Announcement by Subsidiary

3 March 2010 AVATION PLC Results Announcement by Subsidiary. The Board of Avation PLC notes the announcement of interim results by its 51% owned subsidiary Capital Lease Aviation ("CLA") this morning. The text of the release can be found on CLA's website at http://www.capitalleaseaviation.com and from the RNS service of the London Stock Exchange and is included below in this announcement for the interest of Avation's shareholders. The directors take responsibility for the contents of this announcement. Capital Lease Aviation PLC ("CLA") HALF YEAR RESULTS - 31 DECEMBER 2009 The Board of CLA is pleased to announce the unaudited consolidated interim results for the period from 1 July 2009 to 31 December 2009. HIGHLIGHTS: - Net Assets : US $37.56m; - Revenue for the period: US $7.84m; - Profit after tax: US $1.82m; - Earnings per share (after tax): 1.86 US cents Jeff Chatfield, Executive Chairman said: 'Results for the first half of the year are entirely satisfactory given the economic circumstances and current state of the airline industry. The result is in line with the Board's expectations given the present operating environment. The aircraft that the Company owns and leases have all performed well and the lessees are all performing well. We anticipate that further growth will be available as aircraft valuations may become more attractive to operating lessors such as ourselves, as competitors such as financial institutions and banks leave the sector and release their aircraft into the market. The Board of the CLA group continues to plan to build on the portfolio of aircraft already established. The Board's strategic plan involves the acquisition of 737 series and Airbus A320 series new generation planes, we will ensure that these aircraft are leased to reliable operators.' The directors take responsibility for the contents of this announcement. Enquiries: CAPITAL LEASE AVIATION PLC Jeff Chatfield, Executive Chairman 07783 942 553 STOCKBROKERS WH Ireland Limited 020 7220 1690 NOMINATED ADVISER James Joyce, David Porter WH Ireland Limited 020 7220 1666 Website http://www.capitalleaseaviation.com/ Directors' Review of Operations and Strategy The Group results were in line with expectations given the difficulties facing the industry during the period. Despite this, the business remained profitable and cash flow positive. We now report in United States Dollars to reduce the effect of exchange related gains or losses in the income statement and align the reporting currency with our functional currency. Most group transactions are denominated in US Dollars. Revenues were lower by 5% compared to the comparative period due to lower maintenance rent revenues, mainly a result of reduced aircraft usage. After-Tax Profits were down 18% due mainly to foreign exchange losses in the Australian subsidiary whilst the comparative period included foreign exchange gains. Maintenance Claim expenses were also higher. The Group repaid $4.82m of debt during the period and the Financial Position has been strengthened with Net Assets at $37.56m, up by $2.98m compared to the comparative period. Our fleet currently comprises three Fokker F100 jets, two Airbus A321-200's and one Airbus A320. All are currently leased to quality airlines with lease expiries ranging from September 2012 to March 2015. The company's preferred asset targets are the Airbus A320 series and Boeing 737 family of new generation aircraft as we believe these pose the lowest risk given their liquidity, appeal to operators, and ability to remarket. Given recent signs of recovery in the global economy, particularly in the Asia Pacific region, we remain ready to take advantage of opportunities that may be available when demand in the aviation sector rebounds. The risks to the business include typical aviation related risks, including but not limited to, any downturn in the global aviation industry, fuel costs, finance costs, war and terrorism and the like which may affect our airline customers' ability to fulfil their lease obligations. The business also relies on its ability to source finance on favourable terms. Should this supply of finance contract, it will limit our fleet expansion and therefore growth. Richard Sinclair Chief Executive Officer On behalf of the Board of Directors of Capital Lease Aviation PLC 2 March 2010 CAPITAL LEASE AVIATION PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 1 JULY 2009 TO 31 DECEMBER 2009 December December 2009 2008 ---- ---- US$ US$ From Continuing operations -------------------------- Revenue 7,843,164 8,227,517 Cost of sales - - ------------ ------------ Gross profit 7,843,164 8,227,517 Other operating income 40 301,654 Administrative expenses (483,654) (529,527) Other operating expenses (3,137,658) (2,850,651) Finance expense (2,196,325) (2,608,937) ------------ ------------ Profit before tax 2,025,567 2,540,056 Income tax expense (208,725) (334,386) ------------ ------------ Profit for the period 1,816,842 2,205,670 Other comprehensive income Revaluation of property plant and equipment - (3,864) ------------ ------------ Other comprehensive income for the period - (3,864) ------------ ------------ ------------ ------------ Total comprehensive income for the period 1,816,842 2,201,806 ------------ ------------ ------------ ------------ Profit attributable to: Ordinary equity shareholders of the parent 1,816,842 2,205,670 Total comprehensive income attributable to : Ordinary equity shareholders of the parent 1,816,842 2,201,806 ------------ ------------ ------------ ------------ Earnings per share US Cents US Cents Basic 1.86 2.26 ------------ ------------ ------------ ------------ Diluted 1.86 2.14 ------------ ------------ ------------ ------------ ------------------------------------------------------------------------------------------------------ Reclassification of Comparative figures Certain reclassifications have been made to the prior period financial statements to enhance comparability with the current period financial statements. Adjustment Dr / (Cr) US$ --- Other operating expenses (Maintenance claim expenses) 271,972 Finance expense (Loan fees) 197,758 Administrative expense (469,730) ----------- ----------- ------------------------------------------------------------------------------------------------------ CAPITAL LEASE AVIATION PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009 December December 2009 2008 ---- ---- US$ US$ ASSETS Current assets: Cash and cash equivalents 1,723,472 1,883,906 Trade and other receivables 155,198 780,944 ------------- ------------- Total current assets 1,878,670 2,664,850 ------------- ------------- Non-current assets: Plant and equipment 103,792,792 108,904,401 ------------- ------------- Total non-current assets 103,792,792 108,904,401 ------------- ------------- Total assets 105,671,462 111,569,251 ------------- ------------- ------------- ------------- LIABILITIES AND EQUITY Current liabilities : Trade and other payables 4,734,102 4,864,970 Loans and borrowings 9,228,531 9,540,591 Short term provisions 910,626 491,972 Provision for income tax 413,981 489,904 ------------- ------------- Total current liabilities 15,287,240 15,387,437 ------------- ------------- Non-current liabilities: Loan and borrowings 50,861,341 59,983,359 Deferred tax liabilities 1,965,035 1,619,367 ------------- ------------- Total non-current liabilities 52,826,376 61,602,726 ------------- ------------- Capital and reserves: Share capital 196,394 196,243 Share premium 21,696,406 21,660,294 Reserves 9,080,831 9,080,831 Retained earnings 6,584,215 3,641,720 ------------- ------------- Total equity 37,557,846 34,579,088 ------------- ------------- Total liabilities and equity 105,671,462 111,569,251 ------------- ------------- ------------- ------------- ------------------------------------------------------------------------------------------------------ Reclassification of Comparative figures Certain reclassifications have been made to the prior period financial statements to enhance comparability with the current period financial statements. Adjustment Dr / (Cr) US$ Loans and borrowings - current (1,083,827) Loans and borrowings - non current 1,083,827 ------------------------------------------------------------------------------------------------------ CAPITAL LEASE AVIATION PLC CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIOD 1 JULY 2009 TO 31 DECEMBER 2009 December December 2009 2008 ---- ---- US$ US$ Cash flow from operating activities: Profit before tax 2,025,567 2,540,056 Adjustments for : Depreciation 2,537,242 2,578,679 Claims on maintenance reserves 445,164 271,972 Interest expense 2,018,356 2,411,179 Interest income (40) (9,890) ------------ ------------ Operating profit before working capital changes 7,026,289 7,791,996 Trade and other receivables 896,901 (628,501) Trade and other payables 24,224 264,564 Short term provisions (785,399) - ------------ ------------ Cash from operations 7,162,015 7,428,059 Interest paid (2,018,356) (2,411,179) Income tax paid (56,612) (188,699) ------------ ------------ Net cash flows from operating activities 5,087,047 4,828,181 ------------ ------------ Cash flows from investing activities: Interest received 40 9,890 Purchase of plant and equipment 0 (22,086) ------------ ------------ Net cash from (used in) investing activities 40 (12,196) ------------ ------------ Cash flows from financing activities: Proceeds from issuing of new shares, net of expenses 36,263 - Repayment of borrowings (4,821,110) (4,037,902) ------------ ------------ Net cash used in financing activities (4,784,847) (4,037,902) ------------ ------------ Net increase in cash flow 302,240 778,083 Cash and cash equivalent at beginning of period 1,421,232 1,105,823 ------------ ------------ Cash and cash equivalent at end of period 1,723,472 1,883,906 ------------ ------------ ------------ ------------ Approved by the board of Capital Lease Aviation PLC on the 2nd of March 2010. The above financial information has been extracted from the management accounts and has not been audited. These interim statements have been prepared on a basis consistent with International Financial Reporting Standards (IFRS) except that IAS34 "Interim Financial Reporting", which is not mandatory for AIM companies, has not been adopted in the preparation of this statement. Avation plc

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