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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Gama Aviation Plc | LSE:GMAA | London | Ordinary Share | GB00B3ZP1526 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 94.00 | 91.00 | 97.00 | 94.00 | 92.50 | 94.00 | 0.00 | 08:00:29 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Air Transport, Scheduled | 285.64M | -8.86M | -0.1385 | -6.79 | 60.12M |
From Apr 2019 to Apr 2024
TIDMGMAA
RNS Number : 9035P
Gama Aviation PLC
06 September 2017
Gama Aviation Plc (AIM: GMAA)
("Gama Aviation", "the Company" or "the Group")
Interim results for six months to 30 June 2017
Gama Aviation Plc, one of the world's largest business aviation service providers is pleased to announce the results for the six months to 30 June 2017.
Financial Highlights
-- Total Group revenue up 45% to $291m (2016: $201m) -- Underlying total operating profit up 31% to $7.7m (2016: $5.9m). -- Underlying profit before tax of $7.0m, up 40% (2016: $5.0m) -- Underlying EPS up 25% to 12.2 cents (2016: 9.7 cents). -- Net debt decreased to $14.3m, down $5.1m from December 2016 (June 2016: $13.3m)
-- Cash conversion from operations improved to an inflow of $5.7m compared to an outflow of $1.1m in 2016
-- 2017 trading in line with management expectations
Financial Summary
Hot Features
Premium
USD millions (unless Underlying results(1) Reported results
otherwise stated)
-------------------
Constant
Currency(2)
Jun-17 Jun-16 Jun-16 Jun-17 Jun-16
-------- -------- ------------- --------- --------
Revenue - Total Group(3) 290.8 209.8 201.0
Associate & JV revenue (197.8) (117.2) (117.1)
Inter-group revenue
(including branding
fee) 8.6 9.0 8.9
-------- -------- -------------
Revenue 101.6 101.6 92.8 101.6 101.6
Gross profit 21.3 21.8 20.1 21.3 21.8
Gross profit % 21.0% 21.4% 21.6% 21.0% 21.4%
EBITDA 8.0 7.5 7.0
Total operating profit(4) 7.7 6.4 5.9 9.6 3.8
Profit before tax 7.0 5.4 5.0 8.7 7.5
Basic earnings per
share (cents) 12.2 10.4 9.7 16.0 15.1
Operational Highlights
-- US Air revenue up 74% driven by the BBA aircraft management business merger, Wheels Up growth and further contract wins
-- US Air BBA business merger proceeding as planned and on course for full integration by year end
-- Europe Air operational efficiency initiatives completed in 2016 have produced strong improvements in gross profit and EBITDA margins
-- US Ground revenue up 19% driven by full period impact of new bases opened in 2016 and new contract wins
-- Europe Ground showed modest revenue growth and improved profitability -- Middle East Air and Ground showed encouraging growth 1 - Underlying results exclude exceptional items, share-based payment expense, amortisation, losses of associate and joint venture, profit on disposal of interest in associate, and unrealised foreign exchange movements included in finance costs, where applicable. Detailed calculations are presented in the Financial review. 2 - Calculated at a constant foreign exchange rate of $1.26 to GBP1, being the rate that represented the average for the 2017 financial period. 3 - Includes 100% of the revenue of Gama Aviation's associate in the US and its joint venture in Hong Kong. 4 - Total operating profit includes the share of results from Gama Aviation's associate in the US and joint venture in Hong Kong. Please refer to page 8.
Marwan Khalek, Chief Executive of Gama Aviation said:
"The first half of 2017 has seen the Group maintain the positive momentum generated through last year to deliver a good performance in line with our expectations. In all divisions and all regions we achieved strong revenue growth and encouraging improved margin performance.
The integration of the BBA aircraft management business into the US Air division is progressing well and benefiting from a buoyant US market. The 2016 acquisitions of Aviation Beauport and FlyerTech, in Europe Ground and Europe Air respectively, are performing above expectations. Gama Aviation is well positioned to continue to benefit from the opportunities that this highly fragmented market presents.
Based on our performance to date and contract visibility, the Board is confident that the Group will meet its full year expectations."
-S-
The information contained within this announcement is deemed to constitute inside information as stipulated under the Market Abuse Regulations (EU) No. 596/2014. Upon the publication of this announcement, this inside information is now considered to be in the public domain.
A presentation for sell-side analysts is being held today at 09:00am at the offices of Camarco, 107 Cheapside, London EC 2V 6DN.
For further information please visit www.gamaaviation.com or contact:
Gama Aviation Plc +44 (0) 1252 553029
Marwan Khalek, Chief Executive Officer
Kevin Godley, Chief Financial Officer
Camarco +44 (0) 20 3757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
Jefferies International +44 (0) 207 029 8000
Simon Hardy
Will Soutar
Gama Aviation - Notes to Editors
Gama Aviation Plc (AIM:GMAA) is a global business aviation services group that specialises in providing support for individuals, corporations and government agencies; allowing them to deliver on the promises they make.
The Group's services are split into two divisions: Air and Ground. Air services include aircraft management, special mission support and charter. Ground services cover aircraft maintenance services, aircraft modification design and installation, and Fixed Base Operations (FBO).
More details can be found at: http://www.gamaaviation.com/
Chief Executive Report
H1 2017 Performance
The first half of 2017 has seen the Group maintain the positive momentum generated through last year to deliver a good performance in line with our expectations. Strong revenue growth and encouraging margin performance was achieved in both divisions and in all regions. Active working capital management continued during the period resulting in a cash inflow of $5.7m compared to an outflow in the first half of 2016 of $1.1m.
The Air division had a strong six months. Total Divisional revenue was up 43% to $253m (2016: $177m), driven largely by the US. With the benefits of increasing scale, the total operating profit of $7.3m (2016: $2.5m) continued to improve, with the total operating profit margin of 2.9% (2016: 1.4%) moving towards our stated target of 5%.
The Ground division also had a good first half. Total Divisional revenue was up 10% to $38m (2016: $35m), driven largely by the US. The total operating profit of $5.2m (2016: $3.9m) continued to improve due to cost control and business mix. The total operating profit margin increased to 13.6% (2016: 11.4%) moving towards our stated target of 15% to 20%.
Our developing businesses in the Middle East and Asia have both made further steady progress. Movements at our Sharjah FBO are at an all-time high and this provides a strong foundation for our planned development in the region. In Asia, our joint venture with Hutchinson, in collaboration with Chinese Aircraft Services Limited (CASL), has now received the necessary regulatory approvals to offer line and base maintenance services at Hong Kong airport.
Business Development and Growth Strategy
The integration of the BBA aircraft management business into the US Air division is progressing well and benefiting from a buoyant US market. The 2016 acquisitions of Aviation Beauport and FlyerTech, in Europe Ground and Europe Air respectively, are performing above expectations. Gama Aviation is well positioned to continue to benefit from the opportunities that this highly fragmented market presents.
Outlook
Based on our performance to date and contract visibility, the Board is confident that the Group will meet its full year expectations.
Marwan Khalek
Chief Executive Officer
Operational Performance Review
Basis of presentation of financials
The analysis of Gama Aviation's operational performance by division and geography, is shown on a Total Division basis (for revenue, gross profit, underlying EBITDA and underlying total operating profit) reflecting 100% of the performance of associates and joint ventures. The analysis also includes inter-segment revenues, which represent the revenues that arise between divisions, in order to present the underlying performance of each division.
Gama Aviation receives a fee in return for allowing its associates and joint ventures the use of the Gama Aviation brand. Such branding fees are excluded from the results on a Total Division basis but are recognised within Gama Aviation's Group reported performance.
Under IFRS, the trading results of associates are not consolidated and are instead shown as a single line in the profit and loss account under 'share of results from equity accounted investments'.
Europe is the only region in the Group that is affected by any material foreign exchange movements, primarily between GBP and USD. The 2016 performance has been restated at the same average rate for USD to GBP as the 2017 financials. The average rate for H1 of 2017 was USD1.26 to GBP1.00. The commentary below is based on constant currency performance unless otherwise stated.
Constant Currency
June 2017 2016 Change 2016 Change
USD thousands Total Total Total Total Total
------------------------------ --------- --------- --------- --------- ---------
Air 252,579 183,667 37.5% 177,129 42.6%
Ground 38,160 37,491 1.8% 34,664 10.1%
Europe Ground - 10,460 - - - -
aircraft sale revenue
Other 875 1,096 (20.2%) 1,055 (17.1%)
Inter-segment eliminations (11,295) (12,495) 9.6% (11,845) 4.6%
--------- --------- --------- --------- ---------
Total Group Revenue 290,779 209,759 38.6% 201,003 44.7%
Total Group Gross
Profit 32,600 25,124 29.8% 23,454 39.0%
Gross Profit % 11.2% 12.0% (0.8ppt) 11.7% (0.5ppt)
Total Group Underlying
EBITDA 11,803 6,678 76.7% 6,145 92.1%
Underlying EBITDA
% 4.1% 3.2% 0.9ppt 3.1% 1.0ppt
Total Group Underlying
Total Operating
Profit 10,788 5,428 98.8% 4,967 >100%
Underlying Total
Operating Profit
% 3.7% 2.6% 1.1ppt 2.5% 1.2ppt
------------------------------- --------- --------- --------- --------- ---------
Air division
Our Air division specialises in the provision of complex, high touch, time critical, solutions for individuals, corporations and government agencies.
Aircraft management: The provision of aircraft management services to high net worth individuals and corporates. This includes the procurement on the customers' behalf of services such as insurance, fuel, flight training, flight planning and scheduling, crew management and maintenance oversight and regulatory compliance. In return, the customer pays Gama Aviation a management fee.
Special mission: A turnkey, outsource solution for Government agencies looking to cost effectively manage aviation operations for a variety of complex, time critical services such as air ambulance provision and infrastructure monitoring. Our services include cost management, flight planning and scheduling, crew management, maintenance oversight and regulatory compliance. Services are provided on a contract basis.
Aircraft charter and contract charter: A time critical, high touch solution aimed at individuals and corporations wishing to maximise the productive time of their aircraft and/or executives. Services include long term charter contracts, provision of charter within the managed fleet and sub-charter on audited operators. Services are provided on a commission or contract basis.
The Air division had a strong six months. Total Divisional revenue was up 43% to $253m (2016: $177m), driven largely by the US. With the benefits of increasing scale, the total operating profit of $7.3m (2016: $2.5m) continued to improve, with the total operating profit margin of 2.9% (2016: 1.4%) moving towards our stated target of 5%.
June Middle
US Europe East Asia Total
USD 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016
thousands
------------- -------- -------- ------- ------- ------- ------- ------- ------- -------- --------
Revenue 191,196 110,002 43,022 49,699 11,629 8,889 6,732 8,539 252,579 177,129
Gross profit 13,149 6,150 4,414 3,780 821 715 190 223 18,574 10,868
Gross profit
% 6.9% 5.6% 10.3% 7.6% 7.1% 8.0% 2.8% 2.6% 7.4% 6.1%
EBITDA 6,180 2,583 1,723 858 167 (19) (345) (371) 7,725 3,051
EBITDA % 3.2% 2.3% 4.0% 1.7% 1.4% (0.2%) (5.1%) (4.3%) 3.1% 1.7%
Total
operating
profit 6,010 2,429 1,493 588 130 (96) (362) (379) 7,271 2,542
Total
operating
profit % 3.1% 2.2% 3.5% 1.2% 1.1% (1.1%) (5.4%) (4.4%) 2.9% 1.4%
-------------- -------- -------- ------- ------- ------- ------- ------- ------- -------- --------
US Air (Associate)
US Air, now including the merged BBA business, has continued to perform strongly in the first half of 2017, delivering significant revenue growth, up 74% to $191m (2016: $110m) and margin improvement.
US Air total operating profit was $6.0m (2016: $2.4m), with the total operating profit margin of 3.1% (2016: 2.2%). The US Air total operating profit margins are expected to increase towards our target of 5% as the benefits of scale and operational gearing continue. The strength of this performance reflects the addition of the BBA aircraft management business, as well as a high contract win rate in our core management business and the continued growth of our Wheels Up contract.
The integration of the BBA business is progressing as planned. The combination is delivering the envisaged benefits: adding complementary West Coast coverage to the existing East Coast business, diversifying the client base, providing the ability to cross sell maintenance services into Gama Aviation's wholly owned US ground business and delivering cost synergies.
The business was rebranded as Gama Aviation Signature on 1 January 2017. It is the largest aircraft management business in the US and has significant growth prospects.
Europe Air
Whilst revenue declined, as expected, reflecting the Group's decision to exit certain underperforming contracts in 2016, Europe Air delivered a significantly improved total operating profit performance following its restructuring in 2016. Total operating profit increased to $1.5m (2016: $0.6m) at a materially improved total operating profit margin of 3.5% (2016: 1.2%), moving closer to our target of 5%.
Middle East Air
Our Middle Eastern Air business performed well. Revenue was up over 30% on the same period in the prior year and with a significant improvement in operating profit. The division's prospects are strong with a healthy pipeline of contract tenders.
Asia Air
Asia Air has made good progress establishing its brand alongside our joint venture partner, Hutchison Whampoa, and is well positioned for the future.
Ground division
Our Ground division provides solutions to maximise the availability of aircraft and uphold their airworthiness on behalf of individuals, corporations and Government agencies.
Base maintenance: 'Base' refers to the planned maintenance required by the aircraft manufacturer or component supplier. This work is complex, highly regulated and location specific, requiring investment in tooling and training. Our centres of excellence cover a range of aircraft including business jets, helicopters, turbo-prop and piston engine aircraft. Services are provided on a fee or contract basis.
Line maintenance: Our line solutions assist owners with irregular maintenance activities, component failure or simple wear and tear. Depending on the fault, this may be sufficient to ground the aircraft. For private clients, this can be an inconvenience whilst for military or air ambulance clients, the aircraft's re-entry into service is time critical. In all cases it needs to be dealt with efficiently so the aircraft can complete its commitments. Services are provided on a fee or contract basis.
Design and modifications: Our design and modifications team provides solutions to civilian and military aircraft owners to increase the operating life of an aircraft. Typical services include: avionics updates, role or mission changes and cockpit upgrades. Services are provided on a fee or contract basis.
Fixed base operations (FBO): Our FBO's provide infrastructure at airports that are underserved with business / special mission facilities. The business has three dedicated FBOs: Glasgow, Jersey and Sharjah, catering for parking, hangarage, line maintenance and other related ground handling tasks such as the fuelling of aircraft. Services are provided on a fee basis.
The Ground division had a good first half overall with growth in revenues, EBITDA and operating profits. Revenues and EBITDA were up across all regions and whilst there are still fluctuations in the gross profit margin in the fast growing US division as expected, the overall EBITDA and operating profit are up by 25% and 32% respectively.
June US Europe Middle East Total USD thousands 2017 2016 2017 2016 2017 2016 2017 2016 ----------------- ------- ------- ------- ------- ------ ------- ------- ------- Revenue 14,219 11,925 20,938 20,345 3,003 2,394 38,160 34,664 Gross profit 2,648 2,718 9,075 8,719 974 773 12,697 12,210 Gross profit % 18.6% 22.8% 43.3% 42.9% 32.4% 32.3% 33.3% 35.2% EBITDA 1,060 999 4,400 3,546 289 67 5,749 4,612 EBITDA % 7.5% 8.4% 21.0% 17.4% 9.6% 2.8% 15.1% 13.3%
Total operating profit 817 835 4,161 3,207 210 (98) 5,188 3,944 Total operating profit % 5.7% 7.0% 19.9% 15.8% 7.0% (4.1%) 13.6% 11.4% ------------------ ------- ------- ------- ------- ------ ------- ------- -------
US Ground
US Ground delivered strong revenue growth in the first half, up 19% to $14.2m (2016: $11.9m). As expected, there have been variations in the gross profit percentage as the business scales up. This has been driven by the addition of new bases and changes in revenue mix but this gross profit percentage should normalise at around 20% as the business matures. The total operating profit of $0.8m (2016: $0.8m), whilst flat, reflects the investment in the new bases.
The division has good growth prospects after some healthy contract wins in the first half.
Europe Ground
The European Ground division had a positive first half of 2017. Growth in revenue was modest reflecting the return of discretionary spending albeit at low levels. Gross profit was maintained at a healthy margin of 43.3% (2016: 42.9%). Principally, as a result of the restructuring programme in 2016, total operating profit was up 30% to $4.2m (2016: $3.2m).
The division now has a solid platform to deliver modest growth.
Middle East Ground
Middle East Ground successfully built on the platform it established in 2016. Revenue and gross profit were up 25% to $3.0m (2016: $2.4m) and up 26% to $1.0m (2016: $0.8m) respectively.
The division continues to see increased numbers of movements through the FBO and this provides a strong foundation for our planned development in the region.
Financial Review
Basis of presentation of financials
In order to aid understanding of Gama Aviation's underlying business performance, all financial commentary below is provided on a constant currency basis unless otherwise stated. The 2016 performance has been restated to the same average rate for USD to GBP as the reported 2017 financials. The average rate for H1 of 2017 was USD1.26 to GBP1.00.
Total Group performance
During the period the Total Group performance, which included 100% of the results of the associate and joint venture, delivered revenues of $290.8m. This excludes the divisional inter-segment revenue which is removed on a Total Group consolidated basis.
The Operational Performance Review illustrates the divisions and regions on an unconsolidated basis and therefore includes the divisional inter-segment revenue treating each division as a stand-alone business for comparative purposes in order to assess the underlying performance of each division.
The table below reconciles the Total Group performance to the reported results.
Underlying
Total
Gross Underlying Operating
USD thousands Revenue Profit EBITDA Profit
---------------------- ---------- --------- ----------- -----------
June 2017
Total Group 290,779 32,600 11,803 10,788
Associate & joint
venture (197,774) (13,301) (5,807) (5,102)
Branding fee
& other intra-group
revenue 8,623 2,032 2,032 2,032
---------- --------- ----------- -----------
Reported 101,628 21,331 8,028 7,718
June 2016
Total Group 209,759 25,124 6,678 5,428
Associate & joint
venture (117,127) (6,125) (1,909) (1,789)
Branding fee
& other intra-group
revenue 8,974 2,760 2,760 2,760
---------- --------- ----------- -----------
Reported 101,606 21,759 7,529 6,399
Constant currency
June 2016
Total Group 201,003 23,454 6,145 4,967
Associate & joint
venture (117,127) (6,125) (1,909) (1,789)
Branding fee
& other intra-group
revenue 8,917 2,760 2,759 2,761
---------- --------- ----------- -----------
Reported 92,793 20,089 6,995 5,939
----------------------- ---------- --------- ----------- -----------
Revenue
For the first half of the year, the business delivered revenue of $101.6m (2016: $92.8m), up 9.5% on a constant currency basis driven primarily by the one-off procurement of aircraft for one of our government contracts. The total revenue on this was $10.5m, classified as aircraft sales and was derived within the Europe Ground business.
The Landmark merger together with the organic growth in the US Air business, continues to drive record Total Group revenues, which are up 45% to $290.8m (2016: $201.0m).
Gross profit
Reported gross profit is up 6% to $21.3m (2016: $20.1m) with a stable gross profit percentage of 21.0% (2016: 21.6%).
EBITDA
Underlying EBITDA is up 14% to $8.0m (2016: $7.0m). The contribution to the Group EBITDA from the European Air and Ground divisions has increased by 39% to $6.1 (2016: $4.4m). This has offset the lower branding fee derived from the US Air business of $2.0m (2016: $2.7m). The branding fee is now fixed from 1 January 2017 at $4m in 2017 and $3.75m from 2018 onwards. The remainder of the profits attributable to Gama Aviation from the US Air business are derived in total operating profit, which includes Gama Aviation's share within the line of the associate.
Constant
Currency
USD thousands June 2017 June 2016 June 2016
--------------------- ---------- ---------- -----------
Continuing EBITDA 7,363 6,248 5,786
Exceptional items 567 1,281 1,209
Share-based payment 98 - -
expense
---------- ---------- -----------
Underlying EBITDA 8,028 7,529 6,995
---------------------- ---------- ---------- -----------
Exceptional items
Exceptional items amounted to $0.6m (2016: $1.3m), details of which are included within note 4. Of the total $0.6m exceptional costs, $0.2m are transaction costs (2016: $0.5m) with the remainder being the one-off costs associated with the subsequent integration and re-organisation of these transactions.
Share based payment expense
On 10 August 2016, the Group announced that a total of 1,500,000 share options were granted at GBP1.55 to a number of employees. On 6 January 2017, 1,390,000 share options were formally awarded and accordingly there is a share based payment charge in the period of $0.1m (2016: $nil). Please see note 9 for more detail.
Associates and Joint ventures
To illustrate the Total Operating Profit contribution that is derived by the Gama Aviation Group's associates and joint ventures, the following tables below reconcile the divisional performance of both US and Asia Air to the reported Total Operating Profit.
US Air
US Air division performance reconciliation
to reported performance
-------------------------------------------------------------------
Underlying
Total
Gross Underlying Operating
USD thousands Revenue Profit EBITDA Profit
----------------- ---------- --------- ----------- -----------
June 2017
US Air division 191,196 13,149 6,180 6,010
Associate (191,196) (13,111) (6,152) (5,464)
Branding fee 2,000 2,000 2,000 2,000
---------- --------- ----------- -----------
Reported 2,000 2,038 2,028 2,546
June 2016
US Air division 110,002 6,150 2,583 2,429
Associate (108,785) (5,902) (2,281) (2,167)
Branding fee 2,720 2,720 2,720 2,720
---------- --------- ----------- -----------
Reported 3,937 2,968 3,022 2,982
------------------ ---------- --------- ----------- -----------
The reported underlying total operating profit (which includes the contribution of the associate) of the US Air division for Gama Aviation is derived as follows:
USD thousands June 2017 June 2016 --------------------- ---------- ---------- Branding fee 2,000 2,720 Line of associate 1,902 (253) Losses of associate (1,501) 253 Other 145 262 Reported underlying total operating profit 2,546 2,982 ---------------------- ---------- ----------
Losses of associate
Within the $1.9m share of results of the US Air associate is a $1.5m provision release. During the past few years, the US Air associate has been loss- making and the Group has been provisioning amounts in anticipation of additional resourcing requirements. Previously, these losses have been included in the Group's underlying earnings and have therefore been included in the Group's underlying EPS. With the strength of the Associate's performance, its profit-making position and positive net assets position, together with a re-organised branding fee structure, the provisions are no longer required and have been released. The provision release has not been included in the Group's underlying results in this period.
Asia Air
Asia Air division performance reconciliation
to reported performance
------------------------------------------------------------------
Underlying
Total
Gross Underlying Operating
USD thousands Revenue Profit EBITDA Profit
------------------- -------- -------- ----------- -----------
June 2017
Asia Air division 6,732 190 (345) (362)
Joint venture (6,732) (190) 345 362
Branding fee 32 32 32 32
-------- -------- ----------- -----------
Reported 32 32 32 32
June 2016
Asia Air division 8,539 223 (371) (379)
Joint venture (8,539) (223) 371 (379)
Branding fee 40 40 40 40
-------- -------- ----------- -----------
Reported 40 40 40 40
-------------------- -------- -------- ----------- -----------
The reported underlying total operating profit (which includes the profit contribution of the joint venture) of the Asia Air division for Gama Aviation is derived as follows:
USD thousands June 2017 June 2016
Branding fee 32 40
Losses of associate 179 239
Line of joint venture (179) (239)
---------- ----------
Reported underlying
total operating
profit 32 40
------------------------ ---------- ----------
Total operating profit
The underlying total operating profit, which includes the operating profit attributable to Gama Aviation of the 100% owned group companies together with the results attributable to Gama Aviation from its associate and joint venture is up 31% to $7.7m (2016: $5.9m).
Constant
USD thousands June 2017 June 2016 Currency
June 2016
---------------------------- ------------ ------------ -----------
Continuing total operating
profit 9,647 3,811 3,522
Amortisation 755 815 716
Exceptional items 567 1,281 1,209
Share of associate's 156 - -
exceptional items
Share-based payment 98 - -
expense
Losses of associate
and joint venture (1,322) 492 492
Profit on disposal (2,183) - -
of interest in associate
------------ ------------ -----------
Underlying total operating
profit 7,718 6,399 5,939
----------------------------- ------------ ------------ -----------
Share of associate's exceptional items
The Group also had a further share of exceptional items from our associate of $0.2m (2016: $nil).
Losses of associate and joint venture
Over previous and current financial periods, Gama Aviation has been provisioning amounts in anticipation of additional resourcing requirements for both the associate and joint venture. The losses made in the associate and joint venture have been included in the Group's underlying earnings and have therefore been included in the Group's underlying total operating profit. With the strength of the US Air associate's performance in 2017, its profit-making position and positive net assets position, together with a re-organised branding fee structure, the provisions are no longer required and have been released. The provision release has not been included in the Group's underlying earnings in this period.
Provisions continue to be made for the losses of the joint venture and amounted to $170k (2016: $239k) in the period. Similarly, these losses have been excluded from the underlying earnings of the Group and are therefore not included in the underlying Group total operating profit.
Profit on disposal of interest in associate
At 31 December 2016, the Group held a 49% interest in Gama Aviation LLC and accounted for this investment as an associate. On 1 January 2017, Gama Aviation LLC merged its aircraft management and charter operations with Landmark Aviation LLC, a wholly owned subsidiary of BBA Aviation Plc. As a consequence, the Group transferred a 24.5% interest to BBA Aviation Plc in return for 24.5% of the net assets of Landmark Aviation LLC. This transaction has resulted in the recognition of a profit on disposal of interest in associate of $2.2m. The Group has retained the remaining 24.5% and continues to account for the investment as an associate.
Profit before tax
Underlying profit before tax is up 40% to $7.0m (2016: $5.0m).
Constant
USD thousands June 2017 June 2016 Currency
June 2016
--------------------------- ------------ ------------ -----------
Continuing profit
before tax 8,694 7,486 7,325
Amortisation 755 815 716
Exceptional items 567 1,281 1,209
Share of associate's 156 - -
exceptional items
Share-based payment 98 - -
expense
Losses of associate
and joint venture (1,322) 492 492
Profit on disposal (2,183) - -
of interest in associate
Unrealised FX movements
in finance costs 247 (4,642) (4,730)
------------ ------------ -----------
Underlying profit
before tax 7,012 5,432 5,012
---------------------------- ------------ ------------ -----------
Unrealised FX movements within finance costs
Within our global services business, we operate and manage geographically mobile assets. As a result, Gama Aviation is exposed to a number of currencies. With the exception of Europe, the rest of the regions trade in USD which is the same as our Group reporting currency, leaving little or no foreign exchange exposure.
The material currency exposure for Gama Aviation is within our Europe operations between GBP and USD. Gama Aviation experiences both realised and unrealised trading gains and losses on these exchange rate movements. These impact our operating performance, and finance income and costs.
2016 was an especially volatile year between GBP and USD exchange rates and as a result we reported some material gains within finance income. This was due to the loan structure within the business and how the proceeds of equity and debt were deployed into subsidiary companies whereby translation differences arose where functional currencies differed from the Gama Aviation reporting currency of USD.
We reported during 2016, that Gama Aviation was looking to reduce this complexity by simplifying both the loan structure of the group and to carry out a review of the functional currencies of the subsidiaries in the group and we are pleased with the progress made.
The unrealised FX movement in the period was a loss of $0.2m (2016: gain of $4.7m).
Earnings per share (EPS)
Underlying EPS is up 25% to 12.2 cents (2016: 9.7 cents).
Constant
USD thousands June 2017 June Currency
2016 June 2016
---------------------------------- ------------ ----------- -----------
Profit attributable to
ordinary equity holders
of the parent:
Continuing operations 7,037 6,588 6,549
Add back:
Amortisation 755 815 716
Exceptional items 567 1,281 1,209
Share of associate's exceptional 156 - -
items
Share-based payment expense 98 - -
Losses of associate and
joint venture (1,322) 492 492
Profit on disposal of (2,183) - -
interest in associate
Unrealised FX movements
in finance costs 247 (4,641) (4,730)
------------ ----------- -----------
Profit attributable to
ordinary shareholders
for adjusted earnings 5,355 4,535 4,236
Denominator
Weighted average number
of shares used in basic
EPS 43,994,442 43,661,109 43,661,109
Underlying basic earnings
per share (cents) 12.17c 10.39c 9.70c
----------------------------------- ------------ ----------- -----------
Taxation
There is a total tax charge for the period of $1.5m (2016: $1.0m) and an effective tax rate of 20%.
Cash
USD thousands June 2017 June 2016
--------------------------- ------------ ------------
Underlying EBITDA 8,028 7,529
Working capital movement 335 (5,937)
Exceptional items (567) (1,281)
Share-based payment (98) -
expense
Other (2,029) (1,373)
------------ ------------
Cash flow from operations 5,669 (1,062)
Capex movement 708 (930)
Net interest & tax
paid (702) (834)
------------ ------------
Free cash flow 5,675 (2,826)
Acquisitions - (2,529)
Net debt foreign
exchange movements (618) 1,064
------------ ------------
Change in net debt 5,057 (4,291)
------------ ------------
Net debt (14,330) (13,313)
---------------------------- ------------ ------------
Cash increased by $4.0m from $11.2m at December 2016 to $15.2m. This has been aided by all the divisions within the various regions being EBITDA positive.
There has been a significant focus within the Group to improve its working capital management with a working capital movement in the first half that is neutral compared to a $6m outflow in the prior period. As a result, cash generated from operations was $5.7m for the period compared with an outflow of $1.1m in 2016. With the continued focus on working capital management within the Group, a stabilised European fleet and the exiting of the underperforming contracts in 2016 resulting in less debt impairments, the business is starting to generate the expected cash conversion.
Net debt at the half year was $14.3m, down $5.1m from December 2016. This improvement has come as a result of an improved period end cash balance as well as the disposal of two of the aircraft that the Group held as held for sale. The proceeds received allowed the Group to pay off the remaining asset backed debt.
Net debt to underlying EBITDA was 0.98x (2016: 0.80x).
Dividend
As usual and in accordance with the group's dividend policy, the Directors do not propose an interim dividend to be paid for the six months to 30 June 2017. The Group will continue to maintain its progressive annual dividend policy.
The final dividend of 2.6p per share for the year ended 31 December 2016 was approved at the Annual General Meeting on 25 May 2017 and was paid on 18 July 2017.
Discontinued operations
The operating losses incurred on the Group's owned aircraft that are deployed on ad-hoc charter are also separated from the underlying EBITDA as this is a legacy element of the business model that the Group has classified as discontinued. The discontinued operations loss for the period was $1.0m (2016: $0.1m). During the period, the Group sold two of the three remaining owned aircraft. The book value of the one remaining asset held for sale is $1.5m.
Kevin Godley
Chief Financial Officer
Segmental analysis
(USD thousands)
Total Group(1) and Constant Currency(2)
Six months ended 30 June 2017
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 191,196 14,219 43,022 31,398 11,629 3,003 6,732 875 (11,295) 290,779
Gross Profit 13,149 2,648 4,414 9,075 821 974 190 1,329 32,600
Gross Profit
% 6.9% 18.6% 10.3% 28.9% 7.1% 32.4% 2.8% >100% 11.2%
EBITDA(3) 6,180 1,060 1,723 4,400 167 289 (345) (1,671) 11,803
EBITDA(3)
% 3.2% 7.5% 4.0% 14.0% 1.4% 9.6% (5.1%) (>100%) 4.1%
Total Operating
Profit(4) 6,010 817 1,493 4,161 130 210 (362) (1,671) 10,788
Total Operating
Profit(4)
% 3.1% 5.7% 3.5% 13.3% 1.1% 7.0% (5.4%) (>100%) 3.7%
----------------- -------- ------- ------- ------- ------- ------- ------- -------- --------- --------
Six months ended 30 June 2016
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 110,002 11,925 49,699 20,345 8,889 2,394 8,539 1,055 (11,845) 201,003
Gross Profit 6,150 2,718 3,780 8,719 715 773 223 376 23,454
Gross Profit
% 5.6% 22.8% 7.6% 42.9% 8.0% 32.3% 2.6% 35.6% 11.7%
EBITDA(3) 2,583 999 858 3,546 (19) 67 (371) (1,518) 6,145
EBITDA(3)
% 2.3% 8.4% 1.7% 17.4% (0.2%) 2.8% (4.3%) (>100%) 3.1%
Total Operating
Profit(4) 2,429 835 588 3,207 (96) (98) (379) (1,519) 4,967
Total Operating
Profit(4)
% 2.2% 7.0% 1.2% 15.8% (1.1%) (4.1%) (4.4%) (>100%) 2.5%
----------------- -------- ------- ------- ------- ------- ------- ------- -------- --------- --------
Total Group(1)
Six months ended 30 June 2017
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 191,196 14,219 43,022 31,398 11,629 3,003 6,732 875 (11,295) 290,779
Gross Profit 13,149 2,648 4,414 9,075 821 974 190 1,329 32,600
Gross Profit
% 6.9% 18.6% 10.3% 28.9% 7.1% 32.4% 2.8% >100% 11.2%
EBITDA(3) 6,180 1,060 1,723 4,400 167 289 (345) (1,671) 11,803
EBITDA(3)
% 3.2% 7.5% 4.0% 14.0% 1.4% 9.6% (5.1%) (>100%) 4.1%
Total Operating
Profit(4) 6,010 817 1,493 4,161 130 210 (362) (1,671) 10,788
Total Operating
Profit(4)
% 3.1% 5.7% 3.5% 13.3% 1.1% 7.0% (5.4%) (>100%) 3.7%
----------------- -------- ------- ------- ------- ------- ------- ------- -------- --------- --------
Six months ended 30 June 2016
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 110,002 11,925 56,237 23,172 8,889 2,394 8,539 1,096 (12,495) 209,759
Gross Profit 6,150 2,718 4,209 9,930 715 773 223 406 25,124
Gross Profit
% 5.6% 22.8% 7.5% 42.9% 8.0% 32.3% 2.6% 37.0% 12.0%
EBITDA(3) 2,583 999 946 4,039 (19) 67 (371) (1,566) 6,678
EBITDA(3)
% 2.3% 8.4% 1.7% 17.4% (0.2%) 2.8% (4.3%) (>100%) 3.2%
Total Operating
Profit(4) 2,429 835 649 3,652 (96) (98) (379) (1,564) 5,428
Total Operating
Profit(4)
% 2.2% 7.0% 1.2% 15.8% (1.1%) (4.1%) (4.4%) (>100%) 2.6%
----------------- -------- ------- ------- ------- ------- ------- ------- -------- --------- --------
1 - Includes 100% of the results of Gama Aviation's Associate in the US and Joint Venture in Hong Kong.
2 - Calculated at a constant foreign exchange rate of $1.26 to GBP1, being the rate that represented the average for the 2017 financial period.
3 - Underlying EBITDA is arrived at by taking operating profit before depreciation, amortisation, exceptional items and share-based payment expense.
4 - Underlying total operating profit is arrived at by taking operating profit before amortisation, exceptional items, share based payment expense.
5 - 'Elims' represents the elimination of inter-segment revenue.
Segmental analysis (continued)
(USD thousands)
Reported and Constant Currency(2)
Six months ended 30 June 2017
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 2,000 14,219 43,054 31,488 11,629 3,003 32 875 (4,672) 101,628
Gross Profit 2,038 2,648 4,414 9,075 821 974 32 1,329 21,331
Gross Profit
% >100% 18.6% 10.3% 28.8% 7.1% 32.4% 100.0% >100% 21.0%
EBITDA(3) 2,028 1,060 1,723 4,400 167 289 32 (1,671) 8,028
EBITDA(3)
% >100% 7.5% 4.0% 14.0% 1.4% 9.6% 100.0% (>100%) 7.9%
Total Operating
Profit(4) 2,546 817 1,493 4,161 130 210 32 (1,671) 7,718
Total Operating
Profit(4)
% >100% 5.7% 3.5% 13.2% 1.1% 7.0% 100% (>100%) 7.6%
----------------- ------ ------- ------- ------- ------- ------- ------- -------- --------- --------
Six months ended 30 June 2016
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 3,937 11,925 49,699 20,345 8,889 2,394 40 1,055 (5,491) 92,793
Gross Profit 2,968 2,718 3,780 8,719 715 773 40 376 20,089
Gross Profit
% 75.4% 22.8% 7.6% 42.9% 8.0% 32.3% 100.0% 35.6% 21.6%
EBITDA(3) 3,022 999 858 3,546 (19) 67 40 (1,518) 6,995
EBITDA(3)
% 76.8% 8.4% 1.7% 17.4% (0.2%) 2.8% 100.0% (>100%) 7.5%
Total Operating
Profit(4) 2,982 835 588 3,207 (96) (98) 40 (1,519) 5,939
Total Operating
Profit(4)
% 75.7% 7.0% 1.2% 15.8% (1.1%) (4.1%) 100% (>100%) 6.4%
----------------- ------ ------- ------- ------- ------- ------- ------- -------- --------- -------
Reported
Six months ended 30 June 2017
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 2,000 14,219 43,054 31,488 11,629 3,003 32 875 (4,672) 101,628
Gross Profit 2,038 2,648 4,414 9,075 821 974 32 1,329 21,331
Gross Profit
% >100% 18.6% 10.3% 28.8% 7.1% 32.4% 100.0% >100% 21.0%
EBITDA(3) 2,028 1,060 1,723 4,400 167 289 32 (1,671) 8,028
EBITDA(3)
% >100% 7.5% 4.0% 14.0% 1.4% 9.6% 100.0% (>100%) 7.9%
Total Operating
Profit(4) 2,546 817 1,493 4,161 130 210 32 (1,671) 7,718
Total Operating
Profit(4)
% >100% 5.7% 3.5% 13.2% 1.1% 7.0% 100% (>100%) 7.6%
----------------- ------ ------- ------- ------- ------- ------- ------- -------- --------- --------
Six months ended 30 June 2016
US Europe MENA Asia Other Elims(5) Totals
Air Ground Air Ground Air Ground Air
Revenue 3,937 11,925 56,237 23,172 8,889 2,394 40 1,096 (6,084) 101,606
Gross Profit 2,968 2,718 4,209 9,930 715 773 40 406 21,759
Gross Profit
% 75.4% 22.8% 7.5% 42.9% 8.0% 32.3% 100.0% 37.0% 21.4%
EBITDA(3) 3,022 999 946 4,039 (19) 67 40 (1,565) 7,529
EBITDA(3)
% 76.8% 8.4% 1.7% 17.4% (0.2%) 2.8% 100.0% (>100%) 7.4%
Total Operating
Profit(4) 2,982 835 649 3,653 (96) (98) 40 (1,566) 6,399
Total Operating
Profit(4)
% 75.7% 7.0% 1.2% 15.8% (1.1%) (4.1%) 100% (>100%) 6.3%
----------------- ------ ------- ------- ------- ------- ------- ------- -------- --------- --------
1 - Includes 100% of the results of Gama Aviation's Associate in the US and Joint Venture in Hong Kong.
2 - Calculated at a constant foreign exchange rate of $1.26 to GBP1, being the rate that represented the average for the 2017 financial period.
3 - Underlying EBITDA is arrived at by taking operating profit before depreciation, amortisation, exceptional items and share-based payment expense.
4 - Underlying total operating profit is arrived at by taking operating profit before amortisation, exceptional items, share based payment expense and including the share of profits of equity accounted investments.
5 - 'Elims' represents the elimination of inter-segment revenue.
Gama Aviation plc
Unaudited Condensed Consolidated Interim Financial Statements
Six months ended 30 June 2017
Consolidated income statement (unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
Note $'000 $'000
----------------------------------- ----- ----------- -----------
Continuing operations
Revenue 3 101,628 101,606
Cost of sales (80,297) (79,847)
----------------------------------- ----- ----------- -----------
Gross profit 21,331 21,759
----------------------------------- ----- ----------- -----------
Administrative expenses (15,590) (17,456)
Underlying EBITDA 8,028 7,529
Items not included in underlying
EBITDA 4 (665) (1,281)
Depreciation and amortisation (1,622) (1,945)
Operating profit 5,741 4,303
Share of results from equity
accounted investments 1,723 (492)
Profit on disposal of interest
in associate 5 2,183 -
Total operating profit 9,647 3,811
----------------------------------- ----- ----------- -----------
Finance income - 4,535
Finance costs (953) (860)
----------------------------------- ----- ----------- -----------
Profit before tax from continuing
operations 8,694 7,486
Taxation 7 (1,519) (1,002)
----------------------------------- ----- ----------- -----------
Profit from continuing operations 7,175 6,484
----------------------------------- ----- ----------- -----------
Discontinued operations
Loss after tax from discontinued
operations 6 (1,012) (105)
----------------------------------- ----- ----------- -----------
Profit for the period 6,163 6,379
----------------------------------- ----- ----------- -----------
Attributable to:
Owners of the Company 6,025 6,483
Non-controlling interests 138 (104)
----------------------------------- ----- ----------- -----------
Totals 6,163 6,379
----------------------------------- ----- ----------- -----------
Earnings per share attributable
to the equity holders of the
parent 8
Basic (cents) 13.69c 14.85c
Diluted (cents) 13.58c 14.85c
Basic - continuing operations
(cents) 16.00c 15.09c
Diluted - continuing operations
(cents) 15.86c 15.09c
----------------------------------- ----- ----------- -----------
Consolidated statement of comprehensive income (unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
--------------------------------------- ----------- -----------
Profit for the period 6,163 6,379
Items that may be reclassified
to profit or loss:
Exchange differences on translation
of foreign operations 1,733 (10,201)
----------------------------------------- ----------- -----------
Total comprehensive income for
the period 7,896 (3,822)
----------------------------------------- ----------- -----------
Total comprehensive income is
attributable to:
Owners of the Company 7,758 (3,718)
Non-controlling interests 138 (104)
----------------------------------------- ----------- -----------
Totals 7,896 (3,822)
----------------------------------------- ----------- -----------
Consolidated statement of changes in equity (unaudited)
For the six months to 30 June 2017
Share Share Other Foreign Accumulated Total Non-controlling Total
capital premium reserves exchange profit/ shareholders' interest equity
reserve (losses) equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Balance at
1 January 2017 684 - 61,377 (23,529) 17,419 55,951 581 56,532
Share-based
payments - - 98 - - 98 - 98
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Transactions
with owners - - 98 - - 98 - 98
Profit for
the period - - - - 6,025 6,025 138 6,163
Other
comprehensive
income - - - 1,733 - 1,733 - 1,733
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Total
comprehensive
income - - - 1,733 6,025 7,758 138 7,896
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Balance at
30 June 2017 684 - 61,475 (21,796) 23,444 63,807 719 64,526
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
For the six months to 30 June 2016
Share Share Other Foreign Accumulated Total Non-controlling Total
capital premium reserves exchange profit/ shareholders' interest equity
reserve (losses) equity
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Balance at
1 January 2016 670 35,458 57,228 (5,089) (33,304) 54,963 691 55,654
Issuance of
shares 14 - 4,149 - - 4,163 - 4,163
Cancellation
of share
premium - (35,458) - - 35,458 - - -
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Transactions
with owners 14 (35,458) 4,149 - 35,458 4,163 - 4,163
Profit for
the period - - - - 6,483 6,483 (104) 6,379
Other
comprehensive
income - - - (10,201) - (10,201) - (10,201)
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Total
comprehensive
income - - - (10,201) 6,483 (3,718) (104) (3,822)
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Balance at
30 June 2016 684 - 61,377 (15,290) 8,637 55,408 587 55,995
---------------- -------- --------- --------- --------- ------------ -------------- ---------------- ---------
Consolidated balance sheet
30 June 31 December
2017 2016
(unaudited)
$'000 $'000
------------------------------- --- ------------ ------------
Non-current assets
Goodwill 39,238 37,631
Other intangible assets 10,482 9,987
------------------------------- --- ------------ ------------
Total intangible assets 11 49,720 47,618
Property, plant and equipment 11 15,219 12,215
Investments accounted for 2,584 -
using the equity method
Deferred tax asset 4,579 4,557
------------------------------- --- ------------ ------------
72,102 64,390
------------------------------- --- ------------ ------------
Current assets
Assets held for resale 12 1,500 7,200
Inventories 10,966 8,410
Trade and other receivables 54,360 46,473
Cash and cash equivalents 15,186 11,174
------------------------------- --- ------------ ------------
82,012 73,257
------------------------------- --- ------------ ------------
Total assets 154,114 137,647
------------------------------- --- ------------ ------------
Current liabilities
Trade and other payables (46,334) (41,682)
Obligations under finance
leases (798) (1,644)
Provisions for liabilities (1,368) (2,416)
Borrowings (26,471) (24,018)
Deferred revenue (10,710) (4,315)
------------------------------- --- ------------ ------------
(85,681) (74,075)
------------------------------- --- ------------ ------------
Total assets less current
liabilities 68,433 63,572
------------------------------- --- ------------ ------------
Non-current liabilities
Borrowings (975) (923)
Obligations under finance
leases (1,272) (3,976)
Provisions for liabilities - (492)
Deferred tax liabilities (1,660) (1,649)
------------------------------- --- ------------ ------------
(3,907) (7,040)
------------------------------- --- ------------ ------------
Total liabilities (89,588) (81,115)
------------------------------- --- ------------ ------------
Net assets 64,526 56,532
------------------------------- --- ------------ ------------
Shareholders' equity
Share capital 684 684
Share premium - -
Other reserves 61,475 61,377
Foreign exchange reserve (21,796) (23,529)
Accumulated profit/(losses) 23,444 17,419
------------------------------- --- ------------ ------------
Total shareholders' equity 63,807 55,951
------------------------------- --- ------------ ------------
Non-controlling interest 719 581
Total equity 64,526 56,532
------------------------------- --- ------------ ------------
Consolidated cash flow statement (unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
------------------------------------------- ----------- -----------
Cash flows from operating activities
Profit before tax from continuing
operations 8,694 7,486
Loss before tax from discontinued
operations (1,012) (105)
------------------------------------------- ----------- -----------
Profit before tax 7,682 7,381
Adjustments for:
Depreciation and amortisation 1,622 1,967
Finance income - (4,653)
Finance costs 949 860
Loss on disposal of assets held 150 -
for sale
Profit on disposal of interest in (2,183) -
associate
Share-based payment expense 98 -
Unrealised foreign exchange movements (1,261) (1,172)
Share of results from equity accounted
investments (1,723) 492
------------------------------------------- ----------- -----------
Operating cash flows before movements
in working capital 5,334 4,875
Increase in inventories (2,065) (714)
Increase in receivables (5,266) (482)
Increase/(decrease) in payables 1,918 (10,630)
Increase in deferred revenue 5,997 6,048 Decrease in provisions (249) (159) ------------------------------------------- ----------- ----------- Cash generated from operations 5,669 (1,062) Interest received - 26 Interest paid (702) (860) ------------------------------------------- ----------- ----------- Net cash flows from operating activities 4,967 (1,896) ------------------------------------------- ----------- ----------- Cash flows from investing activities Purchases of property, plant and equipment (3,253) (930) Purchases of intangibles (200) - Proceeds on disposal of assets held 4,161 - for sale Acquisition of subsidiary, net of cash acquired - (2,529) ------------------------------------------- ----------- ----------- Net cash flows from investing activities 708 (3,459) ------------------------------------------- ----------- ----------- Cash flows from financing activities Repayments of obligations under finance leases (3,550) (797) Proceeds from borrowings 1,143 7,193 Repayment of borrowings - (40) Net cash flows from financing activities (2,407) 6,356 ------------------------------------------- ----------- ----------- Net increase in cash and cash equivalents 3,268 1,001 Effect of foreign exchange rates 744 - Cash and cash equivalents at 1 January 11,174 8,457 ------------------------------------------- ----------- ----------- Cash and cash equivalents at the end of period 15,186 9,458 ------------------------------------------- ----------- ----------- 1. Corporate information and basis of preparation
The financial information for the year ended 31 December 2016 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2016 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. Gama Aviation plc is a publicly limited company incorporated and domiciled in England and Wales. The Company's shares are publicly traded on the AIM market of the London Stock Exchange.
These interim consolidated financial statements (the interim financial statements) are for the six months ended 30 June 2017. They have been prepared in accordance with IFRSs as adopted by the European Union and IAS 34 "Interim Financial Reporting". They do not include all of 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 2016.
2. Accounting policies
The accounting policies set out in the Group's statutory financial statements for the year ended 31 December 2016 have been applied in the preparation of the interim financial statements. There have been no changes to any of the Group's critical accounting estimates and judgements of its principal financial risks. 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.
3. Segment information
For management purposes, the Group is organised into business units, based on line of business and geographical location.
An analysis of the Group's revenue, gross profit, underlying EBITDA and underlying total operating profit for the period ended 30 June 2017 is as follows:
Total Gross profit Gross profit Underlying Underlying Underlying Underlying
Revenue EBITDA EBITDA total total
operating operating
profit profit
$'000 $'000 % $'000 % $'000 %
-------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
US: Air 2,000 2,038 >100 2,028 >100 2,546 >100
US: Ground 14,219 2,648 18.6 1,060 7.5 817 5.7
Europe:
Air 43,054 4,414 10.3 1,723 4.0 1,493 3.5
Europe:
Ground 31,488 9,075 28.8 4,400 14.0 4,161 13.2
MENA:
Air 11,629 821 7.1 167 1.4 130 1.1
MENA:
Ground 3,003 974 32.4 289 9.6 210 7.0
Asia:
Air 32 32 100.0 32 100.0 32 100.0
Other 875 1,329 >100 (1,671) (>100) (1,671) (>100)
Eliminations (4,672) - - - - - -
---------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
Totals 101,628 21,331 21.0 8,028 7.9 7,718 7.6
---------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
Underlying total operating profit 7,718
Amortisation (755)
Exceptional items (567)
Share of associate's exceptional items (156)
Share-based payment expense (98)
Losses of associate and joint venture 1,322
Profit on disposal of interest in associate 2,183
Finance costs (953)
------------------------------------------------------------------------------ ----------
Profit before tax from continuing operations 8,694
------------------------------------------------------------------------------ ----------
3. Segment information (continued)
An analysis of the Group's revenue, gross profit, underlying EBITDA and underlying total operating profit for the period ended 30 June 2016 is as follows:
Total Gross profit Gross profit Underlying Underlying Underlying Underlying
Revenue EBITDA EBITDA total total
operating operating
profit profit
$'000 $'000 % $'000 % $'000 %
-------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
US: Air 3,937 2,968 75.4 3,022 76.8 2,982 75.7
US: Ground 11,925 2,718 22.8 999 8.4 835 7.0
Europe:
Air 56,237 4,209 7.5 946 1.7 649 1.2
Europe:
Ground 23,172 9,930 42.9 4,039 17.4 3,653 15.8
MENA: Air 8,889 715 8.0 (19) (0.2) (96) (1.1)
MENA: Ground 2,394 773 32.3 67 2.8 (98) (4.1)
Asia: Air 40 40 100.0 40 100.0 40 100.0
Other 1,096 406 37.0 (1,565) (>100) (1,566) (>100)
Eliminations (6,084) - - - - - -
---------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
Totals 101,606 21,759 21.4 7,529 7.4 6,399 6.3
---------------- -------- ------------ ------------ ---------- ---------- ---------- ----------
Underlying total operating profit 6,399
Amortisation (815)
Exceptional items (1,281)
Losses of associate and joint venture (492)
Finance income 4,535
Finance costs (860)
------------------------------------------------------------------------------ ----------
Profit before tax from continuing operations 7,486
------------------------------------------------------------------------------ ----------
An analysis of the Group's revenue is as follows:
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
----------------------------------- ---------- ----------
Continuing operations
Sale of business aviation services 89,136 98,846
Sale of aircraft 10,460 -
Branding fees 2,032 2,760
----------------------------------- ---------- ----------
Totals 101,628 101,606
----------------------------------- ---------- ----------
4. Items not included in underlying EBITDA
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
Exceptional items
Transaction costs 189 519
Integration and business re-organisation
costs 378 762
--------------------------------------------- ---------- ----------
567 1,281
Share-based payment expense 98 -
--------------------------------------------- ---------- ----------
Totals 665 1,281
--------------------------------------------- ---------- ----------
Transactions costs represent expenses incurred in respect of the transactions completed in the period, as well as costs associated with seeking out new potential investment opportunities. Integration and business re-organisation costs represent the subsequent third party and internal costs associated with the acquisitions.
5. Profit on disposal of interest in associate
At 31 December 2016, the Group held a 49% interest in Gama Aviation LLC and accounted for this investment as an associate. On 1 January 2017, Gama Aviation LLC merged its aircraft management and charter operations with Landmark Aviation LLC, a wholly owned subsidiary of BBA Aviation Plc. As a consequence, the Group transferred a 24.5% interest to BBA Aviation Plc in return for 24.5% of the net assets of Landmark Aviation LLC. This transaction has resulted in the recognition of a profit on disposal of interest in associate of $2,183,000. The Group has retained the remaining 24.5% and continues to account for the investment as an associate.
6. Discontinued operations
The losses from discontinued operations are generated by the owned aircraft within the group that are held for sale as part of the group strategy to exit the business model of owned aircraft that are deployed solely for the purposes of ad-hoc charter. The Group believes that operating the aircraft whilst held for sale reduces the losses borne in discontinued operations and helps to maintain their airworthiness, assisting the sale process. Two aircraft that were held for sale at 31 December 2016 were sold in 2017. The results of these discontinued operations are presented below:
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
-------------------------------------------- ---------- ----------
Discontinued operations
Revenue 278 214
Expenses (1,294) (437)
--------------------------------------------- ---------- ----------
Operating loss (1,016) (223)
Finance income 4 118
--------------------------------------------- ---------- ----------
Loss before and after tax from discontinued
operations (1,012) (105)
--------------------------------------------- ---------- ----------
Earnings per share
Basic - cents (2.30c) (0.24c)
Diluted - cents (2.28c) (0.24c)
--------------------------------------------- ---------- ----------
The weighted average number of ordinary shares is included in Note 8.
The net cash flows incurred by discontinued operations are as follows: Operating activities 4,161 (78) Investing activities (4,161) - --------------------------------------------- ------- ---- Net cash outflow - (78) --------------------------------------------- ------- ---- 7. Taxation
The taxation charge for the six months to 30 June 2017 is accrued based on the estimated average annual effective income tax rate of 20% (6 months ended 30 June 2016: 14%).
8. 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.
Six months Six months
ended ended
30 June 30 June
2017 2016
$'000 $'000
----------------------------------------- ---------- ----------
Numerator
Profit attributable to ordinary
equity holders of the parent:
Continuing operations 7,037 6,588
Discontinued operations (1,012) (105)
------------------------------------------- ---------- ----------
Profit attributable to ordinary
equity holders of the parent for
basic earnings 6,025 6,483
------------------------------------------- ---------- ----------
Denominator
Weighted average number of shares
used in basic EPS 43,994,442 43,661,109
Effect of dilutive share options 372,795 -
------------------------------------------ ---------- ----------
Weighted average number of shares
used in diluted EPS 44,367,237 43,661,109
Earnings per share
Basic (cents) 13.69c 14.85c
Diluted (cents) 13.58c 14.85c
Basic - continuing operations (cents) 16.00c 15.09c
Diluted - continuing operations
(cents) 15.86c 15.09c
------------------------------------------ ---------- ----------
9. Share-based payments
On 6 January 2017, 1,390,000 share options were awarded, under the Group's Share Option Plan to senior executives and managers across the Company. The vesting period is three years and the options will be exercisable between three and ten years following grant. There are no cash settlement alternatives. The grant does not have performance conditions but is subject to the employees remaining in employment.
The fair value of the share options is estimated at the grant date using a Black-Scholes model, taking into account the terms and conditions upon which the options were awarded. The inputs to the model are shown below:
Share price on date of grant (pence) 154 Exercise price (pence) 155 Vesting period (years) 3 Expected life of share options (years) 10 Expected volatility (%) 28.36% Risk-free interest rate (%) 1.18% Expected dividend yield (%) 1.66% -------------------------------- ------- 10. Dividends
The Directors do not propose a dividend to be paid for the six months to 30 June 2017 (30 June 2016: nil). The final dividend of 2.6p per share for the year ended 31 December 2016 was approved at the Annual General Meeting on 25 May 2017 and was paid on 18 July 2017.
11. Property, plant and equipment and intangible assets
Property, Intangible
plant and assets
equipment
$'000 $'000
---------------------------------- ----------- -----------
Net book value at 1 January 2017 12,215 47,618
Additions 3,253 200
Depreciation and amortisation (867) (755)
Exchange movements 618 2,657
----------------------------------- ----------- -----------
Net book value at 30 June 2017 15,219 49,720
----------------------------------- ----------- -----------
Property, Intangible
plant and assets
equipment
$'000 $'000
------------------------------------ ----------- -----------
Net book value at 1 January 2016 14,806 48,265
Additions 3,697 400
Additions due to acquisitions 2,978 9,276
Reclassified as assets held for (5,636) -
resale Disposals (8) - Depreciation and amortisation (2,041) (1,438) Exchange movements (1,581) (8,885) ------------------------------------- ----------- ----------- Net book value at 31 December 2016 12,215 47,618 ------------------------------------- ----------- ----------- 12. Assets held for resale
At the beginning of 2015, the Group had five aircraft that were held for resale. During the course of 2015, the Group disposed of three of these aircraft directly to third parties. In 2016, an aircraft with a carrying value of $5.6 million was transferred to assets held for resale under IFRS 5. The additions to its book value in the year are directly related to the continuing airworthiness of the aircraft. Two aircraft that were held for sale at 31 December 2016 with a book value of $5.7 million were sold in the first half of 2017. As at 30 June 2017, there is only one aircraft classified as held for sale.
Although the time period to sell the assets classified as held for sale has exceeded one year, this has occurred due to circumstances beyond the Group's control, and the Group remains committed to the plan of selling the remaining aircraft. The aircraft continues to be actively marketed for sale and is held at a value that the directors believe are realisable within the current second-hand market place.
Assets
held for
resale
$'000
---------------------------------- ----------
Net book value at 1 January 2017 7,200
Disposals (5,700)
Net book value at 30 June 2017 1,500
----------------------------------- ----------
Assets
held for
resale
$'000
------------------------------------ ----------
Net book value at 1 January 2016 3,126
Reclassified from property, plant
and equipment 5,636
Additions 266
Impairment (1,828)
Net book value at 31 December 2016 7,200
------------------------------------- ----------
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR SSWFMIFWSEDU
(END) Dow Jones Newswires
September 06, 2017 02:00 ET (06:00 GMT)
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