Annual Financial Report

AVATION PLC (the "Company") REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CHAIRMAN'S STATEMENT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 Dear Fellow Shareholder, On behalf of your Board of Directors, I present to you the audited financial statements for Avation PLC and its subsidiaries for the year ended 30th June 2010 and to inform you of the progress that the Avation Group has made. A key milestone achieved, subsequent to year end, is the successful admission to a standard listing on the Main Market of the London Stock Exchange on the 6th of October 2010. As a consequence we now present our first set of annual results as a Main Board company. The highlights are: * Consolidated net profit after tax: GBP 1,653,027 * Revenues of: GBP 17,552,513 * Earnings per share of: 6.39 pence. * Increased dividends to: 0.6 pence per share Your Board is pleased to report that in respect of the year ending 30th June 2010 the consolidated net profit after tax was GBP 1,653,027 on revenues of GBP 17,552,513 with earnings per share of 6.39 pence. The operating businesses had a good year with excellent cash flows being recorded across the Group. In the prior financial year the Group enjoyed a one-off foreign exchange gain of GBP 1.4m, the profits reported this year are from recurring business with no extraordinary gains. Therefore, the earnings presented at 6.39 pence per share are the underlying earnings based on the current asset base of aircraft. The business has continued to grow and we have increased the revenue base for the Group by 7.8%. As of June 30th the asset base of the Group had increased to GBP 96,269,565. The Board of Directors now believe that they have demonstrated that the Group has a sustainable business model which demonstrates consistent performance. The Avation Group currently owns a fleet of 12 modern jet aircraft. The Group continues to seek further aircraft acquisitions. Your Company is now growing both in profits and recurring revenues. Customers now include large international airlines. The aircraft owned by the Group are Airbus A320 series and Fokker 100 jet aircraft. Your Board recognises the importance of rewarding shareholders - the owners of the Company. Avation PLC has previously paid dividends and conducted a capital management program by buying in shares for cancellation. Despite the current economic conditions, the Company continues to prosper, and therefore your board is recommending to shareholders a final dividend payment of 0.6 pence per share. The Company hopes to maintain a progressive dividend policy going forward. The Company Annual General Meeting is scheduled to be held on the 2nd of December 2010. Subject to shareholder approval at that meeting, a 2010 final dividend of 0.6 pence per ordinary share will be paid on the 15th of December 2010. The Ex-Dividend Date is the 8th of December 2010 and the Associated Record Date is the 10th of December 2010. The Company and its subsidiaries have secured the bulk of its debt funding at a cost of around 6% per annum. Whilst the Company believes that it can obtain access to further funds for the purchase of aircraft, access to funding nevertheless remains a risk, this risk is common to all businesses that are capital intensive, such as your business. Specific aviation based industry risks are also present and include the creditworthiness of client airlines. My colleagues and I are committed to continue to work tirelessly to build your Company into a respected, profitable, diversified and cash generative aircraft leasing business. The Board would like to thank you - the shareholders - for your continued support and goodwill and look forward to the future with confidence in the successful development of Avation PLC. Jeff Chatfield, Chairman AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 2010 2009 ---- ---- Continuing operations £ £ Revenue 17,552,513 16,278,212 Cost of sales (983,879) (871,494) ----------- ----------- Gross profit 16,568,634 15,406,718 Other income 5,948 1,477,929 Other operating expenses (8,864,955) (7,167,655) Expenses - Administrative expenses (841,892) (953,657) - Finance expenses (3,319,635) (3,777,014) ----------- ----------- Profit before taxation 3,548,100 4,986,321 Taxation (729,517) (754,408) ----------- ----------- Profit from continuing operations for the year 2,818,583 4,231,913 Other comprehensive income Gain on dilution of interest in subsidiary 1,733 - Currency translation differences arising on consolidation 4,076,569 1,587,207 Revaluation gains on property, plant and equipment, net of tax - 2,305,841 ----------- ----------- Other comprehensive income for the year, (net of tax) 4,078,302 3,893,048 ----------- ----------- ----------- ----------- Total comprehensive income 6,896,885 8,124,961 ----------- ----------- ----------- ----------- Profit attributable to: Equity holders of the parent 1,653,027 2,645,976 Non-controlling interest 1,165,556 1,585,937 ----------- ----------- 2,818,583 4,231,913 ----------- ----------- Total comprehensive income attributable to: Equity holders of the parent 4,069,879 6,107,187 Non-controlling interest 2,827,006 2,017,774 ----------- ----------- 6,896,885 8,124,961 ----------- ----------- Earnings per share - Basic - continuing and total operations 6.39 pence 10.40 pence ----------- ----------- ----------- ----------- - Fully Diluted - continuing and total operations 6.30 pence 9.22 pence ----------- ----------- ----------- ----------- COMPANY STATEMENT OF COMPREHENSIVE INCOME 2010 2009 ---- ---- £ £ Profit for the year 262,668 212,424 Other comprehensive income - - ----------- ----------- Total comprehensive income for the year 262,668 212,424 ----------- ----------- ----------- ----------- AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED BALANCE SHEET AS AT 30 JUNE 2010 2010 2009 ---- ---- £ £ ASSETS ------ Current assets: Cash and cash equivalents 1,227,881 1,039,321 Trade and other receivables 1,195,859 1,575,778 Inventories 707 493 ----------- ----------- Total current assets 2,424,447 2,615,592 ----------- ----------- Non-current assets Property, plant and equipment 92,520,577 83,053,926 Goodwill 1,324,541 1,324,541 ----------- ----------- Total non-current assets 93,845,118 84,378,467 ----------- ----------- Total assets 96,269,565 86,994,059 ----------- ----------- ----------- ----------- LIABILITIES AND EQUITY ---------------------- Current liabilities: Trade and other payables 3,818,692 3,851,566 Provision for taxation 18,368 292,823 Loans and borrowings 9,602,462 8,521,911 Short-term provisions 2,047,185 1,088,555 ----------- ----------- Total current liabilities 15,486,707 13,754,855 ----------- ----------- Non-current liabilities: Trade and other payables 1,379,641 550,400 Loans and borrowings 39,123,267 40,253,227 Deferred tax liabilities 4,248,024 3,208,998 ----------- ----------- Total non-current liabilities 44,750,932 44,012,625 ----------- ----------- Equity attributable to shareholders: Share capital 262,190 255,555 Share premium 1,249,258 1,216,336 Assets revaluation reserve 6,760,372 6,760,372 Capital redemption reserve 7,000 7,000 Foreign currency translation reserve 3,563,359 1,148,240 Share option reserve - 12,788 Retained earnings 11,434,226 9,897,773 ----------- ----------- 23,276,405 19,298,064 Non-controlling interest 12,755,521 9,928,515 ----------- ----------- 36,031,926 29,226,579 ----------- ----------- Total liabilities and equity 96,269,565 86,994,059 ----------- ----------- ----------- ----------- AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE 2010 2010 2009 ---- ---- £ £ Cash flows from operating activities: Profit before taxation 3,548,100 4,986,321 Adjustments for: Depreciation expense 4,704,804 4,455,650 Claim on maintenance reserve 4,102,127 2,712,005 Foreign currency exchange adjustment gain - (1,420,401) Interest expense 3,156,229 3,548,968 Interest income (5,948) (13,254) ----------- ----------- Operating profit before working capital changes 15,505,312 14,269,289 Movement in working capital: Trade and other receivables 379,919 (1,212,912) Inventories (214) 242 Trade and other payables 796,367 1,652,747 Short-term provisions (3,143,497) (453,809) ----------- ----------- Cash from operations 13,537,887 14,255,557 Interest paid (3,156,229) (3,366,505) Interest received 5,948 13,254 Corporation tax paid (204,574) (1,066,989) ----------- ----------- Net cash from operating activities 10,183,032 9,835,317 Cash flows from investing activities: Purchase of property, plant and equipment (1,237) (3,967,069) ----------- ----------- Net cash used in investing activities (1,237) (3,967,069) Cash flows from financing activities: Net proceeds from issuance of ordinary shares 39,557 12,421 Share buyback - (7,000) Net proceeds from issuance of subsidiary's shares to minority 22,972 - Dividends paid (131,095) (127,903) Proceeds from borrowings - 3,210,035 Repayment of borrowings (4,283,186) (8,974,547) Capital element of finance lease repayments (781,036) - ----------- ----------- Net cash used in financing activities (5,132,788) (5,886,994) ----------- ----------- Effects of exchange rates on cash & cash equivalents (4,860,447) (199,458) ----------- ----------- Net increase/(decrease) in cash and cash equivalents 188,560 (218,204) Cash and cash equivalents at beginning of financial year 1,039,321 1,257,525 ----------- ----------- Cash and cash equivalents at end of financial year 1,227,881 1,039,321 ----------- ----------- Avation plc

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