for the Company. In addition, Cantor Fitzgerald Europe has conditionally placed on behalf of Dustin Dryden, and certain Gama Aviation vendors, a total of 2,089,286 Ordinary Shares to raise approximately £5.8 million (together, "the Placing").

Highlights:

· Proposed acquisition by way of a reverse takeover of Gama Aviation to be satisfied by the issue of 27,341,960 new Ordinary Shares, valuing the acquisition of Gama Aviation at £82.3 million1

· Merger of two leading private aviation services companies to form Gama Aviation Plc (AIM: GMAA) with an anticipated market capitalisation on Admission of £120.4million2

· Placing of 6,125,379 new Ordinary Shares at a price of 280 pence each (the "Placing Price") raising gross proceeds of £17,151,061 to be used to extinguish net debt and provide additional working capital

· Placing of 2,089,286 existing Ordinary Shares at the Placing Price on behalf of certain vendors (the "Vendor Placing")

Strategic Rationale for the Acquisition

On Admission the Enlarged Group, to be re-named Gama Aviation Plc, will:

· Be a global leader in a large and growing market and one of the five largest operators globally

· Operate in a highly fragmented industry where scale is increasingly important and stringent regulation is increasingly a barrier to new entrants and sub-scale companies

· Have 144 aircraft under management, operating from 44 different locations in 15 countries across 5 continents with a strong presence in North America, the UK, Continental Europe, Africa, Middle East and Asia as well as South America

· Offer a comprehensive service, operating and supporting aircraft from all major manufacturers and all classes of private jet aircraft

· Leverage economies of scale through: a greater number of managed aircraft, across a greater number of geographic locations, providing customers with more choice and convenience, improved logistics and operational cost efficiencies

· Have a high quality, visible earnings stream with 80% of gross margin contracted

· Have a strong platform for organic growth and further complementary acquisitions

· Have a highly experienced board with some 225 years' of industry experience

Dustin Dryden, Chief Executive of Hangar8 commented:

"Hangar8 has achieved much in its short history but, in our highly regulated industry, success at all levels is now entirely driven by scale. It is no longer sufficient to manage a relatively small number of aircraft across a few countries. Today our clients, many with ultra-long range aircraft, require their premier suppliers to be truly global too with the ability to supply a full range of private aviation services across the globe. The combination of our joint capabilities and experience, across all major aircraft manufacturers, and all major global trading hubs, becomes our new service baseline.

This exciting combination of Hangar8 and Gama Aviation, to form Gama Aviation Plc in one step, delivers that, and moreover, does so in a way that organic growth and a series of smaller consolidations would perhaps take a decade or more to replicate, placing the new enlarged group firmly on the podium of global private aviation companies.

I believe this is the largest business combination that our sector has seen, and allows us to seize the full benefits of market consolidation as we continue to meet if not exceed the needs of the most demanding of clients. We believe Gama Aviation Plc will provide a world class offering."

Marwan Khalek, Chief Executive of Gama Aviation commented:

"Over the last 30 years, Gama Aviation has grown steadily to become one of the major business aviation service providers in the world. However, through this merger we will be creating a true global leader and one that is uniquely positioned for accelerated future growth.

We believe the strategic rationale for this merger is clear to see. The two businesses enjoy a complementary geographical coverage; they have a good operational fit and have been pursuing similar growth strategies built on a profitable and robust business model. Bringing them together into Gama Aviation Plc will create a business of significant scale and one with unparalleled breadth of geographical coverage and depth of capability and service, enhancing our client offering.

I am very excited by this merger and the platform that it creates on which we will continue to grow our business aggressively, both organically and through acquisition; a platform that will allow us to continue to offer excellent service to our customers, great opportunity to our people and good returns to our shareholders.

Our new shareholders understand that today's announcement is a game-changing move and their belief is reflected in the strength of the share issue."

A circular comprising an Admission Document will be sent to shareholders giving notice of a general meeting of Hangar8 to be held on 5 January 2015 at 10.00 a.m. at the offices of Cantor Fitzgerald Europe, One Churchill Place, London E14 5RB. The Company has received Irrevocable Undertakings to vote in favour of the Resolutions in respect of 48.9 per cent. of the Existing Ordinary Shares representing 69.8 per cent. of the Ordinary Shares that are entitled to be voted.  A copy of the Admission Document will be available on the Company's website www.hangar8.com

Capitalised but undefined terms shall have the meaning given to them in the definitions appearing in the Admission Document.

1. Based on the Hangar8 closing share price on 5 December 20142. Market capitalisation of the Enlarged Group at the Placing Price

Enquiries:

Proposed acquisition of Gama Aviation Holdings (Jersey) LimitedProposed Placing of 6,125,379 Placing Shares to raise £17,151,062 millionProposed placement of 2,089,286 Vendor Shares on behalf of the VendorsProposed change of name to Gama Aviation PlcApproval of waiver of obligations under Rule 9 of the Takeover CodeAppointment of the Proposed DirectorsRenewal of Shareholder authoritiesAdoption of new articles of associationAdmission to trading on AIMandNotice of General Meeting

INTRODUCTION

The board of Hangar8 announce today that it has conditionally entered into a sale and purchase agreement pursuant to which Hangar8 is to acquire the entire issued share capital of Gama Aviation, and an associated placing of Ordinary Shares. As a result, the Proposals are to be put to Shareholders at the General Meeting. An Admission Document, to be sent to Shareholders today, sets out the details of, and reasons for, the Proposals and explains why the Independent Directors consider the Proposals to be in the best interests of the Company and its Independent Shareholders as a whole and recommend that Independent Shareholders vote in favour of the Resolutions to be proposed at the General Meeting.

Established in 1983, Gama Aviation is a private aviation services group that focuses on air operations (management and charter of business aircraft) and ground operations (engineering, design, software, passenger handling and consultancy). Today it has operations in North America, Europe, Middle East, South America and Asia. As at the date of this document, Gama Aviation has 96 aircraft under management and AOCs in Europe, USA, Middle East and Switzerland.

The Acquisition, if completed, will constitute a reverse takeover of the Company under the AIM Rules and therefore is subject to the approval of Shareholders at the General Meeting. The consideration is be satisfied by the issue of 27,341,960 Consideration Shares which value Gama Aviation at approximately £82.3 million. The Company intends to raise £17.5 million (before expenses) by means of the Placing to extinguish a debt facility and provide additional working capital for the Enlarged Group. In addition it is proposed that Cantor will undertake, on behalf of the Vendors (including the Selling Shareholder), a Vendor Placing of Vendor Shares in order that the Vendors may realise part of their investment in the Enlarged Group.

Following implementation of the Proposals, the Gama Shareholders will be deemed to be acting in concert (pursuant to the Takeover Code) and will hold 25,913,388 Ordinary Shares, representing 60.27 per cent. of the Enlarged Share Capital.

Under Rule 9 of the Takeover Code, the Concert Party would normally be obliged to make a mandatory offer to all Shareholders (other than the Concert Party) to acquire their Ordinary Shares. Following an application by the Company, the Takeover Panel has agreed to waive this obligation, subject to the approval of the Independent Shareholders (being the Shareholders other than Dustin Dryden and Nigel Payne who are independent of the Acquisition) on a poll at the General Meeting.

The Directors and Proposed Directors believe that it is appropriate, should the Acquisition be approved by Independent Shareholders at the General Meeting and the Acquisition completes, that the name of the Company be changed to Gama Aviation Plc.

GENERAL MEETING & IRREVOCABLE UNDERTAKINGS

A General Meeting has been convened for 10.00 a.m. on 5 January 2015 at the offices of Cantor Fitzgerald Europe, One Churchill Place, London E14 5RB to approve the following Resolutions:

(1) the Acquisition, for the purposes of Rule 14 of the AIM Rules;

(2) the Rule 9 Waiver;

(3) the appointment of Marwan Abdel Khalek as a director of the Company;

(4) the appointment of Sir Ralph Robins as a director of the Company;

(5) the appointment of Stephen Wright as a director of the Company;

(6) the appointment of Peter Brown as a director of the Company;

(7) the authorisation of the Directors to allot New Ordinary Shares;

(8) the authorisation of the Directors to disapply statutory pre-emption rights in respect of the allotment of New Ordinary Shares;

(9) the adoption of the New Articles; and

(10) the change of name of the Company.

Resolutions 1 to 7 above require a simple majority vote. The Company has received Irrevocable Undertakings to vote in favour of the Resolutions in respect of 48.9 per cent. of the Existing Ordinary Shares representing 69.8 per cent. of the Ordinary Shares that are entitled to be voted.

Recommendations and Voting Intentions

The Independent Directors, who have been so advised by Cantor, consider that the Proposals are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. Furthermore the Independent Directors, who have been so advised by Cantor, consider that the Rule 9 Waiver is fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cantor has taken into account the Independent Directors' commercial assessment of the transaction.

Accordingly, the Independent Directors recommend that Independent Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own beneficial holdings of 227,571 Ordinary Shares, representing 2.39 per cent. of the Company's issued share capital. Furthermore the Independent Directors recommend that Independent Shareholders vote in favour of Resolution 2 to approve the Rule 9 Waiver.

BACKGROUND TO AND REASONS FOR THE PROPOSALS

Acquisition

Following the Company's admission to AIM in 2010, the Board took the strategic decision to position the Group towards a broad based aviation business with a particular focus on managed aircraft and bringing maintenance in-house. Since 2010, the Group has increased the number of aircraft under management from 19 to 48 aircraft as at the date of this document. This expansion has been in line with the Group's strategy of increasing the fleet organically and through acquisition of other private jet charter operators, as demonstrated by its acquisition of International Jet Club Limited in November 2012. Having reviewed several acquisition opportunities the Board has come to the view that the Acquisition would provide a greater platform with which the Enlarged Group can position itself as a leading global private aviation service company.

Gama Aviation is a business that operates a similar business model to Hangar8, albeit in predominantly different territories globally. Hangar8 operates primarily in Europe and Africa while Gama Aviation operates primarily in Europe, the US, Far East and the Middle East. Gama Aviation has four AOCs, which when combined with Hangar8's AOCs, will provide global coverage.

The Board believes that the Acquisition will assist the Enlarged Group in becoming a major global player in the industry in which it operates offering depth, breadth and scale of services to a wide range of customers and the opportunity to deliver quality, sustainable earnings in an expanding global market. The Enlarged Group will have a strengthened senior management team with the addition to the Board of the Proposed Directors, with a clear and focused strategy for continued growth both organically and by way of further acquisitions.

For the year ended 31 December 2013 Gama Aviation reported revenues of $183.4 million (2012: $162.3 million) with gross profit of $22.9 million (2012: 18.9 million). For the half year ended 30 June 2014, Gama Aviation reported revenues of $89.4 million with gross profit of $14.3 million.

The Directors and Proposed Directors believe that additional synergies can be achieved through the removal of certain duplicated central costs. For example it is intended that certain administrative functions of Hangar8, currently based at Oxford Airport, will be relocated to Gama Aviation's head office at Farnborough Airport.

INFORMATION ON THE COMPANY

Overview

Hangar8 listed on AIM on 10 November 2010 with a strategy to grow the size of its managed fleet, focus on larger intercontinental aircraft, diversify the services the Group offers and expand its geographic reach. By doing so, the Directors believed they could achieve the virtuous circle of providing an improved service to its customers with greater choice on more competitive terms which would improve the quality and visibility of its earnings away from the more volatile charter market.

Since being listed on AIM, Hangar8 has increased the number of aircraft it manages to 48, of which 27 are long range heavy and superheavy jets. In addition, Hangar8 has invested in its MRO capability to bring in-house this important service, thereby improving its offering and improving profitability.

By increasing the number of aircraft under management, the provision of a very focused, personalised service and the expansion of the range of services offered and geographic reach, the Directors believe that they can provide a very high quality, competitively priced solution to aircraft owners, operators and users of business aircraft.

The Group's clients come from a wide variety of backgrounds including music, sport and corporate - all of whom expect, and receive, the same level of service. The Group's focus on long range, heavy and superheavy jets and long term leases has made the Group a preferred aviation solutions supplier to some of the world's largest oil and gas, mining and commodity trading conglomerates.

Hangar8 is one of the largest private aircraft operators in the UK and amongst the top five in Europe and it specialises in operating mid-size, heavy and superheavy aircraft. All of the private jets under management by the Group have the range to fly direct from London to Europe, with some capable of flying non-stop to Russia, the Middle East, India or the US.

The Company has established a number of business divisions focused as follows:

Aircraft Management & Logistics Aircraft Management

The Group provides the following key services to Owners depending on the terms of the individual agreement: the organisation of the use of the aircraft by its Owner; the provision of qualified flight crew (through agreements with crewing companies); the management of aircraft, cleaning and preparation (through agreements with subcontractors); and hangarage of the Owner's aircraft. The Group provides in-house engineering and maintenance services to aircraft from the bases in Oxford (UK), Abuja, Lagos (Nigeria) and Pointe-Noire (Republic of the Congo) having obtained a Part 145 Certification. Having more than doubled the size of the maintenance team, which now has the expertise and skills to maintain the majority of aircraft in the Group's fleet plus a range of others, the Company expects this area of the business to grow significantly as it takes advantage of its own economies of scale. For the year ended 30 June 2014, total revenues from aircraft management represented 83 per cent. of total revenues, increasing by 26 per cent. to £53.8 million (2013: £42.7 million).

Typically, all the direct costs arising from owning and flying an aircraft are either charged to the Owner or to charter customers. In addition, as the Group does not own any aircraft, it does not carry the risk of high capital investment or depreciation associated with aircraft ownership. Whilst this means that Hangar8 does not have guaranteed use of aircraft, this gives the Group the flexibility to adjust the size of its fleet for relatively small cost as demand requires.

Each Owner contract with Hangar8 is negotiated on a case by case basis depending on the type of aircraft, likely demand for the aircraft and the number of aircraft of that type already operated by the Group. Contracts are typically entered into on a rolling basis, and the majority are terminable on three months' notice by either party. Whilst the majority of contracts provide for both the management and chartering of an Owner's aircraft, some Owners stipulate that their aircraft are not to be chartered to third parties.

Aircraft Fleet

The fleet of aircraft operated by the Group has increased from 19 at the time of Hangar8's admission to AIM in November 2010 to 48 as at the date of this announcement.

The fleet currently comprises:

● 2 airliner aircraft (Boeing 737-300, Boeing BBJ)

● 24 heavy and superheavy weight aircraft (Challenger 601/604/605, Falcon 2000EX, Falcon 50EX, Global 5000/6000/Express/Express XRS, Gulfstream 450/550)

● 14 midsize aircraft (Citation CJ1/X/XLS, Embraer Legacy 600/650, Hawker 750/800A/850XP/900XP, Lear 35/45)

● 8 light weight, turboprop and rotary aircraft (Beechcraft KingAir 90, Eurocopter, Robinson R44/R66)

Logistics

The Group offers both short and long term wet (providing an aircraft, complete crew, maintenance and insurance) and dry leases (providing an aircraft without crew, maintenance and insurance) and supplies aviation solutions to large corporate clients including in the oil and gas and natural resources markets. The Group's operations provide a complete go-anywhere aviation service, with the ability to operate in challenging environments worldwide.

Charter Services

The Group operates within a highly regulated industry in the UK and it is regulated and monitored by the CAA. In order to operate charter flights for members of the public, a UK company has to hold an AOC, and a Type B Licence, both of which the Group currently holds.

Whilst an important source of revenue, the Group made the strategic decision to reduce its reliance on the more cyclical charter business and for the year ended 30 June 2014 charter accounted for only 9 per cent. of Group revenue, albeit increasing 35 per cent. to £6 million (2013: £4.5 million).

Engineering & Maintenance

The Group offers scheduled and unscheduled maintenance, repairs and refurbishment to its Owners and other client's aircraft in-house. Among many benefits is the ability of the Group to deploy skilled technicians wherever they are required, saving Owners the expense and inconvenience of repositioning. The Group and its dedicated maintenance arm of global engineers hold a Part 145 Certification, enabling them to support Owners and clients worldwide 24/7.

The Group's continuing airworthiness & maintenance management services authorises the Company to perform activities on EASA, Cayman Islands, Bermuda, Isle of Man and FAA registered aircraft and the in-house EASA Part M Subpart G organisation continuously monitors and enforces standards of technical quality and airworthiness.

The Group has the technical ability to maintain over 12 different aircraft types, specialising in Bombardier, Hawker Beechcraft and Embraer types and has capability in respect of those manufactured by Dassault and Gulfstream. From its line station maintenance facilities in the UK and Nigeria the Group performs all key elements of aircraft maintenance including planning, input, oversight, completions, export and recovery.

Aero-Medical

The Company launched Hangar8 Aero-Medical in March 2012 following the acquisition of Star-Gate Aviation, an AOC holder in South Africa. It has continued to add aircraft to its aero-medical fleet to meet, as the Directors believe that there will be, a substantial increase in demand for this type of service. The Company is progressing in this market with an advanced aeromedical long-range fleet on permanent standby at bases in Abuja, Lagos, Johannesburg and Pointe-Noir. Every flight carries at least one fully qualified paramedic and usually a doctor in addition.

The Directors believe Hangar8 Aero-Medical is well placed to take advantage of the estimated 15,000 aeromedical evacuations from Africa a year. In addition, Hangar8 Aero-Medical estimates there are only some 24 dedicated air ambulance aircraft based on the continent, with only four of these, including Hangar8, covering the whole of Africa.

Recent health concerns, such as the Ebola virus, provide the Directors with comfort for the future growth in Aero-Medical.

Summary financials

Hangar8 announced their final results for the year ended 30 June 2014 on 6 November 2014 where they delivered significant organic growth, increasing the number of long-term fixed contracts, diversifying the services offered and expanding the geographical breadth and depth of the business.

For the year ended 30 June 2014, 87 per cent. of gross profit was contracted. The Group reported total revenues up 26 per cent. to £65.0 million (2013: £51.4 million with a gross profit up 25 per cent. to £10.3 million (2013: £8.3 million). Operating profit increased by 29 per cent. to £1.5 million (2013: £1.2 million). Hangar8 announced its intention to pay a maiden dividend on 19 January 2015 of 2.3 pence per share to those shareholders on the register on 19 December 2014.

1Revenue includes rechargeable expenses

2Overheads represents administrative expenses less exceptional items, depreciation and amortisation

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

4PBT is stated after exceptional items which represent non-recurring costs that are deemed by the Directors to be of a nature not typically incurred in carrying out the principal activities of the business. The total exceptional costs in the year ended 30 June 2014 of £487,000 related to legal and professional fees incurred in respect of an aborted acquisition and to restructuring and redundancy costs in connection with the previous year's acquisition of International Jet Club Limited. The total exceptional costs in the year ended 30 June 2013 of £295,000 principally related to the cost, including redundancy, of reorganising the Group management accounting department; consultancy, legal fees and other contractual amounts required to be paid in connection with the acquisition of International Jet Club Limited during that year; and a bonus paid to International Jet Club Limited following the acquisition.

INFORMATION ON GAMA AVIATION Background

Gama Group is a leading private aviation services group that focuses on air operations (management and charter of business aircraft) and ground operations (engineering, design, software, MRO, passenger handling and consultancy). The Proposed Directors believe that these two integrated complementary business segments, together, increase convenience and reduce costs for customers. Gama Aviation was founded in 1983 by Marwan Khalek and Stephen Wright and currently employs over 600 people at 27 operating bases, across three continents, managing 96 business aircraft across four AOCs and two operating approvals.

Gama Aviation's global headquarters are located at Farnborough Airport, with its American headquarters in Shelton, Connecticut, its Middle East and North Africa headquarters in Dubai, UAE, and its Asian headquarters in Hong Kong.

Gama Group holds the following certifications and approvals:

● CAA (UK), FAA (US), GCAA (UAE) and Swiss AOCs;

● Bermudan and Cayman Islands operating approvals;

● BDCA Part 145;

● Cayman Part 145;

● EASA Part 145/MAA MAOS;

● EASA Part 21J/MAA DAOS;

● EASA Part 21G;

● EASAPart M and BDCA CAMO;

● FAR Part 145/Part 135; and

● GCAA Part 145.

Gama Aviation also maintains localised standards/certification/awards under the following schemes:

● ISO9001:2008;

● ISO9001:2000;

● IS-BAO;

● FAA Diamond award;

● Air Charter Safety;

● NBAA Corporate Business Flying Award;

● Wyvern Wingman; and

● ARG/US.

Gama Aviation is a localised authorised service centre /distributor/ reseller for the following businesses:

● Cirrus Aircraft

● Beechcraft

● Rockwell Commander

● Garmin, Avidyne, Aspen, L3

● Honeywell

● Rockwell Collins

These certificates and approvals listed above enable Gama Group to offer the following services:

(i) Aircraft management - Gama Aviation offers a comprehensive fleet management service to business jet owners managing a wide range of aspects of running an aircraft on behalf of the aircraft or fleet owner, including, but not limited to, the provision of management and training of crew personnel, fuel, airworthiness, engineering oversight, insurance, hangar space, valeting, as well as all travel arrangements.

Gama Group currently has 96 managed aircraft of which 8 are owned.

Aircraft management represents approximately 54 per cent. of Gama Aviation's revenue for the year ended 31 December 2013.

(ii) Charter - Gama Group acts as a charter broker for its owned and/or managed aircraft and it also occasionally sub-charters aircraft. For managed aircraft, revenue is shared between Gama Aviation and the underlying aircraft owner.

Charter represents approximately 10 per cent. of Gama Group's revenue for the year ended 31 December 2013.

(iii) Ground operations - Gama Group offers a comprehensive range of MRO and other services to its managed aircraft fleet and to third party owners. Ground operations cover:

● MRO - provision of MRO, modification and support services for civilian and military aircraft;

● Design - in-house aviation engineering design services and certification projects. Gama Aviation generally retains ownership of designs developed under the Part 21J approvals.

● FBO - circumstances where Gama Aviation granted the right by an airport to operate on aircraft at that airport and provide services to third parties such as handling (aircraft and passengers), fuelling, hangarage, tie-down and parking as well as aircraft maintenance. Gama Aviation has one FBO in the UK (Glasgow), and one FBO at Sharjah International Airport, UAE; and

● Aircraft valet services - Gama Aviation offers a mobile aircraft valet service operating from Gama Aviation's base in Farnborough including internal and external aircraft cleaning, brightwork polishing, leather cleaning, silver polishing and carpet cleaning.

Ground operations represent approximately 35 per cent. of Gama Aviation's revenue for the year ended 31 December 2013.

(iv) Special Missions Support - Gama Aviation provides dedicated "Special Missions" support under contract with a number of UK Government bodies including the NHS Scotland (Air Ambulance) and the UK Ministry of Defence.

(v) Software & IT support - Gama Aviation, through its wholly-owned subsidiary Gama Software, acquired by Gama Aviation in 2008, provides both software consultancy and aviation software packages under the brands "AIROPS 5" and "AIROPS Movement-Exec".

AIROPS 5 is an aviation management system designed to support aircraft operators and brokers in all aspects of commercial, operations, technical, finance, marketing and management. AIROPS 5 is positioned to improve efficiency, accuracy and the speed of response to client enquiries. First introduced in 1988, AIROPS 5 is used by a number of well-known aviation companies around the globe. AIROPS Movement-Exec is a management software system designed to reduce the administrative workload involved in running an airport, handling agent or FBO. In addition, Gama Aviation offers an IT solutions service which provides and supports IT systems both for Gama Group companies and for external clients.

Software & IT support represents approximately 1 per cent. of Gama Aviation's revenue for the year ended 31 December 2013.

(vi) In the United States, Gama Group has provided maintenance support to one of the leading fractional ownership companies since 2012, currently across four bases, and has been contracted by Wheels Up, a membership-based US private aviation company, to support its King Air turboprop fleet expansion.

History

Gama Aviation was established in 1983 by Marwan Khalek and Stephen Wright at Fairoaks Airport, initially providing aircraft charter services with one Beech Baron aircraft. In 1984 Gama Aviation obtained its first AOC and commenced offering business aircraft management services with one aircraft under management in 1988. In 1991 Gama Aviation commenced working with the Scottish Ambulance Service through Bond Aviation Limited to provide fixed and rotary aircraft. In 1997, Gama Group acquired Bond Aviation Limited business from Bond Helicopters Group as well as Heathrow Jet Charter, a charter brokerage business. Having established a core platform during the 1990's, Gama Aviation focused on expanding its UK aircraft maintenance and service business with the acquisition of Plymouth Executive Aviation in 2001, which provided maintenance capabilities. This was further enhanced by the acquisition of Lees Avionics in 2008, which enabled Gama Group to provide a range of design and installation capabilities.

In 2008 Gama Aviation acquired Gama Software, a software consultancy and developer of aviation productivity software and PrivatAir Inc (now Gama Aviation, Inc), based in Connecticut, USA, which provided Gama Aviation with a meaningful presence in the United States, the largest business aircraft market in the world. Full FAA maintenance approval was granted in the USA in 2011. Gama Aviation opened a number of other bases as part of its international expansion, including in the UAE which offers aircraft management, charter, maintenance and FBO services. Gama Aviation was awarded an AOC in the UAE in 2010.

Further acquisitions were undertaken in 2011 (trade and assets of Mann Aviation Group Engineering) and 2012 (Ronaldson Airmotive Limited) which expanded Gama Aviation's engineering and support capabilities. New bases were opened at Sharjah Airport, UAE, and Hong Kong.

Since its inception in 1983, Gama Group has grown its fleet under management from one aircraft to 96 aircraft, across 28 bases in the UK, Europe, United States, Middle East and Asia and is now a leading business aircraft services group.

Group structure

Gama Aviation is a private limited company incorporated in Jersey. Pursuant to a conditional share exchange agreement dated 30 November 2014 Gama Aviation and the Gama Aviation Shareholders agreed to transfer their entire shareholdings in Gama Holding FZC (save for one share in the name of Marwan Khalek) to Gama Aviation, in exchange for which they received share capital in Gama Aviation. Pending completion of the share exchange agreement prior to Admission, Gama Holding FZC remains the holding company of the Gama Group.

Geographic Business Overview

Gama Aviation operates on a regional basis, with its global head office, based in Farnborough, providing oversight, support, central management and finance.

United Kingdom

Gama Aviation holds a CAA Type B Operating Licence and offers aircraft management, charter, engineering, design and support AOC and special mission work across five primary locations in the UK:

● Farnborough - Farnborough combines the headquarters for Gama Aviation and Gama Software as well as a location for the provision of charter, aircraft management and special mission operations, and a 17,000sq.ft. EASA/BDCA/FAA Part 145 maintenance facility. The facility is approved for base and line maintenance on the following aircraft: Beech King Air 90, 100, 200, 300, B300; Hawker Beechcraft 390, 400, 800, 800XP, BAE 125- 800, 1000, Cessna 406/525A and B, Learjet 45 & 60, Challenger 601/604, Gulfstream GIV, V and GVSP and Boeing 737-700. The facilities MAA MAOS approvals extend to King Air 200/300 series and the Britten-Norman Islander/Defender series;

● Fairoaks - Fairoaks is a 53,000sq.ft. EASA/FAA/BDCA Part 145 facility providing full engineering support to both fixed-wing and rotary operators ranging from major corporate clients to private owners and flight schools. It is fully supported by Gama Aviation's in-house EASA and BDCA continued airworthiness management department. The Fairoaks facility also offers Part 21J/MAA DAOS design work on projects on behalf of a broad spread of third party customers ranging from flag carriers to privately owned light aircraft, covering modifications such as avionics upgrades and special mission installations. The Part 21G production department manufacture amongst other things, one of the only child safety seats that is approved for use during take-off and landing;

● Oxford - With approximately 12,000sq.ft. of workshop spaces, Oxford is the primary fixed wing and rotary engine and component centre for Gama Aviation's UK maintenance operation. The facility has EASA Part 145 approval and in addition, it is a D1 rated company (non-destructive test house) with extensive experience in respect of most piston engine types and a particular specialism in Lycoming and CMI engines. It is authorised by CMI/TCM to perform ultrasonic inspections of CMI crankshafts;

● Aberdeen - Aberdeen is primarily a base for Gama Aviation's NHS air support serving the Northern Islands of Scotland; and

● Glasgow - The facility in Glasgow, which opened in November 2013, provides a full service FBO for international and domestic flights as well as 2,480m2 maintenance hangar. Gama Aviation invested approximately £3.8 million to fund the construction of a hangar to develop Glasgow Airport as a private aviation hub. Gama Aviation subsequently entered into a sale and leaseback arrangement on this hangar. A second hangar is under construction (not being funded by Gama Aviation) to operate as the primary hub for its NHS contract.

Aircraft Management

In the UK, Gama Group has 17 aircraft under management including 6 UK registered aircraft owned by Gama Aviation. Aircraft under management are typically on "evergreen" rolling contracts with a 6 month termination period after a minimum term of 6 months. The contracts usually have a fixed fee element, payable regardless of flying activity including management and personnel fees, continued airworthiness management, and engineering oversight and coordination. Fixed costs incurred such as insurance and training are recharged to the client on a monthly basis along with all direct and variable costs incurred in the operation of the aircraft such as fuel, navigation, handling charges and catering.

Charter

Gama Group acts as a charter broker for its fleet of managed or owned aircraft with revenue shared between Gama Aviation and the owner of the aircraft. Gama Aviation may also at times sub-charter aircraft from other operators depending on mission suitability and its own managed fleet availability. With a managed fleet of 96 aircraft (which includes 8 owned aircraft registered in the UK and US) and over 27 bases worldwide, the Proposed Directors believe that the Gama Group can offer a flexible and competitive charter service.

Engineering, Design and Maintenance Support

Through acquisition and organic growth, Gama Group has built a broad engineering and support service capability, across both rotary and fixed wing aircraft, to service large fleet operators as well as private owners. Gama Group holds authorised service centre status on behalf of a number of aircraft manufacturers including Beechcraft, Twin Commander and Cirrus and has certification and approvals (FAA/EASA/BDCA) for a wide variety of fixed wing aircraft including Boeing, Gulfstream, Bombardier, Cessna, Hawker and Embraer. For rotary aircraft, Gama Group has approvals for major helicopter manufacturers including Airbus Helicopters, Augusta, Bell and Sikorsky.

Work undertaken includes MRO, modification and support services for civilian and military aircraft (fixed and rotary), delivered through Gama Engineering, Gama Group's EASA/FAA/BDCA and BDCA CAMO/Part M approved maintenance business based in the UK.

From its Oxford workshops, Gama Group has in-house capabilities to cater for a wide range of piston engine and component overhaul/repair. With EASA Part 145 approval, an extensive range of test equipment and factory trained and accredited staff, Gama Group offers a wide range of services. This also offers an opportunity in the European, Middle East and African markets, which are not sufficiently covered by CMI/TCM authorised service centres.

Gama Aviation also benefits from being an EASA Part 21J/MAA DAOS approved organisation, which enables it to undertake in-house design services and certification projects for aircraft operators or owners. The design scope of the approval covers all aircraft types from small single-engined trainers to large commercial jets and all helicopters and includes structures, avionics/electrical systems and cabin interiors capabilities. Working as an approved distributor with a large number OEM avionics providers, such as Garmin, Aspen, Honeywell, Rockwell Collins, L3 and Avidyne, Gama Aviation is able to design and install a wide range of avionic equipment on behalf of its customers. Designs are either minor changes under Gama Aviation's own approval, or major changes that result in an EASA supplemental type certificate (STC). The EASA Part 21G production department manufactures installation kits to support STCs and minor modifications for both in-house and third-party designs and installations. Kits can include machined and sheet metal parts, composite components and fully assembled wiring harnesses. In addition, the production department also manufactures the only aviation child safety seat which is fully approved for use during take-off and landing (currently in service with Virgin Atlantic, Cathay Pacific and several corporate operators).

Special Mission

Gama Group has successfully won a number of longer term contracts to support "special mission" services. In the UK, since 1991, Gama Aviation has provided air ambulance services in Scotland and in 2006 it became the sole contract holder for the provision of all fixed and rotary aircraft services. Under this contract, which was renewed in 2013 for a further seven years, over 3,400 emergency air ambulance flights were flown in 2013 across a required core fleet of two King Air aircraft (plus an occasional relief aircraft) both of which are owned by Gama Aviation (subject to financing), and two Eurocopter 135 helicopters under a subcontract arrangement with Bond Air Services.

In 2013 Gama Aviation won a competitive tender to procure aircraft for a client's fleet.

Gama Aviation has also undertaken work on behalf of certain armed forces under its MAOS / DAOS approvals. Gama Aviation has been awarded the prestigious Chief of modification Defence Material (CDM) commendation for its work on the Shadow R1 platform. Gama Aviation's work in this area includes (being those programmes allowed to be referenced in the public domain):

● updating avionics for Gazelle helicopters;

● upgrades to the avionics packages military trainers; and

● airworthiness reviews.

United States of America

In 2008 Gama Aviation acquired PrivatAir Inc (now Gama Aviation, LLC., from the Swiss based aviation group, PrivatAir. Gama Aviation LLC currently operates from fourteen North American locations spanning both East Coast and West Coast Initially providing aircraft management and charter, under Gama ownership Gama Aviation LLC has built up its Part 145/EASA repair station capabilities. Its operational facilities are located at the following US locations:

● Two Corporate Drive, Shelton, Connecticut - Gama Aviation's US head office, including the hub for charter, aircraft management and operations;

● Sikorsky Memorial Airport, Connecticut;

● Teterboro Airport, New Jersey;

● Palm Beach International Airport, Florida;

● McCarran International Airport, Las Vegas, Nevada;

● Van Nuys Airport, California; and

● Greater Binghamton Airport, New York.

An eighth location will be opened in Dallas, Texas, by the end of 2014. In the US, Gama Aviation has 71 aircraft under management and operates under FAR Part 135 Certified awarded on 24 April 2009.

Fractional Ownership

In 2012 Gama Aviation was awarded a five year contract to provide maintenance for one of the world's largest fractional ownership business aircraft companies. As part of the planned roll-out of its services, Gama Aviation now operates in a number of US locations to provide maintenance to this customer's fleet.

Membership-based Wheels Up

Wheels Up was formed in 2013 by Kenny Dichter, a former founder of Marquis Jet (which was sold to NetJets in 2010), and previously a vice-chairman of NetJets in the US, to provide access to on-demand business aircraft travel to its members who pay an annual fee. Gama Aviation was awarded a five year contract to provide an outsource management service for the Wheels Up fleet of Beechcraft King Air and Cessna Citation Excel aircraft. As at October 2014, Gama Aviation manages 31 aircraft, 156 pilots and operates up to 40 flights daily on behalf of Wheels Up. New aircraft are being continually added with a fleet of 35 King Air 350i's in total expected by June 2015.

Gama Aviation's US business

Gama Aviation currently has two US Air operating entities; being Gama Charters, Inc. ("GCI") and Gama Aviation, Inc. ("GAI") as well as its ground aviation business, Gama Support Services, Inc. ("GSSI"). These entities are in the process of changing their names to Gama Aviation (Management) Inc., Gama Aviation LLC., and Gama Aviation (Engineering) Inc. respectively

GCI is the entity which holds the AOC for Gama Aviation's US air business and, due to the requirements of the US Federal Aviation Administration, is 49 per cent. owned by Gama Aviation (but only has 25 per cent. of the voting rights) with the balance owned 24 per cent. by GCI's US management team and 27 per cent. owned by Merritt Property LLC, a US based commercial real estate business. As such, GCI is accounted for as an associate of Gama Aviation in its statutory accounts. In addition to its 49 per cent. ownership of GCI, Gama Aviation has a franchising and branding agreement with GCI whereby GCI uses the Gama Aviation brand under license in return for branding and franchising fee based on the revenue that GCI generates. Gama Aviation recognizes such fees from GCI within total revenue. It is the intention of the Enlarged Group to provide more detailed financial analysis on the performance of the US business within the notes to the accounts of its first statutory accounts, being for the year ended 31 December 2015.

GAI is the entity which operates the aircraft management contracts for the majority of the aircraft under management and is currently wholly owned by Gama Aviation.

It is the intention that, following Admission, Gama Aviation will undertake a reorganisation of its US air business which will result in the transfer of the trade and certain assets of GAI to GCI thereby ensuring all of the US Air trading operations are conducted in a more efficient and cost effective manner within the entity which holds the US AOC.

Switzerland

Gama Aviation opened its Geneva facility in July 2012 and currently has one aircraft under management at Geneva Airport's Executive Terminal. Its Geneva operation offers aircraft management and travel services as well as charter and sub charter services. It operates under a Swiss AOC.

Whilst Switzerland is presently a relatively small part of Gama Aviation 's business, the Proposed Directors believe it is an important destination for a number of customers and potential customers. This is particularly true in capturing and servicing traffic from the MENA region and China, attracted to Switzerland's banking and luxury markets.

Middle East

Gama Aviation operates its Middle East headquarters from the Dubai Airport Free Zone, with operational, maintenance, handling and service teams based at Sharjah International Airport ("Sharjah"), UAE. Gama Aviation has been operating at Sharjah since 2004 and it opened its new FBO in July 2014. The facility offers direct airside access, full security and customs clearance on site as well as a comfortable, high specification lounge environment. Traffic through the terminal has been building and Sharjah is already being recognised as a practical alternative airport for Dubai with the Northern Emirates being around 30 minutes by car, or 5 minutes by helicopter, away from central Dubai. The FBO offers a wide range of services, including GCAA CAR145 approved maintenance support which Gama Aviation is seeking to expand as the Proposed Directors see maintenance services as being a key driver of future business.

Whilst most business aircraft in this territory are self-managed, the Proposed Directors believe that there is an increasing interest and pressure to transfer aircraft to professional operators such as Gama Aviation. During 2014 this has been evidenced through an additional two aircraft being placed with Gama Aviation.

Gama Aviation was awarded an AOC by the UAE General Civil Aviation Authority (GCAA) in 2010.

Gama Holding FZC has a 49 per cent. equity interest in Gama Group MENA FZC, the holding company of its Middle East operation ("GGMF"), with the balance owned by Jet Set.

Following Admission, it is the intention of the New Board, under the terms of a joint venture agreement between Falcon and Jet Set, to offer to purchase the 51 per cent. of GGMF currently owned by Jet Set. If successfully concluded, the purchase of such shareholding would be satisfied by the issue of new Ordinary Shares.

Asia- Hong Kong & Beijing

Gama Aviation Group Limited is in the final stages of setting up a new joint venture company with Hutchison Whampoa (China) Limited to act as a holding JV company incorporated in Hong Kong ("Hong Kong JVC").The Hong Kong JVC is envisaged to set up an operating company in Hong Kong and other joint venture companies with local partners in China and any other countries in the territory for the management and charter, maintenance and repair operation, interior decoration and modification and FBO services for business aircraft.

The Proposed Directors recognise that non-commercial aviation is still at a relatively early stage in Asia, and that historically there have been significant barriers to entering such a restricted airspace with high import taxes, but believe that there are good growth prospects in the region.

Other territories

In addition, Gama Aviation has been granted operating approvals in both Bermuda and Cayman Islands. Whilst not full AOCs, these approvals enable Gama Aviation to operate aircraft registered in those two jurisdictions and operated on a private basis.

Financials

Gama Aviation's strategy has been to replicate its profitable UK business model in new regions. International expansion began in 2008 and is expected to be the major driver of future growth. Gama Aviation's results from 2011 to H1 2014 therefore reflect significant investment into international expansion.

Gama Aviation's gross profit increased by 50 per cent. from 2011 to 2013 driven by strong UK growth and margin performance and an increasing contribution from other geographies. Over the same period, overhead increased by 55 per cent. reflecting investment in international expansion, which is expected to drive growth in 2014-2015.

For the year ended 31 December 2013, Gama Aviation recorded consolidated revenue of $183.4 million (2012: $162.3 million) and Adjusted EBITDA of $3.2 million (2012: $2.2 million). Revenue in the year benefited from a military procurement programme, the commencement of the fractional ownership contract and opening new bases, offset by lower than expected flying activity, particularly in the United States. Whilst overall administrative costs were broadly flat, the continued investment in the business, particularly costs associated in setting up and servicing new facilities until they reach sufficient scale, did offset to a certain extent modest margin improvement.

For the six months to 30 June 2014, revenue was $89.4 million and Adjusted EBITDA of $2.2 million. Revenue in the first half of 2014 has benefited from an improving US economy and the roll-out of the fractional ownership contract with one new base in the first half of 2014, offset partially by expected reduction in the low margin military procurement programme. The improved level of EBITDA was driven principally by higher margin new business, the benefit of the developing membership-based and fractional ownership contracts as well as a continued focus on costs. As such, the Proposed Directors believe that 2014 represents an inflection point for Gama Aviation as the US business reaches scale with significant built-in, contracted growth for the year ahead and beyond. The Enlarged Group is also expected to benefit from Gama Aviation's accumulated US tax losses of US$13.2 million, which are expected to be available to offset future profits generated in the US.

The Proposed Directors also monitor Underlying Adjusted EBITDA as a performance measure, which is Adjusted EBITDA before start-up investments and costs associated with owned aircraft Gama Aviation intends to exit. Start-up investments consist of losses incurred by Gama Aviation's Swiss, Middle East and Hong Kong businesses, which are considered by the Proposed Directors to be in the early stages of their development. Costs associated with owned aircraft to be exited relate to losses from three aircraft that are held for sale. Whilst Underlying Adjusted EBITDA is a non-statutory profit measure, the Proposed Directors believe it represents a clearer picture of the underlying trends in the Gama Aviation business. The Proposed Directors expect the start-up losses to reduce in 2015 and that the owned aircraft to be exited will be sold in H1 2015.

1 Excluding non recurring items being impairment of aircraft and goodwill, loan settlement discount, provision for/release of litigation provisions and exceptional legal and professional fees.

2 Adjusted EBITDA is calculated as operating profit and share of associates' results before depreciation, amortisation and non recurring items, as for overheads above, plus exceptional inventory write down recognised in cost of sales.

3 Underlying Adjusted EBITDA is calculated as Adjusted EBITDA before start up investment related to the trading losses of the MENA, Switzerland and Hong Kong entities and profits/losses associated with owned aircraft Gama Aviation intends to exit (relating to 3 of the owned aircraft held for sale).

The different stages of development of the constituent parts of the Gama Aviation business can be further illustrated by Gama Aviation's Gross Profit on a geographical basis. Gama Aviation's mature UK business generated a Gross Profit margin of 15.5 per cent. in 2013, rising to 24.3 per cent. in H1 2014. The UK business has a balanced mix of engineering and air business and benefits from operational leverage from incremental aircraft and additional services.

The US business achieved a Gross Profit margin of 9.5 per cent. in 2013 and 7.0 per cent. in H1 2014. Gama Aviation entered the US market in 2008 through the acquisition of the then-loss making PrivatAir. Gama Aviation has since re-engineered the US business to more closely replicate the integrated UK model. The Proposed Directors believe that contract wins and an improved business mix position the business for strong growth and performance in 2015 and that, over time, the Gross Profit margin of the US business will move more in line with the UK business.

The Rest of World consists of Gama Aviation's non UK and US operations, including the loss marking start-up operations in Switzerland, the Middle East and Hong Kong. As a result of the start-up nature of a number of the territories in this segment, the Gross Profit margin was 3.8 per cent. in 2013 and 4.2 per cent. in H1 2014. The Proposed Directors believe that Gross Profit margin of the Rest of World will improve as the constituent business scale and that, over time, they will trend towards levels exhibited by the US and, eventually, the UK business. The increased gross profit contribution of these businesses is expected to be a significant driver of growth for the Enlarged Group.

STRATEGY OF THE ENLARGED GROUP

Combining the Group and the Gama Group is a key stage in creating one of the world's largest business aircraft service companies. The Enlarged Group will have some 144 aircraft under management in 44 global locations across 5 continents. It will have a strong presence in North America, the UK, continental Europe, Africa, Middle East and Asia, as well as start-up operations in South America, and offer its customers a broad spectrum of services from aircraft management and charter through to engineering and support services. From this strong global platform, in a fragmented industry with opportunity for further organic growth and by acquisition, the Directors and Proposed Directors believe they can build the Enlarged Group to be a global leader.

The Enlarged Group will offer a comprehensive service offering, operating and supporting aircraft from all major manufacturers and all classes of aircraft ranging from light aircraft to global aircraft.

The aviation industry is highly regulated with a significant cost of compliance for owners or operators of business aircraft. Furthermore, global operators are subject to regulatory requirements and oversight in multiple jurisdictions each with its different requirements. The Directors and Proposed Directors believe that the current level of regulation, and any future changes in regulations, do or will make it more difficult for smaller operators to compete effectively in the provision of business aircraft services, or for owner managers to comply. The Directors and Proposed Directors believe these drivers support the combination of Hangar8 and Gama Aviation. Their strategy to grow the Enlarged Group will include the following steps:

(i) Economies of scale; reinforcing the virtuous circle whereby having a greater number of managedaircraft, across a greater number of geographic locations, provides a customer with more choice and convenience. Furthermore, economies of scale improve the logistics of ensuring aircraft are available to meet customer needs, reduce cost of operation and increase buying power such as for maintenance, insurance and aviation fuel for the benefit of owners;

(ii) Broader service offering in more locations; the Group has a particularly strong presence in the UK and Africa, and the Gama Group has a large presence in North America and FBOs in the Middle East and Asia to meet growing demand in those territories. Together, the Enlarged Group will operate from 44 locations across 15 countries in five continents;

(iii) Combining the maintenance and service offerings of the two businesses is expected to provide a fuller solution in the business aircraft industry. The ability to service and maintain a wider range of aircraft and engine manufacturers, both fixed and rotary, across the expanded global footprint of the Enlarged Group, should generate incremental sales and, potentially, lower costs through the benefit of scale;

(iv) Strengthen management through combining two experienced management teams who have been instrumental in building up their respective businesses; each through organic growth and by acquisition. Collectively, the New Board will have some 225 years' industry experience;

(v) Ability to achieve material synergies, improve operational gearing and provide cost efficiencies to improve margin;

(vi) Stronger platform for further complementary acquisitions which may be to expand the size of the managed fleet, broaden maintenance and services offered and/or broader geographic expansion; and

(vi) Opportunity to be a global leader in a fragmented industry which the Directors and Proposed Directors believe is at an early stage of consolidation.

PRINCIPAL TERMS AND CONDITIONS OF THE ACQUISITION AGREEMENT

Under the Acquisition Agreement, the Company has conditionally agreed to acquire the entire issued share capital of Gama Aviation. The consideration due to Gama Aviation Shareholders is £82.3 million to be satisfied by the issue of 27,341,960 Consideration Shares. The consideration has been calculated by means of a formula that applies to Gama Aviation's EBITDA projections for the financial year ending 31 December 2015, a ratio of earnings to enterprise value that is consistent with the market's valuation of Hangar8 as at 12 November 2014, subject to certain agreed adjustments to take account of Gama Aviation's net working capital position and the net present value of net operating losses retained within the Gama Aviation business.

The Consideration Shares will represent 63.59per cent. of the Enlarged Share Capital and will be issued and credited as fully paid and will rank pari passu in all respects with the Ordinary Shares comprised in the Enlarged Share Capital, including rights to future dividends.

Completion of the Acquisition is conditional, inter alia, upon final completion of the Gama Aviation pre-transaction group reorganisation, the passing of the Resolutions and Admission. It is expected that Completion and Admission will take place on 6 January 2015.

CURRENT TRADING AND PROSPECTS FOR THE ENLARGED GROUP

Hangar8

Hangar8 announced its final results for the year ended 30 June 2014 on 6 November 2014. Total Revenue increased by 26 per cent. to £65.0 million (2013: £51.4 million) with a corresponding improvement in profit before taxation to £1.5 million (2013: £1.2 million), an increase of 29 per cent. Adjusted basic earnings per share was 22.0 pence (2013: 19.1 pence). Net assets as at 30 June 2014 were £7.5 million (2013: £6.5 million) and cashflow for the year ended 30 June 2014 from operating activities was £1.1 million (2013: £1.2 million) to increase cash and cash equivalents to £4.6 million (2013: £3.8 million).

Hangar8 announced a maiden full year dividend of 2.3 pence a share, to be paid to Shareholders on the share register on 19 December 2014.

In the Chairman's statement, Nigel Payne stated that "I am delighted to report that the Group has enjoyed an excellent year delivering significant organic growth. Our controlled growth strategy has gained further momentum as we continue to focus our efforts on increasing the number of our long-term fixed contracts, diversifying the services we offer and expanding the geographical breadth and depth of the business. It is also the first year in which we have seen the full benefit of the acquisition of International Jet Club which has continued to surpass our expectations. I am delighted to report a very positive set of results and the Board will accordingly be proposing the payment of a maiden dividend of 2.3 pence per share."

Further historical financial information on Hangar8 for the two years to 30 June 2014 is set out in the Admission Document.

Gama Aviation

For the year ended 31 December 2013, Gama Aviation recorded consolidated revenue of $183.4 million (2012: $162.3 million) and Adjusted EBITDA of $3.2 million (2012: $2.2 million). Revenue in the year benefited from a military procurement programme, the commencement of the fractional ownership contract and opening new bases, offset by lower than expected flying activity, particularly in the United States. Whilst overall administrative costs were broadly flat, the continued investment in the business, particularly costs associated in setting up and servicing new facilities until they reach sufficient scale, did off-set to a certain extent modest margin improvement.

For the six months to 30 June 2014, revenue was $89.4 million and Adjusted EBITDA of $2.2 million. Revenue in the first half of 2014 has benefited from an improving US economy, the roll-out of the fractional ownership contract with one new base in the first half of 2014, offset partially by expected reduction in the low margin military procurement programme. The improved level of Adjusted EBITDA was driven principally by higher margin new business, the benefit of the developing membership-based and fractional ownership contracts as well as a continued focus on costs.

The Proposed Directors are confident that further growth will be achieved, particularly in the United States through further expansion in the number of aircraft under the membership-based contract, new bases to be opened under the fractional ownership contract and new aircraft under management in Europe. A strategic partnership in Asia is expected to commence operations in the first half of 2015.

Further historical financial information on Gama Aviation for the three years and six months to 30 June 2014 is set out in the Admission Document.

INFORMATION ON THE DIRECTORS AND PROPOSED DIRECTORS

It is currently envisaged that the New Board will consist of four Executive Directors and five Non-Executive Directors. On Admission, Sir Ralph Robins will be appointed Non-Executive Chairman and Marwan Khalek will be appointed Chief Executive Officer. Stephen Wright will be appointed as an Executive Director and Kevin Callan will continue in his role as Finance Director. Dustin Dryden will take the position of Executive Director, Nigel Payne will become Non-Executive Director and George Rolls and Michael Peagram will continue in their roles as Non-Executive Directors. Greg Martin and David Savile will step down from their current positions on Admission. Brief biographies of the Directors and Proposed Directors are set out below.

On Admission, the Board will therefore comprise:

Directors

Dustin Dryden (aged 38) - Executive Director

Dustin Dryden is a qualified pilot and has been flying for 22 years both on fixed wing and rotary aircraft. He co-founded the Business in 2002 and has been Chief Executive Officer since inception being instrumental in its growth to date. He has over 19 years' experience in aviation sales and jet management having represented several of the major aircraft manufacturers in their global marketplace. He has specialist technical and contractual knowledge within the business jet environment from his worldwide operations and has first-hand experience of the certification and launch of new aircraft types.

Kevin Callan (aged 54) - Finance Director

Kevin, an accountant by profession, has been involved in aviation finance for more than 25 years and was Group Accountant in an international freight forwarding business prior to joining the airline Flightline as chief financial officer. In 2009 he joined Air Slovakia and was appointed to the board of directors of Hangar8 in 2012.

Nigel Payne (aged 54) - Non-Executive Director

Nigel Payne has some 30 years' experience at board level, covering a wide range of industries: advertising, manufacturing, distribution, retail, finance and e-commerce. Nigel has had wide-ranging exposure to various types of corporate activity including acquisitions, flotations and fundraising. Nigel was Chief Executive of Sportingbet UK plc between 2000 and 2006 and since 2006 he has been a non-executive director of Hangar8. Between 1995 and 2000 Nigel was group finance, business development and IT director of Polestar Magazines, the largest independent printer in Europe (operating in 19 countries). Between 1993 and 1995 Nigel was finance and IT director of Home Brewery plc, a subsidiary of Scottish & Newcastle plc.

George Rolls (aged 54) - Non-Executive Director

Over the last 28 years, George Rolls has been a director, manager and adviser to many private companies in a variety of sectors such as manufacturing, publishing and print media, technology and consumer products. Earlier in his career, George spent several years in Australia, primarily working in trading and insurance, before returning to the UK where he founded Beaufort Securities of which he was a director between 1992 and 2006. Since selling Beaufort Securities in 2008, George has acted as a consultant for private high net worth individuals and more recently has been involved with the launch of a software technology fund. George is a trustee of the Geoffrey de Havilland Flying Foundation and the Honorary Secretary of The Air Squadron. He holds a current helicopter pilot's licence and has a keen interest in aviation.

Michael Peagram (aged 71) - Non Executive Director

Michael qualified as a chemist at Oxford University and subsequently obtained an MBA from Manchester Business School. His initial industrial career in various management roles was at Pfizer and Croda, where he was Managing Director of the Chemical Division. He turned round and built up the Holliday Chemicals Group, which was floated on the Main Market of the London Stock Exchange in 1993 and subsequently sold to Yule Catto in 1998 where he was Deputy Chairman until 2007. He has experience as Chairman and Director of a number of other publicly listed and private SMEs. Michael also served on the Council for Management Studies at Oxford University (Said Business School) from 1991 to 2009.

Proposed Directors

Sir Ralph Robins (aged 82) - Chairman

Sir Ralph graduated from Imperial College, London and joined Rolls-Royce as a graduate apprentice in 1955. He served on the Board of Rolls-Royce for 20 years as Managing Director from 1984, Deputy Chairman from 1989 and latterly as Executive Chairman from 1992-2003. He has also served as Chairman of Cable & Wireless plc and as a Director of Standard Chartered plc, Schroders plc and Marks & Spencer plc. Sir Ralph is a former Chairman of The Defence Industries Council and former President of The Society of British Aerospace Companies. He is a Fellow of The Royal Academy of Engineering, a Fellow of Imperial College, an Honorary Fellow of The Institute of Mechanical Engineers and an Honorary Fellow of the Royal Aeronautical Society.

Marwan Abdel-Khalek (aged 54) - Chief Executive Officer

Marwan is Chief Executive Officer of Gama Aviation, which he founded together with Stephen Wright in 1983. He is a successful entrepreneur with a proven track record of building value through organic and inorganic growth, as evidenced by the scale of Gama Aviation's development over the last three decades. Gama Aviation's growth, over a period marked by a number of profound economic recessions, has resulted in a leading global aviation services group.

Outside of his responsibilities with Gama Aviation, Marwan is Chairman of the BBGA. Marwan holds an Airline Transport Pilot's Licence and occasionally flies the Beech 200. He graduated with a BEng in Civil Engineering from the University of London.

Captain Stephen Wright (aged 57) - Executive Director

Stephen is Chief Operating Officer of Gama Aviation, which he founded together with Marwan Khalek in 1983. He has been fundamental to the institution of a number of process improvements that have been commended by regulators and industry auditors alike. Stephen retains a flying role both on the line and in training, regularly flying helicopters and fixed wing aircraft. His flying duties place him in regular contact with a wide variety of Gama Aviation's clients, allowing him to have a direct, qualitative understanding of their needs and requirements. The insight he gains, combined with the management systems he has instituted, provide Gama Aviation with significant operational advantages.

Peter Brown (aged 62) - Non Executive Director

Peter is a chartered accountant with 25 years' experience at board level within the leisure and travel industry. He adds complementary skills to Gama Aviation's founding directors; having been CEO of a major British leisure airline and managing the mergers, acquisitions and group finance functions of a variety of service companies. Peter is also Chairman of the Gama Aviation audit committee and a member of the remuneration committee. He graduated from University College Cardiff with a BSc in Economics.

It is the intention of the New Board to appoint a further Non-Executive Director following Admission. Whilst at an early stage, this process has commenced.

THE PLACING

Pursuant to the Placing Agreement Cantor has conditionally raised £17.15 million (before expenses) for the Company though the placing of the Placing Shares at the Placing Price with investors conditional on the Resolutions being approved by Shareholders at the General Meeting and Admission. On Admission, the Company will have 42,994,442 Ordinary Shares in issue and a market capitalisation of approximately £120.3 million at the Placing Price. The net proceeds of the Placing are estimated at £14.2 million and will be used to eliminate net debt and for working capital purposes. Pursuant to the Placing Agreement, Cantor has also conditionally agreed to use its reasonable endeavours to procure placees for the Vendor Shares with institutional and other investors at the Placing Price. The Placing and the Vendor Placing have not been underwritten by Cantor. The Placing and the Vendor Placing is conditional upon, inter alia, Independent Shareholders passing the Resolutions at the General Meeting of the Company and Admission becoming effective by not later than 8.00 a.m. on 6 January 2015 (or such date as Cantor may agree being not later than 31 January 2015).

In order to facilitate the issue of the Consideration Shares, the Placing Shares and to enable the Company to raise further funds (if required), it is necessary for the Company to increase the Directors' authority to issue Ordinary Shares and to disapply pre-emption rights in relation to any such issue, as detailed in Resolutions 7 and 8 respectively. In each case, the authorities conferred by Resolutions 7 and 8 shall expire fifteen months after the passing of the relevant Resolutions or at the conclusion of the next annual general meeting of the Company following the passing of these Resolutions, whichever occurs first. Subject to the passing of the Resolutions, the New Board may look to raise further funds for the Company by issuing further New Ordinary Shares for cash in the future but has no immediate plans to do so.

The Placing Shares being offered pursuant to the Placing will represent 14.25 per cent. of the Enlarged Share Capital in issue on Admission. The Placing Shares being offered pursuant to the Placing are or will be in registered form and, on Admission, will rank pari passu in all respects including, without limitation, in relation to any dividends and other distributions declared, paid or made following Admission with the other Ordinary Shares.

TAKEOVER CODE AND RULE 9 WAIVER

The Takeover Code applies to the Company and governs, inter alia, transactions which may result in a change of control of a company to which the Takeover Code applies. Under Rule 9 of the Takeover Code any person who acquires, whether by a series of transactions over a period of time or not, an interest (as defined in the Takeover Code) in shares which, taken together with shares in which he is already interested or in which persons acting in concert with him are interested, carry 30 per cent. or more of the voting rights of a company which is subject to the Takeover Code, is normally required to make a general offer to all the remaining Shareholders to acquire their shares.

Rule 9 of the Takeover Code also provides that when any person, together with persons acting in concert with him, is interested in shares which, in aggregate, carry more than 30 per cent. of the voting rights of such company, but does not hold shares carrying 50 per cent. or more of such voting rights, a general offer will normally be required if any further interest in shares is acquired by any such person. Investors should be aware that, under the Takeover Code, if a person (or group of persons acting in concert) holds interests in shares carrying more than 50 per cent. of the company's voting rights, that person (or any person(s) acting in concert with him) will normally be entitled to increase their holding or voting rights without incurring any further obligations under Rule 9 to make a mandatory offer, although individual members of the concert party will not be able to increase their percentage shareholding above a Rule 9 threshold without Panel consent. Such persons should, however consult with the Panel in advance of making such further acquisitions.

An offer under Rule 9 must be in cash and must be at the highest price paid by the person required to make the offer, or any person acting in concert with him, for any interest in shares of the company in question during the 12 months prior to the announcement of the offer.

Persons acting in concert comprise persons who, pursuant to an agreement or understanding (whether formal or informal), co-operate to obtain or consolidate control of that company or to frustrate an offer for that company.

The vendors of a private company are generally deemed to be acting in concert in relation to an acquisition of that company by a company subject to the Takeover Code. The Gama Shareholders therefore are deemed to be acting in concert for the purposes of the Takeover Code.

Maximum potential controlling position

Immediately following the issue of the Placing Shares and Consideration Shares, and following the Vendor Sale the Concert Party will hold in aggregate 25,913,388 Ordinary Shares, representing 60.27 per cent. of the Enlarged Share Capital which, without a waiver of the obligations under Rule 9 of the Takeover Code, would oblige the Concert Party to make a general offer to Shareholders under Rule 9 of the Takeover Code.

The Concert Party's existing shareholdings in the Company and its proposed interest in the Enlarged Group immediately following Admission are set out in the table below.

The Company has applied to the Panel for a waiver of Rule 9 of the Takeover Code in order to permit the Acquisition without triggering an obligation on the part of the Concert Party to make a general offer to Independent Shareholders.

Save as described in paragraph 9 of this Part I, the Concert Party is not intending to seek any further changes to the Board and has confirmed that its intention is that, following completion of the Proposals, the business of the Company would be merged with the business of Gama Aviation; operating in substantially the same manner as it is at present.

As both Hangar8 and Gama Aviation have their respective head offices in the UK, the New Board intends to relocate the Company's main place of business from Oxford to Farnborough, where Gama Aviation's head office is based. However, it is not anticipated that such a move will require a material redeployment of the Company's fixed assets. Whilst such a relocation will inevitably result in some redundancies of employees who are unable or do not wish to relocate, the Concert Party is not intending to prejudice the existing employment rights, including pension rights, of any of the employees or management of the Enlarged Group nor to procure any material change in the conditions of employment of any such employees or management, save for the change in principal place of work for certain employees.

The Concert Party will not undertake any steps to amend the Company's share trading facilities in force at the date of this document.

The Panel has agreed, subject to Resolution 2 at the General Meeting being passed on a poll of the Independent Shareholders, to waive the requirement which might otherwise arise for the members of the Concert Party (individually or collectively) to make a general offer under Rule 9 of the Takeover Code in cash for the remaining shares in the Company as a result of the issue of the Consideration Shares to members of the Concert Party pursuant to the Acquisition. To be passed, Resolution 2 will require a simple majority of the votes cast on a poll by the Independent Shareholders. Accordingly, Independent Shareholders should be aware that, following completion of the Acquisition, the Placing and the Vendor Placing, as the members of the Concert Party will between them hold more than 50 per cent. of the Company's voting share capital, for as long as they continue to be treated as acting in concert they will normally be entitled to increase their aggregate holding in the Company without incurring any obligation under Rule 9 of the Takeover Code to make a mandatory offer to the other Shareholders. Individual members of the Concert Party will not however be able to increase their percentage shareholding through or between a Rule 9 threshold without Panel consent.

CHANGE OF ACCOUNTING REFERENCE DATE

Following completion of the Proposals, it is the intention of the New Board to change its accounting reference date to 31 December. As such, the first full reporting period of the Enlarged Group would be for the year ended 31 December 2015.

CHANGE OF REPORTING CURRENCY

Gama Aviation currently reports in US Dollars and Hangar8 currently reports in pounds. Following completion of the Proposals, the Enlarged Group will report in US Dollars.

CHANGE OF NAME

Subject to Independent Shareholders' approval by way of a special resolution, it is proposed, pursuant to Resolution 9, that the name of the Company be changed to Gama Aviation Plc shortly following from the General Meeting. If Resolution 9 to approve the change of name of the Company is passed at the General Meeting, the Company's AIM symbol will be changed to GMAA and its website address will be changed to www.gamaaviation.com as soon as possible following the General Meeting.

ADMISSION, SETTLEMENT AND CREST

Application will be made to the London Stock Exchange for the Enlarged Share Capital to be admitted to trading on AIM. It is expected that Admission will become effective and dealings, for normal settlement, will commence at 8.00 a.m. on 6 January 2015.

RECCOMENDATIONS AND VOTING INTENTIONS

The Independent Directors, who have been so advised by Cantor, consider that the Proposals are fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. Furthermore the Independent Directors, who have been so advised by Cantor, consider that the Rule 9 Waiver is fair and reasonable and in the best interests of the Independent Shareholders and the Company as a whole. In providing advice to the Independent Directors, Cantor has taken into account the Independent Directors' commercial assessment of the transaction.

Accordingly, the Independent Directors recommend that Independent Shareholders vote in favour of the Resolutions to be proposed at the General Meeting, as they have irrevocably undertaken to do in respect of their own beneficial holdings of 227,571 Ordinary Shares, representing 2.39 per cent. of the Company's issued share capital. Furthermore the Independent Directors recommend that Independent Shareholders vote in favour of Resolution 2 to approve the Rule 9 Waiver.

Forward Looking Statements

This announcement may contain forward-looking statements relating to the Company's, Gama Aviation's and/or the Enlarged Group's expected operations that are based on management's current expectations, estimates and projections. Words such as "expects", "intends", "plans", "projects", "believes", "estimates", and similar expressions are used to identify such forward-looking statements. These statements are not warranties or guarantees of future performance and involve certain risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecast in such forward-looking statements.

By their nature forward-looking statements involve risk and uncertainty because they relate to events and depend on circumstances that may occur in the future. Although the Company and Gama believe that the expectations reflected in such statements are reasonable, no assurance can be given that such expectations will prove to be correct. There are a number of factors, many of which are beyond the control of the Company, Gama Aviation and the Enlarged Group, which could cause actual results and developments to differ materially from those expressed or implied by forward-looking statements.

Important Notice

This announcement is an advertisement and not an admission document or a prospectus. It does not constitute or form part of, and should not be construed as, an offer to sell or issue, or a solicitation of any offer to buy or subscribe for, any securities, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. Investors should not subscribe for or purchase any securities referred to in this announcement except on the basis of information in the admission document (the "Admission Document") to be published by Hangar 8 Plc ("Hangar 8" or the "Company") in due course in connection with the proposed admission of the issued ordinary shares in the capital of Hangar 8 Plc (the "Admission") to trading on AIM, a market operated by London Stock Exchange plc (the "London Stock Exchange"). Copies of the Admission Document will, following publication, be available free of charge to the public at the registered office of Freeths LLP, One Heddon Street, London W1B 4BD during normal business hours on any weekday (Saturdays, Sundays and public holidays excepted) until the date falling one month after the date of Admission and on the Company's website at www.hangar8.com.

Jefferies International Limited ("Jefferies"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for Gama Aviation Holdings (Jersey) Limited and no one else in connection with the Acquisition and will not be responsible to anyone other than Gama Aviation Holdings (Jersey) Limited for providing the protections afforded to clients of Jefferies nor for providing advice in relation to the Transaction or any other matter referred to in this announcement.