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 side of your screen. Just simply press submit your question. The company may not be in a position to answer every question it receives during the meeting itself. However, the company will review all questions submitted today and publish responses where it's appropriate to do so. Before we begin, we would like to submit the following poll, and if you would give that your kind attention, I'm sure the company would be most grateful. I'd now like to hand over to Group General Counsel, Duncan Scott. Good morning.

Thank you, and good morning to everyone. Today, on the 3rd of March, Ovation published its unaudited financial results for the six months ended 31st December 2022. A copy of our results announced by Ovation on our website at www.ovation.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 projections as to the company's future performance represent management's estimates of future results and speak only as of today, 3rd March 2023. These estimates involve risks and uncertainties that 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 off-year announcements. Ovation assumes no obligation to update any forward-looking statements or information in light of new information or future events. Unauthorised recording of this conference call is not permitted. I will now hand over to Executive Chairman Jeff Chatfield.

Thank you, Duncan. Good afternoon or evening, everybody. Thank you for joining this investor conference call where we discuss our half-year results for the six months ended 31st of December 2022. Evasion has generated a profit, increased its net asset value per share, maintained liquidity and continued to reduce debt. The company is well positioned to execute its business strategy as the aviation sector continues to recover from the impacts of the COVID-19 pandemic. So the snapshot of the company as at December 31st. At the end of the half-year period, aviation's fleet comprises 37 aircraft, leased to 16 airlines in 13 countries. By value, we own a diverse fleet of aircraft, including 52% narrow-body, 30% regional turboprop, and 18% wide-body by value. The fleet has excellent metrics with 6.1-year weighted average age and 5.4-year weighted average remaining lease term. Fleet assets have a net book value of $936 million, and we have 536 million future contracted lease receivables. The portfolio as of 31st of December, 2022. It's dominated by modern fuel efficient regional and narrow body aircraft, which generally operate on domestic and short haul routes. These have been the fastest to recover after the COVID-19 pandemic. The number of unutilised aircraft has been reduced to now two with the sale of an off-lease 737-800 and the commencement of a lease announced this week. There is only one lease for an Airbus A320-200 aircraft set to expire this year. Then the next schedule lease expiry is not until the year 2025. Moving on to our outlook. Aviation has placed two firm orders for two new ATR 72600. We hold purchase rights for a further 28 ATR 72600 aircraft. The two aircraft are due to be delivered in 2024. while the purchase rights for aircraft are to be delivered out to June, 2027. The order book and purchase rights provide the company with the visible fleet growth opportunity. Avations purchase rights have increased in value, partly due to a capped inflation formula, which we believe is now significantly below the actual cost inflation. In respect to the first two aircraft, Avations paid all pre-delivery installments and believes that the balance of the purchase price can be funded with secured debt. Avatian is reasonably confident that it can source an attractive lease contract for the ordered aircraft. Avatian's aircraft come with the Pratt & Whitney 127XTM engine, which provides lower fuel consumption and 5% more power, and also can operate sustainable aviation fuel. And we expect it'll be able to operate with 100% sustainable aviation fuel from 2025. If we just go forward again, so this is an ATR slide which shows the range of customers around the world for ATR72 aircraft. It's actually got As many customers or operators as, for example, Boeing 737 aircraft, more than the Dash 8s and E-Jets and so on. So it's an extremely popular aircraft type all over the world. So there's plenty of choices on where to place aircraft. Now, this is another ATR slide, but it's actually really important in the sense that it demonstrates that of the ATR aircraft that have been made, over 1,200 are over retirement age. So in other words, as they retire and hopefully get replaced, we'll be So, for example, there was 1,600 delivered, but as I've just said, there's 1,200 over retirement age. So that's a really important business opportunity because clearly there's a market there for a lot of replacements, which is very important because I think that Ovation is one of the world's largest, if not the largest, option for that type of aircraft. They're a very extremely fuel efficient and low carbon dioxide aircraft. So at the moment you've got ATRs operating with sustainable aviation fuel. And as I said earlier, by 2025, you can operate an aircraft, an ATR 72 with 100% sustainable aviation fuel. So it's CO2 production will basically be virtually zero. And so we have a background with green finance. In late 2019, we established the world's first commercial aircraft financing with a green loan, which was provided by Deutsche Bank and it was signed off by an agency and we won an award for doing that. So we have a history of green financing. This is another ATR slide. So at the moment, That's actually, that plane is operated by one of our customers, which was financed by, that customer was financed, the aircraft for that customer was financed by that green loan. It's already 50% sustainable aviation fuel compliant. And so it is sort of happening now, the transition to low CO2 operations. And as I said earlier, the ATR is a very successful program. In total of all ATR models, there's 1,800 sold, 200 operators, a billion passengers. So it's the sort of number one turboprop in the world. And we believe given the CO2 initiatives around the world with governments and taxes and it'll have a strong future. But overall, coming back to our broader business, we have 16 customers in 13 countries. We're now 14, given the events of this week. We have 70% of our customers by revenue are in Asia, with the remainder in Europe. Our top three customers by revenue are VHF, AirBaltic, and EVA Air. We have no exposure to anything Russia. We have no impact. We're not aware of any impact from sanctions resulting from Russia. We tend to only want to lease aircraft in places where we're confident that we'd be able to repossess it in the event of a default. So we are a sort of a buyer of new or relatively new aircraft and the natural seller of midlife and older aircraft. So you've seen us sell older aircraft so we can transition to new modern technology aircraft going forward. Some of the highlights, we sold two ATR-72E600 aircraft in the period We transitioned and sold a Boeing 737-800 that we repossessed. We wrote a new lead for an airline in Nepal. And we've successfully repossessed an aircraft from Myanmar. So we're good at transitioning, selling, and leasing aircraft. Now we talk about the financial results and I'll hand over at this point to Ian Court who's the CFO to continue this presentation.