TIDMGMAA
RNS Number : 2890J
Gama Aviation PLC
09 April 2020
Date: 9(th) April 2020
This announcement contains inside information for the purposes
of article 7 of the Market Abuse Regulation (EU) No 596/2014
Gama Aviation Plc (AIM: GMAA)
("Gama Aviation", "the Company" or "the Group")
Updates on COVID-19 Impact and 2019 Full Year Results
Gama Aviation, the global business aviation service provider, is
today updating investors on the continuing impact of COVID-19 and
on its results for the year ended 31 December 2019 ("FY19").
COVID-19 Impact Update
The Group's overriding priority remains the health and
well-being of its staff and clients and we are continuing to follow
national government guidelines in the regions in which we operate.
Since the outbreak of the pandemic, the Group's management have
held daily Global Leadership Team calls to review and update its
guidance to employees, manage business continuity measures, and
coordinate controls on expenditure and cash.
All of the Group's divisions remain operational and are subject
to varying impacts from COVID-19:
-- The US Ground division achieved 85% of planned maintenance
activity in March but is now suffering a marked decline with
activity below plan by over 50% in the first week of April. The
business has prepared an application for financial support from the
federal government via the Paycheck Protection Program.
-- In Europe, service delivery on long-term contracts with NHS
Scotland, the MoD and other government agencies is on-going.
However, in the Air division charter sales are heavily impacted and
in the Ground division other maintenance, overhaul and design
activities are experiencing significant impacts as orders have been
cancelled or delayed. Ground division labour hours were below plan
by over 20% in March and are down by 50% in April so far. A small
number of Air and Ground staff have been furloughed and this
process will be extended to mitigate the financial impacts of
reduced sales.
-- After a brief shutdown of flights in March, operations at
Sharjah have resumed at around 60% of the budgeted levels. We are
benefiting from a waiver of airport fees and rental charges for
three months and internal savings measures are being
implemented.
-- All Hong Kong aviation remains severely disrupted with
consequent major impact on the Group's CASL associate. The Asia Air
and Ground divisions have been less affected due to their business
models, with the impact of reduced flying offset by strong
maintenance activity on parked aircraft.
-- Impacts to FlyerTech and Myairops have been limited to date,
with some disruption to sales activities but also strong market
interest in Myairops software products due to their cloud
deployment model supporting home-working and rapid on-boarding.
In terms of liquidity, the Group retains a $50m credit facility
with HSBC of which $30m remains undrawn and we currently have $17m
of cash following the receipt in March of a substantial annual
advance payment in respect of a long-term contract. We remain
focused on improving the collection of receivables, eliminating
non-essential spend, mitigating costs and making use of all
available financial support to ensure we preserve the Group's
healthy liquidity position.
Given the continuing operational and financial uncertainties
resulting from the COVID-19 pandemic, the Group's financial
guidance for the year ending 31(st) December 2020 remains
suspended.
FY19 Results
The Board remains committed to publishing its annual audited
accounts at the earliest opportunity, whilst ensuring that the work
required is concluded diligently and comprehensively. Given the
disruption to the year-end process caused by the impact of
COVID-19, we now expect to publish our annual audited accounts
before the end of July 2020. Accordingly, we will be applying to
AIM for an extension to the current reporting deadline of 30 June
2020, in accordance with recently announced temporary measures.
On 2 March 2020, the Group announced the sale of its US Air
Associate for a consideration of $33m, comprising $10m in return
for its 24.5% equity interest and $23m for accelerated branding
fees and other trading related considerations. The sale had
originally been expected to close in 2019.
Group revenue and rebate shortfalls associated with the
separation and divestment of the US Air business were identified
and the Group had previously expected to recognise revenue in 2019
to compensate for this shortfall through a $3m apportionment of the
non-equity element of the purchase consideration.
The Audit Committee regularly assesses the appropriateness of
the Group's key accounting judgments and treatments to ensure the
results provide a true, fair, balanced and reasonable presentation
of its financial performance in conformity with accounting
standards. Following a meeting of the Audit Committee it was
concluded that, given the sale was delayed, the $3m apportionment
should be accounted for in 2020. It also concluded that v arious
costs, totalling some $1.2m, principally relating to items
previously excluded from underlying trading costs, should be
reclassified and included. Consequently, these re-classifications
will result in a $4.2m reduction in the Group's adjusted EBIT for
2019 but will not have any cash impact.
While the audit is on-going, the Board will continue its normal
review of judgments in respect of its receivables, inventory and
the carrying values of goodwill and intangibles to ensure it takes
full account of the COVID-19 impact which could result in further
audit adjustments.
Marwan Khalek, Chief Executive Officer of Gama Aviation Plc,
said:
"While we are undoubtedly facing significant challenges posed by
the impact of COVID-19, Gama Aviation has a good level of liquidity
and the Group's resilient business model is supported by our
essential contracted services and global reach. With the continuing
support of our people, clients and shareholders, we believe we will
be able to navigate these challenges and re-focus on delivering
sustainable returns once the impact of COVID-19 has receded."
ENDS
For further information please visit www.gamaaviation.com or
contact:
Gama Aviation Plc +44 (0) 1252 553000
Marwan Khalek, Chief Executive Officer
Daniel Ruback, Chief Financial Officer
Jefferies International +44 (0) 207 029 8000
Simon Hardy
Will Soutar
Camarco +44 (0) 203 757 4992
Ginny Pulbrook
Geoffrey Pelham-Lane
Gama Aviation - Notes to Editors
Founded in 1983 on the simple principle of delivering its
clients' missions with passion & dedication, Gama Aviation Plc
(LSE AIM: GMAA) is a highly valued global partner to those who use
aviation as a platform to perform.
The Group has three divisions: Air, Ground & Global
Services. 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). Global
Services provides CAM, change management consultancy and industry
leading software.
More details can be found at: https://www.gamaaviation.com/
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END
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