THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. If you are in any doubt about the contents of this document, you should consult your accountant, legal or professional adviser, financial adviser or an independent professional adviser authorised under the Financial Services and Markets Act 2000 who specialises in advising on the acquisition of shares and other securities.
This document is an admission document prepared in accordance with the rules of AIM, a market operated by the London Stock Exchange,Annex III 1.1/1.2 and does not comprise a prospectus for the purposes of the Prospectus Rules and has not been approved by or filed with the Financial Services Authority. Application has been made for all of the issued and to be issued Ordinary Shares to be admitted to trading on AIM. It is expected that Admission will become effective and that trading in the Ordinary Shares will commence on AIM on 10 November 2010.
The Company and its Directors, whose names appear on page 5 of this document, accept responsibility for the information contained in thisAnnex I 1.1/1.2 document. To the best of the knowledge and belief of the Company and its Directors (who have taken all reasonable care to ensure that such is the case), the information contained in this document is in accordance with the facts, and does not omit anything likely to affect the import of such information.
AIM is a market designed primarily for emerging or smaller companies to which a higher investment risk tends to be attached thanto larger or more established companies. AIM securities are not admitted to the Official List of the UK Listing Authority. A prospective investor should be aware of the risks of investing in such companies and should make the decision to invest only after careful consideration and, if appropriate, consultation with an independent financial adviser. Each AIM company is required pursuant to the AIM Rules for Companies to have a Nominated Adviser. The Nominated Adviser is required to make a declaration to the London Stock Exchange on admission in the form set out in Schedule Two to the AIM Rules for Nominated Advisers. The London Stock Exchange has not itself examined or approved the contents of this document.
Prospective investors should read the entire document and, in particular, the section headed “Risk Factors” when considering an investment in the Company.
Hangar 8 plc
(Incorporated in England and Wales under Company Number 7264678)
Placing of 1,333,334 Ordinary Shares at 150p per share
and Admission to AIM
Daniel Stewart & Company Plc
Nominated Adviser and Broker
The Placing is conditional, inter alia, on Admission taking place on or before 10 November 2010 (or such later date as Daniel Stewart and the Company may agree, being not later than 24 November 2010).
The Ordinary Shares being placed will, following allotment, rank pari passu, in all respects with the issued ordinary share capital of the Company on Admission including the right to receive all dividends and other distributions declared on the Ordinary Shares after Admission.
The distribution of this document outside the UK may be restricted by law and therefore persons outside the UK into whose possession this document comes should inform themselves about and observe any restrictions as to the Ordinary Shares or the distribution of this document. The Ordinary Shares the subject of the Placing have not been, nor will they be, registered in the United States under the United States Securities Act of 1933, as amended, or under any applicable securities laws of Canada, the Republic of Ireland, the Republic of South Africa or Japan and they may not be offered or sold directly or indirectly within the United States, Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan or to, or for the account or benefit of, US persons or any national, citizen or resident of the United States, Canada, Australia, the Republic of Ireland, the Republic of South Africa or Japan. This document does not constitute an offer to sell or issue or the solicitation of an offer to buy or subscribe for Ordinary Shares in any jurisdiction in which such offer or solicitation is unlawful.
Daniel Stewart, which is regulated by the Financial Services Authority, is acting as the Company’s Nominated Adviser in connection with the Placing and proposed admission of the issued and to be issued Ordinary Shares of the Company to trading on AIM. Its responsibilities as the Company’s Nominated Adviser under the AIM Rules are owed solely to London Stock Exchange plc and are not owed to the Company or to any Director or to any other person in respect of his decision to acquire shares in the Company in reliance on any part of this document. Daniel Stewart is not acting for anyone else and will not be responsible to anyone other than the Company for providing the protections afforded to their clients or for providing advice in relation to the contents of this document or the Admission of the issued and to be issued Ordinary Shares of the Company to trading on AIM. No representation or warranty, express or implied, is made by Daniel Stewart as to any of the contents of this document (without limiting the statutory rights of any person to whom this document is issued). Daniel Stewart will not be offering advice and will not otherwise be responsible for providing customer protections to recipients of this document in respect of the Placing of Ordinary Shares in the Company.
Copies of this document will be available free of charge during normal business hours on any weekday (except Saturdays, Sundays and public holidays) at the offices of Daniel Stewart, 36 Old Jewry, London EC2R 8DD and the registered office of the Company from the date of this document for a period of up to one month following Admission and on the Company’s website
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TABLE OF CONTENTS
EXPECTED TIMETABLE FOR ADMISSION
PLACING STATISTICS
DIRECTORS, SECRETARY AND ADVISERS
DEFINITIONS
PART I INFORMATION ON THE GROUP
1.INTRODUCTION
2.THE GROUP’S BUSINESS
Aircraft Management
Charter Services
Aircraft Sales
3.AIRCRAFT FLEET
4.HISTORY AND REORGANISATION
5.STRATEGY
6.INDUSTRY BACKGROUND
7.HISTORIC TRADING
8.CURRENT TRADING AND PROSPECTS
9.REASONS FOR ADMISSION, THE PLACING AND USE OF FUNDS
10.DIRECTORS AND EMPLOYEES OF THE GROUP
Senior Management
11.THE PLACING
12.ADMISSION, SETTLEMENT AND DEALINGS
13.LOCK-IN ARRANGEMENTS
14.SHARE OPTION SCHEME
15.CORPORATE GOVERNANCE
16.CREST
17.DIVIDEND POLICY
18.TAXATION
19.THE CITY CODE ON TAKEOVERS AND MERGERS
FURTHER INFORMATION
PART II RISK FACTORS
RISKS RELATING TO THE COMPANY’S BUSINESS AND STRUCTURE
GENERAL RISKS RELATING TO THE GROUP
Operating performance
Economic uncertainty
Availability of aircraft to the Group
Availability of Flight Crew
Risk arising from air accidents
Regulation and compliance
Air Operator Certificate
Contracts
Application to perform maintenance work
US Visa Waiver
Reliance on key individuals
Influence of principal shareholders
Litigation
Dividend payment
Foreign exchange risk
RISKS RELATING TO THE ORDINARY SHARES AND THEIR TRADING MARKET AIM
Share dilution
Volatility in share price and liquidity
Market value of the shares
PART III FINANCIAL INFORMATION ON HANGAR 8 PLC
SECTION A –ACCOUNTANTS’ REPORTS ON HANGAR 8 PLC
Hangar8 Group
Introduction
Responsibilities
Basis of opinion
Opinion
Declaration
SECTION B – FINANCIAL INFORMATION ON THE GROUP
Combined statement of comprehensive income for the years ended 30 April 2008, 2009 and 2010
Combined statement of financial position at 30 April 2008, 2009 and 2010
Combined statement of cash flows for the years ended 30 April 2008, 2009 and 2010
Combined statement of changes in equity for the years ended 30 April 2008, 2009 and 2010
Notes to the combined financial information
1.General information, statement of compliance with IFRS and basis of preparation
Aggregation
Earnings per share
First time adoption of IFRS
2.Accounting policies
Convention
New standards, interpretations and amendments not yet effective
Going concern
Revenue recognition
Property, plant and equipment
Intangible assets
Computer software
Impairment of non-financial assets
Cash and cash equivalents
Foreign currencies
Segmental reporting
Financial instruments
Trade and other receivables
Trade payables
Loans and borrowings
Borrowing costs
Leases
Taxation
Current tax
Deferred taxation
Current and deferred tax for the period
Provisions
3.Critical estimates and judgements
Judgements
(a)Revenue recognition
(b)Bad debts
Estimates and assumptions
(c)Useful lives of and property, plant and equipment
(d)Deferred taxation
4.Financial instruments – Risk management
Fair values of material financial instruments
Market risk
Foreign exchange risk
Interest rate risk
Credit risk
Charter income
Contract income
Liquidity risk
Capital disclosures
5.Revenue
6.Expenses by nature
7.Staff costs
Key management personnel compensation
8. Segmental information
9Finance income and expense
10.Income tax
11.Discontinued operations
12.Loss per share
13Dividends
14.Intangible assets
15.Property, plant and equipment
16.Trade and other receivables
17.Trade and other payables
18.Loans and borrowings
19.Deferred taxation
20.Invested capital
21.Leases
Finance leases
Operating leases
22.Retirement benefits
23.Related party transactions
24.Ultimate controlling party
25.Notes supporting the statement of cash flows
26.Events after the reporting date
Litigation
PART IV ADDITIONAL INFORMATION
1.RESPONSIBILITY
2.THE COMPANY
3.SUBSIDIARIES AND GROUP STRUCTURE
4.SHARE AND LOAN CAPITAL
5.SUMMARY OF THE ARTICLES OF ASSOCIATION
5.1Objects
5.2Voting rights attaching to Ordinary Shares
5.3Pre-emption rights
5.4Disclosures of interests in shares and failure to disclose such interests
5.5Alteration of capital and purchase of own shares
5.6Dividends
5.7Distribution of assets on liquidation
5.8Variation of rights
5.9Transfer of shares
5.10Conversion of shares to stock
5.11Redemption
5.12General meetings
5.13Directors
5.13.1Appointment and removal of Directors
5.13.2Retirement and rotation of Directors
5.14Directors’ remuneration, expenses and pensions
5.15Directors’ interests
5.16Directors’ indemnity and insurance
6.SHARE OPTIONS
7.DIRECTORS’ AND OTHER INTERESTS
8.FURTHER INFORMATION ABOUT DIRECTORS
9.DIRECTORS’ AND MANAGEMENT SERVICE AGREEMENTS
9.1Executive Directors
9.2Non-executive Directors
9.3Senior Management
10.MANDATORY TAKEOVER ARRANGEMENTS
Mandatory Takeover Bids and/or “squeeze out” and “sell out rights”
11.UNITED KINGDOM TAXATION
11.1The Directors have been advised that, under current UK legislation and HM Revenue & Customs (“HMRC”) practice, the taxation consequences of an acquisition of the Company’s Ordinary Shares are broadly as outlined below.
11.2Distribution
11.2.1UK resident individual and trustee Shareholders
11.2.2Corporate Shareholders
11.2.3Non-UK resident Shareholders
11.3Taxation of Capital Gains
12MATERIAL CONTRACTS
13RELATED PARTY TRANSACTIONS
14.WORKING CAPITAL
15.LEGAL AND ARBITRATION PROCEEDINGS
16.GENERAL
17.CORPORATE GOVERNANCE
18.AVAILABILITY OF THIS DOCUMENT
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EXPECTED TIMETABLE FOR ADMISSION
Publication of this document / 5 November 2010Admission and dealings in the Ordinary Shares expected to commence on AIM / 10 November 2010
Expected date for CREST accounts to be credited / 10 November 2010
Despatch of share certificates / By 24 November 2010
PLACING STATISTICS
Placing Price / 150pGross proceeds raised by the Placing / £2.0 million
Estimated net proceeds of the Placing receivable by the Company / £0.81 million
Number of new Ordinary Shares being issued pursuant to the Placing / 1,333,334
Number of Ordinary Shares in issue following the Placing and Admission / 6,333,334
Placing Shares as a percentage of the Ordinary Shares in issue following the Placing and Admission / 21.05%
Market capitalisation following the Placing at the Placing Price / £9.50 million
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FORWARD-LOOKING STATEMENTS
This document contains forward-looking statements. These statements relate to the Company’s future prospects, developments and business strategies. Forward-looking statements are identified by their use of terms and phrases such as “believe”, “could”, “envisage”, “estimate”, “intend”, “may” “plan”, “will” or the negative of those, variations or comparable expressions, including references to assumptions. These statements are primarily contained in Part I of this document.
The forward-looking statements in this document are based on current expectations and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by those statements. Certain risks to and uncertainties for the Company are specifically described in Part II of this document headed “Risk Factors”. If one or more of these risk factors or uncertainties materialises, or if the underlying assumptions prove incorrect, the Company’s actual results may vary materially from those expected, estimated or projected. Given these risks and uncertainties, potential investors should not place any reliance on forward-looking statements.
These forward-looking statements speak only as at the date of this document. Neither the Directors nor the Company undertake any obligation to update forward-looking statements or Risk Factors other than as required by the AIM Rules or by the rules of any other securities regulatory authority, whether as a result of new information, future events or otherwise.
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DIRECTORS, SECRETARY AND ADVISERS
Existing Directors / Nigel Payne, Non-Executive Chairman Dustin Dryden, Chief Executive Officer Keiron Blay, Chief Financial Officer David Cowham, Non Executive Director George Rolls, Non Executive Director John Blower, Non Executive DirectorCompany Secretary / Nigel Payne
Registered Office / TheFarmhouse,LangfordLaneOxfordAirportKidlington Oxford OX5 1QT
Nominated Adviser & Broker to the Company / Daniel Stewart & Company plc
Becket House 36 Old Jewry London EC2R 8DD
Lawyers to the Company / Bird & Bird LLP
15 Fetter LaneLondonEC4A 1JP
Lawyers to Daniel Stewart / K&L Gates LLP
110 Cannon StreetLondonEC4N 6AR
Reporting Accountants / BDO LLP
Kings Wharf 20-30 Kings Road, ReadingBerkshire RG1 3EX
Registered Auditors / BDO LLP
Prospect Place 85 Great North Road Hatfield Hertfordshire AL9 5BS
Financial PR / Tavistock Communications Limited
131 Finsbury Pavement London EC2A 1NT
Registrars to Company / Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
The Company Website /
ISIN / GB00B3ZP1526
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DEFINITIONS
The following definitions apply throughout this document, unless the context otherwise requires:
“Act” / Companies Act 2006 of the UK“Admission” / admission of the entire issued and to be issued ordinary share capital of the Company (including the new Ordinary Shares to be issued under the Placing), to trading on AIM becoming effective pursuant to paragraph 6 of the AIM Rules
“AIM” / the AIM market operated by the London Stock Exchange
“AIM Rules” / the rules and guidance notes for AIM listed companies and their nominated advisers published by the London Stock Exchange from time to time governing admission to and the operation of AIM
“AOC” / Air Operator’s Certificate: a CAA licence required for the performance of commercial air operations such as charter flights
“Articles” / the articles of association of the Company
“Avinode” / the world’s largest business to business database used by aircraft charter brokers and operators to assist in chartering and booking services including providing the profile of each aircraft offered for charter
“BDO” / BDO LLP
“Board” or “Directors” / the Directors of the Company whose names are set out on page 5 of this document
“Business” / the business carried on by Langford Lane Limited (formerly known as Hangar 8 Limited), H8 AOC, H8 Management, H8 Engineering and associated companies, since their respective incorporation dates to 12 October 2010 (being the date of the Business Transfer Agreements) and the business carried on by the Group since the effective dates under the Business Transfers Agreements (being 31 May and 25 June 2010)
“Business Transfer Agreements” / “Business Transfer Agreements” means the H8 AOC Agreement and the H8 Management Agreement, further details of each of which are set out in paragraph 7.10 of Part IV
“CAA” / Civil Aviation Authority, being the UK’s national aviation authority and the competent authority in the UK for the purposes of much EU aviation legislation
“CAMO” / an organisation approved by the CAA as a Part M sub-part G approved Continuing Airworthiness Management Organisation
“Certificated” or “In Certificated Form” / an Ordinary Share which is in certificated form (that is not in CREST)
“Clear Days” / means (in relation to a period of a notice) that period, excluding the day when the notice is given or deemed to be given and the day for which it is given or on which it is to take effect
“Code” / the UK City Code on Takeovers and Mergers
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“Company” or “Hangar8” / Hangar 8 plc, a company incorporated in the United Kingdom with Registered Number 7264678“Completion” / completion of the Placing Agreement in accordance with its terms
“Constitution” / the constitution of the Company at the date of this document
“CREST” / the electronic, paperless transfer and settlement mechanism to facilitate the transfer of title to shares in uncertificated form, operated by Euroclear UK and Ireland Limited (company number 0287838)
“CREST Regulations” or “Uncertificated Regulations” / the Uncertificated Securities Regulations 2001, as amended
“Daniel Stewart” / Daniel Stewart & Company Plc, the Company’s nominated adviser and broker for the purposes of the AIM Rules, a member of the London Stock Exchange and regulated in the UK by the Financial Services Authority
“DTR” / the Disclosure and Transparency Rules published by the FSA from time to time
“EASA” / the European Aviation Safety Agency
“EMEA” / Europe, Middle East and Africa
“Enlarged Issued Share Capital” / the issued ordinary share capital of the Company immediately following Admission
“EU” / the European Union
“Existing Issued Share Capital” / the issued ordinary share capital of the Company as at the date of this document
“FSA” / the Financial Services Authority of the United Kingdom
“FSMA” / the Financial Services and Markets Act 2000
“Group” / the Company and its subsidiaries from time to time
“H8 AOC” / Hangar 8 AOC Limited, a wholly owned subsidiary of Hangar 8
“H8 AOC Agreement” / has the meaning given in paragraph 7.10 of Part IV
“H8 Engineering” / Hangar 8 Engineering Ltd, a wholly owned subsidiary of Hangar 8
“H8 Management” / Hangar 8 Management Ltd, a wholly owned subsidiary of Hangar 8
“H8 Management Agreement” / has the meaning given in paragraph 7.10 of Part IV
“HMRC” / HM Revenue & Customs
“ISIN” / International Securities Identification Number
“Lock-in Agreements” / the lock-in agreements dated 5 November 2010 between:
(1)the Rysaffe Trustee Company (C.I.) Limited (as Trustee of The Harrier Trust, of which Dustin Dryden is a beneficiary), the Company and Daniel Stewart, and
(2)Rowan Irving , the Company and Daniel Stewart
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further details of which are set out in paragraph 12.4 of Part IV of this document“London Stock Exchange” / London Stock Exchange plc
“Official List” / the official list of the UK Listing Authority
“Operator” / an operator of privately owned passenger jet aircraft (which are available for charter) categorised in terms of the size of the fleet it manages as listed on Avinode
“Ordinary Shares” / ordinary shares of 1 pence each in the capital of the Company
“Overseas Shareholders” / shareholders with registered addresses in, or who are citizens, residents or nationals of jurisdictions outside the UK
“Owners” / the owners of aircraft with whom the Group has contracts in place for the Group to manage, maintain and in the majority of cases charter the aircraft to third parties
“Panel” / the UK Panel on Takeovers and Mergers
“Placing” / the conditional placing of the Placing Shares at the Placing Price by Daniel Stewart as agent on behalf of the Company, pursuant to the terms of the Placing Agreement
“Placing Agreement” / the conditional agreement between Daniel Stewart, the Directors and the Company relating to the Placing, details of which are set out in paragraph 12.2 of Part IV of this document
“Placing Price” / 150 pence per Placing Share
“Placing Shares” / the 1,333,334 new Ordinary Shares to be issued by the Company and subscribed for pursuant to the Placing
“PROPS Software” / the software operating system used by the Group for operating and chartering aircraft, further details of which are set out in paragraph 7.8 of Part IV of this document
“Registrars” / Equiniti Limited
“Regulations” / means the Uncertificated Securities Regulations 2001 (as amended)
“Relationship Agreement” / the agreement between Hangar8, Dustin Dryden, and Rysaffe Trustee Company (C.I.) Limited (as Trustee of The Harrier Trust, of which Dustin Dryden is a beneficiary), further details of which are set out in paragraph 12.3 of Part IV
“Relevant system” / has the meaning set out in the Regulations
“Reorganisation” / has the meaning set out in paragraph 4 of Part I of this document
“Rysaffe Trustee Company” / Rysaffe Trustee Company (C.I.) Limited (as Trustee of The Harrier Trust, of which Dustin Dryden is a beneficiary)
“Share Dealing Code” / the share dealing code adopted by the Company to ensure compliance with rule 21 of the AIM Rules
“Share Purchase Agreement” / the share purchase agreement dated 26 July 2010 made between: (i) the Company; (ii) Dustin Dryden; and (iii) Rowan Irving, further
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