EXECUJET_(UK)_LIMITED - Accounts

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

The company's principal activity is the management of aircraft in the business aviation sector. Additional revenues are generated in the form of arrangement fees arising from the use of managed aircraft in charter activities, income from aircraft acceptance and registration service fees. As at the year ended 31 December 2021, Luxaviation Europe SA owned 100% of the shares in ExecuJet (UK) Limited.

The company's key financial and other performance indicators for the year ended December 2021 are detailed in the income statement.

Turnover in 2020 had been largely affected by the Covid-19 pandemic and with a return to normal operations in 2021 we saw an 83% increase in revenue year on year. Aircraft operating costs also increased substantially as operations returned to normal. Gross Profit however fell by 7% year on year, largely due to a fall in the profit arising from the income generated from third party charter revenues.

During the year the company made an operating profit of £241k (2020: £326k). Despite seeing an increase in turnover, the company experienced a decrease in operating profit which was largely due to the sale of Execujet Europe A/G by Luxaviation Group and the transfer of other functions within the Group which, prior to the sale the company provided back-office support for. The costs of slimming down these operations have considerably exceeded the income generated for support services as the company restructured.

Competitive risk

The company manages the competitive risk by offering competitive rates and offering a high level of customer service.

Economic risk

An economic downturn could lead to one or more customers going into insolvency and thus creating a potential cash flow/ liquidity issue. To mitigate this risk ExecuJet has taken a number of measures, for example: aircraft management customers are contractually obliged to make a down payment of one to three months of operational costs. The monthly spend is closely monitored and in the event of reaching the predefined threshold the aircraft is grounded in order not to incur any further liabilities. The company undertakes regular and effective credit control measures. The company reviews performance on a monthly basis.

Financial risk

The key financial risk relates to cash flow risk and is that, in the current climate, the proceeds from company's financial assets may not be sufficient to fund the obligations from its liabilities. The biggest financial risk to the company lies in maintaining an adequate cash flow during the period of the travel restrictions resulting from the Covid-19 pandemic. Management has taken measures to mitigate the risks and has implemented strict cash management procedures and has used a reasonable worst-case scenario to forecast to the end of 2023 and is confident it can meet its commitments. The company does not engage in any complex financial arrangements. The most important components of financial risks are foreign currency risk, credit risk, liquidity risk, and price risk.

Foreign currency risk

A number of the revenue contracts are held in currencies other than GBP. At the end of the year the total outstanding debtors denominated in Euros were €3,649k, an equivalent of £3,061k and $1,620k was denominated in US Dollars, an equivalent of £1,200k. This may result in a foreign exchange gain or loss on settlement. The foreign exchange risk is mitigated by way of a natural hedge, and a significant portion of the expenditure related to he aircraft is also held in foreign currencies.

Credit risk

Company policies are aimed at minimising such losses. Aircraft management customers are required to deposit amounts equivalent to one to three months operational costs. Payments for charter are largely on non-credit basis. The company has not suffered unduly from bad debt during challenging trading times.

Liquidity risk

The company retains appropriate cash and facilities to ensure it has sufficient available funds for operations and to finance its capital commitments.

Price risk

The company is exposed to rising fuel prices, which is mitigated through bulk fuel purchasing within the Luxaviation Group.

During the course of 2022 all aircraft previously under management left the business. The down-sized and restructured business remains at the base in Newmarket, with the income now attained through the sub-charter of aircraft and the provision of services to other Luxaviation Group entities. In November 2022, all employees formally transferred to other Luxaviation Group entities.

By order of the board

The directors present their annual report and financial statements for the year ended 31 December 2021.

The principal activity of the company continued to be that of the management of aircraft in the business aviation sector.

The results for the year are set out on page 8.

No ordinary dividends were paid. The directors do not recommend payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

On 24 February 2022, Russia launched an invasion of Ukraine. The war 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 company is that of rising fuel prices. Fuel prices increasing can impact margins; however, the company has reflected these additional costs through its product pricing.

HW Fisher LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

The company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the company'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 and future developments in the business.

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 company'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 company'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.

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 financial statements in accordance with UK-adopted International Accounting Standards (IAS) as adopted by the United Kingdom. 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, 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 UK-adopted IASs 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 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.

We have audited the financial statements of Execujet (UK) Limited (the 'company') for the year ended 31 December 2021 which comprise the income statement, the statement of financial position, the statement of changes in equity, the statement of cash flows and 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 company's affairs as at 31 December 2021 and of its profit for the year then ended;

•     have been properly prepared in accordance with UK-adopted International Accounting Standards; and

•     have been prepared in accordance with the requirements of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Material uncertainty relating to going concern

We draw attention to note 1.2 in the financial statements. As stated in note 1.2, the company has been significantly affected by the Covid-19 pandemic and post year-end, the conflict in Ukraine, and is reliant on its parent company Luxaviation Holding Company SA for financial support. These conditions, together with the other matters set out in note 1.2, indicate that a material uncertainty exists that may cast significant doubt about the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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.

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 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.

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 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, 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.

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 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.

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 company 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 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 company. 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 company, including the extend 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 company, together with the discussions held with the company 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.

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.

• Reviewing and challenging the assumptions and judgements used by management in their significant accounting estimates.

• 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 balances and transactions.

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.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

The income statement has been prepared on the basis that all operations are continuing operations.

Execujet (UK) Limited is a private company limited by shares incorporated in England and Wales. The registered office is First Floor, Rosalind Franklin House, Fordham Road, Newmarket, Suffolk, United Kingdom, CB8 7XN. The company's principal activities and nature of its operations are disclosed in the directors' report.

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.

These financial statements for the year ended 31 December 2021 are the first financial statements of ExecuJet (UK) Limited prepared in accordance with UK-adopted IAS. The company transitioned from FRS 101 to UK-adopted IAS for all periods presented and the date of transition to UK-adopted IAS was 1 January 2020.

The transition to UK-adopted IAS has had no effect on the reported financial position or financial performance.

The financial statements are prepared in sterling, which is the functional currency of the company. 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.

At the year ended 31 December 2021, the company's truebalance sheet was in deficit by £8,442k.

The company is reliant on the financial support of its ultimate parent company, Luxaviation Holding Company SA, which has confirmed that it will provide support for a period of at least 12 months from the date of approval of these financial statements.

There is material uncertainty within the aviation industry in respect of the war in Ukraine, rising fuel prices and inflationary pressures on costs in general. However the directors are confident that the company will retain adequate resources to continue to operate for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing these financial statements.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

Property, plant and equipment are initially measured at cost and subsequently measured at cost, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost of assets less their residual values over their useful lives on the following bases:

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the income statement.

Investment property, which comprises office space that is leased to a third party under a operating lease, is initially measured at cost and subsequently measured using the cost model, net of depreciation and any impairment losses. Investment properties are depreciated over the life of the lease with a useful economic life of 15 years.

At each reporting end date, the company reviews the carrying amounts of its tangible and intangible 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).

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.

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.

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 while the liability is outstanding.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs.

The tax expense represents the sum of the tax currently payable and deferred 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 company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. 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.

The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of inventories or non-current assets.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

At inception, the company 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 company 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 company'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 company 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 lease liability is measured at amortised cost using the effective interest method. It is remeasured when there is a change in: future lease payments arising from a change in an index or rate; the company's estimate of the amount expected to be payable under a residual value guarantee; or the company's assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in this way, a corresponding adjustment is made to the carrying amount of the right-of-use asset, or is recorded in profit or loss if the carrying amount of the right-of-use asset has been reduced to zero.

The company 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.

When the company acts as a lessor, leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessees, over the major part of the economic life of the asset. All other leases are classified as operating leases. If an arrangement contains lease and non-lease components, the company applies IFRS 15 to allocate the consideration in the contract. When the company is an intermediate lessor, it accounts for its interests in the head lease and the sub-lease separately, classifying the sub-lease with reference to the right-of-use asset arising from the head lease instead of the underlying asset.

Rentals under operating leases are charged on a straight-line basis over the lease term, even if the payments are not made on such basis.

Government grants, which include amounts received under the Coronavirus Job Retention Scheme, are recognised at the fair value of the grant received or receivable when there is reasonable assurance that the grant conditions will be met and the grants will be received. The income is recognised in other income on a systematic basis over the periods in which the associated costs are incurred, using the accrual model.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

In the application of the company’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.

At the year-end, trade receivables net of provisions for doubtful debts total £3,331k. Judgement has been taken as to whether these balances will be recovered in full. Where practicable the company 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.

Under IFRS 15 'Revenue from Contracts with Customers', contracts with customers are reviewed to ensure the revenue associated with these has been correctly treated. Charter activities are treated as Agent and therefore are recognised on a net basis. Sub-charter activities are treated as Principal and are therefore 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.

In the current year, there were no new or revised Standards and Interpretations which had an effect on the company's financial statements for the year ended 31 December 2021.

At the date of authorisation of these financial statements, the following Standards and Interpretations, which have not yet been applied in these financial statements, will have an effect on future periods or were in issue but not yet effective.

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.

Revenue recognition policy

Revenue is recognised only when there is evidence of an arrangement and the company determines that the collection is considered probable. In determining whether the collection is probable the company considers a number of factors including the credit worthiness of the client and the contractual payment terms.

The company's principal activity is the management of aircraft in the business aviation sector. Additional revenues are generated in the form of arrangement fees arising from the use of managed aircraft in charter activities, income from aircraft acceptance and registration service fees and operating.

The types of revenues recognised are Management of aircraft, Charter activities and Sub-charter activities. The company enters into different types of contracts for each of the revenue streams. All contracts are non-long term and there is no need to capitalise them. There are no judgements made in evaluating when a customer obtains control of the services. All services are transferred at point in time.

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 etc. All services are charged on the same pattern and therefore are treated as a fixed management fee. In addition, the company takes an advance payment. The customer is obliged to top up the advance payment when this no longer covers aircraft operations. If the customer fails to pay their monthly bills and does not have sufficient advanced payment, the company has the right to ground the aircraft - and therefore reduce their financial exposure. The company recognises the revenue on a monthly basis. Any costs incurred on behalf of the customer are recharged at zero margin. The company acts as a principal.

Charter activities - the service is a charter flight on a managed aircraft - this 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. Charter flight price is a fixed fee payable in advance to the scheduled charter flight. The company recognises the revenue when the flight is completed. The company acts as an agent.

Sub-charter activities - the service is a charter flight on an aircraft purchased or sub-let from a third party operator. The company is responsible for fulfilling the promise to provide the specified charter services and receives the full consideration and bears all the costs in relation to the flight. Charter flight price is a fixed fee payable in advance to the scheduled charter flight. The company recognises the revenue when the flight is completed. The company acts as a principal.

There are no performance obligations that are expected to be satisfied after more than one year.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

In the financial statements for the year ended 31 December 2020, the total for wages and salaries omitted amounts paid under the Coronavirus Job Retention Scheme of £253k and other payments to employees of £50k.

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2020 - 2).

The charge for the year can be reconciled to the profit per the income statement as follows:

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 company 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.

Trade receivable disclosed above are classified as loans and receivables and are therefore measured at amortised cost.

Amounts owed by fellow group undertakings of £2,837k as at 31 December 2020 and £2,380k as at 31 December 2019 were previously classified as non-current. These have now been treated as current assets.

The directors consider that the carrying amount of trade and other receivables is approximately equal to their fair value.

No significant receivable balances are impaired at the reporting end date.

In the financial statements for the year ended 31 December 2020, other payables £1,538k relating to deposits held by the client on behalf of customers were included in accruals and deferred income. In the current year ended 31 December 2021, customer deposits valued at £3,176k are included in other payables.

Amounts owed to fellow group undertakings includes £409k (2020: £392k, 2019: £668k) owed to a related group company. The interest rate on the group loan is 4.5%. There is no set repayment date.

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 company 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 company 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.

Impairment

The company 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 company 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 company 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 company's historical experience and informed credit assessment and including forward-looking information.

The company assumes that the credit risk on a financial asset has increased significantly if it is more than 30 days past due.

The company considers a financial asset to be in default when the borrower is unlikely to pay its credit obligations to the company in full, without recourse by the company 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 company 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 company 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.

Qualitative disclosures

Through the company'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 company operates within. Covid-19 has had an impact on the economic growth of many industries.

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 company is that of rising fuel prices. Fuel prices increasing can impact margins; however, the company has reflected these additional costs through its product pricing. The company'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 company 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.

The company 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 company is exposed to. The company 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 company's main credit risk arises through sales made to customers (trade receivables), and other receivables.

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.

Financial liabilities

The company recognises financial debt when the company 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 company 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 company's obligations are discharged, cancelled, or they expire.

The company 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:

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 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 company is exposed to movements between the US dollar and Sterling. The effect of a 5% strengthening in the US dollar against Sterling at the reporting date on the US dollar denominated balances at the year end would, all other variables being held constant, have resulted in a decrease in the net profit for the year of £340k. A 5% weakening in the exchange rate would, on the same basis, have resulted in an increase in the net profit by £340k.

The company 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 a decrease in the net profit the year of £137k. A 5% weakening in the exchange rate would, on the same basis, have resulted in an increase in the net profit by £137k.

The company is also exposed to movements between the Swiss Francs and Sterling. The effect of a 5% strengthening in the Swiss Franc against Sterling at the reporting date on the Swiss Franc denominated balances at the year end would, all other variables being held constant, have resulted in an increase in the net profit the year of £8k. A 5% weakening in the exchange rate would, on the same basis, have resulted in a decrease in the net profit by £8k.

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:

The company has has no short-term or low-value leases and therefore no expenditure has been recognised in profit or loss for these.

The company leases properties at Capital Park, Fulbourn and Newmarket as well as some office equipment under agreements of between 10 to 15 years for property leases, and 5 years for equipment leases. If the leases are renewed or extended, the terms of the leases are renegotiated.

The company sometimes negotiates a break clause in its property leases, however the company's lease liabilities at the end of the period reflect the full term of the lease, as the company is not reasonably certain that the break clause will be exercised.

The Fulbourn property meets the definition of an investment property and is accounted for as such in accordance with IFRS 16 and IAS 40. The company also received income from subletting this property to a third party as an operating lease.

From the second quarter of 2022, the repayments on the Fulbourn facilities increased to £509,850 per annum, and this increase has also been passed on to the sublease from the same period.

As at 31 December 2021 there were no leases that had not commenced to which the company was committed.

The fair value of the company's lease obligations is approximately equal to their carrying amount.

The company’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 company comprises working capital and equity consisting of issued share capital, reserves and retained losses.

The company 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 company is not subject to any externally imposed capital requirements.

The company operates a defined contribution pension scheme for all qualifying employees. The assets of the scheme are held separately from those of the company in an independently administered fund.

The operating leases represent leases of Capital Park, Fulbourn to third parties. The sub-lease is an operating lease and the company, being a lessor, receives rental income accordingly.

At the reporting end date the company had contracted with tenants for the following minimum lease payments:

The client has recognised a right-of-use asset in relation to a property accounted for as a finance lease under IFRS 16. This property also meets the definition of an investment property, which has been reflected in the accounts under the cost model.

The company then sub-leases this property to another entity. However, the sublease term does not represent the majority of the economic useful life of the head lease. Therefore, the company accounts for the sub-lease as an operating lease in accordance with IFRS 16.

The compensation of key management personnel is the same as disclosed in Note 9.

As at 31 December 2021, the company owed £11,629k (2020: £9,747k, 2019: £11,184k) to entities in the Luxaviation Group and was owed £3,942k (2020: £3,027k, 2019: £3,251k). Of these balances the company owed £5,544k (2020: £nil, 2019: £nil) to the parent company, Luxaviation Europe SA, and was owed £454k (2020: £nil, 2019: £nil). The company earned revenue of £2,564k (2020: £709k, 2019: £77k) and incurred cost of sales expenditure of £4,188k (2020: £943k, 2019: £4,039k) and administrative expenditure of £110k (2020: £1,034k, 2019: £132k) from entities within the Luxaviation Group. There was £nil revenue, cost of sales expenditure and administrative expenditure in relation to the parent company, Luxaviation Europe SA (2020: £nil, 2019: £nil).

The immediate parent company and controlling party is Luxaviation Europe SA, 4a, rue Albert Borschette, 1246 Luxembourg, a company incorporated and registered in Luxembourg.

The smallest and largest group into which the company's accounts are consolidated is that headed by Luxaviation Holding Company SA, 4a rue Albert Borschette, 1246 Luxembourg, the company's ultimate parent company.

The consolidated financial statements of Luxavaition Holding Company SA are not available to the public.

On 24 February 2022, Russia launched an invasion of Ukraine. The war 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 company is that of rising fuel prices. Fuel prices increasing can impact margins; however, the company has reflected these additional costs through its product pricing.