AVATION PLC

November 24, 2025

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213800KA972GUP1B6I78 2023-06-30 ifrs-full:SharePremiumMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:TreasurySharesMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:MergerReserveMember 213800KA972GUP1B6I78 2023-06-30 avap:AssetRevaluationReserveMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:CapitalReserveMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:OtherReservesMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:RetainedEarningsMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:EquityAttributableToOwnersOfParentMember 213800KA972GUP1B6I78 2023-06-30 ifrs-full:NoncontrollingInterestsMember iso4217:USD iso4217:USD xbrli:shares AVATION PLC DIRECTORS’ REPORT AND FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 REGISTERED NUMBER: 05872328 (ENGLAND & WALES) AVATION PLC CONTENTS FOR THE YEAR ENDED 30 JUNE 2025 Company Information ..................................................................................................................... 1 Chairman’s Statement ............................................................................................................... 2 – 4 Strategic Report ...................................................................................................................... 5 - 23 Directors’ Report ................................................................................................................... 24 – 28 Directors’ Remuneration Report .............................................................................................. 29 – 39 Directors’ Responsibilities Statement ....................................................................................... 40 - 41 Auditor’s Report .................................................................................................................... 42 - 52 Consolidated Statement of Profit or Loss ......................................................................................... 53 Consolidated Statement of Comprehensive Income .......................................................................... 54 Consolidated Statement of Financial Position ............................................................................ 55 - 56 Company Statement of Financial Position ........................................................................................ 57 Consolidated Statement of Changes in Equity .......................................................................... 58 – 59 Company Statement of Changes in Equity ................................................................................ 60 - 61 Consolidated Statement of Cash Flows ............................................................................................ 62 Company Statement of Cash Flows ................................................................................................. 63 Notes to the Financial Statements ......................................................................................... 64 - 139 AVATION PLC COMPANY INFORMATION FOR THE YEAR ENDED 30 JUNE 2025 1 DIRECTORS: Robert Jeffries Chatfield Roderick Douglas Mahoney Stephen John Fisher Derek Sharples Mark Stephen Shelton COMPANY SECRETARIES: Duncan Gerard Stephen Scott Jasmine Siow Fui San REGISTERED OFFICE: 5 Fleet Place London EC4M 7RD United Kingdom PRINCIPAL PLACE OF BUSINESS: 65 Kampong Bahru Road Singapore 169370 AUDITOR: Ernst & Young EY Building Harcourt Centre Harcourt Street 2 Dublin Ireland SOLICITORS: Charles Russell Speechlys LLP 5 Fleet Place London EC4M 7RD United Kingdom REGISTRAR: Computershare Investor Services PLC The Pavilions Bridgewater Road Bristol BS99 6ZZ United Kingdom AVATION PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 30 JUNE 2025 2 Financial Highlights  Revenue increased by 19.2% to $110.1 million (2024: $92.4 million);  Lease yield was 11.3% (2024: 10.7%);  Operating cashflow increased by 12.2% to $91.5 million (2024: $81.6 million);  Net indebtedness reduced by 7.3% to $604.2 million (2024: $651.5 million);  Total year-end cash and bank balances were $130.0 million (2024: $117.9 million);  Operating profit was $46.4 million (2024: $83.2 million);  Loss after tax was $7.7 million (2024: profit $19.7 million); and  Basic earnings per share were (11.22) cents (2024: 27.85 cents); and  Net asset value per share increased to $3.66 (2024: $3.62);  Operational Activity  The Company acquired an Airbus A320-200 aircraft on lease to Etihad Airways;  Two new ATR 72-600 aircraft were sold on delivery to an airline customer generating a $3.5 million gain on sale;  The lease for an Airbus A320-200 aircraft to easyJet was extended to March 2029;  An ATR 72-600 was transitioned to a six-year lease to new customer Clic Air;  The first two ATR 72-600 aircraft in Avation’s ten aircraft orderbook were placed on lease with new airline customers in South Korea and Cambodia. The aircraft are scheduled for delivery in November 2025 and February 2026 respectively;  The Company was granted a 5-year extension to its Aircraft Leasing Scheme tax incentive;  Seven aircraft were refinanced with an extendable US$ 85 million term loan facility;  The Company agreed to sell a Boeing 777-300ER aircraft on a transaction that will generate a material profit above book value in the 2026 financial year; and  The Company obtained new corporate credit ratings from Moody’s and Fitch of B1 (stable) and B (stable) respectively. Business review The financial year ended 30 June 2025 was a period of consolidation for Avation. The fleet performed well with all aircraft on lease throughout the period. We successfully transitioned an ATR 72-600 to a new lessee customer Clic Air, extended the lease of an A320-200 aircraft with easyJet and recently signed leases for the first two aircraft to be delivered from our ten aircraft orderbook with ATR. We also added Etihad Airways to our customer list in March 2025 with the purchase of an Airbus A320-200, and sold two ATR 72-600 aircraft to their lessee pursuant to the exercise of purchase options. Further fleet optimisation was achieved in early September 2025 with the sale of a Boeing 777-300ER widebody aircraft at a material profit above book value. We intend to use the sale proceeds to further reduce debt and to reinvest into popular narrowbody aircraft. Cash generation was strong, enabling the Company to further reduce debt, achieving a reduction to 54.8% in the ratio of net debt to total assets as at 30 June 2025. We have made significant repurchases of the Avation Capital S.A. 8.25% October 2026 unsecured notes issue, reducing the outstanding amount to US$310.0 million at 30 June 2025 and to US$298.0 million as of date of this report. The Company now has a strong focus on refinancing the remaining outstanding unsecured notes which are currently due to mature in October 2026. In preparation for a refinancing transaction, we recently updated our Global Medium Term Note programme documentation and engaged Moody’s and Fitch Ratings to provide additional credit ratings on the Company. We are pleased to note that Moody’s assigned the Company a first-time B1 Corporate Family Rating (CFR) and B2 issuer rating with a stable outlook, and Fitch Ratings assigned the Company a B long-term issuer default rating. We believe that we are now well positioned to achieve a successful refinancing of the Notes. AVATION PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 30 JUNE 2025 3 Avation plans to grow its business in a prudent and strategic manner. The first two of the ten new ATR 72-600 aircraft on order have been placed with new customers and we are confident that the Company will be able to place the remaining ordered aircraft in a timely manner. The order was placed by exercising ten purchase rights and the Company holds another 24 purchase rights, providing opportunities for further fleet growth. Market Positioning Avation’s long-term strategy is to target growth and diversification by adding new airline customers, while maintaining a low average aircraft age and long remaining lease term metrics. Avation focuses on new and relatively new commercial passenger aircraft on long-term leases. In the short term the Company is considering further growth in its narrow body fleet. Avation supports the transition of the aircraft industry towards aircraft capable of using SAF to produce lower CO2 emissions on a net basis. Reducing CO2 emissions is key to providing a sustainable future for the global aviation industry and in addressing climate-change risks. The Company’s business model involves rigorous investment criteria that seeks to mitigate the risks associated with the aircraft leasing sector. Avation will typically sell mid-life and older aircraft and redeploy capital to newer assets. This approach is intended to mitigate technology change risk, operational and financial risk, support sustained growth and deliver long-term shareholder value. Avation will consider the acquisition or sale of individual or smaller portfolios of aircraft, based on prevailing market opportunities and consideration of risk and revenue concentrations. Funding for aircraft acquisitions is traditionally sourced from capital markets, asset-backed lending, operational cash flows and disposals of aircraft. The ability to access acceptably priced funding is a key profit driver in aircraft leasing. Principal risks factors facing the aircraft leasing industry include, but are not limited to, exposure to the airline industry and the risk of deterioration in the financial condition of airline customers, asset value risk driven by changing patterns of supply and demand and technological change, operational risks including risks resulting from war, acts of terrorism and natural disasters, regulatory risks from changes to government regulations and tax laws and climate-change risks. The Directors may seek to repurchase ordinary shares in the Company from time to time subject to the terms of a share buy-back mandate which expires at the conclusion of the next Annual General Meeting. Outlook According to IATA, passenger air travel grew at 8.0% in the year to 30 April 2025. International travel continued to show strong momentum with 10.8% year-on-year growth in revenue passenger kilometres. A decline in air travel in the United States was more than offset by strong growth in other regions. In the Asia-Pacific region, where Avation’s fleet and customer base is concentrated, revenue passenger kilometres grew 10.6% year-on-year. At the same time, supply chain constraints continue to impact new aircraft deliveries. New aircraft deliveries are lagging 30% behind peak levels, leading to a record aircraft order backlog of around 17,000 aircraft. This market backdrop has continued to support aircraft valuations and lease rates over the last year with Avation seeing increases in values and lease rates for both new and second-hand commercial aircraft. AVATION PLC CHAIRMAN’S STATEMENT FOR THE YEAR ENDED 30 JUNE 2025 4 Avation’s fleet was fully utilised throughout the year ended 30 June 2025. The Company is now focussed on placing its ATR 72-600 orderbook with new customers and transitioning aircraft which are due to come off lease in the latter half of 2025 and first half of 2026 to new lessees. To this end the first two deliveries from Avation’s ten aircraft orderbook have been placed with new airline customers in South Korea and Cambodia. These aircraft are currently scheduled for delivery in November 2025 and February 2026 respectively. The Company transitioned an ATR 72-600 aircraft to a six-year lease with new customer Clic Air in July 2025 and has signed a six-year lease with existing customer PNG Air for an aircraft scheduled to be redelivered by its existing lessee in the fourth quarter of 2025. The Company will continue to focus on growing its fleet, transitioning aircraft scheduled for redelivery from expiring leases and identifying opportunities to place the remaining new ATR aircraft ordered in 2024. Avation aims to gradually transition to a more sustainable, lower CO2 emissions aircraft fleet. Aircraft delivered from Avation’s orderbook and exercised purchase rights will be fitted with the new Pratt and Whitney Canada PW127XT engine. The PW127XT engine promises 20% lower maintenance costs, extended time on wing, 3% lower fuel consumption and 5% more power compared with the current engine variant. The PW127XT engine is capable of operating with 50% SAF 1 and manufacturer expects to achieve certification to operate with 100% SAF before new fuel regulations planned for 2030. Net emissions of CO2 are expected to be substantially reduced when using SAF. We also anticipate gradually trading out of older aircraft types and focussing on aircraft types such as the Airbus NEO and A220 series in addition to ATR turboprop aircraft. The Company’s portfolio already includes a significant proportion of Airbus A220 and ATR 72 aircraft. Robert Jeffries Chatfield Executive Chairman Singapore 1 October 2025 1 Sustainable aviation fuel or SAF is the main term used by the aviation industry (including IATA and the International Civil Aviation Organization) to describe a non-conventional (non-fossil derived) aviation fuel. SAF is the preferred IATA term for this type of fuel although when other terms such as sustainable alternative fuel, sustainable alternative jet fuel, renewable jet fuel or biojet fuel are used, in general, the same intent is meant. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 5 The Directors present their strategic report for the year ended 30 June 2025. BUSINESS OVERVIEW Avation PLC (”the Company”) and its subsidiaries (“Avation”, the “Group”) is a commercial passenger aircraft leasing group managing a fleet of 33 aircraft, as of 30 June 2025. Avation was founded in 2006 and has now been in operation for 19 years. Avation leases aircraft to 16 airline customers spread across 14 countries in Europe and the Asia-Pacific region. Major customers include Vietjet Air, airBaltic, EVA Air and Philippine Airlines. The Group’s fleet includes 14 narrow-body jets, two twin-aisle jets and 17 ATR 72 twin-engine turboprop aircraft. An analysis of the fleet is provided below under “Fleet Overview”. Avation operates from its headquarters in Singapore where it is tax resident and, since 2014, a beneficiary of the Singapore Aircraft Leasing Scheme (“ALS”) tax incentive. In August 2024 Avation was granted a further five-year extension to its ALS tax incentive at a reduced 8% tax rate. Avation’s management team has extensive experience in the aviation industry and has the expertise to select, acquire and manage aircraft that have achieved strong operational performance for our customers and generated stable returns for our shareholders. The Company maintains in-house commercial, legal, technical and finance teams and operates as a full-service aircraft leasing platform. Avation aims to grow its fleet and continue to diversify its customer base over the coming years. The Group has ten ATR 72-600 aircraft on order from the manufacturer, which are currently scheduled to be delivered between the fourth quarter of 2025 and the second quarter of 2028. The Group also holds purchase rights for a further 24 ATR aircraft. The Group may also acquire additional new and second- hand jet aircraft on an ad-hoc basis. Older aircraft are sold when opportunities arise with the aim of maintaining a low average fleet age. Avation’s ordinary shares are traded on the Main Market of the London Stock Exchange under the ticker symbol LSE: AVAP. BUSINESS MODEL Avation aims to grow its fleet and build long-term shareholder value by focussing on a) new turboprop regional aircraft, principally the popular and fuel-efficient ATR 72-600 model and b) new and second- hand narrow-body jets, in particular the popular Airbus A320/A321, A220 and Boeing 737 aircraft families. The Group will also consider acquiring additional twin-aisle aircraft as part of its strategy to build a diversified portfolio of aircraft. Owning a diversified portfolio of aircraft types is intended to mitigate overall market and residual value risk. As the fleet grows, the Group seeks to continually diversify its customer base as part of its overall credit risk management strategy. Avation has developed a sustainable, low emissions aircraft growth strategy. This initiative was supported by the recent release of the new lower emissions PW127XT engine and announcement that future variants of the ATR 72 aircraft will include hybrid technology and use 100% Sustainable Aviation Fuel. In addition, an ATR 72 aircraft has also completed the first 100% Sustainable Aviation Fuel commercial flight. The Company’s future business strategy will be to focus on leasing modern, low CO2 emissions, fuel- efficient aircraft. We anticipate gradually trading out of older aircraft types and focussing on aircraft types such as the Airbus NEO and A220 series in addition to ATR 72 aircraft with the recently announced new generation engines. The Company’s portfolio already comprises a significant proportion of Airbus A220 and ATR 72 aircraft showing our commitment to new technology, fuel-efficient aircraft types. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 6 Future ATR 72 deliveries from Avation’s orderbook will be powered by the new Pratt and Whitney Canada PW127XT engine which promises 20% lower maintenance costs, extended time on wing, 3% lower fuel consumption and 5% more power compared with the current engine. The PW127XT engine is capable of operating with 50% SAF and manufacturer expects to achieve certification to operate with 100% SAF before new fuel regulations planned for 2030. When using 100% SAF net emissions of CO2 will be reduced by 80% through the fuel lifecycle. Industry data suggests that airlines will require significant numbers of leased aircraft in the future to replace older aircraft that will be retired and to satisfy projected growth in demand for air travel. Airlines’ balance sheets were negatively impacted during the COVID-19 pandemic, reducing their ability to purchase aircraft directly. This supports the Company’s strategy of focussing on young and popular commercial aircraft. This trend supports the Company’s business model and growth strategy. The Group finances the acquisition of new aircraft using internally generated cash flows, senior and junior secured debt finance, the issuance of unsecured notes under its recently updated Global Medium-Term Note programme and the issuance of new ordinary shares on the London Stock Exchange. The Group manages debt and equity issuance with the overall aim of optimising its balance sheet and achieving the lowest possible overall cost of debt, while maintaining appropriate leverage ratios. Debt on older aircraft may be re-financed when there is an opportunity to reduce the Group’s overall cost of debt, and to release equity for investment in new aircraft. The Board applies prudent financial management principles to manage risk when acquiring aircraft by seeking to match lease and financing in both term and currency. Interest rate risk is managed using mostly fixed or hedged interest rate debt. Secured loans are amortised to conservative balloon payments over the terms of the underlying leases. FLEET OVERVIEW Aircraft Type 30 June 2025 30 June 2024 ATR 72-600 13 15 ATR 72-500 4 4 Airbus A220-300 5 5 Airbus A320-200 3 2 Airbus A321-200 6 6 Airbus A330-300 1 1 Boeing 777-300ER 1 1 Total 33 34 At 30 June 2025, Avation’s fleet comprised 33 aircraft, including three aircraft on finance lease. Avation serves 16 customers in 14 countries. The weighted average age of the fleet is 8.5 years (30 June 2024: 7.3 years) and the weighted average remaining lease term is 3.9 years (30 June 2024: 4.1 years). One Airbus A320-200 aircraft was acquired and two ATR 72-600 aircraft were sold during the period. Turboprop and narrowbody aircraft make up 83% of fleet assets as at 30 June 2025. Fleet assets have decreased 1.6% to US$819.8 million (30 June 2024: US$832.8 million) as a result of aircraft sales and depreciation. As at the date of this report, Avation’s fleet is fully utilised. Subsequent to the year-end a Boeing 777-300ER aircraft was sold. Avation has orders for ten new ATR 72-600 aircraft and purchase rights for a further 24 aircraft as at 30 June 2025. The order-book and purchase rights provide a pathway to future fleet growth. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 7 MARKET TRENDS AND FUTURE DEVELOPMENTS The long-term outlook for commercial aviation is one of sustained growth, which will necessitate a near- doubling of the global aircraft fleet over the next two decades. This robust demand, set against a backdrop of significant near-term supply constraints, creates a highly favourable environment for aircraft owners and lessors. Within this broad landscape, the turboprop segment fulfils a unique and indispensable role, underpinning regional connectivity and offering compelling economic and environmental advantages. Boeing and Airbus both predict a need for approximately 43,000 new aircraft over the next 20 years. This will cause the global in-service fleet to grow to roughly 50,000 by the mid-2040s. This demand is driven by two factors: fleet expansion to meet traffic growth and fleet replacement, with up to 50% of new deliveries replacing older, less fuel-efficient aircraft. Single-aisle jets will dominate future deliveries, accounting for over 70% of the total. The turboprop segment, while smaller, plays a vital role. Turboprops provide an essential lifeline to over a third of the world's airports and offer superior economic efficiency on short-haul routes, consuming up to 40% less fuel than comparable regional jets. Demand is robust, with Embraer projecting a need for 1,780 new turboprops through 2044. The commercial aircraft manufacturing sector is currently defined by a fundamental imbalance: overwhelming demand is being met with a constrained and struggling supply chain. This has resulted in systemic production shortfalls and an unprecedented order backlog, creating a condition of asset scarcity that profoundly benefits incumbent aircraft lessors. The inability of Original Equipment Manufacturers (OEMs) to meet their production targets is a defining feature of the current market. IATA data indicates that aircraft deliveries in 2024 were approximately AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 8 30% below their pre-pandemic peak levels and fell 30% short of initial industry predictions for the year. Looking ahead, IATA has already revised its 2025 delivery forecast downward from an initial 2,300 aircraft to a more cautious 1,800, with warnings of potential further cuts. These shortfalls are not attributable to a single cause but are the result of deep, systemic issues plaguing the global aerospace supply chain. The pandemic severely damaged the financial health and operational capacity of many lower-tier suppliers, leading to persistent shortages of raw materials, components, and skilled labour. These issues are expected to take several more years to fully resolve. These general weaknesses have been exacerbated by specific challenges at both Boeing and Airbus, further limiting their output. The combination of record order intake and low delivery rates has created a historic backlog of over 17,000 aircraft. This translates into multi-year waiting lists, with the backlog for the most popular models representing more than a decade of production at current rates. The production deficit has created a global "aircraft shortage," with airlines effectively short of 5,400 aircraft relative to their fleet plans. This scarcity constrains airline growth and forces them to turn to the leasing market to secure near-term capacity. The market for air travel continues to perform strongly in 2025 with IATA reporting 5.1% year-to-date growth in revenue passenger kilometres (RPKs) in its June air passenger market analysis report. Year- to-date RPK growth was 8.7% in the Asia-Pacific region, where the majority of Avation’s customer base is located. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 9 Over the long-term RPKs are projected to grow by 3.6% on a compounded annual basis, doubling global passenger numbers over the next 20 years. Around 34% of the current global commercial aircraft fleet are new generation more fuel-efficient types such as the Airbus A220 and A320/A321 neo types. Over the next 20-year period 95% of the global fleet to expected to transition to new generation aircraft types. The latest generation aircraft are delivering up to 25% better fuel efficiency and lower CO 2 emissions than previous generation aircraft. Avation expects that this trend will support the Company’s future strategy of gradually trading out of older aircraft types and focussing on aircraft types such as the Airbus NEO and A220 series in addition to ATR 72 aircraft with new generation PW127XT engines. PRINCIPAL RISKS AND UNCERTAINTIES The aircraft leasing sector is highly competitive and Avation is exposed to a number of market related, operational and financial risks. The Group is committed to mitigating business risk through the application of prudent risk management policies. The risks and uncertainties described below are those that the Group has identified as most significant to the business. Avation’s Board of Directors is responsible for managing risk and reviews risk management policies regularly. Market related risks: Exposure to the airline industry The Group’s customers are commercial airlines which are financially exposed to the demand for passenger air travel. The financial condition of commercial airlines may weaken due to several factors including but not limited to local and global economic conditions, increased competition between airlines, speculative ordering of new aircraft, war, terrorism, pandemics and natural disasters. If the financial condition of the Group’s airline customers weakens for any reason, the Group may be exposed to increased risks of lessee default and lower lease rates for its aircraft. Asset value risk Fluctuations in the supply and demand for aircraft and aircraft travel may impact values of and lease rates for the Group’s aircraft. Market forces and prevailing economic conditions may change over the economic lives of the Group’s aircraft and could have a positive or negative impact on aircraft valuations. Advances in aircraft technology may create obsolescence in the fleet before the end of aircrafts’ current estimated useful lives. The Group regularly obtains independent third-party valuations for its fleet and may dispose of aircraft in order to reduce its exposure to certain aircraft types. Avation has a policy of investing in popular aircraft types on the basis that asset values and lease rates will be supported by continuing high demand for these aircraft. Avation will consider acquiring additional twin-aisle aircraft, in addition to narrow-body jets and turboprops, as part of its strategy to build a diversified portfolio of aircraft. Twin-aisle aircraft have a risk profile which may be more exposed to technology change factors and the introduction of new more fuel-efficient models. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 10 Operational risks: Economic, legal and political risks Avation leases aircraft to lessees in many different jurisdictions. As such the Group is exposed to economic, legal and political risk in those jurisdictions. Avation’s aircraft are subject to operational risks specific to the aviation sector resulting from war, acts of terrorism or the threat of terrorism, and natural disasters. The Group mitigates these risks by requiring airline lessees to maintain adequate insurance over the aircraft. Regulatory risks Avation’s fleet operates in many jurisdictions and complies with tax and other regulatory requirements in those jurisdictions. There is a risk that changing tax and regulatory regimes may have an impact on the business and the Group’s financial results. Lessee risks Avation’s airline lessees are responsible for all maintenance and safety checks. The requirements for each airline lessee to service and maintain the aircraft are set out in the lease agreements. There is a risk that airlines may not properly maintain aircraft which may lead to an impairment of the aircraft’s value. In order to mitigate this risk, the Group closely monitors each airline’s usage of aircraft and their compliance with agreed maintenance schedules. Avation requires that some lessees make maintenance reserve payments to ensure that there is adequate funding at all times for proper maintenance of the aircraft. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 11 Financial risks: Avation’s financial risk management objectives and policies are set out in note 7 to the financial statements and are as follows:  Airline industry risks  Credit risk  Interest rate risk  Foreign currency risk  Liquidity risk  Capital risk FINANCIAL REVIEW US$ ‘000s Year ended 30 June, 2025 2024 Revenue 110,099 92,397 Other income 2,448 3,575 112,547 95,972 Operating profit 46,444 83,218 (Loss)/Profit before tax (9,722) 30,046 (Loss)/Profit after tax (7,716) 19,735 EPS (basic) (11.22c) 27.85c US$ ‘000s 30 June, 2025 2024 Fleet assets 2 819,807 832,818 Total assets 1,101,935 1,142,321 Total cash and bank balances 3 129,975 117,940 Cash and cash equivalents 48,102 23,561 Net asset value per share (US$) 4 US$3.66 US$3.62 Net asset value per share (GBP) 5 £2.67 £2.85 2 Fleet assets are defined as property, plant and equipment plus assets held for sale plus finance lease receivables. 3 Total cash and bank balances as at 30 June 2025 comprise cash and cash equivalents of US$48.1 million (30 June 2024: US$23.6 million), investment in fixed deposits of US$1.0 (2024: US$nil) and restricted cash balances of US$80.8 million (30 June 2024: US$94.4 million). 4 Net asset value per share is total equity divided by the total number of shares in issue, excluding treasury shares. 5 Based on GBP:USD exchange rate as at 30 June 2025 of 1.37 (30 June 2024:1.27). AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 12 Financial Analysis Revenue US$ ‘000s Year ended 30 June, 2025 2024 Lease rental revenue 89,935 87,749 Less: amortisation of lease incentive assets (3,141) (2,721) 86,794 85,028 Interest income from finance leases 1,219 2,018 Maintenance reserves income 22,086 5,351 110,099 92,397 Lease rental revenue increased by 2.5% to US$89.9 million in the year ended 30 June 2025 from US$87.7 million in the year ended 30 June 2024. The increase was principally due to increased utilisation of the fleet in the year ended 30 June 2025 and the addition of an Airbus A320-200 aircraft to the fleet in March 2025. Interest income from finance leases decreased by 39.6% from US$2.0 million in the year ended 30 June 2024 to US$1.2 million in the year ended 30 June 2025. The decrease was principally due to the sale of two ATR 72-600 aircraft pursuant to the exercise of purchase options during the year. Maintenance reserves income increased to US$22.1 million in the year ended 30 June 2025 compared to US$5.4 million in the year ended 30 June 2024. A review of forecasted maintenance events across the fleet resulted in adjustments to the expected timing of several major maintenance events to beyond the end date of the current leases. This is expected to result in lower maintenance reserve reimbursements during the current lease terms and is the major contributing factor to the increase in maintenance reserve income this year. Other income US$ ‘000s Year ended 30 June, 2025 2024 Foreign currency exchange gain - 807 Claim recovery 682 443 Fees for late payment 1,364 1,828 Deposit released - 350 Others 402 147 2,448 3,575 Fees for late payment reduced by 25.4% from US$1.8 million in the year ended 30 June 2024 to US$1.4 million in the year ended 30 June 2025 due to a corresponding reduction in customer arrears. Claim recoveries recognised in other income are the balance of distributions paid to creditors of Virgin Australia in excess of amounts allocated to trade receivables. Foreign currency exchange gains which were reported in the year ended 30 June 2024 did not reoccur as the weakening US dollar caused exchange losses reported in other expenses in the year ended 30 June 2025. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 13 Administrative expenses US$ ‘000s Year ended 30 June, 2025 2024 Staff costs 5,682 5,487 Other administrative expenses 3,444 3,305 9,126 8,792 Staff costs increased by 3.6% from US$5.5 million in the year ended 30 June 2024 to US$5.7 million in the year ended 30 June 2025 principally due to inflationary salary increments offset by lower charges for employee share warrants. Other administrative expenses increased by 4.2% from US$3.3 million in the year ended 30 June 2024 to US$3.4 million in the year ended 30 June 2025 principally due to inflationary increases to audit and accounting costs and general office overheads. Other operating income and expense items US$ ‘000s Year ended 30 June, 2025 2024 Depreciation (37,512) (37,251) Gain/(loss) on disposal of aircraft 3,455 (2,915) Unrealised (loss)/gain on aircraft purchase rights and pre-delivery aircraft deposits paid (21,643) 46,886 Unrealised loss on equity investment (1,630) (490) Reversal of/(impairment loss) on aircraft 4,831 (5,573) Aircraft transition expenses (244) (2,607) Reversal of expected credit losses 80 239 Legal and professional fees (1,978) (2,251) Other expenses (2,336) - Depreciation increased by 0.7% from US$37.3 million to US$37.5 million due to the addition of an Airbus A320-200 aircraft to the fleet in March 2025. Two new ATR 72-600 aircraft were sold on delivery to an airline customer in the year generating gains on disposal of US$3.5 million. Avation terminated a lease of an ATR 72-500 aircraft to an Indian airline in the year ended 30 June 2024. The aircraft was repossessed from the airline and subsequently sold, generating a loss on sale of US$2.9 million. The Company’s 24 aircraft purchase rights were revalued at 30 June 2025 using a Black-Scholes option pricing model. The principal factors leading to the recognition of an unrealised loss of US$21.6 million (2024: US$ 46.9 million gain) were a decrease in risk-free interest rates and a reduction in the time to expiry of the purchase rights. The Company recorded an unrealised loss of US$1.6 million on its holding of shares in Philippine Airlines, Inc. (2024: US$0.5 million). The Company received these shares as part of the settlement awarded to creditors in the bankruptcy restructuring of the airline in December 2021. Previously recognised impairment losses of US$4.8 million were reversed in the year ended 30 June 2025 due to firmer residual values used in the Company’s lease encumbered valuation model for aircraft. The market environment has been supportive for aircraft values recently due to strong demand for aircraft and constrained supply of new aircraft. Avation recognised US$5.6 million of impairment losses in the year ended 30 June 2024. Aircraft transition expenses of US$0.2 million (2024: US$2.6 million) represent repairs and maintenance expenditure on aircraft incurred during the transition of aircraft during the year. The Company expects transition expenses to remain low in future periods as all aircraft in the fleet are currently on lease. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 14 The net reversal of expected credit losses of US$0.1 million (2024: US$0.2 million) primarily results from reduced rent arrears. Current trade receivables (excluding allowances for credit losses) were US$6.3 million at 30 June 2025, reduced from US$8.2 million at 30 June 2024. Legal and professional fees reduced by 12.1% from US$2.3 million in the year ended 30 June 2024 to US$2.0 million in the year ended 30 June 2025 due to reduced transaction activity. Other expenses of US$2.3 million in the year ended 30 June 2025 represent foreign currency exchange losses on the group’s Euro denominated bank loans. Finance income US$ ‘000s Year ended 30 June, 2025 2024 Interest income 4,706 6,009 Finance income from discounting non-current deposits 629 652 Gain on repurchase of unsecured notes - 675 Gain on early full repayment of borrowings 960 2,507 6,295 9,843 Interest income decreased in the year ended 30 June 2025 principally due to lower available rates for cash deposits and lower interest income on amounts due under a customer payment plan agreement which was fully repaid by 30 June 2025. Avation generated a gain of US$0.7 million in the year ended 30 June 2024 on the repurchase of US$18.0 million of Avation Capital S.A. 8.25%/9.0% unsecured notes at a discount. Gains on early repayment of borrowings of US$1.0 million (2024: US$2.5 million) arose on termination of interest rate swaps when seven aircraft loans were refinanced. As at the date of this announcement the Company has six unencumbered aircraft. Finance expenses US$ ‘000s Year ended 30 June, 2025 2024 Interest expense on secured borrowings 17,033 20,047 Interest expense on unsecured notes 26,924 29,321 Amortisation of loan transaction costs 1,979 1,571 Amortisation of IFRS 9 gain on debt modification 13,885 10,709 Fair value loss on financial derivatives 1,188 405 Amortisation of interest expense on non-current borrowings 628 635 Loss on repurchase of unsecured notes 599 - Others 225 327 62,461 63,015 Interest expense on secured borrowings reduced by 15.0% to US$17.0 million in the year ended 30 June 2025 from US$20.0 million in the year ended 30 June 2024 as a result of net repayments of secured loans. Secured borrowings have been paid down by US$16.2 million from US$372.8 million at 30 June 2024 to US$356.6 million at 30 June 2025. Interest expense on unsecured notes reduced by 8.2% to US$26.9 million in the year ended 30 June 2025 from US$29.3 million in the year ended 30 June 2024 as a result of repurchases of unsecured notes. The Company repurchased US$21.6 million face value of Avation Capital S.A. 8.25%/9.0% unsecured notes during the year. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 15 Interest expense on unsecured notes in the year ended 30 June 2024 also includes US$4.3 million of non-cash interest paid in kind by increasing the face value of Avation Capital S.A. 8.25%/9.0% unsecured notes. Amortisation of IFRS 9 gain on debt modification of US$13.9 million (2024: US$ 10.7 million) represents the non-cash accretion in the book value of Avation Capital S.A. 8.25%/9.0% unsecured notes resulting from the accounting treatment of the extension and changes to the terms of the notes agreed with noteholders in March 2021. The extension was accounted for as a substantial modification of a debt instrument in accordance with IFRS 9. The face value of Avation Capital S.A. 8.25%/9.0% unsecured notes outstanding as of 30 June 2025 is US$310.0 million (30 June 2024: US$331.6 million). DEBT SUMMARY US$ ‘000s 30 June, 2025 2024 Current loans and borrowings 70,084 49,668 Non-current loans and borrowings 582,253 625,426 Total loans and borrowings 652,337 675,094 Cash and cash equivalents 48,102 23,561 Net indebtedness 6 604,235 651,533 Net debt to total assets 7 54.8% 57.0% Weighted average cost of secured debt 8 5.2% 4.8% Weighted average cost of total debt 9 6.6% 6.4% During the period net indebtedness was reduced by 7.3% to US$604.2 million (30 June 2024: US$651.5 million). Seven aircraft were re-financed with long-term floating rate debt in the year. The weighted average cost of total debt has increased to 6.6% as at 30 June 2025 (30 June 2024: 6.4%) due to repayments of lower cost secured loans in the period and refinancing aircraft with higher cost floating rate loans, offset by repayments of unsecured notes. The weighted average cost of secured debt increased to 5.2% at 30 June 2025 (30 June 2024: 4.8%). At the end of the financial period, Avation’s net debt to total assets ratio improved to 54.8% (30 June 2024: 57.0%). As at 30 June 2025, 84.2% of total debt was at fixed or hedged interest rates (30 June 2024: 96.4%). The ratio of unsecured debt to total debt was 45.3% (30 June 2024: 44.8%). The Company’s current credit ratings are as follows: Rating Agency Corporate Credit Rating Unsecured Notes Rating Moody’s B1 B2 Fitch B - Standard & Poor’s B- (Stable outlook) CCC+ 6 Net indebtedness is defined as loans and borrowings less unrestricted cash and bank balances. 7 Net debt to assets is defined as net indebtedness divided by total assets. 8 Weighted average cost of secured debt is the weighted average interest rate for secured loans and borrowings at period end. 9 Weighted average cost of total debt is the weighted average interest rate for total loans and borrowings at period end. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 16 Aircraft leasing is a capital-intensive industry. Avation manages interest rate risk as outlined in the risk management section of the note 7 in the notes to the financial statements. Any potential future increases in interest rates could impact the level of profitability of any new business the group undertakes although this could be mitigated by higher lease rates reflecting the current interest rate environment. CORPORATE SOCIAL RESPONSIBILITY Avation is committed to the principles of being a good corporate citizen. For the 2025 financial year the group did not have any material matters to report on social, community and human rights issues. Avation operates the following policies governing corporate ethics and behaviour:  Anti-bribery policy  Gifts and entertaining policy  Modern slavery policy  Whistleblowing policy  Policy for dealing with Company securities Environmental, social and governance Avation is committed to environmental responsibility as part of its business strategy. This is achieved by investing in technologically advanced designs of commercial aircraft that offer improved fuel efficiency and lower emissions. A substantial percentage of our fleet are modern regional turboprop aircraft which provide significant environmental benefits over comparable jet aircraft due to their more economical use of fuel and consequently lower carbon dioxide emissions. The newest aircraft in our fleet include 5 new technology A220-300 aircraft, which provide significantly reduced fuel consumption and emissions in comparison to older aircraft. As of 30 June 2025, 70% of our overall fleet by number are newer technology or lower carbon emission ATR and Airbus A220 aircraft. Avation is a member of the Aviation Working Group (AWG) which has developed the aviation industry Aircraft Carbon Calculator, aimed at monitoring the carbon emissions of aircraft fleets. The AWG Aircraft Carbon Calculator provides an industry standard methodology for calculating and comparing aircraft carbon dioxide emissions. Use of the Aircraft Carbon Calculator will provide meaningful information and assist in monitoring and reporting of aircraft emissions. Climate-related financial disclosures The Risk Committee makes recommendations to the Board on the principal risks of relevance to the business. Climate-related risks are considered in terms of potential for contribution to these principal risks. The issues considered include both the risk of physical disruption to the business from climate change, and the risks and opportunities as the global economy transitions to significantly lower carbon emissions. In the current period, the Risk Committee concluded that climate related risks did not give rise to the level of a principal risk, except as part of Legal and Regulatory compliance. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 17 The following table presents the Task Force on Climate-Related Financial Disclosures (“TCFD”) recommended disclosures on climate-change risks: TCFD Recommendation Compliance Status Governance Describe the Board’s oversight of climate-related risks and opportunities. The Board of Directors have accountability for the management of climate related risks and opportunities. The Executive Directors are responsible for the day-to- day implementation, monitoring and management of our climate policies. The Group’s Risk Committee supports the Directors in ensuring material climate- related narratives are identified and integrated into the Group’s risk management processes, in addition to reviewing and recommending policy proposals to the Board. At present the Risk Committee does not assess climate-change risk to be a principal risk to the group, except as part of Legal and Regulatory Compliance. Describe management’s role in assessing and managing climate-related risks and opportunities. Identified climate-related risks and opportunities are communicated to the Group’s management team in bi- weekly meetings attended by the Group’s executive Directors and senior members of the management team. Individuals tasked with particular climate- related tasks to carry out or reports to prepare provide regular updates on performance at these meetings. Strategy Describe the climate-related risks and opportunities the organisation has identified over the short, medium, and long term. Physical risks Avation’s fleet may be exposed to the risk of physical damage or loss caused by climate-change related extreme weather events such as severe storms, flooding or fire. Demand for and patterns of air travel may be negatively impacted by long-term impacts of climate change such as rising sea levels, should these occur. Transition risks Regulatory actions to impose controls on greenhouse gas emissions are likely to result in additional legal and compliance costs for aviation business models, including aircraft lessors. The gradual transition of airline fleets away from older more-polluting aircraft types to latest- technology more fuel-efficient types is likely to have a negative impact on the secondary market and residual values for older aircraft. This risk is likely to increase further as new aircraft types featuring low carbon emissions propulsion systems such as SAF, hydrogen or electric power are introduced. Regulatory actions, consumer and market sentiment changes such as an increasing preference for lower emissions aircraft are likely to make it more difficult for businesses who continue to own or operate older aircraft types to raise capital or finance aircraft at competitive prices, or at all. Owners and/or operators of older aircraft types may also face reputational risk if not deemed to be transitioning to a low carbon emissions business model quickly enough. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 18 TCFD Recommendation Compliance Status Short, medium and long-term risks and opportunities Commercial aircraft are long-lived assets with estimated useful lives of up to 25 years. In assessing risks and opportunities arising from climate change, Avation is therefore principally concerned with exposure to long- term risks and attaches less importance to short and medium-term timeframes when assessing climate change risks. Describe the impact of climate-related risks and opportunities on the organisation’s businesses, strategy and financial planning. The Risk Committee makes recommendations to the Directors on the principal risks of relevance to the business. Climate-related risks are considered in terms of potential for contribution to these principal risks. The issues considered include both the risk of physical disruption to the business from climate change, and the risks and opportunities as the global economy transitions to significantly lower carbon emissions. In the current period, the Risk Committee concluded that climate related risks did not give rise to the level of a principal risk, except as part of Legal and Regulatory Compliance. The majority of the group’s assets are commercial aircraft. The useful lives and residual values of commercial aircraft may be affected should any of the phys ical or transition risks of climate change occur. Avation has not seen any impacts on useful lives or residual values resulting from climate change to date but will continue to monitor and consider the impact of climate-change risks on useful lives and residual values in future. Describe the resilience of the organisation’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario. Worst Case scenario (>3ºC) Our Worst-Case Scenario is a theoretical construct and narrative describing a world where climate action is delayed by world governments failing to act on climate change. Such delay may result in a world where physical climate change risks are the greatest across our three scenarios. Under the Worst-Case scenario the Group may face greater physical risks from climate-change related weather events and greater transitional risks from accelerated changing demand patterns. Paris Alignment Scenario (2-3ºC) This scenario involves a market-led transition to a lower carbon future through global government commitments to the Paris Agreement. This would result in increased regulation of climate action and a reduction of the physical impacts of climate change compared with our Worst-Case scenario, where governments fail to legislate in accordance with the Paris Agreement. Under the Paris Alignment scenario the Group expects that its strategy will mitigate the material impacts of climate risk. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 19 TCFD Recommendation Compliance Status Transformation Scenario (<2ºC) This scenario sees a rapid decarbonisation pathway, where global emissions are close to zero in 2040, driven by society. The speed of change required to limit global warming to 1.5 degrees is likely to create instability in our supply chain as suppliers try to keep pace with decarbonisation demands and shifting preferences towards localisation. Under the Transformation Scenario the Group may face reduced physical risks but additional financial and transitional risks and additional opportunities from a more rapid switch to lower carbon emission propulsion systems for aircraft. Under this scenario there is a risk that ordinary aircraft passengers may be priced out of the air travel market. Hence, passenger numbers could fall. Risk Management Describe the organisation’s processes for identifying and assessing climate-related risks. Avation’s Risk Committee is responsible for identifying and assessing climate change related risks and for notifying the Board of any identified principal risks which are deemed to be material to the Company. Please refer to “Principal Risks and Uncertainties” within the Strategic Report for further information on Avation’s risk management policies. Describe the organisation’s processes for managing climate-related risks. The Directors are directly able to determine which risks and opportunities could have a material impact on the Group, as well as how to prioritise them. With a flat management structure and by taking a hands-on approach, the risks are actively managed within all aspects of the business. Describe how processes for identifying, assessing, and managing climate-related risks are integrated into the organisation’s overall risk management. Climate change related matters are monitored by the Directors and Risk Committee to ensure that they are embedded in our risk management and planning process, in addition to our long-term strategic decision- making. Metrics and targets Disclose the metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process. Please refer to the table below. Disclose Scope 1, Scope 2, and, if appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks. Please refer to the table below. As the majority of the Company’s GHG emissions are derived from our customers’ use of our fleet of aircraft, total emissions may increase due to factors outside our control. Describe the targets used by the organisation to manage climate-related risks and opportunities and performance against targets. The Board of Directors has not set particular goals and targets related to climate- change risks or opportunities. The Company is making available to the market up to 34 low carbon emissions ATR72 aircraft by way of its purchase rights and order book. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 20 Greenhouse Gas Emissions Direct emissions Direct emissions are produced by sources which are owned or controlled by the reporting organisation and include electricity use, burning oil or gas for heating, and fuel consumption because of business travel or distribution. The Company does not directly generate greenhouse gas emissions from its business activities as it does not control airlines’ usage of leased aircraft and Scope 1 CO2 emissions are immaterial. Emissions from leased aircraft are disclosed as Scope 3 emissions. Indirect emissions Indirect emissions result from a company’s upstream and downstream activities. These are typically from outsourced activities, and products and the services offered by the organisation. Scope Activity TCO2e 2025 TCO2e 2024 Scope 1 - - - Scope 2 Consumption of purchased electricity 15 16 Scope 3 Customers’ use of our aircraft 527,500 527,400 Employee business travel 309 280 Total 527,824 527,696 Usage of the Company’s aircraft is under the control of lessees who are not required to provide emissions data to the Company. The Company estimates carbon emissions from lessees’ usage of our aircraft using the “AWG Carbon Calculator” tool provided by the Aircraft Working Group. The AWG Carbon Calculator uses OEM source data to provide consistent and reliable estimates of aircraft carbon emissions. Carbon emissions from consumption of purchased electricity are estimated by converting the Company's energy usage of 35,786 kilowatt hours (KWh) (2024: 38,734 KWh) into kilograms (Kg) of carbon dioxide emitted using Singapore's Grid Emission Factor (GEF), a measure of the amount of carbon dioxide emitted per kilowatt hour of electrical energy generated in Singapore. Singapore’s GEF at 30 June 2025 was 0.412 (2024: 0.417). Energy usage is based on electricity consumption at the Company's sole office in Singapore. Carbon emissions from employee business travel are estimated using UK Government Conversion Factors for greenhouse gas reporting. Scope 3 Emissions from Customers’ Use of Our Aircraft 2025 2024 Total emissions (TCO2e) 527,500 527,400 Aircraft flight hours 70,739 76,205 Seats 173 162 Average CO2 emissions per flight hour 7.5 6.9 Average CO2 emissions per seat per flight hour 43.6 42.8 Employees It is the Group's policy to employ individuals with the necessary qualifications without regard to sex, marital status, race, creed, colour, nationality or religion. Full and fair consideration is given to applications for employment made by disabled persons having regard to their particular aptitudes and abilities. The Group recognises the great importance of the contribution made by all employees and aims to keep them informed of matters affecting them as employees and developments within the Group. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 21 Communication and consultation is achieved by a variety of means both within individual companies or branches and on a group-wide basis. A breakdown by gender of the number of persons who were Directors of the Company, senior managers and other employees as of 30 June 2025 is set out below: Male Female Directors of the Company 5 - Senior managers 4 2 Other employees 7 5 A breakdown by gender of the number of persons who were Directors of the Company or senior managers as of 30 June 2025 is set out below: Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management Men 5 100% 2 4 67% Women - - - 2 33% A breakdown by ethnic identity of the number of persons who were Directors of the Company or senior managers as of 30 June 2025 is set out below: Number of board members Percentage of the board Number of senior positions on the board (CEO, CFO, SID and Chair) Number in executive management Percentage of executive management White British or other white (including minority- white groups) 5 100% 2 3 50% Asian/Asian British - - - 3 50% The Company collects data on gender and ethnic identity from employees and directors by means of self-identification. As at 30 June 2025 the Company does not meet targets for:  at least 40% of the individuals on its board of directors to be women;  at least one of the positions of the chair, the chief executive, the senior independent director or the chief financial officer on its board of directors to be held by a woman; and  at least one individual on its board of directors to be from a minority ethnic background. The Company engages directors on the basis of ability without discrimination and has no internal targets for representation on the board on the basis of gender or ethnic identity. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 22 Section 172(1) statement On the following pages we have set out how the Board has acted in a way that promotes the success of the Company for the benefit of its members as a whole, in accordance with the requirements of the Companies (Miscellaneous Reporting) Regulations 2018, whilst having regard to the following matters set out in s.172(1) of the Act. The likely consequences of any decision in the long term The board is mindful that it should make decisions which are the best for the Company in the long term. The nature of the business of aircraft leasing is long-term, with typical aircraft leases being for ten or twelve years duration for new aircraft. The Company does undertake the trading of aircraft where they have reached a certain age and when market conditions are favourable. However, the transfer of an aircraft with a lease attached to it is transaction which would typically take three to five months to complete and therefore such transactions are undertaken on strategic timeframes. Equity released from the sale of aircraft is typically re-invested in financing or re-financing the purchase of aircraft. The interests of the Group’s employees The board actively engages with employees to ensure that staff are kept up to date and informed. The Company has regular management meetings at which typically two of the Company’s directors are present and which are attended by the majority of the Company’s employees. Staff have received regular communications and updates from the Board to ensure that they are kept up to date and informed in respect of business performance, with management meetings being held on a bi-weekly basis. The need to foster the Group’s business relationships with suppliers, customers and others Suppliers The Company has long-term relationships with its suppliers which are primarily comprised of commercial lending organisations such banks and other financial institutions, as well as the manufacturers of aircraft and aircraft engines. Customers The Company has sixteen airline customers and maintains close relationships with them, indeed this is inherent in the nature of aircraft leasing. In particular, the Company needs to ensure that its customers are looking after and maintaining the aircraft and are otherwise complying with the terms of the respective aircraft leases. The impact of the Group’s operations on the community and the environment The board recognises the importance of managing the community impact of the business and minimising any adverse impact of our operations on the environment. The Company is committed to investing in the latest aircraft with the lowest environmental emissions in each aircraft model category. The desirability of the Group maintaining a reputation for high standards of business conduct The board expects the highest standards of conduct throughout the business, both in respect of employees and in respect of its suppliers, advisers and agents. The board receives regular updates in respect of matters of regulatory compliance, and the business has policies, procedures and processes in place in respect of modern slavery, bribery and corruption. AVATION PLC STRATEGIC REPORT FOR THE YEAR ENDED 30 JUNE 2025 23 The need to act fairly as between members of the Company The Company has a single class of ordinary shares, so all shareholders are treated equally. Details of how we engage with shareholders can be found in our corporate governance statement in the Directors’ Report. On behalf of the board ............................... Robert Jeffries Chatfield Executive Chairman 1 October 2025 AVATION PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2025 24 The Directors present their report and financial statements for the year ended 30 June 2025. Principal activities and business review Avation PLC is a public limited company incorporated in England and Wales under the Companies Act 2006 (Registration Number 05872328). The principal activity of the Group is aircraft leasing. Details of activities carried out by subsidiary companies are set out in Note 23 to these financial statements. The principal risks and uncertainties affecting the Group’s turnover are described in the Strategic Report. The full business review including KPI’s can be found in the Strategic Report and in Note 7 to these financial statements. The Group has reviewed environmental matters in the Strategic Report. Results and dividends The consolidated statement of profit or loss and the consolidated statement of other comprehensive income for the year are set out on in these financial statements. The Company paid a dividend of 0.5 pence per share on 23 December 2024. Avation’s dividend policy is, subject to having the reserves to do so and within any restrictions imposed by debt covenants, to declare a dividend if the Board considers that it is in the best long-term interests of the Company and its shareholders. The dividend policy is progressive, in that if reserves are available the dividend shall increase. Directors and their interests The Directors who served the Company during the year together with their interests and deemed interests in the shares of the Company at the beginning and end of the year, were as follows: Direct interest Deemed interest 30 June 2025 1 July 2024 30 June 2025 1 July 2024 Ordinary shares of £0.01 each: Robert Jeffries Chatfield 1 1 12,380,999 12,230,000 Roderick Douglas Mahoney 730,000 730,000 - - Stephen John Fisher 25,115 25,000 - - Derek Sharples 50,000 50,000 - - Mark Stephen Shelton 24,840 23,500 - - AVATION PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2025 25 Significant shareholdings Significant shareholdings as of 30 June 2025 were as follows: Ordinary shares Percentage Ordinary shares of £0.01 each: Luna Nominees Limited 12,380,999 18.6% Pershing Nominees Limited 9,400,664 14.1% Vidacos Nominees Limited 9,320,906 14.0% HSBC Global Custody Nominee (UK) Limited 5,013,635 7.1% HSBC Global Custody Nominee (UK) Limited 3,000,000 4.5% James Capel (Nominees) Limited 2,983,303 4.5% Interactive Brokers LLC 2,615,280 3.9% Interactive Investor Services Nominees Limited 1,655,269 2.5% Future Developments In accordance with s414C(11) of the Companies Act 2006, the Directors have chosen to include information about future developments in the Chairman’s Statement and Strategic Report. Financial Instruments See Note 7 to these financial statements. AVATION PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2025 26 Going Concern The Directors’ assessment of the Group’s ability to continue as a going concern is detailed in Note 3(d) to the financial statements. The Note in its entirety is deemed to be incorporated into and form part of the Directors’ Report. Greenhouse Gas Emissions Statement Usage of the Company’s aircraft is under the control of lessees who are not required to provide emissions data to the Company. The Company estimates carbon emissions from lessees’ usage of our aircraft using the “AWG Carbon Calculator” tool provided by the Aircraft Working Group. The AWG Carbon Calculator uses OEM sources data to provide consistent and reliable estimates of aircraft carbon emissions. Carbon emissions from consumption of purchased electricity are estimated by converting the Company's energy usage in kilowatt hours (KWh) into kilograms (Kg) of carbon dioxide emitted using Singapore's Grid Emission Factor (GEF), a measure of the amount of carbon dioxide emitted per kilowatt hour of electrical energy generated in Singapore. Energy usage is based on electricity consumption at the Company's sole office in Singapore. Carbon emissions from employee business travel are estimated using UK Government Conversions Factors for greenhouse gas reporting. Greenhouse gas emissions are disclosed in the Strategic Report. Capital Structure Details of the Company’s issued share capital, together with details of the movements therein during the financial year are shown in Note 32. The Company has one class of ordinary shares which carry no right to fixed income. Each share carries the right to one vote at general meetings of the Company. There are no specific restrictions on the size of a holding nor on the transfer of shares, which are both governed by the general provisions of the Articles of Association and prevailing legislation. The Directors are not aware of any agreements between holders of the Company’s shares that may result in restrictions on the transfers of securities or on voting rights. Details of employees share option schemes are set out in Note 39. No person has any special rights of control over the Company’s share capital and all issued shares are fully paid. With regards to the appointment and replacement of Directors, the Company is governed by its Articles of Association, the Companies Act and related legislation. The Articles themselves may be amended by special resolution of the shareholders. AVATION PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2025 27 Corporate Governance Statement The Board is accountable to the shareholders for the good corporate governance of the Group. The principles of corporate governance and a code of best practice are set out in the UK Corporate Governance Code issued in July 2018. Under the Financial Conduct Authority’s UK Listing Rules applicable to companies included in the London Stock Exchange’s Equity Share (Transition) segment, the Company is not required to comply with the Code in full. The Board has adopted policies that it considers to be appropriate for the Company’s size and nature. The Board acts as the administrative, management and supervisory body overseeing the operation of the Group. The Board consist of two Executive Directors (Robert Jeffries Chatfield and Mark Stephen Shelton) and three Non-Executive Directors (Roderick Douglas Mahoney, Stephen John Fisher (independent) and Derek Sharples (independent)). The Board meets at least six times a year; matters for discussion at formal meetings are clearly laid down and decisions recorded. The Board is responsible for overall corporate strategy; the reviewing and approval of acquisition and divestment opportunities; the approval of significant capital expenditures; the review of budgets; trading performance; and all significant financial and operational issues. Information on how the Directors have had regard to the need to foster the Company’s business relationships with suppliers, customers and other, and the effect of that regard, including on the principal decisions taken by the Company during the financial year, is included in the Section 172(1) Statement included in the Strategic Report. The Company operates the following committees whose members are detailed below:  Audit Committee - Stephen John Fisher, Derek Sharples, Iain Cawte (non-Board member) and Mark Stephen Shelton; and  Risk Committee – Derek Sharples, Stephen John Fisher, Iain Cawte (non-Board member) and Duncan Scott (non-Board member); and  Remuneration Committee - Robert Jeffries Chatfield, Roderick Douglas Mahoney, Stephen John Fisher and Derek Sharples The Board is responsible for identifying and evaluating the major business risks faced by the Company and for determining and monitoring the appropriate course of action to manage these risks. The key risks the Company faces are described in the risk assessment section of this annual report and accounts. The Board conducts a review of the effectiveness of the Company’s systems of internal control and risk management on an annual basis. Following this review, it has concluded that the Company’s financial, operational and compliance controls, and risk management procedures are appropriate and suitable to enable the Board to safeguard shareholders’ investments and the Company’s assets. The process and systems of internal control are designed to manage, rather than eliminate, the risk of failure to achieve the Company’s objectives, and can therefore only provide reasonable and not absolute assurance against material misstatement or loss. Avation is an equal opportunities employer and its policy and statistics on employee gender and race are included in the Strategic Report. AVATION PLC DIRECTORS’ REPORT FOR THE YEAR ENDED 30 JUNE 2025 28 Statement as to disclosure of information to auditors  So far as the Directors are aware, there is no relevant audit information of which the Company's auditors are unaware, and  They have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the Company's auditors are aware of that information. Auditor Ernst & Young have indicated their willingness to continue in office and in accordance with s489 of the Companies Act 2006. A resolution proposing that they be reappointed as auditors of the Company will be put to the Annual General Meeting. Purchase of own shares During the year ended 30 June 2025, the Company bought 8,361,500 (2024 : 65,000) treasury shares at market price ranging from 138 pence to 150 pence (2024 : 110 pence to 119 pence) per share. By a resolution passed at the Annual General Meeting held on 19 December 2024, the Company’s Directors are authorised to buy back shares not exceeding 25 per cent of the total number of shares in issue on that date. Share buy backs may be at market prices but not under £0.75 and not exceeding a price equal to the higher of (i) 105% of the average of the middle market quotations for the share price for the five business days preceding the buy-back date and (ii) the higher of the price for the last independent share trade and the amount stipulated pursuant to Article 5(6) of the Market Abuse Regulation (EU) No. 596/2014 (as in force in the United Kingdom pursuant to the European Union (Withdrawal) Act 2018), and in any case, not exceeding £2.00 per share, excluding brokerage, commissions and other related expenses. Subsequent events See Note 45 to these financial statements. On behalf of the board ............................... Robert Jeffries Chatfield Executive Chairman AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 29 Introduction This report has been prepared in accordance with Schedule 8 of the Large and Medium Companies and Groups (Accounts and Reports) Regulations 2008 as amended in August 2013. As required a resolution to approve the Directors’ remuneration will be proposed at the forthcoming Annual General Meeting of the Company at which the financial statements will be approved. The vote will have advisory status, will be in respect of the remuneration policy and overall remuneration packages and will not be specific to the individual levels of remuneration. The information in the Directors’ Remuneration Report is not audited, unless specifically stated that the section is subject to audit. Statement by the Chair of the Remuneration Committee The Company’s remuneration policy remains substantially unchanged for the year ended 30 June 2025. Key aspects of the policy are to attract and retain executives; be consistent with best practices and to ensure alignment between performance and compensation. Remuneration (audited) The components of remuneration are:  basic salary and benefits determined by the Remuneration Committee which are included in employment agreements and reviewed annually;  bonuses based upon performance of the Company and the individual concerned; and  share warrants. Component Purpose Operation & framework used to assess performance Salary and benefits To provide the core reward for the role at a sufficient level to recruit and retain individuals of the necessary competence to execute the Company’s business strategy. Operation : Salaries are typically set after considering salary levels in companies of a similar size and complexity, the responsibilities of each individual role, progression within the role, individual performance and an individual’s experience. Our overall policy, having had due regard to the factors noted, is normally to target salaries at the market median level. Salaries may be adjusted in line with the market and adjustments out of line with the market may be awarded in certain circumstances such as where there is a change in responsibility, progression in the role, experience or a significant increase in the scale of the role and/or size, value and/or complexity of the Group. Salary levels for current incumbents are set out elsewhere in this report. Framework used to assess performance: The remuneration committee considers individual salaries at the appropriate committee meeting each year after having due regard to the factors noted in operating the salary policy. No recovery provisions apply to salary. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 30 Bonuses To incentivise and recognise execution of the business strategy on a semi-annual basis. Operation : Bonuses are paid in cash twice yearly to employees and executive Directors based on a target percentage of the employee’s basic salary. All bonus payments are at the discretion of the Committee, as shown following this table. Bonuses are awarded pro-rata to the achievement of up to five individual goals established for each employee. Individual goals are established in alignment with the development of the Company. Framework used to assess performance: The remuneration committee will assess company and individual performance compared to prior year and expectations for the current year. Individual performance will also be assessed against individual goals established for each executive. Metrics considered in awarding bonuses include share price appreciation; increase in the Company’s earnings per share; growth in asset value and profits; and dividend growth. The Company awards bonuses pro-rata to the achievement of up to five individual goals. Share Warrants To incentivise and recognise execution of the business strategy over the long-term. Operation : Each year share warrants and/or performance shares awards may be granted subject to the achievement of individual goals and in order that long-term incentives are aligned with shareholder returns. Awards normally vest over a three-year period. Framework used to assess performance: Same as for bonus. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 31 Individual Director’s remuneration was as follows: Salaries and fees Bonuses Taxable Benefits Share warrants Total 2025 Total 2024 US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Executive Director: Robert Jeffries Chatfield 754 - 50 215 1,019 1,048 Mark Stephen Shelton 226 38 54 16 334 224 Non-Executive Directors: Roderick Douglas Mahoney 63 - - 17 80 150 Stephen John Fisher 55 - - - 55 51 Derek Sharples 55 - - - 55 51 1,153 38 104 248 1,543 1,524 Fixed Variable Total 2025 Fixed Variable Total 2024 US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Executive Director: Robert Jeffries Chatfield 804 215 1,019 765 283 1,048 Mark Stephen Shelton 318 16 334 214 10 224 Non-Executive Directors: Roderick Douglas Mahoney 55 25 80 51 99 150 Stephen John Fisher 55 - 55 51 - 51 Derek Sharples 55 - 55 51 - 51 1,287 256 1,543 1,132 392 1,524 Taxable benefits mainly relate to housing expenses, medical expenses and private car expenses. The information in this part of the Directors’ Remuneration Report is subject to audit. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 32 Service contracts The employment contracts of the Executive Directors with the Company are terminable by either party with the notice in writing to the other detailed in the table below. The Directors’ service contracts are as follows: Date of contract Unexpired term Notice period Compensation payable on early termination Robert Jeffries Chatfield 29 April 2013 Indefinite 4 months - Roderick Douglas Mahoney 21 February 2022 Indefinite 2 months - Stephen John Fisher 29 April 2014 Indefinite 1 month - Derek Sharples 15 November 2016 Indefinite 1 month - Mark Stephen Shelton 7 June 2024 Indefinite 1 month - Share warrants (audited) The Group has an ownership-based compensation scheme for employees of the Group. Warrants are granted to employees of the Group to promote:  Improvement in the Company’s earnings per share;  Reliable and high-quality financial reporting;  Growth in asset value and profits; and  Growth in dividends. Each share warrant converts into one ordinary share of Avation PLC on exercise. No amounts are paid or are payable by the recipient on receipt of the warrant. Warrant exercise prices are determined by reference to the share price at the grant date. The warrants carry neither rights to dividends nor voting rights. There are no performance conditions that need to be met before warrants can be exercised. Warrants granted have a 3-year vesting schedule with details as follows: Vesting period Proportion of total share options that are exercisable Before year 1 0 per cent On year 1 and before year 2 Up to 33 per cent of the grant On year 2 and before year 3 Up to 33 per cent of the grant or up to 66 per cent of the grant if warrants were not exercised after the first vesting year On year 3 to 2 months after year 3 Balance or 100 per cent of the grant if warrants were not exercised after the first and second vesting years AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 33 The following share warrants issued to Directors were outstanding at the year-end: Director Date granted Warrant price Balance at beginning of year Granted during the year Exercised during the year Expired during the year Balance at end of year Robert Jeffries Chatfield * 23 Dec 2020# 130.0p 1,200,000 - (1,200,000) - - Robert Jeffries Chatfield * 29 Sept 2022 102.0p 1,000,000 - (100,999) - 899,001 Robert Jeffries Chatfield * 2 Mar 2023 126.0p 230,000 - - - 230,000 Robert Jeffries Chatfield * 1 Nov 2023 125.5p 300,000 - - - 300,000 Robert Jeffries Chatfield * 13 Mar 2024 118.0p 495,000 - - - 495,000 Robert Jeffries Chatfield * 3 Apr 2025 132.0p - 300,000 300,000 Roderick Douglas Mahoney 23 Dec 2020# 130.0p 750,000 - (750,000) - - Roderick Douglas Mahoney 29 Sept 2022 102.0p 275,000 - - - 275,000 Roderick Douglas Mahoney 2 Mar 2023 126.0p 25,000 - - - 25,000 Mark Stephen Shelton 29 Sept 2022 102.0p 50,000 - - - 50,000 Mark Stephen Shelton 2 Mar 2023 126.0p 18,000 - - - 18,000 Mark Stephen Shelton** 1 Nov 2023 125.5p 25,000 - - 25,000 Mark Stephen Shelton** 13 Mar 2024 118.0p 25,000 - - 25,000 Mark Stephen Shelton** 3 Apr 2025 132.0p - 60,000 60,000 * Robert Jeffries Chatfield was granted the share warrants and assigned these to Epsom Assets Limited. ** Mark Shephen Shelton was granted the share warrants and assigned these to PPT Consulting Pte. Ltd. # The expiry date for the warrants granted on 23 December 2020 was extended to one month after the Company exited a restricted period related to a material refinancing transaction under consideration at the original expiry date. The aggregate amount of gains made by directors on the exercise of share warrants during the year was GBP0.4 million (2024: Nil). The closing market price of the shares subject to warrants at the year-end was 155.5 pence. The highest and lowest closing market prices during the year were 178.0 pence and 124.0 pence. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 34 Company’s performance The graph below shows the total shareholder return on a holding of shares in the Company as against the average total shareholder return of the companies comprising the FTSE100 index. The FTSE 100 Index was selected because in the opinion of the Board it is the most appropriate for the Company for the purposes of a benchmark. Remuneration of Executive Chairman 2025 2024 2023 2022 2021 Executive Chairman single figure remuneration (US$’000) 1,019 1,048 1,151 1,224 1,394 Annual bonus pay-out (as % of maximum) - - - - - The table above shows the prescribed remuneration data for the Director, Robert Jeffries Chatfield, Executive Chairman undertaking the role of Group Chief Executive Officer during each of the last five financial years. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 35 Percentage change in remuneration of Chief Executive Officer and annual percentage change in remuneration for directors and employees The table below sets out the percentage change in the remuneration of the Executive Chairman who is undertaking the role of Group Chief Executive Officer and directors compared to that of all employees of the Group. Change in remuneration from 2024 to 2025 Base salary and fees Bonus Taxable benefits Warrants expense Executive Chairman: Robert Jeffries Chatfield 6% 0% -2% -24% Executive Director: Mark Stephen Shelton 37% 0% 10% 66% Non-executive Director: Douglas Roderick Mahoney -24% 0% 0% -75% Non-executive Director: Stephen John Fisher 8% 0% 0% 0% Non-executive Director: Derek Sharples 8% 0% 0% 0% All employees 12% -3% 4% -44% Change in remuneration from 2023 to 2024 Base salary and fees Bonus Taxable benefits Warrants expense Executive Chairman: Robert Jeffries Chatfield 3% 0% -29% -26% Executive Director: Mark Stephen Shelton 185% 0% 0% 12% Non-executive Director: Douglas Roderick Mahoney -70% 0% 0% -60% Non-executive Director: Stephen John Fisher 7% 0% 0% 0% Non-executive Director: Derek Sharples 7% 0% 0% 0% All employees -2% 1,006% 38% -36% AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 36 Change in remuneration from 2022 to 2023 Base salary and fees Bonus Taxable benefits Warrants expense Executive Chairman: Robert Jeffries Chatfield -2% 0% 4% -13% Executive Director: Mark Stephen Shelton NA NA NA NA Non-executive Director: Douglas Roderick Mahoney -30% -100% 0% -37% Non-executive Director: Stephen John Fisher 6% 0% 0% 0% Non-executive Director: Derek Sharples 6% 0% 0% 0% All employees -3% -96% 4% -20% Change in remuneration from 2021 to 2022 Base salary and fees Bonus Taxable benefits Warrants expense Executive Chairman: Robert Jeffries Chatfield -1% 0% -18% -25% Executive Director: Douglas Roderick Mahoney -15% 105% 0% -22% Non-executive Director: Stephen John Fisher 0% 0% 0% 0% Non-executive Director: Derek Sharples 0% 0% 0% 0% All employees 2% 254% -18% -17% Change in remuneration from 2020 to 2021 Base salary and fees Bonus Taxable benefits Warrants expense Executive Chairman: Robert Jeffries Chatfield 10% 0% 69% 192% Executive Director: Douglas Roderick Mahoney 12% -52% 0% 229% Non-executive Director: Stephen John Fisher 0% 0% 0% 0% Non-executive Director: Derek Sharples 0% 0% 0% 0% All employees -2% -71% 69% 191% AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 37 Relative importance of spend on pay The Chart below displays the relative expenditure of the Company on various matters, as required (in the case of remuneration for group employees and shareholder distributions) by the relevant remuneration regulations. Revenue is included as this is a key element of company performance. In previous years the Company included debt repayments for comparison with employee remuneration. 5,487 92,397 0 5,682 110,099 450 0 20,000 40,000 60,000 80,000 100,000 120,000 Total remuneration for group employees Revenue Dividend paid 2024 US$ '000 2025 US$ '000 19% N/M 4% AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 38 Directors’ remuneration policy The Company applies a policy for Directors’ remuneration which is designed to meet the following objectives:  provide a fair and remuneration policy that is in alignment with shareholders’ interests;  provide both immediate and incentive remuneration that is sufficient to attract and retain executives;  be consistent with best practice for governance of stock exchange listed companies;  allow claw-back of incentives from executives should previous performance be found to have led to future adverse circumstances for the Company; and  ensure alignment between performance and compensation. The Company targets the following outcomes in applying its policy to ensure alignment of Directors’ remuneration and shareholders’ interests:  share price appreciation;  increase in the Company’s earnings per share;  reliable and high-quality financial reporting;  growth in asset value and profits; and  dividend growth. Remuneration of the Company’s Executive Directors is comprised of the following components:  base salary;  short-term incentives in the form of a cash bonus linked to performance against individual key performance indicators; and  long-term incentives in the form of share warrants and/or performance shares. Remuneration of the Company’s Non-Executive Directors is comprised of fixed Directors’ Fees. Payments for loss of office No provisions are made under the Directors’ service contracts for any payments beyond the applicable notice period, except that Non-Executive Directors are entitled to receive payment of two years fees on loss of office pursuant to a change of control. AVATION PLC DIRECTORS’ REMUNERATION REPORT FOR THE YEAR ENDED 30 JUNE 2025 39 Statement of consideration of employment conditions elsewhere in the Company Pay and employment conditions of other employees in the Company were taken into account when setting the policy for Directors’ remuneration. Similar remuneration polices are in place for Directors and employees of an equivalent level. Shareholders' vote on remuneration Share Count % of vote cast Votes cast in favour 42,770,815 98.86% Votes cast against 492,681 1.14% Total votes cast in favour or against 43,263,496 100.00% Votes withheld 97,608 0% Note: The Board as a whole considers the remuneration of the Directors and has not engaged external advisers. The remuneration report for the year ended 30 June 2024 was approved at the Annual General Meeting held on 19 December 2024. On behalf of the Board Robert Jeffries Chatfield Executive Chairman AVATION PLC DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 30 JUNE 2025 40 The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulations. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors are required to prepare the Company and Group financial statements in accordance with UK-adopted International Accounting Standards (“IFRS”) in conformity with the requirements of the Companies Act 2006. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of the affairs of the Company and of the Group and the financial performance and cash flows of the Group for that year. In preparing these financial statements, the Directors are required to:  select suitable accounting policies and then apply them consistently;  make judgements and accounting estimates that are reasonable and prudent;  prepare the accounts on the going concern basis unless it is inappropriate to presume that the Company will continue in business.  present information, including accounting policies, in a manner that provides relevant reliable, comparable and understandable information.  provide additional disclosures when compliance with the specific requirements in IFRSs adopted are insufficient to enable the users to understand the impact of particular transactions, other events and conditions on the entity’s financial position and financial performance.  properly select and apply accounting policies. The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s and the Group’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of the financial statements may differ from legislation in other jurisdictions. AVATION PLC DIRECTORS’ RESPONSIBILITIES STATEMENT FOR THE YEAR ENDED 30 JUNE 2025 41 We confirm that to the best of our knowledge:  the financial statements, prepared in accordance with IFRS inconformity with the Companies Act 2006, give a true and fair view of the assets, liabilities and financial position of the Company and of the Group and of the Group’s profit for the year;  the strategic report includes a fair review of the development and performance of the business and the position of the Company and of the Group, together with a description of the principal risks and uncertainties that they face; and  The annual report and financial statements, taken as a whole, are fair, balanced and understandable and provide the information necessary for the shareholders to assess the Group’s position, performance, business model and strategy. This responsibility statement was approved by the Board of Directors on 1 October 2025 and is signed on its behalf by Robert Jeffries Chatfield. ............................... Robert Jeffries Chatfield Executive Chairman INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 42 Opinion In our opinion: • Avation plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of the state of the group’s and of the parent company’s affairs as at 30 June 2025 and of the group’s loss for the year then ended; • the group financial statements have been properly prepared in accordance with UK adopted international accounting standards; • the parent company financial statements been properly prepared in accordance with UK adopted international accounting standards as applied in accordance with section 408 of the Companies Act 2006; and • the financial statements have been prepared in accordance with the requirements of the Companies Act 2006. We have audited the financial statements of Avation plc which comprise: Group Parent company Consolidated statement of profit or loss for the year then ended Consolidated statement of comprehensive income for the year then ended Consolidated statement of financial position as at 30 June 2025 Company statement of financial position as at 30 June 2025 Consolidated statement of changes in equity for the year then ended Company statement of changes in equity for the year then ended Consolidated statement of cash flows for the year then ended Company statement of cash flows for the year then ended Related notes 1 to 46 to the financial statements, including material accounting policy information Related notes 1 to 46 to the financial statements, including material accounting policy information The financial reporting framework that has been applied in their preparation is applicable law and UK adopted international accounting standards and as regards to the parent company financial statements, as applied in accordance with section 408 of the Companies Act 2006. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 43 Basis for opinion We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report below. We are independent of the group and parent company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Conclusions relating to going concern In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to continue to adopt the going concern basis of accounting included: • In conjunction with our walkthrough of the financial statements close process, we confirmed our understanding of the going concern assessment process and engaged with management to understand the key factors considered in their assessment. • We obtained management’s going concern assessment, including their covenant assessment and cashflow analysis and forecast for a period of 12 months from the expected date of signing of the financial statements. • We reviewed the sources of cash inflows available to the Group and the various scenario analyses performed by management. We noted that in management’s most stressed scenario, management’s forecast minimum cash requirement would still be generated by the Group. • We have considered the assumptions included in the cashflow analysis prepared and considered the appropriateness of the methods used within the cashflow analysis and determined through inspection and testing of the methodology and calculations that the methods utilised were appropriate. • We discussed the Group’s plan for refinancing the October 2026 maturity of the Group’s unsecured Notes with management and their advisers. We understood the steps taken by management to date, the options available to repay the Notes and the likelihood the process will be completed in advance of the maturity date. • We have further stressed managements’ sensitivities to test the resilience of the Group’s business under more pessimistic scenarios. • We have reviewed the appropriateness of the disclosures made by management as detailed under Note 3(d) of the financial statements. Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for a period of 12 months from when the financial statements are authorised for issue. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 44 Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to continue as a going concern. Overview of our audit approach Audit scope • We performed an audit of the complete financial information of Avation plc in accordance with materiality thresholds set out below. Key audit matters • Valuation of Aircraft • Valuation of Aircraft Purchase Rights • Recognition of Maintenance Reserve Income Materiality • Overall group materiality of $2.4m which represents 1% of Total Equity. An overview of the scope of our audit Tailoring the scope In the current year our audit scoping has been updated to reflect the new requirements of ISA (UK) 600 (Revised). We followed a risk-based approach when developing our audit approach to obtain sufficient appropriate audit evidence on which to base our audit opinion. We performed risk assessment procedures to identify and assess risks of material misstatement of the Group’s consolidated financial statements and identified significant accounts and disclosures. When identifying areas at which audit work needed to be performed to respond to the identified risks of material misstatement of the Group financial statements, we considered our understanding of the Group and its business environment, the applicable financial framework, the groups system of internal control at the entity level, the existence of centralised processes and applications. We determined that centralised audit procedures can be performed by the Group audit team in all audit areas. Our scoping to address the risk of material misstatement for the key audit matter is set out in the Key audit matters section of our report. Involvement with component teams All audit work performed for the purposes of the audit was undertaken by the Group audit team. Climate change Stakeholders are increasingly interested in how climate change will impact Avation plc. The Group has determined that the most significant future impacts from climate change on its operations will be from the physical risks and transition risks as the global economy transitions to lower carbon emissions. These are explained in the Task Force on Climate Related Financial Disclosures on pages 17-20 in the Climate-related financial disclosures. All of these disclosures form part of the “Other information,” rather than the audited financial statements. Our procedures on these unaudited disclosures therefore consisted solely of considering whether they are materially inconsistent with the financial statements or our knowledge obtained in the course of the audit or otherwise appear to be materially misstated, in line with our responsibilities on “Other information”. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 45 In planning and performing our audit we assessed the potential impacts of climate change on the Group’s business and any consequential material impact on its financial statements. As explained in Note 3(a) Basis of preparation and Note 4 Critical accounting estimates and judgements, the governmental and societal responses to climate change risks are still developing and are interdependent upon each other. Consequently, financial statements cannot capture all possible future outcomes as these are not yet known. The degree of certainty of these changes may also mean that they cannot be fully taken into account when determining asset and liability valuations and timing of future cash flows under the requirements of UK adopted international accounting standards. As explained in Note 3(a), management believe that reasonably possible changes arising from climate risk would not have a material impact on the financial statements. Our audit effort in considering the impact of climate change on the financial statements was focused on evaluating management’s assessment of the impact of climate risk, physical and transition, their climate commitments, the effects of material climate risks disclosed on pages 17-20 and the significant judgements and estimates disclosed in Note 3(a) and whether these have been appropriately reflected following the requirements of UK adopted international accounting standards. As part of this evaluation, we performed our own risk assessment supported by our climate change internal specialists to determine the risks of material misstatement in the financial statements from climate change which needed to be considered in our audit. Based on our work we have not identified the impact of climate change on the financial statements to be a key audit matter or to impact a key audit matter. Key audit matters Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified. These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in our opinion thereon, and we do not provide a separate opinion on these matters. Risk Our response to the risk Key observations communicated to the Audit Committee Valuation of Aircraft (2025: $725.1 million, 2024 $791.4 million) Refer to Note 3(f) of the Material Accounting policy (page 69) and Note 19 of the Consolidated Financial Statements (page 109). The carrying value of jet and turboprop aircraft represents the most significant asset in the financial statements Avation plc As set out on page 69 within Notes 3(f) ‘Material Accounting Policy We have assessed each aircraft as they are deemed to be individually material to the financial statements. In obtaining sufficient audit evidence we: • Obtained an understanding of the process for the valuation of aircraft on an LEV basis and performed a walkthrough of the process, including controls over the inputs and assumptions in the calculation • Involved our EY Financial Accounting Advisory Services team to assess the reasonableness of Our planned audit procedures were completed without material exception. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 46 Risk Our response to the risk Key observations communicated to the Audit Committee Information’, aircraft are measured at fair value on a Lease Encumbered Value basis (“LEV”). As detailed in Note 4 ‘Critical Accounting Estimates and Judgements’, management applies estimation and judgement as part of their fair value assessment of aircraft. LEV is determined by discounting the lease income streams associated with the lease and the expected future residual value of the aircraft at the end of the lease adjusted for return conditions at lease termination using an appropriate discount rate. We have determined that the valuation of jet and turboprop aircraft using the LEV approach represents a fraud and significant risk as management could override controls in relations to the key assumptions such as the discount rates and residual values used in the calculation or final values determined by the International Bureau of Aviation (“IBA”). The nature and size of these balances and their importance to the Group are such that we have identified this as a key audit matter. the discount rates used in discounting the future cashflows of aircraft in the model. • Evaluated the appropriateness of credit premia and discounts applied by management for each lessee by analysing their respective credit risks. • Assessed and evaluated the appropriateness and accuracy of the key assumptions used in the LEV calculation, such as the discount rates and residual values, through recalculation and scenario analysis. • Traced the residual values used in management’s LEV assessment to the IBA report. We compared the residual values against a third-party valuation and evaluated the reasonableness of the residual values used by IBA. • Evaluated the design and implementation of controls in relation to the identified risk. We did not rely on controls in this area. • Assessed the accuracy of factual inputs, such as lease income streams, by reviewing lease agreements and amendments as necessary. • Evaluated the independence and competence of experts engaged by management in valuing the LEVs including residual values. • Assessed the calculations underpinning the LEV model by checking that the data, assumptions and inputs into the model agree with those that we had evaluated in other areas of the audit. • Assessed the appropriateness and presentation of disclosures in the INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 47 Risk Our response to the risk Key observations communicated to the Audit Committee financial statements for compliance with relevant accounting standards. Valuation of Aircraft Purchase Rights (2025: $91.7 million, 2024: $112.8 million) Refer to the Note 3(h) ‘Material Accounting Policy Information’ (page 70), Note 26 of the Consolidated Financial Statements (page 123). We have determined that the valuation of aircraft purchase rights represents a significant risk. The fair value of aircraft purchase rights may not be correctly valued and recorded in accordance with IFRS 13, Fair Value Measurement. As set on page 85 within Note 4(e) ‘Critical Accounting Estimates and Judgements’, aircraft purchase rights are measured at fair value through profit or loss. The Group values aircraft purchase rights using the Black-Scholes pricing model. Critical assumptions made in determining the fair value of the aircraft purchase rights include the discount rate and forecast inflation rate. The nature and size of these balances and their importance to the Group are such that we have identified this as a key audit matter. In obtaining sufficient audit evidence we: • Obtained an understanding of the process for the valuation of aircraft purchase rights and performed a walkthrough of the process, including controls over the inputs and assumptions of calculation. • Engaged our EY Financial Accounting and Advisory Services team to assist in assessing the reasonableness of the valuation model. • Evaluated the competence and independence of the external appraiser as a management expert in determining the market value of the asset price. We have obtained the valuation reports and validated the market inputs to the valuation calculation. • Evaluated the design and implementation of controls in relation to the identified risk. We did not rely on controls in this area. • Assessed the assumptions used by management and evaluated the appropriateness and accuracy of these inputs, such as assumed delivery dates, purchase right exercise dates, the asset price, and risk-free, volatility and inflation rates. • Assessed the appropriateness and presentation of disclosures in the financial statements for compliance with the relevant accounting standards. Our planned audit procedures were completed without material exception. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 48 Risk Our response to the risk Key observations communicated to the Audit Committee Recognition of Maintenance Reserves Income (2025: $22.1 million, 2024: $5.3 million) Refer to Note 4(f) ‘Critical Accounting Estimates and Judgements’ (page 85). The Group applies estimation in the determination of total maintenance reserves collected which are expected to be reimbursed to the lessee in respect of qualifying maintenance undertaken over the period of the lease. We have determined that the recognition of maintenance reserve income represents a fraud and significant risk as management could override controls due to the level of management judgement involved in the model and the increasing size of maintenance reserve income relative to total revenue. The nature and size of these balances and their importance to the Group are such that we have identified this as a key audit matter. In obtaining sufficient audit evidence we: • Obtained an understanding of the maintenance reserves income process and performed a walkthrough of the process. • Tested the timeliness of the maintenance revenue recorded by inspecting various supporting documents (lease agreements, correspondence with the lessee, etc.) and made enquiries of non- accounting personnel. • Obtained management’s maintenance reserves income assessment and reviewed the reasonableness of changes in which maintenance reserve income has fluctuated from the previous period. • Evaluated the design and implementation of controls in relation to the identified risk. We did not rely on controls in this area. • Performed a reconciliation of the aircraft included within the maintenance reserves model to the portfolio of aircraft held and identified the aircraft recognising income through the model. • Recalculated the monthly income, including any true-up. • Tested the valuation of the maintenance reserves income recorded for each aircraft selected by testing cash payments received or validating that the maintenance reserves cash balance is allowable to be taken into revenue. • Evaluated the appropriateness and accuracy of key assumptions, such as utilisation hours, flight cycles and maintenance cost. Our planned audit procedures were completed without material exception. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 49 Our application of materiality We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit and in forming our audit opinion. Materiality The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit procedures. We determined materiality for the Group to be $2.4 million (2024: $2.5 million), which is 1% (2024: 1%) of Total Equity. We believe that Total Equity provides us with the most reliable measure used by investors and other stakeholders when assessing the performance of the Group. We determined materiality for the Parent Company to be $1.5 million (2024: $1.8 million), which is 1% (2024: 1%) of Total Equity. During the course of our audit, we reassessed initial materiality and there was no change in the materiality basis from the original assessment at planning. Performance materiality The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality. On the basis of our risk assessments, together with our assessment of the Group’s overall control environment, our judgement was that performance materiality was 50% (2024: 50%) of our planning materiality, namely $1.2m (2024: $1.2m). We have set performance materiality at this percentage due to our prior audit experience. Reporting threshold An amount below which identified misstatements are considered as being clearly trivial. Risk Our response to the risk Key observations communicated to the Audit Committee • Evaluated the accuracy of factual inputs, such as maintenance reserves liabilities balances and contractual rates, by reviewing lease agreements. • Assessed the appropriateness and presentation of disclosures in the financial statements for compliance with the relevant accounting standards. How we scoped our audit to respond to the risk All audit work performed to address these risks was undertaken by the Group audit team. INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 50 We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of $122,000 (2024: $128,000), which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other relevant qualitative considerations in forming our opinion. Other information The other information comprises the information included in the annual report, including the Chairman’s Statement (set out on pages 2-4), Strategic Report (set out on pages 5-23), Director’s Report (set out on pages 24-28), Directors’ Remuneration Report (set out on pages 29-39), and Director’s Responsibility Statement (set out on pages 40-41), other than the financial statements and our auditor’s report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not express any form of assurance conclusion thereon. In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required to report that fact. We have nothing to report in this regard. Opinions on other matters prescribed by the Companies Act 2006 In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies Act 2006. In our opinion, based on the work undertaken in the course of the audit: • the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and • the strategic report and directors’ report have been prepared in accordance with applicable legal requirements. Matters on which we are required to report by exception In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors’ report. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion: • adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 51 • the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the accounting records and returns; or • certain disclosures of directors’ remuneration specified by law are not made; or • we have not received all the information and explanations we require for our audit Responsibilities of directors As explained more fully in the directors’ responsibilities statement set out on pages 40-41, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so. Auditor’s responsibilities for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the company and management. Our approach was as follows: • We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most significant are: • Companies Act 2006 • Tax Legislation (governed by HM Revenue and Customs and Inland Revenue Authority of Singapore) • Financial Conduct Authority (FCA) UK Listing Rules • Disclosure Guidance and Transparency Rules (DTR) of the FCA INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF AVATION PLC 52 • We understood how Avation plc is complying with those frameworks by holding discussions with general counsel and service providers. We enquired as to any known instances of non- compliance with laws and regulations • We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by holding discussions with senior management • Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our procedures involved inquiring of key management and reviewing key policies A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report. Other matters we are required to address • We were appointed by the company on 20 December 2017 to audit the financial statements for the year ending 30 June 2018 and subsequent financial periods. The period of total uninterrupted engagement including previous renewals and reappointments is 8 years, covering the years ending 30 June 2018 to 30 June 2025. • The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain independent of the group and the parent company in conducting the audit. • The audit opinion is consistent with the additional report to the audit committee. Use of our report This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed. Vincent Bergin (Senior statutory auditor) for and on behalf of Ernst & Young, Chartered Accountant and Statutory Auditor Dublin 1 October 2025 AVATION PLC CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE YEAR ENDED 30 JUNE 2025 53 Note 2025 2024 US$’000s US$’000s Continuing operations Revenue 9 110,099 92,397 Other income 10 2,448 3,575 112,547 95,972 Depreciation 19 (37,512) (37,251) Gain/(loss) on disposal of aircraft 19 3,455 (2,915) Unrealised (loss)/gain on aircraft purchase rights and pre-delivery aircraft deposits paid 25,26 (21,643) 46,886 Unrealised loss on equity investments 27 (1,630) (490) Reversal of/(impairment loss) on aircraft 19 4,831 (5,573) Aircraft transition expenses (244) (2,607) Reversal of expected credit losses 20,21 80 239 Administrative expenses 11 (9,126) (8,792) Legal and professional fees (1,978) (2,251) Other expenses 12 (2,336) - Operating profit 46,444 83,218 Finance income 13 6,295 9,843 Finance expenses 14 (62,461) (63,015) (Loss)/profit before taxation 16 (9,722) 30,046 Taxation 17 2,006 (10,311) (Loss)/profit from continuing operations (7,716) 19,735 (Loss)/profit attributable to: Shareholders of Avation PLC (7,716) 19,735 Earnings per share for (loss)/profit attributable to: Shareholders of Avation PLC Basic earnings per share (US cents) 18 (11.22) 27.85 Diluted earnings per share (US cents) 18 (10.84) 27.71 AVATION PLC CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2025 54 Note 2025 2024 US$’000s US$’000s (Loss)/profit from continuing operations (7,716) 19,735 Other comprehensive income: Items that may be reclassified subsequently to profit or loss: Net loss on cash flow hedge, net of tax 24 (10,140) (4,568) (10,140) (4,568) Items that may not be reclassified subsequently to profit or loss: Revaluation gain /(loss) on property, plant and equipment, net of tax 33 14,815 (3,421) Other comprehensive income, net of tax 4,675 (7,989) Total comprehensive(loss)/income for the year (3,041) 11,746 Total comprehensive (loss)/income attributable to: Shareholders of Avation PLC (3,041) 11,746 AVATION PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2025 55 Note 2025 2024 US$’000s US$’000s ASSETS Non-current assets Property, plant and equipment 19 725,134 791,420 Finance lease receivables 21 11,129 12,754 Trade and other receivables 20 1,005 939 Pre-delivery aircraft deposits paid 25 18,218 21,813 Derivative financial assets 24 836 8,096 Aircraft purchase rights 26 91,740 112,780 Lease incentive assets 29 4,831 7,756 Goodwill 22 1,902 1,902 854,795 957,460 Current assets Finance lease receivables 21 1,734 28,644 Trade and other receivables 20 9,912 15,876 Pre-delivery aircraft deposits paid 25 10,960 8,520 Derivative financial assets 24 714 - Investment in equity, fair value through profit or loss 27 9,115 10,745 Lease incentive assets 29 2,920 3,136 Restricted cash 30 80,831 94,379 Cash investment in fixed term bank deposits 30 1,042 - Cash and cash equivalents 30 48,102 23,561 165,330 184,861 Assets held for sale 31 81,810 - 247,140 184,861 Total assets 1,101,935 1,142,321 AVATION PLC CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2025 56 Note 2025 2024 US$’000s US$’000s EQUITY AND LIABILITIES Equity Share capital 32 1,234 1,182 Share premium 79,447 70,120 Treasury shares 32 (16,003) - Merger reserve 6,715 6,715 Asset revaluation reserve 33 62,158 47,343 Capital reserve 8,876 8,876 Other reserves 34 (1,406) 11,210 Retained earnings 102,818 110,944 Equity attributable to shareholders of Avation PLC 243,839 256,390 Non-controlling interests 7 7 Total equity 243,846 256,397 Non-current liabilities Loans and borrowings 35 582,253 625,426 Trade and other payables 36 18,843 18,487 Derivative financial liabilities 24 3,142 2,037 Maintenance reserves 37 31,360 73,270 Deferred tax liabilities 38 31,637 34,047 667,235 753,267 Current liabilities Loans and borrowings 35 70,084 49,668 Trade and other payables 36 19,595 18,920 Maintenance reserves 37 69,423 62,153 Income tax payable 1,314 1,916 160,416 132,657 Liabilities associated with assets held for sale 31 30,438 - 190,854 132,657 Total equity and liabilities 1,101,935 1,142,321 Approved by the board and authorised for issue on 1 October 2025 …………………………. Robert Jeffries Chatfield Executive Chairman AVATION PLC COMPANY STATEMENT OF FINANCIAL POSITION AS OF 30 JUNE 2025 57 Note 2025 2024 US$’000s US$’000s ASSETS Non-current assets Trade and other receivables 20 39,476 45,344 Pre-delivery aircraft deposits paid 25 18,218 21,813 Derivative financial assets 24 - 2,176 Investment in debt instrument, fair value through profit or loss 28 - 16,335 Investment in subsidiaries 23 2,050 2,050 Aircraft purchase rights 26 91,740 112,780 151,484 200,498 Current assets Trade and other receivables 20 131,878 132,362 Pre-delivery aircraft deposits paid 25 10,960 8,520 Derivative financial assets 24 635 - Restricted cash 30 - 800 Cash and cash equivalents 30 36,952 7,381 180,425 149,063 Total assets 331,909 349,561 EQUITY AND LIABILITIES Equity Share capital 32 1,234 1,182 Share premium 79,447 70,120 Treasury shares 32 (16,003) - Merger reserve 6,715 6,715 Other reserves 34 (731) 3,026 Retained earnings 77,467 90,609 Total equity 148,129 171,652 Non-current liabilities Loans and borrowings 35 36,293 45,734 Trade and other payables 36 100,631 57,123 Derivative financial liabilities 24 3,142 2,037 Deferred tax liabilities 38 17,193 20,411 157,259 125,305 Current liabilities Loans and borrowings 35 9,442 8,652 Trade and other payables 36 17,079 43,952 26,521 52,604 Total equity and liabilities 331,909 349,561 The Company has taken advantage of the exemption under section 408 of the Companies Act 2006 not to present the Company statement of profit or loss and other comprehensive income. The Company’s loss for the year was US$12.7 million (2024: profit of US$16.0 million). Approved by the board and authorised for issue on 1 October 2025 …………………………. Robert Jeffries Chatfield Executive Chairman AVATION PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2025 58 Capital reserve comprises acquisitions with non-controlling interests that do not result in a change of control. Other reserves consists of capital redemption reserve, share warrant reserve, fair value reserve and foreign currency hedge reserve. See Note 34. The merger reserve arose on acquisition of additional shares of the Company’s subsidiary Capital Lease Aviation Limited through the allotment of ordinary shares in the year ended 30 June 2015. The merger reserve represents the difference between the fair value and the nominal value of the shares issued by the Company. Attributable to shareholders of Avation PLC Note Share capital Share premium Treasury Shares Merger reserve Asset revaluation reserve Capital reserve Other reserves Retained earnings Total Non- controlling interest Total equity US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Balance at 1 July 2024 1,182 70,120 - 6,715 47,343 8,876 11,210 110,944 256,390 7 256,397 Loss for the year - - - - - - - (7,716) (7,716) - (7,716) Other comprehensive income - - - - 14,815 - (10,140) - 4,675 - 4,675 Total comprehensive loss - - - - 14,815 - (10,140) (7,716) (3,041) - (3,041) Issue of shares 32 52 9,327 - - - - (2,847) - 6,532 - 6,532 Purchase of treasury shares 32 - - (16,003) - - - - - (16,003) - (16,003) Share warrant expense 34 - - - - - - 411 - 411 - 411 Dividend paid 40 (450) (450) (450) Total transactions with owners recognised directly in equity 52 9,327 (16,003) - - - (2,436) (450) (9,510) - (9,510) Expiry of share warrants 34 - - - - - - (40) 40 - - - Total others - - - - - - (40) 40 - - - Balance at 30 June 2025 1,234 79,447 (16,003) 6,715 62,158 8,876 (1,406) 102,818 243,839 7 243,846 AVATION PLC CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2024 59 Attributable to shareholders of Avation PLC Note Share capital Share premium Treasury Shares Merger reserve Asset revaluation reserve Capital reserve Other reserves Retained earnings Total Non- controlling interest Total equity US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Balance at 1 July 2023 as previously reported 1,182 70,024 - 6,715 50,764 8,876 15,069 88,995 241,625 7 241,632 Effects of changes in accounting policies - - - - - - - 2,300 2,300 - 2,300 Balance at 1 July 2023 as restated 1,182 70,024 - 6,715 50,764 8,876 15,069 91,295 243,925 7 243,932 Profit for the year - - - - - - - 19,735 19,735 - 19,735 Other comprehensive income - - - - (3,421) - (4,568) - (7,989) - (7,989) Total comprehensive income - - - - (3,421) - (4,568) 19,735 11,746 - 11,746 Issue of shares 32 1 96 - - - - (18) - 79 - 79 Purchase of treasury shares 32 - - (95) - - - - - (95) - (95) Cancellation of treasury shares 32 (1) - 95 - - - 1 (95) - - - Share warrant expense 34 - - - - - - 735 - 735 - 735 Total transactions with owners recognised directly in equity - 96 - - - - 718 (95) 719 - 719 Expiry of share warrants 34 - - - - - - (9) 9 - - - Total others - - - - - - (9) 9 - - - Balance at 30 June 2024 1,182 70,120 - 6,715 47,343 8,876 11,210 110,944 256,390 7 256,397 AVATION PLC COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2025 60 Note Share capital Share Premium Treasury shares Merger reserve Other reserves Retained earnings Total US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Balance at 1 July 2024 1,182 70,120 - 6,715 3,026 90,609 171,652 Profit for the year - - - - - (12,732) (12,732) Other comprehensive income - - - - (1,281) - (1,281) Total comprehensive income - - - - (1,281) (12,732) (14,013) Issue of shares 32 52 9,327 - - (2,847) - 6,532 Purchase of treasury shares 32 - - (16,003) - - - (16,003) Share warrants expense 34 - - - - 411 - 411 Dividend paid 40 - - - - - (450) (450) Total transactions with owners, recognised directly in equity 52 9,327 (16,003) - (2,436) (450) (9,510) Expiry of share warrants 34 - - - - (40) 40 - Total others - - - - (40) 40 - Balance at 30 June 2025 1,234 79,447 (16,003) 6,715 (731) 77,467 148,129 Other reserves consists of capital redemption reserve, share warrant reserve and fair value reserve. See note 34. AVATION PLC COMPANY STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 30 JUNE 2024 61 Note Share capital Share Premium Treasury shares Merger reserve Other reserves Retained earnings Total US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s US$’000s Balance at 1 July 2023 1,182 70,024 - 6,715 3,333 74,678 155,932 Profit for the year - - - - - 16,017 16,017 Other comprehensive income - - - - (1,016) - (1,016) Total comprehensive income - - - - (1,016) 16,017 15,001 Issue of shares 32 1 96 - - (18) - 79 Purchase of treasury shares 32 - - (95) - - - (95) Cancellation of treasury shares 32 (1) - 95 - 1 (95) - Share warrants expense 34 - - - - 735 - 735 Total transactions with owners, recognised directly in equity - 96 - - 718 (95) 719 Expiry of share warrants 34 - - - - (9) 9 - Total others - - - - (9) 9 - Balance at 30 June 2024 1,182 70,120 - 6,715 3,026 90,609 171,652 AVATION PLC CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2025 62 Note 2025 2024 US$’000s US$’000s Cash flows from operating activities: (Loss)/profit before income tax (9,722) 30,046 Adjustments for: Amortisation of lease incentive asset 9 3,141 2,721 Depreciation expense 19 37,512 37,251 Depreciation of right-of-use assets 283 278 Reversal of expected credit losses 20,21 (80) (239) Finance income 13 (6,295) (9,843) Finance expense 14 62,461 63,015 (Gain)/loss on disposal of aircraft (3,455) 2,915 Interest income from finance leases 9 (1,219) (2,018) (Reversal of)/impairment loss on aircraft 19 (4,831) 5,573 Maintenance reserves income 37 (22,086) (5,351) Share warrants expense 15 411 735 Foreign currency exchange loss/(gain) 2,834 (946) Unrealised loss/(gain) on aircraft purchase rights and pre-delivery aircraft deposits paid 25,26 21,643 (46,886) Unrealised loss on equity investments 27 1,630 490 Operating cash flows before working capital changes 82,227 77,741 Movement in working capital: Trade and other receivables and finance lease receivables 32,147 23,919 Pre-delivery aircraft deposits paid (6,238) (2,268) Trade and other payables 2,625 325 Maintenance reserves 17,884 20,583 Cash from operations 128,645 120,300 Finance income received 7,831 7,909 Finance expense paid (43,487) (45,724) Income tax paid (1,486) (916) Net cash from operating activities 91,503 81,569 Cash flows from investing activities: Cash receipt from/(investment in) fixed term bank deposits 30 (1,042) 1,225 Purchase of property, plant and equipment 19 (63,249) (5) Proceeds from disposal of aircraft 19 39,556 11,989 Net cash (used in)/from investing activities (24,735) 13,209 Cash flows from financing activities: Net proceeds from issuance of ordinary shares 32 6,532 79 Purchase of treasury shares 32 (16,003) (95) Dividend paid 40 (450) - Decrease/(increase) of restricted cash balances 30 13,548 (3,515) Proceeds from loans and borrowings, net of transactions costs 35 109,146 29,098 Repayment of loans and borrowings 35 (155,000) (121,600) Net cash used in financing activities (42,227) (96,033) Net increase/(decrease) in cash and cash equivalents 24,541 (1,255) Cash and cash equivalents at beginning of year 30 23,561 24,816 Cash and cash equivalents at end of year 30 48,102 23,561 AVATION PLC COMPANY STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 30 JUNE 2025 63 Note 2025 2024 US$’000s US$’000s Cash flows from operating activities: (Loss)/profit before taxation (15,688) 23,534 Adjustments for: Dividend income (6,700) - Depreciation of right-of-use assets 93 91 Expected credit losses 20 - 15,533 Fair value loss/(gain) on investment in debt instrument 28 920 (920) Finance income (6,239) (3,077) Finance expense 7,420 8,360 Gain on disposal of aircraft (3,455) - Impairment loss on investment in subsidiary - 1,278 Share warrant expense 411 735 Unrealised loss/(gain) on aircraft purchase rights and pre-delivery aircraft deposits paid 25,26 21,643 (46,886) Operating cash flows before working capital changes (1,595) (1,352) Movement in working capital: Trade and other receivables 6,214 14,280 Pre-delivery aircraft deposits paid (6,238) (2,268) Trade and other payables 20,406 33,229 Cash generated from operations 18,787 43,889 Finance income received 5,744 3,669 Finance expense paid (8,574) (6,755) Net cash generated from operating activities 15,957 40,803 Cash flows from investing activities: Dividend received 6,700 - Purchase of investment in debt instrument 28 (21,063) (15,415) Proceeds from sale of investment in debt instrument 28 37,504 - Purchase of property, plant and equipment 19 (31,311) - Proceeds from disposal of aircraft 19 39,556 - Net cash used in investing activities 31,386 (15,415) Cash flows from financing activities: Net proceeds from issuance of ordinary shares 6,532 79 Purchase of treasury shares (16,003) (95) Dividend paid (450) - Decrease/(increase) of restricted cash balances 800 (800) Repayment of loans and borrowings (8,651) (17,862) Net cash used in financing activities (17,772) (18,678) Net increase in cash and cash equivalents 29,571 6,710 Cash and cash equivalents at beginning of year 30 7,381 671 Cash and cash equivalents at end of year 30 36,952 7,381 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 64 1 GENERAL Avation PLC is a public limited company incorporated in England and Wales under the Companies Act 2006 (Registration Number 05872328) and its shares are traded on the Equity Shares (Transition) Segment of the Main Market of the London Stock Exchange. The address of the registered office is given on page 1. As disclosed in the Directors’ Report, the Group’s principal activity is aircraft leasing. Details of the activities of subsidiary companies are set out in Note 23 to these financial statements . 2 STATEMENT OF COMPLIANCE These financial statements have been prepared in accordance with UK-adopted International Accounting Standards (“IFRSs”) in conformity with the requirements of the Companies Act 2006. 3 MATERIAL ACCOUNTING POLICY INFORMATION (a) BASIS OF PREPARATION – The financial statements have been prepared in accordance with UK-adopted International Accounting Standards (“IFRSs”) in conformity with the requirements of the Companies Act 2006. The financial statements have been prepared on a going concern basis and have been prepared in accordance with the historical cost convention, as modified by the revaluation of certain assets and liabilities. The financial statements are presented in United States Dollars and all values are rounded to the nearest thousand (US$’000s) unless otherwise indicated. The year-end exchange rate for Pounds Sterling to United States Dollars is 1.37 (2024: 1.27). The preparation of financial statements in conformity with UK-adopted International Accounting Standards (“IFRSs”) requires the use of significant accounting judgements, estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the financial period. Although these estimates are based on management’s best knowledge of current events and actions, actual results may ultimately differ from those estimates. The accounting policies set out below have been applied consistently throughout the financial period presented in these financial statements by the Company and its subsidiaries, unless otherwise disclosed. As the governmental and societal responses to climate change are still developing, it is not possible to consider all future outcomes when determining the carrying amount of assets and liabilities in the preparation of the financial statements. The Group’s view is that the possible changes arising from climate related risks would not have a material impact on the financial statements. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 65 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (b) BASIS OF CONSOLIDATION - The consolidated financial statements comprise the financial statements of the Company and its subsidiaries, together the Group, as at 30 June 2025. Subsidiaries are all entities over which the Group has control. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if and only if the Group has:  Power over the investee (i.e. existing rights that give it the current ability to direct the relevant activities of the investee)  Exposure, or rights, to variable returns from its involvement with the investee, and  The ability to use its power over the investee to affect its returns When the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has control over an investee, including:  The contractual arrangement with the other vote holders of the investee  Rights arising from other contractual arrangements  The Group’s voting rights and potential voting rights Whether or not the Group controls an investee is re-assessed if facts and circumstances indicate that there are changes to one or more of the three elements of control. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the statement of comprehensive income from the date the Group gains control until the date the Group ceases to control the subsidiary. Profit or loss and each component of other comprehensive income (“OCI”) are attributed to the shareholders of Avation PLC and to the non-controlling interests, even if this results in the non-controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation. Investments in subsidiaries are stated at cost less impairment in the Company’s separate financial statements. (c) GOODWILL - Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognised for non-controlling interests, and any previous interest held, over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred, the Group re-assesses whether it has correctly identified all of the assets acquired a n d all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognised at the acquisition date. If the re-assessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognised in profit or loss. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 66 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Where goodwill has been allocated to a cash-generating unit and part of the operation within that unit is disposed of, the goodwill associated with the disposed operation is included in the carrying amount of the operation when determining the gain or loss on disposal. Goodwill disposed in these circumstances is measured based on the relative values of the disposed operation and the portion of the cash-generating unit retained. (d) GOING CONCERN These consolidated financial statements have been prepared on a going concern basis. As part of the going concern assessment, management has considered all projected cash inflows and outflows of the Company and its subsidiaries, over the period of 12 months from the date of approval of these financial statements including:  Current unrestricted cash on hand balance available,  Projected collections of receivable balances and contracted assets sales,  Forecasted cash outflows for all contractual debt and lease obligations and selling, general and administrative expenses,  Forecasted cash outflows for capital expenditure,  Scheduled maturities of secured and unsecured loans and borrowings. Management has also conducted sensitivity analysis on projected cash flows for changes in base assumptions around rent collection rates and other significant factors. In addition to the sensitivities called out above, the most significant uncertainty is the repayment at maturity of the Company’s unsecured Notes in late October 2026. These Notes are now callable in whole or in part at the Company’s option. The Company’s preferred option is to repay this issue from a fresh issue of Notes amounting to $300 million approximately. In preparation for a refinancing transaction, the Company recently updated its Global Medium Term Note programme documentation and engaged Moody’s and Fitch Ratings to provide additional credit ratings on the Company. Moody’s assigned the Company a first-time B1 Corporate Family Rating (CFR) and B2 issuer rating with a stable outlook, and Fitch Ratings assigned the Company a B long-term issuer default rating. We believe that we are now well positioned to achieve a successful refinancing of the Notes. From discussion with our advisers, we consider that there is significant appetite for such debt, and recent issues from our peers have achieved success, with yields tightening subsequent to issue. The Company’s Notes are also trading close to par, which we believe is indicative of a market that has confidence that the Notes will be repaid or rolled over without significant difficulty. In the unlikely event of our preferred option of a fresh debt issuance being unavailable, or unavailable to the extent envisaged by management, we also note that the Company has a number of unencumbered aircraft and aircraft with low levels of secured financing, and a demonstrated history of successful financing and refinancing of new and existing aircraft. Our engagement with alternative financing providers has indicated to us that the Company has many options available to repay the Notes through one or the combination of the issuance of new secured or unsecured debt instruments and/or the sales of assets or portfolios of assets, and has the necessary time available (13 months) to effect this. We also note that such financings and refinancings of assets, and aircraft sales, are part of the normal course of business for entities in this sector in markets with many active participants. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 67 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) For these reasons we do not consider that the external uncertainties facing the Company rise to the level of material uncertainties. Based on this analysis and the discussions undertaken with advisors and potential counterparties, the Directors are confident that the actions that they have taken and intend to take will ensure that the Group has sufficient liquidity to meet its obligations as they fall due and that it continues to be appropriate to prepare the financial statements on a going concern basis of preparation. (e) FAIR VALUE MEASUREMENT – The Group measures financial instruments, such as derivatives, investment in equity and non-financial assets, such as aircraft and aircraft purchase rights in excess of the Group’s usage requirements at fair values at each reporting date. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:  In the principal market for the asset or liability, or  In the absence of a principal market, in the most advantageous market for the asset or liability The principal or the most advantageous market must be accessible by the Group. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use. The Group uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. In the case of aircraft, unless otherwise disclosed, the assets are valued using lease encumbered value (“LEV”). Under such a valuation, which reflects highest and best use given the fact that the aircraft are held for use in a leasing business, the income streams associated with the lease and the expected future market value of the aircraft at the end of the lease are discounted to current values. The valuers prepare their valuation report based on the market for second hand aircraft, which is active, known and measurable. All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:  Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities  Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable  Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 68 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (e) FAIR VALUE MEASUREMENT (continued) For assets and liabilities that are recognised in the financial statements on a recurring basis, the Group determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. The Group’s management determines the policies and procedures for both recurring fair value measurement, such as aircraft, aircraft purchase rights and for non-recurring measurement, such as assets held for sale in discontinued operations. External valuers are involved for valuation of significant assets, such as aircraft and aircraft purchase rights. At each reporting date, management analyses the movements in the values of assets and liabilities which are required to be re-measured or re-assessed as per the Group’s accounting policies. For this analysis, management verifies the major inputs applied in the latest valuation by agreeing the information in the valuation computation to contracts and other relevant documents so far as possible. Management, in conjunction with the Group’s external valuers, also compares the changes in the fair value of each asset and liability with relevant external sources to determine whether the change is reasonable. For the purpose of fair value disclosures, the Group has determined classes of assets and liabilities on the basis of the nature, characteristics and risks of the asset or liability and the level of the fair value hierarchy as explained above. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 69 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (f) PROPERTY, PLANT AND EQUIPMENT – All items of property, plant and equipment are initially recorded at cost. The cost of an item of property, plant and equipment is recognised as an asset if, it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. Subsequent to recognition, aircraft are stated in the statement of financial position at their revalued amount. All items of property plant and equipment other than aircraft are measured at cost less any accumulated depreciation and accumulated impairment losses. Revaluations are performed with sufficient regularity such that the carrying amount does not differ materially from that which would be determined using fair values at the reporting date. These aircraft have been reviewed for impairment. Any revaluation increase arising on the revaluation of such aircraft is credited to the asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profit or loss to the extent of the decrease previously charged. A decrease in carrying amount arising on the revaluation of such aircraft is charged to profit or loss to the extent that it exceeds the balance, if any, held in the assets revaluation reserve relating to a previous revaluation of that asset. Depreciation on revalued aircraft is charged to profit or loss. On the subsequent sale or retirement of a revalued aircraft, the attributable revaluation surplus remaining in the asset revaluation reserve is transferred directly to retained earnings. Depreciation is charged so as to write off the cost or valuation of assets less residual values, over their estimated useful lives, using the straight-line method, on the following bases: Narrow-body jets and turboprops 25 years from date of manufacture Twin-aisle jets 23 years from date of manufacture Aircraft engines 15 years from date of acquisition Furniture and equipment 3 years Residual values, useful lives and depreciation methods are revised and adjusted if appropriate, at each reporting date. Residual values are based on 15% of cost for new aircraft, estimated scrap values for second hand aircraft and 33% of cost for new aircraft engines. Fully depreciated assets still in use are retained in the financial statements until they are disposed of or retired. The gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 70 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (g) PRE-DELIVERY AIRCRAFT DEPOSITS PAID – Deposits paid to acquire aircraft which are over and above the Group’s requirements for use in the leasing business will be disposed of. The Group values these deposits using the discounted cashflow model. These deposits paid are measured at fair value through profit or loss. (h) AIRCRAFT PURCHASE RIGHTS – Purchase rights to acquire aircraft which are over and above the Group’s requirement for use in the leasing business will be disposed of. The Group values these excess aircraft purchase rights using the Black Scholes model. Aircraft purchase rights are measured at fair value through profit or loss. (i) NON-CURRENT ASSETS HELD FOR SALE – Non-current assets (and disposal groups) classified as held for sale are measured at the lower of carrying amount and fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal) group is available for immediate sale in its present condition. Management must be committed to the sale which should be expected to qualify for recognition as a completed sale within one year from the date of classification. Property, plant and equipment are not depreciated or amortised once classified as held for sale. Assets and liabilities classified as held for sale are presented separately as current items in the statement of financial position. (j) IMPAIRMENT OF NON-FINANCIAL ASSETS - At each reporting date the Group assesses whether there is an indication that an asset may be impaired. If any indication exists, or when an annual impairment testing for an asset is required, the Group makes an estimate of the asset's recoverable amount. An asset's recoverable amount is the higher of an asset's or cash-generating unit's fair value less costs of disposal and its value-in-use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or group of assets. Where the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset is considered impaired and is written down to its recoverable amount. In assessing value-in-use, the estimated future cash flows expected to be generated by the asset are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. In determining fair value less costs of disposal, recent market transactions are taken into account, if available. If no such costs can be identified, an appropriate valuation model is used. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 71 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (j) IMPAIRMENT OF NON-FINANCIAL ASSETS (continued) Impairment losses are recognised in profit or loss to the extent that they do not reverse a previous upwards revaluation. An assessment is made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the Group estimates the asset's or cash- generating unit's recoverable amount. Any reversal of an impairment loss of a revalued asset is treated as a revaluation increase. A reversal of an impairment loss on a revalued asset is recognised in other comprehensive income and increases the revaluation surplus for that asset. However, to the extent that an impairment loss on the same revalued asset was previously recognised in profit or loss, a reversal of that impairment is also recognised in profit or loss. Impairment losses are recognised as an immediate expense. However, the impairment loss shall be recognised in other comprehensive income to the extent of any credit balance existing in the revaluation surplus in respect of that asset. The decrease recognised in other comprehensive income reduces the amount accumulated in equity under the heading of revaluation surplus. (k) MAINTENANCE RESERVES - Normal maintenance and repairs, airframe and engine overhauls, and compliance with return conditions of the aircraft placed on operating leases are provided by and paid for by the lessees. Certain lease agreements require the lessees to make maintenance reserve contributions to the Group which subsequently can be drawn on to pay for certain maintenance events carried out. These maintenance reserve balances are accounted for as liabilities. The Group will recognise maintenance reserves as revenue over the term of a lease, to the extent that collected maintenance reserves are not expected to be reimbursed to the lessee, on the occurrence of specified maintenance events. (l) SHARE-BASED PAYMENTS – The Group operates an equity-settled share-based compensation plan. The value of the employee services received in exchange for the grant of warrants is recognised as an expense in profit or loss with a corresponding increase in the warrant reserve over the vesting period. The total amount to be recognised over the vesting period is determined by reference to the fair value of the warrants granted on the date of the grant using the binomial option pricing model method. Non-market vesting conditions are included in the estimation of the number of shares under warrants that are expected to become exercisable on the vesting date. At the end of each reporting period, the Group revises its estimates of the number of shares under warrants that are expected to become exercisable on the vesting date and recognises the impact of the revision of the estimates in profit or loss, with a corresponding adjustment to the warrant reserve over the remaining vesting period. When the warrants are exercised, the proceeds received and the related balance previously recognised in the warrant reserve are credited to share capital and share premium accounts when new shares are issued to the employees. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 72 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (m) LEASES Group as a lessor The Group leases aircraft to airlines under operating leases. At lease inception or modification date, the Group reviews all necessary criteria to determine proper lease classification. Leases of aircraft where the Group retains substantially all risks and rewards incidental to ownership are classified as operating leases. Rental income from operating leases (net of any incentives given to the lessees) is recognised in profit or loss on a straight- line basis over the lease term. The Group recognises contingent rents when they can be reliably measured. Where the Group transfers substantially all the risks and rewards of ownership of an asset, the lease is classified as a finance lease. Lease receipts are apportioned between finance income and reduction of the finance lease receivable so as to achieve a constant rate of interest on the remaining balance of the asset. Finance income is credited to revenue. For finance leases, the Group recognise the difference between the net book value of the aircraft and the net finance lease receivables as a gain or loss on sale of aircraft, less any initial direct costs. The unearned income is recognised as finance lease interest income within revenue over the lease term in a manner that produces a constant rate of return on the finance lease receivables. Under the terms of certain lease agreements, lessees are required to make maintenance contributions to the Group. The Group will recognise maintenance reserves as revenue over the term of a lease, to the extent that collected maintenance reserves are not expected to be reimbursed to the lessee, on the occurrence of specified maintenance events. End of lease compensation payments made to the Group are recognised as revenue when a reliable estimate of the expected compensation amount can be determined. The Group does not recognise end of lease compensation as revenue if there is a reasonable expectation that the lessee will extend the existing lease agreement rather than returning the aircraft at the end of the current lease period. Lease maintenance contribution Some of the Group’s leases contain provisions which may require the Company to pay a portion of the lessee’s costs for heavy maintenance, overhaul, or replacement of certain high-value components. The Group records liabilities for contractual obligations to contribute to the lessee’s cost of major maintenance events expected to occur during the lease. The Group regularly reviews the level of these contractual obligations under current lease contracts and makes adjustments as necessary. Lessor maintenance contributions represent a lease incentive and are recorded as a charge against lease rental income over the life of the associated lease on a straight-line basis. When aircraft are sold the portion of the accrued liability not specifically assigned to the buyer is derecognised from the Consolidated Statement of Financial Position as part of the gain or loss on disposal of the aircraft. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 73 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (m) LEASES (continued) Group as a lessee The Group applies a single recognition and measurement approach for all leases, except for short-term leases and leases of low-value assets. The Group recognises lease liabilities to make lease payments and right-of-use assets representing the right to use the underlying assets. i) Right-of-use assets The Group recognises right-of-use assets at the commencement date of the lease (i.e., the date the underlying asset is available for use). Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease payments made at or before the commencement date less any lease incentives received. Right-of-use assets are depreciated on a straight-line basis over the shorter of the lease term and the estimated useful lives of the assets. If ownership of the leased asset transfers to the Group at the end of the lease term or the cost reflects the exercise of a purchase option, depreciation is calculated using the estimated useful life of the asset. Right-of-use assets are also subject to impairment. The Group’s lease arrangements do not contain an obligation to dismantle and remove the underlying asset, restore the site on which it is located or restore the underlying asset to a specified condition. The Group’s right-of-use assets are included in trade and other receivables. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 74 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (m) LEASES (continued) ii) Lease liabilities At the commencement date of the lease, the Group recognises lease liabilities measured at the present value of lease payments to be made over the lease term. The lease payments include fixed payments (including in-substance fixed payments) less any lease incentives receivable, variable lease payments that depend on an index or a rate, and amounts expected to be paid under residual value guarantees. The lease payments also include the exercise price of a purchase option reasonably certain to be exercised by the Group and payments of penalties for terminating the lease, if the lease term reflects the Group exercising the option to terminate. Variable lease payments that do not depend on an index or a rate are recognised as expenses in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Group uses its incremental borrowing rate at the lease commencement date because the interest rate implicit in the lease is not readily determinable. After the commencement date, the amount of lease liabilities is increased to reflect the accretion of interest and reduced for the lease payments made. In addition, the carrying amount of lease liabilities is re- measured if there is a modification, a change in the lease term, a change in the lease payments (e.g., changes to future payments resulting from a change in an index or rate used to determine such lease payments) or a change in the assessment of an option to purchase the underlying asset. The Group’s lease liabilities are included in trade and other payables. iii) Short-term leases and leases of low-value assets The Group applies the short-term lease recognition exemption to its short-term leases of equipment (i.e., those leases that have a lease term of 12 months or less from the commencement date and do not contain a purchase option). It also applies the lease of low-value assets recognition exemption to leases of office equipment that are considered to be low-value. Lease payments on short-term leases and leases of low value assets are recognised as expense on a straight-line basis over the lease term. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 75 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (n) REVENUE RECOGNITION – The Group as lessor, leases aircraft principally under both operating leases and finance leases. Revenue which is not derived from leases is measured as follows: (i) Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. (ii) Dividend income from investments is recognised when the Company’s right to receive payment has been established. (o) CONTINGENCIES – A contingent liability is: (i) a possible obligation that arises from past events and whose existence will be confirmed only by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control of the Group; or (ii) a present obligation that arises from past events but is not recognised because: i. It is not probable that an outflow of resources embodying economic benefits will be required to settle the obligation; or ii. The amount of the obligation cannot be measured with sufficient reliability. (p) TAXATION - Taxation expense represents the sum of current tax and deferred tax. Current tax is based on taxable profit for the financial period. Taxable profit differs from profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting date. Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 76 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (p) TAXATION (continued) Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future. The carrying amount of deferred tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Deferred tax is charged or credited to profit or loss, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis. The Company is tax resident in Singapore. (q) FOREIGN CURRENCIES - The Group’s consolidated financial statements and Company financial statements are presented in United States Dollars. The individual financial statements of each Group entity are presented in the currency of the primary economic environment in which the entity operates (its functional currency) and United States Dollars is the functional currency of most Group entities, including Avation PLC. In preparing the financial statements of the individual entities, transactions in currencies other than the entity’s functional currency (foreign currencies) are recorded at rates of exchange prevailing on the dates of the transactions. At each reporting date, monetary items denominated in foreign currencies are retranslated at rates prevailing on the reporting date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at rates prevailing on the date when the fair value was determined. Non- monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary items carried at fair value are included in profit or loss for the period except for differences arising on the retranslation of non-monetary items in respect of which gains and losses are recognised directly in equity. For such non-monetary items, any exchange component of that gain or loss is also recognised directly in equity. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 77 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (r) FINANCIAL INSTRUMENTS Financial assets Initial recognition and measurement Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, fair value through other comprehensive income (OCI), and fair value through profit or loss. Subsequent measurement For the purposes of subsequent measurement, financial assets are classified in four categories:  Financial assets at amortised cost (debt instruments)  Financial assets at fair value through OCI with recycling of cumulative gains and losses (debt instruments)  Financial assets designated at fair value through OCI with recycling of cumulative gains and losses upon derecognition (equity instruments)  Financial assets at fair value through profit or loss (i) Financial assets at amortised cost (debt instruments) This category is the most relevant to the Group. The Group measures financial assets at amortised cost if both of the conditions are met:  The financial asset is held within a business model with the objective to hold financial assets in order to collect contractual cash flows; and  The contractual terms of the financial asset give rise on specific dates to cash flows that are solely payments of principal and interest on the principal amount outstanding Financial assets at amortised cost are subsequently measured using the effective interest (EIR) method and are subject to impairment. Gains and losses are recognised in profit or loss when the asset is derecognised, modified or impaired. The Group and Company’s financial assets at amortised cost are cash and bank balances, trade and other receivables and finance lease receivables. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 78 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (r) FINANCIAL INSTRUMENTS (continued) (ii) Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading, financial assets designated upon initial recognition at fair value through profit or loss, or financial assets mandatorily required to be measured at fair value. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term. Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments. Financial assets with cash flows that are not solely payments of principal and interest are classified and measured at fair value through profit or loss, irrespective of the business model. Notwithstanding the criteria for debt instruments to be classified at amortised cost or at fair value through OCI, debt instruments may be designated at fair value though profit or loss on initial recognition if doing so eliminates, or significantly reduces, an accounting mismatch. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value recognised in the statement of profit or loss. The Group and Company’s financial assets at fair value through profit or loss are options held for trading, investment in equity, investment in debt instrument and derivative financial assets. Derecognition A financial asset is derecognised where the contractual right to receive cash flows from the asset has expired. On derecognition of a financial asset in its entirety, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss that had been recognised in other comprehensive income for financial assets is recognised in profit or loss. Financial liabilities Initial recognition and measurement Financial liabilities are recognised when, and only when, the Group becomes a party to the contractual provisions of the financial instrument. The Group determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised initially at fair value, minus in the case of financial liabilities not at fair value through profit or loss, directly attributable transaction costs. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 79 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (r) FINANCIAL INSTRUMENTS (continued) Subsequent measurement The measurement of financial liabilities depends on their classification as follows: (i) Financial liabilities at fair value through profit or loss Financial liabilities at fair value through profit or loss include financial liabilities held for trading and financial liabilities designated upon initial recognition at fair value. Financial liabilities are classified as held for trading if they are acquired for the purpose of selling in the near term. Subsequent to initial recognition, financial liabilities at fair value through profit or loss are measured at fair value. Any gains or losses arising from changes in fair value of the financial liabilities are recognised in profit or loss. The Group and Company’s financial liabilities at fair value through profit or loss are derivative financial liabilities, including share warrants. (ii) Financial liabilities at amortised cost After initial recognition, financial liabilities that are not carried at fair value through profit or loss are subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised, and through the amortisation process. The Group and Company’s financial liabilities at amortised cost are trade and other payables, loans and borrowings and maintenance reserves. Derecognition A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a de-recognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 80 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (s) IMPAIRMENT OF FINANCIAL ASSETS - The Group recognises an allowance for expected credit losses (“ECLs”) for all financial assets not held at fair value through profit or loss. ECLs are based on the difference between the contractual cash flows due in accordance with the contract and all the cash flows that the Group expects to receive, discounted at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the sale of collateral held or other credit enhancements that are integral to the contractual terms. Loss allowances of the Group are measured on either of the following bases:  12-month ECLs: these are ECLs that result from default events that are possible within the 12 months after the reporting date (or for a shorter period if the expected life of the instrument is less than 12 months); or  Lifetime ECLs: these are ECLs that result from all possible default events over the expected life of a financial instrument. (i) Simplified approach The Group applies the simplified approach to provide for ECLs for all trade and other receivables. The simplified approach requires the loss allowance to be measured at an amount equal to lifetime ECLs. The Group established a credit risk matrix based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. (ii) General approach The Group applies the general approach to provide for ECLs on finance lease receivables and all other financial assets not held at fair value through profit or loss. Under the general approach, the loss allowance is measured at an amount equal to 12-month ECLs at initial recognition. At each reporting date, the Group assesses whether the credit risk of a financial instrument has increased significantly since initial recognition. When credit risk has increased significantly since initial recognition, loss allowance is measured at an amount equal to lifetime ECLs. When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, the Group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the Group’s historical experience and informed credit assessment and includes forward- looking information. If credit risk has not increased significantly since initial recognition or if the credit quality of the financial instruments improves such that there is no longer a significant increase in credit risk since initial recognition, loss allowance is measured at an amount equal to 12-month ECLs. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 81 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (s) IMPAIRMENT OF FINANCIAL ASSETS (continued) For the purpose of recognition of an allowance for ECL, the Group considers a financial asset to be in default:  When the lessee does not pay the amounts due under its lease agreements to the Group in excess of the security deposit or the value of the collateral. The Group will recognise an allowance for ECL based on the historical observed default rates, current credit rating of the customers, forecasted economic conditions to assess the amount of ECL allowance required .  Financial assets are written off when there is no reasonable expectation of recovery. Indicators that there is no reasonable expectation of recovery include, amongst others, the failure of a debtor to engage in a repayment plan with the Group, and a failure to make contractual payments for a period of greater than 90 days past due or where the trade receivables were in excess of the security packages held by the Group.  in the case where the financial asset is not secured, when the financial asset is more than 90 days past due. (t) RESTRICTED CASH AND CASH AND CASH EQUIVALENTS  Restricted cash balances comprise bank balances which are pledged as security for certain loan obligations.  Cash and cash equivalents comprise cash at bank and on hand, demand deposits, and short-term, highly liquid investments that are readily convertible to known amount of cash and which are subject to insignificant risk of changes in value. (u) TRADE AND OTHER PAYABLES – Liabilities for trade and other payables which are normally settled within 30 to 60 days credit terms, are initially carried at cost which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Group and subsequently measured at amortised cost using the effective interest method. Gains and losses are recognised in profit or loss when the liabilities are derecognised as well as through the amortisation process. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 82 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (v) LOANS AND BORROWINGS - Interest-bearing loans from banks and financial institutions are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest rate method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings.  Modification of loans – The Group assesses whether the new terms of modified third party loans results in a modification of contractual cash flows substantially different to the original terms. In making this assessment, the Group considers, among others, significant changes in the interest rate. If the terms are substantially different, the Group derecognises the original financial liability and recognises a new financial liability at fair value and recalculates a new effective interest rate for the liability. If the terms are not substantially different, the modification does not result in derecognition, and the Group recalculates the gross carrying amount based on the revised cash flows of the liability recalculated by discounting the modified cash flows at the original effective interest rate and recognises a modification gain or loss in profit or loss. The present value of the modified cash flow of the financial liability is subsequently measured at and amortised using the effective interest rate method over the remaining life of the loan and recorded as part of finance expense in the consolidated statement of profit or loss. (w) SHARE CAPITAL, SHARE ISSUANCE EXPENSES AND TREASURY SHARES - Proceeds from issuance of ordinary shares in excess of the par value are recognised in share premium in equity. Incremental costs directly attributable to the issuance of ordinary shares are deducted from share premium. Own equity instruments that are reacquired (treasury shares) are recognised at cost and deducted from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Group’s own equity instruments. Any difference between the carrying amount and the consideration, if reissued, is recognised in share premium. (x) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING – The Group uses derivative financial instruments such as interest rate swap contracts and cross currency swap contracts to hedge its risks associated with interest rate fluctuations. Such derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is entered into, and are subsequently re-measured at fair value. Any gains or losses arising from changes in fair value on derivatives that do not qualify for hedge accounting are taken directly into profit or loss. At the inception of a hedge relationship, the Group formally designates and documents the hedge relationship to which the Group wishes to apply hedge accounting and the risk management objective and strategy for undertaking the hedge. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 83 3 MATERIAL ACCOUNTING POLICY INFORMATION (continued) (x) DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING (continued) The documentation includes identification of the hedged item or transaction, the hedging instrument, the nature of the risk being hedged and how the Group will assess the hedging instrument’s effectiveness in offsetting the exposure to changes in the hedged item’s (or transaction’s) cash flows attributable to the hedged risk. Such hedges are expected to be highly effective in achieving offsetting changes in cash flows, and are assessed on an ongoing basis to determine that they have been highly effective throughout the financial reporting periods for which they are designated. Cash flow hedges Hedges are classified as cash flow hedges when hedging the exposure to variability in cash flows that is either attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction and could affect profit or loss. The effective portion of the gain or loss on the hedging instrument is recognised directly in the fair value reserve, while the ineffective portion is recognised in profit or loss. Amounts taken to the fair value reserve are transferred to profit or loss when the hedged transaction affects profit or loss, such as when a forecast sale or purchase occurs. If the hedged item is a non-financial asset or liability, the amounts taken to the fair value reserve are transferred to the initial carrying amount of the non-financial asset or liability. If the hedged future cashflows are no longer expected to occur, amounts previously recognised in hedging reserve are transferred to profit or loss. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its designation as a hedge is revoked, amounts previously recognised in hedging reserve remain in other comprehensive income until the future cash flows occur, if the hedged future cash flows are still expected to occur. (y) SEGMENTAL REPORTING - Operating segments are reported in a manner consistent with the internal reporting provided to the Board of Directors who are responsible for allocating resources and assessing performance of the operating segment. The Group’s principal activity is aircraft leasing and therefore there is only one reportable segment. The financial results from this segment are equivalent to the financial statements of the Group as a whole. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 84 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS Estimates and assumptions concerning the future are made in the preparation of financial statements. They affect the application of the Group’s accounting policies, reported amounts of assets, liabilities, income and expenses and disclosures made. They are assessed on an ongoing basis and are based on experience and relevant factors, including expectations of future events that are believed to be reasonable under the circumstances. The Group has considered the impact of climate change on the accounting estimates and judgements. Many effects arising from climate change will be longer term in nature, with an inherent level of uncertainty, and have been assessed as having limited effect on accounting judgements and estimates for the current period. Refer to page 16 on the climate related financial disclosures in the strategic report. Key sources of estimation uncertainty The key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below. (a) Impairment and review of residual value of property, plant and equipment – aircraft The Group periodically evaluates its aircraft for impairment and also reviews the residual value of the aircraft. Management exercises significant judgement in determining whether there is any indication that any aircraft may have been impaired or if there are any indications of changes in residual value. This exercise involves management considering both internal and external sources of information which include but are not limited to: observable indications that the value of the aircraft has declined during the period significantly more than would be expected as a result of the passage of time or normal use; significant adverse changes in the expected usage of the aircraft, technological or aviation environment that have taken place or will take place in the near future; significant increase in market interest rates; evidence of obsolescence or physical damage of the aircraft and worse than expected economic performance of the aircraft. The carrying amount of property, plant and equipment at the end of the reporting period is disclosed in Note 19. (b) Revaluation of property, plant and equipment – aircraft The Group periodically revalues its aircraft to lease encumbered value (“LEV”). Under such a valuation, which reflects the highest and best use given the fact that the aircraft are held for use in a leasing business, the income streams associated with the lease and the expected future market value of the aircraft at the end of the lease are discounted to current values. Critical assumptions made in determining LEV are the discount rate applied to cashflows associated with the lease and the expected future value of aircraft at the end of the lease. The factors considered in estimating the undiscounted cash flows are impacted by changes in future periods due to changes in projected lease rental and maintenance payments, residual values, economic conditions, technology, airline demand for a particular aircraft type and other factors. The carrying amount of property, plant and equipment - aircraft at the end of the reporting period is disclosed in Note 19. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 85 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) (c) Impairment of financial assets The Group follows the guidance of IFRS 9 Financial Instruments in determining when a financial asset is impaired, and this requires judgement on the correlation between historical observed default rates and ECLs. The Group’s methodology for calculating ECLs is set out in Note 7. The carrying amount of financial assets at the end of the reporting period is disclosed in Note 7. (d) Fair value estimation for pre-delivery aircraft deposits paid The fair value of the pre-delivery aircraft deposits paid is calculated by discounting the cashflow of the pre-delivery payments using market-based discount rates. Critical assumptions made in determining the fair value of pre-delivery aircraft deposits paid include the discount rate and forecast inflation rate. The carrying amount of pre-delivery aircraft deposits paid at the end of the reporting period is disclosed in Note 25. (e) Fair value estimation for aircraft purchase rights The Group values aircraft purchase rights using the Black Scholes pricing model. Critical assumptions made in determining the fair value of the aircraft purchase rights include the assumed delivery date, exercise date and asset price. The carrying amount of aircraft purchase rights at the end of the reporting period is disclosed in Note 26. (f) Recognition of maintenance reserves income The Group applies estimation in the determination of total maintenance reserves collected expected to be reimbursed to the lessee over the lease term. The Group will recognise maintenance reserves as revenue over the term of a lease, to the extent that collected maintenance reserves are not expected to be reimbursed to the lessee, on the occurrence of specified maintenance events The carrying amount of maintenance reserves at the end of the reporting period is disclosed in Note 37. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 86 4 CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS (continued) Judgements made in applying accounting policies In the process of applying the Group’s accounting policies, management has made the following judgements, apart from those involving estimations, which have the most significant effect on the amounts recognised in the financial statements: (a) Income taxes and deferred income taxes a. Avation Group (S) Pte Ltd and its subsidiaries were awarded another 5-year Aircraft Leasing Scheme Incentive by the Singapore Economic Development Board, where income from operating leases for aircraft and aircraft engines and qualifying activities will be taxed at a concessionary rate of 8%. Accordingly, qualifying income derived from the period 17 April 2024 to 16 April 2029 will be taxed at the 8% concessionary rate subject to meeting the terms and conditions of the incentives. Management’s judgement is required in the application of the concessionary tax rate of 8% in determining the carrying amount of deferred tax assets and liabilities for temporary differences that are expected to be realised or settled beyond 16 April 2029. b. Deferred tax assets are recognised for all unabsorbed capital allowances and unutilised tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilised. Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 87 5 NEW ACCOUNTING STANDARDS AND INTERPRETATIONS (a) Standards and interpretations adopted during the year The Group has adopted all new standards that have come into effect during the year ended 30 June 2025. The adoption of these standards did not have any material effect on the financial performance or position of the Group and the Company. (b) New standards and interpretations not yet adopted The Group has not adopted the following new or amended standards and interpretations which are relevant to the Group that have been issued but are not yet effective: Description Effective date (period beginning) Amendments to IAS 21 - Lack of exchangeability 1 January 2025 Amendments to IFRS 9 and IFRS 7 : Classification and 1 January 2026 Measurement of Financial Instruments IFRS 18 – Presentation and Disclosure in Financial Statements 1 January 2027 Annual Improvement Volume 11 1 January 2026 IFRS 18 – Presentation and Disclosure in Financial Statements 1 January 2027 IFRS 19 - Subsidiaries without Public Accountability: 1 January 2027 Disclosures Amendments to IFRS 10 and IAS 28: Sale or Contribution of Postponed indefinitely Assets between an Investor and its Associate or joint venture Based on a preliminary assessment using currently available information, the Group does not expect the adoption of the above standards to have a material impact on the financial statements in the period of initial application. These preliminary assessments may be subject to changes arising from ongoing analyses when the Group adopts the standards. The Group plans to adopt the above standards on the effective date. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 88 6 FAIR VALUE MEASUREMENT The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The carrying amounts of cash and bank balances, trade and other receivables, finance lease receivables – current, trade and other payables, loans and borrowings – current and maintenance reserves are a reasonable approximation of fair value either due to their short-term nature or because the interest rate charged closely approximates market interest rates or that the financial instruments have been discounted to their fair value at a current pre-tax interest rate. Group 2025 2024 Carrying Carrying amount Fair value amount Fair value US$’000s US$’000s US$’000s US$’000s Financial assets: Finance lease receivables – non-current 11,129 10,301 12,754 11,461 Deposits paid for pre-delivery aircraft 29,178 29,178 30,333 30,333 Derivative financial assets 1,550 1,550 8,096 8,096 Aircraft purchase rights 91,740 91,740 112,780 112,780 Investment in equity, fair value through profit or loss 9,115 9,115 10,745 10,745 Financial liabilities: Deposits collected – non-current 15,313 13,379 14,967 11,936 Loans and borrowings other than unsecured notes – non-current 286,565 264,290 323,117 299,009 Unsecured notes 295,688 301,549 302,309 300,887 Share warrants 3,142 3,142 2,037 2,037 Company 2025 2024 Carrying Carrying amount Fair value amount Fair value US$’000s US$’000s US$’000s US$’000s Financial assets: Deposits paid for pre-delivery aircraft 29,178 29,178 30,333 30,333 Derivative financial assets 635 635 2,176 2,176 Aircraft purchase rights 91,740 91,740 112,780 112,780 Investment in debt instrument - - 16,335 16,335 Financial liabilities: Loans and borrowings - non-current 36,293 33,883 45,734 49,782 Share warrants 3,142 3,142 2,037 2,037 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 89 6 FAIR VALUE MEASUREMENT (continued) The fair values (other than for unsecured notes, aircraft purchase rights, investment in debt instrument, fair value through profit and loss, investment in equity) above are estimated by discounting expected future cash flows at market incremental lending rate for similar types of lending, borrowing or leasing arrangements at the end of the reporting period, which is classified under level 2 of the fair value hierarchy. The fair value of the unsecured notes and share warrants are based on level 1 quoted prices (unadjusted) in an active market that the Group can access at the measurement date. The fair value of pre-delivery aircraft deposits paid are classified under level 2 of the fair value hierarchy for which the inputs are observable for the determination of fair value using the discounted cashflow model. The fair value of the derivative financial instruments is determined by reference to marked-to- market values provided by counterparties. The fair value measurement of all derivative financial instruments is classified under level 2 of the fair value hierarchy, for which inputs other than quoted prices that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) are included as inputs for the determination of fair value. The fair value of aircraft purchase rights are classified under level 2 of the fair value hierarchy in for which the aircraft price volatility rates are observable and included in the determination of fair value using the Black Scholes model. The fair value of investment in equity classified under level 3 of the fair value hierarchy in prior years has been reclassified to level 1 during the year when the Group received equity investments listed on the Philippine Stock Exchange. Assets measured at fair value classified under level 3: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Fair value measurement using significant unobservable inputs: Aircraft 725,116 791,408 - - Investment in equity, fair value through profit or loss - 10,745 - - Aircraft were revalued at 30 June 2025 and 30 June 2024. Refer to Note 19 for the details on the valuation technique and significant inputs used in the valuation. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 90 6 FAIR VALUE MEASUREMENT (continued) Information about significant unobservable inputs used in level 3 fair value measurements. The following table provides the information about the fair value measurements using unobservable inputs (level 3): Range Range Sensitivity of the Description Valuation Unobservable (weighted (weighted input to fair value techniques inputs average) average) 2025 2024 Aircraft Lease- Discount rates 5.50% to 5.50% to Jet encumbered 7.00% for 7.00% for 5% (2024 : 5%) basis Jets (6.05%) Jets (6.08%) increase in the discount rates will 5.50% to 5.50% to results in a decrease in 7.00% for 8.00% for fair value by US$6.1 Turboprops Turboprops million (2024 : (6.14%) (6.21%) decrease of US$6.1 million) 5% (2024 : 5%) increase in the inflation Inflation rates 2.29% to 2.17% to rate will result in an 2.52% for 2.32% for increase in fair value Jets (2.39%) Jets (2.23%) by US$1.9 million (2024 : increase of 2.26% to 2.15% to US$1.6 million) 2.73% for 2.45% for Turboprops Turboprops Turboprops (2.47%) (2.26%) 5% (2024 : 5%) increase in the discount rates will result in a decrease in fair value by US$1.7 million (2024 : decrease of US$1.9 million) 5% (2024 : 5%) increase in the inflation rate will result in an increase in fair value by US$0.8 million (2024: increase of US$0.5 million) AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 91 6 FAIR VALUE MEASUREMENT (continued) A reconciliation of liabilities arising from financing activities is as follows: Group 1 July Cash flows Non-cash/ 30 June 2024 other 2025 US$’000s US$’000s US$’000s US$’000s Loans and borrowings: Current 49,668 (46,496) 66,912 70,084 Non-current 323,117 22,258 (58,810) 286,565 Unsecured notes: Non-current 302,309 (21,616) 14,995 295,688 675,094 (45,854) 23,097 652,337 Group 1 July Cash flows Non-cash/ 30 June 2023 other 2024 US$’000s US$’000s US$’000s US$’000s Loans and borrowings: Current 61,401 (60,341) 48,608 49,668 Non-current 391,110 (16,746) (51,247) 323,117 Unsecured notes: Non-current 303,465 (15,415) 14,259 302,309 755,976 (92,502) 11,620 675,094 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 92 6 FAIR VALUE MEASUREMENT (continued) Company 1 July Non-cash/ 30 June 2024 Cash flows other 2025 US$’000s US$’000s US$’000s US$’000s Loans and borrowings: Current 8,652 (8,651) 9,441 9,442 Non-current 45,734 - (9,441) 36,293 Trade and other payables: Interest-bearing payable due to subsidiaries 58,572 43,124 - 101,696 112,958 34,473 - 147,431 Company 1 July Non-cash/ 30 June 2023 Cash flows other 2024 US$’000s US$’000s US$’000s US$’000s Loans and borrowings: Current 13,207 (12,229) 7,674 8,652 Non-current 59,535 (5,633) (8,168) 45,734 Trade and other payables: Interest-bearing payable due to subsidiaries 56,669 1,903 - 58,572 129,411 (15,959) (494) 112,958 The ‘other’ column includes the amortisation of transaction costs and reclassification of non-current portion of loans and borrowings due to passage of time. 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES The Group’s activities expose it to a number of market related, operational and financial risks. Risk is mitigated through the application of prudent risk management policies. The risks described below are those that the Group has identified as the most significant risks to the business. The Directors are responsible for managing risk and review risk management policies regularly. The Group utilises derivative financial instruments as part of its overall risk management strategy. (a) Airline Industry Risks The Group faces risks specific to the aviation sector including war, terrorism, equipment failure and pandemics. These exposures are managed through the requirement for the airlines that lease the Group’s assets to maintain insurance, adequate maintenance policies and/or contribute to a maintenance reserve for the major maintenance events for each aircraft. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 93 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (b) Credit risk Credit risk refers to the risk that debtors will default on their obligations to repay amounts owing to the Group. The Group has adopted a prudent credit policy towards extending credit terms to customers and in monitoring those credit terms. This includes assessing customers’ credit standing and periodic reviews of their financial status to determine appropriate credit limits. The Group generally requires its customers to pay rentals in advance and provide collateral in the form of cash or letters of credit as security deposits for leases. See Note 37. The maximum exposure to credit risk in the event that counterparties fail to perform their obligations in relation to each class of financial assets is the carrying amount of those assets as stated in the statement of financial position. The maximum exposure to credit risk for trade receivables at the reporting date by geographical area is: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Asia-Pacific 5,822 7,850 - - Europe 8 - - - 5,830 7,850 - - For trade receivables, the Group has applied the simplified approach and has calculated ECLs based on lifetime expected losses. The Group has established a credit risk matrix based on the Group’s historical credit loss experience, adjusted for forward-looking factors specific to the debtors and the economic environment. The ECL calculations are based on probability of defaults and loss given default rates of each customer. The Group uses judgements in making these assumptions based on past events, current conditions and forecasts of economic conditions. Financial assets that are past due and/or impaired There is no class of financial assets that are past due and/or impaired except for trade receivables and interest-bearing receivables. An allowance for expected credit losses of US$0.4 million (2024: US$0.3 million) has been provided in relation to trade receivables past due and impaired of US$0.7 million (2024: US$3.9 million). An allowance for expected credit losses of US$Nil (2024: US$0.3 million) has been provided in relation to interest- bearing receivables. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 94 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (b) Credit risk (continued) The age analysis of trade receivables past due but not impaired is as follows: Group 2025 2024 US$’000s US$’000s Past due less than 3 months 2,415 1,776 Past due 3 to 6 months 1,128 632 Past due over 6 months 1,993 1,862 5,536 4,270 Bank deposits that are neither past due or impaired are mainly deposits with banks with strong credit–ratings from international credit-rating agencies. While cash and bank balances are also subject to the impairment requirements of IFRS 9, the identified impairment loss was immaterial. Other receivables from third parties which comprise interest-bearing customer loans are subject to credit risks similar to trade receivables. Expected credit losses on other receivables are calculated using the same methodology as for trade receivables. Other receivables from subsidiaries are low in default credit risk as these subsidiaries are financially sound and with good payment track records. For finance lease receivables, the Group applied the general approach under the standard. The Group’s finance lease receivables are considered to have low credit risk and the loss allowance recognised during the period was therefore limited to 12 months expected credit losses on non-secured amounts. The loss allowance for finance lease receivables are recognised in profit or loss and reduce the carrying amounts of the finance lease receivables. The Group provided a loss allowance for US$7,000 in respect of its finance lease receivables during the year ended 30 June 2025. The Group reversed a loss allowance of US$5,000 in respect of its finance lease receivables during the year ended 30 June 2024. (c) Interest rate risk The Group is exposed to interest rate risk through the impact of interest rate changes on floating rate interest-bearing liabilities and assets. The Group seeks to reduce its exposure to interest rate risk by fixing interest rates on the majority of its loans and borrowings. As at 30 June 2025, 84.2% (2024: 96.4%) of the Group’s loans and borrowings are at fixed or hedged interest rates. Interest rate risk is not material and therefore no sensitivity analysis presented. Interest rates and repayment terms for financial assets and financial liabilities are disclosed in the respective notes to the financial statements as of 30 June 2025. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 95 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (d) Foreign currency risk Foreign currency risk arises from transactions and cash balances that are not denominated in the Group’s functional currency. The Group aims to mitigate foreign currency risk by holding the majority of its cash balances in United States Dollars. From time to time the Group utilises forward foreign currency contracts to hedge its exposure to specific currency risks. The Group’s foreign currency exposure is as follows: Restricted Other Other Net cash, cash financial financial currency and cash assets liabilities exposure Group equivalents US$’000s US$’000s US$’000s US$’000s 2025: Pound sterling 123 - (121) 2 Australian dollar 13 - - 13 Euro 7,225 2,622 (39,230) (29,383) Singapore dollar 261 80 (731) (390) 7,622 2,702 (40,082) (29,758) 2024: Pound sterling 49 100 (108) 41 Australian dollar 6 - - 6 Euro 6,811 16,971 (54,890) (31,108) Singapore dollar 93 91 (621) (437) 6,959 17,162 (55,619) (31,498) Restricted Other Other Net cash, cash financial financial currency and cash assets liabilities exposure Company equivalents US$’000s US$’000s US$’000s US$’000s 2025: Pound sterling 43 - (102) (59) Australian dollar 13 - - 13 Euro - - (431) (431) Singapore dollar 101 30 (18) 113 157 30 (551) (364) 2024: Pound sterling 34 64 (91) 7 Australian dollar 6 - - 6 Euro - - (279) (279) Singapore dollar 1 43 (36) 8 41 107 (406) (258) AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 96 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (d) Foreign currency risk (continued) The table below illustrates the effect on total profit and total equity that would result from a strengthening of foreign currencies against the United States Dollar by 10% (2024: 10%) with all other variables including tax rate being held constant: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Foreign currency: Pound sterling 1 4 (6) 1 Australian dollar 1 1 1 1 Euro (2,938) (3,111) (43) (28) Singapore dollar (39) (44) 11 1 A weakening of the respective currencies by 10% against the United States Dollar would have an equal and opposite effect. The Group entered into Euro denominated lease agreements for aircraft and subsequently arranged Euro denominated financing and cross-currency swap contracts in order to hedge exposure to foreign exchange risk associated with Euro denominated lease revenue by offsetting Euro cash inflows and outflows over the lease term. See note 24. (e) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of funds. The Group’s exposure to liquidity risk arises primarily from mismatches of the maturities of financial assets and liabilities. The Group monitors and maintains a level of cash and cash equivalents that management deems adequate to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. Short-term funding is obtained from loan facilities. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 97 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (e) Liquidity risk (continued) Analysis of financial liabilities by remaining contractual maturities The table below summarises the maturity profile of the Group’s financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations: One year or One to five Over five Total Group less years years US$’000s US$’000s US$’000s US$’000s 2025: Financial liabilities: Trade and other payables 4,925 5,424 13,396 23,745 Loans and borrowings* 106,903 588,285 45,983 741,171 Maintenance reserves 69,423 31,360 - 100,783 181,251 625,069 59,379 865,699 2024: Financial liabilities: Trade and other payables 4,412 7,384 11,119 22,915 Loans and borrowings* 86,447 681,400 56,058 823,905 Maintenance reserves 62,153 73,270 - 135,423 153,012 762,054 67,177 982,243 * The maturity profile on loans and borrowings includes maturity analysis of derivative financial liabilities. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 98 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (e) Liquidity risk (continued) Analysis of financial liabilities by remaining contractual maturities The table below summarises the maturity profile of the Company’s financial liabilities at the end of the reporting period based on contractual undiscounted repayment obligations: One year or One to five Over five Total Company less years years US$’000s US$’000s US$’000s US$’000s 2025: Financial liabilities: Trade and other payables 17,068 100,647 - 117,715 Loans and borrowings* 11,629 36,745 - 48,374 28,697 137,392 - 166,089 2024: Financial liabilities: Trade and other payables 48,581 62,937 - 111,518 Loans and borrowings* 11,401 48,437 - 59,838 59,982 111,374 - 171,356 * The maturity profile on loans and borrowings include maturity analysis of derivative financial liabilities. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 99 7 FINANCIAL INSTRUMENTS, RISK MANAGEMENT OBJECTIVES AND POLICIES (continued) (f) Capital risk For the purpose of the Group’s capital management, capital includes debt and equity items such as issued capital, share premium and all other equity reserves attributable to the equity holders of the parent. The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern and to maintain a suitable capital structure so as to fund growth and maximise shareholder value. In order to maintain or achieve an optimal capital structure, the Group may adjust the amount of dividend payments, return capital to shareholders, issue new shares, buy back issued shares, incur new borrowings or sell assets to reduce borrowings. Management monitors capital based on a gearing ratio. The gearing ratio is calculated as net indebtedness divided by total assets. Net indebtedness is calculated as loans and borrowings less cash and cash equivalents. The Group calculates its gearing ratio on the basis of net indebtedness divided by total assets. Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Net indebtedness 604,235 651,533 8,783 47,005 Total assets 1,101,935 1,142,321 331,909 349,561 Gearing ratio: 54.8% 57.0% 2.6% 13.4% AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 100 8 RELATED PARTY TRANSACTIONS In addition to related party information disclosed elsewhere in these financial statements, the following transactions took place between the Group and related parties at terms agreed between the parties. (a) Remuneration of key management personnel The remuneration of Directors and key management includes fees, salary, bonus, commission and other emoluments (including benefits-in-kind) based on the cost incurred by the Company and the Group, and where the Company or Group did not incur any costs, the value of the benefits. Group and Company key management personnel short-term employee benefits includes US$0.4 million (2024: US$0.6 million) and US$0.4 million (2024: US$0.6 million) respectively for share warrants expense. Key management remuneration is as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Key management: Short-term employee benefits 3,451 3,315 1,180 1,392 The amount above includes remuneration in respect of the highest paid Director as follows: Group 2025 2024 US$’000s US$’000s Aggregate emoluments 1,019 1,048 The Directors do not receive any pension contribution from the Company. Refer to Directors’ remuneration report for details. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 101 8 RELATED PARTY TRANSACTIONS (continued) (b) Significant related party transactions: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Entities controlled by key management personnel (including Directors): Lease liability paid (316) (311) (105) (103) Consulting fee expense (389) (370) (389) (370) Maintenance services - (9) - - Service fee income 89 75 - - Refer to note 20 and note 36 for balances with related parties and subsidiaries. (c) Significant transactions between the Company and its subsidiaries: Company 2025 2024 US$’000s US$’000s Dividend income 6,700 - Interest income 4,947 3,029 Management fee income 1,500 1,344 Sale of unsecured notes 37,721 - Interest expense (3,820) (4,749) AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 102 9 REVENUE Group 2025 2024 US$’000s US$’000s Lease rental revenue 89,935 87,749 Less: amortisation of lease incentive asset (3,141) (2,721) 86,794 85,028 Interest income on finance leases 1,219 2,018 Maintenance reserves income 22,086 5,351 110,099 92,397 Maintenance reserves were released to profit or loss as income of US$22.1 million in the year ended 30 June 2025 (2024: US$5.4 million) as the scope of some major maintenance events was reduced, resulting in lower reimbursements, and some major maintenance events are now not forecasted to occur during the term of the current leases. See Note 37. Geographical analysis Group 2025 2024 US$’000s US$’000s Europe 19,608 20,726 Asia Pacific 90,491 71,671 110,099 92,397 During the year ended 30 June 2025, five customers individually represented more than 5% of the Group’s total revenue (2024: five) of which four are based in Asia-Pacific (2024: four) and one is based in Europe (2024: one). The largest customer, who is based in Asia-Pacific, accounts for US$46.2 million or 41.9% of the Group’s total revenue (2024: US$29.2 million or 31.7%). AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 103 10 OTHER INCOME Group 2025 2024 US$’000s US$’000s Deposit released - 350 Fees for late payment 1,364 1,828 Foreign currency exchange gain - 807 Recovery of claims from customers 682 443 Others 402 147 2,448 3,575 11 ADMINISTRATIVE EXPENSES Group 2025 2024 US$’000s US$’000s Staff costs (note 15) 5,682 5,487 Other administrative expenses 3,444 3,305 9,126 8,792 12 OTHER EXPENSES Group 2025 2024 US$’000s US$’000s Foreign currency exchange loss 2,336 - AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 104 13 FINANCE INCOME Group 2025 2024 US$’000s US$’000s Interest income from financial institutions 4,435 5,316 Interest income from non-financial institutions 271 693 Finance income from discounting non-current deposits 629 652 Gain on repurchases of unsecured notes - 675 Gain on early full repayment of borrowings 960 2,507 6,295 9,843 A gain on early full repayment of borrowings arose when loans were refinanced. During the previous year, the gain on repurchases of unsecured note arose when the Group repurchased its unsecured notes through the market ranging from 85.50 cents per note to 85.75 cents per note. 14 FINANCE EXPENSES Group 2025 2024 US$’000s US$’000s Interest expense on borrowings 17,033 20,047 Interest expense on unsecured notes 26,924 29,321 Amortisation of loan transaction cost 1,979 1,571 Amortisation of IFRS 9 gain on debt modification of the unsecured notes 13,885 10,709 Amortisation of interest expense on non-current deposits 628 635 Fair value loss on financial derivatives 1,188 405 Loss on repurchases of unsecured notes 599 - Others 225 327 62,461 63,015 Amortisation of IFRS 9 gain on debt modification of unsecured notes of US$13.9 million (2024: US$10.7 million) relates to the gain on debt modification of the unsecured notes in 2021 which was amortised as part of the effective interest rate method. During the year, the loss on repurchases of unsecured note arose when the Group repurchased its unsecured notes through the market ranging from 97.5 cents per note to 98.5 cents per note. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 105 15 STAFF COSTS Group 2025 2024 US$’000s US$’000s Salaries and fees 4,599 4,090 Bonuses 372 384 Defined contribution plans 196 177 Benefits 104 101 Warrants expense 411 735 5,682 5,487 The average number of Directors of the Company for the year is 5 (2024: 5). The average number of other employees for the year is 20 (2024: 20) and in the following departments: Group 2025 2024 Administrative 4 4 Commercial 4 4 Finance 5 5 Legal 4 4 Technical 3 3 20 20 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 106 16 (LOSS)/PROFIT BEFORE TAXATION (Loss)/profit before taxation for the year is stated after charging/(crediting) the following: Group 2025 2024 US$’000s US$’000s Depreciation of property, plant and equipment 37,512 37,251 Foreign currency exchange loss/(gain) 2,336 (807) Audit fees: Fees payable to the Company’s auditor and their associates for the audit of the Company’s annual accounts 431 330 Fees payable to the Company’s auditor and their associates for audits of the Company’s subsidiaries’ annual accounts 371 308 Total audit fees 802 638 Auditors’ remuneration for non-audit services: - Tax compliance services - - - All other assurance services - - Total fees for non-audit services - - 17 TAXATION Group 2025 2024 US$’000s US$’000s From continuing operations Current tax expense: - Singapore 220 607 - Overseas 1,270 1,345 Under/(over) provision in prior years current tax expense: - Singapore (371) 325 - Overseas (199) (1) Deferred tax expense/(benefit): - Singapore (3,098) 7,255 - Overseas (841) 642 (Over)/under provision in prior years deferred tax expense: - Singapore 1,013 138 - Overseas - - Income tax (credit)/expense (2,006) 10,311 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 107 17 TAXATION (Continued) Income tax differs from the amount of income tax expense determined by applying the Singapore tax rate of 17% to (loss)/profit before income tax as a result of the following differences: Group 2025 2024 US$’000s US$’000s (Loss)/profit before income tax (9,722) 30,046 Tax calculated at 17% (2024: 17%) (1,653) 5,108 Effects of: Under/(over) provision in prior years current tax expense - Singapore (371) 325 - Overseas (199) (1) Under/(over) provision in prior years deferred tax expense: - Singapore 1,013 138 - Overseas - - Non-deductible items 1,831 2,588 Income not subject to tax (1,830) (1,138) Different tax rates of other countries (590) 1,557 Deferred tax asset not recognised 1,583 1,782 Utilisation of deferred tax asset not recognised (1,362) (818) Effect of concessionary tax rate at 8% (500) 770 Others 72 - Income tax (credit)/expense (2,006) 10,311 The Group has unutilised tax losses of approximately US$26.5 million (2024: US$39.2 million) and unabsorbed capital allowances of approximately US$190.5 million (2024: US$86.5 million) that are available for offset against future taxable profits indefinitely, for which no deferred tax asset is recognised due to uncertainty of its recoverability. The use of these unutilised losses and capital allowances is subject to the agreement of tax authorities and compliance with certain provisions of tax legislation of the countries in which the Group operates. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 108 18 EARNINGS PER SHARE (a) Basic earnings per share (“EPS”) EPS is calculated by dividing total (loss)/profit attributable to shareholders of Avation PLC by the weighted average number of ordinary shares in issue during the year. Group 2025 2024 US$’000s US$’000s Net (loss)/profit attributable to shareholders of Avation PLC (7,716) 19,735 Weighted average number of ordinary shares (‘000s) 68,798 70,865 Basic earnings per share (US cents) (11.22) 27.85 (b) Diluted earnings per share For the purpose of calculating diluted earnings per share, total (loss)/profit attributable to shareholders of Avation PLC and the weighted average number of ordinary shares outstanding are adjusted for the effects of all dilutive potential ordinary shares. The Company has one category of dilutive potential ordinary shares, being warrants. For warrants, the weighted average number of shares on issue has been adjusted as if all dilutive share options were exercised. The number of shares that could have been issued upon the exercise of all dilutive share option less the number of shares that could have been issued at fair value (determined as the Company’s average share price for the year) for the same total proceeds is added to the denominator as the number of shares issued for no consideration. Diluted earnings per share attributable to shareholders of Avation PLC is calculated as follows: Group 2025 2024 US$’000s US$’000s Net (loss)/profit attributable to shareholders of Avation PLC (7,716) 19,735 Weighted average number of ordinary shares (‘000s) 68,798 70,865 Adjustment for warrants (‘000s) 2,375 367 Weighted average number of ordinary shares (‘000s) 71,173 71,232 Diluted earnings per share (US cents) (10.84) 27.71 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 109 19 PROPERTY, PLANT AND EQUIPMENT Furniture and Jet Turboprop Group equipment aircraft aircraft Total US$’000s US$’000s US$’000s US$’000s 2025: Cost or valuation: At beginning of year 102 850,755 289,411 1,140,268 Additions 16 31,922 38,101 70,039 Disposals (54) - (38,101) (38,155) Revaluation recognised in equity - 14,260 1,866 16,126 Reclassified to assets held for sale - (145,054) - (145,054) At end of year 64 751,883 291,277 1,043,224 Representing: At cost 64 - - 64 At valuation - 751,883 291,277 1,043,160 64 751,883 291,277 1,043,224 Accumulated depreciation and impairment: At beginning of year 91 264,402 84,355 348,848 Depreciation expense 9 28,282 9,221 37,512 Disposals (54) - - (54) (Reversal of)/impairment loss - (2,541) (2,290) (4,831) Reclassified to assets held for sale - (63,385) - (63,385) At end of year 46 226,758 91,286 318,090 Net book value: At beginning of year 11 586,353 205,056 791,420 At end of year 18 525,125 199,991 725,134 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 110 19 PROPERTY, PLANT AND EQUIPMENT (continued) Furniture and Jet Turboprop Group equipment aircraft aircraft Total US$’000s US$’000s US$’000s US$’000s 2024: Cost or valuation: At beginning of year 97 851,435 310,169 1,161,701 Additions 5 - - 5 Disposals - - (17,692) (17,692) Revaluation recognised in equity - (680) (3,066) (3,746) At end of year 102 850,755 289,411 1,140,268 Representing: At cost 102 - - 102 At valuation - 850,755 289,411 1,140,166 102 850,755 289,411 1,140,268 Accumulated depreciation and impairment: At beginning of year 81 230,783 85,366 316,230 Depreciation expense 10 27,794 9,447 37,251 Disposals - - (10,206) (10,206) (Reversal of)/impairment loss - 5,825 (252) 5,573 At end of year 91 264,402 84,355 348,848 Net book value: At beginning of year 16 620,652 224,803 845,471 At end of year 11 586,353 205,056 791,420 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 111 19 PROPERTY, PLANT AND EQUIPMENT (continued) Assets pledged as security The Group’s aircraft and aircraft held under asset for sale with carrying values of US$651.2 million (2024: US$638.0 million) are mortgaged to secure the Group’s borrowings (Note 35). Additions and Disposals During the year, the Company purchased two turboprop aircraft and sold two turboprop aircraft for a total of US$38.1 million. During the year, the Group purchased two turboprop aircraft, 1 Jet aircraft and sold two turboprop aircraft. One Jet aircraft was reclassified to asset held for sale. During the previous year, the Group sold two turboprop aircraft. One turboprop aircraft sold was classified as held for sale. A gain of US$3.5 million (2024: loss of US$2.9 million) on the sale of aircraft was included within the consolidated statement of profit or loss for the year ended 30 June 2025. Valuation The Group’s aircraft were valued in June 2025 by independent valuers on a lease-encumbered value basis (“LEV’). LEV takes into account the current lease arrangements for the aircraft and estimated residual values at the end of the lease. These amounts have been discounted to present value using discount rates ranging from 5.50% to 7.00% (2024: 5.50% to 7.00%) per annum for jet aircraft and 5.50% to 7.00% (2024: 5.50% to 8.00%) per annum for turboprop aircraft. Different discount rates are considered appropriate for different aircraft based on their respective risk profiles. Significant airline customer failures and uncertainty created by the pandemic followed by rapid recovery in global air travel and improvements in airline credit worthiness have led to impairment losses and related reversals during the years ended 30 June 2024 and 30 June 2025 respectively. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 112 19 PROPERTY, PLANT AND EQUIPMENT (continued) During the year, an upward revaluation of US$16.1 million to equity and reversal of impairment losses of US$4.8 million were recognised in the statement of profit or loss in relation to aircraft which remain part of the fleet. During the previous year, a downward revaluation of US$3.7 million to equity and impairment losses of US$5.6 million were recognised in the statement of profit or loss in relation to aircraft which remain part of the fleet. If the aircraft were measured using the cost model, carrying amounts would be as follows: 2025 2024 Turbo Turbo Group Jets props Jets props US$’000s US$’000s US$’000s US$’000s Cost 688,427 276,103 801,559 276,103 Accumulated depreciation and impairment (208,631) (88,367) (242,369) (82,756) Net book value 479,796 187,736 559,190 193,347 Geographical analysis of property, plant and equipment Asia 2025 Europe Pacific Total US$’000s US$’000s US$’000s Capital expenditure 38,031 32,008 70,039 Net book value – aircraft 221,200 503,916 725,116 Asia 2024 Europe Pacific Total US$’000s US$’000s US$’000s Capital expenditure - 5 5 Net book value – aircraft 217,480 573,929 791,409 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 113 20 TRADE AND OTHER RECEIVABLES Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Current: Trade receivables 6,262 8,162 19 19 Less: Allowance for expected credit losses (432) (312) (19) (19) 5,830 7,850 - - Accrued revenue 2,144 1,939 - - Less: Allowance for expected credit losses (6) (6) - - 2,138 1,933 - - Other receivables: – subsidiaries - - 131,672 147,539 – third parties 631 5,533 74 81 Less: Allowance for expected credit losses (22) (251) - (15,514) 609 5,282 131,746 132,106 Interest receivables: – subsidiaries - - 26 87 – third parties 452 518 19 3 Less: Allowance for expected credit losses (14) (19) - - 438 499 45 90 Deposits 446 49 27 25 Prepaid expenses 451 263 60 141 9,912 15,876 131,878 132,362 Non-current: Other receivables: – subsidiaries - - 39,160 45,222 - third parties 41 570 - - 41 570 39,160 45,222 Right of use assets 964 369 316 122 1,005 939 39,476 45,344 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 114 20 TRADE AND OTHER RECEIVABLES (continued) Accrued revenue represents deferred lease receivables from customers with whom the Group has agreed to defer lease payments for a short-term period. Other receivables from subsidiaries includes interest-bearing receivables of US$130.1 million (2024: US$51.9 million). Current receivables from subsidiaries are unsecured and repayable upon demand. Interest is charged at 5.9% to 6.0% (2024: 5.8%) per annum. An allowance for expected credit loss of US$15.5 million had been provided for other receivables from subsidiaries during the previous year. Other receivables from third parties at Group level include interest-bearing receivables of US$0.5 million (2024: US$5.8 million). Interest is charged at 11.0% (2024: 5.0% to 11.0%) per annum. The average credit period generally granted to customers is 30 to 60 days. Rent for leased aircraft is due in advance in accordance with the leases. The movements in allowance for expected credit losses are set out below: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s At beginning of year 588 11,952 15,533 1,446 (Reversal of)/provision of expected credit losses (87) (234) - 15,533 Transferred to a subsidiary - - (15,533) - Written off (27) (11,130) - (1,446) At end of year 474 588 - 15,533 During the previous year, the Group and Company had written off US$11.1 million and US$1.4 million of receivables mainly due to the finalisation of the liquidation process of insolvent customers. Trade and other receivables denominated in foreign currencies are as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Pound sterling - 100 - 64 Australian dollar - - - - Euro 2,622 - - - Singapore dollar 80 91 30 43 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 115 21 FINANCE LEASE RECEIVABLES Finance lease receivables do not include any contingent rents or residual value guarantees. Future minimum lease payments receivable under finance lease are as follows: 2025 2024 Minimum Present Minimum Present lease value of lease value of Group payments payments payments payments US$’000s US$’000s US$’000s US$’000s Within one year 2,632 1,756 29,907 28,659 Less: Allowance for expected credit losses (22) (22) (15) (15) 2,610 1,734 29,892 28,644 One to two years 11,405 11,129 2,430 1,625 Two to three years - - 11,405 11,129 Three to four years - - - - Four to five years - - - - Later than five years - - - - Total minimum lease payments 14,015 12,863 43,727 41,398 Less: amounts representing interest income (1,152) - (2,329) - Present value of minimum lease payments 12,863 12,863 41,398 41,398 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 116 21 FINANCE LEASE RECEIVABLES (continued) The movements in finance lease receivables are set out below: Group 2025 2024 US$’000s US$’000s At beginning of year 41,398 45,145 Principal receipts (28,997) (3,822) Interest receivable - 352 Foreign currency translation 469 (282) Allowance for/(reversal of) expected credit losses (7) 5 At end of year 12,863 41,398 The movements in allowance for expected losses are set out below: Group 2025 2024 US$’000s US$’000s At beginning of year 15 20 Allowance for/(reversal of) expected credit losses 7 (5) At end of year 22 15 Finance lease receivables denominated in foreign currencies are as follows: Group 2025 2024 US$’000s US$’000s Euro - 16,971 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 117 22 GOODWILL Group 2025 2024 US$’000s US$’000s Cost: At beginning and end of year 2,384 2,384 Allowance for impairment: At beginning and end of year 482 482 Net carrying amount: At beginning and end of year 1,902 1,902 Impairment test of goodwill Goodwill is allocated to the cash generating unit ("CGU") of the Group which is the aircraft leasing business. The recoverable amount of the CGU has been determined based on value-in-use calculations. Cash flow projections used in the value-in-use calculations were based on financial budgets approved by management covering a five-year period. Key assumptions used for value-in-use calculations: 2025 2024 % % Average cash flow growth rate 2.0 2.0 Terminal growth rate 2.0 2.0 Discount rate 6.0 6.0 Management determined cash flow growth based on past performance and its expectations of market development. The terminal growth rate of 2% that was used to extrapolate cash flows beyond the budget period did not exceed the long-term average growth rate for the business in which the CGU operates. Management has estimated that the recoverable amount of the CGU is US$397.8 million (2024: US$465.8 million). Management believes that no reasonably possible change in any of the above key assumptions would cause the carrying value of the CGU to materially exceed its recoverable amount. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 118 23 INVESTMENT IN SUBSIDIARIES Company 2025 2024 US$’000s US$’000s Unquoted equity shares, at cost At beginning of year 2,050 3,328 Less allowance for impairment loss - (1,278) At end of year 2,050 2,050 The movement in allowance for impairment loss are set out below: Company 2025 2024 US$’000s US$’000s At beginning of year 1,278 - Impairment loss - 1,278 At end of year 1,278 1,278 At each reporting period, the Company reviews investment in subsidiaries for indicators of impairment. An impairment is recognised when the carrying amounts exceeds the recoverable amount for that investment. The recoverable amount is the higher of the investment’s fair value less costs of disposal and value in use. During the previous year, an impairment loss was recognised which is determined based on the fair value of the subsidiaries’ aircraft using the lease encumbered basis under level 3 of the fair value hierarchy (see note 7 for information about the significant unobservable inputs used) adjusted by payments for liabilities of the subsidiaries. The directors have assessed the investment in subsidiaries for indicators of impairment for the current year and are satisfied that the investments in subsidiaries are not impaired. Details of subsidiaries are as follows: Name of entity Country of Principal Ownership interest incorporation activities 2025 2024 % % Held directly by the Company: Avation Capital S.A. (a) Luxembourg Financing 100.00 100.00 Capital Lease Aviation Limited United Kingdom Aircraft leasing 99.68 99.68 Avation Group (S) Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Asia) Limited Ireland Aircraft leasing 100.00 100.00 AVAP Leasing (Asia) II Limited Ireland Aircraft leasing 100.00 100.00 AVAP Leasing (Asia) III Limited Ireland Aircraft leasing 100.00 100.00 AVAP Leasing (Asia) IV Limited Ireland Aircraft leasing 100.00 100.00 Capital MSN 4033 II Limited Ireland Aircraft leasing 100.00 100.00 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 119 23 INVESTMENT IN SUBSIDIARIES (continued) Name of entity Country of Principal Ownership incorporation activities interest 2025 2024 % % Held by Capital Lease Aviation Limited: Capital MSN 4033 Limited Ireland Aircraft leasing 99.68 99.68 Held by Avation Eastern Fleet Pte. Ltd.: Airframe Leasing (S) Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Airframe Leasing (S) II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Held by Avation Eastern Fleet II Pte. Ltd.: Airframe Leasing (S) II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Held by Avation Eastern Fleet III Pte. Ltd.: Airframe Leasing (S) III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Held by Avation Group (S) Pte. Ltd.: Avation Eastern Fleet Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Eastern Fleet II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Eastern Fleet III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Pacific Leasing Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Pacific Leasing II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Taiwan Leasing II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Taiwan Leasing III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) VI Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) VII Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) VIII Pte. Ltd Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Europe) IX Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 F100 Fleet Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 MSN 1607 Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Trading Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Trading II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Trading III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Asia Fleet Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Asia Fleet II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Asia Fleet III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Denmark Leasing Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Capital II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Leasing (Asia) VI Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Leasing Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Leasing II Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Leasing III Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 AVAP Aircraft Leasing IV Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Avation Airframe Holding Pte. Ltd. Singapore Aircraft leasing 100.00 100.00 Airframe Holding 65 Pte. Ltd. Singapore Aircraft leasing 100.00 - AVAP Leasing (Japan) Pte. Ltd. Singapore Aircraft leasing 100.00 - All companies as at 30 June 2025 are audited by member firms of Ernst & Young except for: (a) Audited by Moore Audit S.A. for statutory financial statements purposes. The registered office address of the companies incorporated in the following countries are as follows: Ireland - 32 Molesworth Street, Dublin 2 D02 Y512, Ireland. Luxembourg - 46A, Avenue J. F. Kennedy, L-1855 Luxembourg. Singapore - 65 Kampong Bahru Road, Singapore 169370. United Kingdom - 5 Fleet Place, London EC4M 7RD, United Kingdom. For all non-controlling interests, voting rights not controlled by the group are equivalent to ownership interests. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 120 24 DERIVATIVE FINANCIAL ASSETS/LIABILITIES AND HEDGING Contract/ Fair value notional amount Group 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Derivative financial assets -current Interest rate swap – current 58,501 - 714 - Derivative financial assets -non- current Interest rate swap 80,183 162,741 836 7,505 Cross-currency interest rate swap - 4,000 - 591 80,183 166,741 836 8,096 Derivative financial liabilities Warrants - - 3,142 2,037 Contract/ Fair value notional amount Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Derivative financial assets -current Interest rate swap – current 51,250 - 635 - Derivative financial assets – non- current Interest rate swap - 57,750 - 2,176 Derivative financial liabilities Share warrants - - 3,142 2,037 Hedge accounting has been applied for interest rate swap contracts and cross-currency interest rate swap contracts which have been designated as cash flow hedges. The Group determines the economic relationship between the finance lease income, loans and borrowings and the derivative by matching the critical terms of the hedging instrument with the terms of the hedged item. The hedge ratio (the ratio between notional amount of the derivative financial instrument to the amount of the finance lease income and loans and borrowings being hedged) is determined to be 1:1. There were no expected sources of ineffectiveness on the Group’s hedges as the critical terms of the derivative match exactly with the terms of the hedged item. The Group pays fixed rates of interest of 2.3% to 3.8% per annum and receives floating rate interest equal to 1 to 3 month SOFR under the interest rate swap contracts. The Group paid fixed rates of interest of 3.1% to 4.9% per annum and receives floating interest equal to 3-month SOFR under the cross-currency interest rate swap contracts in the previous year. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 121 24 DERIVATIVE FINANCIAL ASSETS/LIABILITIES AND HEDGING (continued) The swap contracts mature between 28 January 2026 and 25 September 2031. Changes in the fair value of these interest rate swap and cross-currency interest rate swap contracts are recognised in the fair value reserve. The net fair value loss net of tax of US$5.8 million (2024: US$5.0 million) on these derivative financial instruments was recognised in the fair value reserve for the year. The fair value of the derivative financial instruments is determined by reference to marked-to- market values provided by counterparties. The fair value measurement of all derivative financial instruments is classified under level 2 of the fair value hierarchy, for which inputs other than quoted prices that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) are included as inputs for the determination of fair value. The Group entered into Euro denominated lease agreements which create exposure to variability in cash flows due movements in the EUR:USD exchange rate. To hedge its exposure to variable cash flows resulting from changes in EUR:USD spot rates, the Group has arranged Euro denominated financing which reduces overall exposure to variable cash flows to the extent that lease receipts and debt service cashflows are matched. The Group is making use of a non-derivative hedging instrument and has designated the cash flows with respect to the loan interest and principal repayment (hedging instrument) against a specific portion of the lease receivable (hedged item). Unrealised foreign exchange gains and losses arising on Euro denominated loans designated as cash flow hedges are recognised in the foreign currency hedge reserve. Unrealised foreign exchange gains and losses recorded in the foreign currency hedging reserve are systematically re-cycled through profit or loss over the remaining term of the related loan on a straight-line basis. The Group determine the hedging relationship between the hedging instruments and the hedged item on a number of criteria including the reference interest rates, tenors, repricing dates and maturities and to notional or par amounts. The Group assesses whether the derivative designated in each hedging relationship is expected to be effective in offsetting changes in cash flows of the hedged item using the hypothetical derivative method. In these hedge relationships, the main sources of ineffectiveness are:  Differences in the pricing dates between the swaps and the borrowings  Differences in the timing of the cash flows of the hedged items and the hedging requirements  The counterparties’ credit risk differently impacting the fair value movements of the hedging instruments and the hedged items  Changes to the forecasted amount of cash flows of hedged items and hedging instruments AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 122 24 DERIVATIVE FINANCIAL ASSETS/LIABILITIES AND HEDGING (continued) During the year 30 June 2025, the effect of the cash flow hedge in the consolidated statement of profit or loss and consolidated statement of comprehensive income was as follows: Total hedging Amount gain/(loss) reclassified Line item recognised in from in the OCI, net of OCI to profit statement of tax or (loss) profit or loss Group US$’000s US$’000s Interest rate swap (5,751) 3,542 Finance expense Cross currency swap - (105) Finance expense Foreign currency hedge (4,389) (313) Other expense (10,140) 3,124 During the year 30 June 2024, the effect of the cash flow hedge in the consolidated statement of profit or loss and consolidated statement of comprehensive income was as follows: Total hedging Amount gain/(loss) reclassified Line item recognised in from in the OCI, net of OCI to profit statement of tax or (loss) profit or loss Group US$’000s US$’000s Interest rate swap (4,883) 6,680 Finance expense Cross currency swap (106) (423) Finance expense Foreign currency hedge 421 (382) Other income (4,568) 5,875 The share warrants consist of 5,728,054 (2024: 5,857,408) share warrants granted to the holders of the unsecured notes to subscribe for ordinary shares of the Company exercisable to 31 October 2026 at a price of 114.5 pence per share (including cashless exercise option). The share warrants were valued based on level 1 quoted prices (unadjusted) in an active market for the year ended 30 June 2025 and 30 June 2024. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 123 25 PRE-DELIVERY AIRCRAFT DEPOSITS PAID Group and Company 2025 2024 US$’000s US$’000s Current 10,960 8,520 Non-current 18,218 21,813 29,178 30,333 Pre-delivery aircraft deposits paid, at fair value: At beginning of year 30,333 8,139 Additions 6,238 2,268 Transfer from aircraft purchase rights (note 26) - 28,500 Transfer to property, plant and equipment upon delivery of aircraft (6,790) - Unrealised loss (603) (8,574) At end of year 29,178 30,333 During the year, the Group paid US$6.2 million (2024: US$2.3 million) pre-delivery aircraft deposits to the manufacturer. During the previous year, the Group exercised purchase rights for 10 aircraft. These deposits are fair valued using the discounted cashflow model. 26 AIRCRAFT PURCHASE RIGHTS Group and Company 2025 2024 US$’000s US$’000s Aircraft purchase rights, at fair value: At beginning of year 112,780 85,820 Unrealised (loss)/gain (21,040) 55,460 Transfer to pre-delivery aircraft deposits paid (note 25) - (28,500) At end of year 91,740 112,780 During the previous year, the Group exercised purchase rights for ten additional ATR 72-600 aircraft for delivery between the last quarter of 2025 and the first quarter of 2028. The exercised purchase rights are recorded as pre-delivery aircraft deposits paid in Note 25. The Group has been granted additional purchase rights during the previous year and holds purchase rights for a further 24 ATR 72-600 aircraft from the manufacturer with an extended expiry date of June 2034. The Group has determined that it would seek to dispose of excess aircraft purchase rights over and above its requirement to acquire additional aircraft for its fleet. The Group accounts for aircraft purchase rights at fair value through profit or loss. Disclosures about the fair value measurement of aircraft purchase rights at fair value are included in Note 6. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 124 27 INVESTMENT IN EQUITY, FAIR VALUE THROUGH PROFIT OR LOSS Group 2025 2024 US$’000s US$’000s Listed (2024: non-listed) equity, at fair value At beginning of year 10,745 11,235 Unrealised loss (1,630) (490) At end of year 9,115 10,745 The Group received 8,014,602 ordinary shares from an airline customer as part of the airline’s restructuring plan during the year ended 30 June 2022. The Group exchanged 8,014,602 unlisted ordinary shares in Philippine Airlines, Inc. with 124,787,353 ordinary shares in PAL Holdings, Inc. during the year. The Group holds 124,729,353 ordinary shares in PAL Holdings, Inc as of 30 June 2025. 28 INVESTMENT IN DEBT INSTRUMENT, FAIR VALUE THROUGH PROFIT OR LOSS Company 2025 2024 US$’000s US$’000s Listed debt instrument, at fair value At beginning of year 16,335 - Additions 21,063 15,415 Disposal (36,478) - Fair value (loss)/gain (920) 920 At end of year - 16,335 As of 30 June 2025, the Company did not hold any of its subsidiary, Avation Capital SA’s 8.25%/9.00% unsecured notes (2024: US$18.0 million par value). AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 125 29 LEASE INCENTIVE ASSETS Group 2025 2024 US$’000s US$’000s Current 2,920 3,136 Non-current 4,831 7,756 7,751 10,892 At beginning of year 10,892 6,329 Additions - 7,284 Amortisation to profit or loss (3,141) (2,721) At end of year 7,751 10,892 30 RESTRICTED CASH, CASH INVESTMENT IN FIXED TERM DEPOSITS AND CASH AND CASH EQUIVALENTS The Group’s restricted cash has been pledged as security for certain loan obligations. Cash investment in fixed term deposits are deposits with a maturity term of more than 3 months and the entire amount is restricted as of 30 June 2025. Cash and cash equivalents include an amount of US$33.8 million (2024: US$10.8 million) related to short term deposits. The rate of interest for cash on interest earning accounts is approximately 1.45% to 5.60% (2024: 0.20% to 5.60%) per annum. Restricted cash, cash investment in fixed term deposits and cash and cash equivalents denominated in foreign currencies are as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Pound sterling 123 49 43 34 Australian dollar 13 6 13 6 Euro 7,225 6,811 - - Singapore dollar 261 93 101 1 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 126 31 ASSETS HELD FOR SALE AND LIABILITIES DIRECTLY ASSOCIATED WITH ASSETS HELD FOR SALE The Group’s aircraft which met the criteria to be classified as assets held for sale and the associated liabilities were as follows: Group 2025 2024 US$’000 US$’000s Assets held for sale: Property, plant and equipment - aircraft At beginning of year - 8,000 Additions 81,669 - Disposal - (8,000) At end of year 81,669 - Other receivables 141 - 81,810 - Liabilities directly associated with assets held for sale: Maintenance reserves 30,438 - 30,438 - During the year, the board of directors decided to sell one jet aircraft. The sale of aircraft was completed on 8 September 2025. The aircraft was measured at lower of carrying amount and fair value less cost to sell at the date of transfer to assets held for sale. At the date of transfer, it was noted the carrying amount was lower. Other receivables of US$0.1 million is interest-bearing as of 30 June 2025. Interest is charged at 5% per annum. During the previous year, the Group sold two turboprop aircraft. One turboprop aircraft sold was classified as held for sale. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 127 32 SHARE CAPITAL AND TREASURY SHARES (a) Share capital 2025 2024 No of shares US$’000s No of shares US$’000s Allotted, called up and fully paid Ordinary shares of 1 penny each: At beginning of the year 70,878,124 1,182 70,883,124 1,182 Issue of shares 4,072,133 52 60,000 1 Cancellation - - (65,000) (1) At end of the year 74,950,257 1,234 70,878,124 1,182 During the year, the Company issued 4,072,133 ordinary shares of 1 penny each at 102.0 pence to 126.0 pence following the exercise of warrants raising total gross proceeds of US$6.5 million. During the previous year, the Company issued 60,000 ordinary shares of 1 penny each at 102.0 pence following the exercise of warrants raising total gross proceeds of US$0.1 million. The holders of ordinary shares (except for treasury shares) are entitled to receive dividends as and when declared by the Company. All ordinary shares carry one vote per share without restrictions. (b) Treasury shares 2025 2024 No of shares US$’000s No of shares US$’000s At beginning of the year - - - - Acquired during the year 8,361,500 16,003 65,000 95 Cancellation - - (65,000) (95) At end of the year 8,361,500 16,003 - - During the year, the Company bought 8,361,500 treasury shares at market price ranging from 138 pence to 150 pence per share to maximise value for shareholders through capital structure management. These shares represent 11.2% of called up share capital. During the previous year, the Company bought 65,000 treasury shares at market price ranging from 110 pence to 119 pence per share and subsequently cancelled 65,000 treasury shares. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 128 32 SHARE CAPITAL AND TREASURY SHARES (continued) (c) Net asset value per share 2025 2024 Net asset value per share (US$) (1) $3.66 $3.62 Net asset value per share (GBP) (2) £2.67 £2.85 (1) Net asset value per share is total equity divided by the total number of shares in issue excluding treasury shares at period end. (2) Based on GBP:US$ exchange rate as at 30 June 2025 of 1.37 (30 June 2024 : 1.27) 33 ASSET REVALUATION RESERVE Group 2025 2024 US$’000s US$’000s At beginning of year 47,343 50,764 Revaluation gain/(loss) 16,126 (3,746) Deferred tax (liability)/credit (1,311) 325 At end of year 62,158 47,343 34 OTHER RESERVES Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Capital redemption reserve 52 52 52 52 Warrant reserve 1,067 3,543 1,067 3,543 Fair value reserve (1,006) 4,745 (1,850) (569) Foreign currency hedge reserve (1,519) 2,870 - - (1,406) 11,210 (731) 3,026 Capital redemption reserve comprises of the par value of the cancelled treasury shares. Warrant reserve comprises the cumulative value of services received from employees recorded on grant of equity-settled share warrants. The expense for service received is recognised over the vesting period. Fair value reserve represents the portion of the fair value changes (net of tax) on derivative financial instruments designated as hedging instruments in cash flow hedges that is determined to be an effective hedge. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 129 34 OTHER RESERVES (continued) Foreign currency hedge reserve represents the unrealised foreign exchange gains and losses arising on Euro denominated loans designated as cash flow hedges. Unrealised foreign exchange gains and losses recorded in the foreign currency hedging reserve are systematically re-cycled through profit or loss over the remaining term of the related loan on a straight-line basis. Movements in other reserves are as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Capital redemption reserve: At beginning of the year 52 51 52 51 Cancellation of treasury shares - 1 - 1 At end of the year 52 52 52 52 Warrant reserve: At beginning of the year 3,543 2,835 3,543 2,835 Employee share warrant scheme: - Value of employee services 411 735 411 735 - Issue of shares (2,847) (18) (2,847) (18) - Expired (40) (9) (40) (9) At end of the year 1,067 3,543 1,067 3,543 Fair value reserve: At beginning of the year 4,745 9,734 (569) 447 Effective portion of changes in fair value (2,314) 1,268 37 689 Net change in fair value reclassified to profit or loss (3,437) (6,257) (1,318) (1,705) At end of the year (1,006) 4,745 (1,850) (569) Foreign currency hedge reserve: At beginning of the year 2,870 2,449 - - Effective portion of changes in fair value (4,076) 803 - - Net change in fair value reclassified to profit or loss (313) (382) - - At end of the year (1,519) 2,870 - - AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 130 35 LOANS AND BORROWINGS Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Secured borrowings 356,649 372,785 45,735 54,386 Unsecured notes (a) 295,688 302,309 - - 652,337 675,094 45,735 54,386 Less: current portion of borrowings (70,084) (49,668) (9,442) (8,652) 582,253 625,426 36,293 45,734 Weighted average Maturity interest rate per annum 2025 2024 2025 2024 % % Secured borrowings 2026-2031 2025-2031 5.19% 4.80% Unsecured notes (a) 2026 2026 8.25% 8.25% Secured borrowings are secured by first ranking mortgages over the relevant aircraft, security assignments of the Group’s rights under leases and other contractual agreements relating to the aircraft, charges over bank accounts in which lease payments relating to the aircraft are received and charges over the issued share capital of certain subsidiaries. The Group complies with all covenants imposed under secured loan agreements at 30 June 2025. The Group incurred transaction costs and upfront fees of US$1.5 million during the year (2024: US$0.9 million) that are capitalised into loans and borrowings. During the year, the Group drawdowns its secured borrowings, net of transaction costs by US$109.1 million (2024: US$30.0 million) to fund its business operations. During the year, the Group repaid its secured borrowings and repurchased its unsecured notes amounting to US$155.0 million (2024: US$121.6 million). AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 131 35 LOANS AND BORROWINGS (continued) Secured loans and borrowings denominated in foreign currencies are as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Euro 79,475 98,506 - - (a) In May 2015, the Company through its wholly owned subsidiaries, Avation Capital S.A. and Avation Group (S) Pte. Ltd. (together, "the Issuers") established a US$500 million global medium term note programme (the "Programme") guaranteed by the Company. Under the Programme, the Issuers may from time to time issue Notes (the “Notes") denominated in any currency as agreed. All Notes issued under the Programme are listed on the Singapore Stock Exchange (“SGX”). During the year, the Company repurchased US$21.6 million unsecured notes through the market at prices ranging from 97.5 US cents to 98.5 US cents. During the previous year, the Company repurchased US$18.0 million unsecured notes through the market at prices ranging from 85.5 US cents to 85.8 US cents. During the year ended 30 June 2021, the Company reached agreement with the holders of its unsecured notes for a maturity extension and the following are the key terms of the extension:  Maturity extension of the notes from 15 May 2021 to 31 October 2026;  Cash coupon of 6.5% with, at the Company’s option, an additional 2.5% payment in kind coupon or an additional 1.75% cash coupon;  Bondholders receive 6,000,000 warrants to subscribe for ordinary shares exercisable to 31 October 2026 at a price of 114.5 pence per share (including cashless exercise option);  The notes are callable at any time prior to maturity, with the call premium decreasing to par from 31 October 2025. The maturity extension of the unsecured note resulted in a gain on debt modification of US$50.3 million during the year ended 30 June 2021. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 132 36 TRADE AND OTHER PAYABLES Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Current: Trade payables 349 448 8 249 Other payables: - subsidiaries - - 15,780 40,729 - third parties 639 1,029 106 98 Deposits collected 3,890 3,605 620 2,360 Deferred lease income 599 634 - - Lease liability 277 306 91 100 Revenue received in advance 6,312 6,006 - - Accrued expenses 7,529 6,892 474 416 19,595 18,920 17,079 43,952 Non-current: Other payables: - subsidiaries - - 99,700 56,389 Deposits collected 15,313 14,967 - - Deferred lease income 2,117 2,716 - - Lease liability 713 104 231 34 Accrued expenses 700 700 700 700 18,843 18,487 100,631 57,123 Other payables due to subsidiaries includes interest-bearing payables of US$101.7 million (2024: US$58.6 million) which are unsecured, and bear interest at 5.8% to 8.2% (2024: 5.8% to 8.2%) per annum. Amounts due to subsidiaries without fixed repayment terms are payable on demand. Deposits collected mainly consist of security deposits collected from customers in respect of aircraft lease commitments and have been discounted to present value at a current pre-tax rate that reflects the risks specific to these deposits. Deposits will be refunded at the end of the respective lease term. Current deposits collected included US$1.5 million for sales deposit of one aircraft as of 30 June 2025. Trade and other payables denominated in foreign currencies are as follows: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Pound sterling 121 108 102 91 Euro 4,952 4,415 431 279 Singapore dollar 731 621 18 36 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 133 37 MAINTENANCE RESERVES Group 2025 2024 US$’000s US$’000s Current: Maintenance reserves 56,880 62,153 Maintenance lease contribution 12,543 - 69,423 62,153 Non-current: Maintenance reserves 24,895 53,817 Maintenance lease contribution 6,465 19,453 31,360 73,270 Total maintenance reserves 100,783 135,423 Group 2025 2024 US$’000s US$’000s At beginning of year 135,423 113,489 Contributions 32,450 34,152 Utilisations (7,879) (6,285) Released to profit or loss (22,086) (5,933) Transfer to buyer (6,687) - Transfer to liabilities directly associated with assets held for sale (30,438) - At end of the year 100,783 135,423 Maintenance reserves were released to profit or loss as income of US$22.1 million in the year ended 30 June 2025 (2024: US$5.4 million) as the scope of some major maintenance events was reduced, resulting in lower reimbursements, and some major maintenance events are now not forecasted to occur during the term of the current leases. Maintenance lease contribution represents the contractual obligations of the Group to contribute to the lessee’s costs for aircraft maintenance. During the previous year, the maintenance lease contribution was US$7.3 million. The Group also holds letters of credit for US$12.0 million (2024: US$12.0 million) as security for lessees’ obligations under operating leases for the maintenance of aircraft. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 134 38 DEFERRED TAX LIABILITIES Recognised deferred tax liabilities are attributable to the following: Group Company 2025 2024 2025 2024 US$’000s US$’000s US$’000s US$’000s Property, plant and equipment 11,291 6,395 - - Aircraft purchase rights and deposits for aircraft 17,572 20,527 17,571 20,527 Gain on debt modification 3,079 3,926 - - Tax losses - 2,709 - - Cash flow hedge (305) 490 (378) (116) 31,637 34,047 17,193 20,411 Movements in temporary differences are as follows: Aircraft purchase Property, rights and Gain on plant and deposits for debt Cash flow Group equipment aircraft modification hedge Total US$’000s US$’000s US$’000s US$’000s US$’000s 2025 At beginning of the year 6,395 20,527 6,635 490 34,047 Recognised in profit or loss 3,585 (2,955) (3,556) - (2,926) Recognised in equity 1,311 - - (795) 516 At end of the year 11,291 17,572 3,079 (305) 31,637 2024 At beginning of the year 6,240 13,010 6,597 847 26,694 Recognised in profit or loss 480 7,517 38 - 8,035 Recognised in equity (325) - - (357) (682) At end of the year 6,395 20,527 6,635 490 34,047 AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 135 38 DEFERRED TAX LIABILITIES (continued) Aircraft purchase rights and deposits for Cash flow Company aircraft hedge Total US$’000s US$’000s US$’000s 2025 At beginning of the year 20,527 (116) 20,411 - Recognised in profit or loss (2,956) - (2,956) - Recognised in equity - (262) (262) At end of the year 17,571 (378) 17,193 2024 At beginning of the year 13,010 92 13,102 - Recognised in profit or loss 7,517 - 7,517 - Recognised in equity - (208) (208) At end of the year 20,527 (116) 20,411 39 SHARE BASED PAYMENTS The Group has an ownership-based compensation scheme for all employees of the Group. Each share warrant converts into one ordinary share of Avation PLC on exercise. No amounts are paid or are payable by the recipient on receipt of the warrant. The warrants carry neither rights to dividends nor voting rights. Warrants are granted to employees of the Group to promote:  Improvement in share price;  Improvement in the Company’s earnings per share;  Reliable and high-quality financial reporting;  Growth in asset value and profits; and  Growth in dividends. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 136 39 SHARE BASED PAYMENTS (continued) Movement in warrants during the year The following table illustrates the number (No.) and weighted average exercise prices in GBP pence (WAEP) of, and movements in, warrants during the year: 2025 2024 No. WAEP No. WAEP Outstanding at beginning of the year 8,070,000 119.2p 7,050,000 118.7p - Granted 565,000 132.0p 1,105,000 121.3p - Exercised (3,957,129) 125.6p (60,000) 102.0p - Expired (393,419) 126.4p (25,000) 106.8p Outstanding at end of the year 4,284,452 114.3p 8,070,000 119.1p Exercisable at end of the year 2,924,471 109.0p 4,681,667 124.7p The weighted average fair value of warrants granted during the year was 41.8 pence (2024: 28.1 pence). The charge recognised in profit or loss in respect of share based payments is US$0.4 million (2024: US$0.7 million). During the year, 3,957,129 warrants were exercised (2024: 60,000 warrants). Warrants outstanding at the end of the year have the following expiry date and exercise price: Exercise Warrant series granted on Expiry date price Number of warrants 2025 2024 23 December 2020 23 Jan 2024* 130.0p - 3,600,000 29 September 2022 29 Nov 2025 102.0p 2,002,452 2,655,000 2 March 2023 2 May 2026 126.0p 622,000 710,000 1 November 2023 1 January 2027 125.5p 480,000 485,000 13 March 2024 13 May 2027 118.0p 615,000 620,000 3 April 2025 3 June 2028 132.0p 565,000 - * The expiry date for the warrants granted on 23 December 2020 was extended to one month after the Company exited a restricted period related to a material refinancing transaction under consideration at the original expiry date. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 137 39 SHARE BASED PAYMENTS (continued) Warrants granted have a 3-year vesting schedule with details as follows: Proportion of total share options that are Vesting period exercisable Before year 1 0 per cent On year 1 and before year 2 Up to 33 per cent of the grant On year 2 and before year 3 Up to 33 per cent of the grant or up to 66 per cent of the grant if warrants were not exercised after the first vesting year On year 3 to 2 months after year 3 Balance or 100 per cent of the grant if warrants were not exercised after the first and second vesting years The warrants were valued using a binomial option pricing model. Where relevant, the expected life used in the model has been adjusted based on management’s best estimate for the effects of non-transferability, exercise restrictions (including the probability of meeting market conditions attached to the option), and behavioural considerations. Expected volatility is based on the historical share price volatility over the previous twelve months. Warrant series Warrant series Warrant series granted on granted on granted on 3 April 2025 13 March 2024 1 November 2023 Inputs into the model: Grant date share price 132.0 pence 118.0 pence 125.5 pence Exercise price 132.0 pence 118.0 pence 125.5 pence Expected volatility 37.82% 24.75% 33.83% Warrant life 3 years 3 years 3 years Dividend yield 0.30% 0.00% 0.00% Risk free interest rate 4.04% to 4.23% 4.04% to 4.23% 4.54% to 4.77% Warrant series Warrant series granted on granted on 2 March 2023 29 September 2022 Inputs into the model: Grant date share price 126.0 pence 102.0 pence Exercise price 126.0 pence 102.0 pence Expected volatility 45.11% 42.96% Warrant life 3 years 3 years Dividend yield 0.00% 0.00% Risk free interest rate 3.70% to 3.73% 4.36% to 4.44% AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 138 40 DIVIDEND Company 2025 2024 US$’000s US$’000s Paid during the year Dividends on ordinary shares -Final (one-tier) dividend for 0.5 pence (2024: Nil) per share 450 - 41 CAPITAL COMMITMENTS Capital expenditure contracted for at the reporting date but not recognised in the financial statements is as follows: Group and Company 2025 2024 US$’000s US$’000s Property, plant and equipment 207,591 249,481 Capital commitments represent amounts due under contracts entered into by the Group to purchase aircraft. The Company has paid deposits towards the cost of these aircraft which are included in pre-delivery aircraft deposits paid. As at the year end, the Group has commitments to purchase ten (2024: twelve) ATR 72-600 aircraft from the manufacturer with expected delivery dates ranging from 2025 to 2028. 42 OPERATING LEASE MATURITY ANALYSIS The Group leases out aircraft under operating leases. The future minimum undiscounted lease payments under non-cancellable leases are as follows: Group 2025 2024 US$’000s US$’000s Within one year 92,036 91,510 One to two years 85,010 82,240 Two to three years 71,007 68,731 Three to four years 43,713 54,215 Four to five years 32,320 27,393 Later than five years 22,591 38,095 346,677 362,184 The Group holds cash deposits of US$20.6 million (2024: US$20.1 million) and letters of credit for US$4.1 million (2024: US$3.5 million) as security for lessees’ obligations under operating leases. AVATION PLC NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2025 139 43 CONTINGENT LIABILITIES Company 2025 2024 US$’000s US$’000s Guarantees 668,933 706,669 The maximum estimated amount that the Company could become liable for under guarantees for loans and borrowings is as shown above. 44 ULTIMATE HOLDING COMPANY No party controls the Company. 45 SUBSEQUENT EVENTS On 3 July 2025, the directors of the Company have resolved to cancel the 8,361,500 shares held in treasury with immediate effect. On 8 July 2025, the Company repurchased 215,000 ordinary shares, through the market at a price of 160 pence per share. The repurchased shares will be held in treasury. On 8 September 2025, the Company completed the sale of one Boeing B777-300ER. The gain on sale is approximately US$4.1 million. The Group repurchased 12,000,000 unsecured notes through the market ranging from 99.25 US cents per note to 99.75 US cents per note. 46 APPROVAL OF FINANCIAL STATEMENTS The financial statements of the Company and the consolidated financial statements of the Group for the year ended 30 June 2025 were authorised for issue by the Board of Directors on 1 October 2025.