REG - Avation PLC - UNAUDITED RESULTS FOR SIX MONTHS ENDING DEC 2022
03/03/2023 07:16
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RNS Number : 7167R Avation PLC 03 March 2023
AVATION PLC
("Avation" or "the Company")
UNAUDITED Results for the SIX MONTHS ended 31 DECEMBER 2022
Avation PLC (LSE: AVAP), the commercial passenger aircraft leasing company,
announces unaudited results for the six months ended 31 December 2022.
Financial Highlights
· Revenue and other income reduced to US$55.3 million (2021: US$60.1
million);
· Operating profit increased to US$ 35.0 million (2021: US$18.8
million);
· Profit before tax of US$6.7 million (2021: Loss before tax US$15.9
million);
· Net indebtedness reduced by US$46.0 million to US$746.9 million (30
June 2022: US$792.9 million); and
· Net asset value per share increased 5.2% to £2.82 (30 June 2022:
£2.68);
Operational Highlights
· Two ATR 72-600 turboprop aircraft were sold during the period;
· One ATR 72-600 aircraft was repossessed from an airline in Myanmar;
· One off-lease ATR 72-500 started a lease with a new airline customer
in Nepal;
· Avation received a creditors' distribution of US$3.4 million from
Virgin Australia;
· Two Airbus A220-300 aircraft were re-financed with fixed rate
long-term loans, reducing Avation's exposure to interest rate changes;
Outlook
Avation is focussed on the execution of lease deliveries and sale agreements
for the remaining off-lease aircraft in the fleet in the second half-year
period and managing the overall cost of debt. The airline industry is
continuing its recovery from the lows seen during the COVID-19
pandemic. Global domestic air travel in December 2022 as reported by IATA,
has recovered to around 79.9% of December 2019 passenger numbers while
international travel, while lagging, has recovered to around 75.1% of December
2019 levels.
The Company believes that airlines will require significant numbers of leased
aircraft in the short to medium term due to the large number of older aircraft
that have been retired as a result of the COVID-19 pandemic, and the impact of
the pandemic on airline balance sheets, reducing their ability to purchase
aircraft directly.
The Company's future strategy will focus on leasing modern, low CO2 emissions,
fuel-efficient aircraft. Avation is supportive of the aviation industry's goal
of becoming more sustainable through a transition to new technology more
fuel-efficient aircraft engines and the use of sustainable aviation fuel to
reduce CO2 emissions.
The Company will cautiously position itself for a return to organic
self-funded growth through deliveries from its orderbook, opportunistic
aircraft trading and may convert ATR purchase rights to firm orders should
attractive lease opportunities arise."
Executive Chairman, Jeff Chatfield, said:
"During the six months ended 31 December 2022 Avation reduced the number of
off-lease aircraft in the fleet from six to four. In addition, the sale of a
Boeing 737-800 in February 2023 has further reduced the number of off-lease
aircraft to three. A key strategic aim for Avation over the coming months is
to conclude sales or lease agreements for all remaining off-lease aircraft and
we are pleased to announce that we have recently concluded a lease agreement
with a new airline customer for one of the three remaining aircraft.
Avation has continued to de-lever its balance sheet, achieving a reduction to
62.9% in the ratio of net debt to total assets as at 31 December 2022. A
significant portion of the cashflow generated by the fleet has been directed
towards repayments of debt. Scheduled loan repayments for the 2023 calendar
year, amounting to around US$57 million, exceed the expected depreciation of
the fleet over the same period.
A bond repurchase tender was concluded in February, resulting in the
repurchase and retirement of US$7.1m of Avation Capital S.A. 8.25%/9.0%
unsecured notes. The Company may pursue other liability management exercises
from time to time with the aim of further reducing the cost and/or outstanding
amount of unsecured debt in issue. The Company has retained Citibank as a
strategic adviser for potential future debt reduction exercises.
After the recovery from the COVID-19 pandemic, Avation plans to re-grow its
business in an organic prudent and sensible manner. We will target organic
growth, which includes the placement of the remaining off-lease aircraft and
leasing the two ATR aircraft we have on order for delivery in 2024. We have
paid all pre-delivery payments due for the two ordered ATR aircraft and
believe that the balance due on delivery of the aircraft can be funded with
senior secured debt.
We note that most of our peer leasing companies have suffered large losses due
to the seizure of aircraft leased to Russian airlines. Avation was fortunate
in that it did not have any exposure to Russian airlines. Our policy is, and
has always been, to only lease planes in jurisdictions where we are confident
that we can arrange repossession, if ever required.
The Company has taken steps to reduce overheads by reducing headcount and
actively managing legal expenses and other expenditure. The Company has an
in-house technical team and management was pleased that the overall cost of
managing the transition of one Boeing 737-800 was less than anticipated.
Few aircraft were built during the COVID-19 pandemic so lessors that own them
have seen positive developments in valuations. As an owner we have managed to
move, sell, service and, most importantly, transition aircraft.
We are reasonably confident that the Company will be able to place its
remaining inventory of off-lease aircraft and arrange leases for the two new
aircraft ordered for delivery in 2024."
Financial Summary
US$ '000s Six months ended 31 December,
2022 2021
Revenue 46,287 57,903
Other income 9,024 2,186
55,311 60,089
Operating profit 35,010 18,800
Profit/(loss) before tax 6,689 (15,863)
Profit/(loss) after tax 8,332 (15,271)
EPS (basic and diluted) 12.00c (21.98c)
US$ '000s 31 December 2022 30 June
2022
Fleet assets (1) 936,300 987,995
Total assets 1,187,077 1,217,020
Cash and bank balances (2) 111,446 119,171
Unrestricted cash and cash equivalents 32,120 35,267
Net asset value per share (USUS$) (3) US$3.42 US$3.27
Net asset value per share (GBP) (4) £2.82 £2.68
1. Fleet assets are defined as property, plant and equipment plus assets
held for sale plus finance lease receivables.
2. Cash and bank balances as at 31 December 2022 comprise cash and cash
equivalents of US$32.1 million (30 June 2022: US$35.3 million) and restricted
cash balances of US$79.3 million (30 June 2022: US$83.9 million).
3. Net asset value per share is total equity divided by the total number
of shares in issue, excluding treasury shares.
4. Based on GBP:USD exchange rate as at 31 December 2022 of 1.21 (30 June
2022:1.22).
Aircraft Fleet
Aircraft Type 31 December 2022 30 June 2022
Boeing 777-300ER 1 1
Airbus A330-300 1 1
Airbus A321-200 6 6
Boeing 737-800NG 1 1
Airbus A320-200 2 2
Airbus A220-300 5 5
ATR 72-600 16 18
ATR 72-500 5 5
Total 37 39
At 31 December 2022, Avation's fleet comprised 37 aircraft, including five
aircraft on finance lease. Avation serves 16 customers in 13 countries. The
weighted average age of the fleet is 6.1 years (30 June 2022: 5.6 years) and
the weighted average remaining lease term is 5.4 years (30 June 2022: 5.7
years).
Two ATR 72-600 aircraft were sold during the period. Turboprop and narrowbody
aircraft make up 82% of fleet assets as at 31 December 2022. Fleet assets have
decreased 5.2% to US$936.3 million (30 June 2022: US$988.0 million). As at the
date of this report, Avation has three off-lease aircraft. We aim to agree
new leases or sales of these remaining off-lease aircraft by 30 June 2023.
Avation has orders for two new ATR 72-600 aircraft and purchase rights for a
further 28 aircraft as at 30 June 2022. The order-book and purchase rights
provide a pathway to organic fleet growth.
Avation has no exposure to Russia or any Russian airline. Avation is currently
not aware of any sanctions resulting from Russia's invasion of Ukraine that
will impact the Company.
Debt summary
US$ '000s 31 December 2022 30 June
2022
Current loans and borrowings 57,153 63,900
Non-current loans and borrowings 721,826 764,230
Total loans and borrowings 778,979 828,130
Unrestricted cash and bank balances 32,120 35,267
Net indebtedness (1) 746,859 792,863
Net debt to total assets (2) 62.9% 65.1%
Weighted average cost of secured debt (3) 4.5% 4.0%
Weighted average cost of total debt (4) 6.1% 5.7%
1. Net indebtedness is defined as loans and borrowings less unrestricted
cash and bank balances.
2. Net debt to assets is defined as net indebtedness divided by total
assets.
3. Weighted average cost of secured debt is the weighted average interest
rate for secured loans and borrowings at period end.
4. Weighted average cost of total debt is the weighted average interest
rate for total loans and borrowings at period end.
During the period net indebtedness was reduced by 5.8% to US$746.9 million (30
June 2022: US$792.9 million). Two aircraft previously financed under the
Group's floating rate warehouse loan facility were re-financed with long-term
fixed rate debt, reducing exposure to changes in interest rates.
The weighted average cost of total debt has increased to 6.1% as at 31
December 2022 (30 June 2022: 5.7%) due to repayments of lower cost secured
loans in the period. The weighted average cost of secured debt also increased
to 4.5% at 31 December 2022 (30 June 2022: 4.0%).
At the end of the financial period, Avation's net debt to total assets ratio
improved to 62.9% (30 June 2022: 65.1%). As at 31 December 2022, 94.8% of
total debt was at fixed or hedged interest rates (30 June 2022: 90.0%). The
ratio of unsecured debt to total debt was 38.6% (30 June 2022: 35.8%).
Financial Analysis
Revenue
US$ '000s Six months ended 31 December,
2022 2021
Lease rental revenue 42,608 48,531
Less: amortisation of lease incentive assets (612) (769)
41,996 47,762
Interest income from finance leases 1,171 1,406
Maintenance reserves revenue 3,120 4,461
End of lease compensation revenue - 4,274
46,287 57,903
Lease rental revenue decreased by 12.2% from US$48.5 million in the six months
ended 31 December 2021 to US$42.6 million in the six months ended 31 December
2022. The decrease was principally due to the reduction in the number of
aircraft in the fleet from 42 at 31 December 2021 to 37 at 31 December 2022.
Interest income from finance leases decreased by 16.7% from US$1.4 million in
the six months ended 31 December 2021 to US$1.2 million in the six months
ended 31 December 2022. The decrease was principally due to the reduction in
the number of aircraft leased on finance leases from 6 at 31 December 2021 to
5 at 31 December 2022.
Other income
US$ '000s Six months ended 31 December,
2022 2021
Fees for late payment 390 1,419
Deposit released - 200
Lease maintenance contribution provision released 1,942 -
Foreign currency exchange gain 3,481 240
Claim recovery 3,166 -
Others 45 327
9,024 2,186
A provision for lease maintenance contributions was released due to changes to
the terms and conditions for maintenance in three lease agreements during the
period.
Foreign currency exchange gains arose principally from the release of deferred
hedged foreign currency exchange gains on two Euro loans that were refinanced
during the period.
The claim recovery recognised in other income in the six months ended 31
December 2022 is the balance of a distribution paid to creditors of Virgin
Australia in excess of amounts allocated to trade receivables.
Administrative expenses
Six months ended 31 December,
US$ '000s
2022 2021
Staff costs 2,868 3,780
Other administrative expenses 1,591 1,275
4,459 5,055
Staff costs reduced by 24.1% from US$3.8 million in the six months ended 31
December 2021 to US$2.9 million in the six months ended 31 December 2022
principally due to reduced headcount, lower bonus payments and lower charges
for employee share warrants.
Other administrative expenses increased by 24.8% from US$1.3 million in the
six months ended 31 December 2021 to US$1.6 million in the six months ended 31
December 2022 principally due to increased marketing related travel expenses.
Finance income
US$ '000s Six months ended 31 December,
2022 2021
Interest income 853 45
Fair value gain on financial derivatives 44 -
Finance income from discounting non-current deposits to fair value 304 285
Gain on repurchase of unsecured notes 486 -
Gain on early full repayment of borrowings 1,657 -
3,344 330
Interest income increased in the six months ended 31 December 2022 due to an
improved interest rate environment for depositors. The group has transferred
funds into term deposit accounts to take advantage of increased deposit
interest rates.
Avation generated a gain of US$0.5 million on the repurchase of US$4.4 million
of Avation Capital S.A. 8.25%/9.0% unsecured notes at a discount in July 2022.
A gain of US$1.7 million on early full repayment of borrowings arose when two
loans were refinanced in November 2022.
Finance expenses
US$ '000s Six months ended 31 December,
2022 2021
Interest expense on secured borrowings 10,742 12,600
Interest expense on unsecured notes 15,504 15,473
Amortisation of loan transaction costs 669 1,644
Amortisation of IFRS 9 gain on debt modification 4,342 3,638
Amortisation of interest expense on non-current borrowings 283 280
Finance charges on early full repayment of borrowings - 726
Others 125 632
31,665 34,993
Interest expense on secured borrowings reduced by 14.7% to US$10.7 million in
the six months ended 31 December 2022 from US$12.6 million in the six months
ended 31 December 2021 as a result of repayments of secured loans. Secured
borrowings have been paid down by US$113.4 million from US$591.4 million at 31
December 2021 to US$478.0 million at 31 December 2022.
Interest expense on unsecured notes includes US$4.3 million of non-cash
interest paid in kind by increasing the face value of Avation Capital S.A.
8.25%/9.0% unsecured notes.
Amortisation of IFRS 9 gain on debt modification of US$4.3 million represents
the non-cash accretion in the book value of Avation Capital S.A. 8.25%/9.0%
unsecured notes resulting from the accounting treatment of the extension and
changes to the terms of the notes agreed with noteholders in March 2021. The
extension was accounted for as a substantial modification of a debt instrument
in accordance with IFRS 9. The face value of Avation Capital S.A. 8.25%/9.0%
unsecured notes outstanding as of 31 December 2022 is US$348.0 million.
Results Conference Call
Avation's senior management team will host an investor update call on 3 March
2023, at 1:00 pm GMT (UK) / 8:00 am EST (US) / 8:00 pm SGT (Singapore), to
discuss the Company's financial results. Investors can participate in the call
by using the following link:
https://www.investormeetcompany.com/avation-plc/register-investor
(https://www.investormeetcompany.com/avation-plc/register-investor)
A replay of the broadcast will be made available on the Investor Relations
page of the Avation PLC website.
Forward Looking Statements
This release contains certain "forward looking statements". Forward looking
statements may be identified by words such as "expects," "intends,"
"initiate", "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.
Basis of presentation
This announcement covers the unaudited results of Avation PLC for the six
months ended 31 December 2022.
Financial information presented in this announcement is being published for
the purposes of providing preliminary Group financial results for the six
months ended 31 December 2022. The financial information in this preliminary
announcement is not audited and does not constitute statutory financial
statements of Avation PLC within the meaning of section 434 of the Companies
Act 2006. The Board of Directors approved this financial information on 2
March 2023. Avation PLC's most recent statutory financial statements for the
purposes of Chapter 7 of Part 15 of the Companies Act 2006 for the year ended
30 June 2022, upon which the auditors have given an unqualified audit, were
published on 3 November 2022 and have been annexed to the annual return and
delivered to the Registrar of Companies.
All "US$" amounts in this release are US Dollar amounts unless stated
otherwise. Certain comparative amounts have been reclassified to conform with
current year presentation.
-ENDS-
Enquiries:
Avation PLC - Jeff Chatfield, Executive
Chairman
+65 6252 2077
Avation welcomes shareholder questions and comments and advises the email
address is: investor@avation.net
More information on Avation is available at www.avation.net
(http://www.avation.net) .
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Note 31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Continuing operations
Revenue 5 46,287 57,903
Other income 6 9,024 2,186
55,311 60,089
Depreciation 11 (18,932) (19,847)
Gain on derecognition of a finance lease 3,235 -
Loss on disposal of aircraft (1,000) (2,016)
Unrealised gain on aircraft purchase rights 16 1,880 60
Unrealised gain on equity investment 17 6,869 -
Impairment loss on aircraft 11,19 (315) (9,855)
Aircraft transition expenses (5,790) (2,658)
Expected credit losses (250) (131)
Administrative expenses (4,459) (5,055)
Legal and professional fees (1,149) (1,787)
Other expenses 7 (390) -
Operating profit 35,010 18,800
Finance income 8 3,344 330
Finance expenses 9 (31,665) (34,993)
Profit/(loss) before taxation 6,689 (15,863)
Taxation 1,643 592
Profit/(loss) from continuing operations 8,332 (15,271)
Profit/(loss) attributable to:
Shareholders of Avation PLC 8,333 (15,272)
Non-controlling interests (1) 1
8,332 (15,271)
Earnings per share for profit/(loss)
attributable to shareholders of Avation PLC
Basic earnings per share 12.00 cents (21.98) cents
Diluted earnings per share 12.00 cents (21.98) cents
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Note 31 Dec 31 Dec
2022 2021
US$'000s US$'000s
8,332 (15,271)
Profit/(loss) from continuing operations
Other comprehensive income:
Items may be reclassified subsequently to profit or loss:
Net gain on cash flow hedge, net of tax 1,427 11,398
1,427 11,398
Items may not be reclassified subsequently to profit or loss:
Revaluation gain on property, plant and equipment, net of tax - 166
Other comprehensive income, net of tax 1,427 11,564
Total comprehensive income/(loss) for the period 9,759 (3,707)
Total comprehensive income/(loss) attributable to:
Shareholders of Avation PLC 9,760 (3,708)
Non-controlling interests (1) 1
9,759 (3,707)
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
Note 31 Dec 30 Jun
2022 2022
US$'000s US$'000s
ASSETS:
Non-current assets
Property, plant and equipment 11 870,583 813,908
Finance lease receivables 13 42,737 55,208
Trade and other receivables 12 18,818 19,388
Derivative financial assets 15 13,240 5,920
Aircraft purchase rights 16 67,160 65,280
Lease incentive assets 4,817 310
Goodwill 14 1,902 1,902
1,019,257 961,916
Current assets
Finance lease receivables 13 4,168 5,624
Trade and other receivables 12 21,585 13,202
Investment in equity, at fair value through profit or loss 17 10,584 3,715
Lease incentive assets 1,225 137
Cash and bank balances 18 111,446 119,171
149,008 141,849
Assets held for sale 19 18,812 113,255
167,820 255,104
Total assets 1,187,077 1,217,020
EQUITY AND LIABILITIES
Equity
Share capital 20 1,166 1,203
Share premium 65,724 67,681
Treasury shares 20 - (7,811)
Merger reserve 6,715 6,715
Asset revaluation reserve 51,730 51,730
Capital reserve 8,876 8,876
Other reserves 16,132 14,174
Retained earnings 87,242 84,519
Equity attributable to shareholders of Avation PLC 237,585 227,087
Non-controlling interest 5 6
Total equity 237,590 227,093
Non-current liabilities
Loans and borrowings 21 721,826 764,230
Trade and other payables 19,485 18,274
Derivative financial liabilities 15 1,055 1,055
Maintenance reserves 22 64,693 75,131
Deferred tax liabilities 24,127 25,437
831,186 884,127
Current liabilities
Loans and borrowings 21 57,153 63,900
Trade and other payables 21,958 15,940
Maintenance reserves 22 38,467 10,156
Income tax payable 723 658
118,301 90,654
Liabilities directly associated with assets held for sale 19 - 15,146
118,301 105,800
Total equity and liabilities 1,187,077 1,217,020
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Attributable to shareholders of Avation PLC
Share capital Share Treasury Merger reserve Asset revaluation reserve Capital reserve Other Retained earnings Total Non-controlling interest Total
premium Shares reserves equity
US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s
Balance at 1 July 2022 1,203 67,681 (7,811) 6,715 51,730 8,876 14,174 84,519 227,087 6 227,093
Profit for the period - - - - - - - 8,333 8,333 (1) 8,332
Other comprehensive income - - - - - - 1,427 - 1,427 - 1,427
Total comprehensive income - - - - - - 1,427 8,333 9,760 (1) 9,759
Issuance of shares 2 226 - - - - (51) - 177 - 177
Purchase of treasury shares - - (94) - - - - - (94) - (94)
Cancellation of treasury shares (39) (2,183) 7,905 - - - 39 (5,722) - - -
Share warrant expense - - - - - - 655 - 655 - 655
Total transactions with owners recognised directly in equity
(37) (1,957) 7,811 - - - 643 (5,722) 738 - 738
Expiry of share warrants - - - - - - (112) 112 - - -
Total others - - - - - - (112) 112 - - -
Balance at 31 December 2022 1,166 65,724 - 6,715 51,730 8,876 16,132 87,242 237,585 5 237,590
Other reserves consist of capital redemption reserve, warrant reserve, fair
value reserve and foreign currency translation reserve.
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2021
Attributable to shareholders of Avation PLC
Share capital Share Treasury Merger reserve Asset revaluation reserve Capital reserve Other Retained earnings Total Non-controlling interest Total
premium Shares reserves equity
US$'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 2021 1,203 67,681 (7,811) 6,715 37,602 8,876 (21,382) 64,058 156,942 68 157,010
Loss for the period - - - - - - - (15,272) (15,272) 1 (15,271)
Other comprehensive income - - - - 166 - 11,398 - 11,564 - 11,564
Total comprehensive income - - - - 166 - 11,398 (15,272) (3,708) 1 (3,707)
Share warrant expense - - - - - - 983 - 983 - 983
Total transactions with owners recognised directly in equity
- - - - - - 983 - 983 - 983
Release of revaluation reserve upon sale of aircraft
- - - - (2,081) - - 2,081 - - -
Expiry of share warrants - - - - - - (872) 872 - - -
Total others - - - - (2,081) - (872) 2,953 - - -
Balance at 31 December 2021 1,203 67,681 (7,811) 6,715 35,687 8,876 (9,873) 51,739 154,217 69 154,286
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
Note 31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Cash flows from operating activities:
Profit/(loss) before taxation 6,689 (15,863)
Adjustments for:
Amortisation of lease incentive asset 5 612 769
Depreciation expense 11 18,932 19,847
Depreciation of right-of-use assets 110 108
Expected credit losses 250 131
Finance income 8 (3,344) (330)
Finance expense 9 31,665 34,993
Gain on derecognition of finance lease (3,235) -
Loss on disposal of aircraft 1,000 2,016
Interest income from finance lease 5 (1,171) (1,406)
Impairment loss on aircraft 11,19 315 9,855
Share warrants expense 655 983
Unrealised gain on equity investment 17 (6,869) -
Unrealised gain on aircraft purchase rights 16 (1,880) (60)
Foreign currency exchange gain (3,438) -
Operating cash flows before working capital changes 40,291 51,043
Movement in working capital:
Trade and other receivables and finance lease receivables (9) 1,652
Trade and other payables 5,940 (1,563)
Maintenance reserves 3,663 585
Cash from operations 49,885 51,717
Finance income received 1,866 673
Finance expense paid (21,856) (25,776)
Income tax paid (346) (308)
Net cash from operating activities 29,549 26,306
Cash flows from investing activities:
Purchase of property, plant and equipment (568) (4)
Proceeds from disposal of aircraft 21,500 40,361
Net cash from investing activities 20,932 40,357
Cash flows from financing activities:
Net proceeds from issuance of ordinary shares 177 -
Purchase of treasury shares (94) -
Decrease of restricted cash balances 4,578 7,913
Proceeds from loans and borrowings, net of transactions costs 42,958 17,318
Repayment of loans and borrowings (101,247) (85,626)
Net cash used in financing activities (53,628) (60,395)
Net (decrease)/increase in cash and cash equivalents (3,147) 6,268
Cash and cash equivalents at beginning of financial period 35,267 25,067
Cash and cash equivalents at end of financial period 18 32,120 31,335
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2022
This interim condensed consolidated financial statements for Avation PLC for
the six months ended 31 December 2022 were authorised for issue in accordance
with a resolution of the Directors on 2 March 2023.
1 CORPORATE INFORMATION
Avation PLC is a public limited company incorporated in England and Wales
under the Companies Act 2006 (Registration Number 05872328) and its shares are
traded on the Standard Segment of the Main Market of the London Stock
Exchange.
The Group's principal activity is aircraft leasing.
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
These interim condensed consolidated financial statements have been prepared
in accordance with the Disclosure and Transparency Rules (DTR) of the
Financial Conduct Authority and in accordance with UK-adopted International
Accounting Standard (IAS) 34 'Interim Financial Reporting'.
The interim condensed consolidated financial statements do 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 annual report.
It is recommended that the interim condensed consolidated financial statements
be read in conjunction with the annual report for the year ended 30 June 2022
and considered together with any public announcements made by Avation PLC
during the six months ended 31 December 2022.
The accounting policies and methods of computation are the same as those
adopted in the annual report for the year ended 30 June 2022 except for the
adoption of new accounting standards effective as of 1 July 2022.
The preparation of the interim condensed consolidated financial statements
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
2022, 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 condensed consolidated financial statements are unaudited.
The interim condensed consolidated financial statements do not constitute
statutory financial statements within the meaning of section 434 of the
Companies Act 2006.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2022
(a) New standards and interpretations not applied
The Group has not adopted the following new or amended standards and
interpretations which are relevant to the Group that have been issued but are
not yet effective:
Description Effective date
(period beginning)
Amendment to IAS 8 - Definition of Accounting Estimates 1 January 2023
Amendment to IAS 1 and IFRS Practise statement 2 - Disclosure of accounting 1 January 2023
policies
Amendment to IAS 12 -Deferred tax related to assets and liabilities arising 1 January 2023
from single transaction
Lease liability in a Sale and Leaseback Amendments to IFRS 16 1 January 2024
Amendments to IAS 1: Classification of Liabilities as Current or Non-current No earlier than 1 January 2024
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Postponed indefinitely
Investor and its Associate or joint venture
Based on a preliminary assessment using currently available information, the
Group does not expect the adoption of the above standards to have a material
impact on the financial statements in the period of initial application. These
preliminary assessments may be subject to changes arising from ongoing
analyses when the Group adopts the standards. The Group plans to adopt the
above standards on the effective date.
(b) Standard in effect in 2022
The Group has adopted all new standards that have come into effect during the
six months ended 31 December 2022. The adoptions do not have a material impact
on the Group's interim condensed consolidated financial statements.
4 FAIR VALUE MEASUREMENT
The fair value of a financial instrument is the price that would be received
to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The carrying amounts of cash and bank balances, trade and other receivables,
finance lease receivables - current, trade and other payables - current, loans
and borrowings - current are a reasonable approximation of fair value either
due to their short-term nature or because the interest rate charged closely
approximates market interest rates or that the financial instruments have been
discounted to their fair value at a current pre-tax interest rate.
The fair value of the maintenance reserves is not disclosed in the table below
as the timing and cost of the settlement of maintenance reserves cannot be
determined with certainty in advance and hence the fair value of the
maintenance reserve cannot be accurately measured.
31 Dec 2022 30 Jun 2022
Carrying amount Fair value Carrying amount Fair value
US$'000s US$'000s US$'000s US$'000s
Financial assets:
Finance lease receivables - non-current 42,737 39,600 55,208 53,979
Derivative financial assets 13,240 13,240 5,920 5,920
Investment in equity, fair value through profit or loss 10,584 10,584 3,715 3,715
Financial liabilities:
Deposits collected - non-current 15,306 12,775 13,692 12,893
Loans and borrowings other than unsecured notes - non-current 420,831 385,123 436,864
468,030
Unsecured notes 300,995 278,427 296,200 275,893
Derivative financial liabilities 1,055 1,055 1,055 1,055
The fair values (other than for unsecured notes, investment in debt
instrument, fair value through profit or loss and derivative financial
liabilities) above are estimated by discounting expected future cash flows at
market incremental lending rate for similar types of lending, borrowing or
leasing arrangements at the end of the reporting period, which is classified
under level 2 of the fair value hierarchy.
The fair value of the unsecured notes is based on level 1 quoted prices
(unadjusted) in an active market that the Group can access at measurement
date.
The fair value of the derivative financial instruments is determined by
reference to marked-to-market values provided by counterparties. The fair
value measurement of all derivative financial instruments is classified under
level 2 of the fair value hierarchy, for which inputs other than quoted prices
that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) are included as inputs
for the determination of fair value.
4 FAIR VALUE MEASUREMENT (continued)
Assets measured at fair value classified under level 3:
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Fair value measurement using significant unobservable inputs:
Aircraft 870,561 813,885
Aircraft purchase rights 67,160 65,280
Investment in equity, fair value through profit or loss 10,584 3,715
Aircraft were valued at 30 June 2022. Refer to Note 11 for the details on the
valuation technique and significant inputs used in the valuation.
5 REVENUE
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Lease rental revenue 42,608 48,531
Less: amortisation of lease incentive assets (612) (769)
41,996 47,762
Interest income on finance leases 1,171 1,406
Maintenance reserves revenue 3,120 4,461
End of lease return compensation revenue - 4,274
46,287 57,903
Geographical analysis
Europe Asia Pacific Total
US$'000s US$'000s US$'000s
31 Dec 2022 13,497 32,790 46,287
31 Dec 2021 24,311 33,592 57,903
5 REVENUE (continued)
Operating lease commitments
The Group leases out aircraft under operating leases. The maturity analysis of
the undiscounted lease payments to be received under operating leases are as
follows:
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Within one year 91,067 88,258
One to two years 89,924 87,479
Two to three years 85,575 86,216
Three to four years 69,896 86,020
Four to five years 62,236 71,742
Later than five years 85,277 155,281
The operating lease commitments as at 31 December 2022
include US$9.3 million of deferred rents which have also been recognised
within trade and other receivables.
6 OTHER INCOME
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Fees for late payment 390 1,419
Deposit released - 200
Release of maintenance lease contribution 1,942 -
Foreign currency exchange gain 3,481 240
Recovery of claims from customer 3,166 -
Others 45 327
9,024 2,186
7 OTHER EXPENSES
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Deferment fees 390 -
8 FINANCE INCOME
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Interest income from financial institutions 204 -
Interest income from non-financial institutions 649 45
Fair value gain on financial derivatives 44 -
Finance income from discounting non-current deposits to fair value 304 285
Gain on repurchases of unsecured notes 486 -
Gain on early full repayment of borrowings 1,657 -
3,344 330
9 FINANCE EXPENSES
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Interest expense on secured borrowings 10,742 12,600
Interest expense on unsecured notes 15,504 15,473
Amortisation of loan transaction costs 669 1,644
Amortisation of gain on loan modification 4,342 3,638
Amortisation of interest expense on non-current deposits 283 280
Finance charges on early full repayment of borrowings - 726
Others 125 632
31,665 34,993
10 RELATED PARTY TRANSACTIONS
Significant related party transactions:
31 Dec 31 Dec
2022 2021
US$'000s US$'000s
Entities controlled by key management personnel
(including directors):
Lease liability paid (159) (145)
Consulting fee expense (123) (112)
Maintenance service (47) (23)
Interest expense (40) -
Service fee income 43 51
Directors:
Interest expense (8) -
11 PROPERTY, PLANT AND EQUIPMENT
Furniture and equipment Jet Turboprop aircraft Total
Aircraft engine aircraft
US$'000s US$'000 US$'000s US$'000s US$'000s
31 December 2022:
Cost or valuation:
At 1 July 2022 91 - 771,859 305,923 1,077,873
Additions 6 - - - 6
Reclassified from finance lease - - - 16,166 16,166
Reclassified from asset held for sale - - 106,124 - 106,124
Reclassified as asset held for sale - - (28,034) - (28,034)
At 31 December 2022 97 - 849,949 322,089 1,172,135
Representing:
At cost 97 - - - 97
At valuation - - 849,949 322,089 1,172,038
97 - 849,949 322,089 1,172,135
Accumulated depreciation and impairment:
At 1 July 2022 68 - 182,815 81,082 263,965
Depreciation expense 7 - 13,982 4,943 18,932
Reclassified from asset held for sale - - 28,124 - 28,124
Reclassified as asset held for sale - - (9,784) - (9,784)
Impairment loss - - 315 - 315
At 31 December 2022 75 - 215,452 86,025 301,552
Net book value:
At 1 July 2022 23 - 589,044 224,841 813,908
At 31 December 2022 22 - 634,497 236,064 870,583
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture and equipment Jet Turboprop aircraft Total
Aircraft engine aircraft
US$'000s US$'000 US$'000s US$'000s US$'000s
30 June 2022:
Cost or valuation:
At 1 July 2021 74 1,940 868,253 390,322 1,260,589
Additions 17 - - - 17
Disposal - (1,940) - - (1,940)
Reclassified as finance lease - - (53,344) (53,344)
-
Reclassified as asset held for sale - - (106,124) (38,874) (144,998)
Revaluation recognised in equity - - 9,730 7,819 17,549
At 30 June 2022 91 - 771,859 305,923 1,077,873
Representing:
At cost 91 - - - 91
At valuation - - 771,859 305,923 1,077,782
91 - 771,859 305,923 1,077,873
Accumulated depreciation and impairment:
At 1 July 2021 56 128 179,219 117,882 297,285
Depreciation expense 12 85 28,956 10,251 39,304
Disposal - (213) - - (213)
Reclassified as finance lease - - (33,071) (33,071)
-
Reclassified as asset held for sale - - (28,124) (16,374) (44,498)
Impairment loss - - 2,764 2,394 5,158
At 30 June 2022 68 - 182,815 81,082 263,965
Net book value:
At 1 July 2021 18 1,812 689,034 272,440 963,304
At 30 June 2022 23 - 589,044 224,841 813,908
Assets pledged as security
The Group's aircraft with carrying values of US$855.0 million (30 June 2022:
US$879.5 million) are mortgaged to secure the Group's borrowings (Note 21).
Additions and disposals
During the six months ended 31 December 2022, one turboprop aircraft was
reclassified from finance leases, two jet aircraft were reclassified from
assets held for sale, and one jet aircraft was reclassified as asset held for
sale.
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Valuation
The Group's aircraft were valued in June 2022 by independent valuers on a
lease-encumbered value basis ("LEV'). LEV takes into account the current
lease arrangements for the aircraft and estimated residual values at the end
of the lease. These amounts have been discounted to present value using
discount rates ranging from 5.50% to 7.00% (2021: 5.50% to 8.00%) per annum
for jet aircraft and 5.50% to 8.00% (2021: 5.50% to 8.00%) per annum for
turboprop aircraft. Different discount rates are considered appropriate for
different aircraft based on their respective risk profiles.
During the six months ended 31 December 2022, an impairment loss of US$0.3
million was recognised.
If the aircraft were measured using the cost model, carrying amounts would be
as follows:
31 Dec 2022 30 Jun 2022
Jets Turbo Jets Turbo
props props
US$'000s US$'000s US$'000s US$'000s
Cost 801,559 303,149 723,469 286,983
Accumulated depreciation and impairment (201,871) (83,503) (170,115) (78,974)
Net book value 599,688 219,646 553,354 208,009
Geographical analysis
31 Dec 2022 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
Capital expenditure - 6 6
Net book value - aircraft 261,443 609,118 870,561
30 Jun 2022 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
Capital expenditure - 17 17
Net book value - aircraft 250,659 563,226 813,885
12 TRADE AND OTHER RECEIVABLES
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Current
Trade receivables 18,551 12,354
Less:
Allowance for expected credit losses (12,084) (8,678)
6,467 3,676
Accrued revenue 3,390 3,491
Less:
Allowance for expected credit losses (369) (374)
3,021 3,117
Other receivables 12,400 6,335
Less:
Allowance for expected credit losses (907) (910)
11,493 5,425
Interest receivables 467 1,759
Less:
Allowance for expected credit losses (57) (1,373)
410 386
Deposits 50 48
Prepaid expenses 144 550
21,585 13,202
Non-current:
Other receivables 10,882 11,343
Deposits for aircraft 7,749 7,749
Right-of-use assets 187 296
18,818 19,388
Trade and other receivables as at 31 December 2022 include US$25.8 million due
from an Asian airline. The amount includes US$21.0 million repayable by 24
equal monthly instalments between January 2023 and December 2024 and US$4.8
million in overdue invoices. There is a risk of loss should the Company fail
to recover amounts due.
13 FINANCE LEASE RECEIVABLES
Future minimum lease payments receivable under finance leases are as follows:
31 Dec 2022 31 Jun 2022
Minimum lease payments Present value of payments Minimum lease payments Present value of payments
US$'000s US$'000s US$'000s US$'000s
Within one year 6,171 4,213 11,729 7,476
Less:
Allowance for expected credit losses (45) (45) (1,852) (1,852)
6,126 4,168 9,877 5,624
One to two years 31,317 29,238 7,695 5,306
Two to three years 2,430 1,573 31,565 29,044
Three to four years 9,012 8,401 10,615 9,763
Four to five years 3,560 3,525 11,357 11,095
Later than five years - - - -
Total minimum lease payments 52,445 46,905 71,109 60,832
Less: amounts representing interest income (5,540) - (10,277) -
Present value of minimum lease payments 46,905 46,905 60,832 60,832
14 GOODWILL
The Group performs its annual impairment test in June and when circumstances
indicate the carrying value may be impaired. For the purpose of these
financial statements there was no indication of impairment. The key
assumptions used to determine the recoverable amount for the different cash
generating units were disclosed in the annual consolidated financial
statements for the year ended 30 June 2022.
15 DERIVATIVE FINANCIAL ASSETS/LIABILITIES
Contract/ Fair value
notional amount
31 Dec 2022 30 Jun 31 Dec 30 Jun
2022 2022 2022
US$'000s US$'000s US$'000s US$'000s
Derivative financial assets
Interest rate swap 236,225 248,384 12,620 5,470
Cross-currency interest rate swap 4,000 4,000 620 450
240,225 252,384 13,240 5,920
Derivative financial liabilities
Warrants - - 1,055 1,055
Hedge accounting has been applied for interest rate swap contracts and
cross-currency interest rate swap contracts which have been designated as cash
flow hedges.
15 DERIVATIVE FINANCIAL ASSETS/LIABILITIES (continued)
The Group pays fixed rates of interest of 1.0% to 2.6% per annum and receives
floating rate interest equal to 1-month to 3-month LIBOR or 1-month SOFR under
the interest rate swap contracts.
The Group pays fixed rates of interest of 3.1% to 4.9% per annum and receives
floating interest equal to 3-month LIBOR under the cross-currency interest
rate swap contracts.
The swap contracts mature between 26 December 2023 and 21 November 2030.
Changes in the fair value of these interest rate swap and cross-currency
interest rate swap contracts are recognised in the fair value reserve. The net
fair value gain net of tax of US$6.5 million (31 December 2021: gain of US$5.1
million) on these derivative financial instruments was recognised in the fair
value reserve for the six-month period ended 31 December 2022.
The fair value of the derivative financial instruments is determined by
reference to marked-to-market values provided by counterparties. The fair
value measurement of all derivative financial instruments is classified under
level 2 of the fair value hierarchy, for which inputs other than quoted prices
that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) are included as inputs
for the determination of fair value.
The Group entered into Euro denominated lease agreements which create exposure
to variability in cash flows due to movements in the EUR:USD exchange rate. To
hedge its exposure to various cash flows resulting from changes in EUR:SGD
spot rates, the Group has arranged Euro denominated financing which reduces
overall exposure to variable cash flows to the extent that lease receipts and
debt service cashflows are matched. The Group is making use of a
non-derivative hedging instrument and has designated the cash flows with
respect to the loan interest and principal repayment (hedging instrument)
against a specific portion of the lease receivable (hedge item).
Unrealised foreign exchange gains and losses arising on Euro denominated loans
designated as cash flow hedges are recognised in the foreign currency hedge
reserve. Unrealised foreign exchanged gains and losses recorded in the
foreign currency hedging reserve are systematically re-cycled through profit
or loss over the remaining term of the related loan on a straight-line basis.
16 AIRCRAFT PURCHASE RIGHTS
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Aircraft purchase rights, at fair value:
At 1 July 2022/ 1 July 2021 65,280 26,960
Unrealised gain 1,880 38,320
At 31 December/30 June 67,160 65,280
The Company holds rights to purchase an additional 28 ATR 72-600 aircraft from
the manufacturer. The purchase rights are for aircraft to be delivered prior
to 30 June 2027.
17 INVESTMENT IN EQUITY, AT FAIR VALUE THROUGH PROFIT OR LOSS
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Non-listed equity, at fair value
At 1 July 2022/ 1 July 2021 3,715 -
Additions - 3,715
Unrealised gain 6,869 -
At 31 December/30 June 10,584 3,715
The Group received 8,014,602 ordinary shares in the
previous year from an airline customer as part of the airline's restructuring
plan to compensate and offset the amount due to the Group.
18 CASH AND BANK BALANCES
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Fixed deposits 24,855 -
Other cash and bank balances 86,591 119,171
Total cash and bank balances 111,446 119,171
Less: restricted (79,326) (83,904)
Cash and cash equivalents 32,120 35,267
The Group's restricted cash and bank balances have been pledged as security
for certain loan obligations.
In the consolidated statement of cash flows, cash and cash equivalents
comprises unrestricted cash and bank balances.
19 ASSETS HELD FOR SALE AND LIABILITIES DIRECTLY ASSOCIATED WITH
ASSETS HELD FOR SALE
The Group's aircraft which met the criteria to be classified as assets held
for sale and the associated liabilities were as follows:
31 Dec 30 Jun 2022
2022
US$'000s US$'000s
Assets held for sale:
Property, plant and equipment - aircraft
At 1 July 2022/ 1 July 2021 100,500 66,300
Additions 18,812 100,500
Impairment loss - (1,000)
Disposals (22,500) (65,300)
Transfer to property, plant and equipment (78,000) -
At 31 December/30 June 18,812 100,500
Other receivables - 6,547
Lease incentive asset - 6,208
18,812 113,255
Liabilities directly associated with assets held for sale: 31 Dec 30 Jun 2022
2022
US$'000s US$'000s
Deposit collected - 935
Lessor maintenance contribution - 8,769
Maintenance reserves - 5,442
- 15,146
During the six months ended 31 December 2022, two turboprop aircraft
classified as assets held for sale were sold, one jet aircraft was
reclassified as assets held for sale and two jet aircraft that were classified
as assets held for sale in the previous year were reclassified back to
property, plant and equipment.
20 SHARE CAPITAL AND TREASURY SHARES
(a) Share capital
31 Dec 2022 30 Jun 2022
No of shares US$'000s No of shares US$'000s
Allotted, called up and fully paid
Ordinary shares of 1 penny each:
At 1 July 2022/ 1 July 2021 71,698,124 1,203 71,698,124 1,203
Issue of shares 147,000 2 - -
Cancellation (2,310,000) (39) - -
At 31 December/30 June 69,535,124 1,166 71,698,124 1,203
During the six months ended 31 December 2022, the Company issued 147,000
ordinary shares of 1 penny at 101.25 pence following the exercise of warrants
by warrant holders raising total gross proceeds of US$0.18 million. The
Company cancelled 2,310,000 ordinary shares held in treasury.
The holders of ordinary shares (except for treasury shares) are entitled to
receive dividends as and when declared by the Company. All ordinary shares
carry one vote per share without restrictions.
(b) Treasury shares
31 Dec 2022 30 Jun 2022
No of treasury shares US$'000s No of treasury shares US$'000s
At 1 July 2022/ 1 July 2021 2,210,000 7,811 2,210,000 7,811
Acquired during the period 100,000 94 - -
Cancellation (2,310,000) (7,905) - -
At 31 December/30 June - - 2,210,000 7,811
During the six months ended 31 December 2022, the Company repurchased 100,000
ordinary shares through the market at a price of 77.2 pence per share. The
Company cancelled 2,310,000 ordinary shares held in treasury.
(c) Net asset value per share
31 Dec 2022 30 Jun
2022
Net asset value per share (US$)((1)) $3.42 $3.27
Net asset value per share (GBP)((2)) £2.82 £2.68
((1)) Net asset value per share is total equity divided by the total number
of shares issued and outstanding at period end.
((2)) Based on GBP:US$ exchange rate as at 31 December 2022 of 1.21 (30 June
2022: 1.22).
21 LOANS AND BORROWINGS
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Secured borrowings 477,984 531,930
Unsecured notes 300,995 296,200
Total loans and borrowings 778,979 828,130
Less: current portion (57,153) (63,900)
Non-current loans and borrowings 721,826 764,230
Maturity Weighted average interest rate per annum
31 Dec 30 Jun 2022 31 Dec 30 Jun 2022
2022 2022
US$'000s US$'000s % %
Secured borrowings 2023-2031 2023-2031 4.5% 4.0%
Unsecured notes 2026 2026 8.25% 8.25%
Secured borrowings are secured by first ranking mortgages over the relevant
aircraft, 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.
22 MAINTENANCE RESERVES
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Current:
Maintenance reserves 38,467 10,156
Non-current:
Maintenance reserves 55,342 72,607
Maintenance lease contribution 9,351 2,524
64,693 75,131
Total maintenance reserves 103,160 85,287
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
At 1 July 2022/ 1 July 2021 85,287 101,481
Contributions 16,105 13,109
Utilisations (7,381) (3,730)
Released to profit or loss (1,942) (11,362)
Transferred from liabilities associated with asset held for sale 11,091 -
Transfer to liabilities directly associated with assets held for sale - (14,211)
At 31 December/30 June 103,160 85,287
23 CAPITAL COMMITMENTS
Capital expenditure contracted for at the reporting
date but not recognised in the financial statements is as follows:
31 Dec 30 Jun
2022 2022
US$'000s US$'000s
Property, plant and equipment 32,490 31,230
Capital commitments represent amounts due under contracts entered into by the
group to purchase aircraft. The Company has paid deposits towards the cost of
these aircraft which are included in trade and other receivables.
As at 31 December 2022, the Group has commitments to purchase two ATR 72-600
aircraft from the manufacturer with expected delivery dates in 2024.
24 CONTINGENT LIABILITIES
There were no material changes in contingent
liabilities since 30 June 2022.
25 SUBSEQUENT EVENTS
On 31 January 2023, the Company allotted 664,000 fully paid new ordinary
shares representing approximately 0.95 per cent of the enlarged capital of the
Company pursuant to the exercise of 2019 series staff share warrants at a
price of 101.25 pence per share respectively.
On 16 February 2023, the Group completed the sale of the Boeing 737-800
aircraft classified as an asset held for sale.
On 17 February 2023, a Tender Offer for the repurchase of unsecured notes
expired. As of the expiration date, US$7,055,202 in principal amount of
unsecured notes were validly tendered and not withdrawn pursuant to the Tender
Offer and were repurchased at a price of US$860 per US$1,000 principal amount.
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 2022.
DIRECTORS
The directors of Avation PLC are listed in its Annual Report for the year
ended 30 June 2022. 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 UK-adopted IAS 34 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, 2 March 2023
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AnnouncementREG - Avation PLC - Holding(s) in Company
AnnouncementREG - Avation PLC - Transaction in Own Shares
AnnouncementREG - Avation PLC - Transaction in Own Shares
Announcement