financial year 2018 results investor update · • first twin aisle aircraft (boeing 777-300er and...
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LSE: AVAP
13 September 2018
Richard WolanskiFinance Director
Financial Year 2018 ResultsInvestor Update
About Us
Attractive Fleet Profile
Diversified Customer Base
Good Access to Liquidity
Full Leasing Platform
• Experienced 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
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Company OverviewPublicly Listed Aircraft Leasing Business with Long Track Record
Notes
1. Excluding finance leases (5 Fokker 100 leases as at 30 June 2018).
2. Fitch upgraded Avation PLC’s long-term IDR from B+ (Stable) to BB- (Stable) on May 1, 2018
• Avation is a Singapore based aircraft lessor listed on the London Stock Exchange (LSE: AVAP)
• Global participant in the broader commercial aviation sector with earnings and assets denominated in US$
• Portfolio of 39 high demand aircraft (2 widebody, 18 narrowbody, 19 turboprop)
• Weighted average aircraft age of 3.2 years(1)
• Weighted average remaining lease term 7.7 years.
• Diversified customer base of 13 airlines in 10 countries in the Asia Pacific and European aviation markets
• Many of which are longstanding customers of Avation
• Access to equity (LSE listed for 8 years) and debt ($300M bond issuer under current $1Bn MTN program; strong access to bank market)
• Rated BB- IDR (Fitch)(2), B+ CFR (S&P) and BB/BB (Egan Jones/JCR) with improving credit metrics
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Snapshot of AvationVertically Integrated Platform with Diversified Customer Base and Fleet
Notes
1. Excluding finance leases (5 Fokker 100 leases as at 30 June 2018).
2. Includes property, plant and equipment, assets held for sale as at 30 June 2018.
3. Calculated for illustrative purposes, and excludes consideration of operating expenses, financing cost and potential for lessees to not make contracted lease payments. Net debt calculated as total debt minus unrestricted
cash and bank balances as at 30 June 2018.
Aircraft Weighted Average Aircraft Age(1)
3.2Y
13 Airline
Customers Operating
in 10 Countries
Weighted Average Remaining Lease
Term
38 3.2 Years
7.7 Years >US$1BillionFleet asset value(2)
US$854Munearned contracted
revenue
23%/46%/31%split of
widebody/narrowbody/turboprop aircraft by
value
Aircraft (Delivered or Leased
since 1 July 2018)
US$43M in excess of net debt(3)
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Historical Operational and Financial Performance
Continued Evolution to Younger Aircraft Portfolio and Track Record of Financial Expansion
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Notes
1. Excluding finance leases (5 Fokker 100 leases as at 30 June 2018.
Weighted Average Aircraft Age(1)
Years
RevenueTotal AssetsWeighted Average Remaining
Lease Term
Years
Total Fleet
15
29
38
0
10
20
30
40
FY 2012 FY 2015 FY2018
35
57
109
0
20
40
60
80
100
120
FY 2012 FY 2015 FY2018
10.6
5.3
3.2
0
2
4
6
8
10
12
FY 2012 FY 2015 FY2018
7,8
6.5
7.7
0
2
4
6
8
10
FY 2012 FY 2015 FY2018
248 m
586 m
1.15 b
0
200
400
600
800
1,000
1,200
FY 2012 FY 2015 FY2018
US$M
Increased Scale and Portfolio Size
Young, Attractive Fleet
Long Average Lease Term
Strong Revenue and Cash Flow
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Financial Year 2018 Summary
Earnings per Share
US 32.2 cents
(11%) YoY
Total Profit after Tax
US$20.0 million
(6%) YoY
Fleet Assets(1)
US$1.030 billion
+38% YoY
Average Cost of Debt(2)
5.0%
FY 2017 : 5.1%
Operating Profit (EBIT)
US$58.6 million
(3%) YoY
Revenue
US$109.1 million
+16% YoY
1. PP&E plus Assets held for sale2. Weighted average as at 30 June 2018
Total Assets
US$1.152 billion
+29% YoY
Dividend per Share
US 7.25 cents
+21% YoY
Profit & Loss Summary
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Profit & Loss Summary (US$ million) FY2018 FY2017 Growth
Total revenue and Other income 111.8 95.3 17%
Depreciation expense (34.3) (32.3) 6%
Gains on sale (net of impairment) (7.1) 5.4
Administrative expense (10.2) (8.0) 27%
Other expenses (1.7) (0.1)
Operating Profit/EBIT 58.6 60.2 (3%)
Finance expenses (44.8) (40.6) 10%
Finance income 5.1 1.8
Profit before tax 18.9 21.4 (11%)
Tax 1.1 (0.1)
Total profit after tax 20.0 21.3 (6%)
Operational Highlights FY2018
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Renewal and Fleet Diversification
• Reinvestment of equity from aircraft sold in FY2017 to acquire five aircraft into the fleet (US$332 million)
• Revenue exceeded US$100 million for the first time
• Airbus A320 transitioned from Air Berlin to easyJet in Dec 2017
• First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300
• Customer diversification – Six airlines added since 1 July 2017
Funding
• Evolution of capital structure and credit enhancement
• Credit rating upgrade by Fitch and S&P
• Issue US$300 million 6.5% Senior Notes in May 2018
• Refinance unsecured debt at lower cost with longer duration
Aircraft Leasing Business Objectives
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Strong Fleet
Metrics
Scale & Growth
Diversify revenue
IncreaseProfit
ControlCosts
Attractive Industry FundamentalsResilient Airline Traffic Growth Paired with Increasing Reliance on Lessors
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(Revenue Passenger kilometers in Trillions)
Oil Crisis Oil Crisis Gulf CrisisAsianCrisis
Financial Crisis
WTC Attack SARS
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1970 1975 1980 1985 1990 1995 2000 2005 2010 2015
Notes
Source: Airbus Global Market Forecast 2017; Flight Ascend Consulting Q2 2017 Commercial Operating Leasing Market Dynamics Report; Flight Fleets Analyzer (in-service and stored passenger single-aisle and twin-aisle types)† The information provided in this exhibit is a reproduction of an exhibit contained in Flight Ascend Analysis’ Q2 2017 report. Neither the Company nor any of the Dealers have independently verified the data contained on the slide and,
therefore, none of them can assure you that such data is complete or reliable. Accordingly, neither the Company nor any of the Dealers make any representation as to the accuracy, adequacy or completeness of the data. Investors should not
place undue reliance on, or base their investment decision on, the information presented on this page
+60%
+110%
Operating Lessor Fleet of Passenger Jets†
Operating lessor fleet as % of total fleetPassenger jet fleet managed by operating lessors
0%
10%
20%
30%
40%
50%
0
2,000
4,000
6,000
8,000
10,000
Jan
90
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Twin-aisle Single -aisle Share of fleet
Growing Air Travel Demand and Resiliency through Cycles
Aircraft Type Fleet Orders Options
Turboprop Aircraft
ATR 72-600 13 6 30
ATR 72-500 6 - -
Narrowbody Aircraft
A321-200 8 - -
A320-200 3 - -
A220-300 1 1 -
Fokker 100 5 - -
Widebody Aircraft
A330-300 1 - -
B777-300ER 1 - -
Total 38 7 30
Avation has built a diversified fleet with aircraft portfolio consisting of
approximately 23% widebody, 46% narrowbody and 31% turboprop aircraft by value(1)
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Attractive Aircraft Portfolio (as at 30 June 2018)Balanced Fleet Consisting of Young Aircraft
Balanced Fleet with Orderbook and Options to Retain Expansion Flexibility
Turboprop
41%
Narrowbody
59%
By Aircraft Value(1)
FY
20
17
FY
20
18
Turboprop
31%
Narrowbody
46%
Widebody
23%
Notes
1. As at 30 June
14-200-7
7-14
3.2 3-09-6
6-3
7.7
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Attractive Aircraft Portfolio (Cont’d)Fleet Metrics
FY 2016 FY 2017 FY 2018
Fleet 38 35 38
Fleet additions (net) 9 (3) 3
Weighted average aircraft age 4.2 years 3.3 years 3.2 years(1)
Weighted average remaining lease term 6.8 years 7.5 years 7.7 years
Young fleet,
reducing risk of
technology
obsolescence
Visibility of cash
flows due to
contracted nature
Notes
1. Excluding finance leases (5 Fokker 100 leases as at 30 June 2018).
Weighted Average Aircraft Age (years)(1) Weighted Average Remaining Lease Term (years)
New Mid Old Long Mid Short
A young fleet with long remaining leases
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Established Customer Relationships with Favorable Contracts
Global Customer Relationships
13 Airline Customers from 10 Countries
No lessees based in mainland China
VAA
66%
Thomas Cook
10%
Air India
8%
UNI Airways
6%
Condor
6%
Fiji Airways
4%
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Established Customer Relationships with Favorable Contracts (Cont’d)
…with New Relationships Driving Credit Enhancement
Customer diversification continues – airBaltic second aircraft added July 2018 &
Danish Air Transport deliveries expected September & October 2018
By Monthly Rental Revenue Run Rate
Top 1 Customer Share – 25%
Top 3 Customers Share – 57%
As at 30 June 2015 As at 30 June 2018
Top 1 Customer Share – 66%
Top 3 Customers Share – 84%
Revenue FY15 =$57 million Revenue FY18 =$109 million
Fleet Growth
14
0
200
400
600
800
1,000
1,200
2011 2012 2013 2014 2015 2016 2017 2018
Fleet assets (US$m)
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Avation Summary
Attractive Industry Dynamics
Renewal and Replacement of Fleet
Leading Fleet Metrics
Increased Airline and Aircraft Diversification
Evolution of Debt Capital Structure
Growth Focus in FY2019
Avation PLC (LSE: AVAP)
65 Kampong Bahru Road
Singapore 169370
Phone: + 65 6252 2077
www.avation.net
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Richard WolanskiFinance [email protected]
Jeff ChatfieldExecutive [email protected]