Air Partner Share Discussion Threads

[lbo] 04/4/2018 21:44

If Tom is correct and all that information was released internally yet only a very vague RNS was released to the market and shareholders then the company is still trying to hide things and keep them from shareholders. A lot more questions are arising by the day and it's obvious now if Tom is correct that never mind what others did current management are still hiding all the facts from the market and more importantly from shareholders.

[topvest] 04/4/2018 20:59

Share price is heading downwards until they get some clarity on whether existing management knew what was happening. Either management genuinely didn't know or they are putting a brave face on something that they have always been aware of and have now been caught out on. I personally, think its the former but Mr Market doesn't like this sort of uncertainty. Could take weeks to finalise an investigation.

[sleepy] 04/4/2018 20:31

“A very good client of ours had a series of flights and we never got paid because our paperwork wasn't in order

?????how many flights for a significant proportion of £3.3 million?????

?????our paperwork wasn’t in order?????


I won't name them because it was our fault and we still take a lot of work from them

????our fault????


Anyway, a former member of staff from the finance department took it upon them self to hide this debt by moving it around departments over many years.”

?????

Is this the full story ??????

[ygor705] 04/4/2018 20:15

This all fits the pattern of an internal fraud and one individual can certainly carry on this kind of thing for many years as clearing banks of old found to their cost. This is why Bank and mandatory two week holidays were invented.......to break fraudulent control mechanisms. The only thing that makes me think that more than one individual is involved is the fact that he or she failed to benefit. Find that difficult to believe.

[topvest] 04/4/2018 19:29

If this summary is correct then it is the 2nd of the 3 options and shouldn’t be too big an issue, but is it correct?
Bit of an inconsistency on the dates though as the RNS said 2011 and not 2003. If it was 2011 then Biffa should have known about it as not being able to bill £3m or so of flights is not insignificant.
That’s the point that doesn’t quite stack up, along with the error carrying on into later years which is implied by the RNS.
The auditors have no doubt obtained a complete listing of deferred income and sorted by size. Maybe that’s what they didn’t do in prior years!

[dontay] 04/4/2018 18:09

From Tom Winnfrith and published on ShareProphets: Yesterday at 7 AM Air Partner (AIR) fessed up to a £3.3 million black hole in its accounts via RNS but it was vague as to its nature and suggested that nothing big was going on. At 10.15 AM all eighty staff in the Gatwick Office were called into a meeting with CEO Mark Briffa and FD Neil Morris for a briefing. They were told far, far more. One of those present has come forward and states: I am an employee of AP and was there along with about 80 others. We all thought that this was going to be an announcement about the good results and thus bonus. So, at the meeting, Mark and Neil Morris were at the front of the room talking to us. Mark looked as ever confident while Neil was talking. Mark explained that this bad debt goes back to 2003 and had only just been discovered by the auditors*. A very good client of ours had a series of flights and we never got paid because our paperwork wasn't in order. I won't name them because it was our fault and we still take a lot of work from them. Anyway, a former member of staff from the finance department took it upon them self to hide this debt by moving it around departments over many years. Why? Who knows. It wasn't their mistake to cover up but that of a trading team.So Briffa explained that over the weekend his PA had managed to persuade the former employee to come in and explain what they had been doing all these years. It's worth explaining that over the past year there has been a big re-org of the finance team and a lot of staff were severed. This person was one of them and now that they had gone there was nobody to continue their activity. Mark said that their words when asked to come in were 'we were wondering when you'd find out'. They apparently said that they were responsible for hiding this accounting hole on their own but that a number of the finance staff knew.This calls into question the culture that Briffa and Morris had built, where a team of people thought that it was better to hide a mistake they hadn't made than to deal with it by bringing it to the attention of the CFO.Mark insisted that no cash had left the business and that there was no intent to defraud but that they were in discussions with lawyers about whether the former employee had broken the law. He also said that he expected that the the company would be investigated by the authorities, the FRC. He further said that forensic accountants would be coming in and that over the weekend he had wondered if this person could have brought the company to its knees had they not left.*Now clarified by source, the programme was started in 2003 the bad debt is from 2011 and the black hole was discovered internally, the auditors missec it every time.Ends.Well hang on here. If this £3.3 million black hole affects stated PTP should not certain bonuses be repaid?Was it 1 person or more than one person involved in the act or the multi year cover-up? If so how many of the miscreants still work at Air Partner?

[lbo] 04/4/2018 17:59

How would all the culprits be gone already since its been ongoing "since financial year 2010/11" and only just reported now? Also wouldn't any bonuses and share options awarded and sold by the culprits not have effected cash flow wish belonged to shareholders not the culprits on the back of false accounting?

[ygor705] 04/4/2018 17:43

Looks to me as if £3 million of bad debt hasn't been written off when it should have been and will appear as a write off in this year's p&l account. Will put a dent in this year's P&L numbers but shouldn't impact cash flow. Won't make forthcoming numbers look too great but not terminal as long as nothing else crawls out of the woodwork. Does, however, raise question marks about the competence (and possibly honesty) of management. Hopefully the culprits are now gone.

[sleepy] 04/4/2018 09:54

Interesting to look back at comments of Aubrey Adams (Savills, Tritax Big Box) when he stepped down as Chairman on 9 February 2012




Aubrey Adams confirmed in October 2011 his intention to step down as Chairman of Air Partner, once a successor had been identified. He said:

" It has been a great pleasure to serve as Chairman of Air Partner. Richard Everitt's understanding of the aviation sector and his experience in dealing with strategic issues facing transportation businesses have already been clearly demonstrated during his period as a Non-Executive Director. Under his leadership I am confident that Air Partner will continue to respond effectively to change and will be able to extend its model of superior client service into new and growing markets."

His confidence apparently did not extend to the future success of the company

[sleepy] 04/4/2018 09:23

Anyone know how to contact the Chairman, Peter Saunders?

According to Companies House he was born in 1947, is a Canadian national and is resident in the United States

[retsius] 04/4/2018 08:52

Ed.J
Ah, found it. U.K. Buffetology fund 12% stake.

Fortunately only about 3.5% of the total fund.

[lbo] 04/4/2018 08:43

Wonder what bonuses and share options were paid out over the period and to who on the back of earnings being met by overstating the accounts?

[spacedust] 04/4/2018 08:12

With WC looming and continued contracts pouring in the share price should rise regardless of accounting situation until the next update.

Let's hope for a decent upward trend from Here

[edmondj] 04/4/2018 07:49

Quite odd choice for a Buffett mimic fund as the business has tended to suffer more than most during recessions, though it does have a good 'franchise' i.e. reputation. What risk of a downturn would seem more critical than AIR's occasional accounting issues.

[topvest] 04/4/2018 07:39

They have 12% as per the 12 March 2018 RNS.

[dontay] 03/4/2018 21:53

Your not mistaken... and furthermore, it looks like it's been 'disappeared' since February.... and as AIR was well embedded as a top ten holding in their Buffetology fund even before the recent buys... very strange!

[spacedust] 03/4/2018 20:31

This is so stressful. This should help

[topvest] 03/4/2018 20:21

Its odd that they did this in 2011 and 2012 as there were lots of legacy accounting issues at the time and they actually released surplus balances in 2012 after write-off's in 2011 and 2010. To give them the benefit of doubt, maybe it was more complicated and the customer had also advance paid. It maybe that the deferred income balance is a long listing and there are lots of debit balances mis-posted within.

Three scenario's I think: 1. Its just an error and they have made quite a few of those on the accounting front. 2. It was a fraud and well hidden by whoever did it, but wasn't widespread which is why its taken a while to find. or 3. Its a wider fraud with collusion of the CEO and FD and therefore there is a chance that this is the tip of the iceberg.

The share price is assuming a combination of 1. or 2. at this point in time. I would guess 2 is the most likely scenario. 3 would see the share price collapse a lot lot further.

One further value-add point. Have they claimed the VAT back on the debt written-off? Maybe they haven't if they have journaled it to deferred income.

Also, why was the RNS highlighted in yellow this morning? It almost looked like it was a draft RNS or an April fool. Certainly doesn't give a sense of professionalism!

[spacedust] 03/4/2018 20:20

What happ3nded to the share price in 2011 during that time?

[trident5] 03/4/2018 20:10

They reported a bad debt provision of c£0.3m in 2011 - not that dissimilar to the previous year.

It seems that they stripped out a significant part of the £3.3m out of debtors in 2011 as a bad debt and instead of writing it off through the P&L set it against deferred income on the balance sheet.

It seems inconceivable that the Board did not know that a large number was being so treated back in 2011 - after all Profits from continuing operations were £3.3m. There must have been some conversation that this write off would reduce profits to heading for zero.

The CFO has since left. The CEO remains.

I thought the plunge this morning threw up a buying opportunity - but if this was a mistreatment of a bad debt provision as the RNS suggests it now looks more like a bargepole job.

[retsius] 03/4/2018 19:33

The Castlefield U.K. Buffetology fund has no noticeable investment as reported in Morningstar.
I see Castlefield inc has 12%, but this may be in another of their funds... or am I n
Mistaken?

[robsy2] 03/4/2018 19:33

What a day. Some very good posts here. ADVFN thread at it's best and very helpful in helping me gather my thoughts, so thanks .
Here are my thoughts.

In general UK accounting conventions are sound and reliable but the companies need to follow them and be seen to be following them. It is hard not to draw the obvious conclusion that they massaged the figures back in 2011 to improve profits in that year and then it was never corrected.
It raises many questions about the duty of care that the directors and the auditors have and I expect heads to roll. I will be pushing for that. There can be no excuses.
It is disappointing to be caught out like this. I am very mindful of doing my best to avoid any sign of dodgyness before I invest. I am looking for good managers who are skilful and honest operating in decent looking business areas that are doing or providing something that is deemed useful.
The character of the AIR business looked good, a nice feel to everything, good clear accounts, great communication, very customer focussed, evolving and innovative but grounded in its core areas, growing organically and through a series of complementary acquisitions etc.
I still believe that AIR has many attributes and will be able to weather the storm providing they don’t uncover more problems.
Quite understandably, the market has reacted badly to the news. In these circumstances there is no time to escape because as soon as the shot rings out then the damage is done.
I don’t think AIR is a basket case. It is a very well-established solid and profitable business with a 60 year track record.
The cash conversion in this business is really good and that is a key parameter. Cash is King because cash conversion cannot be manipulated by errant accounting folk, inadequate managers and inept auditors. Even the most useless of auditors can be expected to be able to reconcile a company’s bank accounts so on that score, AIR looks good because all serious persistent accounting shenanigans and business weakness and bungling, result in poor cash conversion and there is no evidence of that here .
I am very disappointed, but reluctant to take heavy losses by selling out now because markets tend to overshoot when they go into shock, so I'll sit tight and wait for clarification in the belief that the basics of the business are intact and the hope that this is a contained one-off problem.

Best
R2

[trident5] 03/4/2018 18:47

I see the Chief Financial Officer got a £90k bonus in 2011.

[sleepy] 03/4/2018 17:50

Interesting to look back at their announcement from July 2011 (particularly last paragraph) -

Air Partner has notified the Internal Revenue Service of the United States ("IRS") of a potential liability relating to Federal Excise Tax ("FET") due on certain flights. The potential liability relates to certain past flights contracted by Air Partner plc outside the US but involving a US destination. The Company and its US tax advisors are in preliminary discussions with the relevant authorities to understand and resolve any outstanding payments.

At this early stage, the Company estimates the financial liability is likely to be in the region of GBP1 million. A provision for this liability will be made in the current financial year. Procedures within the Company have now been changed on the instructions of the current management team to ensure no further liabilities are created.

There has been no change in trading levels since the interim management statement issued on 7 June and, as indicated at that time, general trading performance has remained positive. However, profit before tax for the full year to 31 July 2011 will be reduced as a result of the exceptional tax provision for settlement of the FET liability. Excluding the provision for FET liability, underlying trading remains positive, and the Group's focus on its core strategy continues to make good progress.

The Board is not aware of any other legacy issues but, as a prudent step, Air Partner has appointed a top four accountancy firm to review control procedures and provide an independent additional assurance. There have already been significant improvements in processes and reporting procedures and Air Partner has significantly strengthened its financial management team over the past twelve months, with the appointment of Gavin Charles as CFO in July last year, Jim Bowden as Group financial controller in March 2011, and Andrew Wood, former CFO of BBA Aviation plc who joined the Board as a non-executive director in June of this year.

[topvest] 03/4/2018 17:29

Time will tell. It looks like its an isolated issue, but if its not then its a whole lot worse and the CEO and/or FD will be out the door. I suppose there will now be a forensic review to find out who did it and who knew. Anyway, its better to be safe than sorry and I'm happy with my call first thing. Albeit really irritated with myself for not selling my final half at just below 150p when I first thought about taking profits. I've put them back on my medium term watch list. There is more downside than upside in my view, but time will tell.