Information  X 
Enter a valid email address

Avation PLC (AVAP)

  Print      Mail a friend       Annual reports

Thursday 07 September, 2017

Avation PLC

PRELIMINARY UNAUDITED FINANCIAL RESULTS FOR 2017

RNS Number : 0791Q
Avation PLC
07 September 2017
 

AVATION PLC

("Avation" or "the Company")

 

PRELIMINARY UNAUDITED Financial Results for the YEar ended 30 june 2017
and Interim Management Statement

Avation PLC (LSE: AVAP), the commercial passenger aircraft leasing company, announces preliminary unaudited financial results for the year ending 30 June 2017.

Overview

·   Lease revenue increased by 32% to $94.2 million;

·   Earnings before interest and tax ("EBIT" or "Operating Profit") grew 32% to $60.2 million;

·   Profit before taxation increased by 18% to $21.4 million;

·   Total profit after tax increased 16% to $21.3 million;

·   Operating cash flows increased 20% to $63.0 million;

·   Dividend per share increased by 85% to 6.00 US cents; and

·   Earnings per share ("EPS") increased by 6% to 36.3 US cents.

 

Executive Chairman, Jeff Chatfield, said:

"Avation is pleased to report record revenue, profit and operating cashflow in the year to 30 June 2017. Avation continues to diversify its aircraft fleet while adding balance sheet scale. Fleet metrics have improved with lease yield rising to 12.8% (2016: 12.3%) while the average age of the fleet has reduced and the average remaining lease term for the aircraft portfolio has increased.

The Company has ended the year with a substantial cash balance, lower leverage and has an improved credit rating, which are features that support the funding of further fleet expansion. Avation aims to grow the aircraft portfolio materially during the coming financial year and is currently assessing a number of aircraft for acquisition."

 

Aircraft Fleet

Aircraft Type

30 June 2017

ATR 72-600

13

ATR 72-500

6

Airbus A321-200

8

Airbus A320-200

3

Fokker 100

5

Total

35

As at 30 June 2017 Avation's fleet comprised 35 aircraft, including seven aircraft on finance leases. Fleet metrics have continued to improve, the weighted average age of the operating fleet (excluding finance leases) is 3.3 years (2016: 4.2 years) and the weighted average remaining lease term is 7.5 years (2016: 6.8 years). Avation has signed a letter of intent to lease three ATR 72 turboprop aircraft for delivery to Mandarin Airlines, one of which is included in the above fleet numbers with two additional aircraft on order for delivery in the latter part of 2017.

 



Financial Highlights


30 June 2017
US$ 000's

30 June 2016
US$ 000's

Change

 

Lease revenue

94,173

71,190

32%

Lease yield

12.8%

12.3%

0.5%

Operating profit (EBIT)

60,199

45,573

32%

Operating profit margin

63.9%

64.0 %

(0.1)%

Administrative expense

8,046

7,550

7%

Administrative expense/lease revenue

8.5%

10.6%

(2.1%)

Pre tax profit

21,363

18,069

18%

Total profit after tax

21,257

18,280

16%

EPS

36.3 cents

34.4 cents

6%

Dividend

6.00 cents

3.25 cents

85%





Operating cash flows

63,020

52,547

20%





Fleet assets

 

744,731

724,982

3%

Total assets

901,135

831,785

8%

Cash and cash equivalents

87,692

48,267

82%

Book value per share US$

$3.21

$3.11

3%

               


Fleet Summary

Aircraft assets increased 3% to $744.7 million (2016: $725.0 million) during the period. Fleet changes included the addition of four Airbus A321 jets on lease to VietJet. Two midlife Airbus A321 jets, one VietJet Airbus A321 and six ATR 72 turboprops were sold during the period.

By value, over 89% of Avation's fleet is represented by Airbus A321 jet and ATR 72 turboprop aircraft. Sales of these asset types during the period provides support for the valuation of the fleet and demonstrates the liquidity of these assets. 

In addition to aircraft on operating leases, Finance lease receivables totalled $45.4 million (2016: $36.7 million).

Avation has one Airbus A320 aircraft on lease to Air Berlin, which announced insolvency on 15 August 2017 and therefore subsequently defaulted under its lease. Avation holds security deposits and substantial maintenance reserves as security for Air Berlin's lease obligations. Avation is liaising with Air Berlin and various third parties that have expressed interest in acquiring parts of the Air Berlin business and/or leasing this aircraft. The Airbus A320 aircraft is one of the most popular commercial aircraft and Avation expects the prompt transition of this aircraft to another airline.

 

Debt summary

30 June 2017
US$000's

30 June 2016
US$000's

Loans and borrowings

648,813

615,724

Cash & cash equivalents

87,692

48,267

Net indebtedness

561,121

567,457

Total loan to value ratio (LTV)

72.0%

74.0%

Weighted average cost of secured debt

4.5%

4.3%

The weighted average cost of secured debt facilities increased to 4.5% as at 30 June 2017 (2016: 4.3%) principally due to junior secured debt issued to fund the acquisition of aircraft leased to VietJet.

At the end of the financial period, Avation's overall loan to value ratio was 72.0% (2016: 74.0%) and 95.1% of total debt was at fixed or hedged interest rates (2016: 91.6%). At the end of the financial period, there was no related party debt other than pursuant to participation in senior unsecured notes issued under the Company's Global Medium Term Note Programme.

 

Upgrade to Credit Rating

In December 2016, Standard & Poor's Global Ratings advised that Avation's corporate credit rating has been upgraded to 'B+', Outlook Stable from 'B'; 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+'.

During the period Japan Credit Rating Agency, Ltd assigned a Foreign Currency Long-term Issuer Rating for Avation of 'BB', Outlook Stable.

 

Dividend Payment

The Company paid a 6.00 US cents per share (2016: US 3.25 cents per share) dividend for the year ended 30 June 2017 on 10 August 2017.

Shareholders should note that dividends are paid by default in US Dollars. Shareholders who prefer to receive dividends in British Pounds (GBP) can elect to receive GBP by completing and returning a form to the Company's share registrar. Further details and a download of the form can be found at www.avation.net/dividends.html

 

Appointment to Board of Directors

Avation announced the appointment of Mr. Derek Sharples as independent non-executive Director to the Board in November 2016. Mr. Sharples has recently retired from the position of Chief Executive Officer of Airbus Helicopters Southeast Asia and was formerly Corporate Secretary and Head of the Legal Services at Airbus in Toulouse. Mr. Sharples is a resident of Singapore.

 

Market Positioning and Risk

Avation focuses on commercial passenger 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 aims to operate a fleet of aircraft with a low average age and long average remaining lease term to a diversified group of airlines. Avation will typically sell mid-life and older aircraft to redeploy capital to newer assets. This approach is intended to mitigate technology change risk, operational and financial risk, support sustained growth and deliver long term shareholder value.

The Company believes that it can attract airline customers, acquire leased aircraft and obtain the required funding for growth. Funding is traditionally sourced from capital markets, asset backed bank lending, the proceeds from disposal of aircraft and operating cashflow. As with all capital-intensive businesses access to acceptably priced funding is a risk. The aircraft leasing industry is subject to specific risks which 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 risk of impairment of aircraft values.    

 

Outlook and Interim Management Statement

Avation continues to grow its fleet and lease revenue year on year. Avation has demonstrated the liquidity of key aircraft types at a premium to book value and reduced the concentration of assets with individual airlines. New aircraft have been acquired since the commencement of the 2017 financial year while older aircraft have been sold or converted to finance leases. This has resulted in improved fleet age and average remaining lease term metrics.

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 and considerations of risk and airline concentrations.

Avation's strategy continues to target growth and diversification of aircraft assets, maintenance of strong average lease age and term metrics and adding new airline customers. Avation will consider acquiring twin aisle aircraft, in addition to single aisle jets and turboprops as part of a strategy to build a diversified portfolio of aircraft. This expanded portfolio allows for the potential to accelerate fleet growth in the future.  Twin aisle aircraft may have a risk profile which is more exposed to technology change factors. The Company will seek to mitigate this risk.

Following the completion of the sale of six ATR 72 aircraft during the financial period, Avation has cash reserves and improved leverage to support the acquisition of additional aircraft, including the three ATR 72 aircraft to be delivered to Mandarin Airlines in the latter part of 2017.

Avation's Board of Directors is pleased to deliver another record set of financial results from its aircraft leasing business while executing its strategy of fleet growth and risk mitigation. Avation is in a strong position to deliver diversification during the current financial year and to rebuild its fleet after the disposal of six ATR 72 aircraft.


Results Conference Call

Avation's senior management team will host a conference call on 7 September 2017, at 1pm BST (UK) / 8am EST (US) / 8pm SGT (Singapore), to discuss the Company's financial results. Participants should dial: United Kingdom 020 3059 8125; United States +1 724 928 9460; 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/2017finalresults


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.

 

Annual General Meeting

The Annual General Meeting of the Company is expected to be held at the Company's headquarters in Singapore on 13 November 2017 at 10am GMT (UK) / 6pm SGT (Singapore). Notice of the Annual General Meeting will be issued in due course.

 

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.

Accounting policies

Financial information contained in this preliminary unaudited results announcement has been prepared using accounting policies that are consistent with the Company's Annual Report for the year ended 30 June 2016.

 

- ENDS-

 

More information on Avation PLC can be found at: www.avation.net

 

Enquiries:

 



AVATION PLC

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

 



2017

2016



US$'000s

US$'000s





Continuing operations




Revenue


94,173

71,190

Other income


1,086

3,045



95,259

74,235





Depreciation


(32,300)

(23,201)

Gain on disposal of aircraft


5,357

3,660

Impairment loss on aircraft


-

(902)

Administrative expenses


(8,046)

(7,550)

Other expenses


(71)

(669)

Operating profit


60,199

45,573





Finance income


1,790

1,202

Finance expenses


(40,626)

(28,706)

Profit before taxation


21,363

18,069





Taxation


(106)

202

Profit from continuing operations


21,257

18,271





Discontinued operations




Profit from discontinued operations


-

9

Total profit


21,257

18,280





Other comprehensive income:




Items that may be reclassified subsequently to profit or loss:




Currency translation differences arising on consolidation


-

(6)

Fair value gain/(loss) on derivative financial instruments


2,804

(2,158)



2,804

(2,164)

Items that may not be reclassified subsequently to profit or loss:




Revaluation (loss)/gain on property, plant and equipment, net of tax


(5,568)

30,987

Other comprehensive income, net of tax


(2,764)

28,823





Total comprehensive income for the year


18,493

47,103





Profit attributable to:




Equity holders of the Company


21,262

18,279

Non-controlling interests


(5)

1



21,257

18,280

Total comprehensive income attributable to:




Equity holders of the Company


18,509

47,098

Non-controlling interests


(16)

5



18,493

47,103



AVATION PLC

 

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017

 



2017

2016



US$'000s

US$'000s





Earnings per share for profit from continuing and discontinued




operations attributable to equity holders of the Company




Basic earnings per share:




From continuing operations


36.27 cents

34.33 cents

From total operations


36.27 cents

34.35 cents

Diluted earnings per share:




From continuing operations


35.68 cents

34.13 cents

From total operations


35.68 cents

34.15 cents

 



AVATION PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017



2017

2016



US$'000s

US$'000s

ASSETS:




Current assets:




Cash and cash equivalents


87,692

48,267

Trade and other receivables


6,109

5,631

Finance lease receivables


36,641

3,032

Options held for trading


3,640

3,040

Total current assets


134,082

59,970

Non-current assets:




Trade and other receivables


9,320

11,304

Finance lease receivables


8,728

33,627

Property, plant and equipment


744,731

724,982

Goodwill


1,902

1,902

Derivative financial instruments


2,372

-

Total non-current assets


767,053

771,815





Total assets


901,135

831,785





LIABILITIES AND EQUITY:




Current liabilities:




Trade and other payables


14,920

10,065

Provision for taxation


3,515

1,029

Loans and borrowings


94,122

72,423

Maintenance reserves


451

7,440

Total current liabilities


113,008

90,957

Non-current liabilities:




Trade and other payables


11,480

13,471

Loans and borrowings


554,691

543,301

Derivative financial instruments


1,901

2,387

Deferred tax liabilities


3,318

4,738

Maintenance reserves


20,813

3,323

Total non-current liabilities


592,203

567,220

Equity attributable to shareholders:




Share capital


1,058

993

Treasury shares


-

(1)

Share premium


48,365

38,925

Merger reserve


6,715

6,715

Asset revaluation reserve


24,492

41,142

Capital reserve


8,876

8,876

Other reserves


801

(1,814)

Retained earnings


105,556

78,679



195,863

173,515

Non-controlling interest


61

93

Total equity


195,924

173,608





Total liabilities and equity


901,135

831,785


AVATION PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017



Attributable to shareholders of the parent





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 year


-

-

-

-

-

-

-

21,262

21,262

(5)

21,257

Other comprehensive income


-

-

-

-

(5,557)

-

2,804

-

(2,753)

(11)

(2,764)

Total comprehensive income


-

-

-

-

(5,557)

-

2,804

21,262

18,509

(16)

18,493

Dividend paid during the year


-

-

-

-

-

-

-

(1,820)

(1,820)

-

(1,820)

Dividend payable









(3,664)

(3,664)

-

(3,664)

Re-issue of treasury shares


-

1

-

-

-

-

-

-

1

-

1

Issue of new shares


65

-

9,725

-

-

-

(403)

-

9,387

-

9,387

Share issue expenses


-

-

(285)

-

-

-

-

-

(285)

-

(285)

Transfer of asset revaluation surplus upon sale of aircraft


 

-

 

-

 

-

 

-

 

(11,093)

 

-

 

-

 

11,093

 

-

 

-

 

-

Dividend paid to non-controlling interest of a subsidiary

 

 

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(16)

 

(16)

Warrant expired


-

-

-

-

-

-

(6)

6

-

-

-

Warrants expense


-

-

-

-

-

-

220

-

220

-

220

Total transactions with owners recognised directly in equity


 

65

 

1

 

9,440

 

-

 

(11,093)

 

-

 

(189)

 

5,615

 

3,839

 

(16)

 

3,823

Balance at 30 June 2017


1,058

-

48,365

6,715

24,492

8,876

801

105,556

195,863

61

195,924














 

 



 

AVATION PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016



Attributable to shareholders of the parent





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 year


-

-

-

-

-

-

-

18,279

18,279

1

18,280

Other comprehensive income


-

-

-

-

30,983

-

(2,164)

-

28,819

4

28,823

Total comprehensive income


-

-

-

-

30,983

-

(2,164)

18,279

47,098

5

47,103

Dividend paid


-

-

-

-

-

-

-

(1,656)

(1,656)

-

(1,656)

Purchase of treasury shares


-

(7,936)

-

-

-

-

-

-

(7,936)

-

(7,936)

Re-issue of treasury shares


-

8,617

-

-

-

-

-

(307)

8,310

-

8,310

Treasury shares of a subsidiary


-

-

-

-

-

882

-

-

882

2

884

Issue of new shares


2

-

233


-

-

(39)

-

196

-

196

Warrants expense


-

-

-

-

-

-

339

-

339

-

339

Change in ownership interest in a subsidiary


-

-

-

-

-

(465)

-

-

(465)

(1,371)

(1,836)

Total transactions with owners recognised directly in equity


 

2

 

681

 

233

 

-

 

-

 

417

 

300

 

(1,963)

 

(330)

 

(1,369)

 

(1,699)














Balance at 30 June 2016


993

(1)

38,925

6,715

41,142

8,876

(1,814)

78,679

173,515

93

173,608















AVATION PLC

CONSOLIDATED STATEMENT OF CASHFLOWS

FOR THE FINANCIAL YEAR ENDED 30 JUNE 2017



2017

2016



US$'000s

US$'000s

Cash flows from operating activities:




Profit before taxation from continuing operations


21,363

18,069

Profit before taxation from discontinued operations


-

9

Profit before income tax


21,363

18,078

Adjustments for:




    Depreciation expense


32,300

23,201

    Warrants expense


220

339

    Impairment loss on aircraft


-

902

    Impairment loss on trade receivables


41

7

    Impairment loss on goodwill


-

482

    Amortisation of loan insurance premium


1,078

1,078

    Amortisation of interest expense on non-current deposits


924

376

    Non-trade receivables written off


30

-

    Gain on disposal of aircraft


(5,357)

(3,660)

    Gain on disposal of assets held for sale


-

(25)

    Fair value gain on options held for trading


(600)

(2,940)

    Fair value gain on derivatives


(54)

-

    Finance income from discounting non-current deposits to fair value


(929)

(393)

    Interest income


(861)

(809)

    Interest expense


37,396

26,811

    Operating cash flows before working capital changes


85,551

63,447

Movement in working capital:




    Trade and other receivables and finance lease receivables


5,034

3,798

    Trade and other payables


(1,269)

1,226

    Maintenance reserves


10,501

9,938

    Cash from operations


99,817

78,409

Interest received


846

809

Interest paid


(36,922)

(26,034)

Income tax paid


(721)

(637)

Net cash from operating activities


63,020

52,547

Cash flows from investing activities:




Purchase of property, plant and equipment


(275,665)

(323,222)

Purchase of options held for trading


-

(100)

Proceeds from disposal of aircraft


211,714

24,755

Proceeds from disposal of assets held for sale


-

55

Purchase of additional shares in a subsidiary from non-controlling interest


-

(22)

Repurchase of a subsidiary's treasury shares


-

(884)

Net cash used in investing activities


(63,951)

(299,418)

Cash flows from financing activities:




Net proceeds from issuance of ordinary shares


9,102

196

Dividends paid to shareholders


(1,820)

(1,656)

Repurchase of treasury shares


-

(7,936)

Proceeds from sale of treasury shares


1

8,310

Dividend paid to non-controlling interest of a subsidiary


(16)

(46)

Proceeds from loans and borrowings, net of transactions costs


236,243

233,869

Repayment of loans and borrowings


(203,154)

(46,240)

Net cash from financing activities


40,356

186,497

Effects of exchange rates on cash and cash equivalents


-

(6)

Net increase/(decrease) in cash and cash equivalents


39,425

(60,380)

Cash and cash equivalents at beginning of financial year


48,267

108,647

Cash and cash equivalents at end of financial year


87,692

48,267

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
FR EASNXELKXEEF

a d v e r t i s e m e n t