TIDMAVAP
RNS Number : 2900R
Avation PLC
29 June 2020
AVATION PLC
("Avation" or "the Company")
Financial Results for the Nine MONTHS ended 31 March 2020
Avation PLC (LSE: AVAP), the commercial passenger aircraft
leasing company, announces unaudited financial results for the nine
months ended 31 March 2020.
Key Financial Results
-- Revenue increased by 14% to $99.6 million;
-- Profit before tax increased by 173% to $46.6 million;
-- Profit after tax increased by 151% to $38.3 million;
-- Earnings per share increased by 152% to 60.6 cents; and
-- Net asset value per share increased by 10% to GBP3.24.
Executive Chairman, Jeff Chatfield, said:
"Avation is pleased to present its unaudited financial results
for the nine months ended 31 March 2020. Revenue from the aircraft
leasing business grew steadily throughout the first nine months of
the year and the Company is in a strong financial position.
"The Company is releasing these unaudited interim accounts to
provide investors with an up to date report on the business as we
progress through the COVID-19 pandemic. This one-off presentation
was undertaken to provide updated information about Avation's
position at a time of uncertainty in financial markets.
"Immediately at the outset of the COVID-19 pandemic Avation
instituted a programme of support for some of its airline customers
to defer for later payment certain portions of their rent in the
short term. The cashflow impact of this support programme has been
mitigated by adjusting the amortisation profiles of the relevant
financings with the agreement of lenders. Since the outbreak of
COVID-19 the Company has also reduced administration costs and has
instituted a pause on capital expenditure with the goal of
maximising cashflow.
"Avation has a strong cash balance of $131.6 million as at 31
March 2020. The Company is fortunate that some of its largest
customers are in countries where there has been comparatively lower
impact from the pandemic. We are now observing a gradual return to
service of certain customers including VietJet, airBaltic, EVA Air
and Mandarin Airlines which presently represent over 60% of
Avation's future unearned contracted leasing revenue.
"Avation is optimistic about the long term opportunity for
airline travel particularly the turboprop and narrow-body aircraft
sectors. "
Aircraft Fleet
Aircraft Type 31 March 2020
Boeing 777-300ER 1
Airbus A330-300 1
Airbus A321-200 7
Boeing 737-800NG 1
Airbus A320-200 2
Airbus A220-300 6
Fokker 100 2
ATR 72-600 22
ATR 72-500 6
--------------
Total 48
Financial Highlights and Analysis (Unaudited)
9 mths to 9 mths to
31 Mar 31 Mar Change
2020 2019
US$ 000's US$ 000's
Revenue 99,595 87,191 14%
Depreciation (35,502) (29,963) 18%
Administrative expense (9,551) (8,226) 16%
%
Other income and expenses (net) (395) (20)
--------------------------------------------- ----------- -----------
Operating Profit excluding Unrealised gain
on purchase rights, Gains on disposal and
impairment loss on aircraft 54,147 48,982 11%
Finance expenses (net of finance income) 41,823 38,437 9%
--------------------------------------------- ----------- -----------
Profit before tax excluding Unrealised gain
on purchase rights, Gains on disposal of
aircraft and Impairment loss on aircraft 12,324 10,545 17%
Unrealised gain on aircraft purchase rights 40,990 -
Gains on disposal of aircraft 3,530 6,543
Impairment loss on aircraft (10,223) -
--------------------------------------------- ----------- -----------
Profit before taxation 46,621 17,088 173%
Taxation (8,294) (1,814)
--------------------------------------------- ----------- -----------
Total profit after tax 38,327 15,274 151%
EPS 60.6 cents 24.0 cents 152%
Dividends per share 2.1 cents 2.0 cents 5%
As at As at
31 Mar 30 June
2020 2019
US$ 000's US$ 000's
Fleet assets (1) 1,279,586 1,269,682 1%
Total assets 1,475,190 1,392,750 6%
Cash and bank balances 131,610 107,448 22%
Net asset value per share (US$) (2) $4.01 $3.74 7%
Net asset value per share (GBP) (3) GBP3.24 GBP2.95 10%
1. Fleet assets are defined as property, plant and equipment
plus assets held for sale plus finance lease receivables.
2. Net asset value per share is total equity divided by the
total number of shares in issue, excluding treasury shares, at
period end.
3. Based on GBP:USD exchange rate as at 31 March 2020 of 1.24 (30 June 2019 : 1.27)
Forward Looking Statements
This release contains certain "forward looking statements".
Forward looking statements may be identified by words such as
"expects," "intends," "anticipates," "plans," "believes," "seeks,"
"estimates," "will," or words of similar meaning and include, but
are not limited to, statements regarding the outlook for Avation's
future business and financial performance. Forward looking
statements are based on management's current expectations and
assumptions, which are subject to inherent uncertainties, risks and
changes in circumstances that are difficult to predict. Actual
outcomes and results may differ materially due to global political,
economic, business, competitive, market, regulatory and other
factors and risks. Further information on the factors and risks
that may affect Avation's business is included in Avation's
regulatory announcements from time to time, including its Annual
Report, Full Year Financial Results and Half Year Results
announcements. Avation expressly disclaims any obligation to update
or revise any of these forward-looking statements, whether because
of future events, new information, a change in its views or
expectations, or otherwise.
-S -
Enquiries:
Avation PLC - Jeff Chatfield, Executive Chairman +65 6252 2077
Avation welcomes shareholder questions and comments and advises
the email address is: investor@avation.net
More information on Avation is available at www.avation.net.
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF PROFIT OR LOSS
FOR THE NINE MONTHSED 31 MARCH 2020
31 Mar 31 Mar
Note 2020 2019
US$'000s US$'000s
Continuing operations
Revenue 5 99,595 87,191
Other income 6 1,014 212
100,609 87,403
Depreciation 11 (35,502) (29,963)
Gain on disposal of aircraft 11 3,530 6,543
Unrealised gain on aircraft purchase rights 16 40,990 -
Impairment loss on aircraft 11,18 (10,223) -
Administrative expenses (9,551) (8,226)
Other expenses 7 (1,409) (232)
Operating profit 88,444 55,525
Finance income 8 929 3,024
Finance expenses 9 (42,752) (41,461)
Profit before taxation 46,621 17,088
Taxation (8,294) (1,814)
Profit from continuing operations 38,327 15,274
Profit attributable to:
Equity holders of the Company 38,326 15,273
Non-controlling interests 1 1
38,327 15,274
--------- ---------
Earnings per share for profit
attributable to equity holders of the Company
60.58 24.00
Basic earnings per share cents cents
60.21 23.93
Diluted earnings per share cents cents
--------- ---------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE NINE MONTHSED 31 MARCH 2020
31 Mar 31 Mar
Note 2020 2019
US$'000s US$'000s
Profit from continuing operations 38,327 15,274
Other comprehensive income:
Items may be reclassified subsequently to profit
or loss:
Net loss on cash flow hedge (10,979) (7,695)
(10,979) (7,695)
Items may not be reclassified subsequently
to profit or loss:
Revaluation loss on property, plant and equipment,
net of tax (3,924) -
Other comprehensive income, net of tax (14,903) (7,695)
Total comprehensive income for the period 23,424 7,579
--------- ---------
Total comprehensive income attributable to:
Equity holders of the Company 23,423 7,578
Non-controlling interests 1 1
23,424 7,579
--------- ---------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 MARCH 2020
31 Mar 30 June
Note 2020 2019
US$'000s US$'000s
ASSETS:
Non-current assets
Property, plant and equipment 11 1,089,513 1,225,324
Trade and other receivables 12 11,710 8,930
Finance lease receivables 13 85,400 37,137
Goodwill 14 1,902 1,902
Derivative financial assets 15 - 363
Aircraft purchase rights 16 40,990 -
---------- ----------
1,229,515 1,273,656
Current assets
Trade and other receivables 12 9,392 4,425
Finance lease receivables 13 7,315 7,221
Cash and bank balances 17 131,610 107,448
---------- ----------
148,317 119,094
Assets held for sale 18 97,358 -
---------- ----------
245,675 119,094
---------- ----------
Total assets 1,475,190 1,392,750
---------- ----------
EQUITY AND LIABILITIES
Equity
Share capital 19 1,108 1,104
Share premium 57,747 56,912
Treasury shares 19 (7,811) (1,147)
Merger reserve 6,715 6,715
Asset revaluation reserve 30,468 34,392
Capital reserve 8,876 8,876
Other reserves (22,560) (11,809)
Retained earnings 177,000 145,644
---------- ----------
Equity attributable to equity holders of the
parent 251,543 240,687
Non-controlling interest 71 70
---------- ----------
Total equity 251,614 240,757
---------- ----------
Non-current liabilities
Loans and borrowings 20 1,004,184 1,005,693
Trade and other payables 18,870 16,091
Derivative financial liabilities 15 25,939 10,174
Maintenance reserves 21 52,939 31,325
Deferred tax liabilities 7,832 179
---------- ----------
1,109,764 1,063,462
Current liabilities
Loans and borrowings 20 78,078 72,595
Trade and other payables 17,902 11,964
Maintenance reserves 21 6,234 1,166
Income tax payables 1,315 2,806
---------- ----------
103,529 88,531
Liabilities directly associated with assets
held for sale 18 10,283 -
---------- ----------
113,812 88,531
---------- ----------
Total equity and liabilities 1,475,190 1,392,750
---------- ----------
Attributable to shareholders of the parent
Note Share Share Treasury Merger Asset Capital Other Retained Total Non-controlling Total
capital premium Shares reserve revaluation reserve reserves earnings interest equity
reserve
US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s
Balance at 1
July
2019 1,104 56,912 (1,147) 6,715 34,392 8,876 (11,809) 145,644 240,687 70 240,757
Effect of
adoption
of IFRS 16
Leases 3b - - - - - - (199) (199) - (199)
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
As at 1 July
2019
(adjusted) 1,104 56,912 (1,147) 6,715 34,392 8,876 (11,809) 145,445 240,488 70 240,558
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Profit for the
period - - - - - - - 38,326 38,326 1 38,327
Other
comprehensive
income - - - - (3,924) - (10,979) - (14,903) - (14,903)
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total
comprehensive
income - - - - (3,924) - (10,979) 38,326 23,423 1 23,424
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Dividends paid 24 - - - - - - - (6,773) (6,773) - (6,773)
Issue of new
shares 19 4 835 - - - - (69) - 770 - 770
Purchase of
treasury
shares 19 - - (6,664) - - - - - (6,664) - (6,664)
Share warrant
expense - - - - - - 299 - 299 - 299
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total
transactions
with owners
recognised
directly in
equity 4 835 (6,664) - - - 230 (6,773) (12,368) - (12,368)
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Expiry of
share
warrants - - - - - - (2) 2 - - -
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Total others - - - - - - (2) 2 - - -
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
Balance at 31
March 2020 1,108 57,747 (7,811) 6,715 30,468 8,876 (22,560) 177,000 251,543 71 251,614
--------- --------- ---------- --------- ------------ --------- --------- ---------- ----------- ---------------- -----------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHSED 31 MARCH 2020
Other reserves consist of capital redemption reserve, warrant
reserve, fair value reserve and foreign currency translation
reserve.
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTHSED 31 MARCH 2019
Attributable to shareholders of the parent
Note Share Share Treasury Merger Asset Capital Other Retained Total Non-controlling Total
capital premium Shares reserve revaluation reserve reserves earnings interest equity
reserve
US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s US$'000s
Balance at 1
July
2018 1,080 53,083 - 6,715 27,847 8,876 6,389 124,119 228,109 69 228,178
Profit for the
period - - - - - - - 15,273 15,273 1 15,274
Other
comprehensive
income - - - - - - (7,695) - (7,695) - (7,695)
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Total
comprehensive
income - - - - - - (7,695) 15,273 7,578 1 7,579
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Dividends paid 24 - - - - - - - (5,840) (5,840) - (5,840)
Issue of new
shares 19 24 3,829 - - - - (628) - 3,225 - 3,225
Purchase of
treasury
shares 19 - - (380) - - - - - (380) - (380)
Share warrant
expense - - - - - - 206 - 206 - 206
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Total
transactions
with owners
recognised
directly in
equity 24 3,829 (380) - - - (422) (5,840) (2,789) - (2,789)
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Expiry of
share
warrants - - - - - - (31) 31 - - -
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Total others - - - - - - (31) 31 - - -
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
Balance at 31
March 2019 1,104 56,912 (380) 6,715 27,847 8,876 (1,759) 133,583 232,898 70 232,968
--------- --------- --------- --------- ------------ --------- --------- ---------- ---------- ---------------- ----------
AVATION PLC
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE NINE MONTHSED 31 MARCH 2020
31 Mar 31 Mar
Note 2020 2019
US$'000s US$'000s
Cash flows from operating activities:
Profit before taxation 46,621 17,088
Adjustments for:
Depreciation expense 11 35,502 29,963
Depreciation of right-of-use assets 163 -
Share warrants expense 299 206
Impairment loss on aircraft 11,18 10,223 -
Expected credit loss on trade receivables 162 -
Fair value gain on investments - (104)
Gain on disposal of aircraft (3,530) (6,543)
Unrealised gain on aircraft purchase rights (40,990) -
Interest income on finance leases 5 (2,290) (948)
Finance income 8 (929) (3,024)
Finance expense 9 42,752 41,461
--------- ----------
Operating cash flows before working capital
changes 87,983 78,099
Movement in working capital:
Trade and other receivables and finance
lease receivables 4,367 (8,922)
Trade and other payables 3,530 1,021
Maintenance reserves 26,817 5,195
--------- ----------
Cash from operations 122,697 75,393
Interest income received 2,591 2,182
Interest expense paid (33,076) (31,542)
Income tax paid (1,792) (2,782)
--------- ----------
Net cash from operating activities 90,420 43,251
--------- ----------
Cash flows from investing activities:
Purchase of property, plant and equipment (58,592) (169,110)
Proceeds from disposal of aircraft - 54,274
Purchase of investment - (10,000)
--------- ----------
Net cash used in investing activities (58,592) (124,836)
--------- ----------
Cash flows from financing activities:
Net proceeds from issuance of ordinary shares 770 3,225
Dividends paid to shareholders 24 (6,773) (5,840)
Purchase of treasury shares (6,664) (380)
Placement of restricted cash balances (26,118) (7,240)
Proceeds from loans and borrowings, net
of transactions costs 76,530 210,805
Repayment of loans and borrowings (71,529) (79,976)
--------- ----------
Net cash (used in)/from financing activities (33,784) 120,594
--------- ----------
Net (decrease)/increase in cash and cash
equivalents (1,956) 39,009
Cash and cash equivalents at beginning of
financial period 61,689 57,950
--------- ----------
Cash and cash equivalents at end of financial
period 17 59,733 96,959
--------- ----------
AVATION PLC
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE NINE MONTHSED 31 MARCH 2020
This interim condensed consolidated financial statements for
Avation PLC for the nine months ended 31 March 2020 were authorised
for issue in accordance with a resolution of the Directors on 26
June 2020.
1 CORPORATE INFORMATION
Avation PLC is a public limited company incorporated in England
and Wales under the Companies Act 2006 (Registration Number
05872328) and is listed as a Standard Listing on the London Stock
Exchange.
The Group's principal activity is aircraft leasing.
2 BASIS OF PREPARATION AND ACCOUNTING POLICIES
These interim condensed consolidated financial statements have
been prepared in accordance with the Disclosure and Transparency
Rules (DTR) of the Financial Conduct Authority and in accordance
with International Accounting Standard (IAS) 34 'Interim
Reporting'.
The interim condensed consolidated financial statements do not
include all the notes of the type normally included within the
annual report and therefore cannot be expected to provide as full
an understanding of the financial performance, financial position
and financial and investing activities of the consolidated entity
as the annual report.
It is recommended that the interim condensed consolidated
financial statements be read in conjunction with the annual report
for the year ended 30 June 2019 and considered together with any
public announcements made by Avation PLC during the nine months
ended 31 March 2020.
The accounting policies and methods of computation are the same
as those adopted in the annual report for the year ended 30 June
2019 except for the changes in accounting estimates of residual
values of aircraft (see note 11) and the adoption of new accounting
standards effective as of 1 July 2019.
The Group has applied IFRS 16 Leases for the first time in these
interim condensed consolidated financial statements. As required by
IAS 34, the nature and effect of these changes are disclosed in
Note 3b.
Several other amendments and interpretations which apply for the
first time in the nine months ended 31 March 2020 do not have an
impact on the Group's interim condensed consolidated financial
statements.
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 2019, which carried an unqualified audit report, have
been delivered to the Registrar of Companies and did not contain
any statements under section 498 of the Companies Act 2006.
The interim condensed consolidated financial statements are
unaudited.
The interim condensed consolidated financial statements do not
constitute statutory financial statements within the meaning of
section 434 of the Companies Act 2006.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN EFFECT IN 2019
(a) New standards and interpretations not applied
The IASB and IFRIC have issued the following standards and
interpretations with an effective date after the date of these
financial statements.
The Group intends to apply these standards and interpretations
when they become effective.
International Accounting Standards (IAS/IFRS) Effective Date
(accounting periods
commencing after)
Amendments to IAS 1 : Classification of liabilities as Current
or
Non-current 1 January 2022
IFRS 17 Insurance contracts 1 January 2021
Amendments to References to the Conceptual Framework in
IFRS Standards 1 January 2020
Amendments to IFRS 9, IAS 39 and IFRS 7 : Interest Rate
Benchmark Reform 1 January 2020
Amendments to IFRS 3 : Definition of a Business 1 January 2020
Amendments to IAS 1 and IAS 8 : Definition of Material 1 January 2020
Amendments to IFRS 10 and IAS 28 Sale or contribution of
assets
between an investor and its associates or joint venture To be determined
The Directors do not expect that the adoption of the Standards
listed above will have a material impact on the Group in future
periods.
(b) Standard in effect in 2019
The Group has adopted all new standards that have come into
effect during the nine months ended 31 March 2020.
IFRS 16 Leases
The Group adopted IFRS 16 Leases on 1 July 2019. The changes in
accounting policies are as follows:
IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases-Incentives
and SIC-27 Evaluating the Substance of Transactions Involving the
Legal Form of a Lease. The standard sets out the principles for the
recognition, measurement, presentation and disclosure of leases and
requires lessees to recognise most leases on the balance sheet.
Lessor accounting under IFRS 16 is substantially unchanged from
IAS 17. Lessors will continue to classify leases as either
operating or finance leases using similar principles as in IAS 17.
Therefore, IFRS 16 did not have an impact for leases where the
Group is the lessor.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2019 (continued)
(b) Standard in effect in 2019 (continued)
The Group adopted IFRS 16 using the modified retrospective
method of adoption with the date of initial application of 1 July
2019. Under this method, the standard is applied retrospectively
with the cumulative effect of initially applying the standard
recognised at the date of initial application as an adjustment to
the opening balance of retained earnings and the comparative
figures are not re-stated. The Group elected to use the transition
practical expedient to not reassess whether a contract is, or
contains a lease at 1 July 2019. Instead, the Group applied the
standard only to contracts that were previously identified as
leases applying IAS 17 and IFRIC 4 at the date of initial
application.
The effect of adoption IFRS 16 as at 1 July 2019
(increase/(decrease) is, as follows:
US$'000s
Assets:
Right-of-use assets 945
---------
Total assets 945
Liabilities:
Lease liabilities 1,144
---------
Total liabilities 1,144
Total adjustment on equity:
Retained earnings (199)
(199)
---------
The Group has lease contracts for offices. Before the adoption
of IFRS 16, the Group classified these leases (as lessee) as
operating leases. The Group did not have short-term leases and
leases of low-value assets before the adoption of IFRS 16.
Upon adoption of IFRS 16, the Group applied a single recognition
and measurement approach for all leases. The standard provides
specific transition requirements and practical expedients, which
have been applied by the Group.
Leases previously accounted for as operating leases
The Group recognised right-of-use assets and lease liabilities
for lease contracts for offices previously classified as operating
leases. The right-of-use assets for most leases were recognised
based on the carrying amount as if the standard had always been
applied, apart from the use of incremental borrowing rate at the
date of initial application. In some leases, the right-of-use
assets were recognised based on the amount equal to the lease
liabilities, adjusted for any related prepaid and accrued lease
payments previously recognised. Lease liabilities were recognised
based on the present value of the remaining lease payments,
discounted using the weighted average of cost of debt of the Group
of 4.6% at the date of initial application .
The Group also applied the available practical expedients
wherein it:
-- Used a single discount rate to a portfolio of leases with
reasonably similar characteristics
-- Relied on its assessment of whether leases are onerous
immediately before the date of initial application
-- Applied the short-term leases exemptions to leases with lease
term that ends within 12 months of the date of initial
application
-- Excluded the initial direct costs from the measurement of the
right-of-use asset at the date of initial application
-- Used hindsight in determining the lease term where the
contract contained options to extend or terminate the lease
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2019 (continued)
(b) Standard in effect in 2019 (continued)
The lease liabilities as at 1 July 2019 can be reconciled to the
operating lease commitments as of 30 June 2019, as follows:
US$'000s
Operating lease commitments as at 30 June 2019 1,278
Weighted average of cost of debt as at 1 July
2019 4.6%
---------
Discounted operating lease commitments and
lease liabilities as
at 1 July 2019 1,144
---------
Amendments to IAS 28: Long-term interests in associates and
joint ventures
The amendments clarify that an entity applies IFRS 9 to
long-term interests in an associate or joint venture to which the
equity method is not applied but that, in substance, form part of
the net investment in the associate or joint venture (long-term
interests). This clarification is relevant because it implies that
the expected credit loss model in IFRS 9 applies to such long-term
interests.
The amendments also clarified that, in applying IFRS 9, an
entity does not take account of any losses of the associate or
joint venture, or any impairment losses on the net investment,
recognised as adjustments to the net investment in the associate or
joint venture that arise from applying IAS 28 Investments in
Associates and Joint Ventures .
These amendments had no impact on the consolidated financial
statements as the Group does not have long term interests in its
associate and joint venture.
IFRIC Interpretation 23 Uncertainty over Income Tax
Treatment
The Interpretation addresses the accounting for income taxes
when tax treatments involve uncertainty that affects the
application of IAS 12 Income Taxes . It does not apply to taxes or
levies outside the scope of IAS 12, nor does it specifically
include requirements relating to interest and penalties associated
with uncertain tax treatments. The Interpretation specifically
addresses the following:
-- Whether an entity considers uncertain tax treatments separately
-- The assumptions an entity makes about the examination of tax
treatments by taxation authorities
-- How an entity determines taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates
-- How an entity considers changes in facts and circumstances
The Group determines whether to consider each uncertain tax
treatment separately or together with one or more other uncertain
tax treatments and uses the approach that better predicts the
resolution of the uncertainty.
The Group applies significant judgement in identifying
uncertainties over income tax treatments. Since the Group operates
in a complex multinational environment, it assessed whether the
Interpretation had an impact on its consolidated financial
statements.
Upon adoption of the Interpretation, the Group considered
whether it has any uncertain tax positions, particularly those
relating to transfer pricing. The Company's and the subsidiaries'
tax filings in different jurisdictions include deductions related
to transfer pricing and the taxation authorities may challenge
those tax treatments. The Group determined, based on its tax
compliance and transfer pricing study, that it is probable that its
tax treatments (including those for the subsidiaries) will be
accepted by the taxation authorities. The Interpretation did not
have an impact on the consolidated financial statements of the
Group.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2019 (continued)
(b) Standard in effect in 2019 (continued)
Annual Improvements 2015-2017 Cycle
-- IFRS 3 Business Combinations
The amendments clarify that, when an entity obtains control of a
business that is a joint operation, it applies the requirements for
a business combination achieved in stages, including remeasuring
previously held interests in the assets and liabilities of the
joint operation at fair value. In doing so, the acquirer remeasures
its entire previously held interest in the joint operation.
An entity applies those amendments to business combinations for
which the acquisition date is on or after the beginning of the
first annual reporting period beginning on or after 1 January 2019,
with early application permitted.
These amendments had no impact on the consolidated financial
statements of the Group as there is no transaction where joint
control is obtained.
-- IFRS 11 Joint Arrangements
An entity that participates in, but does not have joint control
of, a joint operation might obtain joint control of the joint
operation in which the activity of the joint operation constitutes
a business as defined in IFRS 3.
The amendments clarify that the previously held interests in
that joint operation are not remeasured.
An entity applies those amendments to transactions in which it
obtains joint control on or after the beginning of the first annual
reporting period beginning on or after 1 January 2019, with early
application permitted.
These amendments had no impact on the consolidated financial
statements of the Group as there is no transaction where joint
control is obtained.
-- IAS 12 Income Taxes
The amendments clarify that the income tax consequences of
dividends are linked more directly to past transactions or events
that generated distributable profits than to distributions to
owners. Therefore, an entity recognises the income tax consequences
of dividends in profit or loss, other comprehensive income or
equity according to where it originally recognised those past
transactions or events.
An entity applies the amendments for annual reporting periods
beginning on or after 1 January 2019, with early application
permitted. When the entity first applies those amendments, it
applies them to the income tax consequences of dividends recognised
on or after the beginning of the earliest comparative period.
Since the Group's current practice is in line with these
amendments, they had no impact on the consolidated financial
statements of the Group.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2019 (continued)
(b) Standard in effect in 2019 (continued)
Annual Improvements 2015-2017 Cycle (continued)
-- IAS 23 Borrowing Costs
The amendments clarify that an entity treats as part of general
borrowings any borrowing originally made to develop a qualifying
asset when substantially all of the activities necessary to prepare
that asset for its intended use or sale are complete.
The entity applies the amendments to borrowing costs incurred on
or after the beginning of the annual reporting period in which the
entity first applies those amendments. An entity applies those
amendments for annual reporting periods beginning on or after 1
January 2019, with early application permitted.
Since the Group's current practice is in line with these
amendments, they had no impact on the consolidated financial
statements of the Group.
(c) New accounting policies
These accounting policies are applied on and after the initial
application date of IFRS 16:
Group as a lessee
The Group applies a single recognition and measurement approach
for all leases, except for short-term leases and leases of
low-value assets. The Group recognises lease liabilities to make
lease payments and right-of-use assets representing the right to
use the underlying assets.
i) Right-of-use assets
The Group recognises right-of-use assets at the commencement
date of the lease (i.e., the date the underlying asset is available
for use). Right-of-use assets are measured at cost, less any
accumulated depreciation and impairment losses, and adjusted for
any remeasurement of lease liabilities. The cost of right-of-use
assets includes the amount of lease liabilities recognised, initial
direct costs incurred, and lease payments made at or before the
commencement date less any lease incentives received. Right-of-use
assets are depreciated on a straight-line basis over the shorter of
the lease term and the estimated useful lives of the assets.
If ownership of the leased asset transfers to the Group at the
end of the lease term or the cost reflects the exercise of a
purchase option, depreciation is calculated using the estimated
useful life of the asset.
The right-of-use assets are also subject to impairment.
The Group's lease arrangements do not contain an obligation to
dismantle and remove the underlying asset, restore the site on
which it is located or restore the underlying asset to a specified
condition.
The Group's right-of-use assets are included in trade and other
receivables.
3 NEW STANDARDS AND INTERPRETATIONS NOT APPLIED AND STANDARDS IN
EFFECT IN 2019 (continued)
(c) New accounting policies (continued)
ii) Lease liabilities
At the commencement date of the lease, the Group recognises
lease liabilities measured at the present value of lease payments
to be made over the lease term. The lease payments include fixed
payments (including in-substance fixed payments) less any lease
incentives receivable, variable lease payments that depend on an
index or a rate, and amounts expected to be paid under residual
value guarantees. The lease payments also include the exercise
price of a purchase option reasonably certain to be exercised by
the Group and payments of penalties for terminating the lease, if
the lease term reflects the Group exercising the option to
terminate.
Variable lease payments that do not depend on an index or a rate
are recognised as expenses in the period in which the event or
condition that triggers the payment occurs.
In calculating the present value of lease payments, the Group
uses its incremental borrowing rate at the lease commencement date
because the interest rate implicit in the lease is not readily
determinable. After the commencement date, the amount of lease
liabilities is increased to reflect the accretion of interest and
reduced for the lease payments made. In addition, the carrying
amount of lease liabilities is re-measured if there is a
modification, a change in the lease term, a change in the lease
payments (e.g., changes to future payments resulting from a change
in an index or rate used to determine such lease payments) or a
change in the assessment of an option to purchase the underlying
asset.
The Group's lease liabilities are included in trade and other
payables.
iii) Short-term leases and leases of low-value assets
The Group applies the short-term lease recognition exemption to
its short-term leases of equipment (i.e., those leases that have a
lease term of 12 months or less from the commencement date and do
not contain a purchase option). It also applies the lease of
low-value assets recognition exemption to leases of office
equipment that are considered to be low value.
Lease payments on short-term leases and leases of low value
assets are recognised as expense on a straight-line basis over the
lease term.
4 FAIR VALUE MEASUREMENT
The fair value of a financial instrument is the price that would
be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date.
The carrying amounts of cash and cash equivalents, trade and
other receivables, finance lease receivables - current, trade and
other payables - current, loans and borrowings - current and lease
liabilities- 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.
31 Mar 2020 30 Jun 2019
Carrying Carrying
amount Fair value amount Fair value
US$'000s US$'000s US$'000s US$'000s
------------------------------------------------------------- --------- ----------- --------- -----------
Financial assets:
Finance lease receivables - non-current 85,400 82,602 37,137 35,661
Aircraft purchase rights 40,990 40,990 - -
Financial liabilities:
Deposits collected - non-current 16,119 15,176 13,979 13,273
Loans and borrowings other than unsecured note- non-current 657,197 628,549 660,727 644,726
Unsecured notes 346,987 325,840 344,966 358,327
The fair values (other than aircraft purchase rights and the
unsecured notes) above are estimated by discounting expected future
cash flows using a market incremental lending rate for similar
types of lending, borrowing or leasing arrangements at the end of
the reporting period, classified as level 2.
The fair value of the unsecured notes is based on level 1 quoted
prices (unadjusted) in active market that the Group can access at
measurement date.
The fair values of aircraft purchase rights are classified as
level 3 and are estimated by discounting expected future cash flows
using the Group's weighted average cost of capital (WACC) at the
end of the reporting period. Expected future cash flows include an
assumed sale of the relevant aircraft at delivery. Assumed aircraft
sales values are based on independent third party valuations of the
relevant type at estimated future delivery dates. The assumed sales
values of aircraft less the assumed purchase price presents the
fair value recorded for the aircraft purchase rights.
4 FAIR VALUE MEASUREMENT (continued)
Non-financial assets measured at fair value:
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
-------------------------------------------------------------- ---------- ----------
Fair value measurement using significant unobservable inputs
Aircraft 1,087,572 1,225,285
Aircraft were valued at 30 June 2019. Refer to Note 11 for the
details on the valuation technique and significant inputs used in
the valuation.
Classification of financial instruments:
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
----------------------------------------------------- --- ---------- ----------
Financial assets measured at
amortised cost:
Cash and cash balances 131,610 107,448
Trade and other receivables 19,276 12,616
Finance lease receivables 92,715 44,358
243,601 164,422
---------- ----------
Financial liabilities measured at amortised cost:
Trade and other payables 28,142 19,324
Loans and borrowings 1,082,262 1,078,288
Maintenance reserves 59,173 32,491
1,169,567 1,130,103
---------- ----------
Derivative used for hedging:
Derivative financial assets - 363
Derivative financial liabilities (25,939) (10,174)
Financial assets fair value through profit or loss:
Aircraft purchase rights 40,990 -
5 REVENUE
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
----------------------------------- --------- ---------
Lease rental revenue 97,107 86,243
Interest income on finance leases 2,290 948
Maintenance reserves released 198 -
99,595 87,191
--------- ---------
The maintenance reserves revenue relates to the recovery of
maintenance reserve from an insolvent airline customer that
defaulted on its lease payments. See Note 21.
Geographical analysis
Europe Asia Pacific Total
US$'000s US$'000s US$'000s
-------------- ----- --------- ------------- ---------
31 Mar 2020 28,166 71,429 99,595
31 Mar 2019 21,527 65,664 87,191
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 Mar 31 Mar
2020 2019
US$'000s US$'000s
---------------------------------------- --------- ---------
Within one year 128,860 122,870
In the second to fifth years inclusive 398,832 421,810
More than five years 263,588 337,700
--------- ---------
6 OTHER INCOME
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
-------------------------------- --------- ---------
Foreign currency exchange gain 55 -
Fair value gain on investment - 104
Deposit released 718 -
Others 241 108
1,014 212
--------- ---------
7 OTHER EXPENSES
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
------------------------------------------- --------- ---------
Aircraft repossession expenses 1,244 -
Expected credit loss on trade receivables 162 -
Foreign currency exchange loss - 232
Others 3 -
1,409 232
--------- ---------
The aircraft repossession expenses relate to the repossession of
the 2 aircraft previously leased to an insolvent airline
customer.
8 FINANCE INCOME
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
-------------------------------------------------------------------- --------- ---------
Interest income from financial institutions 664 781
Interest income from non-financial institutions - 228
Fair value gain on derivatives 12 811
Finance income from discounting non-current deposits to fair value 253 470
Interest rate swap break gain - 174
Loan modification gain - 370
Others - 190
929 3,024
--------- ---------
9 FINANCE EXPENSES
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
------------------------------------------------------- --------- ---------
Interest expense on borrowings 20,909 19,546
Interest expense on unsecured notes 17,063 16,151
Amortisation of loan transaction costs 3,915 4,418
Interest expense on non-current deposits 263 488
Finance charges on early full repayment on borrowings 357 166
Others 245 692
42,752 41,461
--------- ---------
10 RELATED PARTY TRANSACTIONS
Significant related party transactions:
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
------------------------------------------------- --------- ---------
Entities controlled by key management personnel
(including directors):
Rental expenses (217) (222)
Consulting fee expenses (376) (417)
Service fee income 80 -
--------- ---------
11 PROPERTY, PLANT AND EQUIPMENT
Furniture Aircraft Jet Turboprop
and equipment engine aircraft aircraft Total
US$'000s US$'000 US$'000s US$'000s US$'000s
-------------------- --------------- ------------------- ---------- ---------- ----------
31 March 2020:
Cost or valuation:
At 1 July 2019 80 - 916,534 450,439 1,367,053
Additions 12 1,925 - 57,605 59,542
Reclassified as
held
under finance
leases - - - (56,913) (56,913)
Reclassified as
asset
held for sale - - (106,124) - (106,124)
Revaluation
recognised
in equity - - (4,265) - (4,265)
At 31 March 2020 92 1,925 806,145 451,131 1,259,293
Representing:
At cost 92 1,925 - - 2,017
At valuation - - 806,145 451,131 1,259,076
92 1,925 806,145 451,131 1,259,293
Accumulated
depreciation
and impairment
loss:
At 1 July 2019 41 - 73,065 68,623 141,729
Depreciation
expense 15 20 24,488 10,979 35,502
Reclassified as
asset
held for sale - - (16,189) - (16,189)
Impairment loss - - 8,738 - 8,738
At 31 March 2020 56 20 90,102 79,602 169,780
Net book value:
At 1 July 2019 39 - 843,469 381,816 1,225,324
--------------- ------ ----------------------- ---------- ----------
At 31 March 2020 36 1,905 716,043 371,529 1,089,513
--------------- ------ ----------------------- ---------- ----------
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Furniture Jet Turboprop
and equipment aircraft aircraft Total
US$'000s US$'000s US$'000s US$'000s
------------------------------------------- --------------- ---------- ---------- ----------
30 June 2019:
Cost or valuation:
At 1 July 2018 346 713,142 374,876 1,088,364
Additions 8 211,548 117,014 328,570
Disposals/written-off (274) (18,624) - (18,898)
Reclassified as held under finance leases - - (39,631) (39,631)
Revaluation recognised in equity - 10,468 (1,820) 8,648
At 30 June 2019 80 916,534 450,439 1,367,053
Representing:
At cost 80 - - 80
At valuation - 916,534 450,439 1,366,973
80 916,534 450,439 1,367,053
Accumulated depreciation and impairment:
At 1 July 2018 292 51,341 55,555 107,188
Depreciation expense 23 27,920 13,068 41,011
Disposals/written-off (274) (6,196) - (6,470)
At 30 June 2019 41 73,065 68,623 141,729
Net book value:
At 1 July 2018 54 661,801 319,321 981,176
--------------- ---------- ---------- ----------
At 30 June 2019 39 843,469 381,816 1,225,324
--------------- ---------- ---------- ----------
Assets pledged as security
The Group's aircraft including those classified as assets held
for sale with carrying values of US$1,120.4 million (30 June 2019 :
US$1,122.0 million) are mortgaged to secure the Group's borrowings
(Note 20).
Additions and Disposals
During the nine months ended 31 March 2020, the Group acquired 3
turboprop aircraft and 1 aircraft engine. 3 turboprop aircraft were
reclassified as held under finance leases. A gain on transfer of
the aircraft to finance lease of US$3.5 million was recorded and
included within the gain on disposal of aircraft.
During the nine months ended 31 March 2020, 2 jet aircraft were
reclassified as held for sale.
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Valuation
The Group's aircraft were valued in June 2019 by independent
valuers on lease-encumbered 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 5.75%
to 7.75% per annum for jet aircraft and 6.00% to 9.25% per annum
for turboprop aircraft. Different discount rates are considered
appropriate for different aircraft based on their respective risk
profiles.
During the nine months ended 31 March 2020, a downward
revaluation of US$0.9 million to equity and an impairment loss of
US$2.5 million was recognised to write down the book value of 2 jet
aircraft to its fair value prior to reclassify as held for
sale.
During the nine months ended 31 March 2020, a downward
revaluation of US$3.4 million to equity and an impairment loss of
US$6.2 million was recognised to write down the book value of 2 old
technology widebody aircraft.
Changes in accounting estimates of residual values of
aircraft
During the nine months ended 31 March 2020, the Group revised
the residual values of its old technology widebody aircraft to
reflect the likely decrease in future residual values for old
technology widebody aircraft with effect from 1 July 2019. The
effect of this change is an increase in depreciation expense of
approximately US$1.3 million for the nine months ended 31 March
2020.
The table below outline the effect of these changes in estimate
on the current financial year depreciation charge and subsequent
years:
30 Jun 30 Jun 30 Jun 30 Jun 30 Jun
2020 2021 2022 2023 2024 onwards
US$'000s US$'000s US$'000s US$'000s US$'000s
-------------------------- --------- --------- --------- --------- --------------
Increase in depreciation
charge 1,781 1,781 1,781 1,781 28,068
--------- --------- --------- --------- --------------
If the aircraft were measured using the cost model, carrying
amounts would be as follows:
31 Mar 2020 30 Jun 2019
Turbo Turbo
Jets props Jets props
US$'000s US$'000s US$'000s US$'000s
----------------------------------------- --------- --------- --------- ---------
Cost 792,891 430,551 776,330 552,544
Accumulated depreciation and impairment (90,064) (75,967) (58,706) (81,504)
Net book value 702,827 354,584 717,624 471,040
--------- --------- --------- ---------
11 PROPERTY, PLANT AND EQUIPMENT (continued)
Geographical analysis
31 Mar 2020 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
--------------------------- --------- ------------- ----------
Capital expenditure 21,922 37,620 59,542
Net book value - aircraft
and engine 331,999 757,478 1,089,477
30 Jun 2019 Europe Asia Pacific Total
US$'000s US$'000s US$'000s
---------------------------- ----- --------- ------------- ----------
Capital expenditure 223,058 105,512 328,570
Net book value - aircraft 415,139 810,146 1,225,285
12 TRADE AND OTHER RECEIVABLES
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
------------------------------------- --------- ---------
Current
Trade receivables 8,585 3,954
Less:
Allowance for estimated credit loss (369) (207)
--------- ---------
8,216 3,747
Other receivables:
-Third parties 275 106
Interest receivables 21 12
Deposits 165 47
Prepaid expenses 715 513
--------- ---------
9,392 4,425
--------- ---------
Non-current
Deposits for aircraft 10,599 8,704
Prepaid expenses 334 226
Right-of-use assets 777 -
------- ------
11,710 8,930
------- ------
13 FINANCE LEASE RECEIVABLES
Future minimum lease payments receivable under finance leases
are as follows:
31 Mar 2020 30 Jun 2019
Present Present
Minimum value of Minimum value of
lease payments payments lease payments payments
US$'000s US$'000s US$'000s US$'000s
-------------------------------------------------- ---------------- ---------- ---------------- ----------
Within one year 10,243 7,315 8,440 7,221
Later than one year but not more than five years 89,556 76,857 13,848 10,566
More than five years 8,740 8,543 28,534 26,571
Total minimum lease payments 108,539 92,715 50,822 44,358
Less: amounts representing interest income (15,824) - (6,464) -
Present value of minimum lease payments 92,715 92,715 44,358 44,358
---------------- ---------- ---------------- ----------
14 GOODWILL
The Group performs its annual impairment test in June and when
circumstances indicate the carrying value may be impaired. For the
purpose of these financial statements there was no indication of
impairment. The key assumptions used to determine the recoverable
amount for the different cash generating units were disclosed in
the annual consolidated financial statements for the year ended 30
June 2019.
15 DERIVATIVE FINANCIAL ASSETS/LIABILITIES
Contract/ Fair value
notional amount
31 Mar 30 Jun 31 Mar 30 Jun
2020 2019 2020 2019
US$'000s US$'000s US$'000s US$'000s
----------------------------------- --------- --------- --------- ---------
Non-current asset
Interest rate swap - 63,185 - 363
Non-current liability
Interest rate swap 310,359 267,118 (25,541) (10,117)
Cross-currency interest rate swap 4,000 4,000 (398) (57)
--------- --------- --------- ---------
314,359 271,118 (25,939) (10,174)
--------- --------- --------- ---------
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.
15 DERIVATIVE FINANCIAL ASSETS/LIABILITIES (continued)
The Group pays fixed rates of interest of 1.0% to 2.6% per annum
and receives floating rate interest equal to 1-month to 3-month
LIBOR under the interest rate swap contracts.
The Group pays fixed rates of interest of 3.1% to 4.9% per annum
and receives floating interest equal to 3-month LIBOR under the
cross-currency interest rate swap contracts.
The swap contracts mature between 23 September 2021 and 21
November 2030.
Changes in the fair value of these interest rate swap and
cross-currency interest rate swap contracts are recognised in the
fair value reserve. The net fair value loss of US$16.1 million
(31 March 2019: loss of US$10.5 million) on these derivative
financial instruments was recognised in the fair value reserve for
the nine month period ended 31 March 2020.
The fair value of the derivative financial instruments is
determined by reference to marked-to-market values provided by
counterparties. The fair value measurement of all derivative
financial instruments for the Group is classified under Level 2 of
the fair value hierarchy, for which inputs other than quoted prices
that are observable for the asset or liability, either directly as
prices or indirectly derived from prices are included as inputs for
the determination of fair value.
16 AIRCRAFT PURCHASE RIGHTS
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
---------------------------------------- --------- ---------
Aircraft purchase rights, at fair value 40,990 -
--------- ---------
Prior to the six months period ended 31 December 2019, the Group
held aircraft purchase rights for the purpose of acquiring aircraft
to its fleet. Aircraft purchase rights were accounted for as
non-financial assets at amortised cost.
The Group adopted a new business model for aircraft purchase
rights and determined that it would seek to dispose of excess
aircraft purchase rights over and above its requirement to acquire
additional aircraft for its fleet. To reflect this change, the
Group now accounts for aircraft purchase rights through profit or
loss. Disclosures about the fair value measurement of aircraft
purchase rights are included in Note 4.
17 CASH AND BANK BALANCES
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
------------------------------ --------- ---------
Fixed deposits 30,405 6,700
Other cash and bank balances 101,205 100,748
--------- ---------
Total cash and bank balances 131,610 107,448
Less: restricted (71,877) (45,759)
--------- ---------
Cash and cash equivalents 59,733 61,689
--------- ---------
The Group's restricted cash and bank balances have been pledged
as security for certain loan obligations.
In the consolidated statement of cash flows, cash and cash
equivalents comprises unrestricted cash and bank balances.
18 ASSETS HELD FOR SALE
As at 31 March 2020, the Group's aircraft which met the criteria
to be classified as assets held for sale are as follows:
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
--------------------------------- ---------- ---------
Assets held for sale:
Property, plant and equipment
- aircraft
At 1 July 2019/ 1 July
2018 - 48,745
Additions 89,935 -
Impairment loss (1,485) -
Disposals - (48,745)
-------- ---------
At 31 March 2020/30 June
2019 88,450 -
Lease incentive asset 8,908 -
-------- ---------
97,358 -
-------------------------------------------- ---------
Liabilities directly
associated with assets
held for sale:
Deposit collected 1,240 -
Lessor maintenance contribution 8,908 -
Maintenance reserves 135 -
-------- ---------
10,283 -
An impairment loss of US$1.5 million was recognised to write
down the book value of 2 jet aircraft to current market value
during the nine months ended 31 March 2020.
19 SHARE CAPITAL AND TREASURY SHARES
(a) Share capital
31 Mar 2020 30 Jun 2019
No of shares US$'000s No of shares US$'000s
-------------------- ------------- --------- ------------- -----------
Allotted, called
up and fully paid
Ordinary shares
of 1 penny each:
At 1 July 2019/
1 July 2018 64,609,939 1,104 62,760,246 1,080
Issue of shares 270,003 4 1,849,693 24
At 31 March 2020
/30 Jun e2019 64,879,942 1,108 64,609,939 1,104
------------- --------- ------------- ---------
During the nine months period ended 31 March 2020, the Company
issued 270,003 ordinary shares of 1 penny each at 2.15p to 2.32p
following the exercise of warrants by warrant holders raising total
gross proceeds of US$0.8 million.
The holders of ordinary shares (except for treasury shares) are
entitled to receive dividends as and when declared by the Company.
All ordinary shares carry one vote per share without
restrictions.
(b) Treasury shares
31 Mar 2020 30 Jun 2019
No of treasury No of treasury
shares US$'000s shares US$'000s
----------------------------- --------------- --------- --------------- ---------
At 1 July 2019/ 1 July 2018 300,000 1,147 - -
Acquired during the period 1,910,000 6,664 300,000 1,147
At 31 Mar 2020 /30 Jun 2019 2,210,000 7,811 300,000 1,147
--------------- --------- --------------- ---------
(c) Net asset value per share
31 Mar 30 Jun
2020 2019
------------------------------------- --- -------- --------
Net asset value per share (US$) (1) $4.01 $3.74
Net asset value per share (GBP) (2) GBP3.24 GBP2.95
-------- --------
(1) Net asset value per share is total equity divided by the total number of shares issued and outstanding at period end.
(2) Based on GBP:US$ exchange rate as at 31 Mar 2020 of 1.24 (30 June 2019 : 1.27).
20 LOANS AND BORROWINGS
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
---------------------------------- ---------- ----------
Secured borrowings 735,275 733,322
Unsecured notes 346,987 344,966
Total loans and borrowings 1,082,262 1,078,288
Less: current portion (78,078) (72,595)
Non-current loans and borrowings 1,004,184 1,005,693
---------- ----------
Weighted average
interest rate per
Maturity annum
31 Mar 30 Jun 31 Mar 30 Jun
2020 2019 2020 2019
% %
-------------------- ----------- ----------- ---------- ---------
Secured borrowings 2020-2031 2019-2031 3.6% 3.7%
Unsecured notes 2021 2021 6.5% 6.5%
Secured borrowings are secured by first ranking mortgages over
the relevant aircraft, security assignments of the Group's rights
under leases and other contractual agreements relating to the
aircraft, charges over bank accounts in which lease payments
relating to the aircraft are received and charges over the issued
share capital of certain subsidiaries.
21 MAINTENANCE RESERVES
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
-------------------------------------------- --------- ---------
Current 6,234 1,166
Non-current 52,939 31,325
Total maintenance reserves 59,173 32,491
--------- ---------
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
-------------------------------------------- --------- ---------
At 1 July 2019/ 1 July 2018 32,491 23,544
Contributions 31,102 15,413
Utilisations (4,222) (1,558)
Released to profit or loss (198) -
Transferred to buyer upon sale of aircraft - (4,908)
At 31 March 2020 /30 June 2019 59,173 32,491
--------- ---------
During the nine months ended 31 March 2020, maintenance reserve
of US$0.2 million were released to profit or loss as revenue due to
the recovery of maintenance reserves from an insolvent airline
customer that defaulted on its lease payments. See Note 5.
22 CAPITAL COMMITMENTS
Capital expenditure contracted for at the reporting date but not
recognised in the financial statements is as follows:
31 Mar 30 Jun
2020 2019
US$'000s US$'000s
------------------------------- --------- ---------
Property, plant and equipment 147,685 169,034
--------- ---------
Capital commitments represent amounts due under contracts
entered into by the group to purchase aircraft. The company has
paid deposits towards the cost of these aircraft which are included
in trade and other receivables.
As at 31 March 2020, the Group has commitments to purchase eight
ATR 72-600 aircraft from the manufacturers with expected delivery
dates from April 2020 to April 2022.
23 CONTINGENT LIABILITIES
There were no material changes in contingent liabilities since
30 June 2019.
24 DIVIDS
31 Mar 31 Mar
2020 2019
US$'000s US$'000s
--------------------------------------------------------------------------- --------- ---------
Dividends declared and/or paid during the nine months ended 31 March 2020
Dividends on ordinary shares
* First interim exempt (one-tier) dividend for 8.50 US
cents (31 Mar 2019 : 7.25 US cents) per share 5,454 4,550
* Second interim exempt (one-tier) dividend for 2.10 US
cents (31 Mar 2019 : 2.00 US cents) per share 1,319 1,290
--------- ---------
6,773 5,840
--------- ---------
Dividends are recorded directly in equity when they are
paid.
No dividends have been declared subsequent to 31 March 2020.
25 SUBSEQUENT EVENTS
On 6 April 2020, Braathens Regional Airways AB ("Braathens")
entered into voluntary administration. The Group has two ATR72-600
aircraft on finance lease to Braathens. At the time of its entry
into administration Braathens represented around 3% of the group's
total monthly run-rate lease revenue. We are currently in
discussion with the administrator of Braathens and expect to enter
into revised operating leases for the two aircraft shortly.
On 20 April 2020, Virgin Australia Holdings Limited ("Virgin
Australia") entered into voluntary administration. Avation has two
Fokker 100 aircraft on finance lease and 11 ATR 72 aircraft on
operating lease to Virgin Australia two of which are subleased to,
and operated by, another airline. At the date of entry into
administration, Virgin Australia represented around 19% of the
group's total monthly run-rate lease revenue. We have subsequently
signed new short-term finance leases for the two Fokker 100
aircraft and have signed new short-term operating leases for two
ATR 72 aircraft with another operator which are expected to
commence shortly.
On 15 May 2020, Avation entered into an agreement to extend the
lease of a Boeing 737-800 aircraft by six years from its original
lease termination date until June 2028. The lease extension rent is
at a market rate.
On 2 and 3 June 2020, the Company repurchased US$1,000,000
Avation Capital S.A. 6.5% senior notes due 2021 issued under the
Avation global medium term note programme. The notes were acquired
through the market at a price of 76.25 per cent and will be
cancelled.
On 13 June 2020, the Company entered into finance leases over
the period to September 2020 for the sale two Fokker 100
aircraft.
On 17 June 2020 Avation entered into agreements to lease two ATR
72- 500 aircraft formerly leased to Virgin Australia to another
commercial airline in Australia, until the end of 2021, at current
market lease rates.
25 SUBSEQUENT EVENTS (continued)
Between 24 March and 18 June 2020 Avation entered into a series
of short-term rent deferral agreements with its airline customers
in response to requests made following the onset of the COVID-19
pandemic. The agreements allow airlines to defer a portion of rent
payments for a short-term period, with the deferred amounts to be
repaid to the company in the form of additional rent following the
end of the deferral period. The company has entered into 13 rent
deferral agreements with a total value of deferred rent of $16.3
million. The average deferral amount is 57% of monthly rent, the
average deferral period is 3.4 months and the deferred rents are
repayable in equal instalments over three to nine month periods
following the end of the relevant deferral period.
Between 21 May and 18 June 2020 Avation entered into a series of
short-term loan principal deferral agreements with its lenders in
order to mitigate the impact on cashflow of granting rent deferrals
to its customers following the onset of the COVID-19 pandemic. The
agreements allow the company to defer up to 100% of loan principal
payments on certain loans for periods of three to six months. The
deferred loan principal payments have a total value of $9.2
million. The deferred loan principal payments are repayable to
lenders in equal instalments over four to 12 month periods
following the end of the relevant deferral period.
PRINCIPAL RISKS
The Group's risk management processes bring greater judgement to
decision making as they allow management to make better, more
informed and more consistent decisions based on a clear
understanding of risk involved. We regularly review the risk
assessment and monitoring process as part of our commitment to
continually improve the quality of decision-making across the
Group.
The principal risks and uncertainties which may affect the Group
in the remaining three months 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 2019.
DIRECTORS
The directors of Avation PLC are listed in its Annual Report for
the year ended 30 June 2019. 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 nine months and their impact on the Interim Report, and a
description required by the principal risks and uncertainties for
the remaining three months of the financial year; and
-- material related party transactions in the first nine months
and any material changes in the related party transactions
described in the last annual report.
By order of the Board
Jeff Chatfield
Executive Chairman
Singapore, 26 June 2020
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
QRTKKFBNQBKKDAB
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June 29, 2020 02:00 ET (06:00 GMT)
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