Final results for the year ended 31 December 2017

RNS Number : 0594I

Gama Aviation PLC

19 March 2018

Date: 19 March 2018

Gama Aviation Plc (AIM: GMAA)

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

Final results for the year ended 31 December 2017

Gama announces a 28% rise in underlying operating profits and strong outlook for growth supported by recent £48 million capital raise

Gama Aviation Plc, one of the world's largest business aviation service providers is pleased to announce the results for the year ended 31 December 2017.

Financial Highlights

· Revenue $207.4m (2016: $196.1m) up 5.8% on a constant currency basis

· Underlying total operating profit $18.7m (2016: $14.6m) up 28.3% on a constant currency basis

· Net debt decreased by $6.4m to $13.0m (2016: $19.4m)

· Operating cash flow increased by $21.6m to $23.8m (2016: $2.2m)

· Current trading in line with management expectations; company well placed to achieve its expectations for the current year

Financial Summary

USD millions (unless otherwise stated)	Underlying results¹			Reported results
	Dec-17	Dec-16	Constant Currency² Dec-16	Dec-17	Dec-16
Revenue	207.4	203.0	196.1	207.4	203.0
Gross profit	47.2	44.2	42.8	47.2	44.2
Gross profit %	22.8%	21.7%	21.8%	22.8%	21.7%
Total operating profit³	18.7	15.1	14.6	17.9	10.9
Profit before tax	17.1	13.7	13.2	16.1	19.3
Basic earnings per share (cents)	31.6	30.1	29.0	27.8	42.9

Operational Highlights

· US Air merger with BBA business proceeding well and the division is benefitting from the Wheels Up growth and contract wins

· Europe Air operational efficiency initiatives completed in 2016 have produced strong improvements in operating profit margins

· US Ground revenue up 27.5% driven by full period impact of new bases opened in 2016 and new contract wins

· Europe Ground revenue growth of 19.8% and operating profit margin of 19.3%

· Middle East and Asia showed encouraging progress

Strategic Highlights

· Acquisitions made in 2016 delivering at or above expectations

· Pipeline of acquisition targets identified

· Management teams and structures in place to support future growth and acquisitions

· Middle East and Asia businesses consolidated into the Group to capture new market opportunities

· Successful placing raising £48m in February 2018, to accelerate the Group's vision of becoming the leading global business aviation services group

1 - Underlying results exclude exceptional items, share-based payment expense, amortisation, reversal of losses of associate and joint venture from prior years, profit on disposal of interest in associate, and unrealised foreign exchange movements included in finance costs, where applicable. In addition, the basic underlying earnings per share excludes a one off deferred tax charge arising in the US from recent tax rate changes. Detailed calculations are presented in the Financial review.

2 - Calculated at a constant foreign exchange rate of $1.29 to £1, being the rate that represented the average for the 2017 financial period.

3 - 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:

"We are pleased to report financial results for 2017 in line with expectations. In particular, we have increased our operating margins and delivered improved operating cash flow.

Strategically this is an exciting time for Gama Aviation, having recently completed our successful £48 million fund raising. This will allow us to deliver significant growth and scale across all geographies and service lines, enabling us to make further value enhancing acquisitions from within our fragmented market and will help us to fulfil our ambition of becoming the global leader in business aviation services.

In US Air, following the BBA aircraft management business merger, we are now the market leader in US business aviation management. This offers us cross-selling opportunities into our US Ground division. We will leverage customer relationships across our national network and invest in base facilities to increase the scale and scope of services.

Europe Air is positioned for sustainable growth and we continue to build our offering in Europe Ground. The acquisitions in Europe have been successful and have added significant value.

Recent corporate developments by us in the Middle East and Asia, together with the proposed construction of a business aviation centre in Sharjah will accelerate growth. With Hutchison as a strategic investor, the addition of two experienced non-executive board directors and the strengthened management teams across the regions, we are well positioned for growth in 2018 and beyond."

-ENDS-

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

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/

Basis of presentation

The analysis of Gama Aviation's operational performance by division and geography, is shown on a Total Division basis (for revenue, gross profit and underlying total operating profit) reflecting 100% of the performance of the division including its 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 currency changes, primarily between GBP and USD. The 2016 performance has been restated at the same average rate for USD to GBP as the 2017 financial statements. The average rate for 2017 was USD1.29 to GBP1.00. The commentary below is based on constant currency performance unless otherwise stated.

The Group operates through eight divisions with clear lines of management responsibility. This represents the four geographies and two business lines. Key financial indicators are measured and monitored on a continuous basis. In summary the key financial indicators by division are:

· Revenue - growth and performance versus plan

· Gross profit - growth and performance versus plan

· Gross profit percentage

· Total operating profit - growth and performance versus plan

The Group also measures and monitors internal non-financial key performance indicators to control and develop operating performance. These are reviewed regularly alongside the key financial indicators reported externally.

Chief Executive Report

I am very pleased to report on another year of strong progress for the business. We have delivered on a number of strategic initiatives and now have the leadership and management teams, systems, processes and capital in place for our next phase of growth.

The business has performed well, with further progress made towards our operating margin targets in both the Air and Ground divisions, as well as a continued improvement in cash generation driven by a strong improvement in working capital management.

Group strategy

The Group's strategy is to become the global market leader in business aviation services through organic, joint venture and acquisition-led profitable growth. The Group is focused on increasing the depth of its capabilities and expertise, broadening the regions it operates in and the services it offers in order to increase the scale of its presence in its chosen markets and to drive further revenue growth through cross selling opportunities.

The Group operates a robust and resilient business model and we have built a strong operational platform to support our growth. We have successfully raised £48m through an equity placing to allow us to capture the investment opportunities which we are currently presented with and to accelerate the next stage of our development.

2017 Performance

The positive momentum seen in the first half of 2017 continued into the second half and the Group delivered performance in line with expectations. Revenue growth and improving profitability were achieved in both divisions. Underlying total operating profit increased to $18.7m (2016: $14.6m) an increase of 28.3%. We achieved significant improvements in working capital resulting in a cash inflow from operations of $23.8m (2016: $2.2m), which led to a $6.4m reduction in net debt.

The Air division delivered exceptional growth with Total Divisional revenue up 35% to $518m (2016: $383m), driven principally by the US associate's merger with the BBA aircraft management business, growth in the Wheels Up contract and further contract wins. Total operating profit increased to $13.6m (2016: $7.4m) on the back of increasing scale. Total operating profit margin increased to 2.6% (2016: 1.9%).

The Ground division also delivered strong growth of 21% with Total Divisional revenue of $80m (2016: $66m). The total operating profit of $10.9m (2016: $9.7m) was underpinned by strong organic growth in our European business. There remains an opportunity to improve margins in our US business to our target levels through further growth, increasing our breadth of services and investment in our base maintenance capability. Total operating margins across the Division were 13.6% (2016: 14.8%).

Our developing businesses in the Middle East and Asia have both made steady progress and we enhanced our positions in both geographies through the rationalisation of our ownership structures. In Asia, our joint venture with Hutchison, in collaboration with China Aircraft Services Limited (CASL), now has the regulatory approvals to offer line and base maintenance services at Hong Kong airport.

Acquisitions and corporate development

The Group successfully executed the merger of its US Air associate with the BBA aircraft management business, which has been completed delivering strong revenue growth.

In 2016, the Group acquired Aviation Beauport and FlyerTech. Both businesses have been successfully integrated into the Europe Air and Ground divisions and have met or exceeded management's strategic and financial objectives since acquisition.

In October 2017, we announced the acquisition of the remaining 51% interest in Gama MENA for a cash consideration of $5.1m. On the same date Gama MENA divested a 51% equity interest in Gama Aviation FZE, its Middle East Air Division for a nominal consideration in order to comply with national ownership requirements. Under an agreement between shareholders, Gama MENA will retain management and operational control of the Middle East Air Division and will be entitled to 80% of the dividends paid by Gama Aviation FZE. Under an agreement between shareholders, Gama MENA will also receive a branding fee of 0.5% of the revenues of Gama Aviation FZE.

The Group's joint venture with Hutchison in Asia, which is active across both the Air and Ground divisions, established a commercial partnership with CASL at Hong Kong airport and is providing line maintenance to business aviation customers.

Leadership

The Company has strengthened its Board and the Group's regional leadership and functional management teams to ensure it can execute its strategy and continue to grow profitably and sustainably.

There have been a number of recent hires to supplement the already strong regional operational management teams. In addition the Group has enhanced its capabilities across a number of key business functions including: legal, finance, IT, business process, risk management and marketing.

Neil Medley, the Group's Chief Operating Officer, who joined the Company in September 2016, was appointed to the Board in January 2018. Neil has a strong track record of managing change and business integration as well as implementing business systems, having previously been at Detica Group Plc and BAE Systems Plc.

Dr Richard Steeves was also appointed to the Board as an independent Non-Executive Director and brings to the Group valuable experience in growing a business organically and through acquisitions, having founded and built Synergy Health Plc from a market capitalisation of £12 million in 2001 to £1.4 billion when it was sold in 2015.

Chi Keung (Simon) To was appointed as a Non-Executive Director in line with the terms of the relationship agreement agreed with Hutchison as part of their strategic partnership and investment. His experience of doing business in Asia and as an AIM Director will be a valuable addition to the business. Simon is the Managing Director of Hutchison and Chairman and Executive Director of Hutchison China MediTech Limited, a company listed on AIM and Nasdaq with a market capitalisation of approximately US$4 billion. Simon joined Hutchison in 1980 and has helped build it from a relatively small trading company into a multi-billion dollar investment and distribution group.

On 1 February 2018, Kevin Godley resigned as a board director and as CFO. Since late December 2017 Michael Williamson has been appointed as interim CFO and an orderly handover has been undertaken. The Board wishes to thank Kevin for his efforts and contribution to the Company and to wish him the very best for the future.

On 8 March 2018, following the successful completion of the Group's equity placing, we appointed Richard Kearsey as Director of Corporate Development. Richard is a chartered accountant by profession and for the last 27 years has worked as a Managing Director of Close Brothers' Aviation & Marine Finance Division. Richard has deep experience across syndication, financing and corporate restructuring. Richard's appointment will increase the Executive team's capacity to pursue the Group's growth strategy.

Equity Placing

We announced on 9 February 2018 that we were raising further capital through the proposed placing of shares. The admission of the placing shares became effective on 2 March 2018. The Group raised £48 million (approximately US$67 million) to accelerate the Group's strategy of becoming the leading global business aviation services group.

Hutchison Whampoa (China) Limited ("Hutchison") subscribed for shares in the placing and now holds approximately 21% of the Company's issued share capital. $19.8 million of the proceeds were used to acquire Hutchison's Hong Kong aviation interests: its 50% stake in Gama Aviation Hutchison Holdings Ltd and its 20% stake in China Aircraft Services Limited.

The balance of the proceeds are intended to be deployed during 2018 as follows:

· $10 million capital investment in two Ground base maintenance facilities in the US;

· $10 million for the development of the Sharjah business aviation centre in the Middle East; and

· the balance to target acquisitions in the Europe Air and Ground divisions and the Middle East Air division

Hutchison's investment in the Company provides a strong endorsement of our stated strategy and our readiness to execute against that strategy. We welcome them as a long term strategic partner who shares our ambition of becoming the leading global business aviation services Company.

Outlook

Based on our performance to date and contract visibility, the Board is confident in the strength of the Group's operations and believes the Group is well placed to deliver its strategic objectives and achieve its expectations for the current year.

The recently completed fund raising is an important development for the business. It will help us accelerate the next stage of profitable growth and support the delivery our strategic objectives in the fragmented aviation services markets.

Marwan Khalek

Chief Executive Officer

Operational Performance Review

Air division

The Air division provides aircraft management, special mission and charter services. It offers a comprehensive fleet management service to business jet owners including the provision of management services, crew personnel, fuel, airworthiness, engineering oversight, insurance management, hangar space, valeting and all travel arrangements. It also works with public agencies providing outsourced solutions to manage aviation operations for a variety of complex, time critical services such as air ambulance provision and aerial survey. The Group also acts as a charter broker for its managed aircraft with revenue shared between the Group and the underlying aircraft owner.

The Air Division saw strong revenue growth primarily driven by the US Air associate on the back of the BBA aircraft management business merger, as well as organic growth, including development of the Wheels Up contract. In Europe revenues have now stabilised following the exit from difficult contracts. Total divisional revenue was up 35.5% to $518.4m (2016: $382.6m) and total operating profit increased to $13.6m (2016: $7.4m), driven by the major markets of US and Europe. Performance in our new markets in the Middle East and Asia continued to improve.

December	US		Europe		Middle East		Asia		Total
USD thousands	2017	2016	2017	2016	2017	2016	2017	2016	2017	2016

Revenue - reported	5,000	7,949	91,821	112,837	23,528	19,531	74	80	120,423	140,397
Associate	387,366	231,560	-	-	-	-	14,730	16,525	402,096	248,085
Branding fee	(4,000)	(5,788)	-	-	-	-	(74)	(80)	(4,074)	(5,868)
Revenue	388,366	233,721	91,821	112,837	23,528	19,531	14,730	16,525	518,445	382,614
Gross profit	23,929	14,114	11,887	9,579	1,886	1,345	809	380	38,511	25,418
Gross profit %	6.2%	6.0%	12.9%	8.5%	8.0%	6.9%	5.5%	2.3%	7.4%	6.6%
Total operating profit	9,154	6,089	4,512	1,957	470	(80)	(583)	(544)	13,553	7,422
Total operating profit %	2.4%	2.6%	4.9%	1.7%	2.0%	(0.4%)	(4.0%)	(3.3%)	2.6%	1.9%
Associate	(7,355)	(5,904)	-	-	-	-	583	222	(6,772)	(5,631)
Branding fee	4,000	5,788	-	-	-	-	74	80	4,074	5,868
Total operating profit - reported	5,799	5,973	4,512	1,957	470	(80)	74	80	10,855	7,609

US Air (Associate)

The US Air associate, including the BBA aircraft management business merger from the start of 2017, has delivered significant growth with revenue up 66% to $388.4m (2016: $233.7m). The growth reflects the addition of the Landmark acquisition, as well as a high contract win rate in our core management business and the continued growth of our Wheels Up contract.

US Air total operating profit was $9.2m (2016: $6.1m), with the total operating profit margin of 2.4% (2016: 2.6%). This reduction in operating margin was expected due to heavy investment in the Group's US sales force in the final quarter of 2017 to enhance the growth of the managed fleet and charter. US Air profit margins are expected to increase towards the total operating profit margin target of 5% as the benefits of scale and operational gearing continue.

The integration of the BBA business is delivering the envisaged benefits: adding complementary West Coast coverage to the US Air associate's 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. The Group has a 24.5% interest and continues to account for the investment as an associate.

Europe Air

The Europe Air division has continued to build on the operational efficiencies implemented in 2016, with significant margin improvements being realised in 2017. Revenue declined, as expected, reflecting the Group's decision to exit certain underperforming contracts in 2016 and as a result Europe Air delivered a significantly improved total operating profit of $4.5m (2016: $2.0m) with a total operating profit margin of 4.9% (2016: 1.7%).

Middle East Air

Revenue in the Middle Eastern Air business increased by 20.5% to $23.5m (2016: $19.5m). The division was profitable at the total operating profit line for the first time, delivering total operating profit of $0.5m and a 2.0% margin on the back of growth in revenue. 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. The division is well positioned for the future and following the end of the period the Group acquired the outstanding 50% of its joint venture with Hutchison to capture more of this growth potential.

Ground division

The Ground division provides base and line maintenance, repair and overhaul, design and modification (MRO) and fixed base operations (FBO).

Base maintenance refers to the planned maintenance required by the aircraft manufacturer or component supplier, whereas line maintenance is irregular maintenance activity often as a result of component failure or wear and tear and both services are offered on either a fee or contract basis. The design and modification services provided by the Group increase the operating life and/or capability of an aircraft through services such as avionics or cabin system upgrades and incorporation of special mission capability. The Ground division provides FBO facilities at Glasgow, Aberdeen, Jersey and Sharjah airports offering parking, hangarage, line maintenance and other related ground handling tasks such as the fuelling of aircraft.

The Ground division grew revenues by 21.5% to $79.8m (2016: $65.7m). The division achieved a total operating profit of $10.8m (2016: $9.7m), with a total operating profit margin of 13.6% (2016: 14.8%). Margins in the Europe Ground business remain broadly in line with Group targets and there is a real opportunity to scale up the US, MENA and Asia businesses to develop towards the target margins. The recent placing of shares and fund raising with the planned strategic investments will be a key enabler of this.

December	US		Europe		Middle East		Total
USD thousands	2017	2016	2017	2016	2017	2016	2017	2016

Revenue - reported	30,775	24,130	60,462	36,430	5,371	5,170	96,608	65,730
Sale of aircraft	-	-	(12,885)	-	-	-	(12,885)	-
Sale of inventory	-	-	(3,929)	-	-	-	(3,929)	-
Revenue	30,775	24,130	43,648	36,430	5,371	5,170	79,794	65,730
Gross profit	6,116	5,560	18,439	16,746	1,240	1,697	25,795	24,003
Gross profit %	19.9%	23.0%	42.2%	46.0%	23.1%	32.8%	32.3%	36.5%
Total operating profit	2,348	2,401	8,408	7,282	85	32	10,841	9,715
Total operating profit %	7.6%	10.0%	19.3%	20.0%	1.6%	0.6%	13.6%	14.8%

US Ground

The US Ground division enjoyed strong organic growth during 2017, with revenue up 27.5% to $30.8m (2016: $24.1m) driven by the full period impact of new bases opened in 2016 and new contract wins.

As planned, the operating margin and profit achieved in 2017 reflects the focus on scaling up, recruiting line maintenance engineers ahead of revenue growth and significant investment in training. There have been variations in the gross profit percentage as the business grows, driven by the addition of new bases and revenue mix. The total operating profit of $2.3m (2016: $2.4m) and margin of 7.6% reflects the effects of these investments. Having made these investments, the division is poised to return to low double digit margins in 2018.

Europe Ground

The European Ground division grew revenue by 19.8% to $43.6m (2016: $36.4m) reflecting the return of discretionary spending, albeit at low levels, and increased base maintenance activity at Oxford. Principally as a result of the restructuring in 2016, total operating profit was up 15.5% to $8.4m (2016: $7.3m). The division continues to operate broadly in line with management targets with the total operating margin at 19.3%. The division now has a solid platform to deliver growth and maintain the total operating margin of 20% at target levels.

The sale of aircraft and inventory in Europe Ground was $16.8m (2016: $nil) and is excluded from the revenue above of Europe Ground. Europe Ground revenue including sales of aircraft and inventory was $60.5 as per note 3.

Middle East Ground

The Middle East Ground division had a stable year with the number of aircraft movements through the FBO facilities showing an improved trend. The division delivered a total operating profit of $0.1m.

The division is now wholly owned following the acquisition of the 51% Jet Set interest in October 2017. This provides a strong foundation for our planned development in the region.

Asia Ground

The business produced its first revenues in the fourth quarter 2017 through its collaboration with CASL. This is an exciting opportunity for new business going forward.

Financial Review

Basis of presentation of financials

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 2017 was USD1.29 to GBP1.00.

Group financial performance

Key financial indicators across the group are reported below.

				Constant Currency
December	2017	2016	Change	2016		Change
USD thousands	Total	Total	Total	Total		Total
Revenue	207,360	203,037	2.1%		196,084	5.7%
Gross Profit	47,206	44,151	6.9%		42,839	9.9%
Gross Profit %	22.8%	21.7%	1.1ppt		21.8%	1.0ppt
Underlying EBITDA	20,067	17,294	16.0%		16,783	19.6%
Underlying EBITDA %	9.7%	8.5%	1.2ppt		8.6%	1.3ppt
Underlying Operating Profit	18,744	15,057	24.5%		14,605	28.3%
Underlying Operating Profit % Underlying Profit before tax Underlying Profit before tax % Underlying Basic Earnings Per Share (cents)	9.0% 17,077 8.2% 31.6c	7.4% 13,678 6.7% 30.1c	1.6ppt 24.8% 1.5ppt 3.5c		7.4% 13,320 6.7% 29.0c	1.6pp 28.2% 1.5ppt 4.6c

Revenue

Reported revenue grew by 5.8% to $207.4m (2016: $196.1m). We have seen growth in revenue in Air and Ground divisions across all geographies, with the exception of the Europe Air division, where the business continued to exit from onerous aircraft management contracts dating back to pre-2015. The revenue in the Europe Air division was $91.8m (2016: $112.8m).

Gross profit

Reported gross profit is up 10.2% to $47.2m (2016: $42.8m) and there has been an increase in the gross profit margin percentage by 1.0% to 22.8% (2016: 21.8%), on the back of increased scale and operational efficiencies.

EBITDA

Underlying EBITDA is up 19.6% at $20.1m (2016: $16.8m). This represents an EBITDA margin of 9.7% against 8.6% for 2016. The improvement in EBITDA has been driven by the growth in revenue of 5.8% to $207.4m, improvements in gross profit margin percentages by 1.0% to 22.8% and control of administration expenses of $33.2m (2016: $32.9m).

Reconciliation of underlying total operating profit to EBITDA

USD thousands	December 2017	December 2016	Constant Currency December 2016

Underlying total operating profit Depreciation Share of associate's results	18,744 1,845 (157)	15,057 2,041 330		14,605 1,982 330
Share of associate's exceptional items	(365)	(134)		(134)
Underlying EBITDA	20,067	17,294		16,783

Depreciation

Depreciation which is set out in note 11 includes depreciation on property, plant and equipment of $1.8m (2016: $2.0m).

Share of associate's results

The share of associate's results represents the share of operating profit as reported in Gama Aviation LLC from the Group's 24.5% interest in Gama Aviation LLC.

Share of associate's exceptional items

The share of associate's exceptional items represents the share of exceptional items as reported in Gama Aviation LLC from the Group's 24.5% interest in Gama Aviation LLC. These represent transaction, integration and legal costs associated with the the merger of the US Air associate with the BBA aircraft management business.

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 28.3% to $18.7m (2016: $14.6m).

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 but excluding accumulated losses of equity accounted investments.

USD thousands	December 2017	December 2016	Constant Currency December 2016

Continuing total operating profit	17,855	10,937		10,621
Amortisation	1,441	1,438		1,367
Exceptional items	2,622	2,548		2,482
Share of associate's exceptional items	365	134		134
Share-based payment expense	195	-		-
Release of provisions in respect of losses of associate and joint venture from prior years	(2,170)	-		-
Disposal of interest in associate	(1,564)	-		-
Underlying total operating profit	18,744	15,057		14,605

Amortisation

Amortisation which is set out in note 11 includes amortisation on intangible assets of $1.4m (2016: $1.4m).

Exceptional items

Exceptional items amounted to $2.6m (2016: $2.5m), which are set out in note 4 and represent transaction costs $0.4m (2016: $1.4m), integration and restructuring costs $1.2m ($1.2m), and legal costs $1.1m (2016: $nil). Exceptional items include travel expenses and costs for executive management incurred in undertaking transactions, integration and restructuring together with the salary costs of certain permanent employees who are employed in place of external professional services.

Share-based payment expense

On 10 August 2016, the Group announced that a total of 1,500,000 share options were granted at £1.55 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, which is set out in note 10 of $0.2m (2016: $nil).

Associates and joint ventures

The release of the provision for our share of associate and joint venture losses from prior years of $2.2m (2016: $nil) and the profit from the disposal of the interest in associate of $1.6m (2016: $nil) are excluded from the underlying total operating profit.

US Air losses of associate from prior years

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 of $1.5m 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 losses of joint venture from prior years

Similar to the US associate, 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. The provisions of $669,000 are no longer required and have been released. The provision release has not been included in the Group's underlying results in this period.

Profit on disposal of interest in associate

On 1 January 2017 the Group and BBA Aviation Plc merged their US aircraft management and charter businesses. This merger resulted in the Group's 49% interest in its associated company Gama Aviation LLC, being reduced to 24.5% and a profit of $1.6m being recorded on the disposal of the other 24.5% interest.

The share of results from equity accounted investments derived by the Gama Aviation Group's associates and joint ventures is set out in note 13 and the consolidated income statement effect is summarized below:

USD thousands	December 2017	December 2016
US associate share of results	157	(8)
HK joint venture share of results	-	(322)
US associate loss provisions release	1,501	-
Asia joint venture loss provisions release	669	-
Share of results from equity accounted investments	2,327	(330)

Profit before tax

USD thousands	December 2017	December 2016	Constant Currency December 2016

Continuing profit before tax	16,146	19,308		19,024
Amortisation	1,441	1,438		1,367
Exceptional items	2,622	2,548		2,482
Share of associate's exceptional items	365	134		134
Share-based payment expense	195	-		-
Release of provisions in respect of losses of associate and joint venture from prior years	(2,170)	-		-
Profit on disposal of interest in associate	(1,564)	-		-
Unrealised FX movements in finance costs	42	(9,750)		(9,777)
Underlying profit before tax	17,077	13,678		13,231

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 $0.04m (2016: gain of $9.7m).

Earnings per share (EPS)

USD thousands	December 2017	December 2016	Constant Currency December 2016

Profit attributable to ordinary equity holders of the parent:
Continuing operations	12,214	18,803		18,499

Add back:
Amortisation	1,441	1,438		1,367
Exceptional items	2,622	2,548		2,482
Share of associate's exceptional items	365	134		134
Share-based payment expense	195	-		-
Release of provisions in respect of losses of associate and joint venture from prior years	(2,170)	-		-
Profit on disposal of interest in associate	(1,564)	-		-
Unrealised FX movements in finance costs	42	(9,750)		(9,777)
Deferred tax charge	750
Profit attributable to ordinary shareholders for adjusted earnings	13,895	13,174		12,706
Denominator
Weighted average number of shares used in basic EPS	43,994,442	43,827,775		43,827,775

Underlying basic earnings per share (cents)	31.6c	30.1c		29.0c

Taxation

There is a total tax charge for the period of $3.9m (2016: $0.6m) and an effective tax rate of 24% on continuing activities. The group operates across a number of jurisdictions and the effective rate of tax reflects the blended rate of operating in different countries. The lower effective rate of tax in 2016 reflected the effect of the utilization of tax losses, which are no longer available. In 2017 the US enacted a lower tax rate which reduced the expected future benefits from temporary differences and operating loss carry forwards. As a consequence the tax charge in 2017 has a higher effective tax rate reflecting the release of deferred tax assets no longer available.

Included in the Group's tax charge in 2017 is $0.75m in respect of a reduction in the value of the Group's deferred tax asset as a consequence of the recently announced reduction in US corporate tax rates. As this tax charge does not relate to underlying earnings in 2017 it has been added back for the purpose of calculating underlying EPS.

Net debt and cash flow movements

The table below highlights the change in the net debt position which shows a $6.4m improvement in 2017. The Group has operated well within its banking covenants and net debt to underlying EBITDA was 0.6x (2016: 0.9x). Cash flow from operations was $23.8m (2016: $2.2m).

Over the last few years management has been focused upon improving its working capital management in an effort to reverse the sizeable outflows experienced in prior years. In 2017 the Group saw a working capital inflow of $10.6m, of which $6.5m resulted from client deposits which will unwind in 2018. The remaining positive inflow demonstrates the improvements in our working capital management and are consistent with the cash generative nature of our business model.

USD thousands	December 2017	December 2016

Underlying EBITDA	20,067	17,294
Working capital movement	10,634	(14,084)
Items not included in underlying EBITDA	(2,622)	(2,682)
Other	(4,308)	1,656
Cash flow from operations	23,771	2,183
Capex movement	(4,521)	(4,363)
Net interest & tax paid	(5,281)	(1,458)
Free cash flow	13,969	(3,638)
Dividends paid	(1,495)	(1,411)
Acquisitions	(5,100)	(6,239)
Net debt foreign exchange movements	(959)	923
Change in net debt	6,415	(10,364)
Net debt Cash and cash equivalents Borrowings Obligations under finance leases	(12,972) 22,349 (31,654) (3,667)	(19,387) 11,174 (24,941) (5,620)

Items not included in underlying EBITDA

Exceptional items in the cash flow movements are as set out in note 4 and represent transaction costs $0.4m, integration and restructuring costs $1.1m, and legal costs $1.1m.

Other Items

Other items in the cash flow movements include losses from discontinued activities $2.4m as set out in note 6 and unrealized foreign exchange movements of $2m.

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 and is set out in note 6. The discontinued operations loss for the period was $2.4m (2016: $2.1m). 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.

Capex movement

Capital expenditure includes the purchase of property, plant and equipment of $8.5m (2016: $3.7m) and intangibles of $1.6m (2016: $0.4m). The Group has invested in a hangar in Aberdeen, Sharjah facilities, an aircraft for a contract for a key customer and ongoing maintenance capital expenditure. Expenditure on intangibles includes investment in new technology and licenses and approvals. This capital expenditure has been offset by proceeds on the sale of two aircraft for $5.5m.

Net interest and tax paid

The Group paid tax on profits of $3.6m (2016: $nil) in the UK and US including advance payments for 2017. In 2016 the Group benefited from the utilization of losses brought forward from prior years. Net interest paid in 2017 was $1.7m (2016: $1.5m) with the increase due to the higher level of utilization of the RBS credit facilities during the year.

Dividend

The Directors are recommending a dividend of 2.75p per share, an increase of 5.7% (2016: 2.6p per share).

Litigation and associated exceptional items, and prior year adjustment

The Group is involved in a number of legal proceedings, most of which arise from historic Hangar 8 trading activity, prior to the merger completed in January 2015, and those relating to disputes with Dustin Dryden (a former non-executive director of the Company and of Hangar 8 who resigned in September 2015) and affiliated entities. Taking account of the circumstances of each set of proceedings, legal advice received in relation to them and the Company's views as to the merits of such proceedings, the Company intends to continue to vigorously pursue/defend such proceedings.

The Company has incurred legal costs of US$1.1m associated with these proceedings in the year ended 31 December 2017, which are treated as an exceptional item. The Board believes a similar amount will be incurred for future legal costs, through to the conclusion of the various proceedings, which will also be treated as exceptional. In respect of one of the proceedings against the Company, amounting to US$1.9m, the Board has decided to make a US$1.1m provision in the form of a prior year adjustment. This arose as a result of an obligation in relation to one particular customer arrangement for services provided prior to 2014 in the Hangar 8 business, which had not been recognised at the time in error. This has resulted in an increase in the liabilities by $1.1m and reduced reserves by the same amount in the prior period. This has had no impact on the income statement in the prior period.

The remaining proceedings fall into two categories, the first involves proceedings by the Company to recover long-standing trade receivables that amount to approximately US$5.5m. The Company has made adequate provisions or holds security against these claims and as a result the Board does not expect any further provisions will be required. In addition, based on legal advice, the Board considers the proceedings to recover these receivables are likely to be successful.

The second involves a number of proceedings brought against the Company in which the claimants seek to recover damages for alleged contractual breaches which amount to approximately US$15.3m. Based on a detailed analysis of the claims and legal advice, the Board believes that these claims are speculative and/or overlapping and the Company continues to vigorously defend them and therefore no provision has been made in the accounts.

By the time all these proceedings, some of which are with the same counterparties, are determined or settled, the Board expects the overall awards and settlements to result in a cash inflow to the Company.

Michael Williamson

Interim Chief Financial Officer

Gama Aviation plc

Consolidated Financial Statements

for the year ended 31 December 2017

Consolidated income statement

For the year ended 31 December 2017

		Year ended 2017	Year ended 2016
	Note	$'000	$'000
Continuing operations
Revenue	3	207,360	203,037
Cost of sales		(160,154)	(158,886)
Gross profit		47,206	44,151

Administrative expenses		(33,242)	(32,884)

Underlying EBITDA		20,067	17,294
Items not included in underlying EBITDA	4	(2,817)	(2,548)
Depreciation and amortisation		(3,286)	(3,479)

Operating profit		13,964	11,267

Share of results from equity accounted investments	13	2,327	(330)
Profit on disposal of interest in associate	13	1,564	-
Total operating profit		17,855	10,937


Underlying total operating profit		18,744	15,057
Items not included in underlying total operating profit	5	(889)	(4,120)

Finance income		-	9,750
Finance costs		(1,709)	(1,379)
Profit before tax from continuing operations		16,146	19,308
Taxation	7	(3,886)	(615)
Profit from continuing operations		12,260	18,693

Discontinued operations
Loss after tax from discontinued operations	6	(2,412)	(2,127)
Profit for the year		9,848	16,566

Attributable to:
Owners of the Company		9,802	16,676
Non-controlling interests		46	(110)
Totals		9,848	16,566


Earnings per share attributable to the equity holders of the parent	8
Basic (cents)		22.28c	38.05c
Diluted (cents)		22.05c	38.05c
Basic - continuing operations (cents)		27.76c	42.90c
Diluted - continuing operations (cents)		27.48c	42.90c

Consolidated statement of comprehensive income

For the year ended 31 December 2017

		Year ended 2017	(Restated) Year ended 2016
		$'000	$'000
Profit for the year		9,848	16,566

Items that may be reclassified subsequently to profit or loss:
Prior year adjustment	9	-	(1,133)
Exchange differences on translation of foreign operations		2,732	(18,440)
Gains on cash flow hedges		127	-
Total comprehensive income / (loss) for the year		12,707	(3,007)

Total comprehensive income / (loss) is attributable to:
Owners of the Company		12,753	(3,117)
Non-controlling interests		(46)	110
Totals		12,707	(3,007)

Consolidated statement of changes in equity

For the year ended 31 December 2017

	Share capital	Share premium	Other reserves	Foreign exchange reserve	Accumulated profit/ (losses)	Total shareholders' equity	Non-controlling interest	Total 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

Profit for the year	-	-	-	-	16,676	16,676	(110)	16,566
Other comprehensive income for the year	-	-	-	(18,440)	-	(18,440)	-	(18,440)
Prior year adjustment	-	-	-	-	(1,133)	(1,133)	-	(1,133)
Total comprehensive income for the year	-	-	-	(18,440)	15,543	(2,897)	(110)	(3,007)

Issuance of shares	14	-	4,149	-	-	4,163	-	4,163
Cancellation of share premium	-	(35,458)	-	-	35,458	-	-	-
Dividend paid	-	-	-	-	(1,411)	(1,411)	-	(1,411)
Balance at 31 December 2016 (restated)	684	-	61,377	(23,529)	16,286	54,818	581	55,399

Profit for the year	-	-	-	-	9,802	9,802	46	9,848
Other comprehensive income	-	-	127	2,732	-	2,859	-	2,859
Total comprehensive income for the year	-	-	127	2,732	9,802	12,661	46	12,707

Cost of share-based payments	-	-	195	-	-	195	-	195
Dividend paid	-	-	-	-	(1,496)	(1,496)	-	(1,496)
Acquisition of non-controlling interest	-	-	-	-	(5,997)	(5,997)	897	(5,100)
Balance at 31 December 2017	684	-	61,699	(20,797)	18,595	60,181	1,524	61,705

Consolidated balance sheet

As at 31 December 2017

		2017	(Restated) 2016
		$'000	$'000
Non-current assets
Goodwill		40,716	37,631
Other intangible assets		11,564	9,987
Total intangible assets	11	52,280	47,618
Property, plant and equipment	11	20,051	12,215
Investments accounted for using the equity method	13	1,721	-
Deferred tax asset		2,689	4,557
		76,741	64,390
Current assets
Assets held for resale	12	1,500	7,200
Inventories		9,705	8,410
Trade and other receivables		47,718	46,473
Cash and cash equivalents		22,349	11,174
		81,272	73,257
Total assets		158,013	137,647

Current liabilities
Trade and other payables		(54,510)	(42,815)
Obligations under finance leases		(1,654)	(1,644)
Provisions for liabilities		(540)	(2,416)
Borrowings		(30,642)	(24,018)
Deferred revenue		(4,388)	(4,315)
		(91,734)	(75,208)
Total assets less current liabilities		66,279	62,439

Non-current liabilities
Borrowings		(1,012)	(923)
Obligations under finance leases		(2,013)	(3,976)
Provisions for liabilities		-	(492)
Deferred tax liabilities		(1,549)	(1,649)
		(4,574)	(7,040)
Total liabilities		(96,308)	(82,248)

Net assets		61,705	55,399

Shareholders' equity
Share capital		684	684
Share premium		-	-
Other reserves		61,699	61,377
Foreign exchange reserve		(20,797)	(23,529)
Accumulated profit		18,595	16,286
Total shareholders' equity		60,181	54,818
Non-controlling interest		1,524	581
Total equity		61,705	55,399

Consolidated cash flow statement

For the year ended 31 December 2017

	Year ended 2017	Year ended 2016
	$'000	$'000
Cash flows from operating activities
Profit before tax from continuing operations	16,146	19,308
Loss before tax from discontinued operations	(2,412)	(2,127)
Profit before tax	13,734	17,181

Adjustments for:
Finance income	-	(9,928)
Finance costs	1,699	1,458
Depreciation and amortisation	3,286	3,479
Loss on disposal of property, plant and equipment	-	8
Impairment of assets held for sale	-	1,828
Loss on disposal of assets held for sale	150	-
Share of results from equity accounted investments	(2,327)	330
Profit on disposal of interest in associate	(1,564)	-
Share-based payment expense	195	-
Unrealised foreign exchange movements	(2,037)	1,911
Operating cash flows before movements in working capital	13,136	16,267
Increase in inventories	(543)	(2,432)
Decrease/(increase) in receivables	699	(462)
Increase/(decrease) in payables	10,950	(9,624)
Decrease in deferred revenue	(223)	(1,407)
Decrease in provisions	(249)	(159)
Cash generated from operations	23,770	2,183
Taxes paid	(3,624)	-
Interest received	-	-
Interest paid	(1,657)	(1,458)
Net cash flows from operating activities	18,489	725

Cash flows from investing activities
Purchases of property, plant and equipment	(8,498)	(3,697)
Purchases of intangibles	(1,573)	(400)
Purchases of assets held for resale	-	(266)
Proceeds on disposal of assets held for sale	5,550	-
Acquisition of subsidiary, net of cash acquired	-	(6,239)
Net cash flows from investing activities	(4,521)	(10,602)

Cash flows from financing activities
Consideration for acquisition of non-controlling interest	(5,100)	-
Repayments of obligations under finance leases	(1,953)	(1,900)
Proceeds from borrowings	8,223	17,798
Repayment of borrowings	(4,000)	(40)
Dividend paid to equity holders of the parent	(1,495)	(1,411)
Net cash flows from financing activities	(4,325)	14,447

Net increase in cash and cash equivalents	9,643	4,570
Effect of foreign exchange rates	1,532	(1,853)
Cash and cash equivalents at the beginning of year	11,174	8,457
Cash and cash equivalents at the end of year	22,349	11,174

Notes to the condensed consolidated financial statements as at 31 December 2017

1. General information

Gama Aviation Plc (previously Hangar8 Plc) is incorporated in the United Kingdom. The address of the registered office is the Business Aviation Centre, Farnborough Airport, Hampshire, GU14 6XA.

2. Significant accounting policies

Non statutory financial statements

The financial information set out in this preliminary results announcement does not constitute the Group's statutory financial statements for the year ended 31 December 2017 or 2016 but is derived from those financial statements. Statutory financial statements for 2016 have been delivered to the Registrar of Companies. Those for 2017 will be delivered following the Company's Annual General Meeting, which will be convened on 14 June 2018. The auditors have reported on those accounts: their reports on those financial statements were unqualified and did not contain statements under Section 498 of the Companies Act 2006.

The financial statements, and this preliminary statement, of the Group for the year ended 31 December 2017 were authorised for issue by the board of Directors on 16 March 2018 and the balance sheet was signed on behalf of the Board by Marwan Khalek, Director.

Basis of accounting

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS) as adopted by the E.U.

The financial statements have been prepared on the historical cost basis. Historical cost is generally based on the fair value of the consideration given in exchange for the assets acquired. The principal accounting policies adopted are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company (its subsidiaries) made up to 31 December each year. Control is achieved when the Group is exposed, or has rights to, variable returns from its involvement in the entity and has the ability to affect those returns through its power over the entity.

Business combinations are accounted for using the acquisition method. The consideration transferred in a business combination shall be measured at fair value, which shall be calculated as the total of the acquisition date fair values of the assets transferred by the Group, the liabilities incurred by the Group to former owners, the equity issued by the Group and the amount of any non-controlling interest in the acquiree either at fair value or at the proportional share of the acquiree's identifiable net assets. The consideration transferred also includes the fair value of any asset or liability resulting from a contingent consideration arrangement.

The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used in line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amount of those interests at the date of the original business combination and the minority's share of changes in equity since the date of the combination. Profit or loss and each component of other comprehensive income are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. A change in the ownership interest of a subsidiary, without a loss of control is accounted for as an equity transaction, being a disposal or acquisition of non-controlling interest.

Going concern

The directors have performed a detailed analysis of the cash flow projections for the Group as a whole covering the period through to the financial year ended 31 December 2017 and beyond. The key assumptions in this forecast include the profitable growth of the trading businesses and the knowledge that the group has material headroom in its debt covenants.

The directors are therefore of the opinion that in all reasonably foreseeable circumstances the company will remain a going concern for at least twelve months from the date on which these financial statements have been approved. Accordingly, the going concern basis has been adopted in the preparation of these financial statements.

Cash and cash equivalents

The Group's cash and cash equivalents in the statements of financial position comprise cash at bank and on hand and short-term deposits with a maturity of three months or less from inception, which are subject to an insignificant risk of changes in value.

For the purpose of the consolidated cash flow statement, cash and cash equivalents consist of cash and short term deposits, as defined above, net of outstanding bank overdrafts as they are considered an integral part of the Group's cash management.

Assets held for sale

The Group classifies assets as held for sale if their carrying value will be recovered principally through sale rather than through continuing use. Such assets are measured at the lower of their carrying amount and fair value less costs to sell. Costs to sell are the incremental costs directly attributable to the sale, excluding finance costs and income tax expense. The criteria for assets held for sale is regarded as only met when the sale is highly probable and the asset is available for immediate sale in its present condition. Property, plant and equipment and intangible assets are not depreciated or amortised once classified as held for sale.

Events or circumstances may extend the period to complete the sale beyond one year. An extension of the period required to complete a sale does not preclude an asset from being classified as held for sale if the delay is caused by events or circumstances beyond the entity's control and there is sufficient evidence that the entity remains committed to its plan to sell the asset.

2. Significant accounting policies (continued)

Investments in associate and joint venture

An associate is an entity over which the Group is in a position to exercise significant influence, but not control or joint control, through participation in the financial and operating policy decisions of the investee.

A joint venture is a type of joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the joint venture. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The considerations made in determining significant influence or joint control are similar to those necessary to determine control over subsidiaries.

The Group's investments in its associate and joint venture are accounted for using the equity method of accounting. The investment is carried in the balance sheet at cost as adjusted by post-acquisition changes in the Group's share of the net assets of the investment, less any impairment in the value of the investment. Losses in excess of the Group's interest in the investment (which includes any long-term interests that, in substance, form part of the Group's net investment) are recognised only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the investment.

Where a Group company transacts with an associate of the Group, profits and losses are eliminated to the extent of the Group's interest in the relevant associate. Losses may provide evidence of an impairment of the asset transferred in which case appropriate provision is made for impairment. The Group's share of the changes in the carrying value of the investments in associates is recognised in the income statement.

Goodwill

Goodwill arising on consolidation represents the excess of the cost of acquisition over the amount of any non-controlling interests in the acquiree and the Group's interest in the fair value of the identifiable assets and liabilities of a subsidiary, associate or jointly controlled entity at the date of acquisition. Goodwill is initially recognised as an asset at cost and is subsequently measured at cost less any accumulated impairment losses. Goodwill which is recognised as an asset is reviewed for impairment at least annually. Any impairment is recognised immediately in profit or loss and is not subsequently reversed.

For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary or associate, the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

Revenue recognition

The Group measures revenue as the fair value of consideration received or receivable and represents amounts received for goods and services provided in the normal course of business, net of discounts, estimated customer returns, VAT and other sales-related taxes.

Revenue is recognised when the amount can be reliably estimated, collection is probable, the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control of the goods sold, and the inherent risks and rewards of ownership of the goods have been transferred to the other party.

Where contracts include provisions for adjustments, including yearly increases based on external benchmarks, these are not taken into consideration until they are known.

Rendering of services

Revenue from services is primarily derived from the management or provision of aircraft which includes the revenues generated by special mission support, logistics support and charter. These services are referred to within the group as "Air". Revenue includes fixed contract fees and variable fees such as revenue earned with reference to flying hours. Revenue also includes the recharges for costs incurred relating to the management or provision of the aircraft. We record revenue relating to services rendered using an accrual method and in accordance with the terms of the contracts pursuant to which such services are rendered. Revenue from aircraft services is recognised based on contractual rates as the related services are performed.

"Ground" Revenues are materially associated with engineering activity which represents amounts derived from the provision of services to customers during the year, including aircraft maintenance and overhauls. The amount of profit attributable to the stage of completion of an engine and maintenance overhaul contract is recognised when the outcome of the contract can be foreseen with reasonable certainty. Revenue for such contracts is stated at the cost appropriate to the stage of completion plus attributable profits, less amounts recognised in previous years. The stage of completion is measured by reference to costs (mainly hours and materials) incurred to date as a percentage of total estimated costs for each contract. Provision is made for any losses as soon as they are foreseen. Other services within "ground" include design and modification work with revenue recognised on the same basis as that of the engineering and FBO operations and software. Revenues for FBO operations and software are recognised at the point of service delivery.

2. Significant accounting policies (continued)

Sale of goods

Revenues associated with the sale of goods represent amounts derived from sales activity whereby the Group procures aircraft, parts or components on behalf of customers for their use. Revenue is recognised when all the following conditions are satisfied:

· the Group has transferred to the buyer the significant risks and rewards of ownership of the goods;

· the amount of revenue can be measured reliably;

· it is probable that the economic benefits associated with the transaction will flow to the entity;

· the costs incurred or to be in incurred in respect of the transaction can be measured reliably; and

· the Group retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold.

Interest revenue

Interest income is recognised when it is probable that the economic benefits will flow to the Group and the amount of revenue can be measured reliably. Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset's net carrying amount on initial recognition.

Leasing

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Assets held under finance leases are recognised as assets of the Group at their fair value or, if lower, at the present value of the minimum lease payments, each determined at the inception of the lease. The corresponding liability to the lessor is included in the balance sheet as a finance lease obligation. Lease payments are apportioned between finance expenses and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability.

Rentals payable under operating leases are charged to income on a straight-line basis over the term of the relevant lease. In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.

Foreign currencies

The individual financial statements of each Group company are presented in the currency of the primary economic environment in which it operates (its functional currency). For the purpose of the consolidated financial statements, the results and financial position of each Group company are expressed in US Dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements. These financial statements are presented in US dollars because that is the currency of the primary economic environment in which the Group operates.

In preparing the financial statements of the individual companies, transactions in currencies other than the entity's functional currency (foreign currencies) are recognised at the rates of exchange prevailing on the dates of the transactions. At each balance sheet date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated at exchange rates prevailing on the balance sheet date. Income and expense items are translated at the average exchange rates for the period. Exchange differences arising are recognised in other comprehensive income and accumulated in equity. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate for each year end.

Operating profit

Operating profit is stated after the share of results of associates but before investment income and finance costs.

Intangible assets

Internally generated intangible assets are recognised only if they satisfy the IAS 38 criteria in that a separately identifiable asset is created from which future economic benefits are expected to flow and the cost can be measured reliably. The life of each asset is assessed individually. Where the life is considered to be indefinite no amortisation is charged. Included in intangible assets are internally generated assets relating to the costs incurred to commence operations in the United Arab Emirates in the process of gaining an AOC (Air Operators Certificate). The certificate has an indefinite life and without the certificate the operation cannot perform legally and as such amortisation is not charged.

Intangible assets acquired separately are measured on initial recognition at cost. The cost of intangible assets acquired in a business combination is their fair value at the date of acquisition. Following initial recognition, intangible assets are carried at cost less any accumulated amortisation and accumulated impairment losses. Included in intangible assets acquired are Part 145 approvals, licences and brand, customer relations and workforce, and computer software.

· Part 145 Approvals - These relate to the recognised regulatory approvals required by a business to perform maintenance in the EU and US Ground business.

· Licence and brand, customer relations and software - recognised on acquisitions

A summary of the policies applied to the Group's acquired intangible assets is as follows:

Part 145 approvals indefinite useful life, no amortisation charged, annual impairment review

Licences 10% per annum, straight line method

Brand amortised over 18 months, straight line method

Customer relations 10% per annum, straight line method

Software 33% per annum, straight line method

2. Significant accounting policies (continued)

Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense when employees have rendered the service entitling them to the contributions. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

Taxation

The tax expense represents the sum of the tax currently payable and deferred tax.

Current tax

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition of goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries and associates, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.

Deferred tax is calculated at the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply in the period when the liability is settled or the asset is realised.

Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Inventories

Inventories are valued at the lower of cost and net realisable value. Costs incurred in bringing each product to its present location and condition are accounted for as follows:

a) Raw materials and consumables: purchase cost on a first in, first out basis

b) Work in progress: cost of direct materials and labour and a proportion of manufacturing overheads based on the normal operating capacity, but excluding borrowing costs

Net realisable value is the estimated selling price in the ordinary course of business, less estimated costs of completion and the estimated costs necessary to make the sale.

Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and any recognised impairment loss.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives, using the straight-line method, on the following bases:

Leasehold property Life of lease

Aircraft hull and refurbishments Remaining life of the aircraft, various rates between 5% and 20% per annum

Furniture, fixtures and equipment 20% per annum

Motor vehicles 20% per annum

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the term of the relevant lease.

The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in the income statement.

Impairment of tangible and intangible assets excluding goodwill

At each balance sheet date the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.

2. Significant accounting policies (continued)

Impairment of tangible and intangible assets excluding goodwill (continued)

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss.

Financial instruments

Financial assets and financial liabilities are recognised in the Group's balance sheet when the Group becomes a party to the contractual provisions of the instrument.

Financial assets

Trade receivables and other receivables are measured at amortised cost less provision for doubtful debts, determined as set out below in "impairment of financial assets". Any write-down of these assets is expensed to the income statement.

Impairment of financial assets

Financial assets are assessed for indicators of impairment at each balance sheet date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been affected.

For certain categories of financial asset, such as trade receivables, assets that are assessed not to be impaired individually are, in addition, assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group's past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

For financial assets carried at amortised cost, the amount of the impairment is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the financial asset's original effective interest rate.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

Financial liabilities and equity

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recognised at the proceeds received, net of direct issue costs.

Other financial liabilities

Other financial liabilities, including borrowings and payables, are initially measured at fair value and subsequently at amortised cost, net of transaction costs.

Derecognition of financial assets and financial liabilities

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. On derecognition of a financial asset measured at amortised cost, the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

The Group derecognises financial liabilities when, and only when, the Group's obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, it is probable that the Group will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation. The amount recognised as a provision is the best estimate of the consideration required to settle the present obligation at the balance sheet date, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows.

Exceptional items

Exceptional items relate to items which do not contribute to the underlying performance of the Group, and as a result are presented separately in the consolidated income statement. Their determination is made after consideration of their nature and materiality and is applied consistently from period to period.

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 year ended 31 December 2017 is as follows:

	Total Revenue	Gross profit	Gross profit	Underlying EBITDA	Underlying EBITDA	Underlying total operating profit	Underlying total operating profit
	$'000	$'000	%	$'000	%	$'000	%
US: Air	5,000	5,076	>100	5,354	>100	5,799	>100
Europe: Air	91,821	11,887	12.9	4,979	5.4	4,512	4.9
MENA: Air	23,528	1,886	8.0	549	2.3	470	2.0
Asia: Air	74	74	100.0	74	100.0	74	100.0
	120,423	18,923	15.7	10,956	9.1	10,855	9.0

US: Ground	30,775	6,116	19.9	2,901	9.4	2,348	7.6
Europe: Ground	60,462	18,439	30.5	8,922	14.8	8,408	13.9
MENA: Ground	5,371	1,240	23.1	240	4.5	85	1.6
	96,608	25,795	26.7	12,063	12.5	10,841	22.4

Other	2,488	2,488	100.0	(2,952)	(>100)	(2,952)	(>100)
Eliminations	(12,159)	-	-	-	-	-	-
Totals	207,360	47,206	22.8	20,067	9.7	18,744	9.0


Underlying total operating profit						18,744
Amortisation						(1,441)
Exceptional items						(2,622)
Share of associate's exceptional items						(365)
Share-based payment expense						(195)
Profit on disposal of interest in associate						1,564
Reversal of prior year losses of associate						1,501
Reversal of prior year losses of joint venture						669
Finance income						-
Finance costs						(1,709)
Profit before tax from continuing operations						16,146

3. Segment information (continued)

An analysis of the Group's revenue, gross profit, underlying EBITDA and underlying total operating profit for the year ended 31 December 2016 is as follows:

	Total Revenue	Gross profit	Gross profit	Underlying EBITDA	Underlying EBITDA	Underlying total operating profit	Underlying total operating profit
	$'000	$'000	%	$'000	%	$'000	%
US: Air	7,949	6,160	77.5	5,927	74.6	5,173	75.2
Europe: Air	118,387	10,006	8.5	2,543	2.1	2,031	1.7
MENA: Air	19,531	1,345	6.9	30	0.2	(80)	(0.4)
Asia: Air	80	80	100.0	80	100.0	(242)	(>100)
	145,947	17,591	12.1	8,580	5.9	7,682	5.5

US: Ground	24,130	5,560	23.0	2,778	11.5	2,401	10.0
Europe: Ground	38,321	17,615	46.0	8,383	21.9	7,660	20.0
MENA: Ground	5,170	1,697	32.8	273	5.3	32	0.6
	67,621	24,872	36.8	11,434	16.9	10,093	14.9

Other	1,676	1,688	>100	(2,720)	(>100)	(2,718)	(>100)
Eliminations	(12,207)	-	-	-	-	-	-
Totals	203,037	44,151	21.7	17,294	8.5	15,057	7.6


Underlying total operating profit						15,057
Amortisation						(1,438)
Exceptional items						(2,548)
Share of associate's exceptional items						(134)
Finance income						9,750
Finance costs						(1,379)
Profit before tax from continuing operations						19,308

An analysis of the Group's assets and liabilities by segment is as follows:

	Assets		Liabilities
	2017 $'000	2016 $'000	2017 $'000	2016 $'000
US: Air	19,177	16,674	(6,342)	(1,866)
US: Ground	10,141	8,407	(1,481)	(1,168)
Europe: Air	37,457	44,000	(30,882)	(38,387)
Europe: Ground	45,938	32,145	(17,870)	(8,715)
MENA: Air	5,970	5,165	(5,974)	(4,878)
MENA: Ground	2,049	1,040	(758)	(4,655)
Asia: Air	889	263	(15)	(18)
Other	150,267	143,686	(34,244)	(21,977)
Investment eliminations	(113,044)	(110,963)	-	-
Other Group adjustments and eliminations	(831)	(2,770)	1,258	(584)
	158,013	137,647	(96,308)	(82,248)

An analysis of the Group's revenue is as follows:

	Year ended 2017	Year ended 2016
	$'000	$'000
Continuing operations
Sale of business aviation services	186,472	197,169
Sale of aircraft	12,885	-
Sale of inventories	3,929	-
Branding fees	4,074	5,868
Totals	207,360	203,037

3. Segment information (continued)

Geographic information

	2017 $'000	2016 $'000
Non-current assets
US	2,720	2,217
Europe	16,148	9,577
MENA	1,183	421
	20,051	12,215

Non-current assets for this purpose consist of property, plant and equipment.

4. Items not included in underlying EBITDA

	Year ended 2017	Year ended 2016
	$'000	$'000
Exceptional items
Transaction costs	403	1,355
Integration and business re-organisation costs	1,160	1,193
Legal costs	1,059	-
	2,622	2,548

Share-based payment expense	195	-
Totals	2,817	2,548

Transactions costs represent expenses incurred in respect of the transactions completed in the year, 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. Legal costs relate to expenses incurred with respect to historic Hangar 8 activity, which do not form part of the underlying earnings of the business. Exceptional items include travel expenses and costs for executive management incurred in undertaking transactions, integration and restructuring together with the salary costs of certain permanent employees who are employed in place of external professional services.

5. Items not included in underlying total operating profit

	Year ended 2017	Year ended 2016
	$'000	$'000
Exceptional items
Transaction costs	403	1,355
Integration and business re-organisation costs	1,160	1,193
Legal costs	1,059	-
	2,622	2,548

Share of associate's exceptional items	365	134
Share-based payment expense	195	-
Amortisation	1,441	1,438
Release of provisions in respect of losses of associate and joint venture from prior years	(2,170)	-
Disposal of interest in associate	(1,564)	-
Totals	889	4,120

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:

	Year ended 2017	Year ended 2016
	$'000	$'000
Discontinued operations
Revenue	141	690
Expenses	(2,563)	(2,916)
Operating loss	(2,422)	(2,226)
Net finance income	10	99
Loss before and after tax from discontinued operations	(2,412)	(2,127)

Earnings per share
Basic - cents	(5.48c)	(4.85c)
Diluted - cents	(5.43c)	(4.85c)

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	5,579	234
Investing activities	(5,550)	(265)
Net cash outflow	29	(31)

7. Taxation

There is a total tax charge for the period of $3.9m (2016: $0.6m) and an effective tax rate of 24% on continuing activities (2016: 3%). The group operates across a number of jurisdictions and the effective rate of tax reflects the blended rate of operating in different countries. The lower effective rate of tax in 2016 reflected the effect of the utilization of tax losses, which are no longer available. In 2017 the US enacted a lower tax rate which reduced the expected future benefits from temporary differences and operating loss carry forwards. As a consequence the tax charge in 2017 has a higher effective tax rate reflecting the release of deferred tax assets no longer available.

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 year.

	Year ended 2017	Year ended 2016
	$'000	$'000
Numerator
Profit attributable to ordinary equity holders of the parent:
Continuing operations	12,214	18,803
Discontinued operations	(2,412)	(2,127)
Profit attributable to ordinary equity holders of the parent for basic earnings	9,802	16,676

Denominator
Weighted average number of shares used in basic EPS	43,994,442	43,827,775
Effect of dilutive share options	450,572	-
Weighted average number of shares used in diluted EPS	44,445,014	43,827,775

Earnings per share
Basic (cents)	22.28c	38.05c
Diluted (cents)	22.05c	38.05c
Basic - continuing operations (cents)	27.76c	42.90c
Diluted - continuing operations (cents)	27.48c	42.90c

9. Prior year adjustment

A liability of US$1.1 million has been raised in the form of a prior year adjustment. This arose as a result of an obligation in relation to one particular customer arrangement for services provided prior to 2014 in the Hangar 8 business, which had not been recognised at the time in error. This has resulted in an increase in the liabilities by $1.1m and reduced reserves by the same amount in the prior period. This has had no impact on the income statement in the prior period.

10. 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%

11. Property, plant and equipment and intangible assets

	Property, plant and equipment	Intangible assets
	$'000	$'000
Net book value at 1 January 2017	12,215	47,618
Additions	8,507	1,573
Disposals	(9)	-
Depreciation and amortisation	(1,845)	(1,441)
Exchange movements	1,183	4,530
Net book value at 31 December 2017	20,051	52,280

	Property, plant and equipment	Intangible assets
	$'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 resale	(5,636)	-
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 31 December 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 31 December 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

13. Investments accounted for using the equity method

Details of the Group's investments accounted for using the equity method at 31 December 2016 and 2017 are as follows:

Name	Investment	Place of incorporation and operation	Proportion of ownership interest	Proportion of voting power held
Gama Aviation LLC	Associate	USA	24.5%	25.0%
Gama Aviation Hutchison Holdings	Joint venture	Hong Kong	50.0%	50.0%

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 $1,564,000. The Group has retained the remaining 24.5% and continues to account for the investment as an associate.

The results of the equity accounted investments are as follows:

	Associate		Joint venture
	Year ended 2017	Year ended 2016	Year ended 2017	Year ended 2016
	$'000	$'000	$'000	$'000
Revenue	387,366	231,560	14,793	16,542
Expenditure	(386,730)	(231,592)	(15,335)	(17,185)
Profit / (loss) before tax	636	(32)	(542)	(643)
Income tax expense	-	16	-	-
Profit / (loss) after tax	636	(16)	(542)	(643)

Group's share of net profit / (loss)	157	(8)	-	(322)

Reversal of prior year losses	1,501	-	669	-
Share of results from equity accounted investments	1,658	(8)	669	(322)

13. Investments accounted for using the equity method (continued)

The movements in the carrying value of the investments are as follows:

	Associate		Joint venture
	2017	2016	2017	2016
	$'000	$'000	$'000	$'000
At 1 January	-	-	-	-
Share of net profit / (loss)	157	(8)	-	(322)
Included in provisions	-	8	-	322
Profit on disposal of interest in associate	1,564	-	-	-
At 31 December	1,721	-	-	-

The summary financial positions of the equity accounted investments are as follows:

Total assets	41,276	18,120	5,500	3,914
Total liabilities	(37,317)	(21,186)	(7,381)	(5,252)
Net assets / (liabilities)	3,959	(3,066)	(1,881)	(1,338)

Group's share of net assets / (liabilities)	970	(1,501)	(941)	(669)
Goodwill arising on disposal of investment	751	-	-	-
Included in provisions	-	1,501	-	669
Investment accounted for using the equity method (*)	1,721	-	-	-

(*) The Group has discontinued recognising its share of losses in the joint venture as the carrying value of this investment is $nil.

14. Events after balance sheet date

On 9 February 2018, Gama Aviation Plc announced its intention to raise further capital through the proposed placing of shares. The admission of the placing shares became effective on 2 March 2018. The Group raised £48 million (approximately US$67 million) to accelerate the Group's strategy of becoming the leading global business aviation services group. Hutchison Whampoa (China) Limited ("Hutchison") subscribed for shares in the placing and now holds approximately 21% of the issued share capital. $19.8 million of the proceeds were used to acquire Hutchison's Hong Kong aviation interests: its 50% stake in Gama Aviation Hutchison Holdings Ltd and its 20% stake in China Aircraft Services Limited. The balance of the proceeds is intended to be deployed in two Ground base maintenance facilities in the US and the development of the Sharjah business aviation centre in the Middle East and through acquisitions targeting Air opportunities in Europe and the Middle East and Ground opportunities in Europe.

This information is provided by RNS

The company news service from the London Stock Exchange

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