Interim Results

RNS Number : 5364Z

Hangar 8 Plc

17 January 2011

 



17 January 2011

Hangar 8 plc

Unaudited half year results for the six months ended 31 October 2010

Hangar 8 plc, (LSE: HGR8) ("Hangar 8" or the "Group"), one of Europe's largest operators of privately owned passenger jet aircraft,  announces its half year results for the six months ended 31 October 2010.

Financial highlights:

·     Total Group revenue up 43% to £7.2m (H1 10: £5.0m)

·     Charter revenue up 52% to £6.0m (H1 10: £3.9m)

·     Management fees up 20% to £1.2m (H1 10: £1.0m)

·     Gross margin percentage up 7% to 19% (H1 10: 12%)

·     Operating profit of £0.3m (H1 10: loss of £0.4)

·     Strong current cash position of £1.2m

·     Adjusted EPS of 5p per share (H1 10: loss of 7p) (see note 5)

·     Basic EPS of 6p per share (H1 10: loss of 8p) (see note 5)

Operational key points:

·     Successful admission to AiM on 10 November 2010 raising £0.8m net of expenses

·     Number of aircraft under management up by 2 to 19 (H1 10: 17 )

·     Recent addition to the fleet of the Embraer Lineage 1000, the largest private jet available to charter in Europe today

·     First Hawker 4000 in Europe available for charter

Key performance indicators:

	Six months ended 31 October 2010	Six months ended  31 October 2009
No. of aircraft	19	17
No. of charter hours flown	1,572	930
Charter gross margin per hour flown	£872	£647

Commenting on the results Nigel Payne, Group Chairman, said:

"During the period, we restructured the Company to create a strong platform to support our planned future growth, including the preparation for admission to AiM. Notwithstanding this we maintained our focus on operations increasing the number of aircraft in our fleet and scale throughout the business. As a result growth in revenue from both charter and management activities has been delivered at a lower unit cost thereby increasing profitability.

We continue to see an exciting future for Hangar8 which we look forward to with confidence."

Hangar 8 plc	Dustin Dryden / Philip Brady	Tel: [phone]
Daniel Stewart and Company plc	Paul Shackleton / Emma Earl	Tel: [phone]
Tavistock Communications Limited	Simon Hudson / John West	Tel: [phone]

NOTES TO EDITORS

Established in 2002, Hangar8 is one of Europe's leading operators of private jets.  With worldwide capabilities, Hangar8 operates some of the newest, safest and most desirable aircraft available for those who appreciate and understand the value of provenance. With aircraft based worldwide and fleet bases at Oxford, Luton, Biggin Hill, Edinburgh, Guernsey, Jersey, Nice, Kiev, Dubai, Krasnodar, Mumbai and Moscow airports, Hangar8 is not only ideally situated but has at its disposal some of the finest terminal facilities.

Hangar8's ambition is to have the right aircraft within one and a half hours of any customer wherever they are in the World, outside the Americas and Australasia.  The Company plans to achieve this through organic growth and through consolidating the fragmented sector in which it operates.

Hangar8 now operates 21 private jets - a modern fleet maintained to the highest standards.  Hangar8's aircraft types differ in size and range offering a complement of capabilities from short European hops to trans-continental voyages.

Hangar8's clients come from a wide variety of backgrounds including, music, sport and corporate - all of whom expect and receive the same level of exemplary service.

For more information about Hangar 8 and its subsidiaries, visit www.hangar8.co.uk.

Chief Executive's Statement

The Group reports total first half revenue of £7.2m (H1 10: £5.0m) which represents a record half performance for the Group.  Gross margins within Charter, a key performance indicator for the Group have been driven up to 23% (H1 10: 15%).  Overall, Group gross margin % nearly doubled compared with the same period last year.  Overhead growth has been kept in check by careful cost monitoring resulting in only a 7% increase from the comparative period in 2009.

Due to the Group's scaleable business model as more aircraft have come on stream then the existing overhead base is spread over more aircraft driving down the overall cost per hour flown.  Further, more aircraft result in more management fees and larger economies of scale in, for example, insurance and fuel purchasing thereby reducing the charter cost per hour as demonstrated by the rise in charter margin per hour versus the same period in 2009.   As a result of the revenue increase and achieving scale, the Group was able to post a pre-tax profit of £0.3m (H1 10: loss of £0.4m) resulting in earnings per ordinary share for the first half of 6p compared with a loss per ordinary share of 8p for the same period last year. 

On a like for like basis the adjusted earnings per ordinary share improves from a loss of 7p per ordinary share to a profit of 5p per ordinary share. 

Cash at bank as at 31 October 2010 stood at £0.2m.  This does not include the £0.8m net proceeds of the flotation which were received after the balance sheet date and the Group remains debt free.

Outlook

The Board believes that the general economic conditions across Europe continue to improve, albeit at a slow pace and with uncertainty still in the back of people's minds.  The Board further believes that whilst Hangar8's markets are not immune to any uncertainty, the Group, which sells products and services in multiple geographic markets, has and continues to demonstrate resilience during these challenging times.

We enter the second half of the financial year in robust financial health and well equipped with a great team of people energised by new aircraft, additional operating routes and strong corporate resources and we look forward to the second half with cautious optimism. 

Dustin Dryden, Group CEO

17 January 2011

CONDENSED CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME

		Six months ended 31 October 2010	Six months ended  31 October 2009	Year ended  30 April 2010
		(unaudited)	(unaudited)	(unaudited)
	Note	£'000	£'000	£'000
Revenue	3	7,201	5,048	10,925
Cost of sales		(5,831)	(4,447)	(9,409)
Gross profit		1,370	601	1,516
Operating expenses		(1,085)	(1,014)	(2,426)
Operating profit/(loss)		285	(413)	(910)
Finance expense		-	-	(21)
Profit/(loss) before taxation	3	285	(413)	(931)
Taxation	4	-	(7)	134
Profit/(loss) and total comprehensive income for the period attributable to the owners of the Company		285	(420)	(797)
Basic and diluted earnings/(loss) per ordinary share	5	5.7p	(8.4p)	(15.9p)

CONDENSED CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION

		31 October 2010	31 October 2009	30 April 2010
		(unaudited)	(unaudited)	(unaudited)
	Note	£'000	£'000	£'000
Non-current assets
Intangible asset		58	72	114
Property, plant and equipment		108	71	28
Deferred tax asset		183	-	193
		349	143	335
Current assets
Trade and other receivables		5,594	6,767	2,776
Cash and cash equivalents		201	141	1,045
		5,795	6,908	3,821
Current liabilities
Trade and other payables		(6,876)	(7,759)	(5,252)
Net current liabilities		(1,081)	(851)	(1,431)
Total assets less current liabilities		(732)	(708)	(1,096)
Non-current liabilities
Trade and other payables		(40)	(20)	(9)
Net liabilities		(772)	(728)	(1,105)
Equity attributable to the owners of the Company
Share capital	6	50	2	2
Retained earnings		(822)	(730)	(1,107)
Total equity		(772)	(728)	(1,105)

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CASHFLOWS

		Six months ended 31 October 2010	Six months ended 31 October 2009	Year ended 30 April 2010
		(unaudited)	(unaudited)	(unaudited)
	Note	£'000	£'000	£'000
Cash flows from operating activities
Operating profit/(loss)		285	(413)	(910)
Depreciation and amortisation		32	14	58
Loss on disposal of property, plant and equipment		-	-	1
Increase in receivables		(2,391)	(4,079)	(317)
Increase in payables		1,621	4,440	2,100
Net cash flows from operating activities		(453)	(38)	932
Cash flows from investing activities
Interest paid		-	-	(21)
Purchase of intangibles		(13)	-	(80)
Purchase of property, plant and equipment		(41)	(49)	(14)
Net cash (used) in investing activities		(54)	(49)	(115)
Cash flows from financing activities
IPO costs paid		(385)	-	-
Proceeds from the issue of share capital		48	-	-
Net cash from/(used in) financing activities		(337)	-	-
Net (decrease) / increase in cash and cash equivalents		(844)	(87)	817
Cash and cash equivalents at beginning of the period		1,045	228	228
Cash and cash equivalents at end of the period		201	141	1,045

CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES TO EQUITY

	Share Capital	Retained earnings	Total
	£'000	£'000	£'000
Balance as at 1 May 2010	2	(1,107)	(1,105)
Transactions with owners:
Shares issued	48	-	48
Total comprehensive income for the period	-	285	285
Balance as at 31 October 2010	50	(822)	(772)
Balance as at 1 May 2009	2	(310)	(308)
Transactions with owners:
Total comprehensive income for the period	-	(420)	(420)
Balance as at 31 October 2009	2	(730)	(728)
Balance as at 1 May 2009	2	(310)	(308)
Transactions with owners:
Total comprehensive income for the period	-	(797)	(797)
Balance as at 30 April 2010	2	(1,107)	(1,105)

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 Company was incorporated on 25 May 2010 and this is the first financial information prepared by the Company.

The basis of preparation of this financial information is consistent with the basis that will be adopted for the full year accounts which will be prepared in accordance with IFRS as adopted by the EU.

The consolidated financial information in relation to the Group consists of the results of the following units:

Unit	Summary description
Hangar 8 plc	Holding company
Hangar 8 AOC Limited	Trading company
Hangar 8 Management Limited	Trading company
Hangar 8 Engineering Limited	Non-trading company
The business and certain assets and liabilities of Langford Lane Limited (formerly Hangar 8 Limited) & Corporate Crewing Limited	-

The Group was formed on 26 July 2010 when Hangar 8 plc acquired the entire share capital of Hangar 8 Management Limited, Hangar 8 AOC limited and Hangar 8 Engineering Limited through the issue of 2010 ordinary shares.

During the period, with effect from 31 May 2010, the trade and certain assets and liabilities of Langford Lane Limited and Corporate Crewing Limited were transferred to Hangar 8 Management Limited and Hangar 8 AOC Limited for consideration of £2.

The acquisitions of the subsidiaries and the transfer of trade are deemed to be 'combinations under common control' as ultimate control before and after the acquisition was the same. As a result, these transactions are outside the scope of IFRS 3 "Business combinations" and have been included under the principles of merger accounting as set out under UK GAAP.

Accordingly, although the units which comprise the Group did not form a legal group for the entire period, the current period and comparative results comprise the results of the subsidiary companies, the trade which was transferred for the relevant periods and the Company, as if the Group had been in existence throughout the entire period.

2.   Accounting policies

The condensed consolidated interim financial information has been prepared using accounting policies consistent with those set out in the admission circular dated 5 November 2010 on pages 30 to 33.  These accounting policies have been applied consistently to all periods presented in this Financial Information. 

The Group's principal accounting policies are reproduced below:

Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, VAT and other sales-related taxes.

Revenue is recognised for major categories as follows:

Aircraft charter - on the provision of the service

Contract fee income - over the period of the contract

Property, plant and equipment

Items of property, plant and equipment are measured at cost less accumulated depreciation and any accumulated impairment losses.  Depreciation is charged so as to allocate the cost of assets less their residual values over their estimated useful lives, using the straight line method.  The following annual rates are used for the depreciation of property, plant and equipment:

Plant and machinery                      Straight line over 8 years

Fixtures and equipment               Straight line over 3 years

Motor vehicles                                  Straight line over 4 years

Intangible assets

Computer software

Computer software is recognised on the basis of the costs incurred to acquire and bring to use the specific software.  Costs that are directly associated with the production of identifiable and unique software products controlled by the Group, and that will probably generate economic benefits exceeding costs beyond one year, are recognised as intangible assets.  Costs are amortised, once commissioned, over their estimated useful lives of four years on a straight line basis.

Costs associated with maintenance of computer software are recognised as an expense as incurred.

Financial instruments

Financial assets and liabilities are recognised on the Group's balance sheet when the Group becomes a party to the contractual provision of the instrument.

Trade and other receivables

Trade and other receivables are initially recognised at fair value and carried at amortised cost.  Most sales are made on the basis of normal commercial terms, and the receivables do not bear interest.  At the end of each reporting period, the carrying amounts of trade and other receivables are reviewed to determine whether there is any objective evidence that the amounts are not recoverable.  If so, an impairment loss is recognised immediately in profit or loss.  Trade receivables denominated in a foreign currency are translated into sterling using the exchange rate at the reporting date.  Foreign exchange gains or losses are included in other income or other expenses.

Trade payables

Trade and other payables are initially recognised at fair value and carried at amortised cost.  Trade payables are obligations on the basis of normal credit terms and do not bear interest.  Trade payables denominated in a foreign currency are translated into sterling using the exchange rate at the reporting date.  Foreign exchange gains or losses are included in other income or other expenses.

Going concern

The Group had net current liabilities of £1.1m as well as a net liability position of £0.8m as at 31 October 2010.  Post the period-end 1,333,334 ordinary shares were placed to raise £0.8m net of associated costs.

The Directors are of the opinion that at 14 January 2011, given the raising of a net £0.8m of cash post the period-end,  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.

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. This is the first financial information prepared by the Company.

3.   Segmental reporting

In accordance with IFRS 8, 'Operating Segments', the Group has derived the information for its operating segments using the information used by the Chief Operating Decision Maker.  The Group has identified the Board of Directors of Hangar8 plc ("the Board") as the Chief Operating Decision Maker as it is responsible for the allocation of resources to operating segments and assessing their performance.  Operating segments are consistent with those used in internal management reporting and the profit measure used by the Board is the profit before tax as set out below.

The Group considers business segments as determined by reference to the markets in which they operate, which also follows the legal entity structure of the Group.  Information is presented in the condensed consolidated interim financial information in respect of the Group's two business segments:

Charter - the chartering of aircraft to third parties; and

Management - the engineering, maintenance, insurance, operational support and crewing of aircraft.

	Six months ended 31 October 2010 (unaudited)
	Charter	Management	Unallocated	Group
	£'000	£'000	£'000	£'000
Revenue
Total segment revenue	5,985	1,184	32	7,201
Segment result
Gross profit				1,370
Unallocated costs				(1,085)
Operating profit before tax				285
Tax				-
Total comprehensive income for the period attributable to the owners of the Company				285

	Six months ended 31 October 2009 (unaudited)
	Charter	Management	Unallocated	Group
	£'000	£'000	£'000	£'000
Revenue
Total segment revenue	3,933	1,046	69	5,048
Segment result
Gross profit				601
Unallocated costs				(1,014)
Operating loss before tax				(413)
Tax				(7)
Total comprehensive income for the period attributable to the owners of the Company				(420)

	Year ended 30 April 2010 (unaudited)
	Charter	Management	Unallocated	Group
	£'000	£'000	£'000	£'000
Revenue
Total segment revenue	8,192	2,593	140	10,925
Segment result
Gross profit				1,516
Unallocated costs				(2,426)
Operating loss				(910)
Finance costs				(21)
Loss before tax				(931)
Tax				134
Total comprehensive income for the period attributable to the owners of the Company				(797)

Given that the resources of aircraft, people and finances were operated in aggregate, the operating results of the business have been historically reviewed and managed as a single unit. Therefore it has been determined that historically only one operating segment has existed under the terms of IFRS 8. Comparative information regarding revenue set out above was not available from management reports but has been extracted from underlying financial records for information purposes only. 

Management are working towards ensuring more detailed segmental information is available at the next year-end and in the future.

4.   Taxation

The tax charge for the half year is calculated on the basis of the estimated full year tax rate. Given the presence of tax losses the tax charge is expected to be £NIL.

5.   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 October 2010	Six months ended 31 October 2009	Year ended 30 April 2010
	(unaudited)	(unaudited)	(unaudited)
	£'000	£'000	£'000)
Profit/(loss) attributable to ordinary shareholders	285	(420)	(797)
Weighted average number of ordinary shares for the purpose of basic earnings per share*	5,000,000	5,000,000	5,000,000
Basic and diluted earnings/(loss) per share (pence)**	5.7p	(8.4p)	(15.9p)
Adjusted basic and diluted earnings/(loss) per share (pence)***	4.5 p	(6.6p)	(12.6p)

* figures have been adjusted to reflect the share split which happened post the period-end to split every £1 share into 100 shares of 1 pence each;

** there are no potential ordinary shares in issue hence basic and diluted earnings/(loss) per share are the same figure;

***this shows the EPS as if the number of shares in issue after the Company's admission to trading on AiM  of 6,333,334 had been in issue throughout the periods disclosed herein, as the Board consider this to provide more meaningful information to shareholders.

6.   Share capital

Date	Narrative	Allotted, called up and fully paid ordinary shares of £1 each
30 April 2010			NIL
25 May 2010	Issued upon incorporation		10
26 July 2010	Issued upon merger with  subsidiaries		2,010
12 October 2010	Further issue to increase share capital prior to conversion to plc		47,980
31 October 2010			50,000

The Company was incorporated on 25 May 2010 and therefore there were no ordinary shares in existence at the comparative period ends of 31 October 2009 and 30 April 2010.

7.     Post balance sheet events

On 2 November 2010 the Company resolved that the ordinary shares of £1 be sub-divided into 100 ordinary shares of 1 pence each.

On 10 November 2010 the Company was successfully admitted to trading on AiM and raised £2m gross via the placing of 1,333,334 new ordinary shares of 1p at a price of £1.50 each.  The net funds raised of £0.8m are to be used to bring in house the specialist maintenance function of the Group and to attract new corporate jet owners and high net worth charter customers.

In line with the Board's stated intention in the admission circular Philip Brady was appointed to the Board on 4 January 2011 as Chief Financial Officer.

8.   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

 

END

 

 

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