Air Partner plc

Notes to the unaudited financial information

for the half year ended 31 July 2014

Basis of preparation

This condensed financial information for the half year ended 31 July 2014 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and International Accounting Standard ("IAS") 34 Interim Financial Reporting as adopted by the European Union.  It was authorised for issue by the Board on 22 September 2014.   These interim condensed financial statements are unaudited and should be read in conjunction with the annual financial statements for the eighteen months ended 31 January 2014.

The financial information contained in this document does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.  The independent auditor, Deloitte LLP, issued an unqualified opinion on the Group's statutory financial statements under International Financial Reporting Standards ("IFRS") as adopted by the European Union for the eighteen months ended 31 January 2014. The auditor's report did not draw attention to any matter of emphasis and did not contain any statement under section 498 (2) or (3) of the Companies Act 2006. The statutory accounts for the eighteen month period ended 31 January 2014 have been filed with the Registrar of Companies.

The accounting policies adopted are consistent with those of the annual financial statements for the eighteen month period ended 31 January 2014, with the exception of the changes made to segmental analysis as detailed in note 2.

Going concern

The Group has adequate cash resources and no debt.  As a consequence, the directors believe that the  Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

The directors have a reasonable expectation that the Group has sufficient resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Key accounting estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could differ from these estimates. These underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if these are also affected.

2.      SEGMENTAL ANALYSIS

The services provided by the Group consist of hiring different types of aircraft for charter to its customers and related aviation services. Following a change in management structure, and the closure of the Fuel division, results of the Emergency Planning division have been aggregated with Commercial Jets. In addition, overheads, with the exception of Corporate costs, are allocated to the Group's operating segments in relation to operating activities.  As a result, prior year segmental analysis has been restated to reflect the current segmental reporting of continuing operations.

Sales transactions between operating segments are carried out on an arm's length basis and all revenues, results, assets and liabilities which are reviewed by the Board, which is the chief operating decision maker, are prepared on a basis consistent with those that are reported in the financial statements.

The Board does not review assets and liabilities at a segmental level, therefore these items are not disclosed.

The segmental information, as provided to the Board for the reportable segments on a monthly basis, is as follows:

The Company is domiciled in the UK but due to the nature of the Group's operations, a significant amount of revenue from external customers is derived from overseas countries. The Group reviews revenue based upon the location of the assets used to generate those revenues. Apart from the UK, no single country is deemed to have material non-current asset levels, other than goodwill in relation to the French operation.

The Board also reviews information on a geographical basis based on the parts of the world which are considered to be key to operational activities. As a result the following additional information is provided showing a geographical split of the United Kingdom, Europe, the United States of America and the Rest of the World:

Europe can be further analysed as:

3.      NON-TRADING ITEMS

4.      DIVIDENDS

5.      EARNINGS PER SHARE

The calculation of the basic and diluted earnings per share is based on the following data:

The denominators used are the same as those above for both basic and diluted earnings per share from continuing and discontinued operations.

The calculation of underlying earnings per share (before non-trading items) is included as the directors believe it provides a better understanding of the underlying performance of the Group. Non-trading items are disclosed in note 3.

6.      NET CASH INFLOW FROM OPERATING ACTIVITIES

7.      TAXATION

8.      GOODWILL

Goodwill relates entirely to one cash generating unit, being Air Partner International SAS.

For the purpose of impairment testing, the recoverable amount of the cash generating unit was measured on the basis of its value in use, by applying cash flow projections based on financial forecasts covering a three-year period. The key assumptions for the value in use calculation were those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast period. The estimated growth rates were based on past performance and expectation of future changes in the market. The growth rate used to extrapolate cash flow projections beyond the period covered by the financial forecasts was 2% (31 January 2014 and 31 July 2013: 2%). The rate used to discount the forecast cash flows was 14% (31 January 2014: 14%; 31 July 2013: 10%).

The directors do not believe that there are any reasonably possible changes to the key assumptions that would result in a material impairment of goodwill.

9.      OTHER INTANGIBLE ASSETS

10.    PROPERTY, PLANT AND EQUIPMENT 

There were no commitments at the period end to purchase any items of property, plant or equipment.

11.    CONTINGENT LIABILITIES

At 31 July 2014, the Group had a charge over cash of £376,000 (31 January 2014: £376,000; 31 July 2013: £240,000) in respect of a passenger sales agency agreement.  Additionally, the Group had a bank guarantee for £17,000 (31 January 2014: £17,000; 31 July 2013: £17,000) lodged in regard to certain employee rights in Dubai and another of €700,000 (31 January 2014 and 31 July 2013: €nil) lodged in favour of an aircraft operator.

12.    PROVISIONS

A provision of £471,000 (31 January 2014: £465,000; 31 July 2013: £473,000) was held in relation to the potential costs of settlement of claims which have been received from third parties following the closure of Air Partner Private Jets Limited.  All remaining claims within this provision are expected to be settled by 31 March 2016.

13.    DISCONTINUED OPERATIONS

On 20 January 2014, management announced the closure of the Group's Fuel division. As a result, trading results of the Fuel division, which were previously disclosed as continuing operations, have now been disclosed as discontinued operations.

14.    DEFERRED TAX

The following is the analysis of the deferred tax balances for financial reporting purposes:

At the balance sheet date the Group had undistributed earnings in respect of overseas subsidiaries that would be subject to overseas withholding taxes on remission to the UK.  No liability has been recognised in respect of these earnings because the Group is in a position to control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.

At the balance sheet date, the Group had unused tax losses totalling £494,000 (31 January 2014: £317,000; 31 July 2013: £287,000) for which no deferred tax asset was recognised, as it is not considered probable that there will be future taxable profits available.

The other temporary timing differences of £750,000 recognised in the period relate to a research and development tax claim in the United Kingdom and the treatment of JetCard deposits in the US.