NEWS | UK Specialist Aviation Services

Gama Aviation Acquires Specialist Aviation Services

Gama Aviation, a global provider of helicopter services, has acquired Specialist Aviation Services, a company that supports air ambulance and police aviation throughout the UK

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

Gama Aviation Acquires Specialist Aviation Services
GAMA, February 03, 2024 - Gama Aviation Plc announces that it has agreed to purchase the business of Specialist Aviation Services Limited, a helicopter special mission business, as part of a pre-pack acquisition from its appointed administrators.

Deal highlights :

- Adds further scale and strength to Gama's Special Mission strategic business unit ("SBU") with some £27m of annual revenue, three significant UK air ambulance charity contracts, six managed Leonardo AW169 aircraft and two further national security contracts in the Middle East.

- The additional capability is complementary to the Special Mission SBU adding a Leonardo Service Centre in Staverton, Gloucestershire.

- Operational synergies through combination of operations are identified.

Marwan Khalek, Group Chief Executive, Gama Aviation Plc commented: "This acquisition accelerates our growth in our Special Mission SBU, adding scale in the UK, building on our recent contract wins with amongst other the Welsh Air Ambulance and opening new international operations in the Middle East to complement our established fixed wing aircraft management and MRO capability in the region.

We believe that there is considerable potential within the trade and assets of this business, that over the medium term will enhance the prospects of the Special Mission SBU. However, given the nature of the acquisition, our immediate priority is to ensure continuity of service for the UK air ambulance charities such that they are able to maintain their life-saving operations."

Gama Aviation

Gama Aviation's Special Mission SBU was conceived following a strategic review in 2020. As part of this review several potential acquisition targets were identified which would be complementary to the SBU's growth. Specialist was identified as one of those businesses.

Specialist has a long history of operating helicopters in the UK with a focus on special mission customers. In recent years, it has expanded its capabilities in maintenance and grew internationally, including winning contracts in the Middle East, based on an excellent reputation for quality of service and safety.

From 2021, the business has been through operational and financial restructuring exercises, as part of which it has sold aircraft to pursue an "asset light" business model. Whilst these actions had improved the underlying prospects of Specialist, the company determined that its capital structure was unsustainable, and the underlying business outlook would be improved through being part of a larger group with balance sheet strength.

In the 12 months to 31 December 2022, Specialist reported turnover of £24.3m (£24.7m in 2021) and a pre-tax profit of £2.7m (loss of £6.1m), including exceptional accounting profits from financial restructuring.

Specialist Aviation Services

Whilst the results for 2023 have not been published, the business would have reported an underlying loss. In December 2023, Specialist, through its advisors, determined that it was in the interests of Specialist to seek an accelerated acquisition process via pre-pack administration.

The Group has acquired the trade and assets of Specialist from FRP, the appointed administrator for a consideration of £280,000.

Considering the initial working capital requirements of the business at completion, provisions for restructuring costs and transaction costs, the Group anticipates the total cost of the acquisition will amount to c.£3.0m.

The net asset value, excluding lease obligations, is approximately £0. In the following weeks, the Group will undertake a detailed review of the book value of the net assets assumed as part of the Transaction, including appropriate provisions. The Group will also assume lease obligations on helicopters and property with customer contracts amounting to c.£8.7m.

As part of the transaction discussions, key customers and suppliers have agreed to amend, extend and novate their contracts to the Company.

Amounts payable in connection with the Purchase will be funded from the Group's existing financial resources.

Whilst Specialist has been loss-making historically, because of agreed changes to customer contracts and certain identified cost savings in combination with the Group, the business of Specialist under the Company is expected to deliver underlying additional revenues of c.£27m per annum and be breakeven at the profit before tax level in H1 2024. The Group believes that further cost savings can be delivered over time as the businesses are integrated, as well as the strategic benefits to the Special Mission SBU.

Regulatory approval of the deal

The Civil Aviation Authority has assigned all of Specialist's regulatory approvals to Gama Aviation such that an orderly and safe management of change process may take place.

Dial Partners LLP is acting as Financial Adviser to the Company on the Purchase.

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

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

  See also

UK Specialist Aviation Services
UK Gama Aviation
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