Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  Equities  >  London Stock Exchange  >  Air Partner plc    AIR   GB00BD736828

AIR PARTNER PLC

(AIR)
  Report
Delayed Quote. Delayed London Stock Exchange - 06/05 06:19:56 am
84.91 GBX   +2.92%
05/22AIR PARTNER : 2020 Annual Report
PU
05/22AIR PARTNER : 2020 Annual Results Presentation
PU
04/28AIR PARTNER : How our Group Charter team are responding to Covid-19
PU
SummaryQuotesChartsNewsCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsPress ReleasesOfficial PublicationsSector news

Air Partner : 2020 Annual Report

share with twitter share with LinkedIn share with facebook
share via e-mail
05/22/2020 | 02:39pm EDT

Where partnership can take us

A N N U A L R E P O R T 2 0 2 0

Growth through partnership

Founded in 1961, Air Partner is a world-leading global aviation services group providing aircraft charter and aviation safety and security solutions to industry, commerce, governments and private individuals, across civil and defence organisations. Working in partnership with our clients, we are dedicated to delivering tailored solutions across our breadth of service offering that goes above and beyond. With a strong geographic presence and 24-houryear-round flight operations centre, our team of aviation professionals consistently puts our customers first to deliver the extraordinary.

Strategic report

  1. Highlights 2020
  2. Purpose, vision, mission
  3. Investing in Air Partner
  4. At a glance
  1. Chair's statement
  1. Business model
  1. Market review
  1. Chief Executive Officer's review
  1. Our strategy
  1. Key performance indicators
  1. Divisional reviews
  1. Chief Financial Officer's review
  1. Principal risks and uncertainties
  1. Going concern and viability statement
  1. Sustainability
  1. Section 172 statement

Corporate governance

  1. Chair's introduction togovernance
  2. Corporate governance report

56 Division of responsibility

58 Board of Directors

and Company Secretary

  1. Group Executive Team
  2. Division of responsibility
  1. Nomination Committee report
  1. Audit and Risk Committee report
  1. Directors' remuneration report
  1. Directors' report

86 Statement of Directors' responsibility in respect of the financial statements

Financial statements

  1. Independent auditors' report
  1. Consolidated income statement
  1. Consolidated statement of comprehensive income
  2. Consolidated statement of changes in equity
  3. Company statement of changes in equity
  4. Consolidated statement of financial position

104 Company statement of financial position

  1. Consolidated and Company statement of cash flows
  2. Notes to the financial statements

Shareholder information

155 Notice of Annual General Meeting

164 Explanation of the resolutions to be proposed at the AGM

168 Company information

Highlights 2020

Strategic highlights

  • Strategically important acquisition of Redline made in December 2019 for a total consideration of £10.0m, further diversifying the Group's revenue streams and broadening its portfolio of aviation products and services
  • Consulting & Training division renamed Safety & Security following the acquisition of Redline
  • Investment made in three new offices in Houston (Q1), Singapore (Q1) and Dubai (Q4)

Operational highlights

  • Tough trading period for Charter, characterised by repeat spending delays and no significant one-off events
  • US Private Jets up 42.5%, reflecting prior year investment in US offices and people
  • Safety & Security division now contributes 13.5% to Group gross profit (FY19: 11.9%) and continues to grow as a percentage of Group profits

Financial highlights

3.261

3.273

236

7.34

5.35

2.34

8.5

8.5

8.4

8.

2.4

4.3

9.0

18

19

20

18

19

20

18

19

20

18

19

20

Gross transaction value1

Gross profit

Underlying profit before tax2

Profit before tax

£236.8m

£34.2m

£4.2m

£0.9m

2020

2019

Underlying continuing basic EPS

6.4p

9.6p

Basic continuing EPS

0.6p

5.6p

Final dividend

-

3.85p

Total dividend per share

1.8p

5.6p

Net (debt) / cash

(£6.9m)

£2.0m

  1. Gross transaction value represents the total value invoiced to clients and is stated exclusive of value added tax.
  2. Underlying profit is stated after exceptional and other items. Please refer to note 2 and 7 in the accounts.

report Strategic

Air Partner plc | Annual Report 2020

01

Strategic report

Purpose, vision, mission

As we have grown and diversified our services and offering, we have also ensured our brand is able to support our continued growth and expansion. Whilst our services reach from aircraft charter to aviation safety consulting, our brand's purpose, vision and values unite us and underpin our strategy.

Our purpose:

We deliver the extraordinary to fly our world.

This is our purpose; it is why we exist and what we continually strive for.

Our vision:

Our mission:

What do we want to achieve?

How will we get there?

To be a world-class

By putting our customers

aviation services group.

first, we create the difference.

Our values:

Our strong values are embedded into our business to help

unite us and deliver our Company vision and goals.

Care deeply

Customer First is in our DNA, whether our customers are internal or external. Treat people how you like to be treated. So work closely, listen carefully and respond with warmth and humility. Exceed people's expectations. Deeply value their contributions. Always go the extra mile.

Take responsibility

Be the trusted partner people count on. Do what you say you'll do and follow through. Taking full responsibility shows true respect.

So if something goes wrong, be open, transparent and honest. Employ ingenuity and integrity to find the fair way forward.

Live your passion

Work as one

Be extraordinary

Let your passion for

Support and empower

Extraordinary is a big

work fuel your hunger

each other, as one team

word. It asks big things

to discover the new.

- one Air Partner

of us. To go above and

Stay curious and

Group. Build, nurture

beyond. Push that bit

informed, fearlessly

and value roles and

more in everything you

trying fresh approaches

relationships with one

do. It's the attitude that

that propel everyone

another. Seek ways

turns up the volume on

forward. Respect each

to collaborate. Be a

what you believe - and

other's know-how and

champion connector

it's vital that we do

amplify expertise,

of people, places and

this, to set us apart

sharing it to help

services - seeking

as an organisation.

everyone improve.

opportunities to

strengthen our

commercial and

creative success.

02 Air Partner plc | Annual Report 2020

Investing in Air Partner

Investing in Air Partner

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.

report Strategic

Strong leadership, reputation and market position

Our business leaders have considerable expertise in the fast evolving, high growth aviation sector. Over almost 60 years in operation, we have built long-term relationships and a robust reputation within the industry. We have developed a market-leading Charter business and a Safety & Security division which is amongst the world's most influential in aviation safety.

Board of Directors: p58-59, Executive Team: p60, Market overview: p10-11

A culture of service and innovation

We use our expertise to provide innovative solutions that exceed our customers' needs, reinforcing our brand reputation, growing sales and profits and delivering long-term value.

Case study: p13, p25

Diverse and high quality global customer base

Our customers are at the heart of every decision we make. We are proud of our global, blue-chip customer base which spans multiple sectors and as well as military and civil organisations. Within this, no one customer makes up more than 10% of gross profits on our run rate business.

Business model: p8-9

Clear long-term strategy

As well as a firm focus on performing well today, Air Partner plans and acts for the long term. We aim to grow

a global aviation services group, in line with our customers' needs, consistently putting customers first to drive shareholder returns.

Strategy: p15-17

A focus on growth - both organic and through acquisition

We aim to grow organically by capitalising on global aviation market opportunities, cross-selling our services between divisions, driving internal efficiencies and investing appropriately. We are also successfully diversifying earnings with investment in the less cyclical Safety & Security division.

Strategy: p16, Chief Executive Officer's review: p12

Sound financial position

An asset light business with a track record of strong cash generation, which is a factor that underpins our long-term growth strategy.

KPIs: p18-19

Shareholder returns

The diversification of operations, to offer a more complete portfolio of aviation services, is leading to improved quality of earnings. As well as reinvesting in the business for the long-term benefit of all stakeholders, we have a track record of delivering strong returns to shareholders, having distributed £13.5m in dividends over the past five years. (Note: the final dividend for financial year ending 31 January 2020

has been suspended and we will re-evaluate once the risks related to COVID-19 have subsided.)

KPIs: p19, Chair's statement: p7

Air Partner plc | Annual Report 2020

03

Strategic report

At a glance

A partnership across our global aviation services

A world-leading, global aviation services group providing aircraft charter and aviation safety and security solutions to industry, governments, private individuals and civil defence organisations. Our reputation and wide-ranging services allow us to partner with our clients to provide them with a broad portfolio of services to match their requirements.

Our global locations

Fairoaks

Doncaster

Gatwick

Cologne

Vienna

London

New York

Paris

Milan

Fort Lauderdale

Los Angeles

Istanbul

Houston

Singapore

Washington, D.C.

Dubai

Experience

Aviation professionals

Global locations

59yrs

C.450

16

04 Air Partner plc | Annual Report 2020

report Strategic

Charter

Safety & Security

Managed Services

Wildlife

Hazard

Private

Management

Regulatory and

Aircraft Registry

Jets

Compliance

Services

Group

Training and

Charter

Consulting

Specialist

Fatigue Risk

Services

Freight

Auditing

Management

Charter

We help all kinds of industries and individuals reach their destinations and goals with our charter services, 24/7 all year round. Our tailored solutions meet often complex requirements across

a suite of services, including Group Charter, Private Jets, Freight and other Specialist Services. Keeping the world moving, one journey at a time.

Group Charter

Charter of aircraft for larger groups (20+ people) for governments, corporates, sports and entertainment industries, industrial and manufacturing customers, and tour operators. Our services also include short-term aircraft leasing, covering both commercial and

private aircraft.

Private Jets

Charter of smaller aircraft (up to 19 people) for corporates and high net worth individuals. We offer a range of solutions to meet our customers' Private Jet requirements, from OnDemand and a flexible JetCard membership programme to custom proposals, whether travelling for business or leisure.

Freight

Charter and part-charter of cargo aircraft, from Learjets to the giant Antonov 225, for regular and bespoke requirements, including emergency aid drops, time-criticaldoor-to-door freight delivery and on-board couriers.

Specialist Services

A range of other aviation services that complement our Charter business - Scheduled Group Travel, Tour Operations, Air Evacuation, Aircraft Sales and Leasing and Flight Operations.

Divisional Reviews: p20-24

Note: Diagram size is not representative of gross profit contribution to the Group.

Safety & Security

Safety & Security is our newly formed division resulting from the recent acquisition of Redline Worldwide Limited (Redline). Our highly technical experts empower clients to resolve compliance and regulatory performance challenges. We support the aviation and transport sectors, critical national infrastructure, armed forces, governments and regulators globally to address risks and vulnerabilities throughout their organisations.

Safety

Aviation safety experts at Baines Simmons offer training, consulting and managed Services such as fatigue risk management and auditing. A range of services that help to advance best practice and shape safety thinking, driving continuous improvement throughout organisations globally.

Security

Redline's mission is to enhance the delivery of assured security in regulated, high value and high threat environments. Our government-standard security solutions are trusted by aviation, critical national infrastructure, event security and corporate organisations.

Divisional Reviews: p20-24

Managed Services

By drawing upon our large pool of expertise, we help clients manage complex projects. Our range of managed services include Wildlife Hazard Management and Aircraft Registry Services.

Air Partner plc | Annual Report 2020

05

Strategic report

Chair's statement

Significant acquisition in Safety & Security

Ed Warner,

Chair

"Our Group has a robust business model and sound strategy and our work during

this COVID-19 crisis has demonstrated the value of our diversified aviation services."

It seems strange to be reporting on the past financial year now, given how different the world is today in the midst of the COVID-19 pandemic. That is not to say that these results are unimportant, but the global aviation sector has been severely impacted over recent months.

As a consequence, our operating environment has changed dramatically and is likely to remain so for the foreseeable future. However, we moved quickly to protect our people, and I can reassure shareholders that Air Partner is very well positioned to prosper, whatever the future may hold for our industry.

There is no doubt that the macroeconomic backdrop during my first year as Air Partner Chair has been challenging, even before the current global crisis. We reported a solid first half performance, despite many customer projects and programmes shifting from H1 to H2 due to Brexit uncertainty.

This uncertainty was then further compounded by the calling of a UK general election in December, which undermined profitability towards the end of our financial year.

Throughout the year, there was a lack of major events worldwide that required our emergency charter services, which held back profits in this core division. Now, of course, there is a sad irony in reporting this dearth of crisis charters.

Overall, Group gross profit fell year on year by 3.7% to £34.2m in the year ended 31 January 2020 (FY19: £35.5m). Underlying profit before tax was £4.2m, 27.6% lower than the

prior year (FY19: £5.8m). Statutory reported profit before tax was 73.5% lower at £0.9m (FY19: £3.4m), driven by a £1.9m impairment charge taken in the year, full details of which are disclosed in note 13.

Having spent the past 13 months getting to know Air Partner, it is clear to me that we have the right strategy, business model and people in place. The global charter business can be volatile, with limited visibility, but the exceptional volume of work undertaken for customers worldwide in recent weeks is testament to the capability of our teams and a reminder of the real value of this division. Mindful of the low predictability

of overall charter volumes, we have acted in recent years to diversify our profit streams within the aviation industry, resulting in a higher overall quality of earnings. This is undoubtedly the correct strategic course for

the Group.

Our acquisition of security company Redline Worldwide Limited (Redline) in December 2019 is an excellent example of this diversification.

It progresses our strategy of pursuing targeted acquisitions that enhance our customer offering by extending the portfolio of aviation services within our Consulting & Training division, which we have now renamed Safety & Security. We expect that Redline will increase visible, steady and recurring revenues for the Group in the long term, once the current COVID-19 crisis has passed. I am delighted to have been able to welcome our new Redline colleagues onboard at

Air Partner.

06 Air Partner plc | Annual Report 2020

In the period under review, we also continued our long-term growth initiatives, making further investments in people and new offices. We are pleased with the return we are generating on these initiatives and believe there is a lot of headroom for further organic development in all divisions. Moreover, I have been encouraged by the increased levels of cross-selling across the business, particularly between Group Charter, Private Jets and Freight.

Board changes

In March 2020, we were greatly saddened to learn of the passing of Richard Jackson, Air Partner's Non-executive Director and Senior Independent Director, after a short illness. Richard joined Air Partner's Board on 8 September 2016 and was appointed as Senior Independent Director in June 2017. He also acted as the Company's Interim Chair for seven months from September 2018. Richard provided a significant contribution to the Company's strategy. He was a highly valued colleague and will be greatly missed.

On 26 June 2019, the date of our Annual General Meeting (AGM), Paul Dollman took up the role of Chair of the Audit and Risk Committee, replacing Shaun Smith, who announced in October 2018 his intention to step down from the Board.

In total, the Board now holds 1.9% of the ordinary shares in the Company, demonstrating a clear alignment with Air Partner's other shareholders. In the context of the ongoing COVID-19 crisis, the Board will not appoint a replacement Non-executive Director in the short term, and Amanda Wills will be appointed as Senior Independent Director with effect from 21 May 2020.

Dividend

In response to the ongoing COVID-19 pandemic, like many companies, we are tightly managing costs across the Group to preserve cash, maintain

sufficient working capital to support increased customer demand and ensure that the business is well placed to emerge from the crisis with a strengthened competitive position. These measures include temporary salary reductions for all Board members and the UK workforce.

In line with this, the Board has decided not to recommend a final dividend payment. However, the Board recognises the importance of regular dividend payments to investors in forming part of their total shareholder return and will re-evaluate the payment of dividends once the risks related to COVID-19 have subsided and there is greater certainty on the Group's cash flows. We trust shareholders will understand that this is the right and prudent approach at this time of unprecedented uncertainty in order to manage the business with confidence through the crisis.

Prospects

Our current financial year started with a strong forward order book and good visibility, particularly in Group Charter and the enlarged Safety & Security division. However, it also coincided with the outbreak of COVID-19. Due to our strategy of diversification, some areas of our business are benefiting from increased activity at this time, while others are being negatively impacted. Nevertheless, the Group has had a strong start to the year overall and we expect Group Charter and Freight to continue to perform well during these challenging times. To put this into context, the unaudited management reports for the first three months of our new financial year indicate that the Group has generated an expected £6.0m of underlying profit before tax.

We are enjoying a strong and profitable May with the business trading considerably ahead of budget, and June is also looking encouraging, with demand for Freight and Group Charter services remaining high as we continue to carry out COVID-19

related work, such as the urgent transportation of medical supplies. While there are also some emerging green shoots of recovery in both Private Jets and Security, clear visibility beyond June is still

very limited.

While this is a worrying time for the industry, the combination of a strong start to the financial year, our swift action on managing costs, agreeing bank waivers with our current lenders and our current cash position gives the Board confidence that Air Partner is effectively positioned to cope with the challenges and uncertainty posed by the ongoing COVID-19 pandemic. As I have stated above, the Group has a robust business model and a sound strategy, and our work during this COVID-19 crisis has demonstrated the value of our diversified aviation services, which operate across multiple markets, helping to offset volatility in any one market or product line. As well as recognising the work of all our exceptional people worldwide, I would like to thank you, our shareholders, for your continued support, especially at this challenging time.

Ed Warner

Non-executive Chair

22 May 2020

report Strategic

Air Partner plc | Annual Report 2020

07

Strategic report

Business model

We deliver the extraordinary to fly our world

Our focus is to ensure that we generate long-term, sustainable value for our stakeholders through our diverse portfolio of services and solutions that we offer to our global customer base. We aim to be a world-class global aviation services group, working in partnership with our clients and suppliers globally to deliver the extraordinary to fly our world.

Key strengths that drive our business

Experienced aviation professionals

Unrivalled aviation expertise

Leading market reputation

Cash generative

Diverse customer profile

Long-standing relationships

Strong market fundamentals

Strong brand repositioning

Customer focus Long-term vision

What we do

Charter

Our market-leading Charter team offers a suite of bespoke services across every type of aircraft charter, delivering expert and reliable charter services to governments, royalty, multi-national organisations and individuals globally. Without owning aircraft ourselves, we leverage the relationships in place with aircraft operators to create tailored solutions to our customers' often complex requirements.

Safety & Security

Through Redline, our mission is to enhance the delivery of assured security in regulated, high value and high threat environments to aviation, critical national infrastructure, event security and corporate organisations. Recognised by ICAO as one of 35 aviation security training centres and acknowledged as 'outstanding' by UK CAA for its consultancy services for clients audits, inspections and assessments as well as managed services for airports and regulatory challenges.

Our aviation safety experts, Baines Simmons, offer training and consulting, helping to advance best practice and shape safety thinking and driving continuous improvement throughout organisations globally. With a large pool of expertise, we offer solutions to complex projects requiring specialist regulatory knowledge.

Managed Services

Our services include Wildlife Hazard Management and Aircraft Registry Services. Managing clients complex projects requires specialist regulatory knowledge and experience.

What differentiates us

Putting our clients at the heart of everything we do

Customer service is integral to our business and we encourage innovation and creativity to ensure that we always deliver the extraordinary for our global customer base. We consider our relationships with our clients as a partnership and our high levels of service have enabled us to achieve preferred supplier and trusted adviser status to some of the most prestigious organisations and discerning individuals in the world.

Experience, plc status and unrivalled breadth of services

Our experience, scale and diverse range of services enable us to handle projects that set us apart from any of our competitors.

As a listed company, we are governed by strict financial regulations and are committed to achieving a high standard of corporate governance, to provide all stakeholders and customers with financial transparency

and assurance.

Case studies: p13, p25, p26, and p33,

Governance: p50

08 Air Partner plc | Annual Report 2020

Where we add value

For our customers

Our service offering has expanded further geographically and by product offering to meet our customers' needs. In Charter, we ensure that we source the right aircraft to match our clients' requirements. Through our Safety & Security division, we provide world-leading products and services to support our clients through an ever-changing regulatory environment with consulting, training, quality assurance and proprietary software solutions in security management systems (SeMS).

Net promoter score 89% (2019: 86%)

For our suppliers

Airlines and operators we work with can rest assured that our experienced Charter business will professionally market their aircraft to our global and diverse customer base.

Our recently expanded business model, with the acquisition of Redline, has allowed us to grow our supplier base within the Safety & Security division, creating new commercial opportunities and expanding our available network. We believe in harnessing and building on long-standing relationships with all our suppliers across the Air Partner Group.

Number of aircraft operators we worked with over 2019

>600

Strategy: p15-17

report Strategic

For our people

We remain a business that is focused on developing, engaging and challenging our staff to ensure they reach their full potential and are empowered to consistently deliver a customer-focused service. We offer a diverse and inclusive working environment where every employee is treated fairly and respectfully. Our engagement survey is conducted every two years allowing time to fully address feedback on communication, engagement, reward and recognition from the prior year's survey.

Engagement score 2019

69%

(note: survey not performed in 2020)

For our shareholders

Our long-term strategic objective is to grow our aviation services business by diversifying our portfolio across geographies and complementary product lines both organically and through acquisition. One of our stated aims is to invest in our Safety & Security business to increase the forward visibility of earnings, thereby smoothing the volatility in our Charter business.

As well as reinvesting in the business for the long-term benefit of all stakeholders, we provide returns to shareholders in the form of progressive dividends. Dividend growth over the last four years pre-COVID was 6.1% per annum (CAGR).

Total dividend per share 1.8p (2019: 5.60p)

Air Partner plc | Annual Report 2020

09

Strategic report

Market review

Navigating the market

The global aviation passenger market continued to see growth

Trend

in 2019, at a slightly slower pace than 2018, with freight starting to see its first fall since 2012, due to international trade tensions.

Our balanced business model of Charter services and an expanded Safety & Security division, with the acquisition of Redline, enables us to be effective in offering

The aviation market

The aviation market has shown steady growth

Global passenger numbers were forecasted to double to 8.2bn by

20371. It was expected that passenger numbers would increase by 4.0% in 2020 pre-COVID-19 and reach 4.72bn (up 4.0% from 4.54bn in 2019).

The long-term forecasts are still referencing an annual 4.3% growth until 2038. In the short term, there is likely to be uncertainty as to how quickly the aviation market might recover to reach this growth potential post-COVID-192.

solutions within a competitive and changing landscape.

On 31 December 2019, the Wuhan government in China announced dozens of cases of pneumonia with unknown causes. COVID-19, which it was later identified as, has affected the world. The repercussions of the virus will affect all of Air Partner's divisions differently but immediately

The wider environment

Natural disasters, geopolitical events and economic downturns

The global aviation market can be adversely affected by geopolitical events, natural disasters and downturns in the economy.

present some opportunities for our vastly experienced Charter division globally. In addition, the specialist skills of our recent acquisition, Redline, could be harnessed during this time to add security services to our existing charter offering around the world. As a Group, we have the ability to react quickly and use

The market for Charter

  1. competitive marketplace with low barriers to entry

The global air charter market continues to be highly fragmented with low barriers to entry.

our excellent relationships with customers, airlines and suppliers to provide solutions that our customers require.

Business model: p8-9

The market for Safety & Security

Increasing regulation and compliance

A number of factors are affecting the pace of growth within the aviation industry such as: busier skies, more competition, demands for higher fleet utilisation and greater operational capability. These factors are occurring against a backdrop of increasing regulation and compliance.

Source:

  1. The International Air Transport Association (IATA).
  2. Airbus - global market forecast.

Note: The footnotes in this section are relevant as at the end of January 2020 and any statistics are quoted pre-COVID-19. The comments cover the fundamental market parameters relevant to Air Partner.

10 Air Partner plc | Annual Report 2020

report Strategic

Impact

How we are responding

The market fundamentals for the aviation industry still remain strong and we have seen this through the demand for our aviation services in both Charter and Safety & Security, prior to COVID-19.

We are building a portfolio of aviation services, in line with customers' requirements. The addition of further services gives us the opportunity to cross-sell between our two divisions to increase revenue, strengthen relationships and support customer retention. We are also investing in our teams and building our geographic presence where we see demand. This year, we built on our global footprint with the opening of offices in Singapore, Houston and Dubai.

While these can cause a short-term decrease in normal demand for air travel, unforeseen world and local events can increase short-term demand for aircraft charter and security services.

The impact of COVID-19 is expected to continue for the foreseeable future.

Our Charter and Safety & Security businesses work closely with government and non-government organisations and freight forwarders to transport aid, equipment and personnel at short notice. As a 24-hour business, we have the resources in place to execute on our clients' time critical requests. The acquisition of Redline and our focus on diversifying our product offering to our global client base have allowed us to reduce the reliance on any one customer, sector or geography.

Competitors are employing a number of tactics to increase their market share from new product development and introductory deals right through to expansion in technology, aggressive promotion and geographical expansion.

With nearly 60 years in operation, Air Partner is an established and reliable group. In a market where we have seen a lot of competitors come and go, we demonstrate stability, quality and financial performance and continue to expand our business model. Our purpose to deliver the extraordinary keeps us focused on providing a market-leading service and maintaining our excellent relationships with our diverse customer base.

Many operators are choosing to outsource training and utilising consultancy services to keep abreast of the rapidly changing environment and regulatory pressures.

A constant desire to improve standards and safety underpins our business model. The move to a global performance based regulation (PBR) approach provides opportunities to take our services beyond the UK and Europe to Asia, Australia and North America. Our long-term relationships and trusted partner status with civil and defence authorities around the world mean we are well positioned to lead this cultural change. In December 2019, we acquired Redline, which provides government-standard security solutions and training for aviation-related companies, event security, corporate organisations and critical national infrastructure. It is a complementary business to Baines Simmons and works

in partnership with our Charter division to provide solutions for our customers. There could be potential opportunity to offer new services aligned to new regulation from COVID-19. At this stage it is uncertain how this will develop.

Air Partner plc | Annual Report 2020

11

Strategic report

Chief Executive Officer's review

Delivering on our strategy

Mark Briffa,

Chief Executive Officer

"Redline adds aviation security to our capabilities, which, combined with our existing aviation safety activities, enables us to deliver a compelling suite of extended aviation services."

While there was good strategic progress made over the last

12 months, our financial performance was impacted by customers delaying spending as they waited for the uncertainty of, first, Brexit and then the UK's December election to clear. As a result, Air Partner's underlying profit before tax of £4.2m for the

12 months to 31 January 2020 was lower than previously expected, largely reflecting a key UK customer suspending a complex global flying programme from H1 to H2, and then further delaying in Q4. There was also an A330 remarketing mandate that was signed but subject to closing conditions, and therefore was not recognised in the year to

31 January 2020. Simultaneously, the already soft UK private jet market worsened in the last quarter.

Strategy

In 2015, we embarked upon a strategy to extend and enhance the services we are able to offer our customers, while reducing the Group's exposure to the volatility of the charter market and improving the overall quality of our earnings. M&A is a key component of this and, since our first acquisition of Cabot Aviation (now referred to as Air Partner Remarketing) in May 2015, we have acquired a number of businesses that meet these criteria. This diversification strategy continues to progress, with our latest acquisition Redline, a leading aviation security and training solutions company that we acquired in December 2019, performing well since it became part of the Group. Redline adds aviation security to our capabilities, which, combined with our existing aviation safety activities, enables us to deliver a compelling suite of aviation safety and security products and services.

Notably, Redline has well-developed proprietary software solutions in security management systems (SeMS) and e-learning. We see significant growth opportunities in this area and it is our intention to offer these capabilities to our Baines Simmons customers over the coming year as part of our Safety & Security strategy.

The ability to cross-sell between different areas of our business is a key driver of our acquisition activity and in the year under review we won a number of new customers as a result of cross-selling, both between Charter and Safety & Security and within the Charter division. Post our year end, we carried out a project on behalf of the Foreign & Commonwealth Office (FCO), which was a fantastic example of the strategy coming to life, with Redline, Group Charter and Freight all working closely together to deliver a fully integrated solution for the evacuation of UK and Irish nationals aboard a cruise ship off the coast of Japan. We continue to see growing levels of cross-selling and joint business development opportunities across the Group and look forward to capitalising on these in this financial year.

While mindful of the current economic climate and the need to conserve cash, we will continue to assess targeted acquisition opportunities that meet our strict criteria and are in line with our Group M&A acquisition strategy on an ongoing basis.

In addition to our acquisition strategy, we have continued to grow organically, particularly within the Charter side of the business.

12 Air Partner plc | Annual Report 2020

Your reliable partner in times of crisis

Due to our proven track record in operating high profile crisis flights, our Group Charter team was called upon by the Foreign & Commonwealth Office (FCO) to arrange charter flights for the evacuation of British and EU nationals from Wuhan, China, following the COVID-19 (coronavirus) outbreak.

The two charter flights took place on 31 January and 8 February 2019, carrying over 125 and 200 passengers respectively from Wuhan to RAF Brize Norton. The flights took place on Boeing 747-400s. The aircraft was ideally configured, with the upper deck designed for crew rest only, so there was clear segregation between the evacuees and the flight crew. There was also a separate section reserved for isolation use if necessary.

Our Group Charter team was always on hand

to manage all logistical operations, from working with stakeholders to put in place the necessary safeguards, to securing the required overflight and landing permissions. We also arranged the delivery of 407 boxes of medical supplies to Wuhan on the first positioning flight.

"The circumstances were challenging but we were able to execute the evacuation due to the dedication of our team, our relationship with the FCO, and the professionalism

of our partner operator."

Mark Briffa, Chief Executive Officer, Air Partner

report Strategic

Air Partner plc | Annual Report 2020

13

Strategic report

Chief Executive Officer's review continued

"Our success in hiring good people continues to pay off. We hire the best people in the industry, who have proven track records and share our passion and drive to succeed."

In the last financial year, we opened three new offices in Singapore (February 2019), Houston (February 2019) and Dubai (November 2019). Importantly, these new offices now offer our full range of Charter services, so customers can fulfil all their charter requirements under one roof, whether this be Group Charter, Private Jets or Freight, which we believe is a true differentiator for us.

While these new offices initially increase our cost base, we typically see a return within a year to 18 months, as they extend our geographical footprint, increase our global market share and grow our customer base. We continue to consider other potential new office locations in

regions that align with the Group's growth strategy and provide attractive growth indicators.

Our success in hiring good people continues to pay off and we will keep monitoring opportunities in this area over the coming year. We will be running an extensive internal management training programme in addition to hiring the best people in the industry, who have proven track records and share our passion and drive to succeed.

People

As I write, post the year end, we are in the midst of the COVID-19 pandemic and I would like to thank all my colleagues for their ongoing

hard work, focus and commitment during these unprecedented times. Whilst COVID-19 has presented significant operational issues, the dedication of our people and suppliers has been nothing short of outstanding.

Mark Briffa

Chief Executive Officer

22 May 2020

Strategy in action

Acquisition of Cabot (Air Partner Remarketing)

Acquisition of Baines Simmons

Customer First initiative launched

2015

Acquisition of

New York office

Upskilling of key

New offices

Clockwork

opened

positions and

opened in

Baines Simmons

Acquisition

Board capabilities

Houston,

Singapore

wins 10-year Isle

of SafeSkys

Accounting review

and Dubai

of Man contract

and subsequent

process controls

Acquisition of

and improvements

Redline for £10m

Los Angeles

Strategic

office opened

partnership with

Northcott Global

Solutions (NGS)

2016

2017

2018

2019

14 Air Partner plc | Annual Report 2020

Our strategy

Building a global aviation services group

report Strategic

Maintaining our long-term strategy

At the core of our business strategy, we aim to continue to grow our world-class global aviation services group

to meet our customers' everevolving needs. Working in partnership with our clients, suppliers and employees, we are dedicated to delivering tailored solutions and the very best service. Our strategy is underpinned by our culture, to ensure that we put the customer at the heart of everything we do, to deliver the extraordinary. To achieve our objective, we have five strategic priorities:

1.

Putting our customers first

The cornerstone of our culture is our Customer First principle. To harness this, we work in partnership with our clients, to provide consistently exceptional services across the Group. Our Peter Saunders Award for Extraordinary Customer Service, now in its second year, has helped to further cement

our customer ethos across our organisation.

Winner of the 2019 Peter Saunders Award for Extraordinary Customer Service

Progress in the year

The global roll-out of our customer relationship management (CRM) system is in the final stages of being deployed. It is operating effectively in the UK for Group Charter and Freight but required some specific customisation to enhance performance for Private Jets and, in particular, JetCard. This system will allow the business to target customers more effectively with more relevant communications, building on existing relationships as well as highlighting opportunities across the Group through cross-selling initiatives.

We have harnessed our experience across the Group to deliver customised solutions to our global customer base, delivering the extraordinary. Our recent work helping customers navigate their way through COVID-19 challenges demonstrates this. Our Charter and Safety & Security divisions worked hand in hand to deliver solutions under exceptional circumstances. See our case study on page 13.

Baines Simmons was awarded the newly introduced Platinum Trusted Service Award by Feefo for 2020, with five Gold Trusted Service Awards over the last five years; this is testament to us delivering excellent customer service for our clients year on year.

Net promoter score 89%(2019: 86%)

Link to KPIs: p18-19

Link to risks: p32-42

Air Partner plc | Annual Report 2020

15

Strategic report

Our strategy continued

2.

Growing organically: strengthening our core business

We continue to strengthen our core Charter business, positioning us well for future organic growth by investing in sales teams in new geographical locations, training, technology advancements, processes and controls.

Progress in the year

This year we continued to grow our footprint globally with three new office openings in Singapore, Houston and Dubai.

We have continued to recruit in key areas of the business, notably in the US, Private Jets and Freight, attracting great people from our competitors and further afield.

Our diversification strategy is working; where Group Charter and Freight have experienced some challenges in the year, the growth in Private Jets, and in particular the US, has helped to mitigate some of the shortfall.

Division review: p20-26

Private Jets' contribution to Group gross profit

34.2%(2019: 29.3%) Delivering growth of 12.2% year on year

Link to KPIs: p18-19

Link to risks: p32-42

3.

Broadening our offering

Our business provides a diverse portfolio of aviation services, reducing the Group's exposure to charter market volatility and improving the overall quality of our earnings.

Progress in the year

The acquisition of Redline has further progressed our strategy of pursuing targeted acquisitions that enhance our customer offering by extending the suite of aviation services within our Safety & Security division (previously known as Consulting & Training).

Redline has long-term contracted revenues with global blue-chip customers, which further expands our customer reach. The business has good forward visibility of its forecasted revenues, a high customer retention rate and a healthy pipeline of new business opportunities.

We continue to review further acquisition opportunities of all sizes and remain selective in our approach, assessing each acquisition not only for its capabilities, but also its product reach, customer relationships, financial track record and, importantly, cultural fit and people.

Safety & Security's contribution to Group gross profit 13.5%(2019: 11.9%)

Link to KPIs: p18-19

Link to risks: p32-42

16 Air Partner plc | Annual Report 2020

4.

Developing and retaining our people

Air Partner is a people business. We remain committed to recruiting and developing the best people to join our already strong and customer-focused teams, empowering our colleagues to live our values and to fulfil their potential.

Progress in the year

The Group people strategy developed last year remains in place and is continually updated to reflect the needs of our customers, business and colleagues.

The People team's focus remains to engage, enable and grow our leaders and managers to enable their teams to be extraordinary. As part of this strategy we continue to invest in the People team itself to fully support the business.

We took the decision not to undertake a full engagement survey during the financial year 2020 in order to focus on two new people initiatives. During the year we continued to address the prior year's feedback on communication, engagement, reward and recognition. We will be conducting a targeted pulse engagement survey during the financial year 2021.

The two key initiatives that the People team focused on were:

Organisational design and career development - starting with our largest and most complex market, the UK, and using a rigorous externally validated methodology, we developed

a new organisational framework across all disciplines.

This framework provided the basis of the Air Partner Career Development Framework, which has been launched in the UK.

Reward - we undertook a full review of the UK reward practice and policies, working with an external reward adviser, and from this we have implemented several changes, including better alignment of our commission plan to the Group values.

We plan to implement the organisational design and reward initiatives to all markets during 2020/21.

Engagement score 2019

69%

(note: survey not performed in 2020)

KPIs: p18-19,

Risks: p32-42

5.

Embedding our brand across our business

As a Group we have grown and diversified but our strong brand and our Company values across Charter and Safety & Security continue to unite us. The strength of our brand shows we are a Group that is dedicated to delivering extraordinary customer service. The development of our brand has continued to evolve, and the use of the core brand proposition and the establishment of our single-brand approach have allowed us to onboard new acquisitions smoothly within an agreed framework.

Progress in the year

Embedded our new brand values into employee training programmes and onboarding of staff globally to build on our brand culture.

Development of new technology to support our new brand and enhance our customer experience.

Implementation of new feedback system, which recognises employees delivering against our brand values to customers and internally within the organisation.

Our purpose: We deliver the extraordinary to fly our world.

Our vision: To be a world-class aviation services group.

Our mission: By putting our customers first, we create the difference.

Our values: Care deeply, take responsibility, live your passion, work as one, be extraordinary.

report Strategic

Air Partner plc | Annual Report 2020

17

Strategic report

Key performance indicators

Measuring our performance

Strategic KPIs

We are seeing wide-ranging benefits from implementing our six key strategic objectives.

Customers and brand

Net promoter score

Calculated by subtracting the percentage of customers who are detractors (those who 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).

89%(2019: 86%)

Strengthening our core Charter business

Measuring growth in our Charter business

Organic growth is a top priority. We are committed to diversifying the Group across products and locations. This measure illustrates how we are performing in our core Charter division.

£29.6m (2019: £31.2m)

Developing and retaining our people

Employee turnover

Calculated as the percentage of employees who leave the Group during the financial year and are replaced by new employees.

20.8%(2019: 28.4%)

Engagement

Measurement of employee positivity in response to a group of key questions on employee advocacy and overall satisfaction. Refer to page 17.

Engagement score 2019

69%

(note: survey not performed in 2020)

Refer to the Chief Executive's divisional review for a full breakdown on page 20.

Broadening our offer

Acquisition contribution to underlying operating profit This measure demonstrates the contribution to profits arising from our strategy of introducing new services and product lines to our customers via our newly acquired businesses. This is measured from our first acquisition in Safety & Security in 2015.

Contribution to Group gross profits 13.2%(2019: 7.8%)

18 Air Partner plc | Annual Report 2020

Financial KPIs

We monitor a range of financial metrics that reflects the underlying strength of our business and helps to measure progress against our strategy.

report Strategic

8.236 3.273 3.261

18 19 20

Definition: This represents the total amount invoiced to our customers, exclusive of value added tax. We use this as a KPI instead of revenue as it gives a fairer impression of the scale of the business we attract at Air Partner. Performance: Refer to the Chief Financial Officer's Review on page 27.

2.34 5.35 7.34

18 19 20

Definition: Total sales minus the cost of providing the service (refer to the accounting policies on page 115). We consider gross profit a key measure given the agent versus principal status of the majority of our contracts. Performance: Refer to the Chief Financial Officer's Review on page 27.

8.5 8.5

2.4

18 19 20

Definition: Underlying profit before tax is stated before exceptional and other items (see note 7). It is the main measure of financial performance used within the business.

Performance: Refer to the Chief Financial Officer's Review on page 27.

Gross transaction value (GTV)

£236.8m

Gross profit

£34.2m

Underlying profit before tax

£4.2m

6.9 4.8

4.6

18 19 20

Definition: Underlying earnings (profit after tax adjusted for exceptional and other items) divided by the average number of shares outstanding in the period. Performance: Lower than the prior year due to a reduction in the underlying performance of the business. The weighted average number of shares increased in the period by 1.3%.

9.6

6.5

6.0

18 19 20

Definition: Profit after tax divided by the average number of ordinary shares outstanding in the period. Performance: Significantly reduced in the period due to the level of exceptional items and a £1.9m impairment charge. Refer to note 7.

49.30 34.42

07.16

18 19 20

Definition: Calculated as underlying operating profit for the year (excluding exceptional and other items) over net assets. Performance: Reduced return on equity given the lower level of trading performance in the period and £1.4m of exceptional items (excluding the impact of the impairment).

Underlying basic earnings per share

Basic earnings per share

Return on equity

6.4p

0.6p

16.07%

8.4

0.2

18

19

20

9).(6

Definition: This measure represents cash in the business, net of debt, excluding that held

on account for our JetCard members. Performance: At 31 January 2020, there is a swing in cash of -£8.9m.This is principally driven by the acquisition of Redline for an initial consideration of £8m in December 2019.

6.5 5.5

8.1

18 19 20

Definition: Total dividends divided by total number of ordinary shares outstanding. Performance: Post- COVID-19 dividends have been increasing steadily

by c.5% per annum over the last three years. Given the current uncertainty in the market the Directors are not recommending a final dividend for FY20. Refer to the Chair's Statement on page 7.

6.37

18

19

20

9).(10

9).(33

Definition: Calculated as the closing share price for the period plus dividends paid, less opening share price, all divided by opening share price. Performance: Refer to dividend per share.

Net cash/(debt) (excluding JetCard)

£(6.9)m

Dividends per share

1.8p

Total shareholder return

(10.9)%

Air Partner plc | Annual Report 2020

19

Strategic report

Divisional reviews

Charter

"We continue to invest for further organic growth in our Charter division, notably in the US, where the market is strong and our business is performing well."

Charter

Overall, the Charter division delivered £29.6m of gross profit for the financial year ending 31 January 2020, down 5.1% on the prior year (FY19: £31.2m). The division contributes 86.5% to the overall gross profit of the Group and is comprised of Group Charter (including Remarketing) at 43.1%, Private Jets at 34.2% and Freight at 9.2%. Although Private Jets had a strong year with growth of 12.5%, this could not offset negative performances in Group Charter and Freight. The above results did translate to an underlying operating profit for the Charter division of £5.9m (FY19: £7.5m).

It was particularly pleasing to see a good level of cross-selling achieved across the Charter division during the financial year. This included Group Charter and Private Jets working together on the European tour of

a high profile music artist, as well as a number of joint projects between Group Charter and Freight.

We continue to invest for further organic growth in our Charter division, notably in the US, where the market is strong and our business is performing well. We selectively increased broker headcount and the opening of the Houston office took our number of US offices to five, alongside New York, Los Angeles, Fort Lauderdale and Washington, D.C. In addition, we opened offices in Singapore and Dubai to offer our full suite of charter solutions, and continue to grow our share of the Asia-Pacific and Middle Eastern markets.

Group Charter

Group Charter has had a mixed performance over the year, with gross profit for the year down 7.5% to £14.7m (FY19: £15.9m). The two main driving factors for this were a key UK customer repeatedly suspending activity and the lack of one-off major events in 2019 comparable to the likes of the FIFA World Cup in the prior financial year. However, it is important to note that Group Charter still carried out a significant amount of work in the sports sector, including the UEFA Champions League, the UEFA Europa League and the Spanish Super Cup, which took place in Saudi Arabia. Positively, we also saw further demand for our Managed Services offering, and in April 2019 we were appointed by Aurigny, the flag carrier airline of the Bailiwick of Guernsey, to manage its operations control centre in Alderney.

Elsewhere in Europe, Germany performed particularly well in the automotive and tour operations sectors, in addition to winning a new government contract from a competitor in the first quarter of the year. However, this regional growth was not enough to offset the weaker results from the UK and France, where the latter experienced a decrease in tour operations activity as a result of reduced operator supply in the market. We have taken a strategic decision to withdraw from the French tour operations market and subsequently have adjusted the size of the team to reflect this. The US was broadly flat year on year, although

"We have seen success through the cross- selling of our charter services to new and existing clients."

Charter gross transaction value

£226.6m

Charter gross profit

£29.6m

Charter underlying operating profit

£5.9m

20 Air Partner plc | Annual Report 2020

we are cautiously optimistic about a positive change over the course of this financial year, given the current performance in the first quarter.

Air Partner Remarketing completed several aircraft sales during the year for various airlines and financial institutions, including an ATR72-500 on behalf of Helitaviation 11 Europe Limited, although performance was affected by the aforementioned A330 sale delay (see the Chief Executive Officer's Review on page 12).

A number of new aircraft mandates were also signed, creating a strong pipeline of c.$3m. However, the market has been impacted by COVID-19 in the short term with the volume of buyers expected to be limited until a market recovery.

Air Evacuation continues to perform well and has been extremely busy throughout the COVID-19 crisis, working closely with Group Charter to evacuate personnel and fly them back to their home countries. In October 2019, we entered into a strategic partnership with Northcott Global Solutions (NGS), an international emergency response company. Under the terms of the partnership, Air Partner is NGS's preferred emergency air charter supplier, while we are also able to leverage its capabilities in the provision of medical assistance, ground and maritime security, armed protection, and traveller tracking and intelligence, thereby offering our customers a broader set of emergency evacuation services. During COVID-19, the partnership has worked well, with customers on both sides benefiting from the services being collectively offered.

Private Jets

Private Jets' gross profit increased by 12.5% to £11.7m (FY19: £10.4m), primarily driven by a strong performance in the US division where gross profit increased by 42.5% year on year. We were particularly delighted with our JetCard performance in the US, with membership up 32% year on year. This is largely attributable to the continued investment made in hiring the best sales and business development talent.

The UK, Germany and France saw a combined gross profit decline of c.3%, the decrease being in line with the wider market performance. Italy had a tough trading period in Private Jets with the loss of a key broker halfway through the year. The softness in the UK market was primarily driven by uncertainty around Brexit and the general election, and was further compounded by some key customers flying less when compared to previous years. JetCard customer numbers remained broadly flat in the UK and Europe as customers were unwilling to change provider due to the economic and political uncertainty.

Freight

Prior to the outbreak of COVID-19, global trade tensions caused challenges for the freight sector in general and air cargo volumes were weak across the industry. Freight gross profit was down £1.7m to £3.2m. The year on year decrease is reflective of a strong comparator period, as last year we carried out significant volumes of work flying humanitarian aid to Guam and Saipan during their typhoon season.

The Freight division did have a strong year in the UK, where gross profit was up 27%, largely driven by the ongoing success of our aircraft on ground (AOG) product (where an aircraft

is grounded because of a technical malfunction), with a number of large airlines added to our customer base. The UK team also carried out a number of projects on behalf of existing Group Charter customers as a result of successful cross-selling, particularly in the energy sector, which has been greatly encouraging.

In addition, our on-board courier (OBC) service, suitable for smaller shipments, continues to go from strength to strength and has grown year on year. OBC is looked after by a dedicated team of operations staff, who are located in the UK and Germany and work with a global network of around 200 couriers.

We continue to consider Freight a strategic and important part of our offering, enabling us to provide customers with a full range of charter services. Its value is never clearer than in times of crisis, when there is increased supply chain and aid work. We expect to see record profits from this division in the current financial year as a result of COVID-19 activity.

report Strategic

"Private Jets' gross profit increased by 12.5%, primarily driven by a strong performance in the US."

Air Partner plc | Annual Report 2020

21

Strategic report

Strengthening our world- leading aviation services

In 2019, we were delighted to announce the acquisition of the entire issued share capital of Redline Worldwide Limited, trading as Redline Assured Security, a leading global aviation security solutions and training company. The acquisition has enhanced our offering as a group by extending the suite of aviation services within our Safety

  • Security division. In its field, Redline is a global leader in the delivery of government-standard security training and solutions. With a strong track record of investing in its business, Redline has developed its own propriety software and e-Learning capabilities. The acquisition offers significant growth opportunities and furthers the Group's relationships with airports, airlines, governments and corporates around the world. This acquisition is a further progression of our long-term corporate strategy and the next step in the Air Partner transformational journey. As a group, our objective remains to improve both the quality and visibility of our earnings over time, by focusing on our customers and our people, while investing in products, services and office infrastructure as we manage the business for the long term.

"This acquisition further enables us to deliver a compelling suite of aviation safety and security products and services."

Mark Briffa, Chief Executive Officer

22 Air Partner plc | Annual Report 2020

Divisional reviews continued

Safety & Security

"Safety & Security now contributes 13.5% to the Group's gross profit"

report Strategic

Safety & Security (formerly

Consulting & Training)

The Safety & Security division includes the recent Redline acquisition, Baines Simmons and Managed Services. The division has performed well over the year with gross profit up 9.5% to £4.6m (FY19: £4.2m) supported by the contribution from Redline. Safety & Security now contributes 13.5% of the Group's gross profit (FY19: 11.9%) and, pre-COVID-19, this figure was on track to increase with the full year impact of the Redline acquisition. Overall the division contributed £0.9m (FY19: £0.6m) of underlying operating profit to the Group, growth of 50%. On a like for like basis, adjusting for the Redline acquisition, underlying operating profit grew by 10.1%, mainly driven by a prior year provision release.

At Baines Simmons, training gross profit was up year on year and looking ahead we aim to grow the reach of this area further as we leverage Redline's proprietary software solutions in e-Learning. We launched our first pop-up training academy in Europe in September 2019, and this is something we intend to revisit in other regions in the future. Furthermore, several large customers, across both the civil and military sectors, confirmed their intention to continue projects with our consultancy service into FY21, although unfortunately the outbreak of COVID-19 has meant that the future of some of these activities is currently uncertain.

Wildlife Hazard Management (WHM) performed well in the period, winning new contracts for fully managed

services at three airfields in addition to retaining all its existing contracts, albeit there is increasing margin pressure in this area from the competition. Following a strategic review of our air traffic control (ATC) operations, we have decided not to renew our two remaining ATC service contracts, thereby exiting our ATC operations presence in the UK. This will allow us to concentrate solely on WHM and accelerate our plans in this area.

Under the leadership of founder Paul Mason, the integration of Redline is progressing smoothly and, as mentioned previously, this financial year the team has already worked alongside Group Charter and Freight to deliver a holistic evacuation service for the FCO. Redline has long-term contracted revenues with global blue-chip customers, that will materially increase visible, long-term, recurring revenues for Air Partner for FY21 onwards. Redline also has good forward visibility of its forecasted revenues, a high customer retention rate and a healthy pipeline of new business opportunities.

The management of Air Partner and Redline have together identified attractive global opportunities as a consequence of the combination with Air Partner's existing brands in aviation safety. We see particularly compelling global growth opportunities for Redline's proprietary SeMS and e-Learning capabilities, which will further the Group's relationships with airports, airlines, governments and corporates around the world, in addition to providing another stable and recurring revenue stream.

We see strong potential in adding safety training to Redline's existing e-Learning platform, which appears a realistic and readily available value driver. The planned launch of WHM software has been delayed to align development of these apps. As a result of this delay and the decision to exit our ATC operations, the Group has recognised an impairment of £1.9m against the goodwill of SafeSkys.

However, while our long-term contracts in the Safety & Security division remain largely unaffected by COVID-19, as previously reported, training, consulting and testing activities have been significantly impacted by government restrictions, resulting in associated revenues being delayed. Management has taken the decisive action to manage costs by reducing discretionary spend in this division in the current financial year.

Safety & Security gross transaction value

£10.2m

Safety & Security gross profit

£4.6m

Safety & Security underlying operating profit

£0.9m

Air Partner plc | Annual Report 2020

23

Strategic report

Divisional reviews continued

Post-year end events

In January and February 2020,

we carried out significant evacuation work for the UK government, including the repatriation of over 300 British and EU nationals from Wuhan. Projects of this type continued into March and April, when we supported a number of new customers, including major cruise and oil companies, in addition to continuing our work with the UK government to assist British citizens overseas.

In March and April, our Freight division also experienced a pick-up in demand for the movement of goods to keep global supply chains operating during the pandemic, such as the transportation of vital medical supplies into the United States.

We continue to receive enquires for logistical support at this critical time and are well placed to mobilise on this activity at short notice.

Current trading and outlook The Group has had a very encouraging start to the financial year, with the unaudited management accounts for the first quarter of the year showing expected underlying profit before tax of £6.0m. April was a record month, predominantly driven by unusually high levels of activity in Freight and Group Charter. The success of the Group in the year to date has been driven by new business wins as a result of the pandemic, such as repatriation contracts and corporate shuttles, which have outweighed a decline in Safety & Security and Private Jets (including JetCard). We have seen high levels of activity in May to date and are strongly ahead of budget for the month. The forward order book

for June is also encouraging, with continued high demand for our Freight and Group Charter services as part of the ongoing COVID-19 response. Visibility beyond this point is very limited.

Looking ahead into the second half of the year, the Directors expect to see a slowdown in repatriation work and freight charter activity as global supply chains recover. Conversely, Private Jets bookings are expected

to increase, as international airways start to re-open, with executives and high net worth individuals wanting to travel in more controlled environments and via less busy airports. We have seen some early signs of recovery within Private Jets (as well as Security), but they remain nascent at this stage.

The COVID-19 crisis, which began at the start of our financial year, has made it very hard to judge the full year impact with any degree of certainty at this point. As a result, we have managed costs to preserve cash and maintain our working capital. Accordingly, we have implemented a series of temporary cost management initiatives, minimising all discretionary spend and, where necessary, reducing salary costs, subject to local legal requirements. In addition, all Board Directors are currently taking a voluntary 20% pay reduction for April, May and June as a minimum. We have also made use of available government grants and benefits to further reduce our cost base in the near term.

I am confident that we have taken the right actions at this time and we will continue to monitor the situation extremely closely. While there are undoubtedly challenging times still to come, we have enjoyed a good start to the current year and have the benefit of a well-diversified business, anchored by great teams of people. The Board will issue regular shareholder updates approximately every four to six weeks during the height of the crisis to ensure investors are kept abreast of how we are addressing the evolving situation.

I would like to take this opportunity to once again thank the entire Air Partner team for its hard work during these unprecedented and difficult times. Their efforts have been - and continue to be - extraordinary.

Mark Briffa

Chief Executive Officer

22 May 2020

"We have enjoyed a good start to the current year and have the benefit of a well- diversified business."

24 Air Partner plc | Annual Report 2020

Hitting the right note

Our Group Charter and Private Jets teams are specialists in complex multi-leg flights, making us a reliable partner for high profile music artists undertaking both national and international tours. Our teams have a unique understanding of and experience in meeting the demanding requirements of tour schedules.

In 2019 we were approached by a promotion agency organising an international music tour for a multi-award- winning artist. The tour took place across six different locations throughout Europe. Our Group Charter team organised two commercial aircraft to operate the route, managing all logistical operations and planning the flight times to coincide conveniently with the rehearsals and performance for each leg.

Discretion was, of course, paramount for the artist; therefore, our team strategically planned the airports to be used based on the strict criteria of having a private terminal for the artist and entourage to use. At the end of the tour, the artist had a last-minute request for a private jet to fly back to the US, our team quickly delivered, and the artist was able to fly back immediately after their tour.

"We are trusted by many big names in music as their preferred partner. Our complete suite of charter services makes us the ideal partner for the industry."

Kevin Macnaughton, Managing Director, Charter

report Strategic

Air Partner plc | Annual Report 2020

25

Strategic report

Your winning partner

Our Group Charter team has had a busy few years with sports flights, transporting teams, fans, management and corporates to pre-season tours, friendlies and tournaments all over the world.

Due to its expertise and reputation within the industry, the team was called upon to organise a series of flights for a major sporting event throughout the Caribbean region. For the flights, our expert team sourced a regional jet aircraft, which was chosen

as the best suitable aircraft for the number of passengers and routes. The Air Partner team was on hand to manage all logistical requirements, with our 24/7 operations team monitoring all flights.

To maximise cost efficiencies, our Freight team supplied three aircraft to transport the broadcasting equipment and additional baggage, which travelled alongside the passenger aircraft. Our teams were pleased to collaborate on this project and worked closely together to ensure all flights operated smoothly for our valued client.

"We value our relationships in the sport industry extremely highly and pride ourselves on always delivering

the extraordinary."

Kevin Macnaughton, Managing Director, Charter

26 Air Partner plc | Annual Report 2020

Chief Financial Officer's review

Joanne Estell,

Chief Financial Officer

"We have ambitious

growth targets for Safety & Security and I believe Redline will catalyse this growth."

Undoubtedly, it was a tough trading period for Air Partner. Typically, we have at least one significant one-off event occur every year such as a major sporting tournament or a large customer flight programme or a crisis event requiring aid relief charters; however, there were none in the period under review. As I start my second year as Air Partner's Chief Financial Officer, the importance

of our diversification strategy to smooth the volatility in the Charter division has never been clearer, especially in light of last year's performance and the current market conditions. We continue to progress this by expanding our offering through targeted acquisitions and driving organic growth by investing in our products, people and new locations.

With this in mind, one of the year's highlights was the acquisition of Redline. We could clearly see the benefits of the acquisition to Air Partner and we worked around the clock to secure the company in a tight timeframe. It is early days; however, I am encouraged by its recent performance and contribution to the Group. We have ambitious growth targets for the Safety & Security division (post COVID-19) and I believe Redline will catalyse this growth.

On more operational and financial matters, we continue to build on the good work we started last year in terms of strengthening the overall control environment and have invested further in new systems and processes. Looking forward, a key initiative for the Finance department this year will be to drive operational efficiencies across the Group with the integration of Redline and the roll-out of our new integrated booking tool and customer relationship management system.

Gross transaction value and 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 an agent.

GTV of £236.8m (FY19: £273.3m) was down by 13.4%, which is principally due to the decrease in Group Charter activity, as described in more detail in the gross profit section below. GTV represents the total value invoiced to customers and is stated exclusive of value added tax. Congruently, revenue of £66.7m (FY19: £77.5m) decreased by 13.9% year on year.

Gross profit

Gross profit of £34.2m was down

3.7% against the prior period (FY19: £35.5m). This includes gross profit for the acquisition of Redline, which was acquired on 12 December 2019. On a comparative basis, adjusting for constant exchange rates (+£0.2m) and the acquisition of Redline (£0.4m), gross profit decreased by 5.3%.

At a divisional level, the gross profit of the Charter division was down 5.1% year on year at £29.6m (FY19: £31.2m) due to a drop in tour operations, a reduction in flying by

  1. key UK customer and no one-off major events comparable to the 2018 FIFA World Cup or 'urgent action' incidents, such as flying humanitarian aid to Guam and Saipan in 2018.

report Strategic

Air Partner plc | Annual Report 2020

27

Strategic report

Chief Financial Officer's review continued

Gross profit continued

Breaking the Charter division down into its constituent parts, the gross profit in Group Charter was down £1.2m to £14.7m (FY19: £15.9m).

In Europe, France was down, on account of a significant reduction in tour operations activity, although this was partially offset by a strong performance in Germany after a large customer win in the early part of the year. As previously mentioned, the UK was adversely affected by a key customer delaying a complex global flying programme.

Private Jets experienced an increase in gross profit of 12.5 % as a result of our performance in the US. Encouragingly, the growth in the US Private Jets business is a result of investments we have made over the last two years in new offices and hiring key talent. In the UK and Europe (excluding Italy, which had a tough second half of the year with the loss of a key broker), performance was down year on year by c.3%, broadly in line with the wider market.

Administrative expenses Costs included in administrative expenses in the consolidated income statement are the Charter personnel costs, sales and marketing, finance, information systems, human resource management, legal and compliance, and other administrative costs.

Underlying* administrative costs, including net impairment losses on financial assets, were broadly flat year on year at £29.4m (FY19: £29.5m), despite investment in new office openings. In order to progress our strategy, while remaining mindful of the risks and effects of COVID-19, the Group expects to make further investments in administrative expenses as we grow organically across new geographical locations. The cost-benefit analysis of any initiative will be assessed at the appropriate time against the Group's investment criteria.

Finance costs

The net interest charge for the period was £0.5m (FY19: £0.2m). This increase was driven by the adoption of IFRS 16 concerning leasing, which added a charge of £0.3m. Excluding the impact of IFRS 16, there was a small increase in interest costs in the period of £16k due to the additional £6.0m of debt that was called down from the revolving credit facility (RCF) in December 2019 to fund the acquisition of Redline. This was fully offset by an increase in interest received of £71k (FY19: £32k).

Underlying profit before tax

The above results translated to an underlying* profit before tax of £4.2m, a decrease of £1.6m (27.6%) from the prior year (FY19: £5.8m). Adjusting for the acquisition of Redline (£0.2m) and for constant exchange rates (£0.1m), underlying profit before tax declined by 32.2%.

  • Underlying earnings are stated before exceptional and other items; see note 7.

Freight was down by £1.7m from £4.9m in FY19 to £3.2m in FY20. This was due to a high volume of aidrelated activities in the previous year, which did not repeat this year, and a widely reported softening in the global freight markets due to trade tensions. However, the UK Freight business did buck this trend and saw year on year growth of c.27%, albeit from a low base.

The above Charter product mix translated to the following regional performance: the UK, US and Rest of World was broadly flat year on year while Europe declined by 11.9%, driven by the aforementioned performance in Group Charter. Overall, US Charter profit remained static year on year due to the aid flights in the prior year resulting in an exceptionally high Freight gross profit for FY19.

Safety & Security delivered gross profit of £4.6m (FY19: £4.2m), an increase of 9.5%, which was supported by the acquisition of Redline (£0.4m).

Exceptional and other items

Exceptional items are excluded from underlying performance measures by virtue of their size and nature, in order to better reflect management's view of the performance of the Group. In the year under review, the net effect of exceptional and other items on operating profit was £3.3m (FY19: £2.4m).

Exceptional and other items excluded from underlying profits in the period are broken down as follows:

2020

2019

£m

£m

Underlying profit before tax

4.2

5.8

Change in Board and operating board composition

(0.2)

(0.4)

Costs relating to the accounting review

and associated items

-

(1.3)

Amortisation of purchased intangibles

(0.6)

(0.4)

Acquisition costs

(0.6)

-

Abortive acquisition costs

-

(0.5)

Cost incurred and provision for outflows resulting from

French tax investigation

(0.7)

-

Impairment of goodwill

(1.9)

-

Settlement of historical legal disputes

0.4

-

Release of deferred consideration

0.3

0.2

Statutory reported profit before tax

0.9

3.4

28 Air Partner plc | Annual Report 2020

In total, there is a £4.0m exceptional charge on the consolidated income statement for the year, comprising

  1. £1.9m impairment charge relating to SafeSkys Limited (SafeSkys) (refer to note 13), £0.6m of amortisation of acquired intangibles, £0.6m of acquisition costs relating to Redline, £0.2m for changes made to the Group Operating Board, and a £0.7m charge in respect of a prior year tax reassessment in France. The latter is made up of a provision of £0.3m for expected indirect tax charges and associated advisers' expenses of £0.4m in defending this matter. The provision is based on management's best estimate of the reassessment liability after taking expert legal advice. Final resolution of this matter remains uncertain; however, in April 2020, encouragingly we received £0.8m to reimburse us for a historical VAT claim from the French tax authorities, relating to the period 1 February 2015 to 31 January 2020. As at 31 January 2020, this liability is included within the £1.2m of social security and other taxes within trade and other receivables within the consolidated statement of financial position.

The above exceptional charges have been partially offset by £0.7m of exceptional gains, including £0.4m of cash settlement net of legal costs for two historical legal disputes and £0.3m relating to the release of the deferred consideration for the SafeSkys acquisition. The latter is due to warranty claims settled with the previous owners in respect of the onerous contracts identified post acquisition.

Statutory reported profit before tax After the above exceptional and other items, statutory reported profit before tax was £0.9m, down 73.5% on the prior year (FY19: £3.4m).

Taxation

The Group seeks to manage the cost of taxation in a responsible manner to enhance its competitive position on a global basis while managing its relationships with tax authorities on the basis of full disclosure and legal compliance.

On a statutory reported profit basis, the effective rate of taxation was 67.6% (FY19: 14.4%). This rate is

abnormally high in the current year due to the level of exceptional costs, which do not attract tax relief and unrecognised tax losses in some tax jurisdictions. In respect to the latter point, we have adopted a prudent approach and have not recognised deferred tax assets relating to the net losses in these jurisdictions until we have greater certainty on how these losses can be utilised. In 2019, the low tax rate of 14.4% was due to HMRC confirming that an overpayment of tax relief claim of £0.4m, relating to the accounting review, was allowable.

The underlying tax charge* of £0.9m (FY19: £0.8m) represents an effective rate of 20.5% (FY19: 13.9%) on the underlying profits before tax.

* Adjusting for exceptional and other items.

Earnings per share

Basic underlying* earnings per share from continuing operations were 6.4p (FY19: 9.6p), down 33.3% on the prior year. On a statutory basis, earnings per share from continuing operations were 0.6p (FY19: 5.6p), a decrease of 89.3%. The sharp drop was driven by the level of exceptional items in the year.

  • Underlying earnings are stated before exceptional and other items; see note 7.

Dividends

Pre-COVID-19, Air Partner's stated dividend policy targeted cover of between 1.5 and 2.0 times underlying earnings per share. On 18 March 2020, the Company announced that it was seeking to preserve cash and to maintain sufficient working capital in the business to support customer demand through the COVID-19 crisis. Accordingly, the Board has chosen not to pay a final dividend for the financial year ending 31 January 2020. The Board is committed to paying dividends and intends, as soon as practicably possible, to resume payments once it has more clarity on future financial performance.

Statement of financial position Shareholders' funds

After considering the profit for the period, dividend payments, exchange rate differences, the acquisition of Redline funded by bank debt and the introduction of IFRS 16 Leases (the impact of which is described further on), overall shareholders' funds at

31 January 2020 were £9.2m, representing a decrease of £2.5m on the position at 31 January 2019 (£11.7m). In summary, the decrease has been driven by the level of non-cash exceptional items resulting in a profit lower than the dividend payments to shareholders.

Acquisition of Redline

Redline was acquired in December 2019 for a total headline consideration of up to £10.0m on a debt free, cash free basis, with an initial outlay of £8.0m on completion. An additional consideration of up to £2.0m is payable over two years post completion. The acquisition was funded from the Company's existing cash and debt facilities and the issue of new ordinary shares to the operational management shareholders of Redline. The effect of the acquisition on the statement of financial position is reflected in the below review. For further details, refer to note 32.

Goodwill and intangibles

During the year goodwill increased by £1.9m. This was driven by the recognition of £3.8m of goodwill relating to the Redline acquisition, although this was partially offset by the £1.9m impairment charge relating to SafeSkys. The impairment of SafeSkys is due to the decision following the acquisition of Redline to delay the launch of the wildlife hazard management app and the decision to not further expand into the air traffic control market (refer to note 13). The carrying value of goodwill is now £8.6m (FY19: £6.7m).

Intangible assets arising from business combinations are assessed at the time of acquisition in accordance with IFRS 3 and are amortised over their expected useful life. This amortisation is excluded from underlying profits. £7.5m of intangible assets were recognised on acquisition of Redline, relating to customer relationships and customer contracts (£6.1m) and software development (£1.4m).

Other intangible assets comprise software development costs. In the period, we spent £0.4m on rolling out the customer relationship management system and a new booking tool for the Charter division. Both these projects are expected to go live in FY21.

Air Partner plc | Annual Report 2020

29

report Strategic

Strategic report

Chief Financial Officer's review continued

Other balances

Movements in other balances within the statement of financial position reflect the trading results of the period.

Excluding the right of use assets as described in the IFRS 16 Leases section below, the Group has property, plant and equipment totalling £1.0m (FY19: £0.9m). Capital expenditure in the period was £0.5m (FY19: £0.1m) on property, plant and motor vehicles for delivering the wildlife hazard management contracts and £0.4m (FY19: £0.4m) on software.

Working capital saw an unfavourable movement of £0.7m in the period

Exchange rates

The results of overseas operations are translated into Sterling at average exchange rates. The net assets are translated at period end rates. The principal exchange rates, expressed in terms of the value of Sterling, are shown in the following table.

Average rates

31 January

31 January

2020

2019

USD

1.28

1.32

USD strengthened by 3.0%

EUR

1.14

1.13

EUR weakened by 0.9%

Period end rates

31 January

31 January

2020

2019

USD

1.32

1.31

USD weakened by 0.8%

EUR

1.19

1.14

EUR weakened by 4.4%

due to reductions in receivables and payables of £1.6m and £2.3m respectively. This was driven by the cash payment to the operator for the Wuhan repatriation flight, which happened close to year end.

Deferred consideration has been recognised as a current and noncurrent liability of £2.3m, including an implied interest charge in relation to the Redline acquisition.

Cash generation and net debt Operating cash from trading activities after investment in capital expenditure and software was £8.2m. However, the adoption of IFRS 16 accounts for £5.4m of this amount, with lease payments that were previously reported within operating cash flows now reported within cash flows from financing activities. Excluding the presentational change as a result

of IFRS 16, cash flows from trading activities after investment and software was £2.8m (FY19: £2.7m).

Net debt (cash offset by bank debt) was £6.9m versus net cash on the same basis of £2.0m. The level of debt has increased to fund the acquisition of Redline in December 2019 for an initial headline price of £8.0m.

JetCard cash deposits decreased by £1.0m, offset by a reduction in liabilities in deferred revenue.

Bank facilities

During the year, the Group renegotiated its debt facility with NatWest to support the acquisition of Redline. The Group now has total debt facilities of £14.5m (FY19: £9.0m) comprising a RCF of £13.0m (FY19: £7.5m) and a £1.5m overdraft.

As at 31 January 2020, £11.5m of the RCF was drawn down (FY19: £5.5m) and the overdraft was not utilised.

The facility attracts an interest rate of 2.6% plus LIBOR and is repayable in February 2023.

Accounting policies and recent accounting developments The accounts in this report are prepared under International Financial Reporting Standards (IFRSs), as adopted by the European Union (EU). The accounting polices used in preparing these accounts are set out in note 1 on page 107.

IFRS 16 Leases

The Group has adopted IFRS 16 retrospectively from 1 February 2019 but has not restated comparatives for the prior period as permitted under the specific transitional provisions in the standard.

The impact on the statement of financial position at 1 February 2019 was to add right of use assets of £11.5m, lease liabilities of £11.8m and a reduction in other liabilities

of £0.1m, resulting in a reduction in reserves of £0.2m. The right of use assets included an aeroplane used in our Italian business at £8.8m, fixtures, fittings and equipment at £1.4m, short leasehold property and leasehold improvements at £1.2m and intangible assets of £0.1m.

The impact on the income statement as at 31 January 2020 has been to decrease cost of sales and overheads by a combined £0.3m but increase the interest charge by £0.3m, therefore having a negligible impact on profit.

The reclassification of lease payments from operating expenses to depreciation, interest and repayments of finance lease liabilities has resulted in a £5.4m increase

in cash generated from operating activities. The increase is offset by a matching increase in net cash used in financing activities.

The impact on the statement of financial position has been to add right of use assets of £6.8m and lease liabilities of £7.3m with a reduction in reserves of £0.2m.

The residual balance of £0.3m is due to the right of use assets acquired as part of the acquisition of Redline and is recognised in the acquisition accounting. This adverse effect on reserves will reverse out over the remaining period of the leases.

30 Air Partner plc | Annual Report 2020

Within current lease liabilities in the statement of financial position is a £4.2m charge relating to the right of use of an aircraft based in Italy. At the time of signing the accounts, given the impact of COVID-19, the Directors have negotiated a payment holiday relating to the Italian contract, effectively moving the £4.2m of payments due into the next financial year. This aircraft is used in Air Partner's tour operations business.

Please refer to note 38, Changes in accounting policy, for further detail.

Treasury and risk management Foreign currency effects Where possible, the Group uses natural hedges to minimise its foreign exchange exposure, for example matching JetCard deposits denominated in Euros or US Dollars with the respective liability. In addition, the Group uses derivatives to hedge certain transactions in accordance with its internal policies.

Financial risks

The main financial risks faced by the Group are credit risk, foreign currency risk, interest rate risk and liquidity risk. The Directors regularly review and agree policies for managing these risks.

Credit risk is managed by monitoring limits and payment performance of counterparties. The Directors consider the level of general credit risk in current market conditions to be higher than normal. Where a customer is deemed to represent a level of credit risk, terms of trade are modified to limit the Group's exposure.

Foreign currency risk is managed by matching payments and receipts in foreign currency to minimise exposure.

Interest rate risk is managed by holding a mixture of cash and borrowings in Sterling, US Dollar and Euro at fixed and floating rates of interest.

Liquidity risk is managed by the Group having access to a RCF, which can be used for working capital means, and a moderate overdraft facility to provide short-term flexibility.

Going concern

The Group's business activities, together with the factors likely to affect its future performance, are set out in the Strategic Report and in the Principal Risks and Uncertainties section.

COVID-19 has increased the level of uncertainty surrounding the future trading environment for the Group. Whilst performance in the first quarter of FY21 has been very strong and in turn the Group's normalised net cash position* was positive at £1.7m, with available headroom of £16.2m, there remains uncertainty over the trading performance for the rest of the year.

Accordingly, the Directors have undertaken a thorough assessment in evaluating going concern considering a number of scenarios and sensitivities. A summary of the going concern assessment is provided in the Going Concern and Viability Statement on page 43.

  • Normalised cash, is cash excluding JetCard cash, customer deposits and significant payments.

From the results of this activity the Directors believe that the Group is well placed to manage its business risks and, after reviewing in detail the current financial position, including factors affecting its cost base, and the availability of financing facilities and forecasts for a period of not less than 12 months from the date of approval of these financial statements, are satisfied that the Group has adequate resources

to continue in business for the foreseeable future and that the Company is a going concern.

Joanne Estell

Chief Financial Officer

22 May 2020

report Strategic

Air Partner plc | Annual Report 2020

31

Strategic report

Principal risks and uncertainties

Risk management: the key to business growth

Risk management process

Like many organisations, our business involves constant risk management

  • it is an integral part of day-to-day operations. The importance of risk management becomes increasingly critical during a period of growth and evolution: 'with growth comes predictable risks, but success depends on identifying and managing them'.1

To complement the ongoing management of inherent business risks, we have implemented a proportionate and effective risk management framework to ensure all significant risks are identified and treated appropriately on a timely basis.

The process is designed to support delivery of our business objectives, protect the interests of our shareholders and key stakeholders, and enhance the quality of our decision making through the awareness of risk-assessed outcomes. It also facilitates open communication on risk between the Audit and Risk Committee and the Group Executive Team.

This approach enables us to manage and monitor the risks which threaten the successful execution of our strategy and ensures that our strategic, financial and operational risks are appropriately considered by the Audit and Risk Committee and the Group Executive Team.

1 Inc.com, author: Lee Colan The L Group

"Business growth requires a solid foundation and a solid foundation is built on powerful risk management. The message is simple. As a rule of thumb, when you cut your risk, you cut your losses and maximise profits."

The Sydney Morning Herald, 2015

32 Air Partner plc | Annual Report 2020

Working as one

At Air Partner, we pride ourselves on working as one close team across our multiple different services and global offices. Earlier in the year, our Freight and Baines Simmons teams were delighted to collaborate to offer their services to a new corporate client.

Our teams joined together to present the suite of Air Partner services to the client and discuss their specific aviation requirements.

Our teams were able to provide assistance to the client, for both their aircraft procurement and aviation safety requirements. The client was pleased to be able to benefit from the provision of two very different aviation services, provided by one group, working closely together to deliver service excellence.

As a leading aviation services group, our broad suite of services and expertise allows us to collaborate, share knowledge and provide multiple services from security and safety to private charter, which

a client would otherwise have to obtain from various providers. With a strong geographic presence and years of aviation expertise, our team of aviation professionals consistently put our customers

first to deliver the extraordinary.

"This is a great example of how our teams work closely together to provide

a complete suite of aviation solutions for our clients."

Ian Holder, Managing Director, Baines Simmons

report Strategic

Air Partner plc | Annual Report 2020

33

Strategic report

Principal risks and uncertainties continued

Enterprise risk management (ERM) framework The Audit and Risk Committee has oversight of the enterprise risk management (ERM) framework and monitors this on behalf of the Board. The Committee is satisfied that management has put in place a proportionate and effective risk management framework to ensure all significant risks are identified and treated appropriately.

The Chief Executive Officer (CEO) has overall accountability for the control and management of risk. The individual members of the Group Executive Team, reporting to the CEO, are accountable for specific risks.

"The Committee is satisfied that management has put in place a proportionate and effective risk management framework."

Risk assessment

Identify

Measure

Risk analysis

Through risk workshops, we

The Board and the Group

identified and assessed new and

Executive Team analysed and

existing risks over the course of

prioritised the identified risks, with

the year as the Group's overall

a focus on those considered to

risk profile continued to evolve.

pose the greatest risk to achieving

our objectives.

Risk governance

The Audit and Risk

Committee received regularReport updates from both the Chief

Financial Officer and the Head of Risk and Assurance.

Our risk

management

framework

Treatment plans

Manage

and controls

The Group Executive

Team implemented

risk treatment activity

through regular reviews

and its general oversight

of the day-to-day running

of the business.

Monitor

Regular review

On behalf of the Audit and Risk Committee, the Head of Risk and Assurance monitored the application and effectiveness of the risk management framework and the risk treatment plans.

34 Air Partner plc | Annual Report 2020

Risk categorisation

We have identified six risk categories to ensure sufficient focus and clear ownership:

Risk categories

Environment

Contractual

Compliance

Financial

Strategic

Operational

and

and market

and internal

performance

risks

risks

counterparty

risks

control risks

risks

risks

report Strategic

The Group's risk register (i.e. risk mitigation plan) is maintained to record all principal risks and uncertainties identified in each part of the business.

A member of the Group Executive Team is allocated as the risk owner for each of the risks identified,

as appropriate.

The risk owners conduct an analysis of each risk, according to a defined set of assessment criteria, including:

How does the risk relate to

the Group's business model and/ or strategy?

What is the likelihood of the risk occurring?

What is the potential impact should the risk occur?

What would the consequences be over the short, medium or long term?

What mitigating actions are available and which are cost effective?

What is the degree of residual risk and is it acceptable?

"Risk management is important in an organisation because, without it, a firm cannot possibly define its objectives for the future. ...

The whole goal of risk management is to make sure that the company only takes the risks that will help it achieve its primary objectives while keeping all other risks under control."

The Institute of Risk Management

Air Partner plc | Annual Report 2020

35

Strategic report

Principal risks and uncertainties continued

Risk heatmap

The principal risks facing the organisation, at the signing of the accounts, are summarised in a heatmap opposite and provided in more detail on pages 37 to 41.

Key

  • High
  • Medium
  • Low

e c n a m r o f r e

p

l a

i c n

a n i F

ic

g

e

t

a

r

t

S

10

5

3 2

8

6

9 7

Environ

mentan d ma r k e t

4

1

O p

er a t i o n a l

C o

m

p

l

y

i

a

t

n

r

c

a

e

p

a

r

e

n

t

d

i

n

u

n

o

t

c

e

d

r

n

a

n

l

a

c

t

o

c

n

a

tr

tr

o

n

l

C

Risk

Category

Movement

Risk owner

1

People

Operational

Craig Pattison, Chief People and

Technology Officer

2

Changing market environment

Environment and

Kevin Macnaughton, Managing Director, Charter

(including COVID-19 impact)

market

David McCown, President, Americas

Paul Mason, Managing Director, Safety & Security

3

Market disruption, including

Environment and

Kevin Macnaughton, Managing Director, Charter

climate change concerns and

market

David McCown, President, Americas

the COVID-19 pandemic

Paul Mason, Managing Director, Safety & Security

4

IT systems and cybersecurity

Operational

Craig Pattison, Chief People and

Technology Officer

5

Growth - geographical expansion,

Strategic

Mark Briffa, CEO

acquisition and integration risk

6

Regulatory environment and compliance

Compliance and

Judith Banks, General Counsel and

internal control

Company Secretary

7

Suppliers and operators

Contract and

Kevin Macnaughton, Managing Director, Charter

counterparty

David McCown, President, Americas

8

Financial management and performance,

Financial performance

Joanne Estell, CFO

including COVID-19

9

Effective control environment

Compliance and

Mark Briffa, CEO

internal control

Joanne Estell, CFO

10

Concerns over Brexit and levels

Environment and

Kevin Macnaughton, Managing Director, Charter

of uncertainty

market

Paul Mason, Managing Director, Safety & Security

Change in risk assessment:

No change

Increased

Decreased

36 Air Partner plc | Annual Report 2020

Areas of

Controls/processes to

strategy

Category

Risk description

Potential impact

mitigate

impacted

Operational

People

Inability to attract and

Leadership development

Customers.

retain key individuals

programme launched.

Developing

The challenge of creating an

leading to a loss of

New vision and values defined

and

effective workforce through

earnings and key

for the organisation.

retaining

quality business leaders

customer/supplier

Annual performance

our people.

who engender a results-

contacts.

Growing

orientated culture and foster

The loss of key

management reviews using

creativity. See page 2 for

best practice processes.

organically.

personnel following

Company values.

acquisitions may

Remuneration packages evaluated

Broadening

Attracting new talent and

impact performance

regularly against market trends.

our offer.

retaining existing key staff who

and value.

Diversity and inclusion initiatives

have in-depth knowledge of the

Risk impact concerning

are in place and delivering results.

business and industry.

COVID-19 relates to a

Investment to build a learning

Our people are our competitive

loss of productivity,

organisation with a focus on

advantage especially around

high sickness rates

culture, reward and recognition.

sector knowledge, key

and employee fatigue.

Regular town hall forums to

customer relationships and

technical expertise in the

communicate the business

aviation industry.

strategy and performance.

A more recent challenge has

Emergency response plan

been keeping the workforce

to restrict the effect of

effective whilst ensuring their

COVID-19 on the workforce,

safety during the COVID-19

including furloughing and

pandemic. It is expected that

the implementation of

there will also be challenges in

safety measures.

remobilising the workforce once

Design of plan to reintroduce

normal working practices

staff to the working environment

resume. This applies to both

post COVID-19.

staff who have been furloughed

Owner: Craig Pattison, Chief

and staff who remained.

People and Technology Officer

Environment

Changing market

The inherent risk of

We have a large customer base

Customers.

and market

environment

the limited visibility of

that is diversified across business

Maintaining

future bookings and

sectors. We also have a strong

brand value.

Air charter bookings can be

contraction of charter

network of suppliers across

availability may result

geographic regions. This allows

Growing

materially impacted by changes

in reduced gross profit

for some 'smoothing' when there

organically.

in financial markets, political

and a cost structure

are seasonal or sectorial changes

instability and natural events

that does not align

in demand.

affecting the movement of

with market conditions.

people or cargo.

Air Partner actively seeks to improve

The risk of long-term

The financial challenges to

the forward visibility of its earnings

social distancing and

by investing in the growth of its

operators and the consequent

the sporadic peaks

Safety & Security division. To this

availability of capacity continues

around the global

end, Redline Worldwide Limited was

to be a factor in the market.

pandemic of COVID-19

acquired in December 2019, which

Safety & Security are largely

could result in a

has strong order book coverage

stable trading environments

laboured return to

through long-term contracts and

with predicable industry needs

normal air travel and

strong customer relationships

resulting from mandated

reduced levels of

(see acquisition note 2). This will

regulatory requirements.

trading into 2021.

help smooth the inevitable peaks

Fluctuations occur from major

Safety & Security is

and troughs in the Charter division.

security incidents from acts of

well placed to adopt

We continue to focus on overheads

unlawful interference and acts

and grow in a new

relative to our revenues and take

of terrorism resulting in greater

aviation environment,

corrective action where necessary.

demand for new equipment,

largely down to its

training and quality assurance.

ability to deliver

We are monitoring the

COVID-19 has created

many of its services

marketplace and assessing

through its technology

indications of changes due

additional uncertainty around

investments using

to COVID-19.

the future of the market. Whilst

e-learning, virtual

there has been some increase

Owners: Kevin Macnaughton,

classrooms and

in demand for certain products

Managing Director, Charter

digital security and

and services in the short term,

David McCown, President,

safety platforms,

future demand and the availability

amongst others.

Air Partner Americas

of operators cannot be predicted.

Paul Mason, Managing Director,

Safety & Security

report Strategic

Air Partner plc | Annual Report 2020

37

Strategic report

Principal risks and uncertainties continued

Areas of

Controls/processes to

strategy

Category

Risk description

Potential impact

mitigate

impacted

Environment

Market disruption

The Group's ability to

We continue to invest in improving

Customers.

and market

(including climate change

maintain and grow

the customer experience of

Growing

revenues and gross

Air Partner, relative to peers, and

concerns and the COVID-19

organically.

profit could be

review technology innovations in

pandemic)

adversely affected.

the sector.

The challenge of retaining and

We actively seek feedback and

undertake customer surveys to

attracting customers in a highly

ensure we remain responsive

competitive environment with

to customer demands, relative

low barriers to entry (in Charter).

to competitors.

The risk of falling behind

Our Marketing division has

competitors in product

completed a rebranding exercise

development, technology

during the year and is in the

innovation, standards of service

process of rolling this out across

or cost effectiveness.

the Group. This should help

The impact of customers'

customer retention and attract

concerns in respect of air

new customer propositions.

travel on the environment, in

We are considering further

particular private jets, and the

measures to ease climate change

possible reduction in demand.

concerns, including carbon

The impact on the aviation

offsetting opportunities. See the

industry if there are

Sustainability section on pages 45

governmental and regulatory

and 46. Any changes in regulations

changes in respect to the

may be an opportunity for our

climate change agenda.

Safety & Security division.

Restrictions and the reduction

We are introducing measures

in air travel as a result of

in order to mobilise quickly to

concerns over the spread

meet market demand driven by

of COVID-19. It is not known

the effect of COVID-19 and

how long this may impact the

post COVID-19 when restrictions

market and what the recovery

are eased.

will look like.

Owners: Kevin Macnaughton,

Managing Director, Charter

David McCown, President,

Air Partner Americas

Paul Mason, Managing Director,

Safety & Security

Operational

IT systems and

Breaches of

The Group uses modern IT systems

Customers.

cybersecurity

confidentiality and

and ensures that they are well

Maintaining

attacks on the

maintained and upgraded regularly

Cyber-attacks seeking to

brand value.

Company's assets

to mitigate the risk of failure.

compromise the confidentiality,

could affect customer

Investment in training and resources

integrity and availability of

service, financial

IT systems and the data held

to counteract cyber threats.

performance and

on them are an increasing risk.

reputation.

Our business resilience is

Risks from social engineering

Systems failure could

underpinned by our technology

and potential losses through

and geographical spread, which

result in business

fraud and theft.

allow our business to be operated

interruption and

and maintained from any of

The dependency on resilient

lost revenue.

our locations.

IT systems and good security

Financial losses

In case of an outage, external

awareness has been

through payment

heightened due to COVID-19

contingency arrangements are

deception.

as fraudsters have looked to

tested on a regular basis.

capitalise on the situation.

The Group has cyber insurance

to mitigate the impact of any

cyber-related losses.

Reinforcement of good IT

security measures to be observed

by staff during homeworking due

to COVID-19.

Owner: Craig Pattison, Group

People and Technology Officer

Change in risk assessment:

No change Increased

Decreased

38 Air Partner plc | Annual Report 2020

Areas of

Controls/processes to

strategy

Category

Risk description

Potential impact

mitigate

impacted

Strategic

Growth - geographical

Business growth puts

Detailed due diligence undertaken

Broadening

expansion, acquisitions

pressure on all

with appropriately skilled

our offer.

resources in an

personnel, supported internally

and integration risk

Customers.

organisation that may

and externally as required.

Our growth strategy is one

not have had the time

Project teams are established with

Growing

of organic growth and

to scale up or

clear lines of responsibility and

organically.

complementary acquisitions

adequately plan for

ownership. Ultimately the Board

in aviation services. Growth

the change.

reviews progress on key strategic

presents both a risk and

Poor acquisitions lead

projects and post-completion

an opportunity.

directly to financial

reviews of both acquisitions and

We have opened new offices

damage and indirectly

organic growth initiatives.

in Houston, Singapore and

to reduced shareholder

Appropriate representations

Dubai over the last financial

confidence.

and warranties negotiated,

year and continue to consider

Financial performance

commensurate with target's

other locations and opportunities.

suffers from goodwill

size and risk profile.

The risk here is that the

or other impairment

investment does not deliver

Detailed integration plans drawn

charges.

the expected returns relative

up with key accountabilities.

to the business case.

Newly acquired

Post-acquisition reviews

We may invest funds and

businesses deliver

conducted to capture key

less value or require

resources in acquisitions which

learnings for future acquisitions

more investment

fail to deliver on expectations

and business cases.

than anticipated.

due to incorrect due diligence

Owner: Mark Briffa, CEO

or poor execution post acquisition. In 2019, we acquired Redline Worldwide Limited to complement our existing Consulting & Training business, which we have now renamed Safety & Security.

report Strategic

Compliance and internal controls

Regulatory environment, ethics and compliance

The challenge of operating in multiple jurisdictions that are subject to many different and evolving laws and regulations.

We have c.450 employees in a number of countries. Individuals may not all behave in accordance with the Company's values and ethical standards.

We operate in markets requiring strict adherence to laws such as:

bribery and corruption;

international trade laws; and

General Data Protection

Regulation (GDPR).

Non-compliance with regulations could result in loss of customers or damage to the Group's reputation.

Ethics or compliance breaches cause harm to our reputation, financial performance, customer relationships and ability to attract and retain talent.

The Group has dedicated legal resources supplemented by external support arrangements to ensure the management team fully understands current and future legal and regulatory risk.

The implementation of the Group's compliance programme is a regular agenda item at both Board and Audit and Risk Committee meetings.

During the year, we have introduced a new tool to improve how we review and monitor our 'Know Your Customer' processes and delivered training in our main business locations. We have enhanced how we train our staff in areas such as general data protection, market abuse regulation and share dealing, confidentiality, conflicts of interest, whistleblowing, trade compliance and money laundering.

Owner: Judith Banks, General

Counsel and Company Secretary

Customers.

Developing

and retaining

our people.

Maintaining

brand value.

Air Partner plc | Annual Report 2020

39

Strategic report

Principal risks and uncertainties continued

Areas of

Controls/processes to

strategy

Category

Risk description

Potential impact

mitigate

impacted

Contractual

Supplier and operators

Failure of aircraft or

We have an approved list of

Customers.

and

Reliance on third parties

operator chartered by

aircraft that we charter on behalf

Maintaining

Air Partner.

of our customers, ensuring that

for delivery of services to

brand value.

counterparty

the best and most appropriate

end customers.

Loss of customers and

aircraft is used.

Growing

Operator compliance with

revenues.

organically.

Air Partner's approved list is

relevant regulations.

Loss of earnings and

continually screened, assessed

Financial exposure if customers

cash impact.

and benchmarked to ensure

fail to pay for Charter services

Negative reputational

every aircraft meets all our

after Air Partner has paid the

ramifications.

stringent tests, as well as all

operators in advance of flight

third-party requirements and

take-off, which is customary

independent assessments.

and practice in the industry.

The Group constantly monitors

During COVID-19, there has

defaults of customers and other

been an increased focus on

counterparties and incorporates

contractual and counterparty

this information into its credit

risks as staff have operated to

risk controls.

shorter timescales and, in some

It is the Group's policy that all

cases, urgent demand.

counterparties which wish to

trade on credit terms are subject

to an external credit verification

process before and during the

business relationship.

Where appropriate, we also aim to

use third-party bank guarantees

instead of cash deposits.

We are monitoring the resilience

of operators and ensuring key

contracting controls are observed

during the COVID-19 pandemic.

Owners: Kevin Macnaughton,

Managing Director, Charter

David McCown, President,

Air Partner Americas

Financial

Financial management and

Loss of earnings.

The Group's policy on foreign

Customers.

performance

performance

currency risk is not to enter into

Maintaining

forward contracts until a firm

There is a foreign exchange risk

contract has been signed.

brand value.

as we buy and sell goods and

Furthermore, Air Partner

Growing

services in currencies other

considers using derivatives where

organically.

than Sterling, particularly with

appropriate to hedge its exposure

regard to the US Dollar and

to fluctuations in foreign exchange

Euro rates.

rates. The purpose is to manage

There is both a credit and liquidity

the currency risks arising from the

risk in paying operators before

Group's operations.

a flight occurs or before payment

The Group aims to mitigate credit

is received from the customer.

and liquidity risk by making

We need to always ensure

payments to operators only once

we have sufficient cash and

payment from the customer has

banking facilities to respond

been received, where possible.

quickly to market conditions

Regular monitoring of cash

and investment opportunities

and investment in banking

as they arise (i.e. acquisition

relationships, creating a culture

and business expansion).

of cash management across

The financial pressures of

the organisation.

COVID-19 have caused an

Owner: Joanne Estell, CFO

increased focus on cash

and liquidity.

Change in risk assessment: No change Increased Decreased

40 Air Partner plc | Annual Report 2020

Areas of

Controls/processes to

strategy

Category

Risk description

Potential impact

mitigate

impacted

Compliance

Effective control

Loss of earnings.

Our risk management and

Maintaining

and internal

environment

Damage to brand

internal control framework is

brand value.

overseen by the Audit and Risk

Ensuring appropriate and

reputation and

controls

Committee (ARC). The Head of

effective controls and risk

stakeholder trust.

Risk and Assurance supports the

management frameworks

ARC and is responsible for the

are embedded in our

internal audit function.

changing business.

Refer to pages 32 to 35 to

understand our process.

We have introduced measures

to track the implementation of

agreed control improvements.

We have a number of automated

initiatives currently underway

to enhance operational and

financial controls.

Owners: Mark Briffa, CEO

Joanne Estell, CFO

Environment

Concerns over Brexit and

Financial loss.

Senior management and the

Growing

and market

levels of uncertainty

Business interruption.

Board have regularly considered

organically.

the potential impact of the UK's

During 2019, there was

withdrawal from the EU.

continued uncertainty around

While the full implications and

the UK's exit from the EU

(Brexit), and the implications

consequences will not be

this would have for both the UK

understood and experienced

and aviation markets.

until later in 2020, the Group

The uncertainly directly

continues to regularly monitor

the economic indicators of the

impacted the Charter business

markets in which it trades, and

as organisations delayed key

is experienced in implementing

flying decisions and activities.

appropriate mitigating actions.

The Group has strong

relationships with technical

specialists and regularly liaises

with them to ensure that the

Group is well placed to react to

legislative or other changes that

occur as a result of Brexit.

Owners: Kevin Macnaughton,

Managing Director, Charter

Paul Mason, Managing Director,

Safety & Security

report Strategic

Air Partner plc | Annual Report 2020

41

Strategic report

Principal risks and uncertainties continued

Statement on the risks and effects of COVID-19

The COVID-19 pandemic has had a severe impact on the aviation industry globally, characterised by extensive travel restrictions, and the operating environment remains extremely challenging.

As referenced in the Principal Risks and Uncertainties above, COVID-19 has disrupted the Air Partner business in several ways, although the organisation has reacted quickly through its emergency response process and put in place several measures to protect staff and business operations.

The Group has acted swiftly to preserve cash and maintain working capital, implementing a series of temporary cost management initiatives that includes furloughing part of our workforce and reducing working hours. This has allowed the organisation to access government support measures. The Group is also giving careful thought to the actions required when normal working practices resume, including remobilising staff and the emerging market requirements.

Our work during this crisis has demonstrated the value of our diversified aviation services, which operate across multiple markets, helping to offset volatility in any one market or product line. While health and safety concerns and travel restrictions have impacted routine demand for our Charter services, the Group has carried out a significant amount of evacuation and repatriation work for customers including the UK government and has seen high levels of demand for our Freight offering. Activity in these areas has so far outweighed a decline in Safety & Security and Private Jets charter.

However, while we have enjoyed a strong start to the current financial year, these circumstances are unprecedented, and we have very limited visibility for the months ahead. We therefore continue to monitor the situation closely so that we can take any necessary action as we manage the business for the long term and in the best interests of all stakeholders.

Pages 1 to 49 of this Annual Report constitute the Strategic Report. It has been approved and signed on behalf of the Board on 22 May 2020.

Mark Briffa

Chief Executive Officer

Joanne Estell

Chief Financial Officer

42 Air Partner plc | Annual Report 2020

Going concern and viability statement

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 49. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described in the Strategic Report on pages 27 to 31. In addition, note 24

  • Financial Instruments in 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.

As at 31 January 2020 the Group had a net debt position of £6.9m (excluding JetCard cash), compared to a net cash position of £2.0m at the previous year end. The reduction in cash is driven by the acquisition of Redline Worldwide Limited. The consideration included a cash payment of £7.4m and acquisitions cost of £0.6m. The acquisition was funded by increasing the Group's borrowing by £6.0m. Following a strong first quarter as at 30 April 2020, the Group had unaudited normalised net cash

of £1.7m, giving a total available headroom of £16.2m. In light of COVID-19, normalised cash adjusts the cash in the bank (excluding JetCard) for significant customer deposits and advance payments.

Group borrowing is comprised of a revolving credit facility of £13.0m (2019: £7.5m), of which the Group currently utilises £11.5m (2019: £5.5m). The Group can draw down the remaining £1.5m on demand. The facility is due to expire in February 2023. For short-term liquidity this means the Group also has access to a £1.5m overdraft facility.

As described in the Strategic Report, COVID-19 has increased significant uncertainty surrounding the future trading environment for the Group. Whilst performance in the first quarter of FY21 has been very strong, supported by additional Group Charter activity of repatriation flights and freight, there remains uncertainty over the trading performance for the rest of the year. Accordingly, the Directors have undertaken a thorough assessment in evaluating Going Concern. This has been assessed by reference to cash forecasts through to May 2021, which reflect a cautious view of trading activity across our divisions, and further sensitivities have then been applied to reflect a slower recovery in underlying performance from the COVID-19 pandemic.

We have also assessed banking covenants throughout this period and taken the precautionary step to obtain waivers of our banking covenants for the periods October 2020 through until April 2021. These waivers have been granted by our lenders. In all scenarios tested there are no reasonably foreseeable downside scenarios where the Group would not maintain sufficient liquidity.

Following the year end, the Directors have taken steps to equip the Group to deal with the economic impact of the COVID-19 pandemic. These include reviewing credit terms, cost cutting measures and utilising government support for staff costs where appropriate. The Directors believe the steps detailed above and the strong cash position at the end of April 2020 mean the Group is well placed to manage its business and meet its liabilities as they fall due.

In reaching this conclusion, the Directors have taken into account the risks identified in the principal risks and uncertainties on pages 32 to 42.

The Directors have made appropriate enquiries and have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for a period of at least 12 months from the date of this report. Thus, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.

Viability statement

In accordance with the requirements of the 2018 UK Corporate Governance Code, the Directors have assessed the longer-term prospects of the Group, taking into account its current position and a range of internal and external factors, including the principal risks detailed on pages 32 to 42 (the viability assessment).

The Directors have determined that a three-year period is an appropriate time frame for the viability assessment. The selected period is considered to be appropriate as it represents the limit of acceptable forecasting accuracy and recognises the unpredictability of the Charter business.

The Directors have considered the current financial position, the prospects of the Group, the detailed operating plan for the 2021 financial year and the strategic plan when making the viability assessment. Against the underlying financial model, the Directors have modelled potential scenarios to assess the impact on the business of key risks materialising and mitigating steps that can be taken to address these. These risks are high impact events as detailed in the principal risks and uncertainties on pages 32 to 42.

report Strategic

Air Partner plc | Annual Report 2020

43

Strategic report

Going concern and viability statement continued

Viability statement continued

The revised models review the impact of the risks on the long-term ability of the Group to continue to operate, in terms of profitability, cash flow and adherence to banking covenant tests. The Directors have considered the impact of the risks both in isolation and cumulatively. The Directors are confident that the Group's diversification in products, services and geographic base means it is well positioned to react to any changes if any of the risks identified are crystallised.

The impact of COVID-19 has been scrutinised due to the wide-ranging effect on the economy and uncertainty over how long it will last. The model has assumed that the restrictions in movements to contain the virus will be in effect in some capacity until mid-2021. The model assesses how each of the Group's revenue streams are likely to be impacted and the potential timeline for that revenue stream to return to pre-COVID levels. The Directors believe that the steps detailed in the Going Concern section above and the current financial position mean the Group is well placed to absorb the impact

of COVID-19.

Based on the assessment detailed above, the Directors have a reasonable expectation the Group will remain viable for the period being assessed and will continue to operate and meet its liabilities as they fall due. The Directors have no reason to doubt that the Group will continue in business beyond the period under assessment.

44 Air Partner plc | Annual Report 2020

Sustainability

Creating a net positive impact

"The Company recognises that the business has a role in contributing to wider society and is committed to improving the impact of its operations on the environment."

report Strategic

Environment, Social and Governance Report

The Company is committed to understanding and improving the impact of its operations on the environment and society. The Company has an impact on the local economies and communities within which it works and recognises its responsibility to the stakeholders in these groups. An environment, social and governance working group was set up during the year to consider the Group's impact on the environment. The aim is to develop

Key focus areas

Environment

Refresh our carbon offset scheme

Develop and implement a carbon reduction programme for offices within the Group

Social

Create an inclusive and safe working environment for our people to ensure they reach their full potential

Positively impact the communities and societies in which we operate

Governance

Manage our corporate governance framework to support the objectives, strategy and business model of the Group

Promote an open and inclusive culture and high ethical working standards

  1. long-termenvironmental strategy and framework of initiatives along with adopting a group-wide cultural and policy change aligned with this strategy.

Our vision and commitment

To develop and implement a long- term environmental, social and governance strategy, setting goals and targets and operating within a responsible and sustainable framework.

Initial work was carried out by the working group. Following feedback from our customers and our people through engagement surveys the following key focus areas have been prioritised:

Environmental

Carbon offset scheme

It is recognised that air travel brings economic, cultural and personal benefits but aviation is under increased scrutiny in the environmental and climate change arena. There is a continued demand for travel which brings regional cohesion and economic growth. The Company aims to promote sustainable flying to balance its environmental and social responsibilities.

The immediate aim has been to refresh the carbon offsetting options available to our Charter customers. In order to achieve this, the Company has formed a new partnership with ClimateCare to provide customers with the ability and choice to offset the carbon emissions of private charter flights.

Formed in 1997, ClimateCare is a market leader in the global carbon markets and climate change sector. ClimateCare and its partners have removed over 35m tonnes of CO and improved the quality of life for more than 37m people around the world over the last 20 years.

ClimateCare has first-hand experience in the aviation sector working with some of the world's renowned airlines. The programme enables customers to calculate and offset their carbon emissions dependent on the type of aircraft being chartered and the distance flown. Carbon credits are purchased from the Climate+Care portfolio, which includes projects that

not only cut carbon but tackle poverty, improve health and protect the environment.

Air Partner plc | Annual Report 2020

45

Strategic report

Sustainability continued

The scheme is an 'opt-in' scheme which gives our customers the choice and flexibility to add the cost of offsetting to their charter flight. A soft launch of the scheme to test its effectiveness has been successfully trialled within the business and will be formally rolled out during 2020.

In the longer term the strategy will revolve around adding additional value for our customers to the scheme.

Carbon reduction programme for offices within the Group

The Company actively promotes the use of public transport, cycling to work initiatives, car sharing, and home working coupled with the increased use of video conferencing technology to reduce employee travel.

Further initiatives to be considered to reduce the carbon footprint

of our offices will include carbon offsetting of employee travel, use of sustainable suppliers and improving resource and waste management processes.

Social

Create an inclusive safe working environment for our people to ensure they reach their full potential Throughout the year, the Company has enhanced the working environment for all employees.

Our people are our greatest assets and we are passionate about attracting new talent as well

as developing and retaining our current talent. As a result, the Air Partner Career Development Framework was launched in the UK. The framework provides a simple and robust basis to support career development and reward within the Group. The framework will be rolled out internationally during 2020.

A working group was set up this year to raise awareness of mental health and wellbeing across the Group. This group has attended awareness sessions run by a mental health charity with some

of the team becoming Mental Health First Aiders in the workplace. Further initiatives will be launched over the next year to show that the Company is visibly committed to positive mental health, that managers are informed and open to conversations with their teams and that our people are self-aware and can ask for help when needed.

An Employee Advisory Panel was established as an engagement mechanism for the Board of Directors to gather the views of the workforce on key strategic matters. Further details on employee engagement can be found in the Corporate Governance Report on pages 52 to 55.

Positively impacting the communities and societies in which we operate Air Partner is conscious of its impact on the communities and societies in which the business operates. Efforts to create positive impact include:

creating employment opportunities in local markets and develop talent and skills;

driving charitable initiatives and supporting and donating to charities - the Group has chosen the World Wide Fund for Nature (WWF) as its dedicated charity for 2020. WWF is the world's leading independent conservation organisation;

actively encouraging staff by offering volunteering days to support projects in their local communities.

Governance

A strong governance framework aligned to the Group's long-term strategic development is critical to support the business and enhance stakeholders' interests for the future. The Corporate Governance Report on pages 50 to 62 includes details of our corporate governance framework, values and culture.

"The Company aims to promote sustainable flying to balance its environmental and social responsibilities."

46 Air Partner plc | Annual Report 2020

Section 172 statement

Section 172 of the Companies Act 2006

The Directors are required to act in a manner which complies with their duties as set out in the UK Companies Act 2006.

report Strategic

This serves as our section 172 (s.172) statement and should be read in conjunction with the stakeholder engagement section in our Corporate Governance Report on pages 52 to 55. Under s.172 of the Companies Act 2006, Directors have a duty to promote the success of the Company for the benefit of the members as a whole and, in doing so, have regard to the interests of stakeholders in their decision making. The Directors, acting fairly and in good faith, consider what is most likely to promote the success of the Company for its members in the long term.

Consideration of stakeholders' interests has always been integral to the work of the Board and in its decision making. The Board's

decision-making process includes deliberating the impact of decisions on the key stakeholder groups identified by the Board. For strategic decisions, the Board is provided with associated documentation to allow an informed assessment, for example an outline of key risks and opportunities and of the possible impact on stakeholders and long-term forecasts. The Board also understands the importance of ensuring it has an effective engagement framework to capture feedback on the business' impact. Details of the stakeholder groups' key concerns and methods of engagement can be found on pages 52 to 55.

"Consideration of stakeholders' interests is integral to the work of the Board and in its decision making."

Air Partner plc | Annual Report 2020

47

Strategic report

Peter Saunders Annual Award for Extraordinary Customer Service

In 2018 we launched the Peter Saunders Annual Award for Extraordinary Customer Service to recognise the lasting impact our late Chairman, Peter Saunders, had on our Group. With a strong career in retail,

Peter intrinsically knew the importance of customer service to business performance and reputation and was key to the introduction of our Customer First programme that helped us to put customers at the heart of everything we do.

The winner of the award for 2019 was Kailesh Patel, Senior Finance Business Partner. Kailesh has worked at Air Partner since 2017 and has provided invaluable support to the Group, consistently providing insightful analysis that has helped inform key decisions made across the Group,

in support of our strategy. Kailesh has consistently lived our brand values

  • care deeply, take responsibility, work as one, and be extraordinary. Customer First is a philosophy that is embraced across our organisation and we recognise the work that Kailesh and our Group functions do to deliver success internally within the organisation as well as playing their part in delivering the extraordinary to our customers.

"Kailesh is a great asset to the Group and consistently demonstrates all of our core values. Customer First is a philosophy that is embedded in our organisation and Kailesh goes above and beyond with

his customer-centric approach."

Mark Briffa, Chief Executive Officer

48 Air Partner plc | Annual Report 2020

Section 172 statement continued

Examples of strategic decisions taken within the year and stakeholder consideration

report Strategic

Acquisition of Redline Worldwide Limited

The Board was supplied with a business case for the acquisition focusing on the product and service offering, market drivers, environmental factors and strategic rationale, along with regular updates on the due diligence process. Substantial information was available to the Board to allow an analysis of the impact on stakeholders and inform decision making.

Stakeholders

Considerations

Shareholders

Alignment to the Group's

long-term strategy to become

a world-class global aviation

services group

Evaluation of funding

methods and associated

shareholder impact

Long-term sustainable

value and forecast of

revenue generation

Our people

Integration programme for

both new and existing staff

Formation of a new division

and addition of new capabilities

Learning opportunities and

cross-selling

Management bandwidth

Customers

Enhancement of our

customer offering

Extending our suite of

aviation services

New customers and

crossselling opportunities

Suppliers

Integration of new suppliers

Opportunities for existing

suppliers

Community

Employment opportunities

in new location

New offices in Dubai and Singapore

Business proposals for new jurisdictions included product and service offering, market drivers, the associated costs and ease of opening a new office in the jurisdictions identified, choices of entity, environmental factors and strategic rationale.

Stakeholders

Considerations

Shareholders

Alignment to the Group's

long-term strategy to become

a world-class global aviation

services group

Organic growth into

new markets

Long-term sustainable value

and forecast of revenue

generation

Our people

Opportunities for new and

existing staff

Cross-selling opportunities

Customers

Enhancement of our customer

offering with extended

geographic reach

New customers and

crossselling opportunities

Suppliers

New market for existing and

new suppliers

Community

Local employment and supplier

opportunities in new geography

Air Partner plc | Annual Report 2020

49

Corporate governance

Chair's introduction to governance

Ed Warner, Chair

On behalf of the Board, I am pleased to introduce our Corporate Governance Report for the year ended 31 January 2020. As a Board, we are committed to delivering the highest standard of corporate governance, believing a strong, effective and efficient governance framework to be essential for our long-term success. With the introduction by the UK Financial Reporting Council (FRC) of the

2018 UK Corporate Governance Code (the Code) we have renewed and strengthened our governance framework to apply the principles of the Code.

We continue to recognise that good governance is paramount. It is an essential part of our brand values

and something our customers, shareholders, employees and other stakeholders place considerable value in. Ensuring the effectiveness of the Board as we deliver our governance priorities continues to be a key focus.

Key governance activities in the year During the course of the year, the Board had a strong focus on implementing the changes brought about by the Code. The Board considered how best to engage with key stakeholders and strengthened existing engagement methods. An Employee Advisory Panel was formed, and a designated Non-executiveDirector appointed to act as a conduit between the Board and the workforce.

The annual process of Board and Committee evaluation was bolstered this year with a refreshed approach taken allowing for a comprehensive review of Board effectiveness.

Good corporate governance underpins the Company's objectives, strategy and business model, details of which can be found in the Strategic Report on pages 1 to 49. The Company has applied the main principles of the Code and a sound structure is in place to support this.

Board changes

Having taken up the role of Chair of the Board on 1 April 2019 this is my first full year of tenure.

We welcomed Paul Dollman, who joined the Board as a Non-executive Director on 1 May 2019 and became Chair of the Audit and Risk Committee on 26 June 2019.

Sadly, we reported that Richard Jackson, Non-executive Director and Senior Independent Director, passed away

in March 2020 after a short illness. Richard joined the Board on

8 September 2016 and was appointed as Senior Independent Director on 28 June 2017. He also acted as the Company's Interim Chair between

4 September 2018 and 30 March 2019, reverting to Senior Independent Director upon my appointment. Over this period Richard provided a significant contribution to the Company's strategy and Board discussions.

I remain confident we have a Board with the right capabilities and experience to deliver our long-term strategy and commitment to high levels of corporate governance. The following pages set out our governance processes and explain some of the changes we have made this year.

Ed Warner

Chair

22 May 2020

Compliance Statement

This corporate governance statement, together with the Nomination Committee report on pages 63 and 64, the Audit & Risk Committee report on pages 65 to 67, and the Directors' Remuneration report on pages 69 to 82, provide a description of how the main principles of the UK Corporate Governance Code 2018 have been applied by the Company during the year ended 31 January 2020. The Code is published by the Financial Reporting Council and is available on its website at www.frc.org.uk. It is the Board's view that, throughout the year ended 31 January 2020, the Company fully complied with the relevant provisions set out in the Code. This statement complies with sub-sections 2.1, 2.2(1), 2.3(1), 2.5, 2.7, 2.8A and 2.10 of Rule 7 of the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority. The information required to be disclosed by sub-section 2.6 of Rule 7 is shown on page 84.

We support the principles and provisions set out in the Code and consider it our duty to manage the Group in accordance with these. 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.

Details of our corporate governance practices are publicly available on our website, www.airpartner.com.

More information:

Board leadership and Company purpose

- see pages 51 to 56

Division of responsibilities - see pages 61 and 62

Composition, succession and evaluation - see page 62 and the Nomination Committee Report on pages 63 and 64

Audit, risk and internal control - see the Audit and Risk Committee Report on pages 65 to 67 and page 68

Remuneration - see the Directors' Remuneration Report on pages 69 to 82

50 Air Partner plc | Annual Report 2020

Corporate governance report

Board leadership and Company purpose

Role of the Board

The Board is responsible for maintaining sustainable value for our shareholders and promoting the long-term success of the Company. It 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 confirms that it has completed a robust assessment of the Company's emerging and principal risks, as detailed in Principal Risks and Uncertainties on pages 32 to 42.

Company purpose

The Board establishes the Company's purpose, values and strategy. In line with the Company's purpose, the Board sets the strategic aims of the Group and rigorously reviews trading performance against strategic initiatives and financial targets set at the beginning of the year. The Board also ensures the necessary resources are in place to achieve the strategic aims.

Values and culture

The Company is reliant on teams of great people to deliver an extraordinary service. This is supported by a culture committed to customer centricity. We have five core values, namely 'Care deeply', 'Take responsibility', 'Live your passion', 'Work as one' and 'Be extraordinary'. These values underpin our strategy and are clearly communicated within the organisation to provide the framework of our culture and define the way in which our employees go about their business. These values, together with the Company's policies, are the thread aligning the practices and behaviours of the business to the Group's strategy. The Board recognises the importance of the Company's remuneration practice and policies being aligned to the strategy and values. In 2019, a comprehensive review of the UK discretionary variable pay plans for the sales and broking teams was completed and the plans were amended to ensure that they are driving behaviours aligned to the Company's purpose, strategy and values. Leading by example, the Board operates in a transparent environment and encourages debate of issues.

This approach is cascaded from the Board to the Group Executive Team to foster a culture of openness and responsibility.

Examples of ways in which the Board monitors and assesses culture

Who

How

The Board

As the designated Non-executive Director, Amanda Wills attends Employee Advisory Panel

(the Panel) meetings, allowing her to assess culture. The Panel is tasked with considering employee

engagement mechanisms and culture. Amanda gives feedback to the Board on these activities.

The Board evaluation carried out during the period specifically asked about the culture of the

Company and how this was linked to strategy.

The General Counsel and Company Secretary reports to the Board on any whistleblowing

investigation made in accordance with the whistleblowing policy.

The Group business ethics policy explains the Company's approach to ethical and professional

standards and ensures employees know what is expected from them to uphold these standards.

The Chief Executive Officer reports to the Board on the results of any employee engagement surveys

undertaken, allowing the Board to assess any cultural misalignment and discuss corrective actions.

No engagement survey was conducted during the year, however the Board took time to address

feedback on communication, engagement, reward and recognition from the prior year's survey.

The implementation of any new policies or significant change to existing policies is reported to the

Board by the Chief Executive Officer to ensure cultural alignment.

Board members

Board members visit different Group offices both in the UK and overseas enabling them to interact

with employees in their own surroundings and assess culture in a local context. For example the Chair

visited the United States and spent time with employees from each of the regional offices representing

varying levels of seniority.

The Executives operate an open door policy and are available to staff, facilitating a culture of transparency.

Audit and Risk

Attitudes to compliance, risk and internal audit help to give an indication of culture. The Committee

Committee

provides an oversight of all business risks including those arising from conduct within the organisation.

The Committee monitors compliance with key Group policies including those relating to conduct and

culture, for example business ethics, Group operating rules, staff commissions and gifts and hospitality.

All agenda items and reports are considered for any conduct and culture implications and their impact

on the vision and values across the Group.

Remuneration

Overviews of employee pay structures and their alignment with the Company's purpose, values and

Committee

strategy are provided to the Committee allowing the Committee to ensure relevant policies and

practices promote the Group's values.

Nomination

The Committee considers the Group's equality and diversity policy, gender balance and succession

Committee

planning. This allows the Committee to ensure policies and practices are consistent with values and

provide for an inclusive and diverse culture.

governance Corporate

Air Partner plc | Annual Report 2020

51

Corporate governance

Corporate governance report

Board leadership and Company purpose continued

The Board is satisfied that the policies, practices and behaviours of the Group are aligned with the Company's purpose, values and strategy and continually monitors this alignment. Outcomes of the Board's evaluation of culture included:

•• renewed training programmes to employees to ensure all relevant policies are embedded in the Company's culture;

•• constant monitoring of any culture-related incidents, regularly discussed in the Group Executive Team's meetings and reported to the Audit and Risk Committee;

•• encouragement by Amanda Wills for the Panel to seek understanding and give insight on the Group's culture; and

•• assessment of culture added as a regular item for discussion at the Board's meetings and at the Board's annual strategy day.

During the year, the Board's governance has contributed to the Company's strategy as follows:

Key strategic activities

Acquisition of Redline: The acquisition was aligned with the Group's diversification strategy and reviewed for strategic fit and cultural alignment to the Group. The risks were reviewed and balanced against opportunities to broaden service offerings and grow the Safety & Security division. The acquisition added to the Group's capabilities and product offering with a new suite of services and also brought cross-selling opportunities. Full Board approval was sought for the transaction and delegated authorities were in place to progress it. The impact on all stakeholders groups was considered and further details are included in our Section 172 Statement on pages 47 to 49.

New offices in Singapore, Houston and Dubai: The opening of new offices followed the organic growth element of our strategy and provided opportunities to extend the Groups' geographic footprint. The new offices added to the Group's customer base and market share and the Board considered customer needs in the locations. The impact on all stakeholders groups was considered and further details are included in our Section 172 Statement on pages 47 to 49.

Further details on the Company's purpose, values and strategy and the assessment of the basis on which the Company generates and preserves value over the long term can be found in the Strategic Report on pages 1 to 49.

Stakeholder engagement

During the year, the Board spent time considering and developing its stakeholder engagement mechanisms and focusing on its understanding of stakeholders' views. The Board recognises its duty to promote the success of the Company for the benefit of its members and, in doing so, to ensure it has regard for the interests of all stakeholders and its contributions to wider society. More information about how the Directors have discharged their duty under Section 172 of the Companies Act 2006 is available in the Strategic Report, on pages 47 to 49.

Regular updates explaining how key stakeholders' needs are addressed are provided to the Board. These include reports on customer and supplier feedback and surveys, reporting on participation in industry forums and events, community activities, engagement with shareholders following roadshows and meetings and engagement with employees through the Employee Advisory Panel and other methods. These updates serve to enhance the Board's understanding of stakeholder views and aid decision making.

The Board considers that engaging with stakeholders and understanding their views is fundamental to the way the Company does business. The people, business partnerships and community stakeholder groups are all integral to our business and their input, cooperation and trust is imperative to the success of the Company.

52 Air Partner plc | Annual Report 2020

Our stakeholders and how we engage with them

Stakeholder

Key concerns

Engagement

Outcomes

Shareholders:

Financial and

Annual General Meeting (AGM): Shareholder

AGM: The 2019 AGM was well attended

Our investors

operational

participation has been welcomed at previous AGMs.

and the proposed resolutions were all

provide capital for

performance

In line with UK government guidance resulting from the

passed with votes in favour ranging from

the Company to

Clear and

COVID-19 situation, shareholders are not entitled to

94.42% to 100%. Board members were

grow and seek

attend the 2020 AGM in person unless notified otherwise

present to answer shareholder questions.

understandable

opportunities for

by the Company. Shareholders are invited to submit any

strategy

Investor engagement: After shareholder

future investment

questions to the Company that they would have asked

Focus on

meetings, feedback is shared with the

and success.

at the 2020 AGM. For further details see the Notice of

whole of the Board, summarising views

sustainable and

Meeting on pages 155 to 167. AGM voting results are made

and identifying actions to be taken

responsible growth

public and published on the Company's website.

as necessary.

Capital allocation

Ongoing investor engagement: Communication is

Shareholders' comments on the

and dividends

conducted primarily through meetings of the Executive

proposed remuneration policy were

Corporate

Directors with analysts and significant shareholders

considered and suggestions implemented

following both the interim and preliminary

governance

such as the introduction of a two-year

announcements of the results of the Group.

holding period for vested share awards.

During the year the Chair and Non-executive Directors

met with shareholders to understand their views on

key matters.

Amanda Wills, Chair of the Remuneration Committee,

maintained a dialogue with major shareholders regarding

proposed changes to the remuneration policy.

Regulatory news service: The Board exercises care

to ensure that all information is released in accordance

with applicable legal and regulatory requirements and

to all shareholders at the same time.

Annual Report and Accounts: The Company strives to

provide a clear, informative and engaging view of the

business in its reporting to shareholders.

Website information: Shareholders and potential

shareholders can access investor-related information

in the Investors section of the Company's website,

www.airpartner.com. This site also provides contact

details for any investor-related queries.

governance Corporate

Customers:

Customer

Putting our

engagement

customers first

and satisfaction

and ensuring

Frictionless

a positive

services and

experience

solutions

is crucial.

Protecting

customers'

businesses through

our services

Direct feedback, customer satisfaction surveys and other engagement: The Board receives regular updates from the CEO at Board meetings on direct customer feedback, customer satisfaction survey results for charters and training, net promoter scores, key customer meetings and account management activities. Customer satisfaction and dispute resolution are captured in our systems as part of our ISO 9001 accreditation.

Customer service: Air Partner is a people business and the 'Customer First' value is promoted by the Board. The Board presents the Peter Saunders Award for Extraordinary Customer Service and a cross-selling reward scheme is also in place.

Direct feedback, customer satisfaction surveys and other engagement:

Customer engagement feedback is taken into account in Board decisions including product development, service offerings and the Group's geographic spread.

Results from customer satisfaction surveys indicating low survey scores and underperformance are followed up by management and appropriate actions taken. Overall performance updates are provided to the Board. Baines Simmons has retained a gold Feefo standard for five years.

Customer questionnaires: Views on a refresh of our environment and sustainability policy were sought from customers and fed back into a proposed action plan for Board adoption.

Air Partner plc | Annual Report 2020

53

Corporate governance

Corporate governance report continued

Board Leadership and Company Purpose continued

Our stakeholders and how we engage with them

Stakeholder

Key concerns

Engagement

Outcomes

Suppliers:

Working in

Key supplier scheme/supplier partnerships:

Supplier engagement: Supplier

Our supplier

partnership to

We continually collaborate with our suppliers to

feedback and engagement informs

partnerships are

deliver the best

offer seamless services. We seek mutually beneficial

the Board's decisions on supplier

vital to our overall

customer

partnerships allowing us to extend our range of service

partnerships and enhancements

success, allowing

experience

offerings to customers. Feedback and updates from

to service offerings.

us to deliver an

Key supplier

supplier meetings and attendance at industry events

extraordinary

(such as BACA, the World Aviation Safety Summit and

scheme

experience to our

the ERA) are shared with the Board.

Effective and

customers in all

of the markets in

respectful working

which we operate.

partnerships

Our people:

Career

Employee Advisory Panel: The Company created

The Board receives updates from the

Our people drive

opportunities

a formal Employee Advisory Panel (the Panel)

CEO at every Board meeting on matters

our business by

and reward

tasked to engage with the workforce, and appointed

relating to our people and engagement

creating, selling

Strategic direction

Amanda Wills as designated Non-executive Director.

activities. Results of engagement

and supporting

Further details on the Panel can be found on page 55.

activities and views have been taken

and success

the delivery of

into account by the Board and its

of the Group

Employee updates: Various engagement methods

an extraordinary

Committees when considering

Learning and

are employed with staff including informal town hall

service to

remuneration and reward, Group

events, all-hands meetings, CEO lunches and the

customers.

development

structure, cultural alignment and

Company's intranet.

Internal

strategic initiatives.

Whistleblowing policy: The channels allowing the

communication

Employee Advisory Panel:

workforce to raise concerns in confidence are clearly

and collaboration

Amanda Wills reports to the Board on

publicised to staff and any matters reported to the Board.

Health, safety

the activities of the Panel, providing the

Mental health awareness: During the year, a group

employees' perspective on key issues.

and wellbeing

was set up to raise awareness of mental health

Panel members are given a clear

Culture

and wellbeing across the business. The awareness

understanding of the Board function

programme aims to help our people look after their

which is passed onto other employees

own wellbeing, be self-aware and to look out for and

of the Group. The Panel is tasked with

support colleagues and to provide an environment

considering employee engagement

where people feel able to ask for help when needed.

mechanisms to gain employee feedback.

Employee updates: Results and key

messages are deployed to the workforce

using the most suitable methods.

Mental health awareness: Initiatives are

being implemented to educate and ensure

that a wellbeing strategy is embedded

into the business.

Community:

Local employment

Environmental, social and governance: An action

Environmental, social and governance:

Considering the

and business

group was set up during the year to consider our impact

Work is ongoing to implement

impact of our

opportunities

on the environment and propose an environmental

environmental initiatives. This is a key

operations on the

Environmental

strategy to the Board.

Board agenda item and the Board is

communities and

committed to reducing the Group's

impact

Charitable giving: The Group has a charity committee

environment that

impact on the environment. More details

Support for local

made up of volunteer employees across the Company,

the Group operates

can be found on pages 45 and 46.

responsible for driving charitable initiatives forward

in is imperative

communities

and organising a range of charitable events.

Charitable giving and volunteering:

to ensure the

Volunteering: All staff are entitled to two volunteering

The Board encourages the fundraising

long-term

and volunteering efforts of the Group.

sustainability

days and are actively encouraged to make use of these

Our nominated Group charity is voted

of our offerings.

to support projects in the local community.

for by our employees and at the end of

2019 the World Wide Fund for Nature

was nominated as our designated

charity for 2020.

You can find our Section 172 Statement, detailing our Directors' responsibility to stakeholders, on pages 47 to 49.

54 Air Partner plc | Annual Report 2020

Engagement with the workforce - Employee Advisory Panel (the Panel)

Following the new provisions of the Code, the Board opted to form an Employee Advisory Panel and appoint a Non-executive Director tasked with engaging with the workforce. The requirement to form the Panel was communicated across the whole Group, seeking members to represent constituencies both on a function and location basis to ensure the entire workforce was represented. Members nominated themselves to represent their constituencies and were tasked with reaching out to their colleagues to educate them on the existence and work of the Panel. Panel activities include:

•• educating the workforce on the Panel existence and purpose;

•• developing a programme of engagement activities;

•• gathering the views of the workforce and distilling these to establish key themes; and

•• ensuring employees have knowledge of the whistleblowing policy and other policies as relevant.

The designated Non-executive Director, Amanda Wills, attends Panel meetings and provides updates on Panel activities to the Board.

Investing in the workforce

The Group employs people in specialised high capability roles, from brokers to consultants and aviation experts to covert testers and management 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. During the year a comprehensive review of the UK reward practices was undertaken and a number of changes were implemented to strengthen the link between reward and the Company's values. From this review a long-term roadmap for reward will be established. In the period, the Company also launched a high potential programme and began the roll-out of the Myers Briggs Type Indicator training. Both of these initiatives will help strengthen the leadership capability throughout the organisation.

UK Corporate Governance Code

  1. 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 is also responsible for maintaining sustainable value for shareholders whilst contributing to wider society and having due regard to all stakeholders in decision making.
  2. The Board establishes the Company's purpose, values and strategy and sets the strategic aims of the Group. The Board acts with integrity, operating in a transparent environment to promote the desired values and culture of the business.
  3. The Board ensures the necessary resources are in place to achieve the strategic aims of the Group and measures performance against objectives. A control framework is in place enabling risk to be assessed and managed.
  4. The importance of stakeholder engagement is recognised and the Board has developed its engagement mechanisms to understand stakeholder views on key matters to support its decision-making processes.
  5. Workforce policies and practices are consistent with the Company's values and are monitored to be refreshed as necessary.

governance Corporate

Air Partner plc | Annual Report 2020

55

Corporate governance

Division of responsibilities

Governance structure: Board and Committees

The Board

Responsibilities

Ed Warner

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

Mark Briffa

of the Group. This is achieved through:

Joanne Estell

setting the strategic objectives of the Group;

Amanda Wills

approving strategic projects and Group and divisional budgets;

Richard Jackson*

ensuring that the Group operates effective risk management; and

Paul Dollman

reviewing trading performance against financial targets set at the start of the

financial year.

Chair

Responsible for:

Chief Executive Officer

Senior Independent

Non-executive

Company

Director

Directors

Secretary

leading the Board as an effective decision-making body;

setting the Board agenda and regularly reviewing strategic aims; and

modelling boardroom culture and promoting individual Director engagement.

Responsible for:

providing executive management and leading the Group Executive Team;

setting, communicating and demonstrating the values and ethos of the Group; and

promoting a clear vision and business plan, focusing on key strategic aims.

Responsible for:

Responsible for:

acting as a sounding

considering the

board for the Chair,

performance of

providing support

management against

in the delivery of

agreed goals;

objectives; and

providing constructive

being available to

challenge and

shareholders who

strategic guidance;

wish to raise concerns.

determining appropriate

levels of remuneration

of Executive Directors;

and

oversight of succession

planning.

Responsible for:

advising the Board on governance matters;

managing the meeting timetable in conjunction with the Chair; and

assisting the Chair to ensure the Board receives accurate, timely and clear information.

Board Committees

Remuneration Committee

Amanda Wills, Chair

Richard Jackson*

Ed Warner

Paul Dollman

Considers and oversees the Group's remuneration policy for Directors and monitors the level and structure of remuneration for senior management.

Directors' Remuneration report: p69-82

Audit and Risk Committee

Paul Dollman, Chair

Richard Jackson*

Amanda Wills

Monitors and reviews the integrity of financial reporting, has oversight for internal control and risk management and oversees the relationship with the external auditors.

Audit and Risk Committee report: p65-68

Nomination Committee

Ed Warner, Chair

Richard Jackson*

Amanda Wills

Paul Dollman

Monitors and reviews the composition of the Board as a whole, leads the process for Director appointments, considers succession planning and diversity and supports the Board's evaluation process.

Nomination Committee report: p63-64

Group Executive Team

Responsible for:

implementing the Group's strategy as approved by the Board;

recommending capital expenditure and investment budgets for Board approval; monitoring financial, operational and service performance; and

allocating resources as agreed by the Board.

* Richard Jackson passed away in March as announced to shareholders on 30 March 2020.

56 Air Partner plc | Annual Report 2020

governance Corporate

"We are delighted to be working alongside Air Partner's Managed Services team to maintain this vital link in Airbus' operations."

Jonathan Hinkles, Managing Director, Loganair

Keeping corporates connected

Our Group Charter team works closely with our corporate clients on a day-to-day basis, assisting with a wide variety of charter flight requirements - varying from one-off charters to multi-leg series of flights. In 2018, we were delighted to be awarded a three- year contract by a new corporate client, Airbus, a leading aircraft manufacturer, providing Managed Services for its corporate shuttle.

Our Managed Services provide a range of professional, technical and commercial expertise that is available around the clock, 365 days a year, enabling customers to maximise operational efficiencies.

Our valued client Airbus had a requirement to operate a corporate shuttle Monday to Thursday between its three locations - two in the UK and one in France. The shuttle provides a vital link for Airbus employees and contractors travelling between the three locations. Our expert team was called upon to manage all operational and contractual requirements, putting into place two dedicated 49-seat Embraer 145 regional jets operated by Glasgow based Loganair, operating 28 sectors every week for the duration of the contract.

We are committed to delivering the extraordinary for our clients every day and, due to our extensive aviation expertise and close relationships with aircraft operators, we are perfectly placed to assist with all manner of corporate charter flight requirements.

Air Partner plc | Annual Report 2020

57

Corporate governance

Board of Directors and Company Secretary

58 Air Partner plc | Annual Report 2020

The Directors and Company Secretary of the Company who were in office during the year were:

Corporate

1. Ed Warner Chair  C

Appointed: 1 April 2019

Ed has extensive PLC experience and has chaired the board of a range of prominent organisations, including in his current role as Chair of Grant Thornton UK LLP. He knows the broking sector well and was a Non-executive Director of Clarkson PLC, the world's leading provider of integrated shipping services, for over

10 years until February 2019. He also has a wealth of financial services broking experience from years spent in senior positions at several investment banks and financial institutions, including Dresdner Kleinwort and Bankers Trust, as well as CEO positions at Old Mutual Financial Services and

IFX Group PLC.

Other significant appointments

Chair, Blackrock Commodities Income Investment Trust PLC

Chair, LMAX Ltd

Director of a suite of Dublinlisted investment funds managed by DCI

Non-executive Director, HarbourVest Global Private Equity

2. Mark Briffa Chief Executive Officer

Appointed: 1 February 2006

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.

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. Before joining Air Partner, Mark held commercial roles at Air 2000 and All Leisure.

3. Joanne Estell Chief Financial Officer

Appointed: 10 September 2018

Joanne is a Chartered Management Accountant with over 20 years' experience. She started her career at Whitbread Plc and held a number of senior finance roles at Smiths Group plc including Finance Director of Specialised Business at John Crane and also Head of Mergers and Acquisitions at Survitec Ltd. Joanne brings a wealth of experience gained from senior finance and M&A roles at a number of listed and private companies. Most recently Joanne held CFO roles at Shield Therapeutics plc, the specialty pharmaceutical business, and, prior to this, at Stadium Group plc, a global manufacturer of technology lead products.

4. Richard Jackson Senior Independent Director 

Appointed: 8 September 2016

Sadly, Richard passed away in March 2020 after a short illness. Richard was appointed as Senior Independent Director in June 2017 and held the position of Interim Chair of the Board from September 2018 to April 2019. 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 acted as consultant to a number of aviation and travel-related clients.

5. Paul Dollman Non-executive Director  C

Appointed: 1 May 2019

Paul Dollman was appointed as Independent Non-executive Director of the Company on

1 May 2019 and took up the role of Chair of the Audit and Risk Committee on 26 June 2019. Paul has significant PLC experience and has held chair and non-executive director positions at a range of listed companies. In addition, he has excellent knowledge of the aviation industry, having been Group Finance Director at John Menzies PLC, the holding company of Menzies Aviation, from 2002 to 2013. He understands the sector's operational, strategic and commercial environment well, and is credited with nearly trebling Menzies Aviation

in size during his tenure.

Other significant appointments

Non-executive Director and Chair of the Audit Committee, Wilmington PLC

Non-executive Director,

Scottish Amicable Life Assurance Society (part of Prudential plc)

Non-executive Director and Chair of the Audit Committee, Etihad Topco Limited, trading as Verastar.

Key:

1 2

3 5

6 7

6. Amanda Wills, CBE Non-executive Director  C

Appointed: 20 April 2016

Amanda 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 a Non-executive Director of eDreams ODIGEO S.A., a global online travel agency and Chair of its Remuneration and Nomination Committee. In 2015 Amanda was awarded a CBE for services to the British travel industry and to charity.

Other significant appointments

Non-executive Director, eDreams ODIGEO S.A.

7. Judith Banks General Counsel and Company Secretary

Appointed: 6 November 2018

Judith qualified as a solicitor in 2001 and has practised law ever since, starting in private practice before becoming an in-house lawyer. Prior to joining Air Partner in October 2018 Judith held a number of senior legal counsel positions, including at Elekta, a Nasdaq- listed medical devices company, the industrial group Atlas Copco and ATR, the regional aircraft manufacturer.

Committees:

  1. Chair

Audit and Risk

Remuneration

Nomination

Independent Director

governance

Shaun Smith stepped down as Chair of the Audit and Risk Committee and Non-executive Director of the Company on 26 June 2019.

Air Partner plc | Annual Report 2020

59

Corporate governance

Group Executive Team

Key:

1 2 3

4 5 6

7 8

1. Mark Briffa

Chief Executive Officer

2. Joanne Estell

Chief Financial Officer

3. Judith Banks

General Counsel and

Company Secretary

4. Kevin Macnaughton Managing Director, Charter

Kevin has a wealth of experience in the aviation charter industry, both in the UK and overseas, having held a number of senior roles at NetJets over a period of

13 years. Most recently, he was Company Director, Head of European Sales, leading the planning and execution of the sales strategy.

5. Paul Mason Managing Director, Safety & Security

Paul was at the helm of Redline from inception in 2006 to acquisition by

Air Partner in 2019, guiding Redline from a concept through to the internationally acclaimed security training, consultancy, and quality assurance company that it has become. With over 25 years of aviation experience, Paul is now leading the Safety & Security division of Air Partner which encompasses both Redline and Baines Simmons. The division offers an unmatched range of products and services spanning all aspects of safety and security, training, consultancy, quality assurance and innovative software products to cater for the needs of tomorrow's threats and risks as well as big data handling, live data analytics and real-time threat and risk management.

6. David McCown President, Air Partner Americas

David has over 20 years' experience in the private aviation industry serving in various capacities including as founder of AirCharter.com (the first online reservation system for private jets,

acquired by FlightTime in 1998), board member of the holding company for Wyvern Aviation safety and Chair of the Air Charter Association of North America. Prior to aviation, David spent several years in the banking industry with Bank of America.

7. Tony Whitty Executive Vice President, Remarketing and ACMI

Tony started his career in aviation in 1991 and in 1998 became one of the founding members of Cabot Aviation, which was acquired by

Air Partner in May 2015 and is now Air Partner Aviation Services. Tony leads

Air Partner's Remarketing business, representing aircraft owners as exclusive remarketing agent and also undertaking acquisition mandates on behalf of airlines, lessors and spares companies. Tony also heads up the ACMI business, assisting airlines in sourcing aircraft on ACMI leases.

Tony is a board member of the European Regions Airline

Association, a committee member of the Aviation Club of the UK and a member

of ISTAT.

8. Craig Pattison

Chief People and

Technology Officer

Craig spent 10 years of his career in general management and customer service with Tesco before deciding to concentrate the next stage of his career in human resources both with the retailer and later in senior HR positions with BP, Lloyd's of London and, most recently, Wood Mackenzie, where he was Global Executive Vice President HR and led the HR function.

In July 2018, Craig joined Air Partner Group as Interim Group HR Director before being appointed permanently to the role in November 2018. Craig became Chief People and Technology Officer on

1 February 2020.

Craig is a Fellow of the Chartered Institute of Personnel and Development.

60 Air Partner plc | Annual Report 2020

Division of responsibilities

The Company is governed by a formal schedule of matters reserved for the Board, which includes responsibility for the 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. This schedule of matters is reviewed annually by the Board to ensure it remains appropriate and complete.

Upon appointment, 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 during the AGM. Upon their appointment to the Board, Ed Warner and Paul Dollman notified the Board of their commitments to other organisations as detailed in their biographies on pages 58 and 59.

Additional external appointments are discussed with the Board before acceptance and the Board reviews the impact before approving. During the year the Chair consulted with the Board on a proposed additional appointment to HarbourVest Global Private Equity. The other Directors were satisfied that Chair could accept the additional appointment and that this would not impact his commitment to his role with the Company.

governance Corporate

The Board discharges some of its responsibilities through its Board Committees. Copies of the schedule of matters reserved for the Board and the Committees' terms of reference are 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.

All Directors have access to the advice and services of the Company Secretary and to independent professional advice at the Company's expense where they judge it necessary to discharge their responsibilities as Directors.

Non-executive Directors The Non-executiveDirectors consider the performance of management against agreed goals and provide constructive challenge and strategic guidance to the Executive Directors during Board discussions.

The Board considers all the

Nonexecutive Directors, including the Chair, to be independent when assessed by the circumstances set out in Provision 10 of the Code. Given their relatively small shareholdings, the Board does not believe that these impact on the independence of Ed Warner, Amanda Wills or Paul Dollman.

UK Corporate Governance Code

  1. The Chair, Ed Warner, is responsible for the leadership and effectiveness of the Board. Board meetings are open and constructive debate is encouraged. The Chair, in conjunction with the Company Secretary, ensures that all Board members receive accurate and timely information.
  2. Half of the Board are considered to be independent, providing an appropriate combination of Executive and Non-executive Directors and balance to decision making. There is a clear division of responsibilities between the leadership of the Board and executive leadership.
    The division of these responsibilities has been set out in writing and approved by the Board and the roles and responsibilities of key Board members are available online at www.airpartner.com.
  3. The Non-executive Directors constructively challenge management and provide strategic steer and guidance. The time commitment required of Non-executive Directors is communicated to them upon appointment and any other obligations which may impact this commitment are disclosed.
  1. The Board, supported by the Company Secretary, ensures that policies and processes are in place. Appropriate time is allowed for consideration of matters and decision making and necessary resources are available for the Board to carry out its duties effectively.
  1. 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. The Nomination Committee leads the process for Board appointments.
  2. As a whole the Board has a balance and depth of skills and experience, together with suitable knowledge of the Group and industry, to enable successful discharge of respective duties and responsibilities.
  3. An annual evaluation of the Board's performance was carried out during the year and included consideration of the composition of the Board and its effectiveness.

Air Partner plc | Annual Report 2020

61

Corporate governance

Division of responsibilities continued

Board meetings

The table below shows the attendance record of individual Directors against scheduled Board meetings and Committee meetings that those individuals were eligible or in office to attend.

Executive Directors

Non-executive Directors

Mark

Joanne

Ed

Richard

Amanda

Paul

Shaun

Briffa

Estell

Warner1

Jackson4

Wills

Dollman2

Smith3

5/5

5/5

5/5

3/5

5/5

4/5

2/2

Board

Audit and Risk

3/55/53/42/2

Committee

Remuneration

3/31/33/32/31/1

Committee

Nomination Committee

1/11/10/11/1

  1. Ed Warner was appointed as Non-executive Chair on 1 April 2019.
  2. Paul Dollman was appointed as a Non-executive Director on 1 May 2019 and Chair of the Audit and Risk Committee on 26 June 2019.
  3. Shaun Smith resigned as a Non-executive Director and Chair of the Audit and Risk Committee on 26 June 2019.
  4. Richard Jackson passed away in March 2020 after a short illness. Richard was unable to attend some of the Board and Committee meetings due to ill health.

Composition, succession and evaluation

Composition of the Board

Election and re-election of Directors

The composition of the Board is

Non-executive Directors are

shown on pages 56 and 58 to 59.

appointed for an initial three-year

term, subject to re-election by

shareholders at each AGM. After the

initial term their appointment may be

extended, subject to mutual

agreement. All Directors are subject to election by shareholders at the first AGM after their appointment and to annual re-election thereafter. On this basis, all members of the Board will retire and seek re-election by shareholders at the 2020 AGM.

62 Air Partner plc | Annual Report 2020

Nomination Committee report

Ed Warner, Chair of the Nomination Committee

The principal purpose of the Nomination Committee is to monitor the composition of the Board and its Committees, lead the process for appointments of new Directors and Committee members and oversee planning for the succession needs of the Company. The Committee has responsibility for the Company's policy on the promotion of diversity and inclusion and supports the Board evaluation process.

The terms of reference for the Committee have been agreed by the Board and are available online at www.airpartner.com. The Directors who served on the Nomination Committee during the period are as detailed below and their meeting attendance during the year is set out on page 62. Although not Committee members, the Chief Executive Officer and Chief Financial Officer are invited from time to time to attend meetings of the Committee:

•• Ed Warner (Chair, appointed 1 April 2019)

•• Amanda Wills

•• Richard Jackson (passed away 26 March 2020)

•• Paul Dollman (appointed 1 May 2019)

•• Shaun Smith (stood down 26 June 2019)

When proposing appointments of Directors, the Committee considers the independence, skills, knowledge and experience that a candidate possesses compared to the skillsets 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.

Board appointments

During the year the Committee recommended the appointment of Ed Warner as Chair of the Board and Paul Dollman as Chair of the Audit and Risk Committee. The process followed by the Committee for these appointments started with an initial review of the job descriptions and assessment of any skills gaps and requirements of the Board. Role specifications were agreed by the Committee and external search consultants Ridgeway Partners carried out a robust search process. Candidates were carefully considered and the Committee made its recommendations to the Board for the appointments. There was no other connection between the Company and the external search consultancy firm noted as being used for the appointments.

Board composition post year end Following the passing away of Richard Jackson, the Committee considered the composition of the Board and its Committees, as well as the position of Senior Independent Director. In the context of the ongoing COVID-19crisis and associated uncertainty, a recommendation was made to the Board not to appoint

  1. replacement Non-executive Director in the short term and that Amanda Wills be appointed as Senior Independent Director with effect from 21 May 2020. The Board approved this recommendation.

Succession planning Succession planning for the Chief Executive Officer and Chief Financial Officer was considered by the Committee during the year. In addition, more robust processes were introduced to assess talent and succession to Band 3 (senior leadership). As with external recruitment, developing the diversity and inclusiveness of the Group's Executive Team is a consideration in all promotions and appointments. The processes identified high potential talent, of which 45% were female.

governance Corporate

Air Partner plc | Annual Report 2020

63

Corporate governance

Nomination Committee report continued

Board and Committee evaluation The performance and effectiveness of the Board is subject to an annual evaluation process which was reinvigorated during the year. The evaluation process was internally led with questionnaires drawn up for the Board and each of the Committees. The evaluation was focused on the Company purpose, strategy and value generation, budgeting and financial performance, risk and control and management and Board operation. Result summaries for the Board and each of the Committees were shared and recommended actions were openly discussed and challenged. The key actions were fed back into the annual Board agenda and policies and processes were updated as necessary.

The evaluation process concluded that the Board maintained focus on the Group's strategy and that the Chair showed effective leadership and encouraged healthy debate of issues. It also highlighted that there were healthy boardroom dynamics and an open Board culture, with Non-executive Directors challenging constructively; and that the Board uses its Committees effectively. Areas of focus for the future included deeper understanding of the Group's culture and re-iteration of purpose, the need for additional Board training and development, and maintaining focus on understanding stakeholders.

The Board and Committee questionnaires included an individual evaluation element both for the Chair of the Board and Chair of each of the Committees. The Chair of the Board and the Chair of the Audit and Risk

Committee were appointed during the year (1 April 2019 and 1 May 2019 respectively). In this context, the Company considered that an individual evaluation of their performance would be more appropriate and worthwhile once they have completed at least one year in service. At this point it is anticipated that individual evaluations of all Non-executive Directors will also be carried out. Executive Director performance evaluations are conducted annually in preparation for the review and approval of the annual remuneration packages.

Overall the collective view of the Directors is that the Board is effective in discharging its responsibilities. 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.

Diversity and inclusion

The Board is a team made up of people with a broad range of backgrounds. The Board believes that a diversity of experience and personal strengths is as important

as diversity of gender and social and ethnic backgrounds. The Company's policy is to ensure that the best candidate is selected to join the Board; this policy will remain in place going forward. 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 require it to search for candidates from as many different backgrounds as possible.

The Group's aim is to ensure that all employees and job applicants are

given equal opportunity and that the organisation is representative of all sections of society. Candidates are selected for employment, promotion, training, or any other benefit on the basis of their aptitude and ability regardless of age, gender, race, religion, sexual orientation or disability. People with disabilities are given full consideration for employment and subsequent training (including retraining, if needed, for people who have become disabled during their employment), career development and promotion on the basis of their aptitude and ability. All employees will be given help and encouragement to develop their full potential and utilise their unique talents. Therefore, the skills and resources of the Group will be fully utilised and maximising the efficiency of the whole workforce. All employees, no matter whether they are part time, full time, or temporary, will be treated fairly and with respect. This policy is adopted throughout the Group in relation to all recruitment and to succession planning, to support a diverse pipeline.

Gender balance

At the date of this report, female Directors comprise 40% of our Board. Female executives represent 22% of the Group Executive Team and 37% of the Group Executive Team's direct reports. Whilst specific diversity targets will not be published, diversity will be a key consideration in future appointments.

Ed Warner

Chair

22 May 2020

Evaluation process

Questionnaire

Evaluation session

Action

Completion of tailored

Discussion of results

Identification of

questionnaires for the

summary in Board and

actions or areas

Board and each

Committee meetings

to address

Committee

Feedback incorporated Feedback on policies and processes and Board agenda

64 Air Partner plc | Annual Report 2020

Audit and Risk Committee report

Paul Dollman, Chair of the Audit and Risk Committee

I am pleased to present the Committee's report for the year ended 31 January 2020. The Committee fulfils an important oversight role on behalf of the Board by monitoring the Group's financial reporting. It also reviews the effectiveness of both the Group's systems of internal control and its risk management framework.

I took over the role of Chair of the Audit and Risk Committee in June 2019 following Shaun Smith's departure. I would like to take this opportunity to formally thank Shaun for his outstanding dedication and efforts during his tenure.

Role of the Audit and

Risk Committee

The principal role of the Committee is to assist the Board in fulfilling its oversight responsibilities in relation to financial reporting, financial and internal controls, audit and risk.

The detailed responsibilities of the Audit and Risk Committee include:

•• monitoring the Group's financial reporting processes;

•• reviewing financial statements and announcements relating to the financial performance of the Company;

•• reviewing and monitoring the internal controls and risk management processes of the Group;

•• reviewing the internal audit programme to ensure its effectiveness and that it is adequately resourced;

•• considering changes to accounting standards and the appropriateness of accounting policies;

•• reviewing the actions and judgements of management in relation to the interim and annual financial statements before submission to the Board;

•• consideration of the appointment of the external auditors, their reports to the Committee and their independence and effectiveness;

•• discussing with the external auditors the nature and scope of the external audit; and

•• reviewing the Company's whistleblowing and anti-bribery policies and procedures on behalf of the Board.

The Committee's terms of reference are reviewed on an annual basis and can be found on the Company's website at www.airpartner.com.

Fulfilling the role of the Audit and Risk Committee

In order to fulfil its role, the Committee has:

•• held five scheduled meetings in the year to coincide with key dates within the financial reporting and audit cycle;

•• received presentations and reports from the Executives and the Head of Risk and Assurance, the Chief Executive Officer and the Chief Financial Officer throughout the year, to gain an understanding of the risks facing the Group; and

•• met privately with the external auditors after Committee meetings.

The attendance of Directors at the meetings of the Committee is set out on page 62.

Audit and Risk

Committee members

The Committee is made up of independent Non-executive Directors. The members of the Committee during the year were:

•• Shaun Smith (Chair), who was replaced by Paul Dollman in June 2019

•• Amanda Wills

•• Richard Jackson

The Committee was therefore adequately resourced in accordance with its terms of reference.

During the early part of 2019 the Chair was Shaun Smith who, at the time, was also the Group Finance Director of a listed PLC. Shaun was replaced in June 2019 by Paul Dollman, who was Group Finance Director at John Menzies PLC, the holding company of Menzies Aviation, from 2002 to 2013.

The Board is satisfied that the Committee members have the appropriate level of expertise to fulfil the Committee's obligations, as set out in its terms of reference, and the competency relevant to aviation services.

Although not Committee members, the Chair, the external auditors, the Chief Executive Officer and the Chief Financial Officer regularly attend meetings by invitation.

Significant issues addressed during the year and up to signing of the scccounts

During the year, the Committee has reviewed risks identified in the Group's risk register and has required assurance reports in respect of some of the more material matters highlighted.

An area of focus for the Committee, and our internal audit resources, during the year has been to provide oversight and judgement on the effect of a prior year tax reassessment in France. The Committee took appropriate steps to understand the issue and considered expert legal advice.

governance Corporate

Air Partner plc | Annual Report 2020

65

Corporate governance

Audit and Risk Committee report continued

On that basis the Company made a best estimate provision of the potential liability in this year's accounts (see note 7). Management has provided a comprehensive response to the matters raised by the tax authorities. Final resolution of this matter is not expected for some time.

The Committee has continued to focus on improvements in the overall control environment following the accounting issues reported by the Board in April 2018 and announced to the London Stock Exchange in June 2018. The Committee has played an active role in monitoring the implementation of new and improved controls that were identified at the time. There has been a strong focus on improving the conduct and culture in the organisation, and reinforcing our entity level controls, through the refresh and launch of Air Partner's vision and values.

Furthermore, a process has been introduced by the Company, with the Committee's input, to monitor and consider all internal control recommendations irrespective of the source and report progress in improving them. This is encouraging a culture of continuous improvement in the organisation, part of the

Air Partner vision and values of

'Care deeply' and 'Take responsibility'.

A major piece of activity during 2019 was the review and monitoring of the acquisition process of Redline Worldwide Limited (Redline) funded via bank debt. The Audit and Risk Committee Chair challenged the assumptions of the business case, financial modelling, cash flow covenants and due diligence findings on behalf of the Board. The business now forms a major part of the Company's Safety & Security division and the Board will monitor the integration plans during 2020.

In more recent times, a significant task for the Committee has been to consider the impact on the Group of the COVID-19 pandemic in relation to going concern and the viability statement. The Committee has reviewed management's papers and financial models to understand

66 Air Partner plc | Annual Report 2020

liquidity, current trading, future projections and the impact on bank covenant test. Refer to pages 43 to 44 for the Going Concern and Viability Statement. It is uncertain what the longer-term impact of COVID-19 will be on the industry, operators and customers. Supporting the Board, the Committee will closely monitor the situation, ensuring the Company is able to react quickly to the changing market environment.​

Accounting judgements

The Committee has considered the following important matters and has taken into account, in all instances, the views of the Company's appointed external auditors.

Going concern basis for the financial statements

On behalf of the Board, the Committee reviewed management's assessment of going concern and viability, including reviewing the precautionary steps taken by management to obtain waivers of banking covenants. Refer to pages 43 to 44 for the Going Concern and Viability Statement.

Goodwill and other intangibles impairment The Committee reviewed management's papers and financial models for testing goodwill and other intangibles for potential impairment and ensuring appropriate sensitivity disclosure. This included challenging the key assumptions, principally cash flow forecasts, growth rates and discount rates. It was the view of management that there were no indications of impairment of goodwill or other intangibles across the Group except in the case of SafeSkys and the associated carrying value of goodwill. In this respect,

an impairment charge of £1.9m has been recognised as exceptional and other items in the consolidated income statement; see note 13. This was as a result of future plans to exit air traffic control, a review of the progress made in developing a software application to support Wildlife Hazard Management and the likely delay in commercialising this product. "On reassessing these key variables in the second half of the

year, it was found necessary to impair the carrying value of the goodwill.

Exceptional and other items The Committee considered the presentation of the Group financial statements and, in particular, the appropriateness of the presentation of exceptional and other items and their disclosure. The Committee reviewed the nature of the items identified and concurred with management's treatment, that taken as a whole these were fair, balanced and understandable. Consideration was also given to the quality of earnings within underlying results. See note 7 to the financial statements.

The effect of a prior year tax reassessment in France

As detailed in the section above.

The acquisition of Redline

As detailed in the section above.

Other areas of activity by the Committee

During the year, the Committee has continued to review the independence and effectiveness of both the Group's systems of internal control and its risk management framework and has consequently monitored the following areas:

External audit

Following their appointment in October 2018, PricewaterhouseCoopers LLP (PwC) are now in their second year with Air Partner. As agreed in their terms of engagement, their appointment will be reviewed on an annual basis.

Audit effectiveness is assessed continually against using a number of measures including: reviewing the quality and scope of the proposed audit plan and progress against the plan; responsiveness to changes in the businesses; and monitoring the independence and transparency of the audit. A formal report received from PwC in respect of the audit and matters arising from the Annual Report was discussed prior to the Board's approval of the financial statements. The Committee monitors

the auditors' performance, behaviour and effectiveness during the exercise of their duties, which informs the Committee's decision to recommend reappointment on an annual basis. The Auditor's Report can be found on pages 88 to 98.

External auditors' independence and non-audit fees

The Committee is aware of the need to safeguard the auditors' objectivity and independence and the issue is discussed annually by the Committee and periodically with the audit engagement partner from PwC.

The Committee is responsible for

the implementation and monitoring of the Group's non-audit services policy, which is designed to maintain the objectivity and safeguard the independence of the external auditor. This policy is reviewed annually and requires that approval of the Committee must be obtained before the external auditors are engaged to provide any permitted non-audit services. For permitted non-audit services that are clearly trivial, the Committee has pre-approved the use of the external auditors subject to set limits detailed in the policy. To preserve the objectivity, independence and effectiveness of the external auditors, they do not provide consulting services unless this is compliant with this policy, which reflects the EU Audit Reform Regulations and the FRC's Revised Ethical Standard 2016. During the year, there were no matters that required consideration under the Groups non-audit services policy.

The Committee has engaged with PwC throughout the year and considered their independence, with reference to the Group's non-audit services policy. The Committee is satisfied that PwC remain independent in fulfilling their role.

Internal audit

The Committee is responsible for setting the annual audit plan; the authority and effectiveness of the internal audit function is derived from the Committee. During the period the Committee received progress reports on the execution

of the plan and discussed the recommendations made with the Head of Risk and Assurance, who attends the Committee meetings. The Committee reviews the quality and scope of the audit plan and progress against the plan. The audit plan that was agreed in April 2019 was deferred until 2020 to allow a focus on the tax reassessment in France. An updated audit plan will be produced once the reduced working impacts of COVID-19 have been resolved.

The Head of Risk and Assurance has full and unrestricted access to all records, has independent access to the Chair and members of the Committee and has the authority to report significant findings or concerns to the Committee.

Whistleblowing

A whistleblowing policy is in place across the Group to enable members of staff to bring to the attention of the Chair of the Board or the Company Secretary any concerns including in particular serious matters of financial misconduct which could damage the performance or reputation of the Company. The effectiveness and application of the policy is considered by the Board.

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 these individuals having responsibility for the production of certain sections of the document.

In turn, the Committee assessed the fairness, balance and understandability of the Annual Report by considering:

•• the accuracy, integrity and consistency of the messages conveyed in the report;

•• the appropriateness of the level of detail in the narrative reporting;

•• the key accounting judgements and the disclosures and estimation of uncertainties; and

•• the explanations of the differences between statutory and underlying reported results.

Following the review, the Committee agreed that the Annual Report is representative of the year and presents a fair, balanced and understandable overview and provides the information necessary for shareholders to assess the Company's position, 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 risk management framework 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, where necessary, taken the initiative in requesting information in order to provide the appropriate constructive challenge for it to fulfil 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. The Committee undertook an internal evaluation during the period, further details of which can be found in the Nomination Committee report on pages 63 and 64.

On behalf of the Audit and

Risk Committee.

Paul Dollman

Chair of the Audit and Risk Committee

22 May 2020

governance Corporate

Air Partner plc | Annual Report 2020

67

Corporate governance

Audit, risk and internal controls

UK Corporate Governance Code

  1. The Board has put in place arrangements for both the external and internal audit activities to have a direct and unfettered line of reporting into the Audit and Risk Committee. Representatives from both internal and external audit are invited to attend Audit and Risk Committee meetings and also are able to meet with the Chair of the Committee as and when required. The Committee also meets privately with the external auditors where any concerns over the financial statements or associate narratives can be discussed and, if necessary, challenged.
  2. The Board is responsible for preparing fair, balanced and understandable financial information. The Strategic Report is set out on pages 1 to 49 inclusive and provides information about the performance of the Group, the business model, the strategy and the risks and uncertainties relating to the Group's business.
  3. 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 65 to 67 and in the principal risks and uncertainties on pages 32 to 42.

Risk management and internal control

During the year, the Board was responsible for the Group's system of risk management and internal control, though reports are provided in the first instance to the Audit and Risk Committee by the external auditors, the Head of Risk and

68 Air Partner plc | Annual Report 2020

Assurance and 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 2020 and up to the date of approval of the Annual Report are as follows:

•• The Group has a suite of policies that define the key business controls for business operations, IT, human resources and regulatory and statutory compliance.

•• The key policies are monitored for their application and adherence.

•• A detailed and comprehensive annual budget is produced and 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 Group Executive Team 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 Group Executive Team 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.

•• The Group has a robust risk management process that follows a sequence of risk identification, assessment of probability and impact, and assigning an owner to manage mitigation activities. A risk register is maintained by the Group Executive Team and reported to the Audit and

Risk Committee.

•• The risk register and the methodology applied is the subject of continuous review by the Group Executive Team 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 Group Executive Team to monitor and mitigate the risks. Those risks which are considered to be the principal risks of the Group are presented on pages 32 to 42.

The Board confirms that it has complied with paragraph 57 of the FRC guidance on risk management, internal control and related financial and business reporting.

The effectiveness of the internal control systems and risk management processes are reviewed on a regular and ongoing basis by the Audit and Risk Committee (the Committee) acting on behalf of the Board. The review process covers the Group's principal risks, as well as financial, operational and compliance controls. The Committee reviewed the effectiveness as follows:

•• considering risks identified in the Group's risks register, actions taken by management to manage those risks, and the Board's risk appetite in respect of each risk;

•• requesting assurance reports in respect of some of the more material matters highlighted in the risk register;

•• monitoring the implementation of new and improved controls following identification of weaknesses in the prior year; and

•• monitoring the internal control recommendations process.

As detailed extensively in the Audit and Risk Committee Report, there has been a thorough examination of the Group's internal control and risk management systems during the year. The Board has 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.

Directors' remuneration report

Annual statement by the Chair of the Remuneration Committee

Corporate

Amanda Wills, Chair of the

Remuneration Committee

On behalf of the Remuneration Committee (the Committee), I am pleased to present the Directors' Remuneration Report for the year ended 31 January 2020.

Our Directors' remuneration policy was reviewed in 2019 and was approved by shareholders at the 2019 AGM with the support of 97.45% of votes cast. We were also pleased to receive a shareholder vote of 99.58% in favour of our 2019 report and we thank our shareholders for their support.

This Director's Remuneration Report focuses on providing information on remuneration and decisions taken in respect of the year ended 31 January 2020. We are facing unprecedented times with the COVID-19 pandemic, the full impact of which became apparent following the year end, and I have outlined the measures that we have implemented to remuneration in 2020/21 further below in

this statement.

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 Executive Directors and senior executives 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;

•• align compensation to performance and incorporate a balance of fixed and variable remuneration elements;

•• design incentive plans which reinforce both short and long-term behaviours, promote long-term development and support the strategic plans of the business; and

•• ensure remuneration packages motivate and incentivise Executive Directors, senior executives and the broader team to deliver on stretching performance targets consistent with our risk management framework.

The Group employs people in specialised high capability roles, from brokers to consultants and aviation experts to covert testers, and management 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 the Executive Directors' remuneration, the Remuneration Committee considers the wider pay and employment conditions elsewhere in the Group to ensure pay structures from Executive Directors to senior executives are aligned and appropriate.

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 grow the context in which we operate and the evolving

governance environment for

governance

executive remuneration in UK public

listed companies will be taken into

consideration. We are on the front

foot in addressing these matters.

Key remuneration activities during the year

Key activities undertaken by the

Committee during the year were:

••

determining the level of annual

bonus for the Chief Executive

Officer (CEO) and Chief Financial

Officer (CFO) in respect of

performance against targets in

respect of FY19;

•• carrying out a focused review

of the Directors' remuneration

policy and consulting with major

shareholders on changes proposed

in advance of publication of the

2019 Annual Report;

•• setting bonus targets for FY20

following the approval of the

financial budget and including

objectives and KPIs for the CEO

and CFO;

••

determining the salary of

the CEO and CFO effective

1 August 2019;

•• determining the extent to which

the performance measures

attached to the Long Term

Incentive Plan awards were

achieved for awards due to

vest in 2019;

•• determining the level and

performance conditions to be

attached to long-term incentive

awards made to Executive

Directors and senior executives

during FY20;

••

determining the fee for our

new Chair;

••

reviewing the Executive

Directors' KPIs and their

performance against them in

relation to their remuneration;

•• implementing the 2019 Directors'

remuneration policy;

•• conducting a group-wide review

of policy on pay;

•• oversight of the new Group

organisational design;

••

proposing the introduction of a

Save as You Earn (SAYE) scheme;

Air Partner plc | Annual Report 2020

69

Corporate governance

Directors' remuneration report continued

Annual statement by the Chair of the Remuneration Committee continued

•• implementing an increase in the remuneration of the Non-executive Directors, as recommended by the Board; and

•• reviewing the appointment of the remuneration adviser to the Committee.

Subsequent to the financial year end, the Remuneration Committee met to review the final outcome of the FY20 annual bonus scheme and the structure and targets of the annual bonus scheme and Long Term Incentive Plan (LTIP) for FY21.

Context to the

Committee decisions

As described earlier in this Annual Report, while there was good strategic progress made over the last 12 months, we were disappointed that we had to downgrade our forecast outlook for the year in early January 2020 and subsequently delivered £4.2m of underlying profit before tax, down on the previous year by £1.5m (2019: £5.8m).

Overall, the Charter division delivered £29.6m of gross profit for the financial year ending 31 January 2020, down 5.1% on the prior year (FY19: £31.2m). Although Private Jets had a strong year with growth of 12.2%, this could not offset negative performances in Group Charter and Freight.

The Safety & Security division had a strong performance with gross profit up 9.5% to £4.6m (FY19: £4.2m).

Safety & Security now contributes 13.4% to the Group's gross profit (FY19: 11.9%).

One of the highlights in the year was the successful acquisition of Redline in December 2020, a highly complementary business to Baines Simmons. It is anticipated this acquisition will further increase Safety & Security's contribution to the Group profits (post COVID-19), which in turn will help to smooth the volatility in the earnings from the Charter side of the business. This is in line with Air Partner's stated strategy on pages 15 to 17.

70 Air Partner plc | Annual Report 2020

Remuneration decisions made and the implementation of the remuneration policy

The Committee recognises the importance of the retention of the Executive Directors in achieving the Group's strategy. The Committee benchmarked the Executive Directors' salaries against external comparators and the salary of our CEO was increased by 13.1% to £300,000 and the salary of our CFO was increased by 4.2% to £200,000 effective 1 August 2019.

The Company's performance in respect of underlying profit before tax was below the threshold required; therefore, no annual bonus was paid in relation to FY20 for the CEO and CFO.

In July 2019, the Company granted an award of 335,696 ordinary shares representing 100% of salary to the CEO and 182,278 ordinary shares representing 75% of salary to the CFO pursuant to the Company's 2012 LTIP scheme subject to the performance conditions detailed later in this report. In accordance with the new remuneration policy, these LTIP awards were subject to enhanced malus and clawback provisions and an additional two-year holding period. These awards are eligible for dividend equivalents to be paid in shares at the time that the award vests.

The awards granted to the CEO in June 2016 under the LTIP 2012 scheme vested in June 2019. This award was subject to EPS and TSR performance conditions covering the period 1 February 2016 to 31 January 2019. The performance conditions of this award were met, and the award partially vested in line with the formulaic outcome.

Focus for FY21

As the focus on executive pay continues, the Committee remains mindful of the developing remuneration landscape. The Committee is satisfied that the remuneration continues to work effectively and supports the delivery of the Company strategy. We do not intend to make any material changes to the remuneration policy in FY21.

COVID-19 has created unprecedented challenges across the world. The full scale of its impact became clear post year end. The Company announced shareholder updates on 18 March and 1 April 2020. The steps the Company has taken in relation to overall Group remuneration have included all nonoperational UK staff, including the Board, taking a temporary 20% pay reduction for at least three months, 32% of UK staff being placed on furlough leave, the Company has applied and utilised the government support available internationally, the Company has reviewed the UK company benefits and has suspended a number of voluntary benefits. The Company will continue to review and utilise the government support available.

Specifically, in relation to executive remuneration and in addition to the pay reductions referred to above:

•• determination of the KPI and remuneration metrics for bonus and LTIP has been postponed and will be reviewed at the half year point;

•• the annual salary review process will not take place in FY21; and

•• there will be no bonuses paid in respect of FY20 performance even where personal objectives have been met.

At this point the proposed annual bonus targets for FY21 have not been determined. The Committee will decide on the level of the 2020 LTIP at a future meeting.

In last year's Annual Report and Accounts, I stated that the Company intended to develop an all employee share plan (SAYE). The SAYE was approved by shareholders in 2019 and is intended to be launched in the later part of FY21.

I hope that you find this report helpful and informative and I look forward to receiving further feedback from our investors on the information presented. On behalf of the Committee, I look forward to receiving your support at the AGM.

Amanda Wills

Chair of the Remuneration Committee 22 May 2020

The Directors' remuneration policy was approved by shareholders at the 2019 AGM on 26 June 2019 and is effective until the 2022 AGM.

The Committee works hard to ensure that the remuneration policy and practices are clear and transparent and that the level of remuneration received is reflective of the overall business performance. The Committee believes that the structure of Executive Directors' and senior executives' reward should be aligned to the Group's strategy, purpose and values and as such a greater proportion of the package for senior leadership roles is therefore performance based pay through an annual bonus and LTIP. This ensures the remuneration of the Executive Directors and the senior executives is aligned with the performance of the Company and therefore the interests of shareholders. The approved 2019 Directors' remuneration policy will be implemented in accordance with the policy table outlined below.

The table below summarises the main elements and performance metrics of the reward package for Executive Directors.

Purpose and link to

Provision for clawback or

remuneration policy

Key features and operation Maximum potential value

Performance metrics

withholding of payment

Base salary

governance Corporate

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 skills, experience and role within the Group.

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; and

personal performance.

The Committee's policy is

N/A

None

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.

Pension

Provides funds to allow Executive Directors to save for retirement.

Provides a market competitive retirement benefit.

Incentivises and encourages retention.

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.

Both the CEO and CFO

N/A

None

receive a Company

contribution of 12.0%

of basic salary.

Pension contributions for

new Executive Directors

will be in line with other

scheme participants.

Air Partner plc | Annual Report 2020

71

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Purpose and link to

Provision for clawback or

remuneration policy

Key features and operation

Maximum potential value

Performance metrics

withholding of payment

Benefits in kind

Provides a market

Executive Directors can

There is no maximum

N/A

None

competitive level of

receive life assurance,

value.

benefits to Executive

health insurance, car

Directors.

allowance, income

protection, critical illness

cover and sports club or

gym membership.

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.

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 and tax equalisation arrangements.

There are a number

N/A

None

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.

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.

Paid in cash following announcement of financial year results.

Bonuses are non-pensionable.

May be paid in shares at the Committee's discretion. Where the bonus is paid in shares these must be held for a period of two years.

The Committee has overall discretion to adjust the extent to which bonuses are paid (in line with the 2018 UK Corporate Governance Code).

Maximum opportunity to achieve:

CEO: 150% of base salary; and

CFO: 100% of base salary.

Bonus accrues from threshold levels of performance. At threshold only the KPI element of the bonus is payable.

Maximum opportunity to be used in exceptional circumstances.

Both CEO and CFO bonus payment based on:

personal objectives: 30% based on performance against key performance indicator (KPI) defined at the beginning of each financial year; and

Company performance: 70% based on financial metrics.

Bonus is usually not paid to a good leaver should they leave before the payment date of

said bonus.

Arrangements are in place under which amounts paid out in bonus can

be clawed back from Executive Directors in defined circumstances.

72 Air Partner plc | Annual Report 2020

Purpose and link to

Provision for clawback or

remuneration policy

Key features and operation Maximum potential value

Performance metrics

withholding of payment

Long Term Incentive Plan (LTIP)

governance Corporate

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%.

The Committee has overall discretion to adjust the extent to which awards will vest (in line with the 2018 UK Corporate Governance Code).

Awards granted from 2019 which vest after the end of the three-year performance period will be subject to an additional two-year holding period. During this period the shares cannot be sold (other than as required for tax purposes). The holding period is also applied post-employment for executives who leave after the performance period.

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; and

CFO: 75%-100% of base salary.

Dividend equivalent amounts may be added to performance share awards in shares at the point

of vesting.

The Committee will review the appropriateness of performance measures on an annual basis and set challenging targets consistent with the business strategy.

Two thirds of the award is based on an earnings per share (EPS) target and the remaining third on a total shareholder return (TSR) target.

The Committee has the ability to select appropriate performance condition criteria, mix and targets each year.

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 or redundancy) to permit an award to vest before the end of the performance period.

The LTIP scheme rules contain malus and clawback provisions under which amounts paid out can be recovered back from Executive Directors in defined circumstances.

All Employee Share Plan

Encourages all employees to

The Executive Directors may

The maximum participation N/A

None

make a long-term investment

participate in the Company's

level will be aligned to

in the Company's shares in a

Save As You Earn (SAYE)

HMRC limits.

tax efficient way.

scheme, once approved, on

the same terms as other

eligible employees.

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 N/A

N/A

N/A

over five years:

CEO: 100% of salary; and

CFO: 50% of salary.

Until the shareholding

guideline has been achieved,

executives must retain at

least half of vested LTIP

awards beyond those

needing to be sold to

pay tax.

Air Partner plc | Annual Report 2020

73

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Discretion

Annual bonus documentation and the LTIP contain provisions to give the Committee the ability to apply discretion to adjust the formulaic outcomes in line with the 2018 Code but always within plan limits as determined by the new policy. Any use of discretion would clearly be explained in the Remuneration Report.

Remuneration policy for other employees

The policy described above applies specifically to the Executive Directors. In practice, the Committee also has responsibility for setting the policy for, and determining the remuneration of, the senior executives.

In all cases, the Committee is mindful of the remuneration policy which applies to the broader workforce and seeks to ensure that the underlying principles which form the basis for decisions on Executive Directors' and senior executives' pay are consistent with those on which pay decisions for the rest of the workforce are taken.

Illustration of the remuneration policy

Three scenarios of Executive Directors' remuneration based on differing performance: minimum (fixed pay, pension and benefits), on target (fixed remuneration plus annual performance-related pay, paying out at target levels, and LTIP at 100% for CEO and 75% for CFO) and maximum (fixed remuneration plus maximum variable pay that may be awarded). A scenario is also shown which provides an indication of the maximum remuneration receivable, assuming share price appreciation of 50% on the LTIP.

A significant proportion of the potential remuneration of the Executive Directors is variable and is therefore performance related. It is also subject to deferral, additional holding periods, malus and clawback.

Chief Executive Officer (£'000)

Minimum

339

100%

Target

824

41%

25%

34%

Maximum

1,188

28%

36%

36%

Maximum with share

1,400

24%

30.5%

30.5%

15%

price growth (50%)

Chief Financial Officer (£'000)

Minimum

231

100%

Target

481

48%

21%

31%

Maximum

623

37%

31.5%

31.5%

Maximum with share

721

32%

27%

27%

14%

price growth (50%)

  Fixed pay 

  Cash bonus 

  LTIP 

  Share price growth

74 Air Partner plc | Annual Report 2020

Remuneration policy table - Non-executive Directors' fees

The following table sets out a summary of the Company's remuneration policy for Non-executive Directors:

Remuneration element

Purpose and link to remuneration policy

Key features and operation

governance Corporate

Fees

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 fee policy is:

•• to pay a basic fee for membership of the Board; and

•• 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. The Company's current maximum fees are as follows:

•• basic fee - £35,000;

•• additional fee for Board Chair - £45,000;

•• additional fee for Committee Chair - £5,000; and

•• additional fee for Senior Independent Director - £5,000.

Non-executive Directors' letters of appointment

The Non-executive Directors do not have service contracts but have entered into letters of appointment with the Company covering matters such as duties, time commitment, fees and other business interests. The letters of appointment do not include any provisions for the payment of pre-determined compensation upon termination of appointment and notice may be served by either party.

The Non-executive Directors are appointed for an initial three-year period which may be renewed once by mutual consent. In exceptional circumstances, a further extension may be agreed, but no Non-executive Director, with the exception of the Chair, may serve for a period of more than nine years from their date of initial appointment.

Details of the letters of appointment of the Non-executive Directors at 31 January 2020 are set out below:

Date of appointment

Unexpired term at

Non-executive Director

or reappointment

Term

31 Jan 2020

Notice period

Ed Warner

1

April 2019

3 years

2 years, 2 months

3 months

Paul Dollman

1

May 2019

3 years

2 years, 3 months

3 months

Richard Jackson2

7 September 2019

3 years

2 years, 8 months

3 months

Shaun Smith1

20 April 2016

3 years

-

3 months

Amanda Wills

20 April 2019

3 years

2 years, 3 months

3 months

  1. Shaun Smith stood down on 26 June 2019 following the AGM.
  2. Richard Jackson passed away in March 2020.

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 make discretionary performance-related awards to the Executive Directors. The full Board agrees the remuneration of the Chair and Non-executive Directors on the principle that no individual should be able to determine their own remuneration.

Air Partner plc | Annual Report 2020

75

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Remuneration Committee membership

The members of the Committee during the year until the date of this report were:

Amanda Wills (Chair)

Ed Warner (joined the Board and became a member of the Committee on 1 April 2019)

Paul Dollman (joined the Board and became a member of the Committee on 1 May 2019)

Richard Jackson

Shaun Smith (stood down on 26 June 2019)

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 seven times during the year. The terms of reference for the Committee can be viewed on the Company's website at airpartner.com/investors.

External advisers

The Committee received advice during the period under review from h2glenfern. h2glenfern was appointed to provide advice to the Committee following a tender process in 2015. h2glenfern voluntarily operates in accordance with the Code of Conduct of the Remuneration Consultants Group in relation to executive remuneration consulting in the United Kingdom. h2glenfern does not provide other services to the Group and has no other connection with the Company or individual Directors. The Committee has therefore satisfied itself that advice provided by h2glenfern was objective and independent. Fees of £18,500 on a time spent basis were payable to h2glenfern during the year. The advice and recommendations of the external advisers are used as a guide, but do not serve as a substitute for thorough consideration of the issues by each Committee member. Advisers attend Committee meetings occasionally, as and when required by the Committee.

The Committee may also obtain, at the expense of the Company, any necessary legal or other professional advice.

Directors' remuneration for the year ended 31 January 2020 (audited)

The following table provides details of the Directors' remuneration for the year ended 31 January 2020, together with their remuneration for the year ended 31 January 2019:

Gain on

Taxable

vesting of

Salary

benefits

Bonus

share options

Pension

Total

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

2020

2019

£'000 £'000 £'000 £'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Executive Directors

Mark Briffa5

283

263

20

20

-

-

335

492

36

30

674

805

Joanne Estell4

196

75

13

4

-

-

-

-

22

8

231

87

Non-executive Directors

Ed Warner1

71

-

-

-

-

-

-

-

-

-

71

-

Paul Dollman2

30

-

-

-

-

-

-

-

-

-

30

-

Richard Jackson

43

43

-

-

-

-

-

-

-

-

43

43

Shaun Smith3

15

35

-

-

-

-

-

-

-

-

15

35

Amanda Wills

39

35

-

-

-

-

-

-

-

-

39

35

Total

677

451

33

24

-

-

335

492

58

38

1,103

1,005

  1. Ed Warner joined the Board on 1 April 2019.
  2. Paul Dollman joined the Board on 1 May 2019.
  3. Shaun Smith stepped down on 26 June 2019.
  4. Due to an administrative error, Joanne Estell was overpaid £3,479 in pension contributions. This is not reflected in the above figure and to deal with this overpayment the full amount of £3,479 is being paid back in 2020.
  5. For Mark Briffa's remuneration set out in the column 'Gain on vesting of share options', no value was attributable to share price appreciation.

The Committee recognises the importance of the retention of the Executive Directors in achieving the Group's strategy. The Committee benchmarked the Executive Directors' salaries against external comparators and the salary of our CEO was increased by 13.1% to £300,000 and the salary for our CFO was increased by 4.2% to £200,000 effective 1 August 2019.

76 Air Partner plc | Annual Report 2020

Pension

The existing Executive Directors' pension arrangements are ahead of the rate which is given to the majority of the Company's workforce. The pension contribution for the CEO and CFO is 12% of salary. The Committee sees that the differential is appropriate given the higher level of responsibility attached to these roles and believes it unfair and inappropriate to seek to change these rates retrospectively.

Benefits in kind

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.

None of the Executive Directors have a prospective right to a defined benefits pension with the Company.

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 2020 was £5.8m.

Based on the Group underlying profit before tax performance for the current financial year, 0% of the Group element of the bonus is payable. Despite strong personal KPI performance of the CEO and CFO, due to the underlying performance of the business, no bonus will be payable to the Executive Directors for the period ending 31 January 2020.

Profit before tax (70%)

Threshold

Target

Stretch

Actual

KPI (30%)

% payable

Mark Briffa

5.8

6.1

6.7

4.2

See table below

-

Joanne Estell

5.8

6.1

6.7

4.2

See table below

-

Profit is before income tax, exceptional and other items.

Below is a summary of the personal objectives and achievements for the CEO:

Strategic pillar

Weighting

Measures

Achievement

Achieve underlying PBT of £6.1m

Not achieved - PBT of £4.2m achieved

Achieve cash conversion - target 85%.

Achieved

Measured by cash generated from

operations less investment activities

(excluding acquisitions) divided by

Profitable growth

70%

operating profit

Earnings per share - target CPI + 5% pa

Not achieved - earnings per share

based on 2019

excluding exceptional and other items

was 6.4p versus 9.6p in FY19

Evolution of the Group strategy and

Achieved

measurement of the relevant KPI metrics

Putting our customers first

•• Net promoter score of 80%

Achieved - Net promoter score of 89%;

prior year 86%

•• Feefo Gold standard

Feefo Platinum standard achieved in

Baines Simmons

Transformational

30%

Broadening our offer

Achieved - Redline Assured Security

success

successfully acquired in December 2019

Organic growth within our core business

Achieved - new offices opened in

Houston (February), Singapore (February)

and Dubai (November)

Developing and retaining our people

Achieved

Maintaining and enhancing brand identity

Achieved

governance Corporate

Air Partner plc | Annual Report 2020

77

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Annual bonus (audited) continued

Below is a summary of the personal objectives and achievements for the CFO:

Strategic pillar

Weighting

Measures

Achievement

Deliver PBT of £6.1m

Not achieved - PBT of £4.2m achieved

Achieve cash conversion - target 85%.

Achieved

Measured by cash generated from

operations less investment activities

Profitable growth

70%

(excluding acquisitions) divided by

operating profit

Earnings per share - target CPI + 5% pa based on 2018/19

Not achieved - earnings per share excluding exceptional and other items was 6.4p versus 9.6p in FY19

Improve capital expenditure controls

Achieved

Customer and

10%

Refresh management accounts

Achieved

brand

People

10%

Review finance team structure

Partly achieved

Support the roll-out of D365 and the

Partly achieved

Operational

10%

booking tool

improvement

Continue to close out actions from the

Achieved

accounting review

Payments to former Directors (audited information)

There were no payments to former Directors made in the year.

Payments for loss of office (audited information)

There were no payments to former Directors made in the year.

Long Term Incentive Plan (LTIP) (audited)

Details of unvested share awards outstanding at the financial year end are shown in the following tables:

Share

options

(audited)

Number of options

Award

31 January

31 January

Size

ExerciseEarliest date

Expiry

Name

Date of grant

2019

Granted

Exercised

Expired

Lapsed

2020

(% salary)

price of exercise

date

Mark

29 June

29 June

Briffa

29 June 2016

552,080

-

463,7471

-

88,333

-

150

0.0p

2019

2026

10

July

10 July

10 July 2017

173,611

-

-

-

-

173,611

75

0.0p

2020

2027

23

July

23 July

23 July 2018

177,273

-

-

-

177,2732

-

83

0.0p

2021

2028

11

July

11 July

11 July 2019

- 335,696

-

-

-

335,696

100

0.0p

2022

2029

Total

902,964

335,696

463,747

-

265,606

509,307

  1. The EPS stretch was achieved and 100% of this element vested. The TSR was between target and stretch and 51.9% of this element vested resulting in an overall vest rate of 84%.
  2. The 2018 options were cancelled on 31 January 2020. This tranche of options was issued before the accounting review in 2018. The Remuneration Committee has reviewed the performance criteria associated with this tranche and deemed it highly unlikely these options are likely to vest. Accordingly, they were cancelled, freeing up headroom for future awards.

78 Air Partner plc | Annual Report 2020

Long Term Incentive Plan (LTIP) (audited) continued

Share

options

(audited)

Number of options

Award

31 January

31 January

Size

ExerciseEarliest date

Expiry

Name

Date of grant

2019

Granted

Exercised

Expired

Lapsed

2020

(% salary)

price of exercise

date

Joanne

11 July

11 July

Estell

11 July 2019

182,278

-

-

-

-

182,278

75

0.0p

2022

2029

Total

182,278

-

-

-

-

182,278

The following performance conditions are attached to the LTIP awards:

Performance measure

Weighting

Performance

Vesting rate

2016

2017 restated

20181

2019

EPS

2/3rds

Threshold

25%

CPI +5%

CPI +7.5%

CPI +7.5%

CPI +6%

Stretch

100%

CPI +10%

CPI +12.5%

CPI +12.5%

CPI +12%

TSR

1/3rd

Threshold

25%

9% pa

9% pa

9% pa

9% pa

Stretch

100%

16% pa

16% pa

16% pa

16% pa

1. The 2018 LTIP was cancelled on 31 January 2020. This tranche of options was issued before the accounting review in 2018. The Remuneration Committee has reviewed the performance criteria associated with this tranche and deemed it highly unlikely these options are likely to vest. Accordingly, they were cancelled freeing up headroom for future awards.

For intermediate performance between threshold and stretch, vesting will occur on a straight-line basis. There is no vesting for any performance measure where the outcome is below threshold.

Share options

None of the Executive Directors hold any unexpired share options.

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:

31 Jan 20

31 Jan 19

Mark Briffa1

822,130

538,102

Joanne Estell2

11,363

-

Ed Warner

125,000

-

Paul Dollman

44,000

-

Richard Jackson

12,500

12,500

Shaun Smith

11,635

11,635

Amanda Wills

5,265

-

  1. Mark Briffa's holding is above the 100% shareholding target.
  2. Joanne Estell joined the Board on 10 September 2018. Joanne's target holding is 50% salary over a five-year period.

CEO pay history

The table below sets out the details for the Director undertaking the role of Chief Executive Officer:

CEO single figure of

Annual bonus pay-out

Vesting rates against

total remuneration

against maximum

maximum opportunity

Year ending

£'000

%

%

2020

674

-

84.0

2019

805

-

100.0

2018

691

64.3

65.5

2017

652

50.1

-

2016

570

73.9

-

2015

271

-

66.7

2014 - 18 months

656

92.8

-

2012

249

16.8

-

2011

369

100.0

-

governance Corporate

Air Partner plc | Annual Report 2020

79

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Percentage change in CEO's remuneration

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 2020, on an annualised basis, and 31 January 2019.

All UK employees employed by the Group in both January 2019 and January 2020 were chosen as the most appropriate comparator group as this includes senior executives and excludes international employees who are on different

pay structures.

Annual

%

Salary

Benefits

bonus

CEO

7.6

-

-

Average pay based on all of the Group's UK employees

5.6

12.3 1

-

1. There has been no significant change in the benefits offered in 2019. In a relatively small population, people opting in or out of benefits can have a significant impact on the overall spend.

Pay ratios

The government recently introduced legislation requiring all quoted companies with more than 250 UK employees to publish the ratio of the Chief Executive Officer's single figure to the average total remuneration of full-time equivalent employees. The table below sets out the ratio of the Chief Executive Officer's pay to the 25th percentile, median and 75th percentile total remuneration of full-time equivalent employees.

Year

Method

25th percentile

50th percentile

75th percentile

2020

A

31:1

21:1

13:1

The Committee has opted to use Option A for calculating the pay ratio, in line with best practice guidance. The total average pay and benefits for the individuals used in the calculations above are as follows:

Year

Method

25th percentile

50th percentile

75th percentile

2020

Total pay

21,559

32,133

50,272

The employee data is at 31 January 2020. Employees are our greatest asset and we ensure that they are fairly remunerated for their contribution to the success of the Group.

Relative importance of spend on pay

2020

2019

% variance

Total employee pay compared to prior period (£m)

23,030

20,415

13%

Profit before tax (£m)

936

3,369

-72%

Total dividends paid and declared (pence)

1.8

5.60

-68%

Profit before tax has been used as a comparison as it is a key financial metric which the Board considers when assessing Company performance.

80 Air Partner plc | Annual Report 2020

Performance graph

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.

AuditRemunerationand Risk

Committee

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Jan

Air Partner plc

FTSE All Share

Note: For the period of suspension in June 2018, we have assumed a constant TSR based on the date of suspension (31 May 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.

Shareholder voting

At the 2019 AGM, the results of the votes on the Directors' Remuneration Report were:

Number of

% of votes

votes

cast

For (including discretionary)

12,841,470

99.58

Against

54,527

0.42

Votes withheld

28,139

-

Shareholder voting

At the 2019 AGM, the results of the votes on the Directors' remuneration policy were:

Number of

% of votes

votes

cast

For (including discretionary)

12,566,645

97.45

Against

329,352

2.55

Votes withheld

28,139

-

We consulted with major shareholders on the proposed remuneration policy changes in April 2019 and reflected comments made in the policy proposed.

governance Corporate

Air Partner plc | Annual Report 2020

81

Corporate governance

Directors' remuneration report continued

Remuneration policy report continued

Remuneration in 2020/21

COVID-19 has created unprecedented challenges across the world. The full scale of its impact became clear post year end.

The Company has taken significant and appropriate steps on executive remuneration in light of these circumstances and of broader actions taken.

Specifically in relation to executive remuneration and in addition to the pay reductions referred to above:

•• the Executive and Non-executive Directors have taken a temporary 20% pay reduction for at least three months commencing 23 March 2020 alongside all non-operational UK staff;

•• determination of the KPI and remuneration metrics for bonus and LTIP has been postponed and will be reviewed at the half year point;

•• the annual salary review process will not take place in 2020/21; and

•• there will be no executive bonuses paid in respect of 2019/20 performance even where personal objectives have been met.

The Remuneration Committee will continue to monitor the situation and take necessary action. The Remuneration Committee will consider setting targets for both Group financial performance and personal objectives under the annual bonus plan at mid-year when there should be a clearer picture on the impact of COVID-19. As in previous years, the performance measures and weightings for both the CEO and CFO will be underlying profit before tax (70%) and personal objectives (30%). Retrospective disclosure will be made in next year's Annual Report.

The Company will determine the performance conditions to be applied to the 2020 LTIP awards at the point of award and disclose them in the announcement at that point and in next year's Annual Report.

The employee share plan (SAYE) is intended to be launched in the later part of 2020/21.

The Directors' Remuneration Report was approved by the Board on 22 May 2020 and is signed on its behalf by:

Amanda Wills

Chair of the Remuneration Committee

22 May 2020

UK Corporate Governance Code

  1. The Committee believes that the structure of Executive Directors' and senior executives' reward should be aligned to the Group's strategy, purpose and values and as such a greater proportion of the package for senior leadership roles is based on performance based pay through the annual bonus and LTIP. This ensures the remuneration of the Executive Directors and the senior executives is aligned with the performance of the Company and therefore the interests of shareholders. The Committee believes the remuneration policy operated as intended in respect of 2019/20 in terms of company performance and quantum. In early 2019/20, the Committee engaged with major shareholders in respect of its 2019 remuneration policy and made changes in response to shareholders' views. The Committee did not engage with employees in respect of executive remuneration during 2019/20.
  1. 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 to make discretionary performance-related awards to the Executive Directors. The full Board agrees the remuneration of the Chair and Non-executive Directors on the principle that no individual should be able to determine their own remuneration.
  2. Annual bonus documentation and the LTIP scheme rules contain provisions to give the Committee the ability to apply discretion to adjust formulaic outcomes in line with the Code but always within the limits as determined by the new policy. Any use of discretion would be explained clearly in the Remuneration Report.

82 Air Partner plc | Annual Report 2020

Directors' report

The Directors present their Annual Report on the affairs of Air Partner plc, together with financial statements and Auditors' Report for the year ended 31 January 2020.

The Strategic Report is a requirement of the Companies Act 2006 and can be found on pages 1 to 49. The Company has chosen to include certain matters in its Strategic Report that would otherwise be disclosed in this Directors' Report. The Strategic Report and the Directors' Report form the management report as required by Rule 4.1.5R of the Disclosure Guidance and Transparency Rules. Other information that is relevant to the Directors' Report, and is incorporated by reference, can be found as follows:

Disclosure

Location

General information

Page 107

Likely future developments and post balance sheet events

Strategic Report on pages 1 to 49

Directors' dividend recommendation

Chair's Statement on page 7

Employment of disabled persons

Page 64

Employee engagement

Corporate Governance Report on pages 52 to 55

Stakeholder engagement

Corporate Governance Report on pages 52 to 55

Corporate Governance Statement

Corporate Governance Report on page 50

Directors during year ended 31 January 2020

Corporate Governance Report on pages 58 and 59

Directors' Responsibilities Statement

Statement of Directors' Responsibilities on page 86

Disclosure of information to auditors

Statement of Directors' Responsibilities on page 86

Financial instruments

Page 136

Share capital disclosures

Share capital note on pages 146 and 147

Listing Rules disclosure

Information required by the Financial Conduct Authority's Listing Rules can be found as set out below:

Listing Rule

Location

9.8.6(5)(6) UK Corporate Governance Code compliance

Corporate Governance Report on page 50

9.8.6(7) Unexpired term of service contract

Remuneration Report on page 75

Directors and Directors' interests

The names of the Directors of the Company including biographical details of the Directors and changes to directorships during the reporting period are shown on page 59. Details of Directors' interests in the shares of the Company are shown on page 79.

Information on those Directors who will be offering themselves for election by shareholders at the 2020 AGM are included in the Notice of Meeting on pages 155 to 167 and in the biographical details on page 59. This information is incorporated into this report by reference.

Conflicts of interest

During the year the Group's conflicts of interest policy was refreshed and training was rolled out within the Group. The Directors completed an annual review of their conflicts. 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 Directors 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.

Directors' indemnities and insurance

During the financial year the Company has made qualifying third-party indemnity provisions for the benefit of its Directors that remain in force at the date of approval of the financial statements. 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.

governance Corporate

Air Partner plc | Annual Report 2020

83

Corporate governance

Directors' report continued

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. The Company's Articles of Association are available online at www.airpartner.com.

Substantial shareholdings

As at 20 May 2020, 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:

Number

%

Nature

Shareholder

of shares

holding

of holding

Schroders Investment Management

7,324,919

13.69

Indirect

Aberforth Partners

6,386,030

11.93

Indirect

Hargreaves Lansdown

Asset Management

6,288,873

11.75

Indirect

The interests shown may include shares held under discretionary management agreements for which the manager may not exercise voting rights.

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

Share capital structure, buying back and shareholder rights

A resolution to revoke the restriction on the authorised share capital of the Company was passed at the 2019 AGM. 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 1p each issued and fully paid at 31 January 2020 was 53,525,293. 1,307,728 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 2.5% of the Company's issued share capital as at 31 January 2020. This includes options granted which have not yet vested. The nominal value of shares in respect of which awards are granted on any date shall not exceed 10% of the nominal amount of the Company's equity share capital on the date of the award. Resolutions to renew the authorities given to Directors to allot shares, to disapply 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 2020 AGM to replace the authorities granted in 2019.

An Employee Benefit Trust (the Trust) holds ordinary shares in the Company in order to satisfy options under the Group's share option schemes. At 31 January 2020, the number of ordinary shares held by the Trust was 69,928. Shares in which the Trust holds the beneficial interest may not be voted upon and the entitlement to receive dividends is waived. A further 90,910 shares are held by the Trust in a nominee capacity for a beneficiary of the Trust. The Trust must act on any voting instructions received from the underlying beneficial owner of any shares held by the Trust in a nominee capacity. Dividends are payable in respect of shares held by the Trust in a nominee capacity.

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. No person has any special rights of control over the Company's share capital and

all issued shares are fully paid.

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 established branches in Austria, France and Singapore.

Greenhouse gas emissions

2020

2019

Global

Global

tonnes

tonnes

of CO2e

of CO2e

Vehicles

154

106

Electricity

429

396

Total

583

502

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

84 Air Partner plc | Annual Report 2020

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. The 2019 vehicle emissions shows a restated figure as the prior year figure was incorrectly calculated. 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.

Political contributions

There were no political contributions during the year (2019: £nil).

Directors' statements

As required under the Companies Act 2006, the Code and the Disclosure and Transparency Rules (DTRs), various statements have been made by the Board as set out on pages 50 to 81 and are incorporated into this report by reference.

PricewaterhouseCoopers LLP have conducted the audit of the Group's financial statements for the financial year to 31 January 2020.

PricewaterhouseCoopers LLP have indicated their willingness to continue in office. In accordance with Section 489 of the Companies Act 2006, a resolution to reappoint PricewaterhouseCoopers LLP as the statutory auditors will be proposed at the 2020 AGM.

Annual General Meeting

The 2020 AGM will be held at 13.00 on Wednesday 15 July 2020 at 2 City Place, Beehive Ring Road, Gatwick, West Sussex RH6 0PA. The Notice of AGM to shareholders can be found on pages 155 to 167 and is being delivered by provision of the Annual Report 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, www.airpartner.com.

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 Notice of AGM is available to download from the Investors section on the Company's website. Proxy cards for the 2020 AGM will not

be sent to shareholders unless specifically requested.

Corporate governance

The Company's Statement on Corporate Governance can be found in the Corporate Governance Report on page 50 of these financial statements. The Corporate Governance Report forms part of this Directors' Report and is incorporated into it by cross-reference.

The Directors' Report was approved by the Board on 22 May 2020 and is signed by order of the Board by:

Judith Banks

General Counsel and

Company Secretary

22 May 2020

governance Corporate

Air Partner plc | Annual Report 2020

85

Corporate governance

Statement of Directors' responsibilities in respect of the financial statements

The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law and regulation.

Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have prepared the Group financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and parent company financial statements in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Group and parent company and of the profit or loss of the Group and parent company for that period.

In preparing the financial statements, the directors are required to:

•• select suitable accounting policies and then apply them consistently;

•• state whether applicable IFRSs as adopted by the European Union have been followed for the Group financial statements and IFRSs as adopted by the European Union have been followed for the Company financial statements, subject to any material departures disclosed and explained in the financial statements;

•• make judgements and accounting estimates that are reasonable and prudent; and

•• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group and parent company will continue in business.

The directors are also responsible for safeguarding the assets of the Group and parent company and hence

for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Group and parent company's transactions and disclose with reasonable accuracy at any time the financial position of the Group and parent company and enable them to ensure that the financial statements and the Directors' Remuneration Report comply with the Companies Act 2006 and, as regards the Group financial statements, Article 4 of the IAS Regulation.

The directors are responsible for the maintenance and integrity of the parent company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Directors' confirmations

The directors consider that the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group and parent company's position and performance, business model and strategy.

Each of the directors, whose names and functions are listed in on pages 58 and 59, confirm that, to the best of their knowledge:

•• the parent company financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Company;

•• the Group financial statements, which have been prepared in accordance with IFRSs as adopted by the European Union, give a true and fair view of the assets, liabilities, financial position and profit of the Group; and

•• the Directors' Report, or where otherwise indicated the Strategic Report or other parts of the Annual Report, includes a fair review of the development and performance of the business and the position of the Group and parent company, together with a description of the principal risks and uncertainties that it faces.

In the case of each director in office at the date the Directors' Report

is approved:

•• so far as the director is aware, there is no relevant audit information of which the Group and parent company's auditors are unaware; and

•• they have taken all the steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the Group and parent company's auditors are aware of that information.

Mark Briffa

Chief Executive Officer

Joanne Estell

Chief Financial Officer

22 May 2020

86 Air Partner plc | Annual Report 2020

Financial statements and shareholder information

Financial statements

  1. Independent auditors' report
  1. Consolidated income statement
  1. Consolidated statement of comprehensive income
  2. Consolidated statement of changes in equity
  3. Company statement of changes in equity
  4. Consolidated statement of financial position

104 Company statement of financial position

106 Consolidated and Company statement of cash flows

107 Notes to the financial statements

Shareholder information

155 Notice of Annual General Meeting

164 Explanation of the resolutions to be proposed at the AGM

168 Company information

statements Financial

Air Partner plc | Annual Report 2020

87

Financial statements

Independent auditors' report

to the members of Air Partner plc

Report on the audit of the financial statements

Opinion

In our opinion, Air Partner plc's group financial statements and parent company financial statements (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 2020 and of the group's profit and the group's and the parent company's cash flows for the year then ended;

have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union and, as regards the parent company's financial statements, as applied in accordance with the provisions of the Companies Act 2006; and

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, included within the Annual Report, which comprise: the consolidated and company statements of financial position as at 31 January 2020; the consolidated income statement and consolidated statement of comprehensive income, the consolidated and company statement of cash flows, and the consolidated and company statements of changes in equity for the year then ended; and the notes to the financial statements, which include a description of the significant accounting policies.

Our opinion is consistent with our reporting to the Audit Committee.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) ("ISAs (UK)") and applicable law. Our responsibilities under ISAs (UK) are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We remained independent of the group in accordance with the ethical requirements that are relevant to our audit

of the financial statements in the UK, which includes the FRC's Ethical Standard, as applicable to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC's Ethical Standard were not provided to the group or the parent company.

Other than those disclosed in note 6 to the financial statements, we have provided no non-audit services to the group or the parent company in the period from 1 February 2019 to 31 January 2020.

88 Air Partner plc | Annual Report 2020

Report on the audit of the financial statements

Our audit approach

Overview

Overall group materiality: £215,000 (2019: £290,000), based on 5% of profit before income tax and exceptional and other items.

Materiality

Overall parent company materiality: £190,000 (2019: £226,000), based on 5%

of profit before income tax and exceptional and other items.

We performed full scope audit procedures on four trading entities. We then

extended our testing in relation to onerous contracts within SafeSkys Limited;

Audit scope

and the French tax investigation within Air Partner International S.A.S, to ensure

that we achieved required levels of audit coverage. Overall, these audit procedures

provided coverage of 78% of consolidated revenue, 82% of consolidated profit before

income tax and exceptional and other items on absolute basis, and 82% of

Key audit

consolidated profit before income tax on absolute basis. Of the four full scope

audits, three audits were performed by the group engagement team based in the

matters

UK. For one entity, Air Partner International GmbH, a separate PwC component

audit team based in Germany performed the audit under instruction from the

group team.

Additionally, the group engagement team performed audit work over tax balances,

share based payments, business combinations, goodwill impairment and the group

consolidation as these items are all controlled centrally.

Impairment of SafeSkys Limited goodwill and intangible assets (Group)

Classification of Exceptional and other items (Group)

Accounting for the acquisition of Redline Worldwide Limited (Group)

French tax investigation (Group)

The impact of COVID-19 on the financial statements (Group and company)

The scope of our audit

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements.

Capability of the audit in detecting irregularities, including fraud

Based on our understanding of the group and industry, we identified that the principal risks of non-compliance with laws and regulations related to the Listing Rules and tax legislation applicable to the significant components, and we considered the extent to which non-compliance might have a material effect on the financial statements, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Listing Rules, tax legislation and the Companies Act 2006. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to overstatement of profit before income tax and exceptional and other items, principally by posting inappropriate journal entries or exercising bias in accounting estimates to increase revenue, reduce expenditure, or misstate exceptional and other items. The group engagement team shared this risk assessment with the component auditors so that they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed by the group engagement team and/or component auditors included:

Discussions with management, including consideration of any known or suspected instances of non-compliance with laws and regulation and fraud;

Challenging assumptions made by management in their significant accounting judgements and estimates in particular in relation to items classified as Exceptional and other income, Goodwill impairment assumptions and the impact of COVID-19 on Going concern (see key audit matters below);

Assessment of matters reported on the group's whistleblowing helpline and the results of management's investigation of such matters;

statements Financial

Air Partner plc | Annual Report 2020

89

Financial statements

Independent auditors' report continued

to the members of Air Partner plc

Report on the audit of the financial statements continued

Our audit approach continued

Capability of the audit in detecting irregularities, including fraud continued

Evaluating and testing journal entries which may be indicative of fraud, for example any journal entries posted with unusual account combinations, journals posted by senior management, and unexpected consolidation journals; and

Review of disclosures included in the financial statements to ensure key judgements and estimates are presented in a way that is fair, balanced and understandable.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

Key audit matters

Key audit matters are those matters that, in the auditors' professional judgement, were of most significance in

the 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) identified by the auditors, including 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, and any comments we make on the results of our procedures thereon, 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. This is not a complete list of all risks identified by our audit.

Key audit matter

How our audit addressed the key audit matter

Impairment of SafeSkys Limited goodwill and intangible assets (Group)

The Group's consolidated statement of financial position as at 31 January 2020 includes goodwill and other intangible assets relating to the acquisition of SafeSkys Limited of £1,775k (£3,660k prior to impairment).

The carrying value of goodwill and other intangible assets is supported by the present value of future cash flows generated by the related business. There is an inherent risk that actual future cash flows may not meet management's expectations, resulting in a further impairment in the value of these intangible assets.

The cash flow forecasts which support the impairment review performed by the group include a number of significant estimates including future revenue growth, profit margins, the terminal growth rate, and the discount rate. Changes in these assumptions could have a material impact on the discounted future cash flows and therefore represent a risk that the level of impairment recorded against the SafeSkys goodwill and intangible asset balance is misstated.

During the year, after consideration of management's impairment testing of SafeSkys Limited, the Directors booked an impairment to goodwill of £1,885k.

Further information is set out in notes 2v) and 13 in the financial statements.

We obtained management's impairment model and performed the following procedures:

evaluated the reasonableness of key assumptions, including future changes in revenues, costs and cash flows, terminal growth rates and the discount rate. Our work was supported by our valuations experts to assess the discount rate used by management

in the impairment workings;

challenged management to substantiate key assumptions, including a 'look-back' analysis to compare management's assumptions in prior year budgets with current year actuals performance;

verified the underlying drivers for the impairment to Goodwill in the year.

tested the mathematical accuracy of management's impairment model and supporting calculations;

obtained and evaluated management's sensitivity analyses to evaluate the financial impact of changes in key assumptions.

As a result of our work performed, we determined that the carrying value of goodwill and intangible assets in respect of SafeSkys Limited were appropriately impaired by £1,885k in the year.

We read the disclosures made in note 13 to the financial statements, including sensitivity analysis and the associated sources of estimation uncertainty disclosed within note 2v, and found these disclosures to be appropriate.

90 Air Partner plc | Annual Report 2020

Report on the audit of the financial statements continued

Our audit approach continued

Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

statements Financial

Classification of Exceptional and other items (Group) The Directors believe that underlying profit before tax and earnings per share measures provide additional useful information for shareholders on the underlying performance of the business. These alternative performance measures are disclosed prominently in various sections of the annual report.

The Directors define underlying profit as profit before income tax and exceptional and other items.

There is a risk that costs incurred by the Group are inappropriately classified as Exceptional and other items in order to increase the perceived performance of the Group, or that items of income or other gains received in the year which should be classified as Exceptional and other items are excluded and reported within underlying profit.

During the year, the Directors classified £3,296k as Exceptional and other items.

Further information is set out in notes 2u), 2v) and 7.

We obtained management's detailed analysis of Exceptional and other items and performed the following procedures:

tested a sample of items classified as exceptional and other items back to supporting documents to ensure that these were accurately recorded;

evaluated the nature of the items tested to ensure that these were appropriately classified as Exceptional and other items by reference to management's definition of underlying profit and established regulatory guidance on the reporting of alternative performance measures;

We evaluated the nature of items of income and other gains received in the year that had not been reported within exceptional and other items to assess whether these should be included within underlying profit.

We specifically challenged management to ensure that exceptional gains and losses were treated consistently, and that items were treated in a consistent manner from one year to the next.

We read the disclosures in notes 2u), 2v) and 7 to the financial statements to ensure these provided clear and sufficient guidance to enable the user of the financial statements to understand the nature and magnitude of the items included within Exceptional and other items, and why management have excluded these items from underlying profit. We found these to be appropriate.

Air Partner plc | Annual Report 2020

91

Financial statements

Independent auditors' report continued

to the members of Air Partner plc

Report on the audit of the financial statements continued

Our audit approach continued

Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

Accounting for the acquisition of Redline Worldwide Limited (Group)

During the year, the Group acquired the Redline Worldwide Limited group "Redline Group", resulting in £7,500k of intangible assets being recorded on the Group statement of financial position.

Accounting for acquisitions can be complex, with judgement required in both the identification of assets acquired (including any intangible assets), and the valuation of those assets and liabilities acquired, in accordance with IFRS 3 'Business Combinations'. Specifically IFRS 3 requires intangible assets must be recognised on an acquisition where these arise from contractual or legal rights acquired and are separable from the business.

The calculation of fair value of assets and liabilities can be subjective due to the inherent uncertainty involved in the valuation, and this requires the application of judgement by management and technical expertise.

In particular, the method of valuation, the future forecasts (including cash flow forecasts) and other underlying assumptions used in valuations may all have a material impact on the valuation of assets and liabilities, notably on the valuation of intangible assets, which represents the most significant value of assets arising on the acquisition.

Due to the complex nature of acquisition accounting, there is a risk that intangible assets acquired may incorrectly or inaccurately be recognised resulting in the risk of material misstatement in these balances.

Further information is set out in notes 2v) and 32.

We read the sale and purchase agreement ("SPA") associated with the acquisition of the Redline Group and performed audit procedures over both the identification of assets acquired (including the completeness of intangible assets identified) and the valuation of assets acquired and liabilities assumed.

Our work over the valuation of intangible assets included the following procedures:

assessed the appropriateness of the valuation models used for each class of intangible asset;

tested the mathematical accuracy of management's valuation model;

evaluated the discount rate used in the models with the support of our valuation specialists;

assessed future cash flow forecasts used in the valuations for each of intangible assets acquired by reference to management budgets, historical performance and matters identified in the due diligence performed over the acquisition;

evaluated the useful lives attributed to each of the categories of intangible assets by reference to our understanding of the nature of the assets and the period over which future economic value is expected to be derived from these assets.

From our review and assessment of the SPA, and audit procedures performed over the valuation of assets acquired and liabilities assumed, we found that the judgments made surrounding the identification of assets and liabilities acquired were appropriate, and that the valuation models used, and the judgments and estimates made surrounding the valuation of assets and liabilities acquired to be reasonable.

We assessed the disclosures made in respect

of the acquisition against the requirements of the relevant accounting standards and found that these were appropriate.

92 Air Partner plc | Annual Report 2020

Report on the audit of the financial statements continued

Our audit approach continued

Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

statements Financial

French tax investigation (Group)

During the year, Air Partner International S.A.S was subject to a tax reassessment in relation to indirect taxes and corporate taxes, resulting in the French Tax Administration challenging some treatments, and issuing a demand for additional payment and fines in respect of previous years.

Evaluating the financial impact of matters of this nature is inherently uncertain and as such management have applied significant judgement in determining the likely outcome of the investigation and estimating the associated provision for any future payments that may be due.

The Directors have made a provision of £283,000 based on their evaluation of matters identified by the French Tax Administration. Management have received external advice from their own experts in responding to the reassessment and in evaluating the financial impact this has on the financial statements.

Given the magnitude of the reassessment the judgements made by management are material to the financial statements.

Further information is set out in notes 2 and 7.

We obtained and read the tax reassessment issued by the French Tax Administration, the company's response it has issued to the French Tax Administration, and all other relevant correspondence between the company, the French Tax Administration and the company's external experts. With the support of our tax specialists in the UK and France we evaluated the nature of the matters identified in the reassessment and considered management's assessment, in light of our own evaluation, including our interpretation of French tax regulations and other relevant precedent.

We held discussions with management, their external experts and our UK and French tax specialists to challenge management's evaluation of the reassessment. We also obtained a confirmation from management's external experts of their assessment of each of the items identified by the French Tax Administration, including their opinion on the likely outcome for each of these matters. We evaluated the confirmation with the support of our UK and French tax specialists.

We performed detailed testing over a sample of underlying transactions recorded within the business to validate that the nature of these transactions was consistent with the tax analysis used to support management's response to the French Tax Administration.

From our detailed testing performed and our review and evaluation of the reassessment, management's formal response, the confirmation from management's experts and other related correspondence we found that management's assessment of the financial impact of the reassessment, including the provision recorded in the financial statements, was reasonable.

We read the disclosures made in the financial statements in respect of the tax reassessment and found these were appropriate.

Air Partner plc | Annual Report 2020

93

Financial statements

Independent auditors' report continued

to the members of Air Partner plc

Report on the audit of the financial statements continued

Our audit approach continued

Key audit matters continued

Key audit matter

How our audit addressed the key audit matter

Consideration on the impact of COVID-19 (Group and company)

The Directors have assessed the impact of COVID-19 on the financial statements, and have concluded that COVID-19 represents a non- adjusting post balance sheet event in accordance with IAS 10 - 'Events After the Reporting Period'. This is on the basis that the full macroeconomic impact

of the pandemic was not apparent until after the balance date, particularly in the Group's most significant markets in the UK, US and mainland Europe. The assessment of whether or not COVID-19 is an adjusting or non-adjusting event involves management exercising judgement.

COVID-19 has created significant economic uncertainty and this increases this risk over the Directors use of the Going concern basis of preparation. The Directors assessment of Going concern is supported by estimates over future trading performance and associated cash flows through to 31 January 2022, and COVID-19 has resulted

in greater uncertainty in estimating future revenues, profits and cash flows.

Further information is set out in notes 2c), 2v) and 39.

We considered the Directors' assessment that the impact of COVID-19 is not an adjusting post balance sheet event by reference to the wider understanding of the impact of COVID-19 on economies in the Group's key markets at 31 January 2020, and based on our evaluation we found the directors assessment to

be reasonable.

We obtained the directors going concern assessment and, with the support of our own internal experts, performed the following procedures:

tested the mathematical accuracy of the cash flow forecast model and other supporting documents;

assessed the reasonableness of key assumptions supporting the cash flow forecasts including revenue and cost projections, mitigating cost actions identified by the directors, and other assumptions over Government support schemes in the Group's key territories;

evaluated forecast revenues by reference to current and historical performance, sensitised to reflect a variety of different downside scenarios as a consequence

of the potential future impact of COVID-19 on the Group's different markets;

assessed the impact of financial obligations arising from existing contractual relationships to ensure that these were appropriate reflected in the cash flow forecasts;

read and evaluated the Group's existing facility agreements to ensure that there were no conditions precedent that would result in the facilities being withdrawn within a 12 month period of the approval of the financial statements, and read confirmation from the Group's lenders of the formal waiver of financial covenants in periods where there was a risk of a potential breach of covenants.

Based on the procedures performed we found that the directors use of the going concern basis in the preparation of the financial statements is reasonable.

We read the disclosures made in the financial statements in respect of the impact of COVID-19 on the financial statements, and the specific disclosures in respect of Going concern in light of the heightened risk as a result of COVID-19 and found these to be appropriate.

94 Air Partner plc | Annual Report 2020

Report on the audit of the financial statements continued

Our audit approach continued

How we tailored the audit scope

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements as a whole, taking into account the structure of the Group and the parent company, the accounting processes and controls, and the industry in which they operate.

The Group consists of fifteen trading companies, of which four of these are considered to be significant components of the Group. These are Air Partner plc and Baines Simmons Limited in the UK; Air Partner Inc. in the USA; and Air Partner International GmbH in Germany. We have performed full-scope audits for each of these components and each of them are 100%-owned subsidiaries of the Group. For Air Partner International GmbH, a separate PwC component audit team based in Germany performed the audit under instruction from the group team. For Air Partner plc, Baines Simmons Limited and Air Partner Inc., the audits were performed by the Group engagement team based in the UK.

Finally, we have performed specified procedures over onerous contracts within the UK entity SafeSkys Limited, and the French tax investigation within Air Partner International S.A.S.

Materiality

The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:

Group financial statements

Parent company financial statements

Overall materiality

£215,000 (2019: £290,000).

£190,000 (2019: £226,000).

How we determined it 5% of profit before income tax and exceptional

5% of profit before income tax and

and other items.

exceptional and other items.

Rationale for

Based on the benchmarks used in the annual

Based on the benchmarks used in the

benchmark applied

report, profit before income tax and exceptional

annual report, profit before income tax

and other items, as defined by management in

and exceptional and other items, as defined

note 7 to the financial statements, is the primary

by management in note 7 to the financial

measure used by the shareholders in assessing

statements, is the primary measure

the performance of the Group, and it is a

used by the shareholders in assessing

generally accepted auditing benchmark to

the performance of the Group, and is a

base materiality on key alternative

generally accepted auditing benchmark

performance measures.

to base materiality on key alternative

performance measures.

statements Financial

For each component in the scope of our group audit, we allocated a materiality that is less than our overall group materiality. The range of materiality allocated across components was between £163,000 and £190,000. Certain components were audited to a local statutory audit materiality that was also less than our overall group materiality.

We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £10,750 (Group audit) (2019: £14,500) and £9,500 (Parent company audit) (2019: £11,300) as well as misstatements below those amounts that, in our view, warranted reporting for qualitative reasons.

Going concern

In accordance with ISAs (UK) we report as follows:

Reporting obligation

Outcome

We are required to report if we have anything material to add or

We have nothing material to add or to draw

draw attention to in respect of the directors' statement in the financial

attention to.

statements about whether the directors considered it appropriate to

adopt the going concern basis of accounting in preparing the financial

However, because not all future events or

statements and the directors' identification of any material uncertainties

conditions can be predicted, this statement

to the Group's and the parent company's ability to continue as a going

is not a guarantee as to the Group's and

concern over a period of at least twelve months from the date of

parent company's ability to continue as

approval of the financial statements.

a going concern.

We are required to report if the directors' statement relating to Going

We have nothing to report.

Concern in accordance with Listing Rule 9.8.6R(3) is materially inconsistent with our knowledge obtained in the audit.

Air Partner plc | Annual Report 2020

95

Financial statements

Independent auditors' report continued

to the members of Air Partner plc

Report on the audit of the financial statements continued

Reporting on other information

The other information comprises all of the information in the Annual Report other than the financial statements

and our auditors' report thereon. The directors are responsible for the other information. Our opinion on the financial statements does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise explicitly stated in this report, any form of assurance 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 an apparent material inconsistency or material misstatement, we are required to perform procedures to conclude whether there is a material misstatement of 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. We have nothing to report based on these responsibilities.

With respect to the Strategic Report, Directors' Report and Corporate Governance Statement, we also considered whether the disclosures required by the UK Companies Act 2006 have been included.

Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006 (CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions and matters as described below (required by ISAs (UK) unless otherwise stated).

Strategic Report and Directors' Report

In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and Directors' Report for the year ended 31 January 2020 is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we did not identify any material misstatements in the Strategic Report and Directors' Report. (CA06)

Corporate Governance Statement

In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance Statement (on pages 50 to 86) about internal controls and risk management systems in relation to financial reporting processes and about share capital structures in compliance with rules 7.2.5 and 7.2.6 of the Disclosure Guidance and Transparency Rules sourcebook of the FCA ("DTR") is consistent with the financial statements and has been prepared in accordance with applicable legal requirements. (CA06)

In light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we did not identify any material misstatements in this information. (CA06)

In our opinion, based on the work undertaken in the course of the audit, the information given in the Corporate Governance Statement (on pages 50 to 86) with respect to the parent company's corporate governance code and practices and about its administrative, management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7 of the DTR. (CA06)

We have nothing to report arising from our responsibility to report if a corporate governance statement has not been prepared by the parent company. (CA06)

96 Air Partner plc | Annual Report 2020

Report on the audit of the financial statements continued

Reporting on other information continued

The directors' assessment of the prospects of the group and of the principal risks that would threaten the solvency or liquidity of the group

We have nothing material to add or draw attention to regarding:

The directors' confirmation on page 51 of the Annual Report 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.

The disclosures in the Annual Report that describe those risks and explain how they are being managed or mitigated.

The directors' explanation on page 43 of the Annual Report 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 have nothing to report having performed a review of the directors' statement that they have carried out a robust assessment of the principal risks facing the group and statement in relation to the longer-term viability of the group. Our review was substantially less in scope than an audit and only consisted of making inquiries and considering the directors' process supporting their statements; checking that the statements are in alignment with the relevant provisions of the UK Corporate Governance Code (the "Code"); and considering whether the statements are consistent with the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit. (Listing Rules)

Other Code Provisions

We have nothing to report in respect of our responsibility to report when:

The statement given by the directors, on page 86, that they consider the Annual Report taken as a whole to be fair, balanced and understandable, and provides the information necessary for the members to assess the group's and parent company's position and performance, business model and strategy is materially inconsistent with our knowledge of the group and parent company obtained in the course of performing our audit.

The section of the Annual Report on page 65 to 68 describing the work of the Audit Committee does not appropriately address matters communicated by us to the Audit Committee.

The directors' statement relating to the parent company's compliance with the Code does not properly disclose a departure from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors.

Directors' Remuneration

In our opinion, the part of the Directors' Remuneration Report to be audited has been properly prepared in accordance with the Companies Act 2006. (CA06)

Responsibilities for the financial statements and the audit

Responsibilities of the directors for the financial statements

As explained more fully in the Statement of Directors' responsibilities in respect of the financial statements set

out on page 86, the directors are responsible for the preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a true and fair view. The directors are also responsible for such internal control as they 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.

statements Financial

Air Partner plc | Annual Report 2020

97

Financial statements

Independent auditors' report continued

to the members of Air Partner plc

Report on the audit of the financial statements continued

Responsibilities for the financial statements and the audit continued

Auditors' 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 auditors' 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 FRC's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors' report.

Use of this report

This report, including the opinions, has been prepared for and only for the parent company's members as a body in accordance with Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Other required reporting

Companies Act 2006 exception reporting

Under the Companies Act 2006 we are required to report to you if, in our opinion:

we have not received all the information and explanations we require for our audit; or

adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

certain disclosures of directors' remuneration specified by law are not made; or

the parent company financial statements and the part of the Directors' Remuneration Report to be audited are not in agreement with the accounting records and returns.

We have no exceptions to report arising from this responsibility.

Appointment

Following the recommendation of the audit committee, we were appointed by the directors on 22 November 2018 to audit the financial statements for the year ended 31 January 2019 and subsequent financial periods. The period of total uninterrupted engagement is 2 years, covering the years ended 31 January 2019 to 31 January 2020.

Matthew Hall (Senior Statutory Auditor)

for and on behalf of PricewaterhouseCoopers LLP Chartered Accountants and Statutory Auditors Gatwick

22 May 2020

98 Air Partner plc | Annual Report 2020

Consolidated income statement

for the year ended 31 January 2020

Year ended

Year ended

31 January

31 January

2020

2019

Continuing operations

Note

£'000

£'000

Gross transaction value (GTV)

2

236,816

273,348

Revenue

3

66,664

77,461

Gross profit

4

34,158

35,458

Administrative expenses before exceptional and other items

(29,180)

(29,039)

Exceptional and other items

7

(3,296)

(2,445)

Total administrative expenses

(32,476)

(31,484)

Net impairment losses on financial assets

(205)

(413)

Operating profit

5

1,477

3,561

Operating profit before exceptional and other items

4,773

6,006

Finance income

9

71

32

Finance costs

9

(612)

(224)

Finance costs - net

(541)

(192)

Profit before income tax

936

3,369

Profit before income tax and exceptional and other items

4,232

5,814

Income tax expense

10

(633)

(484)

Profit for the year

303

2,885

Attributable to:

Owners of the parent company

303

2,885

Earnings per share:

Continuing operations

Basic

12

0.6p

5.6p

Diluted

12

0.6p

5.4p

Consolidated statement of comprehensive income

for the year ended 31 January 2020

Year ended

Year ended

31 January

31 January

2020

2019 

Note

£'000

£'000

Profit for the year

303

2,885

Other comprehensive (expense)/income - items that may subsequently be

reclassified to profit or loss:

Adoption of IFRS 16

38

(167)

-

Exchange differences on translation of foreign operations

(403)

26

Total other comprehensive (expense)/income

(570)

26

Total comprehensive (expense)/income for the year

(267)

2,911

Attributable to:

Owners of the parent company

(267)

2,911

The above consolidated income statement and consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

statements Financial

Air Partner plc | Annual Report 2020

99

Financial statements

Consolidated statement of changes in equity

for the year ended 31 January 2020

Share

Own

Total

Share

premium

Merger

shares

Translation

Retained

capital

account

reserve

reserve

reserve

earnings

equity

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Opening equity as at 1 February 2018

(as restated)

522

4,814

295

(748)

1,038

5,487

11,408

Profit for the year

-

-

-

-

-

2,885

2,885

Exchange differences on translation of

foreign operations

-

-

-

-

26

-

26

Total comprehensive income for the year

-

-

-

-

26

2,885

2,911

Transactions with owners of

the Company:

Share option charge in the year

-

-

-

-

-

252

252

Share options exercised during the year

-

-

-

422

-

(422)

-

Dividends paid (note 11)

-

-

-

-

-

(2,890)

(2,890)

Total transactions with owners of

the Company

-

-