Avation plc
LSE : AVAP

February 03, 2011 03:17 ET

Half year report

                                                  AVATION PLC
                                    CONSOLIDATED UNAUDITED RESULTS FOR THE
                                       SIX MONTHS ENDED 31 DECEMBER 2010

Avation  PLC,  the aircraft leasing company, presents its interim results for the six months  to  31  December
2010.


The highlights presented in the results are:

    *   The consolidated net profit after tax attributable to shareholders of Avation PLC increased by 98% to
        £1,584,826 for the 6 month period
    *   Revenues increased by 10% to £8,282,327
    *   An 87% increase in basic earnings per share to 5.86 pence per share
    *   A major business endeavour with Virgin Blue Airlines Pty Ltd has been established
    *   A move from PLUS to a standard listing on the main market of the London Stock Exchange




ENQUIRES:


Avation PLC
Jeff Chatfield, Chairman                                               +44 7783 942 553

W H IRELAND
Harry Ansell, Stockbroker                                              +44 20 7220 1670

Financial Public Relations
Bishopsgate Communications                                             +44 207 562 3350
Laura Stevens/Giang Nguyen

Websites
www.avation.net







AVATION PLC (the "Company")
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
CHAIRMAN'S STATEMENT AND INTERIM MANAGEMENT REPORT

The highlights in the results are:

    *   Consolidated  net  profit after tax attributable to shareholders of Avation PLC increased  by  98%  to
        £1,584,826 for the 6 month period
    *   Revenues increased by 10% to £8,282,327
    *   An 87% increase in basic earnings per share to 5.86 pence per share
    *   A major business endeavour with Virgin Blue Airlines Pty Ltd has been established
    *   A move from PLUS to a standard listing on the main market of the London Stock Exchange


I  am  pleased  to present the Company's interim results for the six months ended 31 December 2010 (the  "Period").
The total consolidated revenue for the six month period was £8.3 million which is an increase of 10 per cent on the
comparative  period  (31  Dec 2009: £7.6 million) as a result of higher lease rental income  received  during  this
period derived from the leasing of an additional Airbus A320-200 aircraft from April 2010.

The  Avation Group net profit after income tax attributable to the shareholders was recorded as £1.6 million, a  98
per cent increase on the comparative period (31 Dec 2009: £0.8 million).  In line with an expansion of the scale of
the Group's operations, profits have increased.

Basic earnings per share for the Period were 5.86 pence, an increase of 87 per cent (31 Dec 2009: 3.14 pence).

Net  cash  inflow from operating activities was £5.2 million (31 December 2009: £4.8 million).  There was no  major
material  capital expenditure during this six month period. Other operating expenses were reduced by  £0.4  million
mainly due to a reduction in claims on maintenance reserves.

In  October  2010,  the Company moved from the PLUS-quoted market to the Main Market of the London  Stock  Exchange
("LSE") as a standard listing, to facilitate growth and raise the profile of Avation.

On 10 January 2011, the Company entered into an agreement with Skywest Airlines (Australia) Pty Ltd ("Skywest") and
Virgin  Blue  Airlines  Pty  Ltd ("Virgin Blue") to provide a fleet of up to 18 new  aircraft  which  will  operate
primarily across the East Coast of Australia. Skywest proposes to provide "wet-lease" services to Virgin Blue. Some
financial  impact  of  this  contract  may be enjoyed in the period which ends  June  30th  2011,  however,  it  is
anticipated that the first 8 aircraft will, in practice, commence service during the 2011-2012 financial year. Each
aircraft  will  be  operated under wet lease by Skywest on behalf of Virgin Blue for a fixed period  of  10  years.
Following  the introduction of the first 8 aircraft, a further 10 or more aircraft may be deployed under option  at
Virgin Blue's request.
      
The  aircraft  will  be owned by, and leased by the Company to Virgin Blue on 10 year operating leases  with  other
commercial  terms as typically entered into by the Company and its lessee customers. The arrangements  with  Virgin
Blue  are  subject to final negotiation.  The Directors believe that given the calibre of the lessee and  the  wet-
lessee,  the length of the fixed terms and the fact the aircraft will be new, the Company is well placed to utilise
Government-backed  Export  Credit  Agency  style Financing ("ECA Financing").   The  Company  intends  to  make  an
application for ECA Financing forthwith.

Current  trading  conditions  are  satisfactory  with the cost of finance  being  reduced  and  the  Avation  group
successfully  reducing  or repaying higher cost debt facilities. Approximately £5m in long  term  debt  was  repaid
during  the  period.   The  Company anticipates that the operations of the second  half  period  of  the  2010-2011
financial year will be in line with the first half, albeit that in terms of current trading the financial impact of
the Virgin Blue leases will commence in the second half period to 30th June 2011

The  Group is subject to the typical risks associated with the aviation business, including but not limited to  any
downturn  in  the  global aviation industry, fuel costs, finance costs, war and terrorism and the  like  which  may
affect our airline customers' ability to fulfil their lease obligations. The business also relies on its ability to
source for finance on favourable terms.  Should this supply of finance contract, it would limit our fleet expansion
and therefore growth.

I would like to take this opportunity of thanking you, the owners of this enterprise, for your support over this
busy period and look forward to updating you on the progress of the Virgin Blue initiative.

Jeff Chatfield,

Chairman
Singapore 1 Feb 2011



AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

                                                                               6 months to         6 months to
                                                                               31 December         31 December
                                                                         Note         2010                2009
Continuing operations                                                                    £                   £
                                                                                                                   
Revenue                                                                   4      8,282,327          7,556,268
                                                                                                    
Cost of sales                                                                     (362,361)          (593,826)
                                                                                                    
Gross profit                                                                     7,919,966          6,962,442
                                                                                                    
Other income                                                              5         67,582              2,686
                                                                                                    
Other operating expenses                                                  6     (3,049,001)        (3,419,063)
                                                                                                    
Expenses                                                                                            
- Administrative expenses                                                         (601,387)          (408,296)
- Finance expenses                                                        7     (1,548,472)        (1,607,074)
                                                                                                    
Profit before taxation                                                           2,788,688          1,530,695
                                                                                                    
Taxation                                                                          (531,147)          (187,155)
                                                                                                    
Profit from continuing operations for the year                                   2,257,541          1,343,540
                                                                                                    
Other comprehensive income                                                                          
Currency translation differences arising on consolidation                         (874,418)         2,339,896
Revaluation gains on property, plant and equipment, net of tax                          -             339,982
Other comprehensive income for the year (net of tax)                              (874,418)         2,679,878
                                                                                                    
Total comprehensive income                                                       1,383,123          4,023,418
                                                                                                    
Profit attributable to:                                                                             
Equity holders of the parent                                                     1,584,826            801,941
Non-controlling interest                                                           672,715            541,599
                                                                                 2,257,541          1,343,540
                                                                                                    
Total comprehensive income attributable to:                                                         
Equity holders of the parent                                                     1,033,096          2,458,990
Non-controlling interest                                                           350,027          1,564,428
                                                                                 1,383,123          4,023,418
                                                                                                                   
Earnings per share                                                                                                 
- Basic - continuing and total operations                                       5.86 pence         3.14 pence
- Fully Diluted - continuing and total operations                               5.69 pence         2.78 pence
                                                                                                           


AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED BALANCE SHEET (UNAUDITED)
AS AT 31 DECEMBER 2010

                                                                                 31 December             30 June
                                                                           Note         2010                2010
                                                                                           £                   £
ASSETS                                                                                                               
                                                                                                                     
Current assets:                                                                                                      
Cash and cash equivalents                                                          3,054,403           1,227,881
Trade and other receivables                                                        1,332,490           1,195,859
Inventories                                                                            1,109                 707
                                                                                   
Total current assets                                                               4,388,002           2,424,447
                                                                                                       
Non-current assets:                                                                                    
Property, plant and equipment                                               8      87,841,992          92,520,577
Goodwill                                                                            1,324,541           1,324,541
Total non-current assets                                                           89,166,533          93,845,118
                                                                                                       
Total assets                                                                       93,554,535          96,269,565
                                                                                                       
LIABILITIES AND EQUITY                                                                                 
                                                                                                       
Current liabilities:                                                                                   
Trade and other payables                                                           4,002,778            3,818,692
Provision for taxation                                                               369,176               18,368
Loans and borrowings                                                               9,841,422            9,602,462
Short-term provisions                                                              2,524,884            2,047,185
Total current liabilities                                                         16,738,260           15,486,707
                                                                                                       
Non-current liabilities:                                                                               
Trade and other payables                                                             973,183            1,379,641
Loans and borrowings                                                              34,283,291           39,123,267
Deferred tax liabilities                                                           4,215,945            4,248,024
Total non-current liabilities                                                     39,472,419           44,750,932
                                                                                                       
Equity attributable to shareholders:                                                                   
Share capital                                                               9        285,322              262,190
Share premium                                                                      1,326,126            1,249,258
Assets revaluation reserve                                                         6,760,372            6,760,372
Capital redemption reserve                                                             7,000                7,000
Foreign currency translation reserve                                               3,011,629            3,563,359
Retained earnings                                                                 12,847,859           11,434,226
Parent interests                                                                  24,238,308           23,276,405
Non-controlling interests                                                         13,105,548           12,755,521
                                                                                  37,343,856           36,031,926
                                                                                                       
Total liabilities and equity                                                      93,554,535           96,269,565

AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

                                                                                                     Foreign                                                              
                                                                       Assets         Capital       currency          Share                                         Non-  
                                          Share          Share    revaluation      Redemption    translation         option       Retained                   Controlling          Total
                                        capital        premium        reserve         reserve        reserve        reserve       earnings          Total       Interest         Equity
                                              £              £              £               £              £              £              £              £              £              £
Group                                                                                                                                                                     
Balance at 1 July  2010                 262,190      1,249,258      6,760,372           7,000      3,563,359              -     11,434,226     23,276,405     12,755,521     36,031,926
                                                                                                                                                                          
Profit for the year                           -              -              -               -              -              -      1,584,826      1,584,826        672,715      2,257,541
Other comprehensive income                    -              -              -               -      (551,730)              -              -      (551,730)      (322,688)      (874,418)
Total comprehensive income                    -              -              -               -      (551,730)              -      1,584,826      1,033,096        350,027      1,383,123
                                                                                                                                                                          
Dividend related to 2010 paid                 -              -              -               -              -              -      (171,193)      (171,193)              -               
                                                                                                                                                                              (171,193)
                                                                                                                                                                                       
Increase in issued share capital         23,132         76,868              -               -              -              -              -        100,000              -               
                                                                                                                                                                                100,000
                                                                                                                                                                          
Balance at 31 December 2010             285,322      1,326,126      6,760,372           7,000      3,011,629              -     12,847,859     24,238,308     13,105,548     37,343,856
                                                                                                                                                                          
                                                                                                                                                                          
Balance at 1 July  2009                 255,555      1,216,336      6,760,372           7,000      1,148,240         12,788      9,897,773     19,298,064      9,928,515     29,226,579
                                                                                                                                                                                       
Profit for the year                           -              -              -               -              -              -        801,941        801,941        541,599      1,343,540
Other comprehensive income                    -              -        339,982               -      1,317,067              -              -      1,657,049      1,022,829      2,679,878
Total comprehensive income                    -              -        339,982               -      1,317,067              -        801,941      2,458,990      1,564,428      4,023,418
                                                                                                                                                                                       
                                                                                                                                                                                       
Increase in issued share capital            635         14,922              -               -              -              -              -         15,557         21,800         37,357
                                                                                                                                                                                       
                                                                                                                                                                                       
Balance at 31 December 2009             256,190      1,231,258      7,100,354           7,000      2,465,307         12,788     10,699,714     21,772,611     11,514,743     33,287,354
                                                                                                                                                                                
                                                                                                                                                                                

AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2010

                                                                                           31 December             31 December
                                                                                                  2010                    2009
                                                                                                     £                       £
Cash flows from operating activities:                                                                                     
Profit before taxation                                                                       2,788,688               1,530,695
Adjustments for:                                                                                                           
    Depreciation expense                                                                     2,387,116               2,244,704
    Claim on maintenance reserve                                                               661,885               1,053,876
    Interest expense                                                                         1,468,697               1,498,315
    Interest income                                                                            (1,242)                 (2,686)
Operating profit before working capital changes                                              7,305,144               6,324,904
                                                                                                                              
Movement in working capital:                                                                                                  
    Trade and other receivables                                                              (136,631)               (115,208)
    Inventories                                                                                  (402)                    (19)
    Trade and other payables                                                                 (222,372)                 776,927
    Short-term provisions                                                                    (137,248)               (501,976)
                                                                          
    Cash from operations                                                                     6,808,491               6,484,628
                                                                                                                              
Interest paid                                                                              (1,468,697)             (1,498,315)
Interest received                                                                                1,242                   2,686
Corporation tax paid                                                                          (96,776)               (130,155)
                                                   
Net cash from operating activities                                                           5,244,260               4,858,844
                                                                                                                              
Cash flows used in investing activities:                                                                                      
    Purchase of property, plant and equipment                                                 (17,504)                 (1,171)
Net cash used in investing activities                                                         (17,504)                 (1,171)
                                                                                                                              
Cash flows from financing activities:                                                                                         
    Net proceeds from issuance of ordinary shares                                              100,000                  15,557
    Net proceeds from issuance of subsidiary's shares to minority                                    -                  21,800
    Dividends paid                                                                           (171,193)                       -
    Proceeds from borrowings                                                                 1,278,100                       -
    Repayment of borrowings                                                                (4,028,934)             (4,195,171)
    Capital element of finance lease repayments                                              (665,090)                       -
Net cash used in financing activities                                                      (3,487,117)             (4,157,814)
                                                                                                                              
Effects of exchange rates on cash & cash equivalents                                            86,883                 (2,079)
                                                                                                                              
Net increase in cash and cash equivalents                                                    1,826,522                 697,780
Cash and cash equivalents at beginning of financial period                                   1,227,881               1,039,321
Cash and cash equivalents at end of financial period                                         3,054,403               1,737,101



AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2010




The Interim Report for Avation PLC for the six months ended 31 December 2010 was approved by the Directors on 1
February 2011.


1       CORPORATE INFORMATION

        Avation  PLC  (the  Company) is a public limited company incorporated in England and  Wales  under  the
        Companies Act 2006 (Registration Number 05872328).
        
        
2       BASIS OF PREPARATION AND ACCOUNTING POLICIES

        
        This  Interim Report has been prepared in accordance with the Disclosure and Transparency  Rules  (DTR)
        of  the Financial Services Authority and in accordance with International Accounting Standard (IAS)  34
        'Interim Reporting'.
        
        The  Interim  Report  does not include all the notes of the type normally included  within  the  annual
        report  and  therefore  cannot  be  expected to provide as  full  an  understanding  of  the  financial
        performance,  financial position and financial and investing activities of the consolidated  entity  as
        the full financial report.
        
        It  is  recommended that the Interim Report be read in conjunction with the annual report for the  year
        ended  30  June 2010 and considered together with any public announcements made by Avation  PLC  during
        the six months ended 31 December 2010.

        The  accounting policies and methods of computation are the same as those adopted in the annual  report
        for the year ended 30 June 2010.

        The  preparation  of  the  Interim Report requires management to make estimates  and  assumptions  that
        affect  the reported income and expense, assets and liabilities and disclosure of contingencies at  the
        date of the interim Report, actual results may differ from these estimates.
        
        The  statutory  financial statements of Avation PLC for the year ended 30 June 2010, which  carried  an
        unqualified  audit  report, have been delivered to the Registrar of Companies and  did  not  contain  a
        statement under section 498 of the Companies Act 2006.
        
        The Interim Report is unaudited and not reviewed by the auditors.
        
        The  Interim  Report does not constitute statutory financial statements within the meaning  of  section
        434 of the Companies Act 2006.



3     SEGMENT INFORMATION

a)    Segment reporting policy

      A  segment  is  a  distinguishable  component  of the Group  within  a  particular  economic  environment
      (geographical  segment) and to a particular industry (business segment) which is  subject  to  risks  and
      rewards that are different from those of other segments.
      
      The  primary  format,  business  segments,  is based on the Group's  management  and  internal  reporting
      structure.  In  presenting  information on the basis of business segments, segment  revenue  and  segment
      assets  are  based  on  the  nature of the products or services provided by the  Group,  information  for
      geographical segments is based on the geographical areas where the customers are located.
      
      Inter-segment  pricing  is determined on an arm's length basis. Segment results, assets  and  liabilities
      include  items directly attributable to a segment as well as those that can be allocated on a  reasonable
      basis.  Unallocated items comprise mainly of corporate assets and liabilities or profit or  losses  items
      that  are not directly attributable to a segment or those that cannot be allocated on a reasonable basis.
      Common expenses were allocated based on revenue from the Group.

      Segment  capital expenditure is the total cost incurred during the period to acquire segment assets  that
      are expected to be used for more than one year.

b)    Primary reporting segment - business segments

      During  the  six  months ended 31 December 2010, the Group was organised into two main business  segments
      which are aircraft leasing and business procurement.

      Other  operations  of the Group mainly comprise investment holding which does not constitute  a  separate
      reportable segment. There are no inter-segment transactions recorded during the financial period.

                                                               Aircraft         Business                     
                                                                leasing      procurement                Total
       31 December 2010                                               £                £                    £
       Revenue & other income                                                                               
          - External sales                                    8,586,668          424,176            9,010,844
          - Other income                                                                               69,931
       Total of all segments                                                                        9,080,775
       Less: elimination                                                                            (730,866)
       Consolidated revenue & other income                                                          8,349,909



                                                               Aircraft         Business                  
                                                                leasing      procurement                Total
       31 December 2010                                               £                £                    £
                                                                            
       Results                                                                                                  
       Segment results                                        4,349,853         (13,935)            4,335,918
       Finance income                                                                                   1,242
       Finance expense                                                                            (1,548,472)
       Unallocated corporate expenses                                                                       -
       Profit before taxation                                                                       2,788,688
       Taxation                                                                                     (531,147)
       Profit after taxation                                                                        2,257,541
                                                                                                 
       Other segment items                                                                       
       Capital expenditure & valuation movement                                                  
       - property, plant and equipment                           13,566            3,938               17,504
       Depreciation                                           2,386,739              378            2,387,117

                                                               Aircraft         Business               
       31 December 2010                                         leasing      procurement                Total
                                                                      £                £                    £
                                                                                                 
       Segment assets                                        93,324,495          230,040           93,554,535
       Unallocated assets                                                                                   -
       Consolidated total assets                                                                   93,554,535
                                                                                                 
       Segment liabilities                                                                       
       Trade and other payables                               4,698,266          277,695            4,975,961
       Provisions of taxation                                   363,461            5,715              369,176
       Short term provisions                                  2,524,884                -            2,524,884
       Loans and borrowings                                  44,124,713                -           44,124,713
       Deferred tax liabilities                               4,215,945                -            4,215,945
       Unallocated liabilities                                                                              -
       Consolidated total liabilities                        55,927,269          283,410           56,210,679



                                                                Aircraft        Business      
                                                                 leasing     procurement                Total
       31 December 2009                                                £               £                    £
       Revenue & other income                                                                                
          - External sales                                     7,109,469         660,931            7,770,400
          - Other income                                                                               49,547
       Total of all segments                                                                        7,819,947
       Less: elimination                                                                            (260,993)
       Consolidated revenue & other income                                                          7,558,954





                                                               Aircraft         Business                    
                                                                leasing      procurement                Total
                                                                      £                £                    £
      31 December 2009                                                                                      
                                                                                                       
                                                                                                 
      Results                                                                                    
      Segment results                                         3,139,248          (4,165)           3,135,083
      Finance income                                                                                   2,686
      Finance expense                                                                            (1,607,074)
      Unallocated corporate expenses                                                                       -
      Profit before taxation                                                                       1,530,695
      Taxation                                                                                     (187,155)
      Profit after taxation                                                                        1,343,540
                                                                                                            
      Other segment items                                                                                   
      Capital expenditure & valuation movement                                                              
      - property, plant and equipment                          341,153                 -             341,153
      Depreciation                                           2,244,551               153           2,244,704


                                                              Aircraft          Business                    
      30 June 2010                                             Leasing       procurement               Total
                                                                     £                 £                   £
                                                                                                 
      Segment assets                                        96,009,739           259,826          96,269,565
      Unallocated assets                                                                                   -
      Consolidated total assets                                                                   96,269,565
                                                                                                 
      Segment liabilities                                                                        
      Trade and other payables                               4,902,278           296,055           5,198,333
      Provisions of taxation                                    14,532             3,836              18,368
      Short term provisions                                  2,047,185                 -           2,047,185
      Loans and borrowings                                  48,725,729                 -          48,725,729
      Deferred tax liabilities                               4,248,024                 -           4,248,024
      Unallocated liabilities                                                                              -
      Consolidated total liabilities                        59,937,748           299,891          60,237,639




c)    Second reporting segment - geographical segments

      The  following  table  provides an analysis of the revenues by geographical market, irrespective  of  the
      origin of the goods:

                                                                                 31 December        31 December
                                                                                        2010               2009
         Revenue                                                                           £                  £
                                                                                                 
         Australia                                                                 4,671,720          4,067,553
         United States                                                               709,346            678,332
         Denmark                                                                   2,875,725          2,749,995
         Nigeria                                                                      14,288             23,876
         Other                                                                        11,248             36,512
                                                                                   8,282,327          7,556,268


                                                                                       Total     Net Book Value
                                                                                      assets           Aircraft
         31 December 2010                                                                  £                  £
                                                                                                 
         Australia                                                                38,995,810         35,462,871
         United States                                                             7,241,434          7,241,434
         Denmark                                                                  45,137,687         45,137,687
         Nigeria                                                                       8,111                  -
         Malta                                                                       523,309                  -
         United Kingdom                                                              168,869                  -
         Other                                                                     1,479,715                  -
                                                                                  93,554,935         87,841,992


                                                                                       Total     Net Book Value
                                                                                      assets           Aircraft
         30 June 2010                                                                      £                  £
                                                                                                 
         Australia                                                                40,119,752         37,503,127
         United States                                                             7,649,047          7,649,047
         Denmark                                                                  47,368,403         47,368,403
         Malta                                                                       534,235                  -
         United Kingdom                                                              338,302                  -
         Other                                                                       259,826                  -
                                                                                  96,269,565         92,520,577



4     REVENUE

                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
                                                                                              
       Rental income                                                       7,149,482            6,151,577
       Maintenance rent revenue                                              708,669              743,760
       Management and service income                                          45,755              560,282
       Sales of finished goods                                               378,421              100,649
                                                                           8,282,327            7,556,268
                                                                                              


5       OTHER INCOME

                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
                                                                                              
       Interest income                                                         1,242                2,686
       Foreign currency exchange adjustment gain                              66,340                    -
                                                                              67,582                2,686
                                                                                              


6       OTHER OPERATING EXPENSES

                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
       Claim on maintenance reserve expense                                  661,885            1,053,876
       Depreciation of property, plant and equipment                       2,387,116            2,244,704
       Foreign currency exchange adjustment loss                                   -              120,483
                                                                           3,049,001            3,419,063
                                                                                              


7       FINANCE EXPENSES

                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
                                                                                              
       Interest expense on secured borrowings                              1,468,697            1,498,315
       Guarantee and commitment fee                                           79,775              108,749
       
                                                                           1,548,472            1,607,064
                                                                                              

8     PROPERTY, PLANT AND EQUIPMENT

                                           Furniture and        
                                               equipment                   Aircraft                Total
        31 December 2010                               £                          £                    £
        Cost or valuation:                                                                     
           At 1 July 2010                            995                103,942,004          103,942,999
           Additions                               3,938                     13,566               17,504
           Currency realignment                       20                (2,577,032)          (2,577,012)
           At 31 December 2010                     4,953                101,378,538          101,383,491
                                                                                               
        Representing:                                                                          
        Cost                                       4,953                  5,014,813            5,019,766
        Valuation                                      -                 96,363,725           96,363,725
                                                   4,953                101,378,538          101,383,491
                                                                                               
        Accumulated depreciation:                                                              
           At 1 July 2010                            995                 11,421,427           11,422,422
           Depreciation for the period               378                  2,386,739            2,387,117
           Currency realignment                     (23)                  (268,017)            (268,040)
           At 31 December 2010                     1,350                 13,540,149           13,541,499
                                                                                               
        Net book value:                                                                        
           At 1 July 2010                              -                 92,520,577           92,520,577
           At 31 December 2010                     3,603                 87,838,389           87,841,992


                                           Furniture and                                           
                                               equipment                   Aircraft                Total
        30 June 2010                                   £                          £                    £
        Cost or valuation:                                                                     
           At 1 July 2009                          4,367                 88,883,092           88,887,459
           Additions                                   -                  5,016,050            5,016,050
           Disposal/written off                  (3,620)                          -              (3,620)
           Currency realignment                      248                 10,042,862           10,043,110
           At 30 June 2010                           995                103,942,004          103,942,999
                                                                                                
        Representing:                                                                           
        Cost                                         995                  5,014,813            5,015,808
        Valuation                                      -                 98,927,191           98,927,191
                                                     995                103,942,004          103,942,999
                                                                                               
        Accumulated depreciation:                                                               
           At 1 July 2009                          4,140                  5,829,393            5,833,533
           Depreciation for the year                 238                  4,704,566            4,704,804
           Disposal/written off                  (3,620)                          -              (3,620)
           Currency realignment                      237                    887,468              887,705
           At 30 June 2010                           995                 11,421,427           11,422,422
                                                                                                
        Net book value:                                                                         
           At 1 July 2009                            227                 83,053,699           83,053,926
           At 30 June 2010                             -                 92,520,577           92,520,577
 
 
9     SHARE CAPITAL

                                                                                                    
                                                                                       31 December            30 June
                                                                                              2010               2010
                                                                                                 £                  £
     Authorised:                                                                                        
        100,000,000 ordinary shares of 1 penny each                                      1,000,000          1,000,000
                                                                                                                     
     Allotted, called up and fully paid:                                                                             
      28,532,220 (30 June 2010: 26,219,010) ordinary shares of 1 penny each                285,322            262,190


      On  26  October 2010, the Company issued 2,313,210 ordinary shares of 1 penny each following the exercise
      of warrants by the warrant holders for £100,000.


10      DIVIDENDS PAID

                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
                                                                                              
       Dividend paid during the 6 months ended 31 December:                                   
                                                                                              
       Final dividend of 0.6p (2009: NIL)                                    171,193                    -
                                                                                              

      No dividends have been declared subsequent to 31 December 2010.



11    EARNINGS PER SHARE

      (a)    Basic earnings per share ("EPS")
                 
             EPS  is calculated by dividing the net profit attributable to members of the Company by  the
             weighted average number of ordinary shares in issue during the financial year.
             
                                                                               31 December       31 December
                                                                                      2010              2009
                                                                                         £                 £
             Net profit attributable to equity holders                                      
                   of the Company                                                1,584,826           801,941
                                                                                                    
             Weighted average number of ordinary shares                         27,061,320        25,565,173
                                                                                                    
             Basic earnings per share                                           5.86 pence        3.14 pence
                                                                                                   
                                                                                                   
                 
      (b)    Diluted earnings per share

             For  the  purpose of calculating diluted earnings per share, profit attributable to equity holders
             of  the  Company and the weighted average number of ordinary shares outstanding are  adjusted  for
             the  effects of all dilutive potential ordinary shares.  The Company has one category of  dilutive
             potential ordinary shares; warrants.
                 
             For  warrants, the weighted average number of shares on issue has been adjusted as if all dilutive
             share  options were exercised.  The number of shares that could have been issued upon the exercise
             of  all dilutive share option less the number of shares that could have been issued at fair  value
             (determined  as  the  Company's average share price for the financial year)  for  the  same  total
             proceeds  is  added  to the denominator as the number of shares issued for no  consideration.   No
             adjustment is made to the net profit.
                 
             Diluted  earnings  per  share  attributable to equity holders of  the  Company  is  calculated  as
             follows:
                 
                                                                                                  
                                                                                       31 December     31 December
                                                                                              2010            2009
                                                                                                 £               £
                                                                                                      
              Net profit attributable to equity holders                                               
                  of the Company                                                         1,584,826         801,941
                                                                                                       
              Weighted average number of ordinary shares                                27,061,320      25,565,173
              Adjustment for:                                                                          
              - Warrants                                                                   787,348       3,304,827
                                                                                        27,848,668      28,870,000
                                                                                                                  
              Diluted earnings per share                                                5.69 pence      2.78 pence



12    CONTINGENT LIABILITIES

      There were no material changes in contingent liabilities since 30 June 2010.


13      TRANSACTIONS WITH RELATED PARTIES
    
      Significant related party transactions:
      
                                                                         31 December          31 December
                                                                                2010                 2009
                                                                                   £                    £
                                                                                              
                                                                                              
       Sales of goods to a related party(1)                                  306,428               54,542
       Services rendered to a related party(2)                                43,344              541,638
                                                                                              
       Guarantee and commitment fee paid to a related party(3)                79,775              108,749
       Maintenance rent received from a related party(4)                     708,669              743,760
       Rental income received from a related party(5)                      3,569,349            2,723,250
                                                                                              
      
      1 -  Sales  of goods to Skywest Airlines (Australia) Pty Ltd in which a director of the Company is  also  a
           director of Skywest Airlines (Australia) Pty Ltd.
      2 -  Services rendered to Skywest Airlines (Australia) Pty Ltd in which a director of the Company  is  also
           a director of Skywest Airlines (Australia) Pty Ltd.
      3.-  Paid  to CaptiveVision Capital Ltd in which a director of the Company is a director of CaptiveVision
           Capital Ltd.
      4 -  Received  from  Skywest Airlines (Australia) Pty Ltd in which a director of the Company  is  also  a
           director of Skywest Airlines (Australia) Pty Ltd.
      5 -  Received  from  Skywest Airlines (Australia) Pty Ltd in which a director of the Company  is  also  a
           director of Skywest Airlines (Australia) Pty Ltd.

      The nature and contractual terms of key management compensation and inter-company transactions during the
      period are consistent with the disclosures in the Annual Report for the year ended 30 June 2010.

14      EVENTS AFTER THE BALANCE SHEET DATE

      On  10 January 2011, the Company entered into an agreement with Skywest Airlines Pty Ltd ("Skywest")  and
      Virgin  Blue  Airlines  Pty Ltd ("Virgin Blue") to provide a fleet of up to 18 new  aircraft  which  will
      operate in Australia.
      
      Each  aircraft will be operated by Skywest under wet lease to Virgin Blue for a fixed period of 10 years.
      The  2 airlines and the Company are making arrangements to take delivery of new aircraft during 2011  and
      2012.
      
      The  aircraft  will  be  owned  by,  and leased by the Company on 10 year  operating  leases  with  other
      commercial terms in line with those typically entered into by the Company and its lessee customers.   The
      Directors believe that given the quality of the lessee, the fixed term and the fact the aircraft are new,
      the Company is well placed to utilise Government-backed Export Credit Agency Financing ("ECA Financing").
      The Company intends to make an application for ECA Financing forthwith.
      
      
PRINCIPAL RISKS

The  Group's  risk management processes bring greater judgement to decision making as they allow management  to
make better, more informed and more consistent decisions based on a clear understanding of risks involved.   We
regularly  review  the risk assessment and monitoring process as part of our commitment to continually  improve
the quality of decision-making across the Group.

The Group's principal risks and uncertainties are consistent with those set put in the Prospectus submitted  to
the London Stock Exchange.

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

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


GOING 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 2010.


DIRECTORS

The  directors of Avation PLC are listed in its Annual Report for the year ended 30 June 2010.  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 has been prepared in accordance with IAS 34 as adopted by the European Union  and
        that  the  interim management report herein includes a fair review of the information required  by  DTR
        4.2.7 and DTR 4.2.8 namely
        
        *   an indication of important events that have occurred during the first six months and their impact on
            the Interim Report, and a description of the principal risks and uncertainties for the remaining six months of
            the financial year; and
        
        *   material related party transactions in the first six months and any material changes in the related
            party transactions described in the last annual report.

By order of the Board of Directors,

Jeff Chatfield
Chairman
Singapore, 2 Feb 2011

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