28th Feb 2020 11:19
(Alliance News) - Avation PLC on Friday said its profit more than tripled in the first half its financial year, having made a sizeable gain on aircraft purchase rights.
The commercial passenger aircraft leasing company reported a USD45.4 million pretax profit for the six months ended December 31, far higher than the previous year's USD14.2 million profit.
This mostly resulted from a USD37.0 million unrealised gain on aircraft purchase rights, with no such gain in 2018.
Before the half-year period, Aviation held aircraft purchase rights which were intended to be used in acquiring aircraft for its fleet. These were held as non-financial assets at amortised cost.
However, during the six months to December, Aviation decided to "seek to dispose of excess aircraft purchase rights over and above its requirement to acquire additional aircraft for its fleet".
In order to reflect this, Aviation opted to account for aircraft purchase rights through profit or loss.
Adding to its performance, revenue was up 15% at USD67.6 million compared to USD58.7 million.
Aviation declared a 2.1 cents per share interim dividend, 5.0% higher than 2018's dividend of 2.0 cents per share.
Looking ahead, the company is currently undertaking a strategic review of its operations which could result in the sale of the company or its aircraft assets. The review was announced in January and since the "a number of parties have expressed interest in" Aviation and its aircraft portfolios.
Aviation said the review results from "an unsolicited approach to purchase the company" made by an undisclosed firm.
Executive Chair Jeff Chatfield said: "In response to a proposal from an interested party the company appointed an adviser and announced a strategic review and formal sale process. Upon completion of the strategic review and formal sale process the board will consider the recommendations and provide further comment."
Chatfield added that: "Avation has a strong cash position with four new aircraft expected to be added to the fleet through deliveries to Braathen's and US Bangla between now and 30 June 2020. The company believes it has sufficient liquidity to fund further fleet growth which will be sourced from the orderbook for ATR-72-600 aircraft and through aircraft acquisition."
Shares in Aviation were down 0.4% at 255.00 pence in London on Friday morning.
By Anna Farley; [email protected]
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