Registration number:
Eastern Airways (UK) Limited
for the Year Ended 31 March 2023
Eastern Airways (UK) Limited
Contents
Company Information |
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Strategic Report |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Profit and Loss Account |
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Balance Sheet |
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Statement of Changes in Equity |
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Notes to the Financial Statements |
Eastern Airways (UK) Limited
Company Information
Chairman |
Mr R J Lake OBE |
Directors |
Air Marshal C R Spink Mr K Earnden Mr S Dicken Mr A Vickers |
Company secretary |
Mr M C Hutchinson |
Registered office |
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Auditors |
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Eastern Airways (UK) Limited
Strategic Report for the Year Ended 31 March 2023
The directors present their strategic report for the year ended 31 March 2023.
Principal activity
The principal activity of the company is that of the operation of airline services.
Fair review of the business
The results of the company for the year ended 31 March 2023 are as disclosed in the attached financial statements.
The company continues to provide scheduled airline services, charter and leasing of aircraft and crew, to domestic and European destinations for which it enjoys a good reputation for operational reliability. The company continues to be a major support and logistics provider to the oil industry, along with its charter and scheduled service operations.
The period has seen considerable investment on the technical services area of the business in order to regenerate aircraft that had been idle over the long periods of lockdown in recent years.
The company continues to think differently about the product offering and the type of company it would like to become. Consequently, 2022-23 has seen Eastern Airways (UK) maintain its push from previous years to focus on research and development activities, particularly in regards to the development of competencies in electric aircraft maintenance and certification – which will culminate in Eastern Airways becoming the first UK holder of Part-CAO approval and being the first UK maintainer and air worthiness provider of electric aircraft; These activities have been undertaken in concert with the CAA (Civil Aviation Authority).
Attaining net zero emissions stands as a crucial objective in combatting climate change and global warming. With this objective at heart, Eastern Airways is swiftly undertaking adjustments and revisions to its operations to align with these ambitions. The entirety of the business, with a strong focus on the Engineering department, has been actively exploring diverse strategies to meet governmental targets.
In addition to this emphasis on supporting more sustainable aviation, Eastern Airways has responded to the many challenges that the long period of COVID lockdown has ushered in by switching focus to charter activities. This has lead to successful partnerships with a number of national flag carriers such as Air France and TAP.
Whilst Eastern Airways has concentrated on becoming ‘first-in-class’ in electric aircraft maintenance and support, and as travel psychologies have altered as a direct effect of the unprecedented pandemic leading to a diminution in point-to-point business travel, Eastern Airways has continued to enjoy the strong support of its parent company as the company has used 2022-23 to reposition itself as a greener organisation with future-proof capabilities.
During the year the company engaged in a number of safety and operational audits for which the UK civil aviation authority recognised Eastern Airways continued commitment to safety.
In the prior period the company undertook an extensive audit to renew its IOSA accreditation for a further two years. The IOSA standard is an Internationally accepted (IATA) gold-standard, comparable on a world-wide basis with other major airlines. Eastern Airways is the only UK based regional airline that holds this certification. This gives Eastern Airways a competitive advantage over many other airlines and enables a wider range of work to be undertaken.
At the year end the company operated a mixed fleet of Jetstream 41, ERJ 135/145, ERJ190, and ATR-600 aircraft, which allows for considerable flexibility in matching demand to capacity in both the scheduled airline and charter markets.
The fleet strategy is continuously being assessed to increase our operational efficiencies.
The company’s directors monitor route revenue, direct operating costs and business profitability as the main key performance indicators, as the routes operated vary over time, as do the related direct operating costs. The performance of the business during the year can be seen in the profit and loss account.
The company’s directors monitor route revenue, direct operating costs and business profitability as the main key performance indicators, as the routes operated vary over time, as do the related direct operating costs. The performance of the business during the year can be seen in the profit and loss account.
Eastern Airways (UK) Limited
Strategic Report for the Year Ended 31 March 2023 (continued)
Principal risks and uncertainties
The key financial risks and uncertainties facing the company are set out below. The directors feel that the company has a good mix of business activities, and is well-balanced to handle the risks and uncertainties that it may face.
The directors believe the key areas of risk facing the company are:
Environmental and government legislation
There continues to be uncertainty in the airline industry regarding taxation levied on domestic travel, although the reduction of APD rate for domestic travel has been welcomed by the company. The directors believe that due to the use of fuel-efficient turbo-prop aircraft, Eastern Airways enjoys a competitive advantage over the rest of the industry in relation to environmental impact.
Fuel prices
During the year the fuel price increased substantially. As in previous years, the company continues to use fuel hedges to mitigate the risk where appropriate. At 31 March 2023, no fuel hedges were in place.
The price of oil continues to be a risk for the company. However, due to the fuel efficient nature of the turbo-prop aircraft used, the proportionate cost of fuel to other operating costs is lower than the industry average.
Currency movements
A large proportion of aircraft parts, leasing, fuel and other costs are priced in US dollars. The company matches some revenues and costs to reduce this risk. There is an exposure to US dollar movements above the natural hedge, and the company has in the past used forward contracts to manage this risk. At 31 March 2023, no currency hedges were in place.
Section 172(1) statement
The directors of the company have paid due regard to their responsibilities under Section 172(1) of the Companies Act 2006 in so much as producing budgets and forecasts which consider any long term consequences of any decision and the potential impact on the community and environment.
Employees are consulted regularly to ensure the impact of any decisions made are considered thus promoting fairness between the members of the company.
All business relationships are closely monitored by the directors and as such the company maintains a reputation for high standards of business conduct
Non-financial and sustainability information
Energy and carbon report
We have considered the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) when preparing this report. These recommendations encourage businesses to increase disclosure of climate-related information, with an emphasis on financial disclosure. Eastern Airways (UK) Limited supports these recommendations and are committed to disclosing the relevant information which can be found below.
Eastern Airways (UK) Limited
Strategic Report for the Year Ended 31 March 2023 (continued)
Governance
During the year CO2 emissions relating to the operation of flights totalled 9,614 tonnes (2022: 10.252 tonnes). Once aggregated over the total number of flights, this equates to 1.56 tonnes per flight operated, which the directors consider to be fuel efficient. These figures were obtained from the annual independently verified emissions report submitted for compliance with UK law.
Electricity and gas used at each of the company’s bases totalled 599,922kWh (144 tCO2) as obtained from the metered usage (2022: 644,320kWh, tCO2: 181).
For the purpose of transport, the company’s vehicle emissions for the year were 147.9 tonnes of CO2 (2022: 71.2 tCO2).
Approved by the
.........................................
Chairman
Eastern Airways (UK) Limited
Directors' Report for the Year Ended 31 March 2023
The directors present their report and the financial statements for the year ended 31 March 2023.
Directors of the company
The directors who held office during the year were as follows:
Employment of disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of a member of staff becoming disabled, every effort is made to ensure that their employment with the company continues and that appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee involvement
The company values the involvement of its employees and has continued its previous practice of keeping them informed on matters affecting them as employees, and of the various factors affecting the performance of the company. This is achieved through formal and informal meetings and through the posting of company notices. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
Eastern Airways (UK) Limited
Directors' Report for the Year Ended 31 March 2023 (continued)
Going concern
The financial statements have been prepared on the going concern basis. In adopting the going concern basis for preparing the financial statements, the Directors have prepared cash flow forecasts for a period of 14 months from the date of approval of these financial statements, which indicate, that taking account of reasonably possible downsides, the company will have sufficient funds to meet its liabilities as they fall due for that period.
Aviation will still face an uncertain future with risks of a slow recovery. The industry depends significantly on airlines maintaining access to liquidity, including that enabled by governments. Eastern Airways has undertaken significant measures internally to preserve cash and liquidity, as well as operational efficiency and cost savings.
The consolidated Orient Industrial Holdings Limited group maintains a strong statement of financial position including a substantial cash balance and unencumbered aircraft. Eastern Airways has no debt re-financings due, and is in ongoing discussions with liquidity providers who recognise the strength of our balance sheet and business model should those facilities be required.
As at the date of sign off, the ultimate parent company, Orient Industrial Holdings Limited, has issued a letter of support stating that the group will offer working capital support as needed.
The Directors have concluded that the combination of these circumstances does not represent a material uncertainty that casts doubt upon the Company’s ability to continue as a going concern. Nevertheless, after making enquiries and considering the uncertainties described above, in light of the funding outlined and opportunities provided by the unencumbered asset base for further funding, the directors have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Disclosure of information to the auditors
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Reappointment of auditors
The auditors Bissell & Brown Midlands Ltd are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Approved by the
.........................................
Chairman
Eastern Airways (UK) Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities 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). Under company law the directors must not approve the financial statements unless they are 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 directors are required to:
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select suitable accounting policies and apply them consistently; |
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make judgements and accounting estimates that are reasonable and prudent; |
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state whether applicable United Kingdom Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and |
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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 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. 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.
Eastern Airways (UK) Limited
Independent Auditor's Report to the Members of Eastern Airways (UK) Limited
Opinion
We have audited the financial statements of Eastern Airways (UK) Limited (the 'company') for the year ended 31 March 2023, which comprise the Profit and Loss Account, Balance Sheet, 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 Financial Reporting Standard 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 2023 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. |
Basis for opinion
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 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.
Emphasis of matter
We draw attention to the going concern accounting policy in note 2 of these financial statements, which refers to the funding situation of the company. Our opinion is not modified in respect of this matter.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Based on our understanding of the Company and its industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK and European regulatory principles, and we considered the extent to which non-compliance might have a material effect on the financial statements of the Company.
We considered the laws and regulations that have a direct impact on the financial statements of the Company, such as the Companies Act 2006 and UK tax legislation and equivalent local laws and regulations applicable to in-scope components.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are 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.
Eastern Airways (UK) Limited
Independent Auditor's Report to the Members of Eastern Airways (UK) Limited (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
• |
the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report and the Directors' Report.
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 directors' remuneration specified by law are not made; or |
• | we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities [set out on page 7], the directors are 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 directors determine 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 directors are 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 directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.
Auditor 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.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding of the Company and its industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK and European regulatory principles, and we considered the extent to which non-compliance might have a material effect on the financial statements of the Company. |
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We also considered those laws and regulations that have a direct impact on the financial statements of the Company, such as the Companies Act 2006 and UK tax legislation and equivalent local laws and regulations applicable to in-scope components. |
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We have also evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements including the risk of override of controls and determined that the principal risks are related to management bias in accounting estimates and judgemental areas of the financial statements. |
Eastern Airways (UK) Limited
Independent Auditor's Report to the Members of Eastern Airways (UK) Limited (continued)
Audit procedures performed by the engagement team included: |
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discussions with the Board of Directors and management, regarding consideration of known or suspected instances of non-compliance with laws and regulation and fraud |
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evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities; |
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reviewing relevant meeting minutes including those of the Board of Directors; |
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identifying and testing journal entries based on risk criteria; |
We designed our audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and testing transactions entered into outside of the normal course of the Company's business specifically in respect of acquisitions and disposals.
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Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control; |
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Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control; |
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Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. |
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Conclude on the appropriateness of the directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the company to cease to continue as a going concern. |
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Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation. |
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Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the company to express an opinion on the financial statements. We are responsible for the direction, supervision and performance of the company audit. We remain solely responsible for our audit opinion. |
There are inherent limitations in the audit procedures described above and, the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Eastern Airways (UK) Limited
Independent Auditor's Report to the Members of Eastern Airways (UK) Limited (continued)
Use of our 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 them 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.
......................................
For and on behalf of
Charter House
56 High Street
West Midlands
B72 1UJ
Eastern Airways (UK) Limited
Profit and Loss Account for the Year Ended 31 March 2023
Note |
2023 |
2022 |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Administrative expenses |
( |
( |
|
Other operating income |
- |
|
|
Operating loss |
(124,468) |
(1,287,261) |
|
Other interest receivable and similar income |
6,108 |
251 |
|
Interest payable and similar expenses |
( |
( |
|
(639,695) |
(125,299) |
||
Loss before tax |
( |
( |
|
Tax on loss |
|
|
|
Loss for the financial year |
( |
( |
The above results were derived from continuing operations.
The company has no recognised gains or losses for the year other than the results above.
Eastern Airways (UK) Limited
(Registration number: 03468489)
Balance Sheet as at 31 March 2023
Note |
2023 |
2022 |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Current assets |
|||
Debtors |
|
|
|
Cash at bank and in hand |
|
|
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current assets |
|
|
|
Total assets less current liabilities |
|
|
|
Creditors: Amounts falling due after more than one year |
( |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
|
|
|
Profit and loss account |
|
|
|
Total equity |
|
|
Approved and authorised by the
.........................................
Chairman
Eastern Airways (UK) Limited
Statement of Changes in Equity for the Year Ended 31 March 2023
Share capital |
Retained earnings |
Total |
|
At 1 April 2022 |
|
|
|
Loss for the year |
- |
( |
( |
At 31 March 2023 |
|
|
|
Share capital |
Retained earnings |
Total |
|
At 1 April 2021 |
|
|
|
Loss for the year |
- |
( |
( |
At 31 March 2022 |
|
|
|
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023
General information |
The company is a private company limited by share capital, incorporated in England & Wales. The company's registration number is 03468489.
The address of its registered office is:
United Kingdom
The principal place of business is:
Schiphol House
Schiphol Way
Humberside Airport
Kirmington
North East Lincs
DN39 6YH
These financial statements were authorised for issue by the
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements have been prepared in accordance with Financial Reporting Standard 102 - 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' and the Companies Act 2006.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
The financial statements are presented in sterling which is the functional currency of the company and rounded to the nearest £1.
Summary of disclosure exemptions
The Company’s parent undertaking, Orient Industrial Holdings Limited includes the Company in its consolidated financial statements. The consolidated financial statements of Orient Industrial Holdings Limited are prepared in accordance with FRS 102 and are available to the public and may be obtained from the address given in note 23. In these financial statements, the company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosures:
• Reconciliation of the number of shares outstanding from the beginning to end of the period;
• Cash Flow Statement and related notes; and
• Key Management Personnel compensation
• Related party transactions.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
2 |
Accounting policies (continued) |
As the consolidated financial statements of Orient Industrial Holdings Limited include the equivalent disclosures, the Company has also taken the exemptions under FRS 102 available in respect of the following disclosures:
• The disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.
Going concern
The financial statements have been prepared on the going concern basis. In adopting the going concern basis for preparing the financial statements, the Directors have prepared cash flow forecasts for a period of 14 months from the date of approval of these financial statements, which indicate, that taking account of reasonably possible downsides, the company will have sufficient funds to meet its liabilities as they fall due for that period.
Aviation will still face an uncertain future with risks of a slow recovery. The industry depends significantly on airlines maintaining access to liquidity, including that enabled by governments. Eastern Airways has undertaken significant measures internally to preserve cash and liquidity, as well as operational efficiency and cost savings.
The consolidated Orient Industrial Holdings Limited group maintains a strong statement of financial position including a substantial cash balance and unencumbered aircraft. Eastern Airways has no debt re-financings due, and is in ongoing discussions with liquidity providers who recognise the strength of our balance sheet and business model should those facilities be required.
As at the date of sign off, the ultimate parent company, Orient Industrial Holdings Limited, has issued a letter of support stating that the group will offer working capital support as needed.
The Directors have concluded that the combination of these circumstances does not represent a material uncertainty that casts doubt upon the Company’s ability to continue as a going concern. Nevertheless, after making enquiries and considering the uncertainties described above, in light of the funding outlined and opportunities provided by the unencumbered asset base for further funding, the directors have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Revenue recognition
Turnover represents flown revenue from scheduled services and other activities net of Value Added Tax and Air Passenger Duty.
Ticket sales are recorded as current liabilities in a ‘forward sales’ account and are included in creditors, within deferred income, until recognised as revenue when transportation occurs. Unused tickets are recognised as revenue when the right to travel expires which is determined by the terms and conditions of the ticket.
All other revenue streams are recognised at the point of fulfilling the service or the date at which the right to receive consideration occurs.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
2 |
Accounting policies (continued) |
Finance income and costs policy
Operating lease
Payments (excluding costs for services and insurance) made under operating leases are recognised in the profit and loss account on a straight-line basis over the term of the lease unless the payments to the lessor are structured to increase in line with expected general inflation; in which case the payments related to the structured increases are recognised as incurred. Lease incentives received are recognised in profit and loss over the term of the lease as an integral part of the total lease expense.
Interest payable
Interest payable is recognised in profit or loss as it accrues, using the effective interest method.
Foreign currency transactions and balances
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Tangible assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.
The company assesses at each reporting date whether tangible fixed assets are impaired.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
2 |
Accounting policies (continued) |
Depreciation
Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the company expects to consume an asset’s future economic benefits.
Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:
Asset class |
Depreciation method and rate |
Portable buildings |
7-10% per annum |
Fixtures, fittings and equipment |
15-33% per annum |
Motor vehicles |
8-33% per annum |
Intangible assets
Intangible fixed assets are stated in the balance sheet at cost.
The profit or loss on sale of intangible fixed assets is recognised through the profit and loss account on the transaction date.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Stocks
Stocks are valued at the lower of cost and net realisable value including provision for obsolescence.
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
2 |
Accounting policies (continued) |
Borrowings
Interest-bearing borrowings are initially recorded at fair value, net of transaction costs. Interest-bearing borrowings are subsequently carried at amortised cost, with the difference between the proceeds, net of transaction costs, and the amount due on redemption being recognised as a charge to the profit and loss account over the period of the relevant borrowing.
Interest expense is recognised on the basis of the effective interest method and is included in interest payable and similar charges.
Borrowings are classified as current liabilities unless the company has an unconditional right to defer settlement of the liability for at least twelve months after the reporting date.
Leases
Leases in which substantially all the risks and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases are charged to profit or loss on a straight-line basis over the period of the lease.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Defined contribution pension obligation
A defined contribution plan is a post-employment benefit plan under which the company pays fixed contributions into a separate entity and will have no legal or constructive obligation to pay further amounts. Obligations for contributions to defined contribution pension plans are recognised as an expense in the profit and loss account in the periods during which services are rendered by employees.
Financial instruments
Classification
(a) they include no contractual obligations upon the company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and
(b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
2 |
Accounting policies (continued) |
Financial instruments recognition and measurement
Trade and other debtors / creditors
Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Interest-bearing borrowings classified as basic financial instruments
Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Other financial instruments
Other financial instruments not meeting the definition of Basic Financial Instruments are recognised initially at fair value. Subsequent to initial recognition other financial instruments are measured at fair value with changes recognised in profit or loss.
Turnover |
The analysis of the company's Turnover for the year from continuing operations is as follows:
2023 |
2022 |
|
Sale of goods |
|
- |
Rendering of services |
|
|
|
|
The analysis of the company's Turnover for the year by market is as follows:
2023 |
2022 |
|
UK |
|
|
Europe |
|
|
Rest of world |
|
|
|
|
Turnover
Turnover within the British Isles comprises revenue from domestic flights. Turnover between the British Isles and Europe comprises revenue from inbound and outbound flights between the British Isles and Europe and Europe to Europe travel. Turnover relating to the rest of the world comprises revenue from flights outside of both the British Isles and Europe.
The activities of the company are managed and administered on a central basis within the British Isles. As a result it would not be possible to provide a meaningful analysis of the operating results and net assets of the company on a route by route basis. Consequently, the operating results and net assets of the company are not shown across the geographical areas defined.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2023 |
2022 |
|
JRS retention scheme grant income |
- |
|
Miscellaneous other operating income |
- |
|
- |
|
Other gains and losses |
The analysis of the company's other gains and losses for the year is as follows:
2023 |
2022 |
|
Loss on disposal of Tangible assets |
( |
( |
Gain on disposal of intangible assets |
|
|
432,152 |
1,638,732 |
Operating loss |
Arrived at after charging/(crediting)
2023 |
2022 |
|
Depreciation expense |
|
|
Research and development cost |
|
|
Operating lease expense |
|
|
Other interest receivable and similar income |
2023 |
2022 |
|
Interest income on bank deposits |
|
|
Interest payable and similar expenses |
2023 |
2022 |
|
Interest on bank overdrafts and borrowings |
|
|
Interest expense on other finance liabilities |
|
( |
Foreign exchange gains |
|
|
|
|
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2023 |
2022 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Private health insurance |
|
|
Pension costs, defined contribution scheme |
|
|
Redundancy costs |
|
- |
Staff training |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
2023 |
2022 |
|
Production |
|
|
Administration and support |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2023 |
2022 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
|
149,631 |
79,775 |
Auditors' remuneration |
2023 |
2022 |
|
Audit of the financial statements |
|
|
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Taxation |
Tax charged/(credited) in the profit and loss account
2023 |
2022 |
|
Current taxation |
||
UK corporation tax |
( |
( |
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2022 - the same as the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2023 |
2022 |
|
Loss before tax |
( |
( |
Corporation tax at standard rate |
( |
( |
Effect of expense not deductible in determining taxable profit (tax loss) |
- |
|
Decrease from effect of tax incentives |
( |
- |
Deferred tax expense from unrecognised tax loss or credit |
- |
|
Tax decrease from effect of capital allowances and depreciation |
( |
( |
Tax decrease from other short-term timing differences |
( |
- |
Tax increase/(decrease) from effect of adjustment in research and development tax credit |
|
( |
Other tax effects for reconciliation between accounting profit and tax expense (income) |
( |
- |
Total tax credit |
( |
( |
Intangible assets |
Individually material intangible assets
|
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Tangible assets |
Land and buildings |
Furniture, fittings and equipment |
Motor vehicles |
Total |
|
Cost or valuation |
||||
At 1 April 2022 |
|
|
|
|
Additions |
- |
|
- |
|
Disposals |
- |
( |
( |
( |
Transfers |
- |
( |
|
- |
At 31 March 2023 |
|
|
|
|
Depreciation |
||||
At 1 April 2022 |
|
|
|
|
Charge for the year |
|
|
|
|
Eliminated on disposal |
- |
( |
( |
( |
At 31 March 2023 |
|
|
|
|
Carrying amount |
||||
At 31 March 2023 |
|
|
|
|
At 31 March 2022 |
|
|
|
|
Included within the net book value of land and buildings above is £69,879 (2022 - £88,534) in respect of freehold land and buildings.
Debtors |
Current |
Note |
2023 |
2022 |
Trade debtors |
|
|
|
Amounts owed by related parties |
|
|
|
Other debtors |
|
|
|
Prepayments |
|
|
|
|
|
Details of non-current trade and other debtors
£469,351 (2022 -£541,419) of Deposits is classified as non current.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Cash and cash equivalents |
2023 |
2022 |
|
Cash on hand |
|
|
Cash at bank |
|
|
Short-term deposits |
|
|
|
|
Creditors |
Note |
2023 |
2022 |
|
Due within one year |
|||
Loans and borrowings |
|
|
|
Trade creditors |
|
|
|
Social security and other taxes |
|
|
|
Other payables |
|
|
|
Accrued expenses |
|
|
|
|
|
||
Due after one year |
|||
Loans and borrowings |
|
|
|
Other non-current financial liabilities |
- |
|
|
1,375,000 |
2,046,672 |
The interest rate charged on the bank loan is 4.1% above bank base rate. The loan is repaid on a capital basis and is due to be repaid in October 2026.
Santander UK plc has a debenture over all of its assets and undertakings.
Drake Jet Leasing 5 Designated Activity Company holds a fixed charge and a negative pledge dated 9th August 2023.
At the balance sheet date a letter of credit of £2,250,000 in favour of U.S. Bank National Association was in place until 10th October 2023
Loans and borrowings |
2023 |
2022 |
|
Non-current loans and borrowings |
||
Bank borrowings |
|
|
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
18 |
Loans and borrowings (continued) |
2023 |
2022 |
|
Current loans and borrowings |
||
Bank borrowings |
|
|
Provisions for liabilities |
|
The company has an unrecognised deferred tax asset of £664,422 (2022: £664,222) in the year which is made up of gross tax losses of £3,220,973 (2022: £3,220,973) and other balances amounting to £275,984 (2022: £275,984).
The company does not expect to recover the tax assets in the short term.
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
Share capital |
Allotted, called up and fully paid shares
2023 |
2022 |
|||
No. |
£ |
No. |
£ |
|
|
|
501,000 |
|
501,000 |
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences and restrictions: |
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
2023 |
2022 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
Later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Parent and ultimate parent undertaking |
The company's immediate parent is
The ultimate parent is
The most senior parent entity producing publicly available financial statements is
Accounting estimates and judgements |
Key sources of estimation uncertainty
There are no key sources of estimation uncertainty at the end of the reporting period that have any significant risk or would result in a material adjustment.
Critical accounting judgements in applying the Company's accounting policies
There are no critical accounting judgements in applying the Company's accounting policies during the year.
Contingent liabilities |
The company is part of a group VAT scheme and is jointly liable for any group VAT liability, at the balance sheet date the group/company had no liability.
Eastern Airways (UK) Limited
Notes to the Financial Statements for the Year Ended 31 March 2023 (continued)
Related party transactions |
Other transactions with directors |
R Lake provided a personal guarantee to Santander UK plc in respect of the C-Bils loan facility.
Summary of transactions with other related parties
Income and receivables from related parties
2023 |
Other related parties |
Receipt of services |
|
Amounts receivable from related party |
|
|
2022 |
Other related parties |
Receipt of services |
|
Amounts receivable from related party |
|
|
Expenditure with and payables to related parties
2023 |
Other related parties |
Rendering of services |
|
Amounts payable to related party |
|
|
2022 |
Other related parties |
Rendering of services |
|
Amounts payable to related party |
|
|
Limitation of auditors liability |
The company has approved the auditors' limitation of liability, which has been set at £2,000,000 within the letter of engagement dated 1st June 2023. This approval has been confirmed in the letter of representation.