Last checked at 9 Apr 2020 07:00
Date: 9th 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 31st 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 various 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/