ANNUAL REPORT
AND ACCOUNTS 2018
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A LONG TERM
PARTNER
STRATEGIC REPORT
CORPORATE GOVERNANCE
FINANCIAL STATEMENTS
1 Air Partner insight
2 At a glance
4 Chairman’s statement
6 Our business model
8 Market overview
10 Chief Executive’s review
13 Strategy in action
20 Key performance indicators
22 Divisional reviews
28 Financial review
30 Principal risks and uncertainties
34 Board of directors
and senior management
37 Chairman’s introduction to governance
38 Corporate governance report
43 Nomination Committee report
44 Audit and Risk Committee report
47 Directors’ remuneration report
58 Directors’ report
60 Directors’ responsibility statement
61 Independent auditor’s report
69 Financial statements
75 Notes to the financial statements
A LONG TERM
PARTNER
Air Partner is a trusted adviser to our global customer
base, partnering with integrity and long term vision
across a broad range of services
first p14
Putting customers
Broadening
our offer p16
d
Developing an
retaining our people p18
AIR PARTNER INSIGHT
We are creating long term value for all our
stakeholders, founded on a clear strategic vision,
close alignment to the needs of our global customers
and diversification through value added acquisitions.
> STRONG LEADERSHIP AND REPUTATION
Led by an experienced Board, Air Partner has developed
a market leading Charter division and growing strength
in Consulting & Training
> CLEAR, LONG TERM GROWTH STRATEGY
As well as a firm focus on performing well today,
Air Partner plans and acts for the long term
> ORGANIC GROWTH
Capitalising on market opportunities, cross selling
and internal efficiencies to drive organic growth
> GROWTH THROUGH ACQUISITION
Successfully diversifying earnings with investment
in the less cyclical Consulting & Training division
> STRONG FINANCIAL POSITION
Asset light with strong free cash flow and low gearing.
Balance sheet strength underpins the long term
growth strategy
> SHAREHOLDER RETURNS
Diversification of operations supporting improved quality
of earnings and a clear, long term dividend policy for the
benefit of our shareholders
Air Partner plc Annual Report 2018
1
Strategic reportGovernanceFinancial statements AT A GLANCE
Founded in 1961, Air Partner is a global aviation services group
providing worldwide aviation charter, consulting and training
services to industry, commerce, governments and private
individuals. We have a team of 300 great people, operating
from 20 gateway cities, providing outstanding customer service
to our global client base.
HIGHLIGHTS
• Accounting issue
contained and resolved
• Charter division driving
underlying performance
• Record results in US and
in Freight
• JetCard recognised
as the most flexible
membership programme
in the US and Europe
• Clear, long term
growth strategy
• Acquisition of
SafeSkys extends
aviation services offering
£261.3m
Gross transaction value1
8.4p
Underlying basic EPS
£36.1m
Gross profit
£5.8m
Underlying profit before tax
£4.8m
Statutory profit before tax
3.8p
Final dividend
5.5p
Total dividend
£4.8m
Net cash2
1. Gross transaction value is defined in Note 2
2. Net cash is defined as total cash less JetCard cash and borrowings.
GROSS PROFIT
Charter
Consulting & Training
£4.8m
£31.3m
Note: As a result of the accounting issue identified in April 2018, the figures above and those
reported throughout the Strategic Report relating to income statement items and the prior year
balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial
Review which may impact their accuracy and reliability
2
Air Partner plc Annual Report 2018
WHAT WE OFFER
CHARTER
In our market leading core division we deliver tailored solutions to often complex aviation
requirements, 24/7, year round, leveraging our relationships with aircraft operators to meet
our global clients’ specific needs.
COMMERCIAL JETS
PRIVATE JETS
FREIGHT
Charter of large aircraft for 20+ people
by governments, corporates, sports
and entertainment teams, industrial
and manufacturing customers, and tour
operators. Also includes Air Partner
Remarketing and short term aircraft
leasing services, covering both
commercial and private jets.
Charter of small aircraft or jets for up to
19 people, for business and leisure, by
corporates, high net worth individuals
and government. Industry leading
pre-paid JetCard product.
Charter of cargo aircraft and part-charter,
from Learjets to the giant Antonov 225,
for regular and bespoke requirements,
including emergency aid drops, time-
critical door to door freight delivery
and on-board couriers.
10.8%
Percentage of divisions
total gross profit
55.4% 33.8%
CONSULTING & TRAINING
We provide managed services to airports and resolve safety, compliance and regulatory
challenges for our global client base, driving a cultural change to place safety at the heart
of organisations.
BAINES SIMMONS
CLOCKWORK RESEARCH
SAFESKYS
A world leading aviation safety
consultant specialising in regulation
and compliance, safety management,
training and consulting for civil and
defence organisations as well as
outsourced provision of support
to the Isle of Man Aircraft Registry.
A leading fatigue risk management
consultancy delivering innovative and
effective solutions principally for aviation
customers but also for other safety-critical
operating environments, such as the oil
and gas, and mining sectors.
A leading provider of wildlife hazard
management and bird control services
to civil and military airports. In addition,
SafeSkys provides turnkey air traffic control
(ATC) services including ATC engineering
and training, and survival training for
fast jet pilots.
Air Partner plc Annual Report 2018
3
Strategic reportGovernanceFinancial statements CHAIRMAN’S
STATEMENT
I am pleased to report a positive trading
performance for the year ended 31 January
2018. The accounting review announced
in April 2018 has concluded. It was an
unwelcome, challenging and costly event,
and certainly not how any business would
wish to start a new financial year. It is
important to note that it was an accounting
issue and not a business issue. It was
discovered by the Air Partner team
following an upgrade in our finance
capabilities which led to a more thorough
analysis of our financials. However, it had
the potential to overshadow our trading
performance and the substantial progress
made operationally and financially since
our transformation strategy first began in
2015. Now with the review behind us, we
have learnt from its findings and will
emerge a better, stronger company.
ACCOUNTING REVIEW
In April 2018, following the recruitment
of new and enhanced skills into the
Group finance department, the Company
identified an issue, predominantly relating
to the accounting for receivables and
deferred income, originating in 2010/11.
We immediately appointed independent
advisers to carry out a thorough,
transparent and exhaustive review into
this matter which is now concluded.
We have included details of the work
undertaken and outcomes in the Audit and
Risk Committee Report on pages 44 to 46.
A full analysis of the financial impact is
explained in the Financial Review on pages
28 and 29 but key to note is that no cash or
assets were lost and no customer, operator
or supplier was impacted or disadvantaged.
The underlying business remains strong.
Integrating the review into the full
year audit took significant time and,
disappointingly, forced the suspension of
trading in our shares. Upon the resignation
of Neil Morris, the Chief Financial Officer,
we moved quickly to appoint an Interim
CFO, to progress a thorough review of
our financial controls and to address
immediately identified weaknesses. The
rectification is underway. These initiatives
should give shareholders the necessary
confidence in the growth trajectory of Air
Partner. Although we will incur £1.3m of
cost in financial year 2018/19, as a result
of the review and an aborted acquisition,
we now move forwards with a robust set
of financial statements from which we can
confidently pursue our strategy. I would like
to thank, in particular, our Chief Executive
Mark Briffa, Interim Chief Financial Officer
Chris Mann and Financial Controller Ilze
Williamson for their tireless work in
identifying and resolving these issues.
I would like to emphasise that, as a
Board, we are committed to maintaining
a consistent and robust level of corporate
governance across the business in order
to protect value and maintain the stable
platform from which we can successfully
deliver our strategy. Our governance
frameworks are reviewed continually to
ensure they evolve appropriately in the
best interests of our customers, our
people and our shareholders.
STRATEGY UNCHANGED
Over 2017/18 we continued to deliver
on our strategy, building further on our
position as a long term partner to the
aviation industry. Driven by a particularly
encouraging second half, gross profit for
the year was up 13.8% to £36.1m and
underlying profit before tax rose by 23.7%
to £5.8m. The results are presented after
correction of the overstatement of profits
and net assets announced in April 2018
which were fully investigated by the
comprehensive post year end accounting
review. This review ensured the issue has
been completely addressed and leaves
Air Partner well placed to pursue its
strategic aims.
Our clear growth strategy remains
unchanged: we manage the business
for the long term in close alignment to
the needs of our global customer base. We
will continue to grow our Charter business,
offering the best possible experience. In
addition, we will broaden our offer to build
a more complete portfolio of aviation
services, reducing the Group’s exposure
to charter market volatility and improving
the overall quality of our earnings. These
results give me further confidence that
we are pursuing the right strategy and
delivering to plan.
Our strategic objectives are supported by
a culture committed to customer centricity,
strong governance, our great people and to
shareholder returns.
Note: As a result of the accounting issue identified in April 2018, the figures above and those reported throughout the Strategic Report relating to income statement
items and the prior year balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial Review which may impact their accuracy
and reliability
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Air Partner plc Annual Report 2018
“Our strategic objectives are supported by
a culture committed to customer centricity,
strong governance, our great people and
to shareholder returns.”
CUSTOMER FIRST
OUR PEOPLE
OUTLOOK
Our customers have always been our
key focus; our Customer First programme
puts them at the heart of every decision we
make. Not only does it help to differentiate
Air Partner from competitors, but a deeper
understanding of our customers and their
individual needs enables us to deliver
a consistently outstanding service,
improving retention and winning
new business.
THE BOARD
As previously announced, Richard Everitt
stood down as Chairman in June 2017 and
I was delighted to take on the role. Following
this change, Amanda Wills became Chair of
the Remuneration Committee and Richard
Jackson became Senior Independent
Director. Shaun Smith remains Chair
of the Audit and Risk Committee.
As previously reported on 13 April 2018,
following the end of the financial year,
Chief Financial Officer Neil Morris resigned
from the Board.
We have many great people throughout
the business who display a passion and
determination to deliver the extraordinary
every day. It has enabled us to retain our
position as a preferred supplier to some
of the world’s leading corporations,
militaries, governments, regulators, sports
teams, creative talent and high net worth
individuals. Thanks in large part to Mark
Briffa’s strong leadership, throughout the
accounting review process, colleagues
across the Group’s UK and international
offices remained resolutely focused on
maintaining an outstanding service for our
global customers. I am immensely proud of
this and, on behalf of the Board, would like
to thank everyone at Air Partner for their
hard work and commitment.
DIVIDEND
The Board is proposing a final dividend
of 3.8p, a year on year increase of 5.6%,
taking the full year dividend to 5.5p, a
year on year increase of 5.8%. The final
dividend is expected to be paid on 20 July
2018 to those shareholders on the share
register at close of business on 22 June
2018. The ex dividend date will be 21 June
2018. The Board would also like to reaffirm
its ongoing commitment to its dividend
policy, which targets cover of between
1.5 and 2.0 times underlying earnings
per share.
2017/18 was a good year of trading
performance for Air Partner. I believe these
results are a consequence of our customer
focused teams constantly delivering high
quality services and products to global
customers every day. In addition, the long
term strategic initiatives and investments
that were made two to three years ago are
now growing the business, delivering and
adding value. We continue to invest in
our long term future, and will remain
committed to recruiting and training
our people, developing and improving
products and services, and opening new
offices and expanding existing ones. As a
result, we have broadened our geographic
reach and further diversified our customer
and product profile.
As we always state, the global charter
business has consistently been, and will
continue to be, a volatile industry. Against
this backdrop we will manage the business
for the long term, with a very clear strategy
of alignment to the needs of our global
customer base.
Peter Saunders
Chairman
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Air Partner plc Annual Report 2018
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Strategic report
OUR BUSINESS
MODEL
To create long term, sustainable value for shareholders, we are developing
a broad offer in the aviation services market for our global customers who
choose us because we provide the best in quality, safety and service.
RESOURCES AND
RELATIONSHIPS
FINANCIAL CAPITAL
The strength of our balance sheet helps
us support and retain key customers by
enabling the provision of appropriate credit
terms to suit their financial profiles. It also
enables us to offer additional aviation
services through well targeted acquisitions.
OUR SUPPLIERS
The relationships we have built are
essential. In Charter, we trust the airlines
with our brand and in turn they trust us
to deliver an efficient and professional
service, utilising capacity with the backing
of our extensive global customer base and
financial security. In Consulting & Training,
as well as our permanent employees we
use a network of associates to deliver our
broad spectrum of training courses. These
are not simply freelance trainers; they are
fully inducted into the business and our
ethics, delivering a seamless level of
professionalism and service.
OUR CUSTOMERS
Our Charter customers include
corporates, sports teams and tour
operators, governments and high
net worth individuals as well as airlines
and the financial services sector for
remarketing. Consulting & Training
customers include defence, regulators,
airports, commercial airlines, private jet
operators and ancillary service providers
to the aviation industry such as Original
Equipment Manufacturers (OEMs).
WHAT WE DO
CHARTER
CONSULTING & TRAINING
• Commercial Jets
• Private Jets
• JetCard
• Freight
• Training, Aviation Safety
and Regulatory Compliance
• Air Traffic Control
• Wildlife Management
• Jet Registry
• Emergency Planning
FOR MORE INFORMATION
See page 3 for more detail on ‘What we offer’
Explaining our strategy pages 13-19
Divisional reviews pages 22-27
Risks and uncertainties pages 30-33
Note: As a result of the accounting issue identified in April 2018, the figures above and those reported throughout the Strategic Report relating to income statement
items and the prior year balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial Review which may impact their accuracy
and reliability
6
Air Partner plc Annual Report 2018
WHAT DIFFERENTIATES US?
WHERE DO WE ADD VALUE?
OUR CUSTOMER SERVICE
FOR OUR CUSTOMERS
Our Customer First programme, introduced in 2015, is
now firmly established across the Group. In the Charter
business we offer 24/7, year round support, proactively
ensuring the best possible flight experience for our
customers. In the Consulting & Training division, with
safety our core focus, our consultants, researchers
and service providers strive to resolve clients’ safety,
compliance and regulatory challenges. Our excellent
customer service has enabled us to achieve preferred
supplier and trusted adviser status to some of the
most prestigious organisations and discerning
individuals in the world.
OUR PEOPLE
We don’t own aircraft, choosing to operate an asset light
model. Our people, brand and reputation are therefore
our main assets. In our experience, technology cannot
replace people. In Charter, we invest in technology to
improve customer experience and drive efficiencies,
but key to our success is our team of dedicated aviation
experts who deliver a bespoke personal service to our
customers. In Consulting & Training our teams are
picked from both military and the civil/commercial
sectors where they have gained a deep exposure to,
and understanding of, the safety arena.
BRAND AND REPUTATION
Air Partner is well known in the industry for its excellent
customer service and is considered a trusted adviser to
its broad, global customer base. To provide an unrivalled
and more complete range of aviation services to our
customers we have bought other well respected
businesses. The new businesses will be re-branded
as Air Partner companies, bolstering our brand and
enabling our acquisitions to benefit from the growth
opportunities associated with being part of a bigger
PLC group.
OUR PLC STATUS
Air Partner is the only listed company in its sector.
As such, we are governed by strict financial regulations
and are committed to achieving a high standard of
corporate governance, to provide all stakeholders with
a high level of financial transparency and assurance.
Meeting clients’ needs is at the heart of what we
do. Our strategy to add more services helps us to
provide clients with the services they require and
thereby to strengthen these relationships further.
Our clients across the business can rely on our
skills and expertise to meet often complex aviation
requirements. In Charter, we are not limited to our
own fleet, but will source the right aircraft to meet
our customers’ precise requirements. In Consulting
& Training, against a backdrop of changing regulation
and a zero tolerance of accidents, our customers
benefit from our leading edge understanding of safety
best practice and our ability to drive cultural change
to put safety at the heart of their organisation.
FOR OUR SUPPLIERS
The airlines we work with can rely on our professionalism
and experience to market their aircraft effectively to
our extensive global customer base. Our network of
associates in Consulting & Training benefits from our
extensive training offering and large client base.
FOR OUR PEOPLE
We aim to run a business that is equitable for all,
regardless of gender, race, nationality, disability or
any other difference, and to treat everyone fairly and
with respect. We are keen to ensure that people remain
engaged and challenged in their roles to reach their
full potential. We are committed to training, appropriate
levels of remuneration and retaining our best people.
See pages 18 and 19
FOR OUR SHAREHOLDERS
Air Partner’s strategic objective to create an equal
balance between our two divisions, diversifying into
additional aviation services, should provide greater
visibility of future earnings to our shareholders. Our
clear dividend policy supports visibility of future
shareholder returns. Over the financial year ending
31 January 2018, Air Partner has delivered a total
return to shareholders of 36.9%.
See pages 20 and 21 for our KPIs
Air Partner plc Annual Report 2018
7
Strategic reportGovernanceFinancial statements MARKET
OVERVIEW
We have been operating in the aviation services market for almost
60 years and have seen considerable change, both in aviation and
the wider market, over that time.
Over the last year the industry has seen the demise of both Monarch Airlines and Air Berlin. With capacity taken out of
the market, effective sourcing of suitable aircraft for our clients’ needs becomes ever more important. With the experience
we have in the market, and our strong operator and client relationships, we are responding well.
Our business can be difficult to predict, with limited visibility. We are addressing this with the addition of the more
predictable income streams of our Consulting & Training division and, increasingly, we are seeing longer term contracts
within Charter. There will always be challenges in terms of natural disasters, political events and changes to the world’s
major economies, which we monitor closely. We are quick to respond and able to navigate short term market issues, but
we also take a long term strategic approach which we believe has significant benefits for our customers, employees and
shareholders.
See pages 13 to 19 for more information on our strategy
THE AVIATION MARKET
A steadily growing aviation market
Trend: 2017 was another year of above
trend passenger growth, up 7.6%, well
above the ten-year average pace of 5.5%
according to the International Air Transport
Association (IATA). IATA predicts an
increase in passenger traffic to 7.2 billion
passengers in 2035, a near doubling of
the 3.8 billion air travellers in 2016.
Impact: As the aviation market grows,
the demand for aviation services
increases with it.
How we’re responding: In Charter,
we are investing in our teams where we
see increase in demand. We are also
adding new service lines to complement
our core charter offering, strengthening
our customer proposition. By offering
more services in the two broad categories
of Charter and Consulting & Training,
not only do we increase customer
retention, we also have the opportunity
to cross sell services to strengthen our
relationships further.
Predicted growth in passenger traffic
7.2bn
2035
3.8bn
2016
THE WIDER ENVIRONMENT
Economic downturns, material geopolitical events and natural disasters
Trend: The global aviation market can be
adversely affected by geopolitical events or
natural disasters as well as downturns in
the economy.
Impact: This can cause a short term
decrease in demand for air travel.
How we’re responding: Our Emergency
Planning Division is often called upon to
provide aid to a disaster zone, or arrange
troop transfers or evacuations in times
of war. During economic downturns, in
our experience, our high net worth clients
tend to be less affected. In fact, since the
recession of 2008/2009, we have seen an
increase in corporates turning away from
jet ownership in favour of charter. We have
successfully diversified our global client
base, and our strategy to broaden the
range of services we offer is enhancing
the stability of earnings by adding more
predictable revenue streams to the Group.
8
Air Partner plc Annual Report 2018
THE MARKET FOR CHARTER
A broad, fragmented and competitive market
Trend: The global air charter market
is highly fragmented, with low barriers
to entry and little or no regulation.
Impact: As a result the competition
is varied. As well as direct competitors,
there are competitors offering similar
services with a different business model,
particularly in the private jet sector (for
example, fractional ownership, charter
of their own aircraft or charter of aircraft
under their management). There is also an
increase in competitors using technology
to create an end-to-end booking process.
How we’re responding: We aim to
differentiate ourselves through unrivalled
customer service. Our heritage demonstrates
stability, quality and financial performance
in a market where competitors come and
go. We invest in technology to improve
customer experience and drive efficiencies
but our investment is set at a measured
level as, in our experience, technology
cannot replace people. The key to our
success is a genuine 24/7, year round
service by our aviation experts for
customers who want a bespoke,
personal service.
THE MARKET FOR CONSULTING & TRAINING
Increased regulation and zero tolerance of accidents
Trend: The pace of growth of the aviation
industry, busier skies, more competition,
demands for higher fleet utilisation and
greater operational capability are occurring
against a backdrop of zero tolerance of
accidents. Unlike Charter, Consulting &
Training services exist in a highly regulated
environment, and one in which regulations
are constantly changing.
Impact: This is increasing pressure
on safety results and management.
Furthermore, the aviation safety world
has evolved over the past five years from
one where it seeks to understand how
safety management systems (SMS)
work to secure effective performance.
In Civil aviation, in 2013, global regulators
began to move towards performance based
regulation (PBR). This is now standard
practice for the International Civil Aviation
Organization (ICAO) and the European
Aviation Safety Agency (EASA). By moving
to a PBR approach, regulators are aiming
to embed a risk based approach to safety,
whether this be SMS or fatigue risk
management. In the defence market,
bodies such as the European Defence
Agency (EDA) have committed to the
principles of harmonisation of
airworthiness requirements.
How we’re responding: A constant
desire to improve standards and safety
underpins the business models of our
Consulting & Training companies. The
acquisitions we have made enable us
to address these service requirements
and the move to a global PBR approach
provides opportunities to take these
services beyond the UK and Europe to Asia,
Australia and North America. Our long term
relationships and trusted partner status
with military authorities around the world
mean we are well positioned to lead this
cultural change.
24/7/365
Year round outstanding
customer service
Aviation professionals
trained by Baines
Simmons in 2017
4,000+
Air Partner plc Annual Report 2018
9
Strategic reportGovernanceFinancial statements CHIEF
EXECUTIVE’S
REVIEW
Air Partner performed well over the
financial year ended 31 January 2018,
reporting underlying profit before tax of
£5.8m, an increase of 23.7%. The results
for the year are presented after completion
of the post year end accounting review
and the consequent correction of an
overstatement of net assets, the resulting
financial impact of which is explained in
the Financial Review.
STRATEGY
We have a clear, long term growth strategy
in place and I am confident that we are well
placed to continue to deliver that strategy.
When I became CEO in 2010 Air Partner was
heavily reliant on military contracts which
made up over 60% of our £2.8m pre-tax
profits. On a like for like comparison, that
number is now less than 3% as we have
successfully diversified our global customer
base, significantly reducing our risk and
demonstrating our value as a global player
in the industry. Now, no one customer
makes up more than 10% of profits.
Since 2015, we have been consistent in
pursuing our strategic objective to create
a global aviation services group, with
balance between our market leading
divisions of Charter and Consulting &
Training. This objective aims to deliver
increasingly high-quality and visible
earnings for our shareholders.
In previous reports I have explained how
we began our transformation journey with
a strong belief that we could generate
improved performance from our Charter
activities. We firmly placed the customer at
the heart of the business: we refreshed our
organisational leadership and skills; we
re-emphasised our customer and product
focus; we developed new channels to market
and innovative strategic partnerships, and
we are designing and building new
systems infrastructure and processes.
Our Charter business generates a strong
return on capital employed and is highly
cash generative. We reinvest a substantial
portion of this cash in products and
capabilities, recruitment, new offices
and acquisitions. These investments
benefit customers and employees and, as
a consequence, benefit our shareholders.
Today we have a well invested business
and a world class platform enabling us to
compete globally to fulfil our customers’
highest expectations. I would characterise
our approach as one of continual
assessment and improvement: we are
looking for ways to be better every day.
We will continue to invest in the business,
in systems, products, and in people and
we expect to make further acquisitions
to broaden or extend our activities, or
to consolidate our market position. Of
particular focus are two areas: people
and acquisitions.
PEOPLE
Over the last twelve months we have
recruited some exceptional people across
the organisation as we continue our drive
to upskill management and processes. Our
ability to attract the best talent is greatly
helped by our customers’ recognition of
our platform strength and market position,
our capabilities and strategy. We will
continue to recruit across the organisation
globally. We are actively looking to expand
existing offices as well as looking to open
offices in new geographic locations.
ACQUISITIONS
We regularly review acquisition
opportunities, many of which we have
developed relationships with over several
years. We are selective in our approach,
assessing each acquisition not only for
product, capability and customers, but
also for a strong financial track record
and future returns and, importantly, for
its cultural fit and its people. As well as
making both strategic and financial sense,
the acquisitions that we have made to date
have brought on board excellent teams
of highly skilled and experienced people.
We have an experienced team enabling
us to identify, acquire and integrate
these acquisitions.
In September 2017 we acquired SafeSkys
Limited, a leading Environmental and
Air Traffic Control services provider to UK
and International airports. SafeSkys is
a fantastic addition to the Group and its
acquisition brought some great people
into our organisation. SafeSkys was swiftly
integrated after acquisition and, though
early in our ownership, we are excited for
its long term prospects within our Group
and see areas where we can support the
team and help them grow the scale of their
activities, both in the UK and internationally.
In late 2017, we entered discussions to
acquire a high quality managed services
business with international operations and
significant long term contracts with blue
chip customers. At the beginning of January
2018, having agreed transaction terms, we
entered into an exclusivity period expiring
at the end of April 2018. The acquisition,
on the agreed terms, would have met our
financial return criteria and significantly
progressed the delivery of our clear, long
term strategic objectives, immediately
increasing the weighting of our Consulting
and Training profitability to in excess of 30%.
Note: As a result of the accounting issue identified in April 2018, the figures above and those reported throughout the Strategic Report relating to income statement
items and the prior year balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial Review which may impact their accuracy
and reliability
10 Air Partner plc Annual Report 2018
“We have a well invested business and a
world class platform enabling us to compete
globally to fulfil our customers’ highest
expectations”
Despite the compelling strategic
attractions of the acquisition, when our
accounting issues were identified, we
rightly focused our priorities on our existing
business and on our customers, employees
and shareholders. As a result, despite six
months work and being a few days from
announcement we let the exclusivity lapse.
In total £0.5m of cost was incurred, and
will be expensed in financial year 2018/19.
Although we are no longer in exclusivity we
have built a strong relationship with the
target company and remain in dialogue
with the Board members.
ACCOUNTING REVIEW
The events following the end of the
financial year have been some of the most
challenging I have faced as Chief Executive.
In April, we confirmed evidence of repeated
and consistently mis-posted accounting
journals, resulting in a total net assets
overstatement of £4.0m net of corporation
tax. This proved a complex issue to resolve
and one which had arisen over a period
of years dating back as far as 2010/11.
The specific accounting corrections are
explained in the Financial Review.
As part of our strategy to attract and
recruit the best people for our transforming
business we effected significant change in
our Finance team during 2017, and it was
the ability and vigilance of this new team
that identified this issue. The investigation
to understand the issue, rectify errors
and processes, and prevent any similar
breakdown in reporting accuracy, has
been comprehensive and appropriate.
We have developed a healthy culture of
self-improvement across the business,
supported by senior management
encouraging all of our employees to raise
issues and challenge business practices
through open channels of communication.
Sadly, this case of accounting weakness
was complex, without a consistent pattern
and difficult to detect, with no clear
motivation or evidence of personal gain.
It is encouraging that it was our new
finance team that identified the issue.
This isolated incident does not reflect our
values or how we do business, and frankly
it lets down our people and adversely
impacts our shareholders investment.
Our on-going people management
processes and the current upgrading of
key financial controls place us on a very
firm footing to deliver transparency, and
provide confidence for our current and
potential shareholders in the reporting
accuracy of our business performance
going forward. It is also important to
confirm that no customer, operator or
supplier was impacted or disadvantaged
by circumstances or outcomes relating to
these accounting mis-statements. I would
like to thank all involved for their hard work
to conclude this issue.
FOCUSED ON THE LONG TERM
Our approach is long term. Our track record
of capturing opportunity in a volatile
industry has enabled us to grow and
develop the business into a market leader,
to diversify our customer base and to
innovate with new products and services.
Aviation is an industry which demands
long term partners with shared objectives
and vision. These demands regularly go
unmet. We choose to take a different
approach and to meet these demands,
aligning closely with our customers’
own strategic plans and activities.
Long term strategic thinking and
partnership will continue to inform our
actions and behaviour. We will not take
a short term decision if we believe that it
may have a negative impact on the long
term growth, health or reputation of our
Group. We will always strive to do things
in the right way, for the good of customers
and employees, over the long term, firm
in the belief that this approach will mean
that we get things right and deliver
considerable value for our shareholders.
OUR STRATEGIC PRIORITIES
We have five strategic priorities: to create value by putting our customers first; to grow the business organically; to broaden our
offer as the demand for aviation services increases; to develop and retain our great people, and to maintain and enhance our
brand identity. We explore three of these priorities on pages 13 to 19 but the other two are equally important.
We aim to continue to grow organically by driving efficiencies and investing in sales teams, training and technology. Organic gross
profit, adjusting for current and prior year acquisitions, is up 12% year on year. And in an industry that is broad, fragmented and
competitive, differentiating our brand is essential for our current and future success. Air Partner is well known in the industry and
we have acquired equally well respected businesses. Our aim is to bring all businesses under the one unified brand umbrella later
this year.
See our strategy in action and KPIs for more information on pages 13 to 21
Air Partner plc Annual Report 2018
11
Strategic reportGovernanceFinancial statements CHIEF
EXECUTIVE’S
REVIEW
CONTINUED
OUTLOOK
2017/18 was a good year for Air Partner’s
trading performance. Much of the strategic
work undertaken over the past few years,
our focus on self-improvement, and a long
term approach to managing the business
are evident in these results. These results
are also a testament to the hard work and
dedication of our staff, and their focus on
delivering for our customers.
The accounting review announced at
Easter proved to be an unexpected and
challenging event for everyone at Air
Partner. With the review concluded,
I want to thank our staff for their diligence
through this period, as their focus on our
customer service never wavered. The
review has spurred us on to accelerate
additional investments in technology and
processes to improve our risk measures
and reporting so that an event such as this
cannot be repeated. As a consequence of
the review we start the 2018/19 year with
a material one-off cost of £1.3m which
will not recur, consisting of £0.8m of
professional review fees and £0.5m
of aborted acquisition cost.
We are rarely anything more than
cautiously optimistic at the start of
a year, and this year would certainly be
no different. We have a strong portfolio
of global Charter products which provides
us with exposure to various markets and
geographies, and our portfolio approach,
without any single product or market
dominance, often benefits us to mitigate
volatility, in either direction, in any one
market or product line over the course of a
year. At this point in the year we are seeing
a particularly strong performance in Freight
and USA, Commercial Jets is flat, while
Private Jets UK has started the year slowly.
As ever at the beginning of the year, for
global Charter at least, it is far too early to
predict the full year outcome. Our more
pipeline orientated businesses are in
Consulting & Training and also Remarketing
and these activities have encouraging
order books which will develop even
further during the year ahead. We have
exciting investment initiatives in people,
offices and infrastructure planned and
underway from previous years; these will
position the business well for the years
ahead. As a Group we will make further
progress in extending our market position
and delivering exceptional service and
value to our customers globally.
As we always state, the global charter
business has consistently been, and will
continue to be, a volatile industry. Against
this backdrop we will manage the business
for the long term, with a very clear strategy
of alignment to the needs of our global
customer base. In line with our clear
growth strategy, the Board continues to
assess investment opportunities, both
organic and acquisition, to enhance or
extend the services and capabilities we
offer our customers, which will ultimately
strengthen and advance our business.
Mark Briffa
Chief Executive Officer
12 Air Partner plc Annual Report 2018
12 Air Partner plc Annual Report 2018
STRATEGY
IN ACTION
A LONG TERM
PARTNER
We have a clear long term strategy to become a
world class global aviation services group, aligned
to the needs of our global customer base. To achieve
this, we have five strategic priorities:
• Putting our customers first
• Growing organically
• Broadening our offer
• Developing and retaining our people
• Maintaining and enhancing our brand identity
Over the next pages we explore some of these in
greater detail.
Air Partner plc Annual Report 2018
13
Strategic reportGovernanceFinancial statements PUTTING
CUSTOMERS
FIRST
Customer service is part of
our DNA. Putting customers
at the heart of every decision
we make enables us to
provide a consistently
exceptional, tailored
service across the Group.
In response to customer demand and
feedback, we got to know our clients
better, developing proactive, disciplined
and relationship-driven behaviours and
processes to become true partners to
our global clients, exceeding customer
expectations across all products
and geographies.
Just one of the many examples of where
we are delivering exceptional service is
with our JetCard, recognised for the fourth
consecutive year as the best, most flexible
and affordable private jet membership
programme in the industry. Constantly
looking to improve and deliver the very
best VIP experience, we achieve an
unrivalled level of service within the
industry. This year we have introduced
complimentary VIP catering with gourmet
menus across 33 airports in Europe.
We specialise in last minute logistical
planning and can make even the most
remote location more convenient and
accessible. And our JetCard customers
can book in complete confidence knowing
that aviation safety is at the heart of the
business thanks to Baines Simmons, an
Air Partner company and world leader in
aviation safety consulting.
We have strengthened relationships
and built new ones in new and existing
markets. We are delivering what our
customers want by putting them first
in all that we do.
14
Air Partner plc Annual Report 2018
Air Partner’s JetCard
has once again been
recognised by independent
consultants, Conklin and
De Decker, as the number
one offering in the
industry for flexibility
and affordability#1 15
Air Partner plc Annual Report 2018
15
Strategic reportGovernanceFinancial statements BROADENING
OUR OFFER
While we continue to grow
our Charter business, we are
also broadening our offer in
aviation services.
Since 2014 we have reviewed
over 60 businesses, taking a
very selective approach to
acquisitions.
16 Air Partner plc Annual Report 2018
This year we acquired SafeSkys. It’s a
great fit with our strategy, providing good
visibility of revenues and strong global
growth opportunities.
SafeSkys has been trading for over 24 years,
providing airport wildlife management and
services, air traffic control and air traffic
engineering to over 85 international
airports. It is one of the world’s leading
providers of wildlife services which range
from bespoke training courses to the
production of plans and procedures to
comply with ICAO, EASA and national
CAA/FAA regulations.
SafeSkys is also a CAA approved Air
Navigation Service Provider (ANSP).
One of our air traffic services (ATS)
contracts is with Llanbedr, which was
resurrected in 2014 as a Centre of
Excellence for Unmanned Aerial Systems,
having been closed for over 10 years.
SafeSkys were engaged early in the
project to re-establish the provision of air
traffic services which involved designing
and re-equipping the control tower with
state of the art equipment, the production
of procedures and operations manuals as
well as the design and implementation
of the safety management system. We also
selected, recruited and trained the staff
required to deliver the service.
The aerodrome opened on time and
on budget with full CAA approval. We
believe ATS offers considerable global
growth opportunities.
We have many shared clients and our
teams across the Group are communicating
to identify cross selling opportunities.
SafeSkys provides wildlife control services
to nine Royal Air Force (RAF) Airfields and
two CAA airports within the UK and ground
school training for fast jet pilots on the
Hawk T1 and T2 aircraft at Royal Air Force
Valley for both the RAF and overseas
foreign air forces.
Air Partner plc Annual Report 2018
17
Strategic reportGovernanceFinancial statements DEVELOPING AND
RETAINING OUR
PEOPLE
Air Partner is a people
business. We are very proud
of our committed people and
teams, putting our customers
first to deliver consistently
outstanding results.
Attracting, developing and retaining our
great people are critical to our success.
We have done a lot of work again this year
to engage our staff and build a culture
in which they feel included, valued and
empowered to reach their full potential.
Last year, we launched our first ever
global employee opinion survey and have
this year introduced ‘engagement’ as a
strategic KPI. We have listened to the
results, understood what matters to our
people and responded. We have taken
action, from small steps like making fresh
fruit available in our offices, to some
bigger ones such as introducing a whole
new communications framework to help
involve and include all our people
in all aspects of our business. This is
increasingly important as we add new
companies to the Air Partner family
of businesses.
People tend to stay with Air Partner for
a good length of time. The average stay
is five years and some of our staff have
been with us for 10, 15 or 20 years plus.
We recognise their dedication by linking
remuneration to performance and we
actively encourage personal development
by offering training to build capabilities
and cultivate exciting careers. This
year we introduced a graduate trainee
programme, taking in a team of new
graduates and giving them the
opportunity to experience different
aspects of the Group’s businesses.
We will continue to develop this and
hope to see our graduates progress
with us for many years to come.
18 Air Partner plc Annual Report 2018
‘I started in a very junior broking support
role. From the moment I walked in I was
made to feel very welcome. Over the years,
Air Partner has invested in me with training
to support my career. I work hard, I look
after customers really well and I do my best
every single day. The Company recognises
and rewards me for that. At every stage
I’ve had good people around me giving
me good advice — the same advice I now
give to my team.’
Clive Chalmers: Trading Director,
UK (19 years)
‘The Graduate Scheme has been a
great opportunity to see how each area
of the business operates and to build
relationships with colleagues across the
Group. I’ve received a lot of support in each
department and learnt about areas I didn’t
think I would have much interest in. It’s
been very hands on and I was proud to win
my first client, a high profile international
businesswoman in the beauty industry.’
Courtney Jones: Graduate Account
Manager (10 months)
‘Over 11 years, I’ve worked in many
aspects of the business from marketing
to sales to Customer First. Air Partner is
a diverse business with a performance-
driven culture, but it is also a business
that supports employees when they
seek personal development and
new opportunities.’
Miranda Taft: Senior Vice President,
Customer First & Operations, US (11 years)
‘I have had the opportunity to use
my language skills and work with our
international colleagues in different
countries. I had a brilliant mentor who
helped me build a fulfilling career. I try
to do the same and assist junior staff
members in the business with training
and coaching. I have been with Air Partner
for 21 years and it certainly hasn’t
been boring!’
Claudia Schimansky: Trading Manager,
Private Jets Europe (21 years)
‘The Company really listens and
responds to feedback and we get regular
opportunities to meet with Mark (CEO)
over informal lunches. I feel supported
in my career, surrounded by people with
knowledge who have been here for
many years.’
Jemma Goddard: Airworthiness
Coordination Team Leader,
Baines Simmons (2 years)
GENDER DIVERSITY
Directors
Executive team
Senior management
Employees (including team
leaders/managers)
Male
4
4
11
192
Female
1
3
6
112
Air Partner plc Annual Report 2018
19
Strategic reportGovernanceFinancial statements KEY PERFORMANCE
INDICATORS
We monitor a range of financial and strategic indicators that reflect
the underlying strength of our business and help to measure progress
against our strategy.
Gross transaction
value
£261.3M
261.3m
215.8m
Gross
profit
£36.1M
36.1m
31.7m
Underlying profit
before tax
£5.8M
8.4P
Underlying basic
earnings per share
Basic earnings
per share
6.9P
6.9p
5.8m
8.4p
4.7m
5.9p
4.8p
2017
2018
2017
2018
2017
2018
2017
2018
2017
2018
This represents the
total amount invoiced
to our customers
Being the key measure
of business success
Being the main
measure of financial
performance used
within the business
Being EPS derived from
underlying profit for the
year (which excludes
other items)
Being EPS derived
from profit for the year
including other items
Return on
equity
43.4%
43.4%
37.9%
Cash (excluding
JetCard)
£4.8M
4.8m
Dividends
per share
5.5P
5.5p
5.2p
Total
shareholder return
36.9%
50.4%
36.9%
2018
2017
-1.8m
2017
2018
2017
2018
2017
2018
Return on equity is
calculated as operating
profit for the year over
net assets
Representing cash
excluding JetCard cash
net of debt
As adjusted
for the share split
which took effect
on 31 January 2017
Calculated as closing
share price plus
dividends less opening
share price, all divided
by opening share price
20 Air Partner plc Annual Report 2018
STRATEGIC KEY PERFORMANCE INDICATORS
We are on a journey of transformation
to become a world-class global aviation
services group. Last year we introduced
four new key performance indicators
(KPIs) to measure our progress against
this strategy. For the first time, this year we
have comparative data for these measures.
This year, following the launch of our global
employee opinion survey, we have added
‘Engagement’ as a measure of our strategic
priority ‘to develop and retain our people’.
CUSTOMERS
AND BRAND
GROW
ORGANICALLY
BROADEN
OUR OFFER
PEOPLE
PEOPLE
Net Promoter Score
Our Net Promoter
Score is calculated
by subtracting the
percentage of
customers who are
detractors (score the
Group’s service 0-6
out of 10) from those
who are promoters
(score the Group’s
service 9 or more
out of 10).
Increase in gross
profit in our
Charter business
This measure
illustrates the
performance of our
Charter division,
excluding all post FY
2014/15 acquisitions.
Acquisition
contribution
to underlying
operating profit
This measure
demonstrates
the contribution to
profits arising from our
strategy of introducing
new service lines to
our customers.
Employee turnover
Calculated as
the percentage of
employees who leave
the Group during the
financial year and
are replaced by
new employees.
Engagement
Measurement of
employee positivity
in response to a group
of key questions on
employee advocacy
and overall
satisfaction.
79%
£6.0m
£0.6m
22%
69%
(2017: 75%)
(2017: £0.3m)
(2017: £0.7m)
(2017: 25%)
G
o
v
e
r
n
a
n
c
e
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
Note: As a result of the accounting issue identified in April 2018, the figures above and those reported throughout the Strategic Report relating to income statement
items and the prior year balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial Review which may impact their accuracy
and reliability
Air Partner plc Annual Report 2018 21
Strategic report
DIVISIONAL REVIEWS
CHARTER
Our Charter division has delivered a robust full year performance,
with gross profit up 22.8% to £31.3m and underlying operating profit
up 9.5% to £6.7m.
COMMERCIAL JETS
This performance has been driven by
growth in Commercial Jets with gross
profit up 22.7% to £17.3m and underlying
operating profit up 13.7% to £3.8m.
Strength has been seen across territories
and sectors and from new and existing
customers. In the US we posted record
results, despite a strong comparative
period last year when we benefited from
the US election candidates’ flying. The
traditionally softer second half of the
trading year did not materialise as we were
able to respond effectively to customers’
needs in the face of hurricanes Irma and
Maria, which hit the US and the Caribbean
in September, and to a non-hurricane
related evacuation for one of our customers
in the leisure sector. We have also seen
an increase in activity in the MICE sector
(Meetings, Incentives and Corporate
Entertainment). In Europe we benefited
from prior investment in people in the
sports sector and we are well placed to
continue to perform well with this year’s
FIFA World Cup taking place in Russia.
We saw good results from Tour Operating
programmes and continued strength in
automotive, where we have helped with
the launch of a cross over vehicle for
a major German manufacturer and are
seeing growing opportunities despite an
increasingly competitive environment.
In the UK and Europe, we continue to
see steady, year round demand to meet
government requirements.
Air Partner Remarketing has had an
encouraging year in which it has secured
a number of exclusive mandates and
demonstrated the benefit of inclusion in
the wider Air Partner Group with its most
recent sale of a 2009 vintage Beechcraft
King Air 200 for Air Hamburg, the result of
an introduction from Private Jets. During
the year, Air Partner Remarketing has
successfully sold and delivered two
B737-700 aircraft and a GE engine for
Kenya Airways, two 747-400s on behalf
of China Airlines, and won exclusive
contracts with a large Australian bank
and with Saudia, the latter to market
15 Boeing 777-200ER aircraft.
PRIVATE JETS
In Private Jets, gross profit was up 3.4%
to £10.6m, while underlying operating
profit decreased by 56.6% to £1.1m. This
largely reflects lower sales in the UK, as
we moved key personnel to the US, and the
subsequent impact of investment we have
made in upskilling our sales team across
territories. We are beginning to see the
benefit of this investment with some good
new client wins and expect to see further
benefit in the new financial year. In the US,
where we expanded our New York office
last year and recruited new management to
bring greater focus and strong leadership
In Europe, we benefited from prior
investment in our Sports sector
The sale of a Beechcraft King Air 200 was
a result of an introduction from our Private
Jets division
Note: As a result of the accounting issue identified in April 2018, the figures above and those reported throughout the Strategic Report relating to income statement
items and the prior year balance sheet have been prepared on the basis described in pages 28 and 29 of the Financial Review which may impact their accuracy
and reliability
22 Air Partner plc Annual Report 2018
+22.8%
Charter gross profit
+22.7%
Commercial Jets gross profit
+3.4%
Private Jets gross profit
Air Partner plc Annual Report 2018 23
DIVISIONAL REVIEWS
CHARTER CONTINUED
to the region, investment has enabled us to
service an increase in demand and we have
seen a record rise in overall client numbers
of 80%. Business from existing customers
is performing well with JetCard renewals
up 16% including two €1m renewals and
utilisation up 8%. The Air Partner JetCard
in the US has been recognised as the most
flexible membership programme in the
industry for four consecutive years and
this accolade has this year been extended
to JetCard in Europe. We welcomed back
a number of clients from competitors and
we continue to go the extra mile to exceed
customer expectations. All JetCard cash is
held in segregated client accounts. The
partnerships and alliances we have rolled
out in the last 18 months have not only
enhanced our customer experience but
have introduced new customers to us.
We have continued to add to JetCard’s
exceptional product offering with the
introduction of new gourmet menus
across 33 airports in Europe and we
plan to expand this further.
FREIGHT
Freight is an especially volatile sector,
but is a strategic offering, enabling us to
provide our customers with a full aviation
service. Freight has had a record year with
gross profit up 202.4% and client numbers
at their highest level. This outperformance
has been driven by a mix of charters carried
out across the Caribbean to support the
relief effort of hurricanes Irma and Maria,
the positive and immediate impact of
new hires over the period, and ongoing
contracts in the Middle East. Our ability
to respond quickly to requirements in this
region demonstrates the advantage of
Air Partner’s geographic reach.
We have seen a record rise in overall
Private Jet client numbers
Client numbers in Freight are at
their highest level since Air Partner
began operating
24 Air Partner plc Annual Report 2018
+202.4%
Freight gross profit
Air Partner plc Annual Report 2018 25
DIVISIONAL REVIEWS
CONSULTING & TRAINING
In our Consulting & Training division, gross profit was down 23.1% year on
year at £4.8m, while underlying operating profit was down 8.8% at £0.6m.
BAINES SIMMONS
CLOCKWORK RESEARCH
Baines Simmons has had an encouraging
year with good, longer term contract
wins and some of the pipeline projects
crystallising in the second half. Customer
engagement and contract wins have been
good across civil and military organisations
and the forward pipeline remains strong.
In the first half Baines Simmons secured
contracts with Tier 1 national carriers, the
Royal Air Force of Oman and the European
Defence Agency. In January, we won the
STEP (Safety Training for Error Prevention)
tender with the Ministry of Defence (MOD),
for a four to six year project. This is the
third time we have been selected in a
competitive tender to provide training,
advice and guidance to the UK MOD and
extends our remit to include the Royal Navy
and the Army as well as the Royal Air Force.
Academy Training has also continued
to perform well with over 4,000 people
completing training programmes during
the year. A number of commercial contracts
were also won throughout the year. In the
second half we began work on a new three
year strategic plan for Baines Simmons
which is extremely exciting, and as part of
that, in April 2018 we appointed Ian Holder,
a safety management specialist, as Baines
Simmons Managing Director. This is an
important appointment and it follows a
period of interim management. Ian has been
integral to developing the new plan and he
will undoubtedly bring strong leadership
with a transparent and team orientated
approach, and a deep understanding
of the business and the market.
Our Fatigue Risk Management (FRM) Team,
trading as Clockwork Research, has had a
good second half. Over the year Clockwork
has carried out work for Tier 1 national
carriers and airlines across the world and
for a high profile train provider in the UK.
In a move into rotary, a national air
rescue client became the first rotary
operator in Europe to be given fatigue risk
management approval by the regulator.
With Clockwork now fully integrated into
the Baines Simmons offer we are beginning
to see the benefits of a complimentary
client list. The pipeline of opportunities is
good and we expect to increase efficiency
further next year.
SAFESKYS
SafeSkys, acquired in September 2017,
has performed well over the last quarter
of the financial year. The integration of
the team into our Gatwick headquarters
was completed in November and we are
extremely pleased with progress. SafeSkys
has a good customer base with stable
contracts of an average of four to six years
duration and good visibility of revenues.
A key RAF contract was secured at year
end to operate in the Scottish region. The
air traffic control side of the business is
performing in line with expectations and
in the years ahead offers considerable
opportunities for growth from a
global perspective.
We continue to assess acquisition
opportunities within Consulting & Training
as we aim to create a balanced mix
between our two divisions.
26 Air Partner plc Annual Report 2018
Baines Simmons has won new contracts
across military and civil organisations.
Our Fatigue Risk Management team has
carried out work for Tier 1 national carriers
and airlines across the world.
-23.1%
Consulting & Training gross profit
-8.8%
Consulting & Training operating profit
Air Partner plc Annual Report 2018 27
FINANCIAL
REVIEW
The Accounting Issue has been contained and resolved, and the
correction to net assets has been quantified. Despite the resulting
restatement, the strength of our balance sheet will continue to support
our competitive positioning and advantage in the market place.
• In the opinion of the Directors this is
ACCOUNTING POLICIES
There have been no changes to accounting
policies during the year. However, a
review of the potential impact of IFRS 9
Financial Instruments, IFRS 15 Revenue
from Contracts with Customers and IFRS 16
Leases, was conducted during the period.
It is management’s conclusion that there
will be no material impact on the financial
statements arising from the implementation
of IFRS 9 and IFRS 15 in subsequent
financial years. However, under IFRS 16
the majority of operating leases will be
accounted for as right of use assets, which
will largely be offset by corresponding
lease liabilities. The lease liability will
increase net debt. It is anticipated that
operating expenses will decrease and
financing costs will increase as the
operating lease charge is replaced by
depreciation and interest. The overall
impact on net profit is not expected
to be material.
BALANCE SHEET STRENGTH
Despite the impact of the accounting
review and net assets correction the
strength of our balance sheet will continue
to support our competitive advantage and
positioning in the market.
At the balance sheet date the Group’s
own cash, net of borrowings, was £4.8m
(2017: net debt £1.8m). As noted in the
interim report, the Group has moved all
JetCard cash into segregated accounts
to provide protection to our customers.
FINANCIAL IMPACT OF THE POST
YEAR END ACCOUNTING REVIEW
As explained in the preceding Chairman’s
Statement and Chief Executive’s Review, as
part of its year end process the Company
identified an issue over its financial controls
which had a material impact on current
and prior period results. An extensive
review was subsequently undertaken with
external advisory support. Further detail
surrounding the facts and circumstances of
the accounting issue and the investigation
is provided in the Audit and Risk Committee
report on pages 44-46. The financial
implications of this issue are summarised
as follows:
• The total cumulative impact on total net
assets was an overstatement of £4.0m
net of corporation tax; this was in line
with the guidance provided that it would
not exceed £4.0m.
• The resultant £4.0m correction to
decrease net assets is effected as follows:
– £4.3m decrease of net assets as
at 31 January 2018, being a pre-tax
gross impact of £4.4m less related
corporation tax relief arising in the
year of £0.1m.
the most reasonable approach and the
Directors believe that, after adopting
this method of correction, the historic,
adjusted accounts broadly represent the
growth pattern of the business during
this extended period of time. However,
the auditor’s report will contain a
limitation of scope qualification in
respect of the apportionment of the
£3.5m. This is inevitable as it cannot
be estimated reliably across either the
accounting periods or the Income
Statement lines impacted.
• As a result of the Board’s apportionment
the profit for both the current and prior
years is stated after classifying the
£0.4m correction as exceptional costs
in each of these years. This resulted
in a corresponding £4.0m reduction
in opening retained earnings as
at 1 February 2017.
• The anticipated total corporation tax
recovery resulting from the total net
assets correction is £0.4m. Of this
amount £0.1m is included in the
2017/18 results; the remaining £0.3m
is expected to be recognised in 2018/19
following agreement by HMRC.
– £0.3m increase of net assets
• There was no related impact on cash or
as at 31 January 2019, being the
retrospective corporation tax relief
expected to be reclaimed on the gross
correction attributable to prior periods.
• Of the gross amount, £0.9m was
identified as relating to the year ended
31 July 2011. It has not been possible to
attribute the remaining £3.5m to specific
trading years, nor to specific lines in the
Income Statement.
• In light of the review findings and this
misstatement of accounting entries
since 2010/11, the Directors deemed it
appropriate to correct the unidentified
£3.5m net assets overstatement by
apportioning this amount on a straight
line basis across each of the last eight
trading periods.
debt balances.
• The review undertaken to investigate
the issue was wide-ranging and
exhaustive. Total associated costs
of £1.3m, representing £0.8m for the
services of external advisors and £0.5m
of aborted acquisition costs, will be
recognised as an expense in the
year ended 31 January 2019.
• A thorough assessment of financial
controls has been progressed to
address all weaknesses and support
the essential transparency of financial
reporting, to give current and potential
investors the necessary confidence in
the growth trajectory of the Company.
28 Air Partner plc Annual Report 2018
“The recent upskilling of the Finance team through external
recruitment and the successful upgrading of the accounting
system are critical enablers supporting an evolutionary
programme to embed effective financial control and
enhance business performance insight.”
The increase in the Group’s own cash
reflects the trading performance over
the year together with positive changes in
working capital. The Group’s debt facility
at 31 January 2018 comprised a revolving
credit facility (“RCF”) of up to £7.5m,
arranged through the Group’s principal
banker, of which £2.5m was drawn down
as at the year end. The Group also has
an unutilised £1.5m overdraft facility.
All financial covenants were complied
with during the period and to the date
of approval of this report.
FINANCIAL OVERVIEW
Gross transaction value: top line
performance increased by £45.5m
(21.1%) to £261.3m (2017: £215.8m)
primarily due to an increase in client
activity in the Freight division and the
United States operations. Freight activity is
often driven by one off and unusual events;
our investment in people realised financial
benefits in the year as we were well placed
to win hurricane relief related contracts.
In the USA we delivered a significant new
contract with a major insurance company
as new hires brought new clients into
the business.
Revenue: Air Partner primarily uses
gross profit as its key indicator of business
performance. This is due to the potential
for revenue, as determined under IFRS,
to fluctuate depending on the number of
contracts enacted in the year where the
Company acts as principal, as opposed
to agent. The £6.0m (14.0%) increase in
revenue to £48.5m (2017: £42.5m) is
largely driven by the £4.4m increase in
gross profit. The remaining increase of
£2.0m is due to an increase in revenue
from contracts where Air Partner acts
as principal.
Gross profit: this primary measure
increased by £4.4m (13.8%) to £36.1m
(2017: £31.7m), attributable to improved
performance in the USA, Freight and
Commercial Jets. The Commercial Jets
division similarly highlighted the
commercial benefits of strong relationships
with loyal customers, operating three
aircraft on tours throughout the summer
season to boost results. The 13.8%
increase in gross profit is lower than the
21.1% increase in gross transaction value
due to the difference in gross margins
realised across the product mix.
Underlying operating profit: underlying
operating profit increased by 24.9% to
£5.9m (2017: £4.7m), with the majority
of the increase being attributable to the
improved performance in the USA and
Freight, as noted above. Excluding the
impact of Air Partner Remarketing’s
results from the Commercial Jets division,
our core charter business’s performance
increased by £1.7m, on a like-for-like basis.
The operating profit figures for both the
current and prior years is stated after
accounting for a £0.4m exceptional
expense item in each year, as explained
in the commentary on the post year
end accounting review above.
Other items: other items of £1.0m
comprised £0.3m of restructuring costs,
£0.3m for the amortisation of intangible
assets arising on acquisition and £0.4m
of acquisition related costs.
Operating profit: operating profit increased
by £0.9m to £4.9m (2017: £4.0m) as a
result of the year on year improvement
in underlying performance more than
compensating for the restructuring and
acquisition related costs incurred during
the period.
Finance charges: the Group’s net finance
charge of £0.1m comprises interest on the
Group’s loan and interest receivable on
cash balances.
TAXATION
The Group’s underlying effective tax rate
for the financial year was 24% (2017: 33%)
and total effective tax rate was 27%
(2017: 35%). During the year, the Group
implemented a new global transfer pricing
policy, reflecting best practices and the
guidelines issued by the Organisation for
Economic Cooperation and Development.
FOREIGN EXCHANGE
Where possible, the Group uses natural
hedges to minimise its foreign exchange
exposure, for example matching JetCard
deposits denominated in Euro or US dollars
with the respective liability. In addition,
the Group uses derivative financial
instruments to hedge certain transactions
in accordance with its internal policies.
ACCOUNTING DEVELOPMENTS
The Group uses Navision as its accounting
system. During the period, the Group
successfully upgraded the system by
completing the global roll-out of Navision
2016 on schedule and on budget facilitating
improved reporting, more robust financial
control and an ability to integrate
automatically with our CRM system.
In addition, the UK finance team was
restructured, supported by the recruitment
of more qualified staff to upskill the
function. These two actions are critical
enablers in a wider evolutionary change
programme that will see the short term
development of an effective financial
control framework, together with a
leveraging of this platform to drive
enhanced business performance insight
and accurate decision making in order
to more effectively realise commercial
success and associated financial returns.
Air Partner plc Annual Report 2018 29
Strategic reportGovernanceFinancial statements PRINCIPAL RISKS
AND UNCERTAINTIES
The Board has carried out a robust assessment of the principal risks
facing the Group, including those that would threaten its business
model, future performance, solvency or liquidity.
RISK MANAGEMENT PROCESS
The Board defines the risk appetite and
monitors the management of significant
risks to ensure that the nature and the
extent of the significant risks borne by the
Company are aligned with the overall goals
and strategic objectives. Our risk appetite
influences the culture of our business and
how we operate, and is reflected in our
management structure. The Operating
Board supports the Board in monitoring
the exposures through regular reviews and
its general oversight of the day-to-day
running of the business.
ANNUAL RISK ANALYSIS
We identified and assessed new and
existing risks over the course of the year as
the Group’s overall risk profile continued
to evolve. The Board and the Executive
Team performed further analysis to
prioritise these risks, with a focus on
those considered to pose the greatest
risk to achieving our objectives.
During the year, there has been a change
to our legal and regulatory risks following
the potential uncertainties arising from
Brexit and the US Presidential election.
However, both of these political events
could present opportunities, and we are
continuing to evaluate the situation.
OUR PRINCIPAL RISKS AND
UNCERTAINTIES
The principal risk to the Group’s business
stems from the general economic
conditions in which our clients operate,
affecting their willingness and ability to
charter or contract consulting services.
Ad hoc charters are likely to continue to
be affected by serious economic instability
in the major world markets.
The inherent risk to Air Partner’s chartering
business is the fact that lead times for
ad hoc bookings are measured in days
or weeks, rather than months. Forward
bookings can be impacted very suddenly
by changes in financial markets, political
instability and natural events affecting the
movement of people or cargo from one
country to another. Economic uncertainty
affects corporate, government and
individual clients and affects the quality
of aircraft supply as operators consolidate
or leave the market.
Contractually, this risk is mitigated in
that we sell capacity on aircraft owned
and operated by a third party, and
contracts with our customers are normally
placed as mirrored transactions.
The Group does not have any contractual
arrangements with any significant individual
or company which are essential to
continuation of the business.
General business risks faced by the Group
are those faced by businesses with similar
characteristics. Those listed here are the
principal risks considered by the Board
to have a potentially material impact
on the Group achieving its long term
strategic objectives.
30 Air Partner plc Annual Report 2018
Change in risk
assessment
Strategic
initiatives
potentially
impacted
Customers
Maintaining
brand value
Risk
Market conditions/cost structure
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.
Potential
impact
Limited
visibility of
future bookings
may result in a
cost structure
that does not
align with
market
conditions.
Controls/processes to mitigate
Extension of the offering following
the acquisition of Cabot Aviation
Services Limited, and particularly
Baines Simmons Limited, has
enhanced the stability of earnings
by adding more predictable revenue
streams to the Group.
Further diversification of the
client base of the aircraft chartering
business across governments and
non-governmental organisations,
commercial enterprises and
individuals, as well as across
geographic regions, allows for some
smoothing when there are seasonal
or sectorial changes in demand.
We continue to focus on overheads to
ensure they are appropriate to the level
of business and appropriate action is
taken if necessary.
Retaining, developing and
expanding the Group’s
customer base
The challenge of retaining and
expanding customers in a highly
competitive environment with
low barriers to entry.
Attraction, retention and
motivation of staff
The challenge of attracting new
talent and retaining existing
key staff.
Customers
Growing
organically
Customers
Developing
and retaining
our people
Growing
organically
Broadening
our offer
The Group’s
ability to
maintain and
grow revenue
could be
adversely
affected.
Roll-out of the Customer First
programme which underpins the
Group’s strategy for identification
of, and marketing to, potential
customers while elevating the
customer experience through
improved process capabilities.
Loss of
earnings.
Investment in recruitment and talent
management, including through
internal and external courses,
especially through a longstanding
arrangement with Cranfield University
to improve performance.
Elements of remuneration are tied to
individual and Group performance.
Regular review of remuneration and
other incentives to ensure we remain
on par with our competitors.
Air Partner plc Annual Report 2018 31
Strategic reportGovernanceFinancial statements PRINCIPAL RISKS
AND UNCERTAINTIES
CONTINUED
Risk
Financial counterparty risk
Financial exposure following
payments in advance of services
to operators.
Change in risk
assessment
Strategic
initiatives
potentially
impacted
Customers
Maintaining
brand value
Potential
impact
Loss of
earnings.
Non-financial counterparty risk
Reliance on third parties for
delivery of services to end clients.
Operator compliance with
relevant regulations.
Customers
Maintaining
brand value
Failure of
aircraft or
operator
chartered
by Air Partner.
Competitor risk
The risk of falling behind
competitors in product
development, standards of
service or cost effectiveness.
Creating value
Maintaining
brand value
Loss of
customers.
Customers
Developing and
retaining our
people
Maintaining
brand value
Non-compliance
with regulations
could result
in loss of
customers or
damage to the
Group’s brand.
Legal, regulatory and HS&E
The challenge of operating in
multiple jurisdictions subject to
a large number of different and
evolving laws and regulations,
including tax and civil aviation
authority requirements. Risks to
health or safety arising out of
activities relating to our services
and workplace operations.
Satisfactorily controlling the
environmental impact of
our services.
32 Air Partner plc Annual Report 2018
Controls/processes to mitigate
When selecting which operator to use,
we assess reputation and financial
strength in order to mitigate the risk of
making payments to businesses that
may fail. In addition, where possible,
we use third party bank guarantees
instead of cash deposits.
We always choose high quality aircraft
and carriers for every charter. Air
Partner maintains non-owned aircraft
liability insurance which can also be
extended to clients. All flights are
watched in operation by the in-house
operations team. In addition, there is
both an internal audit and an external
audit process, the latter performed as
part of the ISO accreditation.
Roll out of the Customer First
programme across the Group will
embed a unified and elevated level of
customer service delivery by aligning
our sales and marketing strategy with
service delivery.
We also undertake regular client
surveys to ensure we remain
responsive to competitor activity and
client demands within acceptable price
levels for the quality and standards of
service provided.
Management reviews policies and
processes at Operating Board level.
The business has a range of policies to
minimise these risks and reviews and
updates them on a regular basis.
Change in risk
assessment
Risk
Business growth
Challenges in enhancing and
extending the Air Partner offer
following recent acquisitions.
Reputational risk
Damage to Air Partner’s
reputation following incident
or inappropriate behaviour
by our staff.
Business interruption
Reliance on systems for
sourcing and booking aircraft
and client management.
Controls to safeguard value
and identify opportunities
Ensuring appropriate and
effective controls and risk
management frameworks
are embedded in our
changing business.
Strategic
initiatives
potentially
impacted
Customers
Broadening
our offer
Maintaining
brand value
Customers
Maintaining
brand value
Customers
Maintaining
brand value
Creating value
Maintaining our
brand value
Potential
impact
Lack of
sufficient
control over the
strategic and
commercial
activities of
new operations
resulting in
financial loss
or reputational
damage.
Damage to the
Group’s brand
could result in
loss of clients
or impair its
ability to
expand the
customer base.
Systems failure
could result in
business
interruption.
Process failure
leading to
avoidable
financial loss;
reduction in
share price;
inability to
maximise
business
opportunities
Controls/processes to mitigate
We have a dedicated integration team
to ensure that benefits arising from an
acquisition are maximised whilst
maintaining control over core
operations.
Our brand values of honesty, truth and
reliability are treated very seriously.
Discretion is key to our customer
service and its importance is
communicated to all members
of the team.
Business continuity and disaster
recovery plans are in place to
mitigate this risk.
Our controls and risks framework are
subject to continual review by senior
and Board level management to ensure
they are fit for purpose for the
foreseeable future
Pages 1 to 33 of this Annual Report constitute the Strategic Report. It has been approved and signed on behalf of the Board on 11 June 2018.
Mark Briffa
Chief Executive Officer
Air Partner plc Annual Report 2018 33
Strategic reportGovernanceFinancial statements BOARD OF
DIRECTORS
PETER SAUNDERS
Independent
non-executive Chairman
ARC RC NC
Peter joined the Board in
September 2014 and became
Chairman of the Board in June
2017. Peter has a wealth of
experience in marketing and
customer service: he is a non-
executive director of Godiva
Chocolatier NV; non-executive
director of Total Wines & More;
non-executive director of Natura
Cosméticos S.A. and was Chief
Executive Officer of Body Shop
International plc from 2002 to
2008. Past board experience
includes Canadian Tire
Corporation, Jack Wills
and Second Cup.
MARK BRIFFA
Chief Executive Officer
Mark has an extensive
knowledge of air charter broking
and of the aviation industry
worldwide, with over 30 years’
experience working within the
aviation sector. Before joining Air
Partner he held commercial roles
at Air 2000 and All Leisure. He
started his career with Air Partner
in 1996 as a Commercial Jets
Broker and joined the Board in
2006 as Chief Operating Officer,
becoming Chief Executive Officer
in April 2010.
RICHARD JACKSON
Independent
non-executive director
ARC RC NC
Richard joined the Board on
7 September 2016 and became
Senior Independent Director in
June 2017. He served at the Civil
Aviation Authority for 11 years
as Group Director of Consumer
Protection where he was
instrumental in the introduction
of new ATOL regulations. Richard
began his career with the Ministry
of Defence in 1974 before joining
the financial services sector.
Richard also acts as consultant
to a number of aviation and
travel-related clients.
34 Air Partner plc Annual Report 2018
S
t
r
a
t
e
g
i
c
r
e
p
o
r
t
F
i
n
a
n
c
i
a
l
s
t
a
t
e
m
e
n
t
s
SHAUN SMITH
Independent
non-executive director
AMANDA WILLS, CBE
Independent
non-executive director
ARC RC NC
Shaun joined the Board on
1 May 2016, being appointed
as Chair of the Audit and Risk
Committee in June 2016. He
began his career in retail
management and corporate
treasury at Marks and Spencer
plc. He joined Aga Rangemaster
Group plc (formerly Glynwed
International plc) in 1989,
becoming Group Treasurer in
1999 and Group Finance Director
from 2001 to 2015. He is a
qualified corporate treasurer,
and has an economics degree.
Shaun is also Group Finance
Director of Norcros plc.
ARC RC NC
Amanda joined the Board
on 20 April 2016 and was
appointed Chair of the
Remuneration Committee in
June 2017. Amanda began her
career with Airtours plc and was
Chief Executive Officer of Virgin
Holidays Travel Group from 2001
to 2014. Amanda is currently
non-executive director of
eDreams ODIGEO S.A., a global
online travel agency, and
Chairman of Urbanologie.com,
a digital start-up business
catering for the high net worth
and luxury sector. In 2015
Amanda was awarded a CBE for
services to the British travel
industry and to charity.
Note: Neil Morris, former Chief Financial Officer, resigned from
the Board on 13 April 2018
ARC:
Member of the Audit and Risk Committee
RC:
Member of the Remuneration Committee
NC:
Member of the Nomination Committee
Air Partner plc Annual Report 2018 35
Governance
EXECUTIVE TEAM
LEE PYLE
Group Head of Technology
TONY WHITTY
Managing Director,
Charter
JULIA TIMMS
Chief Marketing Officer
RACHEL THRIPP
Group HR Director
TRACY BEICKEN
Group Legal Counsel
and Company Secretary
Appointed 22 August 2017
IAN HOLDER
Managing Director,
Baines Simmons
Appointed 24 April 2018
MARK BRIFFA
Chief Executive Officer
36 Air Partner plc Annual Report 2018
CHAIRMAN’S INTRODUCTION
TO GOVERNANCE
“We are committed to achieving
a high standard of corporate governance,
valued by our customers, shareholders,
employees and all stakeholders.”
DEAR SHAREHOLDER
In this, my first governance statement as Chairman, I would like
to take the opportunity to highlight our ongoing commitment to
conduct business with a high standard of corporate governance.
We believe this is an essential part of our brand values and we know
it is something our customers, shareholders, employees and other
stakeholders place value in.
KEY ACTIVITIES THIS YEAR
We have continued to be active on the acquisition front, scrutinising
proposals and conducting the due diligence necessary to ensure that
any proposed acquisitions will meet our shareholders’ expectations.
I am pleased to welcome SafeSkys, a leading Environmental and
Air Traffic Control services provider, to the Group (see page 26).
Other key areas of focus have been Information Technology (IT), as
we continue to invest in technology platforms that not only improve
our customer experience but enable us to integrate acquisitions
seamlessly, and a revisit of our risk assessment processes, given
the continued growth in services provided by the enlarged Group.
POST YEAR END ANNOUNCEMENT
In April 2018 the Company announced that, as part of its year end
process, it had identified an issue over its financial controls which
has had a material impact on Air Partner results in prior periods.
We immediately appointed independent advisers to carry out a
thorough, transparent and exhaustive review into this matter which
is now concluded. We have moved quickly to appoint an Interim
CFO, to progress a thorough review of our financial controls and to
address immediately identified weaknesses. This matter is explained
more fully in the Audit and Risk Committee Report on pages 44 to 46.
UK CORPORATE GOVERNANCE CODE
The Board supports the principles and provisions set out in the
UK Corporate Governance Code issued by the Financial Reporting
Council in April 2016 (the Code). Our duty is to manage the Group
in accordance with the Code, and we believe that, throughout the
year, the Company applied the main principles of the Code, and
complied with its provisions. We have structured our corporate
governance report in line with the Code’s principles, and you will
find the relevant compliance statements highlighted in each
section. The Financial Reporting Council issued a consultation
paper in December 2017 regarding proposals to update the UK
Corporate Governance Code, with a revised code being effective
from 1 January 2019. The Board shall keep itself appraised of the
BOARD VISITS ACROSS THE GROUP
We have continued to hold some of our Board meetings away from
the Group’s headquarters in Gatwick, this year going to our charter
broking office in Cologne, Germany. We will continue this later in
2018 with a visit planned to our broking office in Milan, Italy in
September. Visiting our sites and meeting our people is enormously
valuable; what we learn about the Group in a short visit is worth
hours of time in the boardroom.
BOARD CHANGES
We said farewell to Richard Everitt at our 2017 AGM following
11 years on the Board, wishing him all the very best in his future
endeavours. Following Richard’s departure, I was appointed as
Chairman of the Board, with Richard Jackson becoming the Senior
Independent Director and Amanda Wills becoming Chair of the
Remuneration Committee, roles both previously held by me. I also
act as Chair of the Nomination Committee. In addition, while not a
member of the Board, we also welcomed Tracy Beicken to Air Partner
in August 2017 as Group Legal Counsel and Company Secretary.
The Company’s Chief Financial Officer, Neil Morris, resigned from
the Board on 13 April 2018.
We have a highly experienced Board and, together with the Group’s
Senior Management, I am confident we have the right team in place
to continue to deliver our long term strategy.
Peter Saunders
Chairman
11 June 2018
consultation as it progresses and intends to comply with the
amended Code.
Leadership – see page 38
Effectiveness – see page 40, and the Nomination Committee report
on page 43
Accountability – see page 41, and the Audit and Risk Committee
report on page 44
Remuneration – see the Directors’ remuneration report
pages 47 to 57
Relations with shareholders – see page 42
Air Partner plc Annual Report 2018 37
Air Partner plc Annual Report 2018 37
Financial statementsStrategic reportGovernance
CORPORATE GOVERNANCE REPORT
LEADERSHIP
ROLE OF THE BOARD
It is the Board’s role to ensure the effective direction and control of
the Group’s business for the long term benefit of all shareholders.
The Board has oversight of the application of standards of corporate
governance that are appropriate to the Group’s size, profile and
circumstances and which emphasise the value of good corporate
governance to the sustainable growth of the Group.
The Board sets the strategic aims of the Group and rigorously
reviews trading performance against strategic initiatives, and
against financial targets set at the beginning of the year. The Board’s
activities during the year have included the consideration of
proposals in line with its acquisition strategy. The Board
meets formally at least five times a year with additional meetings
as necessary.
A formal schedule of matters is reserved for Board decision,
including formulation and development of strategy, major
acquisitions or disposals, significant bank borrowings, Board-level
appointments, the approval of financial reports and price-sensitive
statements and overall business risk assessment. A copy of the
schedule is available online at www.airpartner.com.
The Board receives reports at each meeting from the Chief Executive
Officer, the Chief Financial Officer and, following meetings of Board
committees, from their respective chairs.
BOARD MEETINGS
The table below shows the attendance record of individual directors at Board meetings and relevant Committee meetings.
Number of meetings
Executive Directors
Mark Briffa*
Neil Morris*
Non-executive Directors
Peter Saunders
Richard Jackson
Shaun Smith
Amanda Wills
Richard Everitt1
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
8
8
8
7
8
6
3
5
5
5
4
5
4
2
5
5
5
5
4
4
1
–
–
–
–
1
1
1
1. Richard Everitt resigned as a director on 28 June 2017.
* Mark Briffa and Neil Morris were not members of the Audit and Risk Committee, Remuneration Committee or Nomination Committee but attended meetings when
appropriate by invitation. Accordingly, the number of meetings attended by them (in full or in part) as guest, are identified in the table above. Other senior executives
were regularly invited to attend meetings for specific items. Neil Morris resigned as a director on 13 April 2018.
UK CORPORATE GOVERNANCE CODE
A. Leadership
A.1 The role of the Board
The Board’s role is to provide entrepreneurial leadership to
the Group within a framework of prudent and effective controls
which enables risk to be assessed and managed. The Board
sets the Group’s strategic aims and ensures that the necessary
resources are in place to achieve those aims. The Board met
formally eight times during the year. There is a clear schedule of
matters reserved for the Board, together with delegated authorities
throughout the Group.
A.2 Division of responsibilities
The roles of the Chairman and the Chief Executive Officer are
clearly defined. The Chairman, Peter Saunders, is responsible for
the leadership and effectiveness of the Board. The Chief Executive
Officer, Mark Briffa, is responsible for leading the day-to-day
management of the Group in line with the strategy set by the
Board. Roles and responsibilities of key Board members are
available online at www.airpartner.com.
A.3 The Chairman
The Chairman sets the agendas for the Board meetings, manages
the meeting timetable in conjunction with the Company Secretary
and promotes open and constructive debate between executive
directors and non-executive directors during meetings. The
Chairman ensures that directors receive accurate, timely
and clear information and ensures effective communication
with shareholders.
A.4 Non-executive directors
The Chairman actively invites the non-executive directors’ views.
They scrutinise the performance of management against agreed
goals and provide objective and constructive challenge to the
executive directors. They attend an annual strategy day with the
Operating Board and help develop proposals on strategy. If a
director had a concern which could not be resolved about the
running of the Company or a proposed action, they would ensure
that their concerns were recorded in the Board minutes. The
non-executive directors have discussions without the executive
directors present. The non-executive directors determine
appropriate levels of remuneration of executive directors
and have a prime role in succession planning.
38 Air Partner plc Annual Report 2018
38 Air Partner plc Annual Report 2018
GOVERNANCE STRUCTURE: BOARD AND COMMITTEES
The Board
Peter Saunders
Chairman
Responsibilities
The Board carries ultimate responsibility for the effective direction and
control of the Group’s business and is accountable to shareholders for
the long term success of the Group. This is achieved through:
● setting the strategic objectives of the Group
● approving strategic projects and Group and divisional budgets
● ensuring that the Group operates effective risk management
● reviewing trading performance against financial targets set at the
start of the financial year.
Chief Executive
Mark Briffa
Remuneration Committee
Audit and Risk Committee
Nomination Committee
Amanda Wills, Chair
Peter Saunders
Richard Jackson
Shaun Smith
Shaun Smith, Chair
Peter Saunders
Richard Jackson
Amanda Wills
Peter Saunders, Chair
Richard Jackson
Shaun Smith
Amanda Wills
Responsibilities
Responsibilities
Responsibilities
● Determining and agreeing
with the Board the policy
for remuneration of the
Chief Executive Officer
and Chief Financial Officer
● Reviewing the ongoing
appropriateness and
relevance of the
remuneration policy in
comparison with industry
benchmarks and levels
of remuneration in the
business as a whole
● Approving the design and
targets of performance-
related pay and share
incentive plans and awards
made to executive directors
and performance targets
to be used
● Reviewing financial
● Considering the
reporting, focusing on
the appropriateness of
accounting policies and
judgements and inclusion
of relevant disclosures
● Assessing the effectiveness
of internal controls and risk
management systems and
the risk management
process
● Reviewing the scope and
effectiveness of internal
audit processes
● Overseeing the relationship
with the external auditor
and the effectiveness of
the external audit process
composition of the Board
as a whole including the
range of skills, knowledge
and experience of the
directors and carrying
out succession planning
in respect of the same
● Reviewing the
re-appointment of
non-executive directors
at the expiration of the
term set out in their
appointment letters
Read more on page 47
Read more on page 44
Read more on page 43
Operating Board
Responsibilities
Mark Briffa, Chair
Neil Morris1
Lee Pyle
Julia Timms
Rachel Thripp
Tony Whitty
The Operating Board has collective responsibility for running the
Group’s business under the leadership of the Chief Executive Officer
● Implementing the Group’s strategy approved by the Board
● Recommending capital expenditure and investment budgets for
Board approval
● Monitoring financial, operational and service performance
● Allocating resources as agreed by the Board
● Planning and delivering major programmes
● Reviewing the senior talent base and succession plans
1. Neil Morris resigned as a director on 13 April 2018.
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CORPORATE GOVERNANCE REPORT
EFFECTIVENESS
COMPOSITION OF THE BOARD
The composition of the Board is shown on pages 34 and 35.
BOARD CHANGES
As stated in the 2017 Annual Report, Richard Everitt resigned as a
non-executive director of the Company at the conclusion of the AGM
on 28 June 2017.
Following Richard’s retirement from the Board, Peter Saunders
was appointed as Chairman of the Board, Richard Jackson as Senior
Independent Director, and Amanda Wills was appointed Chair of the
Remuneration Committee. Peter Saunders was appointed as Chair of
the Nomination Committee. Neil Morris resigned as Chief Financial
Officer on 13 April 2018.
INDEPENDENCE OF NON-EXECUTIVE DIRECTORS
The Board considers all the non-executive directors to be
independent. Given their relatively small shareholdings, the Board
does not believe that these impact on the independence of Peter
Saunders or Shaun Smith.
BOARD PERFORMANCE EVALUATION
The Company continues each year to evaluate the performance of
the Board and its committees. This year’s evaluation took place in
June 2017. During the meeting the structure of future Board meetings
was discussed and a decision made to continue to locate Board
meetings in different locations, including the Gatwick headquarters,
Baines Simmons headquarters and our overseas offices. It was also
agreed that:
● a detailed analysis of the business and financial reports
will be undertaken at each Board meeting, with additional
information being provided by the CEO and CFO as well as
detailed strategic discussions;
● business updates from the Operating Board will be given twice
a year;
● an Operating Board mentoring programme will be put in place;
and
● the Risk Management culture will be further developed in line with
Group strategy.
Finally, it was agreed that each Committee Chair will review the
terms of references at their next meeting.
The next annual Board evaluation process is scheduled to take
place in September 2018 and will be reported upon in next year’s
annual report.
The Board confirms its belief that all directors bring significant value
to the business, are effective in Board decision making and show the
appropriate level of commitment to their roles.
ELECTION AND RE-ELECTION OF DIRECTORS
In accordance with best practice, all directors will resign at the 2018
AGM and stand for re-election.
B.5 Information and support
The Chairman, in conjunction with the Company Secretary, ensures
that all Board members receive accurate and timely information.
The Board ensures that all directors have access to independent
professional advice at the Company’s expense where they judge
it necessary to discharge their responsibilities as directors.
All directors have access to the advice and services of the
Company Secretary.
B.6 Evaluation
During the year, the Board and its committees undertook an
evaluation of their performance. The non-executive directors are
responsible for performance evaluation of the Chairman taking
into account the views of the executive directors.
B.7 Re-election
All directors are subject to election by shareholders at the first
AGM after their appointment and to annual re-election thereafter.
UK CORPORATE GOVERNANCE CODE
B. Effectiveness
B.1 The composition of the Board
When making appointments to the Board, the Board and
the Nomination Committee consider the wide range of skills,
knowledge, experience and independence required to maintain
an effective Board.
B.2 Appointment to the Board
The Board is responsible for the appointment of executive
directors. Succession planning and the appointment of new
non-executive directors to the Board is led by the Nomination
Committee. The Nomination Committee report is on page 43.
B.3 Commitment
When appointed, directors are informed of the time commitment
expected from them. A copy of the terms and conditions of the
appointment of the non-executive directors is available for
inspection at the Company’s registered office during normal
business hours and at the AGM.
B.4 Development
Newly appointed Board members receive a full and tailored
induction. Following this induction, meetings are arranged with
key executives and managers within the business to provide
ongoing education and information about the business. All
directors attend an annual Strategy Day with the Operating
Board and other senior managers.
40 Air Partner plc Annual Report 2018
40 Air Partner plc Annual Report 2018
CORPORATE GOVERNANCE REPORT
ACCOUNTABILITY
RISK MANAGEMENT AND INTERNAL CONTROL
During the year, the Board was responsible for the Group’s system
of risk management and internal control and for reviewing its
effectiveness, though reports are provided in the first instance
to the Audit and Risk Committee by the Chief Financial Officer.
The Board has established an ongoing process for identifying,
evaluating and managing significant risk. This process is
reviewed regularly by the Board.
The key internal procedures in place for the year ended 31 January
2018 and up to the date of approval of the Annual Report are
as follows:
● the Group has a robust risk management process that follows a
sequence of risk identification, assessment of probability and
impact, and assigns an owner to manage mitigation activities.
A risk register is maintained by the Operating Board and reported
to the Audit and Risk Committee. The risk register and the
methodology applied is the subject of continuous review by
the Operating Board and updated to reflect new and developing
areas which might impact business strategy. The Audit and Risk
Committee actively reviews the risk register and assesses the
actions being taken by the Operating Board to monitor and
mitigate the risks. Those risks which are considered to be the
principal risks of the Group are presented on pages 31 to 33.
● a detailed and comprehensive annual budget is produced and
● the Group does not trade speculatively in derivatives. Other
formally approved by the Board
● the Board maintains a schedule of matters reserved for its
approval, which include financing and changes to banking
arrangements, all significant capital expenditure and all
acquisitions and disposals
● both the Board and the Operating Board receive monthly financial
reports, showing the performance of each division and country,
with relevant commentaries to highlight variance from budget
or particular areas of concern
● business performance reports are circulated to the Operating
Board on a weekly basis for sales, and monthly to monitor
overall performance
● clearly defined authority limits and controls are in place over
contract signing limits, purchasing commitments and the
extension of credit to clients. Adherence to these limits and
controls are tested on an ongoing basis as part of the internal
audit process
● brokers operate within individual, pre-set limits of authority and
only those staff who have successfully completed a six-month
probationary period can sign charter commitments on behalf
of the Group
● each of the Group’s major offices is visited at least once a year by
a senior member of the finance team
than forward foreign exchange contracts, the Group does not use
complex treasury instruments in the normal course of business
and any specific projects that may involve such instruments
require Board approval.
The Board confirms that it has complied with the Code with
regard to its responsibilities relating to risk management and
internal controls.
The Board reviewed the effectiveness of the Group’s internal control
and risk management systems during the year. In its review, which
covered all material controls including financial, operational and
compliance controls, the Board considered the nature of the Group’s
business, the risks to which that particular business is exposed, the
likelihood of such risks occurring and the costs of protecting against
them. Such a system is designed to manage rather than eliminate
the risk of failure to achieve business objectives, and can only
provide reasonable, and not absolute, assurance.
WHISTLEBLOWING
A whistleblowing policy is in place across the Group to enable
members of staff to bring to the attention of any director or the
Company Secretary any concerns regarding serious matters of
financial misconduct which could damage the performance or
reputation of the Company.
UK CORPORATE GOVERNANCE CODE
C. Accountability
C.1 Financial and business reporting
The Board is responsible for preparing fair, balanced and
understandable financial information. The strategic report is set
out on pages 1 to 33 inclusive and provides information about the
performance of the Group, the business model, strategy and the
risks and uncertainties relating to the Group’s business.
C.2 Risk management and internal control
The Board sets out the nature and extent of any significant risks to
the business and maintains sound risk management and internal
control systems. Further information on risk management and
internal control systems is set out in the Audit and Risk Committee
report on pages 44 to 46.
C.3 Audit Committee and auditors
The activities of the Audit and Risk Committee, which assists the
Board with its responsibilities for monitoring and reviewing the
effectiveness of internal control and risk management systems,
internal audit procedures and the external auditor, are set out in
the Audit and Risk Committee report on pages 44 to 46. The terms
of reference of the Audit and Risk Committee are available online
at www.airpartner.com. The Audit and Risk Committee as a
whole has competence relevant to the sector in which the
Company operates.
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CORPORATE GOVERNANCE REPORT
RELATIONS WITH SHAREHOLDERS
The Board recognises the importance of effective communication
with shareholders, analysts and the financial press and is keen
to gain an understanding of the views of both institutional and
private individual shareholders. This is conducted primarily through
meetings of the Chief Executive Officer and Chief Financial Officer
with analysts and significant shareholders following both the interim
and preliminary announcements of the results of the Group. The
Chairman and/or Senior Independent Director also aim to meet with
significant shareholders on a regular basis. Feedback of shareholder
meetings is provided via the Group’s corporate stockbroker.
WEBSITE INFORMATION
All shareholders and potential shareholders can access investor-
related information on the share price, corporate governance, annual
reports, presentations to investors, AGM documentation, regulatory
news and other information about Air Partner in the Investors section
of the Company’s website, www.airpartner.com. This site also
provides contact details for any investor related queries.
The Board exercises care to ensure that all information,
including that which is potentially price sensitive, is released to all
shareholders at the same time, in accordance with applicable legal
and regulatory requirements.
UK CORPORATE GOVERNANCE CODE
E. Relations with shareholders
E.1 Dialogue with shareholders
The Board values opportunities to meet with shareholders and is
kept informed of shareholder views.
E.2 Constructive use of general meetings
The Board welcomes the opportunity to engage with
shareholders at the Annual General Meeting. All directors attend
the AGM and are available to answer questions before, during
and after the meeting.
ANNUAL GENERAL MEETING
The Company welcomes the participation of shareholders at
its Annual General Meeting. The Chairman of the Board and the
Chair of each committee of the Board will be available at the AGM to
answer questions that might arise. During the year under review, the
AGM was held in June 2017 and each member of the Board attended
and was available to take questions. All shareholders are entitled
to vote on the resolutions put to the AGM and all votes cast are
counted, whether in person or by proxy, by means of a poll on every
resolution in the Notice of AGM. The results of the votes on the
resolutions, including the number of votes for and against each
resolution and the number of shares for which the vote was directed
to be withheld, are given at the meeting. They are made public by
means of an announcement through a Regulatory News Service
and published on the Company’s website.
The 2018 AGM will be held at 11am on Wednesday 11 July 2018
at 2 City Place, Beehive Ring Road, Gatwick, RH6 OPA. The Company
confirms that it will send the Notice of AGM and related documentation
to shareholders at least 21 clear days before the meeting, either
by post, to those shareholders who prefer a paper copy, or by
email to those shareholders who have agreed that the Company
can communicate with them electronically. The Notice of AGM
will be available to download from the Investors section on the
Company’s website.
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42 Air Partner plc Annual Report 2018
NOMINATION COMMITTEE REPORT
DEAR SHAREHOLDER
The principal purpose of the Nomination Committee (the Committee)
is to lead the process for the appointment of new directors to
the Board. The Nomination Committee also plays a key role in
considering and planning for the future succession needs of
the Company.
Membership will vary but the terms of reference for the
Committee have been agreed by the Board and are available
online at www.airpartner.com. The Committee is comprised of
Air Partner’s four non-executive directors:
DIVERSITY
The Board is a team made up of people with a broad range of
backgrounds. Our policy is to ensure that the best candidate is
selected to join the Board; this policy will remain in place going
forward and the Board does not intend to adopt a quota system
with prescriptive, quantitative targets. Instructions to any external
adviser conducting a search for appropriate candidates requires
them to search for candidates from as many different backgrounds
as possible.
Peter Saunders
Chairman
11 June 2018
Peter Saunders (Chair)
Richard Jackson
Shaun Smith
Amanda Wills
When proposing appointments of directors, the Committee
considers the independence, skills, knowledge and experience that
a candidate possesses compared to the skill sets and experience of
the Board as it currently stands. Selection of candidates also takes
into consideration the breadth of knowledge that the Board has and
that it may require to provide a well-balanced environment which,
amongst other things, encourages scrutiny and appropriate
challenge of executive management.
CHAIRMAN SUCCESSION
Following the announcement that Richard Everitt would stand
down as Chairman of the Board after the AGM in June 2017, the
Nomination Committee appointed a sub-committee to conduct a
process to select a new Chairman. It comprised our independent
non-executive directors Shaun Smith and Amanda Wills, who
appointed external search consultants, Ridgeway Partners, to
support them. The sub-committee prepared a detailed specification
for the role of Chairman, specifying the skills, knowledge, experience
and attributes required. They then conducted a robust process
involving discussions with existing directors and advisers, followed
by interviews with the potential candidates. Ridgeway Partners
also carried out detailed research into the candidates and made
recommendations to the sub-committee. The decision-making
process did not involve Richard Everitt, myself (as I was a candidate),
or the Chief Executive Officer, Mark Briffa as he would report to the
new Chairman.
Following this process, the Committee recommended to the
Board that I be appointed as Chairman and the Board approved
the recommendation on 26 April 2017. My appointment was
subsequently ratified by shareholders at the AGM on 28 June 2017
and I duly undertook the role of Chairman from that date.
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AUDIT AND RISK COMMITTEE REPORT
DEAR SHAREHOLDER
The Audit and Risk Committee (the Committee) supports the
Board in maintaining sound internal control and risk management
procedures. It is responsible for ensuring that appropriate corporate
reporting, risk management and internal control systems are applied
throughout the Group and reports regularly to the Board.
The Committee’s principal duties are to monitor the integrity of the
Company’s financial statements, to review the consistency of, and
any changes to, accounting policies and standards, to review on
behalf of the Board the effectiveness of internal audit procedures
and the work of the external auditor and to monitor, on behalf of
the Board, the systems for risk management and internal financial
control. The Board as a whole is responsible for internal control and
risk management. The Committee is required to report its findings
to the Board, making any necessary recommendations for action
or improvements.
The Committee reviewed and revised its terms of reference during
the year under review. Its terms of reference can be found on the
Company’s website www.airpartner.com.
REVIEW OF RISK
The Committee acts on behalf of the Board to review the
effectiveness of the internal control systems and risk management
processes on a regular and ongoing basis.
The Committee undertook this review process throughout the year
and subsequent to the balance sheet date to include the approval
of this Annual Report.
At each meeting, the Committee receives an update from the CFO on
any material matters together with a report of the Group’s internal
audit process. The external auditor, Deloitte LLP, presents its
findings to the Committee twice a year, specifically after the half-year
review and following the year end audit process. Issues reviewed by
the Committee are detailed below.
MEMBERSHIP
The Committee is made up of the non-executive directors:
Shaun Smith (Chair)
Peter Saunders
Richard Jackson
Amanda Wills
The Board is satisfied that Committee members have the
appropriate level of expertise to fulfil its obligations set out in its
Terms of Reference. The Chair, Shaun Smith, a qualified Corporate
Treasurer with an Honours degree in Economics, is considered to
have recent and relevant financial experience. The Committee as
a whole is considered to have competence relevant to the aviation
and travel sector. Biographies of the non-executive directors are
set out on pages 34 and 35.
Although not members, the external auditor, Deloitte LLP (Deloitte),
the Chief Executive Officer and the Chief Financial Officer are notified
of all meetings and may, and regularly do, attend by invitation.
At each meeting, the Committee has the opportunity to talk to
the external auditor without the CEO or the CFO being present.
Deloitte attended all meetings during the year.
MEETINGS
The attendance of directors at the meetings of the Committee is
set out on page 38. The Committee met five times during the year.
In addition to reviewing the interim and annual results announcements
in advance of publication and planning for the annual statutory
audit, the Committee has focused on the process for risk
management and continues to review internal control procedures.
44 Air Partner plc Annual Report 2018
44 Air Partner plc Annual Report 2018
SIGNIFICANT ISSUES RELATED TO THE FINANCIAL
STATEMENTS
The significant accounting and audit matters considered by the
Committee and discussed with the external auditor during the
year and in relation to the 31 January 2018 year end were:
Accounting Issue identified in April 2018
During April, the Board announced that it had identified an issue
relating to its accounting for receivables and deferred income. This
issue has now been fully investigated and quantified at £4.0m in line
with previous announcements.
Background to the issue
During the year end close process, it was identified that the
Company could not substantiate certain balance sheet entries which
were present across a number of different line items, predominantly
affecting deferred income, accounts receivable, purchase accruals
and other creditors. The total cumulative impact on net assets, as
at 31 January 2018, was £4.0m overstated net of corporation tax.
The Company’s initial findings were that these had arisen over a
number of years, dating back at least as far as the financial year
ended 31 July 2011.
Scope of the review
The Board immediately appointed PricewaterhouseCoopers
LLP (‘PwC’) and Rosenblatt Solicitors (‘Rosenblatt’) to provide
accounting and legal support as part of a thorough and exhaustive
review into the causes and impacts of this matter. The review
undertaken by the Company was completed in close co-operation
with this external support and all teams worked together on a clearly
defined and scoped work plan, retaining the flexibility to extend
investigations should additional work be warranted.
The work undertaken broadly comprised substantive interrogation
and reconciliation of all balance sheet accounts as at 31 January
2018, an extensive review of individual journal postings from
2010/11, an investigation of bank payments from 2010/11, interviews
with current employees, interviews with ex-employees and the mining
and review of a considerable number of spreadsheets, emails and
other accounting related documents of relevance.
Findings of the review
The key outcomes arising from the review are as follows:
● No evidence has been found of any cash or other assets being
misappropriated from the Company nor of any customer or
supplier being disadvantaged by this issue;
● The issue was isolated to the UK business of Air Partner Plc;
● The total cumulative impact on the net assets of the Group was
£4.0m net of corporation tax;
● Certain inappropriate financial journals had been deliberately
processed without effective review;
● These journals had been used to conceal accounting issues
including unreconciled balance sheet accounts and recoverability
issues on a major account;
● In certain cases, supporting accounting records were inappropriately
created and manipulated in order to avoid detection of the
accounting issues and it has not been possible to reproduce
all original supporting documents at given points in time;
● No employee within the Group as at 1 February 2018, the start of
the current financial year, has been identified as having exerted
influence over this matter and when the Air Partner finance team
identified the issue as part of the year end close process they
followed the correct procedure in escalating it to the Executive
Team who notified the Board.
Accounting impact
The basis of preparation of these accounts is fully set out in Note 2 to
the financial statements. In summary,
● The resultant £4.0m correction to decrease net assets is effected
as follows:
– £4.3m decrease of net assets as at 31 January 2018, being a
pre-tax gross impact of £4.4m less related corporation tax relief
arising in the year of £0.1m
– £0.3m increase of net assets as at 31 January 2019, being the
retrospective corporation tax relief to be reclaimed on the gross
correction attributable to prior periods
● There was no impact to cash or debt during any period;
● The directors were able to determine that £0.9m of the pre-tax
correction related to the year ended 31 July 2011 but for the
remaining £3.5m were unable to determine exactly which of
the periods and account balances between the year ended
31 July 2011 and 31 January 2018 were impacted;
● These financial statements have therefore been prepared by
pro-rating £3.5m accordingly over this period;
● As a result, the income statements, comparative balance
sheet and supporting notes may not be accurate or reliable
presentations of historical performance or position;
● The full balance sheet as at 31 January 2018 and cash and
debt balances presented as at 31 January 2017 have been
fully substantiated and audited.
Mitigating Actions
In light of the issues identified, the Board immediately moved to
appoint a new Interim CFO on 27 April 2018. The Board has also
approved a controls framework review, the most significant findings
of which will be implemented during the June 2018 close process.
In respect of financial journals, the Company has enhanced its
system driven controls over the approval process and enhanced
balance sheet reconciliation controls are already being conducted.
The Chief Executive has communicated with all UK staff to remind
them of the Company’s independent whistleblowing procedures.
Revenue recognition
One of the key judgements in relation to revenue recognition is the
judgement of whether the Group is acting as principal or agent in
transactions with customers. The Committee sought to understand
the process of determining whether the Group were acting as
principal or agent in revenue transactions and the controls in
place regarding this assessment.
The completeness of provisions against operator prepayments
It is Air Partner’s policy to negotiate contract terms with aircraft
operators which minimise deposit payments and align the final flight
payment with the flight date as closely as possible. In addition, Air
Partner’s internal quality control function assesses aircraft operators
prior to selection to ensure that only operators of the highest quality
are used. Further to ensuring the completeness of the provisions
against pre-payments, the Committee sought to ensure that the
control procedures pertaining to the authorisation of payments to
operators were complied with via the internal audit process.
The impairment of goodwill and intangible assets
relating to the Baines Simmons consulting and
training cash generating unit
During the year there was a potential indicator of impairment
in the consulting and training cash generating unit (CGU) of
Baines Simmons Limited. Having performed a full impairment
review exercise, it was the view of management that there was
no impairment of the goodwill or other intangibles related to this
CGU. There were no issues arising from any other impairment
review performed in respect of other goodwill or intangible assets.
EXTERNAL AUDIT
Deloitte was appointed as the Group’s external auditor in 2011. The
Group’s current audit engagement partner was appointed during the
period ended 31 January 2014, with the next partner rotation being
due after 31 January 2018.
Prior to the audit being conducted, the Committee considered the
content and scope of audit work and the audit fees proposed by
Deloitte and discussed changes in accounting policies and new
developments within the business which might affect financial
reporting going forward. A formal report received from Deloitte
in respect of the audit and matters arising from the report, was
discussed prior to the Board’s approval of the financial statements.
The Committee is aware of the need to safeguard the auditor’s
objectivity and independence and the issue is discussed annually by
the Committee and periodically with the audit engagement partner
from Deloitte. In addition to this, policies on the award of non-audit
work to the external auditor exist. During the year ended 31 January
2018, fees of £23,450 were paid to Deloitte in respect of non-audit
services. Of this amount, £4,700 was for Air Travel Organisers
Licence (ATOL) returns and £18,750 was for an interim review.
In assessing the effectiveness of the external audit process by
the Committee, the auditors were asked to articulate the steps that
they had taken to ensure objectivity and independence. This year,
the Committee reviewed and challenged the external audit plan to
ensure that having identified potential areas of risks, Deloitte would
employ effective audit procedures to examine them. The Committee
monitors the auditors’ performance, behaviour and effectiveness
during the exercise of its duties, which informs the Committee’s
decision to recommend reappointment on an annual basis. The
auditor’s report can be found on pages 61 to 68.
EXTERNAL AUDITOR EFFECTIVENESS
The Committee reviews the effectiveness of the external auditor
with the CFO at the end of each audit period. The Committee has
begun the process of formally assessing Deloitte’s effectiveness
by asking members of the Committee, the interim CFO and
individuals who have worked with Deloitte during the year
under review to provide their feedback.
As this is the final year audit for the current audit partner, before
his rotation, the Company has decided to run a competitive tender
process for the 31 January 2019 year end audit. Depending on
the time scale of the tender process, Deloitte has indicated its
willingness to continue in office to perform the review work for
the half year, should this be requested.
In order to allow Deloitte to continue through to the audit tender, a
resolution to reappoint Deloitte will be proposed at the 2018 AGM.
INTERNAL AUDIT
Once again, during the year ended 31 January 2018, the internal
audit responsibilities performed included audits relating to the
Group’s ISO certification.
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AUDIT AND RISK COMMITTEE REPORT CONTINUED
COMPLIANCE STATEMENTS
Viability statement
In accordance with provision C.2.2 of the Code, the Board
addressed the prospects of the Company over a period longer
than the 12 months required by the going concern provision.
The Board conducted this review for a period of three years,
which was selected for the following reasons:
● the Group’s strategic plan covers a three-year period
● the variability of earnings means that forecasting beyond three
years is more subjective, hence the Board believes a three-year
period is the most appropriate.
The three-year strategic plan considers the Group’s forecasted
underlying profit, associated cash flows, covenant compliance and
investments in technology. These metrics are subject to sensitivity
analysis which involves consideration of downside scenarios.
Where possible, this analysis is carried out to evaluate the
potential impact of the Group’s principal risks.
The findings of the internal audit work programme are presented
regularly to the Committee for review. The Company’s internal audit
function is not fully independent of management as it is currently
staffed by senior members of the Group finance function. Although
not independent, the senior members of the Group finance function
who undertake the work are considered appropriately qualified to
undertake this work.
INTERNAL AUDIT EFFECTIVENESS
The Code and the Committee’s terms of reference require the
Committee to monitor and review the effectiveness of the Company’s
internal audit processes. The Committee is satisfied that the internal
audit function fulfilled its objectives for the year however will
continue to monitor this closely given the recent changes to
the Group as it grows through acquisitions and in light of the
accounting issue identified.
WHISTLEBLOWING
The Committee reviewed the Group’s whistleblowing policy, known
as the Concern at Work Policy, which is in place to enable members
of staff to raise concerns about possible improprieties in matters of
financial reporting or other matters which they believe would
damage the performance or reputation of the Company.
FAIR, BALANCED AND UNDERSTANDABLE
The Board sought assurance from the Committee that the
information presented in this Annual Report, when taken as a whole,
is fair, balanced and understandable and contains the information
necessary for shareholders to assess the Group’s performance,
business model and strategy.
The steps taken by the Committee, or on its behalf, to provide
this advice to the Board included setting up a committee of senior
individuals within the Group to draft the Annual Report, with each of
46 Air Partner plc Annual Report 2018
46 Air Partner plc Annual Report 2018
The three-year plan is underpinned by regular Board briefings
provided by the business unit heads and the discussion of any
new strategic initiatives undertaken by the Board in its normal
course of business.
Based on the results of this analysis, the Board has a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year period
of the assessment.
Going concern
Having considered the Group’s current financial position, the
factors affecting its cost base, the state of the air charter and
aviation consultancy market as a whole and forecasts for a period
of not less than 12 months from the date of approval of these
financial statements, the directors are satisfied that the Group
and Company have adequate resources to continue in business
for the foreseeable future and that the Company is a going
concern. Therefore, the directors have continued to adopt the
going concern basis in the preparation of the financial statements
as fully described in Note 2 to the financial statements.
these individuals having responsibility for the production of certain
sections of the document.
The Board requested that the Committee advise on whether it
believes the Annual Report and Accounts, taken as a whole, is
fair, balanced and understandable and provides the information
necessary for shareholders to assess the Company’s position and
performance, business model and strategy. The Committee has
advised the Board accordingly.
DISCHARGE OF RESPONSIBILITIES
During the year, the Committee has continued its scrutiny of
the appropriateness of the Group’s system of risk management
and internal controls, and the robustness and integrity of the
Group’s financial reporting, along with both the internal and
external audit processes.
The Committee has devoted significant time to reviewing these
areas, which are integral to the Group’s core management and
financial processes, as well as engaging regularly with management.
The Committee has, where necessary, taken initiative in requesting
information in order to provide the appropriate constructive
challenge for its role. During the course of the year, the information
that the Committee has received has been timely and clear and
has enabled the Committee to discharge its duties effectively.
APPROVAL
On behalf of the Audit and Risk Committee.
Shaun Smith
Chair of the Audit and Risk Committee
11 June 2018
DIRECTORS’ REMUNERATION REPORT
ANNUAL STATEMENT BY THE CHAIR OF THE REMUNERATION COMMITTEE
“Deciding how we reward performance
in our evolving Group structure is
critical to maintaining our focus
on growth.”
DEAR SHAREHOLDER
On behalf of the Remuneration Committee (the Committee), I am
pleased to present the Directors’ remuneration report for the year
ended 31 January 2018. During the year, I was appointed as Chair of
the Remuneration Committee and I commit that, going forward, we
will support, on behalf of shareholders, the ongoing development
and effective governance of a remuneration framework appropriate
for our Group.
● align compensation to performance and incorporate a balance of
fixed and variable remuneration
● design incentive plans which reinforce both short and long term
behaviours, promote long term development and support the
strategic plans of the business
● ensure remuneration packages motivate and incentivise executive
directors, management and the broader team to deliver on
stretching performance targets.
I have set out in my statement the following information:
● the Committee’s philosophy for remuneration
● how the Committee reflects employee remuneration arrangements
in considering executive remuneration
● the key activities undertaken by the Committee during the year
● the key areas of focus for the Committee during 2018/19
and beyond.
OUR REMUNERATION PHILOSOPHY
The Group’s total remuneration packages are designed to be
competitive to attract, retain and motivate high-quality individuals
throughout the business. Our packages aim to recruit talented
executives and senior managers capable of effectively delivering
on the Group’s strategy and driving business outcomes through
their teams, thereby enhancing long term shareholder value.
The principles of our remuneration policy are to:
● ensure overall remuneration is market competitive to attract and
retain the leadership and talent required to drive the business
for the benefit of all stakeholders
● adopt a simple, transparent and cost-effective approach to
remuneration which is clear and understandable for business
leaders, shareholders and the wider team
The Group employ people in specialised high capability roles, from
brokers to consultants and avian experts to air traffic controllers,
including senior management and directors across a range of
geographies. The reward structure for our people is built around a
set of common reward principles on a framework altered to suit the
needs of each business area. Reward packages differ, taking into
account a number of factors including seniority, role, impact on
the business, local practice, custom and legislation.
When determining remuneration policy and arrangements for
executive directors, the Remuneration Committee considers the
wider pay and employment conditions elsewhere in the Group to
ensure pay structures from director to senior management are
aligned and appropriate.
When considering salary increases for the executive directors, the
Committee considers the general level of salary increase across the
Group. Typically, salary increases will be aligned with those received
elsewhere in the Group unless the Remuneration Committee
considers that specific circumstances require a different level
of increase for executive directors.
Air Partner plc Annual Report 2018 47
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Financial statementsStrategic reportGovernance
DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL STATEMENT BY THE CHAIRMAN OF THE REMUNERATION COMMITTEE CONTINUED
KEY REMUNERATION ACTIVITIES DURING THE YEAR
Our business is evolving quickly and it is essential that we maintain
both competitive and motivational remuneration. The aims of our
remuneration policy remain valid for our business however we
recognise that as we are growing we are changing the context in
which we are operating. We are on the front foot in addressing these
issues before they become problems and considering how we want
respond. Key activities undertaken by the Committee during the
year were:
● setting bonus targets following the approval of the financial budget
● determining the extent to which the performance measures in
respect of the incentive plan have been achieved
● approving the objectives and Key Remuneration Activities (KRAs) for
the CEO and CFO for 2018/19.
● beginning a strategic review of our remuneration practice, with
a view to ensuring that it is fit for purpose when on-boarding
acquisitions, motivating our people in attaining excellence in
their work and competitive within our commercial position.
FOCUS FOR 2018/19 AND BEYOND
During the current year, the Committee will continue to review
executive and Group-wide remuneration to ensure it remains
appropriate to promote the long term success of the Company.
The Committee also remains committed to developing an all
employee share plan as it supports both shareholder and our
people’s interests. The Committee aims to seek approval in
principle to proceed at the AGM in 2019.
UK CORPORATE GOVERNANCE CODE
D.1 The level and components of remuneration
The Remuneration Committee sets levels of remuneration to
promote the long term success of the Company and structures
executive remuneration so as to link rewards to corporate and
individual performance.
D.2 Procedure
The composition of the Remuneration Committee and its
activities and approach to setting the remuneration policy for
the executive directors and recommendations and monitoring of
the level and structure of remuneration for senior management
can be found in the Annual Statement of the Chair of the
Remuneration Committee set out on pages 47 to 48. The Board
determines the remuneration of the non-executive directors
within the limits set in the Company’s Articles of Association.
COMPLIANCE STATEMENT
This report complies with the Companies Act 2006, Schedule 8 of
the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 and the Listing Rules and
applies the main principles relating to remuneration which are set
out in the UK Corporate Governance Code.
RECOMMENDATION
Positive votes of 99.67% in favour of the Directors’ remuneration
report and the Directors’ remuneration policy report were received
from shareholders at the 2017 AGM, providing a strong endorsement
for our remuneration strategy. I will be available, together with my
fellow Committee members, at our AGM in July 2018 to answer any
questions or receive your feedback with regard to our policy and
how we have implemented it.
On behalf of the Committee, I look forward to receiving your support
at the AGM.
Amanda Wills
Chair of the Remuneration Committee
11 June 2018
The information contained in the following part of this report
has been audited: the table containing the single total figure of
remuneration for directors and accompanying notes, pension
entitlements and incentive awards made during the year on
page 54 and directors’ beneficial interests in shares on
pages 55 to 56.
The information set out on pages 53 to 57 of this report includes,
as indicated, the auditable disclosures referred to in the Auditors’
report on pages 61 to 68 as specified by the UK Listing Authority
and the Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013
(the Regulations).
As required by the Regulations, the rest of this report is divided
into two sections:
● the directors’ remuneration policy table which sets out the
elements of the Company’s policy on director remuneration
● the annual report on remuneration which sets out payments
made to the directors which will be put to shareholder vote at
the 2018 AGM.
48 Air Partner plc Annual Report 2018
48 Air Partner plc Annual Report 2018
REMUNERATION POLICY REPORT
Extracts from the remuneration policy that was approved by shareholders at the 2016 AGM are set out below to enable the reported
remuneration to be assessed in the context of the relevant aspects of the policy. The current intention is that this policy will operate until the
2019 AGM. The original remuneration policy report for the year ended 31 January 2016 is published in its entirety in the Company’s Annual
Report for the year which is available at www.airpartner.com.
REMUNERATION POLICY TABLE – EXECUTIVE DIRECTORS
Remuneration
element
Purpose and link to
remuneration policy
Key features
and operation
Base salary
Supports the recruitment
and retention of executive
directors of the calibre
required to fulfil the role
without paying more than
is necessary.
Rewards executives
for the performance
of their role.
Reflects the individual’s
skills, experience and
role within the Group.
Pension
Provides funds to allow
executives to save for
retirement.
Provides a market
competitive retirement
benefit.
Incentivises and
encourages retention.
Benefits
in kind
Provides a market
competitive level of
benefits to executive
directors.
Paid in cash.
Normally reviewed
annually to take effect
on 1 August but
exceptionally may take
place at other times of
the year.
In determining base
salaries, the Committee
considers:
● pay levels at
companies of a similar
size and complexity
● external market
conditions
● pay and conditions
elsewhere in the Group
● personal performance.
In determining
pension arrangements,
the Committee takes into
account relevant market
practice.
The scheme is defined
contribution.
A salary sacrifice
scheme is in operation
for executive directors.
Executive directors
may elect with the
Committee’s consent
to receive some or all of
the Company’s pension
contribution as a cash
alternative.
Bonuses are non-
pensionable.
Executive directors can
receive life assurance,
health insurance, car
allowance, income
protection, critical illness
cover and sports club or
gym membership.
Maximum potential value
Performance metrics
Provision for claw back
or withholding of payment
N/A
None
The Committee’s policy is
to set base salary at an
appropriate level taking
into account the factors
outlined in this table;
there is no maximum
value. The Committee
considers individual
salaries at the
appropriate Committee
meeting each year.
Both the CEO and CFO
receive a company
contribution of 12.0%
of basic salary.
N/A
None
There is no maximum
value.
N/A
None
Air Partner plc Annual Report 2018 49
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DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION POLICY REPORT CONTINUED
Remuneration
element
Purpose and link to
remuneration policy
Key features
and operation
Maximum potential value
Performance metrics
Provision for claw back
or withholding of payment
N/A
None
There are a number
of variables affecting
the amount that may
be payable, but
the Remuneration
Committee would pay
no more than it judged
reasonably necessary.
The maximum amount
payable shall not
exceed £50,000 per
individual in any
financial year.
Maximum opportunity
to achieve:
● CEO: 150% of base
Both CEO and CFO bonus
payment based on:
● personal objectives:
salary
● CFO: 100% of base
salary
Bonus accrues from
threshold levels of
performance.
Maximum plan
award of 150% of
base salary to be
used in exceptional
circumstances.
Usual award levels
will be:
● CEO: 100%-150%
of base salary
● CFO: 75%-100%
of base salary.
30% based on
performance towards
Key Results Areas
(KRA) defined at the
beginning of each
financial year
● Company performance:
70% based on financial
metrics.
The Committee will review
the appropriateness of
performance measures
on an annual basis and
set challenging targets
consistent with the
business strategy.
The Committee has
the ability to select
appropriate performance
condition criteria, mix
and targets each year.
In the past, these have
been EPS and TSR
based targets and the
Committee expects this
to continue. Further detail
of the specific measures
that the Remuneration
Committee intends to
apply to awards made
in the year ending
31 January 2018 are set
out in the annual report
section of this report.
Bonus is usually not
paid to a good leaver
should they leave before
the payment date of
said bonus.
From 2016, arrangements
in place under which
amounts paid out in
bonus can be clawed
back from executive
directors in defined
circumstances.
As per the rules of the
scheme, awards will
lapse if the executive
leaves before the end of
the performance period.
The Remuneration
Committee has discretion
in certain circumstances
(for example death,
serious illness,
redundancy) to permit an
award to vest before the
end of the performance
period.
Contains provisions
under which amounts
paid out can be clawed
back from executive
directors in defined
circumstances.
Contains a ‘malus’
provision.
N/A
N/A
N/A
Relocation/
expatriate
assistance
Provides assistance
to executive directors
who are required to
work away from their
home location to
enable the Company
to recruit the best
person for the role.
Annual
bonus
Rewards and
incentivises the
achievement of annual
financial objectives
which are aligned with
key strategic goals
and supports the
enhancement of
shareholder value.
Assistance will include
(but is not limited to)
facilitating or meeting
the costs of obtaining
visas or work permits
for executive directors
and their immediate
family, removal and
other relocation costs,
house purchase or
rental costs, limited
amount of travel costs,
tax equalisation
arrangements.
Paid in cash following
announcement of
financial year results.
Bonuses are non-
pensionable.
May be paid in shares
at the Committee’s
discretion.
Long Term
Incentive
Plan (LTIP)
Incentivises
executives to achieve
the Company’s long
term strategy and
create sustainable
shareholder value.
Enhances shareholder
value by motivating
growth in earnings
and maintenance
of an efficient and
sustainable level of
return on capital.
Aligns with
shareholder interests
through the delivery
of shares.
Awards vest after three
years based on Group
financial targets.
Awards are in the form
of nil-cost options and
must be exercised
within four years of
vesting.
25% of awards vest
at threshold levels
of performance. For
performance above
threshold, awards vest
on a straight-line basis
up to a maximum
of 100%.
Shareholding
guideline
Incentivises
executives to achieve
the Company’s long
term strategy and
create sustainable
shareholder value.
Aligns with
shareholder interests.
Target value to be
achieved over five
years:
● CEO – 100% of salary
● CFO – 50% of salary.
Until the guideline
has been achieved,
executives must retain
at least half vested LTIP
awards beyond those
needing to be sold
to pay tax.
50 Air Partner plc Annual Report 2018
50 Air Partner plc Annual Report 2018
REMUNERATION POLICY TABLE – NON-EXECUTIVE DIRECTORS
The Company intends to have at least two independent non-executive directors on the Board at any time, in addition to the Chairman. The
Board considers each of the non-executive directors to be independent.
The non-executive directors’ remuneration (including that of the Chairman) reflects the anticipated time commitment to fulfil their
duties. Non-executive directors do not receive benefits, bonuses, long term incentive awards, a pension or compensation on termination
of their appointments.
The following table sets out a summary of the Company’s remuneration policy for non-executive directors:
Remuneration
element
Fees
Purpose and link to remuneration policy
Key features and operation (including maximum levels)
Fees for non-executive directors
are set at an appropriate level
to recruit and retain directors
of a sufficient calibre without
paying more than is necessary
to do so. Fees are set taking
into account the following
factors: the time commitment
required to fulfil the role,
typical practice at other
companies of a similar size,
and salary levels of employees
throughout the Group.
The non-executive director fees policy is:
● to pay a basic fee for membership of the Board
● to pay additional fees for fulfilling the role of chair of the Board and/or chair
of a committee and for the role of senior independent director, taking into account the
additional responsibilities and time commitment of these roles.
Fees are reviewed at appropriate levels at appropriate intervals (normally once every year)
by the Board with reference to individual experience, the external market and the expected
time commitment required of the director. The Company’s current maximum fees are
as follows:
● basic fee – £30,000
● additional fee for Board Chairman – £30,000
● additional fee for Committee Chairman – £5,000
● additional fee for Senior Independent Director – £5,000.
ILLUSTRATION OF APPLICATION OF REMUNERATION POLICY*
Three scenarios of executive directors’ remuneration are illustrated below:
Stretch target performance
Fixed remuneration (salary, benefits in kind
and pension) plus full pay out of annual
performance related pay.
Assume personal performance (against KRAs)
achievement is 100%.
On target performance
Fixed remuneration plus annual performance
related pay, paying out at target levels.
Assume personal performance (against KRAs)
achievement is 75%.
At threshold performance
Fixed remuneration is payable and only
KRA element of performance bonus.
Assume personal performance (against KRAs)
achievement is 60%
Below threshold performance
Fixed remuneration only is payable.
Chief Executive Officer
Chief Financial Officer
Fixed remuneration
Performance bonus pay out equivalent to
100% of base salary.
Fixed remuneration
Performance bonus pay out equivalent to
70% of base salary.
Fixed remuneration
Annual performance bonus pay out
equivalent to 71.5% of base salary.
Fixed remuneration
Performance bonus pay out equivalent to
52.5% of base salary.
Fixed remuneration
Annual performance bonus pay out
equivalent to 18% of base salary.
Fixed remuneration
Annual performance bonus pay out
equivalent to 12.5% of base salary.
Fixed remuneration only.
Fixed remuneration only.
* Links to schemes currently in place and within the guidance of the remuneration policy.
Air Partner plc Annual Report 2018 51
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Financial statementsStrategic reportGovernance
DIRECTORS’ REMUNERATION REPORT CONTINUED
REMUNERATION POLICY REPORT CONTINUED
The chart below sets out an illustration of the potential value of the current components of the executive directors’ remuneration for the year
ended 31 January 2018, showing the proportion of total remuneration made up of each component and the value of each component.
Chief Executive Officer £’000
(Blue) Annual bonus
(Grey) Fixed pay
£566
46%
£491
38%
£306
100%
62%
54%
Chief Financial Officer £’000
(Blue) Annual bonus
(Grey) Fixed pay
£264
30%
£288
36%
£186
100%
70%
64%
Minimum
performance
In line with
expectations
Maximum
Minimum
performance
In line with
expectations
Maximum
● Salary, benefits in kind and pension (as per the remuneration
policy) are shown as estimated cash cost or taxable value to
the individual.
● The Company’s bonus schemes operate so that amounts in
respect of the current financial period are only paid in the
following financial year, after the completion of the audit and
Board approval of the accounts. The chart reflects the bonus
amount earned in the period but not necessarily paid at year end.
● Bonus at below threshold performance reflects a position
where none of the personal or corporate metrics was achieved
at threshold level; expectation reflects metrics achieved at target
level and maximum reflects the position where every metric is
achieved at stretch up to the amount of bonus cap.
52 Air Partner plc Annual Report 2018
52 Air Partner plc Annual Report 2018
ANNUAL REPORT ON REMUNERATION
This section of the report sets out the annual report on remuneration
for the year ended 31 January 2018.
In connection with the information below, please refer to the table at
the top of the page 54.
REMUNERATION COMMITTEE STRUCTURE
The Committee is constituted as a formal sub-committee of the
Board with its own terms of reference. Its primary role is to review
and set the remuneration policy for the executive directors, within
the context of salaries and benefits paid across the Group as a
whole, and making discretionary performance-related awards to
the executive directors. The full Board agrees the remuneration of
the Chairman and non-executive directors on the principle that no
individual should be able to determine their own remuneration.
REMUNERATION COMMITTEE MEMBERSHIP
The members of the Committee during the year until the date of this
report were:
Amanda Wills (Chair)
Peter Saunders
Richard Jackson
Shaun Smith
Richard Everitt (resigned 28 June 2017)
In addition, the Chief Executive Officer, Chief Financial Officer and
Group HR Director are invited from time to time to attend meetings
of the Committee. No individuals are involved in decisions relating
to their own remuneration. The Committee met formally five times
during the year. The terms of reference for the Committee can be
viewed on the Company’s website.
ADVISERS TO THE COMMITTEE
The Committee can and did obtain information and advice during the
period under review from the Group HR Director, Rachel Thripp and
the Interim Group HR Director, Kathy Poole, the Company Secretary,
Sally Chandler (until 21 August 2017) and the Group Legal Counsel
and Company Secretary, Tracy Beicken (from 22 August 2017), and
the executive directors, Neil Morris and Mark Briffa, and may seek
advice from any other employees as required.
It may also obtain, at the expense of the Company, any necessary
legal or professional advice.
Taxable benefits – executive directors receive a benefits package
including a car allowance, health insurance, life assurance, critical
illness cover, subsidised sports club or gym membership and home
telephone and internet facility. The car allowance payable to the CEO
and CFO included in the above amount was £15,000 and £10,000
respectively (2017: £15,000 and £10,000).
Bonus* – the maximum bonus for the period for the CEO and
CFO was capped at 150% of the financial element of the bonus,
which equates to a maximum of 100% of salary and 70% of
salary respectively.
LTIP* – awards under the revised Air Partner Share Incentive
Plan 2012 following approval at the 2017 AGM were made to both
executive directors in the period under review and are subject to
performance and continued service conditions.
Pension-related benefit – both executive directors are members
of the Air Partner Pension Scheme (a defined contribution scheme)
and receive a pension contribution of 12% of base salary. Executive
directors may elect with the Committee’s consent to receive some
or all of the Company’s pension contribution as a cash alternative.
* The CFO will not receive a Bonus or LTIP award due to his resignation from the
Company on 13 April 2018.
ANNUAL BONUS (AUDITED)
The bonus payment for the CEO* is based on the following
weighting: 70% relating to the Group’s underlying profit before tax
result above threshold and 30% attributable to achievement against
personal objectives. For reference, the underlying profit before tax
threshold for the financial year ended 31 January 2018 was £5.3m
and for the financial year ended 31 January 2017 was £5m. The target
and stretch measures for 2018 were £5.9 and £6.49 respectively.
In respect of the personal objective element, the executive directors
receive four to five objectives each year against which they will
receive a score of 0 (unacceptable performance) to 5 (excellent
performance). Although every effort is made to ensure that personal
objectives are SMART, there is likely to be a degree of subjectivity to
the scores attributed against each objective.
Based on the Group underlying profit before tax performance for
the current financial year, 58% of the Group element of the bonus
is payable. In addition, the CEO achieved 75% of the personal
objective element. A bonus comprised of these combined elements
shall therefore be payable to the CEO for the period ending
31 January 2018.
* The CFO will not receive a bonus award due to his resignation from the Company
on 13 April 2018.
53
Air Partner plc Annual Report 2018
Air Partner plc Annual Report 2018 53
Financial statementsStrategic reportGovernance
DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED
DIRECTORS’ REMUNERATION FOR THE YEAR ENDED 31 JANUARY 2018 (AUDITED)
The following table provides details of the directors’ remuneration for the year ended 31 January 2018, together with their remuneration for
the year ended 31 January 2017:
(Audited)
Executive directors
Mark Briffa1
Neil Morris
Non-executive
directors
Richard Everitt2
Andrew Wood
Peter Saunders3
Richard Jackson
Shaun Smith
Amanda Wills
Total
Salary
Taxable benefits
Bonus
Gain on vesting
of share option
Pension
Total
2018
£‘000
2017
£‘000
2018
£‘000
2017
£‘000
2018
£‘000
2017
£‘000
2018
£‘000
2017
£‘000
2018
£‘000
2017
£‘000
2018
£‘000
2017
£‘000
255
156
250
155
21
14
20
13
164
–
188
59
221
–
178
–
30
16
16
36
691
186
652
263
25
–
50
33
35
33
60
15
35
12
25
23
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
25
–
50
33
35
33
60
15
35
12
25
23
587
575
35
33
164
247
221
178
46
52
1,053
1,085
1. 50% to be payable in cash and the remaining 50% to be applied to the purchase of shares to be held for a minimum of two years.
2. Richard Everitt resigned from the Board on 28 June 2017.
3. Expenses reimbursed to Peter Saunders, including air fares to Board meetings, amount to £32,000 in the year to 31 January 2018.
Personal objectives
Financial Target
Total bonus achieved
Mark Briffa
Neil Morris*
Weighting as
% of bonus
% achieved in
2018
Total bonus earned
£
Weighting as
% of bonus
% achieved in
2018
Total bonus earned
£
30%
70%
100%
75%
58%
58,500
105,560
164,060
30%
70%
100%
–
–
–
–
–
The specific performance targets for the annual bonus for the current and previous year are considered to be commercially sensitive and
accordingly are not disclosed.
* The CFO will not receive a bonus award due to his resignation from the Company on 13 April 2018.
PAYMENT TABLE OF EMPLOYEE WAGES AND OTHER COMPANY METRICS
Total employee pay compared to prior period (£m)
Profit before tax (£m)
Total dividends paid (pence)
2018
19,241
4,752
5.3
2017
(as restated)
18,453
3,948
5.0
% variance
4.27
20.0
6.0
54 Air Partner plc Annual Report 2018
54 Air Partner plc Annual Report 2018
PERFORMANCE GRAPH AND CEO REMUNERATION TABLE
To help investors to measure the Company’s comparative performance, the graph below shows the change in the total shareholder return of
the Company for each of the past eight financial years compared with the FTSE All Share Index.
Air Partner and FTSE All Share Index total return (rebased)
£’000
Air Partner
FTSE All Share
300
250
200
150
100
50
0
Chart to TBC
31 Jan
2010
31 Jan
2011
31 Jan
2012
31 Jan
2013
31 Jan
2014
31 Jan
2015
31 Jan
2016
31 Jan
2017
31 Jan
2018
The Company is not currently a constituent member of the FTSE All Share Index, but the Index has been selected as an appropriate
comparator because it is easily accessible by investors and covers the performance of a broad range of companies, including aviation,
transport and luxury retail businesses.
The table below sets out the details for the director undertaking the role of Chief Executive Officer:
Year
2018
2017
2016
2015
2014 – 18 months
2012
2011
2010
CEO single figure of total
remuneration
£‘000
Annual bonus pay-out
against maximum
%
Long-term incentive
vesting rates against
maximum opportunity
%
691
652
570
271
656
249
369
215
64.31
50.1
73.9
–
92.8
16.8
100.0
15.0
–
65.5
–
–
66.7
–
–
–
The table below shows the percentage change in remuneration of the director undertaking the role of Chief Executive Officer and the Group’s
UK employees as a whole between the year ended 31 January 2018, on an annualised basis, and 31 January 2017.
All UK employees employed by the Group in both January 2017 and January 2018 were chosen as the most appropriate comparator group as
this includes senior management and excludes international employees who are on different pay structures.
%
CEO
Average pay based on all of the Group’s UK employees
Salary
2.0
5.69
Benefits
Annual bonus
5.0
4.71
(15.0)
(34.52)
DIRECTORS’ BENEFICIAL INTERESTS IN SHARES (AUDITED)
The directors who held office during the year had the following beneficial interests in ordinary shares of 1p each in the Company, fully paid
up, at the beginning of the year and end of the year:
M A Briffa
N Morris (resigned 13 April 2018)
R L Everitt (resigned at 2017 AGM)
P Saunders
S Smith
31 Jan 18
307,295
10,000
25,000
25,000
11,635
31 Jan 17
262,230
–
25,000
25,000
11,635
There were no changes in the directors’ beneficial interests in shares between 31 January 2017 and 30 May 2018 (being the latest practicable
date prior to the publication of this report). No director has a non-beneficial interest in the shares of the Company.
Air Partner plc Annual Report 2018 55
55
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Financial statementsStrategic reportGovernance
DIRECTORS’ REMUNERATION REPORT CONTINUED
ANNUAL REPORT ON REMUNERATION CONTINUED
SHARE OPTIONS
Non-executive directors are not eligible to participate in the Company’s share option scheme. Details of the options held by executive
directors at the beginning and end of the year are as follows:
Share options (audited)
Number of options
Name
M A Briffa
31 January
2017
50,000
200,000
25,000
275,000
Granted
Exercised
Expired
Lapsed
31 January
2018
Exercise price
Earliest date of
exercise
Expiry date
–
–
– 200,000
–
25,000
– 225,000
–
–
–
–
–
50,000
–
–
50,000
–
–
–
–
176.8p1
24 Jan 2011 24 Jan 2018
109.0p 27 Nov 2011 27 Nov 2018
78.5p 26 Oct 2013 26 Oct 2020
1. Option vested but not exercised.
LONG-TERM INCENTIVE PLAN (LTIP) (AUDITED)
Share options
(audited)
Number of options
Granted
Exercised
Expired
Lapsed
31 January
2018
Exercise
price
Earliest date
of exercise
Expiry date
Name
Date of
Grant
31 January
2017
M A Briffa
3 Jun 2015 435,485
29 June 2016
552,080
–
–
10 July 2017
–
173,611
Total
987,565
173,611
N J Morris
3 Jun 2015
193,550
–
29 June 2016
113,730
57,222
10 July 2017
–
Total
307,280
57,222
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– 435,485
0.0p 04 Jun 2018 04 Jun 2025
–
–
–
–
–
552,080
173,611
725,691
193,550
113,730
57,222
– 364,502
0.0p 29 Jun 2019 29 Jun 2026
0.0p
10 July 2020
10 July 2027
0.0p 04 Jun 2018 04 Jun 2025
0.0p 29 Jun 2019 29 Jun 2026
0.0p
10 July 2020
10 July 2027
The face value of awards made to Mark Briffa and Neil Morris on
29 June 2016 are £408,539 and £84,157. This is calculated based on
a closing share price of 370.0p on 29 June 2016. The number of LTIPs
awarded was determined from the closing share price the day prior
to grant (339.6p per share) and the executive directors’ salaries at
the date of grant.
The face value of awards made to Mark Briffa and Neil Morris on 10
July 2017 are £177,083 and £58,366. This is calculated based on a
closing share price of 102p on 10 July 2017. The number of LTIPs
awarded was determined from the closing share price the day prior
to grant (108p per share) and the executive director’s salaries at the
date of grant.
The awards granted are subject to the achievement of
performance and employment conditions as specified by the
Remuneration Committee.
The face value of awards made to Mark Briffa and Neil Morris on
10 July 2017 are £175,347 and £57,794. This is calculated based on
a share price of 101.5p on 10 July 2017. The number of LTIPs awarded
was determined from the closing share price prior to grant (108.0p
per share) and the directors’ executive salaries at the date of grant.
The awards are subject to the achievement of performance and
employment conditions as specified by the Remuneration Committee.
The number of share options awarded under the LTIP was
determined by using the closing price of an Air Partner plc share on
the day preceding the date of grant as ascertained by the Official List
which was 502.5p on 21 October 2013, 387.5p on 2 June 2015 and
339.6p on 28 June 2016.
The face value of awards made to Mark Briffa and Neil Morris on
3 June 2015 are £340,000 and £151,000. This is calculated based
on a closing share price of 389.0p on 3 June 2015. Prices quoted are
pre-share split.
The awards granted are subject to the achievement of
performance and employment conditions as specified by the
Remuneration Committee.
Vesting of the grants is subject to a combination of 50% earnings per
share (EPS) and 50% total shareholder return (TSR) related targets:
EPS:
● 100% vest if performance greater than RPI +20% per annum
● 25% vest if performance equal to RPI +15% per annum.
TSR:
● 100% vest if performance greater than 75th percentile
● 25% if performance equal to 50th percentile.
Between these target levels, share options will vest on a straight-line
basis and shares will vest, subject to achievement of these
performance conditions, on 3 June 2018.
The adjusted underlying EPS for the base year ending 31 January
2015 has been calculated as 19.5p excluding the impact of one-off
tax credits.
56 Air Partner plc Annual Report 2018
56 Air Partner plc Annual Report 2018
EPS
Two-thirds of the award (66.67% of the award) will be subject to an
earnings per share (EPS) compound annual growth target which will
be in addition to any increase in the Consumer Prices Index (CPI),
as follows:
APPLICATION OF THE POLICY FOR 2017/18
FIXED PAY
Details of the fixed pay of the executive directors for the current year
are set out in the table below:
EPS growth
Below CPI +5% pa
CPI +5% pa
CPI +10% pa or above
% of award vesting
CEO
CFO
Nil
25%
100%
Basic salary
£’000
Car allowance
£’000
260
156
15
10
Total
£’000
275
166
For intermediate performance between CPI +5% pa and CPI +10% pa
vesting will occur on a straight-line basis.
TSR
The remaining one-third of the award (33.33% of the award) will be
subject to an absolute total shareholder return (TSR) performance
condition as follows:
EPS growth
Below 9% pa returns
9% pa returns
16% pa returns or above
% of award vesting
Nil
25%
100%
For intermediate performance between 9% pa returns and 16% pa
returns, vesting will occur on a straight-line basis.
The underlying EPS for the base year ending 31 January 2018 has
been calculated as 8.4p.
Measures
The market price per share at 31 January 2018 was 142.5p (31 January
2017: 108.0p) and ranged between 102.0p and 151.5p during the
year. The average price during the year ended 31 January 2018 was
124.3p (31 January 2017: 86.0p).
SHAREHOLDER VOTING
At the 2017 AGM, the results of the votes on the Directors’
remuneration report were:
PENSION
The Company pension contribution for the executive directors
remained the same in the current financial year. Executive directors
may elect with the Committee’s consent to receive some or all of
the Company’s pension contribution as a cash alternative.
ANNUAL BONUS
The Remuneration Committee has set stretching targets for both
Group financial performance and personal objectives under the
annual bonus plan. Detail on the targets is considered commercially
sensitive and for this reason is not disclosed during the current
financial year.
The performance measures and weightings for the financial year
ending 31 January 2018 are as follows:
Underlying profit before tax
Personal objectives
As percentage of
maximum bonus opportunity
CEO
70%
30%
CFO
70%
30%
The Directors’ remuneration report was approved by the Board on
11 June 2018 and is signed on its behalf by:
Directors’
remuneration report
Number
of votes
% of votes
cast
Amanda Wills
Chair of the Remuneration Committee
For (including discretionary)
19,296,835
99.67
Against
Votes withheld
64,050
52,105
0.33
–
Air Partner plc Annual Report 2018 57
57
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Financial statementsStrategic reportGovernance
DIRECTORS’ REPORT
The directors present their reports and the audited financial
statements for the year ended 31 January 2018.
STATUTORY INFORMATION CONTAINED ELSEWHERE IN
THE ANNUAL REPORT
Information required to be part of the Directors’ report can be found
elsewhere in this document, as indicated, and is incorporated into
this report by reference:
● Results and dividend in the Chairman’s statement on pages 4 and 5
● Corporate governance and the Group’s financial risk management
objectives and policies in the Corporate governance statement on
pages 37 to 42
● Details of the salaries, bonuses, benefits and share interests of
directors in the Directors’ remuneration report on pages 47 to 57
● Directors’ responsibility statement on page 60
● Employee relations and equal opportunities in Our People on
pages 18 and 19.
Likely future events and all post-balance sheet events are disclosed
within the Strategic report on pages 1 to 33.
MANAGEMENT REPORT
The Strategic report on pages 1 to 27 and this Directors’ report, with
its inclusions as indicated above, form the Management report as
required by DTR 4.1.5R.
DIRECTORS AND DIRECTORS’ INTERESTS
The names of the directors of the Company including biographical
details of the directors are shown on pages 34 and 35 and changes
to directorships during the reporting period are shown on page 37.
Details of directors’ interests in the shares of the Company are
shown on page 55. This information is incorporated into this
report by reference.
DIRECTORS’ INDEMNITIES AND INSURANCE
The Company has made qualifying third-party indemnity provisions
for the benefit of its directors that remain in force at the date of
this report. In certain circumstances, the Company can indemnify
directors, in accordance with its Articles of Association, against costs
incurred in the defence of legal proceedings brought against them by
virtue of their office. Directors’ and officers’ liability insurance cover
remains in place to protect all directors and senior managers.
DIRECTORS’ CONFLICT OF INTEREST
No director had, during the year, any beneficial interest in any
contract significant to the Company’s business, other than a contract
of employment. The Company has procedures in place for managing
conflicts of interest. Should a director become aware that they, or
their connected parties, have an interest in an existing or proposed
transaction with the Company, they are required to notify the Board
in writing or at the next Board meeting.
ARTICLES OF ASSOCIATION
Any amendment to the Company’s articles of association may
only be made by passing a special resolution of the shareholders
of the Company.
SUBSTANTIAL SHAREHOLDINGS
As at 8 June 2018, the Company was aware of substantial interests in
the Company’s shares or had been notified of interests in voting
rights under Chapter 5 of the Disclosure and Transparency Rules,
as follows:
Shareholder
Number of shares
% held
Nature of
holding
Schroder Investment
Management
Sanford Deland Asset
Management
Aberforth Partners
Hargreaves Lansdown
Asset Management
8,730,000
16.72 Indirect
7,500,000
14.36 Indirect
4,509,630
8.64 Indirect
3,627,883
6.95 Indirect
The interests shown may include shares held under discretionary
management agreements for which the manager may not exercise
voting rights.
SHARE CAPITAL STRUCTURE, BUYING BACK AND
SHAREHOLDER RIGHTS
The authorised share capital of the Company is £750,000 divided
into 75,000,000 ordinary shares of 1 pence each. The Company has
one class of ordinary shares which have equal rights to dividends
and capital and to vote at general meetings of the Company, as set
out in the Company’s Articles of Association. The number of ordinary
shares of 1 pence each issued and fully paid at 31 January 2018 was
52,217,565 . Other than in respect of the share split, no new shares
have been issued during the year. No shares were bought back
during the year.
Options outstanding under all employee share schemes amounted
to 6.12% of the Company’s issued share capital as at 31 January
2018. This includes options granted which have not yet vested. In
addition, options representing 8.99% of the issued share capital
have been exercised within the 10 years preceding 31 January 2018.
No more than 10% of the issued share capital in any rolling 10-year
period may currently be taken up by employee share schemes by
way of dilution with any excess (up to a further 10% of the issued
share capital) being acquired by purchase in the market via the
Air Partner Employee Benefit Trust (the Trust). Under the Articles
of Association, the Company has authority to issue 75,000,000
ordinary shares. Resolutions to renew the authorities given
to directors to allot shares, to dis-apply certain pre-emption rights
and to make market purchases of the Company’s own shares, all
subject to appropriate limits, will be put to the Annual General
Meeting (AGM) to replace the authorities granted in 2017.
The Trust holds ordinary shares in the Company in order to satisfy
options under the Group’s share option schemes. At 31 January
2018, the number of ordinary shares held by the Trust was 402,690.
Shares held by the Trust abstain from voting and are not entitled to
receive dividends. A further 272,730 shares are held by the Trust in
a nominee capacity for a beneficiary of the Trust.
There are no specific restrictions on the size of a holding nor on
the transfer of shares, which are both governed by the general
provisions of the Articles of Association and prevailing legislation.
The directors are not aware of any agreements between holders of
the Company’s shares that may result in restrictions on the transfer
of securities or on voting rights.
58 Air Partner plc Annual Report 2018
58 Air Partner plc Annual Report 2018
No person has any special rights of control over the Company’s
share capital and all issued shares are fully paid.
No individual or corporate entity has the right to appoint a director.
The appointment and replacement of directors is governed by the
Articles of Association, the UK Corporate Governance Code, the
Companies Act 2006 and related legislation.
CHANGE OF CONTROL – SIGNIFICANT CONTRACTS
There are a number of commercial agreements that take effect,
alter or terminate upon a change of control of the Company; none
is considered to be significant in terms of its potential impact on
the business of the Group as a whole.
The Company does not have agreements with any director
or employee that would provide compensation for loss of office
or employment resulting from a takeover, except that provisions of
the Company’s share schemes and plans may cause options and
awards granted to employees under such schemes and plans to
vest on a takeover.
BRANCHES
The Company and its subsidiaries have an established branch
in Austria.
GREENHOUSE GAS EMISSIONS
INDEPENDENT AUDITOR
As this is the final year audit for the current audit partner, before
his rotation, the Company has decided to run a competitive tender
process for the 31 January 2019 year end audit. Depending on
the time scale of the tender process, Deloitte has indicated its
willingness to continue in office to perform the review work for
the half year, should this be requested.
In accordance with Section 489 of the Companies Act 2006 and in
order to allow Deloitte to continue through to the audit tender, a
resolution to reappoint Deloitte as the statutory auditor will be
proposed at the 2018 AGM.
ANNUAL GENERAL MEETING
The 2018 AGM will be held at 11am on Wednesday 11 July 2018
at 2 City Place, Beehive Ring Road, Gatwick, RH6 0PA. The
Company confirms that it will send the Notice of AGM and related
documentation to shareholders at least 21 clear days before the
meeting, either by post, to those shareholders who prefer a paper
copy, or by email to those shareholders who have agreed that the
Company can communicate with them electronically.
Both the Notice of AGM and the Proxy form are available
to download from the Investors section on the Company’s website.
The Directors’ report was approved by the Board on 11 June 2018 and
is signed on its behalf by:
Tracy Beicken
Group Legal Counsel and Company Secretary, Air Partner plc
Vehicles
Electricity
Total
2018
Global tonnes
of CO2e
2017
Global tonnes
of CO2e
44
387
431
18
387
405
We have reported on all of the emission sources required under
the Large and Medium-Sized Companies and Groups (Accounts
and Reports) Regulations 2008 as amended in August 2013.
The reporting boundary used for collation of the above data is
consistent with that used for consolidation purposes in the financial
statements. We have used the GHG Protocol Corporate Accounting
and Reporting Standard (revised edition), data gathered to fulfil our
requirements under the CRC Energy Efficiency scheme, and emission
factors from the UK Government’s GHG Conversion Factors for
Company Reporting 2014 to calculate the above disclosures.
Given the Group’s operations, CO2e emissions are restricted to
office use and the operation of a relatively small number of vehicles.
In the case of offices, occupation is within a multi-occupied building
for all of the Group’s subsidiaries without separate metering for
individual usage by each tenant. Accordingly, an estimate has been
used. There has been no change in the premises of the Group during
the last financial year and therefore the electricity metrics shown
above remain unaltered.
POLITICAL CONTRIBUTIONS
There were no political contributions during the year (2017: £nil).
DIRECTORS’ STATEMENTS
As required under the Companies Act 2006, the UK Corporate
Governance Code 2016 and the Disclosure and Transparency
Rules (DTRs), various statements have been made by the Board
as set out on pages 38 and 48 and are incorporated into this report
by reference.
Air Partner plc Annual Report 2018 59
59
Air Partner plc Annual Report 2018
Financial statementsStrategic reportGovernance
DIRECTORS’ RESPONSIBILITY STATEMENT
DIRECTORS’ STATEMENT OF RESPONSIBILITY FOR
FINANCIAL STATEMENTS
Each of the directors serving at the date of approval of the accounts
confirms that, to the best of his/her knowledge and belief:
● the financial statements, which have been prepared in
accordance with IFRS as adopted by the European Union, give
a true and fair view of the assets, liabilities, financial position
and financial performance of the Group and Company
● the Strategic report and the Directors’ report give a fair review of
the Group, together with a description of the principal risks and
uncertainties that the Group faces.
DIRECTORS’ STATEMENT OF RESPONSIBILITY FOR
DISCLOSURE OF INFORMATION TO AUDITOR
As required by section 418 of the Companies Act 2006, each
director serving at the date of approval of the financial statements
confirms that:
● to the best of his/her knowledge and belief, there is no
information relevant to the preparation of their reports of which
the Company’s auditor is unaware
● each director has taken all the steps a director might reasonably
be expected to have taken to be aware of relevant audit
information and to establish that the Company’s auditor
is aware of that information.
Words and phrases used in this confirmation should be interpreted
in accordance with section 418 of the Companies Act 2006.
The Directors’ statements were approved by the Board on 11 June
2018 and are signed on its behalf by:
Tracy Beicken
Group Legal Counsel and Company Secretary, Air Partner plc
The directors are responsible for preparing the Strategic report
incorporating the business review, the Directors’ report, the
Directors’ remuneration report and the Group and Parent Company
financial statements. The directors are required to prepare financial
statements for the Group in accordance with International Financial
Reporting Standards (IFRS) as adopted for use in the European
Union and have also elected to prepare financial statements for
the Company in accordance with IFRS as adopted for use in the
European Union. Company law requires the directors to prepare
such financial statements in accordance with IFRS and the
Companies Act 2006 and Article 4 of the IAS Regulation.
International Accounting Standard 1 requires that financial
statements present fairly for each financial year the Group’s and
Company’s financial position, financial performance and cash flows.
This requires the fair presentation of the effects of transactions,
other events and conditions in accordance with the definitions and
recognition criteria for assets, liabilities, income and expenses set
out in the International Accounting Standards Board’s ‘Framework
for the Preparation and Presentation of Financial Statements’. In
virtually all circumstances, a fair presentation will be achieved by
compliance with all applicable IFRS.
Directors are also required to:
● select suitable accounting policies and apply them consistently
● make judgements and estimates that are reasonable and prudent
● state whether applicable accounting standards have been
followed, subject to any material departures disclosed and
explained in the financial statements
● present information, including accounting policies, in a
manner that provides relevant, reliable, comparable
and understandable information
● provide additional disclosures when compliance with specific
requirements in IFRS is insufficient to enable users to understand
the impact of particular transactions, other events and conditions
on the entity’s financial position and financial performance
● prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping adequate accounting
records which disclose with reasonable accuracy at any time the
financial position of the Group and of the Company, for safeguarding
the assets, for taking reasonable steps for the prevention and
detection of fraud and other irregularities, and for the preparation of
a Directors’ report and Directors’ remuneration report which comply
with the requirements of the Companies Act 2006.
The directors are responsible for the maintenance and integrity of
the Group website. Legislation in the United Kingdom governing the
preparation and dissemination of the financial statements may differ
from legislation in other jurisdictions.
60 Air Partner plc Annual Report 2018
60 Air Partner plc Annual Report 2018
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF AIR PARTNER PLC
QUALIFIED OPINION
In our opinion, except for the possible effects of the matters described in the ‘Basis for qualified opinion’ section of our report:
● the financial statements give a true and fair view of the state of the Group’s and of the parent Company’s affairs as at 31 January 2018 and
of the Group’s profit for the year then ended;
● the Group financial statements have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as
adopted by the European Union;
● the parent Company financial statements have been properly prepared in accordance with IFRSs as adopted by the European Union and as
applied in accordance with the provisions of the Companies Act 2006; and
● the financial statements have been prepared in accordance with the requirements of the Companies Act 2006 and, as regards the Group
financial statements, Article 4 of the IAS Regulation.
We have audited the financial statements of Air Partner plc (the ‘parent Company’) and its subsidiaries (the ‘Group’) which comprise:
● the Consolidated Income Statement;
● the Consolidated Statement of Comprehensive Income;
● the Consolidated and Company Statements of Financial Position;
● the Consolidated and Company Cash Flow Statements;
● the Consolidated and Company Statements of Changes in Equity; and
● the related notes 1 to 37.
The financial reporting framework that has been applied in their preparation is applicable law and IFRSs as adopted by the European Union
and, as regards the parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
BASIS FOR QUALIFIED OPINION
The Company has provided disclosure of an accounting issue which arose in accounting periods dating back at least as far as the year ended
31 July 2011 in the Audit and Risk Committee Report and in note 2 to the financial statements. Specifically:
● Certain inappropriate financial journals had been deliberately processed without effective review
● These journals had been used to conceal accounting issues including unreconciled balance sheet accounts and recoverability issues on
a major account
● In certain cases, supporting accounting records were inappropriately created and manipulated in order to avoid detection of the
accounting issues, and it has not been possible to reproduce all original supporting documents at given points in time
Due to limitations in the Company’s ability to recreate historical accounting records, in respect of £3.5m of the accumulated £4.4m gross
overstatement of net assets, the directors of the Company have been unable to identify which accounting periods and line items this
adjustment relates to. As a result, the directors have apportioned the income statement impact of the adjustment on a straight line basis
beginning in the accounting period 31 July 2011. This has resulted in an exceptional expense of £0.3m (2017: £0.3m) net of tax for the year
ended 31 January 2018 together with an adjustment of £3.7m to opening retained earnings as at 1 February 2017.
We were unable to obtain sufficient, appropriate audit evidence in respect of the £3.5m of the total adjustment described above.
Consequently, we were unable to determine whether any adjustments to the above amounts were necessary.
The qualification relates solely to the allocation of this adjustment across the income statement in the current and prior years, and the
consequential impact on the balance sheet as at 1 February 2017. The qualification does not affect the closing balance sheet as at
31 January 2018.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities
under those standards are further described in the auditor’s responsibilities for the audit of the financial statements section of our report.
We are independent of the Group and the parent Company in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our
other ethical responsibilities in accordance with these requirements. We confirm that the non-audit services prohibited by the FRC’s Ethical
Standard were not provided to the Group or the parent Company.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our qualified opinion.
Air Partner plc Annual Report 2018 61
Air Partner plc Annual Report 2018 61
GovernanceStrategic reportFinancial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF AIR PARTNER PLC CONTINUED
SUMMARY OF OUR AUDIT APPROACH
Key audit matters
The key audit matter that has resulted in a qualification relating to the correction of inappropriate accounting
entries is discussed in the ‘Basis for qualified opinion’ section above.
The other key audit matters that we identified in the current year were:
1. Revenue recognition: classification as either agent or principal
2. Completeness of provisions against operator prepayments
3. Impairment of goodwill and intangible assets relating to the Baines Simmons training and consulting cash-
Materiality
Scoping
Significant changes
in our approach
generating unit
Within this report, any new risks are identified with▴ and any risks which are the same as the prior year are
identified with ▸.
Our chosen materiality of £460,000 (2017: £410,000) represents 8.5% (2017: 8.7%) of underlying profit
before tax, 1.4% (2017: 1.4%) of gross profit and 2.7% (2017: 2.6%) of net assets.
Underlying profit before tax is defined by management in note 7.
Our global testing approach is a combination of full scope, specified audit procedures and defined
procedures. We have made changes to the scoping decisions made in the prior year for several entities
to reflect their current significance.
The identification of historical accounting issues, as discussed in the ‘Basis for qualified opinion’ section
above, resulted in a change to our audit approach.
The following additional procedures were performed:
● Understood the approach and reviewed the results of the Company’s own investigations in to this matter,
including the scope and results of work performed by external advisors;
● Audited the accuracy and completeness of management’s adjusting entries concerning the 2018 balance
sheet position;
● Performed focused audit analytics to identify journals exhibiting characteristics similar to those of
identified mispostings, which were then substantively tested;
● Performed increased focused sampling techniques in the following areas:
a. Subsequent cash receipts for trade receivables;
b. Unpaid receivables were traced to supporting communications and invoices for rights and obligations;
c. Trade receivables as at 31 January 2018 which were cleared via a credit note;
● Performed procedures to test the completeness of the deferred JetCard revenue balances on a sample
basis, including:
a. Obtained a source schedule for all JetCard customers, external from the finance team;
b. Traced the customer details to contract to validate the starting date;
c. Agreed all JetCard top up payments to bank receipt;
d. Agreed all flight hours utilised to sales invoices;
e. Recalculated the carried forward deferred income balance
f. Performed audit procedures testing any manual adjustments between the company’s operational flight
database and the financial records; and
g. Reconciled revenue recorded in the company’s operational flight database and the financial records in
order to ensure the completeness of revenue.
In regard to other key audit matters included in the prior year’s audit report, we have not reported on the
purchase price allocation relating to the acquisition of Baines Simmons as this was finalised in the prior year.
Additionally, the completeness of operator accruals has been considered as part of the key audit matter in
the current year relating to the historical accounting issues.
62 Air Partner plc Annual Report 2018
62 Air Partner plc Annual Report 2018
CONCLUSIONS RELATING TO GOING CONCERN, PRINCIPAL RISKS AND VIABILITY STATEMENT
GOING CONCERN
We have reviewed the directors’ statement in note 2d to the financial statements
about whether they considered it appropriate to adopt the going concern basis of
accounting in preparing them and their identification of any material uncertainties
as to the Group’s and Company’s ability to continue to do so over a period of at least
twelve months from the date of approval of the financial statements.
We are required to state whether we have anything material to add or draw attention
to in relation to that statement required by Listing Rule 9.8.6R(3) and report if the
statement is materially inconsistent with our knowledge obtained in the audit.
PRINCIPAL RISKS AND VIABILITY STATEMENT
Based solely on reading the directors’ statements and considering whether
they were consistent with the knowledge we obtained in the course of the audit,
including the knowledge obtained in the evaluation of the directors’ assessment
of the Group’s and the Company’s ability to continue as a going concern, we are
required to state whether we have anything material to add or draw attention to
in relation to:
● the disclosures on pages 30-33 that describe the principal risks and explain how
they are being managed or mitigated;
We confirm that we have nothing material to report,
add or draw attention to in respect of these matters.
We confirm that we have nothing material to report,
add or draw attention to in respect of these matters.
● the directors’ confirmation on page 46 that they have carried out a robust
assessment of the principal risks facing the Group, including those that would
threaten its business model, future performance, solvency or liquidity; or
● the directors’ explanation on page 46 as to how they have assessed the prospects
of the Group, over what period they have done so and why they consider that
period to be appropriate, and their statement as to whether they have a reasonable
expectation that the Group will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We are also required to report whether the directors’ statement relating to the
prospects of the Group required by Listing Rule 9.8.6R(3) is materially inconsistent
with our knowledge obtained in the audit.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of
the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.
These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and
directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we
do not provide a separate opinion on these matters. In addition to the matter described in the ‘Basis for qualified opinion’ section above,
we have determined the matters described below to be the key audit matters to be communicated in our report.
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INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF AIR PARTNER PLC CONTINUED
1. REVENUE RECOGNITION: CLASSIFICATION AS EITHER AGENT OR PRINCIPAL
▸
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Air Partner plc provide air charter services to customers using operator aircraft to supply the flight. The
recognition of revenue as either “agent” or “principal” is determined by the application of the criteria set
out in IAS 18 “Revenue”. Under this standard, an entity is acting as principal when it has exposure to the
significant risks and rewards associated with the rendering of services.
Management must apply their judgement to consider if the Company is acting as the principal or the agent
in each contract with the end customer where Air Partner’s standard terms and conditions are modified
(or indeed not used as a basis for the contract).
There is a risk that revenue is recognised incorrectly either as “gross” revenue when the business is not
exposed to “principal” risk, or booked as “net” or “agency” revenue when the balance of risk points to
the Company being the ”principal” in the arrangement.
Total gross transaction value (GTV) was £261.5m in the year ended 31 January 2018 (PY: £215.8m).
GTV represents the total value of invoices raised to customers where revenue has also been earned.
The Group’s revenue recognition accounting policy is included on page 81 of the notes to the financial
statements. This is discussed by the Audit and Risk Committee on pages 44-46. Further disclosure on the key
sources of estimation uncertainty can be found on page 77.
In order to address this key audit matter:
● We assessed the design and implementation of management’s control over the classification of revenue;
● We obtained and reviewed Air Partner’s standard contract terms and those contracts where management
concluded that they were principal against the IAS 18 criteria to assess whether the correct application of
IAS 18 recognition was applied;
● We selected a sample of recorded revenue amounts, obtained and reviewed the customer contract in order
to assess whether the correct application of IAS 18 revenue classification had been applied; and
● We performed focused testing on a further sample of contracts which management has classified as agent
arrangements by selecting a sample of those which had similar characteristics (industry, size, margin) to
customer contracts where Air Partner was classified as principal. For these we evaluated management’s
assessment on whether Air Partner is an agent using the criteria of IAS 18.
Key observations
From the work performed above, we are satisfied that revenue recognition has been appropriately applied in
accordance with IAS 18.
▸
2. COMPLETENESS OF PROVISIONS AGAINST OPERATOR PREPAYMENTS
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Key observations
The Group enters into sales contracts with customers for aircraft charter and enters into purchase contracts
‘back-to-back’. The Group is required to prepay operators for flights which occur in the future. At the year end,
the value of Group prepayments was £4.7m (2017: £6.1m) which includes operator prepayments. Although the
Group matches the purchase contract with the customer receipt, there is a credit risk in cases where suppliers
default before the flight takes off and that monies prepaid to suppliers are not recoverable. In certain cases
Air Partner may still fulfil the flight for the customer. There is a risk these prepayments may require a provision
which is not recorded whether due to error or inappropriate management bias. This is discussed by the Audit
and Risk Committee on page 45.
In order to address this risk:
● We assessed the design and implementation of management’s control over the prepayment provisioning;
● We checked the accuracy of the listing of prepaid operator costs as at 31 January 2018 by agreeing a sample
through to signed contracts;
● We reviewed prepaid operator costs to identify those which had a higher chance of irrecoverability based
on their operator risk rating;
● We traced a sample of prepayments through to post year end flight records to check that the operator had
supplied a flight;
● For those flights in our sample that had not yet taken off at the date of our testing we reviewed their
business history with the Group for evidence of dispute and slow payment as well as third party evidence of
their financial position; and
● We requested details from the Group’s external legal advisers to identify legal disputes with operators.
From the work performed above, we are satisfied that operator prepayments are valued appropriately.
64 Air Partner plc Annual Report 2018
64 Air Partner plc Annual Report 2018
3. IMPAIRMENT OF GOODWILL AND INTANGIBLE ASSETS RELATING TO THE BAINES SIMMONS TRAINING
AND CONSULTING CASH-GENERATING UNIT (CGU)
▸
Key audit matter
description
How the scope of our
audit responded to the
key audit matter
Management are required to test Group goodwill balances annually for impairment. The assessment of the
carrying value of goodwill and intangibles involves judgement in relation to forecasting future cash flows and
is sensitive to growth rates and the discount rate applied to future cash flows. We have also considered the
potential for fraud through management bias in the assumptions underlying the impairment assessment.
Management have assessed the future cash flows of the cash generating unit and concluded that it is not
impaired. We have considered the Company’s forecast performance and pinpointed our risk specifically to
the revenue and gross profit growth rates and discount rate applied within Baines Simmons training and
consulting CGU. As at 31 January 2018, goodwill and intangible assets relating to this cash-generating unit
(“CGU”) total £1.5m (31 January 2017: £1.6m).
The Group’s goodwill and intangible assets accounting policies are included on page 88 of the notes to
the financial statements. This is discussed by the Audit and Risk Committee on page 45. Further disclosure
on the key sources of estimation uncertainty can be found on page 77.
In order to address this risk:
● We assessed the design and implementation of management’s control over the impairment review;
● We checked the accuracy of the schedules supporting the cash flow model;
● We challenged appropriateness of the key assumptions of cash flow growth, revenue and gross profit
growth rates using historical performance, historical forecasting accuracy, knowledge of the business and
sensitivity analysis;
● We challenged the discount factor used, using our internal specialists, to assess the appropriateness for
this business by comparison to external data and via sensitivity analysis; and
● We also tested the completeness of direct and overhead costs via post year end payment testing and the
occurrence of revenue for 2018.
Key observations
From the work performed above, we concluded that the inputs and assumptions applied in the valuation
model by management were appropriate. We did not identify any additional need for impairment.
OUR APPLICATION OF MATERIALITY
We define materiality as the magnitude of misstatement in the financial statements that makes it probable that the economic decisions of a
reasonably knowledgeable person would be changed or influenced. We use materiality both in planning the scope of our audit work and in
evaluating the results of our work.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Materiality
Basis for determining
materiality
Rationale for the
benchmark applied
Group financial statements
£460,000 (2017: £410,000)
We considered a number of measures including underlying profit
before tax (as defined by management in note 2), gross profit and
net assets.
In determining our materiality benchmark we considered the
performance indicators most applicable to the users of the financial
statements, the nature of the business and comparative audit
reports for listed entities. Gross profit and underlying profit before
tax are the key measures used by analysts in presenting business
performance to users of the financial statements. However, as profit-
based measures do not fully represent the size of the balance sheet,
we have also considered net assets in determining materiality. In
making this determination, we considered the profit metrics of both
the prior year and the current year because of the significant level
of variation. Materiality represents 8.8% (2017: 8.7%) of underlying
profit before tax, 1.4% (2017: 1.4%) of gross profit and 4.0% (2017:
2.6%) of net assets. The 2017 percentages were calculated based
upon prior year profit and net asset measures before restatement.
Parent Company financial statements
£379,000 (2017: £328,000)
This has been determined with reference
to underlying profit before tax, gross profit
and net assets, and is capped at 82.5% of
Group materiality.
Consistent with the determination of
Group materiality we considered a range of
performance indicators most applicable to
the users of the financial statements.
We agreed with the Audit and Risk Committee that we would report to the Committee all audit differences in excess of £23,000 (2017:
£20,500), as well as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also report to the
Audit and Risk Committee on disclosure matters that we identified when assessing the overall presentation of the financial statements.
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GovernanceStrategic reportFinancial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF AIR PARTNER PLC CONTINUED
AN OVERVIEW OF THE SCOPE OF OUR AUDIT
Our audit was scoped by obtaining an understanding of the Group and its environment, including internal control, how the Group is
organised, the consolidation process, the performance and financial position of each component as a proportion of the total for the Group
and assessing the risks of material misstatement throughout the Group. Based on that assessment, we focused our Group audit scope
primarily on the Group operations in the UK, France, the USA and Germany.
The principal UK (Air Partner plc) and French entities were subject to a full audit, whilst the USA and Germany were subject to specified audit
procedures including full audit procedures on significant risk areas. Our testing in the USA and Germany was based on our assessment of
the risks of material misstatement and of the materiality of the Group’s operations at those locations including an audit of account balances
relating to the significant risks areas applicable to these locations.
The Group audit engagement team visited all of these overseas component audit teams as part of our oversight of their work. We visited each
of the overseas locations set out above in order for a senior member of the Group audit engagement team to update our understanding of the
operations, risks and control environments of each component as well as complete a review of the component auditors’ working papers and
attend key meetings with component management. In addition, detailed audit procedures were performed over the revenue and costs of
sales balances in Turkey. The Group audit engagement team performed the audit of the UK business and procedures on the USA and
Turkey businesses without the involvement of a component team.
For all other locations we have performed analytical review procedures at Group level. At the Group level we also tested the consolidation
process. The changes in scope this year are that we performed:
● specified audit procedures on revenue and cost of sales for Turkey; and
● analytical review procedures for the newly acquired subsidiary SafeSkys Limited.
The Group audit engagement team have obtained an understanding of the Group, including the consolidation process and Group-wide
controls, to confirm our conclusion that there were no significant risks of material misstatement of the aggregated financial information of
the remaining components not subject to audit or audit of specified account balances. Our coverage of the Group results are split as follows:
Gross profit
Statutory profit before tax
Net assets
6
81
13
71
11
CHARTS TBC
18
16
47
37
Key:
Full audit scope
Specified audit procedures
Analytical review procedures
OTHER INFORMATION
The directors are responsible for the other information. The other information comprises the information included in the annual report other
than the financial statements and our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our
report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether
the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to
be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material
misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that fact.
66 Air Partner plc Annual Report 2018
66 Air Partner plc Annual Report 2018
In this context, matters that we are specifically required to report to you as uncorrected material misstatements of the other information
include where we conclude that:
● Fair, balanced and understandable – the statement given by the directors that they consider the annual report and financial statements
taken as a whole is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group’s
position and performance, business model and strategy, is materially inconsistent with our knowledge obtained in the audit; or
● Audit and Risk Committee reporting – the section describing the work of the Audit and Risk Committee does not appropriately address
matters communicated by us to the Audit and Risk Committee; or
● Directors’ statement of compliance with the UK Corporate Governance Code – the parts of the directors’ statement required under the
Listing Rules relating to the Company’s compliance with the UK Corporate Governance Code containing provisions specified for review by
the auditor in accordance with Listing Rule 9.8.10R(2) do not properly disclose a departure from a relevant provision of the UK Corporate
Governance Code.
Except for the possible effects of the matter described in the ‘Basis for qualified opinion’ section of our report on the other information, we
have nothing to report in respect of these matters.
RESPONSIBILITIES OF DIRECTORS
As explained more fully in the directors’ responsibilities statement, the directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary
to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group’s and the parent Company’s ability to continue
as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of accounting unless the
directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,
but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
USE OF OUR REPORT
This report is made solely to the Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006.
Our audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
OPINION ON OTHER MATTERS PRESCRIBED BY THE COMPANIES ACT 2006
In our opinion the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the
Companies Act 2006.
In our opinion, except for the impact on the strategic report of the issues described in the basis for qualified opinion section above, based on
the work undertaken in the course of the audit:
● the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared
is consistent with the financial statements; and
● the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.
Except for the impact on the strategic report of the issues described in the basis for qualified opinion section above, in the light of the
knowledge and understanding of the Group and the parent Company and their environment obtained in the course of the audit, we have
not identified any material misstatements in the strategic report or the directors’ report.
Air Partner plc Annual Report 2018 67
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GovernanceStrategic reportFinancial statements
INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS
OF AIR PARTNER PLC CONTINUED
MATTERS ON WHICH WE ARE REQUIRED TO REPORT BY EXCEPTION
Adequacy of explanations received and accounting records
In respect solely of the limitation on our work relating to the historical accounting issue with a
cumulative net impact of £3.5m, we have not obtained all the information and explanations that
we considered necessary for the purpose of our audit and we were unable to determine whether
adequate accounting records had been kept.
Under the Companies Act 2006 we are also required to report to you if, in our opinion:
● returns adequate for our audit have not been received from branches not visited by us; or
● the parent Company financial statements are not in agreement with the accounting records
and returns.
Directors’ remuneration
We have nothing to report in respect
of these matters.
Under the Companies Act 2006 we are also required to report if in our opinion certain disclosures of
directors’ remuneration have not been made or the part of the directors’ remuneration report to be
audited is not in agreement with the accounting records and returns.
We have nothing to report in respect
of these matters.
OTHER MATTERS
Auditor tenure
Following the recommendation of the Audit and Risk Committee, we were appointed by the Audit and Risk Committee on 10 February 2012
to audit the financial statements for the year ending 31 July 2012 and subsequent financial periods. The period of total uninterrupted
engagement including previous renewals and reappointments of the firm is 6 financial periods, covering the years ending 31 July 2012
to 31 January 2018.
Consistency of the audit report with the additional report to the Audit and Risk Committee
Our audit opinion is consistent with the additional report to the Audit and Risk Committee we are required to provide in accordance with
ISAs (UK).
STATEMENT PURSUANT TO SECTION 837(4) OF THE COMPANIES ACT 2006
Respective responsibilities of directors and the auditor
In addition to their responsibilities described above, the directors are also responsible for considering whether the company, subsequent to
the balance sheet date, has sufficient distributable profits to make a distribution at the time the distribution is made.
Our responsibility is to report whether, in our opinion, the subject matter of our qualification of our auditor’s report on the parent company
financial statements for the year ended 31 January 2018 is material for determining, by reference to those financial statements, whether the
distribution proposed by the company is permitted under section 830 and section 831 of the Companies Act 2006. We are not required to
form an opinion on whether the company has sufficient distributable reserves to make the distribution proposed at the time the distribution
is made.
Opinion
In our opinion the subject matter of the above qualification is not material for determining by reference to these financial statements whether
a distribution of 3.8 pence per share based on the number of shares in issue at 31 January 2018 is permitted under section 830 and section
831 of the Companies Act 2006.
Robert Knight FCA (Senior Statutory Auditor)
for and on behalf of Deloitte LLP
Statutory Auditor
Crawley, United Kingdom
11 June 2018
68 Air Partner plc Annual Report 2018
68 Air Partner plc Annual Report 2018
FINANCIAL STATEMENTS
CONSOLIDATED INCOME STATEMENT
for the year ended 31 January
Year ended 31 January 2018
Restated Year ended 31 January 2017†
Continuing operations
Gross transaction value (GTV)
Revenue
Gross profit
Exceptional items
Administrative expenses
Operating profit
Finance income
Finance expense
Profit before tax
Taxation
Profit for the year
Attributable to:
Owners of the parent company
Earnings/(loss) per share:
Continuing operations
Basic
Diluted
* Before other items (see note 7)
Note
Underlying*
£’000
Other items
£’000
261,317
48,508
36,082
(400)
–
–
–
–
Total
£’000
261,317
48,508
36,082
(400)
(29,792)
(1,011)
(30,803)
5,890
(1,011)
4,879
11
(138)
5,763
(1,390)
4,373
–
–
(1,011)
218
(793)
11
(138)
4,752
(1,172)
3,580
2
3
4
2
9
9
10
Underlying*
£’000
215,829
42,538
31,707
(400)
(26,593)
4,714
39
(96)
4,657
(1,574)
3,083
Other items
£’000
–
–
–
–
(709)
(709)
–
–
(709)
153
(556)
Total
£’000
215,829
42,538
31,707
(400)
(27,302)
4,005
39
(96)
3,948
(1,421)
2,527
4,373
(793)
3,580
3,083
(556)
2,527
12
12
8.4p
8.1p
(1.5)p
(1.5)p
6.9p
6.6p
5.9p
5.8p
(1.1)p
(1.1)p
4.8p
4.7p
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 January
Profit for the year
Other comprehensive income – items that may subsequently be reclassified to profit or loss:
Exchange differences on translation of foreign operations
Total comprehensive income for the year
Attributable to:
Owners of the Parent Company
† Results for year ended 31 January 2017 have been restated; please see note 2 on page 75 for further details.
Year ended
31 January
2018
£’000
Restated
Year ended
31 January
2017†
£’000
3,580
2,527
(372)
3,208
346
2,873
3,208
2,873
Air Partner plc Annual Report 2018 69
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GovernanceStrategic reportFinancial statements
FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 January
Opening equity as at 1 February 2016
(as restated – note 2)
Profit for the year (as restated – note 2)
Exchange differences on translation of
foreign operations
Total comprehensive income for the year
(as restated – note 2)
Issue of shares
Share option movement in the year
Deferred tax on share-based payment
transactions (note 25)
Share options exercised during the year
Remeasurements of post-employment
benefit obligations
Dividends paid (note 11)
Closing equity as at 31 January 2017
(as restated – note 2)
Opening equity as at 1 February 2017
(as restated – note 2)
Profit for the year
Exchange differences on translation of
foreign operations
Total comprehensive income for the year
Share option movement for the year
Issue of shares
Share options exercised during the year
Dividends paid (note 11)
Share
capital
£’000
522
–
–
–
–
–
–
–
–
–
Share
premium
account
£’000
Merger
reserve
£’000
Own
shares
reserve
£’000
Translation
reserve
£’000
Share
option
reserve
£’000
Retained
earnings
as restated
£’000
Total
equity
as restated
£’000
4,814
295
(1,199)
1,064
–
–
–
(59)
–
–
–
–
–
–
–
–
59
–
–
–
–
–
–
–
–
60
–
–
467
–
–
–
346
346
–
–
–
–
–
–
1,708
–
2,993
2,527
10,197
2,527
–
–
(60)
369
–
–
–
–
–
346
2,527
2,873
–
–
(66)
(286)
(23)
–
369
(66)
181
(23)
(2,574)
(2,574)
522
4,755
354
(672)
1,410
2,017
2,571
10,957
Share
capital
£’000
Share
premium
account
£’000
Merger
reserve
£’000
Own
shares
reserve
£’000
Translation
reserve
£’000
Share
option
reserve
£’000
Retained
earnings
as restated
£’000
Total
equity
as restated
£’000
522
4,755
354
(672)
1,410
2,017
–
–
–
–
–
–
–
–
–
–
–
(59)
–
–
–
–
–
–
59
–
–
413
–
–
–
(500)
60
294
–
–
(372)
(372)
–
–
–
–
–
–
–
401
(60)
–
–
(818)
1,038
2,358
2,571
3,580
10,957
3,580
–
(372)
3,580
3,208
–
–
(85)
(2,752)
3,314
(99)
–
209
(2,752)
11,523
Closing equity as at 31 January 2018
522
4,696
70 Air Partner plc Annual Report 2018
70 Air Partner plc Annual Report 2018
COMPANY STATEMENT OF CHANGES IN EQUITY
for the year ended 31 January
Opening equity as at 1 February 2016
(as restated – note 2)
Profit for the year (as restated)
Total comprehensive income for the period
(as restated – note 2)
Issue of shares
Share options movement for the year
Deferred tax on share-based payment transactions
(note 25)
Share options exercised during the year
Dividends paid (note 11)
Closing equity as at 31 January 2017
(as restated – note 2)
Share
capital
£’000
Share
premium
account
£’000
522
4,814
–
–
–
–
–
–
–
–
–
(59)
–
–
–
–
Merger
reserve
£’000
295
–
–
59
–
–
–
–
Own
shares
reserve
£’000
Share
option
reserve
£’000
Retained
earnings
as restated
£’000
Total
equity
as restated
£’000
(1,199)
1,708
–
–
60
–
–
467
–
–
–
(60)
369
–
–
–
4,131
834
834
–
–
(37)
(320)
10,271
834
834
–
369
(37)
147
(2,574)
(2,574)
522
4,755
354
(672)
2,017
2,034
9,010
Share
capital
£’000
Share
premium
account
£’000
Merger
reserve
£’000
Own
shares
reserve
£’000
Share
option
reserve
£’000
Retained
earnings
as restated
£’000
Total
equity
as restated
£’000
Opening equity as at 1 February 2017
(as restated – note 2)
Profit for the year
Total comprehensive income for the year
Issue of shares
Share options movement for the year
Share options exercised during the year
Dividends paid (note 11)
522
4,755
354
(672)
2,017
–
–
–
–
–
–
–
–
(59)
–
–
–
–
–
59
–
–
–
–
–
60
(500)
294
–
–
–
(60)
401
–
–
Closing equity as at 31 January 2018
522
4,696
413
(818)
2,358
2,034
3,389
3,389
–
–
(85)
(2,752)
2,586
9,010
3,389
3,389
–
(99)
209
(2,752)
9,757
Merger reserve
The merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued in an
acquisition partly made by the issue of shares.
Own shares
The own shares reserve represents the cost of shares in Air Partner plc purchased in the market and held by the Air Partner Employee Benefit
Trust to satisfy options under the Group’s share option schemes (see note 30).
Translation reserve
The translation reserve represents the accumulated exchange differences arising from the impact of the translation of subsidiaries with a
functional currency other than pounds sterling.
Share option reserve
The share option reserve relates to the accumulated costs associated with the outstanding share options issued to staff but not exercised.
Air Partner plc Annual Report 2018
71
Air Partner plc Annual Report 2018 71
GovernanceStrategic reportFinancial statements
FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
for the year ended 31 January
Assets
Non-current assets
Goodwill
Other intangible assets
Property, plant and equipment
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Current tax assets
Restricted bank balances
Other cash and cash equivalents
Total cash and cash equivalents
Derivative financial instruments
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Other liabilities
Borrowings
Deferred income and JetCard deposits
Derivative financial instruments
Provisions
Total current liabilities
Net current assets
Long-term liabilities
Borrowings
Deferred consideration
Deferred tax liability
Provisions
Total long-term liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Merger reserve
Own shares reserve
Translation reserve
Share option reserve
Retained earnings
Total equity
31 January
2018
£’000
Restated†
31 January 2017
£’000
Restated†
31 January 2016
£’000
Note
13
14
15
25
17
19
20
18
2u
23
18
21
25
22
27
28
29
30
5,876
5,202
1,191
497
12,766
26,612
683
5,203
17,990
23,193
–
50,488
63,254
(7,269)
(972)
(4,755)
–
(34,351)
(12)
–
(47,359)
3,129
(2,500)
(977)
(775)
(120)
(4,372)
(51,731)
11,523
522
4,696
413
(818)
1,038
2,358
3,314
11,523
3,787
4,956
1,086
533
10,362
25,219
586
1,965
17,830
19,795
–
45,600
55,962
(4,504)
(1,072)
(5,495)
(514)
(30,043)
(9)
–
(41,637)
3,963
(2,443)
(200)
(725)
–
(3,368)
(45,005)
10,957
522
4,755
354
(672)
1,410
2,017
2,571
10,957
3,346
5,038
1,281
143
9,808
23,508
438
2,840
16,951
19,791
36
43,773
53,581
(4,057)
(133)
(7,149)
(514)
(27,602)
–
(421)
(39,876)
3,897
(2,957)
–
(551)
–
(3,508)
(43,384)
10,197
522
4,814
295
(1,199)
1,064
1,708
2,993
10,197
† Results for year ended 31 January 2017 and 2016 have been restated; please see note 2 on page 75 for further details.
These financial statements were approved and authorised for issue by the Board on 11 June 2018 and were signed on its behalf by:
M A Briffa
72 Air Partner plc Annual Report 2018
72 Air Partner plc Annual Report 2018
COMPANY STATEMENT OF FINANCIAL POSITION
for the year ended 31 January
Assets
Non-current assets
Intangible assets
Property, plant and equipment
Investments
Deferred tax assets
Total non-current assets
Current assets
Trade and other receivables
Current tax assets
Restricted bank balances
Other cash and cash equivalents
Total cash and cash equivalents
Derivative financial instruments
Total current assets
Total assets
Current liabilities
Trade and other payables
Current tax liabilities
Other liabilities
Borrowings
Deferred income and JetCard deposits
Derivative financial instruments
Provisions
Total current liabilities
Net current (liabilities)/assets
Long-term liabilities
Borrowings
Deferred consideration
Provisions
Total long-term liabilities
Total liabilities
Net assets
Equity
Share capital
Share premium account
Merger reserve
Own shares reserve
Share option reserve
Retained earnings
Total equity
31 January
2018
£’000
Restated†
31 January 2017
£’000
Restated†
31 January 2016
£’000
Note
14
15
16
25
1,045
616
12,350
178
14,189
17
21,785
566
5,203
2,283
7,486
–
29,837
44,026
(3,540)
(976)
(6,228)
–
(19,914)
(14)
–
(30,672)
(835)
(2,500)
(977)
(120)
(3,597)
(34,269)
9,757
522
4,696
413
(818)
2,358
2,586
9,757
19
20
18
23
18
21
22
27
28
29
30
1,039
726
9,350
24
11,139
13,353
288
1,965
12,237
14,202
–
27,843
38,982
(1,823)
(80)
(6,201)
(514)
(18,702)
(9)
–
993
897
8,587
75
10,552
15,283
337
2,840
12,146
14,986
36
30,642
41,194
(1,608)
–
(6,976)
(514)
(18,702)
–
(166)
(27,329)
(27,966)
514
2,676
(2,443)
(200)
–
(2,957)
–
–
(2,643)
(2,957)
(29,972)
(30,923)
9,010
10,271
522
4,755
354
(672)
2,017
2,034
9,010
522
4,814
295
(1,199)
1,708
4,131
10,271
† Results for year ended 31 January 2017 and 2016 have been restated; please see note 2 on page 75 for further details.
These financial statements were approved and authorised for issue by the Board on 11 June 2018 and were signed on its behalf by:
M A Briffa
Director
Air Partner plc Registered no. 00980675
Air Partner plc Annual Report 2018 73
Air Partner plc Annual Report 2018 73
GovernanceStrategic reportFinancial statements
FINANCIAL STATEMENTS CONTINUED
CONSOLIDATED AND COMPANY STATEMENT OF CASH FLOWS
for the year ended 31 January 2018
Net cash inflow from operating activities
Investing activities
Continuing operations
● Interest received
● Purchases of property, plant and equipment
● Purchases of intangible assets
● Acquisition of subsidiaries
Net cash used in investing activities
Financing activities
Continuing operations
● Dividends paid
● Proceeds on exercise of share options
● Purchase of own shares
● Repayments of borrowings
Net cash used in financing activities
Net increase/(decrease) in cash and cash equivalents
Opening cash and cash equivalents
Effect of changes in foreign exchange rates
Closing cash and cash equivalents
Note
33
15
14
31
Group
Company
Year
ended
31 January
2018
£’000
10,243
Year
ended
31 January
2017
as restated
£’000
1,874
Year
ended
31 January
2018
£’000
Year
ended
31 January
2017
as restated
£’000
(668)
1,926
11
(708)
(204)
(1,974)
(2,875)
(2,752)
269
(500)
(457)
(3,440)
3,928
19,795
(530)
23,193
39
(96)
(173)
(362)
(592)
4
(170)
(185)
(2,200)
(2,551)
34
(53)
(173)
(469)
(661)
(2,574)
181
–
(514)
(2,907)
(1,625)
19,791
1,629
19,795
(2,752)
(2,574)
269
(500)
(457)
(3,440)
(6,659)
147
–
(514)
(2,941)
(1,676)
14,202
14,986
(57)
892
7,486
14,202
JetCard cash
The closing cash and cash equivalents balance can be further analysed into ‘JetCard cash’ (being restricted and unrestricted cash received by
the Group and Company in respect of its JetCard product) and ‘non-JetCard cash’ as follows:
JetCard cash restricted in its use
JetCard cash unrestricted in its use (as restated – note 2)
Total JetCard cash
Non-JetCard cash (as restated – note 2)
Cash and cash equivalents
Group
Company
2018
£’000
5,203
10,688
15,891
7,302
23,193
2017
as restated
£’000
1,965
16,657
18,622
1,173
19,795
2018
£’000
5,203
2,283
7,486
2017
as restated
£’000
1,965
13,324
15,289
–
(1,087)
7,486
14,202
74 Air Partner plc Annual Report 2018
74 Air Partner plc Annual Report 2018
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 31 January 2018
1 GENERAL INFORMATION
Air Partner plc (‘the Company’) is a company incorporated and domiciled in England and Wales under registration number 00980675. The
address of the registered office is 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA. The nature of the Group’s operations and
its principal activities are set out in the Strategic Report on pages 1 to 33.
2 ACCOUNTING POLICIES
a) Basis of preparation of financial statements and accounting restatement
The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRSs) 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 company has been able to prepare its 31 January 2018 balance sheet fully in accordance with applicable
accounting standards.
The financial statements are presented in sterling, being the currency of the primary economic environment in which the Group operates.
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.
As a result of the accounting issue explained in the Financial Review and Audit and Risk Committee Report, the company has had to estimate
in which historical accounting periods the £4.4m (£4.0m net of tax) accounting issue arose between years ended 31 July 2011 and 31 January
2018 as accurate prior period accounting records could not be recreated. Of the £4.4m identified, £0.9m is a known issue relating to the year
ended 31 July 2011.
The directors have spread the accounting error of £4.4m as follows:
Accounting periods
Years ended 31 July 2011 to 31 January 2016
Year ended 31 January 2017
Year ended 31 January 2018
Exceptional
item recorded
in period
£’000
Cumulative
financial effect
£’000
3,600
400
400
3,600
4,000
4,400
A straight-line approach was used as this was deemed the fairest and most appropriate way to account for the issue.
As the causes of this adjustment are believed have resulted from matters which the directors consider principally related to the underlying
business, the directors have reported these amounts as exceptional items within the underlying operating profits.
Accordingly, the comparative balance sheet and income statement line items have been restated as follows:
Consolidated
Line item description
Trade and other receivables
Trade and other payables
Other liabilities
Current tax assets
Deferred income and JetCard deposits
Net current assets
Net assets
JetCard cash unrestricted in its use
Non-JetCard cash
Operating profit (underlying)
Operating profit
Tax
Net profit (underlying)
Net profit
Underlying earnings per share (basic)
Underlying earnings per share (diluted)
Earnings per share (basic)
Earnings per share (diluted)
75 Air Partner plc Annual Report 2018
31 January
2017
as previously
stated
£’000
31 January
2017
as restated
£’000
31 January
2016
as previously
stated
£’000
31 January
2016
as restated
£’000
25,404
25,219
23,708
23,508
(4,359)
(4,463)
506
(4,504)
(5,495)
586
(3,911)
(5,633)
438
(4,057)
(7,149)
438
(27,350)
(30,043)
(25,807)
(27,602)
7,940
14,934
13,901
3,929
5,114
4,405
3,963
10,957
16,657
1,173
4,714
4,005
7,554
13,854
13,936
2,840
4,386
3,208
3,897
10,197
15,731
1,045
3,886
2,708
(1,501)
(1,421)
(1,230)
(1,230)
3,403
2,847
8.4p
8.1p
6.9p
6.6p
3,083
2,527
5.9p
5.8p
4.8p
4.7p
3,391
2,294
2,891
1,794
6.7
6.7
4.5
4.5
5.7
5.7
3.5
3.5
Air Partner plc Annual Report 2018 75
GovernanceStrategic reportFinancial statements NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
2 ACCOUNTING POLICIES CONTINUED
Company
Line item description
Trade and other receivables
Trade and other payables
Other liabilities
Current tax assets
Deferred income and JetCard deposits
Net current assets
Net assets
Net profit
31 January
2017
as previously
stated
£’000
31 January
2017
as restated
£’000
31 January
2016
as previously
stated
£’000
13,539
(1,677)
(5,170)
208
13,353
(1,823)
(6,201)
288
15,483
(1,462)
(5,460)
337
31 January
2016
as restated
£’000
15,283
(1,608)
(6,976)
337
(16,008)
(18,701)
(16,906)
(18,702)
4,491
12,987
1,154
514
9,010
834
6,334
13,928
5,636
2,676
10,271
5,136
The accounting policies adopted are consistent with those of the previous financial year, except as described in the following sections.
Adoption of new and revised standards
The following new and revised Standards and Interpretations have been adopted in the current year.
● IAS 12 Income taxes: clarify recognition of deferred tax assets for unrealised losses; effective for periods beginning on or after
1 January 2017
● Annual Improvements to IFRS standards 2014-2016 cycle; effective for periods beginning on or after 1 January 2017
● IAS 7 Statement of cash flows: clarify disclosure requirements; effective for periods beginning on or after 1 January 2017
Adoption of the above has had no impact on the disclosures or on the amounts recognised in the consolidated financial statements.
New standards, amendments and interpretations in issue but not yet effective
The following standards, amendments and interpretations to existing standards have been published. They are not mandatory for the current
accounting period, and have not been early adopted by the Group.
● IFRS 9: Financial Instruments; effective for periods beginning on or after 1 January 2018:
The Group will apply IFRS 9 from 1 February 2018. The Group has elected not to restate comparatives on initial application of IFRS 9. The
full impact of adopting IFRS 9 on the Group’s consolidated financial statements will depend on the financial instruments that the Group
has during 2018/19 as well as on economic conditions and judgements made as at the year end. The Group has performed a preliminary
assessment of potential impact of adopting IFRS 9 based on the financial instruments and hedging relationships as at the date of initial
application of IFRS 9 (1 February 2018).
● IFRS 15: Revenue from Contracts with Customers; effective for periods beginning on or after 1 January 2018
IFRS 15 will supersede the current revenue recognition guidance including IAS 18 Revenue, IAS 11 Construction Contracts and the related
Interpretations when it becomes effective for accounting periods beginning on or after 1 January 2016. The group is required to adopt IFRS
15 for the year ending 31 January 2019. Based on impact analysis performed by management this is not expected to have a material impact
to the income statement on the group or parent company financial statements.
Under IFRS 15, receivables and deferred income are not recognised until either there is a contractual right to receive cash or a service has
been provided, whichever is earlier. The Group’s balance sheet will be impacted by the change. Amounts have not yet been quantified.
● IFRIC 22: Foreign Currency Transactions and Advance Consideration; not yet EU endorsed
● Amendments to IFRS 2 (Jun 2016): Classification and Measurement of Share-based Payment Transactions; not yet EU endorsed
● Amendments to IFRS 4 (Sept 2016): Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts; effective for periods beginning
on or after 1 January 2018
● Amendments to IAS 40 (Dec 2016): Transfers of Investment Property; not yet EU endorsed
● Annual Improvements to IFRSs: 2014-16 Cycle (Dec 2016): Annual Improvements to IFRSs: 2014-16 Cycle - IFRS 1 and IAS 28 Amendments;
not yet EU endorsed
● IFRS 16: Leases; effective for periods beginning on or after 1 January 2019:
IFRS 16 introduces a comprehensive model for the identification of lease arrangements and accounting treatments for both lessors
and lessees. IFRS 16 will supersede the current lease guidance including IAS 17 Leases and the related interpretations when it becomes
effective for accounting periods beginning on or after 1 January 2019. The group currently expects to adopt IFRS 16 for the year ending
31 January 2020. No decision has been made about whether to use any of the transitional options in IFRS 16.
76 Air Partner plc Annual Report 2018
76 Air Partner plc Annual Report 2018
2 ACCOUNTING POLICIES CONTINUED
● IFRIC 23: Uncertainty over Income Tax Treatments; not yet EU endorsed
● Amendments to IFRS 9 (Oct 2017): Prepayment Features with Negative Compensation; not yet EU endorsed
● Amendments to IAS 28 (Oct 2017): Long-term Interests in Associates and Joint Ventures; not yet EU endorsed
● Annual Improvements to IFRS Standards 2015–2017 Cycle (Dec 2017): Annual Improvements to IFRSs: 2014-16 Cycle - IFRS 3, IFRS 11,
IAS 12 and IAS 23 Amendments; not yet EU endorsed
● IFRS 17: Insurance Contracts; not yet EU endorsed
There are no standards and interpretations in issue but not yet adopted which, in the opinion of the directors, will have a material effect on
the reported income or net assets of the Group or Company.
b) Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company
(its subsidiaries) made up to 31 January each year. Control is achieved where the Company has the power to govern the financial and
operating policies of an investee entity so as to obtain benefits from its activities.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date
of acquisition or up to the effective date of disposal, as appropriate. Where necessary, adjustments are made to the financial statements of
subsidiaries to bring the accounting policies used into line with those used by the Group. All intra-Group transactions, balances, income and
expenses are eliminated on consolidation.
c) Critical accounting judgements and sources of estimation uncertainty
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application
of policies and reported amounts of assets and liabilities, income and expenses. These estimates and associated assumptions are based
on historical experience and various other factors believed to be reasonable under the circumstances. Actual results could differ from
these estimates. These underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in
the period in which the estimate is revised if the revision affects only that period; or in the period of the revision and future periods if these
are also affected.
Critical judgements in applying the group’s accounting policies
The following are the critical judgements, apart from those involving estimations (which are dealt with separately below), that the directors
have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised in
financial statements.
Revenue recognition
One of the key judgements in relation to revenue recognition is the judgement of whether the Group is acting as principal or agent in
transactions with customers. In making its judgement, management considers the detailed terms of sales transactions with customers in
order to determine whether the Group is performing as the principal obligor. This assessment determines how revenue is recognised as
either principal or agent in accordance with IAS 18 Revenue.
Key sources of estimation uncertainty
The key assumptions concerning the future, and other key sources of estimation uncertainty at the reporting period, that may have a significant
risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are discussed below:
Impairment
The directors consider the recoverable amount of goodwill allocated to Baines Simmons Limited (Consulting & Training) of £1,072,000
to be sensitive to certain key assumptions in the Company’s impairment model. This model is based upon forecasts of anticipated market
conditions that have been considered and approved by the Board. These forecasts are then discounted back to net present value using
a weighted average cost of capital. The key assumptions used in the forecasts have been described further in note 13.
Valuation of acquisition goodwill and intangibles
An intangible resource acquired with a subsidiary undertaking is recognised as an intangible asset if it is separable from the acquired
business or arises from contractual or legal rights, and it is expected to generate future economic benefits and its fair value can be
measured reliably. The identification of intangible assets acquired as part of business combinations requires judgement. For each business
combination the balance of goodwill to other intangible assets is reviewed for appropriateness. Acquired intangible assets, comprising
brands, customer relationships, other mandates and training materials, are amortised through the Consolidated income statement on a
straight-line basis over their estimated economic lives of between one and 20 years. Significant judgement is required in determining the fair
value and economic lives of acquired intangible assets. External valuations are obtained for significant acquisitions. Details of the intangible
assets recognised on acquisition during the year are disclosed in note 31.
Air Partner plc Annual Report 2018 77
Air Partner plc Annual Report 2018 77
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
2 ACCOUNTING POLICIES CONTINUED
d) 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 Strategic Report on pages 1 to 39. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are
described in the Strategic Report on pages 1 to 39. In addition, note 23 to the financial statements includes 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.
The Group has considerable cash resources and little debt. As a consequence, the directors believe that the Group is well placed to manage
its business risks successfully despite the current uncertain economic outlook.
As a result of the fall in the Company’s share price post year end, the company experienced a technical default on its revolving credit facility.
Upon request, the bank immediately provided a formal waiver of this matter and have reiterated their ongoing support. The Company is not
currently reliant on the available banking facilities as it is in a net cash position.
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.
e) Foreign currency
i) Foreign currency transactions
Transactions in foreign currencies are translated at the foreign exchange rate prevailing at the time of the transaction. Monetary assets
and liabilities denominated in foreign currencies at the reporting date are translated to the functional currency of the entity at the foreign
exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of
the transaction.
ii) Financial statements of foreign operations
The assets and liabilities of foreign operations are translated at exchange rates prevailing at the reporting date. Income and expenses
are translated at the average rate for the period. Exchange differences arising are classified as equity and transferred to the Group’s
translation reserve.
f) Goodwill
Goodwill arising in a business combination is recognised as an asset at the date that control is acquired (the acquisition date). Goodwill is
measured as the excess of the sum of the consideration transferred, the amount of any non-controlling interest in the acquiree and the fair
value of the acquirer’s previously held equity interest (if any) in the entity over the net of the acquisition date amounts of the identifiable
assets acquired and the liabilities assumed.
Goodwill denominated in currencies other than sterling is revalued at the rate of exchange ruling at balance sheet date.
If, after reassessment, the Group’s interest in the fair value of the acquiree’s identifiable net assets exceeds the sum of the consideration
transferred, the amount of any non-controlling interest in the acquiree and the fair value of the acquirer’s previously held equity interest in
the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
Goodwill is not amortised but is reviewed for impairment at least annually. For the purpose of impairment testing, goodwill is allocated
to each of the Group’s cash-generating units expected to benefit from the synergies of the combination. Cash-generating units to which
goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired.
If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to
reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit prorata on the basis of the carrying
amount of each asset in the unit. An impairment loss recognised for goodwill is not reversed in a subsequent period.
On disposal of a subsidiary the attributable amount of goodwill is included in the determination of the profit or loss on disposal.
g) Intangible assets
Internally generated assets
Internally generated intangible assets developed by the Group are recognised only if all of the following conditions are met:
● an asset is created that can be identified
● it is probable that the asset created will generate future economic benefits
● the development cost of the asset can be measured reliably.
Other research expenditure is written off in the period in which it is incurred.
Amortisation is charged to the income statement so as to write off the cost of assets less their residual values over their estimated useful
lives, which in the case of software is 10%-20% per annum on a straight-line basis. The carrying value of intangible assets with a finite life
is reviewed for impairment whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
78 Air Partner plc Annual Report 2018
78 Air Partner plc Annual Report 2018
2 ACCOUNTING POLICIES CONTINUED
g) Intangible assets continued
Other intangible assets
Intangible assets arising on acquisition are stated at fair value less accumulated amortisation and any impairment losses. Amortisation of the
carrying value of intangible assets arising on acquisition is charged to the income statement over the estimated useful life, which is as follows:
Brands
Mandates / order book
Customer relationships
Training materials
Software
10% per annum on a straight-line basis
100% per annum
5%-16.7% per annum on a straight-line basis
10% per annum on a straight-line basis
5%-25% per annum on a straight line basis
The carrying value of intangible assets with a finite life is reviewed for impairment whenever events or changes in circumstances indicate that
the carrying value may not be recoverable.
h) Property, plant and equipment
Items of property, plant and equipment are stated at cost less accumulated depreciation and any impairment losses.
Depreciation is charged to the income statement so as to write off the cost of assets less their residual values over their estimated useful
lives, as follows:
Short leasehold property
Leasehold improvements
Fixtures and equipment
Motor vehicles
over the life of the lease on a straight-line basis
over the life of the lease on a straight-line basis
10%–33% per annum on a straight-line basis
25% reducing balance
i) Impairment of tangible and intangible assets excluding goodwill
At each balance sheet date, the Group reviews the carrying amounts of its tangible and intangible assets to determine whether there is any
indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated
to determine the extent of the impairment loss (if any). Where the asset does not generate cash flows that are independent from other assets,
the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs. An intangible asset with an indefinite
useful life is tested for impairment at least annually and whenever there is an indication that the asset may be impaired.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and
the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the
asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless
the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised
estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been
determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss
is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the
impairment loss is treated as a revaluation increase.
j) Assets in disposal groups classified as held for sale
Non-current assets and disposal groups are classified as held for sale only if they are available for immediate sale in their present condition
and a sale is highly probable and expected to be completed within one year from the date of classification. Such assets are measured at the
lower of carrying amount and fair value less costs to sell and are not depreciated or amortised.
k) Financial instruments
Financial assets
The Group classifies its financial assets in the following categories: at fair value through profit or loss, and loans and receivables. The
classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its
financial assets at initial recognition.
Purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell the
asset. Financial assets are initially recognised at fair value plus transaction costs, except for financial assets held at fair value through
profit or loss which are initially recognised at fair value, and transaction costs are expensed in the income statement. Financial assets are
derecognised when the rights to receive cash flows have expired or have been transferred and the Group has transferred substantially all
risks and rewards of ownership.
Air Partner plc Annual Report 2018 79
Air Partner plc Annual Report 2018 79
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
2 ACCOUNTING POLICIES CONTINUED
k) Financial instruments continued
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss are financial assets held for trading. A financial asset is classified in this category
if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they are
designated as hedges. Assets in this category are classified as current assets if they are expected to be settled within 12 months; otherwise,
they are classified as non-current. Financial assets at fair value through profit or loss are initially recognised at fair value at the date the
contract is entered into, and subsequently gains or losses arising from changes in their fair value are presented in the income statement
within administrative expenses in the period in which they arise. The Group’s financial assets at fair value through profit or loss comprise
derivative financial instruments.
Derivative financial instruments
The Group enters into derivative financial instruments, including foreign exchange forward contracts, to manage its exposure to foreign
exchange rate risk. Derivatives not designated into an effective hedge relationship are classified as a financial asset or a financial liability.
The Group has not designated any derivatives as hedging items and therefore does not apply hedge accounting.
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.
They are included in current assets, except for maturities greater than 12 months at the end of the reporting period. These are classified
as non-current assets. Loans and receivables are subsequently carried at amortised cost using the effective interest method. The Group’s
loans and receivables comprise trade receivables, other receivables, accrued income and cash and cash equivalents in the balance sheet.
Trade receivables
Trade receivables are amounts due from customers for services performed in the ordinary course of business. If collection is expected in one
year or less, they are classified as current assets. If not, they are presented as non-current assets.
Other receivables
Other receivables are other amounts contractually due from third parties, for example deposits receivable for leased assets.
Accrued income
Accrued income is revenue that has been contracted and recognised in accordance with the Group’s accounting policies, but not yet invoiced.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits with an original maturity of three months or less. The carrying amount
of these assets approximates their fair value.
Financial liabilities
The Group classifies its financial liabilities in the following categories: at fair value through profit or loss, and at amortised cost. The
classification depends on the purpose for which the financial liabilities were acquired. Management determines the classification of its
financial liabilities at initial recognition. Financial liabilities are recognised when the Group becomes a party to the contractual agreement
of the instrument.
Financial liabilities at fair value through profit or loss
Financial liabilities at fair value through profit or loss are financial liabilities held for trading. A financial liability is classified in this
category if acquired principally for the purpose of selling in the short term. Derivatives are also categorised as held for trading unless they
are designated as hedges. Liabilities in this category are classified as current liabilities if they are expected to be settled within 12 months;
otherwise, they are classified as non-current. Financial liabilities at fair value through profit or loss are initially recognised at fair value at
the date the contract is entered into, and subsequently gains or losses arising from changes in their fair value are presented in the income
statement within administrative expenses in the period in which they arise. The Group’s financial liabilities at fair value through profit or
loss comprise derivative financial instruments.
Financial liabilities at amortised cost
The Group’s financial liabilities at amortised cost comprise trade payables, other payables, accrued costs and borrowings. They are initially
measured at fair value, net of transaction costs, and are subsequently measured at amortised cost using the effective interest method.
Trade payables
Trade payables are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Trade
payables are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities.
Other payables
Other payables that are financial liabilities at amortised cost are certain customer deposits which are contractually refundable to customers
on demand.
80 Air Partner plc Annual Report 2018
80 Air Partner plc Annual Report 2018
2 ACCOUNTING POLICIES CONTINUED
k) Financial instruments continued
Accrued costs
Accrued costs are costs that have been contracted and recognised in accordance with the Group’s accounting policies, but for which invoices
have not yet been received or payments made, as applicable.
Borrowings
Borrowings consist of an interest bearing bank loan which is recorded at fair value.
Offsetting financial instruments
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset
the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.
Other items
The directors believe that the underlying profit and earnings per share measures provide additional useful information for shareholders
on the underlying performance of the business. These measures are consistent with how underlying business performance is measured
internally. The underlying profit before tax measure is not a recognised profit measure under IFRS and may not be directly comparable
with adjusted profit measures used by other companies. The adjustments made to reported profit before tax are to exclude the following:
● restructuring costs
● significant and one-off impairment charges and provisions that distort underlying trading
● costs relating to strategy changes that are not considered normal operating costs of the underlying business
● acquisition costs
● amortisation of intangible assets recognised on acquisition
● acquisition consideration classified as an employee cost under IFRS 3 Business Combinations.
Equity instruments issued by the Group
An equity instrument is a contract that evidences a residual interest in the asset of an entity after deducting all of its liabilities. Equity
instruments are recorded at the proceeds received, net of direct issue costs. The Group’s equity instruments comprise share capital in
the balance sheet.
l) Provisions
Provisions are recognised when the Group has a present obligation as a result of a past event, and it is probable that the Group will be
required to settle that obligation. Provisions are measured at the directors’ best estimate of the expenditure required to settle the obligation
at the reporting date, and are discounted to present value.
A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid
expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to
those affected by it.
m) Revenue
Revenues are derived from aircraft chartering services, aircraft remarketing services, aircraft inspection services and the provision of training
and safety consulting services. In line with IAS 18 Revenue, where a contract has been determined as principal, the full amount of the invoice
is recognised as revenue. Where Air Partner is not acting as principal, revenue is recognised on an agency basis and only gross margin is
reported as revenue. Revenue is measured as the fair value of the consideration received for the provision of goods and services to third-
party customers and is stated exclusive of value added tax and is only recognised where there is a contractual right to receive consideration
for work undertaken, the amount can be measured reliably and it is probable that future economic benefits will flow.
Aircraft chartering services
Amounts receivable in respect of aircraft chartering services are recognised as revenue when the economic benefits are deemed to have
passed to the customer, which is generally the flight date. In instances where the Group is acting as agent, the net amount receivable by the
Group is recognised as revenue. In instances where the Group is acting as principal, the full amount of the contract is recognised as revenue.
Aircraft remarketing services
Air Partner Remarketing’s (formerly Cabot Aviation) principal activity is that of an aircraft remarketing broker. Fees earned in respect of these
services are recognised when they become payable in accordance with the terms of the contract with the customer.
Aircraft inspection services
Aircraft registered with the Isle of Man Aircraft Registry, which is managed by Baines Simmons Limited, require an annual inspection.
Amounts receivable in respect of such inspections are recognised as revenue once the aircraft has been inspected.
Air Partner plc Annual Report 2018 81
Air Partner plc Annual Report 2018 81
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
2 ACCOUNTING POLICIES CONTINUED
m) Revenue continued
Provision of aviation-related training and safety consulting services
Baines Simmons Limited provides aviation related specialist training and consultancy services. Revenue is recognised by reference to the
stage of completion of the contract determined by the value of the services provided at balance sheet date as a proportion of the total value
of the assignment. Amounts in respect of unbilled services provided to clients are recognised as revenue at balance sheet date.
n) Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief
operating decision maker, who is responsible for resource allocation and assessing performance of the operating segments, is considered to
be the Board. The nature of the operating segments is set out in note 4.
o) Share-based payments
From time to time the Group will grant options to employees to subscribe for ordinary shares in the Company. The fair value of options
granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date using
the Monte Carlo method and spread over the period during which employees become unconditionally entitled to the options, based on
management’s estimate of the number of options which will ultimately vest, adjusting at each reporting date for the effect of non-market
based vesting conditions.
p) Retirement benefit costs
Payments to defined contribution retirement benefit schemes are charged as an expense in the period in which the employees render
service. Payments made to state-managed retirement benefit schemes are dealt with as payments to defined contribution schemes
where the Group’s obligations under the schemes are equivalent to those arising in a defined contribution retirement benefit scheme.
q) Taxation
The tax expense represents current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting
date, and any adjustments to the tax payable in respect of previous years.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amount of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation of taxable profit and is accounted for using the balance sheet
liability method. Deferred tax liabilities are recognised for all temporary differences and deferred tax assets are recognised to the extent that
it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities
are not recognised if the temporary differences arise from goodwill or from the initial recognition (other than in a business combination) of
other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit.
Deferred tax is calculated at the tax rates that are enacted or substantively enacted at the reporting date.
r) Gross transaction value
Gross transaction value (GTV) represents the total value invoiced to clients and is stated exclusive of value added tax.
s) Leasing
Leases are classified as finance leases whenever the terms of the lease transfer all, or substantially all, of the risks and rewards of ownership
to the lessee. All other leases are classified as operating leases. Rental income or expenditure from operating leases is recognised on a
straight-line basis over the lease term.
t) Dividends
Final dividends on ordinary shares are recognised as a liability in the period in which the dividends are approved by the Company’s
shareholders. Dividends are recognised as a liability in the period in which they are approved.
u) Deferred income
Deferred income is comprised of amounts received or receivable from customers in respect of which services are yet to be provided or flights
that are yet to occur.
For contracts where the company is the principal, the full amount of deferred revenue will be recognised within revenue upon performance of
services. For contracts where the company is acting as agent, the amount of future revenue to be recognised will be purely the company’s
agency commission element of these amounts.
82 Air Partner plc Annual Report 2018
82 Air Partner plc Annual Report 2018
3 REVENUE
An analysis of the Group’s revenue is as follows:
Continuing operations
Aircraft broking
Aircraft remarketing
Aircraft inspection
Safety Consulting and Training
2018
£’000
2017
£’000
40,547
35,992
1,049
1,142
5,770
760
1,469
4,317
48,508
42,538
Included in revenue is approximately £17,164,000 (2017: £8,375,000) which arose from sales to the Group’s largest two customers
(2017: largest customer). No other customers contributed more than 10% to the Group’s revenue in 2018 or 2017.
4 SEGMENTAL ANALYSIS
The services provided by the Group consist of chartering different types of aircraft and related aviation services.
The Group has four segments: Commercial Jets, Private Jets, Freight and Consulting & Training. Air Partner Remarketing’s (formerly Cabot
Aviation) results are aggregated into Commercial Jets. 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, assets and liabilities reviewed by the
Board (which is the chief operating decision maker) are prepared on a basis consistent with those that are reported in the financial statements.
The Board does not review revenue, 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 2018
Continuing operations
Segmental gross profit
Depreciation and amortisation
Underlying operating profit
Other items (see note 7)
Segment result
Finance income
Finance expense
Profit before tax
Tax
Profit for the year
Year ended 31 January 2017 (as restated –note 2)
Continuing operations
Segmental gross profit
Depreciation and amortisation
Underlying operating profit
Other items (see note 7)
Segment result
Finance income
Finance expense
Profit before tax
Tax
Profit for the year
Commercial
Jets
£’000
Private
Jets
£’000
Freight
£’000
Consulting
& Training
£’000
Corporate
costs
£’000
17,336
10,586
3,366
4,794
(211)
–
(593)
Total
£’000
36,082
(1,129)
–
–
(325)
3,821
(747)
3,074
1,081
1,761
561
(1,334)
5,890
–
–
(264)
–
1,081
1,761
297
(1,334)
(1,011)
4,879
11
(138)
4,752
(1,172)
3,580
Commercial
Jets
as restated
£’000
Private
Jets
£’000
14,124
10,236
(411)
(267)
3,360
2,491
(182)
3,178
–
2,491
Freight
£’000
1,113
–
233
–
233
Consulting
& Training
£’000
6,234
(102)
Corporate
costs
£’000
Total
as restated
£’000
–
–
31,707
(780)
615
(1,985)
4,714
(399)
216
(128)
(709)
(2,113)
4,005
39
(96)
3,948
(1,421)
2,527
Air Partner plc Annual Report 2018 83
Air Partner plc Annual Report 2018 83
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
4 SEGMENTAL ANALYSIS CONTINUED
The company is domiciled in the UK but due to the nature of the Group’s operations, a significant amount of gross profit is derived from
overseas countries. The Group reviews gross profit based upon location of the assets used to generate that gross profit. Apart from the UK,
no single country is deemed to have material non-current asset levels other than goodwill in relation to the French operation of £977,000.
The Board also reviews information on a geographical basis based on parts of the world which are considered to be key to operational
activities. As a result the following additional information is provided showing a geographical split of the UK, Europe, the USA and the
Rest of the World:
Continuing operations
Year ended 31 January 2018
Gross profit
Non-current assets (excluding deferred tax assets)
Year ended 31 January 2017 (as restated – note 2)
Gross profit
Non-current assets (excluding deferred tax assets)
Europe can be further analysed as:
Continuing operations
Year ended 31 January 2018
Gross profit
Year ended 31 January 2017 (as restated – note 2)
Gross profit
UK
£’000
Europe
£’000
USA
£’000
Rest of
the World
£’000
Total
£’000
19,030
11,875
18,812
8,696
9,795
351
8,930
1,090
6,198
40
3,771
39
1,059
3
36,082
12,269
194
4
31,707
9,829
France
£’000
Germany
£’000
Italy
£’000
Other
£’000
Total
£’000
3,506
2,847
2,227
1,215
9,795
3,047
2,547
1,854
1,482
8,930
5 OPERATING PROFIT
Operating profit for the year has been arrived at after charging/(crediting) the following:
Continuing operations
Net foreign exchange loss
Change in the fair value of derivative financial instruments
Depreciation of property, plant and equipment
Amortisation of intangible fixed assets – acquired
Amortisation of intangible fixed assets – other
Impairment of trade receivables
Operating lease rentals – land and buildings
Operating lease rentals – other
Staff costs (see note 8)
2018
£’000
121
3
670
280
179
52
227
22
2017
£’000
20
45
347
305
128
34
283
66
19,525
18,453
84 Air Partner plc Annual Report 2018
84 Air Partner plc Annual Report 2018
6 AUDITOR’S REMUNERATION
Fees payable to the principal auditor and its network firms for audit and other services are disclosed below:
The analysis of auditor’s remuneration is as follows:
Fees payable to the Company’s auditor for the audit of the Company’s annual financial statements
Fees payable to the Company’s auditor and its associates for the audit of subsidiaries pursuant to legislation
(including that of countries and territories outside the UK)
Total audit fees
Fees payable to the Company’s auditor and its associates for other services to the Group:
Audit related assurance services
Other non-audit services
Total non-audit fees
7 OTHER ITEMS
Continuing operations
Restructuring costs
Amortisation of purchased intangibles
Acquisition costs
Non-cash acquisition related costs
Tax effect of other items
Other items after taxation
2018
£’000
2017
£’000
143
85
228
143
65
208
2018
£’000
2017
£’000
37
–
37
2018
£’000
(279)
(277)
(368)
(87)
(1,011)
218
(793)
22
4
26
2017
£’000
(183)
(304)
(128)
(94)
(709)
153
(556)
Restructuring costs relate to changes to the management and finance structure made during the year.
8 STAFF COSTS
The average number of people employed by the Group (including directors) during the year, analysed by category was as follows:
Continuing operations
Operations
Administration
The aggregate payroll costs comprised:
Continuing operations
Wages and salaries
Social security costs
Pension costs
Share-based payments
2018
Number
2017
Number
186
81
267
2018
£’000
15,922
2,865
445
293
179
78
257
2017
£’000
15,537
2,219
506
191
19,525
18,453
The Group contributes to personal pension plans of certain employees and this cost is charged to the income statement in the period in
which it is incurred.
Full disclosure of directors’ emoluments, share options and directors’ pension entitlements which form part of their remuneration packages,
and their interests in the Company’s share capital are disclosed in the Directors’ remuneration report.
Air Partner plc Annual Report 2018 85
Air Partner plc Annual Report 2018 85
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
9 FINANCE INCOME AND EXPENSE
Continuing operations
Finance income
Interest on bank deposits
Continuing operations
Finance expense
Interest on loans and bank overdrafts
10 TAXATION
Current tax:
UK corporation tax (as restated –note 2)
Foreign tax
Current tax adjustments in respect of prior years (UK)
Current tax adjustments in respect of prior years (Overseas)
Deferred tax (see note 25)
Total tax
Of which:
Tax on underlying profit
Tax on other items (see note 7)
2018
£’000
2017
£’000
11
39
2018
£’000
2017
£’000
138
96
Continuing operations
2017
as
restated
£’000
448
822
376
66
1,712
(291)
1,421
1,574
(153)
1,421
2018
£’000
1,086
163
(60)
–
1,189
(17)
1,172
1,390
(218)
1,172
Corporation tax in the UK was calculated at 19.16% (2017: 20%) of the estimated assessable profit for the period. Taxation for other
jurisdictions was calculated at the rates prevailing in the respective jurisdictions.
The charge for the period can be reconciled to the profit per the consolidated income statement as follows:
Profit from continuing operations before tax
Accounting profit before tax
Tax at the UK corporation tax rate of 19.16% (2017: 20%; as restated –note 2)
Differences in tax rates
Effect of changes in tax rates
Tax effect of items that are not recognised in determining taxable profit
Tax effect of different tax rates of subsidiaries operating in other jurisdictions
Current tax adjustments in respect of prior years
Deferred tax not recognised
Options deductions
Total tax charge
2018
£’000
4,752
4,752
910
15
89
212
7
(7)
78
(132)
1,172
2017
as restated
£’000
3,948
3,948
790
–
(41)
64
212
442
22
(68)
1,421
The UK corporation tax rate decreased from 20% to 19% from 1 April 2017. The impact on the tax charge is shown above.
Further reductions to the UK corporation tax rate have been announced. A reduction to 19% effective from 1 April 2017 and to 17% on 1 April
2020 was substantively enacted on 16 October 2016 and the deferred tax balance has been adjusted to reflect this change (see note 25).
86 Air Partner plc Annual Report 2018
86 Air Partner plc Annual Report 2018
11 DIVIDENDS
Amounts recognised as distributions to owners of the parent company
Final dividend for the year ended 31 January 2017 of 3.6 pence per share
(Final dividend the year ended 31 January 2016 of 3.4 pence)
Interim dividend for the year ended 31 January 2018 of 1.7 pence per share
(Interim dividend for the year ended 31 January 2017 of 1.6 pence)
2018
£’000
2017
£’000
1,869
1,741
883
833
2,752
2,574
The directors propose a final dividend for the year ended 31 January 2018 of 3.8 pence per share, subject to shareholder approval at the
Annual General Meeting to be held on 11 July 2018.
The Air Partner Employee Benefit Trust, which held 402,690 ordinary shares of 1p each at 31 January 2018 (2017: 341,820 ordinary shares of
1p each) representing 0.70% (2017: 0.65%) of the Company’s issued share capital is not entitled to receive dividends. A further 272,731
ordinary shares of 1p each (2017: 413,640 ordinary shares of 1p each) shares are held by the Trust in a nominee capacity for one (2017: two)
beneficiaries of the Trust.
12 EARNINGS PER SHARE
The calculation of the basic and diluted earnings per share is based on the following data:
Number of shares
Weighted average number of ordinary shares for the calculation of basic earnings per share
Effect of dilutive potential ordinary shares: share options
Weighted average number of ordinary shares for the calculation of diluted earnings per share
From continuing operations
Earnings
Profit attributable to owners of the Parent Company (as restated –note 2)
Adjustment to exclude other items
Underlying earnings for the calculation of basic and diluted earnings per share
2018
Number
2017
Number
52,217,565 52,361,659
1,133,083
2,076,265
54,293,830 53,494,742
2018
£’000
2017
as restated
£’000
3,580
793
4,373
2,527
556
3,083
On 25 January 2017, the Company’s shareholders approved a 5 to 1 split of the Company’s shares, which reduced the nominal value of the
ordinary shares to 1 pence each. The share split became effective on 31 January 2017.
The calculation of underlying earnings per share (before other items) is included as the directors believe it provides a better understanding of
the underlying performance of the Group. Other items are disclosed in note 7.
Air Partner plc Annual Report 2018 87
Air Partner plc Annual Report 2018 87
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
13 GOODWILL
Group
Cost
At 1 February 2016
Recognised on acquisition of subsidiaries
Foreign currency adjustments
At 31 January 2017
Recognised on acquisition of subsidiaries (note 31)
Revised allocation of prior acquisition
Foreign currency adjustments
At 31 January 2018
Provision for impairment
At 31 January 2016,31 January 2017 and 31 January 2018
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
£’000
3,346
333
108
3,787
2,005
63
21
5,876
–
5,876
3,787
3,346
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. Before recognition of impairment losses, the carrying amount of goodwill has been
allocated as follows:
Air Partner International S.A.S.
Baines Simmons Limited (Consulting &Training)
Baines Simmons Limited (Managed Services)
Cabot Aviation Services Limited
Clockwork Research Limited
SafeSkys Limited
2018
£’000
977
1,072
639
787
396
2,005
5,876
2017
£’000
956
1,072
639
787
333
–
3,787
The Group tests goodwill annually for impairment, or more frequently if there are indications that goodwill might be impaired.
For the purpose of impairment testing, the recoverable amount of the cash generating unit was measured on the basis of its value in use,
by applying cash flow projections based on financial forecasts covering a three-year period. The key assumptions for the value in use
calculation were those regarding the discount rates, growth rates and expected changes to selling prices and direct costs during the forecast
period. The estimated growth rates were based on past performance and expectation of future changes in the market. The growth rate used
to extrapolate cash flow projections beyond the period covered by the financial forecasts was 2% (2017: 2%). The pre-tax rate used to
discount the forecast cash flows ranged from 10.76% - 13% (2017: 10.76% - 13%).
The directors do not believe that there are any reasonably possible changes to the key assumptions that would result in a material
impairment of goodwill.
88 Air Partner plc Annual Report 2018
88 Air Partner plc Annual Report 2018
14 OTHER INTANGIBLE ASSETS
Group
Cost
At 1 February 2016
Additions
Acquired on acquisition of subsidiaries
Foreign currency adjustments
At 31 January 2017
Additions
Acquired on acquisition of subsidiaries (note 31)
At 31 January 2018
Amortisation and impairment
At 1 February 2016
Charge for the year
At 31 January 2017
Charge for the year
At 31 January 2018
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
Brands
£’000
Other
mandates
£’000
Customer
relationships
£’000
Training
materials
£’000
Software
£’000
Total
£’000
158
–
–
–
158
–
14
172
7
16
23
17
40
132
135
151
171
–
–
–
171
–
–
171
123
47
170
1
171
–
1
48
3,540
–
174
–
3,714
–
487
4,201
91
200
291
219
510
3,691
3,423
3,449
414
–
–
–
414
–
–
414
19
42
61
42
103
311
353
395
2,074
173
–
4
2,251
204
–
2,455
1,079
128
1,207
180
1,387
1,068
1,044
995
Customer relationships have a remaining amortisation period of between 2.9 years and 18.5 years.
Company
Cost
At 1 February 2016
Additions
At 31 January 2017
Additions
At 31 January 2018
Amortisation and impairment
At 1 February 2016
Charge for the year
At 31 January 2017
Charge for the year
At 31 January 2018
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
Other intangible assets comprise software and assets acquired on acquisitions including training materials, customer relationships,
mandates to remarket aircraft and brands.
6,357
173
174
4
6,708
204
501
7,413
1,319
433
1,752
459
2,211
5,202
4,956
5,038
Software
£’000
2,059
172
2,231
185
2,416
1,066
126
1,192
179
1,371
1,045
1,039
993
Air Partner plc Annual Report 2018 89
Air Partner plc Annual Report 2018 89
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
15 PROPERTY, PLANT AND EQUIPMENT
Group
Cost
At 1 February 2016
Additions
Acquired on acquisition of subsidiaries
Foreign currency adjustments
At 31 January 2017
Additions
Acquired on acquisition of subsidiaries (note 31)
Foreign currency adjustments
At 31 January 2018
Depreciation and impairment
At 1 February 2016
Charge for the year
Foreign currency adjustments
At 31 January 2017
Charge for the year
Foreign currency adjustments
At 31 January 2018
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
Company
Cost
At 1 February 2016
Additions
At 31 January 2017
Additions
At 31 January 2018
Depreciation
At 1 February 2016
Charge for the year
At 31 January 2017
Charge for the year
At 31 January 2018
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
90 Air Partner plc Annual Report 2018
90 Air Partner plc Annual Report 2018
Short
leasehold
property and
leasehold
improvements
£’000
Fixtures and
equipment
£’000
Motor
vehicles
£’000
858
–
–
12
870
222
–
–
2,615
77
5
45
2,742
261
8
(8)
1,092
3,003
335
94
4
433
146
–
579
513
437
523
1,892
242
32
2,166
305
15
2,486
517
576
723
37
19
30
–
86
225
82
–
393
2
11
–
13
219
–
232
161
73
35
Short
leasehold
property and
leasehold
improvements
£’000
Fixtures and
equipment
£’000
Motor
vehicles
£’000
734
–
734
120
854
303
72
375
112
487
367
359
431
1,536
34
1,570
50
1,620
1,105
141
1,246
158
1,404
216
324
431
37
19
56
–
56
2
11
13
10
23
33
43
35
Total
£’000
3,510
96
35
57
3,698
708
90
(8)
4,488
2,229
347
36
2,612
670
15
3,297
1,191
1,086
1,281
Total
£’000
2,307
53
2,360
170
2,530
1,410
224
1,634
280
1,914
616
726
897
16 INVESTMENTS
Company
Cost
At 1 February 2016
Additions
Additions – group share-based payments
At 31 January 2017
Additions
At 31 January 2018
Amounts provided
Investments
in shares of
subsidiaries
£’000
Capital
contributions
to subsidiaries
£’000
Total
£’000
1,993
669
–
2,662
–
2,662
7,330
9,323
–
94
7,424
3,000
10,424
669
94
10,086
3,000
13,086
At 31 January 2016 and 31 January 2017 and 31 January 2018
101
635
736
Net book value
At 31 January 2018
At 31 January 2017
At 1 February 2016
2,561
2,561
1,892
9,789
6,789
6,695
12,350
9,350
8,587
In the year ended 31 January 2018, Air Partner plc purchased SafeSkys Limited to the amount of £3,000,000.
The Company tests its investments for impairment if there are indications that the investments may be impaired. The recoverable amount of
each investment was measured on the basis of its value in use, by applying cash flow projections based on the financial forecasts covering
a three-year period. The key assumptions for the value in use calculation for each subsidiary were those regarding the discount rates, growth
rates and expected changes to selling prices and direct costs during the period. The estimated growth rates were based on past performance
and expectation of future changes in the market. The growth rate used to extrapolate cash flow projections beyond the period covered by
the financial forecasts was 2% (2017: 2%). The pre-tax rate used to discount the forecast cash flows was 13% (2017: 13%). The directors
do not believe that there are any reasonably possible changes to the key assumptions that would result in a further impairment of the
Company’s investments.
Air Partner plc Annual Report 2018 91
Air Partner plc Annual Report 2018 91
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
16 INVESTMENTS CONTINUED
The following is a list of the subsidiaries of which Air Partner plc, incorporated in England and Wales, is the beneficial owner:
Name
Air Partner International S.A.S.
Air Partner International GmbH
Air Partner, Inc.
Air Partner (Switzerland) AG
Principal activity
Country of incorporation
Air charter broking
Air charter broking
Air charter broking
Air charter broking
France
Germany
US
Company number
B398335489
HRB 28279
65-0770487
Switzerland
CH-020.3.022.925.4
Air Partner Travel Management Company Limited
Travel agency
England and Wales
Air Partner Srl
Air charter broking
Air Partner Havacilik ve Tasimacilik Limited Sirketi
Air charter broking
Italy
Turkey
Cabot Aviation Services Limited
Air Partner Consulting Limited
Baines Simmons Limited
Aviation Compliance Limited
Clockwork Research Limited
SafeSkys Limited
Aircraft remarketing
England and Wales
Holding company
England and Wales
Aviation safety consultants
England and Wales
Aviation safety consultants
England and Wales
Aviation safety consultants
England and Wales
Aviation safety consultants
England and Wales
03767092
MI-1811083
720099
03874833
02070950
04295495
06545827
05477740
02833067
Air Partner Jet Charter and Sales Private Limited
Dormant
India U63000DL2012FTC234664
Business Jets Limited
Air Partner Group Limited
Air Partner Investments Limited
Air Partner Enclave Limited
Air Partner Nordic
Dormant
England and Wales
Dormant
England and Wales
Dormant
England and Wales
Dormant
England and Wales
04146214
03685545
06727735
06671502
Air Charter Broking
Sweden
556724-5369
Company
Address
A
B
C
D
E
F
G
E
E
E
E
E
E
H
E
E
E
E
I
All of the above are 100% owned by Air Partner plc, except for Air Partner Havacilik ve Tasimacilik Limited Sirketi where 40% is held by a
subsidiary undertaking and Air Partner Jet Charter and Sales Private Limited which is 99.99% held by one subsidiary company and 0.01%
held by another subsidiary company. Air Partner plc’s holdings are in the ordinary share capital of all the subsidiaries and there are no other
classes of shares.
Registered company addresses are as follows:
A
B
C
D
E
F
G
H
I
89 Rue du Faubourg Saint-Honoré, 75008 Paris, France
Technologiepark, HS 56, Friedrich-Ebert-Str. 75, 51429 Bergisch Gladbach, Germany
1100 Lee Wagener Blvd, Suite 328, Fort Lauderdale, FL 33315, US
Postfach 8722, 8036 Zurich, Switzerland
2 City Place, Beehive Ring Road, Gatwick, West Sussex, RH6 0PA, UK
Via Valtellina 67, 20159 Milano, Italy
Yenibosna Merkez mah. Degirmenbahce cad. Istwest Konutları No:17 A1B Blok D:23 Istanbul, Turkey
Maulseri House, 7, Kapashera Estate, New Delhi-110037, India
Cerid Redovisningsbyra AB, Svanegatan 10, 22224 Lund, Skane, Malmö, Sweden
In the opinion of the directors the recoverable amount of the Company’s subsidiary undertakings is considered to be in excess of the
carrying value.
92 Air Partner plc Annual Report 2018
92 Air Partner plc Annual Report 2018
17 TRADE AND OTHER RECEIVABLES
Gross trade receivables
Allowance for bad and doubtful debts
Trade receivables
Amounts owed by Group undertakings
Social security and other taxes
Other receivables
Prepayments and accrued income
Group
Company
2018
£’000
19,414
(159)
19,255
–
460
349
6,548
26,612
2017
as restated
£’000
19,189
(322)
18,867
–
1,045
278
5,029
25,219
2018
£’000
7,265
–
7,265
10,409
741
–
3,370
21,785
2017
as restated
£’000
7,263
–
7,263
3,498
499
69
2,024
13,353
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:
At 31 January 2016
Charge for the year
Receivables written off during the year
Foreign currency adjustments
At 31 January 2017
Charge for the year
Receivables written off during the year
At 31 January 2018
Group
£’000
809
34
(580)
59
322
52
(194)
181
Company
£’000
135
(2)
(133)
–
–
–
–
–
Of the amounts impaired during the period, £60,000 (2017: £34,000) was for an amount past due by less than 1 year with the remainder
being all overdue by more than one year.
In addition, some of the unimpaired trade receivables were past due at the reporting date. The ageing of financial assets was as follows:
Neither past due nor impaired
Ageing of past due but not impaired:
● By not more than 3 months
● By more than 3 months but not more than 6 months
● By more than 6 months but not more than 1 year
● By more than 1 year
Group
Company
2018
£’000
14,113
3,438
542
519
643
19,255
2017
£’000
11,361
6,598
701
83
124
18,867
2018
£’000
5,333
2017
£’000
4,773
1,474
2,087
198
68
192
229
6
168
7,265
7,263
Air Partner plc Annual Report 2018 93
Air Partner plc Annual Report 2018 93
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
18 BORROWINGS
Secured bank loans
Amount due for settlement within 12 months
Amount due for settlement after 12 months
All borrowings are in sterling.
Group
Company
2018
£’000
2,500
2017
£’000
2,957
2018
£’000
2,500
2017
£’000
2,957
Group
Company
2018
£’000
–
2,500
2,500
2017
£’000
514
2,443
2,957
2018
£’000
–
2,500
2,500
2017
£’000
514
2,443
2,957
The Group’s borrowings consists of a bank loan of £2.5m (2017: £2.96m) from the Company bankers. The loan was taken out on 12 August
2016 and refinanced using a new revolving credit facility provided by the Group’s main banker. The facility is for £7.5m, expiring in February
2020, and carries an interest rate of 2.5% above LIBOR.
19 TRADE AND OTHER PAYABLES
Trade payables (as restated –note 2)
Other taxation and social security payable
Group
Company
2018
£’000
4,528
2,741
7,269
2017
as restated
£’000
3,746
758
4,504
2018
£’000
2,595
945
3,540
2017
as restated
£’000
1,619
204
1,823
The directors consider that the carrying amount of trade and other payables approximates their fair value.
20 OTHER LIABILITIES
Accruals
Other liabilities (as restated – note 2)
Amounts owed to Group undertakings
The directors consider that the carrying amount of other liabilities approximates their fair value.
21 DEFERRED CONSIDERATION
Deferred consideration in respect of Clockwork Research Limited
Deferred consideration in respect of SafeSkys Limited (note 31)
Group
Company
2018
£’000
4,437
318
–
2017
£’000
4,694
801
–
4,755
5,495
2018
£’000
2,173
62
3,993
6,228
2017
£’000
2,579
51
3,571
6,201
Group
Company
2018
£’000
177
800
977
2017
£’000
200
–
200
2018
£’000
177
800
977
2017
£’000
200
–
200
94 Air Partner plc Annual Report 2018
94 Air Partner plc Annual Report 2018
22 PROVISIONS
Dilapidation costs
Group
Company
2018
£’000
120
2017
£’000
–
2018
£’000
120
2017
£’000
–
A provision of £120,000 has been raised in relation to the potential costs of making good any dilapidations or other damage which may occur
during the course of the lease of property.
23 FINANCIAL INSTRUMENTS
The objectives of the Group’s treasury activities are to manage financial risk, minimise adverse effects of fluctuations in the financial
markets on the value of the Group’s financial assets and liabilities and to ensure that the working capital requirements fit the needs of
the ongoing business.
The Group has various financial instruments such as cash, trade receivables, trade payables and borrowings that arise directly from its
operations, along with forward currency contracts undertaken to minimise risk on future business.
a) Interest rate risk
The Group’s policy is to manage interest rate risk and to maximise its return from its cash balances. The Group’s main interest rate risk is
related to variable rates on cash held at the bank. Certain cash balances are deposits on fixed interest terms, but are never lodged for more
than three months to ensure that the Group does not suffer unduly from the risk of interest rate variation.
Cash held at year end on fixed interest rates
Cash held at year end on variable interest rates
Group
Company
2018
£’000
6,630
16,563
23,193
2017
£’000
4,415
15,380
19,795
2018
£’000
16
7,470
7,486
2017
£’000
3,317
10,885
14,202
The following table illustrates the sensitivity of cash held on variable interest rates on profit before tax for the year to a reasonably possible
change in interest rates, with effect from the beginning of the year. There was no additional impact on shareholders’ equity. These changes
are considered to be reasonably possible based on observation of current market conditions. The rate range on which interest was receivable
during the year was 0.0% to 1.0% (2017: 0.0% to 1.0%).
Group
Cash held at year end on variable interest rates
Company
Cash held at year end on variable interest rates
Effect on profit before tax
100 basis points increase
100 basis points decrease
2018
£’000
166
2017
£’000
154
2018
£’000
(166)
2017
£’000
(154)
Effect on profit before tax
100 basis points increase
100 basis points decrease
2018
£’000
75
2017
£’000
109
2018
£’000
(75)
2017
£’000
(109)
The Group is further exposed to interest rate risk due to variable interest owed on its borrowings, £2,500,000, linked to LIBOR.
The following table illustrates the sensitivity of borrowings on variable interest rates on profit before tax for the year to a reasonably possible
change in interest rates, with effect from the beginning of the year. There was no additional impact on shareholders’ equity. These changes
are considered to be reasonably possible based on observation of current market conditions. The rate at which interest was payable during
the year was 3.09% (2017: 3.09%).
Group and company
Borrowings on variable interest rates
Effect on profit before tax
100 basis points increase
100 basis points decrease
2018
£’000
25
2017
£’000
30
2018
£’000
(25)
2017
£’000
(30)
Air Partner plc Annual Report 2018 95
Air Partner plc Annual Report 2018 95
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
23 FINANCIAL INSTRUMENTS CONTINUED
b) Credit risk
The carrying amount of financial assets recognised at the reporting date, as summarised below, represents the Group’s maximum exposure
to credit risk:
Cash and cash equivalents
Trade and other receivables (as restated – note 2)
Group
Company
2018
£’000
23,193
19,604
42,797
2017
as restated
£’000
19,795
19,145
38,940
2018
£’000
7,486
17,674
25,160
2017
as restated
£’000
14,202
10,830
25,032
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 who wish to trade on credit terms are subject to an external credit verification process.
The directors consider that all of the above financial assets that are not impaired for each of the reporting dates under review are of good
credit quality, including those that are past due.
The Group has no significant concentration of credit risk to commercial customers, as credit risk is predominantly government based.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings
assigned by international credit rating agencies.
Refer to note 18 for details of impairment losses for financial instruments.
c) Liquidity risk
The Group faces liquidity risks in paying operators before a flight occurs or before payment is received from the client. The Group aims to
mitigate liquidity risk by, where possible, making payments to operators only once payment from the client has been received.
The Group manages cash within its operations and ensures that cash collection is efficiently managed. Any excess cash is placed on low-risk,
short-term interest-bearing deposits or distributed to shareholders through dividends, although the Group retains enough working capital in
the business to ensure that the business operations can run smoothly.
As at 31 January 2018, the Group and Company’s financial liabilities had contractual maturities which are summarised below:
Group
Trade and other payables
Derivative financial instruments
Company
Trade and other payables
Derivative financial instruments
Current
Non-current
Within 6 months
6 to 12 months
1 to 5 years
More than 5 years
2018
£’000
2017
£’000
2018
£’000
25,221
23,386
12
9
25,233
23,395
–
–
–
2017
£’000
257
–
257
2018
£’000
2,500
–
2017
£’000
2,443
–
2,500
2,443
2018
£’000
2017
£’000
–
–
–
–
–
–
Current
Non-current
Within 6 months
6 to 12 months
1 to 5 years
More than 5 years
2018
£’000
2017
£’000
2018
£’000
17,302
19,382
14
9
17,316
19,391
–
–
–
2017
£’000
257
–
257
2018
£’000
2,500
–
2017
£’000
2,443
–
2,500
2,443
2018
£’000
2017
£’000
–
–
–
–
–
–
96 Air Partner plc Annual Report 2018
96 Air Partner plc Annual Report 2018
23 FINANCIAL INSTRUMENTS CONTINUED
d) Foreign currency risk
The Group has invested in foreign operations outside the UK and also buys and sells goods and services denominated in currencies other
than sterling. As a result the value of the Group’s non-sterling revenue, purchases, financial assets and liabilities and cash flows can be
affected by movements in exchange rates in general and in US Dollar and Euro rates in particular. The Group’s policy on foreign currency
risk is not to enter into forward contracts until a firm contract has been signed.
The Group 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 operations. It is the Group’s policy that no trading in financial instruments will be undertaken.
Foreign currency denominated financial assets and liabilities, translated into sterling at the closing rate, are as follows:
Group
Financial assets (as restated – note 2)
Eur €
26,722
US $
7,846
GBP £
9,189
Financial liabilities (as restated –note 2)
(16,378)
(3,624)
(4,708)
2018
£’000
Short-term exposure
Financial assets
Financial liabilities
Long-term exposure
Company
Financial assets
Financial liabilities
Short-term exposure
Financial assets
Financial liabilities
Long-term exposure
Other
901
(120)
781
–
–
–
10,344
4,222
4,481
–
–
–
–
–
–
–
–
–
10,344
4,222
4,481
781
2018
£’000
Eur €
10,091
(8,644)
1,447
US $
834
GBP £
15,085
(1,665)
(8,684)
(832)
6,402
–
–
–
–
–
–
–
–
–
Other
788
(107)
681
–
–
–
(2,382)
(832)
10,874
681
2017 as restated
£’000
US $
5,213
(3,349)
1,864
–
–
–
1,864
GBP £
14,593
(4,180)
10,413
–
(2,443)
(2,443)
7,970
2017 as restated
£’000
US $
2,404
(2,520)
(116)
–
–
–
(116)
GBP £
19,185
(3,484)
15,701
–
(2,443)
(2,443)
13,258
Eur €
19,231
(15,549)
3,682
–
–
–
3,682
Eur €
8,468
(11,873)
(3,405)
–
–
–
(3,405)
Other
793
(39)
754
–
–
–
754
Other
801
(144)
657
–
–
–
657
Air Partner plc Annual Report 2018 97
Air Partner plc Annual Report 2018 97
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
23 FINANCIAL INSTRUMENTS CONTINUED
d) Foreign currency risk continued
The following table demonstrates the sensitivity of financial instruments to a reasonably possible change in the Euro and US Dollar exchange
rates, with all other variables held constant, on profit before tax and equity. It assumes a 10% change of the sterling/euro exchange rate for
the year ended 31 January 2018 (2017: 10%). A 10% change is also assumed for the sterling/US dollar exchange rate (2017: 10%). Both of
these percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity
is based on the Group’s foreign currency financial instruments held at each reporting date and also takes into account forward exchange
contracts that offset effects from changes in currency exchange rates.
If sterling had strengthened against the euro and US dollar by 10% (2017: 10%) and 10% (2017: 10%) respectively the impact would have
been as follows:
Group
Financial assets
Financial liabilities
Effect on profit before tax/Equity
Company
Financial assets
Financial liabilities
Effect on profit before tax/Equity
2018
£’000
US $
(785)
362
(423)
2018
US $
(83)
167
84
Total
(3,457)
2,000
(1,457)
Total
(1,092)
1,031
(61)
Eur €
(1,923)
1,555
(368)
Eur €
(847)
1,187
340
2017 as restated
£’000
US $
(521)
335
(186)
2017
US $
Total
(2,444)
1,890
(554)
Total
(240)
(1,087)
252
12
1,439
352
Eur €
(2,672)
1,638
(1,034)
Eur €
(1,009)
864
(145)
If sterling had weakened against the euro and US dollar by 10% (2017: 10%) and 10% (2017: 10%) respectively the impact would have been
as follows:
Group
Financial assets
Financial liabilities
Effect on profit before tax/Equity
Company
Financial assets
Financial liabilities
Effect on profit before tax/Equity
Eur €
2,672
(1,638)
1,034
Eur €
1,009
(864)
145
2018
US $
785
(362)
423
2018
US $
83
(167)
(84)
Total
3,457
(2,000)
1,457
Total
1,092
(1,031)
61
Eur €
1,923
(1,555)
368
Eur €
847
(1,187)
(340)
2017 as restated
US $
521
Total
2,444
(335)
(1,890)
186
554
2017
US $
240
(252)
(12)
Total
1,087
(1,439)
(352)
98 Air Partner plc Annual Report 2018
98 Air Partner plc Annual Report 2018
23 FINANCIAL INSTRUMENTS CONTINUED
e) Forward contracts
The Group utilises currency derivatives to hedge significant future transactions and cash flows. The Group is a party to foreign currency
forward contracts in the management of its exchange rate exposures. The instruments purchased are primarily denominated in the
currencies of the Group’s principal markets.
Derivatives that do not qualify for hedge accounting are accounted for as trading instruments and any change in their fair value determined
as the mark-to-market value at balance sheet date is recognised in the income statement. No derivatives qualified for hedge accounting
during the year (2017: none).
At the reporting date, the total notional amount of outstanding forward foreign exchange contracts that the Group had committed are as
below and their related fair value was as follows (terms not exceeding three months from 31 January 2017):
Group and Company
Forward foreign exchange contracts – notional amount
Financial liability
2018
£’000
439
(12)
2017
£’000
682
(9)
Changes in the fair value of derivative financial instruments amounting to £3,000 have been charged to the income statement in the period
(2017: Charge of £45,000).
These derivative financial instruments are not traded in active markets. Their fair value has been determined by using valuation techniques
which maximise the use of observable market data, namely the contract exchange rate and the bank’s forward rate. The derivatives are
therefore categorised as level 2 using the fair value hierarchy.
f) Capital risk management
The Group’s objectives when managing capital are to safeguard the Group’s ability to continue as a going concern in order to provide returns
for shareholders and benefits for other stakeholders.
The Group’s primary tool in managing risk is cash flow analysis. In addition to strategic cash flow management the Group performs detailed
weekly cash flow modelling.
The schedule of matters reserved for Board decision includes approval of any financial instruments or bank borrowings in excess
of £2,000,000.
The capital structure of the Group consists of net debt (borrowings and other long term liabilities disclosed in note 19 after deducting
non-JetCard cash and bank balances) and equity of the group (comprising issued capital, reserves, and retained earnings disclosed in
notes 28 to 31)
The Group is not subject to any externally imposed capital requirements. The Group’s gearing ratio at year end is as follows:
Debt
Cash and cash equivalents (as restated – note 2)
Net cash/(debt)
Equity
Net cash/(debt) to equity ratio
Debt is defined as long- and short-term borrowings and other long term liabilities as detailed in note 18.
Equity includes all share capital and reserves of the Group that are managed as capital.
2018
£’000
2017
as restated
£’000
(2,500)
(2,957)
7,302
4,802
11,523
1,173
(1,784)
10,957
41.67% (16.29%)
Air Partner plc Annual Report 2018 99
Air Partner plc Annual Report 2018 99
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
2018
£’000
2017
as restated
£’000
23,193
19,795
–
–
22,607
20,879
4,688
4,926
50,488
45,600
2018
£’000
2017
as restated
£’000
7,486
12,237
–
19,457
2,888
29,831
–
9,347
6,259
27,843
2018
£’000
(14)
2017
as restated
£’000
(9)
(2,500)
(7,577)
(44,845)
(34,051)
(47,359)
(41,637)
2018
£’000
(14)
2017
as restated
£’000
(9)
(2,500)
(6,906)
(28,158)
(20,414)
(30,672)
(27,329)
2018
£’000
(2,500)
(2,500)
2017
£’000
(2,643)
(2,643)
23 FINANCIAL INSTRUMENTS CONTINUED
g) Financial assets by category
Group
Cash and bank balances
Financial assets held at fair value through profit or loss
Loans and receivables
Current assets which are not financial assets
Total current assets
Company
Cash and bank balances
Financial assets held at fair value through profit or loss
Loans and receivables
Current assets which are not financial assets
Total current assets
h) Financial liabilities by category
Group
Financial liabilities held at fair value through profit or loss
Financial liabilities measured at amortised cost
Current liabilities which are not financial liabilities
Total current liabilities
Company
Financial liabilities held at fair value through profit or loss
Financial liabilities measured at amortised cost
Current liabilities which are not financial liabilities
Total current liabilities
Group and Company
Financial liabilities measured at amortised cost
Total long term liabilities
The directors consider that the carrying amount of the financial assets and liabilities approximates their fair value.
100 Air Partner plc Annual Report 2018
100 Air Partner plc Annual Report 2018
24 SHARE-BASED PAYMENTS
The Company operates a share option scheme under which options may be granted to certain staff of the Group to subscribe for ordinary
shares in the Company. The scheme rules cover grants under an approved and an unapproved section of the scheme. The vesting period
is three years. With certain exceptions, options are forfeited if an employee leaves the Group and outstanding options expire if they remain
unexercised after a period of 6.8 to 10 years from the date of grant.
Details of the share options outstanding during the year are as follows:
Outstanding as at start of year
Granted during the year
Forfeited/lapsed during the year
Exercised during the year
Outstanding at year end
Exercisable at year end
2018
2017
Number
of share
options
2,991,584
339,263
(576,455)
(279,200)
Weighted
average
exercise
price
(pence)
Number
of share
options
32.2 3,925,300
918,290
–
37.2 (1,168,980)
(683,026)
93.0
2,475,192
18.2 2,991,584
Weighted
average
exercise
price
(pence)
60.3
–
74.9
30.4
32.2
441,041
74.4
1,187,044
105.4
The weighted average remaining contractual life of share options outstanding at the year end was 5.12 years (2017: 4.83 years).
The exercise prices of share options outstanding at year end ranged from nil pence to 1,090 pence (2017: nil pence to 1,077 pence).
The total charge for the year relating to employee share-based payment plans was £348,011.
In the current year, options were granted on 30 April 2017. The estimated fair values of the options granted on those dates is £247,622.
Inputs in to the Monte Carlo model were as follows:
Weighted average share price
Weighted average exercise price
Expected volatility
Expected life
Risk-free rate
Expected dividend yields
Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous three years.
2017
Options
1.02p
0.00p
40.57%
3 years
0.36%
4.95%
Air Partner plc Annual Report 2018 101
101
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GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
25 DEFERRED TAX
Deferred tax has been calculated at 17% (2017: 17%) in respect of UK companies and at the prevailing tax rates for the overseas subsidiaries.
The following are the major deferred tax liabilities and assets recognised by the Group and the Company with movements thereon during the
current and prior reporting periods.
Group
At 1 February 2016
Arising on acquisition of subsidiaries
Exchange differences
Credit/(charge) to the income statement
Credit direct to equity
At 31 January 2017
Arising on acquisition of subsidiaries
Exchange differences
Credit/(charge) to the income statement
Credit direct to equity
At 31 January 2018
Company
At 1 February 2016
Charge to the income statement
Credit direct to equity
At 31 January 2017
Charge to the income statement
Charge direct to equity
At 31 January 2018
Net
accelerated
tax
depreciation
£’000
IFRS 3
intangibles
£’000
Tax losses
£’000
Share-based
payment
£’000
Other
temporary
differences
£’000
(725)
(35)
–
94
–
(666)
(95)
–
57
–
(704)
(54)
–
–
(23)
–
(77)
–
–
(12)
–
(89)
2
–
–
(2)
–
–
–
–
–
–
–
156
–
–
–
(66)
90
–
–
145
–
235
213
–
(40)
288
–
461
–
(26)
(173)
–
262
Net
accelerated
tax
depreciation
£’000
Share-based
payment
£’000
(81)
20
–
(61)
(25)
–
(86)
156
–
(71)
85
179
–
264
Deferred tax assets and liabilities are offset where the Group has a legally enforceable right to do so. The following is the analysis of the
deferred tax balances for financial reporting purposes:
Deferred tax liabilities
Deferred tax assets
Group
Company
2018
£’000
(775)
497
(278)
2017
£’000
(725)
533
(192)
2018
£’000
–
178
178
Total
£’000
(408)
(35)
(40)
357
(66)
(192)
(95)
(26)
17
–
(296)
Total
£’000
75
20
(71)
24
154
–
178
2017
£’000
–
24
24
At the balance sheet date the Group had undistributed earnings in respect of overseas subsidiaries that would be subject to overseas
withholding taxes on remission to the UK. No liability has been recognised in respect of these earnings because the Group is in a position to
control the timing of the reversal of the temporary differences and it is probable that such differences will not reverse in the foreseeable future.
At the balance sheet date the Group had no unused tax losses (2017:£167,000 losses).
102 Air Partner plc Annual Report 2018
102 Air Partner plc Annual Report 2018
26 EMPLOYEE BENEFITS
In the UK, the Company operates a defined contribution retirement benefit scheme for all qualifying employees. The assets of the scheme are
held in individual personal pension schemes which are fully transferable if the employee leaves the Company.
Similar schemes operate across the rest of the Group depending on local regulations and individual social contribution levels. The amount of
expense related to such pension contributions is disclosed in note 8.
In other subsidiaries, the employees are members of state-managed retirement funds operated by respective governments, with contributions
payable being a specified percentage of payroll costs. The only obligation of the Group with respect to the retirement benefit scheme is to
make the specified contributions. The total cost charged of £445,000 (2017: £506,000) represents contributions payable to these various
schemes by the Group. As at the balance sheet date £69,280 (2017: £67,000) was accrued in respect of such schemes.
27 SHARE CAPITAL
Authorised
75,000,000 ordinary shares of 1 pence each
Issued and fully paid
52,217,565 ordinary shares of 1 pence each
2018
£’000
2017
£’000
750
522
750
522
On 25 January 2017, the Company’s shareholders approved a 5 to 1 split of the Company’s shares, which reduced the nominal value of the
ordinary shares to 1 pence each. The share split became effective on 31 January 2017.
The Company has one class of ordinary shares which carries no right to fixed income and entitles holders to one vote per share at general
meetings of the Company.
28 SHARE PREMIUM
Balance at 1 February 2017
Issue of shares
Balance at 31 January 2018
29 MERGER RESERVE
Balance at 1 February 2017
Issue of shares
Balance at 31 January 2018
Group and
Company
£’000
4,755
(59)
4,696
Group and
Company
£’000
354
59
413
The merger reserve represents the fair value of the consideration given in excess of the nominal value of the ordinary shares issued as part of
the acquisition consideration for Cabot Aviation Services Limited.
Air Partner plc Annual Report 2018 103
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GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
30 OWN SHARES RESERVE
Balance at 1 February 2017
Issue of shares
Disposed on exercise of options
Balance at 31 January 2018
Group and
Company
£’000
(672)
(500)
354
(818)
The own shares reserve represents the cost of shares in Air Partner plc purchased in the market and held by the Air Partner Employee
Benefit Trust, which was established to satisfy the future exercise of options under the Group’s share options schemes (see note 24).
The number of ordinary shares held by the Air Partner Employee Benefit Trust at 31 January 2018 was 402,690 ordinary shares of 1 pence
each (2017: 341,820 ordinary shares of 1 pence each). A further 272,731 ordinary shares of 1 pence each (2017: 413,640 ordinary shares of
1 pence each ) are held by the Trust in a nominee capacity for one beneficiary (2017: two) of the Trust.
31 ACQUISITION OF SUBSIDIARIES
On 1 September 2017, Air Partner plc acquired 100% of the issued share capital of SafeSkys Limited, obtaining control of the company
on that date. SafeSkys Limited is a leading supplier of turnkey ATC services and wildlife management services. The acquisition of SafeSkys
Limited adds significant specialist consulting expertise and knowledge to the Group.
The provisional amounts recognised in respect of the identifiable assets acquired and liabilities assumed are set out in the table below.
Fair values of assets acquired
Financial assets
Property, plant and equipment
Intangible assets – customer relationships
Intangible assets – SafeSkys trade name
Deferred tax liability on intangible assets
Financial liabilities
Goodwill
Total consideration
Satisfied by
Cash
Deferred consideration
Total consideration
Net cash outflow arising on acquisition
Cash consideration
Less cash and cash equivalents acquired
Net cash outflow
SafeSkys
Limited
£’000
632
90
487
14
(113)
(115)
2,005
3,000
2,200
800
3,000
2,200
(226)
1,974
Deferred consideration of up to £800,000 is payable depending on earnings performance in the 1st and 2nd years post acquisition. The
directors consider it likely that the performance conditions will be met and have therefore recognised the maximum amounts payable.
No goodwill is deductible for tax purposes.
The goodwill of £2,005,000 arising from the acquisition is attributable to the value of the assembled workforce and the ability of the senior
staff to generate future business.
Acquisition related costs (included in Other items) amounted to £61,000.
SafeSkys Limited contributed revenue of £743,000 and profits after tax of £70,000 being the results for the period between the date of
acquisition and 31 January 2017.
If the acquisition of SafeSkys Limited had been completed on the first day of the financial year, Group revenues for the period would have
been £49,653,320 and Group profit after tax would have been £3,735,000.
104 Air Partner plc Annual Report 2018
104 Air Partner plc Annual Report 2018
32 PRIOR YEAR ACQUISITIONS
Clockwork Research Limited
On 12 December 2016, Air Partner plc acquired 100% of the issued share capital of Clockwork Research Limited, obtaining control of the
company on that date. Clockwork Research Limited is a leading fatigue risk management consultant. The acquisition of Clockwork Research
Limited adds significant specialist consulting expertise and knowledge to the Group.
The goodwill of £333,000 arising from the acquisition is attributable to the value of the assembled workforce and the ability of the senior
staff to generate future business.
The amounts recognised in respect of the identifiable assets acquired and liabilities assumed on the acquisition of Clockwork Research
Limited are set out in the table below.
Fair values of assets acquired
Financial assets
Property, plant and equipment
Intangible assets – customer relationships
Deferred tax liability on intangible assets
Financial liabilities
Goodwill
Total consideration
Satisfied by
Cash
Deferred consideration
Net cash outflow arising on acquisition
Cash consideration
Less cash and cash equivalents acquired
Net cash outflow
Clockwork
Research
Limited
£’000
325
35
174
(35)
(163)
336
333
669
469
200
669
469
(107)
362
Air Partner plc Annual Report 2018 105
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Air Partner plc Annual Report 2018
GovernanceStrategic reportFinancial statements
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
for the year ended 31 January 2018
33 NET CASH INFLOW FROM OPERATING ACTIVITIES
Profit for the year
Continuing operations
Adjustments for:
Finance income
Finance expense
Income tax
Depreciation and amortisation
Fair value movement on derivative financial instruments
Share option cost for period
Decrease/(increase) in provisions
Foreign exchange differences
Operating cash flows before movements in working capital
Change in receivables
Change in payables
Cash generated from operations
Income taxes paid
Interest paid
Net cash inflow from operating activities
34 OPERATING LEASE ARRANGEMENTS
Group
Company
2018
£’000
2017
as restated
£’000
2018
£’000
2017
as restated
£’000
3,580
2,527
3,389
834
(11)
138
1,172
1,129
3
341
120
(31)
6,441
(987)
6,333
11,787
(1,406)
(138)
10,243
(39)
96
1,421
780
45
369
(421)
(938)
3,840
(481)
(467)
2,892
(922)
(96)
1,874
(4)
(34)
139
888
459
5
341
120
57
5,394
(8,432)
2,962
(76)
(453)
(139)
(668)
–
711
350
45
369
(166)
(892)
1,217
1,944
(653)
2,508
(582)
–
1,926
The Group as lessee
Minimum lease payments under operating leases recognised as
costs for the period
2018
Land and
buildings
£’000
2017
Land and
buildings
£’000
2018
Other
£’000
2017
Other
£’000
2018
Total
£’000
2017
Total
£’000
227
454
22
68
250
522
At the reporting date, the Group had outstanding commitments for future minimum lease payments under non-cancellable operating leases,
which fall due as follows:
The Group as lessee
Within one year
In the second to fifth year inclusive
After five years
2018
Land and
buildings
£’000
227
493
–
720
2017
Land and
buildings
£’000
428
1,565
–
1,993
2018
Other
£’000
21
24
–
45
2017
Other
£’000
65
135
–
200
2018
Total
£’000
248
517
–
765
2017
Total
£’000
493
1,700
–
2,193
Operating lease payments represent rentals payable by the Group for certain office properties, motor vehicles and office equipment it uses.
Leases are negotiated in isolation, dependent on the trading conditions in the country/region concerned.
106 Air Partner plc Annual Report 2018
106 Air Partner plc Annual Report 2018
35 PROFIT FOR THE FINANCIAL YEAR
The Group financial statements do not include a separate income statement for Air Partner plc (the parent undertaking) as permitted
by Section 408 of the Companies Act 2006. The Parent Company profit after tax for the financial year was £3,389,000 (2017: £834,000)
including dividends from subsidiary companies of £nil (2017: £nil). The Parent Company has no other items of comprehensive income.
36 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
Subsidiaries
Sales to subsidiaries
Purchases from subsidiaries
Amounts owed by subsidiaries at period end
Amounts owed to subsidiaries at period end
2018
£’000
2017
£’000
–
–
10,409
(3,993)
–
(23)
3,498
(3,571)
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)
Short term employee benefits
Post-employment benefits
2018
£’000
831
38
869
2017
£’000
863
52
915
In addition to the above amounts, key management personnel who were also shareholders received £14,454 of dividends in respect of their
shareholdings in the year ended 31 January 2018 (2017: £10,000).
Board of directors’ remuneration in accordance with Schedule 5 of the Accounting Regulations was as follows:
Aggregate directors’ remuneration
Emoluments
Company contributions to money purchase pension contributions
2018
£’000
1,004
38
1,042
2017
£’000
985
52
1,037
One director (2017: two directors) is member of money purchase pension schemes.
Further information about the remuneration of individual directors is provided in the audited part of the Directors’ remuneration report
on pages 53 to 56.
37 CONTINGENT LIABILITIES
The Company’s bankers hold a free and floating charge over the Company’s assets.
Air Partner plc Annual Report 2018 107
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108 Air Partner plc Annual Report 2018
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Air Partner plc
2 City Place
Beehive Ring Road
Gatwick
West Sussex
RH6 0PA
+44 (0)1293 844 800
www.airpartner.com