TIDMAVAP
RNS Number : 4798Q
Avation PLC
26 February 2021
AVATION PLC
("Avation" or "the Company")
UNAUDITED INTERIM Financial Results for the SIX MONTHS ended 31
December 2020 and Interim Management Statement
Avation PLC (LSE: AVAP), the commercial passenger aircraft
leasing company, announces unaudited interim financial results for
the six months ended 31 December 2020.
Key Financial Results
-- Revenue and Other income decreased by 6% to $63.3 million;
-- Impairment loss on aircraft of $46.7 million;
-- Expected credit loss on receivables and accrued revenue of $12.9 million;
-- Loss before tax of $60.5 million;
-- Loss per share of 97.9 cents; and
-- Net asset value per share is $2.38.
COVID-19 Strategy
-- Focus on preservation of liquidity and cashflow;
-- Rent deferrals totalling $25.9 million provided to airline customers;
-- Loan repayment deferrals totalling $31.0 million obtained from secured lenders;
-- Agreement with bondholders to extend maturity of Avation
Capital S.A. 6.5% senior notes to October 2026; and
-- Capital expenditure and dividends have been temporarily suspended.
Executive Chairman, Jeff Chatfield, said:
"The half year ended 31 December 2020 represents a complex
period for the airline industry and Avation. Avation has been
working diligently and with success on its COVID-19 strategy
implemented early in the crisis to preserve liquidity. Recently the
Company announced an agreement to extend the maturity of the
unsecured bonds by over 5 years until October 2026.
"The pandemic related disruption to the airline industry has
impacted aircraft valuations and Avation has impaired the value of
its fleet and provided for credit losses on receivables. These
impairments are largely related to aircraft leased to Philippines
Airlines, Virgin Australia and Braathens who have all been subject
to formal or informal restructuring processes. There was also a
negative adjustment to the value of purchase rights held for ATR
aircraft. The impairment loss dominates the financial result.
"We believe that global immunisation programmes should lead to
an end to the pandemic. Assuming that Avation's customers continue
to meet their contractual obligations to pay rent and arrears the
Company believes that it is unlikely that there will be further
significant impairments to asset values in future. The underlying
business remains profitable.
"The past six months has seen most of Avation's customers
returning to operating at above 50% of pre-COVID levels. At the
current date, 12 of Avation's 19 customers are being charged normal
monthly rentals. The Company has been fortunate that some of its
largest customers are based in countries where there has been a
less severe impact from the pandemic including VietJet, airBaltic,
EVA Air and Mandarin Airlines. These airlines combined represent
over 60% of Avation's future unearned contracted revenue.
"The Company will position itself for a return to growth through
opportunistic aircraft trading and deliveries from its orderbook in
the post pandemic environment. "
Financial Highlights and Analysis
6 mths to 6 mths to
31 Dec 31 Dec Change
2020 2019
US$ 000's US$ 000's
Revenue 61,340 67,606 (9%)
Depreciation (23,652) (24,232) (2%)
Administrative expense (5,542) (6,145) (10%)
Other income and expenses (net) excluding
Expected credit losses on receivables and
accrued revenue 896 (1,127)
--------------------------------------------- ------------- -----------
Operating Profit excluding Unrealised gain
on purchase rights, Gains on disposal and
impairment loss on aircraft 33,042 36,102 (8%)
Finance Expenses (net of finance income) (25,968) (27,527) (6%)
--------------------------------------------- ------------- -----------
Profit before tax excluding Unrealised gain
on purchase rights, Gains on disposal of
aircraft and Impairment loss on aircraft 7,074 8,575 (17%)
Unrealised gain on aircraft purchase rights (7,930) 36,980
Gains on disposal of aircraft - 2,229
Impairment loss on aircraft (46,652) (2,456)
Expected credit loss on receivables and
accrued revenue (12,945) (123)
--------------------------------------------- ------------- -----------
(Loss)/Profit before taxation (60,453) 45,205 (234%)
Taxation (883) (7,051)
--------------------------------------------- ------------- -----------
Total profit after tax (61,336) 38,154 (261%)
EPS (97.9) cents 60.0 cents
Dividend per share - 2.1 cents
As at As at
31 Dec 30 June
2020 2020
US$ 000's US$ 000's
Fleet assets (1) 1,163,263 1,242,176 (6%)
Total assets 1,350,632 1,415,584 (5%)
Cash and bank balances 117,661 114,585 3%
Net asset value per share (US$) (2) $2.38 $3.53 (33%)
Net asset value per share (GBP) (3) GBP1.74 GBP2.86 (39%)
1. Fleet assets are defined as property, plant and equipment
plus assets held for sale plus finance lease receivables.
2. Net asset value per share is total equity divided by the
total number of shares in issue, excluding treasury shares, at
period end.
3. Based on GBP:USD exchange rate as at 31 December 2020 of 1.37 (30 June 2020 : 1.23)
Aircraft Fleet
Aircraft Type 31 December
2020
Boeing 777-300ER 1
Airbus A330-300 1
Airbus A321-200 7
Boeing 737-800NG 1
Airbus A320-200 2
Airbus A220-300 6
ATR 72-600 22
ATR 72-500 6
------------
Total 46
As at 31 December 2020, Avation's fleet comprised 46 aircraft,
including three aircraft on finance lease. The weighted average age
of the fleet is 4.6 years (30 June 2020: 4.1 years) and the
weighted average remaining lease term is 6.5 years (30 June 2020:
6.9 years).
Fleet assets decreased 6.4% to $1,163.3 million (30 June 2020:
$1,242.2 million). Two Fokker 100 aircraft were transferred to the
lessee airline upon completion of their finance leases. Narrowbody
aircraft make up 49% of fleet assets as at 31 December 2020.
Avation had orders for eight ATR72-600 aircraft and purchase
rights for a further 25 aircraft as at 31 December 2020. The
Company is in discussions with ATR regarding its current order
book.
Virgin Australia Update
On 20 April 2020, Virgin Australia entered into voluntary
administration. Avation had two Fokker 100 aircraft on finance
lease and 11 ATR 72 aircraft on operating lease to Virgin
Australia, two of which were subleased to another airline. The two
Fokker 100 aircraft were sold at the end of their leases in
September 2020. Of the 11 ATRs, four have been re-leased at market
rates, three are being actively marketed for sale or lease, and the
remaining four are being marketed for sale or lease but have not
yet been through maintenance. Avation's claim against Virgin
Australia has been mitigated by the transactions noted above and is
expected to be approximately US$56 million. The administrators have
advised an expected pay-out of 9.5-13 cents on the dollar for
unsecured claims.
Debt summary
31 December 30 June 2020
2020 US$000's
US$000's
Loans and borrowings 1,065,096 1,071,738
Unrestricted cash and bank
balances 25,424 35,290
Net indebtedness (1) 1,039,672 1,036,448
Net debt to assets (2) 77.0% 73.2%
Weighted average cost of secured
debt (3) 3.7% 3.6%
Weighted average cost of total
debt (4) 4.6% 4.5%
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.
The weighted average cost of total debt increased slightly to
4.6% as at 31 December 2020 (30 June 2020: 4.5%).
The weighted average cost of secured debt increased to 3.7% at
31 December 2020 (30 June 2020: 3.6%).
At the end of the financial period, Avation's net debt to total
assets ratio has increased to 77.0% (30 June 2020: 73.2%). As at 31
December 2020, 90.7% of total debt was at fixed or hedged interest
rates (30 June 2020: 90.7%). The proportion of unsecured debt to
total debt was 32.1% (30 June 2020: 32.3%).
During the period Avation initiated a process to extend the date
of maturity of the $342.6 million outstanding Avation Capital S.A
6.5% senior notes due May 2021 to October 2026. The Company
recently announced that it reached agreement with sufficient
bondholders to vote in favour of the extension and the consent
solicitation exercise was launched on 23 February 2021. The Company
expects the extension will be completed on 16 March 2021.
Market Positioning
Avation's long-term strategy is to target growth and
diversification by adding new airline customers, while maintaining
a low average aircraft age and long remaining lease term metrics.
Avation focuses on new and relatively new commercial passenger
aircraft on long-term leases. Avation is capable of owning,
managing and leasing turboprop, narrowbody and twin-aisle aircraft
and engines.
The Company's business model involves rigorous investment
criteria that seeks to mitigate the risks associated with the
aircraft leasing sector. Avation will typically sell mid-life and
older aircraft and 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.
Avation is an active trader of aircraft and from time to time
will consider the acquisition or sale of individual or smaller
portfolios of aircraft, based on prevailing market opportunities
and consideration of risk and revenue concentrations.
Interim Management Statement
The Company's continuing focus for the remainder of the 2021
financial year is to preserve liquidity.
Avation instituted a programme of support for its airline
customers by agreeing to defer payment of a portion of their rent
in the short-term. The cashflow impact of this support programme
has been mitigated by adjusting the amortisation profiles of
related financings with the agreement of lenders. Since the start
of the pandemic the Company has also reduced administration costs
and temporarily suspended capital expenditure.
The Company believes that airlines will require significant
number of leased aircraft in the post pandemic phase due to the
vast number of older aircraft that have been retired and the impact
of the pandemic on airline balance sheets, reducing their ability
to purchase aircraft directly. This supports the Company strategy
of being focussed on relatively new and popular commercial aircraft
types.
In addition to operational cash flows, funding is traditionally
sourced from capital markets, asset-backed bank lending and
disposals of selected aircraft. Access to acceptably priced funding
is a risk, which is common to all capital-intensive businesses.
Specific risks which are inherent to the aircraft leasing industry
include, but are not limited to, ongoing pandemic impacts on
travel, the creditworthiness of airline customers, over-production
of new aircraft and market saturation, technology change, residual
value risks, competition from other lessors and the risk of
impairment of aircraft assets.
Results Conference Call
Avation's senior management team will host a conference call on
26 February 2021, at 1pm GMT (UK) / 8am EST (US) / 9pm SGT
(Singapore), to discuss the Company's financial results. Investors
can participate in the conference call by using the following
link:
https://avation.emincote.com/avapHY2021/vip_connect
You will need to register your name and email address. You will
receive a telephone number, a passcode and an individual PIN
number. The conference call will also be webcast live through the
following link:
https://avation.emincote.com/avapHY2021
To view the webcast, you will need to register your name and
email address . A replay of the broadcast will be 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," "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 financial period ended 31 December 2020.
Financial information presented in this announcement is being
published for the purposes of providing preliminary Group financial
results for the half year ended 31 December 2020. 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 26
February 2021. 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 2020 , upon which the
auditors have given an unqualified audit report (with reference to
a material uncertainty related to going concern), were published on
30 October 2020 and have been annexed to the annual return and
delivered to the Registrar of Companies.
All "$" amounts in this release are US Dollar amounts unless
stated otherwise. Certain comparative amounts have been
reclassified to conform with current year presentation.
-S -
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.
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE SIX MONTHSED 31 DECEMBER 2020
31 Dec 31 Dec
Note 2020 2019
US$'000s US$'000s
Continuing operations
Revenue 5 61,340 67,606
Other income 6 1,997 113
63,337 67,719
Depreciation 11 (23,652) (24,232)
Gain on disposal of aircraft 11 - 2,229
Unrealised (loss)/gain on aircraft purchase
rights 16 (7,930) 36,980
Impairment loss on aircraft 11 (46,652) (2,456)
Administrative expenses (5,542) (6,145)
Other expenses 7 (14,046) (1,363)
Operating (loss)/profit (34,485) 72,732
Finance income 8 2,175 717
Finance expenses 9 (28,143) (28,244)
(Loss)/Profit before taxation (60,453) 45,205
Taxation (883) (7,051)
(Loss)/Profit from continuing operations (61,336) 38,154
(Loss)/Profit attributable to:
Equity holders of the Company (61,337) 38,153
Non-controlling interests 1 1
(61,336) 38,154
--------- ---------
Earnings per share for (loss)/profit
attributable to equity holders of the Company
(97.87) 60.04
Basic earnings per share cents cents
(97.87) 59.67
Diluted earnings per share cents cents
--------- ---------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHSED 31 DECEMBER 2020
31 Dec 31 Dec
Note 2020 2019
US$'000s US$'000s
(Loss)/Profit from continuing operations (61,336) 38,154
Other comprehensive income:
Items may be reclassified subsequently to profit
or loss:
Net (loss)/gain on cash flow hedge (10,249) 1,730
(10,249) 1,730
Items may not be reclassified subsequently
to profit or loss:
Revaluation loss on property, plant and equipment,
net of tax (858) (793)
Other comprehensive income, net of tax (11,107) 937
Total comprehensive income for the period (72,443) 39,091
--------- ---------
Total comprehensive income attributable to:
Equity holders of the Company (72,444) 39,090
Non-controlling interests 1 1
(72,443) 39,091
--------- ---------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2020
31 Dec 30 June
Note 2020 2020
US$'000s US$'000s
ASSETS:
Non-current assets
Property, plant and equipment 11 1,110,980 1,057,901
Trade and other receivables 12 12,052 11,601
Finance lease receivables 13 48,455 85,019
Goodwill 14 1,902 1,902
Aircraft purchase rights 16 19,180 27,110
Lease incentive assets 6,753 -
---------- ----------
1,199,322 1,183,533
Current assets
Trade and other receivables 12 28,731 18,210
Finance lease receivables 13 3,828 7,988
Cash and bank balances 17 117,661 114,585
Lease incentive assets 1,090 -
---------- ----------
151,310 140,783
Assets held for sale 18 - 91,268
---------- ----------
151,310 232,051
---------- ----------
Total assets 1,350,632 1,415,584
---------- ----------
EQUITY AND LIABILITIES
Equity
Share capital 19 1,108 1,108
Share premium 57,747 57,747
Treasury shares 19 (7,811) (7,811)
Merger reserve 6,715 6,715
Asset revaluation reserve 29,304 30,162
Capital reserve 8,876 8,876
Other reserves (34,282) (24,302)
Retained earnings 87,397 148,455
---------- ----------
Equity attributable to equity holders of the
parent 149,054 220,950
Non-controlling interest 68 72
---------- ----------
Total equity 149,122 221,022
---------- ----------
Non-current liabilities
Loans and borrowings 20 627,305 534,755
Trade and other payables 15,602 11,725
Derivative financial liabilities 15 24,035 27,928
Maintenance reserves 21 57,529 57,141
Lease maintenance contribution 8,908 -
Deferred tax liabilities 1,469 698
---------- ----------
734,848 632,247
Current liabilities
Loans and borrowings 20 437,791 536,983
Trade and other payables 12,246 10,155
Derivative financial liabilities 15 105 -
Maintenance reserves 21 15,238 3,836
Income tax payables 1,282 1,058
---------- ----------
466,662 552,032
Liabilities directly associated with assets
held for sale 18 - 10,283
---------- ----------
466,662 562,315
---------- ----------
Total equity and liabilities 1,350,632 1,415,584
---------- ----------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHSED 31 DECEMBER 2020
Attributable to shareholders of the parent
Note Share Share Treasury Merger Asset Capital Other Retained Total Non-controlling Total
capital premium Shares reserve revaluation reserve reserves earnings interest equity
reserve
US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s
Balance at1 July
2020 1,108 57,747 (7,811) 6,715 30,162 8,876 (24,302) 148,455 220,950 72 221,022
Loss for the period - - - - - - - (61,337) (61,337) 1 (61,336)
Other comprehensive
income - - - - (858) - (10,249) - (11,107) - (11,107)
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total comprehensive
income - - - - (858) - (10,249) (61,337) (72,444) 1 (72,443)
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Dividends paid
to non-controlling
interest of a
subsidiary - - - - - - - - - (5) (5)
Share warrant
expense - - - - - - 548 - 548 - 548
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total transactions
with owners recognised
directly in equity - - - - - - 548 - 548 (5) 543
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Expiry of share
warrants - - - - - - (279) 279 - - -
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Total others - - - - - - (279) 279 - - -
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
Balance at 31
December 2020 1,108 57,747 (7,811) 6,715 29,304 8,876 (34,282) 87,397 149,054 68 149,122
--------- --------- --------- --------- ------------ --------- --------- --------- --------- ---------------- ---------
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 MONTHSED 31 DECEMBER 2019
Attributable to shareholders of the parent
Note Share Share Treasury Merger Asset Capital Other Retained Total Non-controlling Total
capital premium Shares reserve revaluation reserve reserves earnings interest equity
reserve
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
2019 1,104 56,912 (1,147) 6,715 34,392 8,876 (11,809) 145,644 240,687 70 240,757
Effect of
adoption
of IFRS 16
Leases - - - - - - (199) (199) - (199)
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
As at 1 July
2019
(adjusted) 1,104 56,912 (1,147) 6,715 34,392 8,876 (11,809) 145,445 240,488 70 240,558
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Profit for the
period - - - - - - - 38,153 38,153 1 38,154
Other
comprehensive
income - - - - (793) - 1,730 - 937 - 937
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total
comprehensive
income - - - - (793) - 1,730 38,153 39,090 1 39,091
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Dividends paid 24 - - - - - - - (5,454) (5,454) - (5,454)
Issue of new
shares 19 4 835 - - - - (69) - 770 - 770
Purchase of
treasury
shares 19 - - (6,548) - - - - - (6,548) - (6,548)
Share warrant
expense - - - - - - 299 - 299 - 299
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total
transactions
with owners
recognised
directly in
equity 4 835 (6,548) - - - 230 (5,454) (10,933) - (10,933)
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Expiry of
share
warrants - - - - - - (2) 2 - - -
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total others - - - - - - (2) 2 - - -
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Balance at 31
December 2019 1,108 57,747 (7,695) 6,715 33,599 8,876 (9,851) 178,146 268,645 71 268,716
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHSED 31 DECEMBER 2020
31 Dec 31 Dec
Note 2020 2019
US$'000s US$'000s
Cash flows from operating activities:
(Loss)/Profit before taxation (60,453) 45,205
Adjustments for:
Amortisation of lease incentive asset 5 541 -
Depreciation expense 11 23,652 24,232
Depreciation of right-of-use assets 108 109
Expected credit loss on receivables and
accrued revenue 7 12,945 123
Finance income 8 (2,175) (717)
Finance expense 9 28,143 28,244
Gain on disposal of aircraft - (2,229)
Interest income from finance lease 5 (765) (1,318)
Impairment loss on aircraft 11 46,652 2,456
Share warrants expense 548 299
Unrealised loss/(gain) on aircraft purchase
rights 7,930 (36,980)
--------- ---------
Operating cash flows before working capital
changes 57,126 59,424
Movement in working capital:
Trade and other receivables and finance
lease receivables (24,969) 8,009
Trade and other payables 4,914 3,573
Maintenance reserves 11,655 16,947
--------- ---------
Cash from operations 48,726 87,953
Finance income received 1,066 1,631
Finance expense paid (24,836) (25,540)
Income tax paid (46) (1,930)
--------- ---------
Net cash from operating activities 24,910 62,114
--------- ---------
Cash flows from investing activity:
Purchase of property, plant and equipment - (56,676)
--------- ---------
Net cash used in investing activity - (56,676)
--------- ---------
Cash flows from financing activities:
Net proceeds from issuance of ordinary shares - 770
Dividends paid to shareholders 24 - (5,454)
Dividends paid to non-controlling interest (5) -
of a subsidiary
Purchase of treasury shares - (6,548)
Placement of restricted cash balances (12,942) (20,679)
Proceeds from loans and borrowings, net
of transactions costs 11,815 76,875
Repayment of loans and borrowings (33,644) (38,480)
--------- ---------
Net cash (used in)/from financing activities (34,776) 6,484
--------- ---------
Net (decrease)/increase in cash and cash
equivalents (9,866) 11,922
Cash and cash equivalents at beginning of
financial period 35,290 61,689
--------- ---------
Cash and cash equivalents at end of financial
period 17 25,424 73,611
--------- ---------
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHSED 31 DECEMBER 2020
This interim condensed consolidated financial statements for
Avation PLC for the six months ended 31 December 2020 were
authorised for issue in accordance with a resolution of the
Directors on 26 February 2021.
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 as a Standard Listing on 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 International Accounting Standard (IAS) 34 'Interim
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 2020 and considered together with any
public announcements made by Avation PLC during the six months
ended 31 December 2020.
The accounting policies and methods of computation are the same
as those adopted in the annual report for the year ended 30 June
2020 except for the adoption of new accounting standards effective
as of 1 July 2020.
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 2020, 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 2020
(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:
(b)
Description Effective date
(period beginning)
-----------------------------------
Interest Rate Benchmark Reform - Phase 2: Amendments to IFRS 9, IAS 39, IFRS 7, 1 January 2021
IFRS 4 and
IFRS 16 (Not yet endorsed for use in the EU.)
-----------------------------------
Amendments to IAS 1: Classification of Liabilities as Current or Non-current 1 January 2022
-----------------------------------
Amendments to IAS 37: Onerous Contracts - Cost of Fulfilling a Contract 1 January 2022
-----------------------------------
Amendments to IAS 16: Property, Plant and Equipment, Proceeds before Intended 1 January 2022
Use
-----------------------------------
AIP (2018-2020 cycle): IFRS 9 Financial Instruments - Fees in the '10 per cent' 1 January 2022
Test for Derecognition
of Financial Liabilities
-----------------------------------
Amendments to IFRS 3: Reference to the Conceptual Framework 1 January 2022
-----------------------------------
Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an No effective date
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 2020
The Group has adopted all new standards that have come into
effect during the six months ended 31 December 2020. The adoptions
do not have an 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 maintenance reserves
cannot be determined with certainty in advance and hence the fair
value of the maintenance reserve cannot be measured.
31 Dec 2020 30 Jun 2020
Carrying Carrying
amount Fair value amount Fair value
US$'000s US$'000s US$'000s US$'000s
--------------------------------------------------------------- --------- ----------- ---------- -----------
Financial assets:
Finance lease receivables - non-current 48,455 47,331 85,019 82,631
Financial liabilities:
Deposits collected - non-current 12,956 11,507 9,185 8,639
Loans and borrowings other than unsecured notes - non-current 627,305 593,400 534,755 502,534
Unsecured notes 341,371 254,525 346,656 261,143
Derivative financial liabilities 24,140 24,140 27,928 27,928
The fair values (other than the unsecured notes and derivative
financial assets and 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.
The fair value of the unsecured notes are based on level 1
quoted prices (unadjusted) in 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 under the Group 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)
Non-financial assets measured at fair value:
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
-------------------------------------------------------------- ---------- ----------
Fair value measurement using significant unobservable inputs
Aircraft 1,109,342 1,055,970
Aircraft purchase rights 19,180 27,110
Aircraft were valued at 30 June 2020. Refer to Note 11 for the
details on the valuation technique and significant inputs used in
the valuation.
Classification of financial instruments:
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
----------------------------------------------------- --- ---------- ----------
Financial assets measured at
amortised cost:
Cash and cash balances 117,661 114,585
Trade and other receivables 33,148 19,800
Finance lease receivables 52,283 93,007
203,092 227,392
---------- ----------
Financial liabilities measured at amortised cost:
Trade and other payables 20,285 15,282
Loans and borrowings 1,065,096 1,071,738
Maintenance reserves 72,767 60,977
1,158,148 1,147,997
---------- ----------
Derivative used for hedging:
Derivative financial liabilities (24,140) (27,928)
Financial assets fair value through profit or loss:
Aircraft purchase rights 19,180 27,110
5 REVENUE
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
--------------------------------------------- --------- ---------
Lease rental revenue 60,174 65,046
Less: amortisation of lease incentive asset (541) -
--------- ---------
59,633 65,046
Interest income on finance leases 765 1,318
Deposits released revenue 726 -
Maintenance reserves revenue 216 1,242
61,340 67,606
Geographical analysis
Europe Asia Pacific Total
US$'000s US$'000s US$'000s
-------------- ----- --------- ------------- ---------
31 Dec 2020 15,919 45,421 61,340
31 Dec 2019 21,115 46,491 67,606
Operating lease commitments
The Group leases out aircraft under operating leases. The
maturity analysis of the undiscounted lease payments to be received
under operating leases are as follows:
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
----------------------- --------- ---------
Within one year 100,572 129,744
One to two years 108,300 125,529
Two to three years 111,335 104,790
Three to four years 97,924 91,386
Four to five years 88,339 89,224
Later than five years 249,806 287,665
--------- ---------
6 OTHER INCOME
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
----------------------------------------- --------- ---------
Aircraft purchase option activation fee 1,182 -
Foreign currency exchange gain 384 42
Others 431 71
1,997 113
--------- ---------
7 OTHER EXPENSES
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
--------------------------------------------------------- --------- ---------
Aircraft repossession expenses 205 1,237
Aircraft maintenance expenses 896 -
Expected credit loss on receivables and accrued revenue 12,945 123
Others - 3
14,046 1,363
--------- ---------
8 FINANCE INCOME
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
-------------------------------------------------------------------- --------- ---------
Interest income from financial institution 4 503
Interest income from non-financial institutions 68 -
Finance income from discounting non-current deposits to fair value 230 214
Gain on early cancellation of unsecured note 1,873 -
2,175 717
--------- ---------
9 FINANCE EXPENSES
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
---------------------------------------------------------- --------- ---------
Interest expense on borrowings 13,123 13,935
Interest expense on unsecured notes 11,199 11,375
Amortisation of loan transaction costs 3,134 2,554
Amortisation of interest expense on non-current deposits 217 220
Others 470 160
28,143 28,244
--------- ---------
10 RELATED PARTY TRANSACTIONS
Significant related party transactions:
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
------------------------------------------------- --------- ---------
Entities controlled by key management personnel
(including directors):
Rental expenses paid (125) (145)
Consulting fee paid (42) (174)
Service fee received 51 52
--------- ---------
11 PROPERTY, PLANT AND EQUIPMENT
Furniture Aircraft Jet Turboprop
and equipment engine aircraft aircraft Total
US$'000s US$'000 US$'000s US$'000s US$'000s
--------------- -------------- ----------------------- ---------- ---------- ----------
31 December
2020:
Cost or
valuation:
At 1 July 2020 92 1,940 814,749 441,799 1,258,580
Additions - - - - -
Reclassified
from
held under
finance
leases - - - 41,434 41,434
Reclassified
from
asset held
for sale - - 106,124 - 106,124
Impairment
recognised
in equity - - (934) - (934)
At 31 December
2020 92 1,940 919,939 483,233 1,405,204
Representing:
At cost 92 1,940 - - 2,032
At valuation - - 919,939 483,233 1,403,172
92 1,940 919,939 483,233 1,405,204
Accumulated
depreciation
and
impairment:
At 1 July 2020 60 41 97,542 103,036 200,679
Depreciation
expense 8 43 16,609 6,992 23,652
Reclassified
from
asset held
for sale - - 23,241 - 23,241
Impairment
loss - - 32,318 14,334 46,652
At 31 December
2020 68 84 169,710 124,362 294,224
Net book
value:
At 1 July 2020 32 1,899 717,207 338,763 1,057,901
-------------- ---------- ----------------------- ---------- ----------
At 31 December
2020 24 1,856 750,229 358,871 1,110,980
-------------- ---------- ----------------------- ---------- ----------
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture Aircraft Jet Turboprop
and equipment engine aircraft aircraft Total
US$'000s US$'000 US$'000s US$'000s US$'000s
--------------- -------------- ----------------------- ---------- ---------- ----------
30 June 2020:
Cost or
valuation:
At 1 July 2019 80 - 916,534 450,439 1,367,053
Additions 12 1,940 - 57,737 59,689
Reclassified
as held
under finance
leases - - - (57,047) (57,047)
Reclassified
as asset
held for sale - - (106,124) - (106,124)
Impairment
recognised
in equity - - 4,339 (9,330) (4,991)
At 30 June
2020 92 1,940 814,749 441,799 1,258,580
Representing:
At cost 92 1,940 - - 2,032
At valuation - - 814,749 441,799 1,256,548
92 1,940 814,749 441,799 1,258,580
Accumulated
depreciation
and
impairment:
At 1 July 2019 41 - 73,065 68,623 141,729
Depreciation
expense 19 41 31,928 14,678 46,666
Reclassified
as asset
held for sale - - (16,189) - (16,189)
Impairment
loss - - 8,738 19,735 28,473
At 30 June
2020 60 41 97,542 103,036 200,679
Net book
value:
At 1 July 2019 39 - 843,469 381,816 1,225,324
-------------- ---------- ----------------------- ---------- ----------
At 30 June
2020 32 1,899 717,207 338,763 1,057,901
-------------- ---------- ----------------------- ---------- ----------
Assets pledged as security
The Group's aircraft with carrying values of US$ 1,080.2 million
(30 June 2020 : US$1,083.6 million) are mortgaged to secure the
Group's borrowings (Note 20).
Additions and disposals
During the six months ended 31 December 2020, two turboprop
aircraft held under finance leases were reclassified to property,
plant and equipment.
During the six months ended 31 December 2020, two jet aircraft
were reclassified to property, plant and equipment from assets held
for sale.
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Valuation
The Group's aircraft were valued in June 2020 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 8.00% (2019: 5.75% to 7.75%) per annum for jet
aircraft and 5.50% to 9.00% (2019: 6.00% to 9.25%) 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 2020, a downward
revaluation of US$0.9 million to equity and an impairment loss of
US$46.6 million was recognised during the year.
If the aircraft were measured using the cost model, carrying
amounts would be as follows:
31 Dec 2020 30 Jun 2020
Turbo Turbo
Jets props Jets props
US$'000s US$'000s US$'000s US$'000s
----------------------------------------- ---------- ---------- --------- ---------
Cost 899,015 471,701 792,891 430,267
Accumulated depreciation and impairment (167,924) (120,388) (97,291) (99,149)
Net book value 731,091 351,313 695,600 331,118
---------- ---------- --------- ---------
Geographical analysis
31 Dec 2020 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
--------------------------- --------- ------------- ----------
Capital expenditure - - -
Net book value - aircraft
and aircraft engines 356,459 754,497 1,110,956
30 Jun 2020 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
--------------------------- --------- ------------- ----------
Capital expenditure 59,583 106 59,689
Net book value - aircraft
and aircraft engines 331,651 726,218 1,057,869
12 TRADE AND OTHER RECEIVABLES
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
---------------------------------------- --------- ---------
Current
Trade receivables 34,294 7,900
Less:
Allowance for expected credit loss for
trade receivables (12,874) (205)
--------- ---------
21,420 7,695
Accrued revenue 4,506 8,522
Less:
Allowance for expected credit loss for
accrued revenue (393) (137)
--------- ---------
4,113 8,385
Other receivables 2,519 1,922
Less:
Allowance for expected credit loss for
other receivables (670) (670)
--------- ---------
1,849 1,252
Interest receivables 82 217
Less:
Allowance for expected credit loss for
interest receivables (29) (9)
--------- ---------
53 208
Deposits 50 46
Prepaid expenses 1,246 624
28,731 18,210
--------- ---------
Non-current:
Other receivables 652 -
Deposits for aircraft 10,599 10,599
Prepaid expenses 191 279
Right-of-use assets 610 723
12,052 11,601
------- -------
13 FINANCE LEASE RECEIVABLES
Future minimum lease payments receivable under finance leases
are as follows:
31 Dec 2020 31 Jun 2020
Present Present
Minimum value of Minimum value of
lease payments payments lease payments payments
US$'000s US$'000s US$'000s US$'000s
-------------------------------------------- ---------------- ---------- ---------------- ----------
Within one year 5,793 3,828 11,126 7,988
One to two years 5,793 4,014 8,785 6,167
Two to three years 5,793 4,210 8,785 6,443
Three to four years 33,825 31,287 8,785 6,728
Four to five years 9,295 8,944 62,546 57,545
Later than five years - - 8,185 8,136
Total minimum lease payments 60,499 52,283 108,212 93,007
Less: amounts representing interest income (8,216) - (15,205) -
Present value of minimum lease payments 52,283 52,283 93,007 93,007
---------------- ---------- ---------------- ----------
14 GOODWILL
The Group performs its annual impairment test in June and when
circumstances indicate the carrying value may be impaired. For the
purpose of these financial statements there was no indication of
impairment. The key assumptions used to determine the recoverable
amount for the different cash generating units were disclosed in
the annual consolidated financial statements for the year ended 30
June 2020.
15 DERIVATIVE FINANCIAL LIABILITIES
Contract/ Fair value
notional amount
31 Dec 30 Jun 31 Dec 30 Jun
2020 2020 2020 2020
US$'000s US$'000s US$'000s US$'000s
----------------------------------- --------- --------- --------- ---------
Current liability
Interest rate swap 11,113 - (105) -
--------- --------- --------- ---------
Non-current liability
Interest rate swap 282,619 304,507 (23,554) (27,458)
Cross-currency interest rate swap 4,000 4,000 (481) (470)
--------- --------- --------- ---------
286,619 308,507 (24,035) (27,928)
--------- --------- --------- ---------
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.
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 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 23 September 2021 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$3.6
million (31 December 2019: loss of US$0.5 million) on these
derivative financial instruments was recognised in the fair value
reserve for the six month period ended 31 December 2020.
The fair value of the derivative financial instruments is
determined by reference to marked-to-market values provided by
counterparties. The fair value measurement of all derivative
financial instruments under the Group is classified under Level 2
of the fair value hierarchy, for which inputs other than quoted
prices that are observable for the asset or liability, either
directly (that is, as prices) or indirectly (that is, derived from
prices) are included as inputs for the determination of fair
value.
The Group has also designated certain Euro denominated loans as
cash flow hedges of foreign currency exchange risk derived from
Euro denominated leases. Unrealised foreign exchange gains and
losses arising on Euro denominated loans designated as cash flow
hedges are recognised in the foreign currency hedge reserve.
Unrealised foreign exchange gains and losses recorded in the
foreign currency hedging reserve are systematically re-cycled
through profit or loss over the remaining term of the related loan
on a straight-line basis.
16 AIRCRAFT PURCHASE RIGHTS
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
----------------------------------------- --------- ---------
Aircraft purchase rights, at fair value 19,180 27,110
--------- ---------
17 CASH AND BANK BALANCES
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
------------------------------ --------- ---------
Fixed deposits - 10,067
Other cash and bank balances 117,661 104,518
--------- ---------
Total cash and bank balances 117,661 114,585
Less: restricted (92,237) (79,295)
--------- ---------
Cash and cash equivalents 25,424 35,290
--------- ---------
The Group's restricted cash and bank balances have been pledged
as security for certain loan obligations.
In the consolidated statement of cash flows, cash and cash
equivalents comprises unrestricted cash and bank balances.
18 ASSETS HELD FOR SALE
The Group's aircraft which met the criteria to be classified as
assets held for sale and the associated liabilities were as
follows:
31 Dec 30 Jun
2020 2020
US$'000 US$'000s
------------------------------------------------------------ ---------- ---------
Assets held for sale:
Property, plant and equipment - aircraft
At 1 July 2020/ 1 July 2019 82,884 -
Additions - 89,935
Impairment loss - (7,051)
Transfer to property, plant and equipment (82,884) -
At 31 Dec/30 June - 82,884
Lease incentive asset - 8,384
-------- ---------
- 91,268
----------------------------------------------------------------------- ---------
Liabilities directly associated with assets held for sale:
Deposit collected - 1,240
Lessor maintenance contribution - 8,908
Maintenance reserves - 135
- 10,283
----------------------------------------------------------------------- ---------
19 SHARE CAPITAL AND TREASURY SHARES
(a) Share capital
31 Dec 2020 30 Jun 2020
No of shares US$'000s No of shares US$'000s
-------------------- ------------- --------- ------------- -----------
Allotted, called
up and fully paid
Ordinary shares
of 1 penny each:
At 1 July 2020/
1 July 2019 64,879,942 1,108 64,609,939 1,104
Issue of shares - - 270,003 4
At 31 Dec/30 June 64,879,942 1,108 64,879,942 1,108
------------- --------- ------------- ---------
The holders of ordinary shares (except for treasury shares) are
entitled to receive dividends as and when declared by the Company.
All ordinary shares carry one vote per share without
restrictions.
(b) Treasury shares
31 Dec 2020 30 Jun 2020
No of treasury No of treasury
shares US$'000s shares US$'000s
----------------------------- --------------- --------- --------------- ---------
At 1 July 2020/ 1 July 2019 2,210,000 7,811 300,000 1,147
Acquired during the period - - 1,910,000 6,664
At 31 Dec/30 June 2,210,000 7,811 2,210,000 7,811
--------------- --------- --------------- ---------
(c) Net asset value per share
31 Dec 30 Jun
2020 2020
------------------------------------- --- -------- --------
Net asset value per share (US$) (1) $2.38 $3.53
Net asset value per share (GBP) (2) GBP1.74 GBP2.86
-------- --------
(1) Net asset value per share is total equity divided by the total number of shares issued and outstanding at period end.
(2) Based on GBP:US$ exchange rate as at 31 Dec 2020 of 1.37 (30 June 2020 : 1.23).
20 LOANS AND BORROWINGS
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
---------------------------------- ---------- ----------
Secured borrowings 723,725 725,082
Unsecured notes 341,371 346,656
Total loans and borrowings 1,065,096 1,071,738
Less: current portion (437,791) (536,983)
Non-current loans and borrowings 627,305 534,755
---------- ----------
Weighted average
interest rate per
Maturity annum
31 Dec 30 Jun 31 Dec 30 Jun
2020 2020 2020 2020
US$'000s US$'000s % %
-------------------- ----------- ----------- ---------- ---------
Secured borrowings 2021-2031 2021-2031 3.7% 3.6%
Unsecured notes 2021 2021 6.5% 6.5%
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.
21 MAINTENANCE RESERVES
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
------------------------------------------------------------------ --------- ---------
Current 15,238 3,836
Non-current 57,529 57,141
Total maintenance reserves 72,767 60,977
--------- ---------
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
------------------------------------------------------------------ --------- ---------
At 1 July 2020/ 1 July 2019 60,977 32,491
Contributions 14,168 34,503
Utilisations (2,297) (4,399)
Released to profit or loss (216) (1,618)
Transferred from liabilities associated with asset held for sale 135 -
At 31 Dec/30 June 72,767 60,977
--------- ---------
22 CAPITAL COMMITMENTS
Capital expenditure contracted for at the reporting date but not
recognised in the financial statements is as follows:
31 Dec 30 Jun
2020 2020
US$'000s US$'000s
------------------------------- --------- ---------
Property, plant and equipment 155,140 155,140
--------- ---------
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 2020, the Group has commitments to purchase
eight ATR 72-600 aircraft from the manufacturer with expected
delivery dates over a three-year period.
The Company is currently in discussion with the manufacturer
regarding a reduction in the number of ATR 72-600 aircraft on order
and re-scheduling of delivery dates.
23 CONTINGENT LIABILITIES
There were no material changes in contingent liabilities since
30 June 2020.
24 DIVIDENDS
31 Dec 31 Dec
2020 2019
US$'000s US$'000s
----------------------------------------------------------------------------- ---------- ---------
Dividends declared and/or paid during the six months ended 31 December 2020
Dividends on ordinary shares
* First interim exempt (one-tier) dividend for Nil US
cents (31 Dec 2019 : 8.50 US cents) per share - 5,454
* Second interim exempt (one-tier) dividend for Nil US
cents (31 Dec 2019 : 2.10 US cents) per share - 1,319
---------- ---------
- 6,773
---------------------------------------------------------------------------------------- ---------
Dividends are recorded directly in equity when they are
paid.
25 SUBSEQUENT EVENTS
On 8 February 2021, the Group has entered into a new lease for
an ATR 72-600 with an existing Asian client airline for eight years
lease at current market rates.
On 9 February 2021, the Group advises that it has reach an
agreement with a group of bond holders on the terms of a maturity
extension in relation to the Avation Capital S.A. 6.5% senior notes
due May 2021 issued under Avation's global medium term note
programme.
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, pandemics, war and radicalism 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 2020.
DIRECTORS
The directors of Avation PLC are listed in its Annual Report for
the year ended 30 June 2020. 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, 26 February 2021
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END
IR GZGZZNVKGMZG
(END) Dow Jones Newswires
February 26, 2021 02:15 ET (07:15 GMT)
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