1 Interim Results 6 months to Jan 2007 David Savile / CEO Steph - - PowerPoint PPT Presentation

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04 Apr 07

Interim Results

6 months to Jan 2007

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04 Apr 07

David Savile / CEO Steph White / CFO

Current period: slides 1 to 32 Appendix: background briefing

Disclaimer

This presentation contains forward looking statements which reflect Management’s current views and estimates. The forward looking statements involve certain risks and uncertainties that could cause actual results to differ materially from those contained in the forward looking statements. Potential risks and uncertainties include such factors as general economic conditions, foreign exchange fluctuations, competitive product and pricing pressures and regulatory developments.

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competitive product and pricing pressures and regulatory developments.

Financial highlights

Sales £ 90.3 m up 60% Operating profit £ 3.2 m up 139% Profit before tax £ 3.5 m up 118% Diluted EPS 23.0 p up 115% Interim dividend 6.7 p up 10%

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Cash £ 17.3 m up 39%

Operational highlights

Strong trading across the Group Exceptional performance from our Government and Corporate sectors Continued progress in the HNWI sector Gold Air creating positive halo effect in Air Partner

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Gold Air creating positive halo effect in Air Partner Private Jets New offices under development Recruitment of professional brokers continues New corporate identity to strengthen our brand

Delivering on Group Strategy

Diversification of Revenue Stream

• Continued dominance of Government Sector
• Further progress in growing the large Corporate Sector
• Move into the HNWI sector with JetCard
• Investment in global offices and team continues
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Strong Dividend Policy is maintained

New corporate identity

Revised divisional & reporting business units

for Airliner charter

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{ Ad hoc private jet charter { JetCard card programme { Gold Air Int’l operations

Sales (£m)

125 150 175 200

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25 50 75 100 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10

H2

• H1

Income statement

2007 2006 £’000 £’000 Revenue 90,308 56,278 Cost of Sales (76,064) (50,048) Gross Profit 14,244 6,230

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Operating profit 3,203 1,342 Profit before tax 3,464 1,607 Earnings per share: Basic 23.5p 11.0p Diluted 23.0p 10.7p

Profit before tax (£m)

4 5 6 7

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1 2 3 4 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10

H2

• H1

4 5 6 7

FY profit trend (£m)

H1 is 88% towards the

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1 2 3 4 '94 '96 '98 '00 '02 '04 '06 '08 '10

H1 is 88% towards the trend line for the year-end

Balance sheet

2007 2006 £’000 £’000 Non-current assets 5,712 2,578 Current assets 33,096 26,735 Total assets 38,808 29,313

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Total assets 38,808 29,313 Current liabilities (23,539) (17,445) Non-current liabilities (266) (329) Total liabilities (23,805) (17,774) Net assets 15,003 11,539

Group cash flow

2007 2006 £’000 £’000 Net cash from operating activities 10,036 198 Net cash from investing activities (3,993) 199

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Net cash used in financing activities (588) (3,416) Net increase/(decrease) in cash 5,455 (3,019) Opening cash 11,931 15,437 Foreign exchange rate changes (75) 8 Closing cash 17,311 12,426

Dividend growth (pence)

25 30 35 40

Half Year Full Year Special

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5 10 15 20 25

'90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10

Group review

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Diversification strategy

Geographic

UK Europe Middle East Asia North America

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Client sector

Government Royal Corporate HNWI

Product sector

Private Jet Charter Commercial Jet Charter Freight Charter JetCards Block Hours Contracts Private Jet Sales Private Jet Management Emergency Planning Flight Operations Travel Service

Geographic review (sales)

21 offices across 4 continents

• All established broking offices profitable
• All newly seeded broking offices profitable
• 2 more offices under development

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USA 9% UK 57% Europe 29% Rest of the world 5%

4 offices 2 offices 2 offices 13 offices

Group product review

Private Jet Charter Private Jet Sales Aircraft Mgmt Airliner Charter Freight Charter Jet Card Program Emerg. Evac

USA EUR ME ASIA

Air Partner

Products Territories Players

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• Airlines

(direct sell) Most are single continent Private Jet Operators

• Fractionals
• Card

Programme Operators

Air Partner Managment Experience

Building depth

20 top-quality aviation managers

• In-house training
• Cranfield School of Management

Long history within the Group and the Industry

• 10 most senior managers have average 22 years in the

industry, and 16 years with the Group 19

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Air Partner Managment Experience

100 200 300 400 500

97 98 99 00 01 02 03 04 05 06 07

with Air Partner in the industry Years

Cumulative management experience

Corporate social responsibility

Stated aim for AP to be carbon-neutral by end 2008 First scheme launched

• Carbon-neutral offering launched in October 06

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Divisional review

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Divisional split of sales

3.5% 7% 26% 63.5%

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Commercial Jets Private Jets Freight Other

Commercial Jets

Exceptional business levels from the dominant part of the group

• Sales up 52% at £57m, representing 63.5% of Group activity
• Margin improvement as well

All traditional client sectors performing well Good diversity of revenue; strong areas include

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Good diversity of revenue; strong areas include

• Government, NGO
• Conference & Incentive
• Product launch: e.g. Automotive, Pharmaceuticals
• Cruise ship business
• Sports events
• Airline sub-service and general sales agency work

Commercial Jets

High degree of repeat business Team’s trading ability is very strong

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Private Jets review

Strong trading throughout Benefit of being seen as an end-supplier 25% increase in active client numbers Restructuring in progress will create immaterial one-

• ff cost

Strategic aims falling into place

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Strategic aims falling into place

Ad hoc charter

“I want to charter a jet next week”

The JetCard

“I want a fixed hourly rate and guaranteed availability”

Charter Management

“I want my jet to earn its keep”

Non-type specific

AP product at every point

Lear 45 Card

“I like this Lear and I want to use it regularly”

Private Jet Sales Consultancy

“what jet should I buy?” & “managing the purchase”

Aircraft Management

“Please look after this for me”

The Product Cycle

Type specific

Private jet market overview

Growth of private jet market is extremely strong Manufacturer order books bulging; earliest deliveries

• Gulfstream G450 & G550:

Q1, 2010

• Bombardier Global Express/5000:

Q4, 2010

• Dassault Falcon 900 & F2000:

Q4, 2009

• Dassault Falcon 7X:

Q2, 2011

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• Dassault Falcon 7X:

Q2, 2011

• Airbus ACJ & Boeing BBJ:

2010-2011*

*with completed interiors

London airports facing high demand, constraints

• (Heathrow & Gatwick inaccessible)
• Limitation issues now facing London City, Luton and Stansted
• Farnborough 85% full 9 months since it was fully opened
• Biggin Hill private jet traffic up 39% over last 12 months but

almost unlimited capacity

Private jet market

engine manufacturer view

Honeywell predict 12,000 sales worth $195B between 2006 & 2016, of which 25% will come to Europe

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Current trading

All markets remain buoyant However, forward order book is up 29%

• Strong, but slower than H1

Consolidating position for the future

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Consolidating position for the future Air Partner remains, as always, a long term investment

Q & A

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Appendix

For the benefit of investors who are new to our business, we attach some previously used slides that provide a background briefing on Air Partner. Please contact us if you would like further amplification.

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Contents

A straightforward Business Model An uncomplicated Financial Model The Business by Activity Secondary Divisions Driving the Business

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• The PLC Board
• Senior Management
• Future Management

Independent Research

A Straightforward Business Model

Putting together the buyer who wants to charter an aircraft but doesn’t know how to do it, with the seller who has spare aircraft capacity but cannot successfully market himself Compares with a stock broker: even if the buyer finds the seller direct, is today’s price the right price to pay? Aiming for the ideal scenario where the client is happy that he has a quality aircraft at a price he could not achieve on his own; the

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quality aircraft at a price he could not achieve on his own; the supplier with quality business he could not have secured on his own; and Air Partner earning the right margin and building long term client loyalty and respect

An Uncomplicated Financial Model

Transactional explanation: incoming client funds

• Corporate clients:

90% of sales is payment prior, then we pay supplier prior 10% of sales is payment after, then we pay after, so it is a mirrored transaction

• Govt clients:

90% of sales: Major western Govts demand 30-45 days credit but we pay

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90% of sales: Major western Govts demand 30-45 days credit but we pay suppliers at time of flight, a key reason for why the Group requires significant cash resources

• 10% of sales: we do not extend credit to minor Govts

Margin explanation:

• Client funds (100%) come in (as turnover)
• ~90% go out to external supplier airline (as COGS)
• Leaving ~10% (our gross profit) as fee income, from which we run our

business

Working capital:

• We use ~£7-9m to fund our Govt flying, as a USP not available to our rivals

Business Flights Heads of State Conference/Incentives Product Launches

The Business by Activity

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04 Apr 07 IPO Road-shows Cruise Connections Vital Freight Country Evacuations Air Ambulances Relief Aid Trade Delegations Immediate Flights Government Flights Urgent Media Peace-keeping Point-to-Point

Secondary Divisions

Emergency Planning Division

• Subscription air evacuation programme; provides visibility of earnings
• Client pays annually and then pays as required
• Plan devised and lodged for activation at any time; no risk service.
• Subscription income alone covers fixed overheads

Australian Leasing Operation

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Australian Leasing Operation

• We act as the lessor of a Saab 340B commuter aircraft to an “essential air

service” airline in the Australian outback

• We have no operational or management input
• The lease continues to be profitable, and running as expected

Air Planner (formerly Flight Operations)

• Flight Planning
• Overflights, clearances, slots, weather briefing, ground support
• Service to aircraft owners, as well as to some Group suppliers
• Strong in-house benefits

Growth Drivers

Continued acceptance of flying as a necessary cost Globalisation driven by global corporates, off-shoring, internet etc., even relaxation of borders Intolerance of acceptable time delays, irrespective of distance Increased premium paid for time

• Step change in people’s attitude to acceptable costs

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• Step change in people’s attitude to acceptable costs

Deterioration of airline cabin/service quality Decline of airline logistical capability

• Where airlines are stripping it out, we put the value back in

The Size of the Charter Market

Global market is in excess of £20 billion pa.

• Air Partner sales represents < 0.5%
• Total broker sales approx 2%
• Direct sell: corporate to carrier accounts for the remaining 97%
• Being a credible global player we can invade the direct sell

market as a broker

• Recent acquisition gives us end-supplier status

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• Recent acquisition gives us end-supplier status
• As complexity increases, role of broker because more valuable

The PLC Board

A strong, long-term, consistent, & safe team: Tony Mack, Chairman 37 years (with the Group) David Savile, Chief Executive 24 years Stephanie White, Finance Director 23 years Mark Briffa, Chief Operating Officer 11 years

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Mark Briffa, Chief Operating Officer 11 years Sri Srikanthan, Non-executive 6 years Richard Everitt, Non-executive 2 years

Independent Research

House Broker: Oriel Securities

• Analyst Gerald Khoo rates as:

BUY

Independent: Charles Stanley

• Analyst Peter Ashworth rates as:

BUY

Independent: Seymour Pierce

• Analyst Amit Thakar rates as:

BUY

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• Analyst Amit Thakar rates as:

BUY

Independent: Outstanding Companies Digest

• Analyst Keith Ashworth-Lord rates as:

BUY