FY20 in line; Outperforming in FY21 to date

posted on 22nd May 2020 by Eddie Saunders
FY20 in line; Outperforming in FY21 to date

FY20 results report EPS slightly ahead (4%) of our previous forecast. Net debt (pre-IFRS 16) was also slightly better than expected at £6.9m (N+1SE: £7.5m). The Group had a very strong start to FY21, achieving PBT of £6.0m in Q1 and trading is expected to be strongly ahead of budget in May. The order book for June is also encouraging. This is an impressive result against the significant challenges posed by COVID-19 for the aviation industry. Performance in H2 will likely depend upon the recovery in activity levels in Private Jets and Safety & Security, but Air Partner is already seeing some signs of recovery here. We believe the Group is well placed to achieve a strong full year result given the diversity of its model and the strength of the balance sheet.

 FY20 results included no surprises

Today’s results are in line with expectations. Group gross profit decreased by 3.7% to £34.2m (FY19: £35.5m), with LFL gross profit decreasing by 5.3%. The Charter division had a mixed performance, impacted by Brexit, the late UK election and the lack of one-off events (e.g. sports tournaments). Group Charter and Freight were down 5.1% and 34.7% respectively, and Private Jets was up 12.5%. Safety & Security gross profit increased by 9.5%, supported by the acquisition of Redline. Underlying PBT was £4.2m vs. £5.8m in FY19. Net debt (pre-IFRS 16) stood at £6.9m at the period end post the acquisition of Redline.

Continuing to diversify the business model

A key highlight of the period was the acquisition of Redline in December 2019 for £10.0m. Redline further diversifies the Group’s revenue streams and broadens its portfolio of aviation products and services. Redline sits within the Safety & Security division, which now contributes 13.5% to Group gross profit (FY19: 11.9%). We expect this to continue to grow as a proportion of Group profits. Another key operational highlight was the opening of three new offices in Houston (Q1), Singapore (Q1) and Dubai (Q4).

Well placed for FY21 after a very strong start to the year

Air Partner is on track to report a record H1 result and we believe it is well placed for the full year. In Q1, it delivered PBT of £6.0m, supported by significant repatriation work. Freight activity (mainly PPE) has increased through April and May and this is expected to remain strong up to at least the end of H1. Trading in May is expected to be strongly ahead of budget and the order book for June is encouraging. Visibility beyond this is currently limited, though there are signs of recovery elsewhere in the business. Management is focused on cash preservation and the net debt position has improved post year end.