Avation plc
LSE : AVAP

October 31, 2012 09:07 ET

Annual Financial Report

                                            AVATION PLC (the "Company")
                                                         
                                               FINANCIAL RESULTS FOR
                                              YEAR ENDED 30 JUNE 2012


Avation  Plc (LSE: AVAP) the aircraft procurement and leasing company is pleased to announce its audited  financial
statements for the Company and its subsidiaries for the year ended 30th June 2012.

Highlights:

    *       Increased number of aircraft from 12 to 15 with a fleet value of GBP 137 Million (US$ 214 Million);
    *       Net after tax profits of GBP 3,307,126;
    *       Basic Earnings per share of 8.16 pence;
    *       Dividends increased by 4% to: 1.04 pence per share;
    *       Delivered first six new ATR 72 aircraft into the Australian Regional Airline Network Alliance ("ARAN") to
            Virgin Australia;
    *       Arranged commercial funding of US$180 million for the initial 10 ATR aircraft;
    *       Cumulative Fleet growth of 25% p.a. with planned fleet expansion under the ARAN of a minimum 5 aircraft per
            year for the next 5 years; and
    *       Progressing dual listing on the Singapore Stock Exchange.
    
        
        

Commenting today, Avation Plc Chairman Jeff Chatfield said:

"The Board of Directors believe that they have demonstrated that the Group has a sustainable business model and are
committed to develop the Avation business as a differentiated aircraft operating lease business to provide constant
and defined IRR's, cash yields and predictive capital returns from investment in the regional turbo prop market and
more particularly in the Australian and South East Asian regional airline sector. Looking forward, we are confident
that our business provides for continued and sustainable growth in 2013 and beyond"




Further information on Avation PLC can be seen at: www.avation.net Avation PLC is registered in England and Wales
with an Operational Headquarters in Singapore.

Enquiries:

Avation PLC                                       
Jeff Chatfield, Chairman                          +44 7783 942 553
                                                  
W H IRELAND                                       
Harry Ansell,Equity Sales                         +44 20 7220 1666
                                                  
Cadogan PR                                        
Alex Walters                                      +44 20 7839 9260
                                                  +44 (0) 7771 713 608








Chairman's Statement on Results and Interim Management Statement

        
Your  Board is pleased to report that in respect of the year ended 30th June 2012 the consolidated net profit after
tax  was  GBP 3,307,126 on revenues of GBP 22,098,019 with earnings per share of 8.16 pence. Returns comprise  cash
yield  (income) from the lease payments plus the net asset value (capital) realisable from the sale of the aircraft
after repayment of associated debt obligations.

The  ARAN  alliance between Avation, Skywest Airlines and Virgin Australia is a unique long term aircraft operating
lease  arrangement  and  delivers a solid operating platform for the continued asset and  earnings  growth  of  the
Avation  business. The ARAN Fleet commenced with the order of 15 ATR72 aircraft and 25 options and purchase  rights
to enable a fleet expansion of 40 aircraft to service Virgin Australia's regional airline network on the east coast
of Australia with a potential value of up to US$800 million.

In  the period to 30th June 2012, Avation successfully (i) delivered 6 new ATR 72-500 aircraft with a further 4 new
ATR 72-600 to be delivered by end December 2012 (ii) converted 5 options to firm delivery for aircraft delivery  in
2013 and January 2014, and (iii) ordered 8 more option ATR 72-600 aircraft for delivery in 2014 and 2015.

The  Avation  fleet of 15 aircraft has an average age and lease term of 10.6 years and 7.8 years  respectively  and
generates  a  rental  yield  of  14.6% from a current customer base of 4 airlines in Australia,  Europe  and  North
America.

Avation's fleet is diverse, comprising the new ATR aircraft and other aircraft including the Fokker 100s  and  A320
aircraft  which  we  used  for  core transport services to the mining and resources sector  in  Australia.  Avation
continues to provide active fleet and financial management to ensure the retention of asset values and maximisation
of  earnings.  In  accordance  with  this policy the Group sold its Australian  leasing  subsidiary  Capital  Lease
Australian Portfolio One Pty Ltd ("C1") on 28th June 2012 to Skywest Airlines.This C1 sale delivered a higher  cash
return  on  ageing  and end of lease aircraft. Whilst increasing the overall cash reserves of  the  Avation  Group,
earnings were impacted by a fall of 1.0 pence per share on a fully diluted basis.

Revenue growth to GBP 22,098,019 was consistent with the build-out and significant investment in the ATR fleet  and
reflected  lease income commencing in August 2011 from the delivery of the 6 ATR's. Lease revenues are forecast  to
grow by GBP 4.6 million in 2013 and GBP 2.9 million in 2014 respectively from the proposed ATR fleet expansion.

As  of  June 30th, total assets increased by GBP 58,740,060 to GBP 158,131,903. Corresponding liabilities increased
to GBP 105,610,847 resulting in a moderate net asset increase of 6.2% to GBP 52,521,056.

The Company secured committed funding of US$180 million covering all aircraft deliveries for the period ending 31st
December  2012  from traditional aircraft financing banks. Debt facilities are primarily asset  based  and  limited
recourse  financings and matched to the leases in terms of currency, term and loan servicing ensuring there  is  no
"through lease term" re-financing risk.

The  Company  believes  that it can obtain access to the necessary debt for the purchase  of  aircraft.  Access  to
funding  nevertheless  remains  a  risk, which is common to all businesses that  are  capital  intensive.  Specific
aviation based industry risks are also present and include the creditworthiness of client airlines.

The  Board of Directors believe that they have demonstrated that the Group has a sustainable business model and are
committed to develop the Avation business as a differentiated aircraft operating lease business to provide constant
and  defined  IRR's, cash yields and predictive capital returns from investment in the narrow body aircraft  market
and more particularly in the Australian and South East Asian regional airline sector.
    
Our business provides for continued and sustainable growth in 2013 and beyond. Our fleet procurement and investment
policies are robust and we will only acquire aircraft with leases attached, ensuring there is no "ramp-up" phase or
speculation.

The  outlook for 2013 is positive with scheduled ATR aircraft investment in FY 2013 of US$ 111 million and  US$  74
million for 2014. Net Profit after Tax is expected to increase proportionately with these increased revenues.

Avation  continues  to  actively  evaluate further preferred aircraft acquisition investment  opportunities.  As  a
result,  the Company is well advanced with respect the funding of its 2013 deliveries and is developing  formalised
capital  funding  programs to provide a diversified funding base with access to both debt and equity  markets.  Our
Singapore Stock Exchange listing remains a priority and a core feature of our capital strategy going forward.

Whilst  the  business  is engaged in funding the significant asset growth of the fleet, your  Board  overwhelmingly
recognises the importance of rewarding shareholders and is recommending to shareholders a final dividend payment of
1.04  pence per share. Accordingly, the Company hopes to maintain a progressive dividend policy going forward.  The
record  date  for  this final dividend will be announced in the meeting materials for the upcoming  annual  general
meeting.

My  colleagues  and  I  are  committed  to continue to work tirelessly to build  your  Company  into  a  respected,
profitable,  diversified and cash generative aircraft leasing business. The Board would like to  thank  you  -  the
shareholders  for  your  continued  support and goodwill and look forward to the  future  with  confidence  in  the
successful development of Avation PLC.






Robert Jeffries Chatfield,
Chairman

Singapore
30 October 2012


AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012
                                                                                           2012             2011
Continuing operations                                                                        £                £
                                                                                                                    
Revenue                                                                                 22,098,019       16,291,428
                                                                                                                   
Cost of sales                                                                            (713,126)        (739,278)
                                                                                  -----------------------------------
Gross profit                                                                            21,384,893       15,552,150
                                                                                                                   
Other income                                                                               160,549          297,792
                                                                                                                   
Other operating expenses                                                               (9,159,965)      (6,207,042)
                                                                                                                   
Expenses                                                                                                           
- Administrative expenses                                                              (2,193,520)      (1,255,756)
- Finance expenses                                                                     (4,951,087)      (2,755,498)
                                                                                   ----------------------------------
Profit before taxation                                                                   5,240,870        5,631,646
                                                                                                                   
Taxation                                                                               (1,079,660)        (574,920)
                                                                                   ----------------------------------
Profit from continuing operations for the year                                           4,161,210        5,056,726
Other comprehensive income                                                                                         
Currency translation differences arising on consolidation                                  528,268      (1,809,245)
Revaluation (loss) / gains on property, plant and equipment, net of tax                (3,081,286)          859,629
                                                                                   ----------------------------------
Other comprehensive income for the year, (net of tax)                                  (2,553,018)        (949,616)
                                                                                   ----------------------------------
Total comprehensive income for the year                                                  1,608,192        4,107,110
                                                                                   ----------------------------------
                                                                                   ----------------------------------
Profit attributable to:                                                                                            
Equity holders of the parent                                                             3,307,126        3,627,293
Non-controlling interest                                                                   854,084        1,429,433
                                                                                   ----------------------------------
                                                                                         4,161,210        5,056,726
                                                                                   ----------------------------------
Total comprehensive income attributable to:                                                                        
Equity holders of the parent                                                             1,462,520        3,128,808
Non-controlling interest                                                                   145,672          978,302
                                                                                   ----------------------------------
                                                                                         1,608,192        4,107,110
                                                                                   ----------------------------------
Earnings per share                                 
- Basic - continuing and total operations                                               8.16 pence      11.95 pence
                                                                                   ----------------------------------
                                                                                   ----------------------------------
- Fully Diluted - continuing and total operations                                       8.13 pence      11.84 pence
                                                                                   ----------------------------------
                                                                                   ----------------------------------


AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2012

                                                                                             2012             2011
                                                                                               £                £
ASSETS                                                                                                               
                                                                                                                     
Current assets:                                                                                                      
Cash and cash equivalents                                                                  5,824,099        5,626,771
Trade and other receivables                                                                5,770,332        7,542,395
Prepayments                                                                                  297,904                -
Inventories                                                                                    9,168            1,946
                                                                                    ----------------------------------
Total current assets                                                                      11,901,503       13,171,112
                                                                                    ----------------------------------
                                 
Non-current assets:                                                                                                  
Trade and other receivables                                                                5,403,585                -
Prepayments                                                                                2,452,619                -
Property, plant and equipment                                                            137,049,655       84,896,190
Goodwill                                                                                   1,324,541        1,324,541
                                                                                    ----------------------------------
Total non-current assets                                                                 146,230,400       86,220,731
                                                                                    ----------------------------------
                                 
Total assets                                                                             158,131,903       99,391,843
                                                                                    ----------------------------------
                                                                                    ----------------------------------

LIABILITIES AND EQUITY                                                                                               
                                                                                                                     
Current liabilities:                                                                                                 
Trade and other payables                                                                   3,242,101        3,331,862
Deferred lease income                                                                         58,519                -
Provision for taxation                                                                       332,421           38,748
Loans and borrowings                                                                      12,522,177        9,865,455
Short-term provisions                                                                      1,901,456        2,849,839
                                                                                    ----------------------------------
Total current liabilities                                                                 18,056,674       16,085,904
                                                                                    ----------------------------------
                                
Non-current liabilities:                                                                                             
Trade and other payables                                                                   3,883,863          942,009
Deferred lease income                                                                        468,156                -
Loans and borrowings                                                                      79,402,426       28,091,394
Deferred tax liabilities                                                                   3,799,728        4,811,938
                                                                                    ----------------------------------
Total non-current liabilities                                                             87,554,173       33,845,341
                                                                                    ----------------------------------
                                 
Equity attributable to shareholders:                                                                                 
Share capital                                                                                423,745          386,072
Share premium                                                                             14,192,267       10,543,750
Assets revaluation reserve                                                                 5,465,206        7,436,517
Capital redemption reserve                                                                     7,000            7,000
Warrant reserve                                                                              120,779           74,381
Capital reserve                                                                            1,636,511                -
Foreign currency translation reserve                                                       2,515,434        2,388,729
Retained earnings                                                                         17,790,185       14,890,326
                                                                                    ----------------------------------
                                                                                          42,151,127       35,726,775
Non-controlling interest                                                                  10,369,929       13,733,823
                                                                                    ----------------------------------
                                                                                          52,521,056       49,460,598
                                                                                    ----------------------------------
                                                                                    
Total liabilities and equity                                                             158,131,903       99,391,843
                                                                                    ----------------------------------
                                                                                    ----------------------------------

AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012
                                                                                             2012             2011
                                                                                               £                £
Cash flows from operating activities:                                                                               
Profit before taxation                                                                     5,240,870        5,631,646
Adjustments for:                                                                                 
    Depreciation expense                                                                   6,515,334        4,964,453
    Claim on maintenance reserve                                                           1,257,494        1,242,589
    Impairment loss on property plant and equipment                                          990,924                -
    Amortisation of loan premium                                                             225,283                -
    Amortisation of deferred lease expense                                                     4,207                -
    Loss on disposal of subsidiary                                                           396,213                -
    Warrant expense                                                                           65,386           74,381
    Interest expense                                                                       4,721,597        2,680,231
    Interest income                                                                         (59,643)          (3,607)
                                                                                    ----------------------------------
    Operating profit before working capital changes                                       19,357,665       14,589,693
Movement in working capital:                                                                     
    Trade and other receivables and prepayments                                          (4,099,516)      (5,157,029)
    Inventories                                                                              (7,222)          (1,239)
    Deferred lease income                                                                    526,675                -
    Trade and other payables                                                               5,416,497        (972,482)
    Short-term provisions                                                                  (571,189)        (311,597)
                                                                                    ----------------------------------
    Cash from operations                                                                  20,622,910        8,147,346
Interest paid                                                                            (4,721,597)      (2,809,256)
Interest received                                                                             59,643            3,607
Corporation tax paid                                                                       (298,554)        (440,543)
                                                                                    ----------------------------------
Net cash from operating activities                                                        15,662,402        4,901,154
                                                                                    ----------------------------------
                                                                                                    
Cash flows from investing activities:                                                               
    Cash outflow from disposal of subsidiary - See Note A                                  (127,977)                -
    Purchase of property, plant and equipment                                            (4,884,565)         (19,233)
Loan to related parties                                                                            -      (1,579,860)
                                                                                    ----------------------------------
Net cash used in investing activities                                                    (5,012,542)      (1,599,093)
                                                                                    ----------------------------------
              
Cash flows from financing activities:                                                            
    Net proceeds from issuance of ordinary shares                                          1,961,749        9,418,374 
    Dividends paid                                                                         (407,266)        (171,193)
    Proceeds from borrowings                                                                       -        1,257,800
    Repayment of borrowings                                                             (10,960,417)      (8,192,846)
    Capital element of finance lease repayments                                          (1,497,535)      (1,355,278)
                                                                                    ----------------------------------
Net cash (used in) from financing activities                                            (10,903,469)          956,857
                                                                                    ----------------------------------
Effects of exchange rates on cash and cash equivalents                                       450,937          139,972
                                                                                    ----------------------------------
Net increase in cash and cash equivalents                                                    197,328        4,398,890
Cash and cash equivalents at beginning of financial year                                   5,626,771        1,227,881
                                                                                    ----------------------------------
Cash and cash equivalents at end of financial year                                         5,824,099        5,626,771
                                                                                    ----------------------------------
                                                                                    ----------------------------------
 
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE FINANCIAL YEAR ENDED 30 JUNE 2012

Note A - Disposal of a subsidiary, Capital Lease Australian Portfolio One Pty Ltd:

The aggregate cash inflows arising from the disposal of Capital Lease Australian Portfolio One Pty Ltd were:

                                                                                              £
                                                                                       
Cash                                                                                       127,977
Trade and other receivables                                                              1,194,144
Property, plant and equipment                                                            6,849,275
Trade and other payables                                                               (2,564,404)
Borrowings                                                                             (2,392,449)
Provisions                                                                             (1,634,688)
Income tax payable                                                                       (329,515)
Identifiable net assets disposed                                                         1,250,340
Loss on disposal                                                                         (396,213)
Cash proceeds from disposal                                                                854,127
Less: cash and cash equivalents in subsidiary disposed                                   (127,977)
Net cash inflow on disposal, receivable after year end                                     726,150

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