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Market Cap
£256.95m
Change Today
-20.00p
Share Price
539.50p
Interim Results
Aero Inventory PLC
17 March 2008
Immediate Release 17 March 2008
Aero Inventory plc
INTERIM RESULTS
FOR THE SIX MONTH PERIOD
ENDED 31 DECEMBER 2007
Aero Inventory plc ("Aero Inventory" or the "Group"), the provider of e-based
procurement and inventory management solutions to the aerospace industry, today
announces its results for the six months ended 31 December 2007.
HIGHLIGHTS OF THE SIX MONTHS
•Results now reported under International Financial Reporting Standards
(IFRS) and in US dollars
•Turnover of US$165.1 million, an increase of 91% over the corresponding
period (2006: US$86.3 million), reflecting in particular one and a half
months of sales from the new ACTS contract and a full six month contribution
from the Qantas contract
•Operating profit of US$30.8 million, an increase of 90% over the
corresponding period (2006: US$16.2 million)
•Pre-tax profit of US$22.7 million, an increase of 56% over the
corresponding period (2006: US$14.5 million)
•Basic EPS of 34.12 cents per share, an increase of 63% over the
corresponding period (2006: 20.96 cents per share). Diluted EPS of 31.89
cents per share, an increase of 58% over the corresponding period (2006:
20.14 cents per share)
•Interim dividend of 6.0 pence per share (equivalent to approximately 12
cents per share), an increase of 33% over the corresponding period (2006:
4.5 pence per share)
•Net debt at 31 December of US$309.2 million versus US$111.8 million at 30
June 2007, reflecting increased stocks to support new contracts. New US$425
million asset-backed lending facility announced in February, expandable to
US$500 million
"Business so far this financial year has been buoyant, with initial sales to
ACTS substantially above our original expectations. As a consequence, Aero
Inventory is well placed to achieve significant further sales and profit growth
for the year, although higher-than-expected sales will inevitably involve
further investment in stock during the second half. While we continue to
progress new business discussions in pursuit of our long-term goal of being the
world's leading consumable aircraft parts service provider, our immediate focus
now is upon the successful implementation of our new contract with ACTS and the
delivery of consistently high levels of service to all of our contract customers
after a period of very rapid growth."
Rupert Lewin, Chief Executive
Aero Inventory plc +44 (0)20 8688 5812
Rupert Lewin, Chief Executive rupert.lewin@aero-inventory.com
JPMorgan Cazenove +44 (0) 20 7588 2828
Nicholas Garrett nick.garrett@jpmorgancazenove.com
Buchanan Communications Limited +44 (0)20 7466 5000
Bobby Morse, Director bobbym@buchanan.uk.com
CHAIRMAN'S STATEMENT
A year ago I reported that turnover in the first six months of the year was up
86%. In this period turnover is up a similar amount, at 91%. Operating profits
grew by a 90 per cent over the equivalent period of last year, leading to a very
satisfactory increase of 56 per cent increase in pre-tax profits despite
substantial increases in operating and financial costs associated with this
period of very rapid growth.
Our figures are reported for the first time under IFRS and in US dollars. The
change in the currency is a logical step for a business that trades
predominantly in US dollars and should give a clearer picture of our underlying
performance.
Last year the Company paid an interim dividend of 4.5 pence per share
(equivalent to 8.5 cents per share) and in view of the positive outlook for the
current year and beyond the Board has decided to pay an interim dividend of 6.0
pence per share (equivalent to approximately 12 cents per share), a 33% increase
over last year's figure. The dividend will be paid in sterling.
The final phase of the Qantas contract implementation went live in July 2007 and
we signed our new contract with ACTS (formerly Air Canada Technical Services) in
November 2007. These two contracts, taken together with our growing business
with SR Technics and HAECO, have greatly strengthened our position within the
sector. We are now concentrating on the detailed implementation of the ACTS
contract. In the second half of the financial year we will be opening new
facilities in Bahrain and Sharjah to support HAECO's expansion.
The Aero Inventory Long Term Incentive Plan was approved by shareholders and
adopted by the Company in December 2007. It provides an important incentive to
management to maximise the growth of the business and hence shareholder value,
and provides substantial rewards if the Company's share price reaches 1500p per
share by the time of the Annual General Meeting in 2010.
Nigel McCorkell
Chairman
CHIEF EXECUTIVE'S STATEMENT
REVIEW OF RESULTS
The signing of the ACTS contract in November 2007 has had a significant effect
on the operating results for the first half of our financial year. Turnover for
the six month period ended 31 December 2007 is up by 91% over the corresponding
period. In addition to ACTS we have benefited from turnover from the Qantas
contract for the full six month period compared to only three months in the
corresponding period. There has also been growth at HAECO particularly from its
business in China. The contracts with SR Technics have also grown compared to
the corresponding period last year and we continue to expand our business with
GMF AeroAsia in Jakarta.
As a company listed on AIM we are now required to present our results under
IFRS. We have also decided to change our functional and presentational currency
to the US dollar. The two principal adjustments arising from these changes are
to show our capitalised IT development costs as an intangible asset rather than
a tangible one, and to state inventories at the US dollar values at which they
were purchased. All the figures in this statement are shown in US dollars
including comparative figures from last year.
Operating profit increased from US$16.2 million to US$30.8 million, an increase
of 90%. The operating margin remains at 19% despite a significant increase in
operating expenses which have grown as we have opened and expanded our offices
in Australia and in Los Angeles as well as in anticipation of the ACTS contract
win.
Interest payable was US$8.2 million (2006: US$1.8 million). The increase
reflects the write off of US$1.5 million in respect of bank facility fees
(relating to the replacement of the £80 million Barclays facility) and the
increase in borrowings to finance the ACTS contract and additional investment in
stock to support other existing contracts.
The pre-tax profit for the six months was US$22.7 million (2006: US$14.5
million). The tax charge was US$6.5 million (2006: US$4.6 million), which
reflects an estimated effective annual rate of 28.7% (2006: 31.8 %).
On the basis of after tax earnings of US$16.2 million (2006: US$9.9 million) and
the weighted average number of shares in issue during the period of 47,360,921
(2006: 47,188,999), basic earnings per share were 34.12 cents per share (2006:
20.96 cents per share). Diluted earnings per share were 31.89 cents per share
(2006: 20.14 cents per share).
The intangible assets on the balance sheet reflect the purchase of detailed
historical demand and usage database rights from Qantas and ACTS, to be written
off over the initial ten year contract terms. Intangible assets also include the
capitalised costs relating to developments of our Parts Central IT system.
The period-end balance sheet shows increased stocks at US$569.4 million
(compared to US$390.9 million at 30 June 2007). The increase from 30 June 2007
principally reflects the purchase from ACTS of stocks and further investment in
stock to support the ACTS and Qantas contracts. In particular the ACTS contract
revenue has been substantially ahead of original expectations and additional
investment in stock has and continues to be required to support this.
Annualising half-year revenues, group sales are running at around 83% of period
end stocks, a level similar to that achieved at the end of last financial year.
This similar level reflects the substantial investment in stocks necessary to
support higher than expected sales to ACTS and the need, post implementation, to
meet our contractual service levels for Qantas. However, although masked by the
immediate needs associated with these two very large contracts, the amount of
stock transferred between sites has increased very significantly and our sales
of stock to non-contract customers from our new facility in Los Angeles are
increasing rapidly.
Net bank debt at 31 December 2007 was US$309.2 million (compared to US$111.8
million at 30 June 2007). The movement since 30 June 2007 principally reflects
the inventory purchase from ACTS as well as other stock investment on existing
contracts to support business growth.
DIVIDEND
In view of the strong performance of the business and the prospects for the full
year the Board intends to pay an increased interim dividend of 6.0 pence per
share, equivalent to approximately 12 cents per share (2006: 4.5 pence). This
dividend will be paid on 29 May 2008 to shareholders on the share register on 2
May 2008 and will be paid in sterling.
NEW FINANCING FACILITY
In February 2008 we signed a new syndicated asset based lending facility and
have thereby increased the size of our available banking facilities from £175
million (equivalent to $356 million) to US$425 million.
The new five year syndicated facility was led by Lloyds TSB Commercial Finance
and is an asset based lending facility secured on Aero Inventory's stocks and
trade debtors in the UK, Ireland, Canada, the United States, Hong Kong and
Australia. The facility includes provision for its expansion from US$425 million
to US$500 million.
CURRENT TRADING AND PROSPECTS
"Business so far this financial year has been buoyant, with initial sales to
ACTS substantially above our original expectations. As a consequence, Aero
Inventory is well placed to achieve significant further sales and profits growth
for the year, although higher-than-expected sales will inevitably involve
further investment in stock during the second half. While we continue to
progress new business discussions in pursuit of our long-term goal of being the
world's leading consumable aircraft parts service provider, our immediate focus
now is upon the successful implementation of our new contract with ACTS and the
delivery of consistently high levels of service to all of our contract customers
after a period of very rapid growth."
Rupert Lewin
Chief Executive
AERO INVENTORY PLC
CONSOLIDATED INCOME STATEMENT
SIX MONTH PERIOD ENDED 31 DECEMBER 2007
Notes 6 Months ended 6 Months ended Year ended
31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
Revenue 3 165,129 86,340 246,981
Cost of sales (105,981) (57,365) (164,223)
Net operating
expenses (28,327) (12,757) (29,907)
---------- --------- ---------
OPERATING
PROFIT 30,821 16,218 52,851
Interest
receivable and
similar income - 106 792
Interest
payable and
similar
charges (8,155) (1,818) (8,058)
---------- --------- ---------
PROFIT BEFORE
TAX 22,666 14,506 45,585
Tax 4 (6,508) (4,615) (14,440)
---------- --------- ---------
PROFIT FOR THE
PERIOD 16,158 9,891 31,145
---------- --------- ---------
Basic earnings
per share
(cents) 6 34.12c 20.96c 65.96c
Diluted
earnings per
share (cents) 6 31.89c 20.14c 62.40c
---------- --------- ---------
AERO INVENTORY PLC
CONSOLIDATED BALANCE SHEET
31 DECEMBER 2007
Notes 31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
NON-CURRENT ASSETS
Intangible assets 56,986 30,755 36,284
Property, plant and
equipment 3,871 2,955 3,695
CURRENT ASSETS
Inventories 569,447 318,904 390,868
Trade and other
receivables 69,458 47,302 52,625
Cash and cash
equivalents 377 384 378
--------- ----------- ---------
639,282 366,590 443,871
--------- ----------- ---------
TOTAL ASSETS 700,139 400,300 483,850
CURRENT LIABILITIES
Trade and other
payables 129,458 81,911 117,925
Bank overdraft 7 - 83,620 -
--------- ----------- ---------
129,458 165,531 117,925
--------- ----------- ---------
NET CURRENT ASSETS 509,824 201,059 325,946
--------- ----------- ---------
NON-CURRENT LIABILITIES
Bank loan 7 309,570 - 112,169
--------- ----------- ---------
TOTAL LIABILITIES 439,028 165,531 230,094
--------- ----------- ---------
NET ASSETS 261,111 234,769 253,756
--------- ----------- ---------
EQUITY
Share capital 9 1,008 999 1,005
Share premium account 9 211,120 209,221 210,281
Share based payment
reserve 9 2,819 1,106 1,980
Retained earnings 9 46,164 23,443 40,490
--------- ----------- ---------
TOTAL EQUITY 261,111 234,769 253,756
--------- ----------- ---------
The interim results were approved by the board of directors on 17 March 2008.
AERO INVENTORY PLC
CONSOLIDATED CASH FLOW STATEMENT
SIX MONTH PERIOD ENDED 31 DECEMBER 2007
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
Net cash out
flow from
operating
activities (151,016) (109,898) (121,205)
--------- --------- ---------
Investing activities
Purchase of
intangible
assets (25,169) (30,875) (39,646)
Purchase of
property,
plant and
equipment (1,208) (896) (2,115)
--------- --------- ---------
Net cash used
in investing
activities (26,377) (31,771) (41,761)
--------- --------- ---------
Financing activities
Net interest
paid (8,216) (1,818) (5,681)
Proceeds on
issue of
ordinary
shares 839 21 1,026
Dividends paid (10,484) (5,818) (10,218)
Repayment of
borrowings (113,349) - -
New bank loans
raised 308,602 - 112,169
--------- --------- ---------
Net cash from
/ (used in)
financing
activities 177,392 (7,615) 97,296
--------- --------- ---------
Net decrease
in cash and
cash
equivalents (1) (149,284) (65,670)
--------- --------- ---------
Cash and cash
equivalents at
beginning of
period 378 66,048 66,048
--------- --------- ---------
377 66,048 66,048
--------- --------- ---------
Cash and cash
equivalents /
(net
overdraft) at
end of period 377 (83,286) 378
--------- --------- ---------
AERO INVENTORY PLC
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
SIX MONTH PERIOD ENDED 31 DECEMBER 2007
6 months ended 6 months ended Year ended
31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
a) Reconciliation of operating
profit to net cash outflow from
operating activities
Operating profit 30,821 16,218 52,851
Adjustments for:
Depreciation of property, plant 624 619 1,028
and equipment
Amortisation of intangible assets 4,875 983 2,615
Cost of share based payment 623 344 839
Increase in provisions 551 876 1,367
---------- ---------- ----------
Operating cash flows before 37,494 19,040 58,700
movements in working capital
Increase in inventories (179,130) (145,115) (216,382)
Increase in debtors (16,260) (799) (6,066)
Increase in creditors 10,038 17,033 45,441
---------- ---------- ----------
Cash absorbed by operations (147,858) (109,841) (118,307)
Income taxes paid (3,158) (57) (2,898)
---------- ---------- ----------
Net cash out flow from operating
activities (151,016) (109,898) (121,205)
========== ========== ==========
AERO INVENTORY PLC
NOTES TO THE CONSOLIDATED INTERIM RESULTS
SIX MONTH PERIOD ENDED 31 DECEMBER 2007
1. GENERAL INFORMATION
The information for the year ended 30 June 2007 does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. A copy of the
statutory financial statements for that year has been delivered to the Registrar
of Companies. The auditors' report on those financial statements was not
qualified and did not contain statements under section 237(2) or (3) of the
Companies Act 1985.
2. ACCOUNTING POLICIES
a) Basis of accounting
These interim statements have been prepared using accounting policies consistent
with International Financial Reporting Standards (IFRSs). The disclosures
required by IFRS 1 concerning the transition from United Kingdom Generally
Accepted Accounting Practice (UK GAAP) to IFRSs are given in note 10.
The financial statements have been prepared on the historical cost basis, except
for the revaluation of certain properties and financial instruments. The
principal accounting policies adopted are set out below.
b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of
the Company and entities controlled by the Company (its subsidiaries) made up to
30 June each year. Subsidiaries are all entities over which the Group has the
power to govern the financial and operating policies of the entity concerned,
generally accompanying a shareholding of more than one half of the voting
rights.
All intra-group transactions, balances, income and expenses are eliminated on
consolidation.
c) Revenue recognition
Revenue is measured at the fair value of the consideration received or
receivable and represents amounts receivable for goods and services provided in
the normal course of business, net of discounts, VAT and other sales-related
taxes.
Sales of goods are recognised when title has passed to the customer.
d) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer
substantially all the risks and rewards of ownership to the lessee. All other
leases are classified as operating leases.
Rentals payable under operating leases are charged to income on a straight-line
basis over the term of the relevant lease.
Benefits received and receivable as an incentive to enter into an operating
lease are also spread on a straight-line basis over the lease term.
e) Foreign currencies
The individual financial statements of each group company are presented in the
currency of the primary economic environment in which it operates (its
functional currency). For the purpose of the consolidated financial statements,
the results and financial position of each group company are expressed in the
United States (US) dollar, which is the functional currency of the Company, and
the presentation currency for the consolidated financial statements.
2. ACCOUNTING POLICIES (CONTINUED)
f) Taxation
The tax expense represents the sum of the tax currently payable and deferred
tax.
The tax currently payable is based on taxable profit for the year. Taxable
profit differs from net profit as reported in the income statement because it
excludes items of income or expense that are taxable or deductible in other
years and it further excludes items that are never taxable or deductible. The
group's liability for current tax is calculated using tax rates that have been
enacted or substantively enacted by the balance sheet date.
Deferred tax is the tax expected to be payable or recoverable on differences
between the carrying amounts of assets and liabilities in the financial
statements and the corresponding tax bases used in the computation of taxable
profit, and is accounted for using the balance sheet liability method. Deferred
tax liabilities are generally recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary differences
can be utilised. Such assets and liabilities are not recognised if the temporary
difference arises from the initial recognition of goodwill or from the initial
recognition (other than in a business combination) of other assets and
liabilities in a transaction that affects neither the taxable profit nor the
accounting profit.
Deferred tax liabilities are recognised for taxable temporary differences
arising on investments in subsidiaries and associates, and interests in joint
ventures, except where the group is able to control the reversal of the
temporary difference and it is probable that the temporary difference will not
reverse in the foreseeable future.
The carrying amount of deferred tax assets is reviewed at each balance sheet
date and reduced to the extent that it is no longer probable that sufficient
taxable profits will be available to allow all or part of the asset to be
recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the asset is realised. Deferred tax is
charged or credited in the income statement, except when it relates to items
charged or credited directly to equity, in which case the deferred tax is also
dealt with in equity.
The group intends to settle its current tax assets and liabilities on a net
basis.
g) Property, plant and equipment
Fixtures and equipment are stated at cost less accumulated depreciation and any
recognised impairment loss. Depreciation is charged so as to write off the cost
of assets, less estimated residual value, other than land and properties under
construction, over their estimated useful lives, using the straight-line method,
on the following bases:
Leasehold improvements over the unexpired term of the lease
Fixtures and equipment 33 1/3 % - 50%
Motor vehicles 30%
h) Intangible assets
Database rights
Database rights are included at cost and amortised on a straight-line basis over
a period of 10 years which is their estimated useful economic life. Provision is
made for any impairment.
Software assets
Internal staffing costs relating to the development of IT systems are
capitalised and amortised over a period of 3 years which is their estimated
useful economic life. Provision is made for any impairment.
2. ACCOUNTING POLICIES (CONTINUED)
i) Impairment of tangible and intangible assets
At each balance sheet date, the group reviews the carrying amounts of its
tangible and intangible assets to determine whether there is any indication that
those assets have suffered an impairment loss. If any such indication exists,
the recoverable amount of the asset is estimated in order to determine the
extent of the impairment loss (if any). Where the asset does not generate cash
flows that are independent from other assets, the group estimates the
recoverable amount of the cash-generating unit to which the asset belongs. An
intangible asset with an indefinite useful life is tested for impairment
annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in
use. In assessing value in use, the estimated future cash flows are discounted
to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the
asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to
be less than its carrying amount, the carrying amount of the asset
(cash-generating unit) is reduced to its recoverable amount. An impairment loss
is recognised as an expense immediately, unless the relevant asset is carried at
a revalued amount, in which case the impairment loss is treated as a revaluation
decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset
(cash-generating unit) is increased to the revised estimate of its recoverable
amount, but so that the increased carrying amount does not exceed the carrying
amount that would have been determined had no impairment loss been recognised
for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognised as income immediately, unless the relevant asset is carried
at a revalued amount, in which case the reversal of the impairment loss is
treated as a revaluation increase.
j) Inventories
Inventories are stated at the lower of cost and net realisable value, after
making due allowance for obsolete and slow-moving stocks. Cost is calculated by
averaging purchase prices or by reference to supplier list prices adjusted to
reflect discounts obtained where appropriate, and include, where applicable,
those overheads that have been incurred in bringing the inventories to their
present location and condition. Net realisable value represents the estimated
selling price less all estimated costs of completion and costs to be incurred in
marketing, selling and distribution.
k) Financial instruments
Financial assets and financial liabilities are recognised in the group's balance
sheet when the group becomes a party to the contractual provisions of the
instrument.
Loans and receivables
Trade receivables, loans, and other receivables that have fixed or determinable
payments that are not quoted in an active market are classified as loans and
receivables. Loans and receivables are measured at amortised cost using the
effective interest method, less any impairment. Interest income is recognised by
applying the effective interest rate, except for short-term receivables when the
recognition of interest would be immaterial.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and other
short-term highly liquid investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of changes in value.
2. ACCOUNTING POLICIES (CONTINUED)
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. Financial liabilities,
including borrowings, are initially measured at fair value, net of transaction
costs.
l) Finance costs
Finance costs are amortised over the term of the instrument at a constant rate
on the carrying amount.
m) Provisions
Provisions are recognised when the Group has a present obligation as a result of
a past event, and it is probable that the Group will be required to settle that
obligation. Provisions are measured at the directors' best estimate of the
expenditure required to settle the obligation at the balance sheet date, and are
discounted to present value where the effect is material.
n) Share-based payments
The group has applied the requirements of IFRS 2, Share-based Payment. In
accordance with the transitional provisions, IFRS 2 has been applied to all
grants of equity instruments after 7 November 2002 that were unvested at 1
January 2005.
The group issues equity-settled and cash-settled share-based payments to certain
employees. Equity-settled share-based payments are measured at fair value
(excluding the effect of non market-based vesting conditions) at the date of
grant. The fair value determined at the grant date of the equity-settled
share-based payments is expensed on a straight-line basis over the vesting
period, based on the group's estimate of shares that will eventually vest and
adjusted for the effect of non market-based vesting conditions.
Fair value is measured by use of the Black Scholes model. The expected life used
in the model has been adjusted, based on management's best estimate, for the
effects of non-transferability, exercise restrictions, and behavioural
considerations.
3. BUSINESS SEGMENTS
All turnover arose from the activity of procurement and inventory management for
the aerospace industry.
An analysis of turnover by type of sale is as follows:
6 months ended 6 months ended Audited year
31 December 31 December ended 30 June
2007 2006 2007
$'000 $'000 $'000
----------------------- ---------- --------- --------
Sales to
contracted
customers
under long
term supply
agreements 161,314 83,931 244,452
Other Sales 3,815 2,409 2,529
---------- --------- --------
Group Total 165,129 86,340 246,981
---------- --------- --------
Geographical analysis is presented below:
North America Asia Pacific UK, Europe & Middle Group Total
East
6 months ended 6 months ended 6 months ended 6 months ended
31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
2007 2006 2007 2006 2007 2006 2007 2006
$'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000
Turnover 24,660 - 98,837 53,102 41,632 35,238 165,129 86,340
-------- ------- -------- ------- -------- -------- -------- -------
Balance
sheet
Assets
Segment 172,495 - 349,063 258,187 178,581 142,113 700,139 400,300
assets -------- ------- -------- ------- -------- -------- -------- -------
Liabilities
Segment
liabilities 59,201 - 23,644 29,224 356,183 136,307 439,028 165,531
-------- ------- -------- ------- -------- -------- -------- -------
4. TAX
6 months ended 6 months ended Year Ended
31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
UK corporation tax 6,920 4,393 14,034
Deferred Tax -
Current Period (412) (177) (403)
Adjustment in
respect of
prior periods - 399 809
--------- --------- --------
6,508 4,615 14,440
--------- --------- --------
Corporation tax for the interim period is charged at 30% (2006: 30%),
representing the best estimate of the weighted average annual corporate tax
expenses for the full fiscal year.
5. DIVIDENDS
6 Months to 31 December
2007 2006
$'000 $'000
Amounts recognised as distributions to equity holders in
the period
Final dividend for the year ended 30 June 2007 of
10.5 pence per share, equivalent to 20.3 cents per
share (2006: 6.7 pence per share, equivalent to 11.9
cents per share) per share 10,149 6,189
--------- --------
A dividend of 6 pence per share (equivalent of approximately 12 cents per share)
was proposed after the balance sheet date but has not been recognised as a
liability at the balance sheet date. This will be paid on 29 May 2008 to
shareholders on the share register on 2 May 2008.
6. EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the
following data:
6 months to 31 December
2007 2006
Earnings: $'000 $'000
Earnings for the purpose of basic earnings per share
being
Net profit being attributable to equity holders of
the parent 16,158 9,891
-------- --------
Earnings for the purposes of diluted earnings per
share 16,158 9,891
-------- --------
Number Number
Number of shares
Weighted average number of ordinary shares for the
purposes of
Basic earnings per share 47,360,921 47,188,999
Effect of dilutive potential ordinary shares:
Share options 3,314,865 1,932,051
Weighted average number of ordinary share for the
purposes of
Diluted earnings per share 50,675,786 49,121,050
-------- --------
7. BANK OVERDRAFTS AND LOANS
31 December 31 December 30 June
2007 2006 2007
$'000 $'000 $'000
Bank overdrafts - (83,620) -
Bank loans (309,570) - (112,169)
--------- -------- ---------
(309,570) (83,620) (112,169)
The borrowings are repayable as follows:
On demand or within one year - (83,620) -
In the second year - - -
In the third to fifth
years inclusive (309,570) - (112,169)
Less: Amount due for
settlement within 12
months (shown under
current liabilities) - (83,620) -
--------- -------- ---------
Amount due for settlement
after 12 months (309,570) - (112,169)
--------- -------- ---------
8. ShARE-BASED PAYMENT
The Company provides benefits to employees (including Directors) of the Company
in the form of share-based payment transactions (share options), whereby
employees render services in exchange for rights over shares ('equity-settled
transactions'). The fair value of the employee services rendered is determined
by reference to the fair value of the options granted.
All share options are valued using an option-pricing model (Black-Scholes). This
fair value is charged to the profit and loss account over the vesting period of
the share-based payment scheme, with the corresponding increase in equity. The
value of the charge is adjusted in the profit and loss account over the
remainder of the vesting period to reflect expected and actual levels of options
vesting, with the corresponding adjustment made in equity.
The Group has recognised a total expense of $623,000 relating to equity settled
share option scheme transactions in the first half of 2007/08 ($355,000 in the
six month period to 31 December 2006; $839,000 in the year to 30 June 2007).
9. RESERVES
Share capital Share premium Share based Retained Total
account payment reserve earnings
$'000 $'000 $'000 $'000 $'000
At 1 July 2007 1,005 210,281 1,980 40,490 253,756
Profit for the
financial
period - - - 16,158 16,158
Dividends paid - - - (10,484) (10,484)
Share based
payments - - 839 - 839
Shares issued 3 839 - - 842
-------- -------- ------- -------- --------
At 31 December
2007 1,008 211,120 2,819 46,164 261,111
-------- -------- ------- -------- --------
10. EXPLANATION OF TRANSITION TO IFRS
IFRS 1, First time adoption of International Financial Reporting Standards, sets
out the procedures that the Group must follow as it adopts IFRS for the first
time as the basis for preparing its consolidated financial statements. The Group
is required to establish its accounting policies at 31 December 2007 and, in
general, apply these retrospectively to determine the IFRS opening balance sheet
as its date of transition, 1 July 2006.
Key changes in accounting policies:
(a) The effects of changes in foreign exchange rates
The guidance for the determination of the Group's functional currency is more
prescriptive under IAS 21 The effect of changes in foreign exchange rates. Under
IAS 21 the primary indicators of a functional currency are determined by; the
currency that mainly influences sales prices where it is often the currency that
the sales prices are denominated in and settled in, and the currency in which
the costs of providing goods and services are denominated and settled.
Accordingly, as the Group predominately trades in US dollars, it has changed
functional and presentational currency under IFRS retrospectively at 1 July 2006
from sterling to US Dollars.
10. EXPLANATION OF TRANSITION TO IFRS (CONTINUED)
(b) Intangible assets
Under UK GAAP, software assets were included as part of the cost of property,
plant and equipment whereas under IFRS, unless they are integral to another
fixed asset, they are classified as intangible assets. In the balance sheet, a
reclassification of $11,864,000 from property, plant and equipment to intangible
assets was reflected under IFRS at 30 June 2007 (1 July 2006 $755,000). There
was no impact on either profit before taxation or total net assets under IFRS.
(c) Other - Employee benefits
Under IAS 19 there is a requirement to recognise the monetary value of employee
benefits accruing to employees but not yet settled; typically holiday pay. This
required the present value of employee benefits to be paid in future for
services to be provided up to the reporting date. Employee's holiday entitlement
is aligned to the calendar year, accordingly a holiday accrual has been
recognised of $212,000 as at 31 December 2007 (1 July 2006 - $242,000). The
impact on the income statement is a increase in profit before tax of $62,000 for
the year to 30 June 2007.
Reconciliations of the adjustments to profit and loss for the reported periods
are shown below:
Reconciliation of profit for six months ended 31 December 2006
UK GAAP Functional Sub Total Other IFRS IFRS
Currency Adjustments
£'000 $'000 $'000 $'000
REVENUE 45,555 40,785 86,340 - 86,340
Operating
expenses (36,808) (33,296) (70,104) (18) (70,122)
------- --------- ------- ------ --------
OPERATING
PROFIT 8,747 7,489 16,236 (18) 16,218
Interest
receivable and
similar income 56 50 106 - 106
Interest
payable and
similar
charges (959) (859) (1,818) - (1,818)
------- --------- ------- ------ --------
PROFIT BEFORE
TAX 7,844 6,680 14,524 (18) 14,506
Tax (2,435) (2,185) (4,620) 5 (4,615)
------- --------- ------- ------ --------
PROFIT FOR
PERIOD 5,409 4,495 9,904 (13) 9,891
------- --------- ------- ------ --------
10. EXPLANATION OF TRANSITION TO IFRS (CONTINUED)
Reconciliation of profit for year ended 30 June 2007
UK GAAP Functional Sub Total Other IFRS IFRS
Currency Adjustments
£'000 $'000 $'000 $'000
REVENUE 127,817 119,164 246,981 - 246,981
Operating
expenses (97,281) (96,911) (194,192) 62 (194,130)
------- -------- ------- ------ --------
OPERATING
PROFIT 30,536 22,253 52,789 62 52,851
Interest
receivable and
similar income 410 382 792 - 792
Interest
payable and
similar
charges (4,170) (3,888) (8,058) - (8,058)
------- -------- ------- ------ --------
PROFIT BEFORE
TAX 26,776 18,747 45,523 62 45,585
Tax (8,244) (6,177) (14,421) (19) (14,440)
------- -------- ------- ------ --------
PROFIT FOR
PERIOD 18,532 12,570 31,102 43 31,145
------- -------- ------- ------ --------
10. EXPLANATION OF TRANSITION TO IFRS (CONTINUED)
Reconciliation of balance sheet at 30 June 2007 (date of last UK GAAP financial
statements)
Consolidated Balance
Sheet
UK GAAP Functional Sub Total Other IFRS IFRS
Currency Adjustments
As at 30 June
2007 £'000 $'000 $'000 $'000
ASSETS
Non-current assets
Intangible
assets 13,184 11,236 24,420 11,864 36,284
Property,
plant and
equipment 8,124 7,435 15,559 (11,864) 3,695
Current assets
Inventories 216,098 174,770 390,868 - 390,868
Trade and
other
receivables 26,191 26,499 52,690 54 52,744
Cash at bank
and at hand 188 190 378 - 378
-------- --------- ------- --------- -------
Total assets 263,785 220,130 483,915 54 483,969
LIABILITIES
Current liabilities
Trade and
other payables (58,638) (59,226) (117,864) (180) (118,044)
Non-current liabilities
Bank loan (55,861) (56,308) (112,169) - (112,169)
-------- --------- ------- --------- -------
Total
liabilities (114,499) (115,534) (230,033) (180) (230,213)
-------- --------- ------- --------- -------
NET ASSETS 149,286 104,596 253,882 (126) 253,756
-------- --------- ------- --------- -------
EQUITY
Share capital 592 413 1,005 - 1,005
Share premium
account 124,020 86,261 210,281 - 210,281
Share based
payment
reserve 1,043 937 1,980 - 1,980
Retained
earnings 23,631 16,985 40,616 (126) 40,490
-------- --------- ------- --------- -------
TOTAL EQUITY 149,286 104,596 253,882 (126) 253,756
-------- --------- ------- --------- -------
10. EXPLANATION OF TRANSITION TO IFRS (CONTINUED)
Reconciliation of balance sheet at 31 December 2006
UK GAAP Functional Sub Total Other IFRS IFRS
Currency Adjustments
As at 31
December 2006 £'000 $'000 $'000 $'000
ASSETS
Non-current
assets
Intangible
assets 13,896 11,844 25,740 5,015 30,755
Property,
plant and
equipment 4,205 3,765 7,970 (5,015) 2,955
Current assets
Inventories 178,935 139,969 318,904 - 318,904
Trade and
other
receivables 23,981 23,242 47,223 78 47,301
Cash and cash
equivalents 196 188 384 - 384
-------- --------- ------- --------- -------
Total assets 221,213 179,008 400,221 78 400,299
Current
liabilities
Trade and
other payables (41,777) (39,873) (81,650) (260) (81,910)
Bank loan (42,683) (40,937) (83,620) - (83,620)
-------- --------- ------- --------- -------
Total
liabilities (84,460) (80,810) (165,270) (260) (165,530)
-------- --------- ------- --------- -------
NET ASSETS 136,753 98,198 234,951 (182) 234,769
-------- --------- ------- --------- -------
EQUITY
Share capital 589 410 999 - 999
Share premium
account 123,503 85,718 209,221 - 209,221
Share based
payment
reserve 661 445 1,106 - 1,106
Retained
earnings 12,000 11,625 23,625 (182) 23,443
-------- --------- ------- --------- -------
TOTAL EQUITY 136,753 98,198 234,951 (182) 234,769
-------- --------- ------- --------- -------
10. EXPLANATION OF TRANSITION TO IFRS (CONTINUED)
Reconciliation of equity at 1 July 2006 (date of transition to IFRSs)
UK GAAP Functional Sub Total Other IFRS IFRS
Currency Adjustments
As at 30 June
2006 £'000 $'000 $'000 $'000
ASSETS
Non-current assets
Intangible
assets - - - 755 755
Property,
plant and
equipment 1,581 1,204 2,785 (755) 2,030
Current assets
Inventories 103,794 70,871 174,665 - 174,665
Trade and
other
receivables 25,210 20,587 45,797 73 45,870
Cash and cash
equivalents 36,364 29,684 66,048 - 66,048
------- -------- -------- --------- -------
Total assets 166,949 122,346 289,295 73 289,368
LIABILITIES
Current liabilities
Trade and
other payables (31,872) (26,007) (57,879) (242) (58,121)
Bank loan - - - - -
Non-current liabilities
Provision for liabilities - - - - -
and charges
------- -------- -------- --------- -------
Total
liabilities (31,872) (26,007) (57,879) (242) (58,121)
------- -------- -------- --------- -------
NET ASSETS 135,077 96,339 231,416 (169) 231,247
======= ======== ======== ========= =======
EQUITY
Share capital 589 410 999 - 999
Share premium
account 123,492 85,729 209,221 - 209,221
Share based
reserve 609 497 1,106 - 1,106
Retained
earnings 10,387 9,703 20,090 (169) 19,921
------- -------- -------- --------- -------
TOTAL EQUITY 135,077 96,339 231,416 (169) 231,247
======= ======== ======== ========= =======
11. Availability of Information
Copies of this announcement are available from the company secretary at 30
Lancaster Road, New Barnet, Hertfordshire, EN4 8AP
INDEPENDENT REVIEW REPORT TO AERO INVENTORY 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
December 2007 which comprises the income statement, the balance sheet, the cash
flow statement and related notes 1 to 11. 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 2410 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 them 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 AIM Rules of the London Stock Exchange
As disclosed in note 2, the annual financial statements of the group will be
prepared in accordance with IFRSs as adopted by the European Union. The
condensed set of financial statements included in this half-yearly financial
report have been prepared in accordance with the accounting policies the group
intends to use in preparing its next annual financial statements.
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 December 2007 is not prepared, in all
material respects, in accordance with the AIM Rules of the London Stock
Exchange.
Deloitte & Touche LLP
Chartered Accountants and Registered Auditor
17 March 2008
Reading, United Kingdom
This information is provided by RNS
The company news service from the London Stock Exchange