AVATION PLC
("Avation" or "the
Company")
UNAUDITED Results for the SIX
MONTHS ended 31 DECEMBER 2023
Avation PLC (LSE: AVAP), the
commercial passenger aircraft leasing company, announces unaudited
results for the six months ended 31 December 2023.
Financial Highlights
·
Revenue and other income US$46.3 million (2022
restated: US$55.7 million);
·
Operating profit US$17.5 million (2022 restated:
US$35.4 million);
·
Net indebtedness reduced by US$31.8 million to
US$699.4 million (30 June 2023: US$731.2 million);
·
Group total cash increased to US$150.1 million (30
June 2023: US$116.9 million);
·
Loss before tax US$9.6 million (2022 restated:
Profit before tax US$7.1 million);
·
Loss before tax includes US$2.9 million loss on
sale resulting from aircraft repossession in India and US$4.7
million non-cash amortisation expense resulting from the 2021
modification of terms of Avation Capital S.A. Senior PIK Toggle
Notes due 2026 under IFRS 9; and
·
Net asset value per share decreased 5.5% to £2.56
(30 June 2023 restated: £2.71).
Operational Highlights
·
One Airbus A320-200 started a new four-year lease
with Cebu Pacific;
·
A lease for an ATR 72-500 was terminated and the
aircraft was repossessed from an airline in India and
sold;
·
Avation refinanced four leased aircraft with a new
loan facility; and
·
Avation repurchased US$8.0 million face value
Avation Capital S.A. Senior PIK Toggle Notes due 2026.
Outlook
According to IATA, 2023 was marked
by strong industry-wide recovery with revenue passenger kilometres
increasing 25% year-on-year in December 2023 to 94% of 2019
levels.
Avation's fleet will be 100%
utilised once the delayed sale of an 11-year-old ATR 72-600 and a
delayed lease of the remaining off-lease ATR 72-600 aircraft are
concluded. Both transactions are expected to close shortly.
There are no leases expiring before September 2024 at the earliest,
with the next earliest lease expiry not until January
2026.
The Company's future strategy will
focus on leasing modern, low CO2 emissions, fuel-efficient
aircraft. Avation is supportive of the aviation industry's goal of
becoming more sustainable through a transition to latest technology
more fuel-efficient aircraft engines and the use of sustainable
aviation fuel to reduce CO2 emissions. A portion of Avation's fleet
comprises latest technology ATR72-600 aircraft which have
impeccable and world leading environmental
characteristics.
The Company is focussed on
optimising its capital structure, refinancing and continuing to
lower debt levels and is positioned to cautiously return to organic
growth through deliveries from its environmentally friendly
ATR72-600 orderbook, opportunistic aircraft trading and the
potential exercise of ATR purchase rights should attractive lease
opportunities arise. Avation intends to repurchase
Avation Capital S.A. Senior PIK Toggle Notes on
the open market as and when attractive valuation opportunities
arise and liquidity is available.
Executive Chairman, Jeff Chatfield, said:
"During the six months ending 31
December 2023 Avation repossessed an ATR 72-500 aircraft from an
airline in default in India. Although this resulted in a book
loss of US$2.9 million, we were satisfied with this outcome in what
can be a difficult jurisdiction for repossessions. The
aircraft was not in contractual physical return condition when
repossessed and was subsequently sold at a loss which was
appropriate for a plane in that physical condition. We expect
to conclude a delayed sale of an 11-year-old ATR 72-600 aircraft in
the coming weeks at a much higher price. The sale was
originally announced in September 2023, but completion has been
delayed due to exchange control issues in the buyer's
jurisdiction. The buyer has now fully paid the purchase price
for the aircraft and will take delivery shortly. We also expect to
commence a new lease of our remaining off-lease ATR 72-600 aircraft
in the coming months having signed the associated letter of
intent. We expect to conclude the formal lease agreement with
a new lessee shortly.
Avation has continued to de-lever
its balance sheet, achieving a reduction to 59.7% in the ratio of
net debt to total assets as at 31 December 2023. Improved
collection of rent arrears has led to a reduction in total trade
and other receivables of US$13.9 million in the six-month period
ended 31 December 2023. A significant portion of the cashflow
generated by the fleet is directed towards repayments of
debt. Scheduled loan maturities for the 2024 calendar year
amount to US$58.5 million.
The Company repurchased US$8.0
million Avation Capital S.A. 8.25%/9.0% Senior PIK Toggle Notes due
2026 in December 2023. The Company intends to repurchase
additional unsecured notes from time to time subject to
availability and attractive pricing.
Avation's management believes that
short-term interest rates, which increased dramatically in 2022 and
2023, may have peaked and may stabilise over the coming
years. This background should create opportunities for
Avation to refinance debt at lower interest rates in future.
Avation will review its capital structure and look for
opportunities to refinance existing loans to improve its overall
capital structure and cost of debt.
Avation has two ATR 72-600 aircraft
on order for delivery in 2024. The delivery dates for these
aircraft are likely to be pushed back by the manufacturer to the
fourth quarter of 2024 due to supply chain issues. Avation
will make further announcements regarding placement of these
aircraft in due course.
The Company owns 28 purchase rights
for ATR 72-600 aircraft which provide a pathway to future fleet
growth."
Change in accounting policy for maintenance
rent
The Directors resolved to change the
company's accounting policy for maintenance reserve rents at a
meeting held on 8 February 2024. Under the adopted accounting
policy Avation will recognise any excess maintenance reserves as
revenue over the duration of a lease, to the extent that
maintenance reserves collected are not expected to be reimbursed to
the lessee. Under the previous accounting policy, surplus
maintenance reserves were recognised as revenue only at the end of
the lease term. The change in accounting policy has been
recorded with comparative amounts for prior financial periods
restated. The change in accounting policy has led to
recognition of US$1.0 million maintenance reserve revenue in the
six-months ended 31 December 2023 (2022 restated: US$0.4
million).
Financial Summary
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Revenue
|
44,733
|
48,617
|
|
Other income
|
1,544
|
7,082
|
|
|
46,277
|
55,699
|
|
Operating profit
|
17,547
|
35,398
|
|
Profit/(loss) before tax
|
(9,583)
|
7,077
|
|
Profit/(loss) after tax
|
(8,804)
|
8,679
|
|
EPS
|
(12.42c)
|
12.50c
|
|
|
|
|
|
US$
'000s
|
31 December
2023
|
30 June
2023
(restated)
|
|
Fleet assets (1)
|
870,960
|
898,616
|
|
Total assets
|
1,172,432
|
1,179,596
|
|
Cash and bank balances
(2)
|
150,072
|
116,905
|
|
Unrestricted cash and cash
equivalents
|
43,456
|
24,816
|
|
|
|
|
|
Net asset value per share
(US$) (3)
|
$3.25
|
$3.44
|
|
Net asset value per share
(GBP) (4)
|
£2.56
|
£2.71
|
1. Fleet assets are
defined as property, plant and equipment plus assets held for sale
plus finance lease receivables.
2. Cash
and bank balances as at 31 December 2023 comprise cash and cash
equivalents of US$43.5 million (30 June 2023: US$24.8 million) and
restricted cash balances of US$106.6 million (30 June 2023: US$90.9
million).
3. Net asset value per
share is total equity divided by the total number of shares in
issue, excluding treasury shares.
4. Based on GBP:USD
exchange rate as at 31 December 2023 of 1.27 (30 June
2023:1.27).
Aircraft Fleet
|
Aircraft Type
|
31 December
2023
|
30 June
2023
|
|
Boeing 777-300ER
|
1
|
1
|
|
Airbus A330-300
|
1
|
1
|
|
Airbus A321-200
|
6
|
6
|
|
Airbus A320-200
|
2
|
2
|
|
Airbus A220-300
|
5
|
5
|
|
ATR 72-600
|
16
|
16
|
|
ATR 72-500
|
4
|
5
|
|
Total
|
35
|
36
|
At 31 December 2023, Avation's fleet
comprised 35 aircraft, including five aircraft on finance lease.
Avation serves 15 customers in 13 countries. The weighted average
age of the fleet is 6.9 years (30 June 2023: 6.4 years) and the
weighted average remaining lease term is 4.6 years (30 June 2023:
5.0 years).
One ATR 72-500 aircraft was sold
during the period. Turboprop and narrowbody aircraft make up 82% of
fleet assets as at 31 December 2023. Fleet assets have decreased
3.1% to US$871.0 million (30 June 2023: US$898.6 million). As at
the date of this report, Avation has two off-lease ATR 72-600
aircraft. One aircraft is due to be sold shortly and one
aircraft is currently subject to a non-binding letter of intent
with a prospective lessee.
Avation has two new ATR 72-600
aircraft on order for delivery later this year and purchase rights
for a further 28 aircraft as at 31 December 2023.
Debt summary
|
US$
'000s
|
31 December
2023
|
30 June
2023
|
|
Current loans and
borrowings
|
60,012
|
61,401
|
|
Non-current loans and
borrowings
|
682,836
|
694,575
|
|
Total loans and borrowings
|
742,848
|
755,976
|
|
Unrestricted cash and bank
balances
|
43,456
|
24,816
|
|
Net indebtedness (1)
|
699,392
|
731,160
|
|
Net debt to total assets
(2)
|
59.7%
|
62.0%
|
|
Weighted average cost of secured
debt (3)
|
4.7%
|
4.5%
|
|
Weighted average cost of total
debt (4)
|
6.3%
|
6.1%
|
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.
Net indebtedness was reduced by 4.3%
to US$699.4 million (30 June 2023: US$731.2 million). Four aircraft
were re-financed with long-term fixed rate loans during the
period.
The weighted average cost of total
debt has increased to 6.3% at 31 December 2023 (30 June 2023: 6.1%)
due to repayments of lower cost secured loans in the period and new
secured loans with higher interest rates. The weighted average cost
of secured debt also increased to 4.7% at 31 December 2023 (30 June
2023: 4.5%).
At the end of the period, Avation's
net debt to total assets ratio improved to 59.7% (30 June 2023:
62.0%). As at 31 December 2023, 96.2% of total debt was at
fixed or hedged interest rates (30 June 2023: 95.8%). The ratio of
unsecured debt to total debt was 41.1% (30 June 2023:
40.1%).
Financial Analysis
Revenue
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Lease rental revenue
|
43,887
|
42,608
|
|
Less: amortisation of lease
incentive assets
|
(1,169)
|
(612)
|
|
|
42,718
|
41,996
|
|
Interest income from finance
leases
|
1,036
|
1,171
|
|
Maintenance reserves
revenue
|
979
|
5,450
|
|
|
44,733
|
48,617
|
|
|
|
|
| |
Lease rental revenue increased by
3.1% from US$42.6 million in the six months ended 31 December 2022
to US$43.9 million in the six months ended 31 December 2023.
The increase was principally due to improved fleet
utilisation. There were two off-lease aircraft in the fleet
at 31 December 2023 compared to five at 31 December
2022.
Interest income from finance leases
decreased by 11.5% from US$1.2 million in the six months ended 31
December 2022 to US$1.0 million in the six months ended 31 December
2023. There were five aircraft leased on finance leases at 31
December 2022 and 2023.
Other
income
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Fees for late payment
|
608
|
390
|
|
Deposit released
|
350
|
-
|
|
Foreign currency exchange
gain
|
-
|
3,481
|
|
Claim recovery
|
385
|
3,166
|
|
Others
|
201
|
45
|
|
|
1,544
|
7,082
|
|
|
|
|
| |
The claim recoveries recognised in
other income in the six months ended 31 December 2023 and 31
December 2022 are distributions paid to creditors of Virgin
Australia in excess of amounts allocated to trade
receivables.
Foreign currency exchange gains in
the six months ended 31 December 2022 arose principally from the
release of deferred hedged foreign currency exchange gains on two
Euro loans that were refinanced during the period.
Administrative
expenses
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Staff costs
|
2,792
|
2,868
|
|
Other administrative
expenses
|
1,739
|
1,591
|
|
|
4,531
|
4,459
|
|
|
|
|
| |
Staff costs reduced by 2.6% from
US$2.9 million in the six months ended 31 December 2022 to US$2.8
million in the six months ended 31 December 2023 principally due to
lower charges for employee share warrants.
Other administrative expenses
increased by 9.3% from US$1.6 million in the six months ended 31
December 2022 to US$1.7 million in the six months ended 31 December
2023.
Finance
income
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Interest income
|
2,814
|
853
|
|
Fair value gain on financial
derivatives
|
645
|
44
|
|
Finance income from discounting
non-current deposits to fair value
|
332
|
304
|
|
Gain on repurchase of unsecured
notes
|
311
|
486
|
|
Gain on early full repayment of
borrowings
|
161
|
1,657
|
|
|
4,263
|
3,344
|
|
|
|
|
| |
Interest income increased in the six
months ended 31 December 2023 due increased cash and bank balances
and improved interest rates for cash deposits. The group
deploys surplus cash balances into fixed term deposits while
maintaining sufficient liquidity to meet near-term payment
obligations.
Avation generated a gain of US$0.3
million on the repurchase of US$8.0 million of Avation Capital S.A.
8.25%/9.0% unsecured notes at a discount in December
2023.
A gain of US$0.2 million on early
full repayment of borrowings arose when an in-the-money interest
rate swap was terminated concurrently with repayment of a loan in
November 2023.
Finance
expenses
|
US$
'000s
|
Six months ended 31
December,
|
|
|
2023
|
2022
(restated)
|
|
Interest expense on secured
borrowings
|
10,125
|
10,742
|
|
Interest expense on unsecured
notes
|
15,555
|
15,504
|
|
Amortisation of loan transaction
costs
|
543
|
669
|
|
Amortisation of IFRS 9 gain on debt
modification
|
4,730
|
4,342
|
|
Amortisation of interest expense on
non-current borrowings
|
326
|
283
|
|
Others
|
114
|
125
|
|
|
31,393
|
31,665
|
|
|
|
|
| |
Interest expense on secured
borrowings reduced by 5.7% to US$10.1 million in the six months
ended 31 December 2023 from US$10.7 million in the six months ended
31 December 2022 as a result of repayments of secured loans.
Secured loans have been paid down by US$40.3 million from US$478.0
million at 31 December 2022 to US$437.5 million at 31 December
2023.
Interest expense on unsecured notes
includes US$4.3 million of non-cash interest paid in kind by
increasing the face value of Avation Capital S.A. 8.25%/9.0%
unsecured notes.
Amortisation of IFRS 9 gain on debt
modification of US$4.7 million represents the non-cash accretion in
the book value of Avation Capital S.A. 8.25%/9.0% unsecured notes
resulting from the accounting treatment of the extension and
changes to the terms of the notes agreed with noteholders in March
2021. The extension was accounted for as a substantial
modification of a debt instrument in accordance with IFRS 9.
The face value of Avation Capital S.A. 8.25%/9.0% unsecured notes
outstanding as of 31 December 2023 is US$341.6 million.
Results Conference Call
Avation's senior management team
will host an investor update call on 1 March 2024, at 12:00 PM GMT
(UK) / 7:00 AM EST (US) / 8:00 PM SGT (Singapore), to discuss the
Company's financial results. Investors can participate in the call
by using the following link:
https://www.investormeetcompany.com/avation-plc/register-investor
A replay of the investor update call
will be made available on the Investor Relations page of the
Avation PLC website.
Forward Looking Statements
This release contains certain
"forward looking statements". Forward looking statements may be
identified by words such as "expects," "intends," "initiate",
"anticipates," "plans," "believes," "seeks," "estimates," "will,"
or words of similar meaning and include, but are not limited to,
statements regarding the outlook for Avation's future business and
financial performance. Forward looking statements are based on
management's current expectations and assumptions, which are
subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Actual outcomes and
results may differ materially due to global political, economic,
business, competitive, market, regulatory and other factors and
risks. Further information on the factors and risks that may affect
Avation's business is included in Avation's regulatory
announcements from time to time, including its Annual Report, Full
Year Financial Results and Half Year Results announcements. Avation
expressly disclaims any obligation to update or revise any of these
forward-looking statements, whether because of future events, new
information, a change in its views or expectations, or
otherwise.
Basis of presentation
This announcement covers the
unaudited results of Avation PLC for the six months ended 31
December 2023.
Financial information presented in
this announcement is being published for the purposes of providing
preliminary Group financial results for the six months ended 31
December 2023. 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 29 February 2024. 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
2023, upon which the auditors have given an
unqualified audit, were published on 26 October 2023 and
have been annexed to the annual return and delivered to the
Registrar of Companies.
All "US$" amounts in this release
are US Dollar amounts unless stated otherwise. Certain comparative
amounts have been reclassified to conform with current year
presentation.
-ENDS-
Enquiries:
Avation PLC - Jeff Chatfield,
Executive
Chairman
+65 6252 2077
Avation welcomes shareholder
questions and comments and advises the email address is:
investor@avation.net
More information on Avation is
available at www.avation.net.
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR
LOSS
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
|
|
Note
|
31 Dec
2023
|
31 Dec
2022
(Restated)
|
|
|
|
US$'000s
|
US$'000s
|
|
Continuing operations
|
|
|
|
|
Revenue
|
6
|
44,733
|
48,617
|
|
Other income
|
7
|
1,544
|
7,082
|
|
|
|
46,277
|
55,699
|
|
|
|
|
|
|
Depreciation
|
12
|
(18,660)
|
(18,932)
|
|
Gain on derecognition of finance
lease
|
|
-
|
3,235
|
|
Loss on disposal of
aircraft
|
|
(2,855)
|
(1,000)
|
|
Unrealised gain on aircraft purchase
rights
|
17
|
2,190
|
1,880
|
|
Unrealised (loss)/gain on equity
investment
|
18
|
(500)
|
6,869
|
|
Impairment loss on
aircraft
|
|
-
|
(315)
|
|
Aircraft transition
expenses
|
|
(2,933)
|
(5,790)
|
|
Reversal of/(provision for) expected
credit losses
|
|
38
|
(250)
|
|
Administrative expenses
|
|
(4,531)
|
(4,459)
|
|
Legal and professional
fees
|
|
(1,254)
|
(1,149)
|
|
Other expenses
|
8
|
(225)
|
(390)
|
|
Operating profit
|
|
17,547
|
35,398
|
|
|
|
|
|
|
Finance income
|
9
|
4,263
|
3,344
|
|
Finance expenses
|
10
|
(31,393)
|
(31,665)
|
|
(Loss)/profit before
taxation
|
|
(9,583)
|
7,077
|
|
|
|
|
|
|
Taxation
|
|
779
|
1,602
|
|
(Loss)/profit from continuing operations
|
|
(8,804)
|
8,679
|
|
|
|
|
|
|
(Loss)/profit attributable
to:
|
|
|
|
|
Shareholders of Avation
PLC
|
|
(8,804)
|
8,680
|
|
Non-controlling interests
|
|
-
|
(1)
|
|
|
|
(8,804)
|
8,679
|
|
Earnings per share for (loss)/profit
attributable to shareholders of Avation PLC
|
|
|
|
|
Basic earnings per share
|
|
(12.42
cents)
|
12.50
cents
|
|
Diluted earnings per share
|
|
(12.38
cents)
|
12.50
cents
|
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
|
|
|
31 Dec
2023
|
31 Dec
2022
(Restated)
|
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
(Loss)/profit from continuing operations
|
|
(8,804)
|
8,679
|
|
|
|
|
|
|
Other comprehensive income:
|
|
|
|
|
Items may be reclassified subsequently to profit or
loss:
|
|
|
|
|
Net (loss)/gain on cash flow hedge,
net of tax
|
|
(5,089)
|
1,427
|
|
Other comprehensive income, net of tax
|
|
(5,089)
|
1,427
|
|
|
|
|
|
|
Total comprehensive (loss)/income for the
period
|
|
(13,893)
|
10,106
|
|
|
|
|
|
|
Total comprehensive (loss)/income
attributable to:
|
|
|
|
|
Shareholders of Avation
PLC
|
|
(13,893)
|
10,107
|
|
Non-controlling interests
|
|
-
|
(1)
|
|
|
|
(13,893)
|
10,106
|
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL
POSITION
AS
AT 31 DECEMBER 2023
|
|
Note
|
31 Dec
2023
|
30 Jun
2023
(Restated)
|
1 Jul
2022
(Restated)
|
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
ASSETS
|
|
|
|
|
|
Non-current assets
|
|
|
|
|
|
Property, plant and
equipment
|
12
|
819,325
|
845,471
|
813,908
|
|
Finance lease receivables
|
14
|
13,530
|
41,213
|
55,208
|
|
Trade and other
receivables
|
13
|
8,930
|
14,258
|
19,388
|
|
Derivative financial
assets
|
16
|
8,944
|
13,442
|
5,920
|
|
Aircraft purchase rights
|
17
|
88,010
|
85,820
|
65,280
|
|
Lease incentive assets
|
|
7,569
|
4,686
|
310
|
|
Goodwill
|
15
|
1,902
|
1,902
|
1,902
|
|
|
|
948,210
|
1,006,792
|
961,916
|
|
Current assets
|
|
|
|
|
|
Finance lease receivables
|
14
|
30,105
|
3,932
|
5,624
|
|
Trade and other
receivables
|
13
|
22,494
|
31,035
|
13,202
|
|
Derivative financial
assets
|
16
|
-
|
54
|
-
|
|
Investment in equity, fair value
through profit or loss
|
18
|
10,735
|
11,235
|
3,715
|
|
Lease incentive assets
|
|
2,816
|
1,643
|
137
|
|
Cash and bank balances
|
19
|
150,072
|
116,905
|
119,171
|
|
|
|
216,222
|
164,804
|
141,849
|
|
Assets held for sale
|
20
|
8,000
|
8,000
|
113,255
|
|
|
|
224,222
|
172,804
|
255,104
|
|
Total assets
|
|
1,172,432
|
1,179,596
|
1,217,020
|
|
EQUITY AND LIABILITIES
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Share capital
|
21
|
1,182
|
1,182
|
1,203
|
|
Share premium
|
|
70,024
|
70,024
|
67,681
|
|
Treasury shares
|
21
|
-
|
-
|
(7,811)
|
|
Merger reserve
|
|
6,715
|
6,715
|
6,715
|
|
Asset revaluation reserve
|
|
50,764
|
50,764
|
51,730
|
|
Capital reserve
|
|
8,876
|
8,876
|
8,876
|
|
Other reserves
|
|
10,436
|
15,069
|
14,174
|
|
Retained earnings
|
|
82,500
|
91,295
|
86,067
|
|
Equity attributable to shareholders of Avation
PLC
|
|
230,497
|
243,925
|
228,635
|
|
Non-controlling interest
|
|
7
|
7
|
6
|
|
Total equity
|
|
230,504
|
243,932
|
228,641
|
|
Non-current liabilities
|
|
|
|
|
|
Loans and borrowings
|
22
|
682,836
|
694,575
|
764,230
|
|
Trade and other payables
|
|
18,102
|
20,185
|
18,274
|
|
Derivative financial
liabilities
|
16
|
933
|
1,632
|
1,055
|
|
Maintenance reserves
|
23
|
76,299
|
52,033
|
73,754
|
|
Deferred tax liabilities
|
|
25,060
|
26,694
|
25,613
|
|
|
|
803,230
|
795,119
|
882,926
|
|
Current liabilities
|
|
|
|
|
|
Loans and borrowings
|
22
|
60,012
|
61,401
|
63,900
|
|
Trade and other payables
|
|
23,766
|
17,167
|
15,940
|
|
Maintenance reserves
|
23
|
54,191
|
61,456
|
10,156
|
|
Income tax payable
|
|
729
|
521
|
658
|
|
|
|
138,698
|
140,545
|
90,654
|
|
Liabilities directly associated with
assets held for sale
|
20
|
-
|
-
|
14,799
|
|
|
|
138,698
|
140,545
|
105,453
|
|
Total equity and liabilities
|
|
1,172,432
|
1,179,596
|
1,217,020
|
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
This interim condensed consolidated
financial statements for Avation PLC for the six months ended 31
December 2023 were authorised for issue in accordance with a
resolution of the Directors on 29 February 2024.
1
CORPORATE INFORMATION
Avation PLC is a public limited
company incorporated in England and Wales under the Companies Act
2006 (Registration Number 05872328) and its shares are traded on
the Standard Segment of the Main Market of the London Stock
Exchange.
The Group's principal activity is
aircraft leasing.
2 BASIS
OF PREPARATION AND ACCOUNTING POLICIES
These interim condensed consolidated
financial statements have been prepared in accordance with the
Disclosure and Transparency Rules (DTR) of the Financial Conduct
Authority and in accordance with UK-adopted International
Accounting Standard (IAS) 34 'Interim Financial
Reporting'.
The interim condensed consolidated
financial statements do not include all the notes of the type
normally included within the annual report and therefore cannot be
expected to provide as full an understanding of the financial
performance, financial position and financial and investing
activities of the consolidated entity as the annual
report.
It is recommended that the interim
condensed consolidated financial statements be read in conjunction
with the annual report for the year ended 30 June 2023 and
considered together with any public announcements made by Avation
PLC during the six months ended 31 December 2023.
The accounting policies and methods
of computation are the same as those adopted in the annual report
for the year ended 30 June 2023 except for as explained in note 3,
which addresses a change in accounting policy for maintenance
reserves and in note 4, the adoption of new accounting standards
effective as of 1 July 2023.
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 2023, 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.
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
3
CHANGE IN
ACCOUNTING POLICY
Maintenance reserves
With effect from 1 July 2023, the
Group changed its accounting policy for maintenance reserves.
Under the previous accounting policy, the Group recognised any
surplus or shortfall identified in maintenance reserve liabilities
for an aircraft as compared to the expected future reimbursement
obligations to a lessee in profit or loss at the end of lease or on
sale of an aircraft.
Under the new accounting policy, the
Group will recognise maintenance reserves as revenue over the term
of a lease, to the extent that collected maintenance reserves are
not expected to be reimbursed to the lessee.
The Group will recognise maintenance
revenue once the balance the Group projects will be reimbursed to
the lessee over the lease term has been collected. The policy
would be applied on a component-by-component basis for aircraft
where the Group collects cash maintenance
reserves.
The Group believes that the new
accounting policy which provides for a timely release of
maintenance reserves to profit or loss over the lease term will
ensure that financial statements reflect the Group's financial
performance more accurately. This change in accounting policy has
been applied retrospectively.
Summary of quantitative
impact
The following tables summarise the
material impacts on the condensed consolidated statement of profit
or loss, condensed consolidated statement of comprehensive income
and condensed consolidated statement of financial position
resulting from the change in accounting policy.
Condensed consolidated statement of
profit or loss
|
For
six months ended 31 December 2022
|
Impact of changes in accounting policy
|
|
|
As previously
reported
|
Adjustments
|
As restated
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
Total income
|
55,311
|
388
|
55,699
|
|
Taxation
|
1,643
|
(41)
|
1,602
|
|
Profit from continuing
operations
|
8,332
|
347
|
8,679
|
|
|
|
|
|
|
Profit attributable to:
|
|
|
|
|
Shareholders of Avation
PLC
|
8,333
|
347
|
8,680
|
|
Non-controlling interest
|
(1)
|
-
|
(1)
|
|
|
8,332
|
347
|
8,679
|
|
|
|
|
|
|
Earnings per share for profit
attributable to shareholders of Avation PLC
|
|
|
|
|
Basic earnings per share (US
cents)
|
12.00
cents
|
|
12.50
cents
|
|
Diluted earnings per share (US
cents)
|
12.00
cents
|
|
12.50
cents
|
|
|
|
|
|
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR
THE SIX MONTHS ENDED 31 DECEMBER 2023
3 CHANGE
IN ACCOUNTING POLICY (continued)
Condensed consolidated statement of
comprehensive income
|
For
six months ended 31 December 2022
|
Impact of changes in accounting policy
|
|
|
As previously
reported
|
Adjustments
|
As restated
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
Total comprehensive income for the
period
|
9,759
|
347
|
10,106
|
|
|
|
|
|
|
Total comprehensive income attributable to:
|
|
|
|
|
Shareholders of Avation
PLC
|
9,760
|
347
|
10,107
|
|
Non-controlling interest
|
(1)
|
-
|
(1)
|
|
|
9,759
|
347
|
10,106
|
|
|
|
|
|
Condensed interim statement of
financial position
|
As
at 1 July 2022
|
Impact of changes in accounting policy
|
|
|
As previously
reported
|
Adjustments
|
As restated
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
Maintenance reserves -
non-current
|
75,131
|
(1,377)
|
73,754
|
|
Deferred tax liabilities
|
25,437
|
176
|
25,613
|
|
Liabilities associated with assets
held for sale
|
15,146
|
(347)
|
14,799
|
|
Retained earnings
|
84,519
|
1,548
|
86,067
|
|
As
at 30 June 2023
|
Impact of changes in accounting policy
|
|
|
As previously
reported
|
Adjustments
|
As restated
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
Maintenance reserves -
non-current
|
54,587
|
(2,554)
|
52,033
|
|
Deferred tax liabilities
|
26,440
|
254
|
26,694
|
|
Retained earnings
|
88,995
|
2,300
|
91,295
|
4
NEW STANDARDS AND
INTERPRETATIONS NOT APPLIED AND STANDARDS IN EFFECT IN
2024
(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)
|
|
Amendments to IFRS 16 - Lease
liability in a Sale and Leaseback
|
1 January
2024
|
|
Amendments to IAS 7 and IFRS 7 -
Disclosures : Supplier Finance Arrangements
|
1
January 2024
|
|
Amendments to IAS 1: Classification
of Liabilities as Current or Non-current
Non-current liabilities with Covenants
|
1 January
2024
|
|
Amendments to IFRS 10 and IAS 28:
Sale or Contribution of Assets between an Investor and its
Associate or joint venture
|
Postponed
indefinitely
|
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 2024
The Group has adopted all new
standards that have come into effect during the six months ended 31
December 2023. The adoptions do not have a material impact on the
Group's interim condensed consolidated financial
statements.
5 FAIR
VALUE MEASUREMENT
The fair value of a financial
instrument is the price that would be received to sell an asset or
paid to transfer a liability in an orderly transaction between
market participants at the measurement date.
The carrying amounts of cash and
bank balances, trade and other receivables, finance lease
receivables - current, trade and other payables - current, loans
and borrowings - current are a reasonable approximation of fair
value either due to their short-term nature or because the interest
rate charged closely approximates market interest rates or that the
financial instruments have been discounted to their fair value at a
current pre-tax interest rate.
The fair value of the maintenance
reserves is not disclosed in the table below as the timing and cost
of the settlement of maintenance reserves cannot be determined with
certainty in advance and hence the fair value of maintenance
reserve cannot be accurately measured.
|
|
31 Dec 2023
|
30 Jun 2023
|
|
|
Carrying
amount
|
Fair value
|
Carrying
amount
|
Fair value
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Financial assets:
|
|
|
|
|
|
Finance lease receivables -
non-current
|
13,530
|
12,241
|
41,213
|
38,555
|
|
Derivative financial
assets
|
8,944
|
8,944
|
13,496
|
13,496
|
|
Investment in equity, fair value
through profit or loss
|
10,735
|
10,735
|
11,235
|
11,235
|
|
|
|
|
|
|
|
Financial liabilities:
|
|
|
|
|
|
Deposits collected -
non-current
|
14,983
|
12,001
|
15,907
|
13,502
|
|
Loans and borrowings other than
unsecured notes - non-current
|
377,531
|
338,847
|
391,110
|
360,055
|
|
Unsecured notes
|
305,305
|
292,030
|
303,465
|
300,539
|
|
Share warrants
|
933
|
933
|
1,632
|
1,632
|
|
|
|
|
|
|
|
|
|
|
|
|
The fair values (other than for
unsecured notes, investment in debt instrument, fair value through
profit or loss) above are estimated by discounting expected future
cash flows at market incremental lending rate for similar types of
lending, borrowing or leasing arrangements at the end of the
reporting period, which is classified under level 2 of the fair
value hierarchy.
The fair value of the unsecured
notes and share warrants are based on level 1 quoted prices
(unadjusted) in an active market that the Group can access at
measurement date.
The fair value of the derivative
financial instruments is determined by reference to
marked-to-market values provided by counterparties. The fair
value measurement of all derivative financial instruments is
classified under level 2 of the fair value hierarchy, for which
inputs other than quoted prices that are observable for the asset
or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) are included as inputs for the
determination of fair value.
5 FAIR
VALUE MEASUREMENT (continued)
Assets measured at fair value classified under level
3:
|
|
|
|
|
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Fair value measurement using significant unobservable
inputs:
|
|
|
|
|
|
Aircraft
|
|
|
819,314
|
845,455
|
|
Aircraft purchase rights
|
|
|
88,010
|
85,820
|
|
Investment in equity, fair value
through profit or loss
|
|
|
10,735
|
11,235
|
|
|
|
|
|
|
|
|
|
|
|
|
Aircraft were valued at 30 June
2023. Refer to Note 12 for the details on the valuation technique
and significant inputs used in the valuation.
6
REVENUE
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
(Restated)
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Lease rental revenue
|
43,887
|
42,608
|
|
Less: amortisation of lease
incentive asset
|
(1,169)
|
(612)
|
|
|
42,718
|
41,996
|
|
Interest income on finance
leases
|
1,036
|
1,171
|
|
Maintenance reserves
revenue
|
979
|
5,450
|
|
|
|
|
|
|
44,733
|
48,617
|
|
|
|
|
Geographical analysis
|
|
|
|
Europe
|
Asia
Pacific
|
Total
|
|
|
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
|
|
|
|
31 Dec 2023
|
|
10,621
|
34,112
|
44,733
|
|
|
|
31 Dec 2022 (Restated)
|
|
13,588
|
35,029
|
48,617
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
6
REVENUE (continued)
Operating lease commitments
The Group leases out aircraft under
operating leases. The maturity analysis of the undiscounted lease
payments to be received under operating leases are as
follows:
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Within one year
|
92,367
|
91,067
|
|
One to two years
|
87,210
|
89,924
|
|
Two to three years
|
72,240
|
85,575
|
|
Three to four years
|
64,442
|
69,896
|
|
Four to five years
|
37,535
|
62,236
|
|
Later than five years
|
49,527
|
85,277
|
|
|
|
|
7 OTHER
INCOME
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Fees for late payment
|
608
|
390
|
|
Deposit released
|
350
|
-
|
|
Foreign currency exchange
gain
|
-
|
3,481
|
|
Recovery of claims from
customer
|
385
|
3,166
|
|
Others
|
201
|
45
|
|
|
|
|
|
|
1,544
|
7,082
|
|
|
|
|
|
|
|
| |
8 OTHER
EXPENSES
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Deferment fees
|
-
|
390
|
|
Foreign currency exchange
loss
|
225
|
-
|
|
|
|
|
|
|
225
|
390
|
|
|
|
|
9
FINANCE INCOME
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Interest income from financial
institutions
|
2,365
|
204
|
|
Interest income from non-financial
institutions
|
449
|
649
|
|
Fair value gain on financial
derivatives
|
645
|
44
|
|
Finance income from discounting
non-current deposits to fair value
|
332
|
304
|
|
Gain on repurchases of unsecured
notes
|
311
|
486
|
|
Gain on early full repayment of
borrowings
|
161
|
1,657
|
|
|
|
|
|
|
4,263
|
3,344
|
|
|
|
|
10 FINANCE
EXPENSES
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Interest expense on
borrowings
|
10,125
|
10,742
|
|
Interest expense on unsecured
notes
|
15,555
|
15,504
|
|
Amortisation of loan transaction
costs
|
543
|
669
|
|
Amortisation of gain on loan
modification
|
4,730
|
4,342
|
|
Amortisation of interest expense on
non-current deposits
|
326
|
283
|
|
Others
|
114
|
125
|
|
|
|
|
|
|
31,393
|
31,665
|
|
|
|
|
11 RELATED PARTY
TRANSACTIONS
Significant related party transactions:
|
|
|
|
|
31 Dec
2023
|
31 Dec
2022
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Entities controlled by key management
personnel
(including directors):
|
|
|
|
|
|
|
|
Lease liability paid
|
(164)
|
(159)
|
|
Consulting fee expense
|
(205)
|
(123)
|
|
Maintenance service
|
(7)
|
(47)
|
|
Interest expense
|
-
|
(40)
|
|
Service fee income
|
37
|
43
|
|
|
|
|
|
Directors:
|
|
|
|
|
|
|
|
Interest expense
|
-
|
(8)
|
12 PROPERTY, PLANT AND
EQUIPMENT
|
|
Furniture and
equipment
|
Jet
aircraft
|
Turboprop
aircraft
|
Total
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
31
December 2023:
|
|
|
|
|
|
Cost or valuation:
|
|
|
|
|
|
At 1 July 2023
|
97
|
851,435
|
310,169
|
1,161,701
|
|
Disposals
|
-
|
-
|
(17,692)
|
(17,692)
|
|
|
|
|
|
|
|
At
31 December 2023
|
97
|
851,435
|
292,477
|
1,144,009
|
|
|
|
|
|
|
|
Representing:
|
|
|
|
|
|
At cost
|
97
|
-
|
-
|
97
|
|
At valuation
|
-
|
851,435
|
292,477
|
1,143,912
|
|
|
|
|
|
|
|
|
97
|
851,435
|
292,477
|
1,144,009
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment:
|
|
|
|
|
|
At 1 July 2022
|
81
|
230,783
|
85,366
|
316,230
|
|
Depreciation expense
|
5
|
13,890
|
4,765
|
18,660
|
|
Disposals
|
-
|
-
|
(10,206)
|
(10,206)
|
|
|
|
|
|
|
|
At
31 December 2023
|
86
|
244,673
|
79,925
|
324,684
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
At
1 July 2023
|
16
|
620,652
|
224,803
|
845,471
|
|
At
31 December 2023
|
11
|
606,762
|
212,552
|
819,325
|
|
|
|
|
|
|
12 PROPERTY, PLANT
AND EQUIPMENT (continued)
|
|
Furniture and
equipment
|
Jet
aircraft
|
Turboprop
aircraft
|
Total
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
|
|
|
|
|
|
30
June 2023:
|
|
|
|
|
|
Cost or valuation:
|
|
|
|
|
|
At 1 July 2022
|
91
|
771,859
|
305,923
|
1,077,873
|
|
Additions
|
6
|
-
|
-
|
6
|
|
Reclassified from held under finance
lease
|
-
|
-
|
16,166
|
16,166
|
|
Reclassified from asset held for
sale
|
-
|
106,124
|
-
|
106,124
|
|
Reclassified as asset held for
sale
|
-
|
(28,034)
|
(9,354)
|
(37,388)
|
|
Revaluation recognised in
equity
|
-
|
1,486
|
(2,566)
|
(1,080)
|
|
|
|
|
|
|
|
At
30 June 2023
|
97
|
851,435
|
310,169
|
1,161,701
|
|
|
|
|
|
|
|
Representing:
|
|
|
|
|
|
At cost
|
97
|
-
|
-
|
97
|
|
At valuation
|
-
|
851,435
|
310,169
|
1,161,604
|
|
|
|
|
|
|
|
|
97
|
851,435
|
310,169
|
1,161,701
|
|
|
|
|
|
|
|
Accumulated depreciation and impairment:
|
|
|
|
|
|
At 1 July 2022
|
68
|
182,815
|
81,082
|
263,965
|
|
Depreciation expense
|
13
|
28,615
|
9,938
|
38,566
|
|
Reclassified from asset held for
sale
|
-
|
28,124
|
-
|
28,124
|
|
Reclassified as asset held for
sale
|
-
|
(9,784)
|
(1,354)
|
(11,138)
|
|
(Reversal of)/impairment
loss
|
-
|
1,013
|
(4,300)
|
(3,287)
|
|
|
|
|
|
|
|
At
30 June 2023
|
81
|
230,783
|
85,366
|
316,230
|
|
|
|
|
|
|
|
Net book value:
|
|
|
|
|
|
At
1 July 2022
|
23
|
589,044
|
224,841
|
813,908
|
|
At
30 June 2023
|
16
|
620,652
|
224,803
|
845,471
|
|
|
|
|
|
|
Assets pledged as security
The Group's aircraft and aircraft
held under asset for sale with carrying values of US$819.3 million
(30 June 2023: US$838.5 million) are mortgaged to secure the Group's borrowings (Note
22).
Additions and disposals
During the six months ended 31
December 2023, one turboprop aircraft was sold.
12 PROPERTY, PLANT AND
EQUIPMENT (continued)
Valuation
The Group's aircraft were valued in
June 2023 by independent valuers on a lease-encumbered value basis
("LEV"). LEV takes into account the current lease
arrangements for the aircraft and estimated residual values at the
end of the lease. These amounts have been discounted to present
value using discount rates ranging from 5.50% to 7.00% (30 June
2022: 5.5% to 7.0%) per annum for jet aircraft and 5.50% to 9.00%
(30 June 2022: 5.5% to 8.0%) per annum for turboprop
aircraft. Different discount rates are considered appropriate
for different aircraft based on their respective risk
profiles.
If the aircraft were measured using
the cost model, carrying amounts would be as follows:
|
|
31 Dec 2023
|
30 Jun 2023
|
|
|
Jets
|
Turbo
props
|
Jets
|
Turbo
props
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Cost
|
801,559
|
276,103
|
801,559
|
293,795
|
|
Accumulated depreciation and
impairment
|
(229,295)
|
(77,734)
|
(216,316)
|
(83,657)
|
|
Net
book value
|
572,264
|
198,369
|
585,243
|
210,138
|
Geographical analysis
|
31
Dec 2023
|
|
Europe
|
Asia
Pacific
|
Total
|
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Capital expenditure
|
|
-
|
-
|
-
|
|
Net book value - aircraft
|
|
219,536
|
599,778
|
819,314
|
|
|
|
|
|
|
|
30
Jun 2023
|
|
Europe
|
Asia
Pacific
|
Total
|
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Capital expenditure
|
|
-
|
6
|
6
|
|
Net book value - aircraft
|
|
241,508
|
603,947
|
845,455
|
|
|
|
|
|
|
13 TRADE AND OTHER
RECEIVABLES
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Current
|
|
|
|
Trade receivables
|
9,053
|
26,545
|
|
Less:
|
|
|
|
Allowance for expected credit
losses
|
(173)
|
(10,542)
|
|
|
8,880
|
16,003
|
|
Accrued revenue
|
2,754
|
3,375
|
|
Less:
|
|
|
|
Allowance for expected credit
losses
|
(7)
|
(8)
|
|
|
2,747
|
3,367
|
|
Other receivables
|
10,420
|
12,012
|
|
Less:
|
|
|
|
Allowance for expected credit
losses
|
(499)
|
(1,358)
|
|
|
9,921
|
10,654
|
|
Interest receivables
|
561
|
752
|
|
Less:
|
|
|
|
Allowance for expected credit
losses
|
(28)
|
(44)
|
|
|
533
|
708
|
|
Deposits
|
49
|
48
|
|
Prepaid expenses
|
364
|
255
|
|
|
|
|
|
|
22,494
|
31,035
|
|
Non-current:
|
|
|
|
Other receivables
|
281
|
5,487
|
|
Deposits for aircraft
|
8,139
|
8,139
|
|
Right-of-use assets
|
510
|
632
|
|
|
|
|
|
|
8,930
|
14,258
|
14 FINANCE LEASE
RECEIVABLES
Future minimum lease payments
receivable under finance leases are as follows:
|
|
31 Dec 2023
|
30 Jun 2023
|
|
|
Minimum lease
payments
|
Present value of
payments
|
Minimum lease
payments
|
Present value of
payments
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Within one year
|
31,915
|
30,125
|
5,675
|
3,952
|
|
Less:
|
|
|
|
|
|
Allowance for expected credit
losses
|
(20)
|
(20)
|
(20)
|
(20)
|
|
|
31,895
|
30,105
|
5,655
|
3,932
|
|
One to two years
|
2,430
|
1,571
|
30,041
|
28,491
|
|
Two to three years
|
9,032
|
8,413
|
2,430
|
1,627
|
|
Three to four years
|
3,588
|
3,546
|
11,358
|
11,095
|
|
Four to five years
|
-
|
-
|
-
|
-
|
|
Later than five years
|
-
|
-
|
-
|
-
|
|
Total minimum lease payments
|
46,945
|
43,635
|
49,484
|
45,145
|
|
Less: amounts representing interest
income
|
(3,310)
|
-
|
(4,339)
|
-
|
|
Present value of minimum lease payments
|
43,635
|
43,635
|
45,145
|
45,145
|
15
GOODWILL
The Group performs its annual
impairment test in June and when circumstances indicate the
carrying value may be impaired. For the purpose of these financial
statements there was no indication of impairment. The key
assumptions used to determine the recoverable amount for the
different cash generating units were disclosed in the annual
consolidated financial statements for the year ended 30 June
2023.
16 DERIVATIVE FINANCIAL
ASSETS/LIABILITIES
|
|
Contract/
notional
amount
|
Fair value
|
|
|
31 Dec 2023
|
30 Jun
2023
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Derivative financial assets -current
|
|
|
|
|
|
Interest rate swap -
current
|
-
|
3,531
|
-
|
54
|
|
|
|
|
|
|
|
Derivative financial assets -non- current
|
|
|
|
|
|
Interest rate swap
|
198,903
|
220,110
|
8,445
|
12,847
|
|
Cross-currency interest rate
swap
|
4,000
|
4,000
|
499
|
595
|
|
|
202,903
|
224,110
|
8,944
|
13,442
|
|
|
|
|
|
|
|
Derivative financial liabilities
|
|
|
|
|
|
Share warrants
|
-
|
-
|
933
|
1,632
|
|
|
|
|
|
|
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.
16 DERIVATIVE FINANCIAL
ASSETS/LIABILITIES (continued)
The Group determines the economic
relationship between the finance lease income, loans and borrowings
and the derivative by matching the critical terms of the hedging
instrument with the terms of the hedged item. The hedge ratio (the
ratio between notional amount of the derivative financial
instrument to the amount of the finance lease income and loans and
borrowings being hedged) is determined to be 1:1. There were no
expected sources of ineffectiveness on the Group's hedges as the
critical terms of the derivative match exactly with the terms of
the hedged item.
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 SOFR or 3-month EURIBOR 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 SOFR under the
cross-currency interest rate swap contracts.
The swap contracts mature between 24
January 2026 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 loss
net of tax of US$4.2 million (31 December 2022: gain of US$6.5
million) on these derivative financial instruments was recognised
in the fair value reserve for the year.
The fair value of the derivative
financial instruments is determined by reference to
marked-to-market values provided by counterparties. The fair
value measurement of all derivative financial instruments is
classified under level 2 of the fair value hierarchy, for which
inputs other than quoted prices that are observable for the asset
or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) are included as inputs for the
determination of fair value.
The Group entered into Euro
denominated lease agreements which create exposure to variability
in cash flows due movements in the EUR:USD exchange rate. To
hedge its exposure to variable cash flows resulting from changes in
EUR:USD spot rates, the Group has arranged Euro denominated
financing which reduces overall exposure to variable cash flows to
the extent that lease receipts and debt service cashflows are
matched. The Group is making use of a non-derivative hedging
instrument and has designated the cash flows with respect to the
loan interest and principal repayment (hedging instrument) against
a specific portion of the lease receivable (hedged
item).
Unrealised foreign exchange gains
and losses arising on Euro denominated loans designated as cash
flow hedges are recognised in the foreign currency hedge
reserve. Unrealised foreign 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.
The Group determine the hedging
relationship between the hedging instruments and the hedged item on
a number of criteria including the reference interest rates,
tenors, repricing dates and maturities and to notional or par
amounts. The Group assesses whether the derivative designated
in each hedging relationship is expected to be effective in
offsetting changes in cash flows of the hedged item using the
hypothetical derivative method. In these hedge relationships,
the main sources of ineffectiveness are:
· Differences in the pricing dates between the swaps and the
borrowings
· Differences in the timing of the cash flows of the hedged
items and the hedging requirements
· The
counterparties' credit risk differently impacting the fair value
movements of the hedging instruments and the hedged
items
· Changes to the forecasted amount of cash flows of hedged items
and hedging instruments
17 AIRCRAFT PURCHASE
RIGHTS
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Aircraft purchase rights, at fair value:
|
|
|
|
At 1 July 2023/ 1 July
2022
|
85,820
|
65,280
|
|
Unrealised gain
|
2,190
|
20,540
|
|
At
31 December/30 June
|
88,010
|
85,820
|
|
|
|
|
The Group holds 28 purchase rights
to acquire additional ATR 72-600 aircraft from the
manufacturer. The purchase rights are available for aircraft
to be delivered on or before the end of June 2027.
The Group has determined that it
would seek to dispose of excess aircraft purchase rights over and
above its requirement to acquire additional aircraft for its
fleet. The Group accounts for aircraft purchase rights at
fair value through profit or loss.
18 INVESTMENT IN EQUITY,
FAIR VALUE THROUGH PROFIT OR LOSS
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Non-listed equity, at fair value
|
|
|
|
At 1 July 2023/ 1 July
2022
|
11,235
|
3,715
|
|
Unrealised (loss)/gain
|
(500)
|
7,520
|
|
At
31 December/30 June
|
10,735
|
11,235
|
|
|
|
|
The Group received 8,014,602 ordinary shares from an airline
customer as part of the airline's restructuring plan. The Group
entered into an agreement to exchange 8,014,602 ordinary shares in
Philippine Airlines, Inc. with 124,787,353
ordinary shares in PAL Holdings, Inc. The exchange of shares is
expected to be completed in the first quarter of 2024.
19 CASH AND BANK
BALANCES
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Fixed deposits
|
71,980
|
62,306
|
|
Other cash and bank
balances
|
78,092
|
54,599
|
|
Total cash and bank balances
|
150,072
|
116,905
|
|
Less: restricted
|
(106,616)
|
(90,864)
|
|
Less: investment in fixed terms
deposit
|
-
|
(1,225)
|
|
Cash and cash equivalents
|
43,456
|
24,816
|
|
|
|
|
The Group's restricted cash and bank
balances have been pledged as security for certain loan
obligations.
In the consolidated statement of
cash flows, cash and cash equivalents comprises unrestricted cash
and bank balances.
20 ASSETS HELD FOR SALE
AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR
SALE
The Group's aircraft which met the
criteria to be classified as assets held for sale and the
associated liabilities were as follows:
|
|
31 Dec
2023
|
30 Jun 2023
|
|
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Assets held for sale:
|
|
|
|
|
|
Property, plant and equipment -
aircraft
|
|
|
|
|
|
At 1 July 2023/ 1 July
2022
|
|
|
8,000
|
100,500
|
|
Additions
|
|
|
-
|
26,250
|
|
Disposals
|
|
|
-
|
(40,750)
|
|
Transfer to property, plant and
equipment
|
|
|
-
|
(78,000)
|
|
At
31 December/30 June
|
|
|
8,000
|
8,000
|
|
|
|
|
|
|
21 SHARE CAPITAL AND
TREASURY SHARES
(a)
Share capital
|
|
31 Dec 2023
|
30 Jun 2023
|
|
|
No of
shares
|
US$'000s
|
No of
shares
|
US$'000s
|
|
|
|
|
|
|
|
Allotted, called up and fully
paid
Ordinary shares of 1 penny
each:
|
|
|
|
|
|
At 1 July 2023/ 1 July
2022
|
70,883,124
|
1,182
|
71,698,124
|
1,203
|
|
Issue of shares
|
-
|
-
|
1,495,000
|
18
|
|
Cancellation
|
-
|
-
|
(2,310,000)
|
(39)
|
|
|
|
|
|
|
|
At
31 December/30 June
|
70,883,124
|
1,182
|
70,883,124
|
1,182
|
|
|
|
|
|
|
The holders of ordinary shares
(except for treasury shares) are entitled to receive dividends as
and when declared by the Company. All ordinary shares carry
one vote per share without restrictions.
(b)
Treasury shares
|
|
31 Dec 2023
|
30 Jun 2023
|
|
|
No of
shares
|
US$'000s
|
No of
shares
|
US$'000s
|
|
|
|
|
|
|
|
At 1 July 2023/ 1 July
2022
|
-
|
-
|
2,210,000
|
7,811
|
|
Acquired during the
period
|
-
|
-
|
100,000
|
94
|
|
Cancellation
|
-
|
-
|
(2,310,000)
|
(7,095)
|
|
|
|
|
|
|
|
At
31 December/30 June
|
-
|
-
|
-
|
-
|
|
|
|
|
|
|
(c)
Net asset value per
share
|
|
|
|
|
|
|
|
31 Dec 2023
|
30 Jun
2023
(Restated)
|
|
|
|
|
|
|
|
Net asset value per share
(US$)(1)
|
|
|
$3.25
|
$3.44
|
|
Net asset value per share
(GBP)(2)
|
|
|
£2.56
|
£2.71
|
|
|
|
|
|
|
(1) Net asset value per share is total equity divided by
the total number of shares issued and
outstanding at period end.
(2) Based on GBP:US$ exchange rate as at 31 December 2023
of 1.27 (30 June 2023: 1.27).
22 LOANS AND
BORROWINGS
|
|
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
|
|
Secured borrowings
|
|
|
437,543
|
452,511
|
|
Unsecured notes
|
|
|
305,305
|
303,465
|
|
|
|
|
|
|
|
Total loans and borrowings
|
|
|
742,848
|
755,976
|
|
|
|
|
|
|
|
Less: current portion
|
|
|
(60,012)
|
(61,401)
|
|
|
|
|
|
|
|
Non-current loans and borrowings
|
|
|
682,836
|
694,575
|
|
|
|
|
|
|
|
|
Maturity
|
Weighted average interest
rate per annum
|
|
|
31 Dec
2023
|
30 Jun 2023
|
31 Dec
2023
|
30 Jun 2023
|
|
|
|
|
%
|
%
|
|
|
|
|
|
|
|
Secured borrowings
|
2025-2031
|
2024-2031
|
4.70%
|
4.52%
|
|
Unsecured notes
|
2026
|
2026
|
8.25%
|
8.25%
|
|
|
|
|
|
|
Secured borrowings are secured by
first ranking mortgages over the relevant aircraft, security
assignments of the Group's rights under leases and other
contractual agreements relating to the aircraft, charges over bank
accounts in which lease payments relating to the aircraft are
received and charges over the issued share capital of certain
subsidiaries.
23 MAINTENANCE
RESERVES
|
|
31 Dec
2023
|
30 Jun
2023
(Restated)
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Current:
|
|
|
|
Maintenance reserves
|
54,191
|
61,456
|
|
|
|
|
|
Non-current:
|
|
|
|
Maintenance reserves
|
58,903
|
41,639
|
|
Maintenance lease
contribution
|
17,396
|
10,394
|
|
|
76,299
|
52,033
|
|
|
|
|
|
Total maintenance reserves
|
130,490
|
113,489
|
|
|
|
|
|
|
|
|
|
31 Dec
2023
|
30 Jun
2023
(Restated)
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
At 1 July 2023/ 1 July
2022
|
113,489
|
83,910
|
|
Contributions
|
18,952
|
29,152
|
|
Utilisations
|
(390)
|
(7,544)
|
|
Released to profit or
loss
|
(1,561)
|
(2,773)
|
|
Transfer from liabilities directly
associated with asset held for sale
|
-
|
10,744
|
|
|
|
|
|
At
31 December/30 June
|
130,490
|
113,489
|
|
|
|
|
During the six months ended 31
December 2023, maintenance reserves of US$1.0 million were released
to profit or loss as revenue and US$0.6 million was offset against
loss on disposal of aircraft.
24 CAPITAL
COMMITMENTS
Capital expenditure contracted for at the reporting date but not
recognised in the financial statements is as follows:
|
|
31 Dec
2023
|
30 Jun
2023
|
|
|
US$'000s
|
US$'000s
|
|
|
|
|
|
Property, plant and
equipment
|
31,446
|
32,761
|
|
|
|
|
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 2023, the Group
has commitments to purchase two ATR 72-600 aircraft from the
manufacturer with expected delivery dates in 2024.
25 CONTINGENT
LIABILITIES
There were no material changes in contingent liabilities since 30
June 2023.