Air Partner Share Discussion Threads

[sleepy] 10/4/2018 22:43

Goodpick - I believe you have only posted on one company (not Air Partner) in the last three years or so. What prompted you to post on Air Partner now?

[goodpick] 10/4/2018 22:27

The RNS was lacking in detail but the issue must have been discovered by the auditors who must be finalising the audit for the year ending January 2018.

Firstly you cant rely on auditors who send junior trainees to do most of the work with a top level review carried out by more experienced seniors. In particular the big 4 are appalling and unreliable but ironically are the firms normally chosen by listed firms.

The error does not on the face of it appear to be a fraud IMO. As a guess, it does happen that when billing is in advance, the accounting entry on booking is debit debtors and credit deferred revenue. Revenue is recognised when the service is used / delivered utilised.

When a debt is not recoverable the correct action is to credit trade debtors and debit the P&L. The deferred revenue should probably already have been recognised in a previous year so none of the £3.3m should ever have been recognised.

At a guess someone in the accounts department has on realising that the debt is not going to be paid reversed the original transaction rather than write off the debt. They have therefore probably credited debtors and merely debited deferred revenue.

The original income was recognised but the impact of the correcting entry then not washed out.

This is all speculation but and maybe optimistic but it feels realistic. It also feels realistic that the company is not saying any more until the auditors and any forensics give it a clean bill of health.

They also need to tell shareholders who is going to carry the can for this error and what they are going to do about this. Now these kind of accounting issues are the responsibility of the CFO and you cant just blame the auditors.

The CFO should have his eye on the balance sheet and should have spotted this as soon as he took the job. Monthly balance sheet reconciliations are as important as reviewing the P&L every month.

Lets see what transpires. My gut feeling is that this is incompetence rather than fraud and its not like a Tesco. That is why albeit a risk i topped up this morning and expect to profit handsomely as this is a good company operating well and growing.

[valhamos] 10/4/2018 15:32

"They say no cash impact, but how do they actually know that?"

What they are saying is that cash balances will not be affected - nothing has or will come out of the bank account because of this. The issue relates to amounts that should have been received in the past but wasn't and has not been dealt with in the income statement, that is they were not written off. Correcting what has happened will not affect the cash balances.

I agree there is uncertainty as to the wider impact and a question mark as to whether further investigations reveal anything else.

[steeplejack] 10/4/2018 15:31

Well,for starters,perhaps it will worthwhile hanging around the Air Partner staff canteen and coffee machine,hoping to overhear the latest gossip.If I am feeling generous I will follow AIRs example and release any goss sparingly into the public domain(perhaps on this B.B.)having ,of course,already taken the appropriate investment action.I agree with the earlier post though,it could be weeks until we get a definitive statement from the accountants.Party time for fly by nights.

[trident5] 10/4/2018 15:05

The price reaction is clearly about concerns over and above what has been officially released.

[qs99] 10/4/2018 14:57

Very difficult to make a call here isn't it without more information from the board. Will have to wait until the end of the month probably so a slightly "odd" market until then. They say no cash impact, but how do they actually know that? DYOR and am watching as could more sharply either way depending on next RNS...

[trident5] 10/4/2018 14:54

Try - it's.

[hybrasil] 10/4/2018 14:46

How to spell ITS NOT A CASH CONCERN???

[muffster] 10/4/2018 14:07

Fraudulent activity tends to get clever. Expect they will uncover other areas of concern. What a shambles here and likely to fall unless news... Which could be bad news

[lbo] 10/4/2018 13:03

Are accounting profits backed by cash profits? Air Partner in some years cash profit wildly exceeds accounting profit and in three of the nine years up to 2015 the cash return has been negative in Air Partner

Points from the interims:

The increase in non-JetCard cash was a result of working capital movements, particularly an increase in deferred income relating to our Tour Operations programmes

Balance Sheet
The significant increase in both trade and other receivables (increase of GBP8.1m), other liabilities (increase of GBP6.6m) and deferred income (increase of GBP5.6m) is driven by a combination of a larger Tour Operations programme this financial year, coupled with the timing of the flights. As noted above, the increase in deferred income has also resulted in a higher cash balance.

9 EVENTS AFTER THE BALANCE SHEET DATE
On 27 September 2017 Air Partner plc acquired the entire share capital of SafeSkys Limited for a total net of consideration of GBP3.0m, obtaining control of the company on that date. The acquisition has been funded from the Group's cash resources. Due to the proximity of the transaction to the reporting date, the purchase price allocation accounting has not been finalised. Details of the acquisition accounting will be provided in the annual report for the year ending 31 January 2018.

[hybrasil] 10/4/2018 12:56

had to buy some today. Paid 70p

[trident5] 10/4/2018 12:43

Valhamos - good point.

[frazboy] 10/4/2018 12:28

Valhamos,

Interpreting this statement is key:

"with cash excluded, the Group is in a net current liabilities position as a result of deferred income, particularly in respect of the JetCard product exceeding other current assets"

It doesn't really make sense (to me, at least). If net cash (but not Jet Card cash) were to be excluded then the company may have net liabilities. But the point is, that Jet Card cash should have no impact, since it should be matched by an equivalent deferred income (liability).

[valhamos] 10/4/2018 12:17

"QS99 - strip out the restricted cash balances from the July 2017 accounts and it had net current liabilities."

I'm assuming when the company receives JetCard money it increases resticted cash and deferred income (until the flight hours are used). So to be fair if you strip out restricted cash then you need to strip out the associated deferred income.

[edmondj] 10/4/2018 12:10

Increases, 2017 over 2016 but yes, relatively small for directors:

M A Briffa 262,230 33,061
R L Everitt 25,000 5,000
P Saunders 25,000 –
S Smith 11,635 –
A R Wood (resigned 29 June 2016) 50,000 10,000

[robsy2] 10/4/2018 12:07

I'm out .
Left it far too long of course, even after all these years I still find it hard to sell when the going looks bad. I didn't imagine I'd be showing a small loss of this holding a few months back.
It could come back of course but I'm done with this lot.This could be bungling or it could be worse , either way i don't trust them.
The only good thing about selling is you don't have to think about it any more . I can physically feel my shoulders dehunching as I type.
R2

[lbo] 10/4/2018 11:35

It's what they said in the Annual report themselves. The other point to note is the very low directors beneficial interests in shares versus the very high directors remuneration when salaries, bonuses and gains on vesting share options are added in. Mark Briffa had only an interest in 262,230 shares in the last year annual report.

[trident5] 10/4/2018 11:17

LBO
that statement seems a bit disingenuous - isn't the double entry to increase Receivables and increase deferred income - resulting in a wash.

[lbo] 10/4/2018 11:12

From the last annual report;"with cash excluded, the Group is in a net current liabilities position as a result of deferred income, particularly in respect of the JetCard product exceeding other current assets"

[trident5] 10/4/2018 11:07

QS99 - strip out the restricted cash balances from the July 2017 accounts and it had net current liabilities.

[dontay] 10/4/2018 10:49

I would expect that the Jet Card scheme segregated accounts have by now been emptied by the depositors! How AIR clients will ever trust it with their money again in the future is difficult to see even if this DOES prove to be entirely innocent! The damage to the future prosperity of the company from this will be on-going and enormous.

[bookbroker] 10/4/2018 10:39

Ignore the Jetcard cash, it is theoretically not their property, merely deposits of clients!

[qs99] 10/4/2018 10:36

Wow, watching with interest. It has £10m net cash excluding JetCard at last results, so market cap of £40m even if it writes off all this year's profits, means c.£30m EV (if cash hasn't increased since interims) against what could then be a 2018 full year profit expectation of ? and EBITDA of ? Or will the expectations be revised down? DYOR but am watching as unless more comes out of the woodwork IMO this could get into oversold territory quickly.....but trying to avoid a catching a falling knife scenario!!

[bookbroker] 10/4/2018 10:33

So a halving in value in a week, what a shambles, Briffa should exit NOW!

[steeplejack] 10/4/2018 10:32

Well I sold two thirds at 115p last week and I've now dumped the balance in the 70s.Quite what's going on,nobody knows but this uncertainty has been exacerbated by the management who have left the shares vulnerable to every rumour imaginable.Now let's say that the damage is contained to the 3.3m pounds originally mentioned and things aren't that bad,the price could easily bounce back to triple figures.However,this,as the company is only too keen to stress,is primarily a broking business,chartering and fulfilling bespoke requirements.Confidence is key in a broking business and frankly I wouldn't hire a bicycle from this company given the way they've handled this crisis.Leaked employee meetings etc.