Half Yearly Report

AVATION PLC (the "Company") FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 and Interim Management Report Avation PLC (LSE: AVAP) the commercial passenger aircraft leasing company is pleased to announce unaudited financial statements for the Company and its subsidiaries for the six-month period ended 31st December 2012. The financial highlights are: * Consolidated net profit after tax attributable to shareholders of Avation PLC increased by 38.7% to £2,853,844; * Revenues increased by 26.4% to £12,713,862; * Earnings per share of 6.44 pence were recorded representing an increase of 21.7%; * Increased number of aircraft in the fleet from 15 to 19 with a value of £174 Million; * Fulfilled the delivery of the initial ten ATR72 aircraft into the Australian Regional Airline Network Alliance ("ARAN"); * Placed a firm order for seven additional ATR72 for delivery in 2014; * Secured commercial funding for the five ATR72 aircraft scheduled for delivery in 2013; Commenting today, Avation PLC Chairman, Jeff Chatfield said: "The Board of Directors are pleased with the development of the Avation business, in particular the core aircraft delivery program of 22 ATR72 aircraft for firm delivery in 2013 and 2014, and remains committed to the build-out of the ARAN Alliance and other identified fleet opportunities in the Australian and Asian regions. The business continues to perform strongly, providing consistent and defined IRR's, cash yields and predictable capital returns from aircraft investments. Looking forward, we are confident that our business provides for continued and sustainable growth in 2013 and beyond." Further information on Avation PLC can be seen at: www.avation.net. Avation PLC is registered in England and Wales with its Operational Headquarters in Singapore. Enquiries: Avation PLC Jeff Chatfield, Chairman +44 7783 942 553 Cadogan PR Alex Walters +44 20 7839 9260 +44 (0) 7771 713 608 Statement by the Chairman, Jeff Chatfield: Dear Fellow Shareholder, Introduction ------------ Your Board is pleased to report that during the six month period ended 31st December 2012 the consolidated net profit after tax moved ahead to £2,853,844 on increased revenues of £12,713,862 with earnings per share rising to 6.44 pence. Returns principally comprise cash yield (income) from aircraft lease payments after repayment of associated debt obligations. The ARAN Alliance continues to provide a solid operating platform for the continued asset and earnings growth of the Avation business. The revenue growth increase to £12,713,862 is consistent with the expectations of 30th June 2012 and a result of the build-out and significant investment in the ATR72 fleet. With the recent announcement of further additions to this fleet, lease revenues are expected to grow by an additional £2.3 million in the six months to 30th June 2013. As at 31st December 2012, total assets increased by £46,646,007 to £204,777,910. Corresponding liabilities increased by £43,173,407 to £148,784,254 resulting in a net asset increase of 6.6% to £55,993,656. The Company has at this time secured committed funding of some US$82 million covering senior debt requirements for the five ATR72 deliveries for 2013. Fleet Development ----------------- The Company's aircraft fleet currently comprises nineteen aircraft which are 100% utilised and generate a rental yield of 14.6% from a current customer base of airlines in Australia, Europe and North America (based on the last full year). The fleet is comprised of a diverse range of commercial passenger aircraft, with new ATR72 aircraft, Airbus A320s, Airbus A321s and Fokker 100s. In addition to leasing these aircraft, Avation provides active fleet and financial management to ensure the retention of asset values and the maximisation of earnings. The ATR72 fleet related to the ARAN Alliance now stands at ten delivered, with five additional aircraft scheduled for delivery in 2013 and a further four aircraft scheduled for 2014. The Company has secured a potential pipeline of a total of 30 additional aircraft, meaning it is well placed to maintain a high level of growth in the future. Funding ------- As stated above, the Company has at this time secured committed debt funding for the ATR72 deliveries for 2013 and it is well positioned to obtain access to the necessary debt for the purchase of further aircraft for 2014 and beyond. Access to funding nevertheless remains a risk, which is common to all businesses that are capital intensive. Specific aviation based industry risks are also present and include the creditworthiness of client airlines. Dividend -------- As announced at the Annual General Meeting held on 4 December 2012 the company will pay a final dividend of 1.05 pence per share on 22nd February 2013. Outlook ------- The Board of Directors is strongly committed to developing the Avation business further and confident that it can achieve continued and sustainable growth in 2013 and beyond. Looking forward, the Directors anticipate further increases in lease revenues if, as and when additional aircraft are delivered. Jeff Chatfield, Chairman Singapore, 11th February 2013 AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 31 December 31 December Note 2012 2011 ------------- ------------- Continuing operations £ £ Revenue 4 12,713,862 10,060,035 Cost of sales (245,287) (466,219) ------------- ------------- Gross profit 12,468,575 9,593,816 Other income 5 773,589 118,450 Other operating expenses 6 (4,655,994) (3,604,550) Expenses - Administrative expenses (1,017,554) (692,403) - Finance expenses 7 (3,610,726) (2,191,412) ------------- ------------- Profit before taxation 3,957,890 3,223,901 Taxation (616,423) (521,921) ------------- ------------- Profit from continuing operations for the year 3,341,467 2,701,980 Other comprehensive income Currency translation differences arising on consolidation (1,295,172) 1,431,818 ------------- ------------- Other comprehensive income for the year, (net of tax) (1,295,172) 1,431,818 ------------- ------------- Total comprehensive income 2,046,295 4,133,798 ------------- ------------- ------------- ------------- Profit attributable to: Equity holders of the parent 2,853,844 2,057,004 Non-controlling interest 487,623 644,976 ------------- ------------- 3,341,467 2,701,980 ------------- ------------- ------------- ------------- Total comprehensive income attributable to: Equity holders of the parent 1,909,566 2,967,931 Non-controlling interest 136,729 1,165,867 ------------- ------------- 2,046,295 4,133,798 ------------- ------------- ------------- ------------- Earnings per share - Basic - continuing and total operations 6.44 pence 5.29 pence ------------- ------------- ------------- ------------- - Fully Diluted - continuing and total operations 6.44 pence 5.29 pence ------------- ------------- ------------- ------------- AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED BALANCE SHEET (UNAUDITED) AS AT 31 DECEMBER 2012 31 December 30 June Note 2012 2012 ---- ------------- ------------- £ £ ASSETS ------ Current assets: Cash and cash equivalents 13,525,546 5,824,099 Trade and other receivables 4,311,012 5,770,332 Prepayments 667,538 297,904 Inventories 2,181 9,168 ------------- ------------- Total current assets 18,506,277 11,901,503 ------------- ------------- Non-current assets: Trade and other receivables 4,690,872 5,403,585 Prepayments 5,560,627 2,452,619 Property, plant and equipment 8 174,695,593 137,049,655 Goodwill 1,324,541 1,324,541 ------------- ------------- Total non-current assets 186,271,633 146,230,400 ------------- ------------- Total assets 204,777,910 158,131,903 ------------- ------------- ------------- ------------- LIABILITIES AND EQUITY ---------------------- Current liabilities: Trade and other payables 3,663,279 3,242,101 Deferred lease income 80,898 58,519 Provision for taxation 754,975 332,421 Loans and borrowings 14,694,753 12,522,177 Short-term provisions 2,090,623 1,901,456 ------------- ------------- Total current liabilities 21,284,528 18,056,674 ------------- ------------- Non-current liabilities: Trade and other payables 8,744,258 3,883,863 Deferred lease income 568,624 468,156 Loans and borrowings 114,356,266 79,402,426 Deferred tax liabilities 3,830,578 3,799,728 ------------- ------------- Total non-current liabilities 127,499,726 87,554,173 ------------- ------------- Equity attributable to shareholders: Share capital 9 443,745 423,745 Share premium 16,062,928 14,192,267 Assets revaluation reserve 5,465,206 5,465,206 Capital redemption reserve 7,000 7,000 Warrant reserve 120,779 120,779 Capital reserve 1,636,511 1,636,511 Foreign currency translation reserve 1,571,156 2,515,434 Retained earnings 20,179,673 17,790,185 ------------- ------------- Parent interests 45,486,998 42,151,127 Non-controlling interests 10,506,658 10,369,929 ------------- ------------- 55,993,656 52,521,056 ------------- ------------- Total liabilities and equity 204,777,910 158,131,903 ------------- ------------- ------------- ------------- AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) STATEMENT OF CHANGES IN EQUITY (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 Foreign Assets Captial currency Non- Share Share revaluation Redemption Warrant Capital translation Retained Controlling Total capital premium reserve reserve reserve Reserve reserve earnings Total Interest Equity ------------------------------------------------------------------------------------------------------------------------------------------------- £ £ £ £ £ £ £ £ £ £ £ Group ----- Balance at 1 July 2012 423,745 14,192,267 5,465,206 7,000 120,779 1,636,511 2,515,434 17,790,185 42,151,127 10,369,929 52,521,056 ------------------------------------------------------------------------------------------------------------------------------------------------- Profit for the year - - - - - - - 2,853,844 2,853,844 487,623 3,341,467 Other comprehensive income - - - - - - (944,278) - (944,278) (350,894) (1,295,172) ------------------------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income - - - - - - (944,278) 2,853,844 1,909,566 136,729 2,046,295 Dividend related to 2012 paid - - - - - - - (464,356) (464,356) - (464,356) Increase of issued share capital 20,000 1,980,000 - - - - - - 2,000,000 - 2,000,000 Share issue expenses - (109,339) - - - - - - (109,339) - (109,339) ------------------------------------------------------------------------------------------------------------------------------------------------- Balance at 31 December 2012 443,745 16,062,928 5,465,206 7,000 120,779 1,636,511 1,571,156 20,179,673 45,486,998 10,506,658 55,993,656 ------------------------------------------------------------------------------------------------------------------------------------------------- Balance at 1 July 2011 386,072 10,543,750 7,436,517 7,000 74,381 - 2,388,729 14,890,326 35,726,775 13,733,823 49,460,598 ------------------------------------------------------------------------------------------------------------------------------------------------- Profit for the year - - - - - - - 2,057,004 2,057,004 644,976 2,701,980 Other comprehensive income - - - - - - 910,927 - 910,927 520,891 1,431,818 ------------------------------------------------------------------------------------------------------------------------------------------------- Total comprehensive income - - - - - - 910,927 2,057,004 2,967,931 1,165,867 4,133,798 Dividend related to 2011 paid - - - - - - - (407,266) (407,266) - (407,266) Increase of issued share capital 21,195 2,128,748 - - (18,988) - - - 2,130,955 - 2,130,955 Share issue expenses - (122,074) - - - - - - (122,074) - (122,074) ------------------------------------------------------------------------------------------------------------------------------------------------- Balance at 31 December 2011 407,267 12,550,424 7,436,517 7,000 55,393 - 3,299,656 16,540,064 40,296,321 14,899,690 55,196,011 ------------------------------------------------------------------------------------------------------------------------------------------------- . AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED) FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 31 December 31 December 2012 2011 ---------- ---------- £ £ Cash flows from operating activities: Profit before taxation 3,957,890 3,223,901 Adjustments for: Depreciation expense 3,466,920 2,950,475 Claim on maintenance reserve 869,992 691,670 Amortisation of loan premium 229,569 - Amortisation of deferred lease expense 122,260 - Interest expense 3,258,897 2,191,412 Interest income (10,161) (1,086) ---------- ---------- Operating profit before working capital changes 11,895,367 9,056,372 Movement in working capital: Trade and other receivables (1,657,438) (2,452,948) Inventories 6,987 (848) Trade and other payables 5,163,630 822,501 Deferred lease income 122,847 - Short-term provisions (680,825) (83,187) ---------- ---------- Cash from operations 14,850,568 7,341,890 Interest paid (3,140,954) (1,852,061) Interest received 10,161 1,086 Corporation tax paid (18,095) (260,229) ---------- ---------- Net cash from operating activities 11,701,680 5,230,686 ---------- ---------- Cash flows used in investing activity: Purchase of property, plant and equipment (3,453,493) (44,650,840) ---------- ---------- Net cash used in investing activity (3,453,493) (44,650,840) ---------- ---------- Cash flows from financing activities: Net proceeds from issuance of ordinary shares 1,890,661 2,008,881 Proceeds from borrowings 4,333,700 45,408,208 Repayment of borrowings (6,525,739) (4,214,372) Capital element of finance lease repayments (1,168,204) (927,906) ---------- ---------- Net cash used in financing activities (1,469,582) 42,274,811 ---------- ---------- Effects of exchange rates on cash & cash equivalents 922,842 179,045 ---------- ---------- Net increase in cash and cash equivalents 7,701,447 3,033,702 Cash and cash equivalents at beginning of financial period 5,824,099 5,626,771 ---------- ---------- Cash and cash equivalents at end of financial period 13,525,546 8,660,473 ---------- ---------- ---------- ---------- AVATION PLC REGISTERED NUMBER: 05872328 (ENGLAND & WALES) NOTES TO THE FINANCIAL INFORMATION FOR THE SIX MONTHS ENDED 31 DECEMBER 2012 The Interim Report for Avation PLC for the six months ended 31 December 2012 was approved by the Directors on 11 February 2013. 1 CORPORATE INFORMATION Avation PLC (the Company) is a public limited company incorporated and domiciled in England and Wales under the Companies Act 2006 (Registration Number 05872328). The principal activities of the Company and its subsidiaries are the holding of investments involved in owning, leasing aircraft and trading of broadcasting equipment and procurement business. The Company also owns and leases aircraft in its own right. BASIS OF PREPARATION AND ACCOUNTING POLICIES This Interim Report has been prepared in accordance with the Disclosure and Transparency Rules (DTR) of the Financial Services Authority and in accordance with International Accounting Standard (IAS) 34 'Interim Reporting'. The Interim Report does not include all the notes of the type normally included within the annual report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financial and investing activities of the consolidated entity as the full financial report. It is recommended that the Interim Report be read in conjunction with the annual report for the year ended 30 June 2012 and considered together with any public announcements made by Avation PLC during the six months ended 31 December 2012. The accounting policies and methods of computation are the same as those adopted in the annual report for the year ended 30 June 2012. The preparation of the Interim Report requires management to make estimates and assumptions that affect the reported income and expense, 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 2012, which carried an unqualified audit report, have been delivered to the Registrar of Companies and did not contain section 498 of the Companies Act 2006. The Interim Report is unaudited and not reviewed by the auditors. The Interim Report does not constitute statutory financial statements within the meaning of section 434 of the Companies Act 2006. 3 SEGMENT INFORMATION a) Segment reporting policy A segment is a distinguishable component of the Group within a particular economic environment (geographical segment) and to a particular industry (business segment) which is subject to risks and rewards that are different from those of other segments. The primary format, business segments, is based on the Group's management and internal reporting structure. In presenting information on the basis of business segments, segment revenue and segment assets are based on the nature of the products or services provided by the Group, information for geographical segments is based on the geographical areas where the customers are located. Inter-segment pricing is determined on an arm's length basis. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly of corporate assets and liabilities or profit or losses items that are not directly attributable to a segment or those that cannot be allocated on a reasonable basis. Common expenses were allocated based on revenue from the Group. Segment capital expenditure is the total cost incurred during the period to acquire segment assets that are expected to be used for more than one year. b) Primary reporting segment - business segments During the six months ended 31 December 2012, the Group was organised into two main business segments which are aircraft leasing and business procurement. Other operations of the Group mainly comprise investment holding which does not constitute a separate reportable segment. There are no inter-segment transactions recorded during the financial period. Aircraft Business leasing procurement Total ------- ----------- ----- 31 December 2012 £ £ £ ---------------- Revenue & other income - External sales 19,789,113 275,452 20,064,565 - Other income 838,789 ----------- Total of all segments 20,903,354 Less: elimination (7,415,903) ----------- Consolidated revenue & other income 13,487,451 ----------- ----------- Aircraft Business leasing procurement Total ------- ----------- ----- 31 December 2012 £ £ £ ---------------- Results Segment results 7,625,868 (67,413) 7,558,455 Finance income 10,161 Finance expense (3,610,726) Unallocated corporate expenses - ----------- Profit before taxation 3,957,890 Taxation (616,423) ----------- Profit after taxation 3,341,467 ----------- ----------- Other segment items Capital expenditure & valuation movement - property, plant and equipment 45,463,146 - 45,463,146 Depreciation 3,465,925 995 3,466,920 ----------- ----------- Aircraft Business leasing procurement Total ------- ----------- ----- 31 December 2012 £ £ £ ---------------- Segment assets 204,429,121 348,789 204,777,910 Unallocated assets - ----------- Consolidated total assets 204,777,910 ----------- ----------- Segment liabilities Trade and other payables 12,022,073 385,464 12,407,537 Deferred lease income 649,522 649,522 Provision of taxation 754,975 - 754,975 Short term provisions 2,090,623 - 2,090,623 Loans and borrowings 129,051,019 - 129,051,019 Deferred tax liabilities 3,830,578 - 3,830,578 Unallocated liabilities - ----------- Consolidated total liabilities 148,784,254 ----------- ----------- Aircraft Business leasing procurement Total ------- ----------- ----- 31 December 2011 £ £ £ ---------------- Revenue & other income - External sales 12,268,854 592,548 12,861,402 - Other income 224,787 ----------- Total of all segments 13,086,189 Less: elimination (2,907,704) ----------- Consolidated revenue & other income 10,178,485 ----------- ----------- Aircraft Business leasing procurement Total ------- ----------- ----- 31 December 2011 £ £ £ ---------------- Results Segment results 5,422,303 (8,076) 5,414,227 Finance income 1,086 Finance expense (2,191,412) Unallocated corporate expenses - ----------- Profit before taxation 3,223,901 Taxation (521,921) ----------- Profit after taxation 2,701,980 ----------- ----------- Other segment items Capital expenditure & valuation movement - property, plant and equipment 44,650,238 602 44,650,840 Depreciation 2,949,496 979 2,950,475 ----------- ----------- Aircraft Business leasing procurement Total ------- ----------- ----- 30 June 2012 £ £ £ ------------ Segment assets 157,335,380 796,523 158,131,903 Unallocated assets - ------------ Consolidated total assets 158,131,903 ------------ ------------ Segment liabilities Trade and other payables 6,243,980 881,984 7,125,964 Deferred lease income 526,675 - 526,675 Provision of taxation 332,421 - 332,421 Short term provisions 1,901,456 - 1,901,456 Loans and borrowings 91,924,603 - 91,924,603 Deferred tax liabilities 3,799,728 - 3,799,728 Unallocated liabilities - ----------- Consolidated total liabilities 105,610,847 ----------- ----------- c) Second reporting segment - geographical segments The following table provides an analysis of the revenues by geographical market, irrespective of the origin of the goods: 31 December 31 December 2012 2011 ------------ ------------ Revenue £ £ ------- Australia 8,804,933 5,990,376 Denmark 2,826,135 2,826,900 United States 697,113 697,302 Others 385,681 545,457 ------------ ------------ 12,713,862 10,060,035 ------------ ------------ ------------ ------------ Total Net Book Value assets Aircraft ------------ ------------ 31 December 2012 £ £ ---------------- Australia 131,678,702 130,067,998 United States 5,274,152 5,274,152 Denmark 39,349,126 39,349,126 Malta 648,110 - United Kingdom 13,834,239 - Others 13,993,581 - ------------ ------------ 204,777,910 174,691,276 ------------ ------------ ------------ ------------ Total Net Book Value assets Aircraft ------------ ------------ 30 June 2012 £ £ ------------ Australia 90,946,768 89,698,256 United States 5,662,061 5,661,776 Denmark 41,684,917 41,684,917 Malta 599,386 - United Kingdom 11,514,454 - Others 7,724,317 - ------------ ------------ 158,131,903 137,044,949 ------------ ------------ ------------ ------------ 4 REVENUE 31 December 31 December 2012 2011 ------------ ------------ £ £ Rental income 11,404,870 8,604,687 Maintenance rent revenue 908,600 702,975 Management and service income 132,428 180,069 Sales of finished goods 267,964 572,304 ------------ ------------ 12,713,862 10,060,035 ------------ ------------ ------------ ------------ 5 OTHER INCOME 31 December 31 December 2012 2011 ------------ ------------ £ £ Interest income 10,161 1,086 Foreign currency exchange adjustment gain - 117,302 Software licence repurchase by aircraft manufacturer 681,010 - Other income 82,418 62 ------------ ------------ 773,589 118,450 ------------ ------------ ------------ ------------ 6 OTHER OPERATING EXPENSES 31 December 31 December 2012 2011 ------------ ------------ £ £ Foreign currency exchange adjustment loss 319,082 - Claim on maintenance reserve expense 869,992 654,075 Depreciation of property, plant and equipment 3,466,920 2,950,475 ------------ ------------ 4,655,994 3,604,550 ------------ ------------ ------------ ------------ 7 FINANCE EXPENSES 31 December 31 December 2012 2011 ------------ ------------ £ £ Interest expense on secured borrowings 3,258,897 2,191,412 Amortisation of loan premium 229,569 - Amortisation of deferred lease expense 122,260 - ------------ ------------ 3,610,726 2,191,412 ------------ ------------ ------------ ------------ 8 PROPERTY, PLANT AND EQUIPMENT Furniture and equipment Aircraft Total ------------- ------------ ------------ 31 December 2012 £ £ £ ---------------- Cost or valuation: At 1 July 2012 9,521 155,872,270 155,881,791 Additions 1,248 45,461,898 45,463,146 Currency realignment (276) (4,999,468) (4,999,744) ------------- ------------ ------------ At 31 December 2012 10,493 196,334,700 196,345,193 ------------- ------------ ------------ ------------- ------------ ------------ Representing: Cost 10,493 - 10,493 Valuation - 196,334,700 196,334,700 ------------- ------------ ------------ 10,493 196,334,700 196,345,193 ------------- ------------ ------------ ------------- ------------ ------------ Accumulated depreciation: At 1 July 2012 4,815 18,827,321 18,832,136 Depreciation for the period 1,527 3,465,393 3,466,920 Currency realignment (166) (649,290) (649,456) ------------- ------------ ------------ At 31 December 2012 6,176 21,643,424 21,649,600 ------------- ------------ ------------ ------------- ------------ ------------ Net book value: At 1 July 2012 4,706 137,044,949 137,049,655 ------------- ------------ ------------ ------------- ------------ ------------ At 31 December 2012 4,317 174,691,276 174,695,593 ------------- ------------ ------------ ------------- ------------ ------------ Furniture and equipment Aircraft Total ------------- ------------ ------------ 30 June 2012 £ £ £ ------------ Cost or valuation: At 1 July 2011 7,539 98,053,541 98,061,080 Additions 1,789 69,338,834 69,340,623 Disposal of subsidiary - (13,904,233) (13,904,233) Currency realignment 193 2,384,128 2,384,321 ------------- ------------ ------------ At 30 June 2012 9,521 155,872,270 155,881,791 ------------- ------------ ------------ ------------- ------------ ------------ Representing: Cost 9,521 - 9,521 Valuation - 155,872,270 155,872,270 ------------- ------------ ------------ 9,521 155,872,270 155,881,791 ------------- ------------ ------------ ------------- ------------ ------------ Accumulated depreciation: At 1 July 2011 2,220 13,162,670 13,164,890 Depreciation for the year 2,505 6,512,830 6,515,335 Impairment loss - 5,551,385 5,551,385 Disposal of subsidiary - (6,798,079) (6,798,079) Currency realignment 90 398,515 398,605 ------------- ------------ ------------ At 30 June 2012 4,815 18,827,321 18,832,136 ------------- ------------ ------------ ------------- ------------ ------------ Net book value: At 1 July 2011 5,319 84,890,871 84,896,190 ------------- ------------ ------------ ------------- ------------ ------------ At 30 June 2012 4,706 137,044,949 137,049,655 ------------- ------------ ------------ ------------- ------------ ------------ 9 SHARE CAPITAL 31 December 30 June 2012 2012 ----------- -------- £ £ Allotted, called up and fully paid: 44,374,463 (30 June 2012: 42,374,463) ordinary shares of 1 penny each 443,745 423,745 ----------- -------- ----------- -------- On 5 July 2012, the Company issued 2,000,000 ordinary shares of 1 penny each following a private placement exercise for £2,000,000. 10 DIVIDENDS PAID 31 December 31 December 2012 2011 ----------- ----------- £ £ Dividend declared/paid during the 6 months ended 31 December: Final dividend of 1.05p (2011: 1p) 464,356 407,266 ----------- ----------- ----------- ----------- No dividends have been declared subsequent to 31 December 2012. 11 CONTINGENT LIABILITIES There were no material changes in contingent liabilities since 30 June 2012. 12. TRANSACTIONS WITH RELATED PARTIES Significant related party transactions: 31 December 31 December 2012 2011 ------------ -------------- £ £ Sales of goods to a related party(1) 8,798 125,639 Sales of goods to a related party(2) 957 2,300 Services rendered to a related party(1) - 20,244 Services rendered to a related party(2) 3,086 - Maintenance rent received from a related party(1) 908,600 702,975 Rental income received from a related party(1) 7,762,618 4,971,086 Rental income received from a related party(3) 119,004 109,398 Interest income received from a related party(4) 423 - Interest income received from a related party(5) 4,890 - Interest income received from a related party(6) 331 - Service fee paid to a related party(7) 2,750 10,939 Arrangement fee paid to a related party(8) - 32,355 Service fee paid to a related party(9) - 61,260 Service fee paid to a related party(10) - 10,164 Service fee paid to a related party(11) - 10,000 Service fee paid to a related party(12) - 11,412 Service fee paid to a related party(13) 161,858 2,033 Expenses rebilled from a related party(13) 26,958 17,613 Interest expense paid to a related party(8) 63,282 6,675 Interest expense paid to a related party(14) - 2,821 Interest expense paid to a director of a subsidiary 1,182 - 1. Received from Skywest Airlines (Australia) Pty Ltd in which a director of the Company is also a director of Skywest Airlines (Australia) Pty Ltd. 2. Received from Skywest Airlines (S) Pte Ltd in which a director of the subsidiary is also a director of Skywest Airlines (S) Pte Ltd. 3 Received from F11305 Pte Ltd in which a director of the Company is also a director of F11305 Pte Ltd. 4. Received from Giant Mix Investment Ltd in which a director of the Company is also a director of Giant Mix Investment Ltd 5. Received from Takeoff Services Pte Ltd in which a director of the Company is also a director of Takeoff Services Pte Ltd. 6. Received from CaptiveVision Capital Ltd in which a director of the Company is a director of CaptiveVision Capital Ltd. 7. Paid to Leob Aron & Company Ltd in which a director of a subsidiary is also a director of Leob Aron & Company. 8. Paid to Fleet Solution Consulting Pte Ltd in which a director of a subsidiary is also a director of Fleet Solution Consulting Pte Ltd. 9. Paid to Takeoff Services Pte Ltd in which a director of the Company is also a director of Takeoff Services Pte Ltd. 10. Paid to Giant Mix Investment Ltd in which a director of the Company is also a director of Giant Mix Investment Ltd. 11. Paid to Epsom Assets Limited in which a director of the Company is also a director of Epsom Assets Limited. 12. Paid to Sinclair Management in which a director of the subsidiary is the sole proprietor of Sinclair Management. 13. Paid to Skywest Airlines (S) Pte Ltd in which a director of the subsidiary is also a director of Skywest Airlines (S) Pte Ltd. 14. Paid to CaptiveVision Capital Ltd in which a director of the Company is a director of CaptiveVision Capital Ltd. The nature and contractual terms of key management compensation and inter-company transactions during the period are consistent with the disclosures in the Annual Report for the year ended 30 June 2012. 13 EVENTS AFTER THE BALANCE SHEET DATE Subsequent to the balance sheet date, the followings occurred: a) On 9 January 2013, the Company purchased 150,000 of its own ordinary shares at a price of 88 pence per ordinary share representing approximately 0.34 per cent of the Company's current issued share capital. These 150,000 ordinary shares are to be held in treasury. b) On 25 January 2013, the Group has completed the purchase of a A320-200 which it had previously leased from another aircraft leasing company. 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 risks 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 Group's principal risks and uncertainties are consistent with those set put in the Prospectus submitted to the London Stock Exchange. 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 for finance on favourable terms. Should this supply of finance contract, it would limit our fleet expansion and therefore growth. GOING CONCERNS 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 2012. DIRECTORS The directors of Avation PLC are listed in its Annual Report for the year ended 30 June 2012. 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 Chairman 11 February 2013 Avation plc

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