FINANCIAL RESULTS AND INTERIM MANAGEMENT REPORT

RNS Number : 2893F

Avation PLC

19 February 2015

 

RNS: AVAP

19 February 2015

AVATION PLC

(the "Company")

FINANCIAL RESULTS AND INTERIM MANAGEMENT REPORT

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

"Record number of new ATR 72 deliveries and significant reduction to cost of debt capital"

Avation PLC (LSE: AVAP) the commercial passenger aircraft leasing company is pleased to announce unaudited consolidated financial results for the six-month period ended 31 December 2014.

Highlights for the period are as follows:

•     Revenue increased by 13% to US$27.7m compared with US$24.6m in the six months ended 31 December 2013;

•     Avation generated earnings per share of 11.4 U.S. cents;

•     The fleet increased to 29 aircraft (as at the date of this report), with five new ATR 72-600 aircraft delivered in the six month period ended 31 December 2014;

•     The average cost of debt capital across the group further reduced to 4.6% (31 December 2013: 5.5%); and

•     Avation established a medium term business pipeline and exercised options to place a firm order for five additional ATR 72-600 aircraft for delivery in 2016.

Avation expects to continue fleet growth with a minimum of 13 new aircraft scheduled to be delivered by the end of 2016. These aircraft represent an investment equivalent to approximately 61% of total assets as at 31 December 2014.

Commenting today, Avation PLC Chairman, Jeff Chatfield said:  

"The Directors are pleased with the growth in Avation's core leasing business driven by a rapid rate of deliveries of new aircraft in the period. This growth has also seen the introduction of new airline customers that has further diversified the company's sources of revenue.

"The latest half-year period also saw the announcement of a sale and leaseback with Thomas Cook for two new Airbus A321 aircraft delivering in early 2016.  This is the company's first sale and leaseback transaction of brand new aircraft."

"Avation also secured long term fleet growth by firming five delivery options for ATR72 aircraft for delivery in 2016. This takes the number of firm aircraft scheduled to be delivered between now and the end of 2016 to 13 aircraft. In addition to this Avation has 22 further options for future deliveries for ATR 72 aircraft for delivery from 2017 onwards."

"Growth in core leasing revenue and total fleet assets will through the execution of these contracted deliveries of aircraft. The Board is confident that this increase in the scale of the business combined with the significant reduction in average cost of debt across the fleet will continue to provide sustainable growth and drive future earnings."

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, Executive Chairman                                                                          [phone]

WH Ireland - Harry Ansell / James Joyce                                                                                        [phone]

Blytheweigh- Tim Blythe / Alex Shilov / Andrea Benton                                                               [phone]

Statement and Interim Management Report

by the Executive Chairman, Jeff Chatfield:

Dear Fellow Shareholder,

Introduction

Your Board is pleased to report that during the six month period ended 31st December 2014 the group generated consolidated profit after tax of US$6,289,523 and earnings per share of 11.4 cents on increased revenues of US$27,677,505. As at 31 December 2014, total assets increased to US$503,207,871. Corresponding liabilities increased to US$381,549,170 resulting in net assets and total equity of US$121,658,701.

The Company enjoyed a 13% increase in revenue to US$27,677,505 ($24,560,737 in the comparable prior period). This revenue increase is consistent with expectations and is a consequence of the continued expansion in the aircraft fleet.

Fleet Development

The Company's aircraft fleet currently comprises 29 aircraft which generates a gross rental yield of approximately 13 per cent, calculated from the book value as at 31 December 2014.  The Company has a customer base of airlines in Europe and Asia/Pacific. Avation understands that it is the now the second largest lessor of turbo-prop aircraft in Asia/Pacific.

The fleet is comprised of a diverse range of commercial passenger aircraft, including ATR 72 turbo-prop and Airbus A320, Airbus A321 and Fokker 100 jet aircraft.

The Company took a significant step forward during the period by securing the sale and leaseback of two new Airbus A321 jet aircraft with Thomas Cook, with delivery of these aircraft scheduled for early 2016. Sale and leaseback is one of the key acquisition opportunities for new aircraft for an aircraft lessor such as Avation. The ATR 72 turbo-prop fleet will continue to grow, with five additional ATR 72 aircraft scheduled for delivery by December 2015 and a further six aircraft in 2016.

Funding

There has been a significant reduction to the weighted average cost of capital which 4.6% as at 31 December 2014 (31 December 2013: 5.5%) on debt funding for the fleet, which remains the largest cash operating expense. During the reporting period the Group secured a $31m re-finance on two existing Airbus A321 aircraft, a transaction that demonstrates the ability of the Group to re-finance core assets and release equity from the balance sheet to fund growth. Access to funding nevertheless remains a risk, which is common to all leveraged and capital intensive businesses. Avation also remains subject to specific aviation based industry risks including the credit worthiness of client airlines.

Dividend

As announced at the Annual General Meeting held on 24 November 2014 the Company previously paid a final dividend of 2.01 cents per share on 12 January 2015.

Outlook

The Board of Directors is strongly committed to further developing the Avation business and remains confident that it can achieve continued and sustainable growth throughout 2015 and 2016 through the contracted deliveries of new aircraft. The Directors anticipate additional growth in lease revenues arising from future aircraft acquisitions. As at the date of this report the Company has firm orders for 11 new ATR 72 and two new Airbus A321 aircraft and holds further options and purchase rights for an additional 22 ATR 72 aircraft.

Jeff Chatfield,

Executive Chairman

18 February 2015

AVATION PLC

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

(UNAUDITED)

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

	Note	31 December 2014	31 December 2013
		US$	US$
Continuing operations
Revenue	4	27,677,505	24,560,737
Cost of sales		-	-
Gross profit		27,677,505	24,560,737
Other income	5	609,327	1,652,852
Other operating expenses	6	(9,062,666)	(7,536,993)
Expenses
- Administrative expenses		(3,358,468)	(2,563,604)
- Finance expense	7	(8,887,207)	(8,218,514)
Profit before taxation		6,978,491	7,894,478
Taxation		(688,968)	(1,718,829)
Profit for the financial year		6,289,523	6,175,649
Other comprehensive income:
Items that may be reclassified subsequently to profit or loss:
Currency translation differences arising on consolidation		(12,600)	(48)
Other comprehensive income, net of tax		(12,600)	(48)
Total comprehensive income for the financial period, all attributable to equity holders of the Company		6,276,923	6,175,601
Profit attributable to:
Equity holders of the parent		6,028,142	5,625,607
Non-controlling interest		261,381	550,042
		6,289,523	6,175,649
Total comprehensive income attributable to:
Equity holders of the parent		6,017,170	5,625,577
Non-controlling interest		259,753	550,024
		6,276,923	6,175,601
Earnings per share
- Basic		11.39 cents	11.60 cents
- Fully diluted		11.39 cents	11.60 cents

AVATION PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (UNAUDITED)

AS AT 31 DECEMBER 2014

	Note	31 December 2014	30 June 2014
		US$	US$
ASSETS
Current assets:
Cash and cash equivalents		21,938,621	23,394,739
Trade and other receivables		3,377,193	2,804,086
Prepayments		1,907,527	2,156,478
Inventories		2,840,000	-
Total current assets		30,063,341	28,355,303
Non-current assets:
Trade and other receivables		7,273,485	11,268,750
Loan receivables		13,400,000	-
Prepayments		6,832,448	6,295,123
Property, plant and equipment	8	443,254,589	367,325,131
Goodwill		2,384,008	2,384,008
Total non-current assets		473,144,530	387,273,012
Total assets		503,207,871	415,628,315
LIABILITIES AND EQUITY
Current liabilities:
Trade and other payables		6,601,609	6,141,301
Deferred lease income		380,831	273,110
Provision for taxation		1,389,294	1,098,664
Loans and borrowings		42,315,717	62,173,186
Short-term provisions		491,607	-
Total current liabilities		51,179,058	69,686,261
Non-current liabilities:
Trade and other payables		10,971,049	8,188,983
Deferred lease income		1,561,627	1,579,332
Loans and borrowings		311,157,264	218,984,900
Deferred tax liabilities		6,680,172	6,421,855
Total non-current liabilities		330,370,112	235,175,070
Equity attributable to shareholders:
Share capital	9	990,758	891,301
Treasury shares	9	(682,333)	(682,333)
Share premium		45,686,299	31,424,215
Assets revaluation reserve		10,158,496	10,158,496
Capital redemption reserve		11,564	11,564
Warrant reserve		90,004	-
Capital reserve		7,882,078	3,856,141
Foreign currency translation reserve		(9,826)	1,146
Retained earnings		55,355,778	50,446,477
		119,482,818	96,107,007
Non-controlling interest		2,175,883	14,659,977
Total equity		121,658,701	110,766,984
Total liabilities and equity		503,207,871	415,628,315

AVATION PLC

STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

		Share capital	Treasury shares	Share premium	Assets Revaluation reserve	Capital Redemption reserve	Warrant reserve	Capital reserve	Foreign currency Translation reserve	Retained earnings	Total	Non-controlling Interest	Total equity
		US$	US$	US$	US$	US$	US$	US$	US$	US$	US$	US$	US$
Balance at 1 July  2014		891,301	(682,333)	31,424,215	10,158,496	11,564	-	3,856,141	1,146	50,446,477	96,107,007	14,659,977	110,766,984
Profit for the year		-	-	-	-	-	-	-	-	6,028,142	6,028,142	261,381	6,289,523
Other comprehensive income		-	-	-	-	-	-	-	(10,972)	-	(10,972)	(1,628)	(12,600)
Total comprehensive income		-	-	-	-	-	-	-	(10,972)	6,028,142	6,017,170	259,753	6,276,923
Dividend related to 2014 paid		-	-	-	-	-	-	-	-	(1,118,841)	(1,118,841)	-	(1,118,841)
Treasury shares of a subsidiary		-	-	-	-	-	-	366,263	-	-	366,263	17,500	383,763
Increase in issued share capital		99,457	-	14,585,803	-	-	-	-	-	-	14,685,260	-	14,685,260
Share issue expenses		-	-	(323,719)	-	-		-	-	-	(323,719)	-	(323,719)
Warrant expense		-	-	-	-	-	90,004	-	-	-	90,004	-	90,004
Changes in ownership interest in a subsidiary - acquisition of non-controlling interest without a change in control		-	-	-	-	-	-	3,659,674	-	-	3,659,674	(12,761,347)	(9,101,673)
Balance at 31 December 2014		990,758	(682,333)	45,686,299	10,158,496	11,564	90,004	7,882,078	(9,826)	55,355,778	119,482,818	2,175,883	121,658,701
Balance at 1 July  2013		878,137	(214,498)	29,809,334	10,158,496	11,564	103,565	2,530,212	(251)	37,949,162	81,225,721	17,010,638	98,236,359
Profit for the year		-	-	-	-	-	-	-	-	5,625,607	5,625,607	550,042	6,175,649
Other comprehensive income		-	-	-	-	-	-	-	(30)	-	(30)	(18)	(48)
Total comprehensive income		-	-	-	-	-	-	-	(30)	5,625,607	5,625,577	550,024	6,175,601
Dividend related to 2013 paid		-	-	-	-	-	-	-	-	(866,621)	(866,621)	-	(866,621)
Purchase of treasury shares		-	(467,835)	-	-	-	-	-	-	-	(467,835)	-	(467,835)
Warrant expired		-	-	-	-	-	(103,565)	-	-	103,565	-	-	-
Balance at 31 December 2013		878,137	(682,333)	29,809,334	10,158,496	11,564	-	2,530,212	(281)	42,811,713	85,516,842	17,560,662	103,077,504

.

AVATION PLC

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

	31 December 2014	31 December 2013
	US$	US$
Cash flows from operating activities:
Profit before taxation	6,978,491	7,894,478
Adjustments for:
Depreciation expense	8,489,141	7,466,753
Property, plant and equipment written off	12,238	-
Claim on maintenance reserve	-	70,240
Amortisation of loan premium	539,120	539,120
Amortisation of interest expense on deposit collected	162,894	-
Warrant expense	90,004	-
Interest expense	8,185,193	7,679,394
Finance income	(155,908)	-
Interest income	(72,713)	(11,003)
Operating profit before working capital changes	24,228,460	23,638,982
Movement in working capital:
Trade and other receivables and prepayments	6,444,664	(640,261)
Deferred lease income	(72,878)	-
Trade and other payables	2,524,968	6,443,812
Short-term provisions	491,607	(3,827,321)
Cash from operations	33,616,821	25,615,212
Interest paid	(7,311,879)	(7,321,594)
Interest received	72,713	11,003
Corporation tax paid	(140,021)	(788,451)
Net cash from operating activities	26,237,634	17,516,170
Cash flows from investing activities:
Loan receivables	(13,400,000)	-
Purchase of property, plant and equipment	(91,120,837)	(17,803,062)
Purchase of additional shares in a subsidiary from NCI	(842,648)	-
Repurchase of a subsidiary's treasury shares	(383,763)	-
Net cash used in investing activities	(105,747,248)	(17,803,062)
Cash flows from financing activities:
Net proceeds from issuance of ordinary shares	6,870,041	-
Dividends paid	(1,118,841)	(866,621)
Repurchase of treasury shares	-	(467,835)
Proceeds from loans and borrowings	88,490,242	16,602,575
Repayment of loans and borrowings	(16,175,347)	(11,474,086)
Capital element of finance lease repayments	-	(1,313,494)
Net cash from financing activities	78,066,095	2,480,539
Effects of exchange rates on cash and cash equivalents	(12,599)	(48)
Net (decrease) / increase in cash and cash equivalents	(1,456,118)	2,193,599
Cash and cash equivalents at beginning of financial year	23,394,739	19,623,244
Cash and cash equivalents at end of financial year	21,938,621	21,816,843

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

The Interim Report for Avation PLC for the six months ended 31 December 2014 was approved by the Directors on 18 February 2015.

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.

 2         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 2014 and considered together with any public announcements made by Avation PLC during the six months ended 31 December 2014.

The accounting policies and methods of computation are the same as those adopted in the annual report for the year ended 30 June 2014. 

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 2014, 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.

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

3          SEGMENT INFORMATION

Management has determined the operating segments based on the reports reviewed by the Executive Chairman ("Chief Operating Decision Maker" or "CODM") that are used to make strategic decisions.

The CODM considers the business from a business segment perspective.  Management manages and monitors the business in the 2 primary business areas: aircraft leasing and business procurement.

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 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)            Business segments

During the six months ended 31 December 2014, 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.

The business procurement segment does not meet the quantitative thresholds and is not separately disclosed.

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

3          SEGMENT INFORMATION (CON'T)

c)          Geographical analysis

	Europe	North America	Australia and Oceania	Asia	Total
	US$	US$	US$	US$	US$
31 December 2014
Revenue	6,445,452	146,667	20,106,708	978,678	27,677,505
31 December 2014
Net book value - aircraft	95,181,843	-	293,638,704	54,255,791	443,076,338
Total assets	120,164,162	16,277,160	294,975,756	71,790,793	503,207,871

	Europe	North America	Australia and Oceania	Asia	Total
	US$	US$	US$	US$	US$
31 December 2013
Revenue	5,800,000	350,000	18,410,737	-	24,560,737
30 June 2014
Net book value - aircraft	79,215,923	6,841,366	281,207,642	-	367,264,931
Total assets	96,652,653	6,841,366	307,695,428	4,438,868	415,628,315

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

4          REVENUE

		31 December 2014	31 December 2013
		US$	US$
Rental income		27,677,505	24,560,737

5          OTHER INCOME

		31 December 2014	31 December 2013
		US$	US$
Interest income		72,713	11,003
Foreign currency exchange adjustment gain		-	208,003
Finance income from the discounting of non-current deposits to present value		155,908	-
Profit from sale of property, plant and equipment		-	1,433,784
Others		380,706	62
		609,327	1,652,852

6          OTHER OPERATING EXPENSES

		31 December 2014	31 December 2013
		US$	US$
Claim on maintenance reserve expense		-	70,240
Foreign currency exchange adjustment loss		573,525	-
Depreciation of property, plant and equipment		8,489,141	7,466,753
		9,062,666	7,536,993

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

7          FINANCE EXPENSES

		31 December 2014	31 December 2013
		US$	US$
Interest expense on borrowings		8,185,193	7,679,394
Amortisation of loan insurance premium		539,120	539,120
Notional interest on deposit collected		162,894	-
		8,887,207	8,218,514

8          PROPERTY, PLANT AND EQUIPMENT

	Furniture and equipment	Jet	Turbo Props	Total
	US$	US$	US$	US$
31 December 2014
Cost or valuation:
At 1 July 2014	133,151	177,595,796	252,999,855	430,728,802
Additions	161,011	-	90,959,826	91,120,837
Disposal/written off	(87,297)	-	-	(87,297)
Reclassification	-	(13,477,625)	-	(13,477,625)
At 31 December 2014	206,865	164,118,171	343,959,681	508,284,717
Representing:
At cost	206,865	-	-	206,865
At valuation	-	164,118,171	343,959,681	508,077,852
	206,865	164,118,171	343,959,681	508,284,717
Accumulated depreciation and impairment:
At 1 July 2014	72,951	48,129,215	15,201,505	63,403,671
Depreciation charge	30,722	3,414,208	5,044,211	8,489,141
Disposal/written off	(75,059)	-	-	(75,059)
Reclassification	-	(6,787,625)	-	(6,787,625)
At 31 December 2014	28,614	44,755,798	20,245,716	65,030,128
Net carrying amount:
At 1 July 2014	60,200	129,466,581	237,798,350	367,325,131
At 31 December 2014	178,251	119,362,373	323,713,965	443,254,589

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

8          PROPERTY, PLANT AND EQUIPMENT (CONT'D)

	Furniture and equipment	Jet	Turbo Props	Total
	US$	US$	US$	US$
30 June 2014
Cost or valuation:
At 1 July 2013	20,120	177,595,796	217,015,882	394,631,798
Additions	113,031	-	71,662,590	71,775,621
Disposal	-	-	(35,678,617)	(35,678,617)
At 30 June 2014	133,151	177,595,796	252,999,855	430,728,802
Representing:
At cost	133,151	-	-	133,151
At valuation	-	177,595,796	252,999,855	430,595,651
	133,151	177,595,796	252,999,855	430,728,802
Accumulated depreciation and impairment:
At 1 July 2013	12,411	39,646,096	7,772,902	47,431,409
Depreciation charge	60,540	7,769,869	7,428,603	15,259,012
Impairment	-	713,250	-	713,250
At 30 June 2014	72,951	48,129,215	15,201,505	63,403,671
Net carrying amount:
At 1 July 2013	7,709	137,949,700	209,242,980	347,200,389
At 30 June 2014	60,200	129,466,581	237,798,350	367,325,131

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

9          SHARE CAPITAL AND TREASURY SHARES

a)         Share capital

	31 December 2014		30 June 2014
	No of shares	US$	No of shares	US$
Allotted, called up and fully paid Ordinary shares of 1 penny each
At 1 July	49,604,639	891,301	48,822,960	878,519
Issue of shares	6,059,088	99,457	781,679	12,782
At 31 December/30 June	55,663,727	990,758	49,604,639	891,301

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.

a)   On 3 July 2014, the Company issued 3,000,000 ordinary shares of 1 penny each at 140 pence following a private placement exercise raising gross proceeds of £4.2 million (equivalent to US$7,193,760).

b)  On 24 September 2014, the Company issued 273,027 ordinary shares of 1 penny at each at 164 pence each as consideration for the acquisition of 2,184,216 ordinary shares in its subsidiary, Capital Lease Aviation PLC.

c)  On 20 November 2014, the Company issued 2,786,061 ordinary shares of 1 penny at each at 164 pence each as consideration for the acquisition of 21,065,334 ordinary shares in its subsidiary, Capital Lease Aviation PLC.

b)      Treasury shares

	31 December 2014		30 June 2014
	No of treasury shares	US$	No of treasury shares	US$
At 1 July	450,000	682,333	150,000	214,498
Acquired during the period	-	-	300,000	467,835
At 31 December /30 June	450,000	682,333	450,000	682,333

AVATION PLC

NOTES TO THE FINANCIAL INFORMATION

FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

10         DIVIDENDS PAID

		31 December 2014	31 December 2013
		US$	US$
Declared/paid during the 6 months ended 31 December 2014
Dividends on ordinary shares
- Final exempt (one-tier) dividend for 2014:2.01 US cents (2013:1.78 US cents) per share		1,118,841	866,621

            No dividends have been declared subsequent to 31 December 2014.

11      CONTINGENT LIABILITIES

            There were no material changes in contingent liabilities since 30 June 2014.

12.       TRANSACTIONS WITH RELATED PARTIES

Significant related party transactions:

		31 December 2014		31 December 2013
		US$		US$
Entities controlled by key management personnel (including directors):
Interest income		2,383		5,140
Rental expense paid		(9,182)		-
Service fee paid		(36,000)		(4,830)
Interest expense paid		(223,332)		(326,294)
Ex-director of a subsidiary:
Interest expense paid		-	19,654

            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 2014.

13        EVENTS AFTER THE BALANCE SHEET DATE

On 13 February 2015 the Company announced it had terminated the lease of one aircraft and entered into a conditional sale agreement to sell this and one other aircraft to be delivered in 2015 at prices consistent with current market values.

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 principal risks and uncertainties which may affect the Group in the second half of the financial year will include the typical risks associated with the aviation business, including but not limited to any downturn in the global aviation industry, fuel costs, finance costs, war and terrorism and the like which may affect our airline customers' ability to fulfil their lease obligations.

The business also relies on its ability to source finance on favourable terms.  Should this supply of finance contract, it would limit our fleet expansion and therefore growth.

GOING CONCERN

After making enquiries, the directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future.  For this reason they continue to adopt the going concern basis in preparing the financial statements.  The financial risk management objectives and policies of the Group and the exposure of the Group to credit risk and liquidity risk are discussed in the annual report for the Group for the year ended 30 June 2014.

DIRECTORS

The directors of Avation PLC are listed in its Annual Report for the year ended 30 June 2014.  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

18 February 2015

 

END

 

 

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