Air Partner finishes accounting review and reports 'strong' results

Shares of the U.K.-based private jet charter and jet card broker had been suspended last month after a prolonged review of its financial statements

 

In what might be a sigh of relief for the private jet charter industry, Air Partner PLC announced today it had completed a review of its past financial statements and reported results for its year that ended January 31, 2018. While the company had said its business was solid, following the Chapter 7 bankruptcy of Zetta Jet and ImagineAir ceasing operations, Air Partner’s announcement on May 31 that it would cease trading in its shares until accounts were sorted caused unease. Today the company reported £261.3 million gross transaction value, the amount it invoiced to customers with a £36.1 million gross profit and £5.8 million underlying profit before tax. It reported having £4.8 million in cash excluding deposits for jet cards, the money you pay in advance and is held before your flights. It also said its Net Promoter Score rose from 75% to 79%. 

“I am pleased to report a positive trading performance…The accounting review announced in April 2018 has concluded. It was an unwelcome, challenging and costly event, and certainly not how any business would wish to start a new financial year. It is important to note that it was an accounting issue and not a business issue.,” said Peter Saunders the chairman. In his letter to open its annual report, he wrote, “It was discovered by the Air Partner team following an upgrade in our finance capabilities which led to a more thorough analysis of our financials. However, it had the potential to overshadow our trading performance and the substantial progress made operationally and financially since our transformation strategy first began in 2015. Now with the review behind us, we have learned from its findings and will emerge a better, stronger company. “

 

Air Partner’s accounting woes

 

Saunders said, “In April 2018, following the recruitment of new and enhanced skills into the Group finance department, the Company identified an issue, predominantly relating to the accounting for receivables and deferred income, originating in 2010/11. We immediately appointed independent advisers to carry out a thorough, transparent and exhaustive review into this matter which is now concluded.” Private Jet Card Comparisons reported the news at the time.

 

Speaking of results for the past year released today, CEO Mark Briffa said, “Air Partner performed well over the (most recent) financial year reporting underlying profit before tax of £5.8m, an increase of 23.7%. “

 

Details of the Air Partner’s accounting review

 

• No evidence has been found of any cash or other assets being misappropriated from the Company nor of any customer or supplier being disadvantaged by this issue;

 

• The issue was isolated to the UK business of Air Partner Plc;

 

• The total cumulative impact on the net assets of the Group was £4.0m net of corporation tax;

 

• Certain inappropriate financial journals had been deliberately processed without effective review;

 

• These journals had been used to conceal accounting issues including unreconciled balance sheet accounts and recoverability issues on a major account;

 

• In certain cases, supporting accounting records were inappropriately created and manipulated in order to avoid detection of the accounting issues and it has not been possible to reproduce all original supporting documents at given points in time;

 

• No employee within the Group as at 1 February 2018, the start of the current financial year, has been identified as having exerted influence over this matter and when the Air Partner finance team identified the issue as part of the year-end close process they followed the correct procedure in escalating it to the Executive Team who notified the Board.

 

Impact on Air Partner’s finances

 

• The resultant £4.0m correction to decrease net assets is effected as follows:

 

– £4.3 million decrease of net assets as at 31 January 2018, being a pre-tax gross impact of £4.4 million less related corporation tax relief arising in the year of £0.1m

 

– £0.3 million increase of net assets as at 31 January 2019, being the retrospective corporation tax relief to be reclaimed on the gross correction attributable to prior periods

 

• There was no impact to cash or debt during any period;

 

• The directors were able to determine that £0.9 million of the pre-tax correction related to the year ended 31 July 2011 but for the remaining £3.5 million were unable to determine exactly which of the periods and account balances between the year ended 31 July 2011 and 31 January 2018 were impacted;

 

• These financial statements have therefore been prepared by pro-rating £3.5 million accordingly over this period;

 

• As a result, the income statements, comparative balance sheet and supporting notes may not be accurate or reliable presentations of historical performance or position;

 

• The full balance sheet as at 31 January 2018 and cash and debt balances presented as at 31 January 2017 have been fully substantiated and audited.

 

Air Partner’s Jet Card

 

Air Partner is a diversified business, with charter brokering being only one aspect. Related to its private jet brokerage, gross profit was up 3.4% to £10.6 million, while underlying operating profit decreased by 56.6% to £1.1 million. According to the company, this largely reflects lower sales in the UK, as it moved key personnel to the US, and the subsequent impact of investment it made in “upskilling our sales team across territories.” The company continued, “We are beginning to see the benefit of this investment with some good new client wins and expect to see a further benefit in the new financial year. In the US, where we expanded our New York office last year and recruited new management to bring greater focus and strong leadership to the region, investment has enabled us to service an increase in demand and we have seen a record rise in overall client numbers of 80%.”

 

As part of the results, Air Partner said, “Business from existing customers is performing well with JetCard renewals up 16% including two €1 million renewals and utilization up 8%…We welcomed back a number of clients from competitors and we continue to go the extra mile to exceed customer expectations.”

 

It made a point of noting, “All JetCard cash is held in segregated client accounts. The partnerships and alliances we have rolled out in the last 18 months have not only enhanced our customer experience but have introduced new customers to us. We have continued to add to JetCard’s exceptional product offering with the introduction of new gourmet menus across 33 airports in Europe and we plan to expand this further.”

 

Air Partner offers jet card programs starting at just 10 hours which are fully refundable and begin at under $50,000. You can read Private Jet Card Comparisons’ Jet Card Insider of Air Partner’s jet card program here.