Air Partner Share Discussion Threads

[venek] 10/1/2019 14:27

Which would say their due diligence on purchase was poor.
Poor DD certainly fits my worry that they have bought at least one under performing company.
And IF thats what they were doing, then failing to communicate that is also poor.

[pvb] 10/1/2019 14:00

Late completion of filing the subsidiary accounts is evidence of continued problems.

Possibly. Or, possibly, evidence of forensic examination of subsidiary accounts going back several years in order to discover or forestall, any repetition of the AIR accounting problems coming from a subsidiary?

[venek] 10/1/2019 11:52

Late completion of filing the subsidiary accounts is evidence of continued problems.

Baines Simmonds accounts were only signed 19 Dec 18, 7 weeks after the 9 month deadline for filling, and Deloitte were the accountants not AP's new accountant PWC so there is no delayed by a hand-over excuse.

Clockwork Research accounts are still marked "Accounts overdue Next accounts made up to 31 January 2018 due by 31 October 2018".

One miscreant (if that is really the cause) messing up the AP accounts is one thing.

The fact it wasn't spotted for 6 years is another. Remember Briffa appointed Deloitte back in 2012 after dumping Mazars after a previous restatement of the accounts! He then appointed a CFO from.... yes, Deloitte in 2014.

[pvb] 10/1/2019 11:30

By "adrift on basic corporate governance and compliance" you presumably mean the earlier accounting problems? But is there any real reason to think they are ongoing? We don't know the full details but the person who carried out the cover up had already left the company and the recent CFO has since left.

[3800] 08/1/2019 19:38

Are you short on this share Venek?

[venek] 08/1/2019 09:33

And the Baines Simmonds accounts (signed 19 Dec) have now been filed. Not encouraging:
Turnover down 15%. Operating profit halved.
Consulting sales described as lagging, but big falls in training and outsourced business revenue too (and the latter seems tied to how popular the IoM aircraft registry is, something AP can't really influence). They claim training was down due to a lack of sales staff, suggesting they are struggling to get repeat business(December and January training is currently 10% discounted, no doubt to try to pump this FY's results). Ops staff down and admin is now 1/3 of headcount.
Only 10% of sales in EU27, and having lost their US and Australia businesses before AP bought them, that suggests a big exposure to UK aviation (they still list one now bankrupt British airline on their website as a customer).
They have made much of their IPR products previously. This year they they are trying to rationalise them for efficiencies.
They online video claimed they had worked with 22 different carriers (down 6 vs the previous year's publicity).
Only one specific new contract mentioned. It didn't take much research to see that is a follow on to earlier work so not going to drive growth.

[venek] 06/1/2019 10:24

The first red flag for me was when AP's April 2017 trading statement said: "Baines Simmons delivered good results in its first full year of ownership" but buried deeper said "Contingent consideration of up to £600,000 is payable to the vendors of Baines Simmons Limited depending on the performance to 31 January 2018. As the directors do not consider it likely that the minimum performance threshold will be met, no amounts have been recognised in respect of this".

In fact the only new contract they could announce was an extension of an existing contract. The recent decline in their training business since AP's acquisition is a further concern.

Also worth remembering that at that time AP announced that Baines Simmonds integration with "shared Group services, such as marketing, finance, HR and IT, was largely completed during the year."

[venek] 06/1/2019 10:23

I was always sceptical that Briffa had a sound strategy investing in a consultancy business, especially as such businesses are highly people-centric and the good ones can walk out fairly easily, especially the freelance associates. APs first investment, Baines Simmonds was intriguing. My own research at the time was that Baines Simmonds themselves had subsidiaries in the US and Australia that had been wound down, seemingly a sign of shrinking ambition.

[venek] 06/1/2019 10:09

Valhamos, no one asked for you to proffer excuses for AP I assume. 'Oops, we forgot', might be credible for a village greengrocer with a new book keeper but not a LSE company. It would also beggar belief if AP waited until after the filing deadline to then task PWC audit their subsidiaries. I'd also be surprised if that was taking longer than the external review launched in April and finished in June of AP's own books that looked at "430,000 journals", analysed "all payment transactions posted" and included " a detailed audit of every payment processed from these accounts in the 12 months to 31 January 2018"!

[valhamos] 05/1/2019 18:45

Venek - I am not alleging or assuming anything but merely providing a possible scenario based on what we know from company announcements.

So I am not "assuming that the new accountants starting in November were dim enough not to spot there were 5 by now overdue statutory filings or too shy to mention it."

I have implied no such thing. In fact I have said that if PwC are auditing these accounts there would not have been enough time (based on how long these audits take from start to finish) for the accounts to be audited and filed by now.

I think it is a case of move along, nothing to see here. You evidently think otherwise and that this situation is a massive red flag which is fine by me. But in which case you really ought to follow the logic of your thinking and just sell your shares.

[pvb] 05/1/2019 12:43

sharw 4 Jan '19 - 10:12 - 777 of 794
The situation is even worse - Gazette notices of compulsory strike off are now being issued for five of AIR's subsidiaries:

Can you please provide a link as I cannot find this in The Gazette

OK Found one now (dated 8 Jan 2019). From The Gazette 2019:

[venek] 05/1/2019 11:56

You are also assuming that the new accountants starting in November were dim enough not to spot there were 5 by now overdue statutory filings or too shy to mention it.

Plus the new CFO, would have to be unaware or unbothered that 11 months after accounts are due that CH publicly start the process to strike a company off and therefore not prioritised that, even though the current FY finished at then end of Jan 19 and another set of accounts need to be finalised.

OR you are alleging this failure to file is just the symptom of a bigger financial problem that we all should be REALLY concerned about.

I'm not sure I buy you opining but remain concerned about AP.

[venek] 05/1/2019 11:53

Valhamos, you seem to be alleging amazing complacency and be amazingly tolerant of it.

True, a new CEO was appointed a whole 2 months before these subsidiaries' accounts were due to be filed (and at that point they had already had 7 months from year end)but they had the support of the existing finance team, that AP say were switched on enough to find a buried accounting problem from 6+ years earlier that Deloitte had missed. They also had Deloitte on contract for those two months.

It would be surprising if they a) did not check when there statutory returns were due early in their induction and b) made sure Deloitte had completed their work before their contract finished and the filings were due would it not?

[valhamos] 04/1/2019 18:52

trident5 - Yes you are correct - it was the main business, but the knock effect on the finance dept - loss of CFO, interim holding the fort, then replacement starting in September, change of auditors etc means that for me the delay in filing sub accounts is more understandable.

[trident5] 04/1/2019 18:33

Valhamos - wasn't the reported accounting scandal restricted to the main business and relating to a period before some of these subs were acquired?

Two months late and threats to strike off are big waving red flags - particularly after what has gone before.

[valhamos] 04/1/2019 17:31

Venek - The subsidiary accounts would normally be done after the group accounts have been finished which was in June. We do not know whether Deloitte have been looking at the subsidiary accounts - I suspect not because the CFO had gone and an interim was in place (until September) who had more than enough on his plate sorting out the fallout from the problems that had been discovered to worry about getting the subsidiary accounts files in front of auditors who were clearly on their way out (see my post 641 from last June).

There is a bit more to producing subsidiary accounts than the related element that goes into the group accounts!

If PwC are auditing the 31 January 2018 subs then there would have been little likelihood of their being published before now if they only started in November.

[venek] 04/1/2019 16:29

PWC were indeed appointed 6 Nov 18. The accounts in questions should have been filed 31 Oct 18.

[venek] 04/1/2019 16:27

Valhamos So you are suggesting they could sort out an acknowledged problem going back over 7 years in the larger parent company in 2 months but they either (i) have not been able to get round to meeting their legal obligations for filing the year ending 31 Jan 18 accounts of their small subsidiaries (even though their financial results have been wrapped into the already issued AP annual report!) or (ii) they have looked but are struggling to make sense of their subsidiary accounts. If you are correct someone is indeed asleep at the helm or lacks the confidence to sign the accounts. The director who signed the last Baines Simmonds accounts was one of the two who left last year.

[valhamos] 04/1/2019 16:05

I haven't looked at this in detail. Sometimes there are genuine reasons for late filing. With a rather superficial glance at this it would seem the reason for the late filing of subsidiary accounts is a consequence of the accounting issues that were discovered in April last year. The accounting irregularities had not been spotted by Deloitte over a number of years so they needed to be replaced along with the CFO.

The new CFO was appointed in September and PwC only appointed as auditor in November.

I may be wrong but I think it is just a question of giving them more time.

[trident5] 04/1/2019 15:47

Venek - absolutely - this is not a good sign at all. Particularly after the accounting scandal last year.

[venek] 04/1/2019 15:41

But want would it say of corporate governance, let alone investor comms, after the promises to do better after the scandal last year? Ironic, isn't it that Baines Simmonds claim to be experts on Regulatory Compliance and Clockwork's business is stopping people falling asleep on the job!

[venek] 04/1/2019 15:35

Wilmdav, unlikely. The purchases were several years ago, they'd have a lot of contract variation leg work if they wanted to move contracts between legal entities. Plus the Baines Simmonds and Clockwork web site T&Cs still quote their own CH refs (and neither mention meal orders ha ha1).

[wilmdav] 04/1/2019 15:14

It would not surprise me if this turns out to be no more than a failure to update Companies House about incorporation of the subsidiaries into the parent company.

[venek] 04/1/2019 10:50

One subsidiary that is not subject to striking off action is Safeskys. They were bought more recently. Their current accounting period was extended from 31 Jul 18 to 31 Jan 19 (matching Air partner's) and very oddly he Baines Simmonds 'MD' who isn't a director of Baines Simmonds, was made a director of Safeskys on 28 Nov 18. I wonder if they plan to wrap all their consulting business into one subsidiary when it has an 18 month reporting year itself. That would seriously obfuscate what the performance of their consulting businesses is. Yes, the AP report will have the financial headlines, but it hasn't shown the evidence so far of the growth that Briffa promised when he embarked on building a consulting leg to the business.