14 May 2019 12:16
14 May 2019
LEI: 213800JLR6YIRMSCUS98
Air Partner plc
('Air Partner' or the 'Company')
Annual Report and Notice of Annual General Meeting 2019
Further to the release on 9 May 2019 of the Full Year Results for the year ended 31 January 2019, Air Partner plc, the global aviation services group, confirms that the following documents have been published on the website at http://www.airpartner.com/en/investors:
· Annual Report 2019
· Notice of 2019 Annual General Meeting (contained within the Annual Report 2019)
These documents will be posted to shareholders (or otherwise made available) on 23 May 2019.
These documents have been submitted to the UK Listing Authority via the National Storage Mechanism and will shortly be available for inspection at www.morningstar.co.uk/uk/NSM.
The 2019 Annual General Meeting will be held at 11:00 on Wednesday 26 June 2019 at 2 City Place, Beehive Ring Road, Gatwick, West Sussex, RH6 0PA.
Regulated Information: The information set out in the Appendix, which is extracted from the Annual Report 2019, is included for the purposes of complying with DTR 6.3.5 and its requirements on how to make public annual financial reports. The information in the Appendix should be read in conjunction with the Company's preliminary results for the year ended 31 January 2019 released on 9 May 2019 which can be viewed at http://www.airpartner.com/en/investors. Together, these constitute the material required by DTR 6.3.5 to be communicated in unedited full text through a Regulatory Information Service.
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About Air Partner:
Founded in 1961, Air Partner is a global aviation services group that provides worldwide solutions to industry, commerce, governments and private individuals. The Group has two divisions: Charter division, comprising air charter broking and remarketing; and the Consulting & Training division. For reporting purposes, the Group is structured into four divisions: Commercial Jets, Private Jets, Freight (Charter) and Consulting & Training (Baines Simmons, Clockwork Research and SafeSkys). Commercial Jets charters large airliners to move groups of any size. Air Partner Remarketing, which is within the Commercial Jet division, provides comprehensive remarketing programmes for all types of commercial and corporate aircraft to a wide range of international clients. Private Jets offers the Company's unique pre-paid JetCard scheme and on-demand charter. Freight charters aircraft of every size to fly almost any cargo anywhere, at any time. Baines Simmons is a world leader in aviation safety consulting specialising in aviation regulation, compliance and safety management. Clockwork Research is a leading fatigue risk management consultancy. SafeSkys is a leading Environmental and Air Traffic Control services provider to UK and International airports. Air Partner is headquartered alongside Gatwick airport in the UK. Air Partner operates 24/7 year-round. Air Partner is listed on the London Stock Exchange (AIR) and is ISO 9001:2015 compliant for commercial airline and private jet solutions worldwide. www.airpartner.com
Appendix
Statement of Directors' responsibilities in respect of the financial statements
The Directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.
Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have prepared the group and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of the profit or loss of the Group and parent company for that period. In preparing the financial statements, the Directors are required to:
· select suitable accounting policies and then apply them consistently;
· state whether applicable IFRSs as adopted by the European Union have been followed, subject to any material departures disclosed and explained in the financial statements;
· make judgements and accounting estimates that are reasonable and prudent; and
· prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company will continue in business.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the group financial statements, Article 4 of the IAS Regulation.
The Directors are also responsible for safeguarding the assets of the Group and parent company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the Group and parent company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
The Directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and parent company's performance, business model and strategy.
Each of the Directors, whose names and functions are listed on page 47 of the Annual Report confirm that, to the best of their knowledge:
· the Group and parent company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group and profit of the parent company; and
· the Directors' Report includes a fair review of the development and performance of the business and the position of the Group and parent company, together with a description of the principal risks and uncertainties that it faces.
In the case of each director in office at the date the Directors' Report is approved:
· so far as the Director is aware, there is no relevant audit information of which the Group and parent company's auditors are unaware; and
· they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group and parent company's auditors are aware of that information.
The Directors' statements were approved by the Board on 9 May 2019 and signed on its behalf by:
Mark Briffa
Chief Executive Officer
Joanne Estell
Chief Financial Officer
9 May 2019
Principal risks & uncertainties
Category | Risk description | Impact | Controls/processes to mitigate | Strategy impact |
Operational
Increased | Recruitment and retention ‣‣ The challenge of attracting new talent and retaining existing key staff who have in-depth knowledge of the business and industry. ‣‣ Our people are our competitive advantage especially around sector knowledge, key customer relationships and technical expertise in the aviation industry. | ‣‣ Inability to attract key talent, restricting the Group's ability to grow revenue and deliver on growth strategy. ‣‣ Inability to retain key individuals leading to a loss of earnings and key customer/supplier contacts. ‣‣ The loss of key personnel following acquisitions may impact performance and value. | ‣‣ Annual performance management reviews using best practice processes. ‣‣ Remuneration packages evaluated regularly against market trends. ‣‣ Investment to build a learning organisation with a focus on culture, reward and recognition. ‣‣ Implementation of the right HR infrastructure. ‣‣ Talent and succession plan reviews. Owner: Craig Pattison, Group HR Director | ‣‣ Customers ‣‣ Developing and retaining our people ‣‣ Growing organically ‣‣ Broadening our offer |
Environment and market
No change | Changing market environment ‣‣ Forward visibility of air charter bookings is often measured in days or weeks rather than months and can be materially impacted by changes in financial markets, political instability and natural events affecting the movement of people or cargo from one country to another. | ‣‣ Limited visibility of future bookings may result in a cost structure that does not align with market conditions. | ‣‣ We measure customer concentration and ensure we have a well-diversified client base across governments and non-governmental organisations, commercial enterprises and individuals, as well as across geographic regions. This allows for some 'smoothing' when there are seasonal or sectorial changes in demand. ‣‣ Air Partner actively seeks to grow the forward visibility of its earnings by investing in the growth of its Consulting & Training division. This will help smooth the inevitable peaks and troughs in the Charter division. ‣‣ We continue to focus on overheads relative to our revenues and take corrective action where necessary. Owner: Kevin Macnaughton, MD Charter | ‣‣ Customers ‣‣ Maintaining brand value |
Environment and market
No change | Market disruption ‣‣ The challenge of retaining and expanding customers in a highly competitive environment with low barriers to entry (in Charter). ‣‣ The risk of falling behind competitors in product development, technology innovation, standards of service or cost effectiveness. | ‣‣ The Group's ability to maintain and grow revenue could be adversely affected. | ‣‣ Invest in our Customer First programme to drive customer loyalty and improve retention. ‣‣ Continue to invest in the roll-out of a new CRM/booking tool to improve the customer experience relative to peers. ‣‣ Continually review technology innovations in the sector and assess appropriateness to Air Partner. ‣‣ Actively seek feedback and undertake client surveys to ensure we remain responsive to client demands relative to competitors. ‣‣ Actively promote the Air Partner brand through promotion campaigns and our dedicated Marketing division. Owner: Kevin Macnaughton, MD Charter | ‣‣ Customers ‣‣ Growing organically
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Operational
Increased | IT systems and cybersecurity ‣‣ Cyber attacks seeking to compromise the confidentiality, integrity and availability of IT systems and the data held on them are an increasing risk. | ‣‣ Breach of confidentiality and attack on the Company's assets affecting customer service, financial performance and reputation. ‣‣ Systems failure could result in business interruption and lost revenue. | ‣‣ The Group uses modern IT systems and ensures that they are well maintained and upgraded to mitigate the risk of failure. ‣‣ The latest network and security protocols are deployed to protect against attack or loss of data. ‣‣ The Group has business continuity plans for each of our office locations. Our business resilience is underpinned by our technology and geographical spread, which allow our business to be operated and maintained from any of our locations. ‣‣ In case of an outage, external contingency arrangements are tested on a regular basis. ‣‣ The Group has purchased specific cyber insurance to mitigate the impact of any cyber-related losses. Owner: Lee Pyle, Head of IT | ‣‣ Customers ‣‣ Maintaining brand value |
Strategic
Increased | Acquisitions and integration ‣‣ Our strategy is predicated primarily on organic growth. However, acquisitions are key to our growth strategy. Acquisitions are both a risk and an opportunity. ‣‣ We may invest funds and resources in acquisitions which fail to deliver on expectations due to incorrect due diligence or poor execution post acquisition. This risk has increased over recent years as we actively explore a diversification strategy in aviation services. | ‣‣ Poor acquisitions lead directly to financial damage and indirectly to a loss in shareholder confidence. ‣‣ Financial performance suffers from goodwill or other impairment charges. ‣‣ Newly acquired businesses deliver less value or require more investment than anticipated. | Detailed due diligence undertaken with appropriately skilled personnel, supported internally and externally as required. ‣‣ Negotiate appropriate representations and warranties commensurate with target's size and risk profile. ‣‣ Detailed integration plans drawn up with key accountabilities. ‣‣ Post-acquisition reviews conducted to capture key learnings for future acquisitions. Owner: Mark Briffa, CEO | ‣‣ Broadening our offer ‣‣ Maintaining brand value |
Compliance and internal controls
Increased | Regulatory environment, ethics and compliance ‣‣ The challenge of operating in multiple jurisdictions subject to many different and evolving laws and regulations, including tax and civil aviation authority requirements. ‣‣ We have c.350 employees in a number of countries. Individuals may not all behave in accordance with the Company's values and ethical standards. ‣‣ We operate in markets requiring strict adherence to laws such as: ‣‣ bribery and corruption; ‣‣ international trade laws; and ‣‣ General Data Protection Regulation (GDPR). | ‣‣ Non- compliance with regulations could result in loss of customers or damage to the Group's brand. ‣‣ Ethics or compliance breach causes harm to our reputation, financial performance and customer relationships and our ability to attract and retain talent. | ‣‣ The Group has dedicated legal resources supplemented by external support arrangements to ensure the management team fully understands current and future legal and regulatory risk. ‣‣ The compliance aspect of the Group is a regular agenda item at both the Board and Audit and Risk Committee. ‣‣ During the year, actions were taken toward meeting the requirements of the new GDPR which came into force on 25 May 2018. Owner: Judith Banks, General Counsel and Company Secretary | ‣‣ Customers ‣‣ Developing and retaining our people ‣‣ Maintaining brand value |
Contractual and counterparty
No change | Suppliers and operators ‣‣ Reliance on third parties for delivery of services to end clients. ‣‣ Operator compliance with Relevant regulations. ‣‣ Financial exposure if clients fail to pay for Charter services after Air Partner has paid the operators in advance of flight take-off, which is custom and practice in the industry. | ‣‣ Failure of aircraft or operator chartered by Air Partner. ‣‣ Loss of customers and revenues. ‣‣ Loss of earnings and cash impact. | ‣‣ We have an approved list of aircraft that we charter on behalf of our clients, ensuring that the best and most appropriate aircraft is used. ‣‣ Air Partner's approved list is continually screened, assessed and benchmarked to ensure every aircraft meets all our stringent tests, as well as all third-party requirements and independent assessments. ‣‣ The Group constantly monitors defaults of customers and other counterparties and incorporates this information into its credit risk controls. ‣‣ It is the Group's policy that all counterparties which wish to trade on credit terms are subject to an external credit verification process before and during business relationship. ‣‣ Where appropriate, we also aim to use third-party bank guarantees instead of cash deposits. Owner: Kevin Macnaughton, MD Charter | ‣‣ Customers ‣‣ Maintaining brand value |
Financial Performance
No change | Financial transactions ‣‣ There is a foreign exchange risk as we buy and sell goods and services in currencies other than Sterling. Movements in exchange rates can affect these, particularly the US Dollar and Euro rates. ‣‣ There is a liquidity risk in paying operators before a flight occurs or before payment is received from the client. | ‣‣ Loss of earnings. | ‣‣ The Group's policy on foreign currency risk is not to enter into forward contracts until a firm contract has been signed. Furthermore, Air Partner considers using derivatives where appropriate to hedge its exposure to fluctuations in foreign exchange rates. The purpose is to manage the currency risks arising from the Group's operations. ‣‣ The Group aims to mitigate liquidity risk by, where possible, making payments to operators only once payment from the client has been received. Owner: Joanne Estell, CFO | ‣‣ Customers ‣‣ Maintaining brand value |
Compliance and internal controls
No change | Effective control environment ‣‣ Ensuring appropriate and effective controls and risk management frameworks are embedded in our changing business. | ‣‣ Loss of earnings. ‣‣ Brand reputation and trust. | ‣‣ Our Risk Management Framework is overseen by the Audit and Risk Committee; refer to page 36 of the Annual Report to understand our process. ‣‣ The key learnings from the recent accounting review are in the process of being adopted and we are where we expected to be at this stage. Controls have been tightened in a number of areas; refer to page 29 of the Annual Report. Owner: Joanne Estell, CFO | ‣‣ Maintaining brand value |
Environment and market
No change | Brexit ‣‣ There is uncertainty of the outcome and implications for both the UK and aviation market following the UK's exit from the EU (Brexit). | ‣‣ Financial loss. ‣‣ Business interruption. | Senior management and the Board regularly consider the potential impact of the UK's withdrawal from the EU.
While the full implications and consequences will not be understood and experienced for some time, the Group continues to regularly monitor the markets and economic indicators in which it trades and is experienced in implementing appropriate mitigating actions.
The Group has strong relationships with technical specialists and regularly liaises with them to ensure that the Group is well placed to react to legislative or other changes that occur because of Brexit. Owner: Kevin Macnaughton, MD Charter; Ian Holder, MD Baines Simmons | ‣‣ Maintaining brand value |
Related party transactions
The Company had the following transactions with related parties in the ordinary course of business during the year under review.
Trading transactions | 2019 £'000 | 2018 £'000 |
Subsidiaries |
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Sales to subsidiaries | - | - |
Purchases from subsidiaries | - | - |
Amounts owed by subsidiaries at period end | 10,953 | 10,409 |
Amounts owed to subsidiaries at period end | (7,179) | (3,993) |
Outstanding balances that relate to trading balances are placed on inter-company accounts with no specific credit period.
Compensation of key management personnel (being the Executive Directors) | 2019 £'000 | 2018 £'000 |
Short-term employee benefits | 556 | 831 |
Post-employment benefits | 42 | 38 |
| 598 | 869 |
In addition to the above amounts, key management personnel who were also shareholders received £29,865 of dividends in respect of their shareholdings in the year ended 31 January 2019 (2018: £14,454).
The Board of Directors' remuneration in accordance with Schedule 5 of the Accounting Regulations was as follows:
Aggregate Directors' remuneration | 2019 £'000 | 2018 £'000 |
Emoluments | 1,196 | 1,004 |
Company contributions to money purchase pension contributions | 42 | 38 |
| 1,238 | 1,042 |
Three Directors (2018: two Directors) were members of money purchase pension schemes during the year.
Further information about the remuneration of individual Directors is provided in the audited part of the Directors' Remuneration Report on pages 71 to 77 of the Annual Report.