Air Charter Scotland Limited - Limited company accounts 20.1

REGISTERED NUMBER: SC303971 (Scotland)

Strategic Report,

Report of the Directors and

Financial Statements

for the Year Ended 31 December 2021

for

Air Charter Scotland Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

3

Report of the Independent Auditors

5

Income Statement

8

Other Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Notes to the Financial Statements

12

DIRECTORS:

A M Bisset

G E McFarlane

Mrs E Mcfarlane

Ms J Purewal

D A Thomson

SECRETARY:

A M Bisset

REGISTERED OFFICE:

3 Colvilles Place, Kelvin Industrial Est

East Kilbride

Glasgow

G75 0PZ

REGISTERED NUMBER:

SC303971 (Scotland)

AUDITORS:

O'Haras Accountants Limited

Radleigh House

1 Golf Road

Clarkston

Glasgow

G76 7HU

The directors present their strategic report for the year ended 31 December 2021.

REVIEW OF BUSINESS

We aim to present a balanced, 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.

Despite the challenges with Covid-19, the company overall is in a good financial position at the end of the year, in line with our expectations.

During the year under review revenue increased by 26.9% to £14.1 million. Profitability increased in the year to December 2021 with a gross profit margin of 15.8% (2020: 15.1%).

Overall operating profit has increased from £675k (6%) to £1,231m (8.7%) and profit before tax increased from £649k to £1,058m.

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 is paying off a small CBILs loan and so its exposure to price risk, credit risk, liquidity risk and cash flow risk is not material when assessing the assets, liabilities, financial position and profit or loss of the company.

COVID-19

The company was impacted impacted by the COVID-19 virus at the start of the year in 2021. This has impacted revenue growth in the first quarter however the directors are of the opinion that this will bounce back in due course.

The directors took 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 and the Government furlough scheme.

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:

Ms J Purewal - Director

17 November 2022

The directors present their report with the financial statements of the company for the year ended 31 December 2021.

DIVIDENDS

During the year dividends of £875,000 (2020: £550,000) were paid to shareholders.

DIRECTORS

The directors shown below have held office during the whole of the period from 1 January 2021 to the date of this report.

A M Bisset

G E McFarlane

Mrs E Mcfarlane

Ms J Purewal

Other changes in directors holding office are as follows:

D A Thomson - appointed 1 October 2021

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors 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.

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, O'Haras Accountants Limited, will be proposed for re-appointment at the forthcoming Annual General Meeting.

ON BEHALF OF THE BOARD:

Ms J Purewal - Director

17 November 2022

Opinion

We have audited the financial statements of Air Charter Scotland Limited (the 'company') for the year ended 31 December 2021 which comprise the Income Statement, Other 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 2021 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

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 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.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, 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 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 the audit:

-	the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and

-	the Strategic Report and the Report of the Directors 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 Report of the Directors.

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.

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

We gained an understanding of the legal and regulatory framework applicable to the company and the aviation industry in which it operates. We made enquiries of management as to whether there were any known or suspected instances of non compliance with laws and regulations and reviewed Civil Aviation Authority audit reports for any indication of such matters.

We gained an understanding of management's internal controls designed to prevent and detect irregularities in their day-to-day operations.

We considered laws and regulations which could give rise to a material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. We assessed the extent of compliance with these laws and regulations as part of our procedures on the related financial statement components. Our tests included agreeing the financial statement disclosures to underlying supporting documentation, enquiries with management and enquiries of relevant third parties.

We considered how fraud might occur in this company and designed our tests accordingly.

As in all audits, we also addressed the risk of management override of internal controls, including reviewing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

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.

John O'Hara CA (Senior Statutory Auditor)

for and on behalf of O'Haras Accountants Limited

Radleigh House

1 Golf Road

Clarkston

Glasgow

G76 7HU

17 November 2022

REVENUE

14,169,370

11,163,002

Cost of sales

11,920,418

9,481,262

GROSS PROFIT

2,248,952

1,681,740

Administrative expenses

1,314,767

1,526,661

934,185

155,079

Other operating income

297,788

520,505

OPERATING PROFIT

4

1,231,973

675,584

Interest receivable and similar income

135

766

1,232,108

676,350

Interest payable and similar expenses

5

173,766

26,441

PROFIT BEFORE TAXATION

1,058,342

649,909

Tax on profit

6

191,821

107,403

PROFIT FOR THE FINANCIAL YEAR

866,521

542,506

PROFIT FOR THE YEAR

866,521

542,506

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

866,521

542,506

FIXED ASSETS

Intangible assets

9

-

-

Property, plant and equipment

10

166,291

109,415

166,291

109,415

CURRENT ASSETS

Inventories

11

12,247

13,936

Debtors

12

2,246,856

1,441,687

Cash at bank

2,692,672

2,265,342

4,951,775

3,720,965

CREDITORS

Amounts falling due within one year

13

4,378,204

3,255,717

NET CURRENT ASSETS

573,571

465,248

TOTAL ASSETS LESS CURRENT LIABILITIES

739,862

574,663

CREDITORS

Amounts falling due after more than one year

14

(527,083

)

(366,667

)

PROVISIONS FOR LIABILITIES

17

(26,661

)

(13,399

)

NET ASSETS

186,118

194,597

CAPITAL AND RESERVES

Called up share capital

18

10,000

10,000

Retained earnings

19

176,118

184,597

SHAREHOLDERS' FUNDS

186,118

194,597

The financial statements were approved by the Board of Directors and authorised for issue on 17 November 2022 and were signed on its behalf by:

Ms J Purewal - Director

Called up

share

Retained

Total

capital

earnings

equity

£

£

£

Balance at 1 January 2020

10,000

192,091

202,091

Dividends

-

(550,000

)

(550,000

)

Total comprehensive income

-

542,506

542,506

Balance at 31 December 2020

10,000

184,597

194,597

Dividends

-

(875,000

)

(875,000

)

Total comprehensive income

-

866,521

866,521

Balance at 31 December 2021

10,000

176,118

186,118

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.

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.

Going concern

The directors are satisfied that the Company will have access to sufficient funds to ensure that all liabilities will be met as they fall due over a period of at least 12 months from the approval date of these financial statements. Consequently, the directors consider it appropriate to prepare the financial statements on a going concern basis.

Financial Reporting Standard 102 - reduced disclosure exemptions

The company has taken advantage of the following disclosure exemption in preparing these financial statements, as permitted by FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":

•

the requirements of Section 7 Statement of Cash Flows.

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 Group Limited.

Copies of the consolidated financial statements are available from the Registrar of Companies, Companies House, Edinburgh Quay 2, 139 Fountainbridge, Edinburgh, EH3 9FF.

Revenue

Revenue represents the amounts derived from the provision of goods and services, excluding value added tax and trade discounts.Turnover is recognised at the point at which the Company has fulfilled its contractual obligations.

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.

Fixtures, fittings & equipment

-

10 - 33% straight line

Motor vehicles

-

25% on reducing balance

Government grants

Grants of a revenue nature are recognised in "other income" within profit or loss. This includes the Government Coronavirus Job Retention Scheme ('Furlough').

Inventories

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

Taxation

Taxation 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 in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

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 thebalance 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.

Hire purchase and leasing commitments

Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease.

Pension costs and other post-retirement benefits

The company operates a defined contribution pension scheme. Contributions payable to the company's pension scheme are charged to profit or loss in the period to which they relate.

Debtors

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Creditors

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

Cash and cash equivalents

Cash and cash equivalents includes cash in hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

3.	EMPLOYEES AND DIRECTORS

31/12/21

31/12/20

£

£

Wages and salaries

2,863,930

2,300,781

Social security costs

305,881

270,526

Other pension costs

42,282

37,755

3,212,093

2,609,062

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

31/12/21

31/12/20

Crew & Cabin crew

32

30

Head office staff

12

15

Management

5

5

49

50

31/12/21

31/12/20

£

£

Directors' remuneration

360,217

258,227

Information regarding the highest paid director is as follows:

31/12/21

31/12/20

£

£

Emoluments etc

155,000

135,739

4.	OPERATING PROFIT

The operating profit is stated after charging:

31/12/21

31/12/20

£

£

Other operating leases

72,860

61,649

Depreciation - owned assets

33,294

27,176

Auditors' remuneration

15,075

14,950

5.

INTEREST PAYABLE AND SIMILAR EXPENSES

31/12/21

31/12/20

£

£

Bank loan interest

19,378

5,750

Hire purchase interest

-

314

Exchange rate loss/(gain)

154,388

20,377

173,766

26,441

6.

TAXATION

Analysis of the tax charge

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

31/12/21

31/12/20

£

£

Current tax:

UK corporation tax

186,148

126,916

Over provision in prior year

(7,590

)

(19,003

)

Total current tax

178,558

107,913

Deferred tax

13,263

(510

)

Tax on profit

191,821

107,403

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:

31/12/21

31/12/20

£

£

Profit before tax

1,058,342

649,909

Profit multiplied by the standard rate of corporation tax in the UK of 19% (2020 - 19%)

201,085

123,483

Effects of:

Expenses not deductible for tax purposes

1,270

359

Capital allowances in excess of depreciation

(13,192

)

-

Depreciation in excess of capital allowances

-

3,074

Utilisation of tax losses

(3,015

)

-

Adjustments to tax charge in respect of previous periods

(7,590

)

(19,003

)

assets

Other adjustments

13,263

(510

)

Total tax charge

191,821

107,403

7.

DIVIDENDS

31/12/21

31/12/20

£

£

Ordinary shares of £1 each

Interim

875,000

550,000

8.	IMPAIRMENT OF FIXED ASSETS

At each balance sheet date, the company reviews the carrying amount of its tangible fixed assets to determine whether there is any indication that any items have suffered an impairment loss. If any such indication exists, the recoverable amount of an asset is estimated in order to determine the extent of the impairment loss, if any. Where it is not possible to estimate the recoverable amount of the asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

9.	INTANGIBLE FIXED ASSETS

Patents

and

licences

£

COST

At 1 January 2021

and 31 December 2021

50,000

AMORTISATION

At 1 January 2021

and 31 December 2021

50,000

NET BOOK VALUE

At 31 December 2021

-

At 31 December 2020

-

10.	PROPERTY, PLANT AND EQUIPMENT

Fixtures,

fittings

Motor

& equipment

vehicles

Totals

£

£

£

COST

At 1 January 2021

343,532

80,157

423,689

Additions

26,870

63,300

90,170

At 31 December 2021

370,402

143,457

513,859

DEPRECIATION

At 1 January 2021

267,127

47,147

314,274

Charge for year

21,643

11,651

33,294

At 31 December 2021

288,770

58,798

347,568

NET BOOK VALUE

At 31 December 2021

81,632

84,659

166,291

At 31 December 2020

76,405

33,010

109,415

11.	INVENTORIES

31/12/21

31/12/20

£

£

Stocks

12,247

13,936

12.

DEBTORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31/12/21

31/12/20

£

£

Trade debtors

974,706

617,827

Amounts owed by associates

673,503

277,960

Other debtors

44,014

55,787

VAT

65,472

10,668

Prepayments and accrued income

489,161

479,445

2,246,856

1,441,687

13.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31/12/21

31/12/20

£

£

Bank loans and overdrafts (see note 15)

121,250

33,333

Trade creditors

2,039,799

1,809,780

Amounts owed to group undertakings

1,017,908

158,995

Tax

186,148

126,916

Social security and other taxes

76,357

82,065

Other creditors

137,537

108,345

Accruals and deferred income

799,205

936,283

4,378,204

3,255,717

14.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

31/12/21

31/12/20

£

£

Bank loans (see note 15)

527,083

366,667

15.

LOANS

An analysis of the maturity of loans is given below:

31/12/21

31/12/20

£

£

Amounts falling due within one year or on demand:

Bank loans

121,250

33,333

Amounts falling due between one and two years:

Bank loans - 1-2 years

135,000

80,000

Amounts falling due between two and five years:

Bank loans - 2-5 years

392,083

286,667

16.	SECURED DEBTS

The following secured debts are included within creditors:

31/12/21

31/12/20

£

£

Bank loans

648,333

400,000

The bank holds a floating charge over the assets and undertakings of the company.

17.	PROVISIONS FOR LIABILITIES

31/12/21

31/12/20

£

£

Deferred tax

26,661

13,399