TIDMGMAA
RNS Number : 3296C
Gama Aviation PLC
19 January 2018
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) No 596/2014
19 January 2018
Gama Aviation Plc (AIM: GMAA)
Full Year Trading Update
Gama Aviation reports continued progress in line with
expectations
In advance of the publication of its full year results, Gama
Aviation Plc ("Gama Aviation" or the "Company"), the global
business aviation services provider, today provides an update on
trading for the full year ended 31 December 2017.
Gama Aviation will release its full year results on 19(th) March
2018.
Trading for year ended 31 December 2017(1)
Underlying earnings for the full year are in line with the
Company's expectations and consistent with the trading outlook
provided at the time of the interim results published in September
2017.
The Company has continued the solid progress it made during the
first half of the year in improving its cash conversion, resulting
in cash and cash equivalents as at 31 December 2017 of US$22m
(2016: US$11m). After funding the acquisition of 51% of Gama Group
Mena FZC, which closed in October 2017, and securing a further
US$2m of finance leases in July 2017 for the purchase of a support
aircraft under the Scottish Air Ambulance contract, net debt was
US$13m as at 31 December 2017 (2016: US$19m).
Air Division
The US Air associate, which includes the Landmark acquisition
from the start of the year, has delivered significant revenue
growth over the period. The "Wheels Up" programme continues to
support contracted growth in the US. In the final quarter of 2017,
the US business invested heavily in its sales force to enhance the
growth of the managed fleet and charter. The EU Air division has
continued to build on the operational efficiencies implemented in
2016, with significant margin improvements being realised over the
year. The Middle East and Asia Air divisions had a stable year and
both begin 2018 with solid platforms for growth.
Ground Division
The US Ground division enjoyed strong organic revenue growth
over the year. As planned, the operating margin and profit achieved
in 2017 reflects the Company's focus on scaling up the business,
recruiting line maintenance engineers ahead of revenue growth and
significant investment in training. Having made this investment,
the division is now poised to return to more normalised margins in
2018. The EU Ground division grew modestly over the year, with an
improvement in levels of discretionary spend and increased base
maintenance activity at the Oxford facility.
The Middle East Ground division had a stable year with the
number of aircraft movements through the FBO facilities showing an
improving trend. The Asia Ground division delivered its first
revenues during the final quarter of 2017 through its commercial
collaboration with China Aircraft Services Limited.
(1) This section of the announcement contains inside information
for the purposes of article 7 of the Market Abuse Regulation (EU)
No 596/2014
Exceptionals and prior year adjustment
The Company 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 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.
Exceptional items
The Company has incurred legal costs of US$1.0m associated with
these proceedings in the year ended 31 December 2017, which will be
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.
Additionally, US$0.6m of exceptional charges for transaction
costs and business and re-organisation costs were taken in the
first half of the year; a similar charge has been incurred in the
second half.
Prior year adjustment
In respect of one of the proceedings against the Company,
amounting to US$1.9m, arising as a result of historic unrecorded
liabilities in the Hangar 8 business, the Board has decided to make
a US$1.3m provision in the form of a prior year adjustment.
Litigation
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.
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.
Marwan Khalek, Chief Executive of Gama Aviation Plc said:
"We are pleased to affirm that our underlying earnings for the
year ended 31 December 2017 have been delivered in line with our
expectations whilst continuing to improve cash conversion. Both our
Air and Ground divisions are performing well and we continue to
invest across both divisions and all of our geographies in line
with our strategy of becoming the market leader in business
aviation services. We enter 2018 confident in the strength of the
Company's operations and its growth potential."
For more information contact:
Gama Aviation Plc +44 (0) 1252 553000
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 (LSE AIM:GMAA) is a global business aviation
services company that specialises in providing support for
individuals, corporations and government agencies; allowing them to
deliver on the promises they make.
The Company has two divisions: Air and Ground. Air services
include: aircraft management, special mission support and charter;
with Ground services covering: base & line aircraft maintenance
services, aircraft modification design and installation and Fixed
Base Operations (FBO).
More details can be found at: http://www.gamaaviation.com/
This information is provided by RNS
The company news service from the London Stock Exchange
END
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