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Air Partner PLC   -  AIR   

Full Year results for year ended 31 January 2019

Released 17:45 09-May-2019

RNS Number : 5805Y
Air Partner PLC
09 May 2019
 

9 May 2019                                                                                                                         LEI: 213800JLR6YIRMSCUS98

Air Partner plc

Full Year results for the year ended 31 January 2019

 

Group well positioned for further growth

 

Air Partner plc ("Air Partner" or "Group"), the global aviation services group, today reports results for the year ended 31 January 2019.
 

 

January 2019

January 2018

Change %

Gross Transaction Value

£273.3m

£261.3m

4.6%

Revenue

£77.5m

£74.3m

4.2%

Gross profit

£35.5m

£34.7m

2.3%

Underlying* profit before tax

£5.8m

£5.8m

-

Statutory profit before tax

£3.4m

£4.8m

(29.1%)

Net cash (non-JetCard cash less debt)

£2.0m

£4.8m

(58.3%)

Underlying* continuing basic EPS (pence)

9.6

8.4

14.3%

Basic continuing EPS (pence)

5.6

6.9

(18.8%)

Final dividend (pence)

3.85

3.8

1.3%

Total dividend (pence)

5.6

5.5

1.8%

 

Financial Highlights:

·      Group gross profit up 2.3% to £35.5m (FY18: £34.7m):

Underlying gross profit increased 2.1%, on a like for like basis, adjusting for constant exchange and acquisitions

Charter division performed in line with the prior year, with strong contributions from US and Freight, up 30.2% and 45.3% respectively

Consulting & Training gross profit up 25.0%

·      Group underlying profit before tax* of £5.8m in line with the prior year

·      Profit before tax of £3.4m (FY18: £4.8m) is lower due in the main to exceptional and other items, refer to note 4.

·      Net cash of £2.0m (FY18: £4.8m) is lower, reflecting working capital investment in Freight growth

 

Strategic Highlights:

·      Progress made against stated long-term growth strategy

·      Good organic growth across US, Freight and Consulting & Training

·      Key appointments made to strengthen Board and upskill management positions

·      Los Angeles office opened in June 2018 strengthening US offering

 

Charter Operating Highlights:

·      Record Charter performance in US

·      Freight success driven by investment in high quality hires

·      Investment in Managed Services offering delivered 3-year Airbus contract win

·      Remarketing fulfilled a number of mandates in the period, including sales for Kenya Airways, Investec Bank plc and Air Baltic

 

Consulting & Training Operating Highlights:

·      Division now contributing 11.9% to Group gross profits (FY18: 9.7%)

·      Good contract wins from blue-chip commercial and military customers

 

Post Year-End Highlights:

·      Offices opened in Houston and Singapore in February 2019

·      Appointed by Aurigny to manage its operations control centre in April 2019

·      Appointments of new Chair, Ed Warner, and Chair of Audit and Risk Committee, Paul Dollman


* Underlying results are stated before exceptional and other items (see note 4)

Mark Briffa, CEO of Air Partner, commented: "I am pleased to be announcing a robust set of results, which I believe mark a turning point for the Group. We have taken the steps required of us to strengthen the business and made significant progress over the last year.  As a result, we're reporting good organic growth, with a very strong performance in the US, strong Freight trading, a growing contribution from Consulting & Training and several new office openings.  In addition, we have added excellent experience to our Board, invested in key management positions and appointed new auditors. This progress now leaves us well positioned to execute our stated strategy for growth."

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

 

Enquiries:

Air Partner

 

01293 844788

Mark Briffa, CEO

 

Joanne Estell, CFO

 

 

 

TB Cardew (Financial PR advisor)

020 7930 0777

Tom Allison

07789 998 020

Alycia MacAskill              

07876 222 703

Joe McGregor

07766 231 520

 

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: Charter division, comprising air charter broking and remarketing; and the Consulting & Training division. For reporting purposes, the Group is structured into four divisions: Commercial Jets, Private Jets, Freight (Charter) and Consulting & Training (Baines Simmons, Clockwork Research and SafeSkys). Commercial Jets 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. Air Partner is listed on the London Stock Exchange (AIR) and is ISO 9001:2015 compliant for commercial airline and private jet solutions worldwide. www.airpartner.com

 

CHAIR'S STATEMENT

I am delighted to have been appointed Chair of Air Partner plc. This is a business that I can closely relate to given my recent past experience in the broking sector. I see a wealth of opportunity in aviation for us to expand both organically and through acquisition.

The full year results are in line with the prior year which, given the headwinds over the last 12 months, is a creditable performance. For the year ended 31 January 2019 the Group generated gross profit of £35.5m, up 2.3%, (FY18: £34.7m). Gross profit for 2018 has been restated as per note 14 of this statement. Underlying profit before tax was in line with the prior year at £5.8m (FY18: £5.8m). Statutory reported profit before tax was 29.1% lower at £3.4m (FY18: £4.8m) reflecting the one-off costs, announced in June 2018, associated in the main with the accounting review, a proposed acquisition that did not complete as a consequence of the review, and multiple Board changes.

The past year was a challenging period for Air Partner following the discovery of an historic accounting issue and the resultant review. What is highly encouraging, however, is how Air Partner reacted to this episode, implementing the necessary changes to improve the overall control environment. Our constant commitment to putting customers first has stood us in good stead during this difficult time and demonstrates the strength of the Company's values. We have a robust business model, sound financial position and a clear strategic vision. With the accounting review now behind us, and lessons learnt, we are focused on pursuing the Group's strategic priorities and I am pleased that good progress was made over the second half with robust results seen from further geographic diversification into the US and from a prior acquisition.

These results give me confidence that we are on the right course and delivering good progress against our long-term growth strategy to become a world-class, global aviation services group. To this end, we will continue to invest in the business for the long-term benefit of all stakeholders. We will invest to promote organic growth in our core Charter business; in people, offices and infrastructure; while also looking for acquisition opportunities to add to our portfolio of aviation services in Consulting & Training. 

I share Air Partner's strong commitment to customer service, believing it to be fundamental to our strategy, values and culture. This year, the Peter Saunders Annual Award for Extraordinary Customer Service was launched in recognition of the significant influence of our late Chair. It was Peter who introduced the Customer First strategy that has developed over the years to help us put the customer at the heart of everything we do.

 

Our people

Air Partner relies on the teams of great people which deliver extraordinary service to our customers globally.  Our customer offering is well respected across our international markets. The strong relationships that our people have built in the industry, and their knowledge and expertise, will enable us to continue to adapt as changes come our way and rise to the challenges and opportunities that they present. I am confident we can continue to grow and develop our enviable customer base from here and I would like to thank all our teams for their continued hard work.

 

The Board

In September 2018, our Senior Independent Director, Richard Jackson, was appointed Interim Chair while Air Partner undertook a search for a permanent successor following the sudden death of the former Chair, Peter Saunders. I was appointed Chair on 1 April 2019 and Richard resumed his role as Senior Independent Director. On behalf of the Board, I would like to thank Richard for stepping into the position at a challenging time for the business and for the excellent support he has provided.

In September 2018, we also welcomed Joanne Estell to the Board as Chief Financial Officer (CFO) and Board Director. Joanne replaced Neil Morris who resigned as CFO in April 2018. An interim CFO was in place between April 2018 and September 2018.

On 2 May 2019, Paul Dollman joined the Board as Non-executive Director. He will also chair the Audit and Risk Committee with effect from 26 June 2019, the date of our AGM, replacing Shaun Smith, who announced in October 2018 his intention to step down from the Board at the 2019 AGM. Paul has a deep understanding of the aviation industry which, coupled with his financial expertise, will be highly beneficial to Air Partner, further aligning the Board's experience with the Group's strategy. On behalf of the Board, I would like to welcome Paul to the Board and thank Shaun for his diligence, strong support and counsel during his tenure, particularly in respect of his contribution to the Board in its management of  the investigations and the changes implemented following the discovery of the historic accounting issue.

Dividend

The Board is proposing a final dividend of 3.85p, a year on year increase of 1.3%, taking the full year dividend to 5.60p, a year on year increase of 1.8%. The final dividend is expected to be paid on 4 July 2019 to those shareholders on the share register at close of business on 7 June 2019. The ex-dividend date will be 6 June 2019. The Board would like to reaffirm its ongoing commitment to its dividend policy, which targets cover of between 1.5 and 2.0 times underlying earnings per share. 

 

Outlook

Air Partner has demonstrated its resilience over this past financial year, with a robust business model and sound strategy, executed by a team of great people dedicated to delivering an outstanding service to our global customer base. We have exciting growth plans and I am confident in our continued ability to fulfil them. The current financial year will see us invest to support our growth, as we look to strengthen our core business organically and assess acquisition opportunities to broaden our service offering.

2019 is likely to see continued challenges in the aviation sector. Our market-leading position, culture of innovation and long-term strategy mean we are well placed to navigate short-term challenges. We have a strong portfolio of global aviation services, which provides us with exposure to various sectors and geographies, and our portfolio approach, without any single product or market dominating, helps to mitigate volatility in any one market or product line.  Current trading is slightly ahead of the prior year.

I am confident that we have the right strategy in place and I look forward to working with our dedicated teams to achieve our long-term growth ambitions.

Ed Warner

Non-Executive Chair

 

CHIEF EXECUTIVE'S REVIEW

Air Partner has reported underlying* profit before tax for the year ended 31 January 2019 of £5.8m, in line with the prior year and profit before tax of £3.4m. In a year where we faced considerable challenge, I am pleased with this robust performance. As well as the accounting review, volatility in the aviation sector weighed on results towards the end of the year. However, our strategy to invest in the more stable earnings of the Consulting & Training division has helped to offset some of this volatility, giving me confidence that we are taking the business in the right direction.

 

* Underlying results are stated before exceptional and other items (see note 4).

 

 

Strategy

We are now in the fourth year of implementing our strategy to become a world-class global aviation services group. We aim to grow both organically and through acquisition, investing in our Charter business, while building a more complete portfolio of aviation services to reduce the Group's exposure to the volatility of the charter market and improve overall quality of our earnings. This year we were disappointed not to complete a significant acquisition as a result of the accounting review but we continue to assess opportunities to enhance or extend the services and capabilities we offer our customers.

It is testament to our teams that, despite the challenges we faced in the first half of the year, we have made considerable progress on our organic growth initiatives. We have invested in our teams, across new territories and in strong growth markets, and the talent we have attracted has enabled us to continue to grow organically. We have invested to improve our processes and, importantly, on the right people to take our business to the next level. We have upskilled key management positions and strengthened the capabilities of our Board.

In June 2018 we announced the opening of a new office in Los Angeles. This has strengthened our US office network, bringing a broader range of services to a growing US customer base and contributing to a third consecutive year of record profits in the region. Having also opened new offices in Houston and Singapore in the current financial year, we have a broad geographic reach with a total of 14 offices globally.

 

As well as improvements in our core Charter division, we are making solid progress in Consulting & Training. The upskilling of management and investment in business development has driven new business and we have achieved good contract wins with blue-chip customers across the division. 

Other strategic initiatives that were delayed as we resolved the accounting issue are now back on track. Amongst them, the Air Partner brand refresh, originally scheduled for summer 2018, will be launched with this year's Annual Report.  This is a milestone moment and represents the next phase in our organic development as we unify the business under the one brand umbrella, bringing our Group closer together to further support teamwork and help capture cross-selling opportunities.  The next phase of the brand roll-out will include investment in our new website and intranet, which will follow towards the end of the fourth quarter.

 

As well as growing organically, we aim to broaden our offer in aviation services via targeted acquisitions. According to the International Air Transport Association (IATA), 2018 was the ninth consecutive year of above-trend growth in global passenger demand. As the market has grown, so has our customers' requirements for a broader range of services. Our long-term growth strategy to diversify our portfolio of aviation services is in direct alignment with this growth in demand. Since 2015, we have acquired some strong businesses which have broadened the range of services we offer, extended our customer base and enhanced our international growth potential. We are starting to benefit from the cross-selling opportunities between divisions and geographies that this diversification has presented, as well as the protection that a broader portfolio of services, geographies, sectors and customers affords.

Significant progress

The historic accounting issue discovered in April 2018 and the resultant review completed in June 2018 were a set-back for our Group. However, throughout this period, our focus remained on delivering an outstanding service to our customers.  We have made significant progress over the past 12 months, taking decisive and immediate action on the key learnings from the review. We have made changes to the overall control environment in terms of the way we manage our business, upskilled key positions and improved financial controls. I am deeply thankful to our teams and operational leadership which continued to put our customers first throughout the period and, in turn, for the support that we received from our customers and shareholders.  We recognise that we are on a journey to rebuild confidence and trust with all our shareholders, but we believe the actions we have taken have helped to reset the business and we now move forward fitter and stronger, and well equipped to deliver our long-term growth ambitions. 

 

Our people

I have said many times before that it is our people that drive this business. How we engage with all our teams across the Group is important to me, more so now than ever as we continue to grow globally. We have this year introduced regular 'Town Hall' meetings, which I host in conjunction with other members of our Operating Board. These complement our programme of CEO lunches that we hold regularly across the Group. I am consistently impressed with the calibre of people we have in the business and that we are bringing on board and would like to take this opportunity to thank all our people for their dedication and focus.  It is largely down to the strong relationships that our teams have built and maintained that we could rely on such enduring customer support over this last year.

 

DIVISIONAL REVIEW

Charter                                                                       

Our Charter division has benefited from another record profit performance in the US and in Freight, up 30.2% and 45.3% respectively, driven by the investments we have made in people and the broadening of our footprint in the region. The US delivered its best performance since we entered the region over 20 years ago. The opening of our office in Los Angeles in June has enabled us to support an enlarged US customer base with a broader range of Charter services. The successful introduction of a Freight team in Fort Lauderdale has pushed Group Freight gross profit and customer numbers to their highest ever level.

Despite the tough comparative of last year's significant one-off contract, the Commercial Jets team delivered similar levels of operating profit to the prior year, demonstrating good underlying growth. While Private Jets in the US performed well, at a Group level Private Jets was broadly flat year on year, as the UK and Europe were impacted towards the end of the year by volatility in the sector, as well as client-specific reductions in flying. Charter gross profit for the year ended 31 January 2019 was therefore in line with the prior year at £31.3m (FY18: £31.3m), with underlying operating profit of £7.5m (FY18: £6.7m).

Commercial Jets

Commercial Jets saw strong underlying growth across all territories. In the UK and Europe, Tour Operations again performed well, contributing to strong results in the UK, France and Austria, and we are encouraged by our forward visibility. In Sports, we benefited from the FIFA World Cup in Russia in the first half and from other football-related flying where pre and post-season tours to long-haul destinations have become increasingly popular. An area we are also seeing some success in growing within Charter is managed services. Commercial Jets has been awarded a three-year managed services contract by Airbus, the global leader in aeronautics, space and related services, to manage all operational and contractual requirements for Airbus' corporate shuttle flights, which are a vital link for the company's employees and contractors moving between Airbus factories. Post year end we have also been appointed by Aurigny, the flag carrier airline of the Bailiwick of Guernsey, to manage its operations control centre in Alderney.

Across Europe a focus on sales and business development is having a positive impact. We have developed key contributing relationships and a strong reputation for delivery in the Travel, Government, Conferences and Exhibitions sectors. In the US, while we benefited from some significant one-off business related to typhoons, the underlying activity in all sectors continued to strengthen, providing a platform for ongoing sustainable growth. Good team work and cross-selling between territories and divisions have enabled us to provide outstanding customer service to our many clients around the world and contributed to the record results achieved in the US. Cross-selling opportunities were identified and achieved between our Commercial and Private Jet and Freight teams, with almost half of Commercial Jets gross profit resulting from cross-selling. 

In the US, while we benefited from some significant one-offs business related to typhoons, the underling activity in all sectors continued to strengthen, providing a platform for ongoing sustainable growth.

Good team work and cross-selling between territories and divisions have enabled us to provide outstanding customer service to our many clients around the world and contributed to the record results achieved in the US. Cross-selling opportunities were identified and achieved between our commercial and provide Jet and Freight teams, with almost half of commercial Jet's gross profit resulting from cross-selling.

Air Partner Remarketing has concluded the sale of the last B777-200ER for Kenya Airways and an ATR72 for Investec Bank plc.  The team also signed up and concluded the sale of three B737-500s on behalf of Air Baltic and has several exclusive mandates in progress with sales expected to conclude during the current financial year.

Overall, Commercial Jets' gross profit was down year on year at £15.9m (FY18: £17.3m), due to the significant, one-off contract in the prior year. Commercial Jets contributes 44.9% to Group gross profit.

Private Jets

In Private Jets, gross profit was broadly flat year on year at £10.4m (FY18: £10.6m). Overall, Private Jets contributes 29.3% to Group gross profit. 

In the UK, we have invested in new sales teams from which we expect to see the benefit in the current year. However, we saw an increasing impact from volatility in the sector as the year progressed. Gross profit was, as a result below expectations. In addition, we saw utilisation levels reduce, due to the unusually hot weather in the UK, and some clients reducing their flying plans in both the UK and Europe. Despite this, the number of active JetCards in Europe and the UK rose, and we saw record deposits in the UK.  This confidence from both existing and new members positions us well for a stronger performance in the current financial year. 

We have seen continued strength in the US where Private Jets grew gross profit, increased JetCard membership and saw bookings and renewals rise significantly.

 Freight

Despite freight being a volatile sector with most bookings made on an ad-hoc basis, we have delivered a second year of record profits with good business wins and team growth across our office network. This year, client requirements have ranged from transporting a small box via our growing on-board courier service to chartering the largest aircraft in the world, the An-225. Our service offering spans diverse sectors including automotive, aid, aerospace and energy, providing some protection from a downturn in any one. 

We continued to selectively invest in people across our regional offices, establishing a new team in the US, with immediate success, and expanding our team in Turkey. We won sizeable mandates from a variety of new and existing clients across the Group. In the US, we flew around 30 charters carrying humanitarian aid to Guam and Saipan during their typhoon season.  We transported construction materials to West Africa, arranged through the Turkey office, and the UK benefited from its work supporting airlines in their aircraft on ground (AOG) recovery, as well as Government flying. Our German office has continued to see high levels of activity from the automotive sector and delivered its 11th consecutive year of growth. Freight gross profit for the year was up 45.3% to £4.9m (FY18: £3.4m).Freight contributes 13.8% to Group gross profit.

Consulting & Training

Our Consulting & Training division has performed well over the year with gross profit up 25.0% at £4.2m (FY18: £3.4m). Underlying* operating profit was up 14.3% to £0.6m (FY18: £0.6m). Consulting & Training now contributes 11.9% to Group gross profit. We have benefited from investments we have made in the division which have helped to grow new business and highlight cross-selling opportunities.

*Underlying operating profit is stated before exceptional and other items.

 

Baines Simmons

Since its acquisition in 2015, we have worked hard to integrate and progress Baines Simmons, and we are now seeing good results from the changes we have made. We have invested in business development and in strong management, with Ian Holder, Principal Consultant and former military and civil pilot, appointed as Managing Director in April 2018. Ian has led the formulation of the Baines Simmons growth strategy, given the team clear direction and laid a strong foundation for further growth.

As a result, Baines Simmons has had another good year. The Training Academy has performed particularly well, fuelled by a coordinated strategy between departments.  We saw some of the most successful periods for training in the business' history during the second half and this momentum is continuing in the current financial year.

Over the year, we have won business from both new and existing customers. We continue to work with civilian and military regulators across the world, both training their personnel and supporting regulatory development. The contract with the UK Ministry of Defence to deliver an effective safety training programme, secured at the end of the last financial year, is now well established and we have had considerable success in supporting the RAF of Oman with a programme to redevelop its military regulation. These contracts are expected to continue for at least a further three years.

We have also won new contracts with several European international government organisations and a number of European airlines have requested further work in Safety Management Diagnostics. In addition, we are increasingly working with Ground Operations globally to develop world-class management systems appropriate to the developing ground handling market.

Cross-selling opportunities between our Consulting & Training and Charter divisions are increasing and a pipeline is crystallising. We are providing good leads to our Charter colleagues, which have resulted in them securing new contracts wins. For example, work we carried out for a Formula 1 manufacturer has helped to secure the team as a new client for Commercial Jets in the UK.  Additionally, the inclusion of Consulting & Training within the Group has served as an important differentiator. We are also beginning to see opportunities arise from Charter clients within Baines Simmons and discussions are ongoing which offer the potential for both domestic and international growth.

Clockwork Research

While small, Clockwork Research complements our Baines Simmons business and we now offer Fatigue Risk Management as part of the Baines Simmons portfolio of services. Working with Southwest Airlines and NASA, Clockwork Research co-authored industry guidance on controlled rest on the flight deck, and earlier in the year successfully undertook a safety case for Air France. The team also carried out further work with Jet2.com, this year undertaking an organisation-wide Safety Culture Survey.

SafeSkys

SafeSkys, acquired in September 2017, is a provider of Wildlife Management and Air Traffic Control (ATC) services to UK and international airports.  Integration of the business into the Baines Simons offer is now well advanced.

Within ATC, post-acquisition, two loss-making contracts were identified, for which a provision of £0.7m has been recognised on the opening balance sheet. Our team is working through the contracts to address issues and take remedial actions. Within Wildlife Management, the division has built a strong market position in the UK where we hold multi-year contracts with the Royal Air Force (RAF) and airports nationally. During the year we have won new and extended existing contracts. Our majority share of turnkey RAF flying stations was reinforced through the securing of the Western region for a further minimum of three years. The team has also won contracts to support foreign governments' air forces at strategic transport and training stations within Europe, and we're making meaningful and exciting advances into the training and consultancy markets.                       

Outlook

In summary, our long-term growth strategy is progressing well and proving effective. There is still a lot to do but the key elements are aligned; we have a well-invested business, great people and a solid global customer base. We have learnt from the challenging events of the first half of the year and have made significant progress in addressing the issues highlighted. As a result of the actions we have taken and the investments we have made in our business, we move forward with greater confidence and a stronger foundation. We will continue to invest for the future in the long-term interests of all our stakeholders, in our teams in all regions, in infrastructure and in processes. We continue to assess investment opportunities, both organic and through acquisition, to enhance or extend the service and capabilities we offer our customers, which will ultimately strengthen and advance our business.

 

For the remainder of this year, we expect macroeconomic uncertainties to persist. Amongst them is the still unclear outcome of Brexit. While Brexit does present some challenges for Air Partner, it also offers potential opportunities. Within Charter, only a small percentage of our current business would be impacted by any change in permissions to fly. The strong relationships we have across airline operators will enable us to source alternative carriers and continue to charter the aircraft which best meets our clients' needs. Within Consulting & Training, changes to rules and regulations tend to create business for us; providing the Group with a balance of opportunity against any perceived risks. Current trading is slightly ahead of the prior year.

As we always state, the global charter business has consistently been, and will continue to be, a volatile industry.  Against this backdrop, we manage the business for the long term, with a very clear strategy of alignment to the needs of our global customer base. We have a strong portfolio of global aviation services which provides us with opportunities to address various sectors and geographies. Our portfolio approach, without any single product or market dominance, often enables us to mitigate volatility, in either direction, in any one market or product line over the course of a year.

Aviation can be both challenging and exciting, but we have never been more aligned to our customers in our near 60-year history than today. Our clear long-term strategy is delivering results and opportunity.  We have this year withstood an unwelcome, turbulent and costly event, but we look forward with an exciting strategic outlook and compelling growth plans.

 

Mark Briffa, Chief Executive Officer

 

 

FINANCIAL REVIEW

 

I was delighted to accept the role as Chief Financial Officer for Air Partner. I believe in the Company's strategy and I am very much looking forward to working with Mark, the Board and the rest of the Air Partner team to deliver value to our shareholders. 

As part of my new role, I have undertaken an assessment of the Company's key processes and controls and visited a number of locations. This has enabled me to appreciate the operating business model, its principal risks and the overall financial control environment.

 

It is against this background I have been able to understand the consequence of Air Partner's accounting review in April 2018, which was widely reported at the time and dealt with in the FY18 financial statements. I recognise it has been a challenging period in the Company's history and one of my key priorities since joining Air Partner has been to address the matters arising.

 

As part of the accounting review, with the help of external advisers, the Company undertook a deep dive of the Company's systems, people and processes, and developed a comprehensive work plan to improve the overall internal controls. I am pleased to report we have made good progress against this work plan and implemented the following changes in the year:

·      Upgraded and upskilled key members of the finance and head office team.

·     Individuals roles and responsibility have been reviewed, reducing the dependency on one person and removing 'single points of failure'. 

·     A new Risk and Assurance role has been created, reporting directly to me with a direct line to the Chair of the Audit and Risk Committee. 

·    We have tightened the balance sheet control and review process and improved the quality and frequency of management information.

·     A number of key policies and procedures have been implemented and we have increased the level of training in the organisation.

 

In summary, I believe we are on a road to recovery and are making good progress. We have improved the control environment and importantly put in place processes to continually review and challenge these arrangements.

GTV and Revenue

Gross transaction value (GTV) of £273.3m (FY18: £261.3m) was up 4.6%. GTV represents the total value invoiced to clients and is stated exclusive of value added tax. Revenue of £77.5m (FY18: £74.3m) increased by 4.2% year on year. It is noted here that we have had a change in presentation and quantum of overall revenues recognised in FY18 and FY19 following the first-time adoption of IFRS 15 and misstatements in the prior year; refer to notes 2 and 14.

 

Gross profit

Air Partner primarily uses gross profit as its key indicator of business performance. This is due to the potential for revenue, as determined under IFRS, to fluctuate depending on the number of contracts enacted in the year where the Company acts as principal as opposed to an agent. Gross profit was £35.5m (FY8: £34.7m1), an increase of 2.3% on the prior year. This includes the full year impact of the SafeSkys acquisition, which was made in September 2017. On a comparative basis, adjusting for constant exchange rates and the acquisition of SafeSkys, gross profit improved by 2.1%. 

1 2018 Gross profit has been restated. Refer to note 14.

 

At a divisional level, the gross profit of the Charter division was flat year on year at £31.3m (FY18: £31.3m) with the prior year comparative heavily supported by a significant one-off contract in Commercial Jets. As a result of investing in new offices and attracting key talent we had stronger performance in the year from the US, with growth of 30.2% in gross profit, and in the Freight division, which increased gross profit by 45.3% year on year.

 

Consulting & Training gross profit of £4.2m (FY: £3.4m) increased by 25.0% year on year given the full year effect of the SafeSkys acquisition. On a comparative basis Consulting & Training grew gross profits by 14.9% driven by a strong performance in Baines Simmons. Further details of which can be found in the Divisional Reviews sections and the segmental analysis note 3. 

 

  

Administrative expenses

Costs included in administrative expenses in the consolidated income statement are the Charter personnel costs, sales and marketing, finance, information systems, human resource management, legal and compliance and other administrative costs.

 

Underlying administrative costs of £29.0m increased year on year by 1.1%, driven by investments made in back office support to strengthen the overall control environment post the accounting review.

 

The Group expects to make further investments in administrative expenses as we continue to improve the overall control environment and pursue our growth plans to grow organically across new territories.  The cost benefit of which will be assessed at the time before commitments are made.

 

Net impairment losses on financial assets of £0.4m (FY18: £0.1m), relate to the first time adoption of IFRS9.

 

Finance costs

The net interest charge for the year was £0.2m (FY18: £0.1m). The charge increased in the period as an additional £3.0m of debt was called down from the revolving credit facility (RCF) in September 2018 to support the growth we are experiencing in the Freight division. 

 

Underlying profit before tax

The above results translated to an underlying* profit before tax of £5.8m, in line with the prior year (FY18: £5.8m).

*Underlying profit before tax is stated before exceptional and other items.

 

Exceptional and other items

As expected, post the accounting review process, the results have been affected by a number of one-off exceptional items. Exceptional items are excluded from underlying performance measures by virtue of their size and nature, in order to better reflect management's view of the performance of the Group. In the year under review, the net effect of exceptional items on operating profit was £2.4m (FY18: £1.0m).

 

Exceptional items excluded from the underlying profits comprise £1.3m relating to the cost of the accounting review process, £0.5m of abortive acquisition fees, £0.4m of costs relating to the change of Board composition, and £0.4m of amortisation of acquired intangibles. These items have been partially offset by the release of deferred consideration relating to the Clockwork Research acquisition of £0.2m. The table below sets out the position:

 

Year ended 31 January 2019 (£m)

2019

£m

2018

£m

Underlying profit before tax

5.8

5.8

 

 

 

Cost related to the accounting review and associated items

(1.3)

-

Abortive acquisition costs

(0.5)

(0.3)

Changes in board composition

(0.4)

-

Amortisation of purchased intangibles

(0.4)

(0.3)

Acquisition & non-cash acquisition related costs

-

(0.1)

Restructuring costs

-

(0.3)

Release of deferred consideration

0.2

-

Statutory reported profit before tax (£m)

3.4

4.8

 

Statutory reported profit before tax

After the above exceptional items, statutory reported profit before tax was £3.4m down by 29.1% on the prior year (FY18: £4.8m).

 

 

Taxation

The Group seeks to manage the cost of taxation in a responsible manner to enhance its competitive position on a global basis while managing its relationships with tax authorities on the basis of full disclosure and legal compliance.

 

The underlying tax charge* for FY19 of £0.5m (FY18: £1.2m) represents an effective rate of 8.3% (FY18: 20.3%) on the underlying profits before tax. On a statutory reported profit basis, the effective rate of taxation was 14.4% (FY18: 24.7%). This was lower than the prior year as HMRC confirmed an overpayment of a tax relief claim, relating to the accounting review of £0.4m, was allowable. 

 

* Adjusting for exceptional and other items.

 

A rate of 25.0% is expected for the year ending 31 January 2020 given the Group's expected increase in profits from the US.

 

Earnings per share

Basic underlying* earnings per share from continuing operations was 9.6p (FY18: 8.4p), up 14.3% on the prior year. On a statutory basis, earnings per share from continuing operations was 5.6p (FY18: 6.9p) down by 18.8%, with FY18 affected by the level of exceptional items in the year.

 

*Underlying earnings are stated before exceptional and other items see note 7.

 

Dividends

Following the accounting review process, the Directors have considered the available headroom from distributable reserves to pay dividends and can confirm there is sufficient headroom to meet the proposed final dividend. Air Partner's stated dividend policy targets cover of between 1.5 and 2.0 times underlying earnings per share. 

 

As a result, the Directors are proposing a final dividend of 3.85p (FY18: 3.80p). Taken with the interim dividend of 1.75p (FY18: 1.70p) this would bring the total dividend for the year to 5.60p per ordinary share (FY18: 5.50p), an increase of 1.8%.

The final dividend is expected to be paid on 4 July 2019 to shareholders on the Company register at the close of business on 7 June 2019. The ex-dividend date will be 6 June 2019.

Statement of financial position

Shareholders' funds

After considering the profit for the year, dividend payments and exchange rate differences, overall shareholders' funds have remained in line with the prior year at £11.7m (FY18: £11.4m).

 

Goodwill and intangibles

Under IFRS, goodwill is subject to annual impairment tests. There were no impairments identified in the year. Goodwill in the Statement of Financial Position is carried at £6.8m (FY18: £6.8m). Intangible assets arising from business combinations are assessed at the time of acquisition in accordance with IFRS 3 and are amortised over their expected useful life. This amortisation is excluded from underlying profits.

 

During the course of the year, the provisional fair values recorded on the acquisition of SafeSkys Limited were revisited and adjusted as appropriate. Further details of which can be found in note 12.

 

Other intangible assets comprise software development costs. In the year we spent £0.4m on rolling out the Customer Relationship Management (CRM) system and a new booking tool for the Charter division.

 

Other balances

Movements in other balances within the State of Financial Position reflect the trading results of the period.

 

The Group has property, plant and equipment totalling £0.9m (FY18: £1.2m). Capital expenditure in the year was £0.1m (FY18: £0.4m).

 

In terms of material working capital movements, deferred income and JetCard deposits increased by £1.1m. £1.8m of this related to JetCard deposits offset by a reduction in deferred income. Trade and receivables increased by £2.7m driven by an increase in prepayments to suppliers in Europe for our key customers programmes. 

 

Cash generation and net debt

Operating cash from trading activities after investment in capital expenditure and software was £2.7m. Given the level of exceptional items in the year operating cash in real terms did not increase (excluding JetCard movements). Non-JetCard cash in the bank was £7.5m versus £7.3m in the prior year.

 

Net cash (cash offset by bank debt) was £2.0m (FY18: £4.8m). The level of debt has increased in the business to support the growth in the Freight division, where we can have some sizeable contracts at relatively short notice for various government agencies. An important element of winning this business is the ability to mobilise fast and secure the supply base ahead of the competition. 

 

Bank facilities

The Group had total debt facilities with NatWest of £9.0m. £7.5m of this is a revolving credit facility and was drawn down by £5.5m at the 31 January 2019 (FY18: £2.5m). This facility has been used to fund past acquisitions and the working capital needs of the business. This is repayable in February 2021 with no formal repayment schedule prior to that date. To support short-term liquidity, the Group has access to a £1.5m overdraft facility. This was not utilised at the 31 January 2019.  The Group has complied with all the financial covenants relating to these facilities.

 

Exchange rates

The results of overseas operations are translated into Sterling at average exchange rates. The net assets are translated at period-end rates. The principle exchange rates, expressed in terms of the value of Sterling, are shown in the following table.

 

Average rates

 

Period -end rates

 

31 January 2019

31 January 2018

 

31 January 2019

31 January 2018

 

USD

1.32

1.29

USD weakened by 2.3%

1.31

1.42

USD strengthened by 7.7%

EUR

1.13

1.14

EUR strengthened by 0.9%

1.13

1.14

EUR strengthened by 0.9%

 

Accounting policies and recent accounting developments

The accounts in this report are prepared under IFRS, as adopted by the European Union (EU). The accounting polices used in preparing these accounts are set out in note 2.

 

A number of new standards and amendments to standards and interpretations have been adopted retrospectively in preparing the accounts: IFRS 15 Revenue from Contracts with Customers and IFRS 9 Financial Instruments. The effect of these changes is captured in the detailed notes to the accounts.

 

In respect to IFRS 16 Leases, the standard now requires all material lease liabilities and corresponding 'right to use' assets to be recognised in the Statement of Financial Position. We have undertaken an initial assessment of the impact, which will come into effect for next year's accounts. Based on the Group's provisional estimates, it anticipates that it will recognise additional right of use assets of approximately £2.7m at 31 January 2019 and additional lease creditor of approximately £2.8m with a reduction in retained earnings of £0.1m. Refer to note 2a).

 

Reflecting on the learnings from the past year, we have taken the opportunity to have a fresh look at the presentation of the accounts and the corresponding notes. This has been done to provide greater clarity and transparency on how the Group reports its results and balances.

 

We have made several improvements and enhancements to provide the reader with greater clarity and insight. The overall effect of this change has been captured in note 2a.

 

Treasury and risk management

Foreign currency effects

Where possible, the Group uses natural hedges to minimise its foreign exchange exposure, for example matching JetCard deposits denominated in Euro or US Dollar with the respective liability. In addition, the Group uses derivatives to hedge certain transactions in accordance with its internal policies.

 

Financial risks

The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The Directors regularly review and agree policies for managing these risks.

 

Credit risk is managed by monitoring limits and payment performance of counterparties. The Directors consider the level of general credit risk in current market conditions to be higher than normal. Where a customer is deemed to represent a level of credit risk, terms of trade are modified to limit the Group's exposure.

 

Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure.

 

Interest rate risk is managed by holding a mixture of cash and borrowings in Sterling, US Dollar and Euro at fixed and floating rates of interest.

 

Liquidity risk is managed by the Group having access to an RCF, which can be used for working capital means, and a moderate overdraft facility to provide short-term flexibility.

 

Going concern

The Group's business activities, together with the factors likely to affect its future performance, are set out on in the Strategic Report and in the section 'Principal Risks and Uncertainties' of the 2019 Annual Report.

 

The Directors believe that the Group is well placed to manage its business risks and, after reviewing the Group's current financial position, including factors affecting its cost base, the availability of financing facilities and forecasts for a period of not less than 12 months from the date of approval of these financial statements, the Directors are satisfied that the Group has adequate resources to continue in business for the foreseeable future and that the Company is a going concern.

 

Financial Reporting Council review letter

In October 2018, the Company received a letter from the Corporate Reporting Review Team (CRRT) of the Financial Reporting Council (FRC) in relation to its regular review and assessment of the quality of corporate reporting in the UK. The letter focused on the balance of the Strategic Report, the disclosures of critical accounting judgements and estimates and the disclosures of other provisions. In addition, the CRRT highlighted areas of improvement in the presentation of the notes to the accounts. 

 

The Directors responded to the CRRT's questions, providing clarifying information that addressed the questions and comments raised. The FRC has confirmed this matter as now being closed. The recommendations from the review have been incorporated into the 2019 financial statements.

Joanne Estell

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

Following the accounting irregulates highlighted in April 2018, the business has focussed on its risk management framework and internal financial controls. The organisation has reviewed and introduced several improvements involving both people and processes. This work will continue throughout 2019.

 

The United Kingdom is in the process of withdrawing from the European Union. There may be significant regulatory change depending on the terms of this withdrawal, currently being negotiated by the UK Government and the European Union. We are closely following events as they develop; we comply with all relevant regulations and are confident that we will continue to do so post-Brexit.

 

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 the addressable market and broaden the client mix.

 

Principal risks and uncertainties facing the Group

In addition to the Internal Financial Controls and Brexit risks as highlighted above, the Group continues to operate in a highly competitive market where there are number of inherent risks including operational aviation related risks (such as 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).

 

In order to counteract the market challenges, the organisation continues to diversify and acquire businesses that provide good economic and operational synergies. Whilst this will have a positive impact, there is also a risk involving integration within the Group.

 

The Board reviews risks which may have a significant impact on the Group. The principal risks and uncertainties of the Group are detailed in the relevant section in the annual report.

 

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 2018. 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.

 

Directors' responsibility statement

The responsibility statement below has been prepared in accordance with the Company's full annual report for the year ended 31 January 2019. Certain parts thereof are not included in this announcement.

 

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

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

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

 

The responsibility statement was approved by the Board of Directors on 9 May 2019.

 

Mark Briffa

Joanne Estell

Chief Executive Officer

Chief Financial Officer

9 May 2019

9 May 2019

 

The directors of Air Partner plc are listed on our website at www.airpartner.com.

 

 

Consolidated income statement

for the year ended 31 January 2019

 

 

 

 

Year ended

 

 

 

Year ended

31 January

 

 

 

31 January

2018

 

 

 

2019

as restated 1 ,2

 

Continuing operations

Note

£'000

£'000

 

Gross transaction value (GTV)

2

273,348

261,317

 

Revenue

2

77,461

74,308

 

Gross profit

3

35,458

34,668

 

Administrative expenses before exceptional and other items

 

(29,039)

(28,726)

 

Exceptional and other items

4

(2,445)

(1,011)

 

Total administrative expenses

 

(31,484)

(29,737)

 

Net impairment losses on financial assets

 

(413)

(52)

 

Operating profit

 

3,561

4,879

 

Operating profit before exceptional and other items

 

6,006

5,890

 

Finance income

 

32

11

 

Finance costs

 

(224)

(138)

 

Finance costs - net

 

(192)

(127)

 

Profit before income tax

 

3,369

4,752

 

Profit before income tax and exceptional and other items

 

5,814

5,763

 

Income tax expense

5

(484)

(1,172)

 

Profit for the year

 

2,885

3,580

 

Attributable to:

 

 

 

 

Owners of the parent company

 

2,885

3,580

 

Earnings per share:

 

 

 

 

Continuing operations

 

 

 

 

Basic

7

5.6p

6.9p

 

Diluted

7

5.4p

6.7p

 

1     Revenue has been restated for the prior year following the introduction of IFRS 15 and misstatements. Please refer to note 14 for further detail.

2     Gross profit and administrative expenses before exceptional and other items have been restated for the prior year. Please refer to note 14 for further detail.

 

 

Consolidated statement of comprehensive income

for the year ended 31 January 2019

 

Year ended

Year ended

 

31 January

31 January

 

2019

2018 

 

£'000

£'000

Profit for the year

2,885

3,580

Other comprehensive income/(expense) - items that may subsequently be reclassified to profit or loss:

 

 

Exchange differences on translation of foreign operations

26

(372)

Total comprehensive income for the year

2,911

3,208

Attributable to:

 

 

Owners of the parent company

2,911

3,208

 

The above consolidated income statement and consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

 

 

Consolidated statement of changes in equity

for the year ended 31 January 2019

 

 

Share

 

Own

 

 

 

 

 

premium

Merger

shares

 

Retained

Total

 

Share

account as

reserve as

reserve as

Translation

earnings

equity

 

capital

restated 1

restated 1

restated 2

reserve

as restated 2,3

as restated 2,3

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Opening equity as at 1 February 2017 (as previously stated)

522

4,755

354

(672)

1,410

4,588

10,957

Restatements

-

59

(59)

-

-

(115)

(115)

Opening equity as at 1 February 2017 (as restated - as restated)

522

4,814

295

(672)

1,410

4,473

10,842

Profit for the year

-

-

-

-

-

3,580

3,580

Exchange differences on translation of foreign operations

-

-

-

-

(372)

-

(372)

Total comprehensive (expense)/income for the year

-

-

-

-

(372)

3,580

3,208

Transactions with owners of the Company:

 

 

 

 

 

 

 

Share option movement in the year

-

-

-

(500)

-

401

(99)

Share options exercised during the year

-

-

-

424

-

(215)

209

Dividends paid (note 6)

-

-

-

-

-

(2,752)

(2,752)

Total transactions with owners of the Company

-

-

-

(76)

-

(2,566)

(2,642)

Closing equity as at 31 January 2018 (as restated)

522

4,814

295

(748)

1,038

5,487

11,408

 

 

 

Share

 

Own

 

 

 

 

 

premium

Merger

shares

 

Retained

Total

 

Share

account as

reserve as

reserve as

Translation

earnings

equity

 

capital

restated 1

restated 1

restated 2

reserve

as restated 2,3

as restated 2,3

 

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Opening equity as at 1 February 2018 (as restated)

522

4,814

295

(748)

1,038

5,487

11,408

Profit for the year

-

-

-

-

-

2,885

2,885

Exchange differences on translation of foreign operations

-

-

-

-

26

-

26

Total comprehensive income for the year

-

-

-

-

26

2,885

2,911

Transactions with owners of the Company:

 

 

 

 

 

 

 

Share option movement in the year

-

-

-

-

-

252

252

Share options exercised during the year

-

-

-

422

-

(422)

-

Dividends paid (note 6)

-

-

-

-

-

(2,890)

(2,890)

Total transactions with owners of the Company

-

-

-

422

-

(3,060)

(2,638)

Closing equity as at 31 January 2019

522

4,814

295

(326)

1,064

5,312

11,681

 

1     Share premium and merger reserve have been restated as explained in note 14

2     The share option movement for the prior year has been restated by £70,000 as explained in note 14.

3     Retained earnings have been restated for the effects of the introduction of IFRS 9 Financial Instruments as explained in notes 2a and 14.

The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.

 

 

 

Company statement of changes in equity

for the year ended 31 January 2019

 

 

Share

 

Own

 

 

 

 

premium

Merger

shares

Retained

 

 

Share

account as

reserve as

reserve as

earnings

Total

 

capital

restated 1

restated 1

restated 2

as restated 2

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

Opening equity as at 1 February 2017 (as previously stated)

522

4,755

354

(672)

4,051

9,010

Restatements

-

59

(59)

-

-

-

Opening equity as at 1 February 2017 (as restated)

522

4,814

295

(672)

4,051

9,010

Profit for the year

-

-

-

-

3,389

3,389

Total comprehensive income for the year

-

-

-

-

3,389

3,389

Transactions with owners of the Company:

 

 

 

 

 

 

Share option movement in the year

-

-

-

(500)

401

(99)

Share options exercised during the year

-

-

-

424

(215)

209

Dividends paid (note 6)

-

-

-

-

(2,752)

(2,752)

Total transactions with owners of the Company

-

-

-

(76)

(2,566)

(2,642)

Closing equity as at 31 January 2018

522

4,814

295

(748)

4,874

9,757

 

 

 

Share

 

Own

 

 

 

 

premium

Merger

shares

Retained

 

 

Share

account as

reserve as

reserve as

earnings

Total

 

capital

restated 1

restated 1

restated 2

as restated 2

equity

 

£'000

£'000

£'000

£'000

£'000

£'000

Opening equity as at 1 February 2018 (as restated)

522

4,814

295

(748)

4,874

9,757

Profit for the year

-

-

-

-

5,100

5,100

Total comprehensive income for the year

-

-

-

-

5,100

5,100

Transactions with owners of the Company:

 

 

 

 

 

 

Share option movement for the year

-

-

-

-

255

255

Share options exercised during the year

-

-

-

422

(422)

-

Dividends paid (note 6)

-

-

-

-

(2,890)

(2,890)

Transactions with owners of the Company

-

-

-

422

(3,057)

(2,635)

Closing equity as at 31 January 2019

522

4,814

295

(326)

6,917

12,222

 

1     Share premium and merger reserve have been restated as explained in note 14.

2     The share option movement for the prior year has been restated by £70,000 as explained in note 14.

The above Company statement of changes in equity should be read in conjunction with the accompanying notes.

 

 

Consolidated statement of financial position

as at 31 January 2019

 

 

 

 

 

 

 

 

 

31 January

 

 

 

31 January

2018 as

 

 

 

2019

restated 1

 

 

Note

£'000

£'000

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Goodwill

 

6,750

6,753

 

Other intangible assets

 

4,882

5,337

 

Property, plant and equipment

 

855

1,188

 

Deferred tax assets

 

365

497

 

Total non-current assets

 

12,852

13,775

 

Current assets

 

 

 

 

Trade and other receivables

8

19,062

16,314

 

Current tax assets

 

313

683

 

JetCard bank balances

 

17,692

15,891

 

Other cash and cash equivalents

 

7,462

7,302

 

Total cash and cash equivalents

9

25,154

23,193

 

Total current assets

 

44,529

40,190

 

Total assets

 

57,381

53,965

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

10

(8,044)

(6,717)

 

Current tax liabilities

 

(593)

(1,528)

 

Other liabilities

11

(3,736)

(4,925)

 

Deferred income and JetCard deposits

 

(25,412)

(24,293)

 

Derivative financial instruments

 

(8)

(12)

 

Deferred consideration

 

(800)

-

 

Provisions

 

(689)

(409)

 

Total current liabilities

 

(39,282)

(37,884)

 

Net current assets

 

5,247

2,306

 

Non-current liabilities

 

 

 

 

Borrowings

9

(5,500)

(2,500)

 

Deferred consideration

 

-

(800)

 

Deferred tax liability

 

(700)

(775)

 

Provisions

 

(218)

(598)

 

Total non-current liabilities

 

(6,418)

(4,673)

 

Total liabilities

 

(45,700)

(42,557)

 

Net assets

 

11,681

11,408

 

EQUITY

 

 

 

 

Share capital

 

522

522

 

Share premium account

 

4,814

4,814

 

Merger reserve

 

295

295

 

Own shares reserve

 

(326)

(748)

 

Translation reserve

 

1,064

1,038

 

Retained earnings

 

5,312

5,487

 

Total equity

 

11,681

11,408

 

1     The consolidated statement of financial position at 31 January 2018 has been restated for the finalisation of the fair value of net assets arising on the acquisition of SafeSkys Limited in September 2017 and certain other restatements. Please see notes 12 and 14 for further details.

 

These financial statements were approved and authorised for issue by the Board of Directors on 9 May 2019 and were signed on its behalf by:

M A Briffa                                                              J E Estell

Director                                                                 Director

The above consolidated statement of financial position should be read in conjunction with the accompanying notes.

 

 

Company statement of financial position

as at 31 January 2019

 

 

 

 

 

 

 

 

 

31 January

 

 

 

31 January

2018

 

 

 

2019

as restated 1

 

 

Note

£'000

£'000

 

ASSETS

 

 

 

 

Non-current assets

 

 

 

 

Intangible assets

 

956

1,045

 

Property, plant and equipment

 

450

616

 

Investments

 

12,173

12,350

 

Deferred tax assets

 

60

178

 

Total non-current assets

 

13,639

14,189

 

Current assets

 

 

 

 

Trade and other receivables

8

17,131

17,309

 

Current tax assets

 

-

566

 

JetCard bank balances

 

12,635

7,486

 

Other cash and cash equivalents

 

3,101

-

 

Total cash and cash equivalents

9

15,736

7,486

 

Total current assets

 

32,867

25,361

 

Total assets

 

46,506

39,550

 

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Trade and other payables

10

(3,279)

(3,540)

 

Current tax liabilities

 

(171)

(976)

 

Other liabilities

11

(8,917)

(6,228)

 

Deferred income and JetCard deposits

 

(15,212)

(15,438)

 

Derivative financial instruments

 

(8)

(14)

 

Deferred consideration

 

(800)

-

 

Provisions

 

(277)

-

 

Total current liabilities

 

(28,664)

(26,196)

 

Net current assets/(liabilities)

 

4,203

(835)

 

Non-current liabilities

 

 

 

 

Borrowings

9

(5,500)

(2,500)

 

Deferred consideration

 

-

(800)

 

Provisions

 

(120)

(297)

 

Total non-current liabilities

 

(5,620)

(3,597)

 

Total liabilities

 

(34,284)

(29,793)

 

Net assets

 

12,222

9,757

 

EQUITY

 

 

 

 

Share capital

 

522

522

 

Share premium account

 

4,814

4,814

 

Merger reserve

 

295

295

 

Own shares reserve

 

(326)

(748)

 

Retained earnings

 

6,917

4,874

 

Total equity

 

12,222

9,757

 

1     The Company statement of financial position at 31 January 2018 has been restated for certain items. Please refer to note 14 for further details.

The parent company profit after tax for the financial year was £5,100,000 (2018: £3,389,000).

These financial statements were approved and authorised for issue by the Board of Directors on 9 May 2019 and were signed on its behalf by:

M A Briffa                                                              J E Estell

Director                                                                  Director

Air Partner plc Registered no. 00980675

The above company statement of financial position should be read in conjunction with the accompanying notes.

 

 

Consolidated and Company statement of cash flows

for the year ended 31 January 2019

 

 

Group

 

Company

 

 

 

 

 

 

 

 

 

 

Year

 

 

 

 

 

Year

ended

 

Year

Year

 

 

ended

31 January

 

ended

ended

 

 

31 January

2018 as

 

31 January

31 January

 

 

2019

restated 1

 

2019

2018

 

Note

£'000

£'000

 

£'000

£'000

Cash generated from/(used in) operations

13

3,097

10,956

 

9,202

(76)

- Interest received

 

32

11

 

-

4

- Interest paid

 

(224)

(138)

 

(224)

(139)

Income tax paid

 

(996)

(850)

 

(414)

(453)

Net cash inflow/(outflow) from operating activities

 

1,909

9,979

 

8,564

(664)

Investing activities

 

 

 

 

 

 

- Purchases of property, plant and equipment

 

(136)

(433)

 

(85)

(170)

- Purchases of intangible assets

 

(351)

(204)

 

(329)

(185)

- Acquisition of subsidiaries

 

-

(1,974)

 

-

(2,200)

Net cash used in investing activities

 

(487)

(2,611)

 

(414)

(2,555)

Financing activities

 

 

 

 

 

 

- Dividends paid to the Company's shareholders

 

(2,890)

(2,752)

 

(2,890)

(2,752)

- Proceeds on exercise of share options

 

-

269

 

-

269

- Purchase of own shares

 

-

(500)

 

-

(500)

- Increase in/(repayments of) borrowings

 

3,000

(457)

 

3,000

(457)

Net cash generated from/(used in) financing activities

 

110

(3,440)

 

110

(3,440)

Net increase/(decrease) in cash and cash equivalents

 

1,532

3,928

 

8,260

(6,659)

Opening cash and cash equivalents

 

23,193

19,795

 

7,486

14,202

Effect of changes in foreign exchange rates

 

429

(530)

 

(10)

(57)

Closing cash and cash equivalents

 

25,154

23,193

 

15,736

7,486

 

1     Net cash inflow from group operating activities and the purchases of fixed assets in 2018 have both been reduced by £275,000. There has not been an impact on cash and cash equivalents. .

 

JetCard cash

The closing cash and cash equivalents balance can be further analysed into 'JetCard cash' and 'non-JetCard cash' as follows:

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Total JetCard cash (see explanation below)

17,692

15,891

 

12,635

7,486

Non-JetCard cash

7,462

7,302

 

3,101

-

Cash and cash equivalents

25,154

23,193

 

15,736

7,486

 

JetCard cash is cash received from customers participating in the JetCard programme in advance of bookings being made. It is managed through segregated bank accounts set aside for these purposes and is not used for Air Partner's working capital needs.

The above consolidated and company statement of cash flows should be read in conjunction with the accompanying notes.

 

 

Notes to the condensed financial statements

for the year ended 31 January 2019

1 General information

Air Partner plc (the Company) is a public listed company which is listed on the London Stock Exchange and incorporated and domiciled in the UK under registration number 00980675. The address of the registered office is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA. The nature of the Group's operations and its principal activities are set out in the 2019 Annual Report.

The condensed financial information set out herein does not constitute the Group's statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year ended 31 January 2018 have been delivered to the Registrar of Companies and those for the 2019 year end will be delivered following the Group's Annual General Meeting to be held on 26 June 2019. 

The external auditors have reported on the 2019 accounts and their report is qualified and contained statements under section 498 (2) and (3) of the Companies Act 2006. Their report is qualified following the predecessor auditors' qualification in respect of an accounting issue which arose in accounting periods dating back at least as far as the year ended 31 July 2011, further details of which can be found in the 2018 Annual Report. The qualification for the current year is solely in respect of the possible effect of this matter on the comparability of the current period's figures in the consolidated income statement, consolidated and company statement of changes in equity, consolidated and company statements of financial position, consolidated and company statements of cash flows and the corresponding figures.   

 

2 Accounting policies

a) Basis of preparation of financial statements and accounting restatement

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

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) and interpretations issued by IFRS Interpretation Committee (IFRIC) adopted for use in the European Union in accordance with EU law (IAS Regulation EC1606/2002) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS. The Company has been able to prepare its 31 January 2019 statement of financial position fully in accordance with applicable accounting standards.

The financial statements have been prepared on a historical cost basis, except for the revaluation of certain financial instruments which are stated at fair value, and are presented in Sterling, being the currency of the primary economic environment in which the Group operates. Unless otherwise stated, figures are rounded to the nearest thousand.

As a result of the accounting issue explained in the Financial Review and Audit and Risk Committee Report within the Annual Report for 2018, the Company had to estimate in which historical accounting periods the £4.4m (£4.0m net of an intended tax reclaim of £0.4m) accounting issue arose between years ended 31 July 2011 and 31 January 2018 as accurate prior period accounting records could not be recreated. Of the £4.4m identified, £0.9m is a known issue relating to the year ended 31 July 2011.

The Directors spread the accounting error of £4.4m as being £0.4m in the year ended 31 January 2018, £0.4m in the year ended 31 January 2017 and £3.6m in the years ended 31 July 2011 to 31 January 2016.

A straight-line approach was used as this was deemed the most appropriate way to account for the issue.

The £0.4m tax reclaim has since been agreed with the tax authorities and has therefore been included in the corporation tax calculations for the current year as shown in note 5.

Adoption of new and revised standards

The following new and revised standards and interpretations have been adopted in the current year.

IFRS 9

The Company has adopted IFRS 9 Financial Instruments on a fully retrospective basis. IFRS 9 Financial Instruments sets out requirements for recognising and measuring financial assets, financial liabilities and some contracts to buy or sell non-financial items. This standard replaces IAS 39 Financial Instruments: Recognition and Measurement.

IFRS 9 largely retains the existing requirements in IAS 39 for the classification and measurement of financial liabilities and the adoption of IFRS 9 has not had a material effect on the Group's accounting policies related to financial instruments.

IFRS 9 eliminates the previous IAS 39 categories for financial assets of held to maturity, loans and receivables and available for sale. Under IFRS 9, on initial recognition, a financial asset is classified as:

•     amortised cost;

•     fair value through other comprehensive income (FVTOCI) - debt investment;

•     FVTOCI - equity investment; or

•     fair value through profit or loss (FVTPL).

The classification of financial assets under IFRS 9 is generally based on the business model in which a financial asset is managed and its contractual cash flow characteristics.

Financial assets are subject to new rules regarding provisions for impairment; however, as the Group has minimal financial assets (other than trade receivables) and a history of minimal impairments against these assets, the impact on transition is not material.

The Group has elected to measure loss allowances for trade receivables at an amount equal to lifetime extended credit losses.

Please see note 14 for the impact which IFRS 9 has had on trade and other receivables on its adoption. IFRS 9 has had no impact on cash and cash equivalents and as the Company has no hedging arrangements there is no impact in these respects arising on adoption of the standard.

IFRS 15

In the current year, the Group has applied IFRS 15 Revenue from Contracts with Customers. IFRS 15 introduces a five-step approach to revenue recognition and replaces IAS 18 Revenue, IAS 11 Construction Contracts and related interpretations. Far more prescriptive guidance has been added in IFRS 15 to deal with specific scenarios.

The effect of initially applying IFRS 15 has been an equal reduction in both trade receivables and deferred income in respect of contracts where a customer has been invoiced by Air Partner in advance but the service was not delivered and payment was not received by the statement of financial position date. The statements of financial position at 31 January 2019 and 31 January 2018 include this adjustment. The timing of revenue recognition has not been affected by IFRS 15, under which revenue is recognised when a customer obtains control of goods or services in line with identifiable performance obligations, and therefore there has been no effect upon the opening reserves at 31 January 2018 nor on the results for the year to 31 January 2019.

The Group has adopted this standard using the fully retrospective effect method and so has recognised the cumulative effect of applying the new standard at the beginning of this period with a restatement of comparative periods. IFRS 15 uses the terms 'contract asset' and 'contract liability' to describe what might more commonly be known as 'accrued income' and 'deferred income'; however, the standard does not prohibit an entity from using alternative descriptions in the statement of financial position. The Group has not adopted the terminology used in IFRS 15 to describe such balances.

Apart from as described above, the application of IFRS 15 has not had a significant impact on the financial position of the Group.

The Group recognises broking revenues at the point of flight departure, including those of the JetCard programme, as this is considered to be the point at which contract performance obligations have been satisfied. The key judgement in relation to revenue recognition is the judgement of whether the Group is acting as principal or agent in transactions with customers. In making its judgement, management considers the detailed terms of sales transactions with customers in order to determine whether the Group is performing as the principal obligor. This assessment determines how revenue is recognised as either principal or agent in accordance with the criteria set out IFRS 15 and the Group has therefore re-reviewed this assessment. As a result of this review Air Partner is now considered to be principal in certain additional types of customer contracts rather than agent, as was the case before, and therefore the revenue for the previous year has been restated. This change has had no impact on gross profit.

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for services provided in the normal course of business, less VAT and other sales-related taxes.

A third balance sheet at 31 January 2017 is not required as there would be no changes to net assets if a prior year restatement were to be made.

New standards, amendments and interpretations in issue but not yet effective

The IASB and IFRS Interpretations Committee have issued the following standards and interpretations with an effective date of implementation for accounting periods beginning after the date on which the Group's financial statements for the current year commenced.

Effective after 31 January 2019

Effective for

accounting periods

beginning on or after

Endorsed by the EU

New standards

 

 

IFRS 16 Leases

1 January 2019

Yes

IFRS 17 Insurance Contracts

1 January 2021

No

 

 

 

 

Effective for

accounting periods

beginning on or after

Endorsed by the EU

Amendments

 

 

IFRS 9 Financial Instruments

1 January 2019

Yes

IAS 28 Investments in Associates

1 January 2019

Yes

IFRIC 23 Uncertainty over Income Tax

1 January 2019

Yes

IAS 19 Employee Benefits

1 January 2019

Yes

IFRS 3 Business Combinations

1 January 2019

No

IFRS 11 Joint Arrangements

1 January 2019

Yes

IAS 12 Income Taxes

1 January 2019

Yes

IAS 23 Borrowing Costs

1 January 2019

Yes

IAS 1 Presentation of Financial Statements

1 January 2020

No

IAS 8 Accounting Policies

1 January 2020

No

References to the Conceptual Framework in IFRS Standards

1 January 2020

No

 

IFRS 16 will be implemented by the Group from 1 February 2019. The Standard will replace IAS 17 'Leases' and will require lease liabilities and 'right of use' assets to be recognised on the statement of financial position for almost all leases. The potential impact of IFRS 16 for the Group has been assessed as immaterial.

IFRS 17 is not applicable to the Group, as it does not issue insurance or investment contracts.

•     IFRS 16 Leases - effective for periods beginning on or after 1 January 2019

    IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations when it becomes effective for accounting periods beginning on or after 1 January 2019. The group will adopt IFRS 16 for the year ending 31 January 2020. No decision has been made about whether to use any of the transitional options in IFRS 16.

    Its principal effect will be to gross up the Group's statement of financial position to recognised additional right of use assets within property, plant and equipment and additional lease liabilities in respect of leases that are currently treated as operating leases. The associated operating lease charge that is currently recorded within operating costs will be removed and replaced with a depreciation charge and an interest charge in respect of the additional lease creditors recognised.

    The Group will not apply the standard to short-term leases (being those with an initial term of 12 months or less) nor leases of low-value items (defined as leases of assets with an initial cost of less than US$5,000 (approximately £4,000) as required by the standard.

Adopting IFRS 16 requires the Group to exercise judgement. In particular:

•     IFRS 16 requires the Group to take into account periods covered by options to extend or terminate leases to the extent that it is reasonably certain that the leases will continue for those terms. In assessing what is reasonably certain, the Group considers past practice, its future needs and the lease terms.

•     IFRS 16 requires the Group to estimate incremental rates of borrowing in respect of leases for which no interest rate is implicit in the lease. The Group has determined the incremental rates of borrowing for individual leases based on its average cost of borrowing.

Based on the Group's provisional estimates it anticipates that it will recognise additional right of use assets of approximately £2.7m at 31 January 2019 and additional lease creditors of approximately £2.8m with a reduction in retained earnings of £0.1m. Of the right of use assets that will be recognised at 31 January 2019 approximately £1.4m relates to properties and approximately £1.3m to fixtures and equipment and motor vehicles. This reduction in retained earnings compared to the pre-IFRS 16 position is a timing difference which will reverse over the next years as these leases expire.  The overall impact of this reversal in the income statement in each year will be immaterial.

There are no standards and interpretations in issue but not yet adopted which, in the opinion of the Directors, will have a material effect on the reported income or net assets of the Group or Company.

b) Basis of consolidation

Subsidiaries are all entities (including structured entities) over which the Group has control.

The Group controls an entity where the Group is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for business combinations by the Group.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-group transactions, balances, income and expenses are eliminated on consolidation.

c) Going concern

The Group's business activities, together with the factors likely to affect its future development, performance and position are set out in the 2019 Annual Report. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the 2019 Annual Report.

The Group has sufficient cash resources supported by a moderate level of debt. As a consequence, the Directors believe that the Group is well placed to manage its business risks successfully despite the current uncertain economic outlook.

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

d) Foreign currency

i) Foreign currency transactions

Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the time of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency of the entity at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

ii) Financial statements of foreign operations

The assets and liabilities of foreign operations are translated at exchange rates prevailing at the reporting date. Income and expenses are translated at the average rate for the period. Exchange differences arising are classified as equity and transferred to the Group's translation reserve.

e) Goodwill

Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest (if any) in the entity over the net of the acquisition date amounts of the identifiable assets acquired and the liabilities assumed.

Goodwill denominated in currencies other than Sterling is revalued at the rate of exchange ruling at the statement of financial position date.

If, after reassessment, the Group's interest in the fair value of the acquiree's identifiable net assets exceeds the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer's previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.

Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated to each of the Group's cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.

On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.

f) Intangible assets

Internally generated assets

Internally generated intangible assets developed by the Group are recognised only if all of the following conditions are met:

•     an asset is created that can be identified;

•     it is probable that the asset created will generate future economic benefits; and

•     the development cost of the asset can be measured reliably.

Amortisation is charged to the income statement so as to write off the cost of assets less their residual values over their estimated useful lives. The carrying value of intangible assets with a finite life is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.

Other intangible assets

Intangible assets arising on acquisition are stated at fair value less accumulated amortisation and any impairment losses. Amortisation of the carrying value of intangible assets arising on acquisition is charged to the income statement over the estimated useful life, which is as follows:

Brands                                                10%-50% per annum on a straight-line basis

Mandates/order book                         100% per annum

Customer relationships                       5%-33.3% per annum on a straight-line basis

Training materials                               10% per annum on a straight-line basis

Software                                              20%-33.3% per annum on a straight-line basis

The carrying value of intangible assets with a finite life is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Similarly, the remaining useful life of intangible assets are reviewed and if any of those needs to be shortened due to events or changes in circumstances then the amortisation charge is correspondingly increased to reflect the shorter life.

g) Property, plant and equipment

Items of property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.

Depreciation is charged to the income statement so as to write off the cost of assets less their residual values over their estimated useful lives, as follows:

Short leasehold property                   over the life of the lease on a straight-line basis

Leasehold improvements                  over the life of the lease on a straight-line basis

Fixtures and equipment                    10%-33% per annum on a straight-line basis

Motor vehicles                                   25% reducing balance and 20% per annum on a straight-line basis

h) Impairment of tangible and intangible assets excluding goodwill

At each statement of financial position 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 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 at least 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 (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, 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 (or 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 (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, 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.

i) Financial instruments

Financial assets

The Group classifies its financial assets in the following categories: at fair value through profit or loss, or at amortised cost. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.

Purchases and sales of financial assets are recognised on the trade date - the date on which the Group commits to purchase or sell the asset. Financial assets are initially recognised at fair value plus transaction costs, except for financial assets held at fair value through profit or loss, which are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership.

Financial assets at fair value through profit or loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as fair value through profit and loss unless they are designated as hedges. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise, they are classified as non-current. Financial assets at fair value through profit or loss are initially recognised at fair value at the date the contract is entered into, and subsequently gains or losses arising from changes in their fair value are presented in the income statement within administrative expenses in the period in which they arise. The Group's financial assets at fair value through profit or loss comprise derivative financial instruments.

Derivative financial instruments

From time to time the Group enters into derivative financial instruments, including foreign exchange forward contracts, to manage its exposure to foreign exchange rate risk. Derivatives not designated into an effective hedge relationship are classified as a financial asset or a financial liability. The Group has not designated any derivatives as hedging items and therefore does not apply hedge accounting.

Trade and other receivables and accrued income

Trade and other receivables and accrued income are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets, except for maturities greater than 12 months at the end of the reporting period. These are classified as non-current assets. Trade and other receivables and accrued income are subsequently carried at amortised cost using the effective interest method.

Trade receivables

Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets.

IFRS 9 has been implemented on a fully retrospective basis and this has given rise to an expected credit loss model provision against trade receivables in addition to specific provisions made.

Other receivables

Other receivables are other amounts contractually due from third parties, for example deposits receivable for leased assets.

Accrued income

Accrued income is revenue that has been contracted and recognised in accordance with the Group's accounting policies, but not yet invoiced.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. The carrying amount of these assets approximates their fair value.

Financial liabilities

The Group classifies its financial liabilities in the following categories: at fair value through profit or loss and at amortised cost. The classification depends on the purpose for which the financial liabilities were acquired. Management determines the classification of its financial liabilities at initial recognition. Financial liabilities are recognised when the Group becomes a party to the contractual agreement of the instrument.

Financial liabilities at fair value through profit or loss

A financial liability is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as fair value through profit and loss unless they are designated as hedges. Liabilities in this category are classified as current liabilities if they are expected to be settled within 12 months; otherwise, they are classified as non-current. Financial liabilities at fair value through profit or loss are initially recognised at fair value at the date the contract is entered into, and subsequently gains or losses arising from changes in their fair value are presented in the income statement within administrative expenses in the period in which they arise. The Group's financial liabilities at fair value through profit or loss comprise derivative financial instruments.

Financial liabilities at amortised cost

The Group's financial liabilities at amortised cost comprise trade payables, other payables, accrued costs and borrowings. They are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method. JetCard deposits are included within financial liabilities as they are contractually repayable upon demand.

Trade payables

Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.

Other payables

Other payables that are financial liabilities at amortised cost are certain customer deposits which are contractually refundable to customers on demand.

Accrued costs

Accrued costs are costs that have been contracted and recognised in accordance with the Group's accounting policies, but for which invoices have not yet been received or payments made, as applicable.

Borrowings

Borrowings consist of an interest-bearing bank loan, which is recorded at book amortised cost.

Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the statement of financial position when there is a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

Equity instruments issued by the Group

An equity instrument is a contract that evidences a residual interest in the asset of an entity after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs. The Group's equity instruments comprise share capital in the statement of financial position.

j) 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 reporting date and are discounted to present value.

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it.

k) Revenue

Revenues are derived from aircraft chartering services, aircraft remarketing services, aircraft inspection services and the provision of aviation related training and safety consulting services. In line with IFRS 15 Revenue from Contracts with Customers, where a contract has been determined as principal, the full amount of the invoice is recognised as revenue. Where Air Partner is not acting as principal, revenue is recognised on an agency basis and only gross margin is reported as revenue. Revenue is measured as the transaction price receivable for the provision of goods and services to third-party customers and is stated exclusive of value added tax and is only recognised when control has passed to the customer.

Aircraft chartering services

Amounts receivable in respect of aircraft chartering services are recognised as revenue when the economic benefits are deemed to have passed to the customer, which is generally the flight date. This applies equally whether or not the client is in the JetCard programme. In instances where the Group is acting as agent, the net amount receivable by the Group is recognised as revenue. The determination as to whether Air Partner is considered principal or agent in a contract depends on whether or not Air Partner is contractually obliged under the terms of the contract to provide the particular service.

Aircraft remarketing services

Air Partner Remarketing's (formerly Cabot Aviation) principal activity is that of an aircraft remarketing broker. Fees earned in respect of these services are recognised when legal title to the aircraft has passed to the customer.

Aircraft inspection services

Aircraft registered with the Isle of Man Aircraft Registry, which is managed by Baines Simmons Limited, require an annual inspection. Amounts receivable in respect of such inspections are recognised as revenue once the aircraft has been inspected.

Provision of aviation-related training and safety consulting services

Baines Simmons Limited, Clockwork Research Limited and SafeSkys Limited provide various aviation-related specialist training and consultancy services. Revenue is recognised by reference to the delivery of the services. Amounts in respect of unbilled services provided to clients are recognised as revenue at the statement of financial position date.

l) Segmental reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker, which is responsible for resource allocation and assessing performance of the operating segments, is considered to be the Board. The nature of the operating segments is set out in note 3.

m) Share-based payments

From time to time the Group will grant options to employees to subscribe for ordinary shares in the Company. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date using the Monte Carlo method and spread over the period during which employees become unconditionally entitled to the options, based on management's estimate of the number of options which will ultimately vest, adjusting at each reporting date for the effect of non-market based vesting conditions.

n) Retirement benefit costs

Payments to defined contribution retirement benefit schemes are charged as an expense in the period in which the employees render service. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes where the Group's obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.

Air Partner SAS operates a defined benefit pension scheme and the liability of the scheme is recognised in the statement of financial position at the present value of the obligation at the statement of financial position date.  The obligation is calculated annually by independent actuaries and actuarial gains and losses arising from experience adjustments and changes in assumptions are recognised in full in the period in which they occur.

 o) Taxation

The tax expense represents current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to the tax payable in respect of previous years.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount 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 statement of financial position liability method. Deferred tax liabilities are recognised for all 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 differences arise from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.

Deferred tax is calculated at the tax rates that are enacted or substantively enacted at the reporting date.

p) Leasing

Leases are classified as finance leases whenever the terms of the lease transfer all, or substantially all, of the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Rental income or expenditure from operating leases is recognised on a straight-line basis over the lease term.

q) Dividends

Final dividends on ordinary shares are recognised as a liability in the period in which the dividends are approved by the Company's shareholders. Dividends are recognised as a liability in the period in which they are approved.

r) Deferred income

Deferred income is comprised of amounts received or receivable from customers in respect of which services are yet to be provided or flights that are yet to occur.

For contracts where the Company is the principal, the full amount of deferred revenue will be recognised within revenue upon performance of services. For contracts where the Company is acting as agent, the amount of future revenue to be recognised will be purely the Company's agency commission element of these amounts.

In the charter business Air Partner generally invoices its customers in advance of the flight date. The value of these invoices is taken to deferred income and is only released to the income statement when the revenue is recognised at the time of the flight date on an invoice by invoice basis.

However IFRS 15 requires in cases where trade receivables are matched by deferred consideration, i.e. the flight has not yet taken place, that neither of those amounts is recognised in the statements of financial position. Therefore deferred income under IFRS 15 relates only to contracts where Air Partner has raised an invoice(s) to the customer and been paid for the same by the date of the statement of financial position.

Please refer to note 2a for further information of the impact of IFRS 15 upon deferred income and trade receivables.

s) JetCard programme

The JetCard programme is one where the customer purchases a JetCard in advance for their future flight requirements. The JetCard balance changes over time as the customer uses that balance for flights or replenishes it. The Company manages its JetCard cash balances through segregated bank accounts and it only uses this cash to satisfy JetCard orders not for its own working capital purposes, and for this reason JetCard cash is separately disclosed in the statement of financial position. The JetCard cash balances are assets of the Company, are included in the financial statements and are matched by equal JetCard deposit liabilities so the impact on net assets is nil.

The timing of revenue recognition is the same for flights chartered through the JetCard programme as that for other flights.

t) Gross profit

In the charter business segments the gross profit relating to a flight is calculated as being its charter price less all the direct costs associated with its fulfilment. It does not include the cost of Air Partner staff nor overheads.

In the training and consultancy business segment, gross profit is calculated as being the price of a contract less all the direct costs associated with delivering that contract including the costs of staff and contractors directly engaged in delivering the contracted service. It does not include the cost of other general Air Partner staff nor overheads.

u) Other non GAAP measures

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

Operating profit before exceptional and other items and profit before tax before exceptional and other items are disclosed in order to present what the Directors consider the underlying performance of the Group.

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 and these are referred to in the Annual Report. 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; and

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

v) Critical accounting judgements and sources of estimation uncertainty

The preparation of financial statements requires management to make 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 ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if these are also affected. Management also needs to exercise judgement in applying the Group's accounting policies.

Critical judgements in applying the Group's accounting policies

The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the Directors have made in the process of applying the Group's accounting policies and that have the most significant effect on the amounts recognised in financial statements.

Revenue recognition

One of the key judgements in relation to revenue recognition is the judgement of whether the Group is acting as principal or agent in transactions with customers in its charter business. In making its judgement, management considers the detailed terms of sales transactions with customers in order to determine whether the Group is performing as the principal obligor. This assessment determines how revenue is recognised as either principal or agent in accordance with IFRS 15. Note 3 gives a comparison of gross transaction value and revenue by revenue stream.

Key sources of estimation uncertainty

There are no key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period, that may have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Impairment

The Directors consider the recoverable amount of goodwill allocated to SafeSkys Limited of £2,882,000 to be sensitive to certain key assumptions in the Company's impairment model. This model is based upon forecasts of anticipated market conditions that have been considered and approved by the Board. These forecasts are then discounted back to net present value using a weighted average cost of capital.

3 Segmental analysis

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

The Group has four segments: Commercial Jets, Private Jets, Freight and Consulting & Training. Air Partner Remarketing's (formerly Cabot Aviation) results are aggregated into Commercial Jets. Overheads with the exception of corporate costs are allocated to the Group's 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 assets and liabilities at segmental level, therefore these items are not disclosed. The segmental information, as provided to the Board on a monthly basis, is as follows:

Year ended 31 January 2019

Commercial

Private

 

Consulting

Corporate

 

 

Jets

Jets

Freight

& Training

costs

Total

Continuing operations

£'000

£'000

£'000

£'000

£'000

£'000

Gross transaction value

147,766

66,550

50,526

8,506

-

273,348

Revenue

32,462

25,090

11,403

8,506

-

77,461

Segmental gross profit

15,937

10,404

4,891

4,226

-

35,458

Administrative expenses and net impairment losses on financial assets

(11,848)

(8,953)

(2,894)

(3,585)

(2,172)

(29,452)

Depreciation and amortisation of non-acquired assets (included within administrative expenses)

(398)

(265)

(124)

(107)

-

(894)

Operating profit before exceptional and other items

4,089

1,451

1,997

641

(2,172)

6,006

Exceptional and other items (see note 4)

(292)

-

-

(199)

(1,954)

(2,445)

Segment result

3,797

1,451

1,997

442

(4,126)

3,561

Finance income

 

 

 

 

 

32

Finance expense

 

 

 

 

 

(224)

Profit before income tax

 

 

 

 

 

3,369

Income tax expense

 

 

 

 

 

(484)

Profit for the year

 

 

 

 

 

2,885

 

Year ended 31 January 2018 (note 1)

 

 

 

 

 

 

 

 

 

 

Consulting &

 

 

 

Commercial

Private

 

 Training as

Corporate

Total as

 

Jets

Jets

Freight

restated 1

costs

restated 1

Continuing operations

£'000

£'000

£'000

£'000

£'000

£'000

Gross transaction value

154,404

64,307

35,930

6,676

-

261,317

Revenue

38,348

25,494

3,790

6,676

-

74,308

Segmental gross profit

17,336

10,586

3,366

3,380

-

34,668

Administrative expenses and net impairment losses on financial assets

(13,515)

(9,505)

(1,605)

(2,819)

(1,334)

(28,778)

Depreciation and amortisation of non-acquired assets (included within administrative expenses)

(325)

(211)

-

(39)

-

(575)

Operating profit before exceptional and other items

3,821

1,081

1,761

561

(1,334)

5,890

Exceptional and other items (see note 4)

(747)

-

-

(264)

-

(1,011)

Segment result

3,074

1,081

1,761

297

(1,334)

4,879

Finance income

 

 

 

 

 

11

Finance expense

 

 

 

 

 

(138)

Profit before income tax

 

 

 

 

 

4,752

Income tax expense

 

 

 

 

 

(1,172)

Profit for the year

 

 

 

 

 

3,580

 

1     Gross profit for the Consulting & Training segment has been restated to include the costs of staff directly engaged in delivering the consulting and training activities. This restatement has lowered gross profit by £1,414,000 and increased administrative expenses for that segment and the total. There has also been the same effect on the UK segment below. There has been no change to operating profit. Refer to note 14.

 

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 business operations used to generate that gross profit. Apart from the UK, no single country is deemed to have material non-current asset levels other than there is goodwill in relation to the French operation of £974,000 (2018: £977,000).

The Board also reviews information on a geographical basis based on parts of the world in which it has business operations. As a result the following additional information is provided showing a geographical split of the UK, Europe, the USA and the Rest of the world based upon the location of the relevant business operation which contracts the business.

 

UK as

 

 

Rest of

Total as

 

restated 1

 Europe

USA

the world

restated 1

Continuing operations

£'000

£'000

£'000

£'000

£'000

Year ended 31 January 2019

 

 

 

 

 

Gross profit

17,426

9,915

8,067

50

35,458

Non-current assets (excluding deferred tax assets)

11,226

1,221

37

3

12,487

Year ended 31 January 2018

 

 

 

 

 

Gross profit (restated1)

17,616

9,795

6,198

1,059

34,668

Non-current assets (excluding deferred tax assets)

11,907

1,328

40

3

13,278

 

Europe can be further analysed as:

 

France

Germany

Italy

Other

Total

Continuing operations

£'000

£'000

£'000

£'000

£'000

Year ended 31 January 2019

 

 

 

 

 

Gross profit

4,083

2,762

1,570

1,500

9,915

Year ended 31 January 2018

 

 

 

 

 

Gross profit

3,506

2,847

2,227

1,215

9,795

 

4 Exceptional and other items

The Group has identified a number of items which are material due to the significance of their nature and/or amount. They are listed separately here to provide a better understanding of the financial performance of the Group.

 

2019

2018

Continuing operations

£'000

£'000

Change in Board composition1

(396)

-

Restructuring costs2

-

(277)

Costs relating to the accounting review and associated items3

(1,300)

-

Amortisation of purchased intangibles4

(376)

(279)

Acquisition costs5

-

(61)

Non-cash acquisition costs6

-

(87)

Abortive acquisition costs7

(550)

(307)

Release of deferred consideration8

177

-

 

(2,445)

(1,011)

Tax effect of other items9

322

218

Exceptional and other items after taxation

(2,123)

(793)

 

1     Changes in Board composition relate to the unforeseen costs of changing the Group's Chief Financial Officer; the hiring of an Interim Chief Financial officer; the recruitment costs for a new Chair following the untimely death of Peter Saunders and the costs of recruiting the Senior Non-executive Director. The level of Board changes and associated costs in the year were considered highly unusual.

2     Restructuring costs in 2018 related to management and finance structure changes.

3     The costs of the accounting review and associated expense relate to the accounting review as explained in the Strategic Report.

4     Relates to amortisation of purchased intangibles.

5     The acquisition costs incurred in 2018 were in respect of SafeSkys Limited.

6     The non-cash acquisition costs in the prior year comprised a share-based payment charge in respect of Cabot Aviation Services Limited.

7     In 2019, the abortive acquisition costs in the main relate to professional fees expensed in respect of potential transactions, which were abandoned due to the aforementioned accounting review. Aborted costs in 2018 related to other potential acquisitions.

8     The release of the deferred consideration is in respect of Clockwork Research Limited, where no further deferred consideration is payable.

9     A tax credit has been included in the current year in respect of substantially all of the exceptional and other items apart from those in relation to the abortive acquisition costs and the release of deferred consideration regarding Clockwork Research Limited.

 

5 Income tax expense

 

Continuing operations

 

2019

2018

 

£'000

£'000

Current tax:

 

 

UK corporation tax

665

1,086

Foreign tax

289

163

Current tax adjustments in respect of prior years (UK)1

(563)

(60)

Current tax adjustments in respect of prior years (overseas)

40

-

 

431

1,189

Deferred tax

53

(17)

Total tax

484

1,172

Of which:

 

 

Tax on underlying profit

806

1,390

Tax on other items (see note 7)

(322)

(218)

 

484

1,172

 

1     The current tax adjustment in respect of the prior years in the UK includes a £409,000 credit in respect of the accounting issue adjustments made in the prior year's financial statements which has now been agreed with the tax authorities. This amount was anticipated and referred to in note 2a in the 2018 Annual Report and Accounts.

 

Corporation tax in the UK was calculated at 19.0% (2018: 19.16%) of the estimated assessable profit for the year. Taxation for other jurisdictions was calculated at the rates prevailing in the respective jurisdictions.

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

 

2019

2018

 

£'000

£'000

Profit from continuing operations before income tax expense

3,369

4,752

Income tax at the UK corporation tax rate of 19.0% (2018: 19.16%)

641

910

Effect of changes in tax rates

-

89

Tax effect of items that are not recognised in determining taxable profit

81

212

Tax effect of different tax rates of subsidiaries operating in other jurisdictions

57

22

Current tax adjustments in respect of prior years1

(657)

(7)

Deferred tax not recognised

290

78

Options deductions

72

(132)

Total income tax expense

484

1,172

 

1     The current tax adjustment in respect of the prior years in the UK includes a £409,000 credit in respect of the accounting issue adjustments made in the prior year's financial statements which has now been agreed with the tax authorities. This amount was anticipated and referred to in note 2a in the 2018 Annual Report and Accounts.

 

A further reduction to the UK corporation tax rate has been announced. A reduction to 17% on 1 April 2020 was substantively enacted on 16 October 2016 and the deferred tax balance was adjusted in the prior period to reflect this change.

 

6 Dividends

 

2019

2018

 

£'000

£'000

Amounts recognised as distributions to owners of the parent company

 

 

Final dividend for the year ended 31 January 2018 of 3.8 pence per share

1,979

-

Final dividend the year ended 31 January 2017 of 3.6 pence per share

-

1,869

Interim dividend for the year ended 31 January 2019 of 1.75 pence per share

911

-

Interim dividend for the year ended 31 January 2018 of 1.7 pence per share

-

883

 

2,890

2,752

 

The Directors propose a final dividend for the year ended 31 January 2019 of 3.85 pence per share, subject to shareholder approval at the Annual General Meeting to be held on 26 June 2019.

The Air Partner Employee Benefit Trust, which held 146,883 ordinary shares of 1 pence each at 31 January 2019 (2018: 402,690 ordinary shares of 1 pence each) representing 0.28% (2018: 0.70%) of the Company's issued share capital, is not entitled to receive dividends. A further 181,820 ordinary shares of 1 pence each (2018: 272,731 ordinary shares of 1 pence each) are also held by the Trust in a nominee capacity for one (2018: one) beneficiary of the Trust but dividends are received in respect of those shares.

 

7 Earnings per share

 

2019

2018

Earnings per share

Pence

Pence

Continuing operations

 

 

Basic

5.6

6.9

Diluted

5.4

6.7

 

1     The diluted earnings per share for the prior period has changed from 6.6p to 6.7p due to the restatement of the diluted number of shares as set out below.

 

2019

2018

Earnings per share

Pence

Pence

Excluding exceptional and other items

 

 

Basic

9.6

8.4

Diluted

9.4

8.1

 

 

2019

2018

From continuing operations

£'000

£'000

 

Earnings

 

 

Profit attributable to owners of the parent company

2,885

3,580

Adjustment to exclude exceptional and other items1

2,123

793

Underlying earnings for the calculation of basic and diluted earnings per share

5,008

4,373

 

1     The calculation of underlying earnings per share (before exceptional and other items) is included as the Directors believe it provides a better understanding of the underlying performance of the Group. Exceptional and other items are disclosed in note 4.

 

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

 

 

2018

Weighted average number of ordinary shares

2019

Number

 

Number

as restated 1,2

Issued and fully paid

52,217,565

52,217,565

Less those held by the Air Partner Employee Benefit Trust

(239,888)

(292,571)

Number for the calculation of basic earnings per share

51,977,677

51,924,994

Effect of dilutive potential ordinary shares: share options

1,399,368

1,742,664

Number for the calculation of diluted earnings per share

53,377,045

53,667,658

 

1     The weighted average number of ordinary shares used in the calculation for the prior period has been restated to remove the weighted average number of ordinary shares held by the Air Partner Employee Benefit Trust as they do not attract dividends.

2     The weighted average number of ordinary shares used in the calculation for the prior period has been restated to include future IFRS 2 charges along with the exercise price. This change has reduced the number of dilutive potential ordinary shares: share options from 2,076,265 to 1,742,664.

 

This has changed the diluted earnings per share figure calculated for last year from 6.6p to 6.7p.

 

 

 

8 Trade and other receivables

 

Group

 

 

Company

 

 

 

 

 

 

 

 

 

2018 as

 

 

2018 as

 

2019

restated 1,2

 

2019

restated 1

 

£'000

£'000

 

£'000

£'000

Gross trade receivables

8,893

9,258

 

2,616

2,789

Loss allowance

(698)

(301)

 

(1)

-

Trade receivables

8,195

8,957

 

2,615

2,789

Amounts owed by Group undertakings

-

-

 

10,953

10,409

Social security and other taxes

509

460

 

331

741

Other receivables

651

349

 

-

-

Prepayments and accrued income

9,707

6,548

 

3,232

3,370

 

19,062

16,314

 

17,131

17,309

 

1     IFRS 15 has been retrospectively applied, reducing Group gross trade receivables in 2018 by £10,058,000 and Company gross trade receivables in 2018 by £4,476,000.

2     IFRS 9 has been retrospectively applied, increasing the allowance for bad and doubtful debts and reducing Group gross trade receivables in 2018 by £142,000.

3     The fair value of the trade receivables acquired on the acquisition of SafeSkys Limited in 2018 has been reduced by £98,000.

 

Amounts owed by Group undertakings are interest-free, unsecured and repayable on demand.

Classification as trade receivables

Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days of becoming due.

The Directors consider that the carrying amount of trade and other receivables approximates their fair value.

All trade and other receivables have been reviewed for indicators of impairment. The movement in impaired receivables in the year is shown below:

 

Group

 

 

as restated 1

Company

 

£'000

£'000

At 31 January 2017

464

-

Charge for the year

52

-

Receivables written off during the year

(215)

-

At 31 January 2018

301

-

Charge for the year

413

1

Receivables written off during the year

(16)

-

At 31 January 2019

698

1

 

1     IFRS9 has been retrospectively applied, increasing the allowance for bad and doubtful debts and reducing group gross trade receivables in 2018 by £142,000.

 

Of the amounts impaired during the period, £67,000 (2018: £60,000) was for an amount past due by less than one year with the remainder being all overdue by more than one year.

An analysis of these financial assets at the statement of financial position date for 2019 is as follows:

 

 

Allowance

 

 

 

for bad and

 

 

Gross trade

doubtful

Trade

 

receivables

debts

Receivables

 

2019

2019

2019

Group

£'000

£'000

£'000

Current

3,711

(63)

3,648

Aged:

 

 

 

- By not more than three months

4,271

(74)

4,197

- By more than three months but not more than six months

315

(12)

303

- By more than six months but not more than one year

103

(68)

35

- By more than one year

493

(481)

12

 

8,893

(698)

8,195

 

 

 

Allowance

 

 

 

for bad and

 

 

Gross trade

doubtful

Trade

 

receivables

debts

Receivables

 

2018

2018

2018

Group

£'000

£'000

£'000

Current

3,957

(61)

3,898

Aged:

 

 

 

- By not more than three months

3,438

(53)

3,383

- By more than three months but not more than six months

542

(8)

534

- By more than six months but not more than one year

519

(8)

511

- By more than one year

802

(171)

631

 

9,258

(301)

8,957

 

 

 

Allowance

 

 

 

for bad and

 

 

Gross trade

doubtful

Trade

 

receivables

debts

Receivables

 

2019

2019

2019

Company

£'000

£'000

£'000

Current

1,513

-

1,513

Aged:

 

 

 

- By not more than three months

1,083

(1)

1,082

- By more than three months but not more than six months

18

-

18

- By more than six months but not more than one year

-

-

-

- By more than one year

2

-

2

 

2,616

(1)

2,615

 

 

 

Allowance

 

 

 

for bad and

 

 

Gross trade

doubtful

Trade

 

receivables

debts

Receivables

 

2018

2018

2018

Company

£'000

£'000

£'000

Current

299

-

299

Aged:

 

 

 

- By not more than three months

2,087

-

2,087

- By more than three months but not more than six months

229

-

229

- By more than six months but not more than one year

6

-

6

- By more than one year

168

-

168

 

2,789

-

2,789

 

Prepayments and accrued income include £4,953,000 of operator prepayments (2018: £3,728,000).

 

9 Cash, borrowings and net cash

 

Group

 

Company

 

2019

2018

 

2019

2018

Cash

£'000

£'000

 

£'000

£'000

JetCard cash

17,692

15,891

 

12,635

7,486

Non-JetCard cash

7,462

7,302

 

3,101

-

Cash and cash equivalents

25,154

23,193

 

15,736

7,486

 

 

Group

 

Company

 

2019

2018

 

2019

2018

Borrowings

£'000

£'000

 

£'000

£'000

Secured bank loans

5,500

2,500

 

5,500

2,500

 

 

Group

 

Company

 

2019

2018

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Amount due for settlement within 12 months

-

-

 

-

-

Amount due for settlement after 12 months

5,500

2,500

 

5,500

2,500

 

5,500

2,500

 

5,500

2,500

 

 

Group

 

Company

 

2019

2018

 

2019

2018

Net cash

£'000

£'000

 

£'000

£'000

Cash

25,154

23,193

 

15,736

7,486

Borrowings

(5,500)

(2,500)

 

(5,500)

(2,500)

Net cash

19,654

20,693

 

10,236

4,986

 

 

Group

 

Company

 

2019

2018

 

2019

2018

Net cash/(debt) excluding JetCard cash

£'000

£'000

 

£'000

£'000

Non JetCard cash

7,462

7,302

 

3,101

2,283

Borrowings

(5,500)

(2,500)

 

(5,500)

(2,500)

Net cash/(debt) excluding JetCard cash

1,962

4,802

 

(2,399)

(217)

 

All borrowings are in Sterling.

The Group's borrowings consist of a bank loan of £5.5m (2018: £2.5m) from the Company bankers. The loan was taken out on 12 August 2016 and refinanced using a new revolving credit facility provided by the Group's main banker. The facility is for £7.5m, expiring in February 2021, and carries an interest rate of 2.5% above LIBOR. The loan is secured by a floating charge over the Company's assets.

 

10 Trade and other payables

 

Group

 

Company

 

 

2018

 

 

 

 

2019

as restated 1

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Trade payables

6,383

4,532

 

3,056

2,595

Other taxation and social security payable

1,661

2,185

 

223

945

 

8,044

6,717

 

3,279

3,540

 

1     The fair value of the trade payables acquired on the acquisition of SafeSkys Limited in 2018 has been increased by £4,000.

The Directors consider that the carrying amount of trade and other payables approximates to their fair value.

 

11 Other liabilities

 

Group

 

Company

 

 

2018 as

 

 

 

 

2019

restated 1

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Accruals

2,704

4,437

 

1,658

2,173

Other liabilities

1,032

488

 

80

62

Amounts owed to Group undertakings

-

-

 

7,179

3,993

 

3,736

4,925

 

8,917

6,228

 

1     The fair value of the other liabilities acquired on the acquisition of SafeSkys Limited in 2018 has been increased by £170,000.

Amounts owed to Group undertakings are interest-free, unsecured and repayable on demand.

The Directors consider that the carrying amount of other liabilities approximates to their fair value.

 

12 Prior year acquisition of subsidiaries

On 1 September 2017, Air Partner plc acquired 100% of the issued share capital of SafeSkys Limited, obtaining control of the company on that date. SafeSkys Limited is a leading supplier of turnkey ATC services and wildlife management services. The acquisition of SafeSkys Limited adds specialist consulting expertise and knowledge to the Group.

The amounts recognised in respect of the identifiable assets acquired and liabilities assumed have been modified since the provisional amounts included in the 2018 financial statements. In particular, the provisions of £710,000 relate to two onerous contracts identified in the SafeSkys business as part of the fair value exercise on acquisition. As a result, management is in discussions with the previous owner in relation to a warranty claim under the sale and purchase agreement. The revised amounts together with the original provisional amounts are as follows:

 

Revised

Provisional

 

amounts

Amounts

 

£'000

£'000

Fair value of net assets acquired

 

 

Financial assets

534

632

Property, plant and equipment

87

90

Intangible assets - customer relationships

622

487

Intangible assets - SafeSkys trade name

14

14

Deferred tax liability on intangible assets

(140)

(113)

Financial liabilities

(289)

(115)

Provisions

(710)

-

Goodwill

2,882

2,005

Total net assets acquired

3,000

3,000

Satisfied by

 

 

Cash

2,200

2,200

Deferred consideration

800

800

Total consideration

3,000

3,000

Net cash outflow arising on acquisition

 

 

Cash consideration

2,200

2,200

Less cash and cash equivalents acquired

(226)

(226)

Net cash outflow

1,974

1,974

 

The balance sheet at 31 January 2018 shown as a comparative in this report has been restated for these changes.

Deferred consideration of £400,000 was due for payment in September 2018. Due to a warranty claim, as permitted in the sale and purchase agreement, management has offset this liability with the associated claim and not paid the due amount. At the statement of financial position date this matter had not been resolved so the maximum amount payable £800,000 is still recognised in the accounts adopting a prudent approach.

No goodwill is deductible for tax purposes.

The goodwill of £2,882,000 arising from the acquisition is attributable to the value of the assembled workforce and the ability of the senior staff to generate future business.

Acquisition-related costs (included in other items in the previous year) amounted to £61,000.

 

13 Net cash inflow from operating activities

 

Group

 

 

Company

 

 

 

 

 

 

 

 

 

2018 as

 

 

 

 

2019

restated 1

 

2019

2018

 

£'000

£'000

 

£'000

£'000

Profit for the year

 

 

 

 

 

Continuing operations

2,885

3,580

 

5,100

3,389

Adjustments for:

 

 

 

 

 

Finance income

(32)

(11)

 

-

(4)

Finance expense

224

138

 

224

139

Income tax

484

1,172

 

293

888

Depreciation, amortisation and loss on disposal

1,275

854

 

669

459

Fair value movement on derivative financial instruments

(4)

3

 

(6)

5

Share option cost for period

252

341

 

255

341

(Decrease)/increase in provisions

(100)

120

 

277

120

Foreign exchange differences

6

(31)

 

10

57

Operating cash flows before movements in working capital

4,990

6,166

 

6,822

5,394

Change in receivables

(2,958)

(987)

 

172

(8,432)

Change in payables

1,065

5,777

 

2,208

2,962

Cash generated from/(used in) operations

3,097

10,956

 

9,202

(76)

 

1     Depreciation and amortisation in 2018 have been reduced by £275,000.

 

Net debt reconciliation

This section sets out an analysis of net debt and the movements in net debt for each of the periods presented.

Group

 

At

 

 

At

 

1 February

Cash flow

Foreign

31 January

 

2018

movements

exchange

2019

 

£'000

£'000

£'000

£'000

Cash

23,193

1,532

429

25,154

Debt

(2,500)

(3,000)

-

(5,500)

Net cash/(debt)

20,693

(1,468)

429

19,654

 

 

At

 

 

At

 

1 February

Cash flow

Foreign

31 January

 

2017

movements

exchange

2018

 

£'000

£'000

£'000

£'000

Cash

19,795

3,928

(530)

23,193

Debt

(2,957)

457

-

(2,500)

Net cash/(debt)

16,838

4,385

(530)

20,693

 

 

 

 

Company

 

At

 

 

At

 

1 February

Cash flow

Foreign

31 January

 

2018

movements

exchange

2019

 

£'000

£'000

£'000

£'000

Cash

7,486

8,260

(10)

15,736

Debt

(2,500)

(3,000)

-

(5,500)

Net cash/(debt)

4,986

5,260

(10)

10,236

 

 

At

 

 

At

 

1 February

Cash flow

Foreign

31 January

 

2017

movements

exchange

2018

 

£'000

£'000

£'000

£'000

Cash

14,202

(6,659)

(57)

7,486

Debt

(2,957)

457

-

(2,500)

Net cash/(debt)

11,245

(6,202)

(57)

4,986

 

 

14 Restatement of 2018 financial statements  

The consolidated income statement has been restated as shown in this table:

 

 

 

 

 

 

 

 

 

 

 

 

 

Restated

Restated

Year ended

 

 

As per 2018

Restated

 

revenue as a

as a

31 January

 

 

financial

training and

 

result of

result of

2018

 

 

statements

consulting

Restated

IFRS 15

IFRS 9

as restated

Continuing operations

Note

£'000

direct costs 1

revenue 2

Review 3

review

£'000

Gross transaction value (GTV)

2

261,317

 -

 -

-

-

261,317

Revenue

2

48,508

-

 

11,019

14,781

-

74,308

Gross profit

3

36,082

(1,414)

 

-

-

34,668

Administrative expenses before exceptional and other items and net impairment on financial assets

 

(30,192)

1,414

-

-

52

(28,726)

Exceptional and other items and net impairment on financial assets

4

(1,011)

-

 

-

-

-

(1,011)

Total administrative expenses

 

(31,203)

1,414

-

-

-

(29,737)

 

 

 

 

 

 

 

 

Net impairment losses on financial assets

 

-

-

-

-

(52)

(52)

Operating profit

 

4,879

 

 

-

-

4,879

Operating profit before exceptional and other items

 

5,890

-

-

-

-

5,890

Finance income

 

11

-

-

-

-

11

Finance costs

 

(138)

 -

 -

-

-

(138)

Finance costs - net

 

(127)

-

-

-

-

(127)

Profit before tax

 

4,752

-

-

-

-

4,752

 

 

 

 

 

 

 

 

Profit before tax before exceptional and other items

 

5,763

-

-

-

-

5,763

Income tax expense

5

(1,172)

 -

 -

-

-

(1,172)

Profit for the year

 

3,580

-

-

-

-

3,580

 

           

1     Gross profit has been restated to include the costs of staff directly engaged in delivering the training and consulting activities.   This restatement has lowered both gross profit and administrative expenses before exceptional and other items by £1,414,000.  There has been no change to operating profit.

 

2     The revenue has been restated by a £11,019,000 increase.  There has been no change to gross profit.  This restatement is due to:

i) a £9,107,000 increase in respect of charter customer contracts due to a misstatement last year.  This arose because certain contracts which should have been considered principal were incorrectly classified as agent.

ii) a £1,912,000 increase in respect of the training and consulting business segment where certain direct costs were mistakenly not grossed up for in calculating the revenue.

 

3        As set out in note 2a, a review of customer contracts has taken place following the introduction of the new accounting standard IFRS 15 Revenue from Contracts with Customers. As a result of this review Air Partner is now considered to be principal in certain additional types of customer contracts rather than agent, as was the case before, and therefore the revenue for the previous year has been restated for this increase.

 

 

Consolidated statement of financial position as at 31 January 2018

The consolidated statement of financial position has been restated as shown in this table:

 

 

 

 

 

Deferred

 

 

 

 

 

SafeSkys

Corporation

 

consideration/

 

 

 

 

Original

fair value

tax

Reserves

provision

 

 

Restated

 

£'000

adjustments 1

restatement 2

restatements 3

restatement 4

IFRS 15 5

IFRS 9 6

£'000

Assets

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

Goodwill

5,876

877

-

-

-

-

-

6,753

Other intangible assets

5,202

135

-

-

-

-

-

5,337

Property, plant and equipment

1,191

(3)

-

-

-

-

-

1,188

Deferred tax assets

497

-

-

-

-

-

-

497

Total non-current assets

 

12,766

 

1,009

 

-

 

-

 

-

 

-

 

-

 

13,775

Current assets

 

 

 

 

 

 

 

 

Trade and other receivables

26,612

 (98)

-

-

-

 (10,058)

 (142)

16,314

Current tax assets

683

-

-

-

-

-

-

683

Total cash and cash equivalents

23,193

-

-

-

-

-

-

23,193

Total current assets

50,488

 (98)

-

-

-

 (10,058)

 (142)

40,190

Total assets

63,254

911

-

-

 

 (10,058)

 (142)

53,965

Current liabilities

 -

 -

 -

 -

 -

 -

 -

 -

Trade and other payables

 (7,269)

 (4)

556

 -

 -

 -

 -

(6,717)

Current tax liabilities

 (972)

 -

(556)

 -

 -

 -

 -

(1,528)

Other liabilities

 (4,755)

 (170)

 -

 -

 -

 -

 -

 (4,925)

Deferred income

 (34,351)

 -

 -

 -

 -

10,058

 -

 (24,293)

Provisions

-

 (409)

 -

 -

 -

 -

 -

 (409)

Derivative financial instruments

 

 (12)

 

-

 

-

 

-

 

-

 

-

 

-

 

 (12)

Total current liabilities

(47,359)

 (583)

-

-

-

10,058

-

 (37,884)

Net current assets

3,129

 (681)

-

-

-

-

 (142)

2,306

Non-current liabilities

 

 

 

 

 

 

 

 

Borrowings

(2,500)

 -

 -

 -

 -

 -

 -

(2,500)

Deferred consideration

(977)

 -

 -

 -

177

 -

 -

(800)

Provisions

(120)

(301)

 -

 -

(177)

 -

 -

(598)

Deferred tax liability

 (775)

 (27)

-

-

-

-

27

 (775)

Total non-current liabilities

 

 (4,372)

 

(328)

 

-

 

-

 

-

 

-

 

27

 

 (4,673)

Total liabilities

 (51,731)

 (911)

-

-

-

10,058

27

 (42,557)

Net assets

11,523

-

-

-

-

-

 (115)

11,408

Equity

 

 

 

 

 

 

 

 

Share capital

522

 -

 -

 -

 -

 -

 -

522

Share premium account

4,696

 -

 -

118

 -

 -

 -

4,814

Merger reserve

413

 -

 -

 (118)

 -

 -

 -

295

Own shares reserve

 (818)

 -

 -

70

 -

 -

 -

 (748)

Translation reserve

1,038

 -

 -

 -

 -

 -

 -

1,038

Retained earnings

5,672

 

 

 (70)

 

 

 (115)

5,487

Total equity

11,523

-

-

-

-

-

 (115)

11,408

 

The consolidated statement of financial position at 31 January 2018 has been restated for:

1     The finalisation of the fair value of net assets acquired in relation to SafeSkys Limited which was acquired in September 2017.

2     A balance sheet misclassification which was made at 31 January 2018, when £556,000 of current tax liability was included in trade and other payables in error.

3     Misstatements which were made in respect to the share premium account, merger reserve, own share reserves and retained earnings.

4     The earn-out amount provided in respect of the Clockwork acquisition was included in deferred consideration but should have been included in provisions as it was earnings dependent.

5     The adoption of IFRS 15 which has reduced both trade and other receivable and deferred income amounts by £10,058,000. The equivalent reductions made in the consolidated statement of financial position at 31 January 2019 were £16,293,000.

6     The adoption of IFRS 9 which has reduced trade and other receivables by £142,000, reduced the deferred tax liability by £27,000 and retained earnings by £115,000.

 

 

 

Company statement of financial position as at 31 January 2018

The Company statement of financial position has been restated as shown in this table:

 

 

 

Deferred

 

 

 

 

 

consideration/

 

 

 

 

Reserves

provision

 

Restated

 

Original

restatements 1

restatement 2

IFRS 15 3

£'000

Assets

 

 

 

 

 

Non-current assets

 

 

 

 

 

Intangible assets

1,045

 -

 -

 -

1,045

Property, plant and equipment

616

 -

 -

 -

616

Investments

12,350

 -

 -

 -

12,350

Deferred tax assets

178

 -

 -

 -

178

Total non-current assets

14,189

-

-

-

14,189

Current assets

 

 

 

 

 

Trade and other receivables

21,785

 -

 -

 (4,476)

17,309

Current tax assets

566

 -

 -

 -

566

Total cash and cash equivalents

7,486

 -

 -

 -

7,486

Total current assets

29,837

-

-

 (4,476)

25,361

Total assets

44,026

-

-

 (4,476)

39,550

Current liabilities

 

 

 

 

 

Trade and other payables

 (3,540)

 -

 -

 -

(3,540)

Current tax liabilities

 (976)

 -

 -

 -

(976)

Other liabilities

 (6,228)

 -

 -

 -

 (6,228)

Deferred income

 (19,914)

 -

 -

4,476

 (15,438)

Derivative financial instruments

 (14)

-

-

-

 (14)

Total current liabilities

(30,672)

-

-

4,476

 (26,196)

Net current liabilities

(835)

-

-

-

(835)

Non-current liabilities

 

 

 

 

 

Borrowings

(2,500)

 -

-

 -

(2,500)

Deferred consideration

(977)

 -

177

 -

(800)

Provisions

(120)

 -

(177)

 -

(297)

Total non-current liabilities

 (3,597)

-

-

-

 (3,597)

Total liabilities

 (34,269)

-

-

4,476

 (29,793)

Net assets

9,757

-

-

-

9,757

Equity

 

 

 

 

 

Share capital

522

-

 -

 -

522

Share premium account

4,696

118

 -

 -

4,814

Merger reserve

413

 (118)

 -

 -

295

Own shares reserve

 (818)

70

 -

 -

 (748)

Retained earnings

4,944

 (70)

 -

 -

4,874

Total equity

9,757

-

-

-

9,757

 

The Company statement of financial position at 31 January 2018 has been restated for:

1     Misstatements which were made in respect to the share premium account, merger reserve, own share reserves and retained earnings.

2     The earn-out amount provided in respect of the Clockwork acquisition which was included in deferred consideration but should have been included in provisions as it was earnings dependent.

3     The adoption of IFRS 15 which has reduced both trade and other receivable and deferred income amounts by £4,476,000. The equivalent reductions made in the consolidated statement of financial position at 31 January 2019 were £5,713,000.

 

 

 

 

 


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Full Year results for year ended 31 January 2019 - RNS