TIDMAIR
RNS Number : 2981N
Air Partner PLC
29 September 2021
LEI: 213800JLR6YIRMSCUS98
29 September 2021
Air Partner plc
("Air Partner", "Group" or "Company")
Half Year Results and Trading Update
Strong H1 trading performance; management upgrading financial
expectations for FY 2022
Air Partner, the global aviation services group, is pleased to
report unaudited results for the six months to 31 July 2021 (H1).
The Company also announces today that it now expects performance
for the full year to 31 January 2022 to be materially above market
expectations.
As previously announced, Air Partner's full year results for the
year ended 31 January 2021 reported a record performance, driven by
exceptional COVID-related trading in Group Charter and Freight. The
Directors expected this level of activity to decrease as the global
pandemic eased. However, the Group has continued to perform
strongly.
The robust performance in the period under review has differed
from the last financial year due to a change in business mix.
Products and services previously depressed by COVID-19 restrictions
have made a significant contribution, while Group Charter and
Freight have returned to more normalised levels.
The Directors are extremely pleased with these results, as the
financial performance has come from all areas of the Group's
diverse portfolio of aviation services and is therefore more
sustainable. Importantly, all products (Group Charter, Private
Jets, Freight and Safety & Security) have contributed at least
20% to gross profit.
In August 2021, the Directors undertook the strategically
important acquisition of Kenyon International Emergency Services
Inc ("Kenyon"), a leading emergency planning and incident response
company. This follows the successful acquisition of Redline
Worldwide Limited ("Redline") in late 2019. The Group has budgeted
a minimal contribution from Kenyon in H2 2021. However, it is
expected to be earnings enhancing in 2022 and we anticipate that it
will contribute meaningfully to Air Partner's long-term financial
performance.
The Directors expect to use the Group's strong cash generation
to continue exploring organic investment opportunities and
acquisitions in line with its strategy to drive growth by
diversifying and extending its customer offering.
Financial highlights*:
-- Gross profit of GBP18.6m, reflecting a strong recovery in Private Jets and a robust performance in Group Charter
and Freight as they return to more normalised trading levels (H1 2020: GBP27.7m / H1 2019: GBP17.2m)
-- Overall, 48.2% of gross profit came from outside of the UK; the US contributed 31.6%
-- Underlying profit before tax of GBP3.8m, materially up by 26.7% on pre-pandemic trading (H1 2020: GBP10.5m / H1
2019: GBP3.0m)
-- Statutory profit before tax of GBP3.5m includes amortisation of acquired intangibles, acquisition costs and
release of deferred consideration (H1 2020: GBP8.9m / H1 2019: GBP2.8m)
-- Net cash of GBP9.8m and liquidity headroom of GBP24.3m as of period end (comprising of net cash, a GBP13.0m
undrawn RCF and GBP1.5m overdraft)
-- JetCard cash deposits up 12.5% to GBP19.8m due to high demand in Private Jets (H1 2020: GBP17.6m / H1 2019:
GBP18.5m)
-- Basic EPS of 4.2p; underlying-- EPS of 4.6p, down 64.1% on the prior year, but up 7.0% on H1 2019 (4.3p)
-- Declared interim dividend of 0.85p a share (H1 2020: 0.80p), an increase of 6.3%
* H1 2020 reflects the six months to 31 July 2020 and H1 2019
reflects the six months to 31 July 2019. The Directors believe it
is helpful to provide, where appropriate, H1 2019 as it was the
period prior to the COVID-19 pandemic.
-- - Underlying results are stated before exceptional and other
items (see notes 1 & 4)
Operational highlights:
-- Private Jets gross profit in the US and UK is now at pre-pandemic levels, despite travel restrictions in Q1;
limited activity in Europe
-- Impressive growth in JetCard sales, particularly in the US, which saw 229% increase in new members year-on-year,
as travellers sought a flexible and bespoke solution for flying requirements
-- Group Charter and Freight down on prior year against an exceptional comparable period, due to very high levels of
COVID-19 related emergency flying
-- Group Charter performance driven by demand from government, oil & gas and sport customers
-- Safety & Security performing well in a renascent market, having secured business wins across a diverse range of
customers
Current trading and outlook:
-- Strong start to H2, driven by government work in Group Charter, the transportation of vaccine raw materials in
Freight, and circa 30 flights related to Afghanistan evacuations across both Group Charter and Freight
-- Good demand continuing for Private Jets as COVID-19 restrictions ease globally
-- Encouraging recovery in Safety, however Security is lagging behind as a consequence of airport footfall being
down on pre-pandemic levels
-- Kenyon International Emergency Services Inc, acquired in August 2021, performing in line with expectations
-- The Board expects underlying profit before tax in the second half of the year to be strongly ahead of H2 FY21,
which will result in performance for the full year being materially above current market expectations
-- As the business normalises, the expected underlying PBT for FY22 could be c.66% ahead of FY20 (pre COVID-19)
Mark Briffa, CEO of Air Partner, commented: "I am extremely
proud of the progress we have made in the first half of this year,
following on from record results last year. Our vision to build a
portfolio of diverse aviation services that smooths earnings and
builds out our customer offering is clearly progressing, with all
four products - Group Charter, Private Jets, Freight and Safety
& Security - making a significant contribution to these
results. Looking ahead, strong current trading across all areas of
our Charter division, and an improving outlook for Safety &
Security, gives us confidence in our prospects for H2 and
accordingly we have upgraded our financial performance expectations
for the full year."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014 as it forms part of United
Kingdom domestic law by virtue of the European Union (Withdrawal)
Act 2018 (as amended) ("UK MAR").
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, which comprises Baines Simmons, an aviation
safety management and fatigue risk management consultancy, Redline
Assured Security, a leading provider of global security solutions,
Kenyon International Emergency Services, a world leader in
emergency planning and incident response, and Managed Services.
Air Partner has 18 locations across four continents, with its
headquarters located alongside Gatwick airport in the UK. The group
employs around 450 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.airpartnergroup.com .
CHAIR'S STATEMENT
I am pleased to be able to report a very encouraging set of half
year results for the six months to 31 July 2021, with trading now
ahead of pre-COVID-19 levels. In the period under review, our broad
portfolio of products and services enabled us to continue
supporting our global customer base, despite ongoing travel
restrictions across much of the world. This builds on the successes
of the prior year, when Air Partner reported record results when so
many aviation companies were negatively impacted.
While underlying profit before tax and statutory profit before
tax were lower than the prior period, H1 2020 was characterised by
exceptional levels of COVID-19 emergency work, which the Group did
not expect to repeat. However, a number of our business areas have
now returned to pre-pandemic levels, which is a real testament to
the resilience of our Group. We have continued to see a good level
of trading in Group Charter and Freight as our normal business
activities have returned, as well as increased demand for Private
Jets and Safety & Security as the markets for these products
have started to recover.
It remains clear that our diversification strategy is yielding
fantastic results for the Group, ensuring that we are able to
withstand unpredictable or volatile market conditions in any part
of our business, while also significantly enhancing and
differentiating our customer offering. Building on this, post the
period end, we announced the acquisition of Kenyon International
Emergency Services Inc, a truly exceptional and unique business.
Kenyon is a world leader in emergency planning and incident
response and is highly complementary to both the Group's Safety
& Security and Charter businesses.
With recurring, visible revenues from a high-quality customer
base, drawn from across multiple sectors and geographies, Kenyon is
an exciting addition, which aligns with our stated strategy. We are
confident that the acquisition will be earnings enhancing in its
first full year of ownership and will provide a platform for us to
build out our consultancy and training proposition, particularly in
the US, as we continue to extend the products and services we
provide to existing and new customers across all our markets.
Dividend
As previously stated, the Board has reviewed the dividend policy
to ensure that the Group can pay a sustainable and growing level of
dividends over time. The Board targets dividend cover of 3.0 to 3.5
times earnings in a normal year, after adding back non-cash related
exceptional items such as amortisation of acquired intangibles. The
Board is declaring an interim dividend of 0.85p (H1 2020: 0.80p).
This interim dividend is expected to be paid on 12 November 2021 to
those shareholders registered at close of business on 15 October
2021. The ex-dividend date will be 14 October 2021.
Prospects
As we head into the second half of the year, I am greatly
encouraged by the results we have achieved in the financial year to
date. The strong Charter performance in August and September,
driven by governmental work and emergency evacuations in Group
Charter and Freight, vaccination work in Freight and continued high
demand for Private Jets, means the Group is well placed for the
rest of the year. As a result, we now expect performance for the
full year to 31 January 2022 to be materially above market
expectations.
I would like to take this opportunity to extend my thanks to all
Air Partner employees for continuing to provide customers with the
outstanding service that we are known for, and to our shareholders
for their ongoing support.
Ed Warner
Non-Executive Chair
CHIEF EXECUTIVE'S REVIEW
We have had a positive start to our financial year, as the
momentum from the end of last year has continued, particularly in
the US and Private Jets. As expected, our results are lower than
the prior period, due to the extraordinary levels of emergency work
we carried out in H1 2020. However, I am delighted to report that
our strategy to build a portfolio of diverse aviation services that
provides more consistent earnings and extends our customer offering
is clearly working, with all four products contributing at least
20% to gross profit in H1. Moreover, we are now trading ahead of
our pre-pandemic levels as business starts to return to some degree
of normality. It is particularly notable that our successes in the
first six months of the year have been achieved despite the ongoing
travel restrictions and the lack of any significant one-off
events.
Overall, the Charter division, comprised of Group Charter,
Private Jets and Freight, delivered gross profit of GBP14.7m for
the six months to 31 July 2021 (H1 2020: GBP25.5m). While down
against the prior period, this was a tough comparison and therefore
I am delighted that the division was broadly in line with H1 2019
(GBP15.0m), despite ongoing aviation restrictions. However, we saw
more mixed results across our European Charter markets on account
of the continued lack of events, tour operations and meetings,
incentives, conferences and exhibitions (MICE) activity.
Encouragingly, the US and UK performed particularly well in Private
Jets, as high-net-worth individuals (HNWIs) and businesses sought
out the flexibility of our bespoke travel solutions to navigate the
various travel hurdles.
This strong recovery in Private Jets delivered GBP5.9m of gross
profit, up 28.3% on the prior period (H1 2020: GBP4.6m). As travel
restrictions were eased over the summer months, the UK exceeded
pre-pandemic levels as demand from both first-time private jet
flyers and many of our existing customers took off, with most
flying to European holiday destinations. Private Jets in the US,
the largest market for this product, continued to perform well
throughout the pandemic, and bookings in H1 were higher than before
the pandemic as a result of strong demand for leisure travel by
HNWIs, which offset a softening in business travel. Activity in
Europe remains limited, although Germany is a noteworthy exception,
outperforming both H1 2019 and H1 2020.
We have been particularly pleased by the performance of our
JetCard product in the first half of the financial year, with
global bookings up 46% and the number of new members up 71%
compared to the same period last year. The value of deposits by new
JetCard members is also up 130% on the prior year. The product has
performed especially well in the US, which saw a 229% increase in
new members, a 316% increase in new member deposits, and a 139%
increase in bookings. Demand for JetCard has recovered faster than
for ad-hoc flying, as our programme allows customers to buy private
jet flying 'hours' in advance, while offering fixed rates across
six cabin sizes and the ability to change booking details at short
notice, without penalty. This bespoke approach has proven popular
with travellers who want to fly safely but with flexibility in case
their plans change. Our ability to pivot from the record-breaking
highs in Group Charter and Freight in H1 2020 to manage this
significant demand in Private Jets reflects the depth of our
expertise in charter services.
Group Charter made gross profit of GBP5.0m (H1 2020: GBP12.3m),
which was, as expected, down on the prior period, in which the team
carried out exceptional levels of COVID-19 related activity, driven
by evacuations and corporate shuttles. It is also still behind H1
2019 (GBP7.2m) levels due to the significant decrease in events,
tour operations and MICE business, predominantly in Europe.
However, in the period under review, we have seen a good level of
demand from industries that still have flight requirements, notably
the government, oil & gas and sport sectors. The team has also
operated flights for the energy sector in Europe and Africa, as our
ability to cross-sell Baines Simmons' aviation safety and auditing
services has helped us to win new business in this key sector.
Within our Specialist Services offering, Air Partner
Remarketing's sales conversions have continued to be affected by
COVID-19, which is impacting the market for aircraft sales and
leasing. The pipeline still remains at year end levels, which is
encouraging for when the market recovers. Air Evacuation remains
strong, with 86% customer retention, and future growth of this
product is expected to be driven by integrating business
development activities with Kenyon and leveraging its extensive
customer base.
The Freight team remained busy at the start of our financial
year, delivering COVID-19 test kits and vaccine raw materials.
Although Freight gross profit is down year-on-year at GBP3.8m (H1
2020: GBP8.6m), again this should be viewed in the context of the
significant emergency work carried out in the prior year. Against
pre-pandemic levels, Freight's gross profit is up 100.0% on H1 2019
(GBP1.9m) as a result of the investments we have made in building
our presence in this market across our various locations in line
with our customers' requirements. This is a key strategic driver
for us going forward.
Safety & Security gross profit was up 69.6% to GBP3.9m (H1
2020: GBP2.3m). Our activities here were significantly impacted by
COVID-19 and it was great to see this division return to more
normal business activity in H1, as our airport and airline
customers scaled up operations ahead of some travel restrictions
being eased. Baines Simmons is not yet back at pre-pandemic levels
but nevertheless has seen a marked improvement. It has successfully
converted many of its safety training courses from classrooms to
virtual delivery and is seeing a strong recovery with the military
sector, with customers including the UK Military Aviation
Authority, Leonardo (an aerospace company) and the Royal New
Zealand Defence Force. In March, it was also awarded a contract for
fatigue risk management services by the Department for Transport's
Marine Accident Investigation Branch. However, work with commercial
aviation organisations remains quiet as a result of ongoing travel
restrictions.
We acquired Redline in December 2019, just prior to the COVID-19
outbreak, and, aside from assisting some significant repatriation
work at the start of the pandemic, the company has still not had
the chance to show its true capabilities in a normalised market.
Government measures have resulted in low airport movements and this
has held back the business. Despite this, in the first six months
of the financial year the company has renewed nine contracts,
totalling nearly GBP1 million of annualised revenue, and secured
five new business wins with Gatwick Airport, Doncaster Sheffield
Airport, Teesside International Airport, DHL and the Welsh
Parliament. The fact that Safety & Security's gross profit is
up 85.7% on H1 2019 (GBP2.1m) is largely attributable to Redline's
contribution following its acquisition. We remain very confident
about this area of the Group and look forward to it flourishing as
travel restrictions continue to ease.
Pleasingly, Air Partner CHS, which we acquired in November 2020,
has also made a positive contribution to the Group and is currently
tracking ahead of management's expectations.
Strategic progress
Organic growth
It is extremely positive to see the continued growth of our US
division, which is largely a result of the investments we have made
in the region in recent years, both in people and new office
openings. The region will remain a key area of focus going forward,
and we are excited about both our prospects in Charter and the
emerging opportunities around consulting and training following our
acquisition of Kenyon.
Outside of the US, we are also seeing progress from other
regions in which we have invested as part of our ongoing global
expansion strategy. In the period under review, we have seen the
Dubai's Private Jets business establish itself properly, after it
was hindered by the pandemic last year. Singapore has played a key
role supporting other teams on COVID activity and, although it is
yet to reach its full potential in the current market conditions,
we remain confident in the region's prospects and will continue to
explore investment opportunities here.
Diversification / M&A
Shortly after the end of H1, we announced our acquisition of
Kenyon International Emergency Services Inc, a world leading
emergency planning and incident response company. Kenyon is an
excellent strategic fit for Air Partner: it is expected to be
earnings enhancing in its first full year of ownership; is highly
complementary to our existing Safety & Security and Charter
businesses; provides recurring and visible revenue; increases our
consulting and training activities while adding new capabilities;
and offers cross-selling opportunities with other areas of the
Group.
Furthermore, Kenyon boasts a diverse and high-quality customer
base and, like Air Partner, is trusted by many of the world's most
high-profile companies, governments and institutions. Over 600
customers (including c.400 aviation customers) retain its services
every year in segments including government (national and
regional), emergency services, humanitarian, education, insurance,
leisure, hospitality & tourism, transport & logistics
(airports, aviation, maritime and rail), technology, business
services, manufacturing, natural resources (mining, oil & gas),
infrastructure and sports.
We believe this to be a very important acquisition for Air
Partner, significantly extending our sector reach and global
product offering. With this new addition, the experience and
breadth of services we can now offer across the Group is far
greater than before and truly unique. Kenyon has a strong brand and
reputation and this will provide us with a solid platform from
which to launch our Safety & Security products in the US.
Since we embarked upon our M&A strategy in 2015, we have
successfully demonstrated our ability to acquire businesses that
diversify our product offering, delivering real value to customers
and shareholders alike. We are prepared to spend years monitoring
potential targets before acquisition, using this time to build
relationships with management and owners so that we can fully
understand the companies' business models and how they may
complement our existing portfolio. Both Redline and Kenyon are
examples of this approach, as we first met the owners many years
before acquiring the businesses.
Environmental, Social, and Governance (ESG)
We are at the start of our ESG journey but we are committed to
better understanding and improving the impact of our operations on
the environment and society. We are working with ClimateCare to
enable our customers to offset emissions for any flight taken with
Air Partner and we have an ongoing project to reduce our overall
energy consumption as a business, with new plans set for later this
year.
We have always placed a very strong emphasis on investing in the
training and development of our people, and we have now introduced
a mentoring programme to support this, in which employees are
paired with members of the senior management team in order to help
them achieve their career objectives within the Group.
In May, we were delighted to announce a new corporate
partnership with the Charlie Waller Trust, a mental health charity,
with which we are working closely to continue the development of
our mental health policy and training for management. The Trust
will hold a pilot training session with the human resources team
and associated staff, a workshop with senior leaders, and training
sessions with line managers.
Post period end, we also entered into an exciting new
partnership with Raleigh International, an environmental charity.
Raleigh aligns well with our objectives to make sure our people are
actively engaged in climate change as this will be fundamental to
the business going forward. We are backing Raleigh's campaign
"Action Not Excuses", which is supporting 100,000 young people
across the world to create green jobs, fight for zero waste and
pollution, and reverse deforestation.
Current trading and outlook
Our performance in the first half of the year has demonstrated
once again Air Partner's fortitude in the face of unpredictable and
fluctuating circumstances. Although the timing of easing of
restrictions on travel remains uncertain across Air Partner's
various geographies, the Board is greatly encouraged by current
trading, which is being driven by the ongoing recovery in some
areas of the business and a return of core activity in others.
The Charter division has enjoyed a good start to the year and we
are optimistic about its ongoing prospects, expecting a strong
performance from Private Jets and Freight in the US. The UK is also
performing well, with Group Charter carrying out extensive
government work and Private Jets trading at pre-pandemic levels,
while Freight is also seeing steady demand. In August 2021, Group
Charter also carried out significant evacuation and repatriation
work, safely flying over 3,000 British and Afghan nationals from
Kabul in Afghanistan to the UK. We anticipate that the recovery in
our European business will be more gradual, however, we are seeing
green shoots of recovery in Private Jets here, alongside an
increasing level of enquiries for tour operations.
We expect to see continued demand for our Safety & Security
services from both new and existing customers, especially as
previously mothballed aviation operations are brought back into
action. Baines Simmons has recently won two new contracts with an
international airline and a ferry operator, while Redline is
benefitting from increased demand for covert testing and training
from airport operators in the UK. We see good potential for the
division for the remainder of the year and beyond as we expect
travel restrictions to continue to lift and airports to return to
full capacity.
We will continue to pursue our organic growth initiatives by
hiring excellent people with books of business and expanding into
new geographies where we see opportunity. We will also seek to
undertake targeted acquisitions in either our Safety & Security
or Charter divisions if they will add value to our customers and
deliver an appropriate return on capital.
The Board is delighted to announce a positive trading update for
the full year outturn to 31 January 2022 and now expects
performance to be materially above market expectations.
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 GBP107.6m (H1 2020: GBP182.6m) was down 41.1%. This
decline was expected due to the exceptional COVID-19 related
activity in the prior year, 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 GBP33.6m (H1 2020: GBP36.6m) was down 8.2%
year-on-year. The decrease is smaller than the drop at a GTV level
due to stronger trading in the current period from Private Jets and
Safety & Security, as well as an increased number of government
contracts where Air Partner is more likely to act as principal.
Gross profit
Gross profit of GBP18.6m (H1 2020: GBP27.7m) decreased 32.9%
year-on-year as the one-off COVID-19 related work in the prior year
has not repeated. As a result, the movement has mainly come from
the Charter division, which decreased by 42.4% to GBP14.7m from
GBP25.5m the previous year.
Charter gross profit comparison to H1 2020 can be
unrepresentative due to the exceptional levels of trading in that
period. The analysis below also makes reference, where appropriate,
to H1 2019 gross profit of GBP15.0m, which is considered a more
meaningful comparator than H1 2020 due to the impact of
COVID-19.
Although there has been a decline in COVID-19 related work,
several aspects of the Group's core Charter business have shown
signs of recovery. Private Jets gross profit of GBP5.9m (H1 2020:
GBP4.6m) was an increase of 28.3%, as HNWIs sought to travel in the
most COVID-19 secure way possible, and is broadly in line with H1
2019 gross profit of GBP6.0m.
Group Charter gross profit is down GBP7.3m to GBP5.0m (H1 2020:
GBP12.3m) due to the extensive evacuation and repatriation flights
in the prior year. Although we have seen government work return,
scheduled group travel, tours operations and MICE activities have
continued to be affected by COVID-19 travel restrictions. The
financial impact of the pandemic on the aviation industry means
that opportunities for Remarketing remain limited and a return to
historic trading is not expected this year. The limited recovery of
these products is why gross profit is GBP2.2m lower than the H1
2019 gross profit of GBP7.2m.
Freight gross profit of GBP3.8m (H1 2020: GBP8.6m) is down 55.8%
on the prior period. Apart from H1 2020, this is the strongest
result for Freight in many years and is an increase of GBP1.9m on
H1 2019 (gross profit of GBP1.9m). Business has come from
supporting supply lines disrupted by border closures and COVID-19
related shipments, albeit the latter has been at a lower level than
the prior period. It also demonstrates the return on investment in
talent acquisition over the last three years.
The Safety & Security division was the most adversely
impacted division in the prior period but has made a promising
start to the year. Year-on-year gross profit has increased by 69.6%
to GBP3.9m (H1 2020: GBP2.3m), driven by returning activity in
Redline and Baines Simmons. Air Partner CHS has made a respectable
profit following the purchase of trade and assets in late 2020.
Gross profit is GBP1.8m above the H1 2019 result of GBP2.1m, which
is entirely attributable to Redline and Air Partner CHS, which were
acquired after this period. Removing these entities from the
current period results leaves a gross profit of GBP1.7m, 19.0% down
on H1 2019, showing that the recovery is still ongoing for Safety
& Security.
Considering gross profit by geographical segments, the UK has
contributed 51.8% of the total gross profit (H1 2020: 40.4%),
despite a decline of GBP1.6m (H1 2021: GBP9.6m; H1 2020: GBP11.2m).
The increased share is due to the reduced contribution from the US
(H1 2021: GBP5.9m; H1 2020: GBP12.5m) as a result of the reduction
in COVID-19 related work. The US remains a key market for the
Group, contributing 31.6% (H1 2020: 45.1%) of the total gross
profit in the period, the highest share outside of the UK.
Europe contributed gross profit of GBP2.8m in both H1 2021 and
H1 2020. Government work and a limited return in Private Jets has
offset the reduction in COVID-19 related Freight. However, Europe
historically provided a larger proportion of the tour operations
and MICE based sales and these markets are yet to recover. This is
reflected by the fact gross profit is down 42.9% on H1 2019
(GBP4.9m). Rest of World is also down GBP1.0m (H1 2021: GBP0.3m; H1
2020: GBP1.3m) due to the majority of prior year gross profits
coming from COVID-19 work.
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, decreased year-on-year by 4.4% to GBP15.3m (H1
2020: GBP16.0m). The decrease is driven by lower commission
payments resulting from the reduced gross profit. Reductions in
government support for staff costs and the return of all UK staff
to 100% working has offset the savings resulting from the
restructuring in the prior period.
The Group has received GBP0.7m of support in solidarity support
for lost income in France (H1 2020: GBPnil). Income has been
recognised for approved claims only. This is included within other
operating income.
Finance costs
The net interest charge for the period of GBP0.2m was lower than
the prior period (H1 2020: GBP0.3m), reflecting the repayment of
the revolving credit facility (RCF). Finance costs are expected to
increase in the second half of the year due to the drawing down of
GBP5.0m of cash to fund the acquisition of Kenyon International
Emergency Services Inc.
Underlying profit before tax
The above results translated to an underlying* profit before tax
of GBP3.8m, a decrease of GBP6.7m (63.8%) on the prior year (H1
2020: GBP10.5m). However, the result is GBP0.8m (26.7%) higher than
pre-pandemic levels (H1 2019: GBP3.0m).
*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 GBP0.2m (H1 2020: GBP1.6m).
Exceptional and other items excluded from underlying profits in
the period are broken down as follows:
July July FY January
2021 2020 2021
GBPm's GBPm's GBPm's
Underlying profit before tax 3.8 10.5 11.6
-------- -------- -----------
Restructuring costs - (0.4) (0.8)
-------- -------- -----------
Amortisation of acquired intangibles (1.1) (1.2) (2.4)
-------- -------- -----------
Acquisition costs (0.1) - -
-------- -------- -----------
Adjustments to deferred consideration 1.0 - -
-------- -------- -----------
Statutory reported profit before tax
(GBPm)* 3.5 8.9 8.4
-------- -------- -----------
* Difference as a result of rounding.
The amortisation of intangibles arising on acquisition of
GBP1.1m (H1 2020: GBP1.2m) remain broadly in line with the prior
period as there had been no further acquisitions at the reporting
date. Acquisition costs are costs incurred up to the reporting date
relating to the acquisition of Kenyon International Emergency
Services Inc. The Directors have released the provision for the
deferred consideration relating to the acquisition of Redline
Worldwide Limited as the most recent forecasts suggest the company
is unlikely to meet the targets required for the consideration to
be paid.
A provision of GBP0.3m was made in a 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 GBP3.5m, down 60.7% on the prior year (H1
2020: GBP8.9m).
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 GBP0.9m (H1 2020: GBP3.3m)
represents an effective tax rate of 22.9% (H1 2020: 31.5%) on the
underlying profits before tax. The lower tax rate reflects the
reduced concentration of profits in countries with higher tax
rates. The other operating income has no tax charge as it is all
tax exempt in France. If the other operating income is removed, the
underlying effective rate is 28.1%.
On a statutory reported profit basis, the effective rate of
taxation was 25.0% (H1 2020: 35.9%), 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 and the income from the
release of deferred consideration being tax exempt.
* Adjusting for exceptional and other items.
Earnings per share
Basic underlying* earnings per share from continuing operations
was 4.6p (H1 2020: 12.8p), a decrease of 64.1% on the prior year.
On a statutory basis, earnings per share from continuing operations
was 4.2p (H1 2020: 10.1p), down by 58.4%. The decreases were driven
by the exceptional levels of COVID-19 related trading in the prior
period.
*Underlying earnings are stated before exceptional and other
items, see note 4.
Dividends
As previously stated, the Board has reviewed the dividend policy
to ensure that the Group has the ability to pay a sustainable and
growing level of dividends over time. Recognising the importance of
dividends to Air Partner's shareholders, many of whom are private
investors, the Board targets dividend cover of 3.0 to 3.5 times
earnings in a normal year, after adding back non-cash related
exceptional items such as amortisation of acquired intangibles.
As a result, the Directors are declaring an interim dividend of
0.85p, an increase of 6.3% on H1 2020 (H1 2020: 0.80p).
The interim dividend is expected to be paid on 12 November 2021
to those shareholders registered at close of business on 15 October
2021. The ex-dividend date will be 14 October 2021.
Statement of financial position
Shareholders' funds
After considering the profit for the period, exchange rate
differences and dividends paid, overall shareholders' funds at 31
July 2021 are GBP 23.1m, representing an increase of GBP1.3m on the
position at 31 July 2020 (31 July 2020: GBP21.8m) and an increase
of GBP2.0m on 31 January 2021 (31 January 2021: GBP21.1m).
Goodwill and intangibles
Under IFRS, goodwill is subject to annual impairment tests. No
impairments were identified. Goodwill in the statement of financial
position is carried at GBP8.7m (31 January 2021: GBP8.7m).
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 GBP0.1m (H1 2020: GBP0.2m) on the
development of customer focused applications.
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 GBP0.7m (H1 2020:
GBP1.0m). Capital expenditure remains low (H1 2021: GBP0.1m; H1
2020: GBP0.1m) as the Group continued to manage spend
carefully.
Overall, there was a negative movement in working capital of
GBP2.3m in the period (H1 2020: positive movement of GBP8.8m),
excluding the movement on the JetCard cash. The negative movement
is driven by an increase in receivables of GBP6.6m, resulting from
an uptake in trading towards the end of the period and the
reintroduction of credit terms for a number of customers. This
substantial positive movement in working capital during the prior
period was expected to be a one-off increase due to the impact of
the pandemic and the negative movement this year is in line with
expectation.
As referenced in Exceptional and other items, we have released
the full GBP1.0m deferred consideration balance that relates to the
acquisition of Redline Worldwide Limited.
Cash generation and net debt
The Group generated GBP4.2m (H1 2020: GBP18.7m) of net cash from
operating activities after investing in capital expenditure and
software development. The level of cash generated is encouraging,
as it is despite the aforementioned negative movement in working
capital, including the settlement of remuneration packages based on
the prior year's performance.
Net cash excluding JetCard cash was GBP9.8m (31 January 2021:
GBP9.9m). Including JetCard cash of GBP19.8m (31 January 2021:
GBP17.8m), net cash was GBP29.6m (31 January 2021: GBP27.7m).
JetCard cash is held in separate segregated bank accounts and is
not used for the Group's working capital needs.
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 liability in current and
non-current liabilities is GBP5.1m (H1 2020: GBP7.0m).
Following the period end, the acquisition of Kenyon
International Emergency Services Inc resulted in an initial cash
outflow of GBP7.4m, of which GBP5.0m was drawn down from the RCF.
As a result, as of 31 August 2021, the Group had net cash of
GBP4.7m.
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 2021. To support short-term liquidity, the
Group has access to a GBP1.5m overdraft facility. This was not
utilised at 31 July 2021. 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 principal 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
2021 2020 2021 2020
-------- -------- ---------------- -------- -------- ----------------
USD weakened by USD weakened by
USD 1.39 1.26 10.3% 1.39 1.31 6.1%
-------- -------- ---------------- -------- -------- ----------------
EUR weakened by EUR weakened by
EUR 1.15 1.14 0.9% 1.17 1.11 5.4%
-------- -------- ---------------- -------- -------- ----------------
If the exchange rates were consistent with prior period, gross
profit for the period would have been GBP19.2m (increase of
GBP0.6m) and underlying administrative expenses, including net
impairment losses on financial assets and other operating income,
would have been GBP15.0m (increase of GBP0.4m). As a result, the
net impact on underlying profit before tax in the period would have
been an increase of GBP0.2m.
Accounting policies and recent accounting developments
The accounts in this report are prepared in accordance with the
UK-adopted International Accounting Standard 34, "Interim Financial
Reporting" and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority. The
accounting polices 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, recent acquisition,
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 annual report for the year ending
31 January 2021.
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 strong, visibility
remains fairly low for the next 12 months. Accordingly, the
Directors have undertaken a thorough assessment in evaluating Going
Concern. This has been assessed by reference to cash forecasts
through to January 2023, 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.
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 2021 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 ongoing impact of the COVID-19 pandemic on the aviation
industry globally, characterised by extensive travel restrictions,
and our operating environment remains extremely challenging. The
Group has been able to manage the risk due its well-diversified
product offering and the actions of the Directors to manage costs.
Although the performance in the current period shows a return to
historic trading levels for several of the Group's core products,
the Directors remain aware that restrictions and regulations
continue to change rapidly and could negatively impact the Group.
We 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.
Following the United Kingdom's withdrawal from the European
Union, the extent of potential regulatory change remains uncertain.
We are closely following events as they develop; we comply with all
relevant regulations and are confident that we will continue to do
so. The strong relationships the Group has across airline operators
should enable it to source alternatives to best meet our customers'
needs. Within Safety & Security, changes to rules and
regulations tend to create business opportunities for the Group,
providing balance against perceived risks.
Economic uncertainty affects corporate, government and
individual customers, as well as the quality and availability 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 highlighted above,
the Group continues to operate in a highly competitive market where
there are a 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 regarding 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
2021. 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 these condensed interim financial
statements have been prepared in accordance with UK adopted
International Accounting Standard 34, "Interim Financial Reporting"
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and that the
interim management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the first six months and their impact on the
condensed set of financial statements, and a description of the principal risks and uncertainties for the
remaining six months of the financial year; and
-- material related-party transactions in the first six months and any material changes in the related-party
transactions described in the last annual report.
Mark Briffa Joanne Estell
Chief Executive Officer Chief Financial
Officer
28 September 2021 28 September
2021
The directors of Air Partner plc are listed in the Group's
annual report for the year ended 31 January 2021 and
on our website at www.airpartnergroup.com/who-we-are/board-of-directors/ .
See more at : www.airpartnergroup.com/investors/ .
Consolidated income statement
for the half year ended 31 July 2021
Year
ended
31 January
2021
Half Half
year year
ended ended
31 July 31 July
2021 2020 (audited)
(unaudited) (unaudited)
Continuing operations Note GBP'000 GBP'000 GBP'000
=========================================== ==== ============ ============ ===========
Gross transaction value (GTV) 2 107,595 182,585 274,785
=========================================== ==== ============ ============ ===========
Revenue 2 33,604 36,581 71,173
Cost of sales 2 (15,020) (8,836) (26,303)
Gross profit 2 18,584 27,745 44,870
Administrative expenses before exceptional
and other items (15,317) (15,964) (32,071)
Other operating income 3 695 - 43
Exceptional and other items 4 (218) (1,638) (3,179)
=========================================== ==== ============ ============ ===========
Total administrative expenses (14,840) (17,602) (35,207)
Net impairment losses on financial assets 11 (17) (982) (810)
Operating profit 2 3,727 9,161 8,853
------------------------------------------- ---- ------------ ------------ -----------
Operating profit before exceptional and
other items 3,945 10,799 12,032
------------------------------------------- ---- ------------ ------------ -----------
Finance income 1 26 29
Finance costs (185) (291) (503)
=========================================== ==== ============ ============ ===========
Finance costs - net (184) (265) (474)
=========================================== ==== ============ ============ ===========
Profit before income tax 3,543 8,896 8,379
Profit before income tax and exceptional
and other items 3,761 10,534 11,558
Income tax expense 9 (884) (3,196) (2,747)
=========================================== ==== ============ ============ ===========
Profit for the period 2,659 5,700 5,632
=========================================== ==== ============ ============ ===========
Attributable to:
Owners of the parent company 2,659 5,700 5,632
=========================================== ==== ============ ============ ===========
Earnings per share:
Continuing operations
Basic 6 4.2p 10.1p 9.4p
Diluted 6 4.1p 10.0p 9.3p
=========================================== ==== ============ ============ ===========
Consolidated statement of comprehensive income
for the half year ended 31 July 2021
Half
year
ended
Half
31 July year Year
2021 ended ended
31 July 31 January
2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
========================================================= ============ ============= ============
Profit for the period 2,659 5,700 5,632
Other comprehensive income - items that may subsequently
be reclassified to profit or loss:
Exchange differences on translation of foreign
operations (18) (267) (743)
Total other comprehensive expense for the period (18) (267) (743)
========================================================= ============ ============= ============
Total comprehensive income / (expense) for the
period 2,641 5,433 4,889
========================================================= ============ ============= ============
Attributable to:
Owners of the parent company 2,641 5,433 4,889
========================================================= ============ ============= ============
Consolidated statement of changes in equity
for the half year ended 31 July 2021 (unaudited)
Share Own
Share premium Merger shares Translation Retained Total
capital account reserve reserve 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 100 56 6,896 - - - 7,052
Redemption of shares - - (6,896) - - 6,896 -
Share option movement
for the period - - - - - 132 132
Share options exercised
in the period - - - 91 - (86) 5
Dividends paid (note - - - - - - -
5)
=========================== ========= ======== ======== ========= ============= ========= =========
Closing equity as at
31 July 2020 635 5,951 295 (67) 394 14,607 21,815
=========================== ========= ======== ======== ========= ============= ========= =========
Share Own
Share premium Merger shares Translation Retained Total
capital account reserve reserve reserve earnings equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
=========================== ========= ======== ======== ========= ============= ========== =========
Opening equity as at
1 February 2021 636 5,951 295 (67) (82) 14,349 21,082
Profit for the period - - - - - 2,659 2,659
Exchange differences
on translation of foreign
operations - - - - (18) - (18)
=========================== ========= ======== ======== ========= ============= ========== =========
Total comprehensive
income for the period - - - - (18) 2,659 2,641
Share option movement
for the period - - - - - 357 357
Dividends paid (note
5) - - - - - (1,016) (1,016)
=========================== ========= ======== ======== ========= ============= ========== =========
Closing equity as at
31 July 2021 636 5,951 295 (67) (100) 16,349 23,064
=========================== ========= ======== ======== ========= ============= ========== =========
Consolidated statement of financial position
as at 31 July 2021
31 July 31 July 31 January
2021 2020 2021
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
===================================== ==== ============ ============ ==========
Assets
Non-current assets
Goodwill 7 8,657 8,711 8,692
Other intangible assets 8,011 10,619 9,260
Property, plant and equipment 5,539 7,268 6,047
Deferred tax assets 731 669 700
===================================== ==== ============ ============ ==========
Total non-current assets 22,938 27,267 24,699
===================================== ==== ============ ============ ==========
Current assets
Trade and other receivables 16,059 10,483 9,908
Current tax assets 601 270 816
------------ ------------ ----------
JetCard bank balances 19,830 17,579 17,805
Other cash and cash equivalents 9,792 17,982 9,916
------------ ------------ ----------
Total cash and cash equivalents 29,622 35,561 27,721
Total current assets 46,282 46,314 38,445
===================================== ==== ============ ============ ==========
Total assets 69,220 73,581 63,144
===================================== ==== ============ ============ ==========
Liabilities
Current liabilities
Trade and other payables (5,750) (7,035) (4,287)
Current tax liabilities (354) (3,116) (175)
Other liabilities (5,517) (7,765) (6,903)
Lease liabilities (3,327) (4,278) (4,809)
Deferred income and JetCard deposits (26,935) (22,216) (21,423)
Deferred consideration - (1,045) -
Provisions (719) (381) (735)
Derivative financial instruments (20) (5) -
===================================== ==== ============ ============ ==========
Total current liabilities (42,622) (45,841) (38,332)
===================================== ==== ============ ============ ==========
Net current assets 3,660 473 113
===================================== ==== ============ ============ ==========
Non-current liabilities
Lease liabilities (1,820) (2,683) (1,060)
Deferred consideration - (986) (991)
Deferred tax liability (1,547) (1,860) (1,511)
Provisions (167) (396) (168)
Total non-current liabilities (3,534) (5,925) (3,730)
===================================== ==== ============ ============ ==========
Total liabilities (46,156) (51,766) (42,062)
===================================== ==== ============ ============ ==========
Net assets 23,064 21,815 21,082
===================================== ==== ============ ============ ==========
Equity
Share capital 636 635 636
Share premium account 5,951 5,951 5,951
Merger reserve 295 295 295
Own shares reserve (67) (67) (67)
Translation reserve (100) 394 (82)
Retained earnings 16,349 14,607 14,349
===================================== ==== ============ ============ ==========
Total equity 23,064 21,815 21,082
===================================== ==== ============ ============ ==========
Consolidated statement of cash flows
for the half year ended 31 July 2021
31 July 31 July 31 January
2021 2020 2021
(unaudited) (unaudited) (audited)
Note GBP'000 GBP'000 GBP'000
==================================================== ==== ============ ============ ==========
Cash generated from operations 8 5,014 20,306 19,416
==================================================== ==== ============ ============ ==========
- Interest received 1 26 29
- Interest paid (175) (325) (512)
- Income tax paid (502) (1,050) (4,653)
Net cash inflow from operating
activities 4,338 18,957 14,280
Investing activities
* Purchases of property, plant and equipment (66) (64) (337)
* Purchases of intangible assets (64) (195) (231)
* Proceeds on disposal of PPE - - 21
* Acquisition of subsidiaries - (278) (1,278)
Net cash used in investing
activities (130) (537) (1,825)
==================================================== ==== ============ ============ ==========
Financing activities
* Repayment of finance lease liabilities (674) (869) (1,617)
* Dividends paid to the Company's shareholders (1,016) - (508)
* Proceeds on issue of new shares - 7,052 7,052
* Proceeds on exercise of share options - 5 5
* (Decrease) / increase in borrowings - (11,500) (11,500)
==================================================== ==== ============ ============ ==========
Net cash (used in) / generated
from financing activities (1,690) (5,312) (6,568)
==================================================== ==== ============ ============ ==========
Net increase in cash and cash
equivalents 2,518 13,108 5,887
Opening cash and cash equivalents 27,721 21,375 21,375
Effect of foreign exchange
rate changes (617) 1,078 459
==================================================== ==== ============ ============ ==========
Closing cash and cash equivalents 29,622 35,561 27,721
==================================================== ==== ============ ============ ==========
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
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
========================== ============ ============ ==========
JetCard cash 19,830 17,579 17,805
Non-JetCard cash 9,792 17,982 9,916
========================== ============ ============ ==========
Cash and cash equivalents 29,622 35,561 27,721
========================== ============ ============ ==========
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 2021.
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 2021.
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 2021 were
approved by the Board of Directors on 11 May 2021 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
On 31 December 2020, IFRS as adopted by the European Union at
that date was brought into UK law and became UK-adopted
international accounting standards, with future changes being
subject to endorsement by the UK Endorsement Board. The Company
transitioned to UK-adopted international accounting standards in
its consolidated financial statements on 1 January 2021. There was
no impact or changes in accounting policies from the
transition.
This condensed consolidated interim financial report for the
half-year reporting period ended 31 July 2021 has been prepared in
accordance with the UK-adopted International Accounting Standard
34, "Interim Financial Reporting" and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
The interim report does not include all of the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual report for the
year ended 31 July 2021, which has been prepared in accordance with
both "international accounting standards in conformity with the
requirements of the Companies Act 2006" and "international
financial reporting standards adopted pursuant to Regulation (EC)
No 1606/2002 as it applies in the European Union", and any public
announcements made by the Company during the interim reporting
period.
Accounting policies
The accounting policies adopted are consistent with those of the
annual financial statements for the year ended 31 January 2021.
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 (
www.airpartnergroup.com/investors/reports-results-and-presentations/
).
Going concern
The Group's business activities, together with the factors
likely to affect its future development, recent acquisition,
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 annual report for the year ended 31
January 2021.
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 strong, there remains
uncertainty over the trading performance for the next 12 months.
Accordingly, the Directors have undertaken a thorough assessment in
evaluating Going Concern. This has been assessed by reference to
cash forecasts through to January 2023, 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.
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 2021 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.
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 income or
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 ongoing basis. Revisions to
accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period or
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 2021, with the exception of changes
in estimates that are required in determining the provision for
income taxes and those specified below:
Acquisition accounting - Redline customer relationships and
deferred consideration
The consideration for the acquisition of Redline Worldwide
Limited in 2019 included GBP2.0m of deferred consideration. GBP1.0m
of unconditional deferred consideration was paid on the first
anniversary of the acquisition while the remaining GBP1.0m is
conditional based on a number of performance conditions.
Management has undertaken an assessment of the likelihood of the
second tranche crystallising and at this junction has decided to
release the provision based on the latest forecast outlook for
FY22. The balance has been included as a contingent liability (note
12).
2 SEGMENTAL ANALYSIS
The services provided by the Group consist of chartering
different types of aircraft and related aviation services. The
segmental analysis for the half year ended 31 July 2019 has been
included as a more useful comparison due to the exceptional result
in the prior period.
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 a 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 2021 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 21,522 43,125 35,650 7,298 - 107,595
=========================================== ======== ======== ======== =========== ========= =========
Revenue 10,929 10,809 4,568 7,298 - 33,604
Cost of Sales (5,918) (4,895) (804) (3,403) - (15,020)
=========================================== ======== ======== ======== =========== ========= =========
Segmental gross profit 5,011 5,914 3,764 3,895 - 18,584
=========================================== ======== ======== ======== =========== ========= =========
Administrative expenses and net impairment
losses on financial assets (3,365) (4,453) (2,266) (3,252) (1,303) (14,639)
Depreciation and amortisation of
non-acquired assets (included within
cost of sales & administrative expenses) (425) (170) (136) (79) - (810)
=========================================== ======== ======== ======== =========== ========= =========
Operating profit before exceptional
and other items 1,646 1,461 1,498 643 (1,303) 3,945
=========================================== ======== ======== ======== =========== ========= =========
Exceptional and other items (see
note 4) - - - (118) (100) (218)
=========================================== ======== ======== ======== =========== ========= =========
Segment result 1,646 1,461 1,498 525 (1,403) 3,727
=========================================== ======== ======== ======== =========== ========= =========
Finance income 1
Finance expense (185)
=========================================== ======== ======== ======== =========== ========= =========
Profit before tax 3,543
Income tax expense (884)
=========================================== ======== ======== ======== =========== ========= =========
Profit for the year 2,659
=========================================== ======== ======== ======== =========== ========= =========
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 4) (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 4) - - - 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 2021 (unaudited)
Gross profit 9,623 2,800 5,875 286 18,584
Non-current assets (excluding deferred
tax assets) 17,354 4,648 189 16 22,207
========================================= ======== ========= =========== ======== =========
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 2021 (unaudited)
Gross profit 65 2,167 302 266 2,800
========================================= ======== ======== ======== ======== ========
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 posted negative gross profit for the prior period due
to negligible trading in the period and higher than forecast
finalisation costs on prior year tour operations business.
3 Other operating income
Year
ended
Half Half
year year
ended ended 31 January
31 July 31 July
2021 2020 2021
(unaudited) (unaudited) (audited)
Continuing operations GBP'000 GBP'000 GBP'000
Government grants 695 - 43
====================== ============ ============ ===========
Government grants of GBP695,000 (H1 2020: GBPnil) from the
Direction Générale des Finances Publiques relating to lost income
in France resulting from COVID-19, are included in other operating
income. There are no unfulfilled conditions or other contingencies
attached to these grants.
4 EXCEPTIONAL AND OTHER ITEMS
Year
ended
Half Half
year year
ended ended 31 January
31 July 31 July
2021 2020 2021
(unaudited) (unaudited) (audited)
Continuing operations GBP'000 GBP'000 GBP'000
Restructuring costs (1) - (419) (783)
Amortisation of acquired intangibles (1,109) (1,233) (2,420)
Acquisition costs (2) (100) - 18
Disposal of subsidiary (3) - 23 24
Adjustments to deferred consideration (4) 991 (9) (18)
(218) (1,638) (3,179)
Tax effect of other items (5) (23) 118 331
=========================================== ============ ============ ===========
Exceptional and other items after taxation (241) (1,520) (2,848)
=========================================== ============ ============ ===========
1 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 in the prior period are comprised of the
amounts paid, or due to be paid at year end, to employees as part
of the redundancies, including statutory redundancy, payment in
lieu of notice and employer's National Insurance on these amounts
and costs associated with the closure of offices.
2 The acquisition costs relate to fees incurred up to the
reporting date in relation to the acquisition of Kenyon
International Emergency Services Inc, which was completed in August
2021 (see note 13 - Post balance sheet events). The credit in the
prior year was in respect of the release of a provision for
expected costs related to deferred consideration on the acquisition
of Redline Worldwide Limited.
3 The Group disposed of Air Partner (Switzerland) AG during the prior year.
4 The adjustment to deferred consideration in the current and
prior year relates to the fair valuing of the deferred
consideration relating to Redline Worldwide Limited. The full
provision was released in the current period as, based on the
current forecast, it is no longer expected to be paid.
5 A tax credit has been included in the current year in respect
of the 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 the relevant assets from
19.0% to 25.0% in line with the government announcement in the
Spring Budget 2021 that, from April 2023, corporation tax will be
25.0%.
5 DIVIDS
Half Year
Half year year ended
ended ended 31 January
31 July 2021
31 July 2021 2020
(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
2021 of 1.60 pence 1,016 - -
Interim dividend for the year ended 31 January
2021 of 0.80 pence - - 508
----------------------------------------------- ------------- ------------------ -----------
1,016 - 508
----------------------------------------------- ------------- ------------------ -----------
6 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 2021 2020 2021
(unaudited) (unaudited) (audited)
Earnings per share Pence Pence Pence
====================== ============= ============ ===========
Continuing operations
Basic 4.2 10.1 9.4
Diluted 4.1 10.0 9.3
====================== ============= ============ ===========
Half Year
Half year year ended
ended ended 31 January
31 July
31 July 2021 2020 2021
(unaudited) (unaudited) (audited)
Earnings per share Pence Pence Pence
====================================== ============= ============= ===========
Excluding exceptional and other items
Basic 4.6 12.8 14.2
Diluted 4.5 12.7 14.0
====================================== ============= ============= ===========
Half Year
Half year year ended
ended ended 31 January
31 July
31 July 2021 2020 2021
(unaudited) (unaudited) (audited)
From continuing operations GBP'000 GBP'000 GBP'000
================================================ ============= ============ ===========
Earnings
Profit attributable to the owners of the parent
company 2,659 5,700 5,632
Adjustment to exclude exceptional and other
items 1 241 1,520 2,848
================================================ ============= ============ ===========
Underlying earnings for the calculation of
basic and diluted earnings per share 2,900 7,220 8,480
================================================ ============= ============ ===========
(1) The calculation of underlying earnings per share (before
exceptional and other items) is included as the Directors believe
it provides a better understanding of the underlying performance of
the Group. Exceptional and other items are disclosed in note 4.
Half year Half year Year ended
ended ended 31 January
31 July 31 July
2021 2020 2021
(unaudited) (unaudited) (audited)
Weighted average number of ordinary shares Number Number Number
================================================ ============ ============= ===========
Issued and fully paid 63,562,601 56,649,205 59,970,013
Less those held by the Air Partner Employee
Benefit Trust (47,502) (56,654) (51,898)
================================================ ============ ============= ===========
Number for the calculation of basic earnings
per share 63,515,099 56,592,551 59,918,115
================================================ ============ ============= ===========
Effect of dilutive potential ordinary shares:
share options 1,368,651 419,248 697,851
================================================ ============ ============= ===========
Number for the calculation of dilutive earnings
per share 64,883,750 57,011,799 60,615,966
================================================ ============ ============= ===========
7 GOODWILL
GBP'000
==================================== =======
Cost
At 1 February 2020 10,526
Foreign currency adjustments 70
==================================== =======
At 31 July 2020 10,596
At 1 February 2021 10,577
Foreign currency adjustments (35)
==================================== =======
At 31 July 2021 10,542
Provision for impairment
At 1 February 2020 and 31 July 2020 (1,885)
At 1 February 2021 and 31 July 2021 (1,885)
==================================== =======
Net book value
At 31 July 2021 8,657
==================================== =======
At 31 July 2020 8,711
==================================== =======
At 31 January 2021 8,692
==================================== =======
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
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
================================= ============ =============== ==========
Air Partner International S.A.S. 952 1,006 987
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 3,644
SafeSkys Limited 1,167 1,167 1,167
================================= ============ =============== ==========
8,657 8,711 8,692
================================= ============ =============== ==========
The Group tests goodwill annually for impairment, or more
frequently if there are indications that goodwill might be
impaired. 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
reasonable possible changes to the key assumptions that would
result in a material impairment of goodwill during the period, with
the exception of SafeSkys Limited, which was impaired in a previous
financial period. There are no material differences to the
assumptions used in the calculation for the year ended 31 January
2021 and the current period end.
Details of the impairment assessment of SafeSkys Limited in the
previous financial year can be seen in the annual report for the
year ended 31 January 2021.
8 NET CASH INFLOW FROM OPERATING ACTIVITIES
Half year Half year Year ended
ended ended 31 January
31 July 31 July
2021 2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
================================================ ============ ============= ===========
Profit for the period 2,659 5,700 5,632
Adjustments for:
Finance income (1) (26) ( 29 )
Finance expense 185 300 522
Income tax expense 884 3,196 2,747
Depreciation, amortisation and (profit) /
loss on disposal 1,918 2,440 4,888
Impairments - - 81
Fair value (gains) / losses on derivative
financial instruments 20 (34) (39)
Share option cost for period 357 352 451
Decrease in provisions / deferred consideration (991) (88) 42
Foreign exchange differences 295 (1,150) (1,388)
================================================ ============ ============= ===========
Operating cash inflows before movements in
working capital 5,326 10,690 12,907
Decrease / (increase) in receivables (6,554) 9,638 9,945
Increase / (decrease) in payables 6,242 (22) (3,436)
================================================ ============ ============= ===========
Cash generated from operations 5,014 20,306 19,416
================================================ ============ ============= ===========
9 INCOME TAX EXPENSE
Half year Half year Year ended
ended ended 31 January
31 July 2021 31 July
2020 2021
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
===================================== ============= ============= ===========
Current tax:
UK corporation tax 407 648 778
Foreign tax 535 2,706 2,580
Current tax adjustments in respect
of prior years (UK) - (40) (108)
Current tax adjustments in respect
of prior years (overseas) (57) 286 235
885 3,600 3,485
Deferred tax (1) (404) (738)
===================================== ============= ============= ===========
Total tax 884 3,196 2,747
===================================== ============= ============= ===========
Of which:
Tax on underlying profit 861 3,314 3,078
Tax on other items (see note 4) 23 (118) (331)
===================================== ============= ============= ===========
884 3,196 2,747
=================================== ============= ============= ===========
The underlying effective tax rate for the period was 22.9% (H1
2020: 31.5%). The lower effective tax rate is lower due to the
reduced concentration of profits in high tax jurisdictions. The
solidarity funding of GBP695,000 in France is tax free. The
effective tax rate without this income would have been 28.1%.
In the Spring Budget 2021, the UK government announced that from
1 April 2023 the corporation tax rate will increase to 25.0%. The
Group recognised a deferred tax charge of GBP224,000 due to the
change in rates. This all related to the balances held in relation
to intangibles acquired on acquisition and therefore is included
within exceptional items.
10 RELATED PARTY TRANSACTIONS
There were no material related party transactions requiring
disclosure for the periods ended 31 July 2021 and 31 July 2020.
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 2021 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- --------- --------
Assets
Forward exchange contracts - - - -
---------------------------- -------- -------- --------- --------
Total assets - - - -
---------------------------- -------- -------- --------- --------
Liabilities
Forward exchange contracts (20) - - (20)
---------------------------- -------- -------- --------- --------
Total liabilities (20) - - (20)
---------------------------- -------- -------- --------- --------
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)
---------------------------- -------- -------- --------- --------
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
GBP17,000 (H1 2020: GBP982,000). The losses in the current year are
comprised of the following:
GBP'000
==================================================== =======
Previously provided for balance partially recovered (21)
Specific trade receivable balances written off 13
Additional credit loss provision 25
==================================================== =======
At 31 July 2021 17
The Directors have included the additional credit loss
provision, considering the ongoing economic uncertainty resulting
from COVID-19 in the aviation industry and increasing debtor
balance as credit terms are reintroduced.
12 Contingent liability
The consideration for the acquisition of Redline Worldwide
Limited in 2019 included GBP2.0m of deferred consideration. GBP1.0m
of unconditional deferred consideration was paid on the first
anniversary of the acquisition while the remaining GBP1.0m is
conditional based on a number of performance conditions.
Management has undertaken an assessment of the likelihood of the
second tranche crystallising and at this junction has released the
provision based on the latest forecast outlook for FY22. The range
of outcomes is dependent on the performance of Redline during the
remainder of FY22, with the maximum possible liability being
GBP1.0m.
13 Post balance sheet events
On 26 August 2021, Air Partner plc acquired 100% of the issued
share capital of Kenyon International Emergency Services Inc
("Kenyon"), obtaining control of the company and its subsidiary
(Kenyon International Emergency Services Limited) on that date.
The headline price was $11.7m (GBP8.5m), on a debt free, cash
free basis, with an initial consideration of $10.3m (GBP7.4m) of
cash payable on completion and additional consideration of $1.4m
(GBP1.0m) payable after 12 months. The Group has financed the
purchase by drawing down GBP5.0m from its revolving credit facility
and through available cash.
Kenyon is a world leading emergency planning and incident
response company. Established as Kenyon Emergency Services in 1906,
Kenyon has built a world-class reputation over the last 115 years
as a leading provider of specialised support to the private and
public sectors during and post emergency incidents. The company has
responded to more than 350 incidents worldwide, working for and
with local and national governments, regulatory bodies, emergency
services, blue-chip corporates and other parties. Incidents have
been varied in nature and have included human error, humanitarian
relief, acts of terrorism, pandemics and climate-related extreme
events.
Kenyon's business model is underpinned by membership revenue,
providing a visible and recurring revenue stream, with additional
revenues generated from incident response, consulting projects and
training programmes. In the year ended 31 December 2020, Kenyon
International Emergency Services Inc reported revenues of $16.3
million, including incident revenues of $12.1 million (over the
last 10 years, incident revenues for a single year have ranged from
$0 million to $12.0 million, and over the last five years have
averaged $7.5 million), delivering pre-tax profits of $1.5 million,
EBITDA of $2.5 million and gross assets of $8.0 million.
The acquisition affords Air Partner greater reach across a wide
range of customers from various industries and governments, by
leveraging Kenyon's longstanding and respected brand. There are
also opportunities to grow the core Kenyon business and increase
Group activity through cross-selling with other business areas.
A provision of GBP100,000 for acquisition fees incurred up to
the balance sheet date has been included in the interim financial
statement. A full assessment of the acquisition balance sheet,
intangibles recognised on acquisition and goodwill will be included
in the annual report for the year ending 31 January 2022.
Independent review report to Air Partner plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Air Partner plc's condensed consolidated
interim financial statements (the "interim financial statements")
in the half-year results of Air Partner plc for the 6 month period
ended 31 July 2021 (the "period").
Based on our review, nothing has come to our attention that
causes us to believe that the interim financial statements are not
prepared, in all material respects, in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting'
and the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the consolidated statement of financial position as at 31 July 2021;
-- the consolidated income statement and consolidated statement
of comprehensive income for the period then ended;
-- the consolidated statement of cash flows for the period then ended;
-- the consolidated statement of changes in equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the half-year
results of Air Partner plc have been prepared in accordance with UK
adopted International Accounting Standard 34, 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The half-year results, including the interim financial
statements, is the responsibility of, and has been approved by the
directors. The directors are responsible for preparing the
half-year results in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the half-year results based on our review.
This report, including the conclusion, has been prepared for and
only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the half-year
results and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
London
28 September 2021
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