31 March 2008 Interims 2008 6 months to 31 Jan 2008 David Savile, - - PowerPoint PPT Presentation

31 March 2008

Interims 2008

6 months to 31 Jan 2008

David Savile, CEO Steph White, CFO Mark Briffa, COO

Disclaimer

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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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Trading environment

Excellent results from good trading conditions Our products are increasingly popular Diversification strategy driving success Government and HNW sectors are strong Market is competitive, locally not globally Encouraging forward orders Group remains well-positioned

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Financial highlights for H1

Sales £ 109.4 m up 21% Operating profit £ 3.5 m up 9% Profit before tax £ 3.9 m up 12% Diluted EPS 25.1 p up 9% Final dividend 7.4 p up 10% Cash £ 14.3 m down * 17% Entering 14th consecutive year of a 10% dividend increase

*after £6m special dividend payout in 2007

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Sales (£m)

25 50 75 100 125 150 175 200 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10

H2

• H1

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Profit before tax (£m)

1 2 3 4 5 6 7 8 '90 '92 '94 '96 '98 '00 '02 '04 '06 '08 '10

H2

• H1

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Income statement

2008 2007 £’000 £’000 Revenue 109,366 90,308 Cost of Sales (95,923) (76,064) Gross Profit 13,443 14,244 Operating profit 3,462 3,203 Profit before tax 3,881 3,464 Earnings per share: Basic 25.6p 23.5p Diluted 25.1p 23.0p

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Balance sheet

2008 2007 £’000 £’000 Non-current assets 6,306 5,712 Current assets 41,487 33,096 Total assets 47,793 38,808 Current liabilities (33,988) (23,539) Non-current liabilities (75) (266) Total liabilities (34,063) (23,805) Net assets 13,730 15,003

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Group cash flow

2008 2007 £’000 £’000 Net cash from operating activities 2,176 10,036 Net cash from investing activities (716) (3,993) Net cash used in financing activities (6,639) (588) Net (decrease)/increase in cash (5,179) 5,455 Opening cash 19,479 11,931 Foreign exchange rate changes 49 (75) Closing cash 14,349 17,311

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Dividend growth (pence)

10 20 30 40 50 60 70 80

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

Half Year Full Year Special

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Divisional review

Geographic review (sales)

23 offices across 4 continents

USA 8% UK 60% Europe 31%

2 offices 2 offices 15 offices 4 offices

Rest of the world 1%

21% H1: 2007 H1: 2008

Geographic review (Op. profit)

USA 9% UK 72% Europe 17%

2 offices 2 offices 15 offices 4 offices

Rest of the world 2%

H1: 2008 9% H1: 2007

67% 24%

8% 1%

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Divisional split of sales

Commercial Jets Private Jets Freight Other

H1: 2008 H1: 2007 21%

8%

40% 52%

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Approx split of sales by client sector

Government Corporate Private HNW

H1: 2007 H1: 2008 21%

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Commercial Jets

(Broking of airliners)

67% of Group sales Sales up 28% Operating profit up 9% Increase in longer term contracts Delivering 100% successful flights is the key

• This stems from increasing investment in training, retention,

and client care

• 24 hour live flight operations support

Government flights are currently more than half of CJ activity Talent secondment

• Schemes to export best practice to international offices

Private Jets

24% of Group Sales Sales up 11% (31%) across all our PJ products PJ split into Ad hoc broking, JetCard sales, Operating Company

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Private Jets

(Broking of private jets and JetCard sales)

18% of Group sales Market is still very active

• Overall market demand is still rising, but at a slower rate
• Growth being driven by HNWI activity (up 20%)

JetCard sales up 50%

• Tangible product
• Renewal rates very high – product is popular; existing clients

refer new business

• Steady balanced growth provides sustainable profitability

Industry evidence shows no let up in demand for new aircraft.

• Backlog for new jets extends from 2 to 7 years

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Air Partner Private Jets

(our operating company at Biggin Hill)

6% of Group sales Completing on strategic aims

• Strong halo effect across PJ broking and JetCard sales
• Cross-selling from Gatwick broking to Biggin Hill fleet fully successful
• Average Fleet utilisation up 10%; 2 new aircraft
• Fleet optimisation much improved

Ongoing integration

• Renegotiating legacy contracts – much achieved, more to be done

Current trading

• Expecting good summer season

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Other Divisions

Freight Division (8% of Group sales)

• Sales up 39%; PTP up 74% as we consolidated team mgmt into the UK
• Hit its annual target in month 5

Emergency Planning Division

• GP up 10%, PTP up almost 200% as we save costs

Air Planner

• Key support division that also acts for third parties and makes a

contribution

Air Partner Travel

• Concierge service for key clients requiring more than an internet service
• Sales up 28%, PTP up 10%

Australian Leasing Operation

• No plans to alter investment levels

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

• Airlines

(direct sell) Most are single continent Private Jet Operators

• Fractionals
• Card

Programme Operators

• Products

Territories Players

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Current trading

H2 sales expected to be strong Opportunities remain in ample supply

• Market is tight but business activity levels remain high

And as at end February:

• Forward orders are 40% ahead of comparable period

(on AP’s usual limited visibility)

• Cash is up a further £3.6m

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 The Growth Drivers Size of the Global Market Driving the Business

• The PLC Board
• Senior Management
• Building Depth
• Private Jet Enclave

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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 supplier is happy with quality business he could not have secured
• n his own;
• and Air Partner is earning the right margin and building long term

client loyalty and respect

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An Uncomplicated Financial Model

Transactional explanation: incoming client funds

• Corporate clients: mirrored transactions

90% of sales is payment prior, then we pay supplier prior 10% of sales is payment after, then we pay after Government clients: funding required 90% of sales: 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

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
• ur business

Working capital:

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

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Business Flights Heads of State Conference/Incentives Product Launches 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

The Business by Activity

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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

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

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

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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
• As complexity increases, role of broker because more valuable

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The PLC Board

A strong, long-term, consistent, & safe team: Experience with the Group Tony Mack, retiring Chairman moves to Non-exec role Aubrey Adams, Non-exec Chairman from 1 April 2008 David Savile, Chief Executive 25 years Stephanie White, Finance Director 24 years Mark Briffa, Chief Operating Officer 12 years Tony Mack, Senior Non-executive 38 years Richard Everitt, Non-executive 3 years

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Air Partner Managment Experience

100 200 300 400 500

97 98 99 00 01 02 03 04 05 06 07

Building depth

20 top-quality aviation managers

• Bespoke training from Cranfield School of Management

Long history within the Group and the Industry

• The ten most senior managers have average 24 years in the

industry, and 18 years with the Group with Air Partner in the industry Years

Cumulative management experience

Private Jet Enclave