Last checked at 9 Jan 2017 07:00
9 January 2017
Gama Aviation Plc (AIM: GMAA)
Full Year Trading Update
Good performance in line with expectations
In advance of its full year results, Gama Aviation Plc ("Gama Aviation"), the global business aviation services provider, today provides an update on trading for the financial year ended 31 December 2016.
Gama Aviation will release its audited results for its financial year ended 31 December 2016 on 27 March 2017.
Highlights
Ø Strong revenue growth of over 10% year on year
Ø Earnings in line with market expectations
Ø Improving European business performance
Ø 12% increase in the number of aircraft under management
Group Performance
Total group revenues for the year, on a constant currency basis, increased by over 10% compared with 2015. This growth was primarily organic and based on a strong overall performance, especially in the second half of the year, with aircraft under management up 12% to 165 (2015: 147).
Adjusted earnings, which exclude exceptional items and amortisation, on a constant currency basis, are in line with market expectations. Earnings also exclude a material foreign exchange credit, which resulted from the unusually volatile currency fluctuations during the year. The full year results will be reported at the annual average exchange rate of 1.35 USD to the pound sterling.
Regional Performance
US
Trading in the US Aircraft Management business (US Air) remained very robust, delivering strong organic revenue growth of over 20% compared with 2015. Modest margin improvement was also achieved during the year.
US Ground performed well, delivering organic revenue growth of over 10%. Three new bases were added during the year taking the total number of bases to nine. Whilst revenue builds up at the new bases established during 2015 and 2016, margins have been held back. Further new bases are planned for 2017 to complement the national coverage of our enlarged aircraft management business.
The combination of our aircraft management business with BBA Aviation provides a strong platform for the development of both our US Air and Ground activities and will enable us to build on the strong performances achieved in the current year.
Europe
Europe Air continued its steady recovery, despite challenging market conditions, following the actions taken by management in late 2015. Primarily due to the termination of underperforming contracts during 2016, revenues for the year decreased by approximately 15%, on a constant currency basis. However, following the actions taken to reduce the cost base and the continued focus on operational efficiencies, margins have shown a strong improvement through the year. This improvement was achieved despite a transactional foreign exchange cost of approximately $1 million arising from the unusually volatile currency fluctuations during the year.
Europe Ground delivered modest single digit revenue growth with new business wins offsetting a generally subdued market environment. Healthy and sustainable margins were maintained throughout the year.
The acquisitions of Aviation Beauport in Europe Ground and Flyer Tech in Europe Air are integrating well and have begun to deliver on the anticipated benefits.
We are also pleased to have announced two significant contract awards following competitive tenders. The first is a new three year contract for our Europe Ground business to maintain the fixed wing fleet of the National Police Air Service and the second is a five year contract renewal to manage and pilot a UK aerial survey platform.
The European market is expected to remain challenging during 2017 with little overall growth. However, with new contract wins, more tenders in process and a healthy pipeline, our European business is well-positioned and well-equipped to gain market share and deliver organic revenue growth. These factors, combined with ongoing proactive management of the cost base, should deliver a margin improvement during 2017.
Middle East
The Middle Eastern operations continued to make good progress with the addition of two aircraft during the last quarter, bringing the total aircraft under management to nine. Another aircraft is contracted and will enter service in the early part of 2017. These additional aircraft bring much needed charter capacity into the low inventory, midsize category within the region.
On the ground, our Sharjah Airport FBO continues to attract new customers and increase its line and base maintenance coverage. With fleet growth coming late in 2016, revenues remained flat over the period but are expected to grow in 2017 along with continuing improvements in margins. Importantly, this region is now generating sufficient cash to meet its operating expenditure requirements.
Preparations for the development of our new 100,000 square foot business aviation facility at Sharjah Airport are progressing well. The facility will provide much needed hangar and maintenance infrastructure to the region and attract increased fixed-base operator traffic, line and base maintenance.
Asia
During 2016, we re-organised and consolidated the infrastructure and operational capabilities of our regional aircraft management business based in Hong Kong. With minimal aircraft sale and purchase activity in the region over the period, the opportunity to grow our managed fleet was limited. However, there are some encouraging signs of renewed activity in the market and this is reflected in an improving pipeline.
Plans to launch our line maintenance operations in the region remain on track and we expect to be generating revenues from ground operations during the course of 2017.
Marwan Khalek, Chief Executive Officer commented:
"This has been a busy and productive year for Gama Aviation. We have targeted and delivered organic growth and operational efficiencies despite challenging markets in some regions. We have also been actively developing the group's strategic capabilities across all regions through acquisitions, capital expenditure and partnerships. The recent combination of our US Aircraft management business with BBA Aviation is a clear demonstration of our determination to build scale into our business in ways that add value to our shareholders."
Ends
For further information please visit www.gamaaviation.com or 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
Harry Nicholas
Gama Aviation - Notes to Editors
Gama Aviation (GMAA) is a global business aviation services company that specialises in providing support for individuals, corporations and government agencies. Gama Aviation is now one of the top three global players in a highly fragmented market, with a fleet of over 250aircraft. Gama operates across Europe, the US, the Middle East, Asia and Africa.
Gama's services can be split into two broad areas: Air and Ground. The Air Operations include aircraft management, special mission and charters, with Ground Services covering aircraft maintenance services, aircraft modification design and installation and Fixed Base operations.
http://www.gamaaviation.com/