28 April 2016

Air Partner plc

Preliminary results for the year ended 31 January 2016

Air Partner delivers strong full-year profits and good strategic progress

Air Partner plc ("Air Partner" or "Group"), the global aviation services group, today reports results for the year ended 31 January 2016.

§ EBITDA is calculated as underlying profit before tax, adjusted for depreciation, amortisation and amortisation on acquisition related intangible assets

* following the change in revenue recognition (see note 1 to the financial information), gross transaction value as opposed to the statutory revenue amount of £49.9m (2015: £37.6m) is stated

† "underlying" excludes other items (see note 3) and discontinued operations

# includes JetCard cash of £16.8m (2015: £14.1m)

¥Refer to Chairman's statement

Financial highlights:

·     Underlying PBT of £4.3m, an increase of 64%

·     Underlying EPS of 29.7p, an increase of 7%, lower than the increase in underlying PBT due to non-recurrence of last year's credits and a non-recurring US tax item. Excluding this, underlying EPS would have been 33.1p

·      Statutory PBT rose by 20% to £3.2m after £1.1m of other items

·      Total cash balances including JetCard deposits of £19.8m (£18.8m)

·     Group cash (excluding JetCard deposits) of £3.0m (£4.7m), following acquisitions (£2.3m net) and working capital movements

·      Net debt, excluding JetCard cash, of £0.5m equivalent to 0.1x EBITDA^§

·      Proposed final dividend of 16.9p up 10.0%, taking the total for the year to 24.3p

·      Positive start to the new year

Operating highlights:

·      Commercial Jets delivered a strong performance, particularly in the UK and with a solid performance in Europe but as with the first half, the US was below expectations

·     Private Jets in the UK performed exceptionally well, Europe was stable and the US was slightly below expectations

·      Freight doubled its profits, performing particularly well in Germany and the UK

·      JetCard utilisation up by 33%

Strategic highlights:

·      After successful trials, our Customer First programme has been rolled-out across the global broking business

·     Acquisition of Cabot Aviation Services Limited, a leading Aircraft Remarketing company, announced in May 2015 for a net consideration of up to £0.8m

·     Acquisition of Baines Simmons Limited, a world leader in Aviation Safety Consulting, announced in August 2015 for a net cash consideration of £5.3m

·      Dividend policy announced targeting cover between 1.5 and 2.0 times

Mark Briffa, CEO of Air Partner, commented: "Our full-year performance is a testament to all of those who work at Air Partner and shows that by putting our Customer First we can deliver good trading and positive momentum, the benefits of which we are already seeing in the new financial year. The acquisition of Cabot Aviation and Baines Simmons are exciting opportunities for Air Partner to extend the Group's service and product capabilities and should enhance our customer proposition."

CHAIRMAN'S STATEMENT

Strong full year results

The Board is pleased to report a strong performance for the year ended 31 January 2016. Gross profit rose by 24% to £27.3m while underlying operating profit and underlying profit before tax increased by 67% and 64% respectively, reflecting the Group's strong trading performance. Reported pre-tax profit rose by 20% to £3.2m after a charge of £1.1m relating to acquisitions and restructuring costs. Basic continuing EPS, however, fell by 31% principally due to the non-recurrence of the prior year tax credit.

The strong underlying performance resulted from improved trading across all our broking operations with outstanding performances in Private Jets which increased its underlying operating profit by over 200% to £2.4m (2015: £0.8m) and Freight which doubled its underlying operating profit to £0.8m (2015: £0.4m). Commercial Jets, our largest division, delivered a 10% increase in underlying operating profit to £3.0m (2015: £2.7m). Baines Simmons for the period of ownership incurred a small loss, as a result of the disruption caused by the sale process and the costs associated with the change in ownership.

The Group's underlying basic earnings per share has increased by 7% to 29.7p. This is lower than the increase in underlying pre-tax profits reflecting the non-recurrence of last year's tax credits coupled with a non-recurring US tax item. Excluding this, underlying basic earnings per share would have been 33.1p.

The reduction in non-JetCard cash of £1.7m to £3.0m was driven by a positive inflow from operating items offset by £2.3m being utilised for the acquisition of Baines Simmons and Cabot, £2.3m relating to dividends and £0.3m negative working capital due to an increase in receivables from our larger credit clients. Taking into account the £3.6m bank loan associated with the acquisition of Baines Simmons, our year-end net debt was £0.5m, excluding JetCard cash, equivalent to 0.1x EBITDA.

A clear strategy

We have made good progress against our clear strategy to build a world class aviation services group which delivers tailored and comprehensive aviation solutions to our global customers. We are achieving this organically through continuous operational improvement, optimisation of existing resources and enhancement of our capabilities and services. Where appropriate, we will acquire complementary capabilities and services that either add to or enhance our customer offer, enabling us to leverage our existing global office network and enhance the quality and visibility of our earnings.

Our Customer First programme is a clear commitment to continuous organic improvement and optimisation. Customer First unequivocally puts our customers at the heart of every decision that we make and with improved services and efficiencies, it will enable us to differentiate our offer and build upon our already strong brand identity. Following successful trials which began in September 2015, the programme, which involves a new way of working, was rolled out across the entire broking business at the beginning of the new financial year. We plan to roll out Customer First across the entire Group in 2016.

Over the course of the financial year we acquired two businesses with excellent reputations in their respective markets which have enhanced and extended our capabilities and services. In May 2015, Air Partner acquired Cabot Aviation, a leading global Aircraft Remarketing broker for a total net consideration of up to £0.8m and in August 2015, Baines Simmons, a world leading Aviation Safety consultant was acquired for an initial net cash consideration of £5.3m and up to a further £0.6m based on operating performance in the year ending 31 January 2018. We are very pleased with customer responses and we are confident that both businesses will thrive as part of our Group in the years ahead as we integrate and invest for growth.

Dividend policy

The Board has proposed a final dividend of 16.9p, a year-on-year increase of 10%, taking the full-year dividend to 24.3p which is also a year-on-year increase of 10% and which is equivalent to a 1.4 times dividend cover on adjusted underlying EPS. Subject to approval at the Annual General Meeting on 29 June 2016, the final dividend is expected to be paid on 6 July 2016 to those shareholders registered at close of business on 10 June 2016. The ex-dividend date will be 9 June 2016.

Since moving to a main market listing in November 1995 and following payment of the proposed final dividend, we will have returned over £44m of cash to shareholders in the form of ordinary and special dividends. Then, Air Partner had 35 staff in three locations across two countries and a market capitalisation of £9m. Today we have 260 staff in twenty locations across eight countries with a market capitalisation of £43m. We have adapted to serve a global economy and a very dynamic aviation market, engaging with a broader variety of customers in ways we could never have foreseen at the time of our IPO. We have maintained our leadership by expanding our capabilities and services, investing in our people, our global office network and IT infrastructure and along the way have introduced innovative new solutions and products such as JetCard. During this 20 year period our operating profit has increased at a compound annual growth rate of 9%.

We have always taken a conservative approach to our financing and organic business development, together with day to day working capital needs, has been primarily funded from free cash flow and we have consistently maintained a strong balance sheet. We will continue to adopt a prudent approach to our financial strategy, balancing the need to invest for future growth as well as delivering shareholder returns.

The Board believes that there are further opportunities to grow the business and we will continue to pursue appropriate businesses if there is a strong commercial and strategic logic and if such opportunities meet our strict financial criteria. Businesses of the quality and stature of Cabot and Baines Simmons, were the result of extensive groundwork and analysis by the management team and these two businesses will make great contribution to the Group in the years ahead. We will maintain our conservative financing and where appropriate fund small and medium sized acquisitions with self-generated free cash flows. The Board has reviewed the Group's dividend policy and determined that it should continue to pay a progressive dividend while at the same time aiming to build cover to between 1.5 and 2.0 time underlying EPS.

Board changes

On 21 April 2016, we announced that Amanda Wills CBE and Shaun Smith would be joining the Board as Independent Non-executive directors with effect from 20 April 2016 and 1 May 2016 respectively.

Amanda started her career with Airtours plc in 1987 and was CEO of Virgin Holidays Travel Group from 2001 to 2014. She is currently Non-executive director of eDreams ODIGEO S.A., a global online travel agency listed on the Madrid Stock Exchange and Chairman of Urbanologie.com, a digital start up business catering for the high net worth and luxury sector. Amanda was awarded a CBE in the Queen's 2015 New Year Honours list for services to the British travel industry and to charity. 

Shaun Smith began his career in retail management and corporate treasury at Marks and Spencer plc before joining Aga Rangemaster Group plc (formerly Glynwed International Plc) in 1989, becoming Group Treasurer in 1999 and Group Finance Director from 2001, until its recent takeover. He was appointed Group Finance Director of Norcros plc on 4 April 2016.

We also announced that Andrew Wood, Independent Non-executive director, Senior independent director and Chairman of the Audit Committee has decided to step down from the Board after five years and will retire as a director at the Company's AGM on 29 June. On Andrew's retirement, Peter Saunders will be appointed as Senior independent director and Shaun Smith will be appointed Chairman of the Audit Committee.

I would like to take the opportunity to thank Andrew Wood for his valued service to the Company over the past five years and his significant contribution to the Board and the Audit and Remuneration Committees.  Andrew's experience and financial knowledge have greatly benefitted the Company and on behalf of the Board I wish him well for the future.

Outlook

Trading so far in the new financial year is encouraging, and given the full-year contribution that we expect from Cabot and Baines Simmons, we enter the new financial year with a degree of optimism. The Board remains confident that its strategy to optimise, enhance and extend our capabilities and services, will continue to create shareholder value.

Richard Everitt, Chairman

CHIEF EXECUTIVE'S REVIEW

The strong results in the year are encouraging and provide a solid platform for the year ahead. Within Broking, all divisions contributed to the success in the period with a standout performance in UK Private Jets, along with a robust performance in Freight and a strong performance in Commercial Jets. Cabot, which is included within our Commercial Jets reporting, completed a number of transactions while also signing up new mandates. Baines Simmons was in line with our expectations taking into account the costs related to moving from a private business to being part of a fully-listed public limited company, as well as the business disruptions which were created through the sale process.

The Group's underlying profit before tax has increased to £4.3m, which is a 64% increase year-on-year and reflects the tremendous effort made by all our staff. We made encouraging progress on the implementation of our Customer First programme. By putting our customers first, we can provide an unrivalled and differentiated service, together with a value for money proposition, a formula which is good for all of those who fly with us as well as for our shareholders.

I am delighted to welcome two new brands to the Air Partner Group: Cabot Aviation, a leading remarketer of commercial and private aircraft and Baines Simmons, a world-leading consultancy and training business in the aircraft safety regulation sector. Both companies have outstanding reputations and exceptional expertise that bring new capabilities and services to Air Partner. We believe that many exciting opportunities lie ahead and that together, we are in a stronger position than ever before to deliver a range of customer-focused aviation solutions.  

Customer First

During 2015, Air Partner embarked on our 'Customer First' programme, to further grow and extend the differentiation of our customer service proposition. Customer First will enable Air Partner to provide our customers with an unrivalled customer experience which in turn will enhance our brand and differentiate our brand identity.

Following an extensive customer feedback exercise during 2014, we identified certain components of our customer's interaction with Air Partner that were inconsistent and the programme was put in place to enable us to understand these inconsistencies and then to put into place an integrated approach to all of the component parts and touch points of our customer's interaction with us.

By being proactive rather than reactive and by listening to our customer's needs we can provide an augmented customer approach which, alongside developments and improvements in our operating processes, should facilitate an improved efficiency of our customer service delivery. Customer First will be an enabler towards ensuring that our people, our processes and our systems work in a true partnership with our customers.

The understanding and building of our customer journey's formed much of the Customer First activity during the year with extensive product and country trials implemented in September 2015. Phase 1 of the programme has been completed with the roll out across the entire broking. We are now beginning to apply Customer First principles into Cabot Aviation and Baines Simmons. This involves the forensic understanding of customer touch points, through identification to retention and how the businesses can leverage the Group's knowledge, infrastructure and learning's from the Customer First programme.

Our customers are vital to Air Partner's success and we are committed to fully understanding their needs and requirements. Our Customer First sales and marketing strategy will further enable us to identify and attract new customers who, once on board, will benefit from the experience and expertise of our most important assets, our people.

Commercial Jets

Gross profit in the period increased by 12% to £14.0m and underlying operating profit rose by 10% to £3.0m. The increase has largely been driven by strong trading in the UK and in Europe, which benefited from a larger tour operating programme compared to summer 2014. During the period, Air Partner was the beneficiary of a guarantee from one of its Tour Operator clients in Southern Europe and in the latter part of the financial year, following late payment from the client, Air Partner claimed against the guarantee. The claim was disputed by the guarantor and is now subject to court action. As a result of the legal dispute, we took a £0.4m provision in the second half, pending the outcome. Adjusting for this provision, underlying operating profit rose by 23% over the year.

Within the UK Commercial Jet team we increased our focus on developing a clearer sales strategy, invested in key talent and focused on improving the service levels we provide to our customer base. Success stories for the UK include a strong contribution in the Oil & Gas and sports sectors, along with continued government work.

Trading in Commercial Jets in Europe has been pleasing, benefitting from a larger tour operating programme as well as a strong performance in Germany. Austria delivered a stable performance while results in Italy were down year-on-year mostly due to Government related work in the previous year which has not been repeated this year. Despite some new customer gains, the performance in the US has been behind our expectations due to a lower number of one-off charters, as well as less activity than expected from a key customer.

Cabot Aviation results are included within the Commercial Jets division. Cabot's main business is acting as agent and broker to airlines (flag carriers and regional) and other aircraft owners, such as banks, operating lessors, manufacturers and insolvency practitioners, to dispose of their surplus aircraft, either by arranging a sale or lease of the aircraft. Cabot also advises clients on the acquisition of aircraft and their fleet management process.

The acquisition added significant aircraft sales and dry lease expertise which complemented Air Partner's short-term wet lease activity. The integration of Cabot has gone well and in November 2015, we announced the extension of our remarketing product range to include Private Jets. We have also placed our wet lease operations, ACMI (Aircraft, Crew, Maintenance and Insurance), within the remit of the Cabot management team.

Cabot has benefitted from being part of the Air Partner Group, operationally as well as from the financial stability which the Group provides. In the second half of the year, Cabot was appointed as exclusive marketing agent by China Airlines for two B747-400s and by Kenya Airways for four B777-200ERs, two of which have been delivered at the start of our new financial year.

Sadly Malcolm Holt, co-founder of Cabot Aviation, passed away in November 2015 after a period of illness. Malcolm and his co-founder Tony Whitty started the business in 1998 and grew it to become one of the leading specialist Aircraft Remarketing agents in the world. It is testament to their combined efforts that the business continues to thrive under Tony's sole leadership within the Group.

Private Jets

Our Private Jet division comprises two distinct product offerings: JetCard, Air Partner's private jet card programme with transparent pricing and no hidden charges, and ad hoc broking, our on demand charter service.

Through Customer First we have a clear competitive advantage and an unrivalled ability to offer a differentiated service proposition to our customers. Over time, this should create a virtuous circle where we will attract the right customers and improve customer loyalty. The principal of our ongoing success is both the understanding of the competitive landscape as well as our relationship approach to our customers. By listening to and understanding our customer's needs, we are able to provide them with solutions tailored to their needs.

Continued investment in our service quality together with our 24 hour, 7 day a week office helps maintain and grow our portfolio of customers. Our account management and sales teams offer a length and breadth of experience that is the envy of the industry. They have always been and remain today at the core of everything we do and they are supported with products, services, guarantees and a global brand that stands out in a noisy and fragmented marketplace.

Furthermore, unlike buying, leasing or fractional ownership, all our products offer the opportunity to judge the cost of each charter flight as a stand-alone purchase, empowered purchasing departments and individuals alike to judge the return on investment in each case and utilise the charter market as cost-effectively as possible.

We are already reaping the benefits of getting closer to our customers with gross profit in the period increasing by 17% to £9.4m and underlying operating profit rising threefold to £2.4m, an outstanding performance although prior year profits were negatively impacted by increased investments into JetCard and redundancy costs which we incurred in Europe.

Nevertheless, the increased profitability was largely driven by a very strong performance in the UK, a solid performance in Europe but somewhat offset by a weaker performance in the US.

Our ad hoc broking performance has been mixed. Total gross profit has increased well but while the performance in the UK has been strong, the US and European businesses have experienced a decline in gross profit when compared to last year, albeit a sharp focus on costs has minimised the impact at an operating profit level. We will be addressing this during the current year.

For JetCard, there are a number of measurements which highlight its strong performance. JetCard cash deposits at the year end stood at £16.8m, up on the prior year balance of £14.1m and the number of JetCards stood at 209, an increase of 12 year-on-year. JetCard profit is not recognised until the client has flown hours and our focus has been to increase the number of cards and to improve the frequency of use, which is reflected in the utilisation rate. Utilisation has increased by an impressive 33% in the year following 22% utilisation in the first half of the year. Overall, this performance is a great testament to our flexible card product which was verified by Conklin and de Decker in an independent study in April 2015 to be the most flexible product in the market.

Freight

Freight has been performing well since the second half of last year and in the period delivered a 21% increase in gross profit to £1.9m and an underlying operating profit of £0.8m, an increase of over 100% year-on-year.

We have continued our work with government aid agencies to assist in a number of geopolitical crises and in addition, strong growth has been seen in our German and US businesses. We have benefitted from our continued focus on developing stronger relationships and a good reputation with freight forwarders. In addition, our 'Red Track' technology has contributed to the success of our AOG (aircraft on ground) business. Freight remains a key component of Air Partner's aviation service proposition and it is encouraging to see our focus and investments delivering a continued and improved performance.

Baines Simmons

Baines Simmons was acquired in August 2015 and during the period of its ownership contributed a gross profit of £2.0m, equivalent to 39% of the total gross profit increase for the Group over the whole financial year. At an operating profit level Baines Simmons incurred a small loss of £0.1m, as a result of the associated disruption caused by the sale process and the costs associated with the change in ownership.

Good integration progress has been made across central functions such as finance, HR, IT, travel management and we expect further benefits and opportunities to arise through the new financial year.

Baines Simmons experienced significant change through 2015. We appointed an Interim Managing Director of Baines Simmons to drive integration with the Group and the business has been restructured into three Practice areas, Training, Consulting and Outsourcing. We have implemented a new leadership and executive team, launched SMARRT MAP (Safety Management and Risk Reduction Tool) to assist organisations improve their safety management systems and performance and we have begun the roll out of our Customer First programme.

Baines Simmons successfully held its 4th European Aviation Safety Symposium 'Through compliance to performance' in November 2015. The event showcased the importance of safety management performance, demonstrated by people at the sharp end of major airlines, maintenance repair organisations, defence organisations and regulatory authorities. What was evident is that while aviation organisations are aware of the significant changes facing them under a performance-based environment, many of them are not prepared for these changes. Baines Simmons can address these issues and support companies through the change process.

Since the end of our financial year we have announced that Baines Simmons had been awarded a 10-year contract to provide aviation support services to the Isle of Man Aircraft Registry ("IoMAR"). This important win for the Outsourcing practice provides a strong foundation for growth over the next decade. Since launch on 1 May 2007, Baines Simmons' airworthiness surveyors have completed 2,760 aircraft surveys, recommending Certificate of Airworthiness for issue, renewal or export. Today, a total of 854 aircraft have been registered and there are 467 aircraft active on the register, covering private and corporate jets as well as twin-turbine helicopters.

Strategy

Our aim is to build a world class aviation services group, renowned for differentiating ourselves, putting the customer first in all we do and delivering an elevated customer experience consistently and proactively.

Our strategy is based around three components: Optimise, Enhance and Extend.

·      Optimise: Central to our strategy is Customer First which has already changed the way we operate day-to-day and critically is changing the way that we think about our customers. Through improved customer insights and alongside increased people and process capabilities, the business has become more efficient and responsive and able to identify growth opportunities. Ultimately, we aspire to optimise our current assets and capital.

·      Enhance: We will also identify capabilities and services which can sit alongside the broking business and which will enhance our existing customer proposition. The acquisition of Cabot is a clear example of enhancing our service proposition whilst at the same time leveraging off our existing customer relationships. Cabot is gaining increasing leverage from Air Partner's existing customer relationships and benefitting from being part of a fully-listed public limited company. The addition of private jet remarketing at the end of 2015 formed part of the original acquisition strategy and is natural enhancement to Cabot's proposition. Private jet remarketing should benefit from being adjacent to our private jet charter operations.  

·      Extend: In addition, we will strive to identify areas of strategic attractiveness within aviation which as standalone entities have strong growth characteristics but which also have product and service overlays on our existing operating model. The acquisition of Baines Simmons is a great example of how we have extended our product and service proposition while being able to drive synergies across our infrastructure as well as across our existing operating model.

Effective allocation of capital resources to the best investment opportunities will drive performance and raise expectations internally and externally, thereby enhancing not just shareholder but also and crucially, wider stakeholder value. There is a degree of controlled disruption of the status quo which is required in order to fuel future growth aspirations but which is enabled by a clear set of levers to alter the business trajectory. In turn, we can increasingly optimise existing capital, all set against the backdrop of a dynamic and competitive marketplace.

People

We will continue to invest in our people, both in recruitment of the best and most professional in our industry, and in providing the training and IT support that enables them to deliver excellent customer service and the best possible solutions to customers.

Towards the end of the financial year we introduced a streamlined Operating Board. Given our operational needs and the clear strategic direction of the Group, a flatter operating structure was required which would more closely align to the business structure with clear accountabilities and responsibilities.

Outlook

Trading remained strong through the first and second half of the financial year and while we are constantly mindful of the uncertainties inherent in our industry, this momentum and the energy, enthusiasm and the dedication of our people, and our clear strategic direction, gives the Board a degree of optimism for the year ahead.

Across our broking division, the Customer First programme should benefit from entering into Phase 2, while we have begun to implement a Customer First programme into Cabot and Baines Simmons. Operational challenges remain however, particularly the performance in the US and the sluggishness of Private Jets in Europe and we are cognisant of the need to deliver improvements in these areas.

During the period we completed two acquisitions which have added capabilities and services and which will provide contributions and organic growth in the years ahead, whilst reducing the volatility and enhancing the quality of our earnings. We are constantly evaluating acquisition opportunities which will increase either the scale of our existing activities or add further new capabilities and services.

I would like to express my sincere thanks to all of my Air Partner colleagues, including the new additions to our team from Cabot Aviation and Baines Simmons, for the hard work, dedication and commitment that they have shown throughout the year so far. I am proud of our people and the standards of excellent service that they deliver to our customer's day in and day out across the globe.

Mark Briffa, Chief Executive Officer

FINANCIAL REVIEW

Revenue Recognition

During the period the directors reviewed the Group's revenue recognition methodology. Following this review, which was conducted with reference to the contractual terms between the Group and its customers, the directors determined that it was more appropriate to recognise the majority of the Group's customer contracts on an agency basis, rather than that of principal. Accordingly, revenue for the year to 31 January 2015 has been restated at £37.6m due to this change in methodology. The Group will continue to present the former revenue amount, now called "Gross transaction value" on the face of the income statement. Further details of this change in methodology are provided in note 1.

There has been no impact on reported profit, net assets or cash flows as a result of this change in methodology.

Other items

We incurred £1.1m of other items in the period under review (2015: £nil). Acquisition-related costs accounted for £0.4m with a further £0.2m amortisation charge of acquisition-related intangible assets. A charge of £0.4m related to the changes to the previous Leadership Team while we also incurred a £0.1m share-based payment cost following the Cabot acquisition.

Financial position

The total cash balance of £19.8m has increased from the prior year comparative of £18.8m driven by an increase in JetCard deposits over the period to £16.8m from £14.1m in the previous year. The reduction in non-JetCard cash of £1.7m to £3.0m was driven by a positive inflow from operating items offset by the net £2.3m being utilised for the acquisition of Baines Simmons and Cabot, £2.3m relating to dividends and £0.3m negative working capital due to an increase in receivables from our larger credit clients.

Our gross debt at the year-end totalled £3.5m and increased through the period due to the £3.6m loan and related charges that we took out as part of the Baines Simmons acquisition.

The Group's net debt, excluding JetCard cash, stood at £0.5m at the year end, equivalent to just 0.1 times EBITDA and demonstrates the strength of our balance sheet despite absorbing two acquisitions during the year.

Taxation

The prior year tax position benefited from two one-off initiatives resulting in the recognition of deferred tax assets, namely a research and development claim and the impact of changing the tax basis for JetCards in the US, which resulted in an overall tax credit. In the current period, the Group's underlying tax rate is 30% (2015: -6%) and the effective tax rate, based on reported profit, excluding discontinued operations is 39% (2015: -6%). The underlying rate has been impacted by a timing difference on JetCards in the US and without this would have stood at 24%. The underlying tax rate is lower than the rate for the statutory profit due to the fact that the acquisition costs, goodwill amortisation and share-based payment charge included within other items were not deductible for tax purposes.

Foreign Exchange

Where possible the Group uses natural hedging to minimise its foreign exchange exposure, for example matching JetCard deposits denominated in Euro with the respective deferred income, or when possible, using forward contracts to fix rates to pay its suppliers. The net foreign exchange gain for the year was £2k (2015: £24k).

The Group also uses derivative financial instruments to hedge certain transactions in accordance with its internal policy. The fair value of these instruments at the balance sheet date was an asset of £36k (2015: liability of £150k) and the gain recognised through the income statement as a result of the change in fair value was £186k (2015: loss of £104k).

Neil Morris, Chief Financial Officer

Forward-looking statements

Announcements issued by Air Partner plc may contain forward looking statements, indicated by words such as "aims", "believes," "expects", "intends," and similar expressions. These statements reflect current views and expectations up to the date of approval of this statement and are made in good faith by the directors. Unless otherwise required by laws, regulations or changes in accounting standards, Air Partner accepts no obligation to update these statements as a result of future events or new information subsequently obtained. New announcements will be made to the market as required under the Disclosure and Transparency Rules.

Trends and factors affecting the business

Air Partner's lead times for ad hoc bookings are measured in days or weeks, rather than months and future revenues cannot be predicted with any certainty. Forward bookings can be impacted very suddenly by changes in financial markets, political instability and natural events affecting the movement of people or cargo from one country to another. Lead times in the remarketing business can be up to one year and therefore forecasting when a particular contract may be realised is not always easy to predict. Economic uncertainty affects corporate, government and individual clients and affects the quality of supply of aircraft as operators consolidate or leave the market. These are trends outside the Group's control but the strategy remains to diversify to address seasonality and broaden the client mix.

Principal risks and uncertainties facing the Group

Aircraft charter broking and remarketing can be classed as a relatively low financial risk business, in that the business sells capacity on aircraft owned and operated by a third party and contracts are normally placed as mirrored transactions, or remarkets aircraft on behalf of a third party. The Group does not have any contractual arrangements with any significant individual or company which are essential to continuation of the business. The Board reviews risks which may have a significant impact on the Group, including operational aviation-related risks (quality and quantity of supply, adverse weather conditions, competitive pricing pressure and regulatory changes) and financial risks such as foreign exchange and interest rate fluctuations, credit risk and liquidity and cash flow management. The profile of both financial and operational risks varies from time to time but the current level of risk is not substantially different from that as at 31 January 2015, as described in the principal risks and uncertainties section of the annual report. The principal risk to the Group's business remains the degree to which clients' available financial resources and the general economic conditions in which they operate affect their willingness to charter. The Group recognises that ad hoc charters are likely to continue to be impacted by economic instability in the major world markets for the foreseeable future.

Related party transactions

There has been no significant change in the level of transactions between Air Partner plc and its subsidiaries, since that disclosed in the annual report for the year ended 31 January 2015, other than the addition of Cabot Aviation Services Limited and Baines Simmons Limited. Such transactions did not materially affect the financial position or performance of the Group in the period under review. There are no other related party transactions which are required to be disclosed under DTR 4.2.8R.

Going concern

After making enquiries, the directors are satisfied that the Group and the Company have adequate resources to continue in business for the foreseeable future.  The directors have therefore continued to adopt the going concern basis in the preparation of these financial statements.

Directors' responsibility statement

The responsibility statement below has been prepared in accordance with the Company's full annual report for the year ended 31 January 2016. Certain parts thereof are not included in this announcement.

Each of the directors serving at the date of approval of the accounts confirms that, to the best of his knowledge and belief:

·      the financial statements, which have been prepared in accordance with IFRS as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and financial performance of the Group; and

·      the Chairman's Statement, the Chief Executive's Review and the Finance  Review, together with the supporting notes, give a fair review of the Group, including a description of the principal risks and uncertainties faced by Air Partner plc.

The responsibility statement was approved by the Board of Directors on 27 April 2016.

The directors of Air Partner plc are listed in the Group's Annual Report and Accounts for the year ended 31 January 2015 and on our website at www.airpartner.com.

See more at: http://www.airpartner.com/en/investors.

About Air Partner:

Founded in 1961, Air Partner is a global aviation services group that provides worldwide solutions to industry, commerce, governments and private individuals. The Group is structured into four reporting divisions: Commercial Jets, Private Jets, Freight and Baines Simmons. The Commercial Jet division charters large airliners to move groups of any size. Cabot Aviation, which is formed within the Commercial Jet division, provides comprehensive remarketing programmes for all types of commercial and corporate aircraft to a wide range of international clients. Private Jets offers the company's unique pre-paid JetCard scheme and on-demand charter. Air Partner Freight charters aircraft of every size to fly almost any cargo anywhere, at any time. Baines Simmons is a world leader in Aviation Safety Consulting which specialises in aviation regulation, compliance and safety management. Air Partner is headquartered alongside Gatwick airport in the UK. Air Partner operates 24/7 year-round and has 20 offices globally. Air Partner is listed on the London Stock Exchange (AIR) and is also ISO 9001:2008 compliant for commercial airline and private jet solutions worldwide.  www.airpartner.com

Consolidated income statement

for the year ended 31 January 2016

*Before other items (see note 3)

Consolidated statement of comprehensive income

for the year ended 31 January 2016

Consolidated statement of changes in equity

for the year ended 31 January 2016

Consolidated statement of financial position

as at 31 January 2016

Consolidated statement of cash flows

for the year ended 31 January 2016

JetCard cash

The closing cash and cash equivalents balance can be further analysed into 'JetCard cash' (being restricted and unrestricted cash received by the Group and Company in respect of its JetCard product) and 'non-JetCard cash' as follows:

1 GENERAL INFORMATION, BASIS OF PREPARATION AND ACCOUNTING POLICIES

General information

The Company is a limited liability company incorporated and domiciled in England and Wales under registration number 00980675. The address of its registered office is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA. The Company is listed on the London Stock Exchange.

This consolidated financial information was approved for issue on 27 April 2016.

This consolidated financial information does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 January 2016 were approved by the board of directors on 27 April 2016, but have not yet been delivered to the Registrar of Companies. The auditor's reports on the financial statements for the years ended 31 January 2016 and 31 January 2015 were unqualified and did not contain a statement under Section 498 of the Companies Act 2006. The financial statements for the period ended 31 January 2015 have been delivered to the Registrar of Companies.

Basis of preparation

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union in accordance with EU law (IAS regulation EC1606/2002) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. While the financial information included in this preliminary announcement has been prepared in accordance with the recognition and measurement criteria of IFRS, this announcement does not itself contain sufficient information to comply with IFRS. The Company expects to publish full financial statements that comply with IFRS in May 2016.

Accounting policies

The accounting policies adopted are consistent with those of the previous financial year, except as described in the following sections:

During the period the directors reviewed the Group's revenue recognition methodology. Following this review, which was conducted with reference to the contractual terms between the Group and its customers, the directors determined that it was more appropriate to recognise the majority of the Group's customer contracts on an agency basis, rather than that of principal.

Accordingly, revenue for the year to 31 January 2015 has been restated at £37.6m due to this change in methodology. The Group will continue to present the former revenue amount, now called "Gross transaction value" on the face of the income statement.

There has been no impact on reported profit, net assets or cash flows as a result of this change in methodology.

The table below reconciles the income statement for the year ended 31 January 2015 as previously reported to the current position:

Going concern

The Directors are, based on current financial projections satisfied that the Group has sufficient resources to continue in operation for the foreseeable future, that is a period of at least 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing these 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 chartering different types of aircraft and related aviation services.

Following acquisitions in the year the group has four operating segments: Commercial Jet Broking, Private Jet Broking, Freight and Baines Simmons. Cabot Aviation Services results are aggregated in to Commercial Jet Broking. As a result, prior year segmental analysis has been restated to reflect the current segmental reporting of continuing operations and the change in accounting methodology referred to in note 1.

Overheads with the exception of Corporate costs are allocated to the Group's operating segments in relation to operating activities.

The Segmental analysis for the year ended 31 January 2015 has been restated following a change in accounting methodology referred to in note 1.

Sales transactions between operating segments are carried out on an arm's length basis. All results, assets and liabilities 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 revenue, assets and liabilities at segmental level, therefore these items are not disclosed.

The segmental information, as provided to the Board 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 gross profit is derived from overseas countries. The Group reviews gross profit based upon location of the assets used to generate that gross profit. 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 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 OTHER ITEMS

Restructuring costs relate to changes to the management structure following the acquisitions made during the year.

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 other items) is included as the directors believe it provides a better understanding of the underlying performance of the Group. Other items are disclosed in note 3.

6 NET CASH INFLOW FROM OPERATING ACTIVITIES

7 TAXATION

Corporation tax in the UK was calculated at 20.16% (2015: 21.3%) of the estimated assessable profit for the period. Taxation for other jurisdictions was calculated at the rates prevailing in the respective jurisdictions.

The charge for the period can be reconciled to the profit per the consolidated income statement as follows:

The UK corporation tax rate decreased from 21% to 20% from 1 April 2015. The impact on the tax charge is shown above.

Further reductions to the UK corporation tax rate have been announced. A reduction to 19% effective from 1 April 2017 and to 18% on 1 April 2020 was substantively enacted on 16 October 2015 and the deferred tax balance has been adjusted to reflect this change (see note 11).

8 CONTINGENT LIABILITIES

The Group had issued the following guarantees at 31 January 2016:

In addition, the Company's bankers hold a free and floating charge over the Company's assets.

9 ACQUISITIONS

On 12 May 2015, Air Partner plc acquired 100% of the issued share capital of Cabot Aviation Services Limited, obtaining control of the company on that date.  Cabot Aviation Services Limited is a leading global aircraft remarketing broker. The acquisition of Cabot Aviation Services Limited adds significant aircraft sales and dry lease expertise and knowledge to the group.

On 18 August 2015, Air Partner plc acquired 100% of the issued share capital of Baines Simmons Limited, obtaining control of the company on that date.  Baines Simmons Limited is a leading aviation safety consultant. Baines Simmons Limited will enable Air Partner to extend the Group's service and product capabilities with offerings complementary to its existing broking business.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.

No goodwill is deductible for tax purposes.

Cabot Aviation Services Limited

The goodwill of £787,000 arising from the acquisition is attributable to the value of the assembled workforce and the ability of the senior staff to generate future business.

Acquisition related costs (included in other items) amounted to £93,000.

Cabot Aviation Services Limited contributed revenue of £273,000 and losses after tax of £95,000 being the results profit for the period between the date of acquisition and 31 January 2016.

If the acquisition of Cabot Aviation Services Limited had been completed on the first day of the financial year, Group revenues for the period would have been £50,149,000 and Group profit would have been £2,305,000.

Baines Simmons Limited

The goodwill of £2.8m arising from the acquisition consists of the value of the assembled workforce and the ability of the company to generate new revenue.

Acquisition related costs (included in other items) amount to £326,000.

Baines Simmons limited contributed revenue of £2,381,000 and losses after tax of £74,000, being the results for the period between the date of acquisition and the balance sheet date.

If the acquisition of Baines Simmons Limited had been completed on the first day of the financial year, Group revenues for the period would have been £52,776,000 and Group profit would have been £2,437,000.

10 DISCONTINUED OPERATIONS

In March 2010, Air Partner Private Jets Limited was closed. A claim against the company was filed by former employees of that business on the grounds that contractual undertakings could no longer be fulfilled. The last date for the claims to be pursued was 16 March 2016. As no further actions have been taken by the claimants, the claims have lapsed. As a result the provision was derecognised.

There were no cash flows attributable to discontinued operations in the year ended 31 January 2016 (2015: £7,000 cash outflow).

11 DEFERRED TAX

Deferred tax has been calculated at 18% (2015: 20%) in respect of UK companies and at the prevailing tax rates for the overseas subsidiaries. The following are the major deferred tax liabilities and assets recognised by the Group and the Company with movements thereon during the current and prior reporting periods.

Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. 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 £232,000 (2015: £212,000) for which no deferred tax asset was recognised, as it is not considered probable that there will be future taxable profits available.