Avation PLC

Good afternoon, ladies and gentlemen, and welcome to the Avation half-year results investor presentation. Throughout this recorded presentation, investors will be in listen-only mode. Questions are encouraged and can be submitted at any time using the Q&A tab situated on the right-hand corner of your screen. Just please simply type in your questions at any time and press send. The company may not be in a position to answer every question received during the meeting itself. However, the company will review all questions submitted today and publish responses where it is appropriate to do so. I'd now like to hand over, if I may, to Duncan Scott, Group General Counsel. Good afternoon.

Thank you. Today, on the 3rd of March, Evasion published its unaudited financial results for the financial period ended 31st December 2021. A copy of our earnings release is available on our website at www.evasion.net. This conference call is being webcast and recorded, and the webcast will be available for replay on our website. Please note that certain statements in this conference call, including answers to your questions, are forward-looking statements, including without limitation statements regarding our future operations and performance, revenues, operating expenses, other income and expense items. These statements and any projection as to the company's future performance represent management's estimates of future results and speak only as of today, 3rd March 2022. These estimates involve could cause actual results to differ materially from expectations. Further information on the factors and risks that may affect Ovation's business are included in Ovation's regulatory announcements from time to time, including its annual report and half-year results announcements. Ovation assumes no obligation to update any forward-looking statements or information in light of new information or future events. Unauthorized recording of this conference call is not permitted. I will now hand you over to our Executive Chairman, Jeff Chatfield.

Thank you, Duncan, and thank you for your time today. We have the majority of the management team with us if you have any questions at the end. The financial results for the six months ended 31st of December 2021 reflect the emergence from the severe disruption caused by the COVID-19 pandemic. Revenue exceeded expectations and an evasion strategy to conserve liquidity has succeeded with net indebtedness being reduced as cash collection rates and unrestricted cash balances have improved. We expect this trend to continue throughout the second half of the financial year. The significant impairments and provisions for credit losses on receivables experienced in the previous financial year have not recurred. Some of these provisions may potentially be written back as a result of further collections of debt. Impairments recorded during the period relate to off-lease aircraft, including six ex-virgin Australian ATR-72 aircraft, three of which are now subject to a sale agreement with Aegean Airlines. The fleet is returning to high levels of utilization as unused aircraft continue to be repositioned or sold. This significantly impacts the significant impacts of airline insolvencies or restructuring of some of Avation's customers have been reflected in prior period. Ovation is engaged in a review of alternatives to de-level its balance sheet and lower the cost of debt, which has increased as a result of the agreement to extend the maturity date of Ovation Capital's senior notes to 31 October 2026. The company is seeing an increasing number of positive data points in the aircraft leasing sector. We've seen increasing interest from airlines to buy or lease aircraft at sustainable lease rates, more senior lenders willing to lend against aircraft assets, aircraft orders from airlines and improved utilization of aircraft. These factors all support the emergence of the industry from the pandemic. The company will growth through the opportunistic aircraft trading and deliveries from its order book in the post-pandemic environment. Avation has no direct exposure to Russia or any Russian airline. This presentation is set out in three sections. The first provides an overview of the company. The second provides a summary of the results for the financial year, half year, before taking the pathway forward and then opening up the meeting for Q&A. So we now have a snapshot of evasion as of 31st December, 2021. The past two years since the declaration of the pandemic have been the most challenging in the company's history. The COVID-19 pandemic disrupted our cashflow, our airline customers and evaluation of our assets. As at 31st of December, the company had 42 aircraft in the fleet, serving 16 different customers in 13 countries. Although with the recent announcement that we completed the transfer of title on the first three ATRs we are selling to Aegean, this means we have 41 aircraft as of today. Aviation owns, manages or leases regional, narrow-body and twin-aisle aircraft. fleet is split between 17% wide body, 50% narrow body and 33% turboprop by value respectively. The aircraft fleet has a 5.3 year weighted average age and a 6.1 year weighted average remaining lease term. Today, fleet assets total in excess of $1 billion. Attached to that fleet is 575 million in unearned contracted revenue from existing operating leases and a further 64 million in finance lease receivables. That's over $639 million in income on the remaining leases at this point. On average, the fleet is still less than halfway through its expected life. retained a full complement of commercial, legal, financial and technical personnel to ensure it has the skillset needed to manage the platform successfully and return to growth in the post COVID-19 recovery phase. The company intends to return to adding new aircraft in the fleet from its order book Avation's diversified fleet at 31st December is focused on fuel-efficient regional and narrow-body aircraft. These sectors are seeing the fastest return to service as we emerge from the pandemic. 83% of Avation's fleet is focused on regional domestic travel, which towards the end of 2021 was close to returning to 2019 pre-COVID utilisation levels. Avation believes that new aircraft carry a lower risk of service debt through long-term leases. In the last year, Avation rescheduled the ATR order book to reduce committed capital expenditure. Avation now holds all firm orders for two aircraft and purchase rights for 28 ATR 72600 aircraft. These represent a valuable asset as the purchase rights provide a visible pathway to fleet growth. These first two ATR aircraft represent only a small proportion of the equipment commitment for each aircraft, given we paid significant pre-delivery payments for each aircraft. We expect to be able to finance most of the remaining acquisition costs with debt. Our previous largest customer, Virgin Australia, entered into insolvency at the start of the pandemic, resulting in 13 aircraft being returned to us. We've since placed four and sold six of these aircraft, leaving only three unutilised ex-Virgin aircraft in the fleet. Aviation is returning to a high level of operational efficiency, which simply means that a high percentage of the fleet is generating rent. There is a strong interest in the remaining aircraft and our expectation is that we will sell or lease these aircraft in the short term, with further positive news expected shortly. Airline customers. The next slide shows airline customers. Today we have 16 customers in 13 countries. Avations customers include flag carriers. While flag carriers are not excluded from the impacts of COVID-19 and associated travel restrictions, these airlines are more likely to receive government support due to the national importance of the carrier. These airlines also typically service domestic routes as countries have moved beyond the peak of the pandemic in terms of domestic travel, which has recovered faster than international air travel. It is important to note that Avation's geographical spread of customers has the pandemic impact in different areas at different times. Around two-thirds of Avation's companies are by revenue alone located in Asia, including airlines based in countries that experience a less severe impact in the first year of the virus. We've also been in fortune in Europe, where our largest injection. We've been able to retain the majority of our customers, fleet, team, and for this reason, we believe Vivation's business model is largely intact. We've included the list of customers and their aircraft to provide further granular detail on the fleet. The ATR market is recovering with interest in buying and leasing aircraft increasing. Together with the three ex-Virgin aircraft, we are also remarketing two ex-Logan aircraft. It's likely that we'll sell at least half of these mid-life ATRs, which will free up further cash and enable Ovation to recycle equity and or de-lever the balance sheet. We've also received interest in the ex-Garuda aircraft. The company has announced the sale of three ATR-72-600 aircraft to Aegean Airlines, which will be completed prior to the end of the financial year, which is 30 June 2022. Aviation is currently not aware of any sanctions in respect to the current situation in the Ukraine, which would have an impact on the company. Aviation has no direct exposure to Russia or any Russian airline. Aviation has a focus on Yarnley aircraft and therefore a natural seller of midlife aircraft. Let me now hand the call to Richard Holansky, who will provide more detail on the financial results, liquidity and key ratios.