Alliance Aviation Services Limited · ASX:AQZ
Alliance Aviation Services — Investor Presentation (June 2020)
45 slides from Alliance Aviation Services's investor presentation, Jun 11, 2020
Slide 1: Alliance Aviation Services Limited Investor Presentation Capital Raising
Alliance Aviation Services Limited Investor Presentation Capital Raising 11 June 2020
Slide 2: Important Notices and Disclaimer
Important Notices and Disclaimer This investor presentation (Presentation) is dated 11 June 2020 and has been prepared by Alliance Aviation Services Limited (ACN 153 361 525) (Alliance or the Company). By attending an investor presentation or briefing, or accepting, accessing or reviewing this Prese
Slide 3: Important Notices and Disclaimer (cont’d)
Important Notices and Disclaimer (cont’d) Investment risk An investment in Alliance shares is subject to known and unknown risks, some of which are beyond the control of Alliance and its directors. Alliance does not guarantee any particular rate of return or the performance of Alliance nor does it g
Slide 4: Important Notices and Disclaimer (cont’d)
Important Notices and Disclaimer (cont’d) You are strongly cautioned not to place undue reliance on forward-looking statements, particularly in light of the current economic climate and the significant volatility, uncertainty and disruption caused by the outbreak of COVID- 19. Forward-looking statem
Slide 5: Tasmania Fire Service
Investor Presentation June 2020 Tasmania Fire Service
Slide 6: Chairman’s Letter
Chairman’s Letter Thank you for taking the time to consider an investment in Alliance. Alliance is headquartered in Brisbane and for the past 18 years has been servicing regional Australia. Our core business of providing an essential service to the major mining companies by flying their employees an
Slide 7: Executive Summary
Executive Summary • Alliance is seeking to raise funds for growth through an up to ~$121.9 million equity raising (Equity Raising or Offer) via a: • ~$91.9 million fully underwritten institutional placement (Placement); and Equity Raising • Up to $30.0 million non-underwritten share purchase plan (S
Slide 8: Contents
Contents 09 PROFILE OF ALLIANCE 19 BUSINESS UPDATE 23 DETAILS OF THE OFFER APPENDICES 28 A. KEY RISKS 39 B. INTERNATIONAL OFFER RESTRICTIONS 41 C. UNDERWRITING AGREEMENT SUMMARY Investor Presentation June 2020 8
Slide 9: 1. Profile of Alliance
1. PROFILE OF ALLIANCE Investor Presentation June 2020
Slide 10: Alliance Aviation
Alliance Aviation 18 years of operation 98% Aust & NZ owned $66.4M FY19 EBITDA 95% OTP 42 Aircraft in service Alliance Aviation Services Limited (“Alliance” or the “Company”) was founded in 2002, after it acquired the operating assets (including aircraft) from Flight West Airlines. Alliance owns 44
Slide 11: Company Snapshot
CURRENT CAPITALISATION SHARE PRICE (Last 12 Months) Company (A$ in millions, unless stated otherwise) Current Share price at 10 June 20201 $3.10 3.50 Snapshot 3.00 Shares outstanding (m) 127.5 2.50 Market capitalisation 395.2 2.00 (+) Short Term Debt 21.2 1.50 (+) Long term debt 54.8 1.00 (-) Cash &
Slide 12: COVID-19 risk mitigation
COVID-19 risk mitigation Management took immediate steps to mitigate risk and preserve cash in response to COVID-19 • Recruitment freeze implemented. • Work hours of administration staff were reduced where possible. Workforce • Crew and engineering staff were encouraged to take annual leave. • Redun
Slide 13: Five Revenue Streams
Five Contract Revenue Wet Lease Revenue RPT Charter Aviation Streams Revenue Revenue Services The Company 1 2 3 4 5 provides an essential service to Contract Revenue Wet Lease RPT Revenue Charter Revenue Aviation Services several sectors, (Core Business) Operating Alliance aircraft Regular public tr
Slide 14: Existing National Footprint
Darwin Existing - Crew - Line Maintenance - Operational base - Offices Cairns National - Crew - Line Maintenance - Operational base Footprint - Offices Townsville - Hangar - Crew - Line Maintenance - Operational base - Offices Rockhampton - Crew - Line Maintenance - Operational base - Offices Brisba
Slide 15: Operational Excellence
CURRENT FLEET SAFETY Fokker 100 CERTIFICATIONS 100 Seat Jet Aircraft - 24 in service Operational (2 in storage) Excellence Fokker 70 Wyvern Wingman Certification 95% 80 Seat Jet Aircraft - 131in service O (1 in storage) T P Alliance Airlines consistently achieved 95% Renewing IOSA certification in F
Slide 16: Stable Contract Client Base
Stable Contract Client Base Client Contract Terms Contract 15 Alliance has an Contract 14 excellent track record of being able Contract 13 to renew contracts Contract 12 due to strong client relationships and its Contract 11 proven ability to deliver safe and on- Contract 10 time services. Contract
Slide 17: Regional Capability
Regional Capability Alliance has a superior operating performance for regional Australia routes Jet versus Turbo prop Low Unit Cost Operator • Alliance operates predominately jet aircraft in its FIFO • Alliance has been profitable because it has low operating and regional operations. Jets provide a
Slide 18: Board of Directors
Board of Directors with unparalleled aviation sector experience STEVE PADGETT OAM Non-executive Chairman DAVID CROMBIE AM Years with Alliance: 18 years Non-executive Director Years in aviation sector: 50+ years Years with Alliance: 8+ years Years in aviation sector: 8+ years SCOTT MCMILLAN Managing
Slide 19: 2. Business Update
2. BUSINESS UPDATE Investor Presentation June 2020
Slide 20: Business Update
Business Update Alliance expects to report a Profit Before Tax in excess of $40 million as announced on 20 May 2020. This is 46% above the previous consensus (~$27.5m). This is testament to Alliance’s robust business model and ability to meet customer needs, even through these unprecedented times. •
Slide 21: Growth Opportunities
Growth Opportunities • COVID-19 continues to have a significant impact on the domestic and global aviation sector, which Alliance expects to result in a new operating and competitive environment for existing operators and any potential new sector participants. • Alliance believes it is well-position
Slide 22: Growth Opportunities (cont’d)
Growth Opportunities (cont’d) • As a result of COVID-19, Alliance has received a number of requests for services from new Providing services to new customers (including resource sector companies, domestic tourism operators, tourism boards customers, including potential and regional councils). engage
Slide 23: 3. Details of the Offer
3. DETAILS OF THE OFFER Investor Presentation June 2020
Slide 24: Details of the Offer
Details of the Offer • Up to ~$121.9 million equity raising (Equity Raising or Offer) via a: • ~$91.9 million fully underwritten institutional placement (Placement); and • Up to ~$30.0 million non-underwritten share purchase plan (Share Purchase Plan or SPP).1 Offer Structure • Approximately 31.1 mi
Slide 25: Equity Raising Sources and Uses
Equity Raising Sources and Uses Sources A$ million Equity raising1 91.9 Total 91.9 Uses A$ million Fleet expansion 90.0 Transaction costs 1.9 Total 91.9 Investor Presentation June 2020 1 Excludes funds raised through the non-underwritten SPP. Funds raised via the SPP will be applied for future growt
Slide 26: Pro forma balance sheet
Pro forma balance sheet 31 December 2019 Impact of Equity 31 December 2019 A$ million (unaudited)1 Raising2 pro-forma3 Assets Cash 12.1 90.0 102.1 Other current assets 98.5 98.5 Non-current assets 222.8 222.8 Total Assets 333.5 90.0 423.5 Current & Non-current Borrowings 76.0 76.0 Other current liab
Slide 27: Offer timetable
Offer timetable Event1 Date SPP record date 7.00pm (Brisbane time), Wednesday, 10 June 2020 ASX trading halt Placement and SPP announced to ASX Thursday, 11 June 2020 Placement bookbuild Results of Placement announced to ASX Friday, 12 June 2020 Trading halt lifted and commencement of normal trading
Slide 28: Appendix A. Key Risks
APPENDIX A. KEY RISKS Investor Presentation June 2020
Slide 29: Key Risks
Key Risks This section includes details of the key risks attaching to an investment in shares in Alliance. These risks may affect the future operating and financial performance of Alliance and the value of Alliance shares. The key risks are not set out in any particular order. Before deciding whethe
Slide 30: Key Risks (cont’d)
Key Risks (cont’d) • maintain adequate cash flows and manage liquidity; • maintain customer engagement and communication; • maintain productivity levels of staff; • protect the health (both mental and physical), safety and security of staff, particularly those considered to be at higher risk of cont
Slide 31: Key Risks (cont’d)
Key Risks (cont’d) d) Increased competition from new and existing competitors may cause Alliance’s competitive position to deteriorate The sector in which Alliance operates is subject to competition based on factors including price, range of fleet offering, fleet availability and quality of services
Slide 32: Key Risks (cont’d)
Key Risks (cont’d) The Group’s ITC systems (including those provided by third parties) may be adversely affected by factors including damage, equipment faults, power failure, computer viruses, misuse by employees or contractors, external malicious interventions such as hacking and social engineering
Slide 33: Key Risks (cont’d)
Key Risks (cont’d) j) Political, legislative or regulatory intervention Alliance is required to comply with a range of laws and regulations that relate to the areas of aviation, employment, occupational health and safety and taxation, amongst others. The Australian aviation industry is subject to ex
Slide 34: Key Risks (cont’d)
Key Risks (cont’d) If an event were to occur for which the Group is not insured, the Group may not be able to recover the related loss. In addition, while Alliance believes its current insurance reflects industry practice, the amount of such coverage may be inadequate to cover losses incurred in con
Slide 35: Key Risks (cont’d)
Key Risks (cont’d) q) Availability and costs of airport facilities may change The Group leases a range of airport facilities, including offices, aprons, aircraft hangars and aircraft parking bays. Alliance is exposed to increases in airport, transit and landing fees, along with changes in air securi
Slide 36: Key Risks (cont’d)
Key Risks (cont’d) v) The Group may be exposed to credit risk Credit risk for the Group arises from cash and cash equivalents, held to maturity investments, favourable derivative financial instruments and deposits with banks and financial institutions, as well as credit exposures to customers, inclu
Slide 37: Key Risks (cont’d)
Key Risks (cont’d) z) Taxation Any change to Australian taxation laws (or their interpretation) including the current rate of company income tax or to the rates of indirect taxes could materially impact Alliance’s financial performance. The taxation treatment adopted by Alliance may require an inter
Slide 38: Key Risks (cont’d)
Key Risks (cont’d) No assurances can be given that the New Shares offered under the Placement or the SPP will trade at or above the issue price. None of Alliance, its directors or any other person guarantees the market performance of the New Shares. There have been significant fluctuations and volat
Slide 39: Appendix B. International Offer Restrictions
APPENDIX B. INTERNATIONAL OFFER RESTRICTIONS Investor Presentation June 2020
Slide 40: International Offer Restrictions
International Offer Restrictions New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under the Financial Markets Conduct Act 2013 (New Zealand) (the "FMC Act"). The New Shares are not being offered or sold in New Zealand (or allotted with
Slide 41: Appendix C. Underwriting Agreement Summary
APPENDIX C. UNDERWRITING AGREEMENT SUMMARY Investor Presentation June 2020
Slide 42: Underwriting Agreement Summary
Underwriting Agreement Summary Ord Minnett Limited (ABN 86 002 733 048) is acting as bookrunner, lead manager and underwriter of the Placement. Alliance has entered into an underwriting agreement with the Lead Manager in respect of the Placement (Underwriting Agreement). The Underwriting Agreement c
Slide 43: Underwriting Agreement Summary (cont’d)
Underwriting Agreement Summary (cont’d) If any of the following events occur on or before 10.00am on the allotment date, the Lead Manager may terminate its obligations under the Underwriting Agreement if any of the following events has, or is likely to have, a material adverse effect on the marketin
Slide 44: Underwriting Agreement Summary (cont’d)
Underwriting Agreement Summary (cont’d) If the Lead Manager terminates its obligations under the Underwriting Agreement, the Lead Manager will not be obliged to perform any of its obligations that remain to be performed. Termination of the Underwriting Agreement could have an adverse impact on the a
Slide 45: Investor Presentation June 2020
Investor Presentation June 2020
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