Company registration number 03526156 (England and Wales)
EXECUTIVE AVIATION GROUP LIMITED
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
EXECUTIVE AVIATION GROUP LIMITED
COMPANY INFORMATION
Directors
David Van Den Langenbergh
George Galanopoulos
Patrick Hansen
Secretary
Anthony Medlock
Company number
03526156
Registered office
LEA Office Building
Stapleford Aerodrome
Stapleford Tawney
Romford
Essex
RM4 1SJ
Auditor
HW Fisher LLP
Acre House
11-15 William Road
London
NW1 3ER
United Kingdom
EXECUTIVE AVIATION GROUP LIMITED
CONTENTS
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Group income statement
8
Group statement of financial position
9
Parent company statement of financial position
10
Group statement of changes in equity
11
Parent company statement of changes in equity
12
Group statement of cash flows
13
Notes to the group financial statements
14 - 37
EXECUTIVE AVIATION GROUP LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 1 -
The directors present their strategic report for the year ended 31 December 2022.
Fair review of the business
The principal activities of the group are the provision of air charter services and the management and operation of aircraft on behalf of their owners.
The group has built a strong franchise in the large-cabin market over many years. More recently, since merging with 'The Luxaviation Group' in May 2014, the group has been able to experience savings in its cost bases (fuel, insurance, maintenance, etc.) through group synergies and bulk purchasing power.
The industry saw a significant increase in the demand for aircraft charter services in the wake of the Covid-19 pandemic and we had positioned ourselves to be able to benefit from those opportunities, with the summer months being exceptionally busy. The number of hours operated across the fleet in 2022 was 17% higher than in 2021.
During the year the group made an operating profit before tax of £1.9 million (2021 profit: £2.5 million) which after allowing for taxation produced a profit of £1.9 million (2021 profit: £2.3 million) on turnover of £34.9 million (2021: £25.7 million).
As of 31 December 2022, the group's total liabilities exceeded its total assets by £1.5 million (2021: £3.4 million). The group's liabilities included £3.9 million (2020: £4.9 million) owed to group undertakings.
Principal risks and uncertainties
The directors recognise that within the business there are a number of risks which may affect the performance of the group. These risks are subject to regular review and, where appropriate, processes are established to minimise the level of exposure.
Markets - margins can vary particularly through fuel costs rising; however, the group has reflected these additional costs through its product pricing.
Working capital - the group was able to fulfil all its obligations to its third-party business suppliers as they fall due.
Financial risk - the group is exposed to financial risk through its assets and liabilities. The key financial risk is that, in the current climate, the proceeds from financial assets may not be sufficient to fund the obligations from liabilities as they fall due. The most important components of financial risk are:
1) Credit risk - the group continues to minimise commercial credit risk and has not suffered unduly from bad debts during difficult trading times.
2) Price risk - the group is exposed to rising fuel prices, this is managed through bulk fuel purchasing within the Luxaviation group.
3) Foreign currency risk - the group has a natural hedge against currency exposure as a considerable proportion of both expenses and revenue are in US dollars and Euros, thus partially offsetting the impact of foreign exchange rate movements. The group also aims to settle expenses in the local currency wherever possible.
4) Interest rate risk - the group has very little exposure to interest rate changes.
5) Liquidity risk - during the year the group maintained sufficient cash liquidity in order to finance capital commitments, despite the pandemic.
Future developments
The group is confident of growing within an expanding private charter market. The group’s focus is to expand the number of aircraft under management within its fleet. The group has the infra-structure in place to handle an increased number of aircraft without increasing its overhead base. The addition of further aircraft to the fleet and increased charter activity will improve margins achieved and profitability in the years ahead.
EXECUTIVE AVIATION GROUP LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 2 -
Key performance indicators
The number of charter hours operated by the group during 2022 was 3% lower year on year, mainly due to 2 heavily chartered aircraft being sold in early 2022 (one owned and one managed). Owner hours operated were 42% higher than in 2021, which is largely a result of the restrictions on travel in the first 6 months of 2021 and the introduction of G-IFMI to the fleet in March 2022.
The headcount increased significantly during 2022. Whilst some crewing redundancies were unfortunately necessary in the early part of 2022, these were due to certain aircraft types leaving the fleet. In November 2022, a number of employees from a fellow group undertaking transferred across to the subsidiary company, London Executive Aviation Limited, to increase its management, operations and administration resources as the group looks to expand having weathered the impact of Covid-19.
At the end of the year the group had 15 (2021: 17) aircraft under either full or partial management as well as operating its own aircraft.
Events after the reporting date
There are no events after the reporting date concerning the group.
Anthony Medlock
Secretary
15 December 2023
EXECUTIVE AVIATION GROUP LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2022.
Principal activities
The principal activities of the group are the provision of air charter services and the management and operation of aircraft on behalf of their owners.
The principal activity of the company continued to be that of a holding company.
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
David Van Den Langenbergh
George Galanopoulos
Patrick Hansen
Strategic report
The group has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the group's strategic report information required by Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of information on and exposure to financial risk, likely future developments in the business and particulars of significant events which have occurred since the end of the financial year.
Auditor
The auditor, HW Fisher LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of disclosure to auditor
Each director in office at the date of approval of this annual report confirms that:
so far as the director is aware, there is no relevant audit information of which the 's auditor is unaware, and
the director has taken all the steps that he / she ought to have taken as a director in order to make himself / herself aware of any relevant audit information and to establish that the 's auditor is aware of that information.
This confirmation is given and should be interpreted in accordance with the provisions of section 418 of the Companies Act 2006.
By order of the board
Anthony Medlock
Secretary
15 December 2023
EXECUTIVE AVIATION GROUP LIMITED
DIRECTORS' RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 4 -
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the group and parent company financial statements in accordance with UK-adopted International Accounting Standards. 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 group and of the profit or loss of the group for that period.
In preparing these financial statements, International Accounting Standard 1 requires that directors:
properly select and apply accounting policies;
present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable information;
provide additional disclosures when compliance with the specific requirements in are insufficient to enable users to understand the impact of particular transactions, other events and conditions on the entity's financial position and financial performance; and
make an assessment of the company's ability to continue as a going concern.
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 group 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.
EXECUTIVE AVIATION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBERS OF EXECUTIVE AVIATION GROUP LIMITED
- 5 -
Opinion
We have audited the financial statements of Executive Aviation Group Limited (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 December 2022 which comprise the group income statement, the group and parent company statement of financial position, the group and parent company statement of changes in equity, the group statement of cash flows and the group and parent company notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and UK-adopted International Accounting Standards (IAS).
In our opinion:
the financial statements give a true and fair view of the state of the group's and of the parent company's affairs as at 31 December 2022 and of the group's profit for the year then ended;
the financial statements have been properly prepared in accordance with UK-adopted IAS; and
the financial statements 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 group and parent 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
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
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 group's and parent company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. 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. 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 course of 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 this gives rise to a material misstatement in the financial statements themselves. 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 strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
EXECUTIVE AVIATION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EXECUTIVE AVIATION GROUP LIMITED
- 6 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the group and parent company and their environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or
the parent company 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 directors' responsibilities statement, 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 parent 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 parent company or to cease operations, or have 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.
Detection of 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.
As part of our planning process:
We enquired of management the systems and controls the group has in place, the areas of the financial statements that are most susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. The group and parent company did not inform us of any known, suspected or alleged fraud.
We obtained an understanding of the legal and regulatory frameworks applicable to the group. We determined that the following were most relevant: UK-adopted IAS, Companies Act 2006, Civil Aviation Act 1982 (as amended) and Civil Aviation Authority Regulations 1991 - Statutory Instrument No 1672 1991.
We considered the incentives and opportunities that exist in the group, including the extent of management bias, which present a potential for irregularities and fraud to be perpetuated, and tailed our risk assessment accordingly.
Using our knowledge of the group, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
EXECUTIVE AVIATION GROUP LIMITED
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBERS OF EXECUTIVE AVIATION GROUP LIMITED
- 7 -
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Identifying and testing journal entries and the overall accounting records, in particular those that were significant and unusual.
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Assessing the extent of compliance, or lack of, with the relevant laws and regulations.
Testing key revenue lines, in particular cut-off, for evidence of management bias.
Performing a physical verification of key assets.
Obtaining third-party confirmation of material bank balances.
Documenting and verifying all significant related party and consolidated balances and transactions.
Testing all material consolidation adjustments.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements even though we have properly planned and performed our audit in accordance with auditing standards. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
A further description of our responsibilities is available on the Financial Reporting Council's website at: https://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 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.
Gilles Siow (Senior Statutory Auditor)
For and on behalf of HW Fisher LLP
Statutory Auditor
Acre House
11-15 William Road
London
United Kingdom
NW1 3ER
15 December 2023
EXECUTIVE AVIATION GROUP LIMITED
GROUP INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2022
- 8 -
2022
2021
Notes
£'000
£'000
Revenue
4
34,924
25,743
Cost of sales
(29,377)
(21,157)
Gross profit
5,547
4,586
Other operating income
4
232
645
Administrative expenses
(3,843)
(2,719)
Operating profit
6
1,936
2,512
Investment revenues
10
7
Finance costs
11
(10)
Profit before taxation
1,943
2,502
Income tax expense
12
(2)
(220)
Profit and total comprehensive income for the year
1,941
2,282
The income statement has been prepared on the basis that all operations are continuing operations.
Profit for the financial year is all attributable to the owners of the parent company.
EXECUTIVE AVIATION GROUP LIMITED
GROUP STATEMENT OF FINANCIAL POSITION
AS AT
31 DECEMBER 2022
31 December 2022
- 9 -
2022
2021
Notes
£'000
£'000
Non-current assets
Property, plant and equipment
13
1,190
1,665
Current assets
Trade and other receivables
16
14,267
13,866
Cash and cash equivalents
18
3,382
1,450
17,649
15,316
Current liabilities
Trade and other payables
19
19,749
20,136
Current tax liabilities
168
Borrowings
20
37
Lease liabilities
25
37
-
Provisions
21
426
20,212
20,341
Net current liabilities
(2,563)
(5,025)
Non-current liabilities
Lease liabilities
25
48
2
Deferred tax liabilities
27
52
52
100
54
Net liabilities
(1,473)
(3,414)
Equity
Called up share capital
29
1
1
Share premium account
7
7
Capital redemption reserve
140
140
Retained earnings
(1,621)
(3,562)
Total equity
(1,473)
(3,414)
The financial statements were approved by the board of directors and authorised for issue on 15 December 2023 and are signed on its behalf by:
George Galanopoulos
Director
EXECUTIVE AVIATION GROUP LIMITED
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2022
31 December 2022
- 10 -
2022
2021
Notes
£'000
£'000
Non-current assets
Investments
14
1
1
Current assets
Trade and other receivables
16
147
147
Net current assets
147
147
Net assets
148
148
Equity
Called up share capital
28
1
1
Share premium account
7
7
Capital redemption reserve
140
140
Total equity
148
148
As permitted by s408 Companies Act 2006, the company has not presented its own income statement and related notes. The company's profit for the year was £nil (2021 - £nil).
The financial statements were approved by the board of directors and authorised for issue on 15 December 2023 and are signed on its behalf by:
15 December 2023
George Galanopoulos
Director
Company Registration No. 03526156
EXECUTIVE AVIATION GROUP LIMITED
GROUP STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 11 -
Share
capital
Share
premium account
Capital redemption reserve
Retained earnings
Total
£'000
£'000
£'000
£'000
£'000
Balance at 1 January 2021
1
7
140
(5,844)
(5,696)
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
-
-
2,282
2,282
Balance at 31 December 2021
1
7
140
(3,562)
(3,414)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
-
-
1,941
1,941
Balance at 31 December 2022
1
7
140
(1,621)
(1,473)
EXECUTIVE AVIATION GROUP LIMITED
COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2022
- 12 -
Share capital
Share premium account
Capital redemption reserve
Total
£'000
£'000
£'000
£'000
Balance at 1 January 2021
1
7
140
148
Balance at 31 December 2021
1
7
140
148
Balance at 31 December 2022
1
7
140
148
EXECUTIVE AVIATION GROUP LIMITED
GROUP STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 13 -
2022
2021
Notes
£'000
£'000
£'000
£'000
Cash flows from operating activities
Cash generated from operations
32
1,842
1,410
Interest paid
(10)
Income taxes paid
(170)
Net cash inflow from operating activities
1,672
1,400
Investing activities
Purchase of property, plant and equipment
(1)
(557)
Proceeds from disposal of property, plant and equipment
314
Interest received
7
Net cash generated from/(used in) investing activities
320
(557)
Financing activities
Repayment of bank loans
(37)
(444)
Payment of lease liabilities
(23)
(18)
Net cash used in financing activities
(60)
(462)
Net increase in cash and cash equivalents
1,932
381
Cash and cash equivalents at beginning of year
1,450
1,069
Cash and cash equivalents at end of year
3,382
1,450
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2022
- 14 -
1
Accounting policies
Company information
Executive Aviation Group Limited is a private company limited by shares incorporated in England and Wales. The registered office is LEA Office Building, Stapleford Aerodrome, Stapleford Tawney, Romford, Essex, RM4 1SJ. The company and group's principal activities and nature of its operations are disclosed in the strategic report and directors' report.
The group consists of Executive Aviation Group Limited and its subsidiary, London Executive Aviation Limited.
1.1
Accounting convention
The financial statements have been prepared in accordance with UK-adopted International Accounting Standards (IAS), and with those parts of the Companies Act 2006 applicable to companies reporting under UK-adopted IAS.
The financial statements are prepared in sterling, which is the functional currency of the group. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Basis of consolidation
The consolidated group financial statements consist of the financial statements of the parent company Executive Aviation Group Limited together with all entities controlled by the parent company (its subsidiaries).
Regarding the acquisition of the company's subsidiary which occurred through a share for share exchange, the group financial statements have been prepared in accordance with the merger accounting principles as permitted by Sections 612 and 615 of the Companies Act 2006.
All financial statements are made up to 31 December 2022. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.
Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 15 -
1.3
Going concern
During the year the group made a profit of £true1,941k, but had net liabilities of £1,473k and net current liabilities of £2,563k as at 31 December 2022. The financial statements have been prepared on a going concern basis which the directors consider to be appropriate for the following reasons.
The directors have prepared forecasts for a period of 12 months from the date of approval of these financial statements which indicate that the group will have sufficient cash operating funds to meet its liabilities as they fall due for that period. Those forecasts are dependent on its ultimate parent company, Luxaviation Holding Company SA, and other group subsidiaries not seeking repayment of amounts payable or arising within 12 months of the date of approval of these financial statements.
The directors have also considered the ongoing war on Ukraine, which has had a huge impact on global markets, due to the inability of Ukraine to trade and unprecedented international sanctions imposed on Russia. This has put inflationary pressures on prices and resulted in significant volatility. The main impact on the group is that of rising fuel prices. Fuel prices increasing can impact margins; however, the group has reflected these additional costs through its product pricing. The group's jet fuel price exposure is also limited to owned aircraft, as well as for charter flights on managed aircraft, other than those concluded on a commission basis.
The group is therefore reliant on the financial support of its ultimate parent company, Luxaviation Holding Company SA, which has confirmed that it will not seek or demand repayment of any funds which it has made or will make available to the group for a period of at least 12 months from the date of approval of these financial statements. Luxaviation Holding Company SA has also confirmed its intention, if required, to provide financial support to enable the group to settle its liabilities as they fall due for a period of at least 12 months from the date of approval of these financial statements. The directors acknowledge that there can be no certainty that this support will continue, although at the date of approval of these financial statements, they have no reason to believe that it will not do so.
Therefore, the directors have a reasonable expectation that the group has adequate resources to continue in operation for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.4
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items of property, plant and equipment.
Depreciation is charged to the income statement on a straight-line basis over the estimated useful lives of each part of an item of property, plant and equipment. The estimated useful lives are as follows:
Building improvements
20 years
Fixtures and fittings
4 years
Aircraft
Airframes - over 17 years; Engine - Number of hours remaining on each engine
Office equipment
4 years
Motor vehicles
4 years
Right of use asset
Remainder of lease
Depreciation methods, useful lives and residual values are reviewed at each balance sheet date.
1.5
Non-current investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 16 -
A subsidiary is an entity controlled by the parent company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
1.6
Retained profits
The retained earnings is the accumulated net income of the group that is retained at the end of the reporting period. At the end of the period, the net income (or loss) is transferred from the Profit and Loss account to the retained earnings account.
1.7
Impairment of property, plant and equipment
At each reporting end date, the group 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).
1.8
Operating profit
Operating profit is the result generated from the continuing principal revenue-producing activities of the group as well as other income and expenses related to operating activities. Operating profit excludes net finance costs and income taxes.
1.9
Non-derivative financial instruments
Non-derivative financial instruments comprise trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other payables.
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 liability simultaneously.
Trade and other receivables
Trade and other receivables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses.
Trade and other payables
Trade and other payables are recognised initially at fair value. Subsequent to initial recognition they are measured at amortised cost using the effective interest method.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits.
Interest-bearing borrowings
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Other financial liabilities, including borrowings , trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method . For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.
1.10
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the income statement except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 17 -
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the income statement because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
Deferred tax
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date. A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the temporary difference can be utilised . Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
Retirement benefits
The group operates a defined contribution scheme for the benefit of its employees. Contributions payable are charged to the profit and loss account in the period they are payable.
Holiday pay
The cost of any unused holiday entitlement is recognised in the period in which the employee's services are received.
1.12
Leases
At inception, the group assesses whether a contract is, or contains, a lease within the scope of IFRS 16. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Where a tangible asset is acquired through a lease, the group recognises a right-of-use asset and a lease liability at the lease commencement date. Right-of-use assets are included within property, plant and equipment, apart from those that meet the definition of investment property.
The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date plus any initial direct costs and an estimate of the cost of obligations to dismantle, remove, refurbish or restore the underlying asset and the site on which it is located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using the straight-line method from the commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the lease term. The estimated useful lives of right-of-use assets are determined on the same basis as those of other property, plant and equipment. The right-of-use asset is periodically reduced by impairment losses, if any, and adjusted for certain remeasurements of the lease liability.
The lease liability is initially measured at the present value of the lease payments that are unpaid at the commencement date, discounted using the interest rate implicit in the lease or, if that rate cannot be readily determined, the group's incremental borrowing rate. Lease payments included in the measurement of the lease liability comprise fixed payments, variable lease payments that depend on an index or a rate, amounts expected to be payable under a residual value guarantee, and the cost of any options that the group is reasonably certain to exercise, such as the exercise price under a purchase option, lease payments in an optional renewal period, or penalties for early termination of a lease.
The group has elected not to recognise right-of-use assets and lease liabilities for short-term leases of machinery that have a lease term of 12 months or less, or for leases of low-value assets including IT equipment. The payments associated with these leases are recognised in profit or loss on a straight-line basis over the lease term.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
1
Accounting policies
(Continued)
- 18 -
1.13
Foreign exchange
Transactions in foreign currencies are translated to the group's functional currency at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are retranslated to the functional currency at the foreign exchange rate ruling at that date. Foreign exchange differences arising on translation are recognised in the income statement. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are retranslated to the functional currency at foreign exchange rates ruling at the dates the fair value was determined.
1.14
Financing income and expenses
Financing expenses comprise interest payable, and net foreign exchange losses that are recognised in the income statement (see foreign currency accounting policy).
Interest income and interest payable is recognised in profit or loss as it accrues, using the effective interest method. Foreign currency gains and losses are reported on a net basis.
2
Critical accounting estimates and judgements
In the application of the group’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount 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.
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.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.
Critical judgements
Recoverability of Receivables
At the year-end, trade receivables net of provisions for doubtful debts total £7,123,000 (2021: £7,310,000). Judgement has been taken as to whether these balances will be recovered in full. Where practicable the group offsets its receivable balances with outstanding payable balances where the balances share the same counter-party and when this treatment is agreed between both parties.
Agent or Principal
Under IFRS 15 'Revenue from Contracts with Customers', contracts with customers are reviewed to ensure the revenue associated with these has been correctly treated. The group is regarded as Agent under commission based contracts and these are recognised on a net basis. However it should be noted that the majority of revenue generated under commission based contracts relates to the re-invoicing of direct costs incurred and crew services provided as opposed to commissions from chartering services. The group is recognised as Principal under traditional based contracts and these are recognised on a gross basis. An element of judgement exists as part of the conclusions as to the treatment of these types of contract and to account for these differently would mean revenue would differ materially.
Key sources of estimation uncertainty
Italian Passenger Tax
Other payables include an estimate for Italian Aero Taxi Tax due to the Italian authorities following a change in Italian Tax laws in 2014. Italian Aero Taxi Tax is levied on passengers arriving at and departing from an Italian airport on board executive air charter flights. The tax rate depends on the distance between the airport of departure and the final destination. Only commercially operated flights on board fixed-wing or rotary-wing aircraft are subject to Aero Taxi Tax. It is uncertain to what extent the group will be liable to pay this tax. The group has calculated the estimated tax provision of £1,072,000 (2021: £1,053,000) based on the FCC Aviation guidelines.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 19 -
3
Adoption of new and revised standards and changes in accounting policies
In the current year a number of amendments to IFRSs issued by the International Accounting Standards Board (IASB)
and endorsed by the UK Endorsement Board became mandatorily effective for an accounting period that beings on or after 1 January 2022. The relevant amendments for the company are:
Standard, amendment or interpretation and effective date for accounting period beginning on or after
Description
Amendments to IAS 16, Property Plant and Equipment - Proceeds before Intended Use
1 January 2022
The amendments prohibit deducting from the cost of an item of property, plant and equipment any proceeds from selling items produced while bringing that asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Instead, an entity recognises the proceeds from selling such items, and the cost of producing those items, in profit or loss.
Amendments to IAS 37 - Onerous Contracts - Cost of Fulfilling a Contract
1 January 2022
The amendments specify that the 'cost of fulfilling' a contract comprises the 'costs that relate directly to the contract'. Costs that relate directly to a contract can either be incremental costs of fulfilling that contract or an allocation of other costs that relate directly to fulfilling contracts.
Annual Improvements to IFRS Standards 2018-2020 - IFRS 9
1 January 2022
The amendment clarifies which fees an entity includes when it applies the ‘10 per cent' test in paragraph B3.3.6 of IFRS 9 in assessing whether to derecognise a financial liability. An entity includes only fees paid or received between the entity (the borrower) and the lender, including fees paid or received by either the entity or the lender on the other's behalf.
Standards which are in issue but not yet effective
Description
At the date of authorisation of these financial statements, the following standards and interpretations, which have not yet been applied in these financial statements, were in issue but not yet effective:
Disclosure of Accounting Policies (Amendments to IAS 1)
1 January 2023
Changes requirements from disclosing ‘significant' to ‘material' accounting policies and provides explanations and guidance on how to identify material accounting policies.
Definition of Accounting Estimates (Amendments to IAS 8)
1 January 2023
Clarifies how to distinguish changes in accounting policies from changes in accounting estimates.
Classification of Liabilities as Current or Non-Current (Amendments to IAS 1)
1 January 2024
The amendments aim to promote consistency in applying the requirements by helping companies determine whether, in the statement of financial position, debt and other liabilities with an uncertain settlement date should be classified as current (due or potentially due to be settled within one year) or non-current.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
3
Adoption of new and revised standards and changes in accounting policies
(Continued)
- 20 -
Management anticipates that these new standards, interpretations and amendments will be adopted in the financial
statements as and when they are applicable and adoption of these new standards, interpretations and amendments will be reviewed for their impact on the financial statements prior to their initial application.
4
Revenue
Disaggregation of revenue from contracts with customers
There are four types of revenue streams:
1) Management fees are recognised as invoiced on a monthly basis.
2) Revenues from chartering services for commission deal contracts - the majority of this revenue relates to the re-invoicing of direct costs incurred and crew services provided as opposed to commissions from chartering services.
3) Revenues from chartering services for traditional deal contracts - the full invoice value is recognised in the revenue figures as the group controls the service and bears any costs incurred in providing those services.
4) Revenues from chartering services on an aircraft sub-let from a third-party operator.
2022
2021
£'000
£'000
Revenue analysed by class of business
Revenues from commisson deals
24,278
14,274
Revenues from traditional deals
4,609
6,432
Revenues from sub-charter activities
4,795
3,976
Management fees
1,242
1,061
34,924
25,743
2022
2021
£'000
£'000
Revenue analysed by geographical market
United Kingdom
19,419
14,749
Europe
9,716
6,216
Rest of the World
5,789
4,778
34,924
25,743
2022
2021
£'000
£'000
Other income
Other Income
232
127
Coronavirus Job Retention Scheme
518
232
645
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
4
Revenue
(Continued)
- 21 -
Revenue recognition policy
Revenue is recognised only when there is evidence of an arrangement and the group determines that the collection is considered probable. In determining whether the collection is probable the group considers a number of factors including the creditworthiness of the client and the contractual payment terms.
The group's principal activity is the management and chartering of aircraft in the business aviation sector. The types of revenues recognised are aircraft management fees, third party charter services and sub-charter activities. The group enters into different types of contracts for each of the revenue streams. All contracts are current and there is no need to capitalise them.
Management of aircraft - the service is full aircraft management, this includes but is not limited to, continued airworthiness and maintenance operations, dispatch, safety and compliance support. All services are charged on the same pattern and therefore are treated as a fixed management fee. The group recognises the revenue on a monthly basis at which time the performance obligation is considered to have been discharged. Any costs incurred on behalf of the customer are recharged. The group acts as a principal.
Charter activities - the service provided is a charter flight on either a managed or self-owned aircraft. It includes aircraft operating costs including crew, fuel and maintenance, air navigation, en route and approach charges, airport and handling fees, crew allowances, standard inflight catering and refreshments, newspapers and magazines, passenger and cargo insurances and passenger taxes, crew accommodation and transport. The charter price is either a fixed fee payable in advance from a third party charterer or, in the case of owner flights, a costing is prepared retrospectively for the costs incurred in providing the flight. The group recognises the revenue when the flight is operated and is apportioned to any relevant period over which the flight operated at which time the performance obligation is considered to have been discharged. The group acts as either an agent or principal depending on the type of contract.
These charter activities are split between traditional based contracts and commission based contracts. For traditional based contracts, the group pays costs relating the charter and the group keeps 100% of the revenue but has to pay the owner a block charter fee per hour of flight. The group acts as Principal for traditional contracts. For commission based contracts, the owner pays all costs and the group will keep 10-12% of the revenue. The group acts as Agent for commission contracts.
5
Contracts with customers
Year end
Year end
Analysis of contract assets
2022
2021
£'000
£'000
As at 1 January 2022
4,739
1,661
Transfers in the period from contract assets to trade receivables
(4,739)
(1,661)
Excess of revenue recognised over cash (or rights to cash)
4,998
4,739
As at 31 December 2022
4,998
4,739
Analysis of contract liabilities
2022
2021
£'000
£'000
As at 1 January 2022
870
517
Amounts included in contract liabilities that was recognised as revenue during the period
(870)
(517)
Cash received in advance of performance and not recognised as revenue during the period
504
870
As at 31 December 2022
504
870
There are no performance obligations that are expected to be satisfied after more than one year.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 22 -
6
Operating profit
2022
2021
Operating profit for the year is stated after charging/(crediting):
£'000
£'000
Exchange gains
(78)
(260)
Government grants
(518)
Depreciation of property, plant and equipment
302
151
Profit on disposal of property, plant and equipment
(34)
-
7
Auditor's remuneration
2022
2021
Fees payable to the group's auditor and associates:
£'000
£'000
For audit services
Audit of the financial statements of the group and company
37
27
For other services
Tax services
12
Other services
10
3
Total non-audit fees
22
3
8
Employees
The average monthly number of persons (including directors) employed by the group during the year was:
2022
2021
Number
Number
Sales
24
30
Operations and administration
27
24
Total
51
54
Their aggregate remuneration comprised:
2022
2021
£'000
£'000
Wages and salaries
2,872
2,470
Social security costs
409
354
Pension costs
113
102
3,394
2,926
The Company had no employees (2021: nil) during the year ended 31 December 2022.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 23 -
9
Directors' remuneration
2022
2021
£'000
£'000
Remuneration for qualifying services
135
120
Pension contributions to defined contribution schemes
7
6
142
126
The number of directors for whom retirement benefits are accruing under money purchase scheme amounted to 1 (2021: 1).
10
Investment income
2022
2021
£'000
£'000
Interest income
Bank interest received
7
11
Finance costs
2022
2021
£'000
£'000
Interest on bank overdrafts and loans
10
12
Income tax expense
2022
2021
£'000
£'000
Current tax
UK corporation tax on profits for the current period
2
168
Deferred tax
Origination and reversal of temporary differences
52
Total tax charge
2
220
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
12
Income tax expense
(Continued)
- 24 -
The charge for the year can be reconciled to the loss per the income statement as follows:
2022
2021
£'000
£'000
Profit/(loss) before taxation
1,943
2,502
Expected tax charge based on a corporation tax rate of 19.00% (2021: 19.00%)
369
475
Effect of expenses not deductible in determining taxable profit
120
155
Income not taxable
(22)
-
Adjustment in respect of prior years
(2)
-
Group relief
(533)
-
Permanent capital allowances in excess of depreciation
3
(143)
Depreciation on assets not qualifying for tax allowances
-
(9)
Other non-reversing timing differences
66
-
Change in deferred tax rate
(1)
-
Trading losses brought forward
-
(236)
Deferred tax not recognised
2
-
IFRS transitional adjustment
-
(22)
Taxation charge for the year
2
220
Factors that may affect future tax charges
Changes to the UK corporation tax rates were substantially enacted as part of the 2021 Budget on 3 March 2021. This included an increase to the main rate from 19% to 25% from April 2023. The group will be taxed at a rate of 25% unless its profits are sufficiently low enough to qualify for a lower rate of tax, the lowest being 19%.
Where applicable, deferred taxes at the balance sheet date have been measured using tax rates between 19% and 25% to reflect the rate of the timing differences are likely to unwind and are reflected in the financial statements.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 25 -
13
Property, plant and equipment
Building improvements
Aircraft
Fixtures and fittings
Office equipment
Motor vehicles
Right of use asset
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
Cost
At 1 January 2021
344
3,355
61
248
36
147
4,191
Additions
556
1
557
At 31 December 2021
344
3,911
62
248
36
147
4,748
Additions
1
106
107
Disposals
(1,174)
(1)
(119)
(1,294)
At 31 December 2022
344
2,737
61
249
36
134
3,561
Accumulated depreciation and impairment
At 1 January 2021
237
2,288
60
226
36
85
2,932
Charge for the year
9
88
9
45
151
At 31 December 2021
246
2,376
60
235
36
130
3,083
Charge for the year
8
247
1
7
39
302
Eliminated on disposal
(894)
(1)
(119)
(1,014)
At 31 December 2022
254
1,729
60
242
36
50
2,371
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
13
Property, plant and equipment
Building improvements
Aircraft
Fixtures and fittings
Office equipment
Motor vehicles
Right of use asset
Total
£'000
£'000
£'000
£'000
£'000
£'000
£'000
(Continued)
- 26 -
Carrying amount
At 31 December 2022
90
1,008
1
7
-
84
1,190
At 31 December 2021
98
1,535
2
13
-
17
1,665
At 31 December 2020
107
1,067
1
22
-
62
1,259
The Company did not have any property, plant and equipment as at 31 December 2022 or 31 December 2021.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 27 -
14
Investments
Group
Company
2022
2021
2022
2021
£'000
£'000
£'000
£'000
Investments in subsidiaries
1
1
Movements in non-current investments
Company
Shares in subsidiaries
£'000
Cost or valuation
As at 1 January 2022 and 31 December 2022
1
Carrying amount
As at 31 December 2022
1
As at 31 December 2021
1
15
Subsidiaries
Details of the company's subsidiaries at 31 December 2022 are as follows:
Name of undertaking
Registered office
Class of
% Held
shares held
Direct
London Executive Avitation Limited
LEA Office Building, Stapleford Aerodrome, Stapleford Tawney, Romford, Essex, RM4 1SJ
Ordinary
100.00
16
Trade and other receivables
2022
2021
£'000
£'000
Trade receivables
7,139
7,326
Provision for bad and doubtful debts
(16)
(16)
7,123
7,310
VAT recoverable
69
29
Amounts owed by fellow group undertakings
1,602
1,481
Other receivables
7
45
Prepayments
5,466
5,001
14,267
13,866
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
16
Trade and other receivables
(Continued)
- 28 -
As at 31 December 2022 and 31 December 2021 the Company had amounts owed by fellow group undertakings of £140,000 and other receivables of £7,000.
Trade receivables disclosed above are classified as loans and receivables and are therefore measured at amortised cost.
No significant receivable balances are impaired at the reporting end date.
17
Trade receivables - credit risk
Fair value of trade receivables
The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.
Ageing of past due but not impaired receivables
2022
2021
£'000
£'000
Past due up to 30 days
2,134
2,141
Past due 31 - 92 days
1,827
1,881
Past due over 92 days
3,178
3,304
7,139
7,326
Movement in the allowances for doubtful debts
2022
2021
£'000
£'000
Balance at 1 January 2022 and at 31 December 2022
16
16
Balance at 31 December 2022
16
16
The Company did not have any trade receivables as at 31 December 2022 or 31 December 2021.
18
Cash and cash equivalents
2022
2021
£'000
£'000
Cash and cash equivalents per balance sheet
3,382
1,450
Cash and cash equivalents per cash flow statement
3,382
1,450
The above cash is held with a reputable UK bank.
The Company did not have any cash and cash equivalents as at 31 December 2022 or 31 December 2021.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 29 -
19
Trade and other payables
2022
2021
£'000
£'000
Trade payables
3,346
4,233
Amounts owed to fellow group undertakings
3,859
4,907
Accruals
9,131
7,643
Social security and other taxation
182
144
Other payables
3,231
3,209
19,749
20,136
The loan with the group is unsecured, interest free and payable on demand.
The Company did not have any trade and other payables as at 31 December 2022 or 31 December 2021.
20
Borrowings
2022
2021
£'000
£'000
Secured borrowings held at amortised cost:
Bank loans
-
37
Analysis of borrowings:
Borrowings are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows;
2022
2021
£'000
£'000
Current liabilities
37
Borrowings are secured by way of first priority aircraft mortgage over an aircraft owned by the company, G-SIRS. The loan was taken out specifically to fund the purchase of this asset. The loan attracts interest at a rate of 3.5% above LIBOR. LIBOR was discontinued as of 31 December 2021 and replaced by the Sterling Overnight Index Average (SONIA).
The loan was fully repaid in January 2022 and therefore, there is no current liability as at 31 December 2022.
21
Provisions for liabilities
2022
2021
£'000
£'000
426
-
All provisions are expected to be settled within 12 months from the reporting date.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
21
Provisions for liabilities
(Continued)
- 30 -
Movements on provisions:
£'000
Additional provisions in the year
426
There is an ongoing tax investigation into the company by HMRC with regards to overnight allowances paid the crew members relating to the period from 2016 to 2021. As at the date of signing these financial statements, the decision from HMRC is that the group is liable to pay primary and secondary class 1 contributions as well as PAYE taxes on these allowances, totalling £444,187. Interest is payable on these taxes of an estimated £66,583. A provision has therefore been included as a reasonable estimate can be made however, the decision is currently being appealed by the group.
The Company did not have any provisions as at 31 December 2022 or 31 December 2021.
22
Financial Instruments
Recognition and initial measurement
Trade receivables and debt securities issued are initially recognised when they are originated. All other financial assets and financial liabilities are initially recognised when the group becomes a party to the contractual provisions of the instrument.
A financial asset (unless it is a trade receivable without a significant financing component) or financial liability is initially measured at fair value plus, for an item not at FVTPL, transaction costs that are directly attributable to its acquisition or issue. A trade receivable without a significant financing component is initially measured at the transaction price.
Classification and subsequent measurement
Financial assets
(a) Classification
On initial recognition, a financial asset is classified as measured at: amortised cost; FVOCI - debt investment; FVOCI equity investment; or FVTPL. Financial assets are not reclassified subsequent to their initial recognition unless the group changes its business model for managing financial assets in which case all affected financial assets are reclassified on the first day of the first reporting period following the change in the business model.
A financial asset is measured at amortised cost if it meets both of the following conditions:
it is held within a business model whose objective is to hold assets to collect contractual cash flows; and
its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.
All financial assets not classified as measured at amortised cost or FVOCI as described above are measured at FVTPL. This includes all derivative financial assets.
(b) Subsequent measurement and gains and losses
Financial assets at FVTPL - these assets (other than derivatives designated as hedging instruments) are subsequently measured at fair value. Net gains and losses, including any interest or dividend income, are recognised in profit or loss. Financial assets at amortised cost - These assets are subsequently measured at amortised cost using the effective interest method. The amortised cost is reduced by impairment losses. Interest income, foreign exchange gains and losses and impairment are recognised in profit or loss. Any gain or loss on derecognition is recognised in profit or loss.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
22
Financial Instruments
(Continued)
- 31 -
Impairment
The group recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost, debt investments measured at FVOCI and contract assets (as defined in IFRS 15).
The group measures loss allowances at an amount equal to lifetime ECL, except for other debt securities and bank balances for which credit risk (i.e the risk of default occurring over the expected life of the financial instrument) has not increased significantly since initial recognition which are measured as 12-month ECL.
Loss allowances for trade receivables and contract assets are always measured at an amount equal to lifetime ECL. Trade receivables and contract assets with significant financing component are measured using the general model described above.
When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECL, the group considers reasonable and supportable information that is relevant and available without undue cost or effort. This includes both quantitative and qualitative information and analysis, based on the group's historical experience and informed credit assessment and including forward-looking information.
The group assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.
The group considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the group in full, without recourse by the group to actions such as realising security (if any is held); or the financial asset is more than 90 days past due.
The maximum period considered when estimating ECL's is the maximum contractual period over which the group is exposed to credit risk.
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset's original effective interest rate. Interest on the impaired asset continues to be recognised through the unwinding of the discount. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Credit-impaired financial assets
At each reporting date, the group assesses whether financial assets carried at amortised cost and debt securities at FVOCI are credit-impaired. A financial asset is 'credit-impaired' when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.
Write-offs
The gross carrying amount of a financial asset is written off (either partially or in full) to the extent that there is no realistic prospect of recovery.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
22
Financial Instruments
(Continued)
- 32 -
Qualitative disclosures
Through the group's operations, it is exposed to the following financial risks:
• Market risk
• Fuel price risk
• Foreign exchange risk
• Credit risk
• Liquidity risk
Market risk
The business aviation market largely depends on general economic growth factors and stability within the countries the group operates within. Covid-19 has had an impact on the economic growth of many industries. See note 24 for further information.
Fuel price risk
The war on Ukraine has had a huge impact on global markets, due to the inability of Ukraine to trade and unprecedented international sanctions imposed on Russia. This has put inflationary pressures on prices and resulted in significant volatility.
The main impact on the group is that of rising fuel prices. Fuel prices increasing can impact margins; however, the group has reflected these additional costs through its product pricing. The group's jet fuel price exposure is also limited to owned aircraft, as well as for charter flights on managed aircraft, other than those concluded on a commission basis.
Foreign exchange risk
The group is exposed to foreign exchange risk on sales and operational costs in relation with customers and suppliers based around the world, through sales and purchases in currencies other than the functional currency. See note 24 for further information.
The group has foreign exchange risk when translating profit and loss and other comprehensive income and balance sheet items into the functional currency. Sales and operational costs generally offset the foreign exchange risk the group is exposed to. The group aims to settle expenses in the local currency where possible.
Credit risk
The credit risk refers to the risk that counterparty will default on its contractual obligation, resulting in financial loss from defaults. The group's main credit risk arises through sales made to customers (trade receivables), and other receivables. See note 17 for further information.
Liquidity risk
The group needs to have enough liquidity reserves to meet its existing liabilities and future cash requirement, as well as for unforeseen events. See note 23 for further information.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership to another entity.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
22
Financial Instruments
(Continued)
- 33 -
Financial liabilities
The group recognises financial debt when the group becomes a party to the contractual provisions of the instruments. Financial liabilities are classified as either 'financial liabilities at fair value through profit or loss' or 'other financial liabilities'.
Financial liabilities at fair value through profit or loss
Financial liabilities are classified as measured at fair value through profit or loss when the financial liability is held for trading. A financial liability is classified as held for trading if:
• it has been incurred principally for the purpose of selling or repurchasing it in the near term, or
• on initial recognition it is part of a portfolio of identified financial instruments that the group manages together and has a recent actual pattern of short-term profit taking, or
• it is a derivative that is not a financial guarantee contract or a designated and effective hedging instrument.
Financial liabilities at fair value through profit or loss are stated at fair value with any gains or losses arising on remeasurement recognised in profit or loss.
Derecognition of financial liabilities
Financial liabilities are derecognised when, and only when, the group's obligations are discharged, cancelled, or they expire.
23
Liquidity risk
The group needs to have enough liquidity reserves to meet its existing liabilities and future cash requirement, as well as for unforeseen events.
The following are the contractual maturities of non-derivative financial liabilities, including estimated interest payments and excluding the effect of netting agreements:
Less than 1 year
1 - 2 years
Total
£'000
£'000
£'000
At 31 December 2021
Secured bank loans
37
-
37
Trade and other payables
20,127
-
20,127
Leases
9
2
11
Current tax liabilities
168
-
168
20,341
2
20,343
At 31 December 2022
Trade and other payables
19,749
-
19,749
Leases
37
48
85
Provisions
426
-
426
20,212
48
20,260
The Company did not have any financial liabilities as at 31 December 2022 or 31 December 2021.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 34 -
24
Market risk
Market risk management
Market risk is the risk that changes in market prices - e.g. foreign exchange rates, interest rates and equity prices - will affect the Group's income of the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return.
Foreign exchange risk
The carrying amounts of the group's foreign currency denominated monetary assets and liabilities at the reporting date are as follows:
31 December 2021
Sterling
Euro
US Dollar
Total
£'000
£'000
£'000
£'000
Cash and cash equivalents
925
352
173
1,450
Trade receivables and amounts owed from group
3,843
3,282
1,682
8,807
Secured bank loans
37
37
Trade payables and amounts owed to group
(5,278)
(3,649)
(213)
(9,140)
Net exposure
(473)
(15)
1,642
1,154
31 December 2022
Sterling
Euro
US Dollar
Total
£'000
£'000
£'000
£'000
Cash and cash equivalents
312
3,053
17
3,382
Trade receivables and amounts owed from group
4,546
3,175
1,020
8,741
Trade payables and amounts owed to group
(2,817)
(3,481)
(907)
(7,205)
Net exposure
2,041
2,747
130
4,918
Foreign exchange sensitivity analysis
Whilst the company takes steps to minimise its exposure to foreign exchange risk, changes in foreign exchange rates will have an impact on profit.
The group is exposed to movements between the US dollar and Sterling. The effect of a 5% strengthening in the dollar against sterling at the reporting date on the dollar-denominated balances at the year end would, all other variables being held constant, have resulted in an increase in the post-tax profit for the year of £7,827. A 5% weakening in the exchange rate would, on the same basis, would have resulted in a decrease in the post-tax profit by £7,827.
The group is also exposed to movements between the Euro and Sterling. The effect of a 5% strengthening in the Euro against sterling at the reporting date on the Euro-denominated balances at the year end would, all other variables being held constant, have resulted in an increase in the post-tax profit for the year of £154,796. A 5% weakening in the exchange rate would, on the same basis, would have resulted in a decrease in the post-tax profit by £154,796.
The Company did not have any foreign currency denominated monetary assets and liabilities as at 31 December 2022 or 31 December 2021.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
- 35 -
25
Lease liabilities
2022
2021
Maturity analysis
£'000
£'000
Within one year
37
9
In two to five years
48
2
Total undiscounted liabilities
85
11
During the year the group signed a new premises lease extension for an additional 3 years, superseding the original lease expiring in 2022.
Lease liabilities are classified based on the amounts that are expected to be settled within the next 12 months and after more than 12 months from the reporting date, as follows:
2022
2021
£'000
£'000
Current liabilities
37
-
Non-current liabilities
48
2
The fair value of the group's lease obligations is approximately equal to their carrying amount.
The Company did not have any lease obligations as at 31 December 2022 or 31 December 2021.
26
Capital risk management
The groups’s objectives when managing capital are to safeguard its ability to continue as a going concern and to maintain an optimal capital structure. The capital structure of the group comprises working capital and equity consisting of issued share capital, reserves and retained losses.
The group ensures that it retains sufficient working capital to meet its bank commitments and third-party supplier obligations. It achieves this by only paying monies to the Luxaviation Group when cashflow permits. This has resulted in increased balances on the inter-company creditors.
The group and company is not subject to any externally imposed capital requirements.
27
Deferred taxation
The following are the major deferred tax liabilities and assets recognised by the group and movements thereon during the current and prior reporting period.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
27
Deferred taxation
(Continued)
- 36 -
Accelerated capital allowances
Tax losses and other deductions
Deferred tax not recognised
Total
£'000
£'000
£'000
£'000
Deferred tax asset/(liability) at 1 January 2021
(80)
349
(269)
Deferred tax movements in prior year
Credit to profit or loss
(225)
145
28
(52)
Deferred tax asset/(liability) at 1 January 2022 and 31 December 2022
(305)
494
(241)
(52)
The Company did not have any deferred tax assets or liabilities as at 31 December 2022 or 31 December 2021.
28
Retirement benefit schemes
The group operates a number of defined contribution pension plans.
The total expense relating to these plans in the current year was £112,671 (2021: £102,323).
29
Share capital
2022
2021
2022
2021
Ordinary share capital
Number
Number
£'000
£'000
Issued and fully paid
Ordinary shares of 10p each
101,084
101,084
1
1
30
Related party transactions
Remuneration of key management personnel
The compensation of key management personnel is the same as disclosed in Note 9.
Related parties with which the group has transacted
Group
As at 31 December 2022, the group owed £3,859k (2021: £4,907k) to entities in the Luxaviation Group and was owed £1,602k (2021: £1,481k). The group earned revenue of £476k (2021: £308k) and incurred cost of sales expenditure of £9,138k (2021: £5,169k) and administrative expenditure of £1,175k (2021: £518k) from entities within the Luxaviation Group.
Company
As at 31 December 2022, the company was owed £140k (2021: £140k) from its subsidiary, London Executive Aviation Limited, and owed £nil (2021: £nil). There was £nil revenue, cost of sales expenditure and administrative expenditure between the company and its subsidiary.
31
Ultimate parent company and controlling party
The immediate and ultimate parent company and controlling party is Luxaviation Holding Company S.A., a company incorporated in Luxembourg.
EXECUTIVE AVIATION GROUP LIMITED
NOTES TO THE GROUP FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2022
31
Ultimate parent company and controlling party
(Continued)
- 37 -
The smallest and largest group into which the company's accounts are consolidated is that headed by Luxaviation Holding Company S.A., the company's ultimate parent company.
The consolidated financial statements of Luxaviation Holding Company S.A., are not available to the public.
32
Cash generated from operations
2022
2021
£'000
£'000
Profit for the year before income tax
1,943
2,502
Adjustments for:
Finance costs
-
10
Investment income
(7)
Gain on disposal of property, plant and equipment
(34)
-
Depreciation and impairment of property, plant and equipment
302
151
Increase in provisions
426
-
Movements in working capital:
Increase in trade and other receivables
(401)
(5,318)
(Decrease)/increase in trade and other payables
(387)
4,065
Cash generated from operations
1,842
1,410
The Company does not have a bank account and was dormant for the year ended 31 December 2022 therefore no statement of cash flows has been prepared for the Company.
33
Analysis of changes in net funds
1 January 2022
Cash flows
New finance leases
31 December 2022
£'000
£'000
£'000
£'000
Cash at bank and in hand
1,450
1,932
-
3,382
Borrowings excluding overdrafts
(37)
37
-
-
Obligations under finance leases
(2)
23
(106)
(85)
1,411
1,992
(106)
3,297
1 January 2021
Cash flows
New finance leases
31 December 2021
Prior year:
£'000
£'000
£'000
£'000
Cash at bank and in hand
1,069
381
-
1,450
Borrowings excluding overdrafts
(481)
444
-
(37)
Obligations under finance leases
(20)
18
-
(2)
568
843
-
1,411
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