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LSE: AVAP 13 September 2018 Richard Wolanski Finance Director Financial Year 2018 Results Investor Update

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Page 1: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

LSE: AVAP

13 September 2018

Richard WolanskiFinance Director

Financial Year 2018 ResultsInvestor Update

Page 2: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

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

2

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

Page 3: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

3

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)

3

Page 4: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Historical Operational and Financial Performance

Continued Evolution to Younger Aircraft Portfolio and Track Record of Financial Expansion

4

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

Page 5: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

5

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

Page 6: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Profit & Loss Summary

6

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%)

Page 7: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Operational Highlights FY2018

7

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

Page 8: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Aircraft Leasing Business Objectives

8

Strong Fleet

Metrics

Scale & Growth

Diversify revenue

IncreaseProfit

ControlCosts

Page 9: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Attractive Industry FundamentalsResilient Airline Traffic Growth Paired with Increasing Reliance on Lessors

9

(Revenue Passenger kilometers in Trillions)

Oil Crisis Oil Crisis Gulf CrisisAsianCrisis

Financial Crisis

WTC Attack SARS

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

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

Jan

91

Jan

92

Jan

93

Jan

94

Jan

95

Jan

96

Jan

97

Jan

98

Jan

99

Jan

00

Jan

01

Jan

02

Jan

03

Jan

04

Jan

05

Jan

06

Jan

07

Jan

08

Jan

09

Jan

10

Jan

11

Jan

12

Jan

13

Jan

14

Jan

15

Jan

16

Jan

17

Twin-aisle Single -aisle Share of fleet

Growing Air Travel Demand and Resiliency through Cycles

Page 10: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

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)

10

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

Page 11: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

14-200-7

7-14

3.2 3-09-6

6-3

7.7

11

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

Page 12: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

12

Established Customer Relationships with Favorable Contracts

Global Customer Relationships

13 Airline Customers from 10 Countries

No lessees based in mainland China

Page 13: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

VAA

66%

Thomas Cook

10%

Air India

8%

UNI Airways

6%

Condor

6%

Fiji Airways

4%

13

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

Page 14: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Fleet Growth

14

0

200

400

600

800

1,000

1,200

2011 2012 2013 2014 2015 2016 2017 2018

Fleet assets (US$m)

Page 15: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

15

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

Page 16: Financial Year 2018 Results Investor Update · • First twin aisle aircraft (Boeing 777-300ER and Airbus A330) and first investment in Airbus A220-300 • Customer diversification

Avation PLC (LSE: AVAP)

65 Kampong Bahru Road

Singapore 169370

Phone: + 65 6252 2077

www.avation.net

16

Richard WolanskiFinance [email protected]

Jeff ChatfieldExecutive [email protected]