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Interim results for the six months to 31 July 2017

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RNS Number : 0343S
Air Partner PLC
28 September 2017
 

28 September 2017

 

 

Air Partner plc

 

Interim results for the six months ended 31 July 2017

 

Air Partner delivers strong first half trading results

 

Air Partner plc ("Air Partner" or "Group"), the global aviation services group, today reports results for the six months to 31 July 2017.

 

 

July 2017

July 2016

Change (%)

Gross Transaction Value

£135.5m

£112.9m

20.0

Gross profit

£18.1m

£16.1m

12.2

Underlying§ profit before tax

£4.1m

£3.0m

34.4

Statutory profit before tax

£3.7m

£2.6m

40.0

Cash (including JetCard)

£28.8m

£24.6m

17.4

Net cash (non-JetCard cash less debt)

£10.6m

£5.2m

103.7

Underlying§ basic EPS

5.6p

4.5p

24.4

Basic continuing EPS

4.9p

3.8p

28.9

Interim dividend

1.7p

1.6p

6.2

 

§ - Underlying results are stated after other items as defined in note 1

 

Financial Highlights:

·      Gross profit of £18.1m, a year-on-year increase of 12.2%, reflecting strong trading performance in the  Broking division

·      Underlying profit before tax of £4.1m, a year-on-year increase of 34.4%

Commercial Jets delivered underlying operating profit growth of 44.3% to £2.7m

Freight underlying operating profit up 88.6% to £0.6m

·      Underlying EPS of 5.6p, a year-on-year increase of 24.4%

·      Net cash (non-JetCard cash less debt), of £10.6m, an increase of 103.7%

·      Interim dividend increased by 6.2% to 1.7p per share, payable on 27 October 2017

 

Operating Highlights:

Broking

·      Commercial Jets:

Significant contracts won for elite sports teams

Strong growth from European tour operations

German automotive contract renewed for a further three years

Air Partner Remarketing completed work for Kenya Airways, China Airlines and awarded exclusive contract to market 15 Boeing 777-200ER aircraft for Saudia

 

·      Private Jets:

JetCard renewals up 24%

Number of Private Jet clients in the US up 70%

Continuing alignment of our JetCard product with the lifestyle needs of our customers with exciting partnerships and alliances

 

Consulting & Training:

·      Baines Simmons: new safety and training contracts won with tier 1 national carriers and the Royal Air Force of Oman

·      Clockwork Research has good forward pipeline of projects

·      Cross selling success across the group

·      Acquisition of SafeSkys Limited enhances capabilities in aviation safety

 

Strategic Highlights & Outlook

·      Customer First fully embedded across the group, with the positive results seen in increased customer loyalty and improved retention across both divisions  

·      Good headway made against our strategic objective to create a balanced business, with two market leading divisions of Broking and Consulting & Training

·      Current trading is in line with expectations

·      Second half entered with confidence that expectations for rest of year will be met

 

Mark Briffa, CEO of Air Partner, commented: "I am very pleased to report on an encouraging first half performance with continued progress made as a Group. We are building the company for the long-term, and our strategic objective to create balance between our Broking and Consulting & Training divisions is gaining traction. Our Customer First programme continues to be a key differentiator for us, and has played an important role in both customer retention and new business wins in the period under review. We continue to progress organic and acquisition opportunities that enable us to extend the services and capabilities we offer our global clients. We enter the next six months with optimism that our expectations for the full year will be met."

This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.

 

Air Partner

01293 844788

Mark Briffa, CEO

 

Neil Morris, CFO

Kate Patrick, Investor Relations

 

 

 

Temple Bar Advisory (Financial PR advisor)

020 7002 1080

Tom Allison

07789 998 020

Ed Orlebar

 

Alycia MacAskill           

 

 

 

 

CHAIRMAN'S STATEMENT

An encouraging start to the year

In my first statement as Chairman, I am pleased to report an encouraging set of half year results, which demonstrate continued success in the implementation of our strategy.  The Group has had a good start to the year with gross profit for the six months to 31 July 2017 up 12.2% to £18.1m.  Underlying operating profit and underlying profit before tax rose by 36.0% and 34.4% respectively.

Air Partner is on a journey of transformation, with a clear, long-term strategy to become a world-class global aviation services group.   We aim to create a balanced business, with two market leading divisions of Broking and Consulting & Training.   Our strategy aligns us to the needs of our global customer base and should provide our shareholders with higher quality and increasingly visible earnings.

Our Customer First programme is now firmly established across the Group.  As well as retaining existing customers, with key contracts renewed over the last six months, we are winning exciting new business.  There is still a significant amount of hard work to be done across the Group in the months and years ahead to achieve our long-term objectives but I am confident we have the right framework in place from which to grow.  

Our acquisition strategy is underpinned by sound financial management.  Whilst our strong balance sheet and significant cash flows enable us to carry out acquisitions, we are careful to ensure both financial and cultural fit, maintaining sound financial disciplines in our assessment of each transaction.

Our people

Our customers fly with us time and again because they can rely on the world-class service and expertise we consistently deliver. Our people are at the heart of what we do and they enable us to deliver that world-class, 24-7, year-round, personal service that our customers enjoy as well as the expertise and focus on safety to give them confidence in the air. I am pleased by the commitment from all our people to work together to grow the business for the long-term and achieve our strategic objectives, and so, on behalf of the Board, I would like to thank all of our colleagues for their hard work in delivering another strong set of results. 

Board Changes

As previously announced, Richard Everitt stood down as Chairman following the AGM in June, after 12 years as a Non-executive Director and five years as Chairman. It is with great pleasure that I take up the role, having been a Non-executive Director of the Company since 2014. Following my appointment as Chairman, Amanda Wills has been appointed as Chairman of the Remuneration Committee and Richard Jackson has been appointed as Senior Independent Director.  Shaun Smith remains Head of the Audit Committee.

Earlier this month, we also announced that Tracy Beicken has been appointed as Group Legal Counsel and Company Secretary. Tracy is an experienced in house lawyer and company secretary and will take responsibility for all legal and company secretarial matters within the Company.

I am confident that through working closely with our highly experienced Board and Group senior management, we can continue to implement our long-term transformation strategy to become a world-class global aviation services group. 

Dividend

In line with our dividend policy, the Board is proposing an interim dividend of 1.7p, representing a year-on-year increase of 6.2%.   The interim dividend is expected to be paid on 27 October 2017 to those shareholders registered at close of business on 6 October 2017. 

Outlook

The Board is pleased with our start to the year.  Trading performance since the period end has remained solid, and the Board continues to have confidence in our full year expectations.

Air Partner is making good progress on our journey of transformation.  As we always state, the world of aviation, and most especially the global charter industry, is a volatile industry. Our aim to create a balanced business with two market leading divisions of Broking and Consulting & Training should provide us with higher quality and increasingly visible earnings for our shareholders.  While it is prudent to remain cautious, we are confident that we have the right long-term strategy in place, in alignment with the needs of our global customer base.

Peter Saunders

Chairman

 

 

CHIEF EXECUTIVE'S REVIEW

 

I am delighted with this very encouraging first half performance and the continued progress we are making as a Group.  Underlying profit before tax increased 34.4% year on year to £4.1m and statutory profit before tax by 40.0% to £3.7m, which is testament to the skills, expertise and knowledge of our teams who provide the world-class experience that keeps our customers flying with confidence.  

 

The first six months of the year have seen further progress against our clear long-term strategy to become a world-class global aviation services group.   We have a global platform from which to grow the business, with a clear objective to achieve balance between our two divisions - Broking and Consulting & Training - providing exceptional service and value to our customers globally, and delivering higher quality and increasingly visible earnings to our shareholders.

 

I am very pleased with our strategic progress so far and am encouraged that there is still a lot more we can do.   As shareholders know from reading prior Chief Executive Reviews, a significant amount of time has been spent over the years engaging with customers to really understand how they perceive Air Partner, what they expect from us, what they value from us, and where and how they want to work with us in the future.   We listened, and those findings became the foundation of our clear, long-term strategy.  It gave us the confidence to launch initiatives such as the Customer First programme, which has become central to our business transformation.

 

Customer First is now fully embedded across the Group, with the positive results seen in increased customer loyalty and improved retention across our divisions.   We are seeing some encouraging new business from existing customers requesting services from other divisions, which is testament to the strength of our relationships and the quality and increasing breadth of products and services we can deliver.  

Today, as an organisation we are more aligned to our global customer than ever before.  Like our customers, we are thinking, planning and managing for the long-term, acting and behaving strategically.   We are quick to respond and able to navigate short-term obstacles if required to do so, but find we win more often when we think and act long-term, with integrity, while putting our customer's best interests first.   Our long-term approach has significant benefits for customers and staff, and I am confident it will continue to deliver sound economic returns for our shareholders.

 

Our long-term approach informs how we consider potential acquisitions, and also how vendors perceive Air Partner as a potential owner of their business. I am delighted with the businesses we have acquired and the quality people they have brought into the Group.  We will take time to get things right.  Our ambition for these businesses as 'an Air Partner company' is substantial and strategically we think well beyond a one or two year financial forecast period, confident that the real value creation and operational benefit to the Group comes as they settle, align with our culture and develop working relationships across the global organisation.   We will never be afraid to pause, take a step back or accelerate investment today, if it positions us to take a leap forward tomorrow, because we believe the long-term rewards are worth it.     

 

Divisional Review

 

Broking

This has been a strong first half performance for our Broking division, with gross profit up 21.4% to £15.7m and underlying operating profit up 27.9% to £4.7m.

 

Commercial Jets has underpinned this strong performance, with gross profit increased by 34.4% to £9.4m and underlying operating profit up 44.3% to £2.7m. This growth was driven by pleasing performances from all territories with good business from both new and existing customers.  Across Europe we have benefitted not only from our European Tour Operating programmes but also from our expertise in serving elite sports teams with flights to the US, China, Singapore, South America and Europe arranged for high profile football clubs during the pre-season tours. In the UK we have won a new contract with a premier league football club, bringing the total number of football teams we work for to 35.  We have also renewed our contract with a major German automotive company for a further three years. Finally, our UK and US teams have worked seamlessly together to deliver a successful programme for a large global insurance company.

In Private Jets, gross profit increased slightly year-on-year, by 0.4% to £5.1m while underlying operating profit decreased by 6.0% to £1.4m. This masks the growth and improvement in performance of our US and JetCard businesses and reflects a lower spend over the period from some key clients. In addition, we have continued to invest in our sales team both in the UK and US. While this investment had an adverse impact on the first half results, we are well positioned to benefit from this over the second half and beyond. Our work on the Customer First programme is rewarding us with JetCard renewals up 24% year on year. To enhance our customer experience further we are driving initiatives to align our product with the lifestyle needs of our customers with some exciting partnerships and alliances, and have rolled out bespoke JetCard catering in 33 airports across the UK and Continental Europe. 

 

In the US, where we expanded our New York office last year and brought in new management to bring greater focus and strong leadership to the region, we have seen a sharp increase in corporate and high net worth individual business, with overall client numbers increased by nearly 70% over the period. European Private Jets business remains small with slow growth, hence our focus on the US and UK where there are greater opportunities and greater rewards.

Air Partner Remarketing has had a good start to the new financial year having been rebranded under the Air Partner umbrella.  Over the period, Air Partner Remarketing has successfully sold and delivered two B737-700 aircraft and a GE engine for Kenya Airways, two 747-400s on behalf of China Airlines and won an exclusive contract with Saudia to market 15 Boeing 777-200ER aircraft. 

We continue to consider Freight a strategic offering, enabling us to provide our customers with a full aviation service. Freight has had a good first half, against a soft comparative period, with gross profit up 42.9% to £1.1m and underlying operating profit increasing by 88.6% to £0.6m. While the automotive sector remained strong, this growth arose from our international offices, which benefited from contracts to the Middle East.

Consulting & Training

Overall, our Consulting & Training division's performance was flat year-on-year, with underlying operating profit at £0.4m. However, gross profit has decreased by 24.1%, to £2.5m due to the timing of major projects in Baines Simmons when compared to prior year. It should also be noted that we now include our Emergency Planning Division ("EPD") within Consulting & Training, and EPD has had a good start to the year, with operating profit up 42.1%, albeit off a low base.

 

At the 2017 full year we reported that our 2015 acquisition, Baines Simmons, was profitable in its first full year of operation under the Air Partner banner. Over the first half, Baines Simmons has won new safety and training contracts with tier 1 national carriers and with the Royal Air Force of Oman. The pipeline for the second half remains encouraging. Baines Simmons has secured a four year contract with the European Defence Agency to provide consultancy and training services to all 28 Member States and is also working with various well-known schedule and charter airlines.  We have also seen a strong performance in Academy Training.

 

At the end of 2016, we acquired fatigue management consultancy, Clockwork Research. First half trading has been challenging, but with a good pipeline of projects we are confident in the longer-term prospects for the business.  We have undertaken work to further strengthen this pipeline and leverage the Baines Simmons offering. An encouraging example of the cross selling opportunities that have arisen following acquisition, is that Clockwork Research is now carrying out work within the rotary sector with a Baines Simmons client.

 

I am pleased to announce today the acquisition of SafeSkys Limited ("SafeSkys"), a leading Environmental and Air Traffic Control services provider to UK & International airports.    Established in 1993 by Richard Barber, SafeSkys has built a great reputation serving Airport customers around the world in specialist areas of Aviation Safety, predominantly Environmental Wildlife Hazard Management & Bird Control and Air Traffic Control.    SafeSkys is a great acquisition for Air Partner, immediately enhancing the Group's capabilities and international presence in Aviation Safety and extending our activities with Airport customers.  Working with Richard, and as part of Air Partner's Consulting & Training division, we look forward to supporting SafeSkys's international growth in the years ahead.

 

We continue to assess acquisition opportunities within Consulting & Training, as we aim to create a balanced mix between the two divisions. 

 

Outlook

The new financial year has started well and we are making good headway against our strategic objectives. Trading since the period end has remained solid. We enter the second half with continued confidence that our expectations for the remainder of the year will be met, whilst the final quarter of the financial year can be the most challenging.

 

We have built a strong platform from which to continue to grow the business. Our long-term objective to create a more equal balance between our two divisions, Broking and Consulting & Training, will deliver higher quality and increasingly visible earnings to our shareholders and will further align us to the needs of our global customer base, enabling us to continue to provide exceptional service and value.

 

Mark Briffa, Chief Executive Officer                                                                            

 

 

 

FINANCIAL REVIEW

 

Financial position

 

The total cash balance of £28.8m has increased from the prior year comparative of £24.6m, driven by an increase in non-JetCard cash of £5.0m to £13.4m, offset by a reduction in JetCard cash of £0.8m to £15.4m. The increase in non-JetCard cash was a result of working capital movements, particularly an increase in deferred income relating to our Tour Operations programmes, the first half trading performance and a further weakening of sterling, particularly against the euro, compared to prior year. JetCard cash has reduced because of the continued high utilisation of existing cards outpacing renewals and new card sales.

 

As noted in our annual report, we have undertaken a programme of placing all JetCard funds into segregated accounts to provide further assurance to our customers. This has resulted in the significant increase in 'Restricted Cash' from £2.4m at 31 July 2016 to £11.0m. The remainder of the JetCard cash will have been moved into these accounts by the year-end.

 

Our gross debt at the year-end totalled £2.9m and has reduced following the refinancing of the loan that was in place at the 31 January 2017 with a revolving credit facility. This is due to be repaid or rolled on in November 2017.

 

The Group's net cash, excluding JetCard cash, stood at £10.6m, compared to net cash of £1.0m at the year-end and demonstrates the strength of our balance sheet.

 

Foreign Exchange

 

Although sterling has weakened since the EU referendum result in June 2016, given that the Group maintains a net asset position in euros and profits are generated in its international offices, the Group has not suffered an adverse impact from these movements.

 

Where possible the Group uses natural hedging to minimise its foreign exchange exposure, for example matching JetCard deposits denominated in euros with the respective deferred income. The net foreign exchange gain for the period was £92k (2016: £42k gain).

 

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 a net asset of £3k (2016: £5k liability).

 

Balance Sheet

 

The significant increase in both trade and other receivables (increase of £8.1m), other liabilities (increase of £6.6m) and deferred income (increase of £5.6m) is driven by a combination of a larger Tour Operations programme this financial year, coupled with the timing of the flights. As noted above, the increase in deferred income has also resulted in a higher cash balance.

 

Taxation

 

The underlying effective tax rate for the period stood at 27.4% (2016: 24.7%) and is higher than the UK statutory rate of tax due to the impact of international tax rates. 

 

Other items

 

Other items of £0.4m (2016: £0.4m) include amortisation of intangible assets arising on acquisition of £0.2m and acquisition related costs of £0.2m. Other items in the prior period comprise restructuring of £0.2m and amortisation of intangibles arising on acquisition of £0.2m.

 

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 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 trends are 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, remarketing and consultancy 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 2017, 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 changes, both positive and negative, in the macro-economic climate.

 

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 2017. 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 interim report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The unaudited condensed consolidated financial statements included in this interim report have been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

 

Mark Briffa

Neil Morris

Chief Executive Officer

Chief Financial Officer

27 September 2017

27 September 2017

 

The directors of Air Partner plc are listed in the Group's Annual Report and Accounts for the year ended 31 January 2017 and on our website at www.airpartner.com.

 

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

 

Enquiries

 

Air Partner

01293 844788

Mark Briffa, CEO

 

Neil Morris, CFO

Kate Patrick, Investor Relations

 

 

 

Temple Bar Advisory (Financial PR advisor)

020 7002 1080

Tom Allison

07789 998 020

Ed Orlebar

 

Alycia MacAskill           

 

 

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 has two divisions‎: Broking division, comprising air charter broking and remarketing; and the Consulting & Training division, comprising the aviation safety consultancies, Baines Simmons, Clockwork Research and SafeSkys, as well as Air Partner's Emergency Planning Division. For reporting purposes, the Group is structured into four divisions: Commercial Jets, Private Jets, Freight (Broking) and Consulting & Training (Baines Simmons, Clockwork Research, SafeSkys and Air Partner's Emergency Planning Division). The Commercial Jet division charters large airliners to move groups of any size. Air Partner Remarketing, which is 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. 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 specialising in aviation regulation, compliance and safety management. Clockwork Research is a leading fatigue risk management consultancy. SafeSkys is a leading Environmental and Air Traffic Control services provider to UK and International airports. 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 ISO 9001:2008 compliant for commercial airline and private jet solutions worldwide. www.airpartner.com

 

 Consolidated income statement

for the half year ended 31 July 2017 (unaudited)

 

 

 

Half year ended 31 July 2017

Half year ended 31 July 2016

Year ended 31 January 2017

Continuing operations

Note

Underlying*

£'000

Other items

£'000

Total

£'000

Underlying*

£'000

Other items

£'000

Total

£'000

Underlying*

£'000

Other items

£'000

Total

£'000

Gross transaction value (GTV)

 

135,450

-

135,450

112,922

-

112,922

215,829

-

215,829

Revenue

 

23,109

-

23,109

22,230

-

22,230

42,538

-

42,538

Gross profit

2

18,118

-

18,118

16,141

-

16,141

31,707

-

31,707

Administrative expenses

 

(13,966)

(371)

(14,337)

(13,087)

(385)

(13,472)

(26,593)

(709)

(27,302)

Operating profit

2

4,152

(371)

3,781

3,054

(385)

2,669

5,114

(709)

4,405

Finance income

 

2

-

2

8

-

8

39

-

39

Finance expense

 

(104)

-

(104)

(49)

-

(49)

(96)

-

(96)

Profit before tax

 

4,050

(371)

3,679

3,013

(385)

2,628

5,057

(709)

4,348

 

 

 

 

 

 

 

 

 

 

 

Taxation

8

(1,108)

26

(1,082)

(745)

32

(713)

(1,654)

153

(1,501)

Profit for the period from continuing operations

 

2,942

(345)

2,597

2,268

(353)

1,915

3,403

(556)

2,847

 

 

 

 

 

 

 

 

 

 

 

Profit for the period

2,942

(345)

2,597

2,268

(353)

1,915

3,403

(556)

2,847

Attributable to:

 

 

 

 

 

 

 

 

 

 

Owners of the parent company

 

2,942

(345)

2,597

2,268

(353)

1,915

3,403

(556)

2,847

Earnings/(loss) per share:

 

 

 

 

 

 

 

 

 

 

Continuing operations

 

 

 

 

 

 

 

 

 

 

Basic

5

5.6p

(0.7)p

4.9p

4.5p

(0.7)p

3.8p

6.5p

(1.1)p

5.4p

Diluted

5

5.5p

(0.6)p

4.9p

4.4p

(0.7)p

3.7p

6.4p

(1.1)p

5.3p

Continuing and discontinued operations

 

 

 

 

 

 

 

 

 

 

Basic

5

5.6p

(0.7)p

4.9p

4.5p

(0.7)p

3.8p

6.5p

(1.1)p

5.4p

Diluted

5

5.5p

(0.6)p

4.9p

4.4p

(0.7)p

3.7p

6.4p

(1.1)p

5.3p

 

*Before other items (see note 3)

 

 

Consolidated statement of comprehensive income

for the half year ended 31 July 2017 (unaudited)

 

 

Half year ended
31 July 2017

£'000

Half year ended
31 July 2016

£'000

Year ended
31 January 2017

£'000

Profit for the period

2,597

1,915

2,847

Other comprehensive income - items that may subsequently be reclassified to profit or loss:

 

 

 

Exchange differences on translation of foreign operations

97

254

346

Total comprehensive income for the period

2,694

2,169

3,193

Attributable to:

 

 

 

Owners of the parent company

2,694

2,169

3,193

 

 

 

Consolidated statement of changes in equity

for the half year ended 31 July 2017 (unaudited)

 

 

 

Share

capital

£'000

Share

premium

account

£'000

 

Own

shares

£'000

 

Translation

reserve

£'000

Share

option

reserve

£'000

 

Retained

earnings

£'000

 

Total

equity

£'000

Opening equity as at 1 February 2016

522

4,814

295

(1,199)

1,064

1,708

6,650

13,854

Profit for the period

-

-

-

-

-

-

1,915

1,915

Exchange differences on translation of foreign operations

-

-

-

-

254

-

-

254

Total comprehensive income for the period

-

-

-

-

254

-

1,915

2,169

Share option movement for the period

-

-

-

-

-

122

-

122

Issue of shares

-

-

-

60

-

(60)

-

-

Share options exercised during the period

-

-

-

110

-

-

(45)

65

Dividends paid (note 4)

-

-

-

-

-

-

(1,741)

(1,741)

Closing equity as at 31 July 2016

522

4,814

295

(1,029)

1,318

1,770

6,779

14,469

 

 

 

Share

capital

£'000

Share

premium

account

£'000

Merger Reserve

£'000

 

Own

shares

£'000

 

Translation

reserve

£'000

Share

option

reserve

£'000

 

Retained

earnings

£'000

 

Total

equity

£'000

Opening equity as at 1 February 2017

522

4,755

354

(672)

1,410

2,017

6,548

14,934

Profit for the period

-

-

-

-

-

-

2,597

2,597

Exchange differences on translation of foreign operations

-

-

-

-

97

-

-

97

Total comprehensive income for the period

-

-

-

-

97

-

2,597

2,694

Share option movement for the period

-

-

-

-

-

299

-

299

Issue of shares

-

(59)

59

60

-

(60)

-

-

Share options exercised during the period

-

-

-

15

-

-

(14)

1

Dividends paid (note 4)

-

-

-

-

-

-

(1,869)

(1,869)

Closing equity as at 31 July 2017

522

4,696

413

(597)

1,507

2,256

7,262

16,059

 

 

Consolidated statement of financial position 

as at 31 July 2017

 

                       

Note

31 July

2017

(unaudited)

£'000

31 July

2016

(unaudited)

£'000

31 January

2017

(audited)

£'000

Assets

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

6

3,860

3,440

3,787

Other intangible assets

 

4,795

4,825

4,956

Property, plant and equipment

 

1,084

1,140

1,086

Deferred tax assets

 

533

524

533

 

 

10,272

9,929

10,362

Current assets

 

 

 

 

Trade and other receivables

 

42,245

34,191

25,405

Current tax assets

 

488

399

506

Restricted bank balances

 

10,977

2,434

1,965

Other cash and cash equivalents

 

17,842

22,121

17,830

Total cash and cash equivalents

 

28,819

24,555

19,795

Derivative financial instruments

 

3

-

-

 

 

71,555

59,145

45,706

Total assets

 

81,827

69,074

56,068

Current liabilities

 

 

 

 

Trade and other payables

 

(4,796)

(6,564)

(4,359)

Current tax liabilities

 

(1,430)

(466)

(1,071)

Other liabilities

 

(11,873)

(5,241)

(4,463)

Borrowings

 

(2,872)

(514)

(514)

Deferred income

 

(43,827)

(38,242)

(27,350)

Provisions

 

(71)

-

-

Derivative financial instruments

 

-

(5)

(9)

 

 

(64,869)

(51,032)

(37,766)

Net current assets

 

6,686

8,113

7,940

Long term liabilities

 

 

 

 

Borrowings

 

-

(2,700)

(2,443)

Deferred consideration

 

(200)

-

(200)

Deferred tax liability

 

(699)

(873)

(725)

Total long term liabilities

 

(899)

(3,573)

(3,368)

Total liabilities

 

(65,768)

(54,605)

(41,134)

Net assets

 

16,059

14,469

14,934

Equity

 

 

 

 

Share capital

 

522

522

522

Share premium account

 

4,696

4,814

4,755

Merger Reserve

 

413

295

354

Own shares

 

(597)

(1,029)

(672)

Translation reserve

 

1,507

1,318

1,410

Share option reserve

 

2,256

1,770

2,017

Retained earnings

 

7,262

6,779

6,548

Total equity

 

16,059

14,469

14,934

 

 

Consolidated statement of cash flows

for the half year ended 31 July 2017 (unaudited) 

 

 

 

 

Note

 Half year ended
31 July 2017

£'000

 Half year ended
31 July 2016

£'000

Net cash inflow from operating activities

7

10,079

5,088

Investing activities

 

 

 

‒            Interest received

 

2

8

‒            Purchases of property, plant and equipment

 

(217)

(22)

‒            Purchases of intangible assets

 

(53)

-

Net cash used in investing activities

 

(268)

(14)

Financing activities

 

 

 

‒            Dividends paid

 

(1,869)

(1,741)

‒            Proceeds on exercise of share options

 

1

65

‒            New bank loans raised

 

2,872

-

‒            Repayment of borrowings

 

(2,872)

(257)

Net cash used in financing activities

 

(1,868)

(1,933)

Net increase in cash and cash equivalents

 

7,943

3,141

Opening cash and cash equivalents

 

19,795

19,791

Effect of foreign exchange rate changes

 

1,081

1,623

Closing cash and cash equivalents

 

28,819

24,555

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 in respect of its JetCard product) and 'non-JetCard cash' as follows:

 

 

 

 

2017

£'000

2016

£'000

JetCard cash restricted in its use

10,977

2,434

Jetcard cash unrestricted in its use

4,394

13,715

Total JetCard cash

15,371

16,149

Non-JetCard cash

13,448

8,406

Cash and cash equivalents

28,819

24,555

 

1 GENERAL INFORMATION, BASIS OF PREPARATION AND ACCOUNTING POLICIES

 

General information

The Directors of Air Partner plc present their interim report and the unaudited condensed consolidated financial statements for the six months ended 31 July 2017.

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.

The Interim Financial Statements have been reviewed, but not audited, by Deloitte LLP and were approved by the Board of Directors on 27 September 2017.

The information for the six months ended 31 July 2017 does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006. The Interim Financial Statements should be read in conjunction with the Annual Report and Financial Statements, for the year ended 31 January 2017, which were prepared in accordance with European Union endorsed International Financial Reporting Standards ("IFRS") and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Annual Report and Financial Statements for the year ended 31 January 2017 were approved by the Board of Directors on 26 April 2017 and delivered to the Registrar of Companies. The auditor's report on those financial statements was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under section 498(2) or (3) of the Companies Act 2006.

Basis of preparation

This condensed financial information for the half year ended 31 July 2017 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. These interim condensed financial statements are unaudited and should be read in conjunction with the annual financial statements for the year ended 31 January 2017.

 

Accounting policies

The accounting policies adopted are consistent with those of the annual financial statements for the year ended 31 January 2017.

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 the Interim Financial Statements.

Gross transaction value

Gross transaction value (GTV) represents the total value invoiced to clients and is stated exclusive of value added tax.

Other items

The directors believe that the underlying profit and earnings per share measures provide additional useful information for shareholders on the underlying performance of the business. These measures are consistent with how underlying business performance is measured internally. The underlying profit before tax measure is not a recognised profit measure under IFRS and may not be directly comparable with adjusted profit measures used by other companies. The adjustments made to reported profit before tax are to exclude the following:

· restructuring costs

· significant and one-off impairment charges and provisions that distort underlying trading

· costs relating to strategy changes that are not considered normal operating costs of the underlying business

· acquisition costs

· amortisation of intangible assets recognised on acquisition

· acquisition consideration classified as an employee cost under IFRS 3 Business Combinations.

 

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 future periods.

 

2 SEGMENTAL ANALYSIS

The services provided by the Group consist of chartering different types of aircraft and related aviation services.

The Group has four operating segments: Commercial Jets, Private Jets and Freight (comprising Broking) and Consulting & Training. Due to a change of reporting line, Emergency Planning is now included with Consulting & Training - the prior period comparatives have been restated to reflect this change.

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

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 gross transactional value, revenue, assets or 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:

Half year ended 31 July 2017

(unaudited)

Continuing operations

Commercial

Jet Broking

£'000

Private

Jet Broking

£'000

Freight

broking

£'000

 Broking

£'000

Consulting & Training

£'000

Corporate

costs

£'000

 

Total

£'000

Segmental gross profit

9,444

5,140

1,073

15,657

2,461

-

18,118

Depreciation and amortisation

(139)

(90)

(1)

(230)

(49)

-

(279)

Underlying operating profit

2,736

1,376

577

4,689

408

(945)

4,152

Other items (see note 3)

(147)

-

-

(147)

(224)

-

(371)

Segment result

2,589

1,376

577

4,542

184

(945)

3,781

Finance income

 

 

 

 

 

 

2

Finance expense

 

 

 

 

 

 

(104)

Profit before tax

 

 

 

 

 

 

3,679

Tax

 

 

 

 

 

 

(1,082)

Profit after tax

 

 

 

 

 

 

2,597

 

Half year ended 31 July 2016

(unaudited)

Continuing operations

Commercial

Jet Broking

£'000

Private

Jet Broking

£'000

Freight

broking

£'000

Broking

£'000

Consulting & Training

£'000

Corporate

costs

£'000

 

Total

£'000

Segmental gross profit

7,025

5,122

751

12,898

3,243

-

16,141

Depreciation and amortisation

(90)

(63)

-

(153)

(42)

-

(195)

Underlying operating profit

1,896

1,464

306

3,666

406

(1,018)

3,054

Other items (see note 3)

(111)

-

-

(111)

(274)

-

(385)

Segment result

1,785

1,464

306

3,555

132

(1,018)

2,669

Finance income

 

 

 

 

 

 

8

Finance expense

 

 

 

 

 

 

(49)

Profit before tax

 

 

 

 

 

 

2,628

Tax

 

 

 

 

 

 

(713)

Profit after tax

 

 

 

 

 

 

1,915

 

 

Year ended 31 January 2017

 

Continuing operations

Commercial

Jet Broking

£'000

Private

Jet Broking

£'000

Freight

broking

£'000

Broking

£'000

Consulting

& Training

£'000

Corporate

costs

£'000

 

Total

£'000

Segmental gross profit

14,126

10,236

1,113

25,475

6,232

-

31,707

Depreciation and amortisation

(249)

(162)

-

(411)

(62)

-

(473)

Underlying operating profit

3,508

2,491

233

6,232

867

(1,985)

5,114

Other items (see note 3)

(182)

-

-

(182)

(399)

(128)

(709)

Segmental result

3,326

2,491

233

6,050

468

(2,113)

4,405

Finance income

 

 

 

 

 

 

39

Finance expense

 

 

 

 

 

 

(96)

Profit before tax

 

 

 

 

 

 

4,348

Tax

 

 

 

 

 

 

(1,501)

Profit after tax

 

 

 

 

 

 

2,847

 

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:

Continuing operations

United

Kingdom

£'000

 

Europe

£'000

United States

of America

£'000

Rest of the

World

£'000

 

Total

£'000

Half year ended 31 July 2017 (unaudited)

 

 

 

 

 

Gross profit

9,837

4,633

3,046

602

18,118

Non-current assets (excluding deferred tax assets)

8,486

1,092

158

3

9,739

Half year ended 31 July 2016 (unaudited)

 

 

 

 

 

Gross profit

10,286

4,274

1,511

70

16,141

Non-current assets (excluding deferred tax assets)

8,262

1,096

42

5

9,405

Year ended 31 January 2017 (audited)

 

 

 

 

 

Gross profit

18,812

8,930

3,771

194

31,707

Non-current assets (excluding deferred tax assets)

8,696

1,090

39

4

9,829

 

Europe can be further analysed as:

Continuing operations

France

£'000

Germany

£'000

Italy

£'000

Other

£'000

Total

£'000

Half year ended 31 July 2017 (unaudited)

 

 

 

 

 

Gross profit

1,772

996

1,215

650

4,633

Half year ended 31 July 2016 (unaudited)

 

 

 

 

 

Gross profit

1,595

1,198

954

527

4,274

Year ended 31 January 2017 (audited)

 

 

 

 

 

Gross profit

3,047

2,547

1,854

1,482

8,930

 

 

3 OTHER ITEMS

Continuing operations

31 July

2017

(unaudited)

£'000

31 July

2016

(unaudited)

£'000

31 January

2017

(audited)

£'000

Restructuring costs

(13)

(161)

(183)

Amortisation of intangibles arising on acquisition

(152)

(171)

(304)

Acquisition costs

(174)

-

(128)

Acquisition consideration treated as an employee related share based payment cost under IFRS3 "Business Combinations"

(32)

(53)

(94)

 

(371)

(385)

(709)

Tax effect of other items

26

32

153

Other items after taxation

(345)

(353)

(556)

 

Restructuring costs in the current and prior period relate to changes in the management structure following the acquisitions made in the prior period.

 

4 DIVIDENDS

 

Half year to

31 July 2017

(unaudited)

£'000

Half year to

31 July 2016

(unaudited)

£'000

Amounts recognised as distributions to owners of the parent company

 

 

 

 

 

Final dividend for the year ended 31 January 2017 of 3.6 pence (half year to 31 July 2016: final dividend for the year ended 31 January 2016 of 3.5 pence)

1,869

1,741

 

5 EARNINGS PER SHARE

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

 

Continuing and discontinued operations

31 July

2017

(unaudited)

£'000

31 July

2016

(unaudited)

£'000

31 January

2017

(audited)

£'000

Earnings for the calculation of basic and diluted earnings per share

 

 

 

Profit attributable to owners of the parent company

2,597

1,915

2,847

Adjustment to exclude other items

345

353

556

Underlying profit attributable to owners of the parent company

2,942

2,268

3,403

 

Number of shares

Number

Number

Number

Weighted average number of ordinary shares for the calculation of basic earnings per share

52,687,808

50,915,335

52,361,659

Effect of dilutive potential ordinary shares: share options

1,133,970

225,470

1,133,083

Weighted average number of ordinary shares for the calculation of diluted earnings per share

53,821,779

51,140,805

53,494, 742

On 25 January 2017, the Company's shareholders approved a 5 to 1 split of the Company's shares, which reduced the nominal value of the ordinary shares to 1 pence each.  The share split became effective on 31 January 2017. As a result the prior period number of shares and EPS calculations have been restated to show comparable numbers.

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 GOODWILL

 

£'000

Cost

 

At 1 February 2016

3,346

Foreign currency adjustments

94

At 31 July 2016

3,440

 

 

At 1 February 2017

3,787

Foreign currency adjustments

73

At 31 July 2017

3,860

Provision for impairment

 

At 1 February 2016, 31 July 2016 and 31 July 2017

-

 

 

Net book value

 

At 31 July 2017

3,860

At 31 July 2016

3,440

At 31 January 2017

3,787


Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units (CGUs), or group of units that are expected to benefit from that business combination. Before recognition of impairment losses, the carrying amount of goodwill has been allocated as follows:

 

31 July

2017

£'000

    31 July

2016

£'000

Air Partner International S.A.S. (France)

1,015

942

Cabot Aviation Services Limited

787

787

Baines Simmons Limited (Training and Consulting)

1,072

1,072

Baines Simmons Limited (Managed Services)

639

639

Clockwork Research Limited

347

-

 

3,860

3,440

 

The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired. 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. 

7 NET CASH INFLOW FROM OPERATING ACTIVITIES

 

 

 

 

Half year to

31 July 2017

£'000

Half year to

31 July 2016

£'000

 

 

 

Profit for the period

2,597

1,915

Adjustments for:

 

 

Finance income

                   (2)

(8)

Finance expense

104

49

Income tax expense

1,082

713

Depreciation and amortisation

432

419

Fair value (gains)/losses on derivative financial instruments

(12)

41

Share option cost for period

299

122

Decrease in provisions

-

(421)

(1,081)

(937)

Operating cash inflows before movements in working capital

3,419

1,893

Increase in receivables

(13,605)

(7,695)

21,100

11,315

Cash generated from operations

10,914

5,513

Income taxes paid

(731)

(376)

(104)

(49)

Net cash inflow from operating activities

  10,079

5,088

 

8 TAXATION

 

 

 

 

 

Total

 

 

 

 

Half year to 31 July 2017

(unaudited)

 £'000

Half year to 31 July 2016

(unaudited) £'000

Year ended 31 Jan 2017

(audited)

£'000

Current tax:

 

 

 

 

 

 

UK corporation tax

 

 

 

925

468

528

Foreign tax

 

 

 

157

280

822

Current tax adjustments in respect of prior years (UK)

 

 

 

-

-

376

Current tax adjustments in respect of prior years (overseas)

 

 

 

-

-

66

 

 

 

 

1,082

748

1,792

Deferred tax

 

 

 

26

(35)

(291)

Total tax

 

 

 

1,108

713

1,501

Of which:

 

 

 

 

 

 

Tax on underlying profit

 

 

 

1,108

745

1,654

Tax on other items (see note 3)

 

 

 

(26)

(32)

(153)

 

 

 

 

1,082

713

1,501

 

 

9 EVENTS AFTER THE BALANCE SHEET DATE

On 27 September 2017 Air Partner plc acquired the entire share capital of SafeSkys Limited for a total net of consideration of £3.0m, obtaining control of the company on that date. SafeSkys Limited is a leading environmental and air traffic control services provider to UK and international airports. The acquisition has been funded from the Group's cash resources. Due to the proximity of the transaction to the reporting date, the purchase price allocation accounting has not been finalised. Details of the acquisition accounting will be provided in the annual report for the year ending 31 January 2018.

 

INDEPENDENT REVIEW REPORT TO AIR PARTNER PLC

We have been engaged by the company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2017 which comprises the income statement, the statement of financial position, the statement of changes in equity, the cash flow statement and related notes 1 to 9. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

This report is made solely to the company in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board.  Our work has been undertaken so that we might state to the company those matters we are required to state to it in an independent review 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, for our review work, for this report, or for the conclusions we have formed.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors.  The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

As disclosed in note 1, the annual financial statements of the group are prepared in accordance with IFRSs as adopted by the European Union.  The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34 "Interim Financial Reporting" as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making inquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 31 July 2017 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

 

Deloitte LLP

Statutory Auditor

Crawley, United Kingdom

27 September 2017

 

 


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