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It sounds like the similar setup of FLYB.
GLA
Sneaky... Their accounts say
"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."
They never issued any rns telling us that they sold half of their 50%-holding in Gama Aviation LLC for $1.6m. That values the whole company at $6.4m !!
THe Gama directors must have been desperate to flog the crown jewels holdings for pittance, only to raise a bit of cash...
I've looked at this a bit and can see the following:
According to this RNS from January 2017
https://www.investegate.co.uk/gama-aviation-plc/rns/merger-to-create-us-aircraft-management-business/201701030700101256T/
from Jan 2017 Gama Aviation PLC owns 50% of Gama Avition LLC as follows:
"Gama Aviation Plc will transfer its 49% ownership in Gama Aviation LLC into a new holding company, GB Aviation Holdings LLC, which will be owned 50:50 by Gama Aviation and BBA Aviation"
I cannot find anything about this ownership structure having changed later.
Therefore half of the $7.75mill repaid to Gama Aviation LLC should in effect be a payment to themselves. (But if that really is the case why wasn't this mentioned in today's RNS?)
Is there any ownership connection between Gama plc and Gama Aviation LLC? Why do they call it an "associate" company?
Will we get an explanation from our auditors? Are they the same auditors for Gama Aviation LLC?
No one noticed $7.75m? Some of us invested after examining the balance sheet and the assurance of auditors to confirm a true and fair account of the Company’s finances. Will the company sue its auditors?
Yes, we didn't have to wait long for more dirt: Another RNS today
"Gama Aviation Plc today announces that it has identified the receipt of two overpayments, in error, from Gama Aviation LLC, its US Air associate. $5.75m and approximately $2m were received in June 2018 and December 2017 respectively and were reported in cash and trade creditors in the respective half and full year reporting periods. Both of these overpayments have been re-paid in full."
Unnoticed by the auditors, Gama has had $7.75mill in cash for a year. This has now of course suddenly disappeared. Nearly 11 pence per share CASH. GONE!
Why does this company now remind me of Patisserie Holdings, Marwan Khalek?
Short RNS today:
"Gama Aviation Plc announces that Dr Richard Steeves is to stand down as a Non-Executive Director of the Company with immediate effect."
Dr Richard Steeves
Non-Executive Director
"Richard founded and built
up Synergy Health plc
(“Synergy”), the FTSE 250
outsourcer, established in
1991. Synergy grew from a
£12 million market cap at
the 2001 listing on AIM into
a global medical hygiene
business worth £1.4 billion
at the time of its takeover
by Steris Inc, the Ohio-based
sterilisation equipment
maker, on 2 October 2015.
Richard grew Synergy both
organically and through
acquisition and brings to the
Board valuable experience
in building an international
outsourcing service business. "
Why was this person on the Gama board in the first place? To help transforming Gama into an international outsourcing service business?
How many other stupid arrangements is this company going to admit to and then change?
You can certainly rely on GMAA to disappoint :o))
There's a good - and highly profitable - core business here struggling to get out, but management seem incapable of capitalising on it, and more than capable of mucking it up. The accounting adjustments and changes in accounting treatment are likely a condemnation of the previous FD I'm afraid.
The only consolation is that the share price is now holding up reasonably well - there seems to be a large-ish buyer or two out there. Perhaps in time that strong core business will reveal itself.....
Far too many stupid mergers and acquisitions all the time. These CEOs cannot help themselves; to streamline and run a business profitably they find is boring. But it is actually very difficult. Whereas to buy this and buy that any moron can do and leave the CFO to dress up the accounts the following years until they have to quit for hiding too many skeletons. But these CFOs happily take the blame with a big pay-off and can go into semi-retirement ever after. The new CFO writes off the past mistakes of the CEO and start again. This time however I firmly believe it is the CEO's turn to walk the plank - with lost of golden goodbyes of course.
At least there have been some buyers at the 88p level. That’s substantially down on my entry level. Little option but to sit back and wait for a few years, and the next few years don’t seem to be too rosy
Doesn’t matter, even worse than the last warning. Time for a change of leadership.
Rivaldo, any idea when the Trading Statement is going to be put out? Thanks
Https://www.flightglobal.com/news/articles/gama-moves-into-vip-completions-with-lotus-purchase-455015/
"Gama moves into VIP completions with Lotus purchase
15 January 2019
Business aviation services provider Gama Aviation has made its first move into VIP aircraft completions, following the acquisition of Florida-based MRO firm Lotus Aviation.....
“$10 million was set aside to fund our US growth,” says Duncan Daines, chief marketing officer for the Farnborough, UK-headquartered company.
Gama established a foothold in the world's largest business aviation market in 2008 with the acquisition of PrivatAir's US charter and maintenance arm.
"We have grown significantly since then," says Daines, pointing to a fleet of more than 170 aircraft, which Gama manages through its associate company, Gama Aviation Signature.
These include 90 Beechcraft King Air 350is, Cessna Citation Xs and XLSs, which the company operates on behalf of local membership-based programme Wheels Up.
Gama Aviation Signature was formed in January 2017 following the merger of Gama and BBA Aviation's US charter and management operations....
Gama has full ownership of its maintenance and engineering business in the USA, however, which has expanded from a small operation in 2008 to 19 bases today. "We have grown the maintenance offering in line with the fleet," says Daines.
The company offers aircraft on ground, base and heavy maintenance services, with the latter being provided at its facilities in Dallas, Texas, Opa-locka and Palm Beach, the latter two both in Florida. "With Lotus, we now have completions to add to our portfolio of services, which gives our customers even greater choice," Daines adds.
Dennis Richey, president for Gama Aviation's US ground division, describes the Lotus acquisition as a "significant milestone for our organic growth strategy in the USA".
The Fort Lauderdale-based completions centre and paintshop "adds two new lines of business”, he says. "The depth, breadth and scale we now offer provides a compelling proposition for those operators who wish to simplify their maintenance supply chain."
Meanwhile, Gama has ordered three Airbus Helicopters H145s, the company's first purchase of rotorcraft. The light-twins are scheduled for delivery in the fourth quarter and will enter service in June 2020, in support of an existing long-term contract.
While Gama has not disclosed the customer, the H145s are believed to be headed for Scotland, where they will be used in an air ambulance role, alongside the operator's three King Air twin-engined turboprops. Gama has been providing fixed-wing air ambulance support in Scotland since 1993, with another operator handling helicopter missions.
Gama has also secured a new five-year contract to modify and support four special-mission aircraft from 1 July on behalf of an unnamed European client. This will help to bolster company revenues by nearly £28 million, Gama says."
A crackdown on corruption in Saudi Arabia has severely dented the kingdom's private jet industry.
https://www.aljazeera.com/news/2019/01/saudi-corruption-crackdown-stalls-kingdom-private-jet-industry-190109185838207.html
Well, yes It's excellent news indeed but what a time to release it - Monday morning on xmas eve! It's bound to be a thin trading day.
Terrific news today - a minimum £93m and potential £115m of contract wins guaranteeing those revenues over the next few years, including a new £27.5m contract.
The contract renewals also acts as proof of the high standard of GMAA's services.
This should re-establish some confidence here:
Https://www.investegate.co.uk/gama-aviation-plc--gmaa-/rns/contract-awards/201812240700073627L/
"Contract Awards
Gama Aviation Plc ("Gama"), one of the world's largest business aviation service providers, is pleased to announce the following special mission contract awards within its European Air & Ground divisions.
The first, an 11-year contract commencing 1st April 2019, is for the provision of maintenance and spare parts logistical support for eight government special mission aircraft and is for substantially the same scope of services and terms as the Company currently provides under a similar contract that is due to expire on 31st March 2019. The contract is expected to deliver revenues of between £66m and £88m over the period.
The second, a new 5-year contract commencing 1st July 2019, is to support four special mission aircraft by drawing upon a range of specialist services unique to Gama Aviation's holistic business model including aircraft modifications, maintenance and flight operations. This new contract is expected to deliver overall revenues of approximately £27.5m over the 5-year term.
The combined effect of both contracts is expected to be neutral to earnings in 2019 and accretive thereafter.
Finally, the Company is pleased to report that it has placed a £20m firm order for 3 Airbus H145 Helicopters to be delivered in Q4 2019. The helicopters will be deployed in support of an existing long term contract from the 1stJune 2020 when the Company will be delivering the rotary element of the service directly rather than through its current sub-contractor. It is expected that at least 85% of the purchase price will be funded through a traditional loan and/or lease structure.
The Company's CEO, Marwan Khalek, commented;
"We are delighted with these contract awards which endorse the Company's strength in the UK special mission market segment. This is as a direct result of our strategy to continue to build our depth of capability and breadth of service offerings to derive steady and profitable revenue growth for our European division. These medium and long-term support contracts, which we have a strong track record in winning, significantly improve the forward visibility of our revenues and enhance our earnings in the mid to long term."
Well sort of - my guess is that it will be a year or three for results to really grow. I've only been here just over 2 years now and in spite of averaging down I've only lost half my money!
However I'm confident that Gmaa is a growth stock - just got my timing wrong - again. I Will be topping up again when I can afford to lose more dosh!!
Interesting - and encouraging - comments from GMAA's chief marketing officer from this new article:
https://www.ainonline.com/aviation-news/business-aviation/2018-12-10/gama-aviation-targets-2020-sharjah-bac-opening
"Daines noted the company’s expected 2018 financial performance caused the markets to react negatively in October, given that it is a listed company, but Gama Aviation does tend to perform better in the second half of years. “The basic fundamentals of the business are really strong,” he said, pointing to two major contracts that are almost finalized. These are “amazing contracts” that he couldn’t divulge, but the work is “ideally suited to Bournemouth,” he added.
In terms of the overall business, Gama manages and operates 230 aircraft. The U.S. locations “continue to expand,” he said, as Wheels Up, for which Gama operates a fleet of King Airs and Citations, keeps growing strongly.
Finally, Daines said that Gama is doing well in China. “It’s our smallest operating region but there’s plenty of potential,” he said."
GMAA at 110.5 are on a P/E of just 6.6 for the year about to end of given revised forecasts of 21.3c EPS.
Hopefully this is now the low, even in these markets!
Questor in today's Telegraph says Hold:
Https://www.telegraph.co.uk/investing/shares/questor-one-aim-stocks-has-lost-50pc-value-holding/
Extract:
"Questor Inheritance Tax Portfolio: Gama Aviation needs to sharpen up its act but the business still has a lot of potential
....We asked Nick Hawthorn of Downing, whose holding of Gama prompted our original tip, for his reaction.
He said his firm had not sold any of its shares but described the trading update as “very disappointing”. He said investors’ expectations had been poorly managed after Gama raised £48m from shareholders in March.
Hawthorn attributed the profits warning to increased expenditure in pursuit of growth that had yet to produce returns. He said the firm’s decision to pursue organic growth, rather than acquisitions, in its American operations would be slower to achieve results but progress was being made and returns on investment would be better in the long run.
“We believe the business has attractive attributes such as visibility on management fees and maintenance contracts and global scale, which brings a competitive advantage and barriers to entry,” he added. “We think there are also potential margin improvements available across the business.”
He pointed out that various exceptional costs should fall away over the coming months, which should result in “cleaner” financial results.
A new finance director should provide “further financial rigour” and enable the company to improve forecasting and the setting of “achievable expectations”, Hawthorn said.
For the moment we will hold on."
Downing Micro-Cap Trust issued their latest monthly Investment Letter this morning. They remain confident in GMAA's prospects....
"Gama Aviation
In October, Gama announced that their 2018 full year results are likely to be $3 million behind expectations which would mean an underlying operating profit of around $17-17.5 million. We think that this will make them broadly flat versus 2017. This is very disappointing post the fundraise where expectations do not appear to have been managed appropriately. We think the downgrade is a combination of lower than expected growth combined with higher costs from operational investment, on the back of the growth strategy, which hasn’t yet generated the
expected revenue. Additionally, there has been some disruption in the business from changes like the move to Bournemouth.
Regardless, there have been some positive developments against our long-term investment thesis. Firstly, there has been progress in the US identifying the new base maintenance locations. Gama has chosen to go down the route of organic expansion which, whilst slower to generate returns, should generate a higher return on invested capital over the long term. Secondly, the Air division has demonstrated modest gross profit growth in the newer regions Asia and the Middle East which we crudely infer as an increase in the fleet and/ or management fees. The US also
demonstrated a small uplift in gross profits. Thirdly, the Ground business, whilst disappointing in Europe particularly, has some positive catalysts, not least the Bournemouth move which is expected to bring efficiency savings over the long term.
The interim results were negatively affected by one off exceptionals of $4.3 million. There were additional discontinued items which we now expect to drop away bar some onerous lease costs in Oxford which should run off from mid next year. The result should be cleaner financials going forwards, which is good progress.
We believe the business has attractive and investible attributes such as the visibility on management fees and maintenance contracts and global scale which brings a competitive advantage and barriers to entry. These quality aspects should be leveraged by management.
There is also the opportunity to grow by selective acquisition or, as above, by organically widening the service offering in established regions. This type of growth may be accompanied by an underlying business which is growing less than expected but which, nevertheless, has good long-term drivers.
We think that there are also potential margin improvements available across the business which would offer an additional route to earnings progression. We think that the introduction of a new full time CFO, effective from September, will provide further financial rigour. This should hopefully lead to the company underpromising and overdelivering as management become more adept at internal forecasting and setting achievable expectations."
Downing Microcap reported results this morning - and had this to say about GMAA.
WH Ireland's forecast for the year about to end is now 21.3c, or 16.5p EPS, giving a current year P/E of 7.4:
<a href='Https://www.investegate.co.uk/down-microcap-invtst--dsm-/rns/half-year-report/201811020700021107G/' target='window'>Https://www.investegate.co.uk/down-microcap-invtst--dsm-/rns/half-year-report/201811020700021107G/</a>
"Progress against investment case
Gama reported flat interim results followed by a trading statement which indicated that underlying profits were going to be behind for the year and, we think, about in line with last year. Whilst we expect that some delayed contracts from the first half did begin coming through in the second half, these had not been enough to offset the lower than expected growth elsewhere combined with the higher costs associated with the current investment phase. Overall, it feels like management underestimated the disruption and costs involved in the growth plan.
The business is well financed post the fundraise and has attractive attributes where we think there is a real competitive advantage to Gama. We hope to see demonstrable focus on maximising these as a priority. The new CFO joined in September and we have so far been impressed with his knowledge of the operations. We think that the business will benefit from his financial rigour and independent thought."
Am I being naive in thinking that it should be explained better by the company? To change so significantly in a couple of weeks seems difficult for me to get my head around. Maybe you're right about the CFO finding errors (which is something I'd want in the open and explained).
GMAA is my largest shareholding, because I believed the story.
Back from hols to find once again GMAA have disappointed us. Overall they portray the warning as an accumulation of issues rather than anything fundamental, but it's pretty poor that the outlook for the USA has changed so much in just 5 weeks since the interims, when they said "The US continues to grow strongly"......
This particularly given the well-publicised growth shown by partner WheelsUp.
The puzzlement is summarised by Liberum's comment yesterday:
"We find the weakness reported by Gama as somewhat at odds with strong macro data and high levels of confidence among business jet manufacturers and used aircraft brokers.”
I'm wondering if the new CFO (in place on 1st September) has found budgeting errors and over-optimistic assumptions from the old regime which he's now putting right.
WH Ireland have have provisionally reduced their 2018 EPS forecast by 19.3% to 21.3c, i.e 16.5p.
That's a current year P/E at 125p of only 7.5.
I still believe in GMAA and their strategy, but hopefully management can put a floor under this and start to realise the huge potential which is currently being sidelined by delays and the transformation programme taking place. At least the Balance Sheet is sound, with over $20m of cash.
Only about £100k traded yesterday after the profits warning out of a capitalisation of £750m indicates that the LTHs haven't been put off. Disappointing RNS but seems to be a hold for the time being