Registration number:
Air Kilroe Limited
for the Year Ended 31 March 2021
Air Kilroe Limited
Contents
Company Information |
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Strategic Report |
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Directors' Report |
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Statement of Directors' Responsibilities |
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Independent Auditor's Report |
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Profit and Loss Account |
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Balance Sheet |
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Statement of Changes in Equity |
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Notes to the Financial Statements |
Air Kilroe Limited
Company Information
Directors |
Mr R J Lake OBE Air Marshal C R Spink Mr A J Wheatley |
Company secretary |
Mr M C Hutchinson |
Registered office |
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Auditors |
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Air Kilroe Limited
Strategic Report for the Year Ended 31 March 2021
The directors present their strategic report for the year ended 31 March 2021.
Principal activity
The principal activity of the company is that of a civil airline operator.
Fair review of the business
The results of the company for the year ended 31 March 2021 are as disclosed in the attached financial statements.
The company continues to provide scheduled airline services, charter and leasing of aircraft and crew, to domestic and European destinations for which it enjoys a good reputation for operational reliability. The company continues to be a major support and logistics provider to the oil industry along with its charter and scheduled service operations.
The results for the year ended 31 March 2021 continued to be affected by the impact of the COVID 19 pandemic.
Despite the difficult trading circumstances due to the COVID 19 pandemic and the impact directly on the aviation and tourism industry as a whole, Air Kilroe Limited has managed to adapt quickly to the restrictions that were set in place.
At the year end the company operated a mixed fleet of Jetstream 41, ERJ 135/145, ERJ170, and ATR-600 aircraft which allows for considerable flexibility in matching demand to capacity in both the scheduled airline and charter markets.
The fleet strategy is continuously being assessed. The SAAB fleet has now been returned and we will continue to assess our fleet requirements in these challenging times as demand for travel readjusts.
The loss for the financial year ended 31 March 2021 was £449,000 (2020: profit £7,018,000). This included £111,000 (2020: £5,622,000) of income and expenses which were considered to be exceptional in nature. Further detail can be found under notes to the financial statements.
The prior year adjustment of £839,773 relates to profit and loss on disposal of aircraft fixed assets. The costs are a material number that should be matched against the proceeds received in the year ended 31st March 2020.
The company’s directors monitor route revenue, direct operating costs and business profitability as the main key performance indicators. As the routes operated vary over time, as do the related direct operating costs. The performance of the business during the year can be seen in the profit and loss account.
Air Kilroe Limited
Strategic Report for the Year Ended 31 March 2021 (continued)
Principal risks and uncertainties
The key financial risks and uncertainties facing the company are set out below. The directors feel that the company has a good mix of business activities and is well-balanced to handle the risks and uncertainties that it may face.
The directors believe the key areas of risk facing the company are:
Environmental and government legislation
There continues to be uncertainty in the airline industry regarding taxation levied on domestic travel. The directors believe that due to the use of fuel efficient turbo-prop aircraft, Air Kilroe Limited enjoys a competitive advantage over the rest of the industry. Eastern Airways has engaged in technical developments in order to improve its operational and technical efficiencies. Furthermore, Eastern Airways has undertaken developments and exploration into greener aviation solutions to help reduce emissions.
Fuel prices
During the year the fuel price increased. As in previous years, the company continues to use fuel hedges to mitigate the risk where appropriate. At 31 March 2021, no fuel hedges were in place.
The price of oil continues to be a risk for the company. However due to the fuel efficient nature of the turbo-prop aircraft used, the proportionate cost of fuel to other operating costs is lower than the industry average.
Currency movements
A large proportion of aircraft parts, leasing, fuel and other costs are priced in US dollars. The company matches some revenues and costs to reduce this risk. There is an exposure to US dollar movements above the natural hedge, and the company has in the past used forward contracts to manage this risk. At 31 March 2021, no currency hedges were in place.
Section 172(1) statement
The directors of the company have paid due regard to their responsibilities under Section 172(1) of the Companies Act 2006, in so much as producing budgets and forecasts which consider any long term consequences of any decision, and the potential impact on the community and the environment.
Employees are consulted regularly to ensure the impact of any decisions made are considered, thus promoting fairness between the members of the company.
All business relationships are closely monitored by the directors, and as such the company maintains a reputation for high standards of business conduct.
Approved by the
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Air Kilroe Limited
Directors' Report for the Year Ended 31 March 2021
The directors present their report and the financial statements for the year ended 31 March 2021.
Directors of the company
The directors who held office during the year were as follows:
The following director was appointed after the year end:
Financial instruments
Employment of disabled persons
Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of a member of staff becoming disabled every effort is made to ensure that their employment with the company continues and that appropriate training is arranged. It is the policy of the company that the training, career development and promotion of disabled persons should, as far as possible, be identical with that of other employees.
Employee involvement
The company values the involvement of its employees and has continued its previous practice of keeping them informed on matters affecting them as employees and of the various factors affecting the performance of the company. This is achieved through formal and informal meetings and through the posting of company notices. Employee representatives are consulted regularly on a wide range of matters affecting their current and future interests.
Environmental report
We have considered the recommendations of the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) when preparing this report. These recommendations encourage businesses to increase disclosure of climate-related information, with an emphasis on financial disclosure. Air Kilroe Limited supports these recommendations and are committed to disclosing the relevant information which can be found below.
Energy emissions
During the year CO2 emissions relating to the operation of flights totalled 3,174 tonnes (2020: 5,100 tonnes). Once aggregated over the total number of flights this equates to 2.04 tonnes per flight operated which the directors consider to fuel efficient. These figures were obtained from the annual independently verified emissions report submitted for compliance with EU law.
Electricity and gas used at each of the company’s bases totalled 445,565kWh (tCO2: 125) as obtained from the metered usage (2020: 245,765kWh, 69 tCO2).
For the purpose of transport the company’s vehicle emissions for the year were 48.1 tonnes of CO2 (2020: 23.2 tCO2).
Air Kilroe Limited
Directors' Report for the Year Ended 31 March 2021 (continued)
Future developments
Britain has now left the European Union
After the leaving the EU there is still a potential impact to reduce demand for flights in and out of the UK. Although the majority of the company’s revenue is generated within the British Isles there may be a decline in adhoc charter flights within the EU. We have not yet seen this impact our future sales.
Parts are also imported from within the EU and dependent on future trade talks may extend lead times however Air Kilroe Limited will continue to choose the most efficient suppliers which will have the least impact on our maintenance schedules.
Going concern
The financial statements have been prepared on the going concern basis. In adopting the going concern basis for preparing the financial statements, the Directors have prepared cash flow forecasts for a period of 14 months from the date of approval of these financial statements, which indicate that taking account of reasonably possible downsides, the company will have sufficient funds to meet its liabilities as they fall due for that period.
The Company holds significant cash reserves and is free from financial covenants.
The uncertainty as to the future impact of the company due to the recent COVID-19 outbreak, has been considered as part of the Company’s adoption of the going concern basis. Based on latest forecasts and projections, taking into account available information and government guidelines, the use of the going concern basis is appropriate and conditions are outlined below.
Due to the easing of the unprecedented level of travel restrictions imposed by governments in response to the COVID-19 pandemic, and the softening of demand and load factors, Air Kilroe Limited has undertaken significant investment and time trying to understand the flight requirements and travel demand, and recognises that once travel restrictions have been fully removed, that it would have to kick start the business.
Aviation will still face an uncertain future with risks of a slow recovery. The industry depends significantly on airlines maintaining access to liquidity, including that enabled by governments. Air Kilroe Limited has undertaken, and still maintains significant measures internally, to preserve cash and liquidity as well as operational efficiency and cost savings.
The consolidated Orient Industrial Holdings Limited group maintains a strong statement of financial position, including a substantial cash balance and unencumbered aircraft. Air Kilroe Limited has no debt re-financings due, and is in ongoing discussions with liquidity providers who recognise the strength of our balance sheet and business model should those facilities be required.
The Directors have concluded that the combination of these circumstances does not represent a material uncertainty that casts doubt upon the Company’s ability to continue as a going concern. Nevertheless, after making enquiries and considering the uncertainties described above, in light of the funding outlined and opportunities provided by the unencumbered asset base for further funding, the directors have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Those forecasts are dependent on Eastern Airways International Limited providing additional financial support during that period. Eastern Airways International Limited has indicated its intention to continue to make available such funds as are needed by the company for the period covered by the forecasts. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
On this basis the directors are of the opinion that the company has adequate resources to trade in an orderly fashion for the foreseeable future and accordingly adopt the going concern basis in preparing these financial statements.
As at the date of sign off the parent company has issued a letter of support stating that it will not seek repayment of this within the next 12 months.
Disclosure of information to the auditors
Air Kilroe Limited
Directors' Report for the Year Ended 31 March 2021 (continued)
Each director has taken steps that they ought to have taken as a director in order to make themselves aware of any relevant audit information and to establish that the company's auditors are aware of that information. The directors confirm that there is no relevant information that they know of and of which they know the auditors are unaware.
Reappointment of auditors
The auditors Bissell & Brown Midlands Ltd are deemed to be reappointed under section 487(2) of the Companies Act 2006.
Approved by the
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Air Kilroe Limited
Statement of Directors' Responsibilities
The directors acknowledge their responsibilities 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:
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select suitable accounting policies and apply them consistently; |
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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 |
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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.
Air Kilroe Limited
Independent Auditor's Report to the Members of Air Kilroe Limited
Opinion
We have audited the financial statements of Air Kilroe Limited (the 'company') for the year ended 31 March 2021, which comprise the Profit and Loss Account, Balance Sheet, Statement of Changes in Equity, and Notes to the Financial Statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
• |
give a true and fair view of the state of the company's affairs as at 31 March 2021 and of its loss for the year then ended; |
• |
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and |
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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.
The impact of uncertainties due to the UK exiting the European Union
Uncertainties related to the effects of Brexit are relevant to understanding our audit of the financial statements. All audits assess and challenge the reasonableness of estimates made by the directors, such as recoverability of assets and related disclosures and the appropriateness of the going concern basis of preparation of the financial statements. All of these depend on assessments of the future economic environment and the company’s future prospects and performance.
Brexit is one of the most significant economic events for the UK, and at the date of this report its effects are subject to unprecedented levels of uncertainty of outcomes, with the full range of possible effects unknown. We applied a standardised firm-wide approach in response to that uncertainty when assessing the company’s future prospects and performance. However, no audit should be expected to predict the unknowable factors or all possible future implications for a company and this is particularly the case in relation to Brexit.
Conclusions relating to going concern
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 company's ability to continue as a going concern for a period of at least twelve months from when the original financial statements were authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report 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 there is a material misstatement in the financial statements or a material misstatement of the other information. 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.
Air Kilroe Limited
Independent Auditor's Report to the Members of Air Kilroe Limited (continued)
Opinion on other matter prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
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the information given in the Strategic Report and Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
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the Strategic Report and Directors' Report have been prepared in accordance with applicable legal requirements. |
Matters on which we are required to report by exception
In the light of our 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 and the Directors' Report.
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 |
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the financial statements are not in agreement with the accounting records and returns; or |
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certain disclosures of directors’ remuneration specified by law are not made; or |
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we have not received all the information and explanations we require for our audit. |
Responsibilities of directors
As explained more fully in the Statement of Directors' Responsibilities [set out on page 7], 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.
Auditor’s 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 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.
Capability of the audit in detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Based on our understanding of the Company and its industry, we identified that the principal risks of non-compliance with laws and regulations related to breaches of UK and European regulatory principles, and we considered the extent to which non-compliance might have a material effect on the financial statements of the Company.
We also considered those laws and regulations that have a direct impact on the financial statements of the Company, such as the Companies Act 2006 and UK tax legislation and equivalent local laws and regulations applicable to in-scope components.
We have also 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 are related to management bias in accounting estimates and judgmental areas of the financial statements.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Air Kilroe Limited
Independent Auditor's Report to the Members of Air Kilroe Limited (continued)
Audit procedures performed by the engagement team included:
Discussions with the Board of Directors and management, regarding consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
Evaluation and testing of the operating effectiveness of management's controls designed to prevent and detect irregularities;
Reviewing relevant meeting minutes including those of the Board of Directors.
Identifying and testing journal entries based on risk criteria;
Designing audit procedures to incorporate unpredictability around the nature, timing or extent of our testing; and testing transactions entered into outside of the normal course of the Company's business specifically in respect of acquisitions and disposals.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement 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 on 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 directors.
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.
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For and on behalf of
Charter House
56 High Street
West Midlands
B72 1UJ
Air Kilroe Limited
Profit and Loss Account for the Year Ended 31 March 2021
Note |
2021 |
(As restated) |
|
Turnover |
|
|
|
Cost of sales |
( |
( |
|
Gross profit |
|
|
|
Profit/(Loss) on disposal of fixed assets |
( |
|
|
Administrative expenses |
( |
( |
|
Exceptional net income and costs |
111 |
2,751 |
|
Other operating income |
|
|
|
Operating (loss)/profit |
(524) |
4,309 |
|
Amounts written off investments |
- |
|
|
Interest payable and similar expenses |
( |
( |
|
(15) |
2,799 |
||
(Loss)/profit before tax |
( |
|
|
Tax on (loss)/profit |
|
( |
|
(Loss)/profit for the financial year |
( |
|
The above results were derived from continuing operations.
The company has no recognised gains or losses for the year other than the results above.
Air Kilroe Limited
(Registration number: 03038856)
Balance Sheet as at 31 March 2021
Note |
2021 |
(As restated) |
|
Fixed assets |
|||
Tangible assets |
|
|
|
Memorabilia |
|
|
|
|
|
||
Current assets |
|||
Stocks |
|
|
|
Debtors |
|
- |
|
Cash at bank and in hand |
|
- |
|
|
|
||
Creditors: Amounts falling due within one year |
( |
( |
|
Net current liabilities |
( |
( |
|
Total assets less current liabilities |
|
|
|
Provisions for liabilities |
- |
( |
|
Net assets |
|
|
|
Capital and reserves |
|||
Called up share capital |
- |
|
|
Profit and loss account |
|
( |
|
Total equity |
|
|
Approved and authorised by the
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Air Kilroe Limited
Statement of Changes in Equity for the Year Ended 31 March 2021
Share capital |
Profit and loss account |
Total |
|
At 1 April 2020 |
|
( |
|
Prior period adjustment |
- |
( |
( |
At 1 April 2020 (As restated) |
|
( |
|
Loss for the year |
- |
( |
( |
Total comprehensive income |
- |
( |
( |
Reduction in share capital |
- |
47,601 |
47,601 |
Other share capital movements |
(47,602) |
- |
(47,602) |
At 31 March 2021 |
- |
|
|
The prior year adjustment of £839,000 relates to profit and loss on disposal of aircraft fixed assets. The costs are a material number that should be matched against the proceeds received in the year ended 31st March 2020.
Share capital |
Profit and loss account |
Total |
|
At 1 April 2019 |
|
( |
( |
Profit for the year |
- |
|
|
Total comprehensive income |
- |
|
|
New share capital subscribed |
|
- |
|
At 31 March 2020 |
|
( |
|
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021
General information |
The company is a private company limited by share capital, incorporated in England & Wales. The company's registration number is 03038856.
The address of its registered office is:
United Kingdom
The principal place of business is:
Schiphol House
Schiphol Way
Humberside Airport
Kirmington
North East Lincs
DN39 6YH
These financial statements were authorised for issue by the
Accounting policies |
Summary of significant accounting policies and key accounting estimates
The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated.
Statement of compliance
These financial statements were prepared in accordance with Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland'.
Basis of preparation
These financial statements have been prepared using the historical cost convention.
The financial statements are presented in sterling which is the functional currency of the company and rounded to the nearest £1,000.
Summary of disclosure exemptions
The Company’s parent undertaking, Orient Industrial Holdings Limited, includes the Company in its consolidated financial statements. The consolidated financial statements of Orient Industrial Holdings Limited are prepared in accordance with FRS 102 and are available to the public and may be obtained from the address given in note 22. In these financial statements, the company is considered to be a qualifying entity (for the purposes of this FRS) and has applied the exemptions available under FRS 102 in respect of the following disclosures:
• Reconciliation of the number of shares outstanding from the beginning to end of the period;
• Cash Flow Statement and related notes; and
• Key Management Personnel compensation.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
As the consolidated financial statements of Orient Industrial Holdings Limited include the equivalent disclosures, the Company has also taken the exemptions under FRS 102 available in respect of the following disclosures:
• The disclosures required by FRS 102.11 Basic Financial Instruments and FRS 102.12 Other Financial Instrument Issues in respect of financial instruments not falling within the fair value accounting rules of Paragraph 36(4) of Schedule 1.
Name of parent of group
These financial statements are consolidated in the financial statements of Orient Industrial Holdings Limited.
The financial statements of Orient Industrial Holdings Limited may be obtained from Schiphol House, Humberside International Airport, Kirmington DN39 6YH.
Going concern
The financial statements have been prepared on the going concern basis. In adopting the going concern basis for preparing the financial statements, the Directors have prepared cash flow forecasts for a period of 14 months from the date of approval of these financial statements which indicate that taking account of reasonably possible downsides, the company will have sufficient funds to meet its liabilities as they fall due for that period.
The Company holds significant cash reserves and is free from financial covenants.
The uncertainty as to the future impact in the Company of the recent COVID-19 outbreak has been considered as part of the Company’s adoption of the going concern basis. Based on latest forecasts and projections taking into account available information and government guidelines, the use of the going concern basis is appropriate and conditions outlined below
Due to the unprecedented level of travel restrictions being imposed by governments in response to the COVID-19 pandemic and the softening of demand and load factors, Air Kilroe Limited has undertaken significant cancellations and expects this to continue in line with government and local authority restrictions over the coming months.
Aviation faces an uncertain future with what could be a longer-term travel freeze and the risks of a slow recovery. The industry depends significantly on airlines maintaining access to liquidity, including that enabled by governments. Air Kilroe Limited is undertaking significant measures internally to preserve cash and liquidity as well as operational efficiency and cost savings.
The consolidated Orient Industrial Holdings Limited Group maintains a strong statement of financial position including a substantial cash balance and unencumbered aircraft. Air Kilroe Limited has no debt re-financings due and is in ongoing discussions with liquidity providers who recognize our strength of balance sheet and business model should those facilities be required.
The Directors have concluded that the combination of these circumstances does not represent a material uncertainty that casts doubt upon the Company’s ability to continue as a going concern. Nevertheless, after making enquiries and considering the uncertainties described above, in light of the funding outlined and opportunities provided by the unencumbered asset base for further funding the directors have a reasonable expectation that the Company has access to adequate resources to continue in operational existence for the foreseeable future. For these reasons, they continue to adopt the going concern basis of accounting in preparing the annual financial statements.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
Those forecasts are dependent on Eastern Airways International Limited providing additional financial support during that period. Eastern Airways International Limited has indicated its intention to continue to make available such funds as are needed by the company for the period covered by the forecasts. As with any company placing reliance on other group entities for financial support, the directors acknowledge that there can be no certainty that this support will continue although, at the date of approval of these financial statements, they have no reason to believe that it will not do so.
On this basis the directors are of the opinion that the company has adequate resources to trade in an orderly fashion for the foreseeable future and accordingly adopt the going concern basis in preparing these financial statements.
As at the date of sign off the parent company has issued a letter of support stating that it will not seek repayment of this within the next 12 months.
Prior period errors
The prior year adjustment of £839,773 relates to profit and loss on disposal of aircraft fixed assets. These costs should have been written off against the proceeds on the disposal of the asset at 31 March 2020. It has had the effect that profit on sale of assets was overstated by £839,773.
Revenue recognition
Turnover represents flown revenue from charter, freight and other activities, including aircraft leasing, net of Value Added Tax and Air Passenger Duty.
All other revenue streams are recognised at the point of fulfilling the service or the date at which the right to receive consideration occurs.
Foreign currency transactions and balances
Tax
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in the profit and loss account except to the extent that it relates to items recognised directly in equity or other comprehensive income, in which case it is recognised directly in equity or other comprehensive income.
Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on timing differences which arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. The following timing differences are not provided for: differences between accumulated depreciation and tax allowances for the cost of a fixed asset if and when all conditions for retaining the tax allowances have been met; and differences relating to investments in subsidiaries, to the extent that it is not probable that they will reverse in the foreseeable future and the reporting entity is able to control the reversal of the timing difference. Deferred tax is not recognised on permanent differences arising because certain types of income or expense are non-taxable or are disallowable for tax or because certain tax charges or allowances are greater or smaller than the corresponding income or expense.
Deferred tax is measured at the tax rate that is expected to apply to the reversal of the related difference, using tax rates enacted or substantively enacted at the balance sheet date. Deferred tax balances are not discounted.
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that is it probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
Tangible assets
Tangible fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses.
Where parts of an item of tangible fixed assets have different useful lives, they are accounted for as separate items of tangible fixed assets.
The company assesses at each reporting date whether tangible fixed assets are impaired.
Leases in which the company assumes substantially all the risks and rewards of ownership of the leased asset are classified as finance leases. Leased assets acquired by way of finance lease are initially stated at an amount equal to the lower of their fair value and the present value of the minimum lease payments at inception of the lease, and are then held at cost less accumulated depreciation and less accumulated impairment losses. Lease payments are accounted for as described in note below.
Depreciation
Depreciation methods, useful lives and residual values are reviewed if there is an indication of a significant change since the last annual reporting date in the pattern by which the company expects to consume an asset’s future economic benefits.
For those aircraft that are owned, or held under finance leases, part of the initial cost of the aircraft is attributed to major components. Depreciation is then charged against these components at a variable rate dependent on the actual usage of the aircraft. The remainder of the initial cost is depreciated to its residual value on a straight line basis over its estimated useful economic life.
Subsequent costs of periodic overhauls on these components are capitalised within tangible fixed assets and depreciated over the years benefiting from these enhancements.
Depreciation is charged to the profit and loss account on a straight-line basis over the estimated useful lives of each part of an item of tangible fixed assets. The estimated useful lives are as follows:
Asset class |
Depreciation method and rate |
Aircraft, engines and undercarriage |
on a flying cycle basis for airframes based on manufacturers' guidance as set out below for engines and major components |
Aircraft rotables |
25% per annum from date of acquisition to estimated residual value of 15% |
Aircraft improvements |
over the life or remaining lease period of the relevant aircraft |
Fixtures, fittings and equipment |
10-20% per annum |
Maintenance costs
The costs of periodic overhauls on owned and finance leased aircraft are capitalised and depreciated within tangible fixed assets as noted in note 12, unless the liability for those overhauls has been passed to a third party. All other costs relating to maintenance of owned and finance leased aircraft are charged to the profit and loss account as incurred.
Provisions for periodic overhaul costs on aircraft held under operating leases are made with reference to the number of hours flown, or similar basis, over the lease period.
For certain operating leased aircraft, arrangements have been entered into with maintenance providers under which monthly payments are made on a flying hour, or similar basis. The group retains responsibility for the total costs of the maintenance overhaul of these aircraft, and where these costs exceed the monthly payment the group will incur additional costs. The additional costs are spread over the period to the shorter of the next overhaul, or end of the lease term, and are shown within tangible fixed assets.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
Memorabilia
Memorabilia are stated in the financial statements at their valuation amount. No depreciation is provided on memorabilia. It is the Company’s practice to maintain these assets in a continual state of sound repair. Accordingly, the Directors consider that the lives of these assets and residual values are such that their depreciation is insignificant.
Investments
Investments in equity shares which are publicly traded or where the fair value can be measured reliably are initially measured at fair value, with changes in fair value recognised in profit or loss. Investments in equity shares which are not publicly traded and where fair value cannot be measured reliably are measured at cost less impairment.
Interest income on debt securities, where applicable, is recognised in income using the effective interest method. Dividends on equity securities are recognised in income when receivable.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and call deposits, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of change in value.
Trade debtors
Trade debtors are amounts due from customers for merchandise sold or services performed in the ordinary course of business.
Trade debtors are recognised initially at the transaction price. They are subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for the impairment of trade debtors is established when there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivables.
Stocks
Stocks, including aircraft consumables are stated at lower of cost or net realisable value. Net realisable value is calculated on a basis of 25% straight line per annum with no residual value
Trade creditors
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Accounts payable are classified as current liabilities if the company does not have an unconditional right, at the end of the reporting period, to defer settlement of the creditor for at least twelve months after the reporting date. If there is an unconditional right to defer settlement for at least twelve months after the reporting date, they are presented as non-current liabilities.
Trade creditors are recognised initially at the transaction price and subsequently measured at amortised cost using the effective interest method.
Provisions
Provisions are recognised when the company has an obligation at the reporting date as a result of a past event, it is probable that the company will be required to settle that obligation and a reliable estimate can be made of the amount of the obligation.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
Leases
Leasing agreements which transfer to the company substantially all the benefits and risks of ownership of an asset are treated as if the asset had been purchased outright. The assets are included in tangible fixed assets and the capital element of the leasing commitments are shown as obligations under finance leases. The lease rentals are treated as consisting of capital and interest elements. The capital element is applied to reduce the outstanding obligations and the interest element is charged to the profit and loss account in proportion to the reducing capital element outstanding. Assets held under finance leases are depreciated over the shorter of the lease term and the useful lives of equivalent owned assets.
Annual rentals payable or receivable under operating leases are charged or credited to the profit and loss account on a straight line basis over the lease term, unless another systematic and more rational basis is appropriate.
Share capital
Ordinary shares are classified as equity. Equity instruments are measured at the fair value of the cash or other resources received or receivable, net of the direct costs of issuing the equity instruments. If payment is deferred and the time value of money is material, the initial measurement is on a present value basis.
Defined contribution pension obligation
A defined contribution plan is a pension plan under which fixed contributions are paid into a pension fund and the company has no legal or constructive obligation to pay further contributions even if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
Contributions to defined contribution plans are recognised as employee benefit expense when they are due. If contribution payments exceed the contribution due for service, the excess is recognised as a prepayment.
Financial instruments
Classification
(a) they include no contractual obligations upon the company to deliver cash or other financial assets or to exchange financial assets or financial liabilities with another party under conditions that are potentially unfavourable to the company; and
(b) where the instrument will or may be settled in the company’s own equity instruments, it is either a non-derivative that includes no obligation to deliver a variable number of the company’s own equity instruments or is a derivative that will be settled by the company’s exchanging a fixed amount of cash or other financial assets for a fixed number of its own equity instruments.
To the extent that this definition is not met, the proceeds of issue are classified as a financial liability. Where the instrument so classified takes the legal form of the company’s own shares, the amounts presented in these financial statements for called up share capital and share premium account exclude amounts in relation to those shares.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
2 |
Accounting policies (continued) |
Basic financial instruments
Trade and other debtors are recognised initially at transaction price less attributable transaction costs. Trade and other creditors are recognised initially at transaction price plus attributable transaction costs. Subsequent to initial recognition they are measured at amortised cost using the effective interest method, less any impairment losses in the case of trade debtors. If the arrangement constitutes a financing transaction, for example if payment is deferred beyond normal business terms, then it is measured at the present value of future payments discounted at a market rate of instrument for a similar debt instrument.
Interest-bearing borrowings are recognised initially at the present value of future payments discounted at a market rate of interest. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost using the effective interest method, less any impairment losses.
Impairment excluding stocks
A financial asset not carried at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence that it is impaired. A financial asset is impaired if objective evidence indicates that a loss event has occurred after the initial recognition of the asset, and that the loss event had a negative effect on the estimated future cash flows of that asset that can be estimated reliably.
An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. For financial instruments measured at cost less impairment an impairment is calculated as the difference between its carrying amount and the best estimate of the amount that the Company would receive for the asset if it were to be sold at the reporting date. Interest on the impaired asset continues to be recognised through the unwinding of the discount. Impairment losses are recognised in profit or loss. When a subsequent event causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.
Non-financial assets
The carrying amounts of the Company’s non-financial assets, other than stocks, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated. The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value less costs to sell. 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.
An impairment loss is recognised if the carrying amount of an asset exceeds its estimated recoverable amount. Impairment losses are recognised in profit or loss.
An impairment loss is reversed if and only if the reasons for the impairment have ceased to apply.
Impairment losses recognised in prior periods are assessed at each reporting date for any indications that the loss has decreased or no longer exists. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net of depreciation or amortisation, if no impairment loss had been recognised.
Revenue |
It is the view of the directors that all activities of the company fall within one class of business, that of airline operator.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
3 |
Revenue (continued) |
2021 |
2020 |
|
Rendering of services |
|
|
The analysis of the company's turnover for the year by market is as follows:
2021 |
2020 |
|
British Isles |
|
|
Between the British Isles and Europe |
|
|
|
|
Turnover within the British Isles comprises revenue from domestic flights. Turnover between the British Isles and Europe comprises revenue from inbound and outbound flights between the British Isles and Europe and Europe to Europe travel.
The activities of the company are managed and administered on a central basis within the British Isles. As a result it would not be possible to provide a meaningful analysis of the operating results and net assets of the company on a route by route basis. Consequently, the operating results and net assets of the company are not shown across the geographical areas defined.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
Other operating income |
The analysis of the company's other operating income for the year is as follows:
2021 |
2020 |
|
Government grants |
- |
|
JRS government grant income |
|
|
|
|
Operating (loss)/profit |
Arrived at after charging/(crediting)
2021 |
2020 |
|
Depreciation expense |
|
|
Operating lease expense |
|
|
Exceptional net income and costs |
(111) |
(2,751) |
Exceptional net income and costs
The exceptional item of £111,000 is made up of £429,000 credit in relation to the release of onerous leases, £230,000 aircraft redelivery costs and £88,000 early termination fee of a handling contract.
The exceptional item in 2020 of £2,751,000 is made up of £4,145,000 release of a provision against intercompany debtor balances and £1,394,000 for the early return costs of E170 and Saab aircraft.
Interest payable and similar expenses |
2021 |
2020 |
|
Interest expense on other finance liabilities |
|
|
Interest payable on loans from group undertakings |
- |
66 |
|
|
Staff costs |
The aggregate payroll costs (including directors' remuneration) were as follows:
2021 |
2020 |
|
Wages and salaries |
|
|
Social security costs |
|
|
Pension costs, defined contribution scheme |
|
|
|
|
The average number of persons employed by the company (including directors) during the year, analysed by category was as follows:
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
7 |
Staff costs (continued) |
2021 |
2020 |
|
Administration and support |
|
|
Other departments |
|
|
|
|
Directors' remuneration |
The directors' remuneration for the year was as follows:
2021 |
2020 |
|
Remuneration |
|
|
Contributions paid to money purchase schemes |
|
- |
38 |
40 |
Auditors' remuneration |
2021 |
2020 |
|
Audit of the financial statements |
|
|
Taxation |
Tax charged/(credited) in the income statement
2021 |
2020 |
|
Current taxation |
||
UK corporation tax |
( |
|
UK corporation tax adjustment to prior periods |
( |
- |
(89) |
89 |
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
10 |
Taxation (continued) |
The tax on profit before tax for the year is the same as the standard rate of corporation tax in the UK (2020 - the same as the standard rate of corporation tax in the UK) of
The differences are reconciled below:
2021 |
(As restated) |
|
(Loss)/profit before tax |
( |
|
Corporation tax at standard rate |
( |
|
Effect of revenues exempt from taxation |
- |
( |
Increase from tax losses for which no deferred tax asset was recognised |
|
|
Increase in UK and foreign current tax from adjustment for prior periods |
- |
|
Tax increase/(decrease) from effect of capital allowances and depreciation |
|
( |
Tax decrease arising from group relief |
( |
- |
Tax decrease from effect of adjustment in research and development tax credit |
( |
- |
Other tax effects for reconciliation between accounting profit and tax expense (income) |
( |
( |
Total tax (credit)/charge |
( |
|
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
Tangible assets |
Aircraft, Engines and undercarriage |
Aircraft rotables |
Fixtures, fittings and equipment |
Aircraft improvements |
Total |
|
Cost or valuation |
|||||
At 1 April 2020 |
|
|
|
|
|
Additions |
|
|
- |
- |
|
Disposals |
( |
( |
( |
( |
( |
At 31 March 2021 |
|
|
- |
- |
|
Depreciation |
|||||
At 1 April 2020 |
|
|
|
|
|
Charge for the year |
|
|
- |
|
|
Eliminated on disposal |
( |
( |
( |
( |
( |
At 31 March 2021 |
|
|
- |
- |
|
Carrying amount |
|||||
At 31 March 2021 |
|
|
- |
- |
|
At 31 March 2020 |
|
|
- |
|
|
Stocks |
2021 |
2020 |
|
Aircraft spares and consumable items |
|
|
Debtors |
2021 |
2020 |
|
Other debtors |
|
- |
|
- |
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
Creditors |
Note |
2021 |
(As restated) |
|
Due within one year |
|||
Trade creditors |
|
- |
|
Amounts due to related parties |
|
|
|
Social security and other taxes |
|
- |
|
Other payables |
|
- |
|
Accrued expenses |
|
|
|
|
|
Provisions for liabilities |
Other provisions |
Total |
|
At 1 April 2020 |
|
|
Provisions used |
( |
( |
At 31 March 2021 |
- |
- |
The company has an unrecognised deferred tax asset of £5,221,063 (2020: £5,199,158) in the year which is made up of gross tax losses of £13,757,890 (2020: £14,022,398) and other balances amounting to £13,721,388 (2020: £13,341,588). The company does not expect to recover the tax assets in the short term.
Pension and other schemes |
Defined contribution pension scheme
The company operates a defined contribution pension scheme. The pension cost charge for the year represents contributions payable by the company to the scheme and amounted to £
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
Share capital |
Allotted, called up and fully paid shares
2021 |
2020 |
|||
No. 000 |
£ 000 |
No. 000 |
£ 000 |
|
|
- |
- |
|
47,602 |
Rights, preferences and restrictions
Ordinary shares have the following rights, preferences and restrictions: |
Obligations under leases and hire purchase contracts |
Operating leases
The total of future minimum lease payments is as follows:
2021 |
2020 |
|
Not later than one year |
|
|
Later than one year and not later than five years |
|
|
|
|
The amount of non-cancellable operating lease payments recognised as an expense during the year was £
Contingent liabilities |
The company is part of a group VAT scheme and is jointly liable for any group VAT liability, at the balance sheet date the amount due was £158,450 (2020: £258,161).
Santander UK Plc holds cash in a security account in relation to guarantees provided by the group.
Air Kilroe Limited
Notes to the Financial Statements for the Year Ended 31 March 2021 (continued)
Accounting estimates and judgments |
Key sources of estimation uncertainty
Useful economic lives and residual values of aircraft
In estimating the lives and expected residual values of its aircraft, the Company relies on its own and industry experience and other data available in the marketplace. The key reference points of the assumption are the frequency of maintenance events and their cost in maintaining the airworthiness of the aircraft when considering the future remaining life of the assets. The Company evaluates these estimates and assumptions in each reporting period, and, when warranted, adjusts these depreciation rates accordingly. The useful lives used have been disclosed in note 2 and have remained consistent with the previous financial year.
Critical accounting judgments in applying the Company's accounting policies
There were no certain critical accounting judgments in applying the Company's accounting policies during the year.
Related party transactions |
The company is exempt from disclosing transactions with other wholly owned group companies under Section 33.1A of FRS 102.
Parent and ultimate parent undertaking |
The company's immediate parent is
The ultimate parent is
The most senior parent entity producing publicly available financial statements is
The parent of the largest group in which these financial statements are consolidated is
The address of Orient Industrial Holdings Limited is: