LEI: 213800JLR6YIRMSCUS98
11 May 2021
Air Partner plc
("Air Partner", "Group" or "Company")
Full year results for the year ended 31 January 2021
Record year, driven by exceptional levels of trading in the Charter division;
Current year Q1 performance ahead of management's expectations
Air Partner plc, the global aviation services group, today reports results for the year ended 31 January 2021.
Financial highlights:
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| January 2021 | January 2020 | Change % |
| Gross Transaction Value | £274.8m | £236.8m | 16.0% |
| Revenue | £71.2m | £66.7m | 6.7% |
| Gross profit | £44.9m | £34.2m | 31.3% |
| Underlying* profit before tax (PBT) | £11.6m | £4.2m | 176.2% |
| Statutory profit before tax | £8.4m | £0.9m | 833.3% |
| Net cash/(debt) (non-JetCard cash less bank debt) | £9.9m | (£6.9m) | 243.5% |
| JetCard Cash | £17.8m | £16.7m | 6.6% |
| Underlying* continuing basic EPS (pence) | 14.2p | 6.4p | 121.9% |
| Basic continuing EPS (pence) | 9.4p | 0.6p | 1467.7% |
| Final dividend (pence) | 1.6p | 0.0p | - |
| Total dividend (pence) | 2.4p | 1.8p | 33.3% |
*Underlying results are stated before exceptional and other items (see note 5)
· Gross profit up £10.7m (31.3%) to £44.9m due to exceptional trading in Group Charter and Freight
· Overall, the US contributed 39.6% to total Group gross profit
· Underlying* profit before tax of £11.6m, up £7.4m year on year (176.2%), driven by strong trading and cost saving measures
· Statutory profit before tax of £8.4m
· Basic EPS of 9.4p
· Net cash (excluding JetCard cash) of £9.9m, from net debt of £6.9m at 31 January 2020
· Liquidity headroom of £24.4m, comprised of net cash (excluding JetCard cash), an undrawn RCF facility of £13.0m and £1.5m overdraft
· Recommended final dividend of 1.6p per share (2020: 0.0p), making total of 2.4p per share for the whole year, up 33.3% on prior year (1.8p)
Strategic highlights:
· Group benefitted from diverse portfolio of aviation services across a range of sectors and geographies
· Scope of services enabled Group to combine Charter and Safety & Security capabilities to provide highly tailored solutions
· Successful share placing raised gross proceeds of £7.5m; used to pay down debt from Redline acquisition and provide working capital to fund organic growth opportunities
· Purchase of CHS Engineering Ltd trading assets further extended Managed Services offering
Operational highlights:
· Excellent performance in Group Charter, arising from extensive evacuation activity; sports and government business also continued, despite COVID-19
· Strong Freight performance, driven by PPE flying and automotive supply chain disruption
· US Private Jets performed well, despite the pandemic, as HNWIs travelled for leisure
· Difficult period for Private Jets in UK and Europe due to ongoing travel restrictions
· Number of new JetCards sold up 9.4% on prior period
· Safety activities impacted due to airliners being grounded throughout pandemic
· Areas of Security business adversely affected as airport activity significantly reduced
· Re-organisation of the business to protect low volume trading areas during the pandemic
Current trading and outlook:
· Strong start to the current year with Q1 performance ahead of management's expectations
· Trading levels for Q2 also expected to be ahead of management's original forecast, subject to government restrictions being lifted
· Freight activities continue to support the fight against COVID-19, delivering test kits and vaccine raw materials
· US Charter business continues to trade strongly
· JetCard sales and deposits are up in the UK and US
· Green shoots of recovery in the Safety & Security division
Mark Briffa, CEO of Air Partner, commented: "Last year was a record year for Air Partner, as our proven ability to partner with governments and global corporations enabled the Group to play a vital role in evacuations, repatriations and the provision of PPE in the face of the global pandemic. I am very proud of the hard work, resilience and bravery of our employees. I was also pleased to see our diversification strategy has come to the fore, as we provided customers with solutions that combined our expertise in Charter and Safety & Security in Asia, America and Europe. We have started the new financial year ahead of expectations, with our organic investments in the US continuing to drive growth in this important market. Looking ahead, I am excited about the opening up of the aviation sector and believe our Private Jets and Safety & Security offerings are especially well placed to benefit from the re-opening of skies and airports."
This announcement contains inside information for the purposes of Article 7 of Regulation (EU) No 596/2014.
| Enquiries: |
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| Air Partner | 01293 844 788 |
| Mark Briffa, CEO |
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| Joanne Estell, CFO |
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| TB Cardew (Financial PR advisor) | 020 7930 0777 |
| Tom Allison | 07789 998 020 |
| Alycia MacAskill | 07876 222 703 |
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About Air Partner:
Founded in 1961, Air Partner is a global aviation services group providing aircraft charter and aviation safety & security solutions to industry, commerce, governments and private individuals, across civil and military organisations. The Group has two divisions: Air Partner Charter, comprising Group Charter, Private Jets, Freight and Specialist Services; and Air Partner Safety & Security (formerly Consulting & Training), which comprises Baines Simmons, Redline Assured Security and Managed Services.
Group Charter charters large airliners to move groups of any size. Private Jets offers the Company's unique pre-paid JetCard scheme and on-demand charter for up to 19 people. Freight charters aircraft of every size to fly almost any cargo anywhere, at any time. Specialist Services comprises Air Partner's other aviation services that complement its Charter business: Remarketing, ACMI, scheduled group travel, tour operations, air evacuation and flight operations.
Baines Simmons offers aviation safety management and fatigue risk management. Redline Assured Security delivers government-standard security training, consultancy and solutions to regulated, high value and high threat environments. Managed Services offers wildlife hazard management, aircraft registry services, consultancy services for airports and logistics operations, remote condition monitoring and baggage system testing.
Air Partner has 16 locations across three continents, with its headquarters located alongside Gatwick airport in the UK. The group employs around 420 aviation professionals globally and operates 24/7. Air Partner is listed on the London Stock Exchange (AIR) and is the only publicly listed air charter broker and aviation safety & security consultancy. It is ISO 9001:2015 compliant for commercial airline and private jet solutions worldwide. More information is available on the company's website (www.airpartnergroup.com).
CHAIR'S STATEMENT
Despite the highly complex backdrop posed by the COVID-19 pandemic in the year under review, we are pleased to report a very strong set of results. Gross profit was up 31.3% to £44.9m (FY20: £34.2m), while underlying profit before tax for the period stands at a record £11.6m, an increase of 176.2% on the prior year (FY20: £4.2m). Statutory reported profit before tax was also materially up on the prior year at £8.4m (FY20: £0.9m).
The Group's results are particularly pleasing given the wider aviation industry has been so negatively impacted by COVID-19. This success is due to our strategy to diversify the business by product and geography, which has served us well. We have developed our business model so that we operate in two distinct divisions, Charter and Safety & Security, which offers us a level of protection against the ebbs and flows in our operating environment.
Our performance for the period reflects the inherent strengths that diversity brings to Air Partner. Group Charter and Freight were our best performing services, due to the high levels of COVID-19 related activity in the first half of the year. Group Charter carried out significant volumes of evacuation and corporate shuttle work, while the Freight team experienced very high demand for the transportation of emergency protective personal equipment (PPE).
Conversely, Private Jets and Safety & Security were negatively impacted by government restrictions and airport closures globally. However, we saw some improvement here in the second half of the year, with a noticeable uptick in Private Jets enquiries, especially in the United States (US). From a geographical perspective, the US was our standout performer, contributing 39.6% to the Group at a gross profit level (FY20: 22.8%). This has been extremely encouraging as we have been actively scaling up our operations in the US over the last four years, as there is a huge market here for Charter services and it is a region in which we still have a lot of headroom to grow.
In terms of our customer offering, the value of our scope of services has been apparent throughout the crisis, as we have been able to combine the capabilities of our Charter and Safety & Security divisions to provide global tailored solutions that meet multiple aviation requirements at the same time.
I am proud of the way the Group responded to the crisis across all areas of the business. Throughout the pandemic, our number one priority has been the health, safety and wellbeing of our employees and everyone that we work with. We have worked hard to comply with all government recommendations in the countries where our offices are situated, as well as implement additional preventative and protective measures specific to our operations. In addition, we brought in swift cost saving measures in the early stages of the pandemic, which included our Board Directors taking a voluntary pay reduction for April, May and June, and took government support where appropriate. Combined with our actions throughout the year, this has left us well positioned to benefit from the eventual reopening of the travel industry across both our Charter and Safety & Security divisions.
Fundraise
On 12 June 2020, we announced the successful completion of a placing of new ordinary shares. Retail investors were given the opportunity to participate in the fundraising through a retail offer on the PrimaryBid platform. The oversubscribed placing raised gross proceeds of approximately £7.5m from new and existing shareholders, which enabled us to enter the second half of the year with no debt and good working capital to support large customer programmes and invest in new organic growth opportunities.
Board changes
In March 2020, we were greatly saddened by the passing of Richard Jackson, Air Partner's Senior Independent Director, after a short illness. Richard was a hugely valued and well-liked colleague, who provided a significant contribution to the Group's strategy, and he is greatly missed. Following Richard's passing, Amanda Willis was appointed Senior Non-executive Director at the next Board meeting.
Dividend
As stated in our shareholder update of 22 February 2021, the Board has reviewed its dividend policy so as 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, we announced the reinstatement of dividends at the interim results in September with a payment of 0.8 pence per share. The Board is now recommending a final dividend of 1.6 pence per share, making a total of 2.4 pence per share for the year as a whole. The final dividend is expected to be paid on 15 July 2021 to those shareholders on the share register at close of business on 11 June 2021. The ex-dividend date will be 10 June 2021.
In future, looking beyond the pandemic environment, the Board will target 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.
Prospects
As the vaccination roll-out progresses around the globe, we are prepared and ready to support our customers however we can as government restrictions lift. We are seeing demand returning for our Safety & Security services as airports prepare for a relaxation on lockdown rules and an increase in passenger numbers, and we are confident that Private Jets activity will pick up significantly over the coming months.
We are pleased to see the US continue to perform well, particularly in Private Jets and Freight, proving the rationale for our ongoing investment in this region. As I have said before, it's an area of significant opportunity for us and we shall continue to focus on growing our share of the US charter market.
The Group's strong performance in the period under review, combined with the cost-cutting and fundraising actions taken, stand us in good stead for the current financial year. We are debt free with a solid cash position and a streamlined business. We were already confident that our diversification strategy to mitigate against product or market volatility was the correct one, and the past year has served to reinforce that we have taken the right course. We are very pleased to be able to leave such a tumultuous year on solid footing, and we shall seek to capitalise on this by continuing to explore organic and acquisition growth opportunities, while remaining mindful of the current economic climate and the recovery post the pandemic.
I would like to extend my most sincere thanks to Air Partner's people worldwide, who have shown such dedication and diligence during this busy and difficult period. Despite the challenges involved in complying with government guidelines, our teams across the Group have remained focused on delivering exceptional service to all of our customers. I would also like to thank our shareholders, new and old, for their continued support.
Ed Warner
Non-Executive Chair
CHIEF EXECUTIVE'S REVIEW
The year under review is the most remarkable time I have ever encountered in my 33 years in the aviation industry. Air Partner is used to operating in the volatile market conditions associated with air charter, but we have never before seen such an unpredictable trading environment. I have been hugely impressed by our people, who have worked extremely hard in often challenging circumstances, and they have my deepest thanks.
We are reporting underlying profit before tax of £11.6m (FY20: £4.2m), which was predominantly driven by the strong performance in Group Charter and Freight in the first half of the year, as they carried out very high levels of emergency evacuations and PPE flying as a result of the pandemic. On a statutory reported basis, profit before tax was £8.4m (FY20: £0.9m). I am particularly pleased to be reporting this strong set of results given that other areas of our business, such as Private Jets in the UK and Europe and Safety & Security, were negatively impacted by the COVID-19 crisis, in line with wider aviation market trends. The high levels of activity early in the year resulted in record results, however, trading in the second half of the year returned to more normalised levels, similar to the prior year.
The importance of putting our customers first and providing exceptional service, while remaining flexible at all times, has shone through this year. I would like to send my thanks to all of our customers for their continued support and loyalty through this difficult time.
Our response to the COVID-19 pandemic
Once we had ensured the protection of our team and customers, the key financial priority at the peak of the crisis was to preserve cash, and the measures taken have enabled us to be highly cash generative in 2020. The Board took swift and prudent action to implement cost management initiatives, including minimising discretionary spend, rightsizing departments, and making use of available government support for employees in areas of the business that were most severely impacted. This helped to ensure that we were in the best shape possible to manage our way through the extremely unpredictable crisis.
As a reminder, Air Partner owns no aircraft and is an asset light business, which has certainly positioned us well versus other aviation businesses during the pandemic. Without monies tied up in working capital and underutilised assets, we have been able to maintain our liquidity, which has afforded us flexibility and agility at a time of great uncertainty and change.
In the early stages of the pandemic, the Group took the decision to publish regular market updates to keep shareholders informed of our performance. We released monthly updates from March to July, detailing our activity across all our services and products, cost management measures and cash position, to provide transparency to our investors during this extraordinary period.
Strategic progress
In line with our business strategy, we continue to grow our world-class global aviation services group to better meet our customers' ever-evolving needs, while improving the overall quality of our earnings and reducing our exposure to the volatility of the charter market. The last financial year firmly demonstrated the strength of our stated strategy to diversify our earnings so that the Group is not reliant on any one product, market or geography. This stood us in good stead to navigate the extremely challenging and uncertain marketplace arising from COVID-19.
We saw a very strong performance from the US, which offset weaker results from the EU and certain UK services. We were pleased to see continued growth in the US region, driven by Freight and Private Jets, despite the pandemic. The US Freight team was extremely active flying PPE between Asia and the US, and played a large role in FEMA's Project Airbridge, the US effort to bring in medical supplies from overseas, early in the pandemic. The Freight team has also been active in supporting the automotive sector through supply chain challenges. US Private Jets held up far better than our other regions, and we saw growth in our overall customer numbers and JetCard membership, with particularly strong demand from high-net-worth individuals (HNWI) for leisure travel.
The success of the US division is a direct result of four years of significant investment in the team and office network, as the Group has sought to establish itself as a truly global business and lessen its reliance on revenues from the UK, which was historically always its strongest market. The US accounted for 45.5% (FY20: 26.4%) of the Group's gross profit from Charter services, and it is expected to be the highest Charter contributor to the Group's profits in future years. This expansion in the region has been transformational for Air Partner and it continues to be an area of strategic focus across all product lines.
In terms of other locations in which we have recently invested, the last financial year marked the first contribution from the Group's office in Singapore (opened in 2019), as the team here played a key role supporting the US Freight team on the logistics of transporting large volumes of PPE from Asia. We have invested further in our operations here by increasing our Freight presence. Our Dubai office, which was also opened in 2019 with a focus on Private Jets, has begun to establish a customer base but has not been able to reach its full potential in the current market conditions.
Further to our organic growth objectives over the period, we also continued to monitor acquisition opportunities. At the end of 2020, we acquired the trading assets of CHS Engineering Ltd (CHS) after the business went into administration. CHS offered consultancy services for airports and logistics operations, remote condition monitoring and baggage system testing. These services will now be incorporated into Air Partner's Managed Services offering and trade as Air Partner CHS. This is a small acquisition but one which extends our customer offering further still, while sharing a very similar customer base with the rest of our Safety & Security division, thereby presenting cross-selling opportunities. The business is not expected to be profit enhancing until the second half of the year when airports remobilise post lockdown.
Environmental, Social, and Governance (ESG)
As a company operating in the aviation sector, Air Partner is very focused on understanding and improving the impact of its operations on the environment and society. We are committed to developing and implementing a long-term sustainability strategy and to operating within a responsible and sustainable framework. As part of this, we appointed environmental consultants Delta-Simons to help us identify areas where we can add value to the environment protection effort. We have now defined the four strategic pillars of our environmental strategy as (a) carbon offsetting, (b) charitable partnerships, (c) reduction of resource consumption and (d) transparency in reporting.
An environment working group (EWG), consisting of representatives across Air Partner's functions and geographies, considers ways to implement each of the strategic pillars, and proposes these to the Group Executive Team, which has ultimate responsibility for their implementation. The Board receives regular reports on the development and activity of the sustainability strategy. More information can be found in the Sustainability section of our Annual Report.
We are committed to recruiting the best people to join our already strong teams, improving engagement and retention of our employees, and positively impacting the economies and communities in which we operate. Given the challenging circumstances of the pandemic, in the last financial year we prioritised establishing new ways of working, employee mental health and wellbeing, and ensuring regular and effective communication between management and employees.
We launched a revised diversity and inclusion policy, which reinforces our commitment to constantly improving our workplace culture. As part of this, we conducted implicit bias training sessions across the Group, which received excellent feedback. We remain committed to gender and equal pay and will continue to monitor and take action where it is needed. The mental health and wellbeing of all employees is a key priority for us and we have undertaken a number of activities around this, including the development of a mental health and wellbeing policy to increase awareness and reduce stigmas.
An Employee Advisory Panel, established in FY20, met throughout the year, continuing to gather the views of the workforce and act as a conduit for two-way communication with the Board. We also introduced weekly CEO video updates throughout the pandemic, monthly 'All Hands' virtual townhall meetings (with the ability to ask questions anonymously) and a new intranet platform.
In addition, we have refreshed our volunteering policy, with up to two days paid volunteering per year available to staff. Since January, a number of our employees have volunteered at local vaccination centres in the UK. At Christmas, the Group also donated to several charities in the communities in which our main offices are based to help the homeless and those in need.
Charter
Overall, the Charter division delivered £39.1m (FY20: £29.6m) of gross profit for the 12 months to 31 January 2021, driven by the exceptional H1 performance by Group Charter and Freight, which more than offset a weaker performance in Private Jets. The division contributed 87.1% to the overall gross profit of the Group, with Group Charter (including Specialist Services) contributing 39.6%, Private Jets 20.7%, and Freight 26.5%. Performance was mixed across geographies, with the US performing well, while others, such as Europe, have struggled and remain challenging in the face of multiple lockdowns and restrictions.
Group Charter
Group Charter performed well in the year, reporting gross profit of £17.8m, up 21.1% on the prior year (FY20: £14.7m), with strong results coming out of the US and the UK in particular. A key driver was the delivery of emergency evacuation flights around the world for the UK government, international corporations and the cruise industry. Air Partner was able to provide superior solutions due to our unique ability to combine and coordinate our Group Charter, Air Evacuation and Safety & Security capabilities.
In addition, Group Charter saw high demand for corporate shuttles, as companies in the UK and US sought to safeguard their employees. We also carried out work in the sports sector, flying sports teams to fixtures safely and in line with local regulations to enable the continuation of top tier sporting events. However, there has been a significant downturn in our Tour Operations and Meetings, Incentives, Conferences and Exhibitions (MICE) business, predominantly in Europe, as activities in these areas have been deferred until restrictions have been lifted. As a result of the market conditions, the Directors took the decision to exit the UK Travel Agency market, which will be completed later this year.
Within our Specialist Services offering, Air Partner Remarketing arranged the sale of an ATR72 for Heritaviation, as well as three B747-400s and two PW4000 engines for Corsair. A consultancy agreement was made with an airline to renegotiate its leases on new aircraft, and a substantial Aircraft, Crew, Maintenance and Insurance (ACMI) leasing project was also completed in the year. COVID-19 has impacted the market for aircraft sales and leasing but new mandates have created a promising pipeline for when the market recovers.
Air Evacuation had a strong year, retaining 86% of its long-term customers. Unsurprisingly, interest in this product remains high due to COVID-19 and the hurdles faced for international travel.
Freight
It was an exceptionally strong year for Freight, which delivered gross profit of £11.9m, up 271.9% (FY20: £3.2m). It was the most challenging environment this area of our business has ever seen, due to the high levels of demand, urgent nature of the projects, and additional logistical requirements to ensure the safety of the crews. Due to the volumes of capacity required, the industry saw many commercial passenger aircraft being used for freight deliveries, where regulations permitted, in addition to typical freighters.
Our Freight team around the world worked tirelessly and cohesively to fly critical shipments of PPE from Asia to the US, the UK and Europe throughout the pandemic. Although the US, the UK and Germany were the primary contributors due to their established customer bases, it was a truly global effort, with the Singapore and Turkey offices assisting with aircraft supply and providing key local knowledge so that we could deliver a first-class service to our customers. Over and above the delivery of PPE, Freight also continued to fly critical and high value goods across the globe, with the US team being particularly busy supporting the automotive sector through supply chain challenges.
Private Jets
It was a difficult year for Private Jets, as regulations around lockdowns and quarantines shifted constantly, resulting in gross profit decreasing 20.5% to £9.3m (FY20: £11.7m). The US was the best performing region by some margin on account of both our recent investment in the team and the stronger private jet market there. Although gross profit in the US was lower year on year, we saw a surge in new customers in the first half of the year, as people sought safer methods to return to their homes during the first wave of the pandemic. As a result, bookings during the second half of the year were up 10% on the prior year. Overall, the number of Private Jets customers in the US increased 23% year on year, with new customer numbers up 75%. Our US JetCard programme also continued to grow, with membership increasing 18%.
The UK and Europe were both down year on year, in line with market expectations. Private jet flights are heavily weighted to the leisure market and, unfortunately, a strong summer was not enough to offset the impact of global travel restrictions. Some customers did still fly for business-critical reasons, with private jets taken to ensure the health and safety of employees flying. However, many businesses have scaled back travel in light of the economic impact of the pandemic. We did, though, see an increase in the number of first-time private jet flyers mainly in the UK and the US over the period, as people sought flexibility and the safety of travelling within their own bubble, with fewer contact points.
Safety & Security
Safety & Security gross profit for the period was £5.8m (FY20: £4.6m). There was greatly reduced demand for many of these services during the pandemic, as a number of our airport and airline customers scaled back or, in some cases, indefinitely delayed operations. As result, we took UK government support in the form of furlough monies to protect jobs up to December 2020. In its first year of contribution, Redline was the best performer within the division, supporting other critical infrastructure sectors and delivering software related services.
Baines Simmons saw much lower demand than usual, as airlines cut almost all discretionary spending. However, we successfully converted many of our safety training courses from classrooms to virtual delivery, resulting in a significantly improved performance during the second half of the year, and we are seeing this trend continue. Our Fatigue Risk Management team (previously Clockwork Research) also had a very successful year delivering contracts to well-known airlines and energy customers, among others, as they adapt to the new regulations for COVID-19 compliance.
SafeSkys has now exited its Air Traffic Control operations in the UK, enabling it to focus solely on its wildlife hazard management offering. This area of our Managed Services portfolio delivered expected returns throughout the year, as many regional military airfields continued to operate despite the pandemic.
We acquired Redline just before the outbreak of COVID-19 and we have been encouraged by its performance during a particularly challenging period, although its activities were, of course, significantly impacted by the pandemic. It secured a number of business wins throughout the year with a wide range of customers, including those with international facilities management company OCS Group UK, the UK Civil Aviation Authority (CAA), private aviation company Jet Edge, supporting Align JV on a HS2 project, and Nice, Guernsey, Birmingham and Belfast International airports.
In July, Redline was also appointed to develop and deliver a robust Security Management System for ISS Australia and New Zealand, marking Air Partner's entry into the Australian market. Good progress was also made in terms of embedding Air Partner's culture, values, policies and procedures, developing the go-to- market brand (Air Partner Safety & Security), and establishing cross-functional teams to capitalise on cross-selling opportunities within the enlarged group.
Going forward, we remain confident about the prospects for Redline and we expect to see the true value of this business come through in the current financial year.
The assets of CHS Engineering Ltd were acquired towards the end of the year after the company went into administration. The company's expertise in airport logistics operations and technical services complement and expand the Group's existing Security portfolio, and we foresee cross-selling opportunities with the other areas of our Safety & Security division. We expect that this part of the business will become profit enhancing during the next financial year.
Current trading and outlook
We have enjoyed an encouraging start to our current financial year, with the first quarter exceeding management's expectations, and we are optimistic for the months ahead. Trading levels for Q2 are also expected to be ahead of management's original forecast, subject to government restrictions being lifted. As a result, our base case expectation for the current year is now to deliver profits in excess of those generated in the year ended 31 January 2020, where we achieved underlying profit before tax of £4.2m, despite the global reduction in airline passenger numbers due to the pandemic.
The strong performance from our US Private Jets and Freight has continued into this year, with the latter assisting with the vaccination roll-out by moving large shipments of raw materials used in the manufacture of vaccine vials. In the UK and Europe, our Group Charter team continues to work with governments and the sports sector, although Private Jets bookings in the UK and Europe remain slower due to ongoing travel restrictions. However, pleasingly, JetCard sales and deposits are strong in both the UK and US. We expect to see an improvement in Private Jets activity in the summer as restrictions lift and the vaccine roll-out drives a return of business and leisure travel.
The green shoots of recovery in our Safety & Security division continue to grow as airports scale up operations in preparation for flying during the summer season, the length of which will be dictated by when governments lift lockdown measures and relax restrictions. We are seeing demand return for Redline's range of security services and the order book is now at its highest point since the pandemic took hold. In its first full year of ownership, we are greatly encouraged by the progress Redline is making within the Group and are confident it will go from strength to strength.
We still have a lot of headroom to grow and so we shall continue to pursue our organic growth initiatives and assess targeted acquisition opportunities that meet our strict criteria and align with our strategic objectives to extend our customer offering and improve the visibility of our earnings.
Finally, I would like to thank the collective Air Partner team once again for all its hard work throughout the pandemic. It has certainly not been easy but its commitment to both the Group and our customers has been unwavering and truly inspiring.
Mark Briffa
Chief Executive Officer
CHIEF FINANCIAL OFFICER'S REVIEW
In an extraordinary year, we have demonstrated the inherent strength of our business model, delivering an excellent set of results in which the true value and impact of our strategy shines through. We have built a strong business that is diversified by product and geography, so that we are not over reliant on any one revenue stream. The benefits of this model have never been clearer than in the last financial year as different areas of the Group have been affected by the impact of the global pandemic in varying ways.
We are encouraged by the performance of Redline in its first full year of ownership, despite the challenging environment. It won a number of new contracts and is now seeing demand rebound from airport customers as they plan for a re-emergence post lockdown. We are confident that Redline, along with the rest of the Safety & Security division, is well positioned to benefit from significantly increased levels of activity as the travel industry opens up and airports remobilise.
Our key financial priority at the onset of the pandemic was the preservation of cash and we took several actions in this area to strengthen our position. Cost saving measures included salary reductions, tight control over discretionary spend, reorganisational activities and a reduction in our property footprint. Actions taken to preserve cash included the withdrawal of the final dividend payment relating to FY20 and an overall reduction in capital expenditure for the year.
In June 2020, we raised £7.5m from a successful, oversubscribed fundraise, which enabled us to repay the debt taken on at the time of the Redline acquisition and increase our working capital to fund organic growth initiatives, such as growth in our Freight business and an increase in governmental contract work.
Prudent cash management and the strong trading performance during the year have enabled us to be highly cash generative. Thanks to the significant and swift actions we took in FY21, we are strongly positioned for the coming year.
Gross transaction 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 Group acts as principal as opposed to an agent. The Charter division, which accounts for 87.1% (FY20: 86.5%) of the total gross profit, is the area of the business where we predominantly act as an agent. For the sake of completeness, commentary below is given on gross transaction value (GTV) and revenues.
GTV of £274.8m (FY20: £236.8m) was up by 16.0%, which is principally due to the increase in Freight activity, as described in more detail in the gross profit section below. GTV represents the total value invoiced to customers and is stated exclusive of value added tax.
Revenue of £71.2m (FY20: £66.7m) represented a smaller year on year increase of 6.7%, due to a lower proportion of income coming from transactions where the Group acted as principal.
Gross profit
Gross profit of £44.9m was up 31.3% against the prior period (FY20: £34.2m). On a comparative basis, adjusting for the full year impact of the Redline acquisition, gross profit increased by 24.3%. Constant exchange rates had a negligible impact on year on year gross profit movement.
At a divisional level, the gross profit of the Charter division was up 32.1% on the prior year at £39.1m (FY20: £29.6m). This growth was driven by the exceptional levels of activity in Group Charter and Freight during the first half of the year, carrying out repatriations and PPE flying as a result of the pandemic.
Private Jets, Travel and Tour Operations were all impacted by COVID-19 travel restrictions. After a critical appraisal of the UK Travel Agency business, the Directors took the decision to exit the market and completion is expected in the second half of FY22. The Group's Travel Agency business is currently consolidated into Group Charter. Exiting this business is not expected to have a material impact on the underlying performance of Group Charter going forwards.
Breaking the Charter division down into its constituent parts, Group Charter's gross profit of £17.8m was a year on year increase of 21.1% (FY20: £14.7m). This came predominantly from COVID-19 evacuations earned in the UK and US. Conversely, due to tighter travel restrictions, gross profit in Europe was down due to its dependency on Tour Operations, which all but stopped as a result of the pandemic. Within Group Charter, the reduction in Tour Operations and Travel Agency activity, which are typically high volume, low margin businesses, has resulted in the gross profit to GTV margin increasing to 22.9%, compared to 10.7% in FY20. Depending on the rate of recovery of these businesses, we would expect this margin to reduce while noting our decision to exit the low margin UK Travel Agency business.
Travel restrictions have resulted in Private Jets gross profit decreasing by 20.5% to £9.3m from £11.7m in FY20 due to lower levels of activity in the UK and Europe. Although a significant decrease year on year, this is still considerably stronger than the overall trend in aviation revenue passenger kilometres, which saw a sharp decline of 66% for the 2020 calendar year (source: IATA - Air Passenger Market Analysis, December 2020). The Directors expect to see a strong recovery in this sector in the second half of the current financial year as lockdown measures are eased. We continue to invest in the growth potential of Private Jets, particularly in the US, through talent acquisition and technology investment in our JetCard programme.
Freight was the standout performer of the year, generating £11.9m of gross profit, an increase of 271.9% year on year (FY20: £3.2m), as a result of extensive PPE flying. Although the increase was driven by the exceptional levels of trading in the US, all Freight offices saw significant increases on prior year results.
As alluded to above, the high levels of trading in Group Charter and Freight in the US have significantly changed the Group's regional mix. US Charter gross profit increased by £10.0m year on year to £17.8m (FY20: £7.8m) and now contributes 45.5% to Charter Group gross profit, compared to 26.4% in the prior period. As a result, UK Charter now accounts for 36.8% of Charter gross profit, compared to 43.2% in the prior year, despite a £1.7m increase in gross profit. Europe is the only geographic segment that saw a decline in gross profit year on year to £5.3m, while the Dubai and Singapore offices increased Rest of the World gross profit to £1.5m (FY20: £0.2m).
Safety & Security delivered gross profit of £5.8m (FY20: £4.6m), an increase of 26.1%, which is attributable to the full year impact of Redline. On a true like-for-like basis, the division declined by 31.0% year on year. This reflects the fact that the many of the services provided by our Safety & Security division were viewed as discretionary spend by our customers, especially in the aviation industry.
In addition, within gross profit for Safety & Security is £0.4m of UK government support monies as a result of employees, who are charged as a direct cost of sale, being on furlough for a number of months during the year, in areas of the business where work had effectively dried up.
Despite the decline in gross profit, the Directors remain confident that the Safety & Security division is well positioned to recover. Redline and Clockwork have won a number of contracts from non-aviation customers, while Baines Simmons has been adapting its courses for online learning. In addition, the newly acquired CHS has very similar customers to the rest of our division, offering an opportunity to cross-sell additional products and services.
Administrative expenses
Costs included in administrative expenses in the consolidated income statement are 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, were £32.1m (FY20: £29.2m), an increase of 9.9%, despite the cost-cutting and restructuring undertaken, because of the pandemic (see Exceptional and other items). The increase is driven by higher commission payments and other remuneration effects resulting from the strong trading performance (£3.7m), and a full year of overheads for Redline (£2.3m). This has been offset by £1.3m of government support for areas of the business that have been significantly impacted by COVID-19*. Adjusting for these effects, administrative costs decreased year on year by £1.7m, reflecting the numerous cost-cutting initiatives taken during the year.
Net impairment losses of £0.8m (FY20: £0.2m) represent provisions for irrecoverable balances made during the period. The Group has entered legal proceedings against a customer with an outstanding balance of £0.3m and the case is still ongoing. As a result of the impact of the pandemic, the Group has provided for £0.4m of balances which are no longer considered recoverable and has increased its IFRS 9 credit loss provision by a further £0.1m.
In order to progress our strategy, while remaining mindful of the risks and ongoing effects of COVID-19, the Group expects to make further investments in administrative expenses as we grow organically across new locations. The cost benefit analysis of any initiative will be assessed at the appropriate time against the Group's investment criteria.
*Total of £1.7m taken at Group level, £0.4m relating to employees whose costs are recognised within costs of sales and the government grant matched to this.
Underlying operating profit
Underlying operating profit has increased 150.0% to £12.0m (FY20: £4.8m). As referenced in the preceding sections, performance has varied considerably across the products and services. Underlying operating profit by sector is stated after the allocation of attributable central support costs.
Freight has seen the largest increase in underlying profit, producing £6.7m compared to £0.2m in FY20. Freight has a relatively low cost base, so the high trading volumes converted strongly to operating profit. Group Charter also performed strongly, increasing operating profit by £3.3m to £6.4m (FY20: £3.1m), despite the reduction in its Tour Operations business. Private Jets saw underlying operating profit fall from £2.6m in FY20 to £1.4m with a mixed performance across the Group. The US was the standout performer in this area.
The decline in Tour Operations, combined with the performance of Private Jets, has resulted in underlying operating losses being recorded by the countries where these are the primary revenue drivers. France and Italy have been particularly affected and are loss making, despite the government support taken for staff costs.
The Safety & Security division produced a break-even result (FY20: £0.9m), because of the limited trading opportunities in the year. This was inclusive of the government support of £0.6m taken for staff costs, included within cost of sales and administrative expenses, which are higher in this division.
The remaining underlying profit is comprised of a loss of £2.4m (FY20: £2.1m), relating to corporate costs that are not assignable to any division. The year on year increase reflects the increased performance based remuneration to senior management to reflect the Group's performance.
Finance costs
The net interest charge for the year was £0.5m (FY20: £0.5m). The charge reflects the interest payable on finance leases recognised under IFRS 16 and interest on the Group's revolving credit facility (RCF). The Group repaid the RCF balance in full at the end of the first half of the year and, as a result, expects borrowing costs to decrease going forward.
Underlying profit before tax
The above results translated to record underlying* profit before tax of £11.6m for the Group, an increase of £7.4m (176.2%) from the prior year (FY20: £4.2m). On a comparative basis, adjusting for the full year impact of the Redline acquisition, underlying profit before tax increased by 182.5%. Adjusting for constant exchange rates had a negligible impact on year on year profit movement.
*Underlying earnings are stated before exceptional and other items, see note 5.
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 £3.2m (FY20: £3.3m).
Exceptional and other items excluded from underlying profits in the period are broken down as follows:
|
| 2021 £m | 2020 £m |
| Underlying profit before tax | 11.6 | 4.2 |
| Change of Board composition | - | (0.2) |
| Restructuring costs | (0.8) | - |
| Amortisation of purchased intangibles | (2.4) | (0.6) |
| Acquisition costs | 0.0 | (0.6) |
| Disposal of subsidiary | 0.0 | 0.0 |
| Cost incurred and provision for outflows resulting from French tax investigation | - | (0.7) |
| Impairment of goodwill | - | (1.9) |
| Settlement of historic legal disputes | - | 0.4 |
| Release of deferred consideration | (0.0) | 0.3 |
| Statutory reported profit before tax (£m) | 8.4 | 0.9 |
In total, there is a £3.2m exceptional charge on the consolidated income statement for the year, comprising £2.4m of amortisation of acquired intangibles and £0.8m of restructuring costs incurred across the Group. The latter were incurred as a result of an assessment of the Group's headcount requirements, exiting the UK Travel Agency market, and a reduction in the office footprint of the Group in the wake of COVID-19. The remaining exceptional costs relate to the disposal of our Swiss subsidiary, the release of a provision for acquisition costs, and present valuing of the deferred consideration on acquisition of Redline, which all net to below £100k. They are mentioned here for full transparency and to be consistent with the prior year approach.
Further information and details of the prior year figures are provided in note 5, Exceptional and other items in the financial statements.
Statutory reported profit before tax
Reflecting the strong trading period of the Group, statutory reported profit before tax, after the above exceptional and other items, was £8.4m (FY20: £0.9m).
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.
On a statutory reported profit basis, the effective rate of taxation was 32.8% (FY20: 67.6%). The high tax rate in the prior year was due to the level of exceptional costs which did not attract tax relief.
The underlying tax charge* of £3.0m (FY20: £0.9m) represents an effective rate of 26.6% (FY20: 20.5%) on the underlying profits before tax. The higher tax rate reflects the greater share of profits in countries with higher tax rates, in particular the US, and losses in other tax jurisdictions, on which we have chosen not to recognise the deferred tax assets as the recoverability is not sufficiently certain at this time.
*Adjusting for exceptional and other items.
Earnings per share
Basic underlying* earnings per share from continuing operations was 14.2p (FY20: 6.4p), up 121.9% on the prior year. On a statutory basis, basic earnings per share from continuing operations was 9.5p (FY20: 0.6p).
*Underlying earnings are stated before exceptional and other items, see note 5 in the financial statements.
Dividends
The Board has reviewed its dividend policy so as 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, we announced the reinstatement of dividends at the interim results in September 2020 with a payment of 0.8 pence per share. The Board is now recommending a final dividend of 1.6 pence per share, making a total of 2.4 pence per share for the year as a whole. The final dividend is expected to be paid on 15 July 2021 to those shareholders on the share register at close of business on 11 June 2021. The ex-dividend date will be 10 June 2021.
Going forwards, the Board will target 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.
Statement of financial position
Shareholders' funds
After considering the profit for the period, dividend payments, exchange rate differences and the share issue (see below), overall shareholders' funds at 31 January 2021 were £21.1m, representing an increase of £11.9m on the position at 31 January 2020 (£9.2m).
In June 2020, the Group completed a cash box placing for 10 million new shares in the capital of the Company. The placing price was 75p per share. The placing raised gross funds of £7.5m and incurred fees approaching £0.5m, resulting in a net increase in equity of £7.1m. In accordance with Section 612 of the Companies Act 2006, merger relief has been applied, resulting in an increase to retained earnings of £6.9m, with the remainder going to share capital and share premium. Share premium was only recognised on shares issued as part of an offer through PrimaryBid, which did not qualify for merger relief.
Goodwill and intangibles
The carrying value of goodwill is £8.7m (FY20: £8.6m), with the movement relating to foreign exchange.
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. The net book value of intangible assets is £9.3m (FY20: £11.9m), comprising acquired intangible assets: customer relationships, customer contracts, software development costs and internally generated software assets.
In the period, we invested £0.2m (FY20: £0.4m) in software development as we finalised and subsequently rolled out our Charter customer relationship management system and completed our new Charter and Group websites.
Other balances
The Group holds property, plant and equipment totalling £6.0m (FY20: £7.7m), of which £5.1m is held on lease in accordance with IFRS 16 (FY20: £6.7m). Approximately 70% of the IFRS 16 assets relate to the right of use of an Italian aircraft where the lease was due to expire at the end of October 2021 but, following the year end, the contractual terms and payment obligations have been further delayed until 2022. Capital expenditure in the period was £0.3m (FY20: £0.5m) on property, plant and equipment.
The net current asset position of the Group has improved by £2.9m. The main drivers have been a significant trading result in the period and a cash injection from the shareholder fundraise net of paying down all the Group debt. Other balance sheet movements are noted below.
The positive change in receivables was driven by several factors, including that COVID-19 related activity did not attract customer credit. We also restricted credit terms wherever possible and the parts of the business that typically give credit did not have high levels of trading during the period, i.e. Safety & Security. This resulted in a positive unwinding of the trade receivables position in the year of £3.2m.
In addition, prepayments and accrued income were £4.1m and £1.3m lower than the prior year, respectively. This was driven predominantly by the shift in our business mix. Tour Operations and Travel projects often require deposits several months in advance of the flying date and a reduction in volume in these areas contributed to the movement in prepayments.
In line with the above, deferred income has declined from £24.7m in FY20 to £21.4m in FY21. It should be noted that deferred income includes JetCard balances, which increased by £1.1m year on year. This shows that, although our Private Jets business has been negatively impacted this year, our customers still intend to use the balances once travel restrictions have been eased.
Trade and other payables and other liabilities have increased by £0.5m, driven by the accrued costs for the employee remuneration due because of the strong trading performance. The tax liability due has decreased despite the higher charge for FY21, as the Group has paid instalments in line with the total expected annual charge in most tax jurisdictions.
Overall, the aforementioned movements resulted in a positive working capital movement of £6.5m in the period (FY20: negative movement of £0.7m). This trend is considered one-off and symptomatic of the COVID-19 trading environment we have experienced, and we fully expect to invest in working capital when more normalised levels of trading resume and the parts of our business that have suffered due to the pandemic come back on line.
The Group has a non-current liability for deferred consideration in relation to the Redline acquisition of £1.0m (FY20: £2.3m). £1.3m was paid to the former owners of Redline during the year in line with the acquisition agreement.
Cash generation and net debt
Operating cash from trading activities after investment in capital expenditure and software was £18.9m (FY20: £8.2m), reflecting the higher profit in the year and reduction in receivables.
In terms of financing activities, the aforementioned issue of shares in the period generated net additional funds of £7.1m, which were used to repay the RCF of £11.5m, in combination with funds from operating activities.
The above means that the Group held net cash (cash offset by bank debt) of £9.9m versus net debt on the same basis of £6.9m at 31 January 2020, an increase of £16.8m. The increase is despite significant outflows in the year for corporation tax (£4.5m), payment of finance leases (£1.6m), deferred consideration (£1.3m) and dividends (£0.5m). In managing the Group's cash prudently during the year, the Directors began to use normalised cash (non-JetCard cash less client deposits and similar balances) as the best assessment of available funds in the business. This is due to the expectation at the advent of the pandemic that customers would cancel bookings and pursue refunds. Although this did not occur at the levels expected, the Directors have continued to use this measure as a more meaningful approach to cash management at this time. The normalised cash balance after adjusting for £1.6m of customer deposits at 31 January 2021 was £8.3m.
Encouragingly, JetCard cash increased by £1.1m to £17.8m (FY20: £16.7m). JetCard cash is kept in separate segregated bank accounts and is not used for the Group's working capital needs. Including JetCard cash, the Group held £27.7m cash at the year end (FY20: £21.4m).
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 Q3 of the next financial year. The total lease liabilities in current and non-current liabilities amount to £5.9m (FY20: £7.3m).
Bank facilities
The Group has total debt facilities of £14.5m (FY20: £14.5m) comprising a committed RCF of £13.0m (FY20: £14.5m) and a £1.5m overdraft. As at 31 January 2021, none of the RCF was drawn down (FY20: £11.5m) and the overdraft was not utilised. The facility attracts an interest rate of 2.6% plus LIBOR and non-utilisation fees of 1.3% per annum and is repayable in February 2023.
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 January 2021 | 31 January 2020 |
| 31 January 2021 | 31 January 2020 |
|
| USD | 1.28 | 1.28 | No movement | 1.37 | 1.32 | USD weakened by 3.8% |
| EUR | 1.13 | 1.14 | EUR strengthened by 0.9% | 1.13 | 1.19 | EUR strengthened by 5.0% |
Accounting policies and recent accounting developments
The accounts in this report are prepared under International Financial Reporting Standards (IFRSs), and the applicable legal requirements of the Companies Act 2006. In addition to complying with international accounting standards in conformity with the requirements of the Companies Act 2006, the consolidated financial statements also comply with international financial reporting standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union. The accounting polices used in preparing these accounts are set out in note 1 in the financial statements.
Treasury and risk management
Foreign currency effects
Where possible, the Group uses natural hedges to minimise its foreign exchange exposure, for example matching JetCard deposits denominated in Euro or US Dollar with the respective liability. In addition, the Group uses derivatives to hedge certain transactions in accordance with its internal policies.
Financial risks
The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The Directors regularly review and agree policies for managing these risks.
Credit risk is managed by monitoring limits and payment performance of counterparties. The Directors consider the level of general credit risk in current market conditions to be higher than normal. Where a customer is deemed to represent a level of credit risk, terms of trade are modified to limit the Group's exposure.
Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure.
Interest rate risk is managed by holding a mixture of cash and borrowings in Sterling, US Dollar and Euro at fixed and floating rates of interest.
Liquidity risk is managed by the Group having access to an RCF, which can be used for working capital means, and a moderate overdraft facility to provide short-term flexibility
Going concern
The Group's business activities, together with the factors likely to affect its future performance, are set out in the Strategic report and in the Principal risks and uncertainties section in the Annual Report 2021.
The Directors believe that the Group is well placed to manage its business risks and, after reviewing the Group's current financial position, including factors affecting its cost base, and the availability of financing facilities and forecasts for a period of not less than 12 months from the date of approval of these financial statements, are satisfied that the Group has adequate resources to continue in business for the foreseeable future and that the Company is a going concern.
A summary of the going concern assessment is provided in the Going concern and viability statement in the Strategic report within the Annual Report 2021.
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
As of today, the world is still in the midst of the COVID-19 pandemic. The aviation sector has been severely impacted on a global basis and as a consequence, the environment in which we operate has changed dramatically. The impact of this change and uncertainty is likely to remain for the foreseeable future. Economic uncertainty affects corporate, government and individual customers and affects the quality of aircraft supply as operators consolidate or leave the market. These trends are outside the Group's control, but the strategy remains to diversify services to the addressable market and broaden the customer mix. Our diversification strategy has been one of our key strengths during this period, which has resulted in a record financial performance for the Group. We are closely following events as they develop and are working to ensure Air Partner capitalises on the changing market conditions.
Principal risks and uncertainties
In addition to the COVID-19 risks highlighted above, the Group continues to operate in a highly competitive market where there are number of inherent risks, including operational aviation related risks (such as quality and quantity of supply, adverse weather conditions, competitive pricing pressure and regulatory changes) and financial risks (such as foreign exchange and interest rate fluctuations, credit risk and liquidity and cash flow management).
In order to counteract the market challenges, the Company continues to diversify its revenue streams and acquire businesses that provide broader economic exposure, greater revenue visibility and operational synergies. Whilst this will have a positive impact, there is also a risk involving integration within the Group. The principal risks and uncertainties of the Group are included in the Annual Report, which can be found on our website at www.airpartnergroup.com/investors
Related party transactions
There has been no significant change in the level of transactions between Air Partner plc and its subsidiaries since that disclosed in the annual report for the year ended 31 January 2020. Such transactions did not materially affect the financial position or performance of the Group in the period under review. There are no other related party transactions which are required to be disclosed under DTR 4.2.8R.
These financial statements were approved and authorised for issue by the Board of Directors on 11 May 2021 and were signed on its behalf by:
M A Briffa J E Estell
Director Director
Consolidated income statement
for the year ended 31 January 2021
|
|
|
| Year ended | Year ended |
|
|
|
|
| 31 January | 31 January |
|
|
|
|
| 2021 | 2020 |
|
|
| Continuing operations | Note | £'000 | £'000 |
|
|
| Gross transaction value (GTV) | 3 | 274,785 | 236,816 |
|
|
| Revenue | 3 | 71,173 | 66,664 |
|
|
| Gross profit | 3 | 44,870 | 34,158 |
|
|
| Administrative expenses before exceptional and other items |
| (32,071) | (29,180) |
|
|
| Other operating income |
| 43 | - |
|
|
| Exceptional and other items | 5 | (3,179) | (3,296) |
|
|
| Total administrative expenses |
| (35,207) | (32,476) |
|
|
| Net impairment losses on financial assets |
| (810) | (205) |
|
|
| Operating profit | 4 | 8,853 | 1,477 |
|
|
| Operating profit before exceptional and other items |
| 12,032 | 4,773 |
|
|
| Finance income |
| 29 | 71 |
|
|
| Finance costs |
| (503) | (612) |
|
|
| Finance costs - net |
| (474) | (541) |
|
|
| Profit before income tax |
| 8,379 | 936 |
|
|
| Profit before income tax and exceptional and other items |
| 11,558 | 4,232 |
|
|
| Income tax expense | 6 | (2,747) | (633) |
|
|
| Profit for the year |
| 5,632 | 303 |
|
|
| Attributable to: |
|
|
|
|
|
| Owners of the parent company |
| 5,632 | 303 |
|
|
| Earnings per share: |
|
|
|
|
|
| Continuing operations |
|
|
|
|
|
| Basic | 8 | 9.4p | 0.6p |
|
|
| Diluted | 8 | 9.3p | 0.6p |
|
Consolidated statement of comprehensive income
for the year ended 31 January 2021
|
|
| Year ended | Year ended |
|
|
| 31 January | 31 January |
|
|
| 2021 | 2020 |
|
| Note | £'000 | £'000 |
| Profit for the year |
| 5,632 | 303 |
| Other comprehensive expense - items that may subsequently be reclassified to profit or loss: |
|
|
|
| Adoption of IFRS 16 |
| - | (167) |
| Exchange differences on translation of foreign operations |
| (743) | (403) |
| Total other comprehensive expense |
| (743) | (570) |
| Total comprehensive income/(expense) for the year |
| 4,889 | (267) |
| Attributable to: |
|
|
|
| Owners of the parent company |
| 4,889 | (267) |
The above consolidated income statement and consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
Consolidated statement of changes in equity
for the year ended 31 January 2021
|
|
| Share |
| Own |
|
|
|
|
| Share | premium | Merger | shares | Translation | Retained | Total |
|
| capital | account | reserve | reserve | reserve | earnings | equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Opening equity as at 1 February 2019 | 522 | 4,814 | 295 | (326) | 1,064 | 5,312 | 11,681 |
| Adoption of IFRS 16 | - | - | - | - | - | (167) | (167) |
| Profit for the year | - | - | - | - | - | 303 | 303 |
| Exchange differences on translation of foreign operations | - | - | - | - | (403) | - | (403) |
| Total comprehensive expense for the year | - | - | - | - | (403) | 136 | (267) |
| Transactions with owners of the Company: |
|
|
|
|
|
|
|
| Issue of shares | 13 | 1,081 | - | - | - | (435) | 659 |
| Share option charge for the year | - | - | - | - | - | 59 | 59 |
| Share options exercised during the year | - | - | - | 168 | - | (146) | 22 |
| Dividends paid (note 7) | - | - | - | - | - | (2,961) | (2,961) |
| Transactions with owners of the Company | 13 | 1,081 | - | 168 | - | (3,483) | (2,221) |
| Closing equity as at 31 January 2020 | 535 | 5,895 | 295 | (158) | 661 | 1,965 | 9,193 |
|
|
| Share |
| Own |
|
|
|
|
| Share | premium | Merger | shares | Translation | Retained | Total |
|
| capital | account | reserve | reserve | reserve | earnings | equity |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Opening equity as at 1 February 2020 | 535 | 5,895 | 295 | (158) | 661 | 1,965 | 9,193 |
| Profit for the year | - | - | - | - | - | 5,632 | 5,632 |
| Exchange differences on translation of foreign operations | - | - | - | - | (743) | - | (743) |
| Total comprehensive income for the year | - | - | - | - | (743) | 5,632 | 4,889 |
| Transactions with owners of the Company: |
|
|
|
|
|
|
|
| Issue of shares (note 16) | 101 | 56 | 6,895 | - | - | - | 7,052 |
| Redemption of shares (note 16) | - | - | (6,895) | - | - | 6,895 | - |
| Share option charge for the year | - | - | - | - | - | 451 | 451 |
| Share options exercised during the year | - | - | - | 91 | - | (86) | 5 |
| Dividends paid (note 7) | - | - | - | - | - | (508) | (508) |
| Transactions with owners of the Company |
101 | 56 | - |
91 |
- |
6,752 | 7,000 |
| Closing equity as at 31 January 2021 | 636 | 5,951 | 295 | (67) | (82) | 14,349 | 21,082 |
The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
Consolidated statement of financial position
as at 31 January 2021
|
|
|
| 31 January | 31 January |
|
|
|
| 2021 | 2020 |
|
|
| Note | £'000 | £'000 |
|
| ASSETS |
|
|
|
|
| Non-current assets |
|
|
|
|
| Goodwill | 9 | 8,692 | 8,641 |
|
| Other intangible assets |
| 9,260 | 11,872 |
|
| Property, plant and equipment |
| 6,047 | 7,698 |
|
| Deferred tax assets |
| 700 | 284 |
|
| Total non-current assets |
| 24,699 | 28,495 |
|
| Current assets |
|
|
|
|
| Trade and other receivables | 10 | 9,908 | 18,801 |
|
| Current tax assets |
| 816 | 318 |
|
| JetCard bank balances |
| 17,805 | 16,742 |
|
| Other cash and cash equivalents |
| 9,916 | 4,633 |
|
| Total cash and cash equivalents | 11 | 27,721 | 21,375 |
|
| Total current assets |
| 38,445 | 40,494 |
|
| Total assets |
| 63,144 | 68,989 |
|
| LIABILITIES |
|
|
|
|
| Current liabilities |
|
|
|
|
| Trade and other payables | 12 | (4,287) | (5,669) |
|
| Current tax liabilities |
| (175) | (627) |
|
| Other liabilities | 13 | (6,903) | (5,014) |
|
| Deferred income and JetCard deposits |
| (21,423) | (24,658) |
|
| Derivative financial instruments |
| - | (39) |
|
| Lease liabilities |
| (4,809) | (5,448) |
|
| Deferred consideration |
| - | (1,318) |
|
| Provisions |
| (735) | (469) |
|
| Total current liabilities |
| (38,332) | (43,242) |
|
| Net current assets/(liabilities) |
| 113 | (2,748) |
|
| Non-current liabilities |
|
|
|
|
| Borrowings | 11 | - | (11,500) |
|
| Lease liabilities |
| (1,060) | (1,860) |
|
| Deferred consideration |
| (991) | (982) |
|
| Deferred tax liability |
| (1,511) | (1,819) |
|
| Provisions |
| (168) | (393) |
|
| Total non-current liabilities |
| (3,730) | (16,554) |
|
| Total liabilities |
| (42,062) | (59,796) |
|
| Net assets |
| 21,082 | 9,193 |
|
|
|
| 31 January | 31 January |
|
|
|
| 2021 | 2020 |
|
|
| Note | £'000 | £'000 |
|
| EQUITY |
|
|
|
|
| Share capital |
| 636 | 535 |
|
| Share premium account |
| 5,951 | 5,895 |
|
| Merger reserve |
| 295 | 295 |
|
| Own shares reserve |
| (67) | (158) |
|
| Translation reserve |
| (82) | 661 |
|
| Retained earnings |
| 14,349 | 1,965 |
|
| Total equity |
| 21,082 | 9,193 |
These financial statements were approved and authorised for issue by the Board of Directors on 11 May 2021 and were signed on its behalf by:
M A Briffa J E Estell
Director Director
The above consolidated statement of financial position should be read in conjunction with the accompanying notes.
Consolidated statement of cash flows
for the year ended 31 January 2021
|
|
| Group | |
|
|
| Year | Year |
|
|
| ended | ended |
|
|
| 31 January | 31 January |
|
|
| 2021 | 2020 |
|
| Note | £'000 | £'000 |
| Cash generated from operations | 14 | 19,416 | 9,109 |
| - Interest received |
| 29 | 71 |
| - Interest paid |
| (512) | (578) |
| Income tax paid |
| (4,653) | (898) |
| Net cash inflow from operating activities |
| 14,280 | 7,704 |
| Investing activities |
|
|
|
| - Purchases of property, plant and equipment |
| (337) | (549) |
| - Purchases of intangible assets |
| (231) | (376) |
| - Proceeds on disposal of property, plant and equipment |
| 21 | - |
| - Acquisition of subsidiaries |
| (1,278) | (7,446) |
| Net cash used in investing activities |
| (1,825) | (8,371) |
| Financing activities |
|
|
|
| - Dividends paid to the Company's shareholders |
| (508) | (2,961) |
| ‒ Proceeds on issue of new shares |
| 7,052 | - |
| - Proceeds on exercise of share options |
| 5 | 22 |
| - Repayment of finance lease liabilities |
| (1,617) | (5,414) |
| - (Decrease)/Increase in borrowings |
| (11,500) | 6,000 |
| Net cash (used in)/generated from financing activities |
| (6,568) | (2,353) |
| Net increase/(decrease) in cash and cash equivalents |
| 5,887 | (3,020) |
| Opening cash and cash equivalents |
| 21,375 | 25,154 |
| Effect of changes in foreign exchange rates |
| 459 | (759) |
| Closing cash and cash equivalents |
| 27,721 | 21,375 |
JetCard cash
The closing cash and cash equivalents balance can be further analysed into 'JetCard cash' and 'non-JetCard cash' as follows:
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| JetCard cash (see explanation below) | 17,805 | 16,742 |
|
| Non-JetCard cash | 9,916 | 4,633 |
|
| Cash and cash equivalents | 27,721 | 21,375 |
|
JetCard cash is included on the cashflow as it does not meet the IFRS definition of restricted cash. JetCard cash is cash received from customers participating in the JetCard programme in advance of bookings being made. It is managed through segregated bank accounts set aside for these purposes and is not used for Air Partner's working capital needs.
The above consolidated statements of cash flows should be read in conjunction with the accompanying notes.
Notes to the financial statements
for the year ended 31 January 2021
1 General information
Air Partner plc (the 'Company') is a public listed company limited by shares which is listed on the London Stock Exchange and incorporated and domiciled in the UK (England) under registration number 00980675. The Company and its subsidiaries are a world-leading, global aviation services group providing air charter and related services from 16 locations globally. The address of the registered office is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA.
2 Accounting policies
a) Basis of preparation
The condensed consolidated financial statements for the year to 31 January 2021 have been prepared in accordance with international accounting standards in conformity with the requirements of the Companies Act 2006 (International Financial Reporting Standards - 'IFRS') and the applicable legal requirements of the Companies Act 2006. In addition to complying with international accounting standards in conformity with the requirements of the Companies Act 2006 as applicable to companies using IFRS, the consolidated financial statements also comply with International Financial Reporting Standards adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union.
The financial information contained within this preliminary announcement for the years to 31 January 2021 and 31 January 2020 does not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year to 31 January 2020 have been filed with the Registrar of Companies and those for the year to 31 January 2021 will be filed following the Company's annual general meeting. The auditors' report on the statutory accounts for each of the years to 31 January 2021 and 31 January 2020 is unqualified, does not draw attention to any matters by way of emphasis, and does not contain any statement under section 498 of the Companies Act 2006.
The accounting policies adopted are consistent with those adopted and disclosed in the group financial statements for the year ended 31 January 2021. Accounting policies are consistent with those of the previous financial year, except as described in the following sections.
a) Going concern
The Group's business activities, together with the factors likely to affect its future development, performance and position, are set out in the Chair's Statement and Chief Executive's Review. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Chief Financial Officer's Review. In addition, the Group's objectives, policies and processes for managing its capital risk; details of its financial instruments and hedging activities; and its exposures to interest rate risk, credit risk, liquidity risk and foreign currency risk, are laid out in the financial statements for the year ended 31 January 2021.
The Directors took steps during the year to equip the Group to deal with the economic impact of the COVID-19 pandemic. These included reviewing credit terms, cost cutting measures and utilising government support for staff costs where appropriate. The Directors believe the steps detailed above and the strong cash position at the end of April 2021 mean the Group is well placed to manage its business and meet its liabilities as they fall due. In reaching this conclusion, the Directors have taken into account the risks identified in the Principal risks and uncertainties in the Group's Annual Report for the year ending 31 January 2021.
The Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
b) Government grants
Grants from the government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Grant income has been offset against the relevant expenditure where permitted.
Further information on the grants received during the year is provided in note 15 - Government grants.
c) Leasing
Payments associated with short-term leases and low value assets are recognised on a straight-line basis as an expense in the consolidated statement of comprehensive income. Short-term leases are leases with a lease term of 12 months or less. Low value leases are those where the underlying asset value, when new, is £5,000 or less.
For all other leases where the Group is the lessee, at the lease's inception a right of use asset at the fair value of the leased asset or, if lower, the present value of the minimum lease payments is recognised. The corresponding liability, net of finance charges, is included in other short-term and long-term payables. The liability includes the net present value of the following:
· fixed payments, less any lease incentives receivable
· variable lease payments that depend on an index or a rate, initially measured using the index or rate as at the commencement date
· the exercise price of a purchase option if the Group is reasonably certain to exercise that option
· payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option, and
· amounts expected to be payable by the Group under residual value guarantees.
Each lease payment is allocated between the liability and finance cost. The finance cost is charged to the income statement over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right of use asset acquired is depreciated over the asset's useful life, or over the shorter of the asset's useful life and the lease term if there is no reasonable certainty that the Group will obtain ownership at the end of the lease term.
Judgements made in calculating the lease liability include assessing whether arrangements contain a lease and determining the lease term. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. Property leases will often include an early termination or extension option to the lease term. Extension and termination options have been considered when determining the lease term, along with all facts and circumstances that may create an economic incentive to exercise an extension option, or not exercise a termination option. Extension periods (or periods after termination options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
The lease payments are discounted using an incremental borrowing rate. Calculating the discount rate is an estimate made in calculating the lease liability. The rate used is the rate that the Group would have to pay to borrow the funds necessary to obtain an asset of similar value to the right of use asset in a similar economic environment with similar terms, security and conditions. To determine the incremental borrowing rate, the Group uses the average borrowing cost available for the Group at the date of addition.
d) Critical accounting judgements and sources of estimation uncertainty - Redline deferred consideration
The consideration for the acquisition of Redline Worldwide International included £2.0m of deferred consideration. £1.0m of unconditional deferred consideration was paid on the first anniversary of the acquisition while the remaining £1.0m 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 retained the provision at the full £1.0m. The judgement reflects the level of uncertainty in the aviation market as a result of COVID-19. The range of outcomes is dependent on the FY22 performance of Redline but will not exceed the £1.0m liability held in the accounts.
3 Segmental analysis
The services provided by the Group consist of chartering different types of aircraft and related aviation services.
The Group has two divisions: Charter and Safety & Security. The Safety & Security division is viewed as one segment by management. The Charter division's products and services and reviewed by management in three segments: Group Charter, Private Jets and Freight. Air Partner Remarketing's (formerly Cabot Aviation Services Limited) results are aggregated into Group Charter. Overheads with the exception of corporate costs are allocated to the Group's segments in relation to operating activities.
Sales transactions between operating segments are carried out on an arm's length basis. All results reviewed by the Board (which is the chief operating decision maker) are prepared on a basis consistent with those that are reported in the financial statements.
The Board does not review assets and liabilities at segmental level; therefore these items are not disclosed. The segmental information, as provided to the Board on a monthly basis, is as follows:
| Year ended 31 January 2021 | Group | Private |
| Safety | Corporate |
|
|
| Charter | Jets | Freight | & Security | costs | Total |
| Continuing operations | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Gross transaction value | 77,801 | 58,337 | 126,244 | 12,403 | - | 274,785 |
| Revenue | 27,332 | 18,570 | 12,868 | 12,403 | - | 71,173 |
| Segmental gross profit | 17,817 | 9,296 | 11,941 | 5,816 | - | 44,870 |
| Administrative expenses, other operating income and net impairment losses on financial assets |
(11,437) |
(7,883) |
(5,274) |
(5,830) |
(2,414) |
(32,838) |
| Depreciation and amortisation of non-acquired assets (included within administrative expenses)1 |
(859) |
(390) |
(312) |
(363) |
- |
(1,924) |
| Operating profit before exceptional and other items | 6,380 | 1,413 | 6,667 | (14) | (2,414) | 12,032 |
| Exceptional and other items (see note 5) | (332) | (249) | - | (2,629) | 31 | (3,179) |
| Segment profit/(loss) | 6,048 | 1,164 | 6,667 | (2,643) | (2,383) | 8,853 |
| Finance income |
|
|
|
|
| 29 |
| Finance expense |
|
|
|
|
| (503) |
| Profit before income tax |
|
|
|
|
| 8,379 |
| Income tax expense |
|
|
|
|
| (2,747) |
| Profit for the year |
|
|
|
|
| 5,632 |
1 Depreciation of £0.5m relating to right of use assets and £0.1m relating to motor vehicles is included within gross profit.
| Year ended 31 January 2020 | Group | Private |
| Safety & | Corporate |
|
|
| Charter | Jets | Freight | Security | costs | Total |
| Continuing operations | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Gross transaction value | 136,979 | 69,808 | 19,813 | 10,216 | - | 236,816 |
| Revenue | 26,434 | 25,233 | 4,781 | 10,216 | - | 66,664 |
| Segmental gross profit | 14,724 | 11,672 | 3,158 | 4,604 | - | 34,158 |
| Administrative expenses, other operating income and net impairment losses on financial assets | (11,598) | (9,104) | (2,921) | (3,703) | (2,059) | (29,385) |
| Depreciation and amortisation of non-acquired assets (included within administrative expenses)1 | (1,168) | (253) | (68) | (137) | - | (1,626) |
| Operating profit before exceptional and other items | 3,126 | 2,568 | 237 | 901 | (2,059) | 4,773 |
| Exceptional and other items (see note 5) | (87) | 34 | - | (2,541) | (702) | (3,296) |
| Segment profit/(loss) | 3,039 | 2,602 | 237 | (1,640) | (2,761) | 1,477 |
| Finance income |
|
|
|
|
| 71 |
| Finance expense |
|
|
|
|
| (612) |
| Profit before income tax |
|
|
|
|
| 936 |
| Income tax expense |
|
|
|
|
| (633) |
| Profit for the year |
|
|
|
|
| 303 |
1 Depreciation of £4.6m relating to right of use assets is included within gross profit.
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 the location of the business operations used to generate that gross profit. Apart from the UK, no single country is deemed to have material non-current asset levels other than there is goodwill in relation to the French operation of £987,000 (2020: £936,000) and right of use assets in Italy of £3,705,000 (2020: £4,042,000).
The Board also reviews information on a geographical basis based on parts of the world in which it has business operations. As a result, the following additional information is provided showing a geographical split of the UK, Europe, the USA and the Rest of the world based upon the location of the relevant business operation which contracts the business.
|
|
|
|
| Rest of |
|
|
| UK | Europe | USA | the world | Total |
| Continuing operations | £'000 | £'000 | £'000 | £'000 | £'000 |
| Year ended 31 January 2021 |
|
|
|
|
|
| Gross transactional value | 85,861 | 32,282 | 150,527 | 6,115 | 274,785 |
| Revenue | 40,189 | 8,188 | 21,310 | 1,486 | 71,173 |
| Gross profit | 20,198 | 5,341 | 17,845 | 1,486 | 44,870 |
| Non-current assets (excluding deferred tax assets) | 18,834 | 4,975 | 171 | 19 | 23,999 |
| Year ended 31 January 2020 |
|
|
|
|
|
| Gross transactional value | 89,322 | 97,534 | 49,197 | 763 | 236,816 |
| Revenue | 34,880 | 18,837 | 12,774 | 173 | 66,664 |
| Gross profit | 17,427 | 8,732 | 7,826 | 173 | 34,158 |
| Non-current assets (excluding deferred tax assets) | 22,185 | 5,698 | 304 | 24 | 28,211 |
Europe can be further analysed as:
|
| France | Germany | Italy | Other | Total |
| Continuing operations | £'000 | £'000 | £'000 | £'000 | £'000 |
| Year ended 31 January 2021 |
|
|
|
|
|
| Gross transactional value | 1,634 | 20,973 | 7,047 | 2,628 | 32,282 |
| Revenue | 249 | 4,108 | 3,245 | 586 | 8,188 |
| Gross profit | 108 | 3,986 | 670 | 577 | 5,341 |
| Year ended 31 January 2020 |
|
|
|
|
|
| Gross transactional value | 26,206 | 24,599 | 23,489 | 23,240 | 97,534 |
| Revenue | 2,123 | 9,192 | 4,330 | 3,192 | 18,837 |
| Gross profit | 1,994 | 4,091 | 1,416 | 1,231 | 8,732 |
4 Operating profit
Operating profit for the year has been arrived at after charging/(crediting) the following:
|
| 2021 | 2020 |
| Continuing operations | £'000 | £'000 |
| Net foreign exchange loss | 150 | 238 |
| Change in the fair value of derivative financial instruments | (39) | 31 |
| Depreciation of property, plant and equipment | 2,072 | 5,840 |
| Impairment of property, plant and equipment | 81 | - |
| Profit on disposal of property, plant and equipment | (26) | - |
| Amortisation of intangible fixed assets - acquired | 2,420 | 656 |
| Amortisation of intangible fixed assets - other | 421 | 334 |
| Impairment of trade receivables | 810 | 205 |
| Operating lease rentals - land and buildings | 61 | 213 |
| Operating lease rentals - other | 3 | 13 |
| Staff costs1 | 29,381 | 23,030 |
| Government grants relating to staff costs (note 15)1 | (1,703) | - |
| Other operating income (see below and note 15)1 | (43) | - |
1 The Group received £1,746,000 of government grants during the year from schemes launched in response to the COVID-19 pandemic. See note 15 - Government grants for more information.
Amortisation of intangible fixed assets - acquired, is included with exceptional and other items. Amortisation of intangible fixed assets - other, is included within administrative expenses before exceptional and other items.
Other operating income is comprised of the following:
|
| 2021 | 2020 |
| Continuing operations | £'000 | £'000 |
| Government grants (see note 15) | 43 | - |
5 Exceptional and other items
The Group has identified a number of items which are material due to the significance of their nature and/or amount. They are listed separately here to provide a better understanding of the financial performance of the Group.
|
| 2021 | 2020 |
|
| £'000 | £'000 |
| Changes in Board and operating board composition1 | - | (195) |
| Restructuring costs2 | (783) | - |
| Amortisation of purchased intangibles | (2,420) | (656) |
| Acquisition costs3 | 18 | (604) |
| Disposal of subsidiary4 | 24 | (4) |
| Costs incurred and provision for outflows resulting from French tax investigation5 | - | (657) |
| Impairment of goodwill6 | - | (1,885) |
| Settlement of historical legal disputes7 | - | 389 |
| Adjustments to deferred consideration8 | (18) | 316 |
|
| (3,179) | (3,296) |
| Tax effect of other items9 | 331 | 233 |
| Exceptional and other items after taxation | (2,848) | (3,063) |
1 Following the accounting review in FY19 the Directors undertook an internal review of the Group operating board and determined that several roles were excess to requirements. The employees in these roles left during prior years and have not been replaced. The level of Board changes and associated costs in these years were considered highly unusual and are not expected to recur in future periods.
2 As a result of the negative impact of the COVID-19 pandemic on certain areas of the business the Directors undertook a review of the business and identified savings through reductions in headcount where revenue was not forecast to recover for the foreseeable future. Exceptional costs are comprised of the amounts paid, or due to be paid at 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.
3 The acquisition costs incurred in the prior year were in respect of the acquisition of Redline Worldwide Limited. The credit in the current year reflects the release of a provision for expected costs related to deferred consideration on the acquisition.
4 The Group disposed of Air Partner (Switzerland) AG during the current year and Air Partner Nordic during the prior year.
5 A provision of £283,000 was made in the prior year in respect of indirect tax charges for a tax reassessment in France. The provision is based on management's best estimate of the reassessment liability after taking expert legal advice. Legal fees and expense directly attributable to the tax investigation of £374,000 were incurred in the prior year in connection with this matter. There have been no further developments following the end of the prior financial year and it is unclear when the matter is likely to be resolved.
6 The impairment of goodwill in the prior year is in relation to SafeSkys Limited. Please see note 8 - Goodwill for further details.
7 The Group successfully closed two historical legal disputes in the prior year resulting in the receipt of cash settlements in both cases. The income recognised is net of associated legal expenses.
8 The adjustment to deferred consideration in the current year relates to the fair valuing of the deferred consideration relating to Redline Worldwide Limited. The prior year is in relation to SafeSkys Limited, where a settlement was reached for less than the amount provided for in the prior year's financial statements.
9 A tax credit has been included in the current year in respect of the restructuring costs incurred in the UK and amortisation of purchased intangibles. The tax credit on the purchased intangibles is offset by the change in tax rate used to calculate the deferred tax liability for these assets from 17.0% to 19.0%. At 31 January 2020, a reduction in the UK corporation tax rate on 1 April 2020 to 17.0% as a result of legislation enacted on 16 October 2016 was in effect. The Spring Budget 2020 announced that the corporation tax rate would remain at 19.0%.
6 Income tax expense
|
| 2021 | 2020 |
| Continuing operations | £'000 | £'000 |
| Current tax: |
|
|
| UK corporation tax | 778 | 620 |
| Foreign tax | 2,580 | 408 |
| Current tax adjustments in respect of prior years (UK) | (108) | (200) |
| Current tax adjustments in respect of prior years (overseas) | 235 | (208) |
|
| 3,485 | 620 |
| Deferred tax | (738) | 13 |
| Total tax | 2,747 | 633 |
| Of which: |
|
|
| Tax on underlying profit | 3,078 | 866 |
| Tax on other items (see note 5) | (331) | (233) |
|
| 2,747 | 633 |
Corporation tax in the UK was calculated at 19.0% (2020: 19.0%) of the estimated assessable profit for the year. Taxation for other jurisdictions was calculated at the rates prevailing in the respective jurisdictions.
The charge for the year can be reconciled to the profit per the consolidated income statement as follows:
|
| 2021 | 2020 |
|
| £'000 | £'000 |
| Profit from continuing operations before income tax expense | 8,379 | 936 |
| Income tax at the UK corporation tax rate of 19.0% (2020: 19.0%) | 1,592 | 178 |
| Effect of changes in tax rates | 206 | - |
| Tax effect of items that are not recognised in determining taxable profit | (316) | 407 |
| Tax effect of different tax rates of subsidiaries operating in other jurisdictions | 426 | (158) |
| Current tax adjustments in respect of prior years | 127 | (408) |
| Deferred tax not recognised1 | 620 | 603 |
| Options deductions | 92 | 11 |
| Total income tax expense | 2,747 | 633 |
1 Deferred tax not recognised in the current year relates to tax losses carried forward in France and Italy that have not been recognised as deferred tax assets. Management has opted not to recognise these assets based on the expected economic impact of COVID-19 and therefore does not expect the losses to be usable in the foreseeable future. The assumption will be reassessed each year.
At the previous balance sheet date, a reduction to the UK corporation tax to 17.0% on 1 April 2020 had been substantively enacted on 16 October 2016. Prior year deferred tax balances were stated at this rate. In the Spring Budget 2020, the government announced that from 1 April 2020 the corporation tax rate would remain at 19.0% (rather than reducing to 17.0%, as previously enacted). This new law was substantively enacted on 17 March 2020.
In the Spring Budget 2021, the government announced that from 1 April 2023 the corporation tax rate will increase to 25.0%. As the proposal to increase the rate to 25.0% had not been substantively enacted at the balance sheet date, its effects are not included in these financial statements.
7 Dividends
|
| 2021 | 2020 |
|
| £'000 | £'000 |
| Amounts recognised as distributions to owners of the parent company |
|
|
| Final dividend for the year ended 31 January 2019 of 3.85 pence per share | - | 2,011 |
| Interim dividend for the year ended 31 January 2021 of 0.80 pence per share | 508 | - |
| Interim dividend for the year ended 31 January 2020 of 1.80 pence per share | - | 950 |
|
| 508 | 2,961 |
The Directors propose a final dividend for the year ended 31 January 2021 of 1.60 pence per share, subject to shareholder approval at the Annual General Meeting to be held on 8 July 2021.
The Air Partner Employee Benefit Trust, which held 47,502 ordinary shares of 1 pence each at 31 January 2021 (2020: 69,928 ordinary shares of 1 pence each) representing 0.07% (2020: 0.13%) of the Company's issued share capital, is not entitled to receive dividends. At 31 January 2020 a further 90,910 ordinary shares of 1 pence each were held by the Trust in a nominee capacity for one beneficiary of the Trust but dividends were received in respect of those shares. No further shares relating to this beneficiary were held at 31 January 2021.
8 Earnings per share
|
| 2021 | 2020 |
| Earnings per share | Pence | Pence |
| Continuing operations |
|
|
| Basic | 9.4 | 0.6 |
| Diluted | 9.3 | 0.6 |
|
| 2021 | 2020 |
| Earnings per share | Pence | Pence |
| Excluding exceptional and other items |
|
|
| Basic | 14.2 | 6.4 |
| Diluted | 14.0 | 6.3 |
|
| 2021 | 2020 |
| From continuing operations | £'000 | £'000 |
| Earnings |
|
|
| Profit attributable to owners of the parent company | 5,632 | 303 |
| Adjustment to exclude exceptional and other items1 | 2,848 | 3,063 |
| Underlying earnings for the calculation of basic and diluted earnings per share | 8,480 | 3,366 |
1 The calculation of underlying earnings per share (before exceptional and other items) is included as the Directors believe it provides a better understanding of the underlying performance of the Group. Exceptional and other items are disclosed in note 5 - Exceptional and other items.
The calculation of the basic and diluted earnings per share is based on the following data:
|
| 2021 | 2020 |
| Weighted average number of ordinary shares | Number | Number |
| Issued and fully paid | 59,970,013 | 52,756,188 |
| Less those held by the Air Partner Employee Benefit Trust | (51,898) | (85,952) |
| Number for the calculation of basic earnings per share | 59,918,115 | 52,670,236 |
| Effect of dilutive potential ordinary shares: share options | 697,851 | 844,022 |
| Number for the calculation of diluted earnings per share | 60,615,966 | 53,514,258 |
9 Goodwill
| Group | £'000 |
| Cost |
|
| At 1 February 2019 | 6,750 |
| Additions | 3,814 |
| Foreign currency adjustments | (38) |
| At 31 January 2020 | 10,526 |
| Additions | - |
| Foreign currency adjustments | 51 |
| At 31 January 2021 | 10,577 |
| Provision for impairment |
|
| At 1 February 2019 | - |
| Charge for the year | (1,885) |
| At 31 January 2020 | (1,885) |
| Charge for the year | - |
| At 31 January 2021 | (1,885) |
| Net book value |
|
| At 31 January 2021 | 8,692 |
| At 31 January 2020 | 8,641 |
| At 1 February 2019 | 6,750 |
The additions in the prior year related to the acquisition of Redline Worldwide Limited for £3,644,000. An adjustment of £170,000 for SafeSkys Limited was made during the prior year following finalising the settlement of the amount payable on acquisition.
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:
|
| 2021 | 2020 |
|
| £'000 | £'000 |
| Air Partner International S.A.S.1 | 987 | 936 |
| Baines Simmons Limited | 1,711 | 1,711 |
| Cabot Aviation Services Limited | 787 | 787 |
| Clockwork Research Limited | 396 | 396 |
| Redline Worldwide Limited | 3,644 | 3,644 |
| SafeSkys Limited | 1,167 | 1,167 |
|
| 8,692 | 8,641 |
1 The goodwill held in respect of Air Partner International S.A.S. arose in the local currency of Euros and therefore the amount expressed in Sterling varies depending on exchange rates.
Impairment testing
Goodwill and other intangibles are tested for impairment at least annually or when there is an indication that the carrying value may not be recoverable. Value in use is calculated as the net present value of the projected risk-adjusted cash flows of the CGU. These forecast cash flows are based on the 2022 budget and the five-year strategic plan. The impairment models do include sensitivity testing to ascertain whether a reasonable change in the underlying assumptions could indicate an impairment.
Management reviewed the status of the following CGUs and found no indication of impairments:
• Air Partner International S.A.S.;
• Baines Simmons Limited;
• Cabot Aviation Services Limited;
• Clockwork Research Limited; and
• Redline Worldwide Limited.
As an impairment was recorded against SafeSkys Limited in the prior year, any further adverse change in assumptions would give rise to a further impairment in value. Sensitivity analysis is provided below. There is no reasonably foreseeable change in assumptions that would give rise to an impairment in value of the other goodwill balances.
Impairment testing assumptions
Based on the impairment testing of SafeSkys Limited, management identified a potential impairment as at 31 January 2020. The key assumptions used in the value in use calculation for SafeSkys Limited and all other CGUs were:
• sales: projected sales are built up in line with the strategic business plan;
• margins: reflect the anticipated margins within the strategic business plan;
• discount rate: an exercise has been undertaken to review the discount rate resulting in a post-tax discount rate of 8.65%; and
• long-term growth rates: growth rates for the period after the detailed forecasts are based on the long-term GDP projections, which is 2%.
The assumptions used in the impairment testing model were as follows:
| Basis of valuation | Value in use |
| Discount rate | 8.65% |
| Period covered by management projections | 5 years |
| Long-term growth rates | 2.0% |
Sensitivity 1
A further reduction on forecasted operating profit of 10% each year to account for non-renewal or cost creep in existing contracts.
Sensitivity 2
The discount rate has been increased by 4.0%. This adjustment is deemed to capture all changes to the trading environment and reflect a tougher trading environment compared to the base case.
The following sensitivities have been provided in relation to SafeSkys Limited, being the only CGU where the Directors believe a reasonable change in assumptions could give rise to a further impairment in value.
|
| PV | Goodwill and other intangible assets | Headroom |
| Scenario | £'000 | £'000 | £'000 |
| Base case | 2,029 | 1,815 | 214 |
| Sensitivity 1 | 1,826 | 1,815 | 11 |
| Sensitivity 2 | 1,274 | 1,815 | (541) |
There have been no key changes to the assumptions in the current year's strategic plan compared to the previous year. The increase in headroom from the prior year reflects that SafeSkys Limited has settled the costs associated with the exit from the Air Traffic Control contracts.
Redline Worldwide Limited sensitivity is shown below. The assumptions are in line with those used for SafeSkys. Although COVID-19 reduced the expected revenue for FY21 it still made a net contribution to the Group. The Directors expect to see a strong recovery over FY22 and FY23 resulting in significant headroom on the base case scenario.
|
| PV | Goodwill and other intangible assets | Other non-current assets and liabilities | Headroom |
| Scenario | £'000 | £'000 | £'000 | £'000 |
| Base case | 16,203 | 8,734 | 152 | 7,317 |
| Sensitivity 1 | 14,582 | 8,734 | 152 | 5,696 |
| Sensitivity 2 | 10,017 | 8,734 | 152 | 1,131 |
Based on the impairment testing performed, the Directors believe that there are no reasonable possible changes to the key assumptions that would result in a material impairment of Goodwill.
10 Trade and other receivables
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| Gross trade receivables | 6,731 | 9,623 |
|
| Loss allowance | (1,114) | (854) |
|
| Trade receivables | 5,617 | 8,769 |
|
| Amounts owed by Group undertakings | - | - |
|
| Social security and other taxes1 | 593 | 1,215 |
|
| Other receivables | 422 | 407 |
|
| Prepayments and accrued income2 | 3,276 | 8,410 |
|
|
| 9,908 | 18,801 |
|
1 Prepayments and accrued income are relatively high compared to trade receivables due to the impact of IFRS 15 and cash flow implications. The Group will often need to make payments in advance of the service performed to enable it to secure the resources required. However, the customer will not pay until nearer or after the flight date. As a result under IFRS 15 the trade debtor and matching deferred revenue are not recognised but the cash outflow and prepayment are.
Amounts owed by Group undertakings are interest free, unsecured and repayable on demand.
Prepayments and accrued income include £1,551,000 of operator prepayments (2020: £5,692,000) and accrued income of £647,000 (2020: £1,973,000). All accrued income is in relation to known invoices not issued at the year end. All accrued income will be converted within the 12 months. The remainder of the prepayments and accrued income is for prepayments relating to overheads.
Classification as trade receivables
Trade receivables are amounts due from customers for goods sold or services performed in the ordinary course of business. They are generally due for settlement within 30 days of becoming due.
The Directors consider that the carrying amount of trade and other receivables approximates their fair value.
All trade and other receivables have been reviewed for indicators of impairment. The movement in impaired receivables in the year is shown below:
|
| Group |
|
| £'000 |
| At 1 February 2019 | 698 |
| Charge for the year | 205 |
| Receivables written off during the year | (27) |
| Foreign currency adjustments | (22) |
| At 31 January 2020 | 854 |
| Charge for the year | 810 |
| Receivables written off during the year | (571) |
| Foreign currency adjustments | 21 |
| At 31 January 2021 | 1,114 |
Of the amounts impaired during the year, £153,000 (2020: £123,000) was for an amount past due by less than one year with the remainder being all overdue by more than one year.
An analysis of these financial assets at the statement of financial position date for 2021 is as follows:
|
|
| Allowance |
|
|
|
| for bad and |
|
|
| Gross trade | doubtful | Trade |
|
| receivables | debts | receivables |
|
| 2021 | 2021 | 2021 |
| Group | £'000 | £'000 | £'000 |
| Current | 2,081 | - | 2,081 |
| Aged: |
|
|
|
| - By not more than three months | 3,268 | - | 3,268 |
| - By more than three months but not more than six months | 399 | (131) | 268 |
| - By more than six months but not more than one year | 37 | (37) | - |
| - By more than one year | 946 | (946) | - |
|
| 6,731 | (1,114) | 5,617 |
|
|
| Allowance |
|
|
|
| for bad and |
|
|
| Gross trade | doubtful | Trade |
|
| receivables | debts | receivables |
|
| 2020 | 2020 | 2020 |
| Group | £'000 | £'000 | £'000 |
| Current | 3,066 | - | 3,066 |
| Aged: |
|
|
|
| - By not more than three months | 4,635 | (2) | 4,633 |
| - By more than three months but not more than six months | 767 | (231) | 536 |
| - By more than six months but not more than one year | 465 | (21) | 444 |
| - By more than one year | 690 | (600) | 90 |
|
| 9,623 | (854) | 8,769 |
11 Cash, borrowings and net cash
|
| Group |
| |
|
| 2021 | 2020 |
|
| Cash | £'000 | £'000 |
|
| JetCard cash | 17,805 | 16,742 |
|
| Non-JetCard cash | 9,916 | 4,633 |
|
| Cash and cash equivalents | 27,721 | 21,375 |
|
|
| Group |
| |
|
| 2021 | 2020 |
|
| Borrowings | £'000 | £'000 |
|
| Secured bank loans | - | 11,500 |
|
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| Amount due for settlement within 12 months | - | - |
|
| Amount due for settlement after 12 months | - | 11,500 |
|
|
| - | 11,500 |
|
|
| Group |
| |
|
| 2021 | 2020 |
|
| Net cash | £'000 | £'000 |
|
| Cash | 27,721 | 21,375 |
|
| Borrowings | - | (11,500) |
|
| Net cash | 27,721 | 9,875 |
|
|
| Group |
| |
|
| 2021 | 2020 |
|
| Net cash/(debt) excluding JetCard cash | £'000 | £'000 |
|
| Non JetCard cash | 9,916 | 4,633 |
|
| Borrowings | - | (11,500) |
|
| Net (debt) / cash excluding JetCard cash | 9,916 | (6,867) |
|
All borrowings are in Sterling.
The Group has no borrowings outstanding at 31 January 2021 (2020: £11.5m comprised of a bank loan from the Group's banker).
The Group has access to a revolving credit facility of £13.0m with an interest rate of 2.6% above LIBOR, expiring in February 2023. The loan is secured by a floating charge over the Company's assets.
12 Trade and other payables
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| Trade payables | 2,713 | 3,421 |
|
| Other taxation and social security payable | 1,574 | 2,248 |
|
|
| 4,287 | 5,669 |
|
The Directors consider that the carrying amount of trade and other payables approximates to their fair value.
13 Other liabilities
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| Accruals | 6,536 | 4,880 |
|
| Other liabilities | 367 | 134 |
|
| Amounts owed to Group undertakings | - | - |
|
|
| 6,903 | 5,014 |
|
Amounts owed to Group undertakings are interest-free, unsecured and repayable on demand.
The Directors consider that the carrying amount of other liabilities approximates to their fair value.
14 Net cash inflow from operating activities
|
| Group |
| |
|
| 2021 | 2020 |
|
|
| £'000 | £'000 |
|
| Profit for the year |
|
|
|
| Continuing operations` | 5,632 | 303 |
|
| Adjustments for: |
|
|
|
| Finance income | (29) | (71) |
|
| Finance expense | 522 | 613 |
|
| Income tax | 2,747 | 633 |
|
| Depreciation, amortisation and loss on disposal | 4,888 | 6,830 |
|
| Impairments | 81 | 1,885 |
|
| Fair value movement on derivative financial instruments | (39) | 31 |
|
| Share option cost for period | 451 | 59 |
|
| Share based payments | - | 58 |
|
| Increase/(decrease) in provisions | 42 | (643) |
|
| Foreign exchange differences | (1,388) | 88 |
|
| Operating cash flows before movements in working capital | 12,907 | 9,786 |
|
| Change in receivables | 9,945 | 1,582 |
|
| Change in payables | (3,436) | (2,259) |
|
| Cash generated from/(used in) operations | 19,416 | 9,109 |
|
Cash generated from operations is stated net of a cash outflow at the Group level of £625,000 (FY20: £734,000) relating to exceptional items.
Net cash reconciliation
This section sets out an analysis of net cash and the movements in net cash for each of the periods presented.
Group
|
|
| At |
|
|
|
|
| At |
|
|
| 1 February 2020 | Additions | Disposals | Cash flow movements | Interest | Foreign exchange | 31 January 2021 |
|
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Cash |
| 21,375 | - | - | 5,887 | - | 459 | 27,721 |
| Debt |
| (11,500) | - | - | 11,500 | - | - | - |
| Lease liabilities |
| (7,308) | (277) | 357 | 1,831 | (214) | (258) | (5,869) |
| Net cash |
| 2,567 | (277) | 357 | 19,218 | (214) | 201 | 21,852 |
|
| At |
|
|
|
|
|
| At |
|
| 1 February | Adoption of | Acquired on |
| Cash flow |
| Foreign | 31 January |
|
| 2019 | IFRS 16 | acquisition | Additions | movements | Interest | exchange | 2020 |
|
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
| Cash | 25,154 | - | - | - | (3,020) | - | (759) | 21,375 |
| Debt | (5,500) | - | - | - | (6,000) | - | - | (11,500) |
| Lease liabilities | - | (11,760) | (1,065) | (188) | 5,715 | (301) | 291 | (7,308) |
| Net cash | 19,654 | (11,760) | (1,065) | (188) | (3,305) | (301) | (468) | 2,567 |
15 Government grants
Government grants of £43,000 (2020: £nil) 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.
During the year, the Group utilised the Coronavirus Job Retention Scheme implemented by the government of the United Kingdom, where those employees designated as being 'furloughed workers' are eligible to have 80.0% of their wage costs paid up to a maximum amount of £2,500 per month. The Group utilised similar schemes provided by governments in France, Germany, Austria, Italy and the United States. The total amount of such relief received was £1,703,000, which has been offset against the relevant staff costs in the accounts. There are no unfulfilled conditions or other contingencies attached to these grants.
16 Issue of shares
In June 2020, the Group completed a cash box placing for 10,037,308 new ordinary shares of 1 pence each in the capital of Air Partner plc, the Company. The cash box placing allowed the Group to quickly issue shares by bypassing the pre-emption requirements required for the issue of shares, provided they are issued for a non-cash consideration. This was achieved through the use of shares in a subsidiary company created specifically for the cash box placing. The placing price was 75p per share. The placing raised gross funds of £7,527,981 incurring fees of £475,789, resulting in a net increase in equity of £7,052,192.
In accordance with section 612 of the Companies Act 2006, merger relief has been applied resulting in an increase to retained earnings of £6,895,576. The remainder of the increase in equity comes from:
· share capital of £100,373; and
· share premium of £56,243, which relates to an offer through PrimaryBid as part of the placing. Share issued through this offer did not qualify for merger relief.
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