Small Cap Value Report (Fri 27 Aug 2021) - AIR

Good morning, it's just Paul here today, with the SCVR for Friday.

Update at 08:28 - that was easy, only 1 company in our small caps area reporting today, so I'll sign off now, as have other jobs to do - wishing you all a lovely long weekend! Today's report is now finished.

Agenda -

Paul's section:

Air Partner (LON:AIR) - announces an acquisition. Positive trading update, with H1 profit of at least £3.7m. Lots of moving parts in this small group, some being helped by the pandemic, others being harmed, so it's difficult to work out how the group might perform once travel conditions normalise.

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Explanatory notes -

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Paul's Section

Air Partner (LON:AIR)

84.6p (pre market open) - mkt cap £54m

Acquisition - of Kenyon International Emergency Services Inc.

Air Partner acquires world leading emergency planning and incident response company

Price paid: $10.3m, plus up to $1.4m deferred - so a fairly significant sized acquisition, relative to AIR's £54m market cap.

Funded from existing cash resources.

Post transaction, the Group has net cash of £8.3m, excluding JetCard cash, and access to a debt facility of £9.5m.

More details here - video is an excellent way to explain acquisitions, so I hope more companies do these -

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Trading update -

• Continues to trade strongly
• H1 (Feb-July 2021) underlying profit before tax will be >£3.7m
• Private jets doing well
• US performing very well, with leisure travel for rich people offsetting weakness in business travel
• Activity in Europe "remains limited"
• Jet Card product "performed particularly well"
• Good trading in Group Charter - driven by Govt work

Outlook -

The Board remains encouraged by this performance and is optimistic about the prospects for both the Charter and Safety & Security divisions for the rest of the financial year.

My opinion - for such a small company, there seem to be lots of different divisions & activities. It's difficult to work out how the business might perform once travel conditions normalise. Therefore I'm not sure how to value this share. Still, it's traded well in H1 so this update should drive broker upgrades I imagine. There's no broker research available to me, so the figures will remain a mystery until published.

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