Interim results for six months to 30 June 2017

RNS Number : 9035P

Gama Aviation PLC

06 September 2017

Gama Aviation Plc (AIM: GMAA)

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

Interim results for six months to 30 June 2017

Gama Aviation Plc, one of the world's largest business aviation service providers is pleased to announce the results for the six months to 30 June 2017.

Financial Highlights

· Total Group revenue up 45% to $291m (2016: $201m)

· Underlying total operating profit up 31% to $7.7m (2016: $5.9m).

· Underlying profit before tax of $7.0m, up 40% (2016: $5.0m)

· Underlying EPS up 25% to 12.2 cents (2016: 9.7 cents).

· Net debt decreased to $14.3m, down $5.1m from December 2016 (June 2016: $13.3m)

· Cash conversion from operations improved to an inflow of $5.7m compared to an outflow of $1.1m in 2016

· 2017 trading in line with management expectations

Financial Summary

USD millions (unless otherwise stated)	Underlying results¹			Reported results
	Jun-17	Jun-16	Constant Currency² Jun-16	Jun-17	Jun-16
Revenue - Total Group³	290.8	209.8	201.0
Associate & JV revenue	(197.8)	(117.2)	(117.1)
Inter-group revenue (including branding fee)	8.6	9.0	8.9
Revenue	101.6	101.6	92.8	101.6	101.6
Gross profit	21.3	21.8	20.1	21.3	21.8
Gross profit %	21.0%	21.4%	21.6%	21.0%	21.4%
EBITDA	8.0	7.5	7.0
Total operating profit⁴	7.7	6.4	5.9	9.6	3.8
Profit before tax	7.0	5.4	5.0	8.7	7.5

Basic earnings per share (cents)	12.2	10.4	9.7	16.0	15.1

Operational Highlights

· US Air revenue up 74% driven by the BBA aircraft management business merger, Wheels Up growth and further contract wins

· US Air BBA business merger proceeding as planned and on course for full integration by year end

· Europe Air operational efficiency initiatives completed in 2016 have produced strong improvements in gross profit and EBITDA margins

· US Ground revenue up 19% driven by full period impact of new bases opened in 2016 and new contract wins

· Europe Ground showed modest revenue growth and improved profitability

· Middle East Air and Ground showed encouraging growth

1 - Underlying results exclude exceptional items, share-based payment expense, amortisation, losses of associate and joint venture, profit on disposal of interest in associate, and unrealised foreign exchange movements included in finance costs, where applicable. Detailed calculations are presented in the Financial review.

2 - Calculated at a constant foreign exchange rate of $1.26 to £1, being the rate that represented the average for the 2017 financial period.

3 - Includes 100% of the revenue of Gama Aviation's associate in the US and its joint venture in Hong Kong.

4 - Total operating profit includes the share of results from Gama Aviation's associate in the US and joint venture in Hong Kong. Please refer to page 8.

Marwan Khalek, Chief Executive of Gama Aviation said:

"The first half of 2017 has seen the Group maintain the positive momentum generated through last year to deliver a good performance in line with our expectations. In all divisions and all regions we achieved strong revenue growth and encouraging improved margin performance.

The integration of the BBA aircraft management business into the US Air division is progressing well and benefiting from a buoyant US market. The 2016 acquisitions of Aviation Beauport and FlyerTech, in Europe Ground and Europe Air respectively, are performing above expectations. Gama Aviation is well positioned to continue to benefit from the opportunities that this highly fragmented market presents.

Based on our performance to date and contract visibility, the Board is confident that the Group will meet its full year expectations."

-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

Kevin Godley, Chief Financial Officer

Camarco +44 (0) 20 3757 4992

Ginny Pulbrook

Geoffrey Pelham-Lane

Jefferies International +44 (0) 207 029 8000

Simon Hardy

Will Soutar

Gama Aviation - Notes to Editors

Gama Aviation Plc (AIM:GMAA) is a global business aviation services group that specialises in providing support for individuals, corporations and government agencies; allowing them to deliver on the promises they make.

The Group's services are split into two divisions: Air and Ground. Air services include aircraft management, special mission support and charter. Ground services cover aircraft maintenance services, aircraft modification design and installation, and Fixed Base Operations (FBO).

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

Chief Executive Report

H1 2017 Performance

The first half of 2017 has seen the Group maintain the positive momentum generated through last year to deliver a good performance in line with our expectations. Strong revenue growth and encouraging margin performance was achieved in both divisions and in all regions. Active working capital management continued during the period resulting in a cash inflow of $5.7m compared to an outflow in the first half of 2016 of $1.1m.

The Air division had a strong six months. Total Divisional revenue was up 43% to $253m (2016: $177m), driven largely by the US. With the benefits of increasing scale, the total operating profit of $7.3m (2016: $2.5m) continued to improve, with the total operating profit margin of 2.9% (2016: 1.4%) moving towards our stated target of 5%.

The Ground division also had a good first half. Total Divisional revenue was up 10% to $38m (2016: $35m), driven largely by the US. The total operating profit of $5.2m (2016: $3.9m) continued to improve due to cost control and business mix. The total operating profit margin increased to 13.6% (2016: 11.4%) moving towards our stated target of 15% to 20%.

Our developing businesses in the Middle East and Asia have both made further steady progress. Movements at our Sharjah FBO are at an all-time high and this provides a strong foundation for our planned development in the region. In Asia, our joint venture with Hutchinson, in collaboration with Chinese Aircraft Services Limited (CASL), has now received the necessary regulatory approvals to offer line and base maintenance services at Hong Kong airport.

Business Development and Growth Strategy

Outlook

Based on our performance to date and contract visibility, the Board is confident that the Group will meet its full year expectations.

Marwan Khalek

Chief Executive Officer

Operational Performance Review

Basis of presentation of financials

The analysis of Gama Aviation's operational performance by division and geography, is shown on a Total Division basis (for revenue, gross profit, underlying EBITDA and underlying total operating profit) reflecting 100% of the performance of associates and joint ventures. The analysis also includes inter-segment revenues, which represent the revenues that arise between divisions, in order to present the underlying performance of each division.

Gama Aviation receives a fee in return for allowing its associates and joint ventures the use of the Gama Aviation brand. Such branding fees are excluded from the results on a Total Division basis but are recognised within Gama Aviation's Group reported performance.

Under IFRS, the trading results of associates are not consolidated and are instead shown as a single line in the profit and loss account under 'share of results from equity accounted investments'.

Europe is the only region in the Group that is affected by any material foreign exchange movements, primarily between GBP and USD. The 2016 performance has been restated at the same average rate for USD to GBP as the 2017 financials. The average rate for H1 of 2017 was USD1.26 to GBP1.00. The commentary below is based on constant currency performance unless otherwise stated.

				Constant Currency
June	2017	2016	Change	2016		Change
USD thousands	Total	Total	Total	Total		Total
Air	252,579	183,667	37.5%		177,129	42.6%
Ground	38,160	37,491	1.8%		34,664	10.1%
Europe Ground - aircraft sale revenue	10,460	-	-		-	-
Other	875	1,096	(20.2%)		1,055	(17.1%)
Inter-segment eliminations	(11,295)	(12,495)	9.6%		(11,845)	4.6%
Total Group Revenue	290,779	209,759	38.6%		201,003	44.7%
Total Group Gross Profit	32,600	25,124	29.8%		23,454	39.0%
Gross Profit %	11.2%	12.0%	(0.8ppt)		11.7%	(0.5ppt)
Total Group Underlying EBITDA	11,803	6,678	76.7%		6,145	92.1%
Underlying EBITDA %	4.1%	3.2%	0.9ppt		3.1%	1.0ppt
Total Group Underlying Total Operating Profit	10,788	5,428	98.8%		4,967	>100%
Underlying Total Operating Profit %	3.7%	2.6%	1.1ppt		2.5%	1.2ppt

Air division

Our Air division specialises in the provision of complex, high touch, time critical, solutions for individuals, corporations and government agencies.

Aircraft management: The provision of aircraft management services to high net worth individuals and corporates. This includes the procurement on the customers' behalf of services such as insurance, fuel, flight training, flight planning and scheduling, crew management and maintenance oversight and regulatory compliance. In return, the customer pays Gama Aviation a management fee.

Special mission: A turnkey, outsource solution for Government agencies looking to cost effectively manage aviation operations for a variety of complex, time critical services such as air ambulance provision and infrastructure monitoring. Our services include cost management, flight planning and scheduling, crew management, maintenance oversight and regulatory compliance. Services are provided on a contract basis.

Aircraft charter and contract charter: A time critical, high touch solution aimed at individuals and corporations wishing to maximise the productive time of their aircraft and/or executives. Services include long term charter contracts, provision of charter within the managed fleet and sub-charter on audited operators. Services are provided on a commission or contract basis.

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

Revenue	191,196	110,002	43,022	49,699	11,629	8,889	6,732	8,539	252,579	177,129
Gross profit	13,149	6,150	4,414	3,780	821	715	190	223	18,574	10,868
Gross profit %	6.9%	5.6%	10.3%	7.6%	7.1%	8.0%	2.8%	2.6%	7.4%	6.1%
EBITDA	6,180	2,583	1,723	858	167	(19)	(345)	(371)	7,725	3,051
EBITDA %	3.2%	2.3%	4.0%	1.7%	1.4%	(0.2%)	(5.1%)	(4.3%)	3.1%	1.7%
Total operating profit	6,010	2,429	1,493	588	130	(96)	(362)	(379)	7,271	2,542
Total operating profit %	3.1%	2.2%	3.5%	1.2%	1.1%	(1.1%)	(5.4%)	(4.4%)	2.9%	1.4%

US Air (Associate)

US Air, now including the merged BBA business, has continued to perform strongly in the first half of 2017, delivering significant revenue growth, up 74% to $191m (2016: $110m) and margin improvement.

US Air total operating profit was $6.0m (2016: $2.4m), with the total operating profit margin of 3.1% (2016: 2.2%). The US Air total operating profit margins are expected to increase towards our target of 5% as the benefits of scale and operational gearing continue. The strength of this performance reflects the addition of the BBA aircraft management business, as well as a high contract win rate in our core management business and the continued growth of our Wheels Up contract.

The integration of the BBA business is progressing as planned. The combination is delivering the envisaged benefits: adding complementary West Coast coverage to the existing East Coast business, diversifying the client base, providing the ability to cross sell maintenance services into Gama Aviation's wholly owned US ground business and delivering cost synergies.

The business was rebranded as Gama Aviation Signature on 1 January 2017. It is the largest aircraft management business in the US and has significant growth prospects.

Europe Air

Whilst revenue declined, as expected, reflecting the Group's decision to exit certain underperforming contracts in 2016, Europe Air delivered a significantly improved total operating profit performance following its restructuring in 2016. Total operating profit increased to $1.5m (2016: $0.6m) at a materially improved total operating profit margin of 3.5% (2016: 1.2%), moving closer to our target of 5%.

Middle East Air

Our Middle Eastern Air business performed well. Revenue was up over 30% on the same period in the prior year and with a significant improvement in operating profit. The division's prospects are strong with a healthy pipeline of contract tenders.

Asia Air

Asia Air has made good progress establishing its brand alongside our joint venture partner, Hutchison Whampoa, and is well positioned for the future.

Ground division

Our Ground division provides solutions to maximise the availability of aircraft and uphold their airworthiness on behalf of individuals, corporations and Government agencies.

Base maintenance: 'Base' refers to the planned maintenance required by the aircraft manufacturer or component supplier. This work is complex, highly regulated and location specific, requiring investment in tooling and training. Our centres of excellence cover a range of aircraft including business jets, helicopters, turbo-prop and piston engine aircraft. Services are provided on a fee or contract basis.

Line maintenance: Our line solutions assist owners with irregular maintenance activities, component failure or simple wear and tear. Depending on the fault, this may be sufficient to ground the aircraft. For private clients, this can be an inconvenience whilst for military or air ambulance clients, the aircraft's re-entry into service is time critical. In all cases it needs to be dealt with efficiently so the aircraft can complete its commitments. Services are provided on a fee or contract basis.

Design and modifications: Our design and modifications team provides solutions to civilian and military aircraft owners to increase the operating life of an aircraft. Typical services include: avionics updates, role or mission changes and cockpit upgrades. Services are provided on a fee or contract basis.

Fixed base operations (FBO): Our FBO's provide infrastructure at airports that are underserved with business / special mission facilities. The business has three dedicated FBOs: Glasgow, Jersey and Sharjah, catering for parking, hangarage, line maintenance and other related ground handling tasks such as the fuelling of aircraft. Services are provided on a fee basis.

The Ground division had a good first half overall with growth in revenues, EBITDA and operating profits. Revenues and EBITDA were up across all regions and whilst there are still fluctuations in the gross profit margin in the fast growing US division as expected, the overall EBITDA and operating profit are up by 25% and 32% respectively.

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

Revenue	14,219	11,925	20,938	20,345	3,003	2,394	38,160	34,664
Gross profit	2,648	2,718	9,075	8,719	974	773	12,697	12,210
Gross profit %	18.6%	22.8%	43.3%	42.9%	32.4%	32.3%	33.3%	35.2%
EBITDA	1,060	999	4,400	3,546	289	67	5,749	4,612
EBITDA %	7.5%	8.4%	21.0%	17.4%	9.6%	2.8%	15.1%	13.3%
Total operating profit	817	835	4,161	3,207	210	(98)	5,188	3,944
Total operating profit %	5.7%	7.0%	19.9%	15.8%	7.0%	(4.1%)	13.6%	11.4%

US Ground

US Ground delivered strong revenue growth in the first half, up 19% to $14.2m (2016: $11.9m). As expected, there have been variations in the gross profit percentage as the business scales up. This has been driven by the addition of new bases and changes in revenue mix but this gross profit percentage should normalise at around 20% as the business matures. The total operating profit of $0.8m (2016: $0.8m), whilst flat, reflects the investment in the new bases.

The division has good growth prospects after some healthy contract wins in the first half.

Europe Ground

The European Ground division had a positive first half of 2017. Growth in revenue was modest reflecting the return of discretionary spending albeit at low levels. Gross profit was maintained at a healthy margin of 43.3% (2016: 42.9%). Principally, as a result of the restructuring programme in 2016, total operating profit was up 30% to $4.2m (2016: $3.2m).

The division now has a solid platform to deliver modest growth.

Middle East Ground

Middle East Ground successfully built on the platform it established in 2016. Revenue and gross profit were up 25% to $3.0m (2016: $2.4m) and up 26% to $1.0m (2016: $0.8m) respectively.

The division continues to see increased numbers of movements through the FBO and this provides a strong foundation for our planned development in the region.

Financial Review

Basis of presentation of financials

In order to aid understanding of Gama Aviation's underlying business performance, all financial commentary below is provided on a constant currency basis unless otherwise stated. The 2016 performance has been restated to the same average rate for USD to GBP as the reported 2017 financials. The average rate for H1 of 2017 was USD1.26 to GBP1.00.

Total Group performance

During the period the Total Group performance, which included 100% of the results of the associate and joint venture, delivered revenues of $290.8m. This excludes the divisional inter-segment revenue which is removed on a Total Group consolidated basis.

The Operational Performance Review illustrates the divisions and regions on an unconsolidated basis and therefore includes the divisional inter-segment revenue treating each division as a stand-alone business for comparative purposes in order to assess the underlying performance of each division.

The table below reconciles the Total Group performance to the reported results.

USD thousands	Revenue	Gross Profit	Underlying EBITDA	Underlying Total Operating Profit
June 2017
Total Group	290,779	32,600	11,803		10,788
Associate & joint venture	(197,774)	(13,301)	(5,807)		(5,102)
Branding fee & other intra-group revenue	8,623	2,032	2,032		2,032
Reported	101,628	21,331	8,028		7,718

June 2016
Total Group	209,759	25,124	6,678		5,428
Associate & joint venture	(117,127)	(6,125)	(1,909)		(1,789)
Branding fee & other intra-group revenue	8,974	2,760	2,760		2,760
Reported	101,606	21,759	7,529		6,399

Constant currency June 2016
Total Group	201,003	23,454	6,145		4,967
Associate & joint venture	(117,127)	(6,125)	(1,909)		(1,789)
Branding fee & other intra-group revenue	8,917	2,760	2,759		2,761
Reported	92,793	20,089	6,995		5,939

Revenue

For the first half of the year, the business delivered revenue of $101.6m (2016: $92.8m), up 9.5% on a constant currency basis driven primarily by the one-off procurement of aircraft for one of our government contracts. The total revenue on this was $10.5m, classified as aircraft sales and was derived within the Europe Ground business.

The Landmark merger together with the organic growth in the US Air business, continues to drive record Total Group revenues, which are up 45% to $290.8m (2016: $201.0m).

Gross profit

Reported gross profit is up 6% to $21.3m (2016: $20.1m) with a stable gross profit percentage of 21.0% (2016: 21.6%).

EBITDA

Underlying EBITDA is up 14% to $8.0m (2016: $7.0m). The contribution to the Group EBITDA from the European Air and Ground divisions has increased by 39% to $6.1 (2016: $4.4m). This has offset the lower branding fee derived from the US Air business of $2.0m (2016: $2.7m). The branding fee is now fixed from 1 January 2017 at $4m in 2017 and $3.75m from 2018 onwards. The remainder of the profits attributable to Gama Aviation from the US Air business are derived in total operating profit, which includes Gama Aviation's share within the line of the associate.

USD thousands	June 2017	June 2016	Constant Currency June 2016

Continuing EBITDA	7,363	6,248		5,786
Exceptional items	567	1,281		1,209
Share-based payment expense	98	-		-
Underlying EBITDA	8,028	7,529		6,995

Exceptional items

Exceptional items amounted to $0.6m (2016: $1.3m), details of which are included within note 4. Of the total $0.6m exceptional costs, $0.2m are transaction costs (2016: $0.5m) with the remainder being the one-off costs associated with the subsequent integration and re-organisation of these transactions.

Share based payment expense

On 10 August 2016, the Group announced that a total of 1,500,000 share options were granted at £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 in the period of $0.1m (2016: $nil). Please see note 9 for more detail.

Associates and Joint ventures

To illustrate the Total Operating Profit contribution that is derived by the Gama Aviation Group's associates and joint ventures, the following tables below reconcile the divisional performance of both US and Asia Air to the reported Total Operating Profit.

US Air

US Air division performance reconciliation to reported performance
USD thousands	Revenue	Gross Profit	Underlying EBITDA	Underlying Total Operating Profit
June 2017
US Air division	191,196	13,149	6,180		6,010
Associate	(191,196)	(13,111)	(6,152)		(5,464)
Branding fee	2,000	2,000	2,000		2,000
Reported	2,000	2,038	2,028		2,546

June 2016
US Air division	110,002	6,150	2,583		2,429
Associate	(108,785)	(5,902)	(2,281)		(2,167)
Branding fee	2,720	2,720	2,720		2,720
Reported	3,937	2,968	3,022		2,982

The reported underlying total operating profit (which includes the contribution of the associate) of the US Air division for Gama Aviation is derived as follows:

USD thousands	June 2017	June 2016
Branding fee	2,000	2,720
Line of associate	1,902	(253)
Losses of associate	(1,501)	253
Other	145	262
Reported underlying total operating profit	2,546	2,982

Losses of associate

Within the $1.9m share of results of the US Air associate is a $1.5m provision release. During the past few years, the US Air associate has been loss- making and the Group has been provisioning amounts in anticipation of additional resourcing requirements. Previously, these losses have been included in the Group's underlying earnings and have therefore been included in the Group's underlying EPS. With the strength of the Associate's performance, its profit-making position and positive net assets position, together with a re-organised branding fee structure, the provisions are no longer required and have been released. The provision release has not been included in the Group's underlying results in this period.

Asia Air

Asia Air division performance reconciliation to reported performance
USD thousands	Revenue	Gross Profit	Underlying EBITDA	Underlying Total Operating Profit
June 2017
Asia Air division	6,732	190	(345)		(362)
Joint venture	(6,732)	(190)	345		362
Branding fee	32	32	32		32
Reported	32	32	32		32

June 2016
Asia Air division	8,539	223	(371)		(379)
Joint venture	(8,539)	(223)	371		(379)
Branding fee	40	40	40		40
Reported	40	40	40		40

The reported underlying total operating profit (which includes the profit contribution of the joint venture) of the Asia Air division for Gama Aviation is derived as follows:

USD thousands	June 2017	June 2016
Branding fee	32	40
Losses of associate	179	239
Line of joint venture	(179)	(239)
Reported underlying total operating profit	32	40

Total operating profit

The underlying total operating profit, which includes the operating profit attributable to Gama Aviation of the 100% owned group companies together with the results attributable to Gama Aviation from its associate and joint venture is up 31% to $7.7m (2016: $5.9m).

USD thousands	June 2017	June 2016	Constant Currency June 2016

Continuing total operating profit	9,647	3,811		3,522
Amortisation	755	815		716
Exceptional items	567	1,281		1,209
Share of associate's exceptional items	156	-		-
Share-based payment expense	98	-		-
Losses of associate and joint venture	(1,322)	492		492
Profit on disposal of interest in associate	(2,183)	-		-
Underlying total operating profit	7,718	6,399		5,939

Share of associate's exceptional items

The Group also had a further share of exceptional items from our associate of $0.2m (2016: $nil).

Losses of associate and joint venture

Over previous and current financial periods, Gama Aviation has been provisioning amounts in anticipation of additional resourcing requirements for both the associate and joint venture. The losses made in the associate and joint venture have been included in the Group's underlying earnings and have therefore been included in the Group's underlying total operating profit. With the strength of the US Air associate's performance in 2017, its profit-making position and positive net assets position, together with a re-organised branding fee structure, the provisions are no longer required and have been released. The provision release has not been included in the Group's underlying earnings in this period.

Provisions continue to be made for the losses of the joint venture and amounted to $170k (2016: $239k) in the period. Similarly, these losses have been excluded from the underlying earnings of the Group and are therefore not included in the underlying Group total operating profit.

Profit on disposal of interest in associate

At 31 December 2016, the Group held a 49% interest in Gama Aviation LLC and accounted for this investment as an associate. On 1 January 2017, Gama Aviation LLC merged its aircraft management and charter operations with Landmark Aviation LLC, a wholly owned subsidiary of BBA Aviation Plc. As a consequence, the Group transferred a 24.5% interest to BBA Aviation Plc in return for 24.5% of the net assets of Landmark Aviation LLC. This transaction has resulted in the recognition of a profit on disposal of interest in associate of $2.2m. The Group has retained the remaining 24.5% and continues to account for the investment as an associate.

Profit before tax

Underlying profit before tax is up 40% to $7.0m (2016: $5.0m).

USD thousands	June 2017	June 2016	Constant Currency June 2016

Continuing profit before tax	8,694	7,486		7,325
Amortisation	755	815		716
Exceptional items	567	1,281		1,209
Share of associate's exceptional items	156	-		-
Share-based payment expense	98	-		-
Losses of associate and joint venture	(1,322)	492		492
Profit on disposal of interest in associate	(2,183)	-		-
Unrealised FX movements in finance costs	247	(4,642)		(4,730)
Underlying profit before tax	7,012	5,432		5,012

Unrealised FX movements within finance costs

Within our global services business, we operate and manage geographically mobile assets. As a result, Gama Aviation is exposed to a number of currencies. With the exception of Europe, the rest of the regions trade in USD which is the same as our Group reporting currency, leaving little or no foreign exchange exposure.

The material currency exposure for Gama Aviation is within our Europe operations between GBP and USD. Gama Aviation experiences both realised and unrealised trading gains and losses on these exchange rate movements. These impact our operating performance, and finance income and costs.

2016 was an especially volatile year between GBP and USD exchange rates and as a result we reported some material gains within finance income. This was due to the loan structure within the business and how the proceeds of equity and debt were deployed into subsidiary companies whereby translation differences arose where functional currencies differed from the Gama Aviation reporting currency of USD.

We reported during 2016, that Gama Aviation was looking to reduce this complexity by simplifying both the loan structure of the group and to carry out a review of the functional currencies of the subsidiaries in the group and we are pleased with the progress made.

The unrealised FX movement in the period was a loss of $0.2m (2016: gain of $4.7m).

Earnings per share (EPS)

Underlying EPS is up 25% to 12.2 cents (2016: 9.7 cents).

USD thousands	June 2017	June 2016	Constant Currency June 2016

Profit attributable to ordinary equity holders of the parent:
Continuing operations	7,037	6,588		6,549

Add back:
Amortisation	755	815		716
Exceptional items	567	1,281		1,209
Share of associate's exceptional items	156	-		-
Share-based payment expense	98	-		-
Losses of associate and joint venture	(1,322)	492		492
Profit on disposal of interest in associate	(2,183)	-		-
Unrealised FX movements in finance costs	247	(4,641)		(4,730)
Profit attributable to ordinary shareholders for adjusted earnings	5,355	4,535		4,236
Denominator
Weighted average number of shares used in basic EPS	43,994,442	43,661,109		43,661,109

Underlying basic earnings per share (cents)	12.17c	10.39c		9.70c

Taxation

There is a total tax charge for the period of $1.5m (2016: $1.0m) and an effective tax rate of 20%.

Cash

USD thousands	June 2017	June 2016

Underlying EBITDA	8,028	7,529
Working capital movement	335	(5,937)
Exceptional items	(567)	(1,281)
Share-based payment expense	(98)	-
Other	(2,029)	(1,373)
Cash flow from operations	5,669	(1,062)
Capex movement	708	(930)
Net interest & tax paid	(702)	(834)
Free cash flow	5,675	(2,826)
Acquisitions	-	(2,529)
Net debt foreign exchange movements	(618)	1,064
Change in net debt	5,057	(4,291)
Net debt	(14,330)	(13,313)

Cash increased by $4.0m from $11.2m at December 2016 to $15.2m. This has been aided by all the divisions within the various regions being EBITDA positive.

There has been a significant focus within the Group to improve its working capital management with a working capital movement in the first half that is neutral compared to a $6m outflow in the prior period. As a result, cash generated from operations was $5.7m for the period compared with an outflow of $1.1m in 2016. With the continued focus on working capital management within the Group, a stabilised European fleet and the exiting of the underperforming contracts in 2016 resulting in less debt impairments, the business is starting to generate the expected cash conversion.

Net debt at the half year was $14.3m, down $5.1m from December 2016. This improvement has come as a result of an improved period end cash balance as well as the disposal of two of the aircraft that the Group held as held for sale. The proceeds received allowed the Group to pay off the remaining asset backed debt.

Net debt to underlying EBITDA was 0.98x (2016: 0.80x).

Dividend

As usual and in accordance with the group's dividend policy, the Directors do not propose an interim dividend to be paid for the six months to 30 June 2017. The Group will continue to maintain its progressive annual dividend policy.

The final dividend of 2.6p per share for the year ended 31 December 2016 was approved at the Annual General Meeting on 25 May 2017 and was paid on 18 July 2017.

Discontinued operations

The operating losses incurred on the Group's owned aircraft that are deployed on ad-hoc charter are also separated from the underlying EBITDA as this is a legacy element of the business model that the Group has classified as discontinued. The discontinued operations loss for the period was $1.0m (2016: $0.1m). During the period, the Group sold two of the three remaining owned aircraft. The book value of the one remaining asset held for sale is $1.5m.

Kevin Godley

Chief Financial Officer

Segmental analysis

(USD thousands)

Total Group¹ and Constant Currency²

Six months ended 30 June 2017
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	191,196	14,219	43,022	31,398	11,629	3,003	6,732	875	(11,295)	290,779
Gross Profit	13,149	2,648	4,414	9,075	821	974	190	1,329		32,600
Gross Profit %	6.9%	18.6%	10.3%	28.9%	7.1%	32.4%	2.8%	>100%		11.2%
EBITDA³	6,180	1,060	1,723	4,400	167	289	(345)	(1,671)		11,803
EBITDA³ %	3.2%	7.5%	4.0%	14.0%	1.4%	9.6%	(5.1%)	(>100%)		4.1%
Total Operating Profit⁴	6,010	817	1,493	4,161	130	210	(362)	(1,671)		10,788
Total Operating Profit⁴ %	3.1%	5.7%	3.5%	13.3%	1.1%	7.0%	(5.4%)	(>100%)		3.7%

Six months ended 30 June 2016
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	110,002	11,925	49,699	20,345	8,889	2,394	8,539	1,055	(11,845)	201,003
Gross Profit	6,150	2,718	3,780	8,719	715	773	223	376		23,454
Gross Profit %	5.6%	22.8%	7.6%	42.9%	8.0%	32.3%	2.6%	35.6%		11.7%
EBITDA³	2,583	999	858	3,546	(19)	67	(371)	(1,518)		6,145
EBITDA³ %	2.3%	8.4%	1.7%	17.4%	(0.2%)	2.8%	(4.3%)	(>100%)		3.1%
Total Operating Profit⁴	2,429	835	588	3,207	(96)	(98)	(379)	(1,519)		4,967
Total Operating Profit⁴ %	2.2%	7.0%	1.2%	15.8%	(1.1%)	(4.1%)	(4.4%)	(>100%)		2.5%

Total Group¹

Six months ended 30 June 2017
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	191,196	14,219	43,022	31,398	11,629	3,003	6,732	875	(11,295)	290,779
Gross Profit	13,149	2,648	4,414	9,075	821	974	190	1,329		32,600
Gross Profit %	6.9%	18.6%	10.3%	28.9%	7.1%	32.4%	2.8%	>100%		11.2%
EBITDA³	6,180	1,060	1,723	4,400	167	289	(345)	(1,671)		11,803
EBITDA³ %	3.2%	7.5%	4.0%	14.0%	1.4%	9.6%	(5.1%)	(>100%)		4.1%
Total Operating Profit⁴	6,010	817	1,493	4,161	130	210	(362)	(1,671)		10,788
Total Operating Profit⁴ %	3.1%	5.7%	3.5%	13.3%	1.1%	7.0%	(5.4%)	(>100%)		3.7%

Six months ended 30 June 2016
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	110,002	11,925	56,237	23,172	8,889	2,394	8,539	1,096	(12,495)	209,759
Gross Profit	6,150	2,718	4,209	9,930	715	773	223	406		25,124
Gross Profit %	5.6%	22.8%	7.5%	42.9%	8.0%	32.3%	2.6%	37.0%		12.0%
EBITDA³	2,583	999	946	4,039	(19)	67	(371)	(1,566)		6,678
EBITDA³ %	2.3%	8.4%	1.7%	17.4%	(0.2%)	2.8%	(4.3%)	(>100%)		3.2%
Total Operating Profit⁴	2,429	835	649	3,652	(96)	(98)	(379)	(1,564)		5,428
Total Operating Profit⁴ %	2.2%	7.0%	1.2%	15.8%	(1.1%)	(4.1%)	(4.4%)	(>100%)		2.6%

1 - Includes 100% of the results of Gama Aviation's Associate in the US and Joint Venture in Hong Kong.

2 - Calculated at a constant foreign exchange rate of $1.26 to £1, being the rate that represented the average for the 2017 financial period.

3 - Underlying EBITDA is arrived at by taking operating profit before depreciation, amortisation, exceptional items and share-based payment expense.

4 - Underlying total operating profit is arrived at by taking operating profit before amortisation, exceptional items, share based payment expense.

5 - 'Elims' represents the elimination of inter-segment revenue.

Segmental analysis (continued)

(USD thousands)

Reported and Constant Currency²

Six months ended 30 June 2017
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	2,000	14,219	43,054	31,488	11,629	3,003	32	875	(4,672)	101,628
Gross Profit	2,038	2,648	4,414	9,075	821	974	32	1,329		21,331
Gross Profit %	>100%	18.6%	10.3%	28.8%	7.1%	32.4%	100.0%	>100%		21.0%
EBITDA³	2,028	1,060	1,723	4,400	167	289	32	(1,671)		8,028
EBITDA³ %	>100%	7.5%	4.0%	14.0%	1.4%	9.6%	100.0%	(>100%)		7.9%
Total Operating Profit⁴	2,546	817	1,493	4,161	130	210	32	(1,671)		7,718
Total Operating Profit⁴ %	>100%	5.7%	3.5%	13.2%	1.1%	7.0%	100%	(>100%)		7.6%

Six months ended 30 June 2016
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	3,937	11,925	49,699	20,345	8,889	2,394	40	1,055	(5,491)	92,793
Gross Profit	2,968	2,718	3,780	8,719	715	773	40	376		20,089
Gross Profit %	75.4%	22.8%	7.6%	42.9%	8.0%	32.3%	100.0%	35.6%		21.6%
EBITDA³	3,022	999	858	3,546	(19)	67	40	(1,518)		6,995
EBITDA³ %	76.8%	8.4%	1.7%	17.4%	(0.2%)	2.8%	100.0%	(>100%)		7.5%
Total Operating Profit⁴	2,982	835	588	3,207	(96)	(98)	40	(1,519)		5,939
Total Operating Profit⁴ %	75.7%	7.0%	1.2%	15.8%	(1.1%)	(4.1%)	100%	(>100%)		6.4%

Reported

Six months ended 30 June 2017
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	2,000	14,219	43,054	31,488	11,629	3,003	32	875	(4,672)	101,628
Gross Profit	2,038	2,648	4,414	9,075	821	974	32	1,329		21,331
Gross Profit %	>100%	18.6%	10.3%	28.8%	7.1%	32.4%	100.0%	>100%		21.0%
EBITDA³	2,028	1,060	1,723	4,400	167	289	32	(1,671)		8,028
EBITDA³ %	>100%	7.5%	4.0%	14.0%	1.4%	9.6%	100.0%	(>100%)		7.9%
Total Operating Profit⁴	2,546	817	1,493	4,161	130	210	32	(1,671)		7,718
Total Operating Profit⁴ %	>100%	5.7%	3.5%	13.2%	1.1%	7.0%	100%	(>100%)		7.6%

Six months ended 30 June 2016
	US		Europe		MENA		Asia	Other	Elims⁵	Totals
	Air	Ground	Air	Ground	Air	Ground	Air
Revenue	3,937	11,925	56,237	23,172	8,889	2,394	40	1,096	(6,084)	101,606
Gross Profit	2,968	2,718	4,209	9,930	715	773	40	406		21,759
Gross Profit %	75.4%	22.8%	7.5%	42.9%	8.0%	32.3%	100.0%	37.0%		21.4%
EBITDA³	3,022	999	946	4,039	(19)	67	40	(1,565)		7,529
EBITDA³ %	76.8%	8.4%	1.7%	17.4%	(0.2%)	2.8%	100.0%	(>100%)		7.4%
Total Operating Profit⁴	2,982	835	649	3,653	(96)	(98)	40	(1,566)		6,399
Total Operating Profit⁴ %	75.7%	7.0%	1.2%	15.8%	(1.1%)	(4.1%)	100%	(>100%)		6.3%

1 - Includes 100% of the results of Gama Aviation's Associate in the US and Joint Venture in Hong Kong.

2 - Calculated at a constant foreign exchange rate of $1.26 to £1, being the rate that represented the average for the 2017 financial period.

3 - Underlying EBITDA is arrived at by taking operating profit before depreciation, amortisation, exceptional items and share-based payment expense.

4 - Underlying total operating profit is arrived at by taking operating profit before amortisation, exceptional items, share based payment expense and including the share of profits of equity accounted investments.

5 - 'Elims' represents the elimination of inter-segment revenue.

Gama Aviation plc

Unaudited Condensed Consolidated Interim Financial Statements

Six months ended 30 June 2017

Consolidated income statement (unaudited)

		Six months ended 30 June 2017	Six months ended 30 June 2016
	Note	$'000	$'000
Continuing operations
Revenue	3	101,628	101,606
Cost of sales		(80,297)	(79,847)
Gross profit		21,331	21,759

Administrative expenses		(15,590)	(17,456)

Underlying EBITDA		8,028	7,529
Items not included in underlying EBITDA	4	(665)	(1,281)
Depreciation and amortisation		(1,622)	(1,945)

Operating profit		5,741	4,303

Share of results from equity accounted investments		1,723	(492)
Profit on disposal of interest in associate	5	2,183	-
Total operating profit		9,647	3,811

Finance income		-	4,535
Finance costs		(953)	(860)
Profit before tax from continuing operations		8,694	7,486
Taxation	7	(1,519)	(1,002)
Profit from continuing operations		7,175	6,484

Discontinued operations
Loss after tax from discontinued operations	6	(1,012)	(105)
Profit for the period		6,163	6,379

Attributable to:
Owners of the Company		6,025	6,483
Non-controlling interests		138	(104)
Totals		6,163	6,379



Earnings per share attributable to the equity holders of the parent	8
Basic (cents)		13.69c	14.85c
Diluted (cents)		13.58c	14.85c
Basic - continuing operations (cents)		16.00c	15.09c
Diluted - continuing operations (cents)		15.86c	15.09c

Consolidated statement of comprehensive income (unaudited)

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Profit for the period	6,163	6,379

Items that may be reclassified to profit or loss:
Exchange differences on translation of foreign operations	1,733	(10,201)
Total comprehensive income for the period	7,896	(3,822)

Total comprehensive income is attributable to:
Owners of the Company	7,758	(3,718)
Non-controlling interests	138	(104)
Totals	7,896	(3,822)

Consolidated statement of changes in equity (unaudited)

For the six months to 30 June 2017

	Share 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 2017	684	-	61,377	(23,529)	17,419	55,951	581	56,532

Share-based payments	-	-	98	-	-	98	-	98
Transactions with owners	-	-	98	-	-	98	-	98

Profit for the period	-	-	-	-	6,025	6,025	138	6,163
Other comprehensive income	-	-	-	1,733	-	1,733	-	1,733
Total comprehensive income	-	-	-	1,733	6,025	7,758	138	7,896


Balance at 30 June 2017	684	-	61,475	(21,796)	23,444	63,807	719	64,526

For the six months to 30 June 2016
	Share 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

Issuance of shares	14	-	4,149	-	-	4,163	-	4,163
Cancellation of share premium	-	(35,458)	-	-	35,458	-	-	-
Transactions with owners	14	(35,458)	4,149	-	35,458	4,163	-	4,163

Profit for the period	-	-	-	-	6,483	6,483	(104)	6,379
Other comprehensive income	-	-	-	(10,201)	-	(10,201)	-	(10,201)
Total comprehensive income	-	-	-	(10,201)	6,483	(3,718)	(104)	(3,822)

Balance at 30 June 2016	684	-	61,377	(15,290)	8,637	55,408	587	55,995

Consolidated balance sheet

		30 June 2017	31 December 2016
		(unaudited)
		$'000	$'000
Non-current assets
Goodwill		39,238	37,631
Other intangible assets		10,482	9,987
Total intangible assets	11	49,720	47,618
Property, plant and equipment	11	15,219	12,215
Investments accounted for using the equity method		2,584	-
Deferred tax asset		4,579	4,557
		72,102	64,390
Current assets
Assets held for resale	12	1,500	7,200
Inventories		10,966	8,410
Trade and other receivables		54,360	46,473
Cash and cash equivalents		15,186	11,174
		82,012	73,257
Total assets		154,114	137,647

Current liabilities
Trade and other payables		(46,334)	(41,682)
Obligations under finance leases		(798)	(1,644)
Provisions for liabilities		(1,368)	(2,416)
Borrowings		(26,471)	(24,018)
Deferred revenue		(10,710)	(4,315)
		(85,681)	(74,075)
Total assets less current liabilities		68,433	63,572

Non-current liabilities
Borrowings		(975)	(923)
Obligations under finance leases		(1,272)	(3,976)
Provisions for liabilities		-	(492)
Deferred tax liabilities		(1,660)	(1,649)
		(3,907)	(7,040)
Total liabilities		(89,588)	(81,115)

Net assets		64,526	56,532

Shareholders' equity
Share capital		684	684
Share premium		-	-
Other reserves		61,475	61,377
Foreign exchange reserve		(21,796)	(23,529)
Accumulated profit/(losses)		23,444	17,419
Total shareholders' equity		63,807	55,951
Non-controlling interest		719	581
Total equity		64,526	56,532

Consolidated cash flow statement (unaudited)

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Cash flows from operating activities
Profit before tax from continuing operations	8,694	7,486
Loss before tax from discontinued operations	(1,012)	(105)
Profit before tax	7,682	7,381

Adjustments for:
Depreciation and amortisation	1,622	1,967
Finance income	-	(4,653)
Finance costs	949	860
Loss on disposal of assets held for sale	150	-
Profit on disposal of interest in associate	(2,183)	-
Share-based payment expense	98	-
Unrealised foreign exchange movements	(1,261)	(1,172)
Share of results from equity accounted investments	(1,723)	492
Operating cash flows before movements in working capital	5,334	4,875
Increase in inventories	(2,065)	(714)
Increase in receivables	(5,266)	(482)
Increase/(decrease) in payables	1,918	(10,630)
Increase in deferred revenue	5,997	6,048
Decrease in provisions	(249)	(159)
Cash generated from operations	5,669	(1,062)
Interest received	-	26
Interest paid	(702)	(860)
Net cash flows from operating activities	4,967	(1,896)

Cash flows from investing activities
Purchases of property, plant and equipment	(3,253)	(930)
Purchases of intangibles	(200)	-
Proceeds on disposal of assets held for sale	4,161	-
Acquisition of subsidiary, net of cash acquired	-	(2,529)
Net cash flows from investing activities	708	(3,459)

Cash flows from financing activities
Repayments of obligations under finance leases	(3,550)	(797)
Proceeds from borrowings	1,143	7,193
Repayment of borrowings	-	(40)
Net cash flows from financing activities	(2,407)	6,356

Net increase in cash and cash equivalents	3,268	1,001
Effect of foreign exchange rates	744	-
Cash and cash equivalents at 1 January	11,174	8,457
Cash and cash equivalents at the end of period	15,186	9,458

1. Corporate information and basis of preparation

The financial information for the year ended 31 December 2016 set out in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The Group's statutory financial statements for the year ended 31 December 2016 have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain statements under Section 498 of the Companies Act 2006. The interim results are unaudited. Gama Aviation plc is a publicly limited company incorporated and domiciled in England and Wales. The Company's shares are publicly traded on the AIM market of the London Stock Exchange.

These interim consolidated financial statements (the interim financial statements) are for the six months ended 30 June 2017. They have been prepared in accordance with IFRSs as adopted by the European Union and IAS 34 "Interim Financial Reporting". They do not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2016.

2. Accounting policies

The accounting policies set out in the Group's statutory financial statements for the year ended 31 December 2016 have been applied in the preparation of the interim financial statements. There have been no changes to any of the Group's critical accounting estimates and judgements of its principal financial risks. The Directors consider that the Group has adequate resources to remain in operation for the foreseeable future and have therefore continued to adopt the going concern basis in preparing the interim financial statements.

3. Segment information

For management purposes, the Group is organised into business units, based on line of business and geographical location.

An analysis of the Group's revenue, gross profit, underlying EBITDA and underlying total operating profit for the period ended 30 June 2017 is as follows:

	Total Revenue	Gross profit	Gross profit	Underlying EBITDA	Underlying EBITDA	Underlying total operating profit	Underlying total operating profit
	$'000	$'000	%	$'000	%	$'000	%
US: Air	2,000	2,038	>100	2,028	>100	2,546	>100
US: Ground	14,219	2,648	18.6	1,060	7.5	817	5.7
Europe: Air	43,054	4,414	10.3	1,723	4.0	1,493	3.5
Europe: Ground	31,488	9,075	28.8	4,400	14.0	4,161	13.2
MENA: Air	11,629	821	7.1	167	1.4	130	1.1
MENA: Ground	3,003	974	32.4	289	9.6	210	7.0
Asia: Air	32	32	100.0	32	100.0	32	100.0
Other	875	1,329	>100	(1,671)	(>100)	(1,671)	(>100)
Eliminations	(4,672)	-	-	-	-	-	-
Totals	101,628	21,331	21.0	8,028	7.9	7,718	7.6


Underlying total operating profit						7,718
Amortisation						(755)
Exceptional items						(567)
Share of associate's exceptional items						(156)
Share-based payment expense						(98)
Losses of associate and joint venture						1,322
Profit on disposal of interest in associate						2,183
Finance costs						(953)
Profit before tax from continuing operations						8,694

3. Segment information (continued)

An analysis of the Group's revenue, gross profit, underlying EBITDA and underlying total operating profit for the period ended 30 June 2016 is as follows:

	Total Revenue	Gross profit	Gross profit	Underlying EBITDA	Underlying EBITDA	Underlying total operating profit	Underlying total operating profit
	$'000	$'000	%	$'000	%	$'000	%
US: Air	3,937	2,968	75.4	3,022	76.8	2,982	75.7
US: Ground	11,925	2,718	22.8	999	8.4	835	7.0
Europe: Air	56,237	4,209	7.5	946	1.7	649	1.2
Europe: Ground	23,172	9,930	42.9	4,039	17.4	3,653	15.8
MENA: Air	8,889	715	8.0	(19)	(0.2)	(96)	(1.1)
MENA: Ground	2,394	773	32.3	67	2.8	(98)	(4.1)
Asia: Air	40	40	100.0	40	100.0	40	100.0
Other	1,096	406	37.0	(1,565)	(>100)	(1,566)	(>100)
Eliminations	(6,084)	-	-	-	-	-	-
Totals	101,606	21,759	21.4	7,529	7.4	6,399	6.3


Underlying total operating profit						6,399
Amortisation						(815)
Exceptional items						(1,281)
Losses of associate and joint venture						(492)
Finance income						4,535
Finance costs						(860)
Profit before tax from continuing operations						7,486

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

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Continuing operations
Sale of business aviation services	89,136	98,846
Sale of aircraft	10,460	-
Branding fees	2,032	2,760
Totals	101,628	101,606

4. Items not included in underlying EBITDA

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Exceptional items
Transaction costs	189	519
Integration and business re-organisation costs	378	762
	567	1,281

Share-based payment expense	98	-
Totals	665	1,281

Transactions costs represent expenses incurred in respect of the transactions completed in the period, as well as costs associated with seeking out new potential investment opportunities. Integration and business re-organisation costs represent the subsequent third party and internal costs associated with the acquisitions.

5. Profit on disposal of interest in associate

At 31 December 2016, the Group held a 49% interest in Gama Aviation LLC and accounted for this investment as an associate. On 1 January 2017, Gama Aviation LLC merged its aircraft management and charter operations with Landmark Aviation LLC, a wholly owned subsidiary of BBA Aviation Plc. As a consequence, the Group transferred a 24.5% interest to BBA Aviation Plc in return for 24.5% of the net assets of Landmark Aviation LLC. This transaction has resulted in the recognition of a profit on disposal of interest in associate of $2,183,000. The Group has retained the remaining 24.5% and continues to account for the investment as an associate.

6. Discontinued operations

The losses from discontinued operations are generated by the owned aircraft within the group that are held for sale as part of the group strategy to exit the business model of owned aircraft that are deployed solely for the purposes of ad-hoc charter. The Group believes that operating the aircraft whilst held for sale reduces the losses borne in discontinued operations and helps to maintain their airworthiness, assisting the sale process. Two aircraft that were held for sale at 31 December 2016 were sold in 2017. The results of these discontinued operations are presented below:

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Discontinued operations
Revenue	278	214
Expenses	(1,294)	(437)
Operating loss	(1,016)	(223)
Finance income	4	118
Loss before and after tax from discontinued operations	(1,012)	(105)

Earnings per share
Basic - cents	(2.30c)	(0.24c)
Diluted - cents	(2.28c)	(0.24c)

The weighted average number of ordinary shares is included in Note 8.

The net cash flows incurred by discontinued operations are as follows:
Operating activities	4,161	(78)
Investing activities	(4,161)	-
Net cash outflow	-	(78)

7. Taxation

The taxation charge for the six months to 30 June 2017 is accrued based on the estimated average annual effective income tax rate of 20% (6 months ended 30 June 2016: 14%).

8. Earnings per share ("EPS")

The calculation of earnings per share is based on the earnings attributable to the ordinary shareholders divided by the weighted average number of shares in issue during the period.

	Six months ended 30 June 2017	Six months ended 30 June 2016
	$'000	$'000
Numerator
Profit attributable to ordinary equity holders of the parent:
Continuing operations	7,037	6,588
Discontinued operations	(1,012)	(105)
Profit attributable to ordinary equity holders of the parent for basic earnings	6,025	6,483

Denominator
Weighted average number of shares used in basic EPS	43,994,442	43,661,109
Effect of dilutive share options	372,795	-
Weighted average number of shares used in diluted EPS	44,367,237	43,661,109

Earnings per share
Basic (cents)	13.69c	14.85c
Diluted (cents)	13.58c	14.85c
Basic - continuing operations (cents)	16.00c	15.09c
Diluted - continuing operations (cents)	15.86c	15.09c

9. Share-based payments

On 6 January 2017, 1,390,000 share options were awarded, under the Group's Share Option Plan to senior executives and managers across the Company. The vesting period is three years and the options will be exercisable between three and ten years following grant. There are no cash settlement alternatives. The grant does not have performance conditions but is subject to the employees remaining in employment.

The fair value of the share options is estimated at the grant date using a Black-Scholes model, taking into account the terms and conditions upon which the options were awarded. The inputs to the model are shown below:

Share price on date of grant (pence)	154
Exercise price (pence)	155
Vesting period (years)	3
Expected life of share options (years)	10
Expected volatility (%)	28.36%
Risk-free interest rate (%)	1.18%
Expected dividend yield (%)	1.66%

10. Dividends

The Directors do not propose a dividend to be paid for the six months to 30 June 2017 (30 June 2016: nil). The final dividend of 2.6p per share for the year ended 31 December 2016 was approved at the Annual General Meeting on 25 May 2017 and was paid on 18 July 2017.

11. Property, plant and equipment and intangible assets

	Property, plant and equipment	Intangible assets
	$'000	$'000
Net book value at 1 January 2017	12,215	47,618
Additions	3,253	200
Depreciation and amortisation	(867)	(755)
Exchange movements	618	2,657
Net book value at 30 June 2017	15,219	49,720

	Property, 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 30 June 2017, there is only one aircraft classified as held for sale.

Although the time period to sell the assets classified as held for sale has exceeded one year, this has occurred due to circumstances beyond the Group's control, and the Group remains committed to the plan of selling the remaining aircraft. The aircraft continues to be actively marketed for sale and is held at a value that the directors believe are realisable within the current second-hand market place.

		Assets held for resale
		$'000
Net book value at 1 January 2017		7,200
Disposals		(5,700)
Net book value at 30 June 2017		1,500

		Assets held for resale
		$'000
Net book value at 1 January 2016		3,126
Reclassified from property, plant and equipment		5,636
Additions		266
Impairment		(1,828)
Net book value at 31 December 2016		7,200

This information is provided by RNS

The company news service from the London Stock Exchange

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