Half Yearly Report

RNS Number : 0711C
Hangar 8 Plc
12 March 2014
 



 

12th March2014

 

HANGAR 8 PLC (AIM: HGR8)

("Hangar8", "the Company" or "the Group")

Interim results for the six months to 31 December 2013

 

Hangar 8 plc, one of the world's leading operators of privately owned passenger jet aircraft, today announces its unaudited half-year results for the six month period to 31 December 2013.

 

 

Financial highlights:

 

·     Revenues up 13.1% to £12.5m (2012: £11.1m)

·     Gross profit up 25.0% to £4.9m (2012: £3.9m)

·     Gross margin percentage up 10.7% to 39.2% (2012: 35.4%)

·     Adjusted EBITDA up 32.2% to £1.177m (2012: £0.890m)*

·     Earnings used in Adjusted EPS up 40.7% to £0.882m (2012: £0.627m)**

·     Adjusted basic EPS up 0.75% to 9.4p (2012: 9.3p)

·     Basic and diluted EPS of 4.5p and 4.4p (2012: 6.8p and 6.5p)

·     Maiden dividend to be recommended with the full year results




 

 




Operational highlights

 

·     Continued growth in quality and forward visibility of earnings by focusing on long-term management and long-term charter contracts

·     Contracted revenue up by 15.3% to £10.5m (H1 2012: £9.1m)

·     Contracted revenue now 83% of total (H1 2012: 69%)

·     17 operational bases across EMEA region (H1 2012: 14)

·     Engineering in-house repair capabilities now include aircraft batteries, wheels and tyres

·     Set a new monthly record of 4 new aircraft deliveries (3 heavy and 1 super heavy jets)

·     Aero-Medical operations in Africa building momentum

·     Acquisition of 100% of Oasis Flight Malta Limited, a Maltese aviation company and holder of an Air Operators Certificate.

 

* Adjusted EBITDA is arrived at by taking operating profit before depreciation, amortisation and exceptional items.

 

** Earnings used in the adjusted EPS calculation is the profit after taxation adjusted for exceptional items and amortisation

 

 

 

 

 

 

 

 

Nigel Payne, Chairman, commented:

 

"We are delighted with the performance of the business in the six months to 31 December 2013, a six month period in which we have continued to build upon the strong platform we established in previous periods. We have added more long range aircraft to meet the needs of a growing market; we have increased the breadth and depth of our operations with significant growth into new geographical markets and the provision of additional services into existing markets; we have focused on sustainable contracted revenues and have increased the forward visibility of revenues to now stand at over 83%.

 

Hangar8 is one of the leaders in our sector, providing the highest global standards in private jet management, charter and engineering services.  The Board is very pleased with this set of results which underscores the substantial progress that the Company has made. We are confident that these foundations are scalable and we continue to look to the future with confidence."

 

For further information please visit www.hangar8.co.uk or contact:

Hangar 8 plc                                                                    +44 (0) 1865 372215

Dustin Dryden, Chief Executive Officer

Kevin Callan, Finance Director

Citigate Dewe Rogerson                                               +44 (0) 20 7638 9571

Phil Anderson, Director                                                 +44 (0) 20 7282 1031

Chris Jarvis, Associate Director                                    +44 (0) 20 7282 1088

Cantor Fitzgerald Europe                                             +44 (0) 20 7894 7000

Mark Percy/Catherine Leftley (Corporate Finance)

David Banks/Paul Jewell (Corporate Broking)

 

 

 

 

Chief Executive's Statement

 

The six months period to 31 December 2013 has been an exciting and rewarding period for the company. During the period Hangar8 has delivered strong organic growth yielding higher revenues, greater profitability, and enhanced business capability. The period has provided us with an opportunity to bed-in our prior year enhancements such as in-house crew training and aircraft engineering, enabling the business to become more self-sufficient thereby increasing both absolute margin and margin percentage.

 

Confidence in our business is high which, as the economies around the world continue to improve, puts us in a strong market position.

 

Delivering on strategy

 

The economic difficulties of the previous few years necessarily led the Board to focus its strategy away from the traditional short term charter revenues and more towards a dedicated full-service management operation. This strategy has worked well and during the past six months we have reaped the rewards of continued strong organic growth as well as improved quality, margin and cost from both expanded internal capabilities and enhanced supply chain management.

 

Our range of in-house services continues to grow to such an extent that we provide them not only to our managed aircraft clients but also to third party owners and operators. Our success in these areas has allowed us to create strong profitable individual business units out of what were previously cost centers, creating a high quality multi-facetted aviation product encompassing the quality of our brand in all aspects of aviation services.

 

Hangar 8 now offers more services to our clients than ever before. To provide our stakeholders with greater clarity about our operations and services, we have established business divisions focused on aircraft management; charter; aviation logistics; engineering; aero-medical; and training. These divisions align with the industry requirements, creating strong independent pillars to our already solid Plc base. 

 

The Fleet

 

With the addition of further new aircraft types, Hangar 8 has also increased its fleet range, with a concerted effort to replace smaller light jets with long-range heavy jets in response to the growing market demand for intercontinental business air travel. We also announced in January that we had experienced the largest monthly intake of new aircraft under management. The Company has 14 super heavy jets that can fly up to 9,000km without the need for refueling; a sector of the market that has seen most demand.

 

Financial review

 

Total revenue for the period was £12.495m (2012: £11.051m), an increase of 13.1%, yielding a gross profit of £4.893m (2012: £3.914m), an increase of 25%. Adjusted EBITDA generated was up 32% to £1.177m (2012: £0.890m), which was before exceptional costs of £54k (2012: £112k), details of which are included in note 3, and also before depreciation and amortisation of £453k (2012: £81k). Depreciation and amortisation to December 2013 includes £267k of amortisation of the recently acquired intangibles of IJC.

 

Overhead costs of £4.223m (2012: £3.217m) have risen as a result of the inclusion of IJC's overheads for a full 6 months, compared to 1 month in the results to December 2012. Cash decreased to £2.953m (2012: £4.745m) but the 31 December 2012 balance included unpaid consideration to IJC shareholders of £2.770m which was paid subsequent to that period end. Excluding this element, cash has increased year on year by £0.978m. +

 

Earnings used in the calculation of EPS, have increased 41% to £0.882m (2012: £0.627m).  EPS was 9.4p (2012: 9.3p), an increase of 1% on the same period of the prior year.

 

Resilience

 

As the Company continues to grow we have both recognized the need for greater autonomy of our business units, whilst at the same time being able to leverage off the Company's core central services. Accordingly, during the period we have implemented new business intelligence software, as well as strengthening our IT and finance departments enabling us to manage our growth efficiently.  

 

Engineering to extend its services

 

In late 2012 we were awarded a Part 145 certification enabling us to perform maintenance on aircraft.  Since then we have invested heavily in this area, ensuring our growing team of engineers is capable of providing maintenance services on a wide variety of aircraft.  We have extended our in-house engineering capabilities considerably to include Lead Acid and NiCad battery repairs, aircraft wheels and tyres. This represents £200,000 of historical expenditure which will lead to increased gross margin.  Further new service offerings include avionic modifications and upgrades, paint support and even cabin and furnishing upgrades which will enhance revenues as well as generating additional profitability. As of February 2014 we have taken on the only General Aviation Hangar facility in Nice, one of the busiest corporate airports in Europe, local airport to all Monaco residents. Our dedication to future proofing our Engineering capacity has seen us now able to provide EASA Approved Part-147 Training onsite to both our staff and external candidates.  As we look to the future, we anticipate that this area of the business will grow significantly as we take advantage of our own economies of scale.

 

Building relations

 

In early September, we were delighted to form a new partnership with The Economist, granting us access to conferences and business summits across the African region.  This has allowed us to cement the Hangar 8 business profile across Africa, whilst also giving us access to government departments and political establishments, which is crucial to our growth in the region. Hangar 8 also enhanced its Aero-Medical operations in Africa with the addition of an aeromedical-equipped Bombardier Challenger to the fleet. 

 

Small acquisition

 

On 20 September 2013 Hangar8 acquired 100% ownership of Oasis Flight Malta Limited for a nominal consideration.  This acquisition provides an important additional Air Operators Certificate as well as enhancing our foothold across Europe and providing the basis to further expand our operations for the future. 

 

Dividend Policy

 

The Board is pleased to note that it expects to recommend a maiden dividend at the time of the publication of the final results for the year ended 30 June 2014.

 

Outlook - building on a strong platform

 

The Group has made excellent progress in the first half of the financial year.  We have expanded the breadth of services we offer, and also re-balanced our fleet towards longer range aircraft, meeting the needs of the market.  We continue to focus on creating a strong platform from which we can build scalable growth, as well as seeking strategic acquisitions where they match our strategy. We are taking advantage of our expertise to offer new services, such as providing maintenance training to external parties, which will provide additional sources of revenue from our existing operations.

 

The Group is perfectly positioned to take full advantage of the forecast growth in the global business aviation market, and we look forward to the future with excitement and confidence.

 

Dustin Dryden

Chief Executive Officer

12th March 2014

 

 

 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

 



Six months ended

31 December

2013

Six months ended

31 December

2012

Year

ended

 30 June

2013



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

£'000






Revenue


12,495

11,051

23,632

Cost of sales


(7,602)

(7,137)

(15,361)

Gross profit


4,893

3,914

8,271






Administrative expenses


(4,223)

(3,217)

(7,113)

Other operating income


-

-

-

Adjusted EBITDA


1,177

890

2,020

Exceptional items

3

(54)

             (112)

(295)

Depreciation and amortisation


(453)

(81)

(567)






Operating profit


670

697

1,158

Share of post-tax loss of joint venture


-

                 (48)

-

Profit before taxation


670

649

1,158

Taxation

4

(250)

(189)

(376)

Profit after tax


420

460

782

Other comprehensive income

Items that may be subsequently reclassified to profit and loss:





Exchange gains arising on translation of foreign operations


(33)

                  18

61

Profit and total comprehensive income for the period attributable to the owners of the Company


387

  478

843






Earnings per share attributable to the equity holders of the parent

6




-      basic


4.5p

6.8p

9.7p

-      diluted


4.4p

6.5p

9.5p

 

 

-      Adjusted basic


9.4p

9.3p

19.1p

-      Adjusted diluted


9.3p

8.9p

18.9p

 

 



CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

 



31 December

2013

31 December

2012

30 June

2013



(unaudited)

(unaudited)

(audited)


Note

£'000

£'000

£'000

Non-current assets





Goodwill


82

2,106

199

Brand


950

-

1,072

Customer relationships


1,024

-

1,170

Software


100

157

103

AOCs


941

900

942

Intangible assets


3,097

3,163

                 3,486

Property, plant and equipment


187

202

225

Investment in equity accounted joint venture


-

-

-

Deferred tax asset


104

106

114



3,388

3.471

3,825






Current assets





Stock


450

234

376

Trade and other receivables


23,317

12,127

18,152

Cash and cash equivalents

7

2,953

4,745

3,829



26,720

17,106

22,357






Current liabilities





Trade and other payables


(21,798)

(13,881)

(18,489)

Corporation tax liability


(906)

(656)

(663)



(22,704)

(14,537)

(19,152)






Net current assets/ (liabilities)


4,016

2,569

3,205






Non-current liabilities





Deferred tax liabilities


(535)

-

(548)

Net assets


6,869

6,040

6,482

Equity attributable to the owners of the Company





Share capital


94

94

94

Share premium


5,594

5,594

5,593

Shares to be issued


25

-

25

Merger reserve


1,174

1,114

1,174

Share based payment reserve


21

28

21

Foreign exchange reserve


56

46

89

Retained earnings


(95)

(836)

(514)

Total equity


6,869

6,040

                 6,482

 



CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS

 


Six months

ended

31 December

2012

Year

ended

30 June

2013


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000

Cash flows from operating activities




Profit before taxation

670

649

1,158

Depreciation and amortisation

453

82

567

Shared based payment

-

13

6

Impairment provision

42

-

126

Loss on disposal of property, plant and equipment

-

-

10

Impairment of JV investment

-

48

48

(Increase) in stock

(74)

(113)

(256)

Decrease/(increase) in receivables

(4,968)

775

(3,272)

(Decrease)/increase in payables

3,369

(2,376)

3,062

Other Non Cash Movement

-

12

-

Net cash flows from operating activities

(508)

(910)

1,449





Cash flows from investing activities




Purchase of property, plant and equipment

(14)

(98)

(201)

Purchase of intangibles

(22)

(217)

(314)

Net cash acquired on purchase of subsidiary

-

1,214

(1,651)

Investment in joint venture

-

-

-

Net cash generated/(used) in investing activities

(35)

899

(2,166)





Income taxes paid

(249)

-

(210)





Cash flows from financing activities




Issue of ordinary shares

-

4,200

4,200

Share issue costs

-

(234)

(234)

Net cash from financing activities

-

3,966

3,966





Net increase/(decrease) in cash and cash equivalents

(878)

3,955

3,039





Cash and cash equivalents at beginning of the period

3,830

790

791





Cash and cash equivalents at end of the period

2,953

4,745

3,830

 

 



 

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY

 


Share

capital

Share

premium

Shares

To be issued

Merger reserve

Share based payment reserve

Foreign exchange reserve

Retained

earnings

Total




























Balance as at 1 July 2013

94

5,594

25

1,174

21

89

      (514)

6,482

Transactions with owners:









Issue of shares

-

-


-

-

-

-

-

Share based payments

-

-


-

-

-

-

-

Merger relief taken on acquisition of Star-Gate

-

-


-

-

-

-

-

Total comprehensive income for the year

-

-


-

-

(33)

419

387

Balance as at 31st December 2013

94

5,594

25

1,174

21

56

(95)

6,869











£'000

£'000


£'000

£'000

£'000

£'000

£'000

Balance as at 1 July 2012

64

1,653

0

129

15

28

(1,296)

593

Transactions with owners:









Issue of shares IJC acquisition

5

-

-

-

-

-

-

5

Issue of shares fund raising  December 2012

25

4,174


-

-

-

-

4,199

Issue of Shares on acquisition of

Star gate

-

-

-

25

-

-


25

Share issue costs

-

(234)

-

-

-

-

-

(234)

Share based payments

-

-

-

-

6

-

-

6

Shares to be issued on Star gate Acquisition

-

-

25

-

 

-

-

-

25

Merger relief taken on acquisition of IJC

-

-


     1,020

-

-

-

1,020

Total comprehensive income

-

-



-

61

782

843

Balance as at 30 June 2013

94

5,594

25

1,174

21

89

(514)

6,482










The accompanying notes are an integral part of this interim financial information.



NOTES TO THE CONDENSED CONSOLIDATED INTERIM STATEMENTS

 

1.   Basis of preparation

 

Hangar 8 plc (the "Company") is a company domiciled in England.  The basis of preparation of this financial information is consistent with the basis that will be adopted for the full year accounts which were prepared in accordance with IFRS as adopted by the European Union.

While the financial figures included in this half-yearly report have been computed in accordance with IFRS applicable to interim periods, this half-yearly report does not contain sufficient information to constitute an interim financial report as that term is defined in IAS 34.

 

This interim financial information has neither been audited nor reviewed pursuant to guidance issued by the Auditing Practices Board and the financial information contained in this report does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006. The 30 June 2013 figures have been extracted from the audited financial statements for this period.

 

2.   Accounting policies

 

The condensed consolidated interim financial information has been prepared using accounting policies consistent with those set out on pages 24 to 31 in the audited financial statements for the year ended 30 June 2013, except as set out below.  These accounting policies have been applied consistently to all periods presented in this Financial Information. 

 

Goodwill

Goodwill represents the excess of the cost of an acquisition over the fair value of the Group's share of the identifiable net assets acquired. Goodwill on acquisition of subsidiaries is included in 'intangible assets'. Separately recognised goodwill is tested annually for impairment and carried at cost less accumulated impairment losses.

 

Any impairment losses would be recognised within administrative expenses in the consolidated statement of comprehensive income for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

 

Critical accounting estimates & judgements and principal risks & uncertainties

 

There have been no changes to any of the Group's critical accounting estimates and judgements of its principal financial risks.

 

Going concern

 

The Directors are of the opinion that as at 12th March 2014, given the Group and Company's liquidity and capital resources are adequate to deliver the current strategic objectives and business plan and that both the Group and the Company remain a going concern.

 

3.   Exceptional Items

 

Operating profit is stated after Exceptional items relating to business re-organisation costs.

 

4.   Taxation

 

The tax charge for the half year is calculated on the basis of the estimated full year effective tax rate and therefore an estimated corporation tax charge for the period of £250,472.

 

5.   Segmental Analysis

 

Six months ended 31 December 2013 (unaudited)


Charter

Management

Engineering

Unallocated

Group


£'000

£'000

£'000

£'000

£'000








Revenue


2,044

8,323

1,966

161

12,495

Gross profit


339

3,529

874

151

4,893

Overheads


(124)

(2,364)

(332)

(896)

(3,716)

Adjusted operating profit/(loss)


215

1,165

542

(745)

1,177

Exceptional cost


-

(54)

-

-

(54)

Impairment of JV investment


-

-

-

-

-

Depreciation/amortisation


-

(445)

(3)

(6)

(454)

Profit/(loss) before taxation


215

666

539

(751)

670

 

 

Six months ended 31 December 2012 (unaudited)

 


Charter

Management

Engineering

Unallocated

Group

 


£'000

£'000

£'000

£'000

£'000








Revenue


1,973

7,672

1,109

297

11,051

Gross profit


298

2,494

929

193

3,914

Overheads


(111)

(1,716)

(418)

(779)

(3,024)

Adjusted operating profit/(loss)


187

778

511

(586)

890

Exceptional cost


-

-

-

(112)

(112)

Impairment of JV investment


-

-

-

(48)

(48)

Depreciation/amortisation


-

(64)

(3)

(14)

(81)

Profit/(loss) before taxation


187

714

508

(760)

649

 

 

Year ended 30 June 2013 (audited)

 

 


Charter

Management

Engineering

Unallocated

Group

 

 


£'000

£'000

£'000

£'000

£'000

 








Revenue


4,329

15,867

3,220

216

23,632

Gross profit


705

5,545

1,820

201

8,271

Overheads


(142)

(4,463)

(1,053)

(592)

(6,251)

Other operating income


-

-

-

-

-

Adjusted operating profit/(loss)


563

1,082

767

(391)

2,020

Exceptional costs


-

(295)

-

-

(295)

Depreciation/amortisation


(17)

(537)

(5)

(8)

(567)

Profit/(loss) before taxation


546

250

762

(399)

1,158

 

 

6.   Earnings per share ("EPS")

 

The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. 

 


Six months

ended 31 December 2013

Six months

ended 31 December 2012

Year ended

30 June 2013

 


(unaudited)

(unaudited)

(audited)


£'000

£'000

£'000





Profit attributable to ordinary shareholders

419

460

782

Add Amortisation

Add Exceptional Items

409

54

7

112

472

295

Add Impairment

 

0

48

0

Adjusted Earnings

882

627

1,549


_______

_______

_______

Denominator




Weighted average number of shares used in basic EPS

9,433,609

6,758,141

8,102,439





Effects of:




Employee share options

80,000

232,403

79,781

Deferred share consideration on business combinations

10,571

25,063

13,514


_______

_______

_______

Weighted average number of shares used in diluted EPS

9,524,180

7,015,607

8,195,734


_______

_______

_______





Basic earnings per share - pence

4.5

6.8

9.7

Diluted earnings per share - pence

4.4

6.5

9.5

 

Adjusted Basic earnings per share - pence

9.4

9.3

19.1

Adjusted Diluted earnings per share - pence

9.3

8.9

18.9

 

 

7.   Cash and Cash Equivalents

 

The balance as at 31 December 2012 included an amount of £2.77m in respect of the deferred consideration for the acquisition of International Jet Club.  This had been settled in full by 30 June 2013.

 

8.   Dividend Policy

 

The Board expects to recommend a maiden dividend at the time of the publication of the final results for the year ended 30 June 2014.

 

9.   Copies of the interim statement

 

Copies of the interim statement will be sent to shareholders.  Further copies will be available from the Company's registered office at The Farmhouse, Oxford Airport, Oxford OX5 1RA, and from the Company's website: www.hangar8.co.uk


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
IR JBMTTMBBBTFI
UK 100

Latest directors dealings