Half-year Report to Dec 2016
AVATION PLC
("Avation" or "the Company")
Financial Results and Interim Management Statement
for the SIX MONTHS ended 31 December 2016
Avation PLC (LSE: AVAP), the commercial passenger aircraft leasing company, today announces its unaudited financial results for the six months ending 31 December 2016.
Overview
· Lease revenue increased by 43% to $45.1 million;
· Earnings before interest and tax ("EBIT" or "Operating Profit") grew 54% to $27.6 million;
· Profit before taxation increased by 51% to $8.4 million;
· Total profit after tax increased 54% to $7.4 million;
· Operating cash flows increased 65% to $31.1 million; and
· Earnings per share ("EPS") increased 46% to 12.9 cents.
Executive Chairman, Jeff Chatfield, said:
"Avation is pleased to report significant year on year increases in revenue, profit and operating cashflow in the half year to 31 December 2016.
"Fleet metrics have continued to improve as the fleet has grown, with the weighted average age of the aircraft decreasing to 2.8 years and the weighted average remaining lease term increasing to 7.8 years. Avation's strategy seeks to maintain a low average age of the fleet, lowering risk by maximising the long term earning potential of fleet assets. As at 31 December 2016 the value of the Company's jet fleet now exceeds that of the turboprop fleet.
"In addition to these satisfactory financial results Avation has grown the aircraft fleet, managed overhead costs and improved fleet metrics to position the Company well for the second half of the financial year."
Aircraft Fleet
|
Aircraft Type |
31 December 2016 |
|
ATR 72-600 |
18 |
|
ATR 72-500 |
6 |
|
Airbus A321-200 |
8 |
|
Airbus A320-200 |
3 |
|
Fokker 100 |
5 |
|
Total |
40 |
As at 31 December 2016 Avation's fleet comprised 40 aircraft including seven aircraft on finance lease. The weighted average age of the fleet owned by the Company (excluding finance leases) is 2.8 years (2015: 5.2 years) and the weighted average remaining lease term was 7.8 years (2015: 5.7 years). As at 31 December 2016, all aircraft owned by the Company were fully utilised. Avation has 3 ATR 72 turboprop aircraft on order for placement during calendar year 2017.
Financial Highlights
|
|
31 December 2016 |
31 December 2015 |
Change
|
|
Lease revenue |
45,108 |
31,493 |
43% |
|
Operating profit (EBIT) |
27,628 |
17,941 |
54% |
|
Operating profit margin |
61% |
57% |
4% |
|
Administrative expense |
3,943 |
3,713 |
6% |
|
Administrative expense/lease revenue |
9% |
12% |
(3%) |
|
Profit before tax |
8,388 |
5,573 |
51% |
|
Total profit after tax |
7,357 |
4,781 |
54% |
|
EPS |
12.9 cents |
8.8 cents |
46% |
|
|
|
|
|
|
Operating cash flows |
31,116 |
18,810 |
65% |
|
|
|
|
|
|
Fleet assets |
850,417 |
518,327 |
64% |
|
Total assets |
969,425 |
632,503 |
53% |
|
Cash and cash equivalents |
47,931 |
69,671 |
(31%) |
|
Book Value per Share USD |
$3.10 |
$2.20 |
41% |
Fleet Asset Summary
Fleet assets increased 64% to $850.4 million (2015: $518.3 million). Five Fokker 100 leases were converted to finance leases resulting in fleet assets totalling $12.2 million being transferred to finance lease receivables. Finance lease receivables totalled $48.2 million (2015: nil).
Update on Potential Sale of Turboprop Portfolio
In October 2016 Avation announced that it had received an expression of interest for 22 ATR 72 turboprop aircraft. As a consequence, Avation, through an appointed adviser, sought competing proposals from the market and received eight offers from a range of investors and lessors.
The bids received support a valuation of the portfolio at a premium to book value. The Company is still in discussion with a number of the bidders and best and final offers have yet to be received. At the current stage there is no certainty that any definitive agreement will be entered into nor that any transaction will materialise from the various discussions. The Board reiterates its position that any transaction would need to deliver shareholders a significant premium above book value.
Avation is an active trader of aircraft and from time to time will also consider the sale of individual or smaller portfolios of aircraft based on prevailing market opportunities.
Debt summary
|
31 December 2016 |
31 December 2015 |
|
|
Loans and borrowings |
737,184 |
479,169 |
|
Cash & cash equivalents |
47,931 |
69,671 |
|
Net indebtedness |
689,253 |
409,498 |
|
Total loan to value ratio (LTV) |
76.0% |
75.8% |
|
Weighted average cost of secured debt |
4.5% |
4.2% |
|
Weighted average cost of total debt |
4.9% |
4.9% |
The weighted average cost of total debt remained at 4.9% as at 31 December 2016 (2015: 4.9%). The weighted average cost of secured debt facilities increased to 4.5% as at 31 December 2016 (2015: 4.2%) due to junior debt issued to fund acquisition of VietJet aircraft.
At the end of the financial period, Avation's overall loan to value ratio was 76.0% (2015: 75.8%). At 31 December 2016, 95.7% of total debt was at fixed interest rates (2015: 85.9%). At the end of the financial period, there was no related party debt other than pursuant to participation in notes issued under the Global Medium Term Note Programme.
Upgrade to Credit Rating
In December 2016, Standard & Poor's Global Ratings advised Avation's corporate credit rating was upgraded to 'B+' from 'B', Outlook Stable; the Senior Unsecured Notes rating was raised to 'B' from 'B-'.
Fitch Ratings corporate credit rating for Avation is 'B+', Outlook Stable; the Senior Unsecured Notes rating is 'B+'.
Dividend Payment
A 3.25 US cents per share dividend for the year ended 30 June 2016 was paid 13 October 2016.
Shareholders are reminded that future dividend payments will be made by default in US Dollars (USD). The Company's functional currency is USD and its assets, liabilities and revenues are denominated in USD. Recognising that the Company's business is USD denominated and to reduce exchange rate volatility risk to shareholders, future dividends will be declared and paid in USD. Shareholders who prefer to receive dividends in British Pounds (GBP) can elect to receive GBP by completing a form that can be downloaded at www.avation.net/dividends
Appointment to Board of Directors
Avation announced the appointment of Mr Derek Sharples as independent non-executive Director to the Board in November 2016.
Market Positioning
Avation focuses on narrowbody commercial jet and turboprop aircraft on long term leases. Avation's strategy focuses on new and relatively new aircraft. The Company's business model has a history of delivering consistent profitability while seeking to mitigate some of the risks associated with the aircraft leasing sector.
Avation seeks to maintain a fleet of aircraft assets with a low average age and long average remaining lease term. Avation will typically sell mid-life and older aircraft to redeploy capital to new assets. This approach is intended to mitigate technology change risk, operational and financial risk, support sustained growth and deliver long term shareholder value.
Outlook and Interim Management Statement
Fleet size and lease revenue has continued to increase during the half year. New aircraft have been acquired since the commencement of the 2017 financial year while some older aircraft have been sold or converted to finance leases. This has resulted in improved fleet age and average lease term metrics.
Avation's strategy involves the acquisition of new aircraft, maintain a low average fleet age, increased scale and customer diversification. Avation is an active trader of aircraft and will consider the sale of aircraft based on current market opportunities.
Management believes that it can attract airline customers or acquire leased aircraft and obtain the required funding for growth. In addition to operational cash flows, funding is traditionally sourced from capital markets, asset backed bank lending and disposal of selected aircraft. Access to acceptably priced funding remains a risk, which is common to all capital-intensive businesses. Specific risks which are inherent in the aircraft leasing industry include, but are not limited to, the creditworthiness of client airlines, over-production of new aircraft and market saturation, technology change in engines and aircraft, residual value risks, competition from other lessors and the general risk of impairment of aircraft assets.
Avation's Board of Directors is pleased to deliver satisfactory financial results from the aircraft leasing business while executing a strategy of fleet growth and risk mitigation. Avation is committed to delivering further growth and diversification to the business.
Results Conference Call
Avation's senior management team will host a conference call on 16 February 2017, at 1pm GMT (UK) / 8am EST (US) / 9pm SGT (Singapore), to discuss the Company's financial results. Participants should dial: United Kingdom 020 3059 8125; United States +1 631 983 3103; Singapore 800 101 2697; other locations +44 20 3059 8125 and quote 'Avation' when prompted. The conference call will also be webcast live through the following link:
http://avation.emincote.com/results/2017firsthalf
To view the webcast investors will be invited to register their name and email address, participants can do this in advance or on the day. A replay of the webcast will be available on the Investor Relations page of the Avation website and a presentation, to support the conference call, will be available on the Avation website prior to the conference call.
Forward Looking Statements
This release contains certain "forward looking statements". Forward looking statements may be identified by words such as "expects," "intends," "anticipates," "plans," "believes," "seeks," "estimates," "will," or words of similar meaning and include, but are not limited to, statements regarding the outlook for Avation's future business and financial performance. Forward looking statements are based on management's current expectations and assumptions, which are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Actual outcomes and results may differ materially due to global political, economic, business, competitive, market, regulatory and other factors and risks. Further information on the factors and risks that may affect Avation's business is included in Avation's regulatory announcements from time to time, including its Annual Report, Full Year Financial Results and Half Year Results announcements. Avation expressly disclaims any obligation to update or revise any of these forward looking statements, whether because of future events, new information, a change in its views or expectations, or otherwise.
- ENDS-
More information on Avation PLC can be found at: www.avation.net
Enquiries:
|
Avation PLC Jeff Chatfield, Executive Chairman |
T: +65 6252 2077 |
|
AVATION PLC CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 |
|
|
|
|
|
Note |
31 Dec 2016 |
31 Dec 2015 |
|
|
|
US$'000s |
US$'000s |
|
|
|
|
|
|
Continuing operations |
|
|
|
|
Lease revenue |
|
45,108 |
31,493 |
|
Other income |
3 |
444 |
27 |
|
|
|
45,552 |
31,520 |
|
|
|
|
|
|
Depreciation |
8 |
(15,930) |
(10,084) |
|
Gains on disposals of aircraft |
|
1,979 |
305 |
|
Administrative expenses |
|
(3,943) |
(3,713) |
|
Other expenses |
4 |
(30) |
(87) |
|
Operating profit |
|
27,628 |
17,941 |
|
|
|
|
|
|
Finance income |
5 |
488 |
744 |
|
Finance expenses |
6 |
(19,728) |
(13,112) |
|
Profit before taxation |
|
8,388 |
5,573 |
|
|
|
|
|
|
Taxation |
|
(1,031) |
(801) |
|
Profit from continuing operations |
|
7,357 |
4,772 |
|
|
|
|
|
|
Discontinued operations |
|
|
|
|
Profit from discontinued operations |
|
- |
9 |
|
Total profit |
|
7,357 |
4,781 |
|
|
|
|
|
|
Other comprehensive income: |
|
|
|
|
Items that may be reclassified subsequently to profit or loss: |
|
|
|
|
Currency translation differences arising on consolidation |
|
(6) |
(21) |
|
Fair value gain/(loss) on derivative financial instruments |
|
4,024 |
(118) |
|
|
|
4,018 |
(139) |
|
Items that may not be reclassified subsequently to profit or loss: |
|
|
|
|
Revaluation loss on property, plant and equipment, net of tax |
|
(5,924) |
- |
|
Other comprehensive income, net of tax |
|
(1,906) |
(139) |
|
|
|
|
|
|
Total comprehensive income for the period |
|
5,451 |
4,642 |
|
|
|
|
|
|
Profit attributable to: |
|
|
|
|
Equity holders of the Company |
|
7,363 |
4,780 |
|
Non-controlling interests |
|
(6) |
1 |
|
|
|
7,357 |
4,781 |
|
Total comprehensive income attributable to: |
|
|
|
|
Equity holders of the Company |
|
5,468 |
4,641 |
|
Non-controlling interests |
|
(17) |
1 |
|
|
|
5,451 |
4,642 |
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
|
|
|
|
Basic earnings per share: |
|
|
|
|
From continuing operations |
|
12.88 cents |
8.82 cents |
|
From total operations |
|
12.88 cents |
8.84 cents |
|
|
|
|
|
|
Diluted earnings per share: |
|
|
|
|
From continuing operations |
|
12.65 cents |
8.79 cents |
|
From total operations |
|
12.65 cents |
8.81 cents |
|
CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED) AS AT 31 DECEMBER 2016
|
|
|
|
|
|
Note |
31 Dec 2016 |
30 June 2016 |
|
|
|
US$'000s |
US$'000s |
|
ASSETS: |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
47,931 |
48,267 |
|
Trade and other receivables |
|
5,610 |
5,631 |
|
Finance lease receivables |
|
38,010 |
3,032 |
|
Options held for trading |
|
3,040 |
3,040 |
|
Total current assets |
|
94,591 |
59,970 |
|
Non-current assets: |
|
|
|
|
Trade and other receivables |
|
10,691 |
11,304 |
|
Finance lease receivables |
|
10,187 |
33,627 |
|
Derivative financial instruments |
|
1,637 |
- |
|
Property, plant and equipment |
8 |
850,417 |
724,982 |
|
Goodwill |
|
1,902 |
1,902 |
|
Total non-current assets |
|
874,834 |
771,815 |
|
|
|
|
|
|
Total assets |
|
969,425 |
831,785 |
|
|
|
|
|
|
LIABILITIES AND EQUITY: |
|
|
|
|
Current liabilities: |
|
|
|
|
Trade and other payables |
|
11,734 |
10,065 |
|
Provision for taxation |
|
2,896 |
1,029 |
|
Loans and borrowings |
9 |
89,476 |
72,423 |
|
Maintenance reserves |
|
2,844 |
7,440 |
|
Total current liabilities |
|
106,950 |
90,957 |
|
Non-current liabilities: |
|
|
|
|
Trade and other payables |
|
14,459 |
13,471 |
|
Loans and borrowings |
9 |
647,708 |
543,301 |
|
Derivative financial instruments |
|
- |
2,387 |
|
Deferred tax liabilities |
|
5,810 |
4,738 |
|
Maintenance reserves |
|
11,600 |
3,323 |
|
Total non-current liabilities |
|
679,577 |
567,220 |
|
|
|
|
|
|
Equity attributable to shareholders: |
|
|
|
|
Share capital |
10 |
1,031 |
993 |
|
Treasury shares |
10 |
(1) |
(1) |
|
Share premium |
|
44,505 |
38,925 |
|
Merger reserve |
|
6,715 |
6,715 |
|
Asset revaluation reserve |
|
31,176 |
41,142 |
|
Capital reserve |
|
8,876 |
8,876 |
|
Other reserves |
|
2,261 |
(1,814) |
|
Retained earnings |
|
88,275 |
78,679 |
|
|
|
182,838 |
173,515 |
|
Non-controlling interest |
|
60 |
93 |
|
Total equity |
|
182,898 |
173,608 |
|
|
|
|
|
|
Total liabilities and equity |
|
969,425 |
831,785 |
|
|
|
|
|
|
||||||||
|
|
|
Attributable to shareholders of the parent |
|
|
||||||||
|
|
Note |
Share capital |
Treasury shares |
Share premium |
Merger reserve |
Asset revaluation reserve |
Capital reserve |
Other reserves |
Retained earnings |
Total |
Non-controlling interest |
Total equity |
|
|
|
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2016 |
|
993 |
(1) |
38,925 |
6,715 |
41,142 |
8,876 |
(1,814) |
78,679 |
173,515 |
93 |
173,608 |
|
Profit for the period |
|
- |
- |
- |
- |
- |
- |
- |
7,363 |
7,363 |
(6) |
7,357 |
|
Other comprehensive income |
|
- |
- |
- |
- |
(5,913) |
- |
4,018 |
- |
(1,895) |
(11) |
(1,906) |
|
Total comprehensive income |
|
- |
- |
- |
- |
(5,913) |
- |
4,018 |
7,363 |
5,468 |
(17) |
5,451 |
|
Dividend paid |
13 |
- |
- |
- |
- |
- |
- |
- |
(1,820) |
(1,820) |
- |
(1,820) |
|
Increase in issued share capital |
10 |
38 |
- |
5,864 |
- |
- |
- |
(43) |
- |
5,859 |
- |
5,859 |
|
Fund raising expenses |
|
- |
- |
(284) |
- |
- |
- |
|
|
(284) |
|
(284) |
|
Dividend paid to non-controlling interest of a subsidiary |
|
- |
- |
- |
- |
- |
- |
- |
- |
- |
(16) |
(16) |
|
Transfer of asset revaluation surplus |
|
- |
- |
- |
- |
(4,053) |
- |
- |
4,053
|
- |
- |
- |
|
Warrants expense |
|
- |
- |
- |
- |
- |
- |
100 |
- |
100 |
- |
100 |
|
Balance at 31 December 2016 |
|
1,031 |
(1) |
44,505 |
6,715 |
31,176 |
8,876 |
2,261 |
88,275 |
182,838 |
60 |
182,898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
During the six months, the Company paid an interim dividend of 3.25 US cents per share.
Other reserves consist of capital redemption reserve, warrant reserve, fair value reserve and foreign currency translation reserve.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2015
|
|
|
|
|
|
||||||||
|
|
|
Attributable to shareholders of the parent |
|
|
||||||||
|
|
Note |
Share capital |
Treasury shares |
Share premium |
Merger reserve |
Asset revaluation reserve |
Capital reserve |
Other reserves |
Retained earnings |
Total |
Non-controlling interest |
Total equity |
|
|
|
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
US$'000s |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 July 2015 |
|
991 |
(682) |
38,692 |
6,715 |
10,159 |
8,459 |
50 |
62,363 |
126,747 |
1,457 |
128,204 |
|
Profit for the period |
|
- |
- |
- |
- |
- |
- |
- |
4,780 |
4,780 |
1 |
4,781 |
|
Other comprehensive income |
|
- |
- |
- |
- |
- |
- |
(139) |
- |
(139) |
- |
(139) |
|
Total comprehensive income |
|
- |
- |
- |
- |
- |
- |
(139) |
4,780 |
4,641 |
1 |
4,642 |
|
Dividend paid |
13 |
- |
- |
- |
- |
- |
- |
- |
(1,656) |
(1,656) |
- |
(1,656) |
|
Purchase of treasury shares |
10 |
|
(7,935) |
|
|
|
|
|
|
(7,935) |
- |
(7,935) |
|
Change in ownership interest in a subsidiary - purchase of treasury shares by subsidiary |
|
- |
- |
- |
- |
- |
403 |
- |
- |
403 |
(1,279) |
(876) |
|
Warrants expense |
|
- |
- |
- |
- |
- |
- |
105 |
- |
105 |
- |
105 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 31 December 2015 |
|
991 |
(8,617) |
38,692 |
6,715 |
10,159 |
8,862 |
16 |
65,487 |
122,305 |
179 |
122,484 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2016 |
|
|
|
|
|
Note |
31 Dec 2016 |
31 Dec 2015 |
|
|
|
US$'000s |
US$'000s |
|
Cash flows from operating activities: |
|
|
|
|
Profit before tax from continuing operations |
|
8,388 |
5,573 |
|
Profit before tax from discontinued operations |
|
- |
9 |
|
Total profit before income tax |
|
8,388 |
5,582 |
|
Adjustments for: |
|
|
|
|
Depreciation expense |
8 |
15,930 |
10,084 |
|
Warrants expense |
|
100 |
105 |
|
Impairment loss on non-trade receivables |
4 |
30 |
- |
|
Amortisation of loan insurance premium |
6 |
539 |
539 |
|
Amortisation of fair value discounts on non-current liabilities |
6 |
217 |
171 |
|
Gains on disposals of aircraft |
|
(1,979) |
(305) |
|
Gain on disposal of assets held for sale |
|
- |
(25) |
|
Finance income from discounting non-current liabilities to fair value |
5 |
(227) |
(179) |
|
Interest income |
5 |
(261) |
(565) |
|
Interest expense on borrowings |
6 |
13,882 |
8,187 |
|
Interest expense on unsecured 7.5% notes |
6 |
4,128 |
4,134 |
|
Operating cash flows before working capital changes |
|
40,747 |
27,728 |
|
Movement in working capital: |
|
|
|
|
Trade and other receivables |
|
1,899 |
2,782 |
|
Trade and other payables |
|
1,888 |
62 |
|
Maintenance reserves |
|
3,682 |
445 |
|
Cash from operations |
|
48,216 |
31,017 |
|
Interest received |
|
261 |
565 |
|
Interest paid |
|
(17,232) |
(12,293) |
|
Income tax paid |
|
(129) |
(479) |
|
Net cash from operating activities |
|
31,116 |
18,810 |
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
Purchase of property, plant and equipment |
|
(256,786) |
(113,527) |
|
Proceeds from disposals of aircraft |
|
100,140 |
19,500 |
|
Proceeds from disposal of assets held for sale |
|
- |
55 |
|
Investment in loans receivable |
|
- |
(4,400) |
|
Repurchase of a subsidiary's treasury shares |
|
- |
(876) |
|
Net cash used in investing activities |
|
(156,646) |
(99,248) |
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
Net proceeds from issuance of ordinary shares |
|
5,575 |
- |
|
Dividends paid to shareholders |
13 |
(1,820) |
(1,656) |
|
Repurchase of treasury shares |
|
- |
(7,935) |
|
Dividend paid to non-controlling interest of a subsidiary |
|
(16) |
- |
|
Proceeds from loans and borrowings, net of transactions costs |
|
216,332 |
70,918 |
|
Repayment of loans and borrowings |
|
(94,872) |
(19,844) |
|
Net cash from financing activities |
|
125,199 |
41,483 |
|
Effects of exchange rates on cash and cash equivalents |
|
(5) |
(21) |
|
Net decrease in cash and cash equivalents |
|
(336) |
(38,976) |
|
Cash and cash equivalents at beginning of financial period |
|
48,267 |
108,647 |
|
Cash and cash equivalents at end of financial period |
|
47,931 |
69,671 |
AVATION PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2016
This Interim Report for Avation PLC for the six months ended 31 December 2016 was approved by the Directors on 13 February 2017.
1 CORPORATE INFORMATION
Avation PLC is a public limited company incorporated in England and Wales under the Companies Act 2006 (Registration Number 05872328) and is listed on the London Stock Exchange in the Standard Segment.
The Group's principal activity is aircraft leasing.
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
This Interim Report has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Conduct Authority and in accordance with International Accounting Standard (IAS) 34 'Interim Reporting'.
The Interim Report does not include all the notes of the type normally included within the annual report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financial and investing activities of the consolidated entity as the full financial report.
It is recommended that the Interim Report be read in conjunction with the annual report for the year ended 30 June 2016 and considered together with any public announcements made by Avation PLC during the six months ended 31 December 2016.
The accounting policies and methods of computation are the same as those adopted in the annual report for the year ended 30 June 2016.
The preparation of the Interim Report requires management to make estimates and assumptions that affect the reported income and expenses, assets and liabilities and disclosure of contingencies at the date of the Interim Report, actual results may differ from these estimates.
The statutory financial statements of Avation PLC for the year ended 30 June 2016, which carried an unqualified audit report, have been delivered to the Registrar of Companies and did not contain any statements under section 498 of the Companies Act 2006.
The Interim Report is unaudited and not reviewed by the auditors.
The Interim Report does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006.
3 OTHER INCOME
|
|
|
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Finance lease conversion fee |
325 |
- |
|
Foreign currency exchange gain |
76 |
- |
|
Others |
43 |
27 |
|
|
|
|
|
|
444 |
27 |
|
|
|
|
4 OTHER EXPENSES
|
|
|
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Impairment loss on non-trade receivables |
30 |
- |
|
Foreign currency exchange loss |
- |
42 |
|
Others |
- |
45 |
|
|
|
|
|
|
30 |
87 |
|
|
|
|
5 FINANCE INCOME
|
|
|
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Interest income |
261 |
565 |
|
Finance income from discounting non-current liabilities to fair value |
227 |
179 |
|
|
|
|
|
|
488 |
744 |
|
|
|
|
6 FINANCE EXPENSES
|
|
|
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Interest expense on borrowings |
13,882 |
8,187 |
|
Interest expense on unsecured 7.5% notes |
4,128 |
4,134 |
|
Amortisation of loan insurance premium |
539 |
539 |
|
Amortisation of fair value discounts on non-current liabilities |
217 |
171 |
|
Cost of early termination of borrowings |
740 |
- |
|
Others |
222 |
81 |
|
|
|
|
|
|
19,728 |
13,112 |
|
|
|
|
7 RELATED PARTY TRANSACTIONS
Significant related party transactions:
|
|
|
|
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Entities controlled by key management personnel (including directors): |
|
|
|
Rental expenses paid |
(119) |
(98) |
|
Consulting fee paid |
(81) |
(107) |
|
Service fee paid |
- |
(11) |
|
Interest expense |
(15) |
(261) |
|
Interest expense on unsecured 7.5% notes |
(204) |
(193) |
|
|
|
|
|
|
|
|
|
Director |
|
|
|
Interest expense |
(29) |
- |
|
Interest expense on unsecured 7.5% notes |
(7) |
- |
8 PROPERTY, PLANT AND EQUIPMENT
|
Group |
Furniture and equipment |
Jet aircraft |
Turbo-prop aircraft |
Total |
|
|
US$'000s |
US$'000s |
US$'000s |
US$'000s |
|
|
|
|
|
|
|
31 December 2016: |
|
|
|
|
|
Cost or valuation: |
|
|
|
|
|
At 1 July 2016 |
388 |
382,565 |
435,215 |
818,168 |
|
Additions |
7 |
256,712 |
67 |
256,786 |
|
Disposals/written-off |
(3) |
(126,916) |
- |
(126,919) |
|
Reclassified as held under finance lease |
- |
(32,383) |
- |
(32,383) |
|
Movement in revaluation reserve |
- |
(3,887) |
- |
(3,887) |
|
At 31 December 2016 |
392 |
476,091 |
435,282 |
911,765 |
|
|
|
|
|
|
|
Representing: |
|
|
|
|
|
At cost |
392 |
- |
- |
392 |
|
At valuation |
- |
476,091 |
435,282 |
911,373 |
|
|
|
|
|
|
|
|
392 |
476,091 |
435,282 |
911,765 |
|
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
At 1 July 2016 |
206 |
55,845 |
37,135 |
93,186 |
|
Depreciation expense |
61 |
8,272 |
7,597 |
15,930 |
|
Disposals/written-off |
(3) |
(27,609) |
- |
(27,612) |
|
Reclassified as held under finance lease |
- |
(20,156) |
- |
(20,156) |
|
At 31 December 2016 |
264 |
16,352 |
44,732 |
61,348 |
|
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
At 1 July 2016 |
182 |
326,720 |
398,080 |
724,982 |
|
At 31 December 2016 |
128 |
459,739 |
390,550 |
850,417 |
|
|
|
|
|
|
8 PROPERTY, PLANT AND EQUIPMENT (continued)
|
|
Furniture and equipment |
Jet aircraft |
Turbo-prop aircraft |
Total |
|
|
US$'000s |
US$'000s |
US$'000s |
US$'000s |
|
|
|
|
|
|
|
30 June 2016: |
|
|
|
|
|
Cost or valuation: |
|
|
|
|
|
At 1 July 2015 |
357 |
163,040 |
344,492 |
507,889 |
|
Additions |
31 |
226,914 |
115,877 |
342,822 |
|
Disposals/written-off |
- |
(7,999) |
(19,258) |
(27,257) |
|
Reclassified as held under finance lease |
- |
- |
(35,601) |
(35,601) |
|
Movement in revaluation reserve |
- |
610 |
29,705 |
30,315 |
|
At 30 June 2016 |
388 |
382,565 |
435,215 |
818,168 |
|
|
|
|
|
|
|
Representing: |
|
|
|
|
|
At cost |
388 |
- |
- |
388 |
|
At valuation |
- |
382,565 |
435,215 |
817,780 |
|
|
|
|
|
|
|
|
388 |
382,565 |
435,215 |
818,168 |
|
|
|
|
|
|
|
Accumulated depreciation and impairment: |
|
|
|
|
|
At 1 July 2015 |
88 |
47,875 |
25,847 |
73,810 |
|
Depreciation expense - continuing operations |
118 |
9,704 |
13,379 |
23,201 |
|
Disposals/written-off |
- |
(2,636) |
- |
(2,636) |
|
Reclassified as held under finance lease |
- |
- |
(2,091) |
(2,091) |
|
Impairment loss |
- |
902 |
- |
902 |
|
|
|
|
|
|
|
At 30 June 2016 |
206 |
55,845 |
37,135 |
93,186 |
|
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
At 1 July 2015 |
269 |
115,165 |
318,645 |
434,079 |
|
At 30 June 2016 |
182 |
326,720 |
398,080 |
724,982 |
|
|
|
|
|
|
9 LOANS AND BORROWINGS
|
|
|
|
31 Dec 2016 |
30 June 2016 |
|
|
|
|
US$'000s |
US$'000s |
|
|
|
|
|
|
|
Secured borrowings |
|
|
610,937 |
510,640 |
|
Junior secured borrowings |
|
|
28,802 |
8,017 |
|
Unsecured 7.5% notes due 2020 |
|
|
97,445 |
97,067 |
|
|
|
|
|
|
|
|
|
|
737,184 |
615,724 |
|
|
|
|
|
|
|
Less: current portion of borrowings |
|
|
(89,476) |
(72,423) |
|
|
|
|
|
|
|
|
|
|
647,708 |
543,301 |
|
|
|
|
|
|
|
|
Maturity |
Weighted average interest rate per annum |
||
|
|
31 Dec 2016 |
30 June 2016 |
31 Dec 2016 |
30 June 2016 |
|
|
US$'000s |
US$'000s |
% |
% |
|
|
|
|
|
|
|
Secured borrowings |
2017-2028 |
2015-2028 |
4.4% |
4.3% |
|
Junior secured borrowings |
2020-2024 |
2020-2024 |
6.7% |
6.3% |
|
Unsecured 7.5% notes due 2020 |
2020 |
2020 |
7.5% |
7.5% |
|
|
|
|
|
|
Secured borrowings are secured by first ranking mortgages over the aircraft financed by the related borrowings, security assignments of the Group's rights under leases and other contractual agreements relating to the aircraft, charges over bank accounts in which lease payments relating to the aircraft are received and charges over the issued share capital of certain subsidiaries.
Junior secured borrowings are secured by second ranking aircraft mortgages, security assignments and charges over bank accounts.
10 SHARE CAPITAL AND TREASURY SHARES
(a) Share capital
|
|
31 Dec 2016 |
30 June 2016 |
||
|
|
No of shares |
US$'000s |
No of shares |
US$'000s |
|
|
|
|
|
|
|
Allotted, called up and fully paid Ordinary shares of 1 penny each: |
|
|
|
|
|
At 1 July 2016/ 1 July 2015 |
55,785,227 |
993 |
55,663,727 |
991 |
|
Issue of shares |
3,143,709 |
38 |
121,500 |
2 |
|
|
|
|
|
|
|
At 31 Dec/30 June |
58,928,936 |
1,031 |
55,785,227 |
993 |
|
|
|
|
|
|
On 29 September 2016, the Company issued 200,000 ordinary shares of 1 penny each at a price of 110p following the exercise of warrants by warrant holders raising gross proceeds of US$286,000.
On 12 October 2016, the Company issued 2,943,709 ordinary shares of 1 penny each at 155p each following a private placement exercise raising gross proceeds of US$5.57 million.
The holders of ordinary shares (except for treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions.
(b) Treasury shares
|
|
31 Dec 2016 |
30 June 2016 |
||
|
|
No of treasury shares |
US$'000s |
No of treasury shares |
US$'000s |
|
|
|
|
|
|
|
At 1 July 2016/1 July 2015 |
600 |
1 |
450,000 |
682 |
|
Acquired during the financial period |
- |
- |
3,750,600 |
7,936 |
|
Re-issued during the financial period |
- |
- |
(4,200,000) |
(8,617) |
|
At 31 Dec/30 June |
600 |
1 |
600 |
1 |
|
|
|
|
|
|
11 SEGMENT INFORMATION
Management has determined the operating segments based on reports reviewed by the Executive Chairman ("Chief Operating Decision Maker" or "CODM") that are used to make strategic decisions.
The CODM considers the business from a business segment perspective. Management manages and monitors the business in 2 primary business areas: aircraft leasing and aircraft parts procurement.
(a) Segment reporting policy
A segment is a distinguishable component of the Group within a particular economic environment (geographical segment) and to a particular industry (business segment) which is subject to risks and rewards that are different from those of other segments.
Business segments are based on the Group's management and internal reporting structure. In presenting information on the basis of business segments, segment revenue and segment assets are based on the nature of the products or services provided by the Group while information for geographical segments is based on the geographical areas where customers are located.
Inter-segment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items are mostly comprised of corporate assets and liabilities or profit or losses items that are not directly attributable to a segment or those that cannot be allocated on a reasonable basis. Common expenses were allocated based on revenue.
Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year.
(b) Business segments
During the six months ended 31 December 2016, the Group was organised into two main business segments which are aircraft leasing and aircraft parts procurement.
Other Group operations mainly comprise investment holding which does not constitute a separate reportable segment. There are no inter-segment transactions recorded during the financial period.
The aircraft parts procurement segment does not meet the quantitative thresholds and is not separately disclosed.
11 SEGMENT INFORMATION (continued)
(c) Geographical analysis
|
31 December 2016 |
|
|
Europe |
Asia-Pacific |
Total |
|
|
|
|
US$'000s |
US$'000s |
US$'000s |
|
|
|
|
|
|
|
|
Lease income from continuing activities |
|
|
16,482 |
28,626 |
45,108 |
|
Net book value - aircraft |
|
|
282,715 |
567,574 |
850,289 |
|
Total assets |
|
|
314,956 |
654,469 |
969,425 |
|
|
|
|
|
|
|
|
|
|
|
Europe |
Asia-Pacific |
Total |
|
|
|
|
US$'000s |
US$'000s |
US$'000s |
|
31 December 2015 |
|
|
|
|
|
|
Lease income from continuing activities |
|
|
7,010 |
24,483 |
31,493 |
|
|
|
|
|
|
|
|
30 June 2016 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net book value - aircraft |
|
|
341,765 |
383,035 |
724,800 |
|
Total assets |
|
|
370,708 |
461,077 |
831,785 |
|
|
|
|
|
|
|
12 CONTINGENT LIABILITIES
There were no material changes in contingent liabilities since 30 June 2016.
13 DIVIDEND
|
|
31 Dec 2016 |
31 Dec 2015 |
|
|
US$'000s |
US$'000s |
|
|
|
|
|
Declared/paid during the six months ended 31 December 2016 |
|
|
|
Dividends on ordinary shares |
|
|
|
- Interim exempt (one-tier) dividend for 2017 :3.25 US cents (2016: 3 US cents) per share |
1,820 |
1,656 |
|
|
|
|
No dividends have been declared subsequent to 31 December 2016.
14 SUBSEQUENT EVENTS
None.
PRINCIPAL RISKS
The Group's risk management processes bring greater judgement to decision making as they allow management to make better, more informed and more consistent decisions based on a clear understanding of risk involved. We regularly review the risk assessment and monitoring process as part of our commitment to continually improve the quality of decision-making across the Group.
The principal risks and uncertainties which may affect the Group in the second half of the financial year will include the typical risks associated with the aviation business, 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 would limit our fleet expansion and therefore growth.
GOING CONCERN
After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements. The financial risk management objectives and policies of the Group and the exposure of the Group to credit risk and liquidity risk are discussed in the annual report for the Group for the year ended 30 June 2016.
DIRECTORS
The directors of Avation PLC are listed in its Annual Report for the year ended 30 June 2016. A list of the current directors is maintained on the Avation PLC website: www.avation.net
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that, to the best of their knowledge, this condensed consolidated interim financial information have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely
· an indication of important events that have occurred during the first six months and their impact on the Interim Report, and a description required by the principal risks and uncertainties for the remaining six months of the financial year; and
· material related party transactions in the first six months and any material changes in the related party transactions described in the last annual report.
By order of the Board
Jeff Chatfield
Executive Chairman
Singapore, 16 February 2017
This information is provided by RNS
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