Perth Aircraft Leasing (UK) Limited - Limited company accounts 23.2

REGISTERED NUMBER: 08959688 (England and Wales)

Strategic Report, Report of the Directors and

Financial Statements

for the Year Ended 31 December 2022

for

Perth Aircraft Leasing (UK) Limited

Page

Company Information

1

Strategic Report

2

Report of the Directors

4

Report of the Independent Auditors

6

Statement of Comprehensive Income

9

Balance Sheet

10

Statement of Changes in Equity

11

Cash Flow Statement

12

Notes to the Cash Flow Statement

13

Notes to the Financial Statements

14

DIRECTORS:

A Hewitson

A S Greer

SECRETARY:

Centralis UK Ltd

REGISTERED OFFICE:

100 Longwater Avenue

Green Park

Reading

RG2 6GP

REGISTERED NUMBER:

08959688 (England and Wales)

AUDITORS:

Anstey Bond LLP

Statutory Auditors &

Chartered Accountants

1-2 Charterhouse Mews

London

EC1M 6BB

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

The Company was incorporated in England and Wales on 26 March 2014, as a private company limited by shares under the Companies Act 2006, with the registration number 08959688.

REVIEW OF BUSINESS

On March 24th 2016, the Company entered into a lease agreement with Virgin Australia. The lease term expiry date was scheduled at April 5th 2024. However, on April 21st 2020, Virgin Australia's board of Directors, announced the decision to enter voluntary administration in accordance with Australian corporate law, and the decision of its Board of Directors to appoint special administrators to Virgin Australia and a number of its subsidiaries ("the Special Administrators").

On August 12th, 2020, the Special Administrators informed the Commandant in accordance with the lessee's future activation plan, the investor did not intend to continue operating the aircraft and returned the aircraft to the Company's possession during October 2020. The Company has been seeking a new lessee or sale arrangement for the Aircraft since this date.

On October 28th, 2022, the Company received an interim dividend from the creditors' trust administered by the Special Administrators on account of the Company's debt claim in the amount of approximately $2,468k which was recognized in the Statement of Comprehensive Income for the year ended 31 December 2022.

On December 22nd, 2022, the directors of the Company passed a resolution to allow Global Knafaim Leasing Ltd (henceforth "GKL"), the Company's shareholder, to continue to act on behalf of the Company under the power of attorney in relation to the administration of Virgin Australia Group, and to execute and ratify the execution of any other documents required in respect to the registration, sale and discharge of security of the Aircraft and associated maintenance.

On the same day, GKL, on behalf of the Company entered into a binding agreement to sell the Aircraft to a third-party aviation company (henceforth "the acquirer") for net proceeds of $21,500k, subject to the acquirer's satisfaction of the condition of the aircraft, with the transaction expected to be completed by February 28th 2023. The acquirer transferred $1,000k in December 2022, with a further $1,000k transferred in January 2023, after the year end, as a deposit in respect of the sale. As at 28 February, 2023, the mandatory conditions relating to completing the sale had not been met and both parties continued to promote the various remaining aspects relating to the sales transaction.

On March 9th, 2023, after the report date, the acquirer notified the Company of its intention to annul the agreement, on the basis that the aircraft was unsuitable and did not meet the required conditions in the agreement. The acquirer also gave notice to the Company of its demand for a refund of the advance of $2,000k that had been paid to the Company. GKL, on behalf of the Company, notified the acquirer that it rejected the claims and that the aircraft was ready for delivery and that the termination of the agreement was improper and in bad faith.

In August 2023, after the report date, GKL, on behalf of the Company, and the acquirer agreed a mutual termination agreement regarding the sale agreement from December 2022. On August 28th, 2023, GKL, on behalf of the Company, transferred $1,300k of the deposited funds back to the acquirer, with the balance retained by the Company.

On October 20th, 2023, after the report date, the directors of the Company sold the Aircraft to GKL for $33,974k to facilitate a transfer of legal title agreement with a new acquirer. The directors also noted that the sale of the Aircraft would cause the cessation of trade for the Company but consider the Company a going concern with the continued support from the Parent entity GKL.

On December 14th, 2023, after the report date, the Company received the final dividend from the creditors' trust administered by the Special Administrators on account of the Company's debt claim in the amount of approximately $458k.

At December 31st 2022, the Company had net liabilities of $17,403 (2021: $27,682). Further information regarding the financial position of the Company at the year end is provided in the Directors' Report.

Both the level of business during the year and the financial position of the Company at the year end were as expected, considering the circumstances.

PRINCIPAL RISKS AND UNCERTAINTIES

From the perspective of the Company, the principal risks and uncertainties are integrated with the principal risks of the Global Knafaim Leasing consolidated group (the "Group") and are not managed separately.

FINANCIAL AND OTHER KEY PERFORMANCE INDICATORS

The directors believe that analysis using key and other performance indicators, for the Company, is not necessary or appropriate for an understanding of the development, performance or position of the Company.

ON BEHALF OF THE BOARD:

A S Greer - Director

21 December 2023

The directors present their report with the financial statements of the company for the year ended 31 December 2022.

PRINCIPAL ACTIVITY

The principal activity of the company in the year under review was that of a lessor of an aircraft.

EVENTS SINCE THE END OF THE YEAR

Information relating to events since the end of the year is given in the notes to the financial statements.

DIRECTORS

The directors who have held office during the period from 1 January 2022 to the date of this report are as follows:

N J Cheater - resigned 14 December 2022

E V McEvoy - resigned 30 June 2022

A Hewitson - appointed 30 June 2022

A S Greer - appointed 14 December 2022

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The directors are responsible for preparing the Strategic Report, the Report of the Directors and the financial statements in accordance with applicable law and regulations.

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

-	select suitable accounting policies and then apply them consistently;

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

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

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

The directors are responsible for the maintenance and integrity of the corporate and financial information included on the company's website.

STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS

So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the company's auditors are unaware, and each director has taken all the steps that he ought to have taken as a director in order to make himself aware of any relevant audit information and to establish that the company's auditors are aware of that information.

AUDITORS

The auditors, Anstey Bond LLP, will be proposed for re-appointment at the forthcoming Annual General Meeting.

This report has been prepared in accordance with the provisions of Part 15 of the Companies Act 2006 relating to small companies.

ON BEHALF OF THE BOARD:

A S Greer - Director

21 December 2023

Opinion

We have audited the financial statements of Perth Aircraft Leasing (UK) Limited (the 'company') for the year ended 31 December 2022 which comprise the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Cash Flow Statement and Notes to the Cash Flow Statement, Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).

In our opinion the financial statements:

-	give a true and fair view of the state of the company's affairs as at 31 December 2022 and of its profit for the year then ended;

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

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

Basis for opinion

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

Material uncertainty related to going concern

We draw attention to the disclosures made in the Strategic Report and in note 2 to the financial statements concerning the uncertainty regarding the company's cessation of trade following the sale of the aircraft. The Directors consider that the company will continue as a going concern for the next 12 months with the support provided by the parent entity GKL. As stated in these disclosures, these events and conditions indicate that a material uncertainty exists that may cast doubt on the company's ability to continue as a going concern. Our opinion is not modified in respect of this matter.

Other information

The directors are responsible for the other information. The other information comprises the information in the Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Opinions on other matters prescribed by the Companies Act 2006

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

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

-	the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic Report or the Report of the Directors.

We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion:

-	adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or

-	the financial statements are not in agreement with the accounting records and returns; or

-	certain disclosures of directors' remuneration specified by law are not made; or

-	we have not received all the information and explanations we require for our audit; or

-	the directors were not entitled to take advantage of the small companies' exemption from the requirement to prepare a Strategic Report or in preparing the Report of the Directors.

Responsibilities of directors

As explained more fully in the Statement of Directors' Responsibilities set out on page four, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditors' responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

We gained an understanding of the legal and regulatory framework applicable to the company and the industry in which it operates, and considered the risk of acts by the company that were contrary to applicable laws and regulations, including fraud. We designed audit procedures to respond to the risk recognising that 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.

We focussed on laws and regulations which could give rise to material misstatement in the financial statements, including, but not limited to, the Companies Act 2006 and UK tax legislation. Our tests included agreeing the financial statement disclosures to underlying supporting documentation and enquiries with management. There are inherent limitations in the audit procedures described above, and the further removed non - compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. We did not identify any key audit matters in relation to irregularities, including fraud. As in all our audits, we also addressed the risk of management override of internal controls, including testing journals and evaluating whether there was evidence of bias by the directors that represented a risk of material misstatement due to fraud.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at www.frc.org.uk/auditorsresponsibilities. This description forms part of our Report of the Auditors.

Use of our report

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

Colin Ellis FCCA CF (Senior Statutory Auditor)

for and on behalf of Anstey Bond LLP

Statutory Auditors &

Chartered Accountants

1-2 Charterhouse Mews

London

EC1M 6BB

21 December 2023

TURNOVER

3

12,682

-

Cost of sales

(2,021

)

(36,017

)

GROSS PROFIT/(LOSS)

10,661

(36,017

)

Administrative expenses

(36

)

(40

)

OPERATING PROFIT/(LOSS)

4

10,625

(36,057

)

Interest payable and similar expenses

6

(308

)

(319

)

PROFIT/(LOSS) BEFORE TAXATION

10,317

(36,376

)

Tax on profit/(loss)

7

(38

)

54

PROFIT/(LOSS) FOR THE FINANCIAL YEAR

10,279

(36,322

)

OTHER COMPREHENSIVE INCOME

-

-

TOTAL COMPREHENSIVE INCOME FOR THE YEAR

10,279

(36,322

)

FIXED ASSETS

Tangible assets

8

21,500

23,521

CURRENT ASSETS

Debtors

9

3

11,974

Cash at bank

-

161

3

12,135

CREDITORS

Amounts falling due within one year

10

(1,034

)

(16,169

)

NET CURRENT LIABILITIES

(1,031

)

(4,034

)

TOTAL ASSETS LESS CURRENT LIABILITIES

20,469

19,487

CREDITORS

Amounts falling due after more than one year

11

(37,872

)

(47,169

)

NET LIABILITIES

(17,403

)

(27,682

)

CAPITAL AND RESERVES

Called up share capital

15

14

14

Share premium

16

10,000

10,000

Retained earnings

16

(27,417

)

(37,696

)

SHAREHOLDERS' FUNDS

(17,403

)

(27,682

)

The financial statements were approved by the Board of Directors and authorised for issue on 21 December 2023 and were signed on its behalf by:

A S Greer - Director

Called up

share

Retained

Share

Total

capital

earnings

premium

equity

$'000

$'000

$'000

$'000

Balance at 1 January 2021

14

(1,374

)

10,000

8,640

Changes in equity

Total comprehensive income

-

(36,322

)

-

(36,322

)

Balance at 31 December 2021

14

(37,696

)

10,000

(27,682

)

Changes in equity

Total comprehensive income

-

10,279

-

10,279

Balance at 31 December 2022

14

(27,417

)

10,000

(17,403

)

Cash flows from operating activities

Cash generated from operations

1

147

480

Interest paid

(308

)

(319

)

Net cash from operating activities

(161

)

161

(Decrease)/increase in cash and cash equivalents

(161

)

161

Cash and cash equivalents at beginning of year

2

161

-

Cash and cash equivalents at end of year

2

-

161

1.	RECONCILIATION OF PROFIT/(LOSS) BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS

31.12.22

31.12.21

$'000

$'000

Profit/(loss) before taxation

10,317

(36,376

)

Impairment charges

2,021

36,017

Finance costs

308

319

12,646

(40

)

Decrease/(increase) in trade and other debtors

11,971

(39

)

(Decrease)/increase in trade and other creditors

(24,470

)

559

Cash generated from operations

147

480

2.	CASH AND CASH EQUIVALENTS

The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts:

Year ended 31 December 2022

31.12.22

1.1.22

$'000

$'000

Cash and cash equivalents

-

161

Year ended 31 December 2021

31.12.21

1.1.21

$'000

$'000

Cash and cash equivalents

161

-

3.	ANALYSIS OF CHANGES IN NET DEBT

At 1.1.22

Cash flow

At 31.12.22

$'000

$'000

$'000

Net cash

Cash at bank

161

(161

)

-

161

(161

)

-

Debt

Debts falling due within 1 year

(6,928

)

6,928

-

Debts falling due after 1 year

(36,955

)

5,530

(31,425

)

(43,883

)

12,458

(31,425

)

Total

(43,722

)

12,297

(31,425

)

1.	STATUTORY INFORMATION

Perth Aircraft Leasing (UK) Limited is a private company, limited by shares , registered in England and Wales. The company's registered number and registered office address can be found on the Company Information page.

2.	ACCOUNTING POLICIES

Basis of preparing the financial statements

These financial statements have been prepared in accordance with Financial Reporting Standard 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland" and the Companies Act 2006. The financial statements have been prepared under the historical cost convention.

The accounts are prepared in US Dollars, the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest $'000.

Tangible fixed assets

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.

At each reporting date the Company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.

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:

Aircraft

- 12.5%

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 the Statement of Comprehensive Income.

Financial instruments

The Company 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 non-puttable 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 financial transaction, like the payment of a trade debt deferred beyond normal business terms or financed, at a rate of interest that is not a market rate or in the case of an out-right short-term loan not at market rate, the financial asset or liability is measured, initially at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument, and subsequently at amortised cost.

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 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 the asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the company would receive for an asset if it were to be sold at the reporting 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.

Taxation

Taxation for the year comprises current and deferred tax. Tax is recognised in the Statement of Comprehensive Income, except to the extent that it relates to items recognised in other comprehensive income or directly in equity.

Current or deferred taxation assets and liabilities are not discounted.

Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date.

Deferred tax

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

Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference.

Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.

Foreign currencies

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 the Statement of Comprehensive Income 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 Statement of Comprehensive Income within 'finance income or costs'. All other foreign exchange gains and losses are presented in the Statement of Comprehensive Income within 'other operating income'.

Debtors

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

Cash and cash equivalents

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.

Creditors

Short term creditors are measured at transaction price, less any impairment. Loans payable 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.

Maintenance reserve and security deposits

Typically, under an operating lease, the lessee is responsible for performing all maintenance but might be required to make deposit payments to the Company for heavy maintenance, overhaul or replacement of certain high-value components of the aircraft. These maintenance payments are based on hours or cycles of utilisation or on a calendar time, depending upon the component, and are required to be made monthly in arrears or at the end of the lease term. Whether to permit a lessee to make maintenance payments at the end of the lease term, rather than requiring such payments to be made monthly, depends on a variety of factors, including the creditworthiness of the lessee, the level of security deposit which may be provided by the lessee and market conditions at the time the Company enters into the lease.

If a lessee is making monthly maintenance payments, the Company would typically be obligated to reimburse the lessee for costs they incur for heavy maintenance, overhaul or replacement of certain high-value components to the extent of maintenance payments received in respect of the specific maintenance event, usually shortly following completion of the relevant work. Any excess maintenance reserve at the end of the lease term will be recognised as revenue.

The Company records maintenance payments paid by the lessee as accrued maintenance payments liabilities in recognition of the Company's contractual commitment to refund such receipts. In these contracts, the Company does not recognise such maintenance payments as maintenance revenue during the lease. Reimbursements to the lessee upon receipt of evidence of qualifying maintenance work are charged against the existing accrued maintenance payments liability. The Company defers maintenance revenue recognition of all maintenance payments collected until the end of the lease, when the Company is able to determine the amount, if any, by which reserve payments received exceed costs to be incurred by the current lessee in performing scheduled maintenance. Any excess maintenance reserve at the end of the lease term will be recognised as revenue by the head-lessor, a fellow group undertaking.

Security deposits represent cash received from the lessee that is held on deposit until the lease expiration. The Company's operating leases also obligates the lessees to maintain flight equipment and comply with all governmental requirements applicable to the flight equipment, including without limitation, operational, maintenance, registration requirements and airworthiness directives.

Finance costs

Finance costs are charged to the Statement of Comprehensive Income 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.

Operating leases: the company as a lessor

Rental income from operating leases is credited to the Statement of Comprehensive Income on a straight line basis over the term of the relevant lease.

Operating leases: the Company as a lessee

Rentals paid under operating leases are charged to the Statement of Comprehensive Income on a straight line basis over the lease term.

Benefits received as an incentive to sign an operating lease are recognised on a straight line basis over the lease term, unless another systematic basis is representative of the time pattern of the lessee's benefit from the use of the leased asset.

The Company has advantage of the optional exemption available on transition to FRS 102 which allows lease incentives on leases entered into before the date of transition to the standard on 01 January 2017, to continue to be charged over the period to the first market rent review rather than the term of the lease.

Interest income

Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.

Borrowing costs

All borrowing costs are recognised in the Statement of Comprehensive Income in the year in which they are incurred.

Provisions for liabilities

Provisions are made where an event has taken place that gives the Company 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 the Statement of Comprehensive Income in the year that the Company 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 made, they are charged to the provision carried in the Balance Sheet.

Going concern

The financial statements have been prepared on a going concern basis. The board has assessed the Company’s financial position as at 31 December 2022 and the factors that may impact the Company for a period of up to 12 months from the date of these financial statements were signed.

The Company's primary activites are that of aircraft leasing however post year end the Company sold the aircraft resulting in a cessation of trading. The Directors consider the company to continue as a going concern for the next 12 months as they seek further opportunities with the continued support of the Parent Company GKL and therefore it is deemed appropriate to prepare the financial statements on a going concern basis.

3.

TURNOVER

The turnover and profit (2021 - loss) before taxation are attributable to the one principal activity of the company.

An analysis of turnover by class of business for the year ended 31 December 2022 is given below:

$'000

Lease payments received

2,468

Maintenance reserve surplus

10,214

12,682

This analysis is not considered to be applicable to the year ended 31 December 2021.

4.	OPERATING PROFIT/(LOSS)

The operating profit (2021 - operating loss) is stated after charging:

31.12.22

31.12.21

$'000

$'000

Foreign exchange differences

1

-

5.	AUDITORS' REMUNERATION

31.12.22

31.12.21

$'000

$'000

Fees payable to the company's auditors for the audit of the company's financial statements

12

12

The amounts due to the auditors in the current year, are broken down as $9,000 for the statutory audit, and $3,000 for non-audit services.

6.

INTEREST PAYABLE AND SIMILAR EXPENSES

31.12.22

31.12.21

$'000

$'000

Bank loan interest

308

319

7.

TAXATION

Analysis of the tax charge/(credit)

The tax charge/(credit) on the profit for the year was as follows:

31.12.22

31.12.21

$'000

$'000

Deferred tax

38

(54

)

Tax on profit/(loss)

38

(54

)

Reconciliation of total tax charge/(credit) included in profit and loss

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

31.12.22

31.12.21

$'000

$'000

Profit/(loss) before tax

10,317

(36,376

)

Profit/(loss) multiplied by the standard rate of corporation tax in the UK of 19% (2021 - 19%)

1,960

(6,911

)

Effects of:

Expenses not deductible for tax purposes

384

6,850

Capital allowances in excess of depreciation

(1,903

)

-

Depreciation in excess of capital allowances

-

76

Utilisation of tax losses

(441

)

-

Movements in deferred tax

38

(69

)

Total tax charge/(credit)

38

(54

)

The UK Finance bill 2015 reduced the standard corporation tax rate form 20% to 19% effective 1 April 2017 and the UK Finance Bill 2022 increased the corporation tax rate to 25% effective from 1 April 2023. Accordingly, the deferred tax balance has been stated after taking into account the effect of the changes in tax rates.

8.	TANGIBLE FIXED ASSETS

Plant and

machinery

$'000

COST

At 1 January 2022

and 31 December 2022

88,111

DEPRECIATION

At 1 January 2022

64,590

Impairments

2,021

At 31 December 2022

66,611

NET BOOK VALUE

At 31 December 2022

21,500

At 31 December 2021

23,521

No depreciation charges have been recognised in the current or prior year as the asset held has not been in use.

9.

DEBTORS

31.12.22

31.12.21

$'000

$'000

Amounts falling due within one year:

VAT

3

3

Deferred tax asset

-

38

3

41

Amounts falling due after more than one year:

Amounts owed by group undertakings

-

11,933

Aggregate amounts

3

11,974

10.

CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR

31.12.22

31.12.21

$'000

$'000

Bank loans and overdrafts (see note 12)

-

5,416

Other loans (see note 12)

-

1,512

Amounts owed to group undertakings

-

9,212

Other creditors

1,000

-

Accrued expenses

34

29

1,034

16,169

Included within other creditors is an amount of $1,000k being held as a deposit in respect of the planned sale of the Aircraft.

11.

CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR

31.12.22

31.12.21

$'000

$'000

Bank loans (see note 12)

-

7,042

Other loans (see note 12)

31,425

29,913

Amounts owed to group undertakings

6,447

10,214

37,872

47,169

Amounts owed to group undertaking are interest free, unsecured and subordinate to the Company's other debts.