TIDMAIR
RNS Number : 5133A
Air Partner PLC
30 September 2020
LEI: 213800JLR6YIRMSCUS98
30 September 2020
Air Partner plc
("Air Partner", "Group" or "Company")
Half year results for the six months ended 31 July 2020
Record half year profits, driven by Group Charter and Freight
performance
Air Partner, the global aviation services group, today reports
unaudited results for the six months to 31 July 2020.
Financial highlights:
July 2020 July 2019 Change (%)
Gross profit GBP27.7m GBP17.2m 61%
---------- ---------- -----------
Underlying(--) profit before
tax GBP10.5m GBP3.0m 250%
---------- ---------- -----------
Statutory profit before
tax GBP8.9m GBP2.8m 218%
---------- ---------- -----------
Net cash (non-JetCard cash
less debt) GBP18.0m GBP4.3m 319%
---------- ---------- -----------
JetCard Cash GBP17.6m GBP18.5m (5%)
---------- ---------- -----------
Underlying(--) basic EPS
(pence) 12.8p 4.3p 198
---------- ---------- -----------
Basic EPS (pence) 10.1p 4.1p 146%
---------- ---------- -----------
Interim dividend (pence) 0.80p 1.80p (56%)
---------- ---------- -----------
-- - Underlying results are stated before exceptional and other
items (see notes 1 & 3)
-- Gross profit up GBP10.5m (61%) to GBP27.7m due to exceptional
levels of trading from COVID-19 related work
-- Underlying(--) profit before tax of GBP10.5m, a year-on-year
increase of GBP7.5m, driven by strong trading and swift cost saving
measures in the early stages of pandemic
-- Statutory profit before tax of GBP8.9m after reorganisation
costs and amortisation of acquired intangibles
-- Basic EPS up 146.3% to 10.1p; underlying(--) EPS of 12.8p, up 197.7% on the prior year
-- Net cash (excluding JetCard cash) increased to GBP18.0m from
net debt of GBP6.9m at 31 January 2020
-- Recommended interim dividend of 0.80p per share (H1 2019: 1.80p)
Strategic highlights:
-- Record results as portfolio diversity enables Group to support COVID-19 evacuations and PPE transportation
-- Successful share placing raised gross proceeds of GBP7.5m to
pay down debt which was used to fund the Redline acquisition
(acquired 12 December 2019) and to make further working capital
available for organic growth opportunities
-- Entry into Australian market through Redline contract with ISS Australia and New Zealand
Operational highlights:
-- Excellent performance in Group Charter and Freight divisions
-- Extremely difficult trading period for Private Jets and areas
of Safety & Security due to COVID-19 impact
-- Number of new JetCards sold up 50% on prior period
-- Redline secured a number of new business wins with a diverse range of customers
Current trading and outlook:
-- Gross profit for the first two months of Q3 is down
year-on-year, although this has been offset by a reduced cost base
and governmental support across our various markets, where
available
-- Private Jet enquiries continue to increase from the low levels seen in Q2
-- COVID-19 related activity in Group Charter and Freight has
now stabilised, albeit against a rapidly changing market
environment
-- Visibility in Charter remains limited, however we are seeing
some green shoots of recovery within the Safety & Security
division
Mark Briffa, CEO of Air Partner, commented: "This has been the
busiest time we have ever encountered as a business, and this is
reflected in our record half year trading performance. We have
always prided ourselves on our ability to provide quick, reliable
and effective support to our customers in times of crisis, and we
are pleased that we could play an important role during this very
challenging time, particularly with regards to emergency
evacuations and PPE flying. Group Charter and Freight have been the
standout performers, while other areas, such as Private Jets and
some parts of Safety & Security, have been severely impacted by
the pandemic, although activity levels in our core business are
gradually starting to return. This mixed performance has served to
reinforce the importance and value of our diversification strategy,
which ensures that we are not reliant on any one revenue
stream.
We were pleased to be oversubscribed in our fundraising in June
2020, through which we raised GBP7.5m. This, in addition to the
numerous cost saving measures that we implemented in the early
stages of the pandemic, means we entered the second half of the
year with no debt and good working capital to invest in new organic
growth initiatives. While there is undoubtedly much uncertainty
ahead for us all, and our visibility for H2 remains unsurprisingly
limited, the Board is confident that the business is well placed to
weather the ongoing economic storm and take advantage of any
suitable opportunities that arise."
This announcement contains inside information for the purposes
of Article 7 of Regulation (EU) No 596/2014.
Enquiries:
Air Partner 01293 844 788
Mark Briffa, CEO
Joanne Estell, CFO
TB Cardew (Financial PR advisor) 020 7930 0777
Tom Allison 07789 998 020
Alycia MacAskill 07876 222 703
About Air Partner:
Founded in 1961, Air Partner is a global aviation services group
providing aircraft charter and aviation safety & security
solutions to industry, commerce, governments and private
individuals, across civil and military organisations. The Group has
two divisions: Air Partner Charter, comprising Group Charter,
Private Jets, Freight and Specialist Services; and Air Partner
Safety & Security (formerly Consulting & Training), which
comprises Baines Simmons, Redline Assured Security and Managed
Services.
Group Charter charters large airliners to move groups of any
size. Private Jets offers the Company's unique pre-paid JetCard
scheme and on-demand charter for up to 19 people. Freight charters
aircraft of every size to fly almost any cargo anywhere, at any
time. Specialist Services comprises Air Partner's other aviation
services that complement its Charter business: Remarketing, ACMI,
scheduled group travel, tour operations, air evacuation and flight
operations.
Baines Simmons offers aviation safety management and fatigue
risk management. Redline Assured Security delivers
government-standard security training, consultancy and solutions to
regulated, high value and high threat environments. Managed
Services offers wildlife hazard management and aircraft registry
services.
Air Partner has 16 locations globally, with its headquarters
located alongside Gatwick airport in the UK. The group employs over
400 aviation professionals globally and operates 24/7. Air Partner
is listed on the London Stock Exchange (AIR) and is the only
publicly listed air charter broker and aviation safety &
security consultancy. It is ISO 9001:2015 compliant for commercial
airline and private jet solutions worldwide. More information is
available on the Company's website ( www.airpartner.com ).
CHAIR'S STATEMENT
While Air Partner and the whole aviation industry worldwide have
been severely impacted by the COVID-19 pandemic, I am pleased to be
able to report that Air Partner has produced record profits in the
six months to 31 July 2020. The make-up of these results is very
varied across our different divisions, with Group Charter and
Freight driving the Group's underlying profit before tax of
GBP10.5m (H1 2019: GBP3.0m) and statutory profit before tax of
GBP8.9m (H1 2019: GBP2.8m).
The pandemic has affected our business divisions in very
different ways, reinforcing the importance of our diversification
strategy to mitigate against unforeseen circumstances. It has been
greatly encouraging to see the Group's resilience during this
challenging time. Group Charter and Freight both reported record
performances, with the former carrying out significant evacuation
and corporate shuttle work, and the latter seeing high demand for
the transportation of emergency protective personal equipment
(PPE). By contrast, activities in Private Jets and some areas of
our Safety & Security division were adversely affected by
COVID-19. However, we have recently seen some positive signs of
recovery in both of these areas while, as expected, Group Charter
and Freight activity has decreased relative to the strong first
half performance.
Our customer service orientated portfolio enabled us to swiftly
respond to customer needs during the COVID-19 crisis by launching a
new product, Air Partner Protect. This combines the capabilities
and services of our Charter and Safety & Security divisions
into one dedicated project team to mobilise and support customers.
Examples of Air Partner Protect in action include projects
undertaken repatriating over 300 British and EU nationals from
Wuhan and thereafter repatriating 32 passengers from a cruise ship
off the coast of Yokohama in Japan.
The value of our strategy to diversify the business in order to
broaden our customer offering and increase the predictability of
our earnings has never been clearer. While Charter performed
extremely well in the period under review, it remains a volatile
market sector and so we continue to assess targeted acquisition
opportunities, particularly in Safety & Security, where
revenues are more visible and recurring.
Fundraise
On 12 June 2020, we announced the successful completion of a
placing of new ordinary shares in the capital of the Company. The
oversubscribed placing raised gross proceeds of approximately
GBP7.5m from new and existing shareholders. This enabled us to
enter the second half of the year with no debt and good working
capital to support large customer programmes and invest in new
organic opportunities to drive growth.
Board Changes
In March 2020, we were greatly saddened by the passing of
Richard Jackson, Air Partner's Senior Independent Director, after a
short illness. Richard provided a significant contribution to the
Group's strategy. He was a highly valued colleague and is greatly
missed. Given the constraints of the COVID-19 crisis, the Board has
decided not to appoint a replacement Non-Executive Director in the
short term and Amanda Wills was appointed as Senior Independent
Director, with effect from 21 May 2020.
In total, the Board now holds 1.8% of the ordinary shares in the
Company, demonstrating a clear alignment with Air Partner's other
shareholders.
Dividend
Early in the pandemic, the Board decided to suspend the
declaration of dividends to shareholders to reflect the uncertain
operating climate. Although that uncertainty persists, the Board
considers it appropriate to recommence some payment now to
recognise the importance of dividends to Air Partner's
shareholders, many of whom are private investors. However, we
believe it prudent to maintain the strength of the Group's balance
sheet and to ensure that there are sufficient resources to fund
future growth. Accordingly, the Board is recommending an interim
dividend of 0.80p per share, down 55.6% from last year's 1.80p. The
Board's objective is to establish a level of dividends that is
sustainable, well covered by the Group's earnings, and that can be
increased over time. The level of this interim dividend is
consistent with this policy.
The interim dividend is expected to be paid on 20 November 2020
to those shareholders registered at close of business on 16 October
2020. The ex-dividend date will be 15 October 2020.
Prospects
We are now seeing significantly lower levels of activity as the
underlying Charter business begins to return to pre-pandemic
levels. While visibility for the remainder of the year remains
limited, we do expect to see reduced demand for our standout
performers of the first half, Group Charter and Freight.
Conversely, Private Jets enquiries and activity have been steadily
returning and we anticipate this will continue. In addition, future
profitability will be underpinned by management's early, decisive
action to reorganise some of the Group's operations to reflect the
dramatic changes in demand and in our operating climate.
While there can be no doubt that these are still uncertain times
for us all, we are confident that the Group is well positioned to
handle the current economic and operational environment. We are
debt free with a solid cash position, a streamlined business and a
sound strategy that mitigates against product or market
volatility.
In addition to this, so many of Air Partner's fantastic teams
across the globe have worked incredibly hard throughout this
unprecedented and difficult period, and I would like to thank them
for their ongoing commitment to the Group and our customers. My
thanks also go to our shareholders, new and old, for their support
as we continue to build a world-leading aviation services
group.
Ed Warner
Non-Executive Chair
CHIEF EXECUTIVE'S REVIEW
The start of our financial year coincided with the outbreak of
COVID-19, which significantly impacted the operations of companies
globally, not least of those in our industry. However, Air Partner
was able to demonstrate that its business model enables it to
succeed in a challenging trading environment. The Company is asset
light, owning no aircraft, which offers flexibility and supports
the operational agility that is so essential when navigating a
crisis. As a result, we are reporting record results for the half
year, reflecting our role carrying out emergency evacuations and
transporting PPE supplies during the pandemic. However, despite the
success of our Group Charter and Freight divisions, it is important
to note that many parts of our business were also negatively
impacted by COVID-19.
Given the extraordinary global circumstances of the first half
of the financial year, and the vital role some of our divisions
were performing with little notice or visibility, we published
regular market updates throughout the COVID-19 crisis to keep
shareholders informed of our performance. In order to preserve cash
and maintain our working capital, we implemented a number of cost
management initiatives. These included minimising discretionary
spend, reducing salary costs, subject to local legal requirements,
and rightsizing departments to reflect the likely future demand
patterns for our aviation services. In addition, the UK workforce
and all of our Board directors took a voluntary pay reduction for
April, May and June, and we made use of available government grants
and benefits across the Group to further reduce our cost base, as
parts of our business literally stopped overnight.
Overall, the Charter division delivered GBP25.5m (H1 2019:
GBP15.0m) of gross profit for the six months to 31 July 2020,
driven by Group Charter and Freight. Our performance was mixed
across geographies, with the US performing exceptionally well,
while others, such as Europe, have struggled and remain subdued
post lockdown. The strong performance also masked a significant
downturn in Scheduled Group Travel and Tour Operations, which have
been severely impacted by COVID-19 travel restrictions.
Group Charter made gross profit of GBP12.3m (H1 2019: GBP7.2m),
which was a record for the division. In the immediate aftermath of
the outbreak, the team carried out significant repatriation and
evacuation work, including working to assist British citizens
overseas. For one project, Redline, Group Charter and Freight all
worked closely together to deliver a fully-integrated solution for
the evacuation of UK and Irish nationals aboard a cruise ship off
the coast of Japan, in a great example of our successful
cross-selling efforts.
Throughout the period, we also supported a number of businesses,
such as major cruise lines and oil companies, to repatriate
employees and customers, flew agricultural workers into the UK from
elsewhere in Europe, and operated several large corporate
programmes. In addition, we also received a large number of
bookings for corporate shuttles, as companies in the UK and US
sought to safeguard their employees in the COVID environment.
Freight also reported a record first half, with gross profit of
GBP8.6m (H1 2019: GBP1.9m), as it saw increased demand for the
movement of goods to keep global supply chains operating. In
particular, the team were busy flying significant volumes of PPE
from Asia to the UK, Europe and US, with the strongest demand
coming from the US.
Private Jets was down 23.3%, delivering gross profit of GBP4.6m
(H1 2019: GBP6.0m), as it was affected by border closures, travel
restrictions, national lockdowns and quarantines. The US, where
there is a more developed private aviation market, fared better
than the UK and European private jet markets, where we saw a number
of cancellations or postponements at the beginning of the year as
our customers significantly reduced travel. Pre COVID-19, these
markets had begun to show signs of recovery at the turn of the
year, post the UK general election. As the world emerges from
lockdown, we have started to see signs of recovery, as private
aviation offers a safe solution to those needing to travel.
Pleasingly, the US business had double the level of enquiries in
May compared to April, and JetCard enquiries in Europe also
increased. JetCard delivered strong sales for the month of June, to
the degree that more cards were sold globally in the first half of
this year than in the entirety of our last financial year.
Safety & Security gross profit was slightly up year-on-year
to GBP2.3m (H1 2019: GBP2.1m), reflecting reduced demand for these
services during the COVID-19 lockdown, despite the added
contribution of Redline. Performance has been mixed, with Baines
Simmons seeing reduced levels of demand during the period under
review, as struggling airlines cut all discretionary spending. As
previously reported in the 2020 Annual Report, SafeSkys Limited is
in the process of exiting its Air Traffic Control operations in the
UK, enabling it to focus solely on Wildlife Hazard Management.
Pleasingly, Clockwork Research Limited's fatigue risk management
offering has experienced good demand during the COVID-19
environment and is performing well, carrying out work for airlines
and oil companies, among others.
We have been particularly encouraged by Redline's performance as
it has continued to secure business wins throughout the period,
including those with Aéroport Nice Côte d'Azur, international
facilities management company OCS Group UK, the UK Civil Aviation
Authority (CAA), private aviation company Jet Edge and Align JV to
support on an HS2 project. Furthermore, in July it was appointed to
develop and deliver a robust Security Management System for ISS
Australia and New Zealand, marking Air Partner's entry into the
Australian market.
Strategy
Since 2015, our strategy has been to extend and enhance our
service offering, which serves the dual purpose of better meeting
our customers' needs, while also reducing the Group's exposure to
the volatility of the charter market and improving the overall
quality of our earnings.
Our diverse range of services enables us to offer our customers
bespoke products in unique circumstances, such as when we launched
Air Partner Protect in March in response to the emergence and
spread of COVID-19. This also supports our efforts in
cross-selling, another key component of our strategy. We continue
to focus on identifying and maximising cross-selling opportunities
across the Group, both within the Charter division and between
Charter and Safety & Security.
The impact of COVID-19 has further proven the rationale for
diversifying the business, as we have seen unusually high demand
for some of our services and reduced activity in others. This
demonstrates the importance of deriving our earnings from diverse
revenue streams, as demand for the different parts of our business
fluctuates in relation to the operating environment.
The Board has been encouraged by this strong half year trading
performance, and believe the Company is well placed to continue
capturing new business opportunities resulting from the impact of
COVID-19. Accordingly, in June we successfully raised gross funds
of GBP7.5m through the placing of new ordinary shares in the
capital of the Company in order to strengthen our balance sheet,
repay the debt taken on at the time of the acquisition of Redline,
and enable the Group to capitalise on new organic growth
opportunities. This includes hiring key talent and expanding into
new geographies where the market fundamentals are strong. We were
pleased to enter the Australian market via a new Redline contract
in June and we are monitoring further expansion opportunities.
Alongside our organic growth initiatives, while remaining
mindful of the current economic climate, we will continue to assess
targeted acquisition opportunities that meet our strict acquisition
criteria. We seek businesses that complement our existing services
and have strong forward order books that will improve the
visibility of our earnings.
Our people
This year has been the most extraordinary time we have ever
encountered as a business, as has been the case for many. While
there have been significant challenges along the way, the
commitment and hard work of so many of our people and suppliers has
been unwavering. Many of our team have worked around the clock in
difficult circumstances and they have my continued gratitude.
Current trading and outlook
Our first half performance leaves the business well positioned
to navigate the continued uncertainty expected in the second half
of the year, although the continual, and often sudden, changes in
the COVID-19 operating environment make it very difficult to
predict the remainder of the financial year with any degree of
certainty. As a result, we will not be reinstating market guidance
beyond the end of this financial year, although we do expect to
report a modest profit for the second half of the year.
We entered H2 with no debt and good working capital to invest in
new organic growth initiatives. For instance, we have recently
established a presence in Johannesburg, our first in South Africa,
and we continue to look for other such opportunities.
Group Charter and Freight activity is no longer at the levels
seen in the first half of the year, although we remain prepared for
any spikes in demand as a result of dealing with the impact of
COVID-19. We do not foresee the same level of demand for
repatriation flights as we saw in the first half of the year,
however we anticipate Freight activity could return depending on
the required response to the ongoing pandemic.
Despite the weak start to the year, enquiries for Private Jets
are up, particularly in the US, where corporates and high net worth
individuals are looking to private aviation solutions to enable
more effective social distancing, and we expect this to
continue.
Our sports activity at the beginning of the year was
significantly reduced as numerous large sporting events, including
the UEFA European Football Championships and Olympic Games, were
postponed or cancelled, but we are now seeing some sport related
demand in Europe as sporting events have started to resume and
secure bubbles have been required to make travel possible.
While it has undoubtedly been a challenging period for aspects
of our Safety & Security business, we are starting to see some
green shoots of recovery here.
There is undoubtedly still much uncertainty ahead for us all,
but against this backdrop we will manage the business for the long
term, in the best interests of all our stakeholders. While we
anticipate that profits in the second half of the year will be
modest, I am nevertheless confident that the Group is well placed
to weather the ongoing economic storm and take advantage of any
suitable opportunities that may arise.
Mark Briffa,
Chief Executive Officer
FINANCIAL REVIEW
Gross transactional value and revenue
Air Partner 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. For the sake of completeness, commentary
below is given on gross transaction value (GTV) and revenues.
GTV of GBP182.6m (H1 2019: GBP124.1m) was up 47.1%, which is
principally due to the exceptional COVID-19 related activity as
described in more detail in the gross profit section below. GTV
represents the total value invoiced to customers and is stated
exclusive of value added tax.
Revenue of GBP36.6m (H1 2019: GBP31.7m) was an increase of 15.5
% year-on-year. The lower increase in revenue is due to a smaller
percentage of sales coming from Private Jets, Safety & Security
and government contracts, where the Group is more likely to act as
principal.
Gross profit
Gross profit of GBP27.7m (H1 2019: GBP17.2m) increased 61.0%
year-on-year. This increase is driven almost exclusively by the
Charter division, which grew 70.0% year-on-year from GBP15.0m to
GBP25.5m. Adjusting for the gross profit of GBP1.0m attributable to
Redline, which was acquired in December 2019, the underlying gross
profit increased year-on-year by GBP9.5m (55.2%).
Charter's growth was driven by the exceptional activity relating
to COVID-19 repatriations and PPE supply, resulting in Group
Charter and Freight gross profit increasing by GBP5.1m and GBP6.7m
(up 70.8% and 352.6%) respectively. Conversely, the Group's core
business has seen a decline as a result of the pandemic, as
demonstrated by Private Jets gross profit decreasing by 23.3% to
GBP4.6m (H1 2019: GBP6.0m). In addition, Scheduled Group Travel and
Tours Operations both saw significant downturns as a result of
COVID-19 travel restrictions.
Considering gross profit by geographical segments, the US is now
the largest contributor of the total gross profit at 45.1% (H1
2019: 21.5%). The US had an exceptional trading period, yielding
GBP12.5m of gross profit, up 237.8% on the prior period (H1 2019:
GBP3.7m), driven by COVID-19 related activities and a number of
large corporate programmes. The UK also saw high levels of activity
from COVID-19 flights, resulting in gross profit of GBP11.2m (H1
2019: GBP8.4m), an increase of 33.3%. The Rest of World Charter
gross profit of GBP1.3m (H1 2019: GBP0.1m) reflects a combination
of COVID-19 business and the first contributions from the Singapore
and Dubai offices. Conversely, Charter in Europe has seen gross
profit fall by 42.9% to GBP2.8m (H1 2019: GBP4.9m) as its business
from Private Jets, Tour Operations and government contracts have
all reduced as a result of the pandemic.
The Safety & Security division has been the most adversely
impacted by the ongoing economic uncertainty. Although there is a
year-on-year increase in gross profit of 9.5% (H1 2020: GBP2.3m; H1
2019: GBP2.1m), this is entirely attributable to Redline, which was
acquired in H2 2019. If the gross profit from Redline were to be
excluded from the current year, Safety & Security's gross
profit would be GBP1.2m, a decrease of 42.9%.
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, excluding net impairment losses
on financial assets, increased year-on-year by 15.1% to GBP16.0m
(H1 2019: GBP13.9m). The increase is driven in the main by higher
commission payments and other remuneration effects relating to the
strong trading performance, as well as overheads for Redline and
Dubai which are not included in the prior year. Adjusting for these
effects and a positive foreign exchange translational impact in the
prior period, administrative costs have decreased by GBP1.4m, which
is supported by the savings from the reduced working week and
government support.
Net impairment losses of GBP1.0m (HY 2019: GBP0.0m) represent
provisions for irrecoverable balances made during the period. The
Group has entered legal proceedings against a customer with a
balance due of GBP0.5m. The Group expects to recover some of the
balance but has provided for the whole amount until the outcome is
clearer. As a result of the impact of COVID-19, the Group has
provided for GBP0.4m of balances which are no longer considered
recoverable and has opted to increase its credit loss provision by
a further GBP0.1m.
The Group is in the process of streamlining business operations
and has incurred restructuring costs of GBP0.4m in the period,
which are included in exceptional items (see Exceptional and other
items). Further restructuring costs are expected in the second half
of the year.
Finance costs
The net interest charge for the period of GBP0.3m was in line
with the prior period (H1 2019: GBP0.3m). Finance costs are
expected to decline in the second half of the year following the
repayment of all outstanding debt.
Underlying profit before tax
The above results translated to an underlying* profit before tax
of GBP10.5m, an increase of GBP7.5m (250%) on the prior year (H1
2019: GBP3.0m). Adjusting for the profit of GBP0.4m attributable to
Redline, which was acquired in December 2019, the underlying gross
profit increased year-on-year by GBP7.1m (236.7%).
*Underlying profit before tax is stated before exceptional and
other items.
Exceptional and other 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 and other items on
operating profit was a charge of GBP1.6m (H1 2019: GBP0.2m).
Exceptional and other items excluded from underlying profits in
the period are broken down as follows:
July July FY January
2020 2019 2020
GBPm's GBPm's GBPm's
Underlying profit before tax 10.5 3.0 4.2
-------- -------- -----------
Change in operating board composition - - (0.2)
-------- -------- -----------
Restructuring costs (0.4) - -
-------- -------- -----------
Amortisation of intangibles arising
on acquisition (1.2) (0.2) (0.7)
-------- -------- -----------
Acquisition costs - - (0.6)
-------- -------- -----------
Costs incurred and provision for outflows
resulting from French tax investigation - (0.3) (0.6)
-------- -------- -----------
Impairment of goodwill - - (1.9)
-------- -------- -----------
Settlement of historical legal disputes - - 0.4
-------- -------- -----------
Adjustments to deferred consideration - 0.3 0.3
-------- -------- -----------
Statutory reported profit before tax
(GBPm) 8.9 2.8 0.9
-------- -------- -----------
The increase on amortisation of intangibles arising on
acquisition to GBP1.2m (H1 2019: GBP0.2m) is as a result of the
intangibles recognised on the acquisition of Redline Worldwide
Limited. Restructuring costs are comprised of the amounts paid, or
due to be paid at period end, to employees made redundant as part
of the restructuring process, including statutory redundancy,
payment in lieu of notice, and employers' national insurance on
these amounts.
A provision of GBP0.3m was made in the prior period in respect
of indirect tax charges relating to a tax reassessment in France.
The provision is based on management's best estimate of the
reassessment liability after taking expert legal advice. There have
been no further developments following the end of the prior
financial year and as a result there has been no change to the
provision held.
Statutory reported profit before tax
After the above exceptional and other items, statutory reported
profit before tax was GBP8.9m, up 217.9% on the prior year (H1
2019: GBP2.8m).
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* of GBP3.3m (H1 2019: GBP0.7m)
represents an effective rate of 31.5% (H1 2019: 23.4%) on the
underlying profits before tax. The higher tax rate reflects the
greater share of profits in countries with higher tax rates, in
particular the US, and net losses in other tax jurisdictions. On a
statutory reported profit basis, the effective rate of taxation was
35.9% (H1 2019: 23.3%) due to the impact of the change in the UK
tax rate used for the calculation of the deferred tax liabilities
on the acquired intangibles.
* Adjusting for exceptional and other items.
Earnings per share
Basic underlying* earnings per share from continuing operations
was 12.8p (H1 2019: 4.3p), an increase of 197.7% on the prior year.
On a statutory basis, earnings per share from continuing operations
was 10.1p (H1 2019: 4.1p), up by 146.3%.
*Underlying earnings are stated before exceptional and other
items, see note 3.
Dividends
Early in the pandemic, the Board decided to suspend the
declaration of dividends to shareholders to reflect the uncertain
operating climate. Although that uncertainty persists, the Board
considers it appropriate to recommence some payment now to
recognise the importance of dividends to Air Partner's
shareholders, many of whom are private investors. However, we
believe it prudent to maintain the balance sheet strength of the
Group and to ensure that there are sufficient resources to fund
future growth. Accordingly, the Board is recommending an interim
dividend of 0.80p per share, down 55.6% from last year's 1.80p. The
Board's objective is to establish a level of dividends that is
sustainable, well covered by the Group's earnings, and that can be
increased over time. The level of this interim dividend is
consistent with this policy.
The interim dividend is expected to be paid on 20 November 2020
to those shareholders registered at close of business on 16 October
2020. The ex-dividend date will be 15 October 2020.
Statement of financial position
Shareholders' funds
After considering the profit for the period, exchange rate
differences and the share issue (see below), overall shareholders'
funds at 31 July 2020 are GBP21.8m, representing an increase of
GBP9.8m on the position at 31 July 2019 (GBP12.0m) and an increase
of GBP12.6m on 31 January 2020 (GBP9.2m).
In June 2020, the Group completed a cash box placing for 10
million new shares in the capital of the Company. The placing price
was 75p per share. The placing raised gross funds of GBP7.5m and
incurred fees approaching GBP0.5m, resulting in a net increase in
equity of GBP7.1m. In accordance with Section 612 of the Companies
Act 2006, merger relief has been applied, resulting in an increase
to retained earnings of GBP6.9m with the remainder going to share
capital and share premium. Share premium was only recognised on
shares issued as part of an offer through PrimaryBid, which did not
qualify for merger relief.
Goodwill and intangibles
Under IFRS, goodwill is subject to annual impairment tests.
Impairment tests were completed for period end to assess the impact
of COVID-19. No impairments were identified. Goodwill in the
statement of financial position is carried at GBP8.7m (31 January
2020: GBP8.6m). The increase from year end is due to changes in
exchange rates. 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.
Other intangible assets comprise software development costs. In
the period, the Group spent GBP0.2m (H1 2019: GBP0.1m) on the
development of the Group's CRM and Booking tool, which is in the
process of being rolled out across the Group.
Other balances
Movements in other balances within the statement of financial
position reflect the trading results of the period.
Excluding the right of use assets recognised under IFRS 16, the
Group has property, plant and equipment totalling GBP1.0m (H1 2019:
GBP0.9m). Capital expenditure in the period was GBP0.1m (H1 2019:
GBP0.3m). The reduced spending is in line with our cost saving
efforts during H1 2020.
Overall, there was a positive working capital movement of
GBP8.8m in the period (H1 2019: GBP2.0m) excluding the movement on
the JetCard cash. This was related to a significant reduction in
receivables of GBP9.6m from the year end position, offset by an
outflow of GBP0.8m in payables.
The positive change in receivables was driven by two main
factors, being that COVID-19 related activity did not attract
customer credit and the parts of the business that typically give
credit did not have high levels of trading. This resulted in a
positive rewinding of the receivable position in the first half of
the year. This trend is considered one-off and symptomatic of the
COVID-19 trading environment we have experienced, and we fully
expect the need to invest in working capital in the second half of
the year.
Cash generation and net debt
The Group generated GBP18.7m (H1 2019: GBP8.4m) of net cash from
operating activities after investing in capital expenditure and
software development as a result of the high levels of trading and
a favourable movement in working capital. The issue of shares in
the period generated net additional funds of GBP7.1m, which,
combined with the funds from operating activities, were used to
repay the revolving credit facility of GBP11.5m in full.
Net cash excluding JetCard cash was GBP18.0m (31 January 2020:
net debt of GBP6.9m). Including JetCard cash of GBP17.6m (31
January 2020: GBP16.7m), net cash was GBP35.6m (31 January 2020:
GBP9.9m). JetCard cash is held in separate segregated bank accounts
and is not used for the Group's working capital needs.
The Directors began to use normalised cash (Non-JetCard cash
less client deposits and similar balances) as the best assessment
of available funds in the business due to the expectation at the
advent of the pandemic that customers would cancel bookings and
pursue refunds. Although this did not occur at the levels expected,
the Directors have continued to use this measure as a more prudent
approach to cash management. The normalised cash balance after
adjusting for GBP2.8m of customer deposits at 31 July 2020 was
GBP15.2m.
The only borrowing remaining in the Group relates to the leases
recognised under IFRS 16, which include property leases, motor
vehicles, office equipment and the right of use of an Italian
aircraft under a Charter agreement that is due to expire in the
next financial year. The total lease liabilities in current and
non-current liabilities is GBP7.0m (H1 2019: GBP9.3m).
The cash position at the interim period end is at a particularly
high point in the cycle. There are some material cash outlays
expected in the second half of the year, namely US corporation tax
relating to the strong trading period in the first half of the
year, Redline deferred consideration (GBP1.0m), further anticipated
restructuring activities to streamline the business in the current
trading environment, and investment in working capital and organic
growth initiatives.
Bank facilities
The Group has total debt facilities with NatWest of GBP14.5m.
GBP13.0m of this is a revolving credit facility, none of which was
drawn down at 31 July 2020. To support short-term liquidity, the
Group has access to a GBP1.5m overdraft facility. This was not
utilised at 31 July 2020. 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 July 31 July 31 July 31 July
2020 2019 2020 2019
-------- -------- ----------------- -------- -------- ----------------
USD strengthened USD weakened by
USD 1.26 1.29 by 2.3% 1.31 1.22 7.4%
-------- -------- ----------------- -------- -------- ----------------
EUR strengthened EUR weakened by
EUR 1.14 1.15 by 0.9% 1.11 1.09 1.8%
-------- -------- ----------------- -------- -------- ----------------
If the exchange rates in the prior period were consistent with
the current period, H1 2019 gross profit would have been GBP17.3m
(increase of GBP0.1m) and underlying administrative expenses
including net impairment loss on financial assets would have been
GBP14.0m (increase of GBP0.1m). As a result, the net impact on
underlying profit before tax is negligible.
Accounting policies and recent accounting developments
The accounts in this report are prepared under International
Financial Reporting Standards (IFRSs), as adopted by the European
Union (EU). The accounting policies used in preparing these
accounts are set out in note 1.
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 a
revolving credit facility, 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 development, performance and position,
are set out in the Chair's Statement and Chief Executive's Review.
The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Financial
Review. In addition, the Group's objectives, policies and processes
for managing its capital risk, details of its financial instruments
and hedging activities, and its exposures to interest rate risk,
credit risk, liquidity risk and foreign currency risk, are laid out
in the section 'Principal Risks and Uncertainties' in the financial
statements for the year ending 31 January 2020.
COVID-19 has increased uncertainty surrounding the future
trading environment for the Group. Whilst performance in the first
half of the current financial year has been very strong, driven by
pandemic-related repatriation and freight activity in the Charter
division, there remains uncertainty over the trading performance
for the rest of the year. Accordingly, the Directors have
undertaken a thorough assessment in evaluating Going Concern. This
has been assessed by reference to cash forecasts through to October
2021, which reflect a cautious view of trading activity across our
divisions, and further prudence has then been applied to reflect a
slower recovery in underlying performance from the COVID-19
pandemic. The cautious forecasts used are seen as the lowest
outcome of likely outturns and include a number of cash mitigation
actions that could be undertaken if necessary.
Following the strong half year of trading and the share placing,
the Directors have repaid all the bank facilities available.
Forecasts show that the Group is not expected to require access to
these facilities during the next 12 months.
The Directors have taken the steps necessary to equip the Group
to deal with the economic impact of the COVID-19 pandemic. These
include reviewing credit terms, cost cutting measures and utilising
government support where appropriate. The Directors believe the
steps detailed above and the strong cash position at the end of
August 2020 mean the Group is well placed to manage its business
and meet its liabilities as they fall due.
Based on current financial projections, The Directors are
satisfied to a material level of certainty that the Group has
sufficient resources to continue in operation for the foreseeable
future, that is, a period of at least 12 months from the date of
this report.
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
The COVID-19 pandemic has had a severe impact on the aviation
industry globally, characterised by extensive travel restrictions,
and the operating environment remains extremely challenging. As
referenced in the Chair's Statement and Chief Executive's Review,
COVID-19 has disrupted the Air Partner business in several ways,
although the organisation has reacted quickly through its emergency
response process and put in place several measures to protect staff
and business operations. While we have enjoyed a strong start to
the current financial year, these circumstances are unprecedented,
and we have very limited visibility for the months ahead. We
therefore continue to monitor the situation closely so that we can
take any necessary action as we manage the business for the long
term and in the best interests of all stakeholders.
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. While Brexit does present challenges to the Group,
within Charter only a small percentage of current business would be
impacted by any change in permission to fly. The strong
relationships the Group has across airline operators should enable
it to source alternatives to best meet our customers' needs. Within
Consulting and Training, changes to rules and regulations tend to
create business for the Group, providing balance against perceived
risks.
Economic uncertainty affects corporate, government and
individual customers 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 customer mix.
Principal risks and uncertainties facing the Group
In addition to the COVID-19 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. There have
been no material changes other than those highlighted above since
the signing of the most recent 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
2020. 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 Directors confirm that, to the best of their knowledge, the
extracts from the consolidated financial statements included in
this report, which has been prepared in accordance with
International Financial Reporting Standards (IFRSs), as adopted by
the European Union, give a true and fair view of the assets,
liabilities, financial position and profit or loss of the Company
taken as a whole, and that the management report contained in this
report includes a fair view of the development and performance of
the business.
As disclosed in note 1, the annual financial statements of the
Group are prepared in accordance with IFRSs as adopted by the
European Union. The unaudited condensed consolidated financial
statements included in this interim report have been prepared in
accordance with International Accounting Standard 34 "Interim
Financial Reporting" as adopted by the European Union.
Mark Briffa Joanne Estell
Chief Executive Officer Chief Financial
Officer
2 9 September 2020 2 9 September
2020
The directors of Air Partner plc are listed in the Group's
Annual Report and Accounts for the year ended 31
January 2020 and on our website at https://airpartnergroup.com/ .
See more at: https://airpartnergroup.com/investors/ .
Consolidated income statement
for the half year ended 31 July 2020
Year
ended
31 January
2020
Half Half
year year
ended ended
31 July 31 July
2020 2019 (audited)
(unaudited) (unaudited)
Continuing operations Note GBP'000 GBP'000 GBP'000
=========================================== ==== ============ ============ ===========
Gross transaction value (GTV) 2 182,585 124,143 236,816
=========================================== ==== ============ ============ ===========
Revenue 2 36,581 31,668 66,664
Cost of sales 2 (8,836) (14,502) (32,506)
Gross profit 2 27,745 17,166 34,158
Administrative expenses before exceptional
and other items (15,964) (13,902) (29,180)
Exceptional and other items 3 (1,638) (155) (3,296)
=========================================== ==== ============ ============ ===========
Total administrative expenses (17,602) (14,057) (32,476)
Net impairment losses on financial assets 11 (982) (1) (205)
Operating profit 2 9,161 3,108 1,477
------------------------------------------- ---- ------------ ------------ -----------
Operating profit before exceptional and
other items 10,799 3,263 4,773
------------------------------------------- ---- ------------ ------------ -----------
Finance income 26 33 71
Finance expense (291) (329) (612)
=========================================== ==== ============ ============ ===========
Profit before income tax 8,896 2,812 936
Profit before income tax and exceptional
and other items 10,534 2,967 4,232
Income tax expense 8 (3,196) (654) (633)
=========================================== ==== ============ ============ ===========
Profit for the period 5,700 2,158 303
=========================================== ==== ============ ============ ===========
Attributable to:
Owners of the parent company 5,700 2,158 303
=========================================== ==== ============ ============ ===========
Earnings per share:
Continuing operations
Basic 5 10.1p 4.1p 0.6p
Diluted 5 10.0p 4.0p 0.6p
=========================================== ==== ============ ============ ===========
Consolidated statement of comprehensive income
for the half year ended 31 July 2020
Half
year
ended
Half
31 July year Year
2020 ended ended
31 July 31 January
2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
========================================================= ============ ============= ============
Profit for the period 5,700 2,158 303
Other comprehensive income - items that may subsequently
be reclassified to profit or loss:
Adoption of IFRS 16 - (166) (167)
Exchange differences on translation of foreign
operations (267) 182 (403)
Total comprehensive income / (expense) for the
period 5,433 2,174 (267)
========================================================= ============ ============= ============
Attributable to:
Owners of the parent company 5,433 2,174 (267)
========================================================= ============ ============= ============
Consolidated statement of changes in equity
for the half year ended 31 July 2020 (unaudited)
Share
Share premium Merger Own Translation Retained Total
capital account reserve shares reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= ======== ======== ========= ============= ========= =========
Opening equity as at
1 February 2019 522 4,814 295 (326) 1,064 5,312 11,681
Adoption of IFRS 16 (166) (166)
Profit for the period - - - - - 2,158 2,158
Exchange differences
on translation of foreign
operations - - - - 182 - 182
=========================== ========= ======== ======== ========= ============= ========= =========
Total comprehensive
income for the period - - - - 182 1,992 2,174
Issue of shares 7 486 - - - (435) 58
Share option movement
for the period - - - - - 101 101
Share options exercised
in the period - - - 168 - (146) 22
Dividends paid (note
4) - - - - - (2,011) (2,011)
=========================== ========= ======== ======== ========= ============= ========= =========
Closing equity as at
31 July 2019 529 5,300 295 (158) 1,246 4,813 12,025
=========================== ========= ======== ======== ========= ============= ========= =========
Share
Share premium Merger Own Translation Retained Total
capital account reserve shares reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= ======== ======== ========= ============= ========== =========
Opening equity as at
1 February 2020 535 5,895 295 (158) 661 1,965 9,193
Profit for the period - - - - - 5,700 5,700
Exchange differences
on translation of foreign
operations - - - - (267) - (267)
=========================== ========= ======== ======== ========= ============= ========== =========
Total comprehensive
income for the period - - - - (267) 5,700 5,433
Issue of shares (note
10) 100 56 6,896 - - - 7,052
Redemption of shares
(note 10) - - (6,896) - - 6,896 -
Share option movement
for the period - - - - - 132 132
Share options exercised
in the period - - - 91 - (86) 5
Dividends paid (note - - - - - - -
4)
=========================== ========= ======== ======== ========= ============= ========== =========
Closing equity as at
31 July 2020 635 5,951 295 (67) 394 14,607 21,815
=========================== ========= ======== ======== ========= ============= ========== =========
Consolidated statement of financial position
as at 31 July 2020
31 July 31 July 31 January
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
===================================== ==== ============ ============ ==========
Assets
Non-current assets
Goodwill 6 8,711 6,794 8,641
Other intangible assets 10,619 4,581 11,872
Property, plant and equipment 7,268 9,927 7,698
Deferred tax assets 669 311 284
===================================== ==== ============ ============ ==========
Total non-current assets 27,267 21,613 28,495
===================================== ==== ============ ============ ==========
Current assets
Trade and other receivables 10,483 25,703 18,801
Current tax assets 270 158 318
------------ ------------ ----------
JetCard bank balances 17,579 18,535 16,742
Other cash and cash equivalents 17,982 9,822 4,633
------------ ------------ ----------
Total cash and cash equivalents 35,561 28,357 21,375
Derivative financial instruments - 24 -
===================================== ==== ============ ============ ==========
Total current assets 46,314 54,242 40,494
===================================== ==== ============ ============ ==========
Total assets 73,581 75,855 68,989
===================================== ==== ============ ============ ==========
Liabilities
Current liabilities
Trade and other payables (7,035) (7,967) (5,669)
Current tax liabilities (3,116) (480) (627)
Other liabilities (7,765) (6,875) (5,014)
Lease liabilities (4,278) (5,800) (5,448)
Deferred income and JetCard deposits (22,216) (32,217) (24,658)
Deferred consideration (1,045) - (1,318)
Provisions (381) (718) (469)
Derivative financial instruments (5) - (39)
===================================== ==== ============ ============ ==========
Total current liabilities (45,841) (54,057) (43,242)
===================================== ==== ============ ============ ==========
Net current assets / (liabilities) 473 185 (2,748)
===================================== ==== ============ ============ ==========
Non-current liabilities
Borrowings - (5,500) (11,500)
Lease liabilities (2,683) (3,530) (1,860)
Deferred consideration (986) - (982)
Deferred tax liability (1,860) (650) (1,819)
Provisions (396) (93) (393)
Total non-current liabilities (5,925) (9,773) (16,554)
===================================== ==== ============ ============ ==========
Total liabilities (51,766) (63,830) (59,796)
===================================== ==== ============ ============ ==========
Net assets 21,815 12,025 9,193
===================================== ==== ============ ============ ==========
Equity
Share capital 635 529 535
Share premium account 5,951 5,300 5,895
Merger reserve 295 295 295
Own shares (67) (158) (158)
Translation reserve 394 1,246 661
Retained earnings 14,607 4,813 1,965
===================================== ==== ============ ============ ==========
Total equity 21,815 12,025 9,193
===================================== ==== ============ ============ ==========
Consolidated statement of cash flows
for the half year ended 31 July 2020
31 July 31 July 31 January
2020 2019 2020
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
================================================== ==== ============ ============ ==========
Cash generated from operations 7 20,306 9,733 9,109
================================================== ==== ============ ============ ==========
- Interest received 26 33 71
- Interest paid (325) (329) (578)
- Income tax paid (1,050) (593) (898)
Net cash inflow from operating
activities 18,957 8,844 7,704
Investing activities
* Purchases of property, plant and equipment (64) (300) (549)
* Purchases of intangible assets (195) (121) (376)
* Acquisition of subsidiaries (278) (430) (7,446)
Net cash used in investing
activities (537) (851) (8,371)
================================================== ==== ============ ============ ==========
Financing activities
* Repayment of finance lease liabilities (869) (2,718) (5,414)
* Dividends paid to the company shareholders - (2,011) (2,961)
* Proceeds on issue of new shares 7,052 - -
* Proceeds on exercise of share options 5 22 22
* (Decrease) / increase in borrowings (11,500) - 6,000
================================================== ==== ============ ============ ==========
Net cash (used in) / generated
from financing activities (5,312) (4,707) (2,353)
================================================== ==== ============ ============ ==========
Net increase in cash and cash
equivalents 13,108 3,286 (3,020)
Opening cash and cash equivalents 21,375 25,154 25,154
Effect of foreign exchange
rate changes 1,078 (83) (759)
================================================== ==== ============ ============ ==========
Closing cash and cash equivalents 35,561 28,357 21,375
================================================== ==== ============ ============ ==========
JetCard cash
The closing cash and cash equivalents balance can be further
analysed into 'JetCard cash' received by the Group in respect of
its JetCard product and 'non-JetCard cash' as follows:
31 July 31 July 31 January
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
========================== ============ ============ ==========
Total JetCard cash 17,579 18,535 16,742
Non-JetCard cash 17,982 9,822 4,633
========================== ============ ============ ==========
Cash and cash equivalents 35,561 28,357 21,375
========================== ============ ============ ==========
1 GENERAL INFORMATION, BASIS OF PREPARATION AND ACCOUNTING
POLICIES
General information
The Directors of Air Partner plc (the "Company") present their
interim report and the unaudited condensed consolidated financial
statements for the six months ended 31 July 2020.
The Company is a public listed company incorporated and
domiciled in England and Wales under registration number 00980675.
The address of its registered office is 2 City Place, Beehive Ring
Road, Gatwick, West Sussex, RH6 0PA. The Company is listed on the
London Stock Exchange.
These condensed consolidated interim financial statements
("Interim Financial Statements") were approved for issue on 29
September 2020.
These interim financial statements do not comprise statutory
accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 January 2020 were
approved by the Board of Directors on 22 May 2020 and delivered to
the Registrar of Companies. The report of the auditors on those
accounts was unqualified, did not contain an emphasis of matter
paragraph and did not contain any statement under section 498 of
the Companies Act 2006.
The interim financial statements have been reviewed, but not
audited, by PricewaterhouseCoopers LLP.
Forward-looking statements
Certain statements in these interim financial statements are
forward looking. Although the Group believes that the expectations
reflected in these forward-looking statements are reasonable, we
can give no assurance that these expectations will prove to be
correct. As these interim financial statements involve risks and
uncertainties, actual results may differ materially from those
expressed or implied by these forward-looking statements.
We undertake no obligation to update any forward-looking
statements, whether as a result of new information, future events
or otherwise.
Basis of preparation
This condensed financial information for the half year ended 31
July 2020 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and
International Accounting Standard ("IAS") 34 "Interim Financial
Reporting" as adopted by the European Union. These interim
condensed financial statements are unaudited and should be read in
conjunction with the annual financial statements for the year ended
31 January 2020, which have been prepared in accordance with IFRSs
as adopted by the European Union.
Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 January 2020.
-- Taxes on income in the interim periods are accrued using the
tax rate that would be applicable to expected total annual profit
or loss.
Copies of these financial statements can be found either on
Companies House or the Air Partner website (
https://airpartnergroup.com/investors/reports-results-and-presentations/
).
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 Chair's Statement and Chief Executive's Review.
The financial position of the Group, its cash flows, liquidity
position and borrowing facilities are described in the Financial
Review. In addition, the Group's objectives, policies and processes
for managing its capital risk; details of its financial instruments
and hedging activities; and its exposures to interest rate risk,
credit risk, liquidity risk and foreign currency risk, are laid out
in the financial statements for the year ended 31 January 2020.
The COVID-19 pandemic has increased uncertainty surrounding the
future trading environment for the Group. Whilst performance in the
first half of FY21 has been very strong, supported by additional
Group Charter activity of repatriation flights and freight, there
remains uncertainty over the trading performance for the rest of
the year. Accordingly, the Directors have undertaken a thorough
assessment in evaluating Going Concern. This has been assessed by
reference to cash forecasts through to October 2021, which reflect
a cautious view of trading activity across our divisions, and
further sensitivities have then been applied to reflect a slower
recovery in underlying performance from the COVID-19 pandemic. The
forecasts include severe but plausible downsides and are seen as
the lowest outcome of likely outruns. The forecasts include a
number of cash mitigation actions that could be undertaken if
necessary.
Following the strong half year of trading and the share placing
which took place in June 2020, the Directors have repaid all the
bank facilities available. Forecasts show that the Group is not
expected to require access to these facilities during the next 12
months however it retains access to them.
The Directors have taken steps to equip the Group to deal with
the economic impact of the COVID-19 pandemic. These include
reviewing credit terms, cost cutting measures and utilising
government support for staff costs where appropriate. The Directors
believe the steps detailed above and the strong cash position at
the end of August 2020 mean that the Group is well placed to manage
its business and meet its liabilities as they fall due.
The Directors are, based on current financial projections,
satisfied that the Group has sufficient resources to continue in
operation for the foreseeable future, that is a period of at least
12 months from the date of this report. Accordingly, they continue
to adopt the going concern basis in preparing the Interim Financial
Statements.
Gross transaction value
Gross transaction value (GTV) represents the total value
invoiced to customers and is stated exclusive of value added tax.
GTV is a non-statutory measure but is more applicable to the Group
than revenue as it gives a fairer impression of the scale of the
business the Group attracts.
Exceptional and other items
The Directors believe that the underlying profit and earnings
per share measures provide additional useful information for
shareholders on the underlying performance of the business. These
measures are consistent with how underlying business performance is
measured internally and management are remunerated. 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:
-- significant one-off restructuring costs
-- significant and one-off impairment charges and provisions
that distort underlying trading
-- costs relating to strategy changes that are not considered
normal operating costs of the underlying business
-- acquisition costs
-- amortisation of intangible assets recognised on
acquisition
-- acquisition consideration classified as an employee cost
under IFRS 3 Business Combinations.
The Directors consider exceptional items to be one-off expenses
that are unlikely to reoccur and are not in part of the usual
course of business. Other items are expenses that are incurred as a
result of accounting adjustments required on consolidation. These
are regular expenses but are not considered to be part of the
underlying group performance.
Key accounting estimates and judgments
The preparation of financial statements requires management to
make judgments, estimates and assumptions that affect the
application of policies and reported amounts of assets and
liabilities, income and expenses. These estimates and associated
assumptions are based on historical experience and various other
factors believed to be reasonable under the circumstances. Actual
results could differ from these estimates. These underlying
assumptions are reviewed on an on-going basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or
future periods.
In preparing these interim financial statements, the significant
judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the
same as those that applied to the consolidated financial statements
for the year ended 31 January 2020, with the exception of changes
in estimates that are required in determining the provision for
income taxes.
2 SEGMENTAL ANALYSIS
The services provided by the Group consist of chartering
different types of aircraft and related aviation services.
The Group has four operating segments: Group Charter, Private
Jets and Freight (comprising Charter) and Safety & Security.
Overheads, with the exception of Corporate costs, are allocated to
the Group's operating segments in relation to operating
activities.
Sales transactions between operating segments are carried out on
an arm's length basis. All results, assets and liabilities reviewed
by the Board (which is the chief operating decision maker) are
prepared on a basis consistent with those that are reported in the
financial statements.
The Board does not review assets or liabilities at segmental
level, therefore these items are not disclosed.
The segmental information, as provided to the Board on a monthly
basis, is as follows:
Half year ended 31 July 2020 Group Private Safety Corporate
(unaudited) Charter Jets Freight & Security costs Total
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================================== ========= ========= ========= =========== ========= ==========
Gross transactional value 55,389 26,326 94,972 5,898 - 182,585
=========================================== ========= ========= ========= =========== ========= ==========
Revenue 14,929 6,316 9,438 5,898 - 36,581
=========================================== ========= ========= ========= =========== ========= ==========
Cost of Sales (2,615) (1,760) (826) (3,635) - (8,836)
=========================================== ========= ========= ========= =========== ========= ==========
Segmental gross profit 12,314 4,556 8,612 2,263 - 27,745
=========================================== ========= ========= ========= =========== ========= ==========
Administrative expenses and net impairment
losses on financial assets (6,184) (3,895) (3,446) (2,152) (1,269) (16,946)
=========================================== ========= ========= ========= =========== ========= ==========
Depreciation and amortisation of
non-acquired assets (included within
cost of sales & administrative expenses) (641) (141) (268) (200) - (1,250)
=========================================== ========= ========= ========= =========== ========= ==========
Operating profit before exceptional
and other items 6,130 661 5,166 111 (1,269) 10,799
=========================================== ========= ========= ========= =========== ========= ==========
Exceptional and other items (see
note 3) (86) (122) - (1,445) 15 (1,638)
=========================================== ========= ========= ========= =========== ========= ==========
Segment result 6,044 539 5,166 (1,334) (1,254) 9,161
=========================================== ========= ========= ========= =========== ========= ==========
Finance income 26
Finance expense (291)
=========================================== ========= ========= ========= =========== ========= ==========
Profit before tax 8,896
Income tax expense (3,196)
=========================================== ========= ========= ========= =========== ========= ==========
Profit for the year 5,700
=========================================== ========= ========= ========= =========== ========= ==========
Half year ended 31 July 2019 Group Private Safety Corporate
(unaudited) Charter Jets Freight & Security costs Total
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================================== ========= ========= ========= =========== ========= ==========
Gross transactional value 73,025 35,755 10,703 4,660 - 124,143
=========================================== ========= ========= ========= =========== ========= ==========
Revenue 12,260 12,814 1,934 4,660 - 31,668
=========================================== ========= ========= ========= =========== ========= ==========
Cost of Sales (5,073) (6,833) (70) (2,526) - (14,502)
=========================================== ========= ========= ========= =========== ========= ==========
Segmental gross profit 7,187 5,981 1,864 2,134 - 17,166
=========================================== ========= ========= ========= =========== ========= ==========
Administrative expenses and net impairment
losses on financial assets (5,154) (4,257) (1,435) (1,850) (1,207) (13,903)
=========================================== ========= ========= ========= =========== ========= ==========
Depreciation and amortisation of
non-acquired assets (included within
cost of sales & administrative expenses) (2,969) (163) (51) (59) - (3,242)
=========================================== ========= ========= ========= =========== ========= ==========
Operating profit before exceptional
and other items 2,033 1,724 429 284 (1,207) 3,263
=========================================== ========= ========= ========= =========== ========= ==========
Exceptional and other items (see
note 3) - - - 128 (283) (155)
=========================================== ========= ========= ========= =========== ========= ==========
Segment result 2,033 1,724 429 412 (1,490) 3,108
=========================================== ========= ========= ========= =========== ========= ==========
Finance income 33
Finance expense (329)
=========================================== ========= ========= ========= =========== ========= ==========
Profit before tax 2,812
Income tax expense (654)
=========================================== ========= ========= ========= =========== ========= ==========
Profit for the year 2,158
=========================================== ========= ========= ========= =========== ========= ==========
Air Partner plc, the Company, is domiciled in the UK but due to
the nature of the Group's operations a significant amount of gross
profit is derived from overseas countries. The Group reviews gross
profit based upon location of the assets used to generate that
gross profit.
The Board also reviews information on a geographical basis based
on parts of the world which are considered to be key to operational
activities. As a result, the following additional information is
provided showing a geographical split of the United Kingdom,
Europe, the United States of America and the Rest of the World:
United Rest
United States of the
Kingdom Europe of America World Total
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================================= ======== ========= =========== ======== =========
Half year ended 31 July 2020 (unaudited)
Gross profit 11,172 2,807 12,497 1,269 27,745
Non-current assets (excluding deferred
tax assets) 20,721 5,633 223 21 26,598
========================================= ======== ========= =========== ======== =========
Half year ended 31 July 2019 (unaudited)
Gross profit 8,434 4,911 3,738 83 17,166
Non-current assets (excluding deferred
tax assets) 12,520 8,707 75 - 21,302
========================================= ======== ========= =========== ======== =========
Europe can be further analysed as:
France Germany Italy Other Total
Continuing operations GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
========================================= ======== ======== ======== ======== ========
Half year ended 31 July 2020 (unaudited)
Gross profit (1) (16) 2,135 341 347 2,807
========================================= ======== ======== ======== ======== ========
Half year ended 31 July 2019 (unaudited)
Gross profit 1,678 1,900 577 756 4,911
========================================= ======== ======== ======== ======== ========
1 France has posted negative gross profit for the period due to
negligible trading in the period and higher than forecast
finalisation costs on prior year tour ops business.
3 EXCEPTIONAL AND OTHER ITEMS
Year
ended
Half Half
year year
ended ended 31 January
31 July 31 July
2020 2019 2020
(unaudited) (unaudited) (audited)
Continuing operations GBP'000 GBP'000 GBP'000
Change in operating board composition (1) - - (195)
Restructuring costs (2) (419) - -
Amortisation of intangibles arising on acquisition (1,233) (187) (656)
Acquisition costs (3) - - (604)
Disposal of subsidiary (4) 23 - (4)
Costs incurred and provision for outflows resulting
from French tax investigation (5) - (283) (657)
Impairment of goodwill (6) - - (1,885)
Settlement of historical legal disputes (7) - - 389
Adjustments to deferred consideration (8) (9) 315 316
(1,638) (155) (3,296)
Tax effect of other items (9) 118 37 233
==================================================== ============ ============ ===========
Exceptional and other items after taxation (1,520) (118) (3,063)
==================================================== ============ ============ ===========
1 Following the accounting review in FY19 the Directors
undertook an internal review of the Group Operating Board and
determined that several roles were excess to requirements. The
employees in these roles left during the year and have not been
replaced. The level of Board changes and associated costs in both
years were considered highly unusual and are not expected to recur
in future periods.
2 As a result of the negative impact of the COVID-19 pandemic on
certain areas of the business the Directors undertook a review of
the business and identified savings through reductions in headcount
where revenue was not forecast to recover for the foreseeable
future. Exceptional costs are comprised of the amounts paid, or due
to be paid at period end, to employees as part of the redundancies,
including statutory redundancy, payment in lieu of notice and
employers national insurance on these amounts.
3 The acquisition costs incurred in the prior year were in
respect of the acquisition of Redline Worldwide Limited.
4 The Group disposed of Air Partner (Switzerland) AG during the
current year and Air Partner Nordic AB during the prior year.
5 A provision of GBP283,000 was made in the prior period in
respect of indirect tax charges for a tax reassessment in France.
The provision is based on Management's best estimate of the
reassessment liability after taking expert legal advice. Legal fees
and expense directly attributable to the tax investigation of
GBP374,000 were incurred in the prior year in connection with this
matter. There have been no further developments following the end
of the prior financial year and it is unclear when the matter is
likely to be resolved.
6 The impairment of goodwill in the prior year is in relation to SafeSkys Limited.
7 The Group successfully closed two historical legal disputes in
the prior year resulting in the receipt of cash settlements in both
cases. The income recognised is net of associated legal
expenses.
8 The adjustment to deferred consideration in the current year
relates to the fair valuing of the deferred consideration relating
to Redline Worldwide Limited. The prior year is in relation to
SafeSkys Limited, where a settlement was reached for less than the
amount provided for in the prior year's financial statements.
9 A tax credit has been included in the current year in respect
of the restructuring costs and amortisation of purchased
intangibles. The tax credit on the purchased intangibles is offset
by the change in tax rate used to calculate the deferred tax
liability for these assets from 17% to 19%. At 31 January 2020, a
reduction in the UK corporation tax rate on 1 April 2020 to 17% as
a result legislation enacted on 16 October 2016 was in effect. The
Spring Budget 2020 announced that the corporation tax would remain
at 19%.
4 DIVIDS
Half Year
Half year year ended
ended ended 31 January
31 July 2020
31 July 2020 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
=============================================== ============= ================== ===========
Amounts recognised as distributions to owners
of the parent company
Final dividend for the year ended 31 January
2019 of 3.85 pence - 2,011 2,011
Interim dividend for the year ended 31 January
2020 of 1.80 pence - - 950
----------------------------------------------- ------------- ------------------ -----------
- 2,011 2,961
----------------------------------------------- ------------- ------------------ -----------
5 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is
based on the following data:
Half Year
Half year year ended
ended ended 31 January
31 July
31 July 2020 2019 2020
(unaudited) (unaudited) (audited)
Earnings per share Pence Pence Pence
====================== ============= ============ ===========
Continuing operations
Basic 10.1 4.1 0.6
Diluted 10.0 4.0 0.6
====================== ============= ============ ===========
Half Year
Half year year ended
ended ended 31 January
31 July
31 July 2020 2019 2020
(unaudited) (unaudited) (audited)
Earnings per share Pence Pence Pence
====================================== ============= ============= ===========
Excluding exceptional and other items
Basic 12.8 4.3 6.4
Diluted 12.7 4.2 6.3
====================================== ============= ============= ===========
Half Year
Half year year ended
ended ended 31 January
31 July
31 July 2020 2019 2020
(unaudited) (unaudited) (audited)
From continuing operations GBP'000 GBP'000 GBP'000
================================================ ============= ============ ===========
Earnings
Profit attributable to the owners of the parent
company 5,700 2,158 303
Adjustment to exclude exceptional and other
items 1 1,520 118 3,063
================================================ ============= ============ ===========
Underlying earnings for the calculation of
basic and diluted earnings per share 7,220 2,276 3,366
================================================ ============= ============ ===========
(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 3.
Half year Half year Year ended
ended ended 31 January
31 July 31 July
2020 2019 2020
(unaudited) (unaudited) (audited)
Weighted average number of ordinary shares Number Number Number
================================================ ============ ============= ===========
Issued and fully paid 56,649,205 52,464,730 52,756,188
Less those held by the Air Partner Employee
Benefit Trust (56,654) (102,241) (85,952)
================================================ ============ ============= ===========
Number for the calculation of basic earnings
per share 56,592,551 52,362,489 52,670,236
================================================ ============ ============= ===========
Effect of dilutive potential ordinary shares:
share options 419,248 1,204,501 844,022
================================================ ============ ============= ===========
Number for the calculation of dilutive earnings
per share 57,011,799 53,566,990 53,514,258
================================================ ============ ============= ===========
6 GOODWILL
GBP'000
==================================== =======
Cost
At 1 February 2019 6,750
Foreign currency adjustments 44
==================================== =======
At 31 July 2019 6,794
At 1 February 2020 10,526
Foreign currency adjustments 70
==================================== =======
At 31 July 2020 10,596
Provision for impairment
At 1 February 2019 and 31 July 2019 -
At 1 February 2020 and 31 July 2020 (1,885)
==================================== =======
Net book value
At 31 July 2020 8,711
==================================== =======
At 31 July 2019 6,794
==================================== =======
At 31 January 2020 8,641
==================================== =======
Goodwill acquired in a business combination is allocated, at
acquisition, to the cash generating units (CGUs), or group of units
that are expected to benefit from that business combination. After
recognition of impairment losses, the carrying amount of goodwill
has been allocated as follows:
31 July 31 July 31 January
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
========================================== ============ =============== ==========
Air Partner International S.A.S. (France) 1,006 1,018 936
Baines Simmons Limited 1,711 1,711 1,711
Cabot Aviation Services Limited 787 787 787
Clockwork Research Limited 396 396 396
Redline Worldwide Limited 3,644 - 3,644
SafeSkys Limited 1,167 2,882 1,167
========================================== ============ =============== ==========
8,711 6,794 8,641
========================================== ============ =============== ==========
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired. Given the economic impact of COVID-19, impairment
calculations were undertaken for all holdings for the period end
and no impairment was identified in respect of any of the CGUs. The
Directors do not believe that there are any reasonably possible
changes to the key assumptions that would result in a material
impairment of goodwill during the period, with the exception of
SafeSkys Limited. SafeSkys Limited was impaired in the previous
financial year. There are no material differences to the
assumptions used in the calculation for the year ended 31 January
2020 and the current period end.
Details of the impairment recognised on SafeSkys Limited in the
previous financial year can be seen in the annual financial
statements for the year ended 31 January 2020.
7 NET CASH INFLOW FROM OPERATING ACTIVITIES
Half year Half year Year ended
ended ended 31 January
31 July 31 July
2020 2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
================================================ ============ ============= ===========
Profit for the period 5,700 2,158 303
Adjustments for:
Finance income (26) (33) ( 71 )
Finance expense 300 329 613
Income tax expense 3,196 654 633
Depreciation, amortisation and (profit) /
loss on disposal 2,440 3,429 6,830
Impairments - - 1,885
Fair value (gains) / (losses) on derivative
financial instruments (34) (8) 31
Share option cost for period 352 101 59
Share based payments - - 58
( 643
Decrease in provisions / deferred consideration (88) (466) )
Foreign exchange differences (1,150) 698 88
================================================ ============ ============= ===========
Operating cash inflows before movements in
working capital 10,690 6,862 9,786
Decrease / (increase) in receivables 9,638 (5,625) 1,582
Increase / (decrease) in payables (22) 8,496 (2,259)
================================================ ============ ============= ===========
Cash generated from operations 20,306 9,733 9,109
================================================ ============ ============= ===========
8 INCOME TAX EXPENSE
Half year Half year Year ended
ended ended 31 January
31 July 2020 31 July
2019 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
===================================== ============= ============= ===========
Current tax:
UK corporation tax 648 370 620
Foreign tax 2,706 265 408
Current tax adjustments in respect
of prior years (UK) (40) - (200)
Current tax adjustments in respect
of prior years (overseas) 286 - (208)
3,600 635 620
Deferred tax (404) 19 13
===================================== ============= ============= ===========
Total tax 3,196 654 633
===================================== ============= ============= ===========
Of which:
Tax on underlying profit 3,314 691 866
Tax on other items (see note 3) (118) (37) (233)
===================================== ============= ============= ===========
3,196 654 633
=================================== ============= ============= ===========
The underlying effective tax rate for the period was 31.5%
(2019: 23.4%). The higher effective rate is due to a greater
proportion of the profits being incurred in countries with higher
corporate tax rates and losses being made in other tax
jurisdictions.
In the Spring Budget 2020, the government announced that from 1
April 2020 the corporation tax rate would remain at 19.0% (rather
than reducing to 17.0%, as previously enacted). This new law was
substantively enacted on 17 March 2020. The Group recognised a
deferred tax charge of GBP196,000 due to the change in rates.
9 RELATED PARTY TRANSACTIONS
There were no material related party transactions requiring
disclosure for the periods ended 31 July 2020 and 31 July 2019.
10 ISSUE OF SHARES
In June 2020, the Group completed a cash box placing for
10,037,308 new ordinary shares of 1 pence each in the capital of
the Air Partner plc, the Company. The placing price was 75p per
share. The placing raised gross funds of GBP7,527,981 incurring
fees of GBP475,789 resulting in a net increase in equity of
GBP7,052,192.
In accordance with s612 of the Companies Act 2006, merger relief
has been applied resulting in an increase to retained earnings of
GBP6,895,576. The remainder of the increase in Equity comes
from:
-- share capital of GBP100,373
-- share premium of GBP56,243, which relates to an offer through
PrimaryBid as part of the placing. Share issued through this offer
did not qualify for merger relief.
11 FINANCIAL INSTRUMENTS
Fair value estimation
To provide an indication about the reliability of the inputs
used in determining fair value, the Group classifies its financial
instruments into the three levels prescribed under the accounting
standards. An explanation of each level follows underneath the
table. The following table presents the Group's financial assets
and financial liabilities measured and recognised at fair
value:
Level 1 Level 2 Level 3 Total
31 July 2020 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- --------- --------
Assets
Forward exchange contracts - - - -
---------------------------- -------- -------- --------- --------
Total assets - - - -
---------------------------- -------- -------- --------- --------
Liabilities
Forward exchange contracts (5) - - (5)
---------------------------- -------- -------- --------- --------
Total liabilities (5) - - (5)
---------------------------- -------- -------- --------- --------
Level 1 Level 2 Level 3 Total
31 July 2019 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- --------- --------
Assets
Forward exchange contracts 24 - - 24
---------------------------- -------- -------- --------- --------
Total assets 24 - - 24
---------------------------- -------- -------- --------- --------
Liabilities
Forward exchange contracts - - - -
---------------------------- -------- -------- --------- --------
Total liabilities - - - -
---------------------------- -------- -------- --------- --------
The forward exchange contracts have been fair valued using
forward exchange rates that are quoted in an active market.
Level 1: The fair value of financial instruments traded in
active markets (such as publicly traded derivatives, and trading
and available-for-sale securities) is based on quoted (unadjusted)
market prices at the end of the reporting period. The quoted marked
price used for financial assets held by the Group is the current
bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not
traded in an active market (for example, over-the-counter
derivatives) is determined using valuation techniques. These
valuation techniques maximise the use of observable market data
where it is available and rely as little as possible on entity
specific estimates. If all significant inputs required to fair
value an instrument are observable, the instrument is included in
level 2.
Level 3: If one or more of the significant inputs is not based
on observable market data, the instrument is included in level 3.
This is the case for unlisted equity securities.
Group's valuation process
Derivatives financial instruments are valued using NatWest
mid-market rates at the statement of financial position date. The
Group's finance department performs the valuation of forward
exchange contracts required for financial reporting purposes.
The results of the valuation processes are included in the
Group's monthly reporting to the Directors, which includes all
members of the Audit Committee.
Fair value of other financial instruments
The Group also has a number of financial instruments which are
not measured at fair value in the statement of financial position.
For the majority of these instruments, the fair values are not
materially different to their carrying amounts, since the interest
receivable/payable is either close to current market rates or the
instruments are short term in nature. The fair value of the
following financial assets and liabilities approximate to their
carrying amount:
- Trade and other receivables
- Cash and cash equivalents
- Trade and other payables
- Lease liabilities
- Borrowings
Net impairment losses on financial assets
Net impairment losses on financial assets in the period were
GBP982,000 (2019: GBP1,000). The high losses in the current year
are comprised of the following:
GBP'000
=========================================================== =======
A balance with a customer the Group are due to enter legal
proceedings against. The Director's believe it is prudent
to provide for the whole balance until the outcome of the
proceedings are clearer. 506
Provision for customer deposit due to cashflow problems
as a result of COVID-19 135
Balances written off upon exit of an Air Traffic Control
contract 96
Specific trade receivable balances provided for 145
Additional credit loss provision 100
=========================================================== =======
At 31 July 2019 982
The Directors have included the additional credit loss provision
considering the current economic uncertainty resulting from
COVID-19. Reductions to debtor balances through stricter credit
control has reduced the Group's exposure, but the Director's
consider it prudent to expect a higher than usual level of defaults
in the second half of the year.
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END
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