RNS: AVAP
February 25 2014
AVATION PLC
(the "Company")
FINANCIAL RESULTS AND INTERIM MANAGEMENT REPORT
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
"Material growth in Profit & Revenues with significant fleet growth to come in 2014"
Avation PLC (LSE: AVAP) the commercial passenger aircraft leasing company is pleased to announce unaudited financial statements for the Company and its subsidiaries for the six-month period ended 31st December 2013.
The financial highlights, year on year, are:
• Revenues increased by 21% to US$24,560,737, with Gross Profit increasing by 24%;
• Consolidated net profit before tax of Avation PLC increased by 15% to US$7,894,478;
• Earnings per share of 11.6 cents (US$) were recorded;
• Increased number of aircraft in the fleet from 19 to 24;
• Placed a firm order for five additional ATR 72 for delivery in 2015;
• The granting to Avation of five additional Purchase Rights for new ATR 72 aircraft; and
• Total number of aircraft under order or option for future delivery increased to 40 as at 31 December 2013.
Commenting today, Avation PLC Chairman, Jeff Chatfield said:
"The Board of Directors is pleased with the significant growth in the Avation aircraft leasing business. The Company, by way of revenue from leased aircraft assets, continued to deliver outstanding growth in the core aircraft business and successfully completed a sale of an aircraft to a customer pursuant to an option exercise.
"Avation also secured long term growth with the addition of purchase rights for future aircraft that takes the total future deliveries to 27 aircraft in addition to the thirteen firm aircraft scheduled to be delivered.
"The business continues to grow and perform strongly, with recent re-financing transactions releasing equity to fund further deliveries along with a warehouse facility to support lease attached aircraft acquisitions. We are confident that our strategy provides for continued and sustainable growth for the remainder of 2014 and beyond."
Further information on Avation PLC can be seen at: www.avation.net. Avation PLC is registered in England and Wales with its operational headquarters in Singapore.
Enquiries:
Avation PLC - Jeff Chatfield, Executive Chairman |
+65 97354151 |
Cenkos Securities - Guy Briselden |
+44 207 397 8900 |
WH Ireland - Harry Ansell / James Joyce |
+44 207 220 1666 |
Blythe Weigh Communications - Tim Blythe / Eleanor Parry |
+44 207 138 3204 |
Statement by the Executive Chairman, Jeff Chatfield:
Dear Fellow Shareholder,
Introduction
Your Board is pleased to report that during the six month period ended 31st December 2013 the consolidated net profit after tax moved ahead to US$6,175,649 on increased revenues of US$24,560,737 with earnings per share rising to 11.6 cents. Returns principally comprise cash yield (income) from aircraft lease payments after repayment of associated debt obligations.
The revenue growth increase to US$24,560,737 is consistent with the expectations of 30th June 2013 and a result of the continued expansion in the ATR 72 and jet fleet, together with the sale of a brand new ATR 72 aircraft to a customer presented within other income, which signifies an increase in the scope of operations to include aircraft sales.
As at 31 December 2013, total assets increased to US$407,014,349. Corresponding liabilities increased to US$303,936,845 resulting in net assets of US$103,077,504.
Fleet Development
The Company's aircraft fleet currently comprises 24 aircraft all of which are 100 per cent utilised and generate a gross rental yield of 14 per cent, based on book value as at 31 December 2013, from a current customer base of airlines in Australia, Europe and North America.
The fleet is comprised of a diverse range of commercial passenger aircraft, including new ATR 72 turbo-prop and Airbus A320, Airbus A321 and Fokker 100 jet aircraft. In addition to leasing these aircraft, Avation completed the first sale of an ATR 72 aircraft during the period. The transaction is recorded on a net income basis. Avation also provides active fleet and financial management to ensure the retention of asset values and the maximisation of earnings.
The ATR 72 fleet now stands at 13 delivered, with eight additional aircraft scheduled for delivery by December 2014 and five in 2015.
Funding
The weighted average cost of capital for the period was 5.5 per cent on debt funding for the fleet. Subsequent to the end of the reporting period the Company secured material re-finance of two ATR aircraft, a transaction that demonstrates the bankability of the core aircraft of the Avation fleet and positions the Company well to obtain access to the necessary debt for future deliveries. Access to funding nevertheless remains a risk, which is common to all businesses that are leveraged and capital intensive. Specific aviation based industry risks are also present and include the creditworthiness of client airlines.
Dividend
As announced at the Annual General Meeting held on 4 November 2013 the Company paid a final dividend of 1.78 cents per share on 25 November 2013.
Outlook
The Board of Directors is strongly committed to developing the Avation business further and confident that it can achieve continued and sustainable growth in 2014 as demonstrated through the eight aircraft to be delivered before the end of 2014. Looking forward, the Directors anticipate further increases in lease revenues if, as and when, ordered aircraft are delivered or additional aircraft are purchased. As at the date of this report the Company has firm orders for 13 ATR72 aircraft and options and purchase rights for an additional 27 aircraft.
Jeff Chatfield,
Executive Chairman
Singapore, 25 February 2014
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
Cash flows from operating activities: |
|
|
|
Profit before taxation |
7,894,478 |
|
6,871,770 |
Adjustments for: |
|
|
|
Depreciation expense |
7,466,753 |
|
5,508,778 |
Claim on maintenance reserve |
70,240 |
|
1,385,271 |
Amortisation of loan premium |
539,120 |
|
365,513 |
Interest expense |
7,679,394 |
|
5,188,716 |
Interest income |
(11,003) |
|
(16,159) |
Operating profit before working capital changes |
23,638,982 |
|
19,303,889 |
|
|
|
|
Movement in working capital: |
|
|
|
Trade and other receivables and prepayments |
(640,261) |
|
(3,211,819) |
Inventories |
- |
|
10,793 |
Trade and other payables |
6,443,812 |
|
7,967,939 |
Deferred lease income |
- |
|
226,724 |
Short-term provisions |
(3,827,321) |
|
(977,566) |
Cash from operations |
25,615,212 |
|
23,319,960 |
|
|
|
|
Interest paid |
(7,321,594) |
|
(5,000,930) |
Interest received |
11,003 |
|
16,159 |
Corporation tax paid |
(788,451) |
|
(17,357) |
Net cash from operating activities |
17,516,170 |
|
18,317,832 |
|
|
|
|
Cash flows used in investing activity: |
|
|
|
Purchase of property, plant and equipment |
(17,803,062) |
|
(73,434,188) |
Net cash used in investing activity |
(17,803,062) |
|
(73,434,188) |
|
|
|
|
Cash flows from financing activities: |
|
|
|
Net proceeds from issuance of ordinary shares |
- |
|
2,958,227 |
Dividend paid |
(866,621) |
|
- |
Repurchase of treasury shares |
(467,835) |
|
- |
Proceeds from borrowings |
16,602,575 |
|
73,931,175 |
Repayment of borrowings |
(11,474,086) |
|
(7,241,268) |
Capital element of finance lease repayments |
(1,313,494) |
|
(1,782,995) |
Net cash from financing activities |
2,480,539 |
|
67,865,139 |
|
|
|
|
Effects of exchange rates on cash & cash equivalents |
(48) |
|
3,858 |
|
|
|
|
Net increase in cash and cash equivalents |
2,193,599 |
|
12,752,641 |
Cash and cash equivalents at beginning of financial period |
19,623,244 |
|
9,094,470 |
Cash and cash equivalents at end of financial period |
21,816,843 |
|
21,847,111 |
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
The Interim Report for Avation PLC for the six months ended 31 December 2013 was approved by the Directors on 25 February 2014.
1 CORPORATE INFORMATION
Avation PLC (the Company) is a public limited company incorporated and domiciled in England and Wales under the Companies Act 2006 (Registration Number 05872328).
The principal activities of the Company and its subsidiaries are the holding of investments involved in owning, leasing aircraft and trading of broadcasting equipment and procurement business. The Company also owns and leases aircraft in its own right.
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 2013 and considered together with any public announcements made by Avation PLC during the six months ended 31 December 2013.
The accounting policies and methods of computation are the same as those adopted in the annual report for the year ended 30 June 2013.
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 2013, which carried an unqualified audit report, have been delivered to the Registrar of Companies and did not contain 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.
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
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 2013, 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.
The business procurement segment does not meet the quantitative thresholds and is not separately disclosed.
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
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 |
|
|
|
2013 |
|
2012 |
Revenue |
|
|
US$ |
|
US$ |
|
|
|
|
|
|
Australia |
|
|
18,410,737 |
|
14,220,479 |
Denmark |
|
|
4,150,000 |
|
4,500,000 |
Germany |
|
|
1,650,000 |
|
- |
United States |
|
|
350,000 |
|
1,110,000 |
Others |
|
|
- |
|
412,595 |
|
|
|
24,560,737 |
|
20,243,074 |
|
|
|
Total |
|
Net Book Value |
|
|
|
assets |
|
Aircraft |
31 December 2013 |
|
|
US$ |
|
US$ |
|
|
|
|
|
|
Australia |
|
|
269,118,919 |
|
268,451,482 |
Denmark |
|
|
59,274,275 |
|
59,274,275 |
Germany |
|
|
22,208,645 |
|
21,862,278 |
Malta |
|
|
992,864 |
|
- |
United States |
|
|
7,876,857 |
|
7,876,857 |
United Kingdom |
|
|
21,595,629 |
|
- |
Others |
|
|
25,947,160 |
|
- |
|
|
|
407,014,349 |
|
357,464,892 |
|
|
|
Total |
|
Net Book Value |
|
|
|
|
Assets |
|
Aircraft |
|
30 June 2013 |
|
|
US$ |
|
US$ |
|
|
|
|
|
|
|
|
Australia |
|
|
258,760,998 |
|
255,939,738 |
|
Denmark |
|
|
60,667,000 |
|
60,667,000 |
|
Germany |
|
|
23,194,344 |
|
22,388,817 |
|
Malta |
|
|
1,163,056 |
|
- |
|
United States |
|
|
8,197,159 |
|
8,197,125 |
|
United Kingdom |
|
|
20,114,934 |
|
- |
|
Others |
|
|
22,285,809 |
|
- |
|
|
|
|
394,383,300 |
|
347,192,680 |
|
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
4 REVENUE
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
Rental income |
24,560,737 |
|
18,159,284 |
Maintenance rent revenue |
- |
|
1,446,746 |
Management and service income |
- |
|
210,370 |
Business procurement revenue |
- |
|
426,674 |
|
24,560,737 |
|
20,243,074 |
|
|
|
|
5 OTHER INCOME
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
Interest income |
11,003 |
|
16,159 |
Foreign currency exchange adjustment gain |
208,003 |
|
54,781 |
Software licence repurchase by aircraft manufacturer |
- |
|
1,075,420 |
Profit from sale of goods |
1,433,784 |
|
- |
Other income |
62 |
|
137,483 |
|
1,652,852 |
|
1,283,843 |
|
|
|
|
6 OTHER OPERATING EXPENSES
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
Claim on maintenance reserve expense |
70,240 |
|
1,385,271 |
Depreciation of property, plant and equipment |
7,466,753 |
|
5,508,778 |
|
7,536,993 |
|
6,894,049 |
|
|
|
|
7 FINANCE EXPENSES
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
Interest expense on borrowings |
7,679,394 |
|
5,188,716 |
Amortisation of loan premium |
539,120 |
|
365,513 |
Amortisation of deferred lease expense |
- |
|
194,659 |
|
8,218,514 |
|
5,748,888 |
|
|
|
|
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
8 PROPERTY, PLANT AND EQUIPMENT
|
Furniture and |
|
|
|
|
|
equipment |
|
Aircraft |
|
Total |
31 December 2013 |
US$ |
|
US$ |
|
US$ |
Cost or valuation: |
|
|
|
|
|
At 1 July 2013 |
20,120 |
|
394,611,678 |
|
394,631,798 |
Additions |
93,392 |
|
17,709,670 |
|
17,803,062 |
At 31 December 2013 |
113,512 |
|
412,321,348 |
|
412,434,860 |
|
|
|
|
|
|
Representing: |
|
|
|
|
|
Cost |
113,512 |
|
234,691,720 |
|
234,805,232 |
Valuation |
- |
|
177,629,628 |
|
177,629,628 |
|
113,512 |
|
412,321,348 |
|
412,434,860 |
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
At 1 July 2013 |
12,411 |
|
47,418,998 |
|
47,431,409 |
Depreciation for the period |
29,295 |
|
7,437,458 |
|
7,466,753 |
At 31 December 2013 |
41,706 |
|
54,856,456 |
|
54,898,162 |
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
At 1 July 2013 |
7,709 |
|
347,192,680 |
|
347,200,389 |
At 31 December 2013 |
71,806 |
|
357,464,892 |
|
357,536,698 |
|
Furniture and |
|
|
|
|
|
equipment |
|
Aircraft |
|
Total |
30 June 2013 |
US$ |
|
US$ |
|
US$ |
Cost or valuation: |
|
|
|
|
|
At 1 July 2012 |
14,922 |
|
243,234,348 |
|
243,249,270 |
Additions |
5,198 |
|
147,781,846 |
|
147,787,044 |
Revaluation surplus |
- |
|
3,595,484 |
|
3,595,484 |
At 30 June 2013 |
20,120 |
|
394,611,678 |
|
394,631,798 |
|
|
|
|
|
|
Representing: |
|
|
|
|
|
Cost |
20,120 |
|
217,015,882 |
|
217,036,002 |
Valuation |
- |
|
177,595,796 |
|
177,595,796 |
|
20,120 |
|
394,611,678 |
|
394,631,798 |
|
|
|
|
|
|
Accumulated depreciation: |
|
|
|
|
|
At 1 July 2012 |
7,529 |
|
29,379,438 |
|
29,386,967 |
Depreciation for the year |
4,882 |
|
11,362,055 |
|
11,366,937 |
Increase in revaluation |
- |
|
(26,646) |
|
(26,646) |
Impairment loss |
- |
|
6,704,151 |
|
6,704,151 |
At 30 June 2013 |
12,411 |
|
47,418,998 |
|
47,431,409 |
|
|
|
|
|
|
Net book value: |
|
|
|
|
|
At 1 July 2012 |
7,393 |
|
213,854,910 |
|
213,862,303 |
At 30 June 2013 |
7,709 |
|
347,192,680 |
|
347,200,389 |
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
9 SHARE CAPITAL AND TREASURY SHARES
(a) |
|
|
31 December |
|
30 June |
|
|
2013 |
|
2013 |
|
Allotted, called up and fully paid: |
US$ |
|
US$ |
|
48,822,960 (30 June 2013: 48,822,960) |
|
|
|
|
ordinary shares or 1 penny each |
878,137 |
|
878,137 |
|
(b) Treasury shares |
|
|
31 December |
|
30 June |
|
|
2013 |
|
2013 |
|
|
US$ |
|
US$ |
|
|
|
|
|
|
450,000 (30 June 2013: 150,000) ordinary shares |
682,333 |
|
214,498 |
|
|
|
|
|
|
|
a) On 19 September 2013, the Company purchased 150,000 of its own ordinary shares at a price of 94 pence per ordinary share representing approximately 0.31 per cent of the Company's current issued share capital. These 150,000 ordinary shares are to be held in treasury.
b) On 24 September 2013, the Company purchased 150,000 of its own ordinary shares at a price of 100 pence per ordinary share representing approximately 0.31 per cent of the Company's current issued share capital. These 150,000 ordinary shares are to be held in treasury.
10 DIVIDENDS PAID
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
Dividend declared/paid during the 6 months ended 31 December: |
|
|
|
|
|
|
|
Final dividend of 1.11p (2012: 1.05p) |
866,621 |
|
745,618 |
|
|
|
|
No dividends have been declared subsequent to 31 December 2013.
11 CONTINGENT LIABILITIES
There were no material changes in contingent liabilities since 30 June 2013.
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
12. TRANSACTIONS WITH RELATED PARTIES
Significant related party transactions:
|
31 December |
|
31 December |
|
2013 |
|
2012 |
|
US$ |
|
US$ |
|
|
|
|
|
|
|
|
Business procurement revenue from a related party1 |
- |
|
14,009 |
Business procurement revenue from a related party2 |
- |
|
1,524 |
Services rendered to a related party2 |
- |
|
4,914 |
Maintenance rent received from a related party1 |
- |
|
1,446,746 |
Rental income received from a related party1 |
- |
|
12,360,266 |
Rental income received from a related party3 |
- |
|
189,018 |
Interest income received from a related party4 |
- |
|
674 |
Interest income received from a related party5 |
5,140 |
|
7,767 |
Interest income received from a related party6 |
- |
|
523 |
Service fee paid to a related party7 |
4,830 |
|
4,368 |
Service fee paid to a related party10 |
- |
|
189,018 |
Expenses rebilled from a related party10 |
- |
|
42,855 |
Interest expense paid to a related party8 |
178,842 |
|
100,513 |
Interest expense paid to a related party9 |
147,452 |
|
- |
Interest expense paid to an ex-director of a subsidiary |
19,654 |
|
1,882 |
|
|
|
|
1. Received from Virgin Australia Regional Airlines Pty Ltd in which a director of the Company was also a director of Virgin Australia Regional Airlines Pty Ltd.
2. Received from Skywest Airlines (S) Pte Ltd in which a director of the Company was also a director of Skywest Airlines (S) Pte Ltd.
3 Received from F11305 Pte Ltd in which a director of the Company was also a director of F11305 Pte Ltd.
4. Received from Giant Mix Investment Ltd in which an ex-director of the Company is also a director of Giant Mix Investment Ltd
5. Received from Takeoff Services Pte Ltd in which a director of the Company is also a director of Takeoff Services Pte Ltd.
6. Received from CaptiveVision Capital Ltd in which a director of the Company was a director of CaptiveVision Capital
Ltd.
7. Paid to Leob Aron & Company Ltd in which a director of a subsidiary is also a director of Leob Aron & Company.
8. Paid to Fleet Solution Consulting Pte Ltd in which an ex-director of a subsidiary is also a director of Fleet Solution Consulting Pte Ltd.
9. Paid to Epsom Assets Limited in which a director of the Company is also a director of Epsom Assets Limited.
10. Paid to Skywest Airlines (S) Pte Ltd in which a director of the Company was also a director of Skywest Airlines (S) Pte 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 2013.
AVATION PLC
REGISTERED NUMBER: 05872328 (ENGLAND & WALES)
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTHS ENDED 31 DECEMBER 2013
13 EVENTS AFTER THE BALANCE SHEET DATE
Subsequent to the balance sheet date, the followings occurred:
a) On 13 January 2014, the Company has entered into a loan facility agreement with an Australian based institution. Funds are on standby and, when applicable, the loan facility can be drawn down to a maximum amount of US$9.5 million. The facility is secured on the Company's fleet of five Fokker F100 aircraft. These Aircraft are currently un-encumbered and are fully owned by the Company. The loan facility is on usual commercial terms based on the assets against which the loan is secured.
b) On 24 January 2014, the Company has agreed to extend the leases of its four Fokker F100 aircraft, all of which are on lease to a major Australian airline. The leases will be extended by 36 months in each case from the previously scheduled expiry dates of each lease, which were between December 2013 and August 2014. Rentals under the extended leases are on typical market terms for transactions of this nature.
c) On 17 February 2014, the Company has obtained a further finance facility to support future aircraft acquisitions. The senior secured revolving warehouse facility has been designed to support the ad-hoc purchase of an aircraft when opportunities present themselves.
d) On 24 February 2014, the Company entered into a refinance facility of two ATR 72 aircraft. The facility represented 14.2% of loans & borrowings as at 31 January 2014. The facility re-financed $32.6 million of senior debt in respect of the aircraft. The cost of funds associated with the new facility are approximately half of the cost of the facility that was re-financed.
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 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 finance on favourable terms. Should this supply of finance contract, it would limit our fleet expansion and therefore growth.
GOING CONCERNS
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 2013.
DIRECTORS
The directors of Avation PLC are listed in its Annual Report for the year ended 30 June 2013. A list of the current directors is maintained on the Avation PLC website: www.avation.net.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that, to the best of their knowledge, this condensed consolidated interim financial information have been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report herein includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8 namely
· an indication of important events that have occurred during the first six months and their impact on the Interim Report, and a description required by 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
Jeff Chatfield
Executive Chairman
Singapore 25 February 2014
