Air Charter Scotland Limited - Limited company accounts 20.1

REGISTERED NUMBER: SC303971 (Scotland)

STRATEGIC REPORT, DIRECTORS' REPORT AND

FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2019

FOR

AIR CHARTER SCOTLAND LIMITED

Page

Company Information

1

Strategic Report

2

Directors' Report

3

Report of the Independent Auditors

4

Statement of Comprehensive Income

6

Balance Sheet

7

Statement of Changes in Equity

8

Notes to the Financial Statements

9

DIRECTORS:

G E McFarlane

A M Bisset

Mrs E H McFarlane

Mrs J Purewal

SECRETARY:

A M Bisset

REGISTERED OFFICE:

3 Colvilles Place

Kelvin Industrial Estate

East Kilbride

Glasgow

G75 0PZ

REGISTERED NUMBER:

SC303971 (Scotland)

AUDITORS:

Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

The directors present their strategic report for the year ended 31 December 2019.

REVIEW OF BUSINESS

We aim to present a balanced and comprehensive review of the development and performance of our business during the year and

its position at the end of the year. Our review is consistent with the size and non-complex nature of our business and is written in

the context of the risks and uncertainties we face.

As a private jet operator, the Company continues to manage different jet types on behalf of owners and provide a service to the

commercial world through 3rd party agents and continued direct customer contacts.

We consider that our key financial performance indicators are those that communicate the financial performance and strength of

the Company, these being turnover, gross margin and return on capital employed.

Overall, the Company is in a good financial position at the end of the year, in line with our expectations.

During the year under review revenue has decreased by 2% to £17.6 million. Profitability increased in the year to December 2019

with gross profit margin of 11.3% (2018: 9.9%).

Overall operating profit has decreased from £312k (1.7%) to £168k (0.9%) and profit before tax increased from £114k to £147k.

PRINCIPAL RISKS AND UNCERTAINTIES

The directors have assessed the main risk facing the Company as being the competition from other companies within the industry.

The directors believe that the reputation of the Company and the quality of the service provided will mitigate this risk.

FINANCIAL RISK MANAGEMENT

The Company makes little use of financial instruments other than an operational bank account and so its exposure to price risk,

credit risk, liquidity risk and cash flow risk is not material for the assessment of the assets, liabilities, financial position and profit or

loss of the Company.

COVID-19

Subsequent to the year end the company has been impacted by the COVID-19 virus. This has impacted revenue growth in the short

term however the directors are of the opinion that this will bounce back in due course.

The directors have taken action to reduce the company's cost base to minimise the rate of cash utilisation in the business and have

also received support from their bankers.

The directors have prepared financial projections covering a period of 12 months from the date of signing these financial

statements. These show that on the basis of reasonable assumptions with regards to revenue, costs and cash flows that the

company can continue to operate as a going concern, meeting liabilities as they fall due. On this basis the directors believe it is

appropriate for these financial statements to be prepared on a going concern basis.

ON BEHALF OF THE BOARD:

G E McFarlane - Director

19 November 2020

The directors present their report with the financial statements of the Company for the year ended 31 December 2019.

PRINCIPAL ACTIVITY

The principal activity of the Company in the year under review was that of commercial aircraft charter.

DIVIDENDS

During the year dividends of £nil (2018: £325,000) were paid to the shareholders.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2019 to the date of this report.

G E McFarlane

A M Bisset

Mrs E H McFarlane

Mrs J Purewal

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Directors' 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:

-	select suitable accounting policies and then apply them consistently;

-	make judgements and accounting estimates that are reasonable and prudent;

-	prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business.

The 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.

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the

Company's website.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of

which the Company's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a

director in order to make himself or herself aware of any relevant audit information and to establish that the Company's auditors

are aware of that information.

AUDITORS

The auditors, Consilium Audit Limited (Statutory Auditor), will be proposed for re-appointment at the forthcoming Annual General

Meeting.

ON BEHALF OF THE BOARD:

G E McFarlane - Director

19 November 2020

Opinion

We have audited the financial statements of Air Charter Scotland Limited (the 'Company') for the year ended 31 December 2019

which comprise the Statement of Comprehensive Income, 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 December 2019 and of its profit 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 Auditors' responsibilities for the audit of the financial statements

section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our

audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical

responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion.

Conclusions relating to going concern

We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:

-	the directors' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or

-

the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report

and the Directors' Report, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated

in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,

consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the

audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material

misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material

misstatement of the other information. If, based on the work we have performed, we conclude that there is a material

misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the 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.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have

not identified material misstatements in the Strategic Report or 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 three, 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 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.

Auditors' 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 a Report of the Auditors that includes our opinion. Reasonable

assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always

detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,

individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis

of these financial statements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's

website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

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 a Report of the Auditors 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.

David Holt (Senior Statutory Auditor)

for and on behalf of Consilium Audit Limited (Statutory Auditor)

169 West George Street

Glasgow

G2 2LB

19 November 2020

TURNOVER

17,649,786

18,048,577

Cost of sales

15,651,956

16,265,019

GROSS PROFIT

1,997,830

1,783,558

Administrative expenses

1,830,220

1,472,019

OPERATING PROFIT

4

167,610

311,539

Interest receivable and similar income

2,403

789

Interest payable and similar expenses

5

(22,713

)

(198,276

)

PROFIT BEFORE TAXATION

147,300

114,052

Tax on profit

6

22,342

19,151

PROFIT FOR THE FINANCIAL YEAR

124,958

94,901

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

124,958

94,901

FIXED ASSETS

Intangible assets

8

-

-

Tangible assets

9

131,171

1,977,241

131,171

1,977,241

CURRENT ASSETS

Stocks

10

13,936

6,074

Debtors

11

2,250,960

2,672,131

Cash at bank

1,601,806

1,234,986

3,866,702

3,913,191

CREDITORS

Amounts falling due within one year

12

3,781,873

5,261,740

NET CURRENT ASSETS/(LIABILITIES)

84,829

(1,348,549

)

TOTAL ASSETS LESS CURRENT LIABILITIES

216,000

628,692

CREDITORS

Amounts falling due after more than one year

13

-

(535,079

)

PROVISIONS FOR LIABILITIES

16

(13,909

)

(16,480

)

NET ASSETS

202,091

77,133

CAPITAL AND RESERVES

Called up share capital

17

10,000

10,000

Retained earnings

18

192,091

67,133

SHAREHOLDERS' FUNDS

202,091

77,133

The financial statements were approved by the Board of Directors and authorised for issue on 19 November 2020 and were signed on its behalf by:

G E McFarlane - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2018

10,000

297,232

307,232

Changes in equity

Dividends

-

(325,000

)

(325,000

)

Total comprehensive income

-

94,901

94,901

Balance at 31 December 2018

10,000

67,133

77,133

Changes in equity

Total comprehensive income

-

124,958

124,958

Balance at 31 December 2019

10,000

192,091

202,091

1.	STATUTORY INFORMATION

Air Charter Scotland Limited is a private company, limited by shares, registered in Scotland. The Company's registered

number and registered office address can be found on the Company Information page.

The presentation currency of the financial statements is the Pound Sterling (£).

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

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. The financial statements have been prepared under the historical cost convention.

Subsequent to the year end the company has been impacted by the COVID-19 virus. This has impacted revenue growth in

the short term however the directors are of the opinion that this will bounce back in due course.

The directors have taken action to reduce the company's cost base to minimise the rate of cash utilisation in the business

and have also received support from their bankers.

The directors have prepared financial projections covering a period of 12 months from the date of signing these financial

statements. These show that on the basis of reasonable assumptions with regards to revenue, costs and cash flows that the

company can continue to operate as a going concern, meeting liabilities as they fall due. On this basis the directors believe

it is appropriate for these financial statements to be prepared on a going concern basis.

Financial Reporting Standard 102 - reduced disclosure exemptions

The Company has taken advantage of the exemption under FRS 102 from disclosing a statement of cash flows on the

grounds that it is a wholly owned subsidiary and a group statement of cash flows is included in the consolidated financial

statements of Air Charter Scotland (Holdings) Limited.

Copies of the consolidated financial statements are available from the Registrar of Companies, Companies House,

Edinburgh Quay 2, 139 Fountainbridge, Edinburgh, EH3 9FF.

Significant judgements and estimates

Preparation of the financial statements requires management to make significant judgements and estimates. In preparing

the financial statements the directors have made the following judgements:

-

Determine whether leases entered into by the Company as a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis.

-

Determine whether there are indicators of impairment of the Company's tangible assets. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset.

-

Determine whether any bad debt provision is required via review of trade debtors, with debts provided for on a specific basis. Factors considered include customer payment history and agreed credit terms.

Turnover

The turnover shown in the Statement of Comprehensive Income represents the value of services delivered at a selling price

exclusive of Value Added Tax. Sales are recognised at the point at which the Company has fulfilled its contractual

obligations.

Intangible fixed assets

Patents and licences are valued at cost less accumulated amortisation.

Amortisation is calculated to write off the cost, less estimated residual value, in equal annual instalments over their

estimated useful life of 10 years.

Tangible fixed assets

Depreciation is provided at the following annual rates in order to write off the cost less estimated residual value of each asset over its estimated useful life or, if held under a finance lease, over the lease term, whichever is the shorter.

Aircraft

-

4% on cost

Fixtures, fittings and equipment

-

10% to 33.3% on cost

Motor vehicles

-

25% reducing balance

Tangible fixed assets are stated at cost less depreciation. Cost represents purchase price together with any incidental costs

of acquisition.

Stocks

Stocks are valued at the lower of cost and net realisable value, after making due allowance for obsolete and slow moving

items. Costs represents the purchase price of goods.

Financial instruments

The Company has chosen to adopt Sections 11 and 12 of FRS 102 in respect of financial instruments.

Financial instruments are classified and accounted for as financial assets, financial liabilities or equity instruments,

according to the substance of the contractual arrangement.

Financial instruments which are assets are stated at cost less any provision for impairment. Financial liabilities are stated at

principal capital amounts outstanding at the period end. Issue costs relating to financial liabilities are deducted from the

outstanding balance and are amortised over the period to the due date for repayment of the financial liability.

An equity instrument is any contract that evidences a residual interest in the assets of the Company after deducting all of

its liabilities. A financial liability is any contractual arrangement for an entity to deliver cash to the holder of the associated

financial instrument.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income,

except to the extent that it relates to items recognised directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively

enacted by the balance sheet date.

Deferred tax

Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet

date.

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in

which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been

enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be

recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet

date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction.

Exchange differences are taken into account in arriving at the operating result.

Leasing commitments

Rentals applicable to operating leases, where substantially all of the benefits and risks of ownership remain with the lessor,

are charged against profits on a straight line basis over the period of the lease.

Assets held under hire purchase agreements and finance leases are capitalised and disclosed under tangible fixed assets at

their fair value, and are depreciated in accordance with the above depreciation policies.

Future instalments payable under such agreements, net of finance charges, are included within creditors. Rentals payable

are apportioned between the capital element, which reduces the outstanding obligation included within creditors, and the

finance element, which is charged to the Statement of Comprehensive Income on a straight line basis.

Pension costs and other post-retirement benefits

The Company contributes to a defined contribution pension scheme for certain employees. The assets of the scheme are

held separately in an independently administered fund. Contributions payable are charged to the Statement of

Comprehensive Income in the period to which they relate.

3.	EMPLOYEES AND DIRECTORS

2019

2018

£

£

Wages and salaries

2,838,189

2,729,914

Social security costs

281,165

257,919

Other pension costs

58,135

25,609

3,177,489

3,013,442

The average number of employees during the year was as follows:

2019

2018

Crew

27

30

Cabin crew

7

4

Head office staff

15

17

Management

4

4

53

55

2019

2018

£

£

Directors' remuneration

236,783

209,981

Directors' pension contributions to money purchase schemes

1,094

703

Information regarding the highest paid director is as follows:

2019

2018

£

£

Emoluments etc

100,564

81,270

Pension contributions to money purchase schemes

134

-

The Company considers key management to be the directors of the Company. The key management remuneration for the

year is as disclosed above.

4.	OPERATING PROFIT

The operating profit is stated after charging/(crediting):

2019

2018

£

£

Other operating leases

59,098

54,716

Depreciation - owned assets

25,362

27,467

Depreciation - assets on hire purchase contracts and finance leases

28,690

81,724

Profit on disposal of fixed assets

(140,681

)

-

Auditors' remuneration

17,450

16,050

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

2019

2018

£

£

Hire purchase interest

314

448

Finance lease interest

22,399

197,828

22,713

198,276

6.

TAXATION

Analysis of the tax charge

The tax charge on the profit for the year was as follows:

2019

2018

£

£

Current tax:

UK corporation tax

26,635

23,009

Over provision in prior year

(1,722

)

-

Total current tax

24,913

23,009

Deferred tax

(2,571

)

(3,858

)

Tax on profit

22,342

19,151

Reconciliation of total tax charge included in profit and loss

The tax assessed for the year is lower than the standard rate of corporation tax in the UK. The difference is explained

below:

2019

2018

£

£

Profit before tax

147,300

114,052

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2018 - 19%)

27,987

21,670

Effects of:

Expenses not deductible for tax purposes

2,231

820

Adjustments to tax charge in respect of previous periods

(1,722

)

-

Depreciation on non-qualifying assets

922

1,211

Group relief

-

(4,550

)

Indexation on chargeable gain

(4,480

)

-

Other adjustments

(2,596

)

-

Total tax charge

22,342

19,151

7.

DIVIDENDS

2019

2018

£

£

Ordinary shares of £1 each

Paid in year

-

325,000

8.	INTANGIBLE FIXED ASSETS

Patents

and

licences

£

COST

At 1 January 2019

and 31 December 2019

50,000

AMORTISATION

At 1 January 2019

and 31 December 2019

50,000

NET BOOK VALUE

At 31 December 2019

-

At 31 December 2018

-

9.	TANGIBLE FIXED ASSETS

Fixtures,

fittings

and

Motor

Aircraft

equipment

vehicles

Totals

£

£

£

£

COST

At 1 January 2019

1,965,015

335,489

47,333

2,347,837

Additions

-

2,623

32,823

35,446

Disposals

(1,965,015

)

-

-

(1,965,015

)

At 31 December 2019

-

338,112

80,156

418,268

DEPRECIATION

At 1 January 2019

111,351

228,649

30,596

370,596

Charge for year

26,200

19,696

8,156

54,052

Eliminated on disposal

(137,551

)

-

-

(137,551

)

At 31 December 2019

-

248,345

38,752

287,097

NET BOOK VALUE

At 31 December 2019

-

89,767

41,404

131,171

At 31 December 2018

1,853,664

106,840

16,737

1,977,241

Included within the net book value is £9,790 (2018: £1,865,944) relating to assets held under hire purchase agreements and

finance leases. The depreciation charged to the financial statements in the year in respect of such assets amounted to

£28,690 (2018: £81,724).

10.

STOCKS

2019

2018

£

£

Food and beverage stock

13,936

6,074