Last checked at 5 Sep 2019 07:00
AVATION PLC
("Avation" or "the Company")
PRELIMINARY UNAUDITED Financial Results for the YEar ended 30 june 2019and Interim Management Statement
Avation PLC (LSE: AVAP), the commercial passenger aircraft leasing company, announces preliminary unaudited financial results for the year ending 30 June 2019.
Key Financial Results
·; Fleet assets increased by 22% to $1.27 billion as at 30 June 2019;
·; Lease rental revenue increased by 21% to a record $117.7 million;
·; Net profit after tax for the year increased by 28% to a record $25.7 million;
·; Earnings per share ("EPS") increased by 25% to 40.3 US cents;
·; Interim dividend per share of 8.5 US cents declared, taking total dividends for the financial year to 10.5 US cents (2018: 7.25 cents), an increase of 45%;
·; Dividend yield increased to 3.1% for the year up from 2.4%;
·; Weighted average cost of debt declined from 5.0% to 4.6%; and
·; Net asset value per share increased 7% year on year to £2.95 per share.
Operational Highlights
·; Twelve aircraft added to the fleet during the year;
·; Two narrowbody aircraft sold;
·; Completed deliveries of five Airbus A220-300 aircraft to airBaltic;
·; Order for eight additional ATR 72-600 aircraft for delivery between 2020 and 2022; and
·; Airline customers increased from thirteen to seventeen.
Executive Chairman, Jeff Chatfield, said:
"Avation posted record revenue, profit, EPS and fleet assets for the year ended 30 June 2019.
"The Company acquired twelve aircraft during the year and continued to diversify aircraft types and add new customers to reduce revenue concentration.
"Avation sold two narrowbody aircraft during the year, both of which were sold for more than 10% above book value. Narrowbody aircraft represent almost half of the fleet by value. This confirms that Avation's fleet assets are liquid and supports management's view that the group's net realisable value per share exceeds the reported net asset value per share.
"The Company's strong performance enabled the Board to declare a second dividend of 8.5 US cents per share for the year, which takes the full year dividend to a record 10.5 US cents per share including the initial interim dividend of 2 US cents per share paid in December 2018. This dividend payout results in a yield of 3.1%.
"Avation will continue to focus on growing the fleet and adding new airline customers in the coming financial year. The Company is currently assessing jet aircraft for acquisition, in addition to scheduled deliveries of new ATR 72 turboprop aircraft from our order book."
Financial Highlights
30 June 2019US$ 000's | 30 June 2018US$ 000's |
Change
| |
Revenue | 119,055 | 109,787 | 8% |
Operating profit (EBIT) | 77,165 | 57,209 | 35%
|
Operating profit margin | 65% | 52% | |
Administrative expense | 10,954 | 10,202 | 7% % |
Administrative expense/ Total income (1) | 9.2% | 9.2% | |
Profit before tax | 25,559 | 18,915 | 35% |
Total profit after tax | 25,691 | 20,000 | 28% |
EPS (cents) | 40.3 | 32.2 | 25% |
Dividend per share (cents) | 10.5 | 7.25 | 45% |
Dividend yield (based on share price at 30 June) | 3.1% | 2.4% | |
Fleet assets (2) | 1,269,682 | 1,038,649 | 22% |
Total assets | 1,392,750 | 1,152,205 | 21% |
Cash and bank balances | 107,448 | 91,102 | 18% |
Net asset value per share (US$) (3) | $3.74 | $3.64 | 3% |
Net asset value per share (GBP) (4) | £2.95 | £2.75 | 7% |
1. Total income is defined as revenue plus other income.
2. Fleet assets are defined as property, plant and equipment plus assets held for sale plus finance lease receivables.
3. Net asset value per share is total equity divided by the total number of shares in issue, excluding treasury shares, at period end.
4. Based on GBP:USD exchange rate as at 30 June 2019 of 1.270 (30 June 2018 : 1.321).
Aircraft Fleet
Aircraft Type | 30 June 2019 |
Boeing 777-300ER | 1 |
Airbus A330-300 | 1 |
Airbus A321-200 | 7 |
Airbus A320-200 | 2
|
Boeing 737-800 | 1 |
Airbus A220-300 | 6 |
Fokker 100 | 5 |
ATR 72-600 | 19 |
ATR 72-500 | 6 |
Total | 48 |
As at 30 June, Avation's fleet comprised 48 aircraft, including seven aircraft on finance lease. The weighted average age of the fleet is 3.4 years (2018: 3.2 years) and the weighted average remaining lease term is 7.5 years (2018: 7.7 years).
Fleet assets increased 22% to $1,269.7 million (2018: $1,038.6 million). Twelve aircraft were added to the fleet in the year including six ATR 72-600 aircraft, five Airbus A220-300 and the Company's first Boeing 737-800. Two narrowbody aircraft were sold during the year. Narrowbody aircraft make up 47.9% of fleet assets as at 30 June 2019.
Avation has orders for nine additional ATR 72-600 aircraft for delivery by 2022 and has purchase rights for a further 25 aircraft.
Debt summary
30 June 2019US$000's | 30 June 2018US$000's | |
Loans and borrowings | 1,078,288 | 868,600 |
Unrestricted cash and bank balances | 61,689
| 57,950 |
Net indebtedness (1) | 1,016,599 | 810,650 |
Debt to assets (2) | 77.4% | 75.4% |
Weighted average cost of secured debt (3) | 3.7% | 4.3% |
Weighted average cost of total debt (4) | 4.6% | 5.0% |
1. Net indebtedness is defined as loans and borrowings less unrestricted cash and bank balances.
2. Debt to assets is defined as total debt 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 decreased to 4.6% as at 30 June 2019 (2018: 5.0%).
The weighted average cost of secured debt decreased to 3.7% at 30 June 2019 (2018: 4.3%). This was due to settlements of certain higher cost secured loans following the issuance of $300 million 6.5% Senior Notes due 2021 under the Company's Global Medium Term Note programme ("Notes") in May 2018 and the funding of recent growth with comparatively low cost senior secured debt. Avation completed a tap issue of an additional $50 million Notes in November 2018.
At the end of the year, Avation's debt to assets ratio was 77.4% (2018: 75.4%). At 30 June 2019, 92.0% of total debt was at fixed or hedged interest rates (2018: 94.8%). The proportion of unsecured debt to total debt was 32.0% (2018: 33.8%).
Avation will continue to source secured and unsecured debt finance to fund fleet growth with the overriding objective of lowering the weighted average cost of finance.
Aircraft Leasing Scheme Tax Incentive
In April 2019 Avation was granted a renewal of its membership of the Singapore Aircraft Leasing Scheme ("ALS") for a further 5 years. The ALS provides for a concessionary tax rate of 8% on income derived from aircraft and aircraft engine leasing and an exemption from withholding tax on qualifying loans. Prior to April 2019 the applicable concessionary tax rate was 10%. Avation's net profit after tax benefited from recognition of deferred tax assets derived from the reduction in the ALS tax rate.
Credit Ratings
In November 2018, S&P Global Ratings advised that Avation's issue rating for the Notes had been upgraded to B+. The Company's current issuer and Notes credit ratings are as follows:
Rating Agency | Corporate Credit Rating | Notes Rating |
Standard and Poor's | B+ outlook positive | B+ |
Fitch Ratings | BB- outlook stable | BB- |
Japan Credit Ratings Company | BB outlook stable | NR |
Declaration of Interim Dividend
In order to recognise shareholder ownership as it continues the development of the business, the Board has declared a second dividend of 8.5 US cents per share in respect of the financial year ended 30 June 2019. Inclusive of the initial interim dividend of 2 US cents per share paid in December 2018, this takes the total dividend for the financial year to 10.5 US cents per share (2018: 7.25 US cents), representing an increase of 45%.
The record date and timetable for the second interim dividend is as follows:
Ex-dividend date: 3 October 2019Record date: 4 October 2019Payment date: 18 October 2019Amount: 8.5 US cents
The Company confirms its aim to maintain a progressive dividend policy.
Recognising that the Company's functional currency is US Dollars (USD) and to reduce exchange rate risk, shareholders are reminded that dividend payments are declared in USD. Shareholders who prefer to receive dividends in British Pounds (GBP) can elect to receive GBP by completing a form that can be downloaded at www.avation.net/dividends.html
Market Positioning
Avation's strategy is to target growth and diversification by adding new airline customers, while maintaining strong average aircraft age and remaining lease term metrics. Avation focuses on new and relatively new commercial passenger aircraft on long-term leases. Avation is able to own, manage and lease turboprop, narrowbody and twin-aisle aircraft.
The Company's business model is based on rigorous investment criteria which has historically delivered consistent profitability, while seeking 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.
Engine Leasing
In the new financial year Avation has initiated a purchase and leaseback of a narrowbody jet aircraft engine. This acquisition represents Avation's first investment in an individual engine for leasing. Airlines require access to spare engines to ensure continuous operation of aircraft. This new business line is highly synergistic to Avation's core aircraft leasing business. Avation will look to leverage its position in the aviation industry and will consider further investment in aircraft engines in the future.
Interim Management Statement
The outlook for the 2020 financial year is for continued fleet growth and the acquisition of new airline customers.
Management believes that the risks associated with its portfolio of assets have been reduced through the growth and diversification that has been achieved during the year. Avation has demonstrated that it has the capability to acquire, finance and deliver a number of aircraft in a short period of time when opportunities arise and has a platform which supports continued growth.
Management believes that it can attract airline customers, acquire aircraft and obtain the required funding for growth. In addition to operational cash flows, funding is traditionally sourced from capital markets, asset-backed bank lending and disposal of selected aircraft. Access to acceptably priced funding 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, 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.
Avation's Board of Directors is pleased to deliver a record set of financial results from its aircraft leasing business during this period of diversification and growth.
Results Conference Call
Avation's senior management team will host a conference call on 5 September 2019, at 1pm BST (UK) / 8am EST (US) / 8pm SGT (Singapore), to discuss the Company's financial results. Participants should dial: United Kingdom +44 20 3059 5869; United States +1 631 302 6547; Singapore +65 3157 6417; other locations +44 20 3059 5869 and quote "Avation 2019 Results" when prompted. The conference call will also be webcast live through the following link:
http://avation.emincote.com/results/2019fullyearresults
To view the webcast investors will be invited to register their name and email address, participants can do this in advance or on the day. A replay of the webcast will be available on the Investor Relations page of the Avation website.
Annual General Meeting
The annual general meeting of the Company is expected to be held at the Company's headquarters in Singapore on 14 November 2019 at 10am GMT (UK) / 6pm SGT (Singapore). Notice of the annual general meeting will be issued in due course.
Forward Looking Statements
This release contains certain "forward looking statements". Forward looking statements may be identified by words such as "expects," "intends," "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 results of Avation PLC for the year ended 30 June 2019.
Financial information presented in this announcement is being published for the purposes of providing preliminary Group financial results for the year ended 30 June 2019. 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 Group statutory financial statements for the year ended 30 June 2019 are expected to be delivered to the Registrar of Companies within 28 days of 30 September 2019 (as at the date of this report, such statutory financial statements have not been reported on by the independent auditors of the Company). The Board of Directors approved this financial information on 4 September 2019. Avation PLC 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 2018, upon which the auditors have given an unqualified audit report, were published on 21 September 2018 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.
- ENDS-
More information on Avation PLC can be found at: www.avation.net. Avation welcomes shareholder questions and comments and advises the email address is: investor@avation.net
Enquiries:
Avation PLC Jeff Chatfield, Executive Chairman
| T: +65 6252 2077
|
AVATION PLC
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
2019 | 2018 | ||
US$'000s | US$'000s | ||
Continuing operations | |||
Revenue | 119,055 | 109,787 | |
Other income | 215 | 639 | |
119,270 | 110,426 | ||
Depreciation | (41,011) | (34,284) | |
Gains on disposal of aircraft | 10,026 | - | |
Impairment loss on aircraft | - | (7,080) | |
Administrative expenses | (10,954) | (10,202) | |
Other expenses | (166) | (1,651) | |
Operating profit | 77,165 | 57,209 | |
Finance income | 3,722 | 6,521 | |
Finance expenses | (55,328) | (44,815) | |
Profit before taxation | 25,559 | 18,915 | |
Taxation | 132 | 1,085 | |
Profit from continuing operations | 25,691 | 20,000 | |
Profit attributable to: | |||
Equity holders of the Company | 25,690 | 19,992 | |
Non-controlling interests | 1 | 8 | |
25,691 | 20,000 |
Earnings per share for profit | |||
attributable to equity holders of the Company | |||
Basic earnings per share: | 40.26 cents | 32.20 cents | |
Diluted earnings per share | 40.10 cents | 31.84 cents | |
AVATION PLC
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
2019 | 2018 | ||
US$'000s | US$'000s | ||
Profit from continuing operations | 25,691 | 20,000 | |
Other comprehensive income: | |||
Items that may be reclassified subsequently to profit or loss: | |||
Currency translation differences arising on consolidation | - | 27 | |
Net (loss)/gain on cash flow hedge | (18,009) | 5,239 | |
(18,009) | 5,266 | ||
Items that may not be reclassified subsequently to profit or loss: | |||
Revaluation gain on property, plant and equipment, net of tax | 8,181 | 3,355 | |
Other comprehensive income, net of tax | (9,828) | 8,621 | |
Total comprehensive income for the year | 15,863 | 28,621 | |
Total comprehensive income attributable to: | |||
Equity holders of the Company | 15,862 | 28,613 | |
Non-controlling interests | 1 | 8 | |
15,863 | 28,621 |
AVATION PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
2019 | 2018 | ||
US$'000s | US$'000s | ||
ASSETS | |||
Non-current assets | |||
Property, plant and equipment | 1,225,324 | 981,176 | |
Trade and other receivables | 8,930 | 6,790 | |
Finance lease receivables | 37,137 | 5,529 | |
Goodwill | 1,902 | 1,902 | |
Derivative financial instruments | 363 | 7,848 | |
1,273,656 | 1,003,245 | ||
Current assets | |||
Trade and other receivables | 4,425 | 3,914 | |
Finance lease receivables | 7,221 | 3,199 | |
Options held for trading | - | 2,000 | |
Cash and bank balances | 107,448 | 91,102 | |
119,094 | 100,215 | ||
Assets held for sale | - | 48,745 | |
119,094 | 148,960 | ||
Total assets | 1,392,750 | 1,152,205 | |
EQUITY AND LIABILITIES | |||
Equity | |||
Share capital | 1,104 | 1,080 | |
Share premium | 56,912 | 53,083 | |
Treasury shares | (1,147) | - | |
Merger reserve | 6,715 | 6,715 | |
Asset revaluation reserve | 34,392 | 27,847 | |
Capital reserve | 8,876 | 8,876 | |
Other reserves | (11,809) | 6,389 | |
Retained earnings | 145,644 | 124,119 | |
Equity attributable to equity holders of the parent | 240,687 | 228,109 | |
Non-controlling interests | 70 | 69 | |
Total equity | 240,757 | 228,178 | |
Non-current liabilities | |||
Loans and borrowings | 1,005,693 | 796,896 | |
Trade and other payables | 16,091 | 12,397 | |
Derivative financial instruments | 10,174 | - | |
Maintenance reserves | 31,325 | 22,504 | |
Deferred tax liabilities | 179 | 2,988 | |
1,063,462 | 834,785 | ||
Current liabilities | |||
Loans and borrowings | 72,595 | 71,704 | |
Trade and other payables | 11,964 | 13,390 | |
Maintenance reserves | 1,166 | 1,040 | |
Income tax payables | 2,806 | 2,608 | |
88,531 | 88,742 | ||
Liabilities directly associated with assets held for sale | - | 500 | |
88,531 | 89,242 | ||
Total equity and liabilities | 1,392,750 | 1,152,205 |
AVATION PLC
CONSOLIDATED STATEMENT OF EQUITY CHANGES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
Attributable to shareholders of the parent | ||||||||||||
Share capital | Share premium | Treasury shares | Merger reserve | Asset revaluation reserve | Capital reserve | Other reserves | Retained earnings | Total | Non-controlling interest | Total equity | ||
US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | ||
Balance at 1 July 2018 | 1,080 | 53,083 | - | 6,715 | 27,847 | 8,876 | 6,389 | 124,119 | 228,109 | 69 | 228,178 | |
Profit for the year | - | - | - | - | - | - | - | 25,690 | 25,690 | 1 | 25,691 | |
Other comprehensive income | - | - | - | - | 8,181 | - | (18,009) | - | (9,828) | - | (9,828) | |
Total comprehensive income | - | - | - | - | 8,181 | - | (18,009) | 25,690 | 15,862 | 1 | 15,863 | |
Dividend paid | - | - | - | - | - | - | - | (5,840) | (5,840) | - | (5,840) | |
Issue of new shares | 24 | 3,829 | - | - | - | - | (628) | - | 3,225 | - | 3,225 | |
Purchase of treasury shares | - | - | (1,147) | - | - | - | - | - | (1,147) | - | (1,147) | |
Warrants expense | - | - | - | - | - | - | 478 | - | 478 | - | 478 | |
Total transactions with owners recognised directly in equity |
24 |
3,829 |
(1,147) |
- |
- |
- |
(150) |
(5,840) |
(3,284) |
- |
(3,284) | |
Warrants expired | - | - | - | - | - | - | (39) | 39 | - | - | - | |
Release of revaluation reserve upon sale of aircraft |
- |
- |
- |
- |
(1,636) |
- |
- |
1,636 |
- |
- |
- | |
Total others | - | - | - | - | (1,636) | - | (39) | 1,675 | - | - | - | |
Balance at 30 June 2019 | 1,104 | 56,912 | (1,147) | 6,715 | 34,392 | 8,876 | (11,809) | 145,644 | 240,687 | 70 | 240,757 | |
AVATION PLC
CONSOLIDATED STATEMENT OF EQUITY CHANGES
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018
Attributable to shareholders of the parent | ||||||||||||
Share capital | Share premium | Treasury shares | Merger reserve | Asset revaluation reserve | Capital reserve | Other reserves | Retained earnings | Total | Non-controlling interest | Total equity | ||
US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | US$'000s | ||
Balance at 1 July 2017 | 1,058 | 48,365 | - | 6,715 | 24,492 | 8,876 | 801 | 105,556 | 195,863 | 61 | 195,924 | |
Profit for the year | - | - | - | - | - | - | - | 19,992 | 19,992 | 8 | 20,000 | |
Other comprehensive income | - | - | - | - | 3,355 | - | 5,266 | - | 8,621 | - | 8,621 | |
Total comprehensive income | - | - | - | - | 3,355 | - | 5,266 | 19,992 | 28,613 | 8 | 28,621 | |
Issue of new shares | 22 | 3,564 | - | - | - | - | (348) | - | 3,238 | - | 3,238 | |
Warrants expense | - | 1,154 | - | - | - | - | 688 | (1,447) | 395 | - | 395 | |
Total transactions with owners recognised directly in equity |
22 |
4,718 |
- |
- |
- |
- |
340 |
(1,447) |
3,633 |
- |
3,633 | |
Warrants expired | - | - | - | - | - | - | (18) | 18 | - | - | - | |
Total others | - | - | - | - | - | - | (18) | 18 | - | - | - | |
Balance at 30 June 2018 | 1,080 | 53,083 | - | 6,715 | 27,847 | 8,876 | 6,389 | 124,119 | 228,109 | 69 | 228,178 | |
AVATION PLC
CONSOLIDATED STATEMENT OF CASHFLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2019
2019 | 2018 | ||
US$'000s | US$'000s | ||
Cash flows from operating activities: | |||
Profit before income tax | 25,559 | 18,915 | |
Adjustments for: | |||
Depreciation expense | 41,011 | 34,284 | |
Warrants expense | 478 | 394 | |
Impairment loss on aircraft | - | 7,080 | |
Expected credit loss on trade receivables | 166 | - | |
Gain on disposal of aircraft | (10,026) | - | |
Gain on disposal of subsidiary | - | (1) | |
Fair value loss on options held for trading | - | 1,640 | |
Interest income from finance leases | (1,382) | (734) | |
Finance income | (3,722) | (6,521) | |
Finance expense | 55,328 | 44,815 | |
Operating cash flows before working capital changes | 107,412 | 99,872 | |
Movement in working capital: | |||
Trade and other receivables and finance lease receivables | 4,411 | 36,143 | |
Trade and other payables | 1,412 | 2,320 | |
Maintenance reserves | 8,947 | 2,280 | |
Cash from operations | 122,182 | 140,615 | |
Finance income received | 2,950 | 4,775 | |
Finance expense paid | (48,579) | (42,148) | |
Income tax paid | (2,946) | (546) | |
Net cash from operating activities | 73,607 | 102,696 | |
Cash flows from investing activities: | |||
Cash inflow from disposal of subsidiary | - | 1 | |
Purchase of property, plant and equipment | (328,570) | (322,804) | |
Proceeds from disposal of aircraft | 70,184 | - | |
Net cash used in investing activities | (258,386) | (322,803) | |
Cash flows from financing activities: | |||
Net proceeds from issuance of ordinary shares | 3,225 | 3,238 | |
Dividends paid to shareholders | (5,840) | (3,664) | |
Purchase of treasury shares | (1,147) | - | |
Placement of restricted cash balances | (12,607) | (2,309) | |
Proceeds from loans and borrowings, net of transactions costs | 301,741 | 600,627 | |
Repayment of loans and borrowings | (96,854) | (376,711) | |
Net cash from financing activities | 188,518 | 221,181 | |
Effects of exchange rates on cash and cash equivalents | - | 27 | |
Net increase in cash and cash equivalents | 3,739 | 1,101 | |
Cash and cash equivalents at beginning of year | 57,950 | 56,849 | |
Cash and cash equivalents at end of year | 61,689 | 57,950 |