LSE: AVAP - Proactiveinvestors UK · LSE: AVAP Corporate Presentation . 238 47 36 225 226 226 16 16...
17
December 2017 LSE: AVAP Corporate Presentation
Transcript of LSE: AVAP - Proactiveinvestors UK · LSE: AVAP Corporate Presentation . 238 47 36 225 226 226 16 16...
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70 December 2017
LSE: AVAP
Corporate Presentation
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
About Us • Avation is a Singapore based aircraft lessor • Earnings and assets denominated in US$
Attractive Fleet Profile
• Portfolio of 37 high demand aircraft (2 widebody, 16 narrowbody, 19 regional)(1)
• Weighted average aircraft age of 3.0 years(1)(2) • Weighted average remaining lease term 7.7 years(1)
Diversified Customer Base
• Diversified customer base of 12 airlines(1) in Asia Pacific and Europe
Good Access to Liquidity
• Guarantor listed on London Stock Exchange • Rated B+ by S&P and Fitch (S&P upgrade in December 2016) • Access to equity and debt capital markets
Full Leasing Platform
• Strong management team, led by Executive Chairman Jeff Chatfield
• Leasing platform with operational capability in OEM orders, aircraft acquisition & disposal, lease origination & extension, transition, repossession and part out
2
Group Overview Full Leasing Platform with Diversified Customer Base and Aircraft
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet.
2. Excluding finance leases (Fokker 100s and 2 ATR 72-600s)
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Financial Year 2017 Results
3
Lease Revenue
US$94.2 million
+32% YoY
Earnings per Share
US 36.3 cents
+6% YoY
Total Profit after Tax
US$21.3 million
+16% YoY
Operating Cashflow
US$63.0 million
+20% YoY
Operating Profit (EBIT)
US$60.2 million
+32% YoY
Total Assets
US$901.1 million
+8% YoY
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Company Evolution Rapidly Growing Aircraft Lessor with High Quality and Diversified Aircraft
4
• Avation PLC formed in 2006 as a narrowbody jet lessor
• Listed on PLUS Markets in 2006 and transferred to the Main Market of the London Stock Exchange in 2010
• Regional aircraft focused (Skywest Airlines and Virgin Australia being customers)
• Introduced ATR aircraft to Australia with Skywest Airlines in 2011
• Initiated diversification with US Airways and Thomas Cook
FY2006–FY2012
FY2012–FY2017
• Aircraft fleet grew from 12 aircraft as of 1 Jul 2011 to 35 aircraft as of 30 Jun 2017 with active portfolio management including sale of 18 aircraft
• Total asset base grew from US$160M as of 1 Jul 2011 to US$901M as of 30 Jun 2017
• 10 airline customers
• Accepted by Singapore Aircraft Leasing Scheme (10% tax rate(2), WHT exemption)
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet
2. Singapore Aircraft Leasing Scheme tax rate reduces from 10% to 8% in 2019
FY2018 and Beyond
• Taking advantage of attractive market dynamics
• Increasing customer diversification and exposure into new markets
− 3 ATRs to be delivered to Mandarin Airlines in Q4 2017
• Asset diversification through acquisition of additional aircraft types
− Acquire Airbus A330 on lease to EVA Air and Boeing B777-300ER on lease to Philippine Airlines by the end of the Q4 2017
• 12 airline customers by Q4 2017
• Improving credit metrics and increased scale
• 6 ATR aircraft on order with 30 delivery options providing liquidity and growth)
Identified Aircraft Pipeline
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Listed since 2006, and on the Main Market of the London Stock Exchange since 2010
Raised US$49M in equity versus balance sheet equity of US$196M as at FY2017
Equity Financing
Purchased 57 aircraft with aggregate purchase price of over US$1.4Bn(1)
6 ATR aircraft on order with additional 30 delivery options
Total of 38 new aircraft deliveries from OEMs(1)
Purchasing
Leased 54 aircraft to 17(1) airlines over operating history
Total of 15 lease extensions on fleet assets Leasing
Sold 18(2) aircraft for aggregate price of US$306M
Converted 7 aircraft to finance lease
Part out of 1 aircraft Sales
Total of 19 aircraft acquisitions in secondary market
Traded 4 aircraft purchase options with an aircraft value of US$110M Trading
Transitioned 3(3) aircraft between airlines and repossessed 1 aircraft
Lease transition from Air Berlin to EasyJet in Q4 2017
Transition / Repossession
Access to secured debt with 14 active lenders
Unsecured debt (GMTN) issue: US$100M (May 15), US$20M tap (June 17)
Credit rating: B+ (Standard and Poor’s, Fitch); BB (Egan Jones, JCR)
Debt Financing
5
Operational Track Record A Global Aircraft Leasing Platform with an 11 Year Operating History
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet
2. Excluding the sale of 2x ATR 72-600 aircraft to UNI Air in Sep/Oct 2017 pursuant to its finance lease
3. Includes transition of A320 from Air Berlin to easyJet
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Historical Operational and Financial Performance
Continued Evolution to Younger Aircraft Portfolio and Track Record of Financial Expansion
6
0.0
100.0
200.0
300.0
400.0
500.0
600.0
700.0
800.0
900.0
FY 2012 FY 2013 FY 2014 FY 2015 FY 2016 1HFY2016
1HFY2017
Net PPE US$M Total Fleet Weighted Average Aircraft Age(1) Weighted Average Remaining Lease
Term
Notes
1. Excluding finance leases (Fokker 100s and 2 ATR 72-600s)
15
35
0
10
20
30
40
50
FY 2012 FY 2017
7.3
3.3
0.0
2.0
4.0
6.0
8.0
10.0
FY 2012 FY 2017
Years
8.2
7.5
0.0
2.0
4.0
6.0
8.0
10.0
FY 2012 FY 2017
Years
35.0
94.2
0.0
20.0
40.0
60.0
80.0
100.0
FY 2012 FY 2017
US$M
Lease Revenue(1) EBITDA Total Assets
26.2
94.3
0.0
20.0
40.0
60.0
80.0
100.0
120.0
140.0
FY 2012 FY 2017
US$M
247
901
0
200
400
600
800
1,000
1,200
FY 2012 FY 2017
US$M
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Demand for air travel, and in turn for aircraft, has been growing and has been resilient
through the economic cycles
Attractive Industry Fundamentals Resilient Airline Traffic Growth through the Economic Cycles
7
(RPK(1) Tr) Oil Crisis Oil Crisis Gulf Crisis
Asian Crisis
Financial Crisis
WTC Attack SARS
+60%
+110%
0.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Source: Airbus Global Market Forecast 2017
Notes
1. Revenue Passenger Kilometers
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Aircraft Type Fleet(1) Orders Options
Regional Aircraft
ATR 72-600 13 6 30
ATR 72-500 6 - -
Narrowbody Aircraft
A321-200 8 - -
A320-200 3 - -
Fokker 100 5 - -
Widebody Aircraft
A330-300 1 - -
B777-300ER 1 - -
Total 37 6 30
8
Attractive Fleet Portfolio Balanced Portfolio of Young Aircraft
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet
Balanced Fleet with Orderbook and Options to Retain Expansion Flexibility
ATR 72-600 325.1
ATR 72-500 94.4
A321-200 372.4
A320-200 81.6
Fokker 100 12.2
Aircraft Type Current
Fleet Orders Options
Weighted Avg. Age(1)
Regional Aircraft
ATR 72-600 13 8 27 3.1
ATR 72-500 6 - - 5.7
Narrow-body Aircraft
A321-200 8 - - 1.7
A320-200 3 - - 8.2
Fokker 100 5 - - 24.0
Total 35 8 27 3.3(2)
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70 9
Attractive Fleet Portfolio (Cont’d) Fleet Metrics
FY 2015 FY 2016 FY 2017 Projected HY 2018(1)
Fleet 29 38 35 37
Fleet additions (net) 4 9 (3) 2
Weighted average aircraft age 5.3 years 4.2 years 3.3 years 3.0 years(2)
Weighted average remaining lease term 6.5 years 6.8 years 7.5 years 7.7 years(1)
Young fleet,
reducing risk of
technology
obsolescence
Visibility of cash
flows due to
contracted nature
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet
2. Excluding finance leases (Fokker 100s and 2 ATR 72-600s)
14-20 0-7
7-14
3.0
Weighted Average Aircraft Age (years)(1)(2)
3-0 9-6
6-3
7.7
Weighted Average Remaining Lease Term (years)(1)
New Mid Old Long Mid Short
A young fleet with long remaining leases
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70 10
Established Customer Relationships with Favorable Contracts
Global Customer Relationships
12 Airline Customers from 9 Countries(1)
Notes
1. Projected as at Dec 31, 2017 including transition of aircraft to EasyJet and deliveries to Mandarin Airlines, Philippine Airlines and EVA Air added to operating fleet
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Virgin Australia 54% Thomas Cook
12%
Flybe/SAS 8%
Air India Regional 7%
UNI Airways 5%
Condor 5%
Air France 4%
Fiji Airways 3%
Air Berlin 2%
VietJet 1%
Increasing Customer Diversification
11
Established Customer Relationships with Favorable Contracts (Cont’d)
…with Increasing Customer Diversification
By Revenue
Virgin Australia 37%
VietJet 20%
Flybe/SAS 11%
Thomas Cook 11%
Condor 5%
Air India Regional
5%
Air France 4%
Air Berlin 4%
Fiji Airways 2%
Virgin Australia 67%
Thomas Cook 13%
Condor 6%
UNI Airways 5%
Air India Regional 4%
Fiji Airways 4%
Quick Duck 2%
FY 2016
FY 2015(1) Top 1 Customer Share – 67% Top 3 Customers Share – 86%
Notes
1. FY ending 30 Jun, excluding income from finance leases which is not accounted for under revenue but including contingent rents
2. During the year ended June 30, 2016 UNI Air agreed to acquire their aircraft at the end of their lease terms. As a result the leases of these aircraft were reclassified as finance leases
3. In the year ended June 30, 2017, VARA’s leases of the Fokker F100 aircraft were converted to finance leases
FY 2017(1) Top 1 Customer Share – 37% Top 3 Customers Share – 68%
10 Customers
Top 3 Customers Share: 74%
(2)
(3)
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Airline Country Relationship
Initiated Initial Number
of Aircraft Current Number
of Aircraft
2011 8 17
2016 3 5
2017 3(1) 3(1)
2014 2 2
2015 5 2
2008 2 2
2017 1 1
2011 1 1
2011 1 1
2013 1 1
2017 1(1) 1(1)
2017 1(1) 1(1)
Established Customer Relationships with Favorable Contracts (Cont’d)
Airline Country Sovereign/Government
Backed
Relationship Initiated
Initial Number
of Aircraft
Current Number
of Aircraft
Repeat Customer
• Etihad • Singapore
Airlines 2011 8 17 Yes
• Fiji Islands 2014 1 1 No
2014 2 2 No
• India 2014 2 2 No
2008 2 2 Yes
2013 1 1 No
• Sweden • Denmark • Norway
2015 5 2 No
• France 2015 1 1 No
• Etihad 2016 1 1 No
2016 3 5 Yes
12
√
√
√
X
X
√
√
√
X
√ ?: didn’t find gov shareholder
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Board of Directors
Rod Mahoney
Executive Director,
Chief Commercial
Officer
• A member of Avation’s Board of
Directors since 2011
• Previously fleet planning and
aircraft procurement consultant to
Avation and Virgin Australia
• 40 years of experience in the
aviation sector
Jeff Chatfield
Founder, Executive
Chairman
• Founder of Avation
• Executive Chairman of Avation
since 2006
• 13 years of experience in the
aviation sector
• 7 years as Executive Chairman of
Skywest
• Also acts as Head of Trading
Dr. Stephen Fisher PhD
Non-Executive Director
• A member of Avation’s Board of
Directors since 2014
• Serves as Chairman, Principal and
Chief Investment Officer of First
Degree Global Asset Management
• Former Head of Global Fixed
Income Product – Asia Pacific at JP
Morgan
Derek Sharples
Non-Executive Director
• A member of Avation’s Board of
Directors since 2016
• Served as CEO of Airbus
Helicopters Southeast Asia
• Previously Corporate Secretary and
Head of Legal and export control at
Airbus
• Former Chairman of Airbus Japan
13
Strong Management Team with Proven Track Record
Highly Experienced Management Team
Senior Management
Robert Heese
Chief Financial Officer
• Has served as Chief Financial
Officer since 2016
• Experience includes accessing both
debt and equity capital markets
• Has over 35 years of finance
experience
Richard Wolanski
Finance Director
• Has served as Finance Director
since 2013
• Primarily responsible for
maintaining access to equity capital
• Responsible for investor relations
Iain Cawte
Director - Treasury,
Compliance & Risk
• Has served as Director of Treasury,
Compliance & Risk since 2014
• Over 20 years experience in the
transportation / energy sectors
Ashley Nicholas
Director,
Corporate Finance
• Has served as Director of Corporate
Finance since 2016
• Responsible for asset-backed
financing
• 12 years aviation finance
experience
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70 14
Snapshot of Avation
Full Leasing Platform with Diversified Customer Base and Aircraft
Notes
1. Projected as at Dec 31, 2017 including Airbus A330-300, B777-300ER, 3 x ATR72-600 to be added to operating fleet.
2. Excluding finance leases (Fokker 100s and 2 ATR 72-600s)
3. As of Oct 2017. Aircraft valued by International Bureau of Aviation
Aircraft(1)
Weighted Average Aircraft Age(1)(2)
2.6Y
12 Airline
Customers Operating
in 9 Countries(1)
Weighted Average Remaining Lease
Term(1)
37 3.0 Years
7.7 Years >US$1Billion
Fleet asset value(1)
US$836M
unearned contracted revenue(1)
24/45/31 split of
widebody/narrowbody/regional aircraft by
value(1)
US$623M value
of aircraft on option(3)
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70 15
Summary
Attractive Industry Dynamics
Strong Financial Results
Leading Fleet Metrics
Increased Airline and Aircraft Diversification
Experienced Management
Primed for Growth
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Avation PLC (LSE: AVAP)
65 Kampong Bahru Road
Singapore 169370
Phone: + 65 6252 2077
www.avation.net
16
Richard Wolanski Finance Director
Jeff Chatfield Executive Chairman
238
47
36
225
226
226
16
16
16
146
147
146
206
36
39
247
150
70
Important Notice NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY IN, OR INTO THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SINGAPORE OR SOUTH AFRICA OR TO U.S. PERSONS
(AS DEFINED BELOW). This presentation and any accompanying management discussion of this presentation (the "Presentation") are confidential and being given by Avation PLC (the “Company”) solely for
your information and may not be reproduced in any form or further distributed to any other person or published in whole or in part for any purpose. Any failure to comply with this restriction may constitute a
violation of applicable securities laws.
United Kingdom
This Presentation has not been approved by an authorised person in accordance with Section 21 of the Financial Services and Markets Act 2000 ("FSMA") and therefore it is being delivered for information purposes only to a
very limited number of persons and companies who are persons who have professional experience in matters relating to investments in the United Kingdom: (i) that the Company reasonably believes are of a kind described in
either article 19(5) (investment professionals) or article 49(2)(a) to (d) (high net worth companies, unincorporated associations, etc) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005; or (ii) to
whom it may otherwise be lawfully given, (in United Kingdom all such persons together being referred to as "relevant persons"). This Presentation must not be acted on or relied on by persons who are not relevant persons.
No offer or invitation or solicitation of any offer to acquire securities of the Company or any new company to be established at the Company's direction is being made at this time nor does this Presentation constitute or form a
prospectus or part of any invitation or inducement to engage in investment activity (within the meaning of section 21 of the FSMA). No recipient of or attendee at this Presentation should deal in or attempt to deal in or
otherwise engage in any behaviour which would or might constitute market abuse (as defined in section 118 of FSMA) in relation to any securities or other qualifying investments to which this Presentation relates. No individual
within the Company or its associates is, by virtue of making this Presentation, encouraging recipients of or attendees at this Presentation to deal in accordance with section 52(2)(a) of the Criminal Justice Act 1993.
Singapore
This presentation has not been registered as a prospectus with the Monetary Authority of Singapore. This presentation and any other document or material in connection with the offer or sale, or invitation for subscription or
purchase, of the securities may not be circulated or distributed, nor may the securities be offered or sold, or be made the subject of an invitation for subscription or purchase, whether directly or indirectly, to persons in
Singapore other than (i) to an institutional investor (as defined in Section 4A of the Securities and Futures Act (Chapter 289 of Singapore) (the “Securities and Futures Act”)) pursuant to Section 274 of the Securities and
Futures Act, (ii) to a relevant person (as defined in Section 275(2) of the Securities and Futures Act) pursuant to Section 275(1) of the Securities and Futures Act, or any person pursuant to Section 275(1A) of the Securities
and Futures Act, and in accordance with the conditions specified in Section 275 of the Securities and Futures Act, or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the
Securities and Futures Act.
By viewing the contents of this presentation, you represent and warrant that you are entitled to view it in accordance with the restrictions set forth above and agree to be bound by the limitations contained herein. Any failure to
comply with these limitations may constitute a violation of law.
United States
This Presentation and the materials contained herein does not constitute an offer of securities for sale in the United States or to U.S. Persons (as such term is defined in "Regulation S" under the U.S. Securities Act of 1933
(the “Securities Act”)). Securities may not be offered or sold in the United States or to, or for the account or benefit of, U.S. Persons unless they are registered under the Securities Act or exempt from such registration
requirements. No public offering of securities is being made in the United States. This Presentation is being made only to qualified institutional buyers as defined in Rule 144A under the Securities Act and persons outside the
United States who are not U.S. Persons (all such persons together being referred to as “relevant persons”).
General
Some of the statements in this presentation constitute “forward-looking statements” that do not directly or exclusively 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 other factors, many of which are outside the Company’s control. Important factors that could cause actual results to differ
materially from the expectations expressed or implied in the forward-looking statements include known and unknown 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 statements contained 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 the part of the Company to undertake or proceed with any transaction. In no circumstances will the Company be
responsible for any costs, losses or expenses incurred in connection with any appraisal or investigation of the Company. No reliance may be placed for any purpose whatsoever on the information or opinions contained in or
given during this Presentation. The information and opinions contained in or given during this Presentation are provided as at the date hereof, are not necessarily complete and are subject to change without notice. No
representation, 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 the information
or opinions contained in or given during this Presentation and no liability is accepted or incurred by any of them for or in respect of any such information or opinions, provided that nothing in this paragraph shall exclude liability
for any representation or warranty made fraudulently.
By agreeing to attend or receive this Presentation you: (i) represent and warrant that you are a relevant person; and (ii) agree to the foregoing (including, without limitation, that the liability of the Company and
its directors, officers, employees, agents and advisors shall be limited in the manner described above). IF YOU ARE NOT A RELEVANT PERSON OR DO NOT AGREE WITH THE FOREGOING, PLEASE IDENTIFY
YOURSELF IMMEDIATELY.
17
