MENZIES_WORLD_CARGO_LIMIT - Accounts

The directors present the strategic report for the year ended 31 December 2022.

On 1 June 2022, the John Menzies plc shareholders approved a scheme arrangement for the sale of the entire issued share capital in John Menzies plc to GIL International Holdings V Limited, a subsidiary of Agility Public Warehousing Company K.S.C.P. (Agility). This transaction includes Menzies World Cargo Limited.

On 4 August 2022, the transaction was completed and the change in control effective. The company’s ultimate parent company from this date is Agility Public Warehousing Company K.S.C.P., a public company based in Kuwait and listed on the stock exchanges of Kuwait and Dubai.

Trading conditions within the business have improved during the current year. An increase in Revenue saw the company return a pre-tax profit of £1,295,000 (2021: £263,000 loss).

The management of the aviation services business and the execution of strategy are subject to a number of risks. These risks are managed in accordance with Board approved policies. The key non-financial business risks of the aviation services business and mitigating actions identified are as follows:

Business risk

• Risk of an adverse change in the business environment or to the overall global economy

•Risk of inadequate financing facilities or inadequately managing foreign exchange exposures

To mitigate these risks the company’s board undertakes monthly reviews of divisional results versus budget and forecast, and has a structured three-year plan in place. Market trends in key product categories are reviewed on a monthly basis and the cost base is reviewed to ensure that it is fit for purpose. The company, through its ultimate parent company, is confident that it has sufficient debt headroom available to fund the business in the medium-term.

Customer risk

• Risk associated with airline industry change. Airline consolidation or failure can lead to opportunities and threats.

To mitigate this risk the company ensures a balanced customer portfolio is in place and focuses on maintaining key relationships with airlines. Costs are reviewed on a regular basis to ensure that they are appropriate.

People risk

• Risk of losing key staff as a result of not providing sufficient people development opportunities

• Risk that a serious safety and security breach or incident occurs that is directly attributable to the actions of one of the company’s employees or the failure of related processes and/or training

• Risk of failing to provide staff with appropriate training working environments and failing to comply with relevant legislation

To mitigate these risks the company believes that retaining and developing staff is crucial for the business. Personal Development Programmes and Leadership Development Programmes are in place. The company works in tandem with the airport authorities and subjects all employees to rigorous checks. One of the key objectives of the company is the continuous improvement of the safety & security standards globally. There a number of Health & Safety and Quality Assurance programmes in place including:

MORSE (Menzies Operating Responsibly Safely Effectively) is the key safety management system and promotes a safety culture to ensure that in all operations globally, safety & security comes first.

SMART (Standard Menzies Audit Report Tool) is an integral part of the MORSE programme and promotes Quality Assurance and Quality Controls to ensure standards are monitored, effective and fit for purpose.

Technology risk

• Risk of collapse of an IT platform or an external cyber-attack on the IT infrastructure. The company operates its own IT platform, which is critical to the running of the business.

To mitigate this risk the company ensures that all back-up data centres have adequate power and facilities. The company also ensures that systems remain up to date with appropriate external firewalls where required. The company has a disaster recovery plan, which is periodically tested.

The company has a consistent programme as that of the Agility group in relation to ethics, integrity and compliance.

The company monitors key performance indicators (KPI’s) to help achieve key business objectives.

The table below indicates financial KPIs, which are used to monitor financial performance.

*EBITDA is stated before exceptional items.

The table below indicates operational KPI’s which monitor operational performance.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2022.

The principal activity of the company continued to be that of the supply of air freight handling services within the United Kingdom. Operating from London Heathrow Airport, this service comprises import and export cargo handling.

The results for the year are set out on page 9.

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:

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

The company does not operate a standard code in respect of payment to suppliers. Payments to suppliers are made in accordance with the agreed terms, provided that the supplier has performed in accordance with all relevant terms and conditions.

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 future developments.

Ernst & Young LLP were appointed as auditor to the company for the current reporting period. Subsequent to the reporting date, the company has appointed Johnston Carmichael LLP as its statutory auditor.

These financial statements have been prepared on a going concern basis.

The Board of Directors of the Company is required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements over a period of at least twelve months from the date of approval of the financial statements. The period of management’s assessment is the period to 31 December 2024.

The Company is reliant on parental support from the Company’s intermediate holding company, John Menzies Limited (the “parent”), The intermediate parent confirmed that it has the ability to provide such support and intends to provide the support, as appropriate, for a period of 15 months to 31 December 2024.

In reaching its conclusion on going concern, the Board of Directors of the Company assessed the ability and intention of the parent, John Menzies Limited, to continue to provide financial support. Following the change in ownership to Agility in August 2022, the parent updated its 3 Year Plan in May 2023 to consider the new facilities in place and carried out further stress testing due to the uncertain macro-economic environment and confirmed they remain satisfied with the parent’s ability to provide support. After reviewing the updated going concern assessment, the Board of Directors has a reasonable expectation that the parent has sufficient resources to continue in operational existence for the period to 31 December 2024. Furthermore, after undertaking enquiries, the Board of Directors are satisfied that the funding agreement with the ultimate parent, Agility was signed on 21 October 2022.

The Board has taken account of its intermediate holding company’s current intention and other relevant factors and has agreed that there is a reasonable expectation that the Company will continue as a going concern for a period of 15 months from the date of approval of these financial statements to 31 December 2024. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the financial statements.

The financial statements do not reflect any adjustments that would be required to be made if they were prepared on basis other than going concern.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period. In preparing these financial statements, the directors are required to:

•     select suitable accounting policies and then apply them consistently;

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

•     state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and

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

The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

We have audited the financial statements of Menzies World Cargo Limited for the year ended 31 December 2022 which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Changes in Equity and the related notes 1 to 24, 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 FRS 101 “Reduced Disclosure Framework (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•     give a true and fair view of the company’s affairs as at 31 December 2022 and of its loss for the year then ended;

•     have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and

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

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the 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.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate. Our evaluation of the directors’ assessment of the company’s ability to continue to adopt the going concern basis of accounting included:

• Reviewing the cashflow forecasts and sensitivity analysis prepared by management

• Performing a stress test over the forecasts and assessing the available mitigating actions

• Reviewing all financing arrangements in place including assessing the likelihood of additional support being required

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company’s ability to continue as a going concern for a period of 15 months to 31 December 2024.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the company’s ability to continue as a going concern.

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 this 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 the other information, we are required to report that fact.

We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

• the information given in the strategic report and the directors’ report for the financial year for which the financial statements are prepared is consistent with the financial statements; and

• the strategic report and 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 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 set out on page 5, 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.

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the entity and management.

• We obtained an understanding of the legal and regulatory frameworks that are applicable to the company and determined that the most significant are those that relate to the reporting framework (UK GAAP and Companies Act 2006) and the relevant tax compliance regulations. In addition, there are certain ither significant laws and regulations in relation to health and safety, employee matters, environments and bribery and corruption practices.

• We understood how Menzies World Cargo Limited is complying with those frameworks by making enquires of management to understand how the company maintains and communicates its policies and procedures in these areas. We corroborated our enquiries through review of Board minutes and noted that there was no contradictory evidence.

• We assessed the susceptibility of the company’s financial statements to material misstatement, including how fraud might occur by making enquiries with management and other employees within the company to understand the entity’s policies and procedures. We also obtained documentation on the entity level controls environment to determine whether it supports the prevention, detection and correction of material misstatements, including those that are due to fraud. We considered the risk if management override and determined that revenue recognition may present a fraud risk.

• Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our procedures involved enquiries with management and considering whether any events or conditions during the audit might have indicated non -compliance with laws and regulations. Our procedures on revenue included utilisation of data analytical tools to correlate sales to debtors to cash.

• Our procedures on judgements and estimates made in the financial statements included challenging the assumptions made and models used in determining estimates and sought to obtain both contradictory and corroborative evidence to challenge and support estimate inputs.

A further description of our responsibilities for the audit of the financial statements is located 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 notes on pages 12 to 26 form an integral part of the financial statements.

Menzies World Cargo Limited is a private company limited by shares incorporated in England and Wales. The registered office is MW1 Building 557 Shoreham Road, Heathrow Airport, London, United Kingdom, TW6 3RT. 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 Financial Reporting Standard 101 Reduced Disclosure Framework (FRS 101) and in accordance with applicable accounting standards.

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.

As permitted by FRS 101, the company has taken advantage of the following disclosure exemptions from the requirements of IFRS:

• inclusion of an explicit and unreserved statement of compliance with IFRS;

• presentation of a statement of cash flows and related notes;

• disclosure of the objectives, policies and processes for managing capital;

• disclosure of key management personnel compensation;

• disclosure of the categories of financial instrument and the nature and extent of risks arising on these financial instruments;

• the effect of financial instruments on the statement of comprehensive income;

• comparative period reconciliations for the number of shares outstanding and the carrying amounts of property, plant and equipment, intangible assets, investment property and biological assets;

• disclosure of the future impact of new International Financial Reporting Standards in issue but not yet effective at the reporting date;

• certain comparative narrative information; and

• related party disclosures for transactions with the parent or wholly owned members of the group.

Where required, equivalent disclosures are given in the group accounts of Agility Public Warehousing Company K.S.C.P. The group accounts of Agility Public Warehousing Company K.S.C.P. are available to the public and can be obtained as set out in note 24.

The company has taken advantage of the exemption under section 401 of the Companies Act 2006 not to prepare consolidated accounts. The financial statements present information about the company as an individual entity and not about its group.

Menzies World Cargo Limited is a wholly owned subsidiary of Agility Public Warehousing Company K.S.C.P. and the results of Menzies World Cargo Limited are included in the consolidated financial statements of Agility Public Warehousing Company K.S.C.P. which are available from The Secretary, Agility Public Warehousing Company K.S.C.P., PO Box 25418, Sulaibiya, Safat, 13115 Kuwait.

These financial statements have been prepared on a going concern basis.true

The Board of Directors of the Company is required to state whether it is appropriate to adopt the going concern basis of accounting in preparing the financial statements over a period of at least twelve months from the date of approval of the financial statements. The period of management’s assessment is the period to 31 December 2024.

The Company is reliant on parental support from the Company’s intermediate holding company, John Menzies Limited (the “parent”), The intermediate parent confirmed that it has the ability to provide such support and intends to provide the support, as appropriate, for a period of 15 months to 31 December 2024.

In reaching its conclusion on going concern, the Board of Directors of the Company assessed the ability and intention of the parent, John Menzies Limited, to continue to provide financial support. Following the change in ownership to Agility in August 2022, the parent updated its 3 Year Plan in May 2023 to consider the new facilities in place and carried out further stress testing due to the uncertain macro-economic environment and confirmed they remain satisfied with the parent’s ability to provide support. After reviewing the updated going concern assessment, the Board of Directors has a reasonable expectation that the parent has sufficient resources to continue in operational existence for the period to 31 December 2024. Furthermore, after undertaking enquiries, the Board of Directors are satisfied that the funding agreement with the ultimate parent, Agility was signed on 21 October 2022.

The Board has taken account of its intermediate holding company’s current intention and other relevant factors and has agreed that there is a reasonable expectation that the Company will continue as a going concern for a period of 15 months from the date of approval of these financial statements to 31 December 2024. Accordingly, they consider it appropriate to adopt the going concern basis in preparing the financial statements.

The financial statements do not reflect any adjustments that would be required to be made if they were prepared on basis other than going concern.

Turnover represents the weekly invoiced value of air-freight handling services excluding value-added tax. Cargo revenue is recognised at the point of departure for exports and at the point that the goods are ready for dispatch for imports.

The timing of customer billing in relation to the satisfaction of performance obligations results in amounts being recorded in the balance sheet for accrued and deferred income. Individual billing arrangements vary by customer and contract. Accrued income is recognised on contracts for which performance obligations have been satisfied but have not yet been billed to customers at the balance sheet date. When the recovery of such amounts becomes unconditional the customer is billed and the amounts are transferred to trade receivables. Deferred income is recognised in respect of payments received from customers in advance of the company fulfilling its performance obligations under the contracts.

Intangible assets other than goodwill include costs directly attributable to the production of identifiable software products controlled by the company which are expected to generate future economic benefits. Computer software products are amortised over their useful economic life which is usually 3 to 7 years.

Costs associated with maintaining computer software programs are recognised as an expense as incurred.

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

Depreciation is recognised so as to write off the cost or valuation 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 profit and loss account.

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in the profit and loss account.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

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). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in the profit and loss account.

Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in the profit and loss account.

Cash and cash equivalents include cash in hand, deposits held at call with banks and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

Financial assets are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument. Financial assets are classified into specified categories, depending on the nature and purpose of the financial assets.

At initial recognition, financial assets classified as fair value through profit and loss are measured at fair value and any transaction costs are recognised in profit or loss. Financial assets not classified as fair value through profit and loss are initially measured at fair value plus transaction costs. The company had no financial assets measured at fair value through profit or loss at the balance sheet date.

Financial instruments are classified as financial assets measured at amortised cost where the objective is to hold these assets in order to collect contractual cash flows, and the contractual cash flows are solely payments of principal and interest. They arise principally from the provision of goods and services to customers (eg trade receivables). They are initially recognised at fair value plus transaction costs directly attributable to their acquisition or issue, and are subsequently carried at amortised cost using the effective interest rate method, less provision for impairment where necessary.

The company recognises loss allowances for expected credit losses (ECLs) on financial assets measured at amortised cost where appropriate. The company measures loss allowances at an amount equal to lifetime ECLs, except for 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 ECLs.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition and when estimating ECLs, 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.

Lifetime ECLs are the ECLs that result from all possible default events over the expected life of a financial instrument. 12-month ECLs are the portion of ECLs that result from default events that are possible within the 12 months after the reporting date (or a shorter period if the expected life of the instrument is less than 12 months).

The maximum period considered when estimating ECLs is the maximum contractual period over which the company is exposed to credit risk.

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.

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'. The company had no financial liabilities at fair value through profit or loss at the balance sheet date.

Other financial liabilities, including borrowings, trade payables and other short-term monetary liabilities, are initially measured at fair value net of transaction costs directly attributable to the issuance of the financial liability. They are subsequently measured at amortised cost using the effective interest method. For the purposes of each financial liability, interest expense includes initial transaction costs and any premium payable on redemption, as well as any interest or coupon payable while the liability is outstanding.

Financial liabilities are derecognised when, and only when, the company’s obligations are discharged, cancelled, or they expire.

Equity instruments issued by the company are recorded at the proceeds received, net of direct issue costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.

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 profit and loss account 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 profit and loss account, 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 fixed 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 tangible fixed assets, 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 tangible fixed assets. 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.

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.

Exceptional items

Exceptional items are those material items which, by virtue of their size or incidence, are presented separately in the profit and loss account to enable a full understanding of the company's financial performance.

Prior period restatement

The prior period financial statements have been restated to reflect a revision to the classification of lease obligations due within and after one year. The revision has resulted in a decrease of lease obligations due within one year of £5,997k and a corresponding increase in lease obligations due after one year of the same amount.

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.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are outlined below.

Management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and level of future taxable profits together with an assessment of the effect of future tax planning strategies. Further details are included within note 9.

Management performs an impairment review on any assets that show indicators of impairment, including the company's investments. Management's impairment review involves exercising judgement about future cash flows and other events that are by their nature uncertain. Details of impairments identified in the year are outlined within note 11.

All turnover generated by the company is within the UK.

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

Their aggregate remuneration comprised:

In 2022, all directors (2021 - all directors) did not earn a salary from this entity but are remunerated in another group entity. Part of that remuneration covers director services for this entity.

The directors of the company are also directors of other subsidiary companies within the wider group and do not believe it to be practicable to apportion the aggregate remuneration receivable between their services as directors of the company and their services as directors of fellow subsidiary companies.

Exceptional items in the current year relate to £60k of costs associated with SAYE scheme payments as well as £31k in relation to an impairment charge on the company's investments in subsidiaries. In the prior year exceptional costs related to redundancy costs linked to a cost rationalisation exercise.

The charge/(credit) for the year can be reconciled to the profit/(loss) per the profit and loss account as follows:

Unrecognised tax losses

The company has unrecognised tax losses of £5.6m at the reporting date.

Change in corporation tax rate

A change in the future UK Corporation tax rate to 25% with effect from 1 April 2023 was announced in the March 2021 budget and substantively enacted on 24 May 2021. This change will have a consequential effect on the company's future tax charge in the UK and as the 25% tax rate was substantively enacted prior to the reporting date, deferred tax expected to unwind after 1 April 2023 has been calculated at 25% as opposed to the current tax rate of 19%.

During the current year, an impairment loss of £31k was recognised in relation to the company's investment in London Cargo Centre Ltd. This impairment loss is recognised within exceptional costs on the face of the Profit and Loss Account.

Details of the company's subsidiaries at 31 December 2022 are as follows:

The registered address of all of the company's subsidiaries is MW1 Building, 557 Shoreham Road, London Heathrow Airport, London, TW6 3RT.

Trade debtors at 1 January 2021 were £2,006k.

Bank overdrafts are unsecured.

Amounts owed to fellow group undertakings include £284k (2021 - £Nil) due in respect of group relief.

As lessee, the company leases various offices and ground handling equipment. The company's obligations under its leases are secured by the lessor's title to the leased assets. Lease contracts are typically entered into for fixed periods of one to ten years but may have break or extension options included. These terms are used to maximise operational flexibility in terms of managing contracts. In determining the lease term applicable for accounting purposes, management considers facts and circumstances that create economic incentive to exercise an extension option or not to exercise a termination option. Extension options are only included in the lease term if the lease is reasonably certain to be extended or not terminated. The assessment is reviewed if a significant event or significant change in circumstances occurs which affects this assessment and that is within the control of the lessee.

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 total cash outflow for leases during the year was £3,730k (2021 - £3,025k).

The principal pension scheme is the Scottish Widows Master Trust, a defined contribution pension scheme operated on behalf of the company by Scottish Widows. The assets of the scheme are held separately from those of the company in an independently administered fund.

The capital redemption reserve represents amounts retained as fixed capital following redemptions of shares under Company Law.

The profit and loss reserves represents cumulative profits or losses, net of dividends paid.

The company has certain leases of property and equipment with lease terms of 12 months or less and leases of office equipment with low value. The company applies the short-term lease and low value assets recognition exemption for these leases.

Amounts recognised in profit or loss as an expense during the period in respect of these arrangements are as follows:

In addition to amounts recognised in the year, the company has future lease commitments relating to non-lease components of contracts as well as short-term leases where the exemption from capitalisation has been utilised as follows:

The company has taken advantage of the exemption under paragraph 8(j) of FRS 101 not to disclose remuneration paid to key management personnel.

During the year the company transacted with related parties in the normal course of business and on an arm's length basis. The company has taken advantage of the exemption under paragraph 8(k) of FRS 101 not to disclose transactions with fellow wholly owned subsidiaries.

The company's immediate parent undertaking is Menzies Aviation Limited. The company's ultimate parent undertaking is Agility Public Warehousing Company K.S.C.P. which is the smallest and largest group preparing consolidated financial statements including the company. Copies of the consolidated financial statements are available from The Secretary, Agility Public Warehousing Company K.S.C.P., PO Box 25418, Sulaibiya, Safat, 13115 Kuwait.