Half Year 2020 Results · Half Year 2020 Results. ... 2.Lease rentals receivable under...
Transcript of Half Year 2020 Results · Half Year 2020 Results. ... 2.Lease rentals receivable under...
LSE: AVAP
28 February 2020
Jeff ChatfieldExecutive Chairman
Iain CawteChief Financial Officer
Richard WolanskiFinance Director
Duncan ScottGroup General Counsel
Half Year 2020 Results
Important Notice
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Some of the statements in this presentation constitute “forward-looking statements” that do not directly orexclusively relate to historical facts. These forward-looking statements reflect the Company’s current intentions,plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and otherfactors, many of which are outside the Company’s control. Important factors that could cause actual results todiffer materially from the expectations expressed or implied in the forward-looking statements include known andunknown risks. Because actual results could differ materially from the Company’s current intentions, plans,expectations, assumptions and beliefs about the future, you are urged to view all forward-looking statementscontained in this presentation with caution.Neither the issue of this Presentation nor any part of its contents is to be taken as any form of commitment on thepart of the Company to undertake or proceed with any transaction. In no circumstances will the Company beresponsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of theCompany. No reliance may be placed for any purpose whatsoever on the information or opinions contained in orgiven during this Presentation. The information and opinions contained in or given during this Presentation areprovided as at the date hereof, are not necessarily complete and are subject to change without notice. Norepresentation, warranty or undertaking is given by or on behalf of the Company or its directors, officers,shareholders, employees, agents and advisors as to the accuracy, completeness or reasonableness of theinformation or opinions contained in or given during this Presentation and no liability is accepted or incurred byany of them for or in respect of any such information or opinions, provided that nothing in this paragraph shallexclude liability for any representation or warranty made fraudulently.
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Snapshot of AvationVertically Integrated Platform with Diversified Fleet and Customer Base
1. Includes property, plant and equipment, assets held for sale and finance lease receivables as at 31 December 2019.2. Lease rentals receivable under non-cancellable operating leases plus finance lease rentals receivable excluding final/option payments.
Aircraft Weighted Average Aircraft Age
3.7Y
18 Airline Customers Operating
in 15 Countries
Weighted Average Remaining Lease
Term
49 3.7 Years
7.2 Years US$1.3BnFleet asset value(1)
US$925.8MnUnearned contracted
revenue (2)
18%/46%/36%split of
Widebody/narrowbody/turboprop aircraft by
value
8 Orders2 for Braathens2 for US Bangla
25 Purchase rights
Historical Operational and Financial PerformanceContinued Evolution to Younger Aircraft Portfolio and Track Record of Financial Expansion
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Weighted Average Aircraft Age
Years
Lease Rental RevenueTotal AssetsWeighted Average Remaining
Lease TermYears
Total Fleet
23
38
48 49
0
10
20
30
40
50
FY 2013 FY 2016 FY2019 HY2020
40
71
119
68
0
20
40
60
80
100
120
FY 2013 FY 2016 FY2019 HY2020
8.7
4.23.4
0
2
4
6
8
10
FY 2013 FY 2016 FY2019 HY2020
5.7
6.87.5
7.2
0
2
4
6
8
10
FY 2013 FY 2016 FY2019 HY2020
394M
832M
1.4B
0
300
600
900
1,200
1,500
FY 2013 FY 2016 FY2019 HY2020
US$M
ü Increased Scale
ü Young, Popular Fleet
ü Long Average Lease Term
ü Strong Revenue visibility
US$M
3.1
1.5B
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Half Year 2020 Summary
Total Profit after TaxUS$38.2 million+180% YoY
Profit before TaxUS$45.2 million +218% YoY
Interim Dividend per ShareUS 2.1 cents paid 9 January 2020+5% YoY
Average Cost of Debt(2)
4.56%FY 2019 : 4.62%
Lease rental revenueUS$65.0 million+12% YoY
RevenueUS$67.6 million+15% YoY
1. PP&E, assets held for sale and finance lease receivables2. Weighted average as at 31 December 2019
Fleet Assets(1)
US$1.30 billion+22% YoY
Earnings per ShareUS 60.0 cents+178% YoY
Operational Highlights HY2020
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Repossession and Repositioning
• Thomas Cook announced Liquidation 23 September 2019
• Aircraft repossessed and ferried out of the UK for maintenance checks
• Aircraft successfully transitioned to new lessee
Fleet Growth and Diversification
• Acquired 3 ATR72-600 aircraft, disposal of 2 Fokker F100 aircraft
• Leases signed with Braathens for 5 ATR72-600 aircraft
• Increase to 18 airline customers
• Acquisition of initial engine available for lease
Funding
• Credit rating upgrade by S&P (BB-/BB-)
• First ever commercial aircraft financed with Green Loan
• Airline Economics Award – “Deal of the Year for Innovation”
Strategic Review and Formal Sale Process
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• Announced on 6 January 2020 following an unsolicited approach to buy the Company
• Formal sale process of Company or portfolios of aircraft considered in parallel
• Purchase Rights for ATR aircraft now recognized in financial statements
• There are significant value drivers not recorded in the balance sheet including:
Ø 4 new ATR aircraft to be delivered in coming months
Ø Realisable value of fleet may exceed book value;
Ø Value of aircraft leasing platform and employees;
Ø Singapore tax domicile and membership of ALS;
Ø Positive rating trajectory and refinancing opportunities;
Ø Premium for control.
• The process will establish which pathway represents best value for shareholders
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5
10
15
20
25
1978 1982 1987 1992 1997 2002 2007 2012 2017 2022 2027 2032 2037
Strong Industry Fundamentals
Passenger Air Travel is Resilient with a Long History of Stable Growth
Global air travel has doubled every 15 years
Source: ICAO, Airbus GMF 2019.
Oil Crisis
GulfCrisis
AsianCrisis
9/11 SARS Financial Crisis
4.3% Growth P.A.
x2
x2
x2
World Annual Traffic (Trillion RPKs)
Traffic Has Proven Resilient to External Shocks and has doubled every 15 years
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Aircraft Type Fleet Orders Options
Turboprop Aircraft
ATR 72-600 22 8 25
ATR 72-500 6 - -
Narrowbody Aircraft
A321-200 7 - -
B737-800 1 - -
A320-200 2 -
A220-300 6 - -
Fokker 100 3 - -
Widebody Aircraft
A330-300 1 - -
B777-300ER 1 - -
Total 49 8 25
Diversified fleet consisting of 18% widebody, 46% narrowbody and 36% turboprop aircraft by value9
Attractive Aircraft PortfolioDiversified Fleet Consisting of Young Aircraft
Balanced Fleet with Orderbook and Options to Retain Expansion Flexibility By Aircraft Value
Turboprop36%
Narrowbody46%
Widebody18%
Average Fleet Age: 3.7 Years
Average Lease Term: 7.2 Years
No order book for jets
Total 82 Aircraft fleet/orders/options
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Global Customer Relationships and Diversification
18 Airline Customers in 15 Countries
No lessees based in mainland China
Virgin Australia
66%Thomas Cook10%
Air India8%
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De-risking the Company through Revenue Growth and Diversification
Growth and diversification continues – New aircraft delivered & new customers in FY2020
By Monthly Rental Revenue Run Rate
Top 1 Customer Share – 19%
Top 3 Customers Share – 51%
As at 30 June 2015 As at 31 December 2019
Top 1 Customer Share – 66%
Top 3 Customers Share – 84%
Revenue FY15 =$57 million Revenue HY20 =$68 million
Virgin Australia
19%
VietJet19%
airBaltic13%
PAL10%
EVA8%
Cebu Pacific (1%)Golden Myanmar (2%)Fiji Airways (2%)easyJet (2%)Gailstair (2%)Air France (2%)DAT (2%)US-Bangla (2%)Flybe (3%) Garuda Indonesia (3%)Braathens (3%)Air India (3%)Mandarin Airlines (4%)
Fiji Airways (4%)Condor (6%)UNI Airways (6%)
Fleet Growth
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0
200
400
600
800
1,000
1,200
1,400
2011 2012 2013 2014 2015 2016 2017 2018 2019 HY2020
Fleet assets(1) (US$m)
1. Includes property, plant and equipment, assets held for sale and finance lease receivables as at 30 June, 31 December.
Profit & Loss Analysis
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Profit & Loss (US$m) HY2020 HY2019 ChangeRevenue 67.6 58.7 15%Depreciation expense (24.2) (19.8) 22%Administrative expense (6.1) (5.5) 12%Other income and expenses (Net) (1.3) -Leasing Business Operating Profit 36.0 33.4 8%Finance expense (Net) (27.5) (25.7) 7%Leasing Business Profit before tax 8.5 7.7 10%Unrealised gain on purchase rights 37.0 -Gains on disposal of aircraft 2.2 6.5Impairment loss on aircraft (2.5) -Total profit before tax 45.2 14.2 218%Tax (7.1) (0.6)Total profit after tax 38.2 13.6 180%
Debt Analysis
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HY2020 FY2019Net Indebtedness (US$ million) 1,043.6 1,016.6Weighted Average Cost of Debt 4.56% 4.62%Weighted Average Cost of Secured Debt 3.69% 3.74%Proportion of Fixed/Hedged Interest Rate Debt 90.8% 92.0%Net Debt/Assets 69.8% 73.0%
3.00%
4.00%
5.00%
6.00%
7.00%
8.00%
9.00%
10.00%
FY2014 FY2015 FY2016 FY2017 FY2018 FY2019 HY2020
Cost of Debt
Secured debt Unsecured debt Total debt
Key Ratios
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Comparative Ratios HY2020 FY2019
Net asset value per share (A) £3.25 £2.95
Dividend/share for first half year (cents) 2.1 2.0
Administrative Expense/Revenue 9.1% 9.2%
Credit Ratios
Debt/EBITDA (B) 5.6 8.8
Operating Cash flows $62.1 million $22.3 million
FFO/Debt (C) 13.3% 6.6%
EBITDA/Interest Expense 4.0 2.5
A. Net asset value per share = Equity/Shares in Issue (USD:GBP = 1.32 at 31 December 2019)(FY2019: 1.27)B. EBITDA = Profit before taxation + Finance expenses +Depreciation + ImpairmentC. Funds from Operation = EBITDA - Interest Expense - Current Tax
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Avation Summary
Attractive Industry Dynamics
Focus on Maximising Shareholder Value
Leading Fleet Metrics
Increased Airline and Aircraft Diversification
Improved Credit Rating & Lower Cost of Debt
Increased Dividend
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Avation PLC65 Kampong Bahru RoadSingapore 169370Phone: + 65 6252 2077www.avation.net
Jeff ChatfieldExecutive [email protected]
Richard WolanskiFinance [email protected]
Iain CawteChief Financial [email protected]
Question & Answer Section
Duncan ScottGroup General [email protected]