Company Registration No. 02672115 (England and Wales)
PATRIOT AVIATION LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
PATRIOT AVIATION LIMITED
COMPANY INFORMATION
Director
Mr P Southall
Company number
02672115
Registered office
XLR Business Aviation Centre
Terminal Road
Birmingham Airport
Birmingham
B26 3QN
Auditor
Ormerod Rutter Limited
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
PATRIOT AVIATION LIMITED
CONTENTS
Page
Director's report
1 - 3
Independent auditor's report
4 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 21
PATRIOT AVIATION LIMITED
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 MARCH 2020
- 1 -
The director presents his annual report and financial statements for the year ended 31 March 2020.
Principal activity
The principal activity of the company in the year under review was that of aviation service provider..
Review of business
The Aviation business delivered
collective revenues of
£23.6m, up £3.1m year-on-year, with
an EBITDAE loss of £1.1m due to a
number of factors.
BIH
BIH is a helicopter operations business,
flying a number of military contracts,
including the Flag Officers’ Sea Training
(FOST) contract, which provides
helicopter support to the UK and NATO
navies within the south coast of the UK
training areas. In addition, BIH operates
from Mount Pleasant to support military
operations in the Falkland Islands,
including the provision of search and
rescue (SAR) services.
BIH’s strategy is to grow its contract
base in the military sector, with the right
experience and scalability to deliver
specialist SAR and support operations.
In the financial year ended 31 March
2020, BIH achieved a key milestone with
the acquisition of the contract to provide
combined SAR and Support Helicopter
service to the British Forces South Atlantic
Islands (BFSAI) operations from AAR
in the final month of the year.
The service is provided by two
Agusta
Westland AW-189 SAR helicopters
and two Sikorsky S-61 support
helicopters and includes programme
management, flight operations,
maintenance, logistics, and facilities
support at the Mount Pleasant Complex
in the Falkland Islands and surrounding
maritime region. The 10-year contract,
valued at approximately £180 million,
has seven years left to run with two
additional option years and had been
a long-term target for BIH.
FY20 was an improved year for BIH, with
FY19 marred by aircraft performance
issues on its two key military contracts in
the UK and Falklands. Over the past 12
months, improved aircraft performance
helped BIH meet KPIs more frequently,
reducing negative impact on the
bottom line.
Significant achievements for BIH in
FY20 included two of its SAR missions
featuring in the RAF Chief of the Air
Staff’s annual report to Her Majesty
The Queen. When calls came from two
vessels with patients requiring urgent
medical assistance, a five-day operation
and two consecutive complex rescues
followed. The weather was severe, with
strong gale force winds and a high swell.
The crew had minimal time to conduct a
stretcher transfer to recover the casualty,
requiring exceptional skill from the whole
crew, particularly the pilot. The team was
awarded the Shipwrecked Fishermen and
Mariners’ Society’s prestigious Edward &
Maisie Lewis Award following the rescue.
Looking ahead to FY21, BIH will look to
strengthen customer relationships and
develop the business with additional
military and SAR opportunities. The
business is positioned well to achieve this
as one of the few global SAR providers
using the latest and best technology.
In terms of COVID-19, the pandemic
did not have a significant impact on
BIH in FY20, operating as normal until
mid-March when the AAR contract was
acquired immediately before lockdown
measures were implemented.
CAA
CAA is a medical repatriation business,
delivering the repatriation of injured or ill
people. It provides these services using its
own ground or air ambulances or on a
commercial flight, providing the ultimate
bed-to-bed service and guaranteed
peace of mind, using its critical care
equipped fleet and highly trained
medical teams.
In FY19, CAA acquired new Learjet
and King Air aircraft, relaunching its
proposition as solely a Lear 45 and
King Air operator. Throughout FY20,
Rigby Group continued to operate and
develop the business with an ultimate
view to transfer CAA’s contracts to a
new provider whose core activity is air
ambulance services and is therefore
better positioned to scale the business
going forward.
PAE
The Patriot Aviation Engineering business
was closed during FY20.
PATRIOT AVIATION LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 2 -
Director
The director who held office during the year and up to the date of signature of the financial statements was as follows:
Sir Peter Rigby
(Resigned 30 July 2020)
Mr P Southall
Results and dividends
The results for the year are set out on page 6.
No ordinary dividends were paid. The director does not recommend payment of a final dividend.
Qualifying third party indemnity provisions
The company has made qualifying third party indemnity provisions for the benefit of its director during the year. These provisions remain in force at the reporting date.
Auditor
The auditors, Ormerod Rutter Limited, shall be proposed for re-appointment in accordance with Section 487(2) of the Companies Act 2006.
Statement of director's responsibilities
The director is responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the director is required to:
-
select suitable accounting policies and then apply them consistently;
-
make judgements and accounting estimates that are reasonable and prudent;
-
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and 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 2006. He is 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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.
Going Concern
After making enquiries, the directors believe that the company will have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the financial statements. Further details regarding the adoption of the going concern basis can be found in note 1 to the financial statements.
PATRIOT AVIATION LIMITED
DIRECTOR'S REPORT (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 3 -
Strategic Report
The company has taken advantage of the small companies exemption not to prepare a strategic report in accordance with Part 15 of the Companies Act 2006.
On behalf of the board
Mr P Southall
Director
7 December 2020
PATRIOT AVIATION LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF PATRIOT AVIATION LIMITED
- 4 -
Opinion
We have audited the financial statements of Patriot Aviation Limited (the 'company') for the year ended 31 March 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 March 2020 and of its loss for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the financial statements
section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Conclusions relating to going concern
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
-
the director's use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
-
the director has not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the company’s ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue
.
The director is responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the
financial statements
does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit
:
-
the information given in the director's r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the director's report has been prepared in accordance with applicable legal requirements.
PATRIOT AVIATION LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF PATRIOT AVIATION LIMITED
- 5 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the director's
r
eport
.
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of director's remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit; or
-
the company is not entitled to claim exemption in preparing a strategic report due to it being a member of an ineligible group.
Responsibilities of director
As explained more fully in the director's
r
esponsibilities
s
tatement, the director is responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the director is responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or has no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the
Financial Reporting Council’s website at: http://www.frc.org.uk/auditorsresponsibilities
.
This description forms part of our auditor’s report.
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to him in an auditor's 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.
Colm McGrory FCA (Senior Statutory Auditor)
for and on behalf of Ormerod Rutter Limited
9 December 2020
Chartered Accountants
Statutory Auditor
The Oakley
Kidderminster Road
Droitwich
Worcestershire
WR9 9AY
PATRIOT AVIATION LIMITED
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 MARCH 2020
- 6 -
2020
2019
Notes
£
£
Turnover
3
536,092
733,684
Cost of sales
(351,757)
(600,203)
Gross profit
184,335
133,481
Administrative expenses
(2,653,034)
(477,500)
Operating loss
4
(2,468,699)
(344,019)
Interest receivable and similar income
7
-
984
Interest payable and similar expenses
8
(150,874)
(132,004)
Loss before taxation
(2,619,573)
(475,039)
Taxation
9
352,302
78,570
Loss for the financial year
(2,267,271)
(396,469)
The profit and loss account has been prepared on the basis that all operations are continuing operations.
PATRIOT AVIATION LIMITED
BALANCE SHEET
AS AT 31 MARCH 2020
31 March 2020
- 7 -
2020
2019
Notes
£
£
£
£
Fixed assets
Tangible assets
11
4,779,310
6,498,057
Current assets
Debtors
13
468,623
608,933
Cash at bank and in hand
-
56
468,623
608,989
Creditors: amounts falling due within one year
14
(8,012,247)
(7,290,043)
Net current liabilities
(7,543,624)
(6,681,054)
Total assets less current liabilities
(2,764,314)
(182,997)
Creditors: amounts falling due after more than one year
15
(2,626,150)
(2,682,160)
Provisions for liabilities
258,036
-
Net liabilities
(5,132,428)
(2,865,157)
Capital and reserves
Called up share capital
19
1,813,610
1,813,610
Share premium account
20
5,927,983
5,927,983
Capital redemption reserve
21
1,428,292
1,428,292
Profit and loss reserves
(14,302,313)
(12,035,042)
Total equity
(5,132,428)
(2,865,157)
The financial statements were approved by the board of directors and authorised for issue on 7 December 2020 and are signed on its behalf by:
Mr P Southall
Director
Company Registration No. 02672115
PATRIOT AVIATION LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 MARCH 2020
- 8 -
Share capital
Share premium account
Capital redemption reserve
Profit and loss reserves
Total
£
£
£
£
£
Balance at 1 April 2018
1,813,610
5,927,983
1,428,292
(11,638,573)
(2,468,688)
Year ended 31 March 2019:
Loss and total comprehensive income for the year
-
-
-
(396,469)
(396,469)
Balance at 31 March 2019
1,813,610
5,927,983
1,428,292
(12,035,042)
(2,865,157)
Year ended 31 March 2020:
Loss and total comprehensive income for the year
-
-
-
(2,267,271)
(2,267,271)
Balance at 31 March 2020
1,813,610
5,927,983
1,428,292
(14,302,313)
(5,132,428)
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2020
- 9 -
1
Accounting policies
Company information
Patriot Aviation Limited is a
private
company
limited by shares
incorporated in England and Wales.
The registered office is
XLR Business Aviation Centre, Terminal Road, Birmingham Airport, Birmingham, B26 3QN.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The functional currency of Patriot Aviation Limited is considered to be pounds sterling because that is the currency of the primary economic environment in which the company operates.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
Patriot Aviation Limited meets the definition of a qualifying entity under FRS 102 and has therefore taken advantage of the disclosures exemptions available to it in respect of its financial statements. Exemptions have been taken in relation to related party transactions with wholly owned group companies, share-based payments, financial instruments, presentation of a cash flow statement and remuneration of key management personnel.
The financial statements contain information about Patriot Aviation Limited as an individual company and do not contain consolidated financial information as the parent of a group. The company is exempt under Section 400 of the Companies Act 2006 from the requirements to prepare consolidated financial statements as it and its subsidiary undertaking are included by full consolidation in the consolidated financial statements of its ultimate parent company, Rigby Group (RG) plc, a company registered in England and Wales.
1.2
Going concern
The accounts have been prepared on a going concern basis which the directors consider appropriate. The company relies on support from
true
Patriot Aerospace Limited
, which is considered to be available for the foreseeable future and for at least the next twelve months from the date of approval of the accounts. Should the going concern basis not be applicable, adjustments would have to be made to reduce assets to their recoverable amounts and reclassify long term liabilities as short term liabilities.
1.3
Turnover
Turnover represents amounts receivable for goods and services provided in the normal course of business, net of trade discounts, VAT and other sales related taxes. Revenue is recognised when persuasive evidence of an arrangement with a customer exists, delivery has occurred or all significant performance obligations have been completed, the price is fixed or determinable and the collection of the amount due is reasonably assured. Income from service contracts is recognised when the work has been completed.
1.4
Tangible fixed assets
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Aircraft
up to 20 years straight line and on the basis of flying hours
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 10 -
Aircraft major components are depreciated on the basis of hours flown compared to component life, with the remaining value depreciated on a straight line basis over up to 20 years depending on size or type of aircraft.
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
1.5
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.6
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.7
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset
, with
the net amounts presented in the financial statements
,
when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 11 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest
method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest.
Financial assets classified as receivable within one year are not amortised.
Other financial assets
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Impairment of financial assets
Financial assets, other than those
held
at
fair value through profit and loss
, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected.
If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when
the company
transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 12 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from
fellow group companies and preference shares that are classified as debt, are
initially recognised at transaction price unless the arrangement constitutes a
financing transaction, where the debt instrument is measured at the present value of
the future
paymen
ts discounted at a market rate of interest.
Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective
interest rate method.
Trade creditors
are obligations to pay for goods or services that have been acquired
in the ordinary course of business from suppliers. A
m
ounts payable are classified as
current liabilities if payment is due within one year or less. If not, they are presented
as non-current liabilities. Trade creditors are recognised initially at transaction price
and subsequently measured at amortised cost using the effective interest method.
Other financial liabilities
Derivatives, including interest rate swaps and forward foreign exchange contracts,
are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
s
ubsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as
being measured at
fair value th
r
ough profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations
expire or are discharged or cancelled.
1.8
Equity instruments
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.9
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
Current 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 substantively enacted by the balance sheet date.
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 13 -
Deferred tax
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where transactions or events that result in an obligation to pay more tax in the future or a right to pay less tax in the future have occurred at the balance sheet date. Timing differences are differences between the company's taxable profits and its results as stated in the financial statements that arise from the inclusion of gains and losses in tax assessments in periods different from those in which they are recognised in the financial statements.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that, on the basis of all available evidence, it can be regarded as more likely than not that there will be suitable taxable profits from which the future reversal of the underlying timing differences can be deducted.
Deferred tax liabilities are recognised for timing differences arising from investments in subsidiaries and associates, except where the company is able to control the reversal of the timing difference and it is probable that it will not reverse in the foreseeable future.
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of the timing difference. Deferred tax relating to property, plant and equipment measured using the revaluation model and investment property is measured using the tax rates and allowances that apply to sale of the asset.
Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income.
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously.
Deferred tax assets and liabilities are offset only if: a) the company has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered.
1.10
Employee benefits
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
1.11
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
1
Accounting policies
(Continued)
- 14 -
1.12
Leases
Assets held under finance leases, hire purchase contracts and other similar arrangements, which confer rights and obligations similar to those attached to owned assets, are capitalised as tangible fixed assets at the fair value of the leased asset (or, if lower, the present value of the minimum lease payments as determined at the inception of the lease) and are depreciated over the shorter of the lease terms and their useful lives. Hire purchase transactions are dealt with similarly, except that assets are depreciated over their useful lives.
The capital elements of future lease obligations are recorded as liabilities, while the interest elements are charged to the profit and loss account over the period of the leases to produce a constant periodic rate of interest on the remaining balance of the liability.
Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such a basis. Benefits received and receivable as an incentive to sign an operating lease are similarly spread on a straight-line basis over the lease term.
1.13
Foreign exchange
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date.
Exchange differences are recognised in profit or loss in the period in which they arise.
1.14
Investments are shown at cost value less any provision for diminution in value.
2
Judgements and key sources of estimation uncertainty
In the application of the group's accounting policies, which are described above, the directors are required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates. Future results could differ due to changes in these estimates and the difference between the actual result and the estimates are recognised in the period in which the results are known / materialise.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2020
2019
£
£
Turnover analysed by class of business
Provision of services
536,092
733,684
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
3
Turnover and other revenue
(Continued)
- 15 -
2020
2019
£
£
Other significant revenue
Interest income
-
984
4
Operating loss
2020
2019
Operating loss for the year is stated after charging/(crediting):
£
£
Exchange differences apart from those arising on financial instruments measured at fair value through profit or loss
22,738
(25,292)
Depreciation of owned tangible fixed assets
337,910
379,951
Impairment of owned tangible fixed assets
2,135,582
-
(Profit)/loss on disposal of tangible fixed assets
-
17,626
5
Auditor's remuneration
2020
2019
Fees payable to the company's auditor and associates:
£
£
For audit services
Audit of the financial statements of the company
4,890
4,560
6
Employees
2020
2019
Number
Number
Administration
1
-
Their aggregate remuneration comprised:
2020
2019
£
£
Wages and salaries
21,285
-
Social security costs
2,229
-
Pension costs
753
-
24,267
-
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 16 -
7
Interest receivable and similar income
2020
2019
£
£
Interest income
Interest on bank deposits
-
984
8
Interest payable and similar expenses
2020
2019
£
£
Interest on bank overdrafts and loans
150,874
132,004
9
Taxation
2020
2019
£
£
Current tax
UK corporation tax on profits for the current period
(180,900)
(145,172)
Adjustments in respect of prior periods
554
13,401
Total current tax
(180,346)
(131,771)
Deferred tax
Origination and reversal of timing differences
(163,572)
55,278
Changes in tax status
(9,944)
(5,819)
Adjustment in respect of prior periods
1,560
3,742
Total deferred tax
(171,956)
53,201
Total tax credit
(352,302)
(78,570)
The actual credit for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
2020
2019
£
£
Loss before taxation
(2,619,573)
(475,039)
Expected tax credit based on the standard rate of corporation tax in the UK of 19.00% (2019: 19.00%)
(497,719)
(90,257)
Tax effect of expenses that are not deductible in determining taxable profit
153,247
364
Adjustments in respect of prior years
2,114
17,143
Effect of change in corporation tax rate
(9,944)
(5,819)
Other
-
(1)
Taxation credit for the year
(352,302)
(78,570)
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
9
Taxation
(Continued)
- 17 -
The standard rate of Corporation Tax in the UK is 19% with effect from 1 April 2017.The Finance Act 2016 includes a reduction in the standard rate of Corporation Tax from 19% to 17% from 1 April 2020. However, on 11 March 2020 in the UK Budget it was further announced that the cut in the tax rate to 17% will now not occur and the tax rate will instead remain at 19%. This rate change was substantively enacted on 17 March 2020 via the Provisional Collection of Taxes Act 1968. As this change had been substantively enacted at the Balance Sheet date it is reflected in these financial statements.
10
Impairments
Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss:
2020
2019
Notes
£
£
In respect of:
Property, plant and equipment
11
2,135,582
-
Recognised in:
Administrative expenses
2,135,582
-
The impairment amount of £2,135,582 (2019: £nil) recognised during the year relates to the impairment of an aircraft; reducing it's carrying value to that of its recoverable amount. The recoverable amount has been determined as the asset's fair value, on the basis that the fair value is greater than the value in use.
11
Tangible fixed assets
Aircraft
£
Cost
At 1 April 2019
7,296,527
Additions
846,718
Disposals
(91,973)
At 31 March 2020
8,051,272
Depreciation and impairment
At 1 April 2019
798,470
Depreciation charged in the year
337,910
Impairment losses
2,135,582
At 31 March 2020
3,271,962
Carrying amount
At 31 March 2020
4,779,310
At 31 March 2019
6,498,057
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
11
Tangible fixed assets
(Continued)
- 18 -
Aircraft
with a carrying amount of £4,244,079 (2019 - £3,255,717) have been pledged to secure borrowings of the company
.
12
Subsidiaries
Details of the company's subsidiaries at 31 March 2020 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
Patriot Aviation Engineering Limited (Formerly BIH (Onshore) Limited)
That of the parent
Ordinary shares
100.00
13
Debtors
2020
2019
Amounts falling due within one year:
£
£
Trade debtors
19,140
55,466
Group relief debtor
325,518
249,828
Amounts due from group undertakings
87,900
-
Other debtors
3,736
149,155
Prepayments and accrued income
32,329
68,404
468,623
522,853
2020
2019
Amounts falling due after more than one year:
£
£
Deferred tax asset (note 17)
-
86,080
Total debtors
468,623
608,933
14
Creditors: amounts falling due within one year
2020
2019
Notes
£
£
Bank loans and overdrafts
16
2,606,463
1,631,040
Trade creditors
50,733
96,285
Amounts owed to group undertakings
4,893,105
5,338,880
Taxation and social security
326,271
176,544
Other creditors
37,435
(48,790)
Accruals and deferred income
98,240
96,084
8,012,247
7,290,043
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
- 19 -
15
Creditors: amounts falling due after more than one year
2020
2019
Notes
£
£
Bank loans and overdrafts
16
2,626,150
2,682,160
16
Loans and overdrafts
2020
2019
£
£
Bank loans
3,527,796
3,413,620
Bank overdrafts
1,704,817
899,580
5,232,613
4,313,200
Payable within one year
2,606,463
1,631,040
Payable after one year
2,626,150
2,682,160
Lombard North Central plc holds an aircraft mortgage over the company, securing all monies due and secured by charges over 3 of the aircraft included in fixed assets.
Barclays Bank plc holds two aircraft mortgage over the company, securing all monies due and secured by charges over two of the aircraft included in fixed assets.
17
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:
Liabilities
Liabilities
Assets
Assets
2020
2019
2020
2019
Balances:
£
£
£
£
Accelerated capital allowances
(258,036)
-
-
84,015
Short term differences
-
-
-
2,065
(258,036)
-
-
86,080
2020
Movements in the year:
£
Liability/(Asset) at 1 April 2019
(86,080)
Credit to profit or loss
(173,516)
Effect of change in tax rate - profit or loss
1,560
Liability/(Asset) at 31 March 2020
(258,036)
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
17
Deferred taxation
(Continued)
- 20 -
A deferred tax asset of £692,944
(2019: £620,002)
has not been recognised on the basis that there is insufficient evidence that the asset will be recoverable.
The net reversal of deferred tax assets expected in the 12 months to 31 March 2020 is £38,963
.
This is expected to arise because depreciation is anticipated to be lower than the available capital allowances
18
Retirement benefit schemes
2020
2019
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
753
-
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
19
Share capital
2020
2019
£
£
Ordinary share capital
Issued and fully paid
1,813,610 Ordinary Shares of £1 each
1,813,610
1,813,610
All classes of shares hold equal voting rights with no right to fixed income.
20
Share premium account
This reserve records the amount above the nominal value received for shares sold, less transaction costs.
21
Capital redemption reserve
This reserve records the nominal value of shares repurchased by the company.
22
Financial commitments, guarantees and contingent liabilities
The company is party to an intercompany guarantee agreement with unlimited security in respect of amounts banked with NatWest. The group companies included within the arrangement are Patriot Aerospace Limited, British International Helicopter Services Limited, Patriot Aviation Limited, Patriot Aviation Engineering Limited and Capital Air Ambulance Limited. The amounts owing at the year end, after taking into account any set off arrangements is Nil.
23
Operating lease commitments
Lessor
The operating leases represent leases
aircraft
to
fellow group companies
. The leases are negotiated over terms of
5
years and rentals
contain a
fixed
element
for
the same period
. There are no options in place for either party to extend the lease terms.
PATRIOT AVIATION LIMITED
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 MARCH 2020
23
Operating lease commitments
(Continued)
- 21 -
At the reporting end date the company had contracted with tenants for the following minimum lease payments:
2020
2019
£
£
Within one year
439,909
235,424
Between two and five years
188,687
706,271
628,596
941,695
24
Related party transactions
Transactions with related parties
During the year the company entered into the following transactions with related parties:
Sales
2020
2019
£
£
Other related parties
413,644
497,500
There were no amounts outstanding at the reporting end date.
25
Ultimate parent company
Rigby Group (RG) plc is regarded by the directors as being the company's ultimate parent company.
The principal place of business of Rigby Group (RG) plc is at Bridgeway House, Stratford-upon-Avon, Warwickshire, CV37 6YX. Rigby Group (RG) plc is the largest group to consolidate these financial statements.
The consolidated statements for Rigby Group (RG) plc are available at the above address.
Ultimate controlling party
The immediate parent company is Patriot Aerospace Limited who owns all of the issued ordinary share capital.
Sir Peter Rigby, a director of Rigby Group (RG) plc, controlled the Company as a result of holding 68.28% of the issued ordinary share capital and 80% of the voting rights of Rigby Group (RG) plc, the ultimate parent undertaking.
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