Gama Aviation Regulatory News (GMAA)

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

Date: 24 September 2021

Gama Aviation Plc (AIM: GMAA)

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

Unaudited interim results for six months to 30 June 2021

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

Highlights (2020 comparatives restated1)

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

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

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

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

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

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

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

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

Financial Summary

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

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

Outlook

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

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

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

-ENDS-

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

Gama Aviation Plc +44 (0) 1252 553029

Marwan Khalek, Chief Executive Officer

Daniel Ruback, Chief Financial Officer

Camarco +44 (0) 20 3757 4992

Ginny Pulbrook

Geoffrey Pelham-Lane

WH Ireland +44 (0) 207 220 1666

James Joyce

Ben Good

Gama Aviation - Notes to Editors

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

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

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

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

Chief Executive Officer's Report

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

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

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

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

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

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

H1/21 Financial Performance

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

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

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

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

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

Sale of US Air Associate

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

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

Acquisition of Jet East

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

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

Investments

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

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

Sharjah

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

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

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

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

Fairoaks

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

CASL

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

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

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

Strategy

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

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

Outlook

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

Marwan Khalek

Chief Executive Officer

Group Operational Performance

Revenue

$'000

Gross Profit

$'000

EBIT

$'000

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

The above Group results are explained in detail below.

Air Division

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

Adjusted

$'000

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

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

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

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

Adjustments

$'000

Statutory

$'000

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

Ground Division

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

Adjusted

$'000

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

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

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

Adjustments

$'000

Statutory

$'000

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

Global Services Division

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

Adjusted

$'000

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

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

Adjustments

$'000

Statutory

$'000

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

Associates

Adjusted

$'000

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

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

Adjustments

$'000

Statutory

$'000

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

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

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

Financial Review

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

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

Adjusted Revenue Bridge

$m

· Acquisition of Jet East contributed $16.8m of revenue and integration well underway

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

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

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

· Modest reduction in Global Services revenue due to COVID effects

Adjusted EBIT Bridge $m

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

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

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

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

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

Investment in CASL

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

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

Statutory EBIT Bridge

$m

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

· Litigation costs on legacy matters $0.1m lower

· Increased transaction cost of $0.2m relating to Jet East acquisition

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

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

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

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

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

Finance expenses

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

Taxation

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

EPS

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

Net debt and cash flow movements

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

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

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

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

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

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

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

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

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

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

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

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

Litigation

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

Daniel Ruback

Chief Financial Officer

Responsibility Statements

Each director confirms that to the best of their knowledge:

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

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

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

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

The directors consider the principal risks to the business are:

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

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

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

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

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

/ Cyber threat and information security

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

Signed on behalf of the Board,

Marwan Khalek

Chief Executive Officer

Gama Aviation Plc

Consolidated income statement

For the period ended 30 June 2021

* Restatements are detailed in Note 2

Earnings per share attributable to the equity holders of the parent

Gama Aviation Plc

Consolidated statement of comprehensive income

For the period ended 30 June 2021

*Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated balance sheet

As at 30 June 2021 and 31 December 2020

* Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated balance sheet (continued)

As at 30 June 2021 and 31 December 2020

*Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated statement of changes in equity

For the period ended 30 June 2021

* Restatements are detailed in Note 2.

Gama Aviation Plc

Consolidated cash flow statement

Notes to the interim financial statements

For the period ended 30 June 2021

1. Corporate information and basis of preparation

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

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

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

2. Accounting policies

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

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

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

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

Restatements

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

This impacts the H1 2020 financial statements as follows:

The restatement impacts the US Ground segment as follows:

3. Segment information

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

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

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

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

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

4. Alternative performance measures

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

Transaction costs

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

Integration and business re-organisation costs

Integration and business re-organisation costs include:

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

· Jet East integration related severance costs of $483,000

· Other minor charges relating to earlier re-organisations

Legal costs

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

Share-based payment

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

Amortisation of intangible assets

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

Impairment

Impairments comprise:

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

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

Accelerated branding fees and profit on disposal of interest in associates

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

Tax related to adjusting items

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

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

Organic and constant currency growth

Organic and constant currency growth in Revenue, Gross Profit and EBIT is a measure which seeks to reflect the performance of the Group that will contribute to long-term sustainable growth. As such, organic and constant currency growth excludes the impact of acquisitions or disposals, and foreign exchange movements. Constant currency growth has been calculated using a constant foreign exchange rate of $1.39 to £1, being the cumulative average USD-GBP exchange rate for the first half of 2021 instead of the reported exchange rate of $1.26 to £1 for the first half of 2020. A reconciliation from organic and constant currency growth in Revenue, Gross Profit and EBIT to the most directly comparable IFRS measures is set out below.

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

Net Debt

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

5. Earnings per share ("EPS")

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

weighted average number of shares in issue during the period.