Final Results

RNS Number : 2191U

Air Partner PLC

12 October 2010

 

Air Partner PLC

("Air Partner" or "the Group" or "the Company")

Results for the year ended 31 July 2010

 

Air Partner is a leading provider of private aviation services to industry, commerce, governments and individuals worldwide.

 

Highlights:

 

·; Resilient performance despite challenging markets

 

·; Core broking business performed well in H2

 

·; Restructuring of core business bearing fruit

 

·; Closure of Private Jet Operating Company complete (discontinued operations)

 

·; New management team in place

 

·; Dividend reinstated:15p interim dividend announced on 4 October 2010 will be paid on 17 December 2010 to shareholders on the register at 12 November 2010

 

·; Visibility continues to be limited

 

·; Current trading remains challenging, but with grounds for cautious optimism

 

Group Sales	£230m	2009: £187m
Underlying Group PBT*	£3.5m	2009: £5.9m
Statutory Group PBT	£2.8m	2009: £5.6m
Loss for the period	(£1.65m)	2009: (£0.04m)
Discontinued operations	(£4.4m)	2009: (£4.7m)
Cash	£11.7m	2009: £16.1m
Diluted EPS (continuing operations)	26.8p	2009:45.7p
Diluted EPS (discontinued operations)	(42.9p)	2009: (46.0p)
Diluted EPS (continuing & discontinued operations)	(16.1p)	2009: (0.4p)

 

*Adjusted for exceptional expenditure of £742,000 (2009: £292,000)

 

Mark Briffa, CEO of Air Partner commented:

 

"At the half year, the Board announced decisive action to transition Air Partner back to its core broking business and better position the Group for a return to growth. I am pleased to report that the restructuring has progressed well and our broking business performed strongly in the second half of the year. As a result, the dividend has been reinstated and the Board intends to pursue a progressive dividend policy in the future. The Board is confident that today, despite the ongoing challenging economic backdrop, Air Partner is leaner, more efficient and better placed for future growth. My thanks go to the whole Air Partner team for all their effort and hard work over the last year."

 

12 October 2010

 

Enquiries:

Air Partner plc	T. 01293 844 788
Mark Briffa
Temple Bar Advisory	T. 0207 002 1080
Tom Allison	T. 0778 999 8020
Nicola Flynn

 

Chairman's Statement

 

The year to 31 July 2010 was a challenging time for Air Partner. Generally, the aviation industry was severely affected by the global economic crisis and, although the core broking divisions of our business held up well, the Private Jet Operating Company ("PJOC") felt the full impact of the downturn. As a result, the PJOC was regretfully put into administration, as previously announced in March.

 

Despite strong competition, aggressive pricing and difficult trading conditions, the core business performed ahead of expectations in the second half of the year. As a result, the Group made an underlying full year profit of £3.5m (2009:£5.9m) in the continuing core broking business. This was offset by a loss of £4.4m in the discontinued PJOC and £0.7m of exceptional restructuring costs, which combined to produce an overall loss for the year of £1.65m (2009:loss of £0.04m). Turnover rose by 23% to £230m (2009:£187m) with a gross profit margin of 8.7% (2009:11.8%).

 

There were significant Board changes during the year as the former CEO, CFO and PJOC director left Air Partner. In April, Mark Briffa took over as Chief Executive Officer and has made excellent progress on refocusing Air Partner back to the core broking business. Gavin Charles joined as Chief Finance Officer on 29 June and brings strong financial skills and valuable commercial experience to the Group.

 

The Group management structure has also been reorganised with a new Operating Board responsible for implementing strategy and day-to-day executive decisions. The period under review saw significant cost saving measures introduced and implemented. Consequently, the Group is well positioned for a return to growth.

 

Particular tribute must be paid to all the teams at Air Partner who, in difficult times, have maintained morale and performed outstandingly to keep the core business profitable.

 

Dividend

The Board reluctantly decided not to pay an interim dividend at the half year because of the uncertainties surrounding the PJOC and the general economic situation. On 4 October 2010, having reviewed distributable reserves, the Board declared an interim dividend of 15p per share, to be paid on 17 December 2010 to shareholders on the register on 12 November 2010, in substitution for a final dividend for the year. This payment does not require shareholder approval. In future the Board intends to revert to the more usual interim and final dividends and aims to follow a progressive policy of increasing dividends from this new base of 15p.

 

Outlook

We have started to see the first, albeit modest, signs of an improvement in air charter volumes. However, the ad hoc nature of the air charter business means that our order book runs on short lead times. As always, we have limited visibility of future demand and we remain vulnerable to any further economic downturn. Nonetheless, following the restructuring of the business, the Group is leaner, more efficient and better poised for future growth.

 

Going forward, the Group will concentrate on building further its reputation for high quality service, while developing new markets and cross-selling products, which will allow Air Partner to resume long-term profit growth.

 

Aubrey Adams

Chairman

 

CEO's Review

 

Since March, the Board has concentrated on resizing the Group to meet current demand and thereby position Air Partner for future growth, with the key strategic focus being a return to the core broking business. The most obvious demonstration of this was the Board's decision to place the PJOC into administration and the ensuing work to consolidate the strengths of the operating business units. Additionally, the Board has reduced head count at all levels across the Group, and closed or merged non-performing offices within the Group's global office network. While these decisions were crucial, it is perhaps more pleasing to report that, where new opportunities presented themselves, Air Partner has used its financial strength to invest, both in new offices and in people. The emphasis on the core business and on developing areas of future growth has been reflected in new strategic partnerships and general sales agreements ("GSAs") signed with a number of leading companies.

 

At the half year, having exhausted all other options of a joint venture or sale, the Board announced its decision to close the PJOC. This decision was not taken lightly. However, given the losses at the PJOC and the need to protect the core business, which has remained profitable throughout the current economic difficulties, the Board is reassured that the prompt action taken prevented further losses and paves the way for a return to growth. Since the closure, the Board has made good progress in resolving issues relating to the PJOC, including some third party claims for which provision has been made.

 

Cash at the year end fell from £16.1m to £11.7m. This was in part driven by the loss made in the year as a result of the PJOC closure costs, and partly relates to the increase in debtors. The increase in debtors reflects Air Partner's ability to offer government clients terms which provide the Company with a competitive advantage and minimal credit risk.

 

Trading conditions continued to be challenging across all markets, with strong competition and aggressive pricing impacting margins still in force. However, there are signs of some early improvements. Moreover, it is pleasing to note that Air Partner's diverse revenue streams include many non-cyclical areas of work - entertainment industry charters, military deployments and NHS organ flights to name but a few - which have continued flying throughout the period.

 

The Board's strategy is to focus Air Partner on its core strength - broking across all of its clients, products and geographies. Additionally, the Board will seek to leverage the opportunities generated by joint ventures and GSAs in a sector where aircraft supply constraints may re-emerge in the future. The Board is pleased with the progress made already on this front, with several agreements signed during the year and, post year end, a strategic alliance was established with Cessna's US-based CitationAir. Through such alliances, and building on an existing presence in 20 offices across 17 countries, the Group aims to establish an important presence in key international locations.

 

Operational Review

 

Commercial Jet Broking

This division charters aircraft with 20+ seats. Within this area we have a strong presence in the government sector as well as business in the oil and gas sector and sports-related travel. During the year the division performed strongly in competitive tendering situations, winning significant new business including flying the Real Madrid football team during its US Tour. Commercial Jets remains the largest division and turnover in the year reached £114m, equating to almost 50% of the Group total. Sales were 8% lower than last year reflecting weak demand and strong competition. The well publicised weakness in the aviation market applied downward pressure on net margins with pre-tax profit for the segment falling 58% to £1.5m.

 

Private Jet Broking

The Private Jets business represents 18% of Group sales and the segment grew by 6% to £41.4m. Competitive pressure again depressed net margins, delivering 1.6% (2009: 3.3%). The private jets sector comprises ad hoc charters of aircraft with fewer than 20 seats and the JetCard programme. In the second half of the year, there were strong signs of activity among High Net Worth Individuals (HNWI) and within the entertainment industry. The business has a diverse client base, including corporate customers in a variety of industry sectors as well as medical repatriation/transplant flights.

 

The JetCard programme enables clients to pre-purchase hours of Private Jet flying time on a card, in a flexible and price competitive manner. Despite lower usage, JetCard has remained profitable during the period under review and is being expanded into France, Germany and Italy. Meanwhile, ad hoc charter has continued to benefit from the demise of fractional ownership, with an increase in enquiries from dissatisfied members from other schemes. The Private Jets division's recently announced alliance with Citation Air will enable Air Partner to look after CitationAir's JetCard customers flying privately in Europe, whilst CitationAir will be Air Partner's preferred private jet supplier for its JetCard clients travelling in North America.

 

Freight Broking

The Freight division provides bespoke freight solutions for clients with a wide range of urgent and outsize requirements. The business is a major focus area, growing 178% to £55.7m (2009: £20.0m) in the financial year. Despite this growth, profit for the segment fell from £0.7m to £0.4m, as margins fell in response to fierce price competition and Air Partner's growth strategy in this division. Many new contracts were won during the year, including Air Partner Freight's four year appointment as the sole provider of air charter services for freight and passenger flights to the UK Government's Department for International Development.

 

Other revenue generating areas have performed strongly with revenues up more than 300%, albeit from a low base. These areas include a fuel broking division, an emergency planning division and a travel agency.

 

Outlook

I believe we leave the year a leaner, more flexible and better structured business. However, Air Partner will only truly maximise its existing advantages and develop new ones, if it continues to employ the best brokers and support teams. Accordingly, the Board is determined to put people and skills at the centre of Air Partner's strategy and invest when necessary.

 

Our people are at the heart of our future success. We put considerable focus into developing and supporting their careers. Our learning and development department is now well established and our bespoke management training scheme is strengthening skill sets and management capability throughout the Group. We passionately believe in a flat structure environment and effective two-way communication. We have an excellent team of people who, despite the sector's difficulties in 2010, are starting the current financial year with high energy and strong morale. I would like to thank them all for their commitment and achievements over the last 12 months.

Air Partner has a talented team, a wide range of products, a diverse client base, financial strength and an international network across 17 countries. I believe this not only provides a well diversified business, which helps mitigate against future adverse market conditions; but it also provides an excellent launch pad from which to further grow the business.

 

While current trading remains challenging and visibility continues to be poor, there are some signs of tentative improvement and the results in the core business are a testimony to this. Moreover, today we are leaner and tightly focused on our core business, better positioning us for any future turbulence that may occur. Today, we have the right strategy in place to ensure we are well placed for long term revenue and margin recovery as the trends of globalisation, increased wealth creation and a deterioration of the commercial airline services continue.

 

Mark Briffa

CEO

 

Risks and uncertainties facing the Group

A high percentage of the Group's business is driven by the short term needs of the client. Our business is founded on being able to respond quickly to ad hoc requests from a wide range of clients across many different countries. A long forward order book is therefore not available and not appropriate to use as a measure of the Group's longer term prospects. The Group is entirely comfortable with this.

 

Approximately 92% of our business is aircraft charter broking which can be classed as a relatively low financial risk business, in that the broker sells capacity on aircraft owned and operated by a third party. Contracts are normally placed as mirrored transactions. The Group aims to mitigate risk where possible by making payments to operators only once payment from the client has been received. Rigorous flight standards are applied in our selection of charter operators and high quality aircraft are chartered from a large number of aircraft providers located in many different countries to minimise the Group's exposure to failure of a particular operator. The Group does not have any contractual arrangements with any significant individual or company which are essential to continuation of the business.

 

The principal risk to the Group's business therefore stems from the ongoing financial position of clients and the general economic conditions in which they operate, affecting their willingness to charter. The Group recognises that during the year under review its business has been, and is likely to continue to be, impacted by the economic downturn.

 

Financial information

This preliminary statement was approved by the Board of Directors on 11 October 2010. The financial information in this preliminary announcement which comprises the consolidated income statement, consolidated statement of comprehensive income, consolidated balance sheet, consolidated statement of changes in equity, consolidated statement of cash flows, summary accounting policies and related notes does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.

 

The statutory accounts for the year ended 31 July 2009 have been filed with the Registrar of Companies. The auditors have reported on those accounts and on the statutory accounts for the year ended 31 July 2010, which will be made available to shareholders in November and will be filed with the Registrar of Companies following the Annual General Meeting to be held on 9 December 2010. Both the audit reports were unqualified and did not contain any statement under section 498 of the Companies Act 2006.

 

Forward-looking statements

Announcements issued by Air Partner plc may contain forward-looking statements, indicated by words such as "believes," "aims", "intends," and similar expressions. These statements reflect current views and expectations but are subject to risks and uncertainties which could cause actual results to be materially different from those projected or implied. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory changes.

 

 

Air Partner PLC

("the Group" or "the Company")

Preliminary Announcement of audited results for the year ended 31 July 2010

Consolidated income statement

 

		Year ended	Year ended
Continuing operations	Note	31 July 2010 £'000	31 July 2009 (restated) £'000
Revenue	2	229,968	187,029
Cost of sales		(209,863)	(164,926)
Gross profit		20,105	22,103
Administrative expenses		(16,704)	(16,659)
Restructuring costs	7	(742)	(292)
Operating profit		2,659	5,152
Finance income		123	490
Profit before tax		2,782	5,642
Taxation	3	(31)	(965)
Profit for the period from continuing operations		2,751	4,677
Loss for the period from discontinued operations	8	(4,406)	(4,715)
Loss for the period		(1,655)	(38)
Attributable to:
Equity holders of the parent company		(1,655)	(38)
Earnings per share: Continuing and discontinued operations
Basic	5	(16.1)p	(0.4)p
Diluted	5	(16.1)p	(0.4)p
Continuing operations
Basic 5		26.8p	45.9p
Diluted 5		26.8p	45.7p
Discontinued operations
Basic	5	(43.0)p	(46.2)p
Diluted	5	(42.9)p	(46.0)p

 

 

Air Partner PLC

("the Group" or "the Company")

Preliminary Announcement of audited results for the year ended 31 July 2010

Consolidated statement of comprehensive income

 

2010 £'000		2009  £'000
Loss for the period	(1,655)	(38)
Exchange differences on translation of foreign operations	248	843
Total comprehensive (expenditure)/income for the period	(1,407)	805
Attributable to:
Equity holders of the parent company	(1,407) (1,407)	805 805

 

 

 

Air Partner PLC

("the Group" or "the Company")

Preliminary Announcement of audited results for the year ended 31 July 2010

Consolidated balance sheet

 

Assets	Note	As at 31 July 2010 £'000	As at 31 July 2009 (re-presented) £'000
Non-current assets
Goodwill		755	2,268
Other intangible assets		0	29
Property, plant and equipment		1,843	2,238
Deferred tax assets		633	487
3,231			5,022
Current assets
Inventories		0	424
Trade and other receivables		41,753	28,382
Financial assets		14	0
Current tax assets		47	359
Cash and cash equivalents		11,720	16,137
53,534			45,302
Total assets		56,765	50,324
Current liabilities
Trade and other payables		(17,230)	(12,452)
Financial liabilities		0	(3)
Provisions		(1,319)	0
Current tax liabilities		(248)	(537)
Other liabilities		(26,315)	(22,027)
(45,112)			(35,019)
Net current assets		8,422	10,283
Non-current liabilities
Deferred tax liabilities		(48)	(18)
(48)			(18)
Total liabilities		(45,160)	(35,037)
Net assets		11,605	15,287
Equity
Share capital		513	512
Share premium account		4,499	4,440
Translation reserve		1,447	1,199
Share option reserve		859	896
Retained earnings		4,287	8,240
Equity attributable to equity holders of the parent		11,605	15,287
Total equity		11,605	15,287
Total equity and liabilities		56,765	50,324

 

Air Partner PLC

("the Group")

Preliminary Announcement of audited results for the year ended 31 July 2010

Consolidated statement of changes in equity

 

Group	Share capital £'000	Share premium account £'000	Share option reserve £'000	Translation reserve £'000	Retained earnings £'000	Total equity £'000
Opening equity as at 1 August 2008	509	4,264	591	356	11,362	17,082
Loss for the period	0	0	0	0	(38)	(38)
Exchange differences on translation of foreign operations	0	0	0	843	0	843
Total comprehensive income for the period	0	0	0	843	(38)	805
Share option movement for the period	0	0	353	0	0	353
Issue of shares under share option scheme	3	176	(48)	0	48	179
Dividends	0	0	0	0	(3,132)	(3,132)
Closing equity as at 31 July 2009	512	4,440	896	1,199	8,240	15,287
Loss for the period	0	0	0	0	(1,655)	(1,655)
Exchange differences on translation of foreign operations	0	0	0	248	0	248
Total comprehensive expenditure for the period	0	0	0	248	(1,655)	(1,407)
Share option movement for the period	0	0	(20)	0	0	(20)
Issue of shares under share option scheme	1	59	(17)	0	17	60
Dividends Total equity and liabilities	0	0	0	0	(2,315)	(2,315)
Closing equity as at 31 July 2010	513	4,499	859	1,447	4,287	11,605

 

 

The translation reserve represents the accumulated exchange differences arising from the impact of the translation of subsidiaries with a functional currency other than Sterling.

 

The share option reserve relates to the accumulated costs associated with the outstanding share options issued to staff but not exercised.

 

 

Air Partner PLC

("the Group")

Preliminary Announcement of audited results for the year ended 31 July 2010

Consolidated statement of cash flows

Note		Year ended 31 July 2010  £'000		Year ended 31 July 2009 (restated)  £'000
Cash flows from operating activities
Continuing operations	6	(675)		1,194
Discontinued operations	8	(1,336)		(2,577)
Net cash (outflow)/inflow from operating activities		(2,011)		(1,383)
Investing activities
Continuing operations
Interest received			123	490
Acquisition of subsidiaries (net of cash acquired)			(22)	0
Purchases of property, plant and equipment			(119)	(1,184)
Discontinued operations			0	(82)
Net cash used in investing activities			(18)	(776)
Financing activities
Continuing operations
Dividends paid			(2,315)	(3,132)
Proceeds on issue of shares			60	179
Discontinued operations			26	0
Net cash used in financing activities			(2,229)	(2,953)
Net (decrease) in cash and cash equivalents			(4,258)	(5,112)
Opening cash and cash equivalents			16,137	20,756
Effect of foreign exchange rate changes			(159)	493
Closing cash and cash equivalents			11,720	16,137

 

1 AUTHORISATION OF FINANCIAL STATEMENTS AND STATEMENT OF COMPLIANCE WITH IFRS

 

a) Basis of preparation of financial statements

 

The financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") as adopted for use in the European Union in accordance with EU law (IAS regulation EC1606/2002) and those parts of the Companies Act 2006 applicable to companies reporting under IFRS.

 

The financial statements are presented in Sterling and, unless otherwise stated, figures are rounded to the nearest thousand. They are prepared on the historical cost basis, except for the revaluation of certain financial instruments which are stated at fair value. These financial statements have been prepared on a going concern basis.

 

The comparative figures in the consolidated income statement and the consolidated statement of cash flows have been restated in relation to discontinued operations. The comparative figures in the balance sheet have been re-presented in relation to the classification of deferred income.

 

Impact of new International Financial Reporting Standards

 

The accounting policies adopted are consistent with those of the previous financial year except as follows:

 

The accounting policies adopted are consistent with those of the previous financial year except as follows:

IFRS 2 (Amendment), 'Share-based payments'; effective for periods beginning on or after 1 January 2009. The amendment clarifies that vesting conditions can be service and performance conditions only and that other features of share-based payments are not vesting conditions. The amendment does not have a material impact on the Group or Company's financial statements.

 

IFRS 3 (Revised), 'Business Combinations'; effective for periods beginning on or after 1 July 2009. The revised standard introduces changes to the accounting for business combinations, including the expensing of acquisition costs through the income statement as they are incurred and permitting a choice, on an acquisition-by-acquisition basis to measure the non-controlling interest in the acquiree's net assets at fair value or at the non-controlling interest's proportionate share of the net assets of the acquiree. Contingent considerations are required to be valued at the date of acquisition, with all subsequent revaluations recorded in the income statement.

 

IFRS 7 (Amendment), 'Financial instruments - Disclosures' (Amendment); effective for periods beginning on or after 1 January 2009. The amendment requires enhanced disclosures about fair value measurement and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of hierarchy.

 

IFRS 8 (Amendment), 'Operating Segments'; effective for periods beginning on or after 1 January 2009. The amendment requires operating segments to be identified on the basis of internal management information that is regularly reviewed by the Chief Operating Decision Maker (CODM) to allocate resources to the segments and to assess their performance. In contrast, IFRS 8's predecessor (IAS 14 Segmental Reporting) required the Group to identify two sets of segments (geographical and business) with one being designated as the primary segment (geographical). As a result of the application of IFRS 8, the Group's segmental information has been presented as discussed in note 2 and comparative information has been re-presented accordingly.

 

IAS 1 (Revised), 'Presentation of financial statements'; effective for periods beginning on or after 1 January 2009. The revised standard prohibits the presentation of items of income and expenses, that are not classified as transactions with owners, in the statement of changes in equity. 'Non-owner changes in equity' are to be presented separately from owner changes in equity in a statement of other comprehensive income, which will be produced in addition to the income statement. Comparative information has been re-presented so that it conforms to the revised standard, although the Group has chosen not to adopt the revised names for the financial statements.

 

IAS 27 (Revised), 'Consolidated and separate financial statements'; effective for periods beginning on or after 1 July 2009. The revised standard requires that all transactions with non-controlling interests be recorded in equity, provided that these transactions do not result in a change in control and do not result in goodwill or gains and losses. The amendment provides additional guidance on the accounting treatment when control is lost.

 

IAS 36 (Amendment), 'Impairment of assets'; effective for periods beginning on or after 1 January 2009. The amendment requires disclosures equivalent to those for value-in-use calculations to be made where fair value less costs to sell has been calculated on the basis of discounted cash flows. The amendment does not have a material impact on the Group or Company's financial statements.

 

IAS 38 (Amendment), 'Intangible assets'; effective for periods beginning on or after 1 January 2009. The amendment requires expenditure on advertising and promotional activities to be recognised as an expense as soon as the entity has the 'right to access' the goods or has received the services. The amendment does not have a material impact on the Group or Company's financial statements.

 

IAS 39 (Amendment), 'Financial instruments: Recognition and measurement'; effective for periods beginning on or after 1 January 2009. The amendment clarifies that entities should no longer apply hedge accounting for transactions between segments in their separate financial statements. The amendment does not have a material impact on the Group or Company's financial statements.

 

The following standards and interpretations came into effect but they are not relevant to the Group:

 

IAS 28 'Investment in Associates'; effective for periods beginning on or after 1 January 2009;

 

IAS 31 'Interests in Joint Ventures'; effective for periods beginning on or after 1 January 2009;

 

IFRIC9 'Reassessment of Embedded Derivatives'; effective for periods beginning on or after 1 July 2009;

 

IFRIC15 'Agreements for the Construction of Real Estate'; effective for periods beginning on or after 1 January 2009;

 

IFRIC16 'Hedges of a Net Investment in a Foreign Operation'; effective for periods beginning on or after 1 July 2009;

 

IFRIC17 'Distributions of Non-cash Assets to Owners'; effective for periods beginning on or after 1 July 2009;

 

IFRIC18 'Transfer of Assets from Customers'; effective for transfers received on or after 1 July 2009;

 

b) Basis of consolidation

The consolidated financial statements include the results of the Company (including its branches in, Dubai and Japan and the former branch office in Spain) and its subsidiary undertakings, all of which have been made up to 31 July 2010.

i) Subsidiaries

Subsidiaries are entities controlled by the Company. Control exists when the Company has the power, directly or indirectly, to govern the financial and operating policies of an entity so as to obtain benefits from its activities. In assessing control, potential voting rights that presently are exercisable or convertible are taken into account. Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with those used by the Group.

ii) Transactions eliminated on consolidation

Intra-group balances, and any unrealised gains and losses or income and expenses arising from intra-group transactions are eliminated in preparing the consolidated financial statements.

iii) Non-controlling interests

Non-controlling interests in the net assets of consolidated subsidiaries are identified separately from the Group's equity therein. Non-controlling interests consist of the amounts of those interests at the date of the original business combination and the non-controlling entity's share of changes in equity since the date of combination.

 

c) Key accounting estimates and judgments

The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could differ from these estimates. These underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if these are also affected.

The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are certain provisions and income following from the closure of Air Partner Private Jets Limited and future dilapidation works on the Company's registered office.

A reasonable assessment has been made of the potential costs of settlement of third party claims received following the closure of Air Partner Private Jets Limited, based on discussions with advisors and the outcomes of similar legal cases. There is no guarantee that such claims will be successful, nor that the full amount of the provision will be required. Dilapidations costs have been provided for based on the maximum likely cost per square foot for restoration of the office space currently occupied in Platinum House, on or before expiry of the current lease.

 

2 SEGMENTAL ANALYSIS

The Group has adopted IFRS 8 'Operating segments' effective from 1 August 2009. IFRS 8 requires operating segments to be identified on the basis of how internal management reporting presents components of the Group to the 'Chief Operating Decision Maker' and on the basis that this information is reviewed and used to allocate resources to the segments and to assess their performance.

 

The 'Chief Operating Decision Maker' is considered to be the Board. Based on monthly internal reporting, the Board considers the Group's business from both a services and geographical perspective at each Board meeting. However in contrast to the information which was presented using a risks and returns approach, as previously required under IAS 14 'Segmental Reporting', the adoption of IFRS 8 has resulted in minor changes to the identification of the Group's reportable segments.

 

The services provided by the Group consist of hiring different types of aircraft for charter to its customers and related aviation services. The Board reviews the performance of the broking and other services that are provided by the Group on the following basis: commercial jet broking, private jet broking, freight broking and other services. Each of these components has been identified as an operating segment.

 

Sale transactions between operating segments are carried out on an arm's length basis and all revenues, results, assets and liabilities which are reviewed by the Board are prepared on a basis consistent with those that are reported in the financial statements.

 

Revenues from external customers are derived primarily from the provision of services within the commercial jet and private jet broking operations. Revenues are also derived from the offering of freight broking services, operations and travel services.

 

The segmental information which is provided to the Board for the reportable segments is as follows:

 

2010	Private jet broking   £'000	Commercial jet broking     £'000	Freight broking     £'000	Other services     £'000	Discontinued operations     £'000	Total       £'000	Discontinued operations     £'000	Per Consolidated Financial Statements £'000
Total revenues	41,717	115,353	55,918	20,383	4,135	237,506	(4,135)	233,371
Revenues from transactions with other operating segments	(306)	(1,071)	(237)	(1,789)	(1,128)	(4,531)	1,128	(3,403)
Revenue from external customers	41,411	114,282	55,681	18,594	3,007	232,975	(3,007)	229,968
Depreciation and amortisation	(147)	(323)	(82)	(48)	(62)	(662)	(62)	(600)
Restructuring costs	(182)	(399)	(101)	(60)	0	(742)	0	(742)
Finance income	30	66	17	10	0	123	0	123
Profit before tax	681	1,496	380	225	(4,406)	(1,624)	4,406	2,782
Segment assets	15,788	31,453	7,632	1,892	0	56,765	0	56,765

 

 

2009 (restated)	Private jet broking   £'000	Commercial jet broking     £'000	Freight broking     £'000	Other Services     £'000	Discontinued operations     £'000	Total       £'000	Discontinued Operations     £'000	Per Consolidated Financial Statements £'000
Total revenues	39,251	124,278	20,076	4,427	9,369	197,401	(9,369)	188,032
Revenues from transactions with other operating segments	(147)	(580)	(37)	(239)	(2,100)	(3,103)	2,100	(1,003)
Revenue from external customers	39,104	123,698	20,039	4,188	7,269	194,298	(7,269)	187,029
Depreciation and amortisation	(68)	(188)	(40)	(5)	(265)	(566)	265	(301)
Restructuring costs	(66)	(182)	(39)	(5)	(688)	(980)	688	(292)
Finance income	111	305	65	9	6	496	(6)	490
Profit before tax	1,277	3,516	749	100	(4,742)	900	4,742	5,642
Segment assets	15,287	25,413	5,939	3,685	2,602	52,926	(2,602)	50,324

 

The Company is domiciled in the UK. However, due to the nature of the Group's operations a significant amount of revenue from external customers is derived from overseas countries. The Group attributes revenue to individual countries based upon the location of the assets used to generate those revenues. Apart from the UK, no one individual country is deemed to have material revenue and non-current asset levels, but the Board continues to monitor potential reportable segments.

The Board also reviews information about operating segments on a geographical basis based on the parts of the world which are considered to be key to operational activities. As a result the following additional information is provided showing a geographical split between the United Kingdom, Europe, the United States of America and the Rest of the World.

 

	United Kingdom £'000	Europe   £'000	United States of America £'000	Rest of the World £'000	Discontinued Operations £'000	Total £'000
2010 Revenue from external customers	142,111	72,625	11,082	4,150	3,007	232,975
Non-current assets	868	158	1,556	16	0	2,598
2009 (restated) Revenue from external customers	101,444	70,283	12,057	3,245	7,269	194,298
Non-current assets	3,043	214	3	1,275	0	4,535

 

3 Tax

	2010 £'000	2009 (restated) £'000
Continuing operations Current tax:
UK corporation tax	264	844
Foreign tax	414	405
Adjustments in respect of current income tax in prior year	(559)	(97)
	119	1,152
Deferred tax	(88)	(187)
Total tax on continuing operations	31	965
Discontinued operations Current tax:
UK corporation tax	0	0
Foreign tax	0	0
Deferred tax	0	(27)
Total tax on discontinued operations	0	(27)
Total tax	31	938

Corporation tax is calculated at 28% (2009: 28%) of the estimated assessable profit for the year. Taxation for other jurisdictions is 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:

	2010 £'000	2009 (restated) £'000
(Loss)/profit on ordinary activities before tax	(1,624)	900
Tax at the UK corporation tax rate of 28% (2009: 28%)	(455)	252
Tax effect of expenses that are not deductible in determining taxable profit	1,082	769
Tax effect of different tax rates of subsidiaries operating in other jurisdictions	(37)	41
Tax effect of prior year adjustments	(559)	(97)
Total tax on continuing operations	31	965
Total tax on continuing operations	0	(27)
Total tax	31	938

 

4 Dividends

2010 £'000		2009 £'000
Amounts recognised as distributions to equity holders in the period
Final dividend for year ended 31 July 2009 of 22.6 pence (2008: 22.6 pence) per share	2,315	2,306
Interim dividend for year ended 31 July 2010 of 0.0 pence (2009: 8.1 pence) per share	0	826
	2,315	3,132

 

 

5 Earnings per share

 

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

2010  £'000		2009 £'000
Earnings
Continuing and discontinued operations
Earnings for the calculation of basic earnings per share being net profit attributable to equity holders of the parent	(1,655)	(38)
Earnings for the calculation of diluted earnings per share	(1,655)	(38)
Continuing operations
Earnings for the calculation of basic earnings per share being net profit attributable to equity holders of the parent	2,751	4,677
Earnings for the calculation of diluted earnings per share	2,751	4,677
Discontinued operations Earnings for the calculation of basic earnings per share being net profit attributable to equity holders of the parent	(4,406)	(4,715)
Earnings for the calculation of diluted earnings per share	(4,406)	(4,715)
Number of shares
Weighted average number of ordinary shares for the purposes of basic earnings per share	10,249,078	10,200,067
Effect of dilutive potential ordinary shares: share options	21,974	43,080
Weighted average number of ordinary shares for the calculation of diluted earnings per share	10,271,052	10,243,147

 

6 Net cash (outflow)/inflow from operating activities

	2010 £'000		2009 (restated) £'000
Operating profit for the period		2,659	5,152
Adjustments for:
Depreciation and amortisation		600	301
Costs written off (hangar project)		0	536
Movement on financial asset		(17)	(214)
Share option cost for period		(20)	353
Loss on disposal of property, plant and equipment		26	0
Operating cash flows before movements in working capital		3,248	6,128
(Increase)/decrease in receivables		(14,930)	1,911
Increase/(decrease) in payables		11,103	(4,449)
Cash generated from operations		(579)	3,590
Income taxes paid		(96)	(2,396)
Interest paid		0	0
		(675)	1,194

 

7 RESTRUCTURING COSTS

Restructuring costs are those items the Group considers to be material and which therefore have been disclosed separately. During the year the following exceptional items of expense were incurred by the Group:

 

Employee restructuring costs 742 292

 

 

8 DISCONTINUED OPERATIONS

On 15 March 2010, Air Partner Private Jets Limited, a wholly-owned subsidiary, was put into administration. On that date the control of the subsidiary was passed to the administrators.

As a result of this decision, the results of Air Partner Private Jets Limited up to the date of disposal have been classified as discontinued operations in the consolidated income statements. An analysis of discontinued operations is presented below:

 

	2010 £'000	2009 £'000
Revenue   Cost of sales	3,007   (2,419)	7,269   (4,476)
Gross Profit Administrative expenses Impairment of goodwill	588 (2,218) (1,513)	2,793 (5,424) (2,106)
Operating loss Finance income Finance costs Loss on disposal	(3,143) 0 (26) (90)	(4,737) 23 (28) 0
Legal provision Loss before tax Taxation Loss after tax	(1,147) (4,406) 0 (4,406)	0 (4,742) 27 (4,715)
Loss for the period from discontinued operations	(4,406)	(4,715)

 

 

During the year, Air Partner Private Jets Limited contributed a reduction of £1,336,000 (2009:£2,577,000) to the Group's net operating cashflows, received £nil (2009: £82,000) in respect of investing activities and received £26,000 (2009: £nil) in respect of financing activities.

 

A loss of £90,000 arose on the administration of Air Partner Private Jets Limited, being the loss of net assets at the time of administration (as shown below), less expected return from the administrators of £400,000.

 

The effect of discontinued operations on segment results is disclosed in note 2.

 

	2010 £'000
Assets Non-current assets Property, plant and equipment	147
	147
Current assets Inventories Trade and other receivables Cash and cash equivalents	386 1,679 58
	2,123
Total assets	2,270
Current liabilities Trade and other payables Other liabilities	(1,519) (248)
	(1,767)
Net current assets	356
Non-current liabilities Deferred tax liabilities	(13)
	(13)
Total liabilities	(1,780)
Net assets	490

 

This information is provided by RNS

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