AVATION: FINANCIAL RESULTS AND INTERIM MANAGEMENT REPORT FOR THE SIX MONTHS ENDED 31 DECEMBER 2014

Avation PLC (LSE: AVAP) the commercial passenger aircraft leasing company is pleased to announce unaudited consolidated financial results for the six-month period ended 31 December 2014.

Highlights for the period are as follows:

• Revenue increased by 13% to US$27.7m compared with US$24.6m in the six months ended 31 December 2013;
• Avation generated earnings per share of 11.4 U.S. cents;
• The fleet increased to 29 aircraft (as at the date of this report), with five new ATR 72-600 aircraft delivered in the six month period ended 31 December 2014;
• The average cost of debt capital across the group further reduced to 4.6% (31 December 2013: 5.5%); and
• Avation established a medium term business pipeline and exercised options to place a firm order for five additional ATR 72-600 aircraft for delivery in 2016.

Avation expects to continue fleet growth with a minimum of 13 new aircraft scheduled to be delivered by the end of 2016. These aircraft represent an investment equivalent to approximately 61% of total assets as at 31 December 2014.

Commenting today, Avation PLC Chairman, Jeff Chatfield said:

“The Directors are pleased with the growth in Avation’s core leasing business driven by a rapid rate of deliveries of new aircraft in the period. This growth has also seen the introduction of new airline customers that has further diversified the company’s sources of revenue.

“The latest half-year period also saw the announcement of a sale and leaseback with Thomas Cook for two new Airbus A321 aircraft delivering in early 2016. This is the company’s first sale and leaseback transaction of brand new aircraft.”

“Avation also secured long term fleet growth by firming five delivery options for ATR72 aircraft for delivery in 2016. This takes the number of firm aircraft scheduled to be delivered between now and the end of 2016 to 13 aircraft. In addition to this Avation has 22 further options for future deliveries for ATR 72 aircraft for delivery from 2017 onwards.”

“Growth in core leasing revenue and total fleet assets will through the execution of these contracted deliveries of aircraft. The Board is confident that this increase in the scale of the business combined with the significant reduction in average cost of debt across the fleet will continue to provide sustainable growth and drive future earnings.”

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.

Statement and Interim Management Report
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 2014 the group generated consolidated profit after tax of US$6,289,523 and earnings per share of 11.4 cents on increased revenues of US$27,677,505. As at 31 December 2014, total assets increased to US$503,207,871. Corresponding liabilities increased to US$381,549,170 resulting in net assets and total equity of US$121,658,701.

The Company enjoyed a 13% increase in revenue to US$27,677,505 ($24,560,737 in the comparable prior period). This revenue increase is consistent with expectations and is a consequence of the continued expansion in the aircraft fleet.

Fleet Development
The Company’s aircraft fleet currently comprises 29 aircraft which generates a gross rental yield of approximately 13 per cent, calculated from the book value as at 31 December 2014. The Company has a customer base of airlines in Europe and Asia/Pacific. Avation understands that it is the now the second largest lessor of turbo-prop aircraft in Asia/Pacific.

The fleet is comprised of a diverse range of commercial passenger aircraft, including ATR 72 turbo-prop and Airbus A320, Airbus A321 and Fokker 100 jet aircraft.

The Company took a significant step forward during the period by securing the sale and leaseback of two new Airbus A321 jet aircraft with Thomas Cook, with delivery of these aircraft scheduled for early 2016. Sale and leaseback is one of the key acquisition opportunities for new aircraft for an aircraft lessor such as Avation. The ATR 72 turbo-prop fleet will continue to grow, with five additional ATR 72 aircraft scheduled for delivery by December 2015 and a further six aircraft in 2016.

Funding
There has been a significant reduction to the weighted average cost of capital which 4.6% as at 31 December 2014 (31 December 2013: 5.5%) on debt funding for the fleet, which remains the largest cash operating expense. During the reporting period the Group secured a $31m re-finance on two existing Airbus A321 aircraft, a transaction that demonstrates the ability of the Group to re-finance core assets and release equity from the balance sheet to fund growth. Access to funding nevertheless remains a risk, which is common to all leveraged and capital intensive businesses. Avation also remains subject to specific aviation based industry risks including the credit worthiness of client airlines.

Dividend
As announced at the Annual General Meeting held on 24 November 2014 the Company previously paid a final dividend of 2.01 cents per share on 12 January 2015.

Outlook
The Board of Directors is strongly committed to further developing the Avation business and remains confident that it can achieve continued and sustainable growth throughout 2015 and 2016 through the contracted deliveries of new aircraft. The Directors anticipate additional growth in lease revenues arising from future aircraft acquisitions. As at the date of this report the Company has firm orders for 11 new ATR 72 and two new Airbus A321 aircraft and holds further options and purchase rights for an additional 22 ATR 72 aircraft.

Jeff Chatfield,
Executive Chairman
18 February 2015