aero inventory - annual reportwere listed on aim, sales have grown at a compound annual rate of 69...
TRANSCRIPT
United Kingdom
Aero Inventory plc/Aero Inventory (UK) Limited 30 Lancaster Road, New Barnet, Hertfordshire,EN4 8AP, United KingdomTel +44 (0)20 8449 9263 Fax +44 (0)20 8449 3555Email [email protected]
Hong Kong
Aero Inventory (Hong Kong) LimitedUnits 01, 02 and 03, 6th Floor,Airport Freight Forwarding Centre,2 Chun Wan Road, Chek Lap Kok,Hong KongTel +852 3657 2600Fax +852 3657 2601Email [email protected]
Australia
Aero Inventory Pty LimitedLevel 7, 250 Victoria Parade,East Melbourne, Victoria 3002Tel +61 3 9445 5700Fax +61 3 9445 5798Email [email protected]
United States of America
Aero Inventory (USA) Inc12257 Florence Avenue,Santa Fe Springs, California 90670Tel +1 562 236 5500Fax +1 562 236 5501Email [email protected]
www.aero-inventory.com
Aero Inventory
73922 COVER 19/10/07 16:59 Page 1
Annual report and accounts 2007
AERO INVENTORY plc
RIGHT TIME...RIGHT PLACE...RIGHT QUANTITY...
AERO INVENTORY’S ULTIMATE GOALIS TO BECOME THE WORLD’S LEADINGAIRCRAFT CONSUMABLE PARTS SERVICE PROVIDER
73922 COVER 19/10/07 18:39 Page 3
01
Aero Inventory plc 07
FINANCIAL HIGHLIGHTS
Turnover
£127.8mup 101%
Operating profit
£30.5mup165%
Pre-tax profit
£26.8mup171%
Fully diluted EPS
38.9pup 77%
03 15.9
04 21.1
05 43.6
06 63.5
07 127.8
Turnover (£ millions)
03 15.6
04 5.7
05 25.2
06 22.0
07 38.9
Fully diluted EPS (pence)
03 4.2
04 4.8
05 8.0
06 10.0
07 15.0
Dividends per share (pence)
03 2.8
04 1.7
05 7.1
06 9.9
07 26.8
Pre-tax profit (£ millions)CONTENTS02 The market04 About Aero Inventory08 Chairman’s statement10 Chief Executive’s statement16 Directors’ biographies18 Directors’ report21 Corporate governance22 Remuneration report26 Statement of directors’ responsibilities27 Independent auditors’ report28 Consolidated profit and loss account29 Consolidated balance sheet30 Company balance sheet31 Consolidated cash flow statement32 Notes to the financial statements49 Notice of Annual General Meeting51 Explanatory notes52 Shareholder information53 Summary five year record55 Form of proxy
73922 PRE 1 22/10/07 09:09 Page 1
02
GLOBAL PRESENCE IN A GLOBAL
Aero Inventory plc 07
AERO INVENTORY IS BASED IN THE UKWITH OFFICES IN AUSTRALIA, HONG KONG,INDONESIA, IRELAND, SWITZERLAND ANDTHE UNITED STATES OF AMERICA.
73922 PRE 1 19/10/07 17:38 Page 2
03
Aero Inventory plc 07
MARKET
THE MARKETAn expanding market - Aero Inventory is positioned to benefit
from the trend towards outsourcing
in the growing global aviation market.
The overall underlying aviation
market is forecast to grow at c.5%
per annum over the next 20 years
by the International Air Transport
Association (IATA). This is being
driven by global economic growth,
the rapid development of the
civil aviation market in emerging
economies in Asia, the increasing
use of air transport to move goods,
and the liberalisation of air travel.
Structural changes - The development of the low cost
airline model where much of the
maintenance is outsourced to
independent Maintenance and
Repair Organisations (MROs) and
continuing financial pressures on
many large airlines are driving
restructuring and outsourcing,
particularly of maintenance. In turn,
competitive pressures are pushing
MROs to consider outsourcing
non-core activities, including
the procurement and inventory
management of consumable parts.
This creates important new business
opportunities for Aero Inventory
as a leading aircraft consumable
parts service provider.
Organic growth - In addition to growth from potential
new customers, there continues to
be significant organic growth from
Aero Inventory’s existing contracts
as new parts are added and the
scope of contracts is extended.
Global presence - Aero Inventory has reached sufficient
size to build a global presence and
IT infrastructure. These support
the scalability of the business and
provide opportunities for more
efficient purchasing and use of
stock. The company’s presence in
the US will improve its access to the
aerospace supply base and generate
logistics efficiencies. Aero Inventory
is well positioned in the Asia Pacific
area which is expected to see the
highest rates of aviation growth.
Strong liquidity position - Aero Inventory recently negotiated
new bank facilities increasing the
amount of funds available from £85m
to £175m. This places Aero Inventory
in a strong position to finance further
major contracts without recourse to
the equity markets.
Unique business model - The upfront purchase of customer
inventories, financing of stock on
consignment and ‘across the board’
parts coverage on all major current
aircraft types give Aero Inventory a
unique position in the market place.
This is supported by Aero Inventory’s
track record of effective contract
implementation and ongoing
performance to the high standards
required in a highly regulated sector.
Hong Kong – operations centre for Asia Pacific
Melbourne, Australia – operations centre for Australasia
Los Angeles, USA – operations centre for the Americas
Customer located offices
73922 PRE 1:Layout 1 22/10/07 20:28 Page 3
Barnet UK – headquarters and operations centre for Europe and Middle East
04
ABOUT AERO INVENTORY
Aero Inventory plc 07
AERO INVENTORY IS A LEADER IN THE PROVISION OF CUSTOMISEDE-BASED PROCUREMENT AND INVENTORY MANAGEMENTSOLUTIONS TO THE AEROSPACE INDUSTRY.
WE HAVE LONG-TERM SOLE SUPPLIER CONTRACTS IN PLACE WITHLEADING AIRLINE AND AIRCRAFT MAINTENANCE AND REPAIRBUSINESSES IN AUSTRALIA, THE UK, CONTINENTAL EUROPEAND ASIA PACIFIC.
AERO INVENTORY –STRUCTURED FOR GROWTHAero Inventory is a leader in theprovision of customised e-basedprocurement and inventorymanagement solutions to the aerospaceindustry. We have long-term solesupplier contracts in place with leadingairline and aircraft maintenance andrepair businesses in Australia, the UK,Continental Europe and Asia Pacific.
Aero Inventory becomes the exclusivesupplier to a customer of a definedrange of aircraft parts on the basis of along-term contract; usually at contractinception, Aero Inventory purchasesthe customer’s existing inventory.Thereafter, we charge the customer asparts are used. As the customer usuallypays no more for their parts than in thepast, this means the customer benefitsfrom significant savings in operatingand capital costs as well as receiving
an upfront payment for the stockpreviously held on its balance sheet.The financial rewards for Aero Inventoryare achieved through optimisingprocurement, as no separate chargeis made for our services.
Aero Inventory has built a regionalstructure to support the developmentof business opportunities and theirtranslation from initial pre-contractproposal and information exchangeto full operational implementation.Close integration between businessdevelopment, project implementation,operations and support functionsprovides the basis for the acquisition of new long term contracts and bringingthem to full operation.
A key feature of our customer contractsis our commitment to providing veryhigh service levels. Aero Inventorysuccessfully achieved those targetsthroughout 2006-07.
73922 PRE 1 19/10/07 17:38 Page 4
05
Aero Inventory plc 07
As well as sales to contracted customers,Aero Inventory also takes advantage ofopportunities to sell surplus stock bymeans of separate sales transactionswith third parties.
The Aero Inventory service –a total procurement and inventorymanagement solutionContracts typically involve taking fullresponsibility for an agreed list of parts forour customers. Aero Inventory undertakesto ensure that parts are made available tocustomers in the right place, at the righttime and in the right quantities. Aroundthe standard contract format, eachsolution is tailor-made to meet thespecific needs of the customer concerned.
Parts Central –the technology behind the serviceAero Inventory has developed aproprietary business system, PartsCentral: this links data on our stocks ofaircraft parts, pricing, customer usageand replenishment profiles and managesthe purchasing and supply of materials.
We use Internet-based communicationtools with our contract customers andwith purchasers of surplus stock. TheQantas implementation has seen thedelivery of new Web Services technology:this defines a series of standardinterfaces which can be used withmultiple customers to enable secureinterchange of real-time information withbetter management of errors arisingfrom data inaccuracies.
Aero Inventory continues to develop PartsCentral using the .Net platform and willmove to a more Service OrientatedArchitecture to better facilitateintegration, scalability and increasedfunctionality. These new developments areweb enabled for customer self service.
Operations –effective procurement, purchasingpricing and logistics to delivercustomer satisfactionThe regional structure of Aero Inventory’sOperations team aims to optimisecustomer responsiveness and our accessto the global aerospace supply chain. Wecontinue to develop mutually beneficialstrategic supplier partnerships withmajor Original Equipment Manufacturers,distributors and other suppliers.
There are currently four multi-functionalregional offices based in the UK, HongKong, Australia and the USA. Each teamcomprises procurement, planning,purchasing and pricing teams. Thisallows both customers and suppliers inall geographical areas to be covered intheir own time zones to ensure optimumsupply and customer service. We alsohave local procurement/support teamsat each main customer site.
Logistics is another key area of AeroInventory’s business. Our Los Angelesfacility acts as a freight consolidationpoint to optimise shipments for the largevolume of materials sourced in the USA.
Optimisation of InventoryAs Aero Inventory’s business grows, anincreasing level of commonality of partsbetween different sites and contracts willsupport higher levels of stock turnover.Our new facility in the USA provides asubstantial new opportunity for AeroInventory to create additional thirdparty sales, given scale of consumptionof such material within what is theworld’s largest aircraft operating andmaintenance environment. Aero Inventorywill also use the Los Angeles facility asthe primary holding, consolidation andshipping point for the re-positioning orre-deployment of existing inventories.
Aero Inventory peopleAero Inventory currently employs around300 people, blending extensive airline,aerospace and supply chain/logisticsexperience with relevant expertise fromother sectors. Training and developmentis a key focus to support bothprofessional and technical knowledgeand personal development and learning.
QualityAircraft maintenance is a closelyregulated environment. There can beno compromise as far as the quality ofaircraft parts is concerned. Part of AeroInventory’s responsibility is to ensure thateach part has the paperwork to confirmthat it complies with the relevant qualitystandards specified by the customer. Wemaintain close relationships with keyregulatory bodies.
Aero Inventory’s business has ISO
9001:2000 quality certification and FAA
AC 00-56A accreditation.
AERO INVENTORY’S LOS ANGELES FACILITY IS OURREGIONAL PROCUREMENTAND PURCHASING OFFICE IN THE AMERICAS WHERESOME 65% OF OUR SUPPLIERSARE LOCATED. IT ALSO ACTS AS A LOGISTICSCONSOLIDATION POINT.
73922 PRE 1 19/10/07 17:38 Page 5
06
Aero Inventory plc 07
RIGHT TIME...Key service levels across all major contracts
achieved 12 months out of 12
RIGHT PLACE...We deliver across 4 continents
RIGHT QUANTITY...Supporting customer repair turn round times
73922 PRE 1 19/10/07 17:39 Page 6
07
Aero Inventory plc 07
OUR CUSTOMERS PICK OVER 1.25 MILLION PARTS EVERY YEAR.
73922 PRE 1 19/10/07 17:39 Page 7
08
CHAIRMAN’S STATEMENT
Aero Inventory plc 07
We have completed a year of significant growth and development which hasfocused on the integration of our new contract with Qantas, and we havedemonstrated clearly that we have the skills required to implement largecontracts so improving our competitive position.
73922 PRE 1 19/10/07 17:39 Page 8
09
Aero Inventory plc 07
ResultsIn the seven years since June 2000, theyear in which Aero Inventory’s shareswere listed on AIM, sales have grownat a compound annual rate of 69 per centreflecting our success in winning a seriesof long-term sole-supplier contracts.In the year being reported on this growthin sales was principally driven by thecontract with Qantas. This 10 yearcontract, which has been successfullyimplemented, has effectively doubledthe size of our business and has furtherenhanced our position in the marketplace.
DividendReflecting confidence in the future, theBoard is recommending the payment ofa final dividend of 10.5 pence per share(2006: 6.7 pence). Taken with the interimdividend of 4.5 pence (2006: 3.3 pence)per share paid in May 2007, the totaldividends for the year amount to15.0 pence (2006: 10.0 pence).
ProspectsThe commercial aviation industrycontinues to grow globally and the trendtowards outsourcing non-core activitiesis strengthening. We have a provenglobal business servicing world-classaerospace players and a number ofimportant new business prospects.The increase in our debt facilities, from£85 million to £175 million, which wehave announced today, means that weare in a very strong position to financefurther substantial growth withoutrecourse to the equity market.
Board ChangesWe have strengthened our Board duringthe year with the appointment of a furthernon-executive director, Roger Davis, aformer director of Barclays plc, and twoexecutive directors, Martin Webster, who has been appointed as ResourcesDirector, and Tim Davey, who has beenappointed as IT Director. We welcomethem all to the Board.
The roles of two existing Board memberswere changed and expanded during theyear to reflect their changing contributionto our business. Paul Docker, previouslyOperations Director, was appointed ChiefOperating Officer and Collin Trupp,formerly Australasia Director, wasappointed Business Development Director.Paul has increased responsibilities for theday-to-day management of our businessand Collin’s appointment reflects ourincreasing focus on expanding ourbusiness now that we have clearlydemonstrated our ability to take on andimplement major contracts profitably.
We are also announcing today thatLaurence Heyworth has rejoined the Boardas a non-executive director. Having beeninvolved with Aero Inventory since itsinception, Laurence brings to the Board anexceptional understanding of the businessand the market in which it operates.
Long Term Incentive SchemeThe Board believes that it is essentialto provide the right incentive to theCompany’s management team tomaximise the growth opportunities thatthe Company’s unique business model hascreated. The Board has developed initialproposals for a new Long Term IncentivePlan on which it intends shortly to consultwith shareholders. Subject to the outcomeof these discussions, formal consent forthe Plan will be sought at an ExtraordinaryGeneral Meeting later in the year.
Thanks to StaffThe successful implementation of ourcontract with Qantas during the financialyear is a testament to the skill andprofessionalism of Aero Inventory’s staff.Once again I would like to thank theentire team at Aero Inventory for itscustomer focus, professionalism,determination and enthusiasm.
Nigel McCorkellNon-Executive Chairman
10 September 2007
AERO INVENTORY HAS SUBSTANTIALLYINCREASED THE SIZE OF ITS BUSINESSAND IS BETTER POSITIONED THAN EVERTO PROVIDE AN ATTRACTIVE SERVICE TOAIRLINES AND MAINTENANCE PROVIDERS.
Nigel McCorkellChairman
73922 PRE 1 19/10/07 17:39 Page 9
10
CHIEF EXECUTIVE’S STATEMENT
Aero Inventory plc 07
We are in a very strong position to finance furthersubstantial growth without recourse to the equity market.
73922 PRE 1 19/10/07 17:39 Page 10
11
Aero Inventory plc 07
Review of ResultsTurnover for the year ended 30 June
2007 increased by 101 per cent to
£127.8 million (2006: £63.5 million). The
largest part of the increase resulted from
our new contract with Qantas but there
was also a significant expansion of our
business with HAECO in Hong Kong and
China. Our contracts with SR Technics
performed satisfactorily and we made
further progress in the development of
our business in Indonesia.
The results for the year reflect the
adoption of FRS 20, Share-based
Payments. The 2006 comparative figures
shown below reflect this change.
Operating profit rose by 165 per cent to
£30.5 million (2006: £11.5 million) with
the main contributions arising from sales
to Qantas, SR Technics and HAECO.
Net interest payable amounted to
£3.8 million (2006: £1.6 million) reflecting
a higher level of borrowings following
the commencement of the contract
with Qantas. The profit before tax was
£26.8 million (2006: £9.9 million).
The average US dollar/sterling exchange
rate during the year was 1.93 (2006: 1.77)
and the rate used for translating year-
end financial assets and liabilities was
2.01 (2006: 1.85).
After a tax charge of £8.2 million
(2006: £3.3 million) – an effective rate
of 30.8 per cent (2006: 33.6 per cent) –
profit after tax was £18.5 million
(2006: £6.6 million) and basic earnings
per share were 39.3 pence
(2006: 22.2 pence). Fully diluted
earnings per share were 38.9 pence,
(2006: 22.0 pence).
Net debt at the year-end was
£55.9 million compared to net funds
of £36.4 million in 2006. Although we have
strong positive operational cashflow from
our established contracts, we invested
heavily in the year to support our new
Qantas contract. In particular we
purchased US$114.6 million of stocks
from Qantas in October 2006 and we also
paid them US$26.4 million for intellectual
property, an amount which is being written
off over the ten year life of the contract.
Year-end shareholders’ funds amounted
to £149.3 million (2006: £135.1 million).
This takes into account the retained
profits for the year less dividends paid.
The year-end consolidated balance sheet
shows significantly increased stocks at
£216.1 million (2006: £103.8 million).
The principal increase in stock levels
reflects the inventory purchase connected
with our contract with Qantas. In addition
to the initial stock purchase referred to
above we also made a purchase from
Qantas of further relevant stock of
US$18.9 million in June 2007 to
enable us to support our largest
contract more effectively.
High levels of stock have to date been
necessary to enable the performance
expectations of our customers to be
satisfied. As our business expands
further, we are increasingly well placed
to service new customers from our
existing stocks. The improved purchasing
and secondary market trading resulting
from the opening of our new facility in
Los Angeles should also ensure that
our stock turn improves significantly.
We noted at the half year that our
annualised stock frequency was
0.76 times per annum and, despite the
distortion caused by the additional stock
purchase made from Qantas in the
second half of our year, the annualised
rate remains at the financial year-end
at 0.76 times.
WE ARE NOW FOCUSED ON FURTHEREXPANSION AND ARE WELL PLACED TO WIN NEW BUSINESS PARTICULARLYGIVEN OUR SUBSTANTIALLY INCREASEDDEBT FACILITIES
Rupert LewinChief Executive
73922 PRE 1 19/10/07 17:39 Page 11
12
CHIEF EXECUTIVE’S STATEMENT CONTINUED
Aero Inventory plc 07
The Qantas contract has generated considerable interest within the sectorin which we operate. As maintenance and repair organisations (MROs) andairlines consider outsourcing the procurement and inventory managementof consumable and expandable parts, Aero Inventory is better placed thanever to win new business.
73922 PRE 1 19/10/07 17:39 Page 12
13
Aero Inventory plc 07
DividendReflecting our confidence in the future,
the Board is recommending the payment
of a final dividend of 10.5 pence per
share. Taken with the interim dividend
of 4.5 pence (2006: 3.3 pence) per share
paid in May 2007, the total dividends
for the year amount to 15 pence
(2006: 10.0p pence). The final dividend
will be paid on 13 December 2007
to shareholders on the register on
9 November 2007.
New Business Opportunities The Qantas contract has generated
considerable interest within the sector
in which we operate. As maintenance
and repair organisations (MROs) and
airlines consider outsourcing the
procurement and inventory management
of consumable and expendable parts,
Aero Inventory is better placed than ever
to win new business. We are currently in
discussions with a number of potential
new customers.
Debt Facilities AvailableSubsequent to the year-end we have
increased the size of our revolving
credit facility from £85 million to
£175 million through new debt
arrangements arranged by Lloyds TSB
permitting us to finance the next stage
of our expansion without recourse to
the equity market.
Operational ReviewWe continued to develop our operationalstructure during the year in order toprovide an efficient framework to supportboth current operations and future newbusiness and we have expanded ourglobal presence significantly. Strongcentral direction from the UK head officeis underpinned by highly capable localoffices which deal with customers andsuppliers around the world in their ownregions and time zones. This structureenables customer service andresponsiveness to be optimised.
It also allows strong relationships to bedeveloped with suppliers in differentregions and provides access to allrelevant sources of parts whilst bringingto bear Aero Inventory’s position as anincreasingly important player in theaircraft parts supply chain. Good progresswas made during the year in developinglong-term agreements with a number of key suppliers.
In a year which saw us successfullybring the Qantas contract into fulloperation, we also remained stronglyfocused on our existing customers andit is pleasing to report that we achievedthe key service levels agreed with allour major customers in every monthin the year.
In more detail, the key operationaldevelopments during the year wereas follows:-
Australia – Our contract with Qantas was signed in October 2006 and we thenembarked on a detailed implementationprogramme. An office has been establishedin Melbourne with some 40 locallyrecruited staff to support the supply ofparts to the four Qantas maintenance andrepair locations in Australia. The Australianteam also deals with the local Australiansupply base.
The implementation was successfullycompleted in July 2007. Many of thedevelopments in operational proceduresand IT systems required for Qantas arenow being used to improve our serviceat other sites.
Europe and the Middle East – Our majorcontracts with SR Technics in Zurich,Stansted and Dublin all performedsatisfactorily. This business is operatedfrom our office in New Barnet in the UK,supported by local on-site accountsupport staff.
WE HAVE EXPANDED OURGLOBAL PRESENCESIGNIFICANTLY
73922 PRE 1 19/10/07 17:39 Page 13
14
CHIEF EXECUTIVE’S STATEMENT CONTINUED
Aero Inventory plc 07
Many of the developments in operational procedures and ITsystems required for Qantas are now being used to improveour service at other sites.
73922 PRE 1 19/10/07 17:39 Page 14
15
Aero Inventory plc 07
Hong Kong and China – Business in
Hong Kong and China has been very
strong with sales from the area growing
by more than 50 per cent in the period.
From an initial small contract in 2000
we have expanded our business to cover
the full range of component workshops,
line maintenance and base maintenance
operations. The recent expansion has
been largely driven by the opening of
HAECO’s second hangar at Chep Lap Kok
International Airport in Hong Kong and by
growing business with TAECO, HAECO’s
subsidiary in Xiamen, China. We have
enlarged our local support team in Hong
Kong to over 50 staff and we also have a
dedicated warehouse and distribution
facility there. As well as providing the
interface to customers in the region, the
Hong Kong team has responsibility for
procurement and purchasing from Asia
Pacific based suppliers.
Indonesia – We have continued to develop
our business with GMF AeroAsia in
Indonesia, putting in place the necessary
infrastructure to support the expansion of
our operations to supply parts for GMF’s
hangar maintenance activities. Although
it has taken longer than expected, the
volume of sales is now growing
satisfactorily and we have a much
improved infrastructure to support
expected further growth.
United States – Although Aero Inventory
does not currently have contract
customers in the Americas, we took the
decision during the year to establish
ourselves in the US which is the main
source for many of the parts used by our
customers. In June 2007 we opened a
30,000 square foot facility in Los Angeles.
The initial team has now been recruited
there to develop procurement and
purchasing from US based suppliers in
support of all our customer contracts.
The facility will also act as a logistics
consolidation point for the considerable
volumes of material which we source in
the US for supply to our customers. We
have also positioned some materials
not immediately required for current
customer contracts in the facility with a
view to marketing such materials to
customers in the US.
StaffDuring the period, Aero Inventory
increased headcount from 158 in June
2006 to 268 in June 2007. In particular
there has been a major recruitment
exercise in Australia to support the
new Qantas contract. A team has
been assembled with the necessary
capabilities and experience in operational
management, procurement, purchasing,
and inventory and demand planning.
More recently we have also been
recruiting for our new facility in Los
Angeles where we will be basing some
12 buyers to deal day-to-day, in the
same time zone, with many of our
US suppliers.
ProspectsWe have completed a year of significant
growth and development which has
focused on the successful integration
of our new contract with Qantas, and
we have demonstrated clearly that we
have the skills required to implement
large contracts so improving our
competitive position. We are now
focused on further expansion and
are well placed to win new business
particularly given our substantially
increased debt facilities
Rupert LewinChief Executive
10 September 2007
73922 PRE 1 19/10/07 17:39 Page 15
Nigel McCorkell(born 9 January 1947)Chairman
Nigel McCorkell joined the Company as a non-executive director in April 2000. A Chartered Accountant, he was FinanceDirector of Flight Refuelling plc (Cobhamplc) from 1981 to 1984. After purchasingan equity interest in Meggitt plc in 1984, hewas Finance Director, becoming ManagingDirector between 1991 and 1994. He wasDeputy Chairman of Meggitt between 1994and 1996. In 1996 he became Chairman ofCork Industries Limited until the companywas acquired in 1999. He is a non-executiveDirector of FFastFill plc. He is vice-chairmanof St Mary’s Hospital Paddington NHS Trust.
Rupert Lewin(born 19 October 1955)Chief Executive
Rupert Lewin has had overall responsibilityfor the direction and management of theCompany since 1994. Between 1977 and1991, he worked as a research analystfor a number of City firms, including Scott,Goff, Hancock & Co. (1977-80), Moy,Vandervell & Co. (1980-82), Sheppardsand Chase (1982) and Robert Fleming(1982-91). He was a director of RobertFleming Securities Limited between 1987and 1991 and, for part of this time, Headof Corporate Broking. Between 1992 and1994, he was Chief Executive of SIIndustries Limited.
Martin Dodge(born 17 February 1962)Commercial Director
Martin Dodge joined the Company at thesame time as Rupert Lewin in 1994. He has been closely involved in all areas of thebusiness. He was Commercial Directorbetween December 1998 and August 2002when he became Asia Pacific Director toreflect his position as Managing Director ofAero Inventory (Hong Kong) Limited. He wasre-appointed as Commercial Director witheffect from 1 July 2004. From 1985 to 1988he held various positions in Imperial Groupplc. From 1988 to 1994 he worked asBusiness Development Manager atSI Industries Limited.
16
DIRECTORS’ BIOGRAPHIES
Aero Inventory plc 07
Hugh Bevan(born 27 September 1961)Finance Director
Hugh Bevan, a Chartered Accountant, joinedthe Company in April 2002. Between 1987and 2001 he worked for Robert Fleming andJardine Fleming, subsequently acquired byJP Morgan Chase. During this time, heworked mainly in the Hong Kong andLondon offices on fundraising and advisorytransactions. In 1997 he became ChiefOperating Officer of Jardine Fleming’s AsianCorporate Finance business, and in 1999returned from Hong Kong to London asHead of Equity Capital Markets Execution.
Paul Docker(born 22 July 1965)Chief Operating Officer
Paul Docker joined Aero Inventory (UK)Limited as Procurement Director inNovember 2003 and held the position ofOperations Director from July 2004 untilJune 2007, when he became ChiefOperating Officer. From 1981 to 1996, MrDocker worked for Dunlop Aerospace andwas involved in supplies management andbusiness process re-engineering. In 1996,he moved to Smiths Group where he heldsuccessive senior purchasing positionswithin Smiths Aerospace. In 1999 hebecame Materials Executive for PortexLimited, a large multi-site operation withinSmiths Group Medical Division.
Collin Trupp(born 20 November 1971)Business Development Director
Collin Trupp joined Aero Inventory as SoftwareDevelopment Manager in December 2002 andbecame Information Systems Director of AeroInventory (UK) Limited in October 2003 andthen Information Director of Aero Inventory plcin April 2005, in which role he played a keypart in the conception and development ofAero Inventory’s Parts Central corporatebusiness system. He relocated to Australiain early 2006 and took up the position ofAustralasia Director, a position he held untilJune 2007, when he became BusinessDevelopment Director. A Canadian citizen, hehad previously worked in IT and systems rolesat Oz New Media Inc., Imaging SolutionsLimited and Flint Energy in Canada.
73922 PRE 1 19/10/07 17:39 Page 16
Martin Webster(born 1 July 1957)Resources Director
Martin Webster joined the Company asPersonnel Director & Company Secretary ofAero Inventory (UK) Limited and was CompanySecretary of Aero Inventory plc since June2004 before being appointed as ResourcesDirector on 8 January 2007. Mr. Webster isresponsible for Human Resources within Aero Inventory and for a range of other areasincluding training and development, legalmatters, insurance and risk management.He also acts as Company Secretary. Prior tojoining the Company, Mr. Webster had beenDirector of Business Services and GroupCompany Secretary of the Dexion Groupwhere he had worked since 1984.
Tim Davey(born 1 September 1966)IT Director
Tim Davey has overall responsibility forAero Inventory’s IT activities. He joinedAero Inventory as Programme Manager inNovember 2006 and became acting head ofIT in April 2007. Previously, Mr Davey hadheld senior IT positions as a contractor withTUI UK, dreamticket.com, MyTravel/GoingPlaces and BP Exploration/SAIC. Prior tothese appointments, he spent 7 years in the Royal Artillery Commandos.
Frank Turner(born 7 June 1943)Non-executive Director
Frank Turner joined the Company as anon-executive director in May 2000. He wasappointed non-executive Deputy Chairmanin June 2000 and became non-executiveChairman in July 2001 until stepping downon 1 January 2005. A fellow of the RoyalAcademy of Engineering, he spent 33 yearsat Rolls-Royce, becoming a main boarddirector in 1988. He subsequently held mainboard positions at Lucas Industries plcand British Midland plc. He is currentlyChairman of Symmetry Medical Inc., GCATFlight Academy and Potenza Group Limited,a non-executive director of Mettis GroupLimited, and an advisor on aerospace toStar Capital Partners, and 3i. A formerCouncil Member of the Society of BritishAerospace Companies and the RoyalAeronautical Society, he is currently aCouncil Member of the InternationalFederation of Airworthiness.
17
Aero Inventory plc 07
Roger Davis(born 4 June 1956)Non-executive Director
Roger Davis joined the Company as anon-executive director on 8 January 2007.Mr Davis worked for Barclays plc from 1997until December 2005. From January 2004,he was a director of Barclays plc andheld the position of Chief Executive,UK Banking. Mr Davis had been a memberof the Barclays Group Executive Committeesince February 2003 and his previous rolesfor the Barclays Group included ChiefExecutive of Business Banking; Chairmanand Chief Executive of Barclays Capital,Asia Pacific. Before joining Barclays, hespent 12 years in the British Army and10 years in investment banking atRobert Fleming.
Laurence Heyworth(born 19 March 1955)Non-executive Director
Laurence Heyworth re-joined the Companyas a non-executive director on 7 September2007. He was Chairman of the Companyat the time of its flotation in 2000, beforebecoming executive Deputy Chairman in2001-04 during which time he helpedstructure the business and played a keyrole in recruiting a number of the currentmanagement team in preparation for a periodof substantial growth. He ceased to be anexecutive director in 2004 in order to establishtwo new businesses, in the fields of mediaand insurance. Between 1980 and 2000Mr Heyworth worked for Robert Fleming (theinvestment bank) in various roles includingHead of European Capital Markets.
73922 PRE 1:Layout 1 22/10/07 18:29 Page 17
The Directors present their annual report on the affairs of the Group, together with the accounts and auditors’ report, for the year
ended 30 June 2007.
Results And DividendsThe profit for the year after taxation amounted to £18.5 million (2006: £6.6 million). The Directors recommend the payment of a final
dividend of 10.5 pence per share (2006: 6.7 pence), payable on 13 December 2007 to shareholders on the register on 9 November
2007, which will be reflected in the 2008 accounts, making a total for the year of 15.0 pence per share (2006: 10.0 pence).
Principal ActivitiesThe principal activity of the Company is that of a holding company to its subsidiary undertakings. Aero Inventory (UK) Limited is
primarily engaged in procurement and inventory management for the aerospace industry. Aero Inventory (Hong Kong) Limited,
Aero Inventory (Switzerland) AG and Aero Inventory (Australia) Pty Limited provide customer support in relation to the activities
of Aero Inventory (UK) Limited. Aero Inventory (USA) Inc. provides services to Aero Inventory (UK) Limited in relation to the
procurement and purchasing of aircraft parts, logistics and the sale of parts to non-contract customers in the USA.
Review Of BusinessA review of the business and future developments is given in the Chairman’s and Chief Executive’s statements.
There are a number of risks and uncertainties, which could impact the Group’s performance. The Group has a risk management
structure in place which is designed to identify, manage and mitigate business risk as described in the Corporate Governance
report on page 21. The Group has experienced, and may in the future experience, fluctuations in the results of its operations.
There are a number of factors that can affect the results.
Operating RisksThese include the timing of new customer agreements, the achievement of the demanding service levels included in customer
contracts, prolonged disruption to the Group’s IT services, the successful implementation of new contracts, the Group’s ability
to attract and retain the right quality and quantity of personnel, logistics and transport, the failure of a product supplied by the
Group and the ability to procure aircraft parts in such a way as to maintain a satisfactory level of profitability.
External RisksThe Group’s performance is also subject to external macro economic conditions and changes in factors such as exchange rates,
interest rates and inflation. A global economic downturn in the aerospace industry could negatively affect Aero Inventory’s business.
Demand for consumable aircraft parts primarily depends on the number of flights and hours flown. Any events or circumstances
that severely affect demand for air travel generally or in a specific region to the extent that a portion of the fleet is grounded could
affect the Group’s business. Operations in emerging or new markets may have a higher than average risk of political or economic
instability and may carry increased credit and financial risk.
Financial RisksThe Group’s activities expose it to a number of financial risks including price risk, credit risk, cash flow risk, liquidity risk and
exchange rate risk. The use of financial derivatives is governed by the Group’s policies approved by the Board of Directors,
which provide written principles on the use of financial derivatives to manage these risks. At present the Group does not use
financial derivatives.
The Group’s financial instruments comprise cash and liquid resources and an available revolving credit facility as at 30 June 2007
of £85,000,000 (2006: £32,000,000). The main purpose of these financial instruments is the funding of the Group’s activities. It has
been the Group’s policy throughout the period under review that no trading in financial instruments shall be undertaken.
Credit RiskThe Group’s principal financial assets are bank balances and cash, trade and other receivables. The Group’s credit risk is primarily
attributable to its trade receivables, which are concentrated in a small number of high value customer accounts.
The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international
credit-rating agencies.
Cash Flow RiskThe Group’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates. Interest bearing
assets and liabilities are held at fixed rate to ensure certainty of cash flows.
18
DIRECTORS’ REPORT
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 18
Liquidity RiskGroup policy is to maintain the available credit facility to meet its anticipated requirements over a two to three year period. The
facility as at 30 June 2007 of £85,000,000 (2006: £32,000,000), which is available until October 2009, may be drawn in advances,
which may be of 1,2,3 or 6 months duration.
Exchange Rate RiskA significant percentage of the Group’s purchases and sales are denominated in US$ rather than sterling. Except for certain
borrowings held in US$ during the year which partially mitigate against US$ operating gains and losses, the Group has not hedged
these transactions. The Group, therefore, is exposed to a degree of risk in respect of changes in the Sterling/Dollar exchange rate.
Supplier Payment PolicyOur strategy is to have mutually beneficial long-term relationships with our suppliers. The Group’s policy is to negotiate the terms
of payment with suppliers and abide by those terms. At 30 June 2007 the average period of credit taken from the Group’s suppliers
amounted to 76 days (2006: 44 days). The Company itself has no trade creditors.
DirectorsThe Directors who served during the period and to the date of signing were:
H N P McCorkell
P R Lewin
T C N Davey (appointed 29 June 2007)
R W J Davis (appointed 8 January 2007)
M P Dodge
H C Bevan
P M Docker
C L Trupp
F Turner
M J Webster (appointed 8 January 2007)
Since the end of the period, Laurence Heyworth was appointed a Director on 7 September 2007.
Biographical details of the Directors are provided on pages 16 to 17.
In accordance with the Articles of Association of the Company, P M Docker, M P Dodge, T C N Davey, R W J Davis, L Heyworth and
M J Webster will retire at the next Annual General Meeting of the Company, and being eligible, offer themselves for re-election.
Directors’ InterestsThe Directors’ interests in the Company’s issued share capital were:
Ordinary shares of Ordinary shares of
1.25 pence each 1.25 pence each
30 June2007 30 June2006
H C Bevan 54,552 54,552
R W J Davis 1,008,681 –
P M Docker 10,000 –
M P Dodge 302,973 539,794
P R Lewin 1,289,559 1,320,997
H N P McCorkell 109,309 109,309
F Turner 616,046 350,957
M J Webster 17,500 –
Directors’ share options are detailed in the Remuneration Report on pages 22 to 25.
19
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 19
Substantial InterestsAt 10 September 2007, the Company has been notified of the following interests in 3.0 per cent or more of the issued share capital:
Ordinary shares of Percentage of issued Investor 1.25 pence each share capital
AXA 4,420,799 9.3%
F&C 2,324,937 4.9%
Gartmore Investment Limited 4,267,948 9.0%
JO Hambro Capital Management Limited 1,971,096 4.2%
Lansdowne Partners Limited 4,704,332 9.9%
Merrill Lynch & Co., Inc 1,645,035 3.5%
Morgan Stanley Securities Limited 3,189,070 6.7%
The mid-market price of the Company’s shares on 30 June 2007 was 475.9 pence and the range from 1 July 2006 to 30 June 2007
was 303.0 pence to 479.6 pence.
Charitable DonationsDuring the year the Company made charitable donations amounting to £5,746 (2006: £740).
Authority to Allot and Issue SharesAt the forthcoming Annual General Meeting, the Company will seek authority for the allotment and issue of shares equal to 33.3%
of the issued share capital at the date of the Annual General Meeting, and for disapplication of pre-emption rights on new shares
equal to 10% of the issued share capital at the date of the Annual General Meeting. The maximum number of shares to which the
authority would apply is 15,784,573, and the number of shares for which pre-emption rights might be disapplied is 4,735,372.
During the year 168,240 shares were issued to satisfy option exercises by employees. Details of changes in the Company’s share
capital are given in note 21.
Going ConcernOn the basis of current financial projections and the facilities available, the Directors have a reasonable expectation that the
Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason
they continue to adopt the going concern basis in preparing the Accounts.
Subsequent eventsOn 7 September 2007 the Group entered into a new facility with Lloyds TSB plc to provide up to £175,000,000 by way of a revolving
credit facility.
AuditorsEach of the persons who is a Director at the date of approval of this report confirms that:
1) So far as the Director is aware, there is no relevant audit information of which the auditors are unaware; and
2) The Director has taken all steps that he ought to have taken as a Director in order to make himself aware of any relevant audit
information and to ascertain that the Company’s auditors are aware of the information.
This confirmation is given and shall be interpreted in accordance with the provisions of s234ZA of the Companies Act 1985.
Deloitte & Touche LLP have expressed their willingness to continue in office as auditors and a resolution proposing their
reappointment will be submitted to the forthcoming Annual General Meeting.
By order of the Board
Martin Webster Registered OfficeSecretary 30 Lancaster Road
10 September 2007 New Barnet
Hertfordshire EN4 8AP
20
DIRECTORS’ REPORT CONTINUED
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 20
Corporate GovernanceAIM listed companies are not required to comply with the disclosure requirements of the New Combined Code on Corporate
Governance. However, the Board supports the principles contained in the New Combined Code and is committed to applying the
principles set out therein where they are appropriate, given the Company’s size. The following provides information on how these
principles have been applied but does not constitute full compliance with the New Combined Code.
The Board of DirectorsThere is a clear division of responsibility between the Chairman and the Chief Executive. The Board comprises ten Directors
of whom three are independent Non-executive Directors. None of the Non-executive Directors has day-to-day involvement in
running the business. The Board is responsible for overall strategy, approval of major projects and consideration of significant
financing matters. The Board meets at regular scheduled intervals and follows a formal agenda: it can also meet to approve
specific transactions.
The Directors have access to the advice and services of the Company Secretary and may take, at the Company’s expense,
independent professional advice.
Board CommitteesThe Board has delegated responsibility in specific matters to three committees, the Audit Committee, the Nominations Committee,
and the Remuneration Committee. During the year the Audit and Remuneration Committees consisted of the three Non-executive
Directors, F Turner, H N P McCorkell and R W J Davis (from March 2007). The Nominations Committee consists of the three
Non-executive Directors, together with P R Lewin. H N P McCorkell is the Chairman of the Nominations Committee, F Turner is
the Chairman of the Remuneration Committee and the Audit Committee.
The Audit Committee receives and reviews reports from management and the Company’s auditors relating to the annual and
interim accounts and the accounting and internal control systems in use throughout the Company. The Audit Committee has
unrestricted access to the Company’s auditors.
The Nominations Committee nominates candidates for the approval of the Board and makes recommendations to the Board
regarding its composition and balance.
The Remuneration Committee is responsible for the remuneration of the Executive Directors. The policies adopted by the
Committee together with details of the Directors’ remuneration and service agreements are included in the Remuneration report
on pages 22 to 25.
Internal Controls and Risk ManagementThe Directors are responsible for the Group’s system of internal control and for reviewing its effectiveness. The Group’s system
of internal control is designed to manage rather than eliminate the risk of failure to achieve the Group’s business objectives and
therefore provides reasonable, rather than absolute, assurance against material misstatement or loss. The Group operates a series
of controls to meet its needs. The Board considers that there is no necessity at the present time to establish an independent
internal audit function.
The process of monitoring and updating internal controls and procedures continued throughout the year and has been
supplemented by the implementation of a risk management process. Existing processes and practices are being reviewed to
ensure that risks are effectively managed around a sound internal control structure. A fundamental element of the internal control
structure involves the identification and documentation of significant risks, the likelihood of those risks occurring, their potential
impact and the plans for managing and mitigating each of those risks. These assessments are reviewed by the Board. The plans
are regularly discussed, updated and reviewed, and any matters arising from internal reviews or external audit are also considered.
Relations with Shareholders The Board understands the need for communication with both institutional and private shareholders. In addition to individual
presentations after publication of results, periodic meetings are held with fund managers, analysts and institutional investors.
The Company’s Annual General Meeting provides a forum for all shareholders to attend and put questions to the Board. Results
statements, announcements and presentations are posted on the Company’s website, www.aero-inventory.com.
21
CORPORATE GOVERNANCE
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 21
The Remuneration Committee The Remuneration Committee consists of F Turner, H N P McCorkell and, since March 2007, R W J Davis. It is chaired by
F Turner. The Committee has access to advice from the Resources Director who is responsible for Human Resources matters
within the Company and from the Chief Executive. External advice is obtained when appropriate. The Committee usually meets
on a bi-monthly basis.
Remuneration PolicyExecutive remuneration packages are designed to motivate, reward and retain Directors of the calibre necessary to continue the
development of the Company’s business. Each Executive Director’s salary and benefits are reviewed annually by the Remuneration
Committee. In deciding appropriate levels of remuneration the Remuneration Committee has regard to rates of pay for similar
jobs in comparable companies as well as internal factors such as performance. The Committee also takes account of the level
of commitment, dedication and sustained performance improvement needed to deliver the potential which the Company’s
development to date has created. The Remuneration Committee recognises the importance of providing both short and long
term rewards to the Executive Directors in recognition of achieving performance related targets with the aim of enhancing
shareholder value.
The remuneration and terms and conditions of appointment of the Non-executive Directors are set by the Board.
Service AgreementsService agreements and letters of appointment have been entered into with all the Directors of the Company. No notice period is
longer than 12 months. The service agreements with the Executive Directors are in line with the guidance of the Combined Code.
Directors’ RemunerationAn analysis of Directors’ remuneration for the year ended 30 June 2007 is set out below:
Salaries/ Benefits Pension Total Total
Fees Bonus in Kind Contribution 2007 2006
Director £’000 £’000 £’000 £’000 £’000 £’000
Executive directors:P R Lewin 288 199 59 36 582 374
M P Dodge 195 133 1 19 348 225
H C Bevan 195 133 19 22 369 235
P M Docker 157 105 1 15 278 180
C L Trupp 155 70 3 14 242 154
M J Webster 67 – 1 9 77 –
1,057 640 84 115 1,896 1,168
Non–executive directors:H N P McCorkell 71 – 2 – 73 62
R Davis 18 – – – 18 –
F Turner 73 – – – 73 59
162 – 2 – 164 121
1,219 640 86 115 2,060 1,289
Note: Included in the salary/fees paid in respect of the services of Frank Turner are consultancy fees of £39,000 (2006: £29,000).
A bonus provision of £750,000 has been included in the accounts for the year ended 30 June 2007 and will be payable to senior
managers and Directors. This bonus has not been included in the above table as the final bonus amounts have yet to be determined.
22
REMUNERATION REPORT
Aero Inventory plc 07
73922 PRE 2:Layout 1 22/10/07 19:58 Page 22
Directors’ Bonus SchemeAn annual bonus scheme is in place, based on a combination of stretching corporate and individual performance targets. For
2007-08 a potential bonus of 100% of base salary can be earned depending on performance.
PensionsUK based executive directors are able to participate in a contributory defined contribution group pension arrangement. For
Collin Trupp, who is resident in Australia, a pension arrangement has been established in accordance with Australian practice.
Company contributions are provided as a percentage of the base salary excluding bonus and other benefits.
Share OptionsThe Company’s policy on options is to ensure that, through successive awards of share options, executive directors have a
meaningful exposure to the equity of the Company in order to align their interests with those of shareholders.
From time to time, directors are considered for awards of share options under the Approved and Unapproved Share Option
Schemes in place. The Remuneration Committee approves awards only if considered appropriate. Other than awards made under
the Executive Option Plan of the Unapproved Scheme, as described below, awards are not subject to performance conditions.
In 2005 and 2006, options were granted to executive directors under the terms of the Executive Option Plan, a performance based
executive share arrangement within the Aero Inventory plc Unapproved Share Option Scheme. These options are exercisable
between three and ten years from the date of the grant subject to the achievement of performance conditions. In respect of the
award made in 2005, the full award will vest if the Company achieves earnings per share (as defined in the rules of the Plan) of
65p per share for the financial year ending on 30 June 2008. In the event that earnings per share are greater than 50p but less than
65p, partial vesting will occur on a stepped scale. In respect of the award made in 2006, the full award will vest if the Company
achieves earnings per share (as defined in the rules of the Plan) of 80p per share for the financial year ending on 30 June 2009.
In the event that earnings per share are greater than 60p but less than 80p, partial vesting will occur on a stepped scale.
UK based executive directors are also eligible to participate in the Aero Inventory plc Savings-Related Share Option Scheme which
is open to all permanent UK employees.
Details of options held by executive directors under the Aero Inventory plc Enterprise Management Incentive Scheme (“EMI”), the
Aero Inventory plc Share Option Scheme (“SOS”), the Aero Inventory plc Unapproved Share Option Scheme (“USOS”), the Executive
Option Plan within the Aero Inventory plc Unapproved Share Option Scheme (“EOP”) and the Aero Inventory plc Savings-Related
Share Option Scheme (“SRSOS”) are set out below.
23
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 23
Options Options Options Options Options Date
held as at granted lapsed exercised held at Exercise from
1 July during during during 30 June price which
2006 year year year 2007 pence exercisable Expiry date
H C BevanEMI* 32,123 – – – 32,123 311 9 April 2005 8 April 2012USOS 29,133 – – – 29,133 343 29 October 2005 28 October 2013USOS 34,799 – – – 34,799 359 27 November 2005 26 November 2012USOS 160,358 – – – 160,358 249 22 October 2007 21 October 2014SRSOS 2,486 – – – 2,486 376 1 May 2009 31 October 2009EOP 34,125 – – – 34,125 410.25 1 May 2009 30 April 2016USOS 21,829 – – 21,829 347 16 November 2009 15 November 2016EOP 54,794 – – 54,794 370 23 April 2010 22 April 2017
T C N DaveySOS 8,108 – – 8,108 370 23 April 2010 22 April 2017USOS 18,918 – – 18,918 370 23 April 2010 22 April 2017
P M DockerUSOS 23,862 – – – 23,862 293 1 April 2007 31 March 2014SOS 10,226 – – – 10,226 293 29 April 2007 28 April 2014USOS 128,286 – – – 128,286 249 22 October 2007 21 October 2014USOS 5,507 – – – 5,507 363 4 November 2008 3 November 2015EOP 26,812 – – – 26,812 410.25 1 May 2009 30 April 2016USOS 57,786 – – 57,786 347 16 November 2009 15 November 2016EOP 43,835 – – 43,835 370 23 April 2010 22 April 2017SRSOS 4,910 – – 4,910 333.5 30 April 2010 30 October 2010
M P DodgeSOS 12,026 – – – 12,026 249 22 October 2007 21 October 2014USOS 148,331 – – – 148,331 249 22 October 2007 21 October 2014USOS 44,054 – – – 44,054 363 4 November 2008 3 November 2015EOP 34,125 – – – 34,125 410.25 1 May 2009 30 April 2016USOS 69,165 – – 69,165 347 16 November 2009 15 November 2016EOP 54,794 – – 54,794 370 23 April 2010 22 April 2017SRSOS 4,910 – – 4,910 333.5 30 April 2010 30 October 2010
P R LewinSOS 12,026 – – – 12,026 249 22 October 2007 21 October 2014USOS 204,456 – – – 204,456 249 22 October 2007 21 October 2014USOS 82,602 – – – 82,602 363 4 November 2008 3 November 2015EOP 51,188 – – – 51,188 410.25 1 May 2009 30 April 2016USOS 103,747 – – 103,747 347 16 November 2009 15 November 2016EOP 82,191 – – 82,191 370 23 April 2010 22 April 2017SRSOS 4,910 – – 4,910 333.5 30 April 2010 30 October 2010
C L TruppEMI* 6,264 – – – 6,264 287 30 April 2006 29 April 2013EMI* 13,186 – – – 13,186 379 10 October 2006 9 October 2013SOS 7,516 – – – 7,516 305 29 April 2007 28 April 2014USOS 106,721 – – – 106,721 275 15 April 2008 14 April 2015SOS 2,534 – – – 2,534 275 15 April 2008 14 April 2015USOS 2,493 – – – 2,493 363 4 November 2008 3 November 2015EOP 24,375 – – – 24,375 410.25 1 May 2009 30 April 2016USOS 69,178 – – 69,178 347 16 November 2009 15 November 2016EOP 43,835 – – 43,835 370 23 April 2010 22 April 2017
M J WebsterSOS 12,026 – – – 12,026 249 22 October 2007 21 October 2014USOS 28,062 – – – 28,062 249 22 October 2007 21 October 2014USOS 20,651 – – – 20,651 363 14 October 2008 13 October 2015SRSOS 4,281 – – – 4,281 376 1 May 2011 31 October 2011EOP 18,281 – – – 18,281 410.25 1 May 2009 30 April 2016USOS 93,660 – – 93,660 347 16 November 2009 15 November 2016EOP 34,246 – – 34,246 370 23 April 2010 22 April 2017
*In November 2006, options issued under the Aero Inventory plc Enterprise Management Incentive were adjusted pursuant to therights issue made by the Company in March 2006.
24
REMUNERATION REPORT CONTINUED
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 24
Apart from options granted under the terms of the Aero Inventory plc Savings–Related Share Option Scheme where there is a
limited exercise period after the maturity of the related savings contract, options are exercisable between three and ten years
from the date of the grant.
Long Term Incentive The board believes that it is essential to provide the right incentive to the Company’s management team to maximise the growth
opportunities that the Company’s unique business model has created. The Board has developed initial proposals for the new Long
Term Incentive Plan on which it intends shortly to consult with shareholders. Subject to the outcome of these discussions, formal
consent for the Plan will be sought at an Extraordinary General Meeting later in the year.
Signed by order of the Board of Directors
Martin WebsterResources Director
10 September 2007
25
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 25
The directors are responsible for preparing the Annual Report and the financial statements in accordance with applicable law
and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have
elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United
Kingdom Accounting Standards and applicable law). The financial statements are required by law to give a true and fair view of the
state of affairs of the Company and the Group and of the profit or loss of the Group for that period. In preparing these financial
statements, the directors are required to:
(a) select suitable accounting policies and then apply them consistently;
(b) make judgements and estimates that are reasonable and prudent;
(c) state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and
explained in the financial statements; and
(d) prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will
continue in business.
The directors are responsible for keeping proper accounting records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that the financial statements comply with the Companies Act 1985.
They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the corporate and financial information included on the
Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may
differ from legislation in other jurisdictions.
26
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 26
We have audited the Group and individual Company financial statements (the “financial statements”) of Aero Inventory plc for
the year ended 30 June 2007 which comprise the consolidated profit and loss account, the consolidated and individual Company
balance sheets, the consolidated cash flow statement and the related notes 1 to 31. These financial statements have been prepared
under the accounting policies set out therein.
This report is made solely to the Company’s members, as a body, in accordance with section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the Company’s members those matters we are required to state to them
in an auditors’ report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Company and the Company’s members as a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of Directors and AuditorsThe Directors’ responsibilities for preparing the Annual Report and the financial statements in accordance with applicable law and
United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice) are set out in the statement of
Directors’ responsibilities.
Our responsibility is to audit the financial statements in accordance with relevant United Kingdom legal and regulatory
requirements and International Standards on Auditing (UK and Ireland).
We report to you our opinion as to whether the financial statements give a true and fair view and are properly prepared in
accordance with the Companies Act 1985. We also report to you whether in our opinion the information given in the Directors’
Report is consistent with the financial statements. The information given in the Directors’ Report includes that specific information
presented in the Chairman’s and Chief Executive’s statements that is cross referred from the review of business section of the
Directors’ Report. In addition, we report to you if, in our opinion, the Company has not kept proper accounting records, if we have
not received all the information and explanations we require for our audit, or if information specified by law regarding directors’
remuneration and other transactions is not disclosed.
We read the Directors’ report and the other information contained in the annual report for the above year as described in the
contents section and consider the implications for our report if we become aware of any apparent misstatements or material
inconsistencies with the financial statements. Our responsibilities do not extend to any further information outside the annual report.
Basis of audit opinionWe conducted our audit in accordance with International Standards on Auditing (UK and Ireland) issued by the Auditing Practices
Board. An audit includes examination, on a test basis, of evidence relevant to the amounts and disclosures in the financial
statements. It also includes an assessment of the significant estimates and judgements made by the Directors in the preparation
of the financial statements, and of whether the accounting policies are appropriate to the circumstances of the Company and the
Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable assurance that the financial statements are free from material
misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the overall adequacy
of the presentation of information in the financial statements.
OpinionIn our opinion:
● the financial statements give a true and fair view, in accordance with United Kingdom Generally Accepted Accounting Practice,
of the state of the Group’s and the individual Company’s affairs as at 30 June 2007 and of the Group’s profit for the year then
ended;
● the financial statements have been properly prepared in accordance with the Companies Act 1985; and
● the information given in the Directors’ report is consistent with the financial statements.
Deloitte & Touche LLPChartered Accountants and Registered Auditors
Reading, United Kingdom
10 September 2007
27
INDEPENDENT AUDITORS’ REPORTTO THE MEMBERS OF AERO INVENTORY PLC
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 27
Year ended Year ended
30 June 30 June
2007 2006
Restated
Notes £’000 £’000
Turnover 2 127,817 63,549
Operating expenses 3 (97,281) (52,022)
Operating profit 30,536 11,527
Interest receivable and similar income 5 410 607
Interest payable and similar charges 6 (4,170) (2,242)
Profit on ordinary activities before taxation 26,776 9,892
Tax on profit on ordinary activities 7 (8,244) (3,319)
Profit on ordinary activities after taxation 18,532 6,573
Basic earnings per share 9 39.26p 22.15p
Diluted earnings per share 9 38.91p 21.95p
All amounts derive from continuing operations.
Results for the year ended 30 June 2006 have been restated to reflect the adoption of FRS 20 “Share-based payments”.
See note 30 for details.
There are no other recognised gains or losses, accordingly no consolidated statement of total recognised gains and losses
is presented.
28
CONSOLIDATED PROFIT AND LOSS ACCOUNTFOR THE YEAR ENDED 30 JUNE 2007
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 28
2007 2006
Restated
Notes £’000 £’000
Fixed assets
Intangible assets 12 13,184 –
Tangible fixed assets 13 8,124 1,581
Current assets
Stocks 15 216,098 103,794
Debtors 16 26,191 25,210
Cash at bank and in hand 188 36,364
242,477 165,368
Creditors: amounts falling due within one year 17 (58,638) (31,872)
Net current assets 183,839 133,496
Total assets less current liabilities 205,147 135,077
Creditors: amounts falling due after one year 18 (55,861) –
Net assets 149,286 135,077
Capital and reserves
Called up share capital 21 592 589
Share premium account 22 124,020 123,492
Share based payment reserve 22 1,043 609
Profit and loss account 22 23,631 10,387
Shareholders’ funds 23 149,286 135,077
The balance sheet as at 30 June 2006 has been restated to reflect the adoption of FRS 20 “Share-based payments”.
See note 30 for details.
The accounts were approved by the board on 10 September 2007 and signed on its behalf:
Rupert Lewin, Chief Executive Hugh Bevan, Finance Director
29
CONSOLIDATED BALANCE SHEETAT 30 JUNE 2007
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 29
2007 2006
Restated
Notes £’000 £’000
Fixed assets
Investments 14 83 83
Current assets
Debtors – due after one year 16 132,579 129,902
Net current assets 132,662 129,985
Net assets 132,662 129,985
Capital and reserves
Called-up share capital 21 592 589
Share premium account 22 124,020 123,492
Share-based payment reserve 22 1,043 609
Profit and loss account 22 7,007 5,295
Shareholders’ funds 23 132,662 129,985
The balance sheet as at 30 June 2006 has been restated to reflect the adoption of FRS 20 “Share-based payments”.
See note 30 for details.
The accounts were approved by the board on 10 September 2007 and signed on its behalf:
Rupert Lewin, Chief Executive Hugh Bevan, Finance Director
30
COMPANY BALANCE SHEETAT 30 JUNE 2007
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 30
2007 2006
Notes £’000 £’000
Net cash outflow from operating activities 24 (61,866) (18,476)
Returns on investments and servicing of finance 25 (2,940) (994)
Taxation (1,500) (2,350)
Capital expenditure and financial investment 25 (21,612) (972)
Equity dividends paid (5,288) (2,705)
Cash outflow before financing (93,206) (25,497)
Net cash inflow from financing 25 57,030 61,678
(Decrease)/Increase in Cash (36,176) 36,181
31
CONSOLIDATED CASH FLOW STATEMENTFOR THE YEAR ENDED 30 JUNE 2007
Aero Inventory plc 07
73922 PRE 2 19/10/07 16:53 Page 31
1. Accounting Policies
The principle accounting policies are summarised below. They have all been applied consistently throughout the year and the preceding
year, except for the adoption of FRS 20 “Share-based payments” see note 11.
a) Basis of accounting The financial accounts are prepared under the historical cost convention and in accordance with applicable United Kingdom accounting
standards.
b) Basis of consolidationThe group accounts consolidate the accounts of Aero Inventory plc and its subsidiary undertakings drawn up to 30 June each year.
c) TurnoverTurnover represents amounts receivable for goods provided in the normal course of business, net of trade discounts, Value Added Tax
and other sales related taxes.
d) Tangible fixed assets and depreciationTangible fixed assets are stated at cost less depreciation. Depreciation is provided at rates calculated to write off the cost of tangible
fixed assets, less their estimated residual value, over their expected useful lives on the following bases:
Leasehold improvements – over the unexpired term of the lease
Fixtures and equipment – 331/3% - 50% per annum
Motor vehicles – 30% per annum
IT Systems – 15% - 331/3% per annum
Internal staffing costs relating to the development of IT systems are capitalised and depreciated over the life of the IT System.
e) Intangible assets – database rightsDatabase rights are included at cost and amortised in equal instalments over a period of 10 years which is their estimated useful
economic life. Provision is made for any impairment.
f) InvestmentsLong-term investments are classified as fixed assets and stated at cost less any provision for impairment.
g) Operating leasesRentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor, are
charged to profit and loss account as incurred.
h) Finance costsFinance costs are amortised over the term of the instrument at a constant rate on the carrying amount.
i) Share-based paymentsThe Group has applied the requirements of FRS 20 (IFRS2) Share-based payments. In accordance with the transitional provisions,
FRS 20 has been applied to all grants of equity instruments after 7 November 2002 that were unvested as of 1 July 2005.
The Group issues equity-settled share-based payments to certain employees. Equity-settled share-based payments are measured at
fair value (excluding the effect of non market-based vesting conditions) at the date of the grant. The fair value determined at the grant
date of the equity-settled share-based payments is expensed on a straight-line basis over the vesting period, based on the Group’s
estimate of shares that will eventually vest and adjusted for the effect of non market-based vesting options.
Fair value is measured by use of Black-Scholes pricing model. The expected life used in the model has been adjusted, based on
management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural considerations.
A liability equal to the portion of goods or services received is recognised at the current fair value determined at each balance sheet
date for cash-settled share-based payments.
j) StocksStocks are valued at the lower of cost (including appropriate overheads) and net realisable value after making due allowance for
obsolete and slow-moving stocks. Cost is calculated by averaging purchase prices or by reference to supplier list prices adjusted to
reflect discounts obtained where appropriate. The Company regards stock as slow moving where it is unlikely to be sold within the
periods of its various long-term inventory management contracts or under separate transactions.
32
NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2007
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 32
1. Accounting policies continued
k) Foreign currenciesAssets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date.
Transactions in foreign currencies are translated into sterling at the rate ruling on the date of the transaction. Exchange differences
are taken to the profit and loss account.
l) TaxationCurrent tax including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates
and laws that have been enacted or substantially enacted by the balance sheet date.
Full provision is made, at the tax rates that are expected to apply in the periods in which the timing differences are expected to reverse,
based on the tax rates and laws that have been enacted or substantially enacted at the balance sheet date, in respect of timing
differences which have arisen but not reversed at the balance sheet date. Timing differences are differences between the Group’s
taxable profits and its results as stated in the accounts. Deferred tax is measured on a non-discounted basis.
2. Turnover
All turnover arose from the activities of procurement and inventory management for the aerospace industry.
Segmental analysisWhilst the directors consider the activities of the Group to form one class of business, an analysis of turnover by type of sale is
as follows:
Sales to ContractedCustomers under Long
Term Supply Agreements Other Sales Group Total2007 2006 2007 2006 2007 2006
Restated
£’000 £’000 £’000 £’000 £’000 £’000
Turnover 124,773 49,379 3,044 14,170 127,817 63,549
Gross Profit 46,014 21,414
Common costs (15,478) (9,887)
Operating profit 30,536 11,527
Net interest (3,760) (1,635)
Profit before taxation 26,776 9,892
All overheads are considered to be common costs due to the Group mainly operating from a common centre of business, which
services all types of activity.
The Group has entered into exclusive long-term contracts with a number of customers to supply parts over a contracted period of time,
typically ten years. The Group holds stocks for these contracts on a long-term basis and generally sells parts as they are consumed
by customers. Such sales are classified under “Sales to contracted customers under long-term supply agreements”. In addition the
Group’s strategy is to sell excess levels of stock where possible by means of separate sales transactions with third parties. Such sales
are classified under “Other Sales”.
A geographic analysis of turnover is as follows:
UK, rest of Europe
Asia Pacific & Middle East Group Total
2007 2006 2007 2006 2007 2006
£’000 £’000 £’000 £’000 £’000 £’000
Turnover 90,430 28,351 37,387 35,198 127,817 63,549
33
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 33
3. Operating expenses
2007 2006
Restated
£’000 £’000
Operating expenses comprise:Raw materials and consumables 81,803 42,220
Staff costs 9,098 6,192
Depreciation of tangible fixed assets
– owned by the Group 816 391
Amortisation of Intangible assets 1,069 –
Operating lease rentals:
– plant and machinery 80 165
– other 453 379
Auditors remuneration:
– audit services 165 131
– non-audit services 55 33
Other operating charges 3,742 2,511
97,281 52,022
The auditors for the years ending 30 June 2007 and 30 June 2006 were Deloitte & Touche LLP. Fees payable to the Company’s auditor
for the audit of the Company’s annual accounts were £10,000 (2006: £10,000). Fees payable to the Company’s auditor for the audit of the
Company’s subsidiaries, pursuant to legislation, were £130,000 (2006: £98,000). Fees payable in respect of interim review procedures
during the year were £25,000 (2006: £23,000) and fees payable in respect of tax services were £55,000 (2006: £33,000).
4. Staff costs & DIrectors’ remuneration
2007 2006
£’000 £’000
Staff costs, including Executive Directors’ remuneration, were as follows:
Wages and salaries 7,779 5,042
Pension costs 249 98
Social security costs 636 443
Share based payment costs 434 609
9,098 6,192
The average monthly number of employees, including Directors during the year was as follows:
No. No.
Administration 184 139
A bonus provision of £750,000 has been included in the accounts for the year ended 30 June 2007 and will be payable to senior
managers and Directors. The final bonus amounts have yet to be determined.
Directors’ emoluments were as follows: 2007 2006
£’000 £’000
Remuneration 2,060 1,289
The highest paid Director received
Remuneration 582 374
34
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 34
5. Interest receivable and similar income
2007 2006
£’000 £’000
Bank interest receivable 410 607
410 607
6. Interest payable and similar charges
2007 2006
£’000 £’000
Foreign currency loss – 682
Interest on bank facilities 3,957 1,560
Amortisation of loan costs 213 –
4,170 2,242
The foreign currency loss arose on the retranslation of US$ borrowings.
7. Tax on profit on ordinary activities
2007 2006
Restated
£’000 £’000
(a) Analysis of tax chargeCurrent year taxation:
UK Corporation Tax 8,034 3,248
Adjustment re prior year 419 112
8,453 3,360
Foreign taxation – –
Deferred tax:
Timing differences origination and reversal (214) 37
Adjustment in respect of prior years 5 (78)
8,244 3,319
(b) Factors affecting the tax charge for the yearThe tax assessed for the year is higher than the standard rate of Corporation Tax in the UK (30%).
The differences are explained below:
2007 2006
Restated
£’000 £’000
Profit on ordinary activities before taxation 26,776 9,892
Profit on ordinary items activities multiplied by standard
rate of Corporation Tax in the UK of 30% (2006: 30%) 8,033 2,968
Effects of:
Expenses not deductible for tax purposes 190 161
Movement in short term timing differences 22 119
Adjustment in respect of prior years 208 112
Current tax charge 8,453 3,360
35
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 35
8. Dividends
2007 2006
£’000 £’000
Final dividend for the year ended 30 June 2006 of 6.7p (2005: 6.7p) per ordinary share 3,162 1,148
Interim dividend for the year ended 30 June 2007 of 4.5p (2006: 3.3p) per ordinary share 2,126 1,557
5,288 2,705
Proposed final dividend for the year ended 30 June 2007 of 10.5p (2006: 6.7p) per ordinary share 4,972 3,100
The proposed dividend is subject to approval by share holders at the Annual General Meeting and has not been included as a liability in
these financial statements.
9. Earnings per share
Year ended Year ended
30 June 30 June
2007 2006
Restated
£’000 £’000
Profit on ordinary activities after taxation 18,532 6,573
2007 2006
Number Number
Weighted average number of shares in issue 47,205,097 29,672,589
Effect of dilutive potential Ordinary shares
– share options 417,727 277,396
Diluted weighted average number of shares 47,622,824 29,949,985
2007 2006
Pence Pence
Basic earnings per share 39.26 22.15
Dilutive impact of share options (0.35) (0.20)
Diluted earnings per share 38.91 21.95
Earnings per share for the year-ended 30 June 2006 has been adjusted for the bonus element of the rights issue.
10. Profit for the financial year
As permitted by Section 230 of the Companies Act 1985, the profit and loss of the Company is not presented as part of these accounts.
The parent company’s profit for the year amounted to £7,000,000 (2006: £4,000,000).
36
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 36
11. Share based payments
The Company has a share option scheme for all employees of the Group. Options are exercisable at a price equal to the average quoted
market price of the Company’s shares on the date of grant. The vesting period is three years. If the options remain unexercised after a
period of ten years from the date of grant the options expire. Options are normally forfeited if the employee leaves the Group before the
options vests.
Details of the share options outstanding during the year are as follows:
2007 2007 2006 2006
Weighted Weighted
Number average Number average
of share exercise price of share exercise price
options (in £) options (in £)
Outstanding at beginning of period 2,092,928 3.13 1,781,752 2.91
Granted during the year 1,443,554 3.56 394,406 4.11
Lapsed during the year (99,094) 3.49 (49,540) 3.64
Exercised during the year (168,240) 2.99 (33,690) 3.04
Outstanding at the end of the year 3,269,148 3.31 2,092,928 3.13
Exercisable at the end of the year 1,229,864 2.73 214,024 2.90
The weighted average share price at the date of exercise for share options during the period was £2.99. The options outstanding at
30 June 2007 had a weighted average exercise price of £3.31, and a weighted average remaining contractual life of 2.2 years. In 2007,
options were granted on 16 November 2006, 23 April 2007 and 30 April 2007. The aggregate of the estimated fair value of the options
granted on those dates is £5.1m. In 2006, options were granted on 14 October 2005, 4 November 2005, 28 April 2006 and 1 May 2006.
The aggregate of the estimated fair value of the options granted on those dates is £1.6m.
The inputs into the Black-Scholes option pricing model are as follows:
2007 2006
Weighted average share price £3.31 £3.13
Weighted average exercise price £2.99 £3.04
Expected volatility 25% 25%
Expected life 5 years 5 years
Risk-free rate 4.6% 4.6%
Dividend yield 2.9% 2.9%
Expected volatility was determined by an estimation based on similar AIM listed companies. The expected life used in the model has
been adjusted, based on management’s best estimate, for the effects of non-transferability, exercise restrictions, and behavioural
considerations.
37
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 37
12. Intangible assets
Database
Group rights
£’000
CostAt 1 July 2006 –
Additions 14,253
At 30 June 2007 14,253
AmortisationAt 1 July 2006 –
Charge for the Year (1,069)
At 30 June 2007 (1,069)
Net book valueAt 30 June 2007 13,184
At 30 June 2006 –
13. Tangible fixed assets
Leasehold Fixtures & IT Motor
Group improvements equipment systems vehicles Total
£’000 £’000 £’000 £’000 £’000
CostAt 1 July 2006 228 1,407 1,338 115 3,088
Additions 170 213 6,976 – 7,359
Disposals – – – (22) (22)
At 30 June 2007 398 1,620 8,314 93 10,425
DepreciationAt 1 July 2006 103 760 529 115 1,507
Charge for the year 44 85 687 – 816
Disposals – – – (22) (22)
At 30 June 2007 147 845 1,216 93 2,301
Net book valueAt 30 June 2007 251 775 7,098 – 8,124
At 30 June 2006 125 647 809 – 1,581
38
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 38
14. Fixed asset investments
£’000
CompanyAt 30 June 2007 and 30 June 2006 – cost and net book value 83
The Company owns the entire issued ordinary share capital of Aero Inventory (UK) Limited, a company principally engaged in
procurement and inventory management for the aerospace industry. Aero Inventory (UK) Limited is registered in England and Wales.
Aero Inventory (UK) Limited owns the entire issued ordinary share capital of Aero Inventory (Hong Kong) Limited, Aero Inventory
(Switzerland) AG, Aero Inventory (Australia) Pty Limited and Aero Inventory (USA) Inc companies principally engaged in customer
support activities for procurement and inventory management services for the aerospace industry. Aero Inventory (Hong Kong) Limited
is incorporated in Hong Kong, Aero Inventory (Switzerland) AG is incorporated in Switzerland, Aero Inventory (Australia) Pty Limited is
incorporated in Australia and Aero Inventory (USA) Inc is incorporated in the USA.
All subsidiary undertakings have been included in the consolidation.
15. Stocks
2007 2006
£’000 £’000
Goods for resale 216,098 103,794
16. Debtors
2007 2006
Due within one year £’000 £’000
GroupTrade debtors 23,457 18,947
Deferred taxation (note 19) 331 122
Other debtors 1,247 –
Prepayments and accrued income 1,156 6,141
26,191 25,210
Due after more than one yearCompany Restated
Amounts owed by Group undertakings 132,579 129,902
17. Creditors: amounts falling due within one year
2007 2006
£’000 £’000
GroupTrade creditors 44,950 26,715
Corporation tax 8,373 1,920
Other taxation and social security 155 154
Other creditors 212 82
Accruals and deferred income 3,491 3,001
Accrued interest payable 1,457 –
58,638 31,872
39
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 39
18. Creditors: amounts falling due after one year
2007 2006
£’000 £’000
Bank loan (note 20) 56,499 –
Bank loan costs (note 20) (638) –
55,861 –
The bank loan is secured by a fixed and floating charge over the assets of the Group.
19. Deferred taxation
Group £’000
At 1 July 2006 – asset 122
Credited to the profit and loss account 209
At 30 June 2007 – asset (note 16) 331
2007 2006
£’000 £’000
Analysis of deferred tax:
Depreciation in excise of capital allowances 743 236
Short term timing differences (412) (114)
331 122
20. Financial instruments
The Group’s financial instruments as at 30 June 2007 comprise cash and liquid resources, and bank loans at the rate of 1.75% above
LIBOR. The main purpose of these financial instruments is the funding of the Group’s activities. It has been the Group’s policy
throughout the period under review that no trading in financial instruments shall be undertaken.
Liquidity riskGroup policy is to maintain available credit facilities to meet its anticipated requirements over a two to three year period. The facility,
which is available until October 2009, may be drawn in advances which revolve over periods of 1,2,3 or 6 months. The Group has a
revolving credit facility as at 30 June 2007 of £85,000,000 (£32,000,000 in 2006).
Exchange rate riskA significant percentage of the Group’s purchases and sales are denominated in US$ rather than sterling which is its functional
currency. Except for certain borrowings held in US$ during the year which partially mitigate against US$ operating gains and losses,
the Group has not hedged these transactions. The Group, therefore, is exposed to a degree of risk in respect of changes in the
Sterling/Dollar exchange rate.
Maturity Profile of Group Financial Liabilities2007 2006
£’000 £’000
Due after one year or more or on demand 56,499 –
The Group had the following committed undrawn borrowing facilities at 30 June 28,501 32,000
40
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 40
20. Financial instruments continued
Financial liabilities2007 2006
Fixed Floating Fixed Floating
rate rate Total rate rate Total
£’000 £’000 £’000 £’000 £’000 £’000
GBP – 55,861 55,861 – – –
– 55,861 55,861 – – –
All above amounts relate to gross borrowings.
Financial assets2007 2006
Floating Non-interest Floating Non-interest
rate bearing Total rate bearing Total
£’000 £’000 £,000 £’000 £’000 £’000
GBP – – – 22,135 – 22,135
Other European currencies – 167 167 – 180 180
Other worldwide currencies – 21 21 14,049 – 14,049
– 188 188 36,184 180 36,364
All above amounts relate to cash deposits.
Currency profileNet Foreign Currency Monetary Liabilities excluding Trade and Other Creditors as at 30 June 2007
GBP USD EUR Other Total
£’000 £’000 £’000 £’000 £’000
Bank loans (55,861) – – – (55,861)
41
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 41
21. Called up share capital
2007 2006
£’000 £’000
Authorised share capital
80,000,000 ordinary shares of 1.25 pence 1,000 1,000
Allotted, called up and fully paid
47,353,721 ordinary shares of 1.25 pence each (2006: 47,185,481 ordinary shares of 1.25 pence each) 592 589
Number of Nominal
shares value
£’000
As at 1 July 2006 47,185,481 589
Shares issued during the year 168,240 3
As at 30 June 2007 47,353,721 592
During the year 45,863 shares (nominal value £573) were issued and allotted as a result of the exercise of options under the Aero
Inventory plc Share Option Scheme. 44,521 shares (nominal value £557) were issued and allotted as a result of the exercise of options
under the Aero Inventory plc Unapproved Share Option Scheme. 77,856 shares (nominal value £973) were issued and allotted as a
result of the exercise of options under the Aero Inventory plc Enterprise Management Incentive Scheme. The aggregate subscriptions
payable for these shares were £235,914, £128,190 and £165,544 respectively.
Share options have been granted and are still outstanding under the Aero Inventory plc Share Option Scheme, the Aero Inventory plc
Unapproved Share Option Scheme, Aero Inventory plc Enterprise Management Incentive Scheme and the Aero Inventory plc Savings-
Related Share Option Scheme as follows:-
Aero Inventory plc Share Option Scheme This approved share incentive scheme was introduced when the Company’s shares were listed on the Alternative Investment Market
in 2000. At 30 June 2007, the following options had been granted and were still outstanding under this scheme:-
Number Exercise
Date of grant of shares price pence
24 September 2001 7,516 148.9
1 April 2004 20,452 293.0
29 April 2004 15,850 305.0
22 October 2004 48,104 249.0
15 April 2005 2,534 275.0
29 April 2005 48,969 283.0
14 October 2005 8,259 363.0
28 April 2006 102,776 414.0
16 November 2006 73,355 347.0
23 April 2007 103,604 370.0
Total 431,419
These options are exercisable between three and ten years from the date of the grant. During the year 68,426 options lapsed.
42
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 42
21. Called up share capital continued
Aero Inventory plc Unapproved Share Option SchemeAt 30 June 2007, the following options had been granted and were still outstanding under this scheme:-
Number Exercise
Date of grant of shares price pence
27 November 2002 34,799 359.0
10 October 2003 9,618 379.0
29 October 2003 29,133 343.0
1 April 2004 47,724 293.0
29 April 2004 10,218 305.0
22 October 2004 697,555 349.0
15 April 2005 106,721 275.0
29 April 2005 6,511 283.0
14 October 2005 110,687 363.0
4 November 2005 134,656 363.0
28 April 2006 59,545 414.0
16 November 2006 738,455 347.0
23 April 2007 146,066 370.0
Total 2,131,688
These options are exercisable between three and ten years from the date of the grant. During the year 16,578 options lapsed.
Aero Inventory plc Unapproved Share Option Scheme – Executive Option Plan This unapproved Share Option Scheme was approved by shareholders in 2005 and the first grant of shares was made in May 2006.
At 30 June 2007, the following options had been granted and were still outstanding under this scheme.
Number Exercise
Date of grant of shares price pence
1 May 2006 188,906 410.25
23 April 2007 313,695 370.0
Total 502,601
These options are exercisable between three and ten years from the date of the grant subject to the achievement of targets.
The target for the award made on 1 May 2006 is to achieve earnings (as defined in the rules of the Plan) of 65p per share for the
financial year ending on 30 June 2008. In the event that earnings per share are greater than 50p but less than 65p, partial vesting
will occur on a stepped scale.
The target for the award made on 23 April 2007 is to achieve earnings (as defined in the rules of the Plan) of 80p per share for the
financial year ending on 30 June 2009. In the event that earnings per share are greater than 60p but less than 80p, partial vesting
will occur on a stepped scale.
43
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 43
21. Called up share capital continued
Aero Inventory plc Enterprise Management Incentive SchemeAt 30 June 2007, the following options had been granted and were still outstanding under this scheme. Following the rights issue
carried out by the Company in March 2006, on 16 November 2006 the terms of the options were varied as required by the Rules of
Aero Inventory plc Share Option Scheme using the methodology prescribed by HM Revenue and Customs. No further grants will be
made under this Scheme:-
Number Exercise
Date of grant of shares price pence
9 April 2002 11,274 322.0
26 April 2002 32,123 311.0
30 April 2003 30,312 287.0
10 October 2003 70,451 379.0
Total 144,160
These options are exercisable between three and ten years from the date of the grant. During the year 12,997 options lapsed.
Aero Inventory plc Savings-Related Share Option Scheme This approved Savings-Related Share Option Scheme was approved by shareholders in 2005 and the first grant of shares was made in
April 2006. At 30 June 2007, the following options had been granted and were still outstanding under this scheme.
Number Exercise
Date of grant of shares price pence
28 April 2006 9,053 376.0
30 April 2007 50,227 333.5
Total 59,280
These options are exercisable upon the maturity of three or five year approved savings contracts. During the year 1,093 options lapsed.
44
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 44
22. Reserves
The comparative figures in the financial statements for the year ended 30 June 2006 have been restated as a result of a change in
accounting policy for share based payments as described in note 30. The effects of the change in policy are summarised below:
Share
Based Profit
Share Share Payment and loss
Capital Premium Reserve account Total
£’000 £’000 £’000 £’000 £’000
GroupAt 30 June 2006 as previously stated 589 123,492 – 10,996 135,077
Prior Year adjustment – Share-based payment – – 609 (609) –
1 July 2006 as restated 589 123,492 609 10,387 135,077
Profit for the financial year – – – 18,532 18,532
FRS 20 – Share-based payments – – 434 – 434
Dividends paid – – – (5,288) (5,288)
Share issue 3 528 – – 531
30 June 2007 592 124,020 1,043 23,631 149,286
CompanyAt 30 June 2006 as previously stated 589 123,492 – 5,295 129,376
Prior Year adjustment – Share–based payment – – 609 – 609
1 July 2006 as restated 589 123,492 609 5,295 129,985
Profit for the financial year – – – 7,000 7,000
Dividends paid – – – (5,288) (5,288)
Share issue 3 528 – – 531
FRS 20 Share-based payments – – 434 – 434
30 June 2007 592 124,020 1,043 7,007 132,662
45
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 45
23. Reconciliation of movements in shareholders’ funds
2007 2006
Restated
Group £’000 £’000
Profit for the year 18,532 6,573
Dividends (5,288) (2,705)
13,244 3,868
New Shares Issued 531 88,263
Prior year adjustment (Share-based payment reserve) – 609
Share-based payment reserve 434 –
Net addition to shareholders’ funds 14,209 92,740
Opening shareholders’ funds 135,077 42,337
Closing shareholders’ funds 149,286 135,077
CompanyProfit for the year 7,000 4,000
Dividends (5,288) (2,705)
1,712 1,295
New Shares Issued 531 88,263
Share-based payment reserve 434 609
Net additions to shareholders’ funds 2,677 90,167
Opening shareholders’ funds as previously stated 129,376 39,818
Prior year adjustment 609 –
Closing shareholders’ funds 132,662 129,985
24. Reconciliation of operating profit to net cash outflow from operating activities
2007 2006
Restated
£’000 £’000
Operating profit 30,536 11,527
Depreciation of tangible fixed assets 816 391
Amortisation of intangible fixed assets 1,069 –
Increase in debtors (792) (14,004)
Increase in stocks (112,304) (36,963)
Increase in creditors 18,375 19,964
Share based payment charge 434 609
Net cash outflow from operating activities (61,866) (18,476)
46
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 46
25. Analysis of cash flows
2007 2006
£’000 £’000
Returns on investments and servicing of financeInterest received 410 566
Interest paid (2,500) (1,560)
Bank facility fees paid (850) –
Net cash outflow (2,940) (994)
Capital expenditurePurchase of intangible assets (14,253) –
Purchase of tangible fixed assets (7,359) (972)
Net cash outflow (21,612) (972)
FinancingIssue of ordinary share capital – net of expenses 531 88,263
New loans 56,499 –
Repayment of secured loan – (25,010)
Repayment of unsecured loan – (893)
Foreign exchange loss on repayment of loan – (682)
Net cash inflow 57,030 61,678
26. Analysis and reconciliation of net (debt)/funds
2007 2006
£’000 £’000
(Decrease)/increase in cash in year (36,176) 36,181
New loans – net of expenses (55,861) 893
Repayment of secured loan – 25,692
Foreign exchange loss – (682)
Net funds/(debt) at the beginning of the year 36,364 (25,720)
Net (debt)/funds at the end of the year (55,673) 36,364
27. Analysis of net (debt)/funds
1 July Cash New 30 June2006 flows Loans 2007
£’000 £’000 £’000 £’000
Cash at bank 36,364 (36,176) – 188Bank loans – – (55,861) (55,861)
36,364 (36,176) (55,861) (55,673)
47
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 47
Net funds/(funds)
28. Operating lease commitments
At 30 June 2007 there were annual commitments under non-cancellable operating leases, including property leases, as follows:
Land and buildings OtherGroup 2007 2006 2007 2006
£’000 £’000 £’000 £’000
Expiry date:Within 1 year 136 112 – –
Between 2 and 5 years 163 137 80 165
In more than 5 years 154 130 – –
453 379 80 165
29. Related party transactions
Rupert Lewin Racing Limited (of which PR Lewin is a director and shareholder) entered into a licence agreement with Aero Inventory
(UK) Limited on 1 December 2002 in respect of the use of the warehouse space as licensee at Unit A, Lancaster Road Industrial Estate,
New Barnet, Hertfordshire, for the storage and repair of private motor vehicles. During the period of the licence Rupert Lewin Racing
Limited agreed to pay Aero Inventory (UK) Limited a fee of £1,000 per month (inclusive of VAT).
£75,000 (2006: £42,300) was paid to Rupert Lewin Racing Limited during the year in respect of corporate entertainment provided to
Aero Inventory’s guests.
Mr Turner’s services as a Non-executive Director are provided via Potenza Enterprises Limited, a service company owned by Mr Turner
and his family. As well as acting as a Non-executive Director of the Company, Mr Turner also provides consultancy services in relation
to the strategic direction and market development of the Company. During the period, £39,000 (2006: £29,000) was paid to Potenza
Enterprises Limited in respect of such consultancy services.
30. Prior period adjustment
The comparative figures for the year ended 30 June 2006 have been restated as a result of a change in accounting policy for FRS 20
share-based payments as described in note 11. The restatement has reduced the profit for the year ended 30 June 2006 by £609,000.
Net assets were unchanged as at 30 June 2006.
31. Subsequent events
On 7 September 2007 the Group entered into a new facility with Lloyds TSB plc to provide up to £175,000,000 by way of a revolving
credit facility.
48
NOTES TO THE FINANCIAL STATEMENTS CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 48
Notice is hereby given that the Annual General Meeting of the Company will be held at The Royal Aeronautical Society, 4 Hamilton Place,
London W1J 7BQ on Monday 19 November 2007 at 11:00am for the following purposes.
To consider and, if thought fit, pass the following resolutions, of which resolutions 1 to 10 will be proposed as ordinary resolutions and
resolution 11 will be proposed as a special resolution.
1. To receive and adopt the Company’s annual accounts for the period ended 30 June 2007 and the reports of the Directors and auditors
on those accounts.
2. To declare a final dividend in respect of the year ended 30 June 2007 at the rate of 10.5p (net) per ordinary share to be paid on
13 December 2007 to shareholders on the register at the close of business on 9 November 2007.
3. To re-elect P M Docker who retires by rotation.
4. To re-elect M P Dodge who retires by rotation.
5. To re-elect T C N Davey who has been appointed since the last Annual General Meeting.
6. To re-elect R W J Davis who has been appointed since the last Annual General Meeting.
7. To re-elect L Heyworth who has been appointed since the last Annual General Meeting.
8. To re-elect M J Webster who has been appointed since the last Annual General Meeting.
9. To re-appoint Deloitte & Touche LLP as auditors of the Company and to authorise the Directors to agree their remuneration.
10. That in substitution for any existing authorities:
(a) in accordance with Section 80 of the Companies Act 1985 (the 'Act'), the Directors be and generally are unconditionally authorised
to exercise all the powers of the Company to allot relevant securities within the terms of the following restrictions and provisions,
namely:
(i) this authority shall expire (unless previously renewed, revoked or varied) on the earlier of the date of the next Annual General
Meeting of the Company following the date of the passing of this resolution and the date which is 15 months after the date of
the passing of this resolution; and
(ii) this authority shall be limited to the allotment of relevant securities up to an aggregate nominal amount of £197,307.16; and
(b) for the purpose of sub-paragraph 10 (a) above:
(i) the said power shall allow and enable the Directors to make an offer or agreement which would or might require relevant
securities to be allotted after such expiry of the authority and the Directors may allot relevant securities in pursuance of such
an offer or agreement as if the power conferred by this resolution had not expired; and
(ii) words and expressions defined in or for the purposes of Part IV of the Act shall bear the same meaning this resolution.
11. That in substitution for any existing authorities:
(a) conditionally upon the passing of resolution 10 above and in accordance with section 95 of the Act, the Directors be and are hereby
given power to allot equity securities pursuant to the authority conferred by resolution 10 above as if section 89(1) of the Act did
not apply to any such allotment provided that the power granted by this resolution shall be limited to:
(i) the allotment of equity securities in connection with or pursuant to an offer by way of rights to the holders of shares in
the company and other persons entitled to participate in such offer, in the proportion (as nearly may be) to the existing
shareholdings of such members (or, as appropriate, to the number of shares which such other persons are for these purposes
deemed to hold) subject only to such exclusions or other arrangements as the Directors may feel necessary or expedient to
deal with fractional entitlements or the regulations of any recognised regulatory body in any territory;
(ii) the grant of options to subscribe for shares in the Company under the terms of any share option schemes adopted or operated
by the Company up to a maximum aggregate nominal amount equal to 10 per cent of the nominal amount of the issued share
capital of the Company as at the date of grant of such option(s), and the allotment of such shares pursuant to the exercise of
options granted; and
(iii) the allotment of equity securities, otherwise than pursuant to sub-paragraphs 11(a)(i) and 11(a)(ii) above, up to an aggregate
nominal amount of £59,192.15;
(b) the power granted by this resolution shall expire on the earlier of the date of the next Annual General Meeting of the Company
following the date of the passing of this resolution and the date which is 15 months after the date of the passing of this resolution,
save that the said power shall allow and enable the Directors before this power expires or is replaced, to make an offer or
agreement which would or might require equity securities to be allotted pursuant to such offer or agreement as if the power
conferred by this resolution had not expired, or, as the case may be, been replaced; and
(c) words and expressions defined in or for the purposes of Part IV of the Act shall bear the same meanings in this resolution.
By order of the Board Registered OfficeMartin Webster 30 Lancaster Road
Secretary New Barnet
10 September 2007 Hertfordshire EN4 8AP
49
NOTICE OF ANNUAL GENERAL MEETING
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 49
Notes1. Pursuant to Regulation 41 of the Uncertificated Securities Regulations 2001, the Company specifies that only those shareholders
registered in the register of members of the Company at 11.00 am on 17 November 2007 shall be entitled to attend or vote at the
Annual General Meeting in respect of the number of shares registered in their respective names at that time. Changes to entries on
the register of members after that time will be disregarded in determining the rights of any person to attend or vote at the meeting.
2. If you are a member of the Company at the time set out in note 1 above, you are entitled to appoint a proxy to exercise all or any of
your rights to attend, speak and vote at the Meeting and you should have received a proxy form with this notice of meeting. You can
only appoint a proxy using the procedures set out in these notes and the notes to the proxy form.
3. If you are not a member of the Company but you have been nominated by a member of the Company to enjoy information rights,
you do not have a right to appoint any proxies under the procedures set out in these notes. Please read section 11 below.
4. A proxy does not need to be a member of the Company but must attend the Meeting to represent you. Details of how to appoint the
Chairman of the Meeting or another person as your proxy using the proxy form are set out in the notes to the proxy form. If you wish
your proxy to speak on your behalf at the Meeting you will need to appoint your own choice of proxy (not the Chairman) and give your
instructions directly to them.
5. You may appoint more than one proxy provided each proxy is appointed to exercise rights attached to different shares. You may not
appoint more than one proxy to exercise rights attached to any one share. To appoint more than one proxy, please contact Capita
Registrars, PO Box 25, 34 Beckenham Road, Beckenham, Kent BR3 4BR.
6. A vote withheld is not a vote in law, which means that the vote will not be counted in the calculation of votes for or against the
resolution. If no voting indication is given, your proxy will vote or abstain from voting at his or her discretion. Your proxy will vote
(or abstain from voting) as he or she thinks fit in relation to any other matter which is put before the Meeting.
7. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote.
To appoint a proxy using the proxy form, the form must be:
• completed and signed;
• sent or delivered to Capita Registrars, PO Box 25, 34 Beckenham Road, Beckenham, Kent BR3 4BR; and
• received by Capita Registrars no later than 11.00 am on 17 November 2007.
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an
officer of the company or an attorney for the company.
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority)
must be included with the proxy form.
8. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by
the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the
Company's register of members in respect of the joint holding (the first-named being the most senior).
9. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off
time for receipt of proxy appointments (see above) also applies in relation to amended instructions; any amended proxy appointment
received after the relevant cut-off time will be disregarded. Replacement proxy forms can be obtained from the Company Secretary.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies
will take precedence.
10. In order to revoke a proxy instruction you will need to inform the Company as follows:
• By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Capita Registrars,
PO Box 25, 34 Beckenham Road, Beckenham, Kent BR3 4BR.
• In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its
behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the
revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
The revocation notice must be received by Capita Registrars, PO Box 25, 34 Beckenham Road, Beckenham, Kent BR3 4BR no later
than 11.00 am on 17 November 2007.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph
directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and
attend the Meeting in person, your proxy appointment will automatically be terminated.
11. If you are a person who has been nominated under section 146 of the Companies Act 2006 to enjoy information rights you may have a
right under an agreement between you and the member of the Company who has nominated you to have information rights (Relevant
Member) to be appointed or to have someone else appointed as a proxy for the Meeting.
If you either do not have such a right or if you have such a right but do not wish to exercise it, you may have a right under an agreement
between you and the Relevant Member to give instructions to the Relevant Member as to the exercise of voting rights.
12. Copies of the service contracts and letters of appointment of the Directors of the Company will be available:
• for at least 15 minutes prior to the Meeting; and
• during the Meeting.
50
NOTICE OF ANNUAL GENERAL MEETING CONTINUED
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 50
51
EXPLANATORY NOTES
Aero Inventory plc 07
Resolution 1: Report and accountsThis is a standard resolution common to all annual general meetings.
Resolution 2: DividendThis is a standard resolution to declare the final dividend.
Resolutions 3 & 4: Re-election of directorsMessrs. Bevan and Docker will retire by rotation and being eligible will stand for re-election by the shareholders.
Resolutions 5 to 8: Re-election of directorsMessrs. Davey, Davis, Heyworth and Webster, having been appointed since the last Annual General Meeting and being eligible will stand
for re-election by the shareholders.
Resolution 9: Appointment of auditorsCompany law requires Aero Inventory plc, at each general meeting at which accounts are laid, to appoint auditors who will remain in office
until the next general meeting at which accounts are laid. This resolution will, therefore, reappoint Deloitte & Touche LLP as auditors of
Aero Inventory plc and authorise the Directors to agree their remuneration.
Resolution 10: General authority to allot sharesYour Directors may only allot shares or grant rights over shares if authorised to do so by the shareholders. The authority granted at the
Annual General Meeting of the Company held on 20 November 2006 is due to expire at this year's Annual General Meeting. Accordingly,
resolution number 10 will be proposed as an ordinary resolution to grant a new authority to allot unissued share capital up to an aggregate
nominal value of £197,307.16, representing 33.3 per cent of the total issued ordinary share capital as at the date of this notice. If given, this
authority will expire on 21 February 2008 or at the conclusion of the Annual General Meeting in 2008 whichever is the earlier. The Directors
have no present intention of exercising this authority.
Resolution 11: Dis-application of pre-emption rightsYour Directors also request additional authority from the shareholders to allot shares or grant rights over shares where they propose to do
so for cash and otherwise than to existing shareholders pro rata to their holdings. The authority granted at the Annual General Meeting of
the Company held on 20 November 2006 is due to expire at this year's Annual General Meeting. Accordingly, resolution number 11 will be
proposed as a special resolution to grant such authority. The authority will be limited to the issue of shares up to an aggregate nominal
value of £59,192.15 (being ten per cent of the total issued ordinary share capital as at the date of this notice). If given, this authority will
expire on 19 February 2009 or at the conclusion of the Annual General Meeting in 2008 whichever is the earlier. The Directors have
no present intention of exercising this authority.
73922 NOTES 19/10/07 16:54 Page 51
52
SHAREHOLDER INFORMATION
Aero Inventory plc 07
Financial calendar
Financial year end 30 June 2007
Preliminary results 10 September 2007
Ex-dividend date 7 November 2007
Annual General Meeting 19 November 2007
Payment of final dividend 13 December 2007
Interim results March 2008
Financial year end 30 June 2008
Preliminary results September 2008
Annual reports
Further copies of this annual report are available from the Company
Secretary at the Registered Office. It can also be ordered through the
Financial Times Annual Report service.
Share price information
The Company’s share price is quoted daily in the Financial Times
and the Daily Telegraph, in both cases in the Alternative Investment
Market section.
Reuters code: AI.L
Bloomberg code: AI/LN
Investor relations information
The Company’s website – www.aero-inventory.com – provides certain
investor relations information, including press releases and access
to up-to-date share price data.
Registrar
Enquiries about administrative matters relating to the holding of
Aero Inventory plc shares should be addressed to the Company’s
registrars, Capita Registrars, Shareholder Services Department,
Northern House, Woodsome Park, Fenay Bridge, Huddersfield, West
Yorkshire HD8 0LA, tel: +44 (0) 870 1623 3100. This includes: loss of
share certificates; notification of change of address; and transfer of
shares to another person. Capita Registrars also operate a Dividend
Reinvestment Plan for shares in Aero Inventory plc.
CREST
A computerised system for settling sales and purchases of shares
(CREST) operates for the Company’s shares. It is a voluntary system
that enables shareholders, if they choose, to hold and transfer
shareholdings electronically rather than in paper form. Shareholders
wishing to retain their paper certificates continue to be able to do so.
Further information
For further information, please contact Hugh Bevan
(Finance Director) on +44 (0)20 8447 3303, or by email, to
COMPANY INFORMATION
DirectorsH N P McCorkell FCA
P R Lewin
M P Dodge MBA
H C Bevan ACA
P M Docker
C L Trupp
M J Webster (appointed 8 January 2007)
T C N Davey (appointed 29 June 2007)
F Turner FR Eng
R W J Davis (appointed 8 January 2007)
L Heyworth (appointed 7 September 2007)
SecretaryM J Webster FCIS
Company number2887038
Registered office30 Lancaster Road
New Barnet
Hertfordshire EN4 8AP
AuditorsDeloitte & Touche LLP
Reading
SolicitorsTaylor Wessing
London
Principal bankersLloyds TSB Bank plc
10 Gresham Street
London EC2V 7AE
Nominated adviser and nominated brokerJ P Morgan Cazenove Limited
20 Moorgate
London EC2R 6DA
RegistrarsCapita Registrars
Shareholder Services Department
Northern House, Woodsome Park
Fenay Bridge, Huddersfield
West Yorkshire HD8 0LA
73922 NOTES 19/10/07 16:54 Page 52
Year ended 30 June 2003 2004 2005 2006 2007Restated
£’000 £’000 £’000 £’000 £’000
Turnover 15,871 21,078 43,639 63,549 127,817
Operating profit 3,135 1,898 7,865 11,527 30,536
Net interest (320) (241) (709) (1,635) (3,760)
Pre-tax profit 2,815 1,657 7,156 9,892 26,776
Tax (880) (634) (2,107) (3,319) (8,244)
Profit after tax 1,935 1,023 5,049 6,573 18,532
Fully diluted EPS (pence) 15.6 5.7 25.2 22.0 38.9
Dividends per share (pence) 4.2 4.8 8.0 10.0 15.0
Shareholders’ funds 18,106 32,968 42,337 135,077 149,286
Employees (average) 78 101 114 139 184
The fully diluted EPS figures for the prior years 2003, 2004 and 2005 have been restated, taking into account the rights issue in 2006.
2006 has been restated to reflect the effect of FRS 20.
53
SUMMARY FIVE YEAR RECORD
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 53
54
SHAREHOLDER NOTES
Aero Inventory plc 07
73922 NOTES 19/10/07 16:54 Page 54
I/We............................................................................................................................................................................................. (block letters please)
of.....................................................................................................................................................................................................................................
being a member/members of Aero Inventory plc hereby appoint the chairman of the meeting or
. .......................................................................................................................................................................................................................................
as my/our proxy to vote for me/us and on my/our behalf at the Annual General Meeting of the Company to be held on 19 November 2007,
and at any adjournment thereof, in the manner specified below.
Resolutions For Against
1. To receive and adopt the accounts
2. To declare the dividend
3. To re-elect P M Docker
4. To re-elect M P Dodge
5. To re-elect T C N Davey
6. To re-elect R W J Davis
7. To re-elect L Heyworth
8. To re-elect M J Webster
9. To re-appoint the auditors and to authorise the Directors to agree their remuneration
10. To authorise the Directors under section 80
11. To disapply pre-emption rights
Signature ............................................................................................................................Dated ........................................................................2007
Notes(1) Please indicate by a ✘ in the space provided how you wish your votes to be cast. Without such directions the proxy will vote or abstain
at his/her discretion.
(2) In the case of a corporation this form of proxy should be completed under its common seal or signed by its attorney or by an officer on
its behalf.
(3) In the case of joint holders the vote of the senior who tenders the vote will be accepted to the exclusion of all others, seniority being
determined by the order in which the names stand in the Register of Members.
(4) To be valid this form of proxy, duly executed, and the power of attorney or other authority (if any) under which it is executed or a
certified copy of such power or authority must be received at the Company's registered office not later than 48 hours before the time
appointed for the meeting.
(5) If a member wishes to appoint any other person to act as proxy, insert the name in the space provided and strike out all other
appointees. The proxy need not be a member of the Company.
(6) Completion of this form will not preclude you from attending and voting at the meeting if you so wish.
(7) Any alteration to this form of proxy must be initialled.
55
FORM OF PROXY
Aero Inventory plc 07
✂
73922 NOTES 19/10/07 16:54 Page 55
SECOND FOLD
THIRD FOLD AND TUCK IN OPPOSITE
FIR
STFO
LDCCaappiittaa RReeggiissttrraarrss ((PPrrooxxiieess))PPOO BBooxx 22553344 BBeecckkeennhhaamm RRooaaddBBeecckkeennhhaammKKeennttBBRR33 44BBRR
AFFIXSTAMPHERE
73922 NOTES 19/10/07 16:54 Page 56
United Kingdom
Aero Inventory plc/Aero Inventory (UK) Limited 30 Lancaster Road, New Barnet, Hertfordshire,EN4 8AP, United KingdomTel +44 (0)20 8449 9263 Fax +44 (0)20 8449 3555Email [email protected]
Hong Kong
Aero Inventory (Hong Kong) LimitedUnits 01, 02 and 03, 6th Floor,Airport Freight Forwarding Centre,2 Chun Wan Road, Chek Lap Kok,Hong KongTel +852 3657 2600Fax +852 3657 2601Email [email protected]
Australia
Aero Inventory Pty LimitedLevel 7, 250 Victoria Parade,East Melbourne, Victoria 3002Tel +61 3 9445 5700Fax +61 3 9445 5798Email [email protected]
United States of America
Aero Inventory (USA) Inc12257 Florence Avenue,Santa Fe Springs, California 90670Tel +1 562 236 5500Fax +1 562 236 5501Email [email protected]
www.aero-inventory.com
Aero Inventory
Ae
roIn
ven
tory
plc
An
nu
al
rep
ort
an
da
cco
un
ts2007
73922 COVER 19/10/07 16:59 Page 1
Annual report and accounts 2007