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Registered number: 07680154
Avfuel Limited
Annual report and financial statements
For the year ended 31 December 2022
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Avfuel Limited
Company Information
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2nd Floor 168 Shoreditch High Street
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Chartered Accountants & Statutory Auditor
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Avfuel Limited
Contents
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Independent auditors' report
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Consolidated statement of comprehensive income
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Consolidated balance sheet
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Consolidated statement of changes in equity
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Company statement of changes in equity
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Consolidated statement of cash flows
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Notes to the financial statements
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Avfuel Limited
Group strategic report
For the year ended 31 December 2022
The director presents their Strategic Report with the audited financial statements of Avfuel Limited (the Company) for the year ended 31 December 2022.
Business review and principal activities
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Avfuel Limited, (the Company), incorporated in the United Kingdom, is a wholly owned subsidiary of Avfuel Corporation (the Parent Company), incorporated in the state of Michigan, United States of America.
The Company’s principal activity is purchasing and reselling aviation fuel, as well as related products and services to commercial, industrial, and private customers in the aviation industry.
Avfuel Limited EU S.à.r.l, incorporated in Luxembourg, is a wholly owned subsidiary of the Company. In 2022 the Company completed its transition of transacting business in certain EU countries into this Luxembourg subsidiary which started in 2021 in response to Brexit.
The Company’s financial statements, for the year ended 31 December 2022, reflect total revenues of $139,952,440 ($46,366,996 in 2021). This growth was partially due to increased sales to key accounts in the Commercial segment as well as expanding sales beyond the Company’s core UK and continental Europe region including in China, the Caribbean and Africa.
From 1 December 2022, the presentational currency of the Company changed from Sterling to US Dollars. This change was made to bring the Company in line with the Parent Company’s reporting methods.
Principal risks and uncertainties
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The Group's principal risks and uncertainties are integrated with the principal risks of the Avfuel Corporation and are not managed separately. These risks include, but are not limited to:
• Price/market fluctuations
• Currency fluctuations
• Interest rates
• Credit risk
• Competition
Financial key performance indicators
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This report was approved by the board on 26 September 2023 and signed on its behalf.
Page 1
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Avfuel Limited
Director's report
For the year ended 31 December 2022
The director presents his report and the financial statements for the year ended 31 December 2022.
Director's responsibilities statement
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The director is responsible for preparing the Group strategic report, the Director's report and the consolidated financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the director is required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgments and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The director is 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 the Group and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The company's principal activity is providing fuel and services to the aviation market.
The director who served during the year was:
There have been no significant events affecting the Group since the year end.
Disclosure of information to auditors
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The director at the time when this Director's report is approved has confirmed that:
∙so far as he is aware, there is no relevant audit information of which the Company and the Group's auditors are unaware, and
∙he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company and the Group's auditors are aware of that information.
Post balance sheet events
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There have been no significant events affecting the Group since the year end.
Page 2
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Avfuel Limited
Director's report (continued)
For the year ended 31 December 2022
The auditors, Kreston Reeves LLP, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board on 26 September 2023 and signed on its behalf.
Page 3
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Avfuel Limited
Independent auditors' report to the members of Avfuel Limited
We have audited the financial statements of Avfuel Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2022, which comprise the Group Statement of comprehensive income, the Group and Company Balance sheets, the Group Statement of cash flows, the Group and Company Statement of changes in equity and the related notes, 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 Group's and of the parent Company's affairs as at 31 December 2022 and of the Group's profit for the year then ended;
∙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.
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 Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council'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
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In auditing the financial statements, we have concluded that the director's use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the parent Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the director with respect to going concern are described in the relevant sections of this report.
The other information comprises the information included in the Annual Report other than the financial statements and our Auditors' report thereon. The director is 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.
Page 4
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Avfuel Limited
Independent auditors' report to the members of Avfuel Limited (continued)
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group strategic report and the Director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Group strategic report and the Director's report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group strategic report or the Director's report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
∙adequate accounting records have not been kept by the parent Company, or returns adequate for our audit have not been received from branches not visited by us; or
∙the parent Company financial statements are not in agreement with the accounting records and returns; or
∙certain disclosures of director's 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
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As explained more fully in the Director's responsibilities statement set out on page 2, the director is 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 director determines 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 director is responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Page 5
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Avfuel Limited
Independent auditors' report to the members of Avfuel Limited (continued)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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 Group financial statements.
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:
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the group and industry, and through discussion with the director and other management (as required by auditing standards), we identified that the principal risks of non-compliance with laws and regulations related to health and safety, anti-bribery and employment law. We considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies Act 2006, taxation and pension legislation. We communicated identified laws and regulations throughout our team and remained alert to any indications of non-compliance throughout the audit. We evaluated management’s incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries to increase revenue or reduce expenditure. Audit procedures performed by the group engagement team included:
∙Discussions with management and assessment of known or suspected instances of non-compliance with laws and regulations (including health and safety) and fraud, and review of the reports made by management; and
∙Assessment of identified fraud risk factors; and
∙Performing analytical procedures to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
∙Confirmation of related parties with management, and review of transactions throughout the period to identify any previously undisclosed transactions with related parties outside the normal course of business; and
∙Performing analytical procedures with automated data analytics tools to identify any unusual or unexpected relationships, including related party transactions, that may indicate risks of material misstatement due to fraud; and
∙Identifying and testing journal entries, in particular any manual entries made at the year end for financial statement preparation.
Because of the inherent limitations of an audit, there is a risk that we will not detect all irregularities, including those leading to a material misstatement in the financial statements or non-compliance with regulation. This risk increases the more that compliance with a law or regulation is removed from the events and transactions reflected in the financial statements, as we will be less likely to become aware of instances of non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation.
Page 6
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Avfuel Limited
Independent auditors' report to the members of Avfuel Limited (continued)
As part of an audit in accordance with ISAs (UK), we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
∙Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
∙Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion of the effectiveness of the Company's internal control.
∙Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the director.
∙Conclude on the appropriateness of the director's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditors' report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our Auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.
∙Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
∙Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
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 Auditors' 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.
Robert Sellers FCCA (Senior statutory auditor)
for and on behalf of
Kreston Reeves LLP
Chartered Accountants
Statutory Auditor
37 St Margaret's Street
Canterbury
Kent
CT1 2TU
27 September 2023
Page 7
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Avfuel Limited
Consolidated statement of comprehensive income
For the year ended 31 December 2022
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Interest payable and similar expenses
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Profit for the financial year
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Currency translation differences
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Other comprehensive income for the year
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Total comprehensive income for the year
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Profit for the year attributable to:
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Owners of the parent Company
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The notes on pages 14 to 26 form part of these financial statements.
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Page 8
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Avfuel Limited
Registered number: 07680154
Consolidated balance sheet
As at 31 December 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 September 2023.
The notes on pages 14 to 26 form part of these financial statements.
Page 9
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Avfuel Limited
Registered number: 07680154
Company balance sheet
As at 31 December 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Profit and loss account brought forward
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Profit and loss account carried forward
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The financial statements were approved and authorised for issue by the board and were signed on its behalf on 26 September 2023.
The notes on pages 14 to 26 form part of these financial statements.
Page 10
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Avfuel Limited
Consolidated statement of changes in equity
For the year ended 31 December 2022
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Comprehensive income for the year
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Currency translation differences
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Total comprehensive income for the year
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Consolidated statement of changes in equity
For the year ended 31 December 2021
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Comprehensive income for the year
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Currency translation differences
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Total comprehensive income for the year
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The notes on pages 14 to 26 form part of these financial statements.
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Page 11
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Avfuel Limited
Company statement of changes in equity
For the year ended 31 December 2022
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Comprehensive income for the year
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Currency translation differences
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Total comprehensive income for the year
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Company statement of changes in equity
For the year ended 31 December 2021
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Comprehensive income for the year
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Currency translation differences
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Total comprehensive income for the year
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The notes on pages 14 to 26 form part of these financial statements.
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Page 12
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Avfuel Limited
Consolidated statement of cash flows
For the year ended 31 December 2022
Cash flows from operating activities
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Profit for the financial year
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Depreciation of tangible assets
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(Increase)/decrease in stocks
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of tangible fixed assets
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Purchase of share in associates
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Net cash from investing activities
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Cash flows from financing activities
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Net cash used in financing activities
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Net increase in cash and cash equivalents
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Cash and cash equivalents at beginning of year
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Cash and cash equivalents at the end of year
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Cash and cash equivalents at the end of year comprise:
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Page 13
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
Avfuel Limited is a private company, limited by shares, incorporated in England. The address of the registered office is 2nd Floor 168 Shoreditch High Street, London, United Kingdom E1 6RA.
2.Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and the Companies Act 2006.
The preparation of the financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires Group management to exercise judgment in applying the Group's accounting policies (see note 3).
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of comprehensive income in these financial statements.
The Group's presentational currency has changed from Pound Sterling to US Dollars in the year. Given that a significant majority of the Group's earnings are denominated in US Dollars, the director believes that the presentational currency change will give users of these financial statements a clearer understanding of financial performance and financial position and stability over time.
The financial statements are presented to the nearest US Dollar.
The following principal accounting policies have been applied:
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Balance sheet, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated statement of comprehensive income from the date on which control is obtained. They are deconsolidated from the date control ceases.
The Group has met its day to day working capital requirements. The Group provides aviation fuel and flight plans to the corporate market.
The Group has sufficient net assets and can meet its working capital obligations for a period of 12 months from the date of signing these accounts. As such this will enable the Group to continue in operational existence for the foreseeable future.
On this basis, the director considers it appropriate to prepare the financial statements on a going concern basis.
Page 14
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
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Foreign currency translation
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Functional and presentation currency
The Group's functional and presentational currency is USD.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Consolidated statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
On consolidation, the results of overseas operations are translated into Dollars at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are recognised in other comprehensive income.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Rendering of services
Revenue from a contract to provide services is recognised in the period in which the services are provided in accordance with the stage of completion of the contract when all of the following conditions are satisfied:
∙the amount of revenue can be measured reliably;
∙it is probable that the Group will receive the consideration due under the contract;
∙the stage of completion of the contract at the end of the reporting period can be measured reliably; and
∙the costs incurred and the costs to complete the contract can be measured reliably.
Page 15
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
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Current and deferred taxation
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The tax expense for the year comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the Company and the Group operate and generate income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
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10 - 12.5% straight line from date of first use
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Page 16
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
Investments in subsidiaries are measured at cost less accumulated impairment.
Investments in associates are measured under the equity method.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis. Work in progress and finished goods include labour and attributable overheads.
At each balance sheet date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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.
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Cash and cash equivalents
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Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
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.
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Provisions for liabilities
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Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Balance sheet.
Page 17
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
2.Accounting policies (continued)
The Group only enters into basic financial instrument transactions that result in the recognition of financial assets and liabilities like trade and other debtors and creditors, loans from banks and other third parties, loans to related parties and investments in ordinary shares.
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Investments in non-derivative instruments that are equity to the issuer are measured:
∙at fair value with changes recognised in the Consolidated statement of comprehensive income if the shares are publicly traded or their fair value can otherwise be measured reliably;
∙at cost less impairment for all other investments.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Consolidated statement of comprehensive income.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Group would receive for the asset if it were to be sold at the balance sheet date.
Financial assets and liabilities are offset and the net amount reported in the Balance sheet when there is an 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 settle the liability simultaneously.
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Changes in presentational currency
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With effect from 1 December 2022, the Company's and Group's presentational currency changed from Pound Sterling to US Dollars, given that a significant majority of earnings are denominated in US Dollars. The Director believes that the presentational currency change will give stakeholders a clearer understanding of the financial performance and financial position over time. Following this change in accounting policy, the prior year figures have been translated into US Dollars using the procedures below:
• assets and liabilities are translated into US Dollars at the closing rates of exchange
• trading results are translated into US Dollars at the average rates of exchange
• differences resulting from the retranslation of the opening net assets and tthe results for the period have been presented into a separate foreign exchange reserve on the Balance Sheet
Page 18
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Judgments in applying accounting policies and key sources of estimation uncertainty
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The preparation of the financial statements requires the directors to make judgements, estimates and assumptions that can affect the amounts reported for assets and liabilities, and the results for the year. The nature of estimation is such though that actual outcomes could differ significantly from those estimates.
The following judgements have had the most significant impact on amounts recognised in the financial statements:
Tangible fixed assets
The company has recognised tangible fixed assets with a carrying value of $450,864 (2021 - $658,532) at the reporting date (see note 9). These assets are stated at their cost less provision for depreciation and impairment. For material assets the Group determines at acquisition reliable estimates for the useful life of the asset, its residual value and decommissioning costs. These estimates are based upon such factors as the expected use of the acquired asset and market conditions. At subsequent reporting dates the director considers whether there are any factors such as technological advancements or changes in market conditions that indicate a need to reconsider the estimates used.
Taxation
Provision has been made in the financial statements for deferred tax amounting to $65,000 (2021 - $147,663) at the reporting date. The provision is based upon estimates of the availability of future taxable profits, the timing of the reversal of timing differences upon which the provision is based and the tax rates that will be in force at that time together with an assessment of the impact of future tax planning strategies.
Analysis of turnover by country of destination:
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The operating profit is stated after charging:
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Depreciation of tangible fixed assets
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Page 19
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Staff costs were as follows:
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The average monthly number of employees, including directors, during the year was 3 (2021 - 3).
The wages and salaries expense for the Group stated above consists of recharged costs for staff time recharged from fellow group Companies.
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Interest payable and similar expenses
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Origination and reversal of timing differences
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Page 20
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
8.Taxation (continued)
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Factors affecting tax charge for the year
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The tax assessed for the year is lower than (2021 - lower than) the standard rate of corporation tax in the UK of 19% (2021 - 19%). The differences are explained below:
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Profit on ordinary activities before tax
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Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
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Expenses not deductible for tax purposes
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Capital allowances for year in excess of depreciation
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Utilisation of tax losses
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Differing tax rates on overseas earnings
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Other timing differences leading to an increase (decrease) in taxation
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Total tax charge for the year
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Factors that may affect future tax charges
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As part of the Finance Bill 2021, which was substantively enacted on 1 April 2022, the corporation tax main rate is to remain at 19% until 31 March 2023.
Following the end of the accounting period, the UK government have announced that the main rate will increase on 1 April 2023 to 25%, for companies with taxable profits above £250,000. Companies with taxable profits below £50,000 will continue to pay at 19%, and marginal relief will apply between these thresholds. This change was enacted on 1 April 2022.
Deferred taxes have been measured using rates substantively enacted at the reporting date and reflected in these financial statements.
Page 21
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Charge for the year on owned assets
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Page 22
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Charge for the year on owned assets
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Investments in associates
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Page 23
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Investments in subsidiary companies
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The following was a subsidiary undertaking of the Company:
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11 Avenue de la Porte Neuve, 2227 Luxembourg, LUX
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The aggregate of the share capital and reserves as at 31 December 2022 and the profit or loss for the year ended on that date for the subsidiary undertaking were as follows:
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Aggregate of share capital and reserves
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Page 24
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Amounts owed by group undertakings
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Prepayments and accrued income
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Cash and cash equivalents
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Creditors: Amounts falling due within one year
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Amounts owed to group undertakings
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Accruals and deferred income
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Creditors: Amounts falling due after more than one year
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Amounts owed to group undertakings
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Page 25
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Avfuel Limited
Notes to the financial statements
For the year ended 31 December 2022
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Allotted, called up and fully paid
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10,000 (2021 - 10,000) Ordinary shares of $1.6153 each
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Foreign exchange reserve
This reserve comprises the difference arising from the translation of financial statements from Pounds Sterling to US Dollars, following the change of presentational currency on 1 December 2022.
Other reserves
This reserve represents the capitalisation of shareholder loans.
Profit and loss account
This reserve comprises all current and prior period retained profits and losses after deducting any distributions made to the company's shareholders.
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Related party transactions
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Transactions with group companies have not been disclosed in accordance with section 33.1A of Financial Reporting Standard 102.
There were no other related party transactions in the year.
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The ultimate controlling party is Avfuel Corporation by virtue of its 100% holding of the ordinary share capital of the company. Avfuel Corporation is a company incorporated in the United States of America and details of its controlling interests are disclosed in that company's financial statements.
Page 26
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