Air Partner : 2020 Annual Results Presentation

2020 Full Year Results

For the year ended 31 January 2020

FULL YEAR RESULTS MAY 2020

Disclaimer

Certain information included in this presentation is forward looking and involves risks, assumptions and uncertainties that could cause actual results to differ materially from those expressed or implied by forward looking statements. Forward looking statements cover all matters which are not historical facts and include, without limitation, projections relating to results of operations and financial conditions and Air Partner plc's plans and objectives for future operations. These may include, without limitation, discussions of expected future revenues, financing plans, expected expenditures, risks associated with changes in economic conditions, the strength of the aviation markets in the jurisdictions in which the Air Partner group operates, changes in exchange and interest rates. Forward looking statements can be identified by the use of forward looking terminology, including, but not limited to, terms such as "believes", "estimates", "anticipates", "expects", "forecasts", "intends", "plans", "projects", "goal", "target", "aim", "may", "will", "would", "could" or "should" or, in each case, their negative or other variations or comparable terminology. Forward looking statements are not guarantees of future performance. All forward looking statements in this presentation are based upon information known to Air Partner plc on the date of preparation of this presentation. Accordingly, no assurance can be given that any particular expectation will be met and readers are cautioned not to place undue reliance on forward looking statements. Additionally, forward looking statements regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Other than in accordance with its legal or regulatory obligations (including under the UK Listing Rules and the Disclosure and Transparency Rules of the Financial Conduct Authority), Air Partner plc undertakes no obligation to publicly update or revise any forward looking statement, whether as a result of new information, future events or otherwise. Nothing in this presentation shall exclude any liability under applicable laws that cannot be excluded in accordance with such laws.

FULL YEAR RESULTS MAY 2020

Mark Briffa

Group Chief Executive

FULL YEAR RESULTS MAY 2020

FINANCIAL HIGHLIGHTS

• Gross profit of £34.2m, down against prior year by 3.7%
• Administration expenses1 in line with prior year after investing in three new office openings
• Underlying PBT of £4.2m (FY19: £5.8m), down on the prior period by 27.6% 1 & 2
• Statutory reported profit down by 73.5% to £0.9m (FY19: £3.4m), driven by:
• • Impairment charge relating to SafeSkys of £1.9m
  • Amortisation of acquired intangibles for Redline of £0.6m
  • A number of other exceptional costs, offset by a number of exceptional gains, of £0.8m
• Net debt (excluding JetCard cash) of £6.9m (FY19: net cash of £2.0m), change resulting from Redline acquisition
• Underlying EPS of 6.4p, down 33.3% (FY19 2019: 9.6p)
• Statutory EPS of 0.6p, down 89.3% (FY19: 5.6p)

1. Stated before exceptional and other items but including net impairment on financial losses
2. The adoption of IFRS 16 has decreased both underlying PBT and statutory reported profit by £0.1m

4

FULL YEAR RESULTS MAY 2020

OPERATIONAL HIGHLIGHTS

• Strategically important acquisition of Redline in December 2019
• Redline further diversifies and increases visibility of the Group's revenues
• Safety & Security (S&S) gross profit of £4.6m, up 9.5%, driven by Redline
• • S&S now contributes 13.5% to the Group's gross profit (FY19: 11.9%)
• Tough trading period for Charter division, down 5.1% on prior year at £29.6m, driven by no significant one-off events during the year
• Delivering on prior year investments in offices and people, with US PJ up 42.5%
• Investment made in three new offices: Houston (Q1), Singapore (Q1) and Dubai (Q4)
• Significant government contract win in Europe for Charter division
• New hire - Managing Director of Charter for EMEA
• Group formed strategic partnership with Northcott Global Solutions

5

FULL YEAR RESULTS MAY 2020

AIR PARTNER'S CUSTOMER OFFERING1

CHARTER

P R I V AT E

J E T S

GR OU P

CH AR T ER

SP ECI ALI ST	FR EI GH T
SER VI CES 2

SAFETY & SECURITY

R EGULAT OR Y &

COM P LI AN CE

T R AI N I NG &
CON SULT AN CY
FAT I GUE R I SK	AUDI T I N G
M AN AGEM EN T

MANAGED SERVICES

WI LD LI FE

H AZAR D

M AN AGEM EN T

AI R CR AFT R EGI ST R Y

SER VI CES

Diverse Global

Customer Base

• Airline operators
• Military & civil organisations
• Regulators
• Airports
• Oil & Gas
• Sports
• MICE
• Corporates
• Individuals

1	This slide is illustrative of our services and is not a breakdown of our divisional structure
6 2	Specialist Services is a range of aviation services that complement our Charter business - Scheduled Group Travel, Tour Operations, Air
	Evacuation, Remarketing & ACMI, and Flight Operations

FULL YEAR RESULTS MAY 2020

STRONG GEOGRAPHIC PRESENCE

Founded in 1961, Air Partner

is a global aviation services

group providing aircraft charter and aviation safety & security solutions to industry, commerce,

governments and private

individuals, across civil and military organisations.

7

FULL YEAR RESULTS MAY 2020

STRATEGY IN ACTION

		New offices opened in Houston,
Acquisition of Cabot Aviation		Singapore and Dubai
(Air Partner Remarketing)		Acquisition of Redline for £10.0m in
Acquisition of Baines Simmons	New York office opened	December 2019
Customer First initiative launched	Acquisition of SafeSkys	Strategic partnership formed with
Northcott Global Solutions

2015

2016

2017

2018

2019

Acquisition of Clockwork Research	Upskilling of key positions
	and Board capabilities
Baines Simmons wins 10 year Isle of
Man contract	Accounting review and
	subsequent process controls
	and improvements
	Los Angeles office opened

2010: Military

contracts

> 60% of gross profits

2020: No one customer

> 10% gross profits

Safety & Security

contribution to Group

gross profit

13.5%

8

FULL YEAR RESULTS MAY 2020

REDLINE - STRATEGIC ACQUISTION RATIONALE

• A global leader in the provision of government-standard security training, consultancy and solutions to regulated, high value and high threat environments
• Acquired in December 2019 for a total consideration of £10.0m, initial consideration of £8.0m and deferred consideration of up to £2.0m
• In line with our strategy, Redline will be earnings enhancing in the first full year of ownership and improves our quality of earnings
• Pre-acquisitionin the year ended 31 March 2019, Redline generated revenue of £6.5m and adjusted EBITDA of £0.8m
• Provides long term visible contracted revenues through to 2023, with blue chip global customer base
• Holds proprietary software and technology that will provide recurring revenues and can also be leveraged across all existing businesses within S&S division
• Brings opportunity to leverage existing customer relationships and cross sell between Charter and S&S
• Brings additional management bandwidth and expertise to S&S division

9

FULL YEAR RESULTS MAY 2020

REDLINE PRODUCTS AND SERVICES

COMPLIANCE MANAGEMENT		ICAO TRAINING
Features of Redline's	Currently only 1 of 35 centres
proprietary SeMS systems:	worldwide to offer ICAO
• Uses web based cloud	training. Training available
for:
architecture
	National inspectors
• Uses a flexible dashboard	•
supported by a suite of	•	Crisis management
functional add ins	•	Air cargo and mail
• Full drill down and visibility		security
to allow any risk to be	•	Instructors
assessed from top to
bottom
• Full tech support from
Redline

E-LEARNING

Redline's comprehensive e- product line provides instant access to industry leading training delivered through a state-of-the-art online

training platform

QUALITY ASSURANCE

Consists of:

• Covert and overt testing
• Redline reporting system
• Physical security systems audit

REGULATORY TRAINING

Recognised as an "Outstanding" training provider against the CAA quality assurance framework

10

Useful info:

• Blue chip global customer base
• 40 active customers spread across governments, corporates and sports sector
• Long term contracts that deliver revenues beyond 2023
• Top 6 customers have renewed long term contracts over last 12 months

FULL YEAR RESULTS MAY 2020

AIR PARTNER: KPIs

	PUTTING OUR CUSTOMERS	BROADENING OUR OFFER	GROWING ORGANICALLY:	DEVELOPING AND RETAINING		MAINTAINING AND
	FIRST		STRENGTHENING OUR CORE		OUR PEOPLE		ENHANCING OUR BRAND
				BUSINESS				IDENTITY
• Continued roll out of CRM	• Acquisition of Redline	•	US footprint increased	•	Implementation of Air	• Measured roll out of
	and booking tool. Will	further broadens our		with launch of Houston		Partner Career		new Air Partner brand -
	improve customer	portfolio of aviation		office in Q1		Development Framework,		unifying the Group
	experience/ information	products and services,	•	Singapore office opened		launched in the UK during		under one brand
	requests and facilitate	while diversifying and		H2		umbrella
		in Q1 with a focus on
	cross selling opportunities	increasing visibility of the				•	Website development
		Freight and Remarketing	•	Review of UK reward
	across the Group.	Group's revenues
				practices and policies to		continues to take place in
			• Dubai office opening in
•	Our experienced and	• As a result of this		ensure we are aligned		preparation for new
	Q4
	dedicated teams	diversification of services,			with brand values		website launch in FY21
	continue to deliver	gross profit for S&S is up	•	Delivering on PYR	•	Senior management team	•	New brand values
	outstanding customer	by 9.5% and the division		investments in offices and		embedded into
			upgraded - New MD of
	service to our worldwide	now contributes 13.5% to		people with US PJ gross			employee training
			Charter for EMEA
	customer base	the Group's gross profit		profit up 42.5%			programme and
•	Net Promoter score: 89%	and increasing	• Continued to recruit in key				onboarding of new staff
	at January 2020	• We continue to review		areas of the business,
•	Feefo Platinum Trusted	acquisition opportunities		notably in the US PJ and
	Service Award	and remain selective in		Freight divisions, attracting
		our approach		talent from our
				competitors and further
				afield
11

FULL YEAR RESULTS MAY 2020

Joanne Estell

Chief Financial Officer

FULL YEAR RESULTS MAY 2020

FINANCIAL HIGHLIGHTS

£m's - unless otherwise stated	January	January	Change
20	19	(%)
Gross transaction value	236.8	273.3	-13.4%
Gross Profit	34.2	35.5	-3.7%
*Admin expenses (inc. net impairment losses on financial assets)	29.4	29.5	-0.2%
*Underlying operating profit	4.8	6.0	-20.5%
*Underlying profit before tax	4.2	5.8	-27.6%
Statutory profit before tax	0.9	3.4	-73.5%
Underlying basic EPS (pence)	6.4p	9.6p	-33.3%
Basic EPS (pence)	0.6p	5.6p	-89.3%
Final Dividend (pence)	0.0p	3.85p	-100.0%
Total Dividend (pence)	1.8p	5.6p	67.9%

13 *Stated before exceptional and other items

FULL YEAR RESULTS MAY 2020

PROFIT RECONCILIATION

£m's Underlying profit before tax

Change of Board composition Costs relating to the accounting review and associated items Amortisation of purchased intangibles Acquisition costs Abortive acquisition costs

Cost incurred and provision for outflows resulting from French tax investigation

Impairment of goodwill Settlement of historical legal disputes Release of deferred consideration Statutory reported profit before tax (£m)

January	January
20	19
4.2	5.8
(0.2)	(0.4)
	(1.3)
(0.6)	(0.4)
(0.6)
-	(0.5)
(0.7)
(1.9)
0.4
0.3	0.2
0.9	3.4

14

FULL YEAR RESULTS MAY 2020

GROSS PROFIT BY DIVISION

18.0
16.0	15.9
14.7
14.0
12.0		11.7
	10.4
10.0
8.0
6.0			4.9	4.6	4.2
4.0			3.2
2.0
0.0
	Group Charter	Private Jets	Freight	Safety & Security
		Jan-20	Jan-19

100.0%
90.0%	13.5%				11.9%
80.0%	9.2%					13.8%
70.0%
60.0%	34.2%				29.3%
50.0%
40.0%
30.0%
20.0%	43.1%				44.9%
10.0%
0.0%
	Jan-20				Jan 19
		Group Charter			Private Jets		Freight		Safety & Security

15

• Group Charter down 7.5%, due to:
• • A key UK customer delaying a significant flying programme
  • Lack of major one off event in 2019
  • Decreased tour operations activity in France
• Private Jets GP increased by 12.5%, driven by strong US performance, up 42.5%
• Freight GP down 34.7%, owing to significant PRY humanitarian aid activity

• S&S up 9.5%, supported by the acquisition of Redline

• Group Charter remains largest division at 43.1%
• Private Jets contributes 34.2% to the Group's GP, driven by the strong growth in the US
• Freight has decreased due to significant PRY comparison
• S&S now contributes 13.5% of total GP with Redline contribution

FULL YEAR RESULTS MAY 2020

GROSS PROFIT BY REGION

20.0
18.0	17.4	17.4
16.0
14.0
12.0
10.0		9.9
	8.7			8.1
			7.8
8.0
6.0
4.0
2.0			0.2	0.1
0.0
	UK	Europe		ROW	US
		Jan-20	Jan-19

• US broadly flat year despite growth in PJ. Growth could not offset high PYR comparator in Freight activity
• UK in line with last year, where S&S and UK Freight growth has helped negate a key customer delay in Group Charter
• Europe 11.9% down on last year, principally due to a sharp drop in the tour operations activity in France and softening of Private Jets market, partially offset by good growth in Germany and Austria

16

100.0%
90.0%	22.9%			22.8%
80.0%	0.5%			0.1%
70.0%
60.0%	25.6%			28.0%
50.0%
40.0%
30.0%
20.0%	51.0%			49.1%
10.0%
0.0%
Jan-20				Jan 19
			UK		Europe		ROW		US

• 49% of GP coming from outside UK
• US contribution remains steady at 22.9%, despite significantly reduced Freight GP in the year
• Investment in Houston, Singapore and Dubai initially increases the cost base, however we expect to see a return within 12 to 18 months

FULL YEAR RESULTS MAY 2020

ABBREVIATED STATEMENT OF FINANCIAL POSITION

£m's	January	January
	20	19
Intangible assets	20.5	11.6
Tangible assets	1.0	0.9
Right of use assets	6.7	0.0
Trade and other receiv ables	18.8	19.1
JetCard bank balances	16.7	17.7
Other cash balances	4.6	7.5
Other current assets	0.3	0.3
Trade and other payables	(5.7)	(8.0)
Deferred income and JetCard deposits	(24.7)	(25.4)
Current lease liabilities	(5.4)	0.0
Other current liabilities	(6.1)	(5.0)
Deferred consideration	(2.3)	(0.8)
Deferred tax (net)	(1.5)	(0.3)
Borrowings	(11.5)	(5.5)
Long term lease liabilities	(1.9)	0.0
Other long term liabilities	(0.4)	(0.2)
Net assets	9.2	11.7

17

• Intangible assets movement includes the goodwill resulting from the acquisition of Redline (£3.6m) and the impairment of SafeSkys (£1.9m)
• Intangible asset movement also includes £7.5m of intangibles acquired on acquisition of Redline, offset by the £0.6m of amortisation charge in intangibles acquired on acquisition
• Borrowing is comprised of the group's revolving credit facility
• • Net debt excluding IFRS 16 leases is £6.9m
  • Net debt including IFRS 16 leases is £14.2m
• Deferred consideration of £2.3m in the current year relates to the acquisition of Redline. £0.3m has been settled post year end. Prior year balance of £0.8m relating to SafeSkys was settled in the year, with £0.4m paid out
• Adoption of IFRS 16 has decreased net assets by £0.2m. The right of use assets at year end included £4.0m for an aeroplane, £1.5m for property and £1.2m for other assets. Prior year has not been restated, as permitted under IFRS
• Air Partner has a clean going concern position as at 22nd May 2020

FULL YEAR RESULTS MAY 2020

CASH FLOW BRIDGE

• The adoption of IFRS16 has increased depreciation by £5.4m and introduced a corresponding repayment of finance leases by £5.4m with the difference going to working capital movements
• Increased borrowing was used to finance the acquisition of Redline
• Within Capex there is software at £0.4m (PYR £0.3m) and other Capex £0.5m (PYR £0.1m)
• • Increase in capex driven by new contract wins in WHM

18

FULL YEAR RESULTS MAY 2020

Mark Briffa

Group Chief Executive

FULL YEAR RESULTS MAY 2020

CHARTER

GROUP CHARTER

Gross profit decreased £1.2m to £14.7m, down 7.5%

• Germany and Austria strong performance driven by government and automotive sector work
• Significant reduction in our French tour operations activity due to reduced operator base
• A key UK customer suspended a complex global flying programme for 12 months
• A lack of one off major events in 2019 comparable to prior year

Group Charter Private Jets Freight

PRIVATE JETS	11%
Gross profit increased £1.3m to £11.7m, up 12.5%	50%
• Strong performance in US ad hoc, with gross profit up 42.5%.	39%

• JetCard membership up 32% on prior year for US
• UK and Europe key customers flying less due to the geo-political environment

Charter gross profit split

FREIGHT

Gross profit decreased £1.7m to £3.2m, down 34.7%

• UK performance strong with gross profit growth of 26.3%, driven by strong demand for AOG (aircraft on ground) and OBC (on board courier)
• European gross profit down 11.2%, driven by the macro-economic climate
• Freight in the US down due to significant prior year comparator

20

FULL YEAR RESULTS MAY 2020

SAFETY & SECURITY (S&S)

SAFETY & SECURITY

Division gross profit increased by 9.5% to £4.6m

• S&S contributes 13.5% of overall group gross profit, up from 11.9% contribution in the prior period
• S&S contributes £0.9m underlying operating profit - growth of 50% on the prior period (on a like for like basis, adjusting for Redline, operating profit grew by 10.1%)

Redline

• Strategically important acquisition for the Group, further diversifying our non core charter business
• Two significant contract wins in FY21
• Integration plan progressing well, headed by MD of S&S Paul Mason

Baines Simmons

• Good contract wins within Fatigue Risk Management with clients such as Air France and BP
• Feefo Platinum Award has been won on the back of exceptional customer feedback

13.5%

Safety & Security

contribution to Group

gross profit

Managed Services

•

•

Three new wildlife hazard management contracts have been won and all existing contracts have been retained Following a strategic review, the decision was taken not to renew two air traffic control contracts post year end

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FULL YEAR RESULTS MAY 2020

OUTLOOK

• Strong start to FY21 with Q1 delivering unaudited results of £6.0m underlying profit before tax
• Anticipating a positive Q2 for FY21 with strong forward order book for the rest of May and June
• Visibility beyond this point is currently very limited, with significant uncertainty around COVID-19
• Normalised cash at the end of Q1 was £13.2m (after adjusting for JetCard, significant advance payments and customer deposits)
• In addition to the £13.2m of normalised cash, the Group has access to a further £3.0m from its existing banking facilities
• Guidance and dividend expectation currently under review. This will be re-evaluated once the risks related to COVID-19 have subsided
• Redline to be earnings enhancing in first full year of ownership, despite COVID-19
• Freight expected to remain strong throughout Q2 of FY21
• Early signs of recovery in Private Jets in the US and UK
• Government contracts continuing to deliver to the core Charter business
• Significant long term contract wins and renewals expected in Redline during the year

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FULL YEAR RESULTS MAY 2020

Appendix

FULL YEAR RESULTS MAY 2020

AIR PARTNER: DIVISIONAL STRUCTURE

Charter

Safety & Security

GROUP CHARTER

PRIVATE JETS

FREIGHT

SPECIALIST

SERVICES

24

Charter of large aircraft for 20+ people for governments, corporates, sports and entertainment teams, industrial and manufacturing customers, and tour operators

Charter of smaller aircraft (up to 19 people) for corporates and HNWIs. A range of solutions from on-demand and a flexible JetCard membership programme to custom proposals, whether travelling for business or leisure

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

A range of other aviation services that complement our Charter business - Scheduled Group Travel, Tour Operations, Air Evacuation, Remarketing and ACMI, and Flight Operations

Aviation safety experts at Baines Simmons offer training, consulting and managed services such as

fatigue risk management and

SAFETY auditing. A range of services that help to advance best practice and shape safety thinking, driving continuous improvement throughout organisations globally

Redline's mission is to enhance the delivery of assured security in

regulated, high value and high threat environments. Our

SECURITY government-standard security solutions are trusted by aviation, critical national infrastructure, event security, and corporate organisations

		Our range of managed
MANAGED		services include Wildlife
	Hazard Management
SERVICES
	and Aircraft
		Registry Services

3	FULL YEAR RESULTS MAY 2020

REDLINE - PRODUCTS, SERVICES & CUSTOMERS

• TRAINING COURSES
• Aviation Security Training
• E-LearningCourses
• ICAO Courses
• Corporate, CNI & Event Security Courses
• Advanced Security

Security Services

• Consultancy
• Corporate/CNI/Event
• Transition Management

Compliance Management

• Monitoring
• SeMS (Security Management System)
• SeMS (Security Testing)
• Threat Image Recognition
• Redline TIRT

Quality Assurance and GAP Analysis

• Quality Assurance and Auditing
• Physical Penetration Testing
• SeMS Gap Analysis

25

UK Mainland Airports	Air Cargo Facilities	Airlines
•	Aberdeen	•	Edinburgh	•	Qatar
•	Birmingham	•	Glasgow	•	UPS
•	Bournemouth	•	Motherwell	•	Eastern Airways
•	Bristol	•	Newcastle	•	Tui Airways
•	Cardiff	•	Leeds	•	British Airways
•	Doncaster	•	3x Manchester	•	Japan Airlines
•	Durham Tees Valley	•	2x East Midlands	•	Virgin Atlantic
•	East Midlands	•	Birmingham
•	Exeter	•	Tamworth	Critical National Infrastructure
•	Glasgow Prestwick	•	Northampton	•	Parliamentary Estate
•	Liverpool	•	10x London sites	•	Buckingham Palace
•	London Heathrow	•	Gatwick	•	Windsor Castle
•	London Southend	•	Stansted	•	380+ HMG Courts
•	Manchester			•	Network Rail
•	Stansted	Overseas Cargo
•	Southampton	•	Cologne	Other
•	Belfast	•	Hong Kong	•	Olympic venues
		•	Bangkok	•	Sports Clubs & Stadia
Overseas Airports	•	Singapore	•	Foreign Governments &
• Paris CDG & Orly	•	Mexico		Departments
	CAA
•	Gibraltar	•	Portugal	•
	United Nations
• Jersey, Guernsey & IoM			•

FULL YEAR RESULTS MAY 2020

TOP TEN SHAREHOLDERS

1 Share register analysis at 20th April 2020

26

FULL YEAR RESULTS MAY 2020