The following amendment has been made to the 'Interim Results' announcement released on 22 September at 07:16 under RNS No 3509N.

 

Under Note 6, under 'Secured borrowing at amortised cost', the amount for 'Other loans' has been corrected to 1,154

 

All other details remain unchanged.

 

The full amended text is shown below.

 

 

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.

 

22 September 2023

 

Gama Aviation Plc (AIM: GMAA)

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

Unaudited interim results for the six months to 30 June 2023

 

 

Continuing Progress in the Implementation of our Strategy in a Challenging Economic Environment.

 

Gama Aviation Plc, the business aviation services company, is pleased to announce its unaudited interim results for the six months to 30 June 2023.

 

Financial Summary

 

	Adjusted1 $m		Statutory $m
	Jun-23 Unaudited	Jun-223,4 Unaudited	Jun-23 Unaudited	Jun-223,4 Unaudited
Revenue	145.0	139.3	145.0	139.3
Gross profit3	27.6	26.7	27.6	26.7
Gross profit %	19.0%	19.2%	19.0%	19.2%
EBITDA2	7.9	9.2	6.4	6.3
EBIT	0.3	1.8	(1.8)	(1.7)
Loss for the period	(2.7)	(0.8)	(4.5)	(3.8)
Basic and diluted loss per share (cents)	(4.2)	(1.6)	(7.0)	(6.4)

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

² Statutory EBITDA represents earnings before interest, tax, depreciation, and amortisation. Adjusted EBITDA is Statutory EBITDA after Adjusting Items. Adjusted EBITDA and Statutory EBITDA provide management and investors with useful additional information about the Group's performance and profitability.

 

³ Depreciation charges of $2,788,000 in the prior period, have been reclassified from administrative expenses to cost of sales to conform with the presentation in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit.

 

⁴ To aid comparability, a further version of the H1 2022 results has also been calculated on a constant currency basis using a constant foreign exchange rate of $1.23 to £1, being the cumulative average USD/GBP exchange rate for 2023, instead of the reported exchange rate of $1.30 to £1 for H1 2022. On a constant currency basis H1 2022 Revenue is $136.0, Gross Profit is $26.1m, Gross Profit percentage is 19.2%.

 

 

Financial Highlights

 

·      Revenue growth of 4% (7% at constant currency) to $145.0m (H1 2022: $139.3m)

·      Gross profit up 3% (6% at constant currency) to $27.6m (H1 2022: $26.7m)

·      Gross profit margin down by 0.2 percentage points ('ppt') at 19.0% (H1 2022: 19.2%)

·      Adjusted earnings before interest and tax ('Adjusted EBIT') of $0.3m (H1 2022: $1.8m)

·      Adjusted EBIT includes foreign exchange losses of $0.3m (H1 2022: $1.4m gain) $1.4m Statesville start-up costs, $1.1m Las Vegas restructuring expenses and a gain of $2.6m for a legacy debtor recovery (HY22: one-off items included a gain of $1.0m for release of PPP grant repayment provision, recovery of $0.6m of branding fees and operating losses of $1.0m associated with closure of FXE).

·      Excluding foreign exchange gains and losses and one-off items, adjusted EBIT is $0.5m (H1 2022: loss $0.2m)

·      Net cash inflow from operating activities of $11.6m (H1 2022: $15.5m)

·      As at 30 June 2023 cash balances were $11.6m (FY 2022: $22.4m)

·      Net debt, inclusive of $53.9 (FY 2022: $52.7) of lease obligations, was $66.1m as at 30 June 2023 (FY 2022: $66.4m). Net bank debt decreased by $12.3m to $22.5m (FY 2022: $34.8m)

·      As at 21 September 2023, cash balances were $9.1m.

 

Outlook

The Group continues to make steady progress in the execution of its strategy. Despite the strong growth in the US, the Group delivered modest revenue growth overall during the period against the backdrop of a challenging economic and business environment, but as expected, margins were impacted by inflationary cost pressures. With little prospect of any significant change in the macro-economic conditions coupled with the continuing geopolitical uncertainties, the Board remains understandably cautious in its outlook for the second half of the year.

 

However, continuing focus on optimising operational performance and controlling costs is helping to mitigate the impact on margins whilst the inflationary and adverse economic conditions persist in the UK and ensuring the Group is well placed to restore and grow these margins when conditions ease.

 

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

 

"The H1/23 results demonstrate the progress the Group continues to make in consolidating and building upon the significant improvement in financial performance that has been delivered over the last couple of years. This is the result of our diligent implementation of our organic growth strategy and the optimisation of our operational platform and cost base whilst continuing to deliver our clients' mission.

These results, delivered against a backdrop of a very challenging economic and business environment, again serve to illustrate the robustness and resilience of our business, as well as the unwavering commitment and dedication of our people to delivering our clients' mission.

Despite this uncertain economic backdrop, the pipeline of business opportunities continues to grow, and the Group remains well positioned for the future."

 

-ENDS-

 

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

 

Gama Aviation Plc                                      +44 (0) 1252 553029

Marwan Khalek, Chief Executive Officer

Michael Williamson, Chief Financial Officer

 

Camarco                                                     +44 (0) 20 3757 4992

Ginny Pulbrook

Geoffrey Pelham-Lane

 

WH Ireland                                                  +44 (0) 20 7220 1666

James Joyce

Ben Good

 

Gama Aviation - Notes to Editors

 

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

 

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

 

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

 

 

Chief Executive Officer's Statement

 

Introduction

 

The H1/23 results demonstrate the progress the Group continues to make in consolidating and building upon the significant improvement in financial performance that has been delivered over the last couple of years. This is the result of our diligent implementation of our organic growth strategy, the optimisation of our operational platform and cost base whilst continuing to deliver our clients' mission.

This has been underpinned by significant organic investment in new facilities in our US MRO business, the development of infrastructure for our recently awarded Special Mission contracts that come on stream at the start of 2024 and in our T&O SBU so as to ensure we maintain our leading technology platforms for the future.

Over the last year or so, the Group has successfully secured alternative debt for its maturing credit facilities allowing it to maintain the necessary liquidity levels for its on-going operations.  However, efforts to secure the additional funding necessary to support the Group's hangar construction projects are behind schedule due to the challenging credit markets.

These results, delivered against a backdrop of a very challenging economic and business environment, again serve to illustrate the robustness and resilience of our business.  They are also testament to the efforts and dedication of our people and their unwavering commitment to upholding our values, which remains critical to retaining the trust and loyalty of our existing clients and to the winning of new business.

Despite this uncertain economic backdrop, the pipeline of business opportunities continues to grow, and the Group remains well positioned for the future.

 

Strategic Business Unit Update

 

Business Aviation

 

The Business Aviation SBU delivered a solid performance thanks largely to strong revenue and profit growth in our US MRO business, the world's largest business aviation market, which we operate under our Jet East brand.

Further investments in the first half of 2023 saw the opening of our new flagship retail base maintenance facility in Statesville, North Carolina. During the same period, and working collaboratively with one of our major clients, we consolidated the base maintenance services we previously provided at Las Vegas into our Millville facility, which will optimise efficiencies and service delivery and transitioned the released capacity at Vegas to support additional line maintenance demand there.  These highly strategic investments are expected to ensure that Jet East continues to deliver solid revenue and profit growth into the future.

Elsewhere, the other three business lines within this SBU (Aircraft Charter and Management, FBO services and MRO services in Europe) have been the most challenged by the economic conditions which have limited growth and impacted margins.  However, the pipeline of new business opportunities across these business lines is encouraging. 

Special Mission

 

The Special Mission SBU delivered another strong performance which is underpinned by its stable long term government contracts.  Inflationary cost pressures have impacted margins, but this has been partially mitigated by increased revenues resulting from appropriate contract provisions.

 

The SBU is currently experiencing a high level of bid activity both in terms of the periodic re-competing of some of its current contracts as well as the strong pipeline of new opportunities.  Alongside this, the SBU continues to make very good progress in the standing up of its capabilities to support the commencement of operations in January 2024 of the two recent major contract awards in Wales and the North Sea.  This contracts awards, which we announced towards the end of last year will deliver significant revenue and profit growth for the SBU.

 

Technology & Outsourcing ('T&O')

 

The T&O SBU continues to deliver leading edge technology and outsourcing services to support the business sector. We continue to invest in our industry leading SaaS platform, which we deliver though our myairops brand.

There is extensive interest in the product and a strong pipeline of qualified prospects, but client capture has been slower than expected.  This is largely due to customers delaying their transition decisions due to other priorities during this uncertain economic period.  However, the continuing engagement with these customers is encouraging and management remains positive about the prospects for this SaaS offering and the opportunity to develop it into a market leading service.  Sales and marketing efforts are very focused on growing our share of the North American market, which is the world's largest.

The skill shortages in the technology sector are impacting costs and development timelines, and consequently margins.

H1 2023 Operational & Financial Performance

The Operational Performance report and CFO Finance review that follow provide detailed segmental analysis and financial commentary on the operational and financial performance of the Group.

Outlook

The Group continues to make steady progress in the execution of its strategy. Despite the strong growth in the US, the Group delivered modest revenue growth overall during the period against the backdrop of a challenging economic and business environment, but as expected, margins were impacted by inflationary cost pressures. With little prospect of any significant change in the macro-economic conditions   coupled with the continuing geopolitical uncertainties, the Board remains understandably cautious in its outlook for the second half of the year.

 

However, we are continuing to focus on optimising operational performance and controlling costs which is helping to mitigate the impact on margins whilst the inflationary and adverse economic conditions persist in the UK and ensuring the Group is well placed to restore and grow these margins when conditions ease.

 

Marwan Khalek

Chief Executive Officer

 

 

Group Operational Performance Review

 

Revenue¹

$'000

			H1 2023 Unaudited	H1 2022 Unaudited
Business Aviation			115,418	108,792
Special Mission			27,091	27,245
Technology & Outsourcing			2,446	2,639
Branding Fees			−	625
Total			144,955	139,301

¹ There are no Adjusting Items that impact Revenue. To aid comparability 2022 results have been calculated on a constant currency basis. See note 4 for more details.

 

Gross Profit^1,2

$'000

			H1 2023 Unaudited	H1 20221,2 Unaudited
Business Aviation			20,750	17,039
Special Mission			5,528	7,168
Technology & Outsourcing			1,334	1,889
Branding Fees			−	625
Total			27,612	26,721

¹ There are no Adjusting Items that impact Gross Profit. To aid comparability 2022 results have been calculated on a constant currency basis. See note 4 for more details.

 

² Depreciation charges of $2,788,000 in the prior year have been reclassified in the profit and loss account to cost of sales to conform with the disclosure in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit and is attributable to Business Aviation ($327,000), Special Mission ($2,440,000) and Technology & Outsourcing ($21,000).

 

EBIT

$'000

	Adjusted		Statutory
	H1 2023 Unaudited	H1 2022 Unaudited	H1 2023 Unaudited	H1 2022 Unaudited
Business Aviation	545	(797)	(1,013)	(3,807)
Special Mission	2,841	2,302	2,806	2,260
Technology & Outsourcing	(1,499)	(493)	(1,632)	(636)
Branding Fees	-	625	−	625
Central Costs	(1,552)	137	(1,971)	(130)
Total	335	1,774	(1,810)	(1,688)

The above Group results are explained in detail below.

 

Business Aviation

Business Aviation is focused on the delivery of the following lines of business to clients principally in the top three regional business aviation markets: the US, Europe, and the Middle East.

/ Management. The operational management of an aircraft (or fleet), and its crew, that the owner wishes to place on one of the Group's air operating certificates ("AOCs")

/ Charter. The sale of available flight hours on aircraft to charter brokers or to direct clients worldwide

/ FBO. The management of our strategically positioned fixed base operations at airports in the UK, Channel Islands and Middle East

/ MRO. The delivery of comprehensive maintenance, repair and modification solutions that support business aviation aircraft operators and owners.

 

Business Aviation MRO in the US has a dedicated management team and is separately reviewed by the Group Chief Executive Officer who acts as the Chief Operating Decision Maker ('CODM'). Therefore, Business Aviation MRO US has been presented separately from Business Aviation excluding MRO US which falls under a separate management team and is separately reviewed by the CODM.

 

Unaudited Adjusted EBIT

$'000

 

	BA MRO US				BA excluding MRO US			Total
	H1 2023	H1 20222	Constant currency growth1	H1 2023	H1 2022	Rebased H1 2022	Constant currency growth1	H1 2023	H1 20222	Rebased H1 2022	Constant currency growth1
Revenue	70,701	55,473	27%	44,717	53,319	51,518	(13%)	115,418	108,792	106,991	8%
Gross profit	14,779	12,045	23%	5,971	4,994	4,910	22%	20,750	17,039	16,955	22%
Gross profit %	20.9%	21.8%		13.4%	9.4%	9.5%		18.0%	15.7%	15.8%
Adjusted EBIT1	885	(66)		(340)	(731)			545	(797)

 

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

² Depreciation charges of $2,788,000 in the prior year have been reclassified in the profit and loss account to cost of sales to conform with the disclosure in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit and is attributable to Business Aviation ($327,000), Special Mission ($2,440,000) and Technology & Outsourcing ($21,000).

Overall, the Business Aviation SBU grew its revenues by 8% on a constant currency basis to $115.4m. Gross profit was up 22% on a constant currency basis to $20.8m.

 

The US business has seen increased revenues and gross profits from all key business lines, which led to 27% growth. Gross profit also improved, up 23% to $14.8m (H2 2022: $12.0m).

 

The US Adjusted EBIT was $0.9m after investments in startup activities at the Statesville facility ($1.4m) and the transition of the Las Vegas facility to tier one status ($1.1m).

 

In the BA ROW the number of aircraft under management decreased compared with prior period and this resulted in lower revenue. Improved gross profit benefitted from higher profit allocation to BA ROW maintenance activities in relation to work undertaken to support Special Mission contracts. The improvement in BA ROW adjusted EBIT reflects the improved gross profits, combined with the recovery of previously impaired debtors, partially offset by re-allocation of overheads to the BA ROW MRO activities.

 

USD'000s	BA MRO US		BA excluding MRO US		Total
	H1 2023	H1 2022	H1 2023	H1 2022	H1 2023	H1 2022
Adjusted EBIT1	885	(66)	(340)	(731)	545	(797)
Exceptional items - integration and business re-organisation costs	−	(244)	−	−	−	(244)
Exceptional items - deferred consideration adjustment	−	243	−	−	−	243
Exceptional items - profit on disposal of entity	−	−	−	126	−	126
Exceptional items - impairment of goodwill	−	(787)	−	−	−	(787)
Exceptional items - impairment of assets under construction	−	−	(98)	(749)	(98)	(749)
Long-term employee incentive plan	(1,026)	(956)	−	−	(1,026)	(956)
Share-based payments	2	(201)	(14)	(18)	(12)	(219)
Amortisation	(369)	(368)	(53)	(56)	(422)	(424)
EBIT	(508)	(2,379)	(505)	(1,428)	(1,013)	(3,807)

 

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

 

Exceptional items include: -

·      Impairment charges of $98k (H1 2022: $749k) relating to assets under construction at the Sharjah Business Aviation Centre.

·      There were various other H1 2022 charges which were not repeated in H1 2023. These relate to the cost of integrating Jet East into Business Aviation ($244k); release of the performance related deferred consideration relating to the US acquisition ($243k); gain on the sale of Gama International Saudi Arabia ($126k) and impairment of goodwill associated with the closure of the paint and interior completion operations at FXE ($787k)

 

Other tabulated items include: -

·      The Jet East long-term incentive scheme $1,026k (H1 2022: $956k) relating to senior executives' incentives agreed at the time of acquisition

·      Share-based payments charges of $12k (H1 2022: $219k)

·      Amortisation of the acquired intangibles of $422k (H1 2022: $424k)

 

Special Mission

The Special Mission SBU provides the mission expertise to assist governments and businesses in exploiting a variety of aviation assets (principally fixed wing and helicopters) within the following sectors:

 

/ Air Ambulance & Rescue. The delivery of fixed wing and rotary mission solutions to the governments of Scotland, Jersey and Guernsey as well as the approximately 21 helicopter air ambulance charities operating within the UK

/ National Security & Law Enforcement. Providing "intelligence as a service" aviation platforms to the UK government to protect the national interest

/ Infrastructure & Survey. The monitoring of critical national infrastructure for the purposes of failure monitoring, environmental controls, mapping or other such studies

 

USD'000s	H1 2023	H1 20222	Rebased1 H1 2022	Constant currency growth1
Revenue	27,091	27,245	25,839	5%
Gross profit2	5,528	7,168	6,762	(18%)
Gross profit %	20.4%	26.3%	26.2%
Adjusted EBIT1	2,841	2,302

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

² Depreciation charges of $2,788,000 in the prior year have been reclassified in the profit and loss account to cost of sales to conform with the disclosure in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit and is attributable to Business Aviation ($327,000), Special Mission ($2,440,000) and Technology & Outsourcing ($21,000).

 

Special Mission has delivered 5% revenue growth on a constant currency basis in the first half, reflecting inflationary price adjustments to key contracts. Gross profit has reduced by 18% reflecting higher profit allocation to BA ROW maintenance activities which support Special Mission contracts and cost inflation. Adjusted EBIT increased to $2.8m (H2 2022: $2.3m) reflecting re-allocation of overheads to the Group's MRO activities, partially offset by the lower gross profit.

 

In the Annual Report and Accounts 2022, the Company disclosed the award of a five-year, multi aircraft, North Sea offshore contract to Bond Helicopters, the Group's newly created joint venture with Peter Bond. During the first half of 2023 the Company incurred costs of $0.5m on various activities associated with standing up this contract. These costs have been capitalised as a contract asset and will be amortised over the life of the contract which is scheduled to commence on 1 January 2024.

 

USD'000s	H1 2023	H1 2022
Adjusted EBIT1	2,841	2,302
Share-based payments	-	(5)
Amortisation	(35)	(37)
EBIT	2,806	2,260

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

In addition to the movements discussed above, statutory EBIT includes share-based payment charges and amortisation relating to the intangibles acquired as part of the Jersey and Guernsey Air Ambulance business in 2020.

 

Technology & Outsourcing

T&O comprises of four lines of business which trades as Gama Aviation, but with a further two brands, FlyerTech and myairops®. The lines of business are Software & Data Services, Ground Operations, Part-M Services and Maintenance Management & Advisory Services. The business unit provides Continuing Airworthiness Management ('CAM') and airworthiness review certification (ARC) and surveying services for business aviation, military, and commercial airline operators. myairops® has developed a suite of business aviation products deployed as "Software as a Service" (SaaS) and mobile app solutions for aviation operators and charter brokers, flight support companies, FBOs and regional airports. The Ground Operations line of business provides trip support services which includes flight planning and the arrangement of services such as permits, slots and fuel. These services are provided to business and commercial aviation customers.

 

USD'000s	H1 2023	H1 20221	Rebased1 H1 2022	Constant currency growth1
Revenue	2,446	2,639	2,503	(2%)
Gross profit2	1,334	1,889	1,789	(25%)
Gross profit %	54.5%	71.6%	71.5%
Adjusted EBIT2	(1,499)	(493)

 

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

² Depreciation charges of $2,788,000 in the prior year have been reclassified in the profit and loss account to cost of sales to conform with the disclosure in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit and is attributable to Business Aviation ($327,000), Special Mission ($2,440,000) and Technology & Outsourcing ($21,000).

 

Technology and Outsourcing revenue remained broadly in line on a constant currency basis. However, increased labour and associated costs have led to a 25% reduction in gross profits, also on a constant currency basis. The lower gross profit combined with higher investment in marketing and intangibles, which increases amortisation, has resulted in an Adjusted EBIT loss of $1.5m (2022: Adjusted EBIT loss of $0.5m).

 

USD'000s	H1 2023	H1 2022
Adjusted EBIT1	(1,499)	(493)
Share-based payments	(4)	(7)
Amortisation	(129)	(136)
EBIT	(1,632)	(636)

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

 

Adjustments to EBIT relate to share-based payments and amortisation of acquired customer relationship intangibles, which decreased due to the impact of foreign exchange.

 

Branding Fees

 

Branding fees were $Nil during the 6 months ended 30 June 2023. The US branding fee arrangement ended on 2 March 2022, with $625k being recognised in revenue and gross profit in H1 2022, and $625k recognised in EBIT in H1 2022.

 

 

Financial Review

	Adjusted1 $m		Statutory $m
	Jun-23 Unaudited	Jun-223 Unaudited	Jun-23 Unaudited	Jun-223 Unaudited
Revenue	145.0	139.3	145.0	139.3
Gross profit3	27.6	26.7	27.6	26.7
Gross profit %	19.0%	19.2%	19.0%	19.2%
EBITDA2	7.9	9.2	6.4	6.3
EBIT	0.3	1.8	(1.8)	(1.7)
Loss for the period	(2.7)	(0.8)	(4.5)	(3.8)
Basic and diluted loss per share (cents)	(4.2)	(1.6)	(7.0)	(6.4)

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

 

² Statutory EBITDA represents earnings before interest, tax, depreciation, and amortisation. Adjusted EBITDA is Statutory EBITDA after Adjusting Items. Adjusted EBITDA and Statutory EBITDA provide management and investors with useful additional information about the Group's performance and profitability.

³ Depreciation charges of $2,788,000 in the prior year have been reclassified in the profit and loss account to cost of sales to conform with the disclosure in the Annual Report and Accounts 2022. This has resulted in a reduction of $2,788,000 in gross profit and is attributable to Business Aviation ($327,000), Special Mission ($2,440,000) and Technology & Outsourcing ($21,000).

 

Revenue and Gross Profit Bridges

$m

Unaudited

	Revenue	Gross Profit
2022	139.3	26.7
Rebasing of 2022 results	(3.3)	(0.6)
Rebased Revenue and Gross Profit − 2022 at 2023 exchange rate	136.0	26.1
Business Aviation	8.4	3.8
Special Mission	1.3	(1.2)
Technology & Outsourcing	(0.1)	(0.5)
Branding Fee	(0.6)	(0.6)
2023	145.0	27.6

Unaudited Statutory EBIT Bridge

$m

Statutory EBIT - 2022	(1.7)
Improvement in gross profit	0.6
Movement in foreign exchange gains/losses	(1.7)
Increase in administrative expenses	(0.5)
Decrease in impairment losses	0.7
Decrease in impairment of goodwill	0.8
Statutory EBIT - 2023	(1.8)

 

Unaudited Adjusted EBIT Bridge

$m

Adjusted EBIT - 2022	1.8
Increase in gross profit	0.6
Foreign exchange gains/loss movement	(1.7)
Increase in administrative expenses	(0.4)
Adjusted EBIT - 2023	0.3

 

Unaudited Adjusted EBIT excluding one-off items

$m

 

	H1 2023	H1 2022
Adjusted EBIT	0.3	1.8
Foreign exchange losses/(gains)	0.3	(1.4)
Adjusted EBIT excluding foreign exchanges gains losses	0.6	0.4
Excluding one off items:
Statesville start-up	1.4	-
Las Vegas restructuring	1.1	-
Legacy debtor recovery	(2.6)	-
Release of PPP grant repayment provision	-	(1.0)
Branding fees	-	(0.6)
Operating losses associated with closure of FXE	-	1.0
Adjusted EBIT - excluding one-off items	0.5	(0.2)

 

Impairments

Expenditure of $0.1m (H1 2022: $0.7m) incurred during the year on the Sharjah Business Aviation Centre project has been impaired, which brings the total impairments associated with this project to $15.3m. Whilst the Group is in discussions with investors to secure the necessary funding for the project, the Board considers that it is appropriate to recognise an impairment loss in respect of this expenditure until profits can be forecast with greater certainty.

 

In H1 2022, an impairment loss against goodwill of $0.8m was recognised associated with the closure of the paint and interior completion operations at Fort Lauderdale Executive Airport.

Finance income and expenses

Finance income of $0.7m reflects interest received on legacy debts (H1 2022: $1.8m of foreign exchange gains on intercompany loans). Finance expense of $3.5m (H1 2022: $4.3m) reflects the decrease in debt levels and foreign exchange losses on debt in prior year, partially offset by higher interest rates.

Taxation

There is a statutory taxation credit for the period of $0.1m (H1 2022: $0.2m credit). The adjusted taxation for the period is a $0.3m charge (H1 2022: $0.3m charge).

Earnings per share (EPS)

Weighted average shares in issue increased to 64.0m (H1 2022: 63.7m) following the share issue in May 2022. Adjusted EPS was a loss of 4.2 cents per share (H1 2022: 1.6 cents).  Basic Statutory EPS was a loss per share of 7.0 cents (H1 2022: 6.4 cents). No share options, vested or otherwise, have been included in this calculation.

 

Credit Facilities

In 2022 and 2023, the Group progressed the establishment of new funding and credit facilities to replace the RCF of $50m and term loan of £20m with HSBC, which matured on 14 November 2022 and 31 January 2023, respectively. As part of the refinancing, we reported in the H1 2022 Interim Results the completion of the sale and lease back of its helicopter assets resulting in a cash inflow of $27m.

On 28 December 2022, new credit facilities were secured by the Group's wholly owned US operating subsidiary, Gama Aviation (Engineering) Inc. ("GAEI"), from a US lender Great Rock Capital LLC. The $25.0m facilities are for a term of four years and comprise a combination of a RCF and up to $6.5m of term loans. A total of $20.0m was available immediately, with a further $5.0m available contingent on future trading performance. The facilities are subject to customary financial covenants. $11.0m of the facility was drawn down to repay GAEI's intercompany loan from the Company. The balance of the facility is available to fund the investment capital expenditure and other working capital requirements of the US business in the execution of the Group's organic growth strategy in the US.

On 25 January 2023, the Group repaid its £20m term loan from HSBC (which had a maturity date of 31 January 2023) in full utilising the $11.0m received from the repayment of the Company's intercompany loan with GAEI, together with cash at hand.

On 3 March 2023, the Group received £9.4m ($11.1m) from Close Brothers Aviation and Marine by way of a loan secured by a mortgage over the Group's owned aircraft. The loan will be used to fund the investment capital expenditure and other working capital requirements of the non-US business.

During 2023, management has continued to work to optimise the Company's capital structure via further sale and leaseback and asset sale activities to ensure that the group is fully capitalised to meet its liquidity requirements and to finance its development projects.

Net debt and cash flow movements

Net cash inflow from operating activities was $11.6m for the first half of 2023 compared with $15.5m for the same period in 2022 and includes the benefit of deferred revenue received in advance on certain special mission contracts in H1 2023

Net debt, exclusive of lease obligation, was $12.1m as at 30 June 2023 (31 December 2022: $13.7m).  The repayment of the HSBC term loan was offset by the draw down of a new term loan with Close Brothers of $9.4m and a reduction in cash balances by $10.8m to $11.6m.

Obligations under leases were $53.9m (31 December 2022: $52.7m). As a result, total net debt remained broadly stable at $66.1m (31 December 2022: $66.4m).

Liquidity

The Group liquidity comprises $11.6m (31 December 2022: $22.4m) of cash and $8.3m of its $15.0m RCF with Great Rock Capital was undrawn as at 30 June 2023 (31 December 2022: $9.0m).

 

Collection of receivables

Following the litigation update provided in the Company's 2022 Annual Report and 2022 Interim release, the Group continues to pursue the recovery of its long-standing trade receivables through enforcement actions both in the UK and in other jurisdictions. The Group has made progress through court proceedings in the UK, which has resulted in material collections in 2023 and anticipates further recoveries in due course.

 

Interim dividend

 

The Directors do not propose that an interim dividend be paid for the six months to 30 June 2023 (H1 2022: $nil).

 

 

 

 

Michael Williamson

Chief Financial Officer

 

 

 

 

 

 

Responsibility Statements

 

Each directors confirms that to the best of their knowledge:

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

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

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

 

The basis of preparation of the condensed consolidated interim financial statements is shown in Note 2, and related party transactions are shown in Note 8. The principal risks and uncertainties for the remainder of the year are unchanged from those set out in the Group's recently published statutory financial statements for the year ended 31 December 2022 and shown below.

 

The directors consider the principal risks to the business are:

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

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

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

/ Changes in political and economic climate that make air transport less attractive

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

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

/ Cyber threat and information security

 

Signed on behalf of the Board,

 

 

 

 

Marwan Khalek

Chief Executive Officer

 

 

 

Gama Aviation Plc

Condensed consolidated income statement

For the period ended 30 June 2023

 

 

	Period ended 30 June 2023 Unaudited			Period ended 30 June 20222 Unaudited
	Statutory result $'000	Adjustments1 $'000	Adjusted result1 $'000	Statutory result4 $'000	Adjustments1 $'000	Adjusted Result1 4 $'000
Continuing operations:
Revenue	144,955	−	144,955	139,301	−	139,301
Cost of sales2	(117,343)	−	(117,343)	(112,580)	−	(112,580)
Gross profit	27,612	−	27,612	26,721	−	26,721
Administrative expenses3 4	(29,089)	2,145	(26,944)	(29,824)	3,462	(26,362)
Other expenses/income	(333)	−	(333)	1,415	−	1,415
Operating (loss)/profit	(1,810)	2,145	335	(1,688)	3,462	1,774
Finance income	723	−	723	1,783	−	1,783
Finance expense	(3,499)	−	(3,499)	(4,133)	−	(4,133)
(Loss)/profit before tax	(4,586)	2,145	(2,441)	(4,038)	3,462	(576)
Taxation credit/(charge) (note 9)	87	(339)	(252)	194	(449)	(255)
(Loss)/profit for the period	(4,499)	1,806	(2,693)	(3,844)	3,013	(831)
Attributable to:
Owners of the Company	(4,457)	1,806	(2,651)	(4,061)	3,013	(1,048)
Non-controlling interests	(42)	−	(42)	217	−	217

 

Earnings per share attributable to the equity holders of the parent

Basic and diluted (cents)

(7.0)

2.8

(4.2)

(6.4)

4.8

(1.6)

¹       APMs are defined in Note 4 of the notes to the financial statements and reconciled to the nearest IFRS measure.

²           Depreciation charges of $2.8m in the prior period relating to aircraft and refurbishment, and leasehold property improvements have been reclassified from administrative expenses to cost of sales to conform with the current year presentation and to show depreciation of assets used in the delivery of revenues in cost of sales. There has been no change in operating loss or loss for the year in respect of the prior period.

³       Impairment of assets under construction have been included in the administration expenses to be consistent with the presentation in the 2022 Annual report and accounts.

⁴       Foreign exchange gain of $1.4m in the prior period has been reclassified from administrative expenses to other Income in line with the presentation in the current     period.